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MBE Real Property

Mbe Real Property

by joen9557, Jan. 2009

Subjects: bar exam mbe property real

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Present Estates: The Fee Simple	1. An estate of indefinite duration 2. Sometimes requires that transfer be to grantee “and his heirs” 3. In most states- Grantor is presumed to convey entire interest unless a lesser estate is clerly intended.
Present Estates: Defeasible Fees Simple :Types of qualified estates Determinable estates	i. Automatically terminate and revert to the grantor on the happening of a specified event ii. Grantors retained interest is called the possibility of reverter iii. Words of creation: “so long as,” “until,” or “during” – use of these words is not necessary is there is evidence of intent that estate should terminate automatically on the stated contingency
Present Estates: Defeasible Fees Simple :Types of qualified estates Estates subject to a condition subsequent	i. Grantor has right to enter and repossess if contingency comes to pass (right of entry for condition broken or power of termination) ii. Words creating – “but if”, “on condition that”, or “provided that” iii. Actions necessary – used to have to enter land physically, now can file action to reclaim
Present Estates: Defeasible Fees Simple :Types of qualified estates Estates subject to an executory limitation	On happening of a contingency, a third party takes control of the estate
Present Estates: Defeasible Fees Simple :Types of qualified estates The fee tail	i. Estate that automatically passes from generation to generation until a suitable heir is not available, at which time it reverts to the grantor ii. This has been mostly replaced by the fee simple absolute
Issues Common to All Qualified Estates Possesory Rights of Grantees	a. Possessory rights of grantees are not affected by the qualified nature of their estates. Owner of a qualified fee has an unlimited right to use the land without liability to the holder of the future interest. i. Therefore, holder of a qualified fee estate has no duty to the future interest holder for waste.
Issues Common to All Qualified Estates Grantee’s right of alienations	i. Qualified estates are transferable, but the conditions imposed on the estate pass with the estate, even if not listed on the deed. Only a release by holder of future interest will remove the condition. May have difficulty selling because of this.
Issues Common to All Qualified Estates Rules of Construction	Courts do not look favorably on qualified estates. They will often strive to construe the conditional language of a grant as precatory language or as mere covenant.
Issues Common to All Qualified Estates Use As a Planning Device	A qualified estate gives the grantor an effective and certain means to control the grantee’s use of the property b/c grantor can obtain enforcement of the condition of a qualified estate without having to meet the requirement for obtaining equitable relief. Drawback is that the marketability is destroyed b/c of risk of forfeiture.
Issues Common to All Qualified Estates Impermissible conditions	i. The contingency which terminates the estate cannot be within the control of the grantor (creates estate at will – impermissible) ii. Contingency cannot be prohibition against ownership or use of land by certain race iii. Many states void conditions that encourage divorce, discourage marriage, or discourage legitimate will contests iv. Many states also will not enforce conditions that would divest a fee owner of the estate on the basis of their alienation of the estate
Life Estates	1. A life estate is an estate, the duration of which is measured by the lifetime of a person. 2. Words of creation – at one time a conveyance “to A” (without mention of A’s heirs) would create life estate; now it creates a fee simple absolute 3. A life estate can also be granted on the basis of the life of a third party (life estate pur autre vie). Or joint measuring lives “A and B for life” where the estate survives until the death of the last survivor. On the death of either life tenant the survivor takes the deceased’s interest. 4. Any reasonable number of measuring lives can be used to define the duration of an estate. 5. It cannot be qualified by time limitations which could end the estate prior to the end of the measuring life. “to A for life or 20 years” is not a life estate.
Life Estates: Rights and Obligations of the Life Tenant Right of possession and related rights of employment	i. Possession is the life tenants fundamental right ii. Incident to that right is the right to rent and profits iii. Entitled to evict grantor, trespassers, adverse possessors, and holders of future interests iv. Can sue for damages to present possessory interest in property v. KNOW: that a third party tenant has no recourse as against the grantee’s to prevent them from taking possession if the estate ends earlier than the tenant’s grant or lease. But, if the if the tenant pur autre vie predeceases the measuring life the life estate is inheritable by the tenant’s hears or devisees.
Life Estates: Rights and Obligations of the Life Tenant Right of alienation	i. Absent a prohibition against, life tenant may lease, sell, or mortgage the interest in the property. ii. Life tenant cannot convey more than she owns,
Life Estates: Rights and Obligations of the Life Tenant Right in Fixtures	When personal property is affixed to a life estate that can be removed without major damage to the property, the life tenant’s estate has a reasonable amount of time to remove it after the life tenant’s death
Life Estates: Rights and Obligations of the Life Tenant Rights in Division of Proceeds	If property is taken by eminent domain, the value of the remaining estate is determined and the proceeds are split accordingly
Life Estates: Rights and Obligations of the Life Tenant Obligation Not to Commit Waste	Limited by doctrine of waste – life tenant is liable to the holder of the future interest for any reduction in the value of the future estate
Life Estates: Rights and Obligations of the Life Tenant Obligation to Pay Taxes	Life tenant must pay real estate taxes (to extent that actual or imputed income is derived from property)
Life Estates: Rights and Obligations of the Life Tenant Obligation To Pay Interest On Mortgage	i. If property was mortgaged when life tenant’s estate became possessory, the life tenant is obliged to pay the interest due on the mortgage during the estate (to the extent that the property produces or can produce income) ii. Not responsible for principle
Co-Tenancy: Tenancy In Common	1. Exists when two or more owners have the right to possess property at the same time 2. No rights of survivorship – if one tenant dies, their interest passes to their heirs 3. When the respective shares are not specified, the assumption is equal shares
Co-Tenancy: Joint Tenancy Right of Survivorship	1. Right of survivorship a. This right is incident to a joint tenancy b. Interest passes to surviving tenant upon death of the other c. Can’t be devised by will
Co-Tenancy: Joint Tenancy Requirements to Create Joint Tenancy	a. Common law requirements i. Unity of time ii. Unity of title iii. Unity of interest iv. Unity of possession b. Modern law requirements i. Must be clear that grantor intended to create a joint tenancy ii. Some states require specific statements regarding right of survivorship iii. Most jurisdictions require unity of interest (same interest held by each tenant)
Co-Tenancy: Joint Tenancy Destruction	i. Conveyance 1. A contract to sell a joint tenant’s interest destroys the joint tenancy 2. A mortgage by a joint tenant will destroy in a title-theory state (title passed to mortgagee as security) 3. Not destroyed by attempt to devise interest – no affect at all ii. Partition action 1. Judgment in a partition action will destroy iii. Effect of destruction 1. Terminates right of survivorship only in the share conveyed or partitioned 2. Persists with respect to remaining tenants
Co-Tenancy: Tenancy by the Entirety	a. Can only be held by married couple b. There is a right of survivorship, but tenants cannot convey or unilaterally partition their individual interests
Co-Tenancy: Tenancy by the Entirety Creation & Destruction	c. Creation i. Married couples are assumed to take as tenants by the entirety ii. Conveyance to an unmarried couple will likely be deemed a joint tenancy d. Destruction i. Can only be terminated by a divorce, annulment, or agreement to partition ii. Divorce > tenants in common iii. Cannot be terminated by a conveyance or devise
Co-Tenancy: Rights and Liabilities of Cotenants Right to Possession	i. A cotenant is entitled to possession of the entire property, subject to same rights as cotenants ii. Attempt to exclude others from possession or use of any part of property = ouster > action for ejectment created 1. Permissive possession and use of entire property is ok
Co-Tenancy: Rights and Liabilities of Cotenants Right to Convey	i. Tenants in common and joint tenants may convey their undivided interest in the property 1. Successor is tenant in common, even if grantor was joint tenant ii. Attempt to convey entire property only conveys owned interest iii. Attempt to separate and convey a segment of the property will be void to the extent that it interferes with the other co-tenants right of partition
Co-Tenancy: Rights and Liabilities of Co tenants: Partition	i. A partition assigns a physical share of commonly held land corresponding to the interest of a cotenant to the cotenant in exclusive ownership
Co-Tenancy: Rights and Liabilities of Co tenants Voluntary Partition	1. Cotenants agree to division of land 2. Must be in writing
Co-tenancy: Rights and Liabilities of Co-tenants: Partition Involuntary Partition	1. Partition of property held in joint or common tenancy may be accomplished by court action
Co-tenancy: Rights and Liabilities of Co-tenants: Partition Restraints On Rights of Partition	1. Reasonable restraints on partition are generally upheld 2. Cotenant can still assign undivided interest 3. Co-tenants can only partition their own interests: they cannot affect the rights of third parties. EX: Partitioning co-tenants can partition in such a way that the interest of a remainderman would be adversely affected. EX: If one co-tenant leases the property to a 3rd party, that lease is only good against the lessor-cotenant after a partition; it is not good as against the nonjoining cotenant
Co-tenancy: Rights and Liabilities of Co-tenants Right to Lease, License, and Grant an Easement	On co tenant may give a lease or permission to a third person to use and enjoy the property in the same manner as the tenant himself but the right of the co-tenants can only be impinged if they have joined in the transaction.
Co-tenancy: Rights and Liabilities of Co-tenants Obligation to account for rent	1. Cotenant has right to occupy the entire premises 2. Not required to account to cotenants for fair rental value of personal use of land: but is required to account for the net proceed of rents from third persons minus any operating expenses. 3. Two exceptions: 1. on co tenant attempts to ouset the other then she is liable to the other for the rental value during the time of the ouster. 2. if one cotenent exploits the land in a waywhich will permanantly depreciate its value she must account to her cotenants.
Co-tenancy: Rights and Liabilities of Co-tenants Obligation to Pay for Improvements and Repairs	1. In cases of necessary repairs, majority rule is that contribution is required 2. In all other cases, contribution is not required
Co-tenancy: Rights and Liabilities of Co-tenants: Partition Involuntary Partition	1. Partition of property held in joint or common tenancy may be accomplished by court action
Co-tenancy: Rights and Liabilities of Co-tenants: Partition Restraints On Rights of Partition	1. Reasonable restraints on partition are generally upheld 2. Cotenant can still assign undivided interest 3. Co-tenants can only partition their own interests: they cannot affect the rights of third parties. EX: Partitioning co-tenants can partition in such a way that the interest of a remainderman would be adversely affected. EX: If one co-tenant leases the property to a 3rd party, that lease is only good against the lessor-cotenant after a partition; it is not good as against the nonjoining cotenant
Co-tenancy: Rights and Liabilities of Co-tenants Right to Lease, License, and Grant an Easement	On co tenant may give a lease or permission to a third person to use and enjoy the property in the same manner as the tenant himself but the right of the co-tenants can only be impinged if they have joined in the transaction.
Co-tenancy: Rights and Liabilities of Co-tenants Obligation to account for rent	1. Cotenant has right to occupy the entire premises 2. Not required to account to cotenants for fair rental value of personal use of land: but is required to account for the net proceed of rents from third persons minus any operating expenses. 3. Two exceptions: 1. on co tenant attempts to ouset the other then she is liable to the other for the rental value during the time of the ouster. 2. if one cotenent exploits the land in a waywhich will permanantly depreciate its value she must account to her cotenants.
Co-tenancy: Rights and Liabilities of Co-tenants Obligation to Pay for Improvements and Repairs	1. In cases of necessary repairs, majority rule is that contribution is required 2. In all other cases, contribution is not required
Co-tenancy: Rights and Liabilities of Co-tenants Obligation to Pay for Taxes and Carrying Charges	1. Each tenant is responsible for their share of the carrying charges (mortgage principles and interest and taxes). If paid more than share has right to contribution. *except where the tenant who has paid taxes or interest has been in sole possession and the value of the use and enjoyment which he has had equals or exceeds such payments, no action for contribution will lie
Co-tenancy: Rights and Liabilities of Co-tenants Waste	1. Most jurisdictions allow one tenant to sue another for waste 2. Waste occurs when one tenant exceeds the reasonable use and enjoyment of the land
Co-tenancy: Rights and Liabilities of Co-tenants Obligation to Pay for Taxes and Carrying Charges	1. Each tenant is responsible for their share of the carrying charges (mortgage principles and interest and taxes). If paid more than share has right to contribution. *except where the tenant who has paid taxes or interest has been in sole possession and the value of the use and enjoyment which he has had equals or exceeds such payments, no action for contribution will lie
Co-tenancy: Rights and Liabilities of Co-tenants Waste	1. Most jurisdictions allow one tenant to sue another for waste 2. Waste occurs when one tenant exceeds the reasonable use and enjoyment of the land
Co-tenancy: Rights and Liabilities of Co-tenants Fiduciary Obligation an Foreclosure	If the cotenants' title is foreclosed at a tax or mortgage foreclosure sale, the courts will find that a fiduciary obligation exists between the co-tenants, so that if one party buys the property at such a sale, the other co-tenants by promptly paying their contribution can aqcuire the same interest in the property which they previously held. if such a fiduciary obligation is not found the co-tenant can buy at a sale free from the rights of the the others.
Future Interests: Generally	The total of all interests in a piece of land must equal a fee simple absolute. For every estate of limited duration or qualified estate, there must be a subsequent taker. Subsequent takers interests are called future interests. Anyone who has even a mere chance of later achieving a present possessory estate has a future interest.
Future Interests: Reversions	1. A future interest is reversionary if it is retained by the grantor at the time he conveys the prior estates 2. Any time a person grants a qualified estate or an estate of lesser duration than they own without naming a subsequent taker, the grantor automatically retains the future interest 3. Not subject to rule against perpetuities 4. A grantor retains a reversion when they grant an absolute interest that is less than their own interest 5. Reversions can be conveyed, devised, or inherited.
Future Interests: Remainders Definition	Any interest in a third party that may become possessory immediately after a prior life estate, fee tail, or freehold estate is a remainder.
Future Interests: Vested Remainders Generally	An individuals remainder is vested if he has a present or certain right to take possession of the property when the prior estates terminate
Future Interests: Vested Remainders Legal Incidents of a Vested Remainder	i. Does not lapse if holder dies prior to time of possession ii. Not subject to rule against perpetuities iii. Indestructible
Future Interests: Vested Remainders Classification of Vested Remainders	i. The absolutely vested remainder – holder’s interest is subject neither to dilution nor to divestment ii. A vested remainder is "subject to open" if the remainderman's interest is vested but her share of the property is not certain because other persons may be capable of sharing in the grant.Commonly occurs in class-gift situations where the interest does not vest until the class closes. ** the difference btwn. a vested remainder subject to complete divestment and a contingent remainder si the difference between a condition subsequent and a condition precedent. The distinction may be necessary for Rule Against Perpetuities purposes. iii. The vested remainder subject to complete divestment, possesses the essential character of a vested remainder, however the occurrence of a condition subsequent will completely divest the remainder interest.
Future Interests: Contingent Remainders	a. When a person may someday have right to take a remainder interest, but has not yet met a condition precedent, they have a contingent remainder b. Words of creation – implied or explicit condition precedent c. Destructibility – abolished: today, if the condition has not bee satisfied by the the preceding estate terminates, the grantors reversion will become possessory and the person holding the contingent remainder will take a springing executory interest which will become posssessory if and when the condition precedent is met.
Future Interests: Executory Interests Generally	Any non-reversionary future interest following a qualified fee or any interest held by the grantor is an executory interest. Classified into "shifting" and "springing interests."
Future Interests: Executory Interests Shifting Executory Interests	a. A non-reversionary future interest following a qualified estate held by another grantee is a shifting executory interest b. Example – conveyance to A, so long as property is used for X purpose, and if not so used, to B
Future Interests: Executory Interests Springing Executory Interests	a. Estate does not begin until a future time and the immediately preceding estate is held by the grantor. EX: "to A for life, then one year after A's death, to B" creates a life estate in A a one-year reversion in the grantor.
Future Interests: Possibilites of Reverter, Power of Termination	1. Possibilities of reverter a. Retained by grantor when they convey a determinable estate b. Title and right to possession automatically re-vest in grantor on happening of specified condition 2. Right of entry a. Power of termination is created when the grantor conveys an estate subject to a condition subsequent b. Grantor has right to take back granted estate, at their discretion, if/when stated condition comes to pass c. Right is personal and thus inalienable – unlike reversions and possibilities of reverter
The Law of Landlord and Tenant: Fitness and Suitability of the Premises Landlord’s Obligations: Common Law Rule	i.Common law rule- Landlord made no implied warranties that premises were or would remain in any particular state of repair ii. A few exceptions were recognized 1. Latent defects – duty to disclose defects not readily discoverable by the tenant 2. Short-term lease of a furnished dwelling – landlord liable for defects of which they were or should have been aware 3. Short-term public-use lease – landlord liable for defects on premises 4. Common areas – liable for defects in common areas of multi-unit complexes 5. Undertaking to repair – attempt to repair = liability
The Law of Landlord and Tenant: Fitness and Suitability of the Premises Landlord’s Obligations: Modern Rules of Residential Leases	i. Implied covenant of habitability 1. Required by most states 2. Premises are in compliance with local building health and safety codes and will remain so 3. Covenant cannot be waived by tenant 4. Landlord must repair defects that violate codes ii. General duty of care 1. States that impose this duty hold landlords liable for negligence in failing to discover or repair defects 2. Defects need not rise to level of code violation for liability to attach
The Law of Landlord and Tenant: Fitness and Suitability of the Premises Tenant's Common Law Duty to Avoid Waste	a. Common law rule was that tenant was under duty to avoid waste b. Required to repair negligent or intentional damage and to make ordinary repairs to keep property in the same condition as at beginning of lease c. Not responsible for normal wear and tear, unless necessary to avoid more substantial waste d. Liable for ameliorating waste, unless they hold a very long term lease
The Law of Landlord and Tenant: Fitness and Suitability of the Premises Leases Imposing Duty on Tenant	e. If tenant covenants to repair in a non-residential lease, they must return premises in original condition (including wear and tear) i. In a residential lease, landlord is still responsible for implied warranty of habitability.
The Law of Landlord and Tenant: Fitness and Suitability of the Premises Tenant's Obligations: Rebuilding After Structural Damage or Casualty Destruction	Covenants requiring the tenant to repair is not usually construed by the modern case to include rebuilding of structural damage.
The Law of Landlord and Tenant: Fitness and Suitability of the Premises Tenant's Obligations: Repairing Ordinary Wear and Tear	A covenant requiring the tenant to repair is usually construed to include even repair of ordinary wear and tear even if the cov. in the lease makes not specific mention of it. However, repair covenants frequently exclude repair of ordinary wear and tear, and such and exclusion is enforceable.
The Law of Landlord and Tenant: Fitness and Suitability of the Premises Tenant's Obligations: Liability For Injuries	The tenant is always liable for the negligent condition of the premises, even if he was under no duty (to the landlord) to repair it.
The Law of Landlord and Tenant: Types of Holdings, Creation, Termination The Estate for Years	a. Any estate with a certain period of duration b. Terminates at the end of the stated period c. No notice required for termination **if the tenant stays in possession beyond the period the tenenecy is converted into a tenancy at sufferance or if the landlord accepts rent, a periodic tenancy by implication. statute of frauds applies to leases of more than one year.
The Law of Landlord and Tenant: Types of Holdings, Creation, Termination Tenancy at Will	Terminable at will of landlord or tenant (without notice) and has no specified period of duration.
The Law of Landlord and Tenant: Types of Holdings, Creation, Termination Holdovers and Other Tenancies at Sufferance	a. Tenant wrongfully remains in possession after her tenancy has been validly terminated b. No notice required to terminate c. The landlord may avail herself immediately of any procedures available to recover possession of the land. d. On the other hand the landlord can require the tenant at sufferance to pay rent and so convert the tenancy into a periodic tenanecy by implication.
The Law of Landlord and Tenant: Types of Holdings, Creation, Termination Periodic Tenancies	Estate for successive periods of time with no fixed termination date is a periodic estate.
The Law of Landlord and Tenant: Types of Holdings, Creation, Termination Periodic Tenancy by Implication	A periodic tenancy can be implied any time a tenant pays and the landlord accepts rent for an identifiable period of time. EX: When rent is accepted and tenant takes possession under and invalid lease or if a tenant for years retains possession of and pays rent the the lease property beyond the termination of her estate. Can be terminated by either party but only in compliance with the standards for giving notice of termination. 1. notice must be equal to the length of the tenency period and 2. can only be terminated at the end of one of the periods. thus, must be received by the start of the period for it to be effective at the end of the period.
The Law of Landlord and Tenant: Types of Holdings, Creation, Termination The Estate for Years	a. Any estate with a certain period of duration b. Terminates at the end of the stated period c. No notice required for termination **if the tenant stays in possession beyond the period the tenenecy is converted into a tenancy at sufferance or if the landlord accepts rent, a periodic tenancy by implication. statute of frauds applies to leases of more than one year.
The Law of Landlord and Tenant: Types of Holdings, Creation, Termination Tenancy at Will	Terminable at will of landlord or tenant (without notice) and has no specified period of duration.
The Law of Landlord and Tenant: Types of Holdings, Creation, Termination Holdovers and Other Tenancies at Sufferance	a. Tenant wrongfully remains in possession after her tenancy has been validly terminated b. No notice required to terminate c. The landlord may avail herself immediately of any procedures available to recover possession of the land. d. On the other hand the landlord can require the tenant at sufferance to pay rent and so convert the tenancy into a periodic tenanecy by implication.
The Law of Landlord and Tenant: Types of Holdings, Creation, Termination Periodic Tenancies	Estate for successive periods of time with no fixed termination date is a periodic estate.
The Law of Landlord and Tenant: Types of Holdings, Creation, Termination Periodic Tenancy by Implication	A periodic tenancy can be implied any time a tenant pays and the landlord accepts rent for an identifiable period of time. EX: When rent is accepted and tenant takes possession under and invalid lease or if a tenant for years retains possession of and pays rent the the lease property beyond the termination of her estate. Can be terminated by either party but only in compliance with the standards for giving notice of termination. 1. notice must be equal to the length of the tenency period and 2. can only be terminated at the end of one of the periods. thus, must be received by the start of the period for it to be effective at the end of the period.
The Law of Landlord and Tenant: Assignment and Subletting Generally	1. Unless the lease provides otherwise, the interests of the landlord, tenant for years, and periodic tenant are freely transferable a. Unless the parties to the sale agree otherwise; when the LL sells her interest in the property the new owner succeeds to the LL rights however, the tenants are not liable to the new LL until they have been notified of the conveyance. 2. A transfer of a tenancy at will or at suffrage is enforceable between the parties, but not against the landlord
The Law of Landlord and Tenant: Assignment and Subletting Assignment	a. Assignment – transfer of remainder of entire estate i. Assignee is in privity of estate with the landlord – replaces tenant
The Law of Landlord and Tenant: Assignment and Subletting Subletting	b. Sublease – tenant conveys less than entire interest i. Creates a second tenancy between tenant and subtenant
The Law of Landlord and Tenant: Assignment and Subletting Running of Lease Covenants Generally	i. Landlord and tenant may make lease covenants that run with the land and are enforceable by and against successors b/c they are in horizontal privity. ii. Landlord holds reversionary estate and therefore satisfies the the requirement that the party seeking to enforce an equitable servitude must hold an estate that will benefit from the covenant so.. – may enforce equitable servitude (however, covenant must also the usual requirements to run with the land) iii. a tenant who tranfers his leashold in effect only tranfers his rights under the lease. He cannot however, transfer his duties to such an extent that he is resolved of all liability under the lease. (an assigning tenant is secondarily liable, a subleasing tenent remains primarily liable on the lease obligations the subtenant is not at all liable on the obligations under the original lease
The Law of Landlord and Tenant: Assignment and Subletting: The Rent Obligation Specifically Obligation of Original Tenant	1. Tenant cannot discharge rent obligation by sublease or assignment 2. Contractual obligation to pay rent continues even if not in possession of premises 3. If interest is assigned, tenant’s responsibility is secondary to that of assignee
The Law of Landlord and Tenant: Assignment and Subletting: The Rent Obligation Specifically Obligation of Assignee	Only liable for rent during the period the assignee actually possesses the premises
The Law of Landlord and Tenant: Assignment and Subletting: The Rent Obligation Specifically Obligation of Subtenant	Rent covenant not directly enforceable against subtenant b/c no privity of estate btwn LL and subT. LL can only sue original T. If the subT does not pay rent and as a result the T does not pay her rent, the LL can terminate the estate and evict the subT.
The Law of Landlord and Tenant: Assignment and Subletting: The Rent Obligation Specifically Assumption of Rent Obligation By Lesee	If lessee expressly assumes rent obligation, landlord can go after them.
The Law of Landlord and Tenant: The Lessee's Right of Possession	If T breaches her lease w/ the LL and the LL the exercises her right to terminate the leasehold the interest of and assignee or subtenent are also terminated. a. Exception: if the original leasehold was terminated by the LLs surrender of the lease and the LL knew of the tenant's lease. KNOW: Tenant may have a cause of action for breach of the covenant of quiet enjoyment. A SubT can su only her LL (the original T). An assignee will be able to sue either the tenant or the LL.
The Law of Landlord and Tenant: Covenants against assigning and subletting	Courts construe these provisions narrowly and are quick to find a waiver of the landlord’s contractual right to prohibit a sublease or assignment ii. Consent by landlord once = waiver for future (unless right is specifically saved by agreement)
The Law of Landlord and Tenant: Assignment and Subletting: The Rent Obligation Specifically Obligation of Assignee	Only liable for rent during the period the assignee actually possesses the premises
The Law of Landlord and Tenant: Assignment and Subletting: The Rent Obligation Specifically Obligation of Subtenant	Rent covenant not directly enforceable against subtenant b/c no privity of estate btwn LL and subT. LL can only sue original T. If the subT does not pay rent and as a result the T does not pay her rent, the LL can terminate the estate and evict the subT.
The Law of Landlord and Tenant: Assignment and Subletting: The Rent Obligation Specifically Assumption of Rent Obligation By Lesee	If lessee expressly assumes rent obligation, landlord can go after them.
The Law of Landlord and Tenant: The Lessee's Right of Possession	If T breaches her lease w/ the LL and the LL the exercises her right to terminate the leasehold the interest of and assignee or subtenent are also terminated. a. Exception: if the original leasehold was terminated by the LLs surrender of the lease and the LL knew of the tenant's lease. KNOW: Tenant may have a cause of action for breach of the covenant of quiet enjoyment. A SubT can su only her LL (the original T). An assignee will be able to sue either the tenant or the LL.
The Law of Landlord and Tenant: Covenants against assigning and subletting	Courts construe these provisions narrowly and are quick to find a waiver of the landlord’s contractual right to prohibit a sublease or assignment ii. Consent by landlord once = waiver for future (unless right is specifically saved by agreement)
The Law of Landlord and Tenant: The Rent Obligation	The Ts obligation pay rent is inherent in the LL-T relationship. If the amount is not specified by lease or agreement a reasonable rent will be implied.
The Law of Landlord and Tenant: The Rent Obligation Defenses to Rent Obligation	i. Eminent domain 1. If premises are taken by eminent domain, the rent obligation terminates 2. If less than all property is taken, a reduction in rent is appropriate ii. Destruction of leasehold 1. If premise is space in building, destruction of building ended rent 2. If premise was building and land, obligation continues, though is likely reduced if building is destroyed iii. Frustration of purpose/illegality 1. If only use of premise was or became illegal (or was otherwise prohibited) then obligation ended iv. Surrender 1. Rent is terminated only if landlord agrees to surrender lease 2. Surrender may be express or implied v. Eviction 1. Eviction relieves tenant of rent obligation vi. Constructive eviction 1. Landlord breaches covenant of quiet enjoyment by significantly interfering with the use and enjoyment of the premises 2. Tenant must vacate shortly after start of interference to avoid rent vii. Breach of a covenant of habitability 1. Violation of warranty entitles residential tenant to abate rent without quitting the premises	E+D+F/I+S+E+CE+BofH
The Law of Landlord and Tenant: The Rent Obligation Landlord’s Remedies for Failure to Pay Rent	i. Debt action – can sue tenant for rent due, as it becomes due ii. Eviction – landlord can initiate eviction proceedings
The Law of Landlord and Tenant: Surrender, Mitigation of Damages, Anticipatory Breach	a. Surrender- T cannot unilaterally abandon the prperty and avoid her contractual rent obligation. The rent obligation is terminated only if the LL agrees to surrender the lease.Surrender can be an express agreement to terminate or it can be found in the LL actions. i. If landlord takes possession of premises for own use = surrender of lease ii. Re-renting of the premises generally works a surrender unless it is clear that landlord is doing so on behalf of the tenant b. Mitigation of damages i. Landlord generally has duty to mitigate damages c. Anticipatory breach i. Landlord can sue for rent as it becomes due ii. Acceleration clauses generally not enforced
Ownership Interests in Trusts The Instrument	Statute of frauds means that equitable interests in land must be created in writing
Ownership Interests in Trusts Settlor	The person who creates the trust. Can reserve the pwer to amend the trust instrument, the ppwer to change trustees, and the pwer to revodke the instrument in its entirety. The settleor can be both the trustee and the beni. Hoever, cannot be the sole trustee and the sole beni b/c there would be no separation the legal and beneficial interest in the property.
Ownership Interests in Trusts Trustees	The trust instrument vests legal title in the trustee usually giving broad powers to control and manage the trust property. 1. Power of sale a. Unless trust provides power to sell trust property, trustee must obtain court permission to sell 2. Power of contract a. Trustee has inherent power to enter into contracts to manage the trust property b. Not liable for such contracts personally as long as third party knew that trustee was acting in fiduciary capacity 3. Right to compensation a. Trustee is entitled to reasonable expenses and liabilities incurred in execution of the trust and reasonable compensation for all services 4. Duty of loyalty and good faith a. Trustee is a fiduciary – duty of loyalty and utmost good faith in dealing with the trust b. Cant put self in position with interest contrary to trust i. Can’t enter into transactions with the trust c. If trustee uses trust funds for own benefit, they must account for gains and losses and cannot use gains to offset losses 5. Duty of reasonable care a. Trustee must exercise reasonable care in managing the trust (need not be infallible)
Ownership Interests in Trusts Rights of Beneficiaries	1. Has only the rights granted in the trust instrument. (if Beni has right to income the Trustee must turn over that income to her if Trustee's handing over of the income is discretionary the beni has no right to income) 2. Right to sue trustee for breach of fiduciary duties
Termination of a Trust	1. By the terms of the trust 2. By the settler a. A valid trust cannot be unilaterally terminated by the settler prior to the time set out in the trust instrument unless such power was expressly retained 3. By the beneficiaries a. A trust cannot be terminated by the agreement of all parties in interest b. Can be terminated by a probate court
Charitable Trusts	1. Creation similar to private trusts 2. Differences from private trusts a. Indefinite beneficiaries i. Beneficiaries must be members of an indefinite class ii. Ensures public benefit b. Rule against perpetuities and accumulations i. Rule against perpetuities does not apply to charitable trusts ii. Rule of accumulations does not restrict charitable trusts unless the accumulation is found to be unreasonable c. Trust purpose i. Must be charitable as recognized by law – health, religion, education, governmental establishments, relief of poverty or discrimination ii. Cy pres doctrine 1. If trust is perpetual, focus of trust may change such that trust cannot be applied exactly as intended 2. Doctrine allows court to adjust gift to closely meet wishes – unless trust document provides otherwise d. Power to enforce i. May be enforced only by action of the AG of the state
Implied Trusts: Generally	1. Equitable remedy used by courts to avoid unjust enrichment of a titleholder 2. Arise by operation of law rather than express intent of settler 3. Trustee’s only power and duty is to convey legal title to the property to the beneficiary
Implied Trusts Resulting trusts	a. Title to property taken in the name of a person other than the one paying the consideration i. If one party pays for property, but title is taken by another, the other holds property in trust for payer ii. If payer is legally bound to support titleholder, then no trust will be found (e.g. the titleholder is the purchaser's minor child or spouse) b. Purchase by a fiduciary i. If fiduciary uses trust funds to purchase property in his own name, he holds title in trust c. On termination of express trust i. Where an express trust is created, but fails for some reason, the trustee holds any remaining trust funds on a resulting trust for the settler, his heirs, devisees, or legatees
Implied Trusts Constructive trusts	May be imposed where property has been acquired as the result of fraud (KNOW: The constructive trust remedy is available only where the fraud actually induced the transfer of the property) or a violation of a fiduciary duty or confidential relationship.
Trusts: Special Problems The Rule Against Perpetuities	1. All non-reversionary interests must be certain either to fail or vest within 21 years after some life in being at the creation of the interest 2. Interests to which rule applies a. Only applies to contingent remainders, executory interests, and options or rights of first refusal
Trusts: Special Problems: The Rule Against Perpetuities The Period of the Rule	a. The rule begins with the creation of the interest i. Interest is created when property is no longer freely alienable by any party ii. If property is transferred inter vivos, the period begins at the time of the transfer of title to the grantee iii. If transferred by will, period begins at the death of the testator iv. IF trust is irrevocable, period begins at time of creation of trust v. If trust is revocable, the period begins when the power of revocation is terminated
Trusts: Special Problems: The Rule Against Perpetuities The Lives in Being	i. Once a starting point is determined, one must check to see if there are any lives in being at the time that can serve to extend the period of time allowed by the rule ii. The future interest in question must vest within 21 years of the creation of the interest or the end of the measuring lives (if there are any). ii. Lives in being may be artificially or naturally connected with the conveyance 1. If artificially connected with the gift, they must be expressly set forth in the grant 2. If naturally connected, they are implied from the grant iii. Measuring lives can only be usefully implied from a grant if every member of that class must, by definition, be alive at the time of the creation of the interest iv. A child conceived but not born at the time of the creation of an interest is a life in being v. If no measuring lives are identifiable, the period is 21 years (otherwise its life in being + 21 years + pregnancy)
Trusts: Special Problems: The Rule Against Perpetuities Non-Reversionary Future Interests Must Vest or Fail	a. When interest vests i. These interest must be certain to vest/fail within the prescribed period and the point at which the interests are said to be vested depends on the classification of the interest i. A contingent remainder vests when it becomes either a vested remainder or a present possessory interest. ii. An executory interest vests only when it becomes a present possessory interest b. Certainty i. Interests must be certain to vest or fail at the moment of their creation 1. If any possibility of failure at time of creation = void ii. The fertile octogenarian rule 1. Everyone is presumed to be capable of having children as long as they are alive iii. The unborn widow rule 1. If an instrument gives an interest to a living person’s widow, there is no guarantee that the living person will be married at the time of death to a person who was alive at the time of the creation of the interest 2. Widow might not be a life in being at moment of creation 3. If subsequent interest does not vest until after widow’s, then that interest will vest too remotely and is void iv. The administrative contingency 1. Anytime that a non-reversionary future interest does not vest until the end of some procedure or event which is not necessarily limited in time to less than 21 years, the interests are probably invalid c. Interests must vest or fail i. The rule does not require the interests actually vest with the period of the rule, only that they be limited such that they either vest or fail within the period. i. Any interest that is not explicitly or implicitly limited to vesting within a limited period of time will violate the rule and be void
Trusts: Special Problems: The Rule Against Perpetuities The Rule’s Effect on Interests and Conveyances	5. The rule’s effect on interests and conveyances a. If it is not certain that a non reversionary interest will vest within 21 years from the end of the lives in being at the time of the creation of the interest, the interest is void and is stricken from the granting instrument. b. If the future interest is void then it is stricken from the granting instrument c. The striking of the future interest may also effect the estate of the prior holder i. If the condition that terminates the prior estate is part of the description of the prior estate, then the estate is unaltered (life estate or fee simple determinable) ii. If the condition is part of the description of the future estate then the prior estate will be converted from qualified to absolute
Trusts: Special Problems: The Rule Against Perpetuities The Rule Against Accumulations	A proviiosn in a non charitable trust instrument permitting the accumulation of the income is valid only as long as the income must be distributed within the period of The Rule.
Trusts: Special Problems: The Rule Against Perpetuities Special Applications of the Rule	a. Class gifts i. Exist any time a gift is to be shared equally among a group of unnamed individuals who all bear the same relationship to the grantor and, the membership of the group may change after the creation of the interest. ii. If the rule can be violated by any member of the class it is entirely void iii. As a general rule, courts consider the class to close when any member of that class has a right to distribution their share iv. IF the gift is per capita (specific sum given to each class member), it closes immediately on the testator’s death v. If the grantees can be divided into subclasses, a court can save the interest of any subclass whose interests will vest within the period of the rule. vi. If the gift is immediate and there are members of the class alive at the testator’s death, then the class closes immediately vii. If the class gift is an immediate lump sum and there are no members of the class alive at the time of the distribution, the class stays open until all potential members of the class are determined viii. If a class gift is by its own terms postponed, then the class does not close until a class member has the to receive their share
Trusts: Special Problems: The Rule Against Perpetuities Severable Alternative Contingencies	i. If the remainderman can receive his interest under either of two contingencies, but one contingency is too remote for purposes of the rule, he will still be able to take under the valid contingency (only).
Trusts: Special Problems: The Rule Against Perpetuities The charity to charity exception	c. The charity to charity exception i. Rule does not apply if property is vested in one charity with a gift over to a different charity on the happening of a condition
Trusts: Special Problems: The Rule Against Perpetuities Modifications Of the Common Law Rule: The “wait and see” doctrine	Some courts/statutes take the view that unless the limitation does in fact fail to vest within a life in being plus 21 years, it should be held valid
Trusts: Special Problems: The Rule Against Perpetuities Modifications Of the Common Law Rule: The cy pres rule	Some courts use this doctrine to reform private trusts in a manner to effectuate the wishes of the settler/grantor as nearly as possible within the confines or the rule’s time limits c. The uniform statutory rule against perpetuities i. A nonvested property interest is valid if certain to vest within the common-law time limit or actually does vest within 90 years after its creation 1. Essentially a wait and see rule ii. Interested persons can petition the court to apply the cy pres doctrine, so long as the interest vests within 90 years iii. Certain rights must be exercised within 30 years 1. Option in gross or a preemptive right of fist refusal in gross regarding an interest in land or minerals 2. Lease commencing at certain time or upon the happening of future events 3. Nonvested easement in gross iv. Fee simple determinable or fee simple subject to right of entry for condition broken becomes an absolute fee unless the contingency occurs within 30 years 1. If contingency does happen within 30 years, then the succeeding interest becomes possessory or the right of entry exercisable, irrespective of whether the devise would have violated the rule against perpetuities v. Applies to reversionary or executory interest
Trusts: Special Problems: The Rule Against Perpetuities Modifications Of the Common Law Rule: The uniform statutory rule against perpetuities	A nonvested property interest is valid if certain to vest within the common-law time limit or actually does vest within 90 years after its creation 1. Essentially a wait and see rule ii. Interested persons can petition the court to apply the cy pres doctrine, so long as the interest vests within 90 years iii. Certain rights must be exercised within 30 years 1. Option in gross or a preemptive right of fist refusal in gross regarding an interest in land or minerals 2. Lease commencing at certain time or upon the happening of future events 3. Nonvested easement in gross iv. Fee simple determinable or fee simple subject to right of entry for condition broken becomes an absolute fee unless the contingency occurs within 30 years 1. If contingency does happen within 30 years, then the succeeding interest becomes possessory or the right of entry exercisable, irrespective of whether the devise would have violated the rule against perpetuities v. Applies to reversionary or executory interest
Alienability, Descendability, and Devisability Right of Alienation	a. All present estates, except for those at will or at sufferance, are alienable b. All future interests, except rights of entry (b/c they are considered personal rights), are alienable
Alienability, Descendability, and Devisability Types of Restraints on Alienation	i. Disabling restraints purport to prohibit alienation by rendering the estate void upon any conveyance by the grantee. Disabling estates are void, except maybe when applied to freehold estates ii. Forfeiture restraint – grantee loses estate if he attempts to convey it 1. Takes the form of a qualified estate 2. Forfeiture restraints are generally effective against all estates except fees simple iii. Promissory restraint – grantee covenants or contracts not to convey the estate 1. Effective except against fees simple
Alienability, Descendability, and Devisability Preemptive rights	i. Right retained by grantor to buy back property when grantee chooses to sell it ii. Enforceable as long as not a restraint on alienation (price below market value), and does not violate the rule Against Perpetuities. (if the right can be exercised beyond the rule period i.e. it runs without limit) it is void. EX: "to A, so long as before he sells the property, he shall offer the property to the grantor at the market price, and he does not,then to B" (B's future interest is void).
Alienability, Descendability, and Devisability Descendability & Devisability	2. Descendability a. Right of property owner’s heirs to inherit whatever interest they held in the property by intestacy upon the death of the owner b. Unless interest is limited by life of possessor it will descend 3. Devisability a. Right of the possessor to dispose of his interest in land by will.
Rules of Construction: Generally	Rules of construction operate where the grantor's intent is not clean, to create presumptions about the grantor's intent in a particular conveyance.
Rules of Construction: Remainders in Heirs or Next of Kin: The Rule in Shelley’s Case and the Doctrine of Worthier Title	1. Remainders in Heirs or Next of Kin: The Rule in Shelley’s Case and the Doctrine of Worthier Title a. At common law, the rule in Shelley’s case operated as a rule of law to transform a remainder in heirs or next of kin of a life tenant into a remainder in the hands of the life tenant herself b. The doctrine of word your title accomplished much the same function as the rule in Shelley’s when they grant or conveyed a limited estate inter vivos with a remainder in her own heirs i. The remainder in the grantor’s heirs was treated as a reversion in the grantor c. Under modern law, the vast majority of states have rejected the rule in Shelley’s case and the doctrine of worthier title as rules of law i. They remain as rules of construction and many states
Rules of Construction: Postponed Gifts To "Heirs" or "Next of Kin"	1. Hiers of the Testator- Many states today provide by statute that the class of heirs of the grantor should be determined when the interest becomes possessory not at the grantor's death. 2. Heirs of other persons- wher the gift is to the "heirs" or the "next of kin" of a person other than the testator and the testator does ot define when the class is to be determined A. At the death of the other peson if she in fact outlives the testator or B. at death of the testator if the testator outlives that person.
Rules of Construction: "Die without Issue"	Present day construction of "die without issue" is that it refers only to a definite failure of issue. conveyance "to A and his heirs, but if a should dies without issue, then to B and his heirs" B's interest vests only if A dies without any issue. If A is survived by any issue, B's interest is defeated.
Rules of Construction: Conditions of survival	a. General rule-survival not required i. As a general principle, the holder of a future interest need not survive the holder of a prior possessory estate in order to take the interest b. Exceptions-when survival is required i. When the condition as expressed ii. When survival to a given age is required iii. When the grant is to heirs the individual’s family members must survive that person in order to qualify as heirs ** if the bift merely states that the money will be paid or the interest will only become possessory when the child reaches a given age, no requirement of survival is implied; the gift is vested before the grantee reaches that age.
Rules of Construction: Gifts to "A and His Children"	1. A gift to A and his grandchildren is ambiguous, in that it could create a concurrent estate between A and the grandchildren in existence at the time of the conveyance, or it could create a present interest in the parent and a future interest in whole of the parents children 2. As a rule of construction, if they did not have children at the time of the gift, the conveyance would create a life estate in A and a remainder in all of his children, whenever born 3. If A had children living at the time of the conveyance, then, as a rule of construction, the conveyance would create a tenancy in common in A and any living children
Covenants At Law and in Equity: Types of Binding Agreements	An enforceable contractual obligation between two parties. A mere covenant becomes a convenant running with the land if it is enforceable, not only between the actual parties to the covenant, but also by or against persons who were not parties to the original agreement, but now hold the land to which the agreement pertains. a covenant can run with the land either at law or as an equitable servitude.
Covenants At Law and in Equity: Rights vs. Duties.	Any covenant can be divided into rights and duties (or benefits" and burdens.") Successors will only be able to enforce the covenant if it runs with the land.
Covenants in Law and in Equity: Requirements for a Covenant to Run: Requirements Common to Both Theories	The rights and duties of a covenant will run with the land only if certain requirement are met the requirement vary with the theory upon which the party seeks to enforce the covenant. i. Requirements for a covenant to run with the land 1. A binding covenant a. In order for a covenant to be enforceable by or against successors, it must first have been enforceable between the original parties 2. A writing and signature a. A covenant relating to land must be in writing b. The only exception is common-scheme restrictions c. In general, a covenant must also be signed by the promisor d. A covenant indeed need not be signed by the promisor if the promisor is the grantee; it will be binding in the promisor accepts the deed 3. Intent a. The original parties must intended that the rights and/or duties of the covenant run with the land. Intent can be made explicit by including the phrase "and her heirs and assigns" after the names of the promisor and/or the promisee, but the intention need not be explict if it can be implied from the overall instrument and the circumstances. 4. Touch-and-concern requirement a. The covenants must affect the promisee and promisor as owners of the land. b. If agreement decreases or increases the value of land then requirement is met c. Covenants to pay money touch and concern the land when there is a direct relationship between the payment of money and services to be rendered to the land d. The covenant must touch and concern both the land of the promisor and the land of the promisee to be enforceable by and against the successors of both parties EX: If a covenant touches and concerns the land of only the promisor, the duty may run with the land, by the promisee's right will be only personal and will not be transferred to his successor. So, If A sells half of his land to B with a covenant that B will build a monument on B's property, the covenant touches and concerns B's land, but not A's. Therefore, B's duty may run with the land, but A's right will not. A may enforce his right against B's successors to perform the covenant. However, if A sells land to B with a covenant that B. will build a road across B's property to give access to A's property, the covenant will touch and concern the land.
Covenants in Law and in Equity: Covenants Restricting Competition	An agreement limiting the use of land for the purpose of restricting competition has failed to pass the touch-and-concern test in some states, because the benefit is an economic benefit rather than a physical one. EX: Shelley owns a tract of land of which she runs a gas station, and sells a portion of that land to Sinclair imposing a restriction that Sinclare's land not be used for gas-station purposes, the agreement restricts Sinclair in the physical use of her land but has no physical connection with the land retained by Shelley. So, Shelly's' right to enforce the covenant will not run to her successors. **A majority of states would permit the right to run since it does enhance the value of Shelley's land by freeing it from nearby competition.
Covenants in Law and in Equity: Covenants Restricting Competition	Covenant to pay money touch and concern the land when there is a direct relationship between the payment of the money and services to be rendered to the land. On the other hand if there is no obligation to use the money for purposes related to the land or the money is to be used for the repayment of previously incurred debts, then the obligation will not touch and concern the land.
Covenants in Law and in Equity: Requirements for a Covenant to Run: Special requirements for a covenant to run at law	For a covenant to enforceable by and against successor to property as a covenant running at law with the land, the covenant must be in writing and signed, touch and concern the land, and be intended to bind successors and meet two extra requirements. 5. Special requirements for a covenant to run at law a. Horizontal privity i. In order for a covenant to run at law, the Promisor and promisee must have been in privity of estate at the time the covenant was imposed ii. The Promisor must have granted the promisee is estate by the same instrument that imposed a covenant b. Vertical privity i. The successor to property can only be held to the covenant if he has succeeded to the original parties estate ii. If the successor acquired his title by adverse possession or at a foreclosure sale, he is not in privity iii. If successor owns a lesser estate then the promisor they cannot have the covenants enforced against them
Covenants in Law and in Equity: Requirements for a Covenant to Run: Special requirements for Equitable Servitudes	For a covenant to be enforceable by and against successors to property as an equitable servitude, the covenant must be in writing ans signed, touch and concern the land, and be intended to bind successors and a. Privity i. No horizontal privity is required ii. Vertical privity required for right to run. Therefore, the party seeking enforcement of the covenent must be able to trace her estate back to the original promisee. An adverse possessor has no right to force the promisor or her successors to perform the covenant. The same is not true of the duty, as anyone who is in possession of the promisor's land may be forced to perform the covenant. b. Notice i. A covenant is enforceable in equity against the subsequent possessor of the burdened estate at any time that possessor has notice of the existence of servitude ii. Only a Bona fide purchaser can avoid and equitable servitude on a parcel of land. Proper notice can be provided by the recording system, or if the restriction is in any f the deeds in the chain of title and, hearsay notice from a third party will also suffice. c. Dominant estate i. An equitable servitude can be enforced only if the person seeking enforcement is the owner of a parcel benefited by covenant
Covenants in Law and in Equity: Common Scheme	1. If land is developed under common scheme and the common scheme includes restrictions on some lots, the owners of those lots may enforce the same restrictions on the owners of other lots which are part of the common-scheme but were not expressly so burdened 2. Finding of common scheme a. There must at least be similar restrictions imposed by a common grantor upon a significant number of lots in a given area. The restrictions need not be identical. Uniformity and consistency are required to support inferences that the owners of the restricted lots expected the same restrictions to be imposed on the later sol lots and the purchasers of the unrestricted later sold lots had at least inquiry notice that their lots were part of a common scheme which involved restrictions. b. Any owner burdened by a common-scheme restriction and enforces restrictions on any land that is part of the common-scheme, regardless of who owns it. Some jurisdictions even allow a burdened owner to force the grantor to impose the commom scheme restriction on other lots in the area even if it cannot be shown that the grantor promised to so restrain that land.
Denial of Relief in Equity	3. Denial of relief in equity a. Equitable enforcement of a covenant running at law may be denied and an equitable servitude may be extinguished entirely in a number of situations b. The equitable doctrine of unclean hands will prevent any lot owner who is in violation of restrictions on his land from enforcing those restrictions against others c. Equitable enforcement of a restriction may be denied if the neighborhood has changed such that the benefits secured by the restriction is significantly reduced
Effectiveness Of Covenants As Devices To Control Land Use	A multiple choice property question may ask which property concept will be most effective in achieving a desired goal. The choice will be among: a fee simple subject to a condition subsequent, a lease, a covenant, an easement and, a zoning ordinance. a. A lease is an effective means to control the use of the land as the lessor has an unqualified right to control the use of the land via the lease i. Only appropriate if lessor wants to remain the owner of the land b. A covenant is often an effective means to control the use of land i. Binding on successors to land only in limited situations described in this chapter c. In using and is often a preferable device to a covenant i. Indefinite in duration ii. Enforcement not subject to requirements of contract law or equitable considerations iii. Usually cannot be used to limit the uses of land directly or to require the burdened party to perform an affirmative act d. The zoning ordinance is really an effective form of land-use-control i. Difficult to obtain ii. Can’t be obtained in reference to a single parcel of land iii. Enforcement is uncertain since it can only be enforced by public authorities and is subject to administrative variances and legislative changes e. A qualified estate is also a limited effectiveness i. It is only an option if the person who desires to control the land owns it ii. Its enforceability as certain but the severity of the penalty of forfeiture usually destroys the marketability of the property
Easements Servient v. Dominant Estates	The land burdened by an easement is called the servient estate while the land benefited is called the dominant estate
Easements Appurtenant Easements vs. Easements in Gross	i. If the owner of amusement holds it only by virtue of her status as the owner or possessor of land that is benefited the easement is appurtenant. 1. Automatically transferred with the land benefited, whether or not the easement is mentioned in the instrument of conveyance. 2. Cannot be transferred separately from the transfer of the dominant estate ii. An easement in gross is one that benefits no particular parcel of land 1. Benefits of the easement are held personally by owner. they are generally freely alienable.
Easements Affirmative vs. Negative	i. Affirmative easement - one has the right to physically and her on and use the land upon which to these men exists ii. Negative easement – gives the owner of the easement the right to prevent the owner of the servient estate from using the land in a particular manner
Easements By express grant	i. Writing required by Statute of Frauds to be enforceable. must be construed as a conveyance in fee ii. Must be recorded to bind the successors
Easements By express reservation	Created when the grantor, in the deed, reserves to himself easement rights in the granted premises,
Easements By implication	i. Requirements to have easement by implication: 1. The dominant and servient estates must have been held in common ownership at the time the easement was allegedly created 2. The servient estate must have been used in an apparent (such that the holder of the servient estate can be charged w/ knowledge) in continuous way such that a quasi easement could be said to exist 3. The continued use of the quasi easement must be reasonably necessary to the enjoyment of the dominant estate A quasi easement exists when a landowner owns two pieces of property and uses one to benefit the other in such a way that could give rise to an easement if the properties were owned by different people. ii. Possible to defeat by showing that party’s did not intend to create an easement
Easements By Necessity	i. Same as an easement by implication except that there is no requirement that quasi may exist on the land prior to the time of the mission of the way ii. The easement sought must be strictly necessary the enjoyment of the dominant parcel 1. An easement is strictly necessary if the land is practically incapable of use without the easement iii. An easement by necessity lasts only as long as the necessities which gave rise to it
Easements Easement by prescription	e. Easement by prescription i. Based it on same legal principle as title by adverse possession ii. Requirements 1. Actual use - use of the servient estate must be made, the use need not oust the owner from possession 2. Open and notorious – be used must be such that the owner is put on notice that she has a cause of action a. The statutory period runs from the time that the owner has constructive notice or actual knowledge of the use 3. Continuous – the prescriptive use must not be interrupted or even temporarily abandoned during the statutory period a. The use is continuous if it is only seasonal provided that the customary use of the easement would occur only seasonally b. Successive owners of the dominant estate are able to tack their periods of successive use in computing the statutory period c. Continuous use is interrupted and that period must start anew if the owner physically bars the owner of the dominant estate from using the easement or if the owner initiates court action to prevent the use of his property d. The use must be by particualr persons. Use by various members of the public generally is not sufficient to create it. However, a number of diff. indivs. could acquire a pres. easement over the same parcel of property if each complied with the necessary conditions. 4. Adverse a. All that is required to be used to be a use is that it be without permission of the owner b. A use that starts permissively can become hostile when the user communicates the hostile nature of her use to the owner or when the permission is revoked c. If the owner grants permission to continue what once was a hostile use then the prescriptive period ends 5. Status of the easement at the end of the period a. Once the requirements to obtain an easement by prescription are met that easement has the permanence of any other kind of these kind b. There is no longer a requirement of continuous use
Easements Scope of easements: Right of easement holder	iii. Scope of easements 1. Right of easement holder a. In the case of an easement by grant or reservation, the easement rights are determined by the language of that grant b. If the easement by grant or reservation fails to determine the location and scope of the easement, or the easement is an easement by necessity, the owner of the servient estate has the right to reasonably fix the location of and control the use of the easement c. In the case of easements by implication or prescription, new location and scope of the easement will be determined by the prior use of the servient estate
Easements: Scope of easements: Right of easement holder Changed Circumstances; Use For Other Than Dominant Estate; Repairs and Construction	d. Changed circumstances i. Courts will generally permit reasonable change in the use of an easement when circumstances have changed since the creation of the easement ii. If the original use becomes more intense because the dominant estate becomes more fully developed, there will not be an overburdening of the easement unless the intensity of use is beyond the reasonable contemplation of the parties e. Use for other than the dominant estate i. If the holder of attempts to the easement for the benefit of land other than the dominant estate, he has automatically overburdened it and that use can be enjoined 2. Repairs a. The easement holder has the obligation to keep the easement in repair and has the right to enter on to the servient estate in order to so b. If both the holder of the easement and the servient owner are making use of the easement, costs for will be apportioned between them
Easements: Right of holder of servient estate	a. The holder of the servient estate may make any use of her land that is not inconsistent with the rights of the easement holder b. If the easement is one of passage, you may use the road and permit others to do so c. If the location and scope of the easement have not been defined by a grant or prior use, he may reasonably control the location and scope of an easement
Easements: Termination of easements	iv. Termination of easements 1. By the term of the grant a. An easement is of infinite duration unless limited by conditions in the grant 2. A written release a. The holder of an easement, whether in gross or appurtenant, can terminate it by delivering written notice to the owner of the servient estate 3. By non-use and intent to abandon a. Mere non-use of the easement, even for extended periods of time, does not result in its destruction b. Before the easement will be terminated there must be an affirmative act that is a manifestation of intent to abandon 4. Estoppel a. If either an oral relief or extended non-use is coupled with reliance on the termination by the owner of the servient estate, then the easement will be terminated 5. By merger a. If the servient and dominant estates come into the identical ownership, then the easement is extinguished b. If the servient estate is later separately reconveyed, the easement does not automatically come back into existence 6. By prescription a. If the owner of the servient estate bars the easement holder from using the easement for the statutory period the easement will be extinguished 7. Destruction of the servient estate a. If the easement right is one of passage through a building, the easement is terminated if the building is involuntarily destroyed by fire or other cause 8. Conveyance of servient estate to Bona fide purchaser a. If the granted easement is not recorded and the purchaser takes the servient estate without knowledge of the easement, then the easement is unenforceable against the purchaser b. Easements by prescription, implication, and necessity, however, bind a Bona fide purchaser, even though not recorded 9. End of the necessity a. In easement by necessity ends at the time the necessity ends 10. Death a. In a jurisdiction that does not permit the alienation of easements in gross, they are terminated by the death of the holder, or sometimes by an improper attempt to alienate the easement
Profits A Prendre	ii. Profits A Prendre 1. Specialized form of easement a. Right to go on the land of another b. Right to sever, remove, and own something from the land 2. Creation a. Profits can be created by express grant, by reservation, by implication, and by prescription b. Profits by implication require that A quasi profit have been in existence at the time of the division of the common estate c. A profit cannot be created by necessity 3. Profits may be terminated in the same manner as easements. 3. Gross profits vs. appurtenant profits a. A profit in gross exists where the interest is held separately from ownership of any parcel of land, and a profit appurtenant, where the benefit of the profit is an integral part of a parcel of neighboring land. b. A profit in gross is freely assignable, unlike most easements in gross
Profits A Prendre: Scope of Profits Exclusive vs. non-exclusive profits; Apportionment	Exclusive vs. non-exclusive profits a. If the profit is exclusive only the owner of the profit has the right to take the subject matter of the profit from the land and that right is unlimited b. If the profit is non-exclusive then either the owner or others may also take the profit, or the property holders right is limited by quantity, time period, or use which may be made of the profit taken Apportionment a. If the profit is exclusive, it may be apportioned. b. if the exclusive profit is in gross, it may be apportioned among any group of persons as long as the right to be exercised after the apportionment is not wholly inconsistent with the agreement of the original parties. c. if the exclusive profit is appurtenent, the subdivision of the dominant estate will effect a corresponing apportionment of the profit. However, the benefit of the profit will attach to each parcel of the subdivision only if the burden of the servient estate is not as s a overly burdened. d. If the profit is nonexclusive the general principle is that while the profit may be assigned they may not be apportioned, because that will cause and unreasonable increase in the burden on the servient estate. However if those among whom it is apportioned will work in concert so that the burden is not increased,apportionment is sometime permitted. EX: apportionment will be permitted if the nonexclusive profit if limited by the amount of material that can be taken and those taking divide up that quantity.
Licenses	1. The licensee is a right given by the owner that permits a person to go on and use the owners land 2. It is usually revocable at will a. Irrevocable if the licensor permits the licensee to maintain personal property on his land, the licensee has an irrevocable right to enter on the licensor’s land for access to the property b. If the licensee justifiably relies on a grant of a long term license and spends substantial sums of money because of that reliance, that the license or will be estopped from revoking the license 3. Valid if oral: Damages are usually the only remedy, because the remedy of specific performance would create an ‘interest” land to which the SofF would apply.
Fixtures Definition	i. Fixtures 1. Definition a. In item of personal property that becomes part of the real estate because of its annexation to the real estate b. Once an item is classified as a fixture it passes to the owner of the real estate
Fixtures Rules for determining when personal property becomes a fixture	a. The intention of the parties rules b. If the intent is unclear, the following factors are considered: i. The character of the attachment 1. Any personalty that is attached to realty in such a way that its removal would cause substantial damage to the realty becomes a fixture ii. The character of the personalty 1. If specially designed for the realty, it is treated as a picture 2. If necessary to the use of the realty, fixture 3. Trade fixtures (those attached as a necessary part of business on the premises) are not presumed to be a fixture iii. The relationship between the competing parties 1. Disputes occur between the following groups a. Vendor and purchaser i. Part of real estate; fixture b. Mortgagor and mortgagee i. Part of real estate; fixture c. Landlord and tenant i. Not fixture; personal property d. Owner and licensee i. Not fixture; personal property e. Life-tenant and remaindermen i. Not fixture; personal property
Removal of personalty not considered to be a fixture	a. If not a fixture item must be removed promptly at the end of the annexor’s estate or it will become part of the realty b. Where there is a life estate, periodic tenancy, or tenancy at will, there is a reasonable time after the end of the tenancy when fixtures can be removed c. Removal is only permitted when it can be accomplished without seriously damaging the real estate i. Any damage caused by removal must be repaired by the owner of the removed property
Third party interest in fixtures	a. Mortgages are written to include later added fixture b. The owner of property which is later annexed to real estate, in a mortgagee who has a security interest in the real estate, will likely have competing security interests in the fixture
Fixtures Rules of Priority, Derived From U.C.C.	c. No security interest unless property is easily removable– if the property is not removable without substantial damage then the owner of loses his property interest once it has been attached d. Security interest in property must be recorded before mortgage in order to retain ownership of property i. A purchase-money security interest in property will prevail over even a prior mortgage, provided that it is promptly perfected by recording Remover of Personalty Must Repair Premises
Fixtures Plants Growing on Land	1 Timber and Other Natural Growth: Plants that have a long term association with the land on which they are growing and that require little cultivation are considered real property. 2. Crops- Generally classified as personal property. A person having an estate of uncertain duration who plants crops on the land can enter the land and remove the crops at the end of the growing season.
Scope and Extent of Real Property	A possessor of land has a right to prevent others from physically intruding on his land. If such an intrusion takes place, the possessor has a right o eject the trespasser and the collect damages, regardless of the length of time or the impact of the duration.
Scope and Extent of Real Property Rights in Airspace	a. The possessor of the right to possession of the airspace above his land
Scope and Extent of Real Property Adjacent, Rights to Lateral Support	2. Right to support a. Possessor of land has the right to both lateral and subjacent support b. The right of lateral support means that neighbors cannot use their land in such a manner that the surface of the possessor’s land subsides c. The right of subjacent support means that if someone else owns areas below the surface of the possessor’s land, they have an obligation to keep the surface of the possessor’s land from some subsiding i. If a landowner has the right to remove subsurface waters there is no liability for subsidence of a neighbor’s land as a result of that removal. Generally a cause of action for lateral or subjacent support may only be base upon excavation of the soil or improper removal of underground water. d. Absolute liability i. Possessor’s has an absolute right to lateral support of the land in its natural condition (land is undeveloped) and subjacent support of the land in the condition it was in at the time of the conveyance of the right to subjacent areas 1. Lateral Support: If the land is developed she can recover for the subsidence only as long as it can be shown that the land would have subside even if it were still in its natural state. ii. Liability cannot be contracted away
Scope and Extent of Real Property Actions in Negligence for Subsidence of Land	i. A possessor always has a cause of action in negligence or subsidence of their land. The possessor may recover, if this neighbor was negligence even if the land would not have subsided in its natural state. ii. A landowner is not ordinarily liable for the negligence of her independent contractor but can be held liable for negligence in choosing an incompetent independent contractor
Scope and Extent of Real Property Rights In Party Walls	a. Rights to support exist in party walls b. Each of us and owner phones that part of the wool won his side of the common boundary, and has an easement to use the entire wall for the support of the remaining part of his building c. Each party can extend the height or length of a wall i. This must be done at their own expense unless the other party uses the extended wall
Rights in common resources of light, air, streams, and bodies of water: Rights in lights and air	i. To be valid, rights to light and air must be specifically granted in deeds or other conveyances ii. A negative easement for light and air cannot be created by implication, because it is not apparent iii. Cannot be obtained by prescription merely because one landowner enjoyed, without permission, light or air that came across the property of his neighbor for the statutory period
Rights in common resources of light, air, streams, and bodies of water Generally	1. Land contiguous to a stream or river is riparian land. The possessor of such land has riparian rights in the water in the stream and any use he makes of the water which directly benefits riparian land is riparian use. 2. If the land is contiguous to a pond or lake, the land, the owner's rights int eh water, and the use of the water is termed littoral. 3. A person ha usufructuary rights if he has the right to use water. A person with merely usufructuary rights must tailor hsi uses of the water to the usufructuary rights of others. 3. A person has proprietary rights only when he has the right to possess and entire body of water without liability.
Water rights, classification of bodies of water and rights therein Watercourses	1. Any water that follows a well defined course or channel is a watercourse a. It need not have water year round 2. If course is navigable riparian owners rights are subservient to the public rights 3. If non navigable, the riparian owner owns the land under the stream 4. The riparian owners usufructuary rights vary depending on the jurisdiction a. At common-law they could use as much water as needed for domestic purposes as long as the quality and quantity of the water return to the stream were not affected (the natural flow doctrine) b. Under an appropriations system, the priority of all users is determined by the time they begin their use, with the prior use are always having a superior right to continue their use
Water rights, classification of bodies of water and rights therein Above ground ponds and lakes	1. If a landowner owns a whole the land around a lake work on, they usually have a proprietary right in the water 2. If the land around the lake is held by several persons the rights are similar to those of riparian owners
Water rights, classification of bodies of water and rights therein Underground ponds and lakes	1. If a landowner owns all the land of all of an underground pool or lake, they have a proprietary right in the water 2. If a landowner only owns part of the land over the lake, rights vary depending on jurisdiction 3. At common-law, a rule of capture applied, each owner had unqualified right to appropriate water below 4. Most jurisdictions now use a reasonable use standard – landowners have the right to use underground water to all reasonable extent for domestic, riparian uses a. Right to use for non riparian uses if no other riparian uses are affected 5. Some jurisdictions use correlative rights which give owners the right to the portion of water corresponding to their land over it
Water rights, classification of bodies of water and rights therein Surface water	iv. Surface water 1. Surface water consists of bodies of water, which do not follow any regular course or have any identifiable, regular boundaries 2. The owner of land on which surface water is found has a proprietary rights in it 3. A landowner is permitted to repel or remove surface water as long as it does not unduly damaged the land of a neighbor
Private Nuisance	a. A possessor of land has the right to quiet enjoyment of the land. Generally actions for nuisance will only lie for nonphysical invasions. b. Interference with use and enjoyment i. Plaintiff must show that defended substantially interfere with the plaintiffs use and enjoyment of the property, and that such use was unreasonable, even if the defendant’s conduct was not negligent or intentional c. Reasonableness of conduct i. Whether defendant’s conduct is a reasonable or unreasonable involves a balancing of three considerations 1. The locality in character of the surrounding area 2. The nature, extent, and frequency of the interference 3. The utility and social value of the activity involved d. Relief i. The damages and/or injunctive relief ii. If plaintiffs harm is small as compared with the potential harm to the defendant if the injunction is granted, the court may treat the nuisance as permanent, and awarded the plaintiff damages for the diminution of the value of his property
Public Nuisance	i. Public nuisance is an invasion of intangibles that unreasonably interferes with the health, safety, or property rights of the public i.e. a broad segment of the community rather than one or a few individuals.
Takings	1. Requirement of a public purpose a. The court has construed a public purpose broadly, as coterminous with the scope of the sovereigns police power b. If a taking is invalid because it did not serve a public purpose, the owner is entitled to damages for the temporary taking 2. What constitutes a taking a. Not all actions by the government regulates the use of land or diminish its value are takings for which the government must pay compensation b. Zoning ordinances, environmental protections laws, and landmark preservation are usually found to be valid as police power instead of takings c. Regulations may constitute a taking i. Any physical intrusion onto private property or establishment of a non possessory property interest constitutes a taking ii. A land use regulation even if enacted for valid police purposes will constitute a taking if it deprives the owner of all economically viable use of the land 1. The only way for government to avoid has to prove that building on the land would constitute a common-law nuisance iii. To be a regulation instead of a taking, the regulation must substantially advance the government objective being pursued and there must be a tight fit between the regulation and the governmental interest iv. Conditions imposed in building permit must be roughly proportionate to the burden imposed on the public
Zoning	1. Constitutional attack on zoning ordinance a. The police power justification i. Can control the density of dwelling units to prevent overcrowding ii. Can achieve aestheticism by imposing controls on the style buildings iii. Can preserve the integrity of historical districts by prohibiting a building which is out of character in such districts iv. Economic motives are OK for zoning b. Takings i. A zoning ordinance can constitute a taking when it deprives a land owner of all economic use of the land or burdens the land in a way that is disproportionate to the benefits conferred on the government ii. The government must pay just compensation for the value of the land which the ordinance has taken away from the landowner c. Due process i. Since the adoption of the zoning ordinance is a legislative act, affected landowners are not entitled to notice or hearing ii. If an ordinance is amended in such a way that will only affect a few specific parcels of land, the governmental activity is more administrative and nature, and effected owners will be entitled to procedural due process iii. A zoning ordinance can violate substantive due process by infringing upon the association all rights of families d. Equal protection i. The ordinance must only bear a rational relationship to a permissible state objected to be upheld unless it operates with respect to a suspect classification ii. Plaintiff must prove that the purpose of the ordinance was to discriminate, not just that it has a discriminatory effect e. First amendment issues i. A zoning ordinance could be unconstitutional if it improperly limits the right of free speech
The zoning enabling act	a. Each state has a zoning enabling act that sets forth substantive and procedural requirements that municipalities must comply with in enacting zoning statutes. Unless the state enabling act runs afoul of one of the constitutional limitations it is valid.
Administration of Zoning Passing and Amending the Zoning Ordinance	i. The zoning ordinance must be passed according to the procedure laid out in the state enabling act ii. Once enacted it then sets up an administration and enforcement structure that must be in accordance with the enabling act iii. A zoning ordinance which has been enacted can be amended by the local legislative body which enacted it in the first place.
Administration of Zoning The protection of nonconforming uses	i. Property that is in existence at the time the zoning ordinance is enacted or amended and which violates the ordinance either in use, density, or dimensional requirements is protected as a nonconforming use ii. Such uses can be modified with the permission of the zoning administrative body iii. Some ordinances provide that nonconforming uses must be amortized and can only continue for a specific period iv. A majority of courts uphold such limitations as long as they are reasonable in length and the property can be economically use after the nonconforming use is phased out
Administration of Zoning Conditional Uses	i. Many zoning ordinances to date permit specific uses only if certain conditions are met ii. Many times these conditions are general, such as a compatibility requirement iii. Compliance is generally determined by a zoning board of appeals after a public hearing in which proponents and the community and heard iv. Many commercial permits are granted only after some local body reviews the site plan of the development
Administration of Zoning Variances	i. There are circumstances dealing with unique conditions for a particular lot of land where compliance with the provisions of the zoning ordinance would create a substantial hardship on the owner ii. Variances permitting the property to be used for a purpose prohibited by the zoning ordinance are rarely granted, whereas as dimensional variances are commonly approved
Administration of Zoning Floating Zones and Planned Unit Developments	i. As the zoning process has matured over the past 70 years, ordinances have permitted developer’s and administrators more flexibility in planning specific uses ii. Planned unit developments permit developers of large parcels to plan mixed uses of varying densities on the property and gain approval of the entire plan by some planning authority in the municipality iii. Floating zones set forth the requirements for a particular kind of use and permit developers to petition the proper authorities to place specific land in those zones
Real Property Contracts Purchase-and-Sale Agreements	The agreement to convey routinely takes the form of a purchase-and-sale agreement-- contract entered into by the buyer and seller expressing at least a conditional commitment to the conveyance often including a description of the land, purchase price, and other particulars.
Real Property Contracts Relationships Included	i. Two types of contract for the sale of land 1. In the most common situation the contract is performed by the seller conveying title to the buyer in exchange for the agreed upon consideration a. Occurs within a short time period, usually 90 days b. Buyer does not take possession until the contract is fully performed 2. In the second situation the contract is used as a financing device a. The buyer takes possession at the time the contract is executed, makes periodic payments on the purchase price, and receives conveyance only when all of the consideration has been paid
Real Property Contracts Contracts to Buy and Sell By Conveyance of Realty	A contract for conveyance of real estate must satisfy the requirements of a valid contract.
Real Property Contracts Installment Contracts	A purchaser who buys property under an installment contract is in much the same position as a mortgagor. The purchaser will take immediate possession of the property but will not be the legal owner of the property until he pays the seller the full purchase price and receives a deed. Two problems from the buyer's viewpoint: 1. The seller may be unable to deliver clear title when the payments have been completed. 2. If the purchaser breaches (e.g. by making a late payment he has breached the contract and may lose all of the installment he has paid and his right to a deed.
Real Property Contracts Interest In Land Within the Statute of Frauds	1. Leaseholds, except those of short duration which are expressly accepted by statute 2. Interests of mortgagor and mortgagee or vendor and purchaser under a specifically enforceable contract 3. Present and future interests, both legal and equitable 4. Easements and profits 5. Interests created by covenants 6. Option contracts 7. Contracts by joint tenants or tenants in common to partition land into separate tracks for each tenant
Real Property Contracts Modification or Rescission Of a Contract Which is Within the Statute of Frauds	If a contract creating an interest in land were required by the Statute of Frauds to be in writing any agreement which modifies or extinguishes that interest must also be in writing.
Real Property Contracts Contracts Not Within the Statute of Frauds	1. Agreements which create a license as opposed to an easement or covenant, boundary agreements and broker contracts, and a promise not to make a will so that an heir will inherit the real estate, although connected with the land are not within the statute of frauds
Exception to Interests in Land Requiring SOF Part Performance Doctrine	If a court finds sufficient evidence of a in the parties' actions of an agreement, it will order a conveyance of the land under the part performance doctrine. Generally part performance is not ground for an action at law for damages; specific performance is the only remedy available. In general jurisdictions require the purchaser to perform varying combination of the following acts: 1. payment of the purchase price 2. possession of the land with the permission of the seller 3. improvements to the land. Note: A majority of jusridictions require all three. A minority of jurisdictions hold that mere possession with the knowledge of the seller is sufficient. No jurisdiction is satisfied by payment of the purchase price alone.
Real Property Contracts Essential Terms	Writing need not be a purchase and sale agreement per se to satisfy the SOF. a. Any writing for collection of writings that evidence is the agreement will suffice, even if they were not intended to embody the contract b. Land must be described- with reasonable precision. However, extrinsic evidence (e.g. surveys) can be used to resolve an ambiguity in the memorandum. b. The parties and the land must be identified c. There must be language indicating that a sale was intended d. The purchase price must be included if agreed upon e. The document must be signed by the party to be charged
Real Property Contracts Implied Conditions or Terms: Time for Performance	a. If there is no date then it is presumed that the parties intended for it to be a reasonable time b. If a specific date is fixed strict compliance with the date is only required in an action for damages (at law) i. Strict adherence is not required for actions in equity, unless the contract specifies or it can be implied from the circumstances of the contract that time is of the essence ii. Failure to perform on the specified date is usually not grounds for an action for rescission or specific performance iii. If time is not of the essence a party can sue for specific performance as long as he was ready to perform w/in a reasonable time. Also, either party may, by giving notice to the other party of a reasonable time for performance and by making that time of he essence, require that the other party either perform the contract on that date or be in default.
Real Property Contracts Implied Conditions or Terms: Title Required	a. If the purchase and sale agreement is silent on the matter the seller is required to deliver marketable title at the closing to all of the property specified in the purchase and sale agreement. b. The agreement can provide for a lesser quality of title
Real Property Contracts Burdens Related to Title Defects.	i. Seller’s right to notice of defects 1. When the purchaser finds a defect in the title, she must notify the vendor, who will then have a reasonable time to clear the defect 2. A purchaser cannot assert a defect that was not brought to the vendors attention as a justification for the purchasers failure to perform ii. Seller’s burden to clear liens 1. If there is a defect in title created by a lien on the property, the seller has the obligation to clear that lien at the time of closing (most common is the mortgage) 2. If the defect us uncurable by the payment of a specified amount of m money because another person has some title claim then the obligation of the parties are governed by the agreement. iii. Variance between area owned by seller in the area specified in agreement 1. Minor variances between the land promised in the contract and the land conveyable by the seller will not put the seller in breach of contract, unless there was fraud involved 2. A variance between the area agreed to and actually conveyable will also not usually result in an adjustment of the purchase price unless the price was established on a per acre basis iv. Buyers option when defect incurable 1. The buyer has the right to terminate the agreement and recover his deposit 2. Some agreements give the seller a period of time to cure the defect 3. The buyer can waive the requirement of marketable title and take any title that the seller possesses 4. If the buyer elects to take the seller’s unmarketable title he must pay the full purchase price
Real Property Contracts Performance: Fitness and Suitability of the Premises	1. The UCC does not apply to sales and realty, there are generally no implied warranties, except for the covenants of title discussed below incident to a deed 2. The purchaser must rely on express warranties of material fact made by the seller 3. The lone exception is a warranty of habitability is implied in every from a vendor who is also the builder of the improvements on the land 4. Except for the implied warranty on a new home, obligations of the seller concerning the physical status of promises conveyed depends on the language set forth in the purchase and sale agreement 5. If nothing is said about the condition and there is no misrepresentation about the condition of the promises, the obligation of the seller is only to convey the promises in their existing condition 6. Most purchase and sale agreements provide that the buyer has a period of time to inspect the condition of the promises and terminate the agreement if it as environmental defects or physical defects, and terminate the agreement that the defects are not cured 7. If the buyer has not terminated within the specific period she cannot use the defects as a reason to back out of the agreement
Real Property Contracts Performance: Marketable Title Required	1. A marketable title is one reasonably free from doubt both in fact and in law. It is the type of title which a reasonable, prudent, and knowledgeable investor desiring to purchase the property would accept. 2. Unless the contract provides otherwise, the seller must provide marketable title at the closing, you will use only obligated to give a quit claim deed a. If the seller cannot use in breach of the contract to convey and the purchaser need not go through with the conveyance and may sue for damages 3. If there is a factual problem with the title, the facts supporting its marketability must: a. The so conclusive of the judge would not permit the contrary verdict to stand, and b. Be capable of proof whenever challenged i. If the challenge is one of law, the law in favor of good title must be clear and not debatable
Real Property Contracts Performance: Defects That Render Title Unmarketable	a. Gaps or defects in the chain of title b. Inadequate estate: A seller does not have marketable title if she cannot produce the estate promised in the purchase-and-sale agreement. c. Encumbrances i. Agreement can provide the conveyance is subject to certain enumerated encumbrances ii. Absent an agreement to the contrary, encumbrances have the following effects 1. Mortgages and liens destroy marketable title 2. Dower rights destroy marketable title 3. Restrictions and equitable servitudes destroy marketable title only if they are more burdensome then the zoning ordinances applicable to the land 4. Leasehold interests destroyed marketable title 5. Easements destroy marketable title only if they actually or potentially interfere with the reasonable use of the land 6. Zoning ordinances do not destroyed marketable title a. And existing violation of a zoning ordinance renders title unmarketable b. A change in the zoning ordinance prior to closing may allow a purchaser to rescind on the agreement
Real Property Contracts Risk of Loss	1. Parties may determine who will bear risk of loss 2. If not specified governed by doctrine of equitable conversion. Under this view once there is a binding purchase and sale agreement, the purchaser bears the risk of loss if the property is destroyed. 3. The minority view is that the risk of loss is on the vendor until title passes 4. The Uniform Vendor and Purchaser Act puts the risk of loss on the party in possession 5. Where the risk of loss is on the purchaser but only the seller is insured for the loss then the seller must deduct the insurance proceeds from the sale price or pay those proceeds to the purchaser
Real Property Contracts Remedies for breach of purchase and sale agreement	1. Damages a. Either party is entitled to expectancy damages if the other party breaches (the expected profit is equal to the difference between the market value of the property at the time of the closing and the purchase price) b. If the seller breaches the purchaser is also entitled to the return of any deposit she has paid c. If the purchase breaches the purchase and sale agreement often will allow the seller to keep the purchaser’s deposit as liquidated damages. 2. Specific performance a. Either side can elect to obtain specific performance: i.e. force the breaching party to pay the purchase price or convey the property which ever is appropriate b. A court may also award incidental damages as part of a judgment for specific performance c. Specific performance can be denied though if an equitable defense is available. 3. Rescission
Real Property Contracts: Interest Before Conveyance The Effect of an Enforceable Purchase and Sale Agreement – The Doctrine of Equitable Conversion	i. The Effect of an Enforceable Purchase and Sale Agreement – The Doctrine of Equitable Conversion 1. The doctrine of equitable conversion provides that a purchaser who has a valid and binding agreement to convey should be treated as the property owner 2. The doctrine does not apply to options to purchase, unenforceable agreements to convey, or agreements to convey in which a condition precedent to enforceability has not been met 3. Right of possession and enjoyment a. Equitable conversion does not give the purchaser a right to possession prior to the time of performance b. If the contract gives the right to possession to the purchaser before the closing, the has full use of the property and may commit waste as long as the value of the property does not fall below the purchase price 4. Effect Of Equitable Conversion In the Event of the Death of Vendor or Purchaser a. If the seller dies the heirs will be required to convey the property but, the heirs will receive the vendor’s lien on the property and the purchase monies when paid b. If the purchaser dies, the heirs will receive the property but the heirs will be forced to pay her contractual obligation, the purchase price, out of their estate fund. 5. Creditor’s Rights a. The doctrine of equitable conversion gives the purchaser’s creditors the right to reach the land whereas the vendor’s creditors do not have rights in the land, but do have rights in the seller’s lien. 6. Risk of loss a. Most jurisdictions hold that the doctrine of equitable conversion governs the risk of loss. b. The parties may determine who bears risk of loss c. Absent agreement, the purchaser bears the risk of loss even if they do not have possession 7. Third party damage a. Since the purchaser is treated as the owner of the property under the doctrine of equitable conversion the purchaser can bring a tort action against third parties for any damage to the property committed after the execution of the contract to convey
Real Property Contracts: Interest Before Conveyance Earnest Money Deposits	ii. Earnest Money Deposits 1. Most agreements require buyer to place a deposit in escrow and provide that the deposit will be liquidated damages if the buyer defaults provided that it bears a reasonable relationship to the seller’s actual damages. 2. The purchase money deposit is unlikely to approximate actual damages in the installment land contract where the buyer has made periodic payments over a substantial length of time. In that case courts will probably not permit the seller to retain deposits either treating the contract as an equitable mortgage and requiring the seller to hold a foreclosure sale, or requiring a refund of that portion of the deposit which exceeds actual damages.
Real Property Contracts: Interest Before Conveyance The Closing	1. Seller must sign deed a. The purchaser is entitled to a deed from and actually signed by the seller if the deed is to contain any warranties of title 2. Purchasers obligation to produce purchase-money a. The purchaser is expected to produce the full purchase price at the time of the closing unless other arrangements have been made b. Seller may agree to finance the purchaser’s purchase of the property of the purchaser may agree to assume the seller’s mortgage.
Real Property Contracts: Relationships After Conveyance Condition of the Premises-Effect of Closing on Purchase and Sale Agreement	1. In general, if a purchase and sale agreement is performed on both sides a conveyance discharges the obligations arising from the contract to convey except those obligations expressly made to survive the closing. (specific warranties).
Real Property Contracts: Relationships After Conveyance Title Problems	1. Once the deed is delivered and accepted, the grantee can only sue for defects in the title based on the covenants of title in the deed 2. Any promises made by the grant or in the purchase and sale agreement are superseded and extinguished by the deed, unless those provisions of the agreement are made to survive the deed
Real Property Mortgages: Types of Security Devices Mortgages	a. A mortgage is a conveyance of an interest in land for the purpose of securing some obligation that the owner of the land owes to the creditor. b. It allows the mortgagee to sell the property to satisfy the mortgagor’s obligation if the mortgagor does not perform his obligation.
Real Property Mortgages: Types of Security Devices Deed of Trust	a. A trust deed is a conveyance from the owner of property to a third person in trust. b. Trustee will hold the property as security for a debt owed by the owner to the lender. c. The trust instrument will require the trustee to deed the property to the debtor when the obligation is satisfied, or to the creditor in the event of default d. Different from a mortgage because the trustee may be able to sell the property without all of the safeguards required for a foreclosure sale
Real Property Mortgages: Types of Security Devices Land Contracts as a Security Device	1. The purchaser who buys property under an installment contracts will take immediate possession of the property but not be the legal owner until the full purchase price is paid and they receive the deed 2. Two problems for buyer a. Seller may be unable to deliver clear title when the payments have been completed. This can be solved if the Bayer shecks the seller’s title at the time of contract formation and records it. But, contract may forbid recording in which case buyer is not protected. b. If purchaser breaches by making a late payment or missing a payment they may lose the property and forfeit payments already made.
Real Property Mortgages: Types of Security Devices Absolute Deeds as Security, Equitable Mortgages	1. Where a deed was delivered solely as security for a debt, the deed is treated as an equitable mortgage 2. Procedure to establish an equitable mortgage a. The grant or may introduce parole evidence in an equity proceeding to show that the deed was intended only to serve as a mortgage and its use entitled to a re-conveyance when the debt is paid
Real Property Mortgages: Types of Security Devices Absolute Deeds as Security, Equitable Mortgages Rights of Bonafide Purchaser	a. If a deed and that is an equitable mortgage has been recorded, a Bona fide purchaser from the grantee can cut off the rights of the grantor
Real Property Mortgages: Types of Security Devices Sale Lease back Arrangements	a. A sale of property accompanied by a lease back to the seller may function as a financing device. b. This works as a loan, seller’s payment of rent repay its loan until the debt is cleared and property is returned to seller
Real Property Mortgages: Some Security Relationships Requirement of Underlying Obligation	1. The mortgage must serve as security for an underlying obligation a. The obligation is usually a debt however it can be any sort of obligation including a duty to perform services 2. The mortgage is enforceable only as long as there is an underlying enforceable obligation a. If the underlying debt is unenforceable the mortgage is likewise unenforceable. Also title automatically revests in the grantor on performance of the obligation.
Real Property Mortgages: Some Security Relationships Exceptions to: If the underlying debt is unenforceable the mortgage is likewise unenforceable.	i. Two exceptions (mortgage still enforceable) 1. If the debt becomes unenforceable due to a discharge in bankruptcy 2. If the debt becomes unenforceable due to the running of the statute of limitations b. Obligation need not be that of the mortgager i. Landowner can grant a valid mortgage to secure a debt owed by a third party to the mortgagee ii. Also, a mortgagor can grant a mortgage in lieu of being personally liable on her own debt.
Real Property Mortgages: Some Security Relationships Underlying Obligation need not be that of the mortgager	i. Landowner can grant a valid mortgage to secure a debt owed by a third party to the mortgagee ii. Also, a mortgagor can grant a mortgage in lieu of being personally liable on her own debt.
Real Property Mortgages: Some Security Relationships Requirements for a mortgage	i. Formalities of execution ii. Consideration not required
Real Property Mortgages: Some Security Relationships Title and Lien Theories of Mortgages	ii. Title and Lien Theories of Mortgages 1. In a title-theory state, the mortgager will deed legal title to the mortgagee, but will retain an equity of redemption (the right to have legal title revested in him when he discharges his obligation) 2. In a lien theory state, the mortgager conveys only a lien on the property to the mortgagee 3. Principal difference occurs when parties own property as joint tenants. In title theory state the unilateral act of on JT in granting a mortgage is considered an alienation of the property this has the effect of turning the JT into a TC where in a lien theory the JT is not severed.
Real Property Mortgages: Some Security Relationships Rights Between the Mortgagor and Mortgagee Prior to Default	1. The mortgager has full right to possession until default a. This includes the right to rent and profits from the land 2. The mortgager also has a possessory right to use the property, as long as his use does not constitute a waste that would prejudice the security interest of the mortgagee 3. Morgagee has right to prevent waste thru injunction or entering the property and, a right to collect for any damages to his security interest. 4. The mortgagor has a right to sue a third party for damage to the property. The mortgagee may also sue, but can recover only for damage to his security interest in the property.
Real Property Mortgages: Some Security Relationships Rights to Redeem and Clogging the Equity of Redemption	iv. Rights to Redeem and Clogging the Equity of Redemption 1. Some states allow the mortgager to redeem the property for a period of time after the foreclosure sale, usually two years 2. If the mortgager or pays the lesser of the amount bid at the foreclosure sale or the amount due on the mortgage note and foreclosure costs within the prescribed time, the mortgagee or person buying from him must deed the property back to mortgager. 3. This is known as Clogging equity of redemption because the purchaser is reluctant to develop property that she may lose if the mortgagor redeems.
Real Property Mortgages: Transfers by the Mortgagor Conveyance Free and Clear of the Mortgage	1. The grantor/mortgage or can convey the property free and clear of mortgage if she discharges her obligation to the mortgagee at the time of or prior to the closing
Real Property Mortgages: Transfers by the Mortgagor Conveyance Subject to the Mortgage	1. The grantor can convey the property without making any special arrangements in regard to the mortgage a. In this situation, only the grantor is personally liable on the note b. The purchaser will lose his land if the mortgage obligation is not discharged 2. Surety and Subrogation a. The grantor/mortgagor can force the mortgagee to foreclose on the land before pursuing the grantor/mortgagor personally (like a surety but not truly b/c does not have the defenses available) b. If the grantor/mortgagor does pay on mortgage obligation, is subrogated to the rights of the mortgagee, and may foreclose on the property if the grantee does not pay him back.
Real Property Mortgages: Transfers by the Mortgagor Conveyance Subject to the Mortgage With the Grantee Assuming the Debt	1. The grantee may expressly promise the grantor/mortgagor that she will pay the mortgage obligation as it becomes due 2. By assuming the obligation, the grantee becomes the principle debtor and the grantor/mortgagor becomes a surety 3. The grantee’s express promise to pay the mortgage gives the grantor/mortgagor a direct cause of action against the grantee if the grantee fails to pay 4. The mortgagee is a third party beneficiary of the grantee’s promise to pay, so the mortgagee can sue the grantee directly if a grantee fails to pay 5. Surety and Subrogation a. B/c assumption grantee becomes principal debtor and grantor/mortgagor becomes true surety. b. However, mortgagee may sue the mortgagor & the assuming party together for default. c. The assumption cannot impair the mortgagee’s right to sue the mortgagor, except in limited circumstances where the mortgagee’s conduct impairs the mortgagor’s rights.
Real Property Mortgages: Transfers by the Mortgagor Novation	1. In a few cases, the mortgagee may agree to substitute the grantee as the oblige are and release the grantor/mortgagor from liability 2. In order to do this, the grantee and mortgagee must enter into a new contract (novation)
Real Property Mortgages: Transfers by the Mortgagor Due-on-Sale Clauses	1. In theory the mortgagee need not approve of the conveyance of property to a grantee or the financial arrangements made between the grantor/mortgagor and the grantee 2. However, most mortgages now contain due on sale clause that makes the entire mortgage debt duly immediately if the grantor/mortgagor conveys the property a. If the debt is not paid when mortgagee exercises his right then the mortgagee can foreclose b. The grantor/mortgager and the grantee can arrange to pay off the mortgagee at the time of the sale or else obtain a mortgagee’s approval of the sale c. Courts have upheld these as valid
Real Property Mortgages: Transfers by the Mortgagee	. Mortgagees may transfer of the underlying obligation and the mortgage itself 1. Normally the two will be transferred together unless the right to the mortgage is expressly reserved by the transferee. ii. A conveyance of a mortgage is a conveyance of an interest in property and so must meet the necessary formalities there iii. If the obligation is in the form of a negotiable note, it will be endorsed a negotiated to the transferee 1. Any other obligation must be conveyed by a contract between the mortgagee and the transferee (or a novation between the mortgagor and the new obligee). 2. The mortgage and the note must pass to the same person in order for the transfer to be considered complete. iv. The first purchaser has the presumed right to both instruments, except that a holder in due course of the note always has superior right to the mortgage
Real Property Mortgages: Transfers by the Mortgagee Formalities Needed	ii. A conveyance of a mortgage is a conveyance of an interest in property and so must meet the necessary formalities there iii. If the obligation is in the form of a negotiable note, it will be endorsed a negotiated to the transferee 1. Any other obligation must be conveyed by a contract between the mortgagee and the transferee (or a novation between the mortgagor and the new obligee). 2. The mortgage and the note must pass to the same person in order for the transfer to be considered complete. iv. The first purchaser has the presumed right to both instruments, except that a holder in due course of the note always has superior right to the mortgage
Real Property Mortgages: Transfers by the Mortgagee Rights of First Purchaser	iv. The first purchaser has the presumed right to both instruments, except that a holder in due course of the note always has superior right to the mortgage
Real Property Mortgages: Transfers by the Mortgagee Discharge and Defenses	i. The mortgager has satisfied his obligation to mortgagee, use promptly entitled to receive from the mortgagee a discharge of the mortgage in recordable form so that he can clear his title of the mortgagee’s encumbrance 1. States impose severe penalties for failure to discharge 2. The mortgager can sue for any actual damages suffered by failure to provide a discharge
Real Property Mortgages: Transfers by the Mortgagee Discharge and Defenses: Installment Payments	ii. The mortgagee is not required to accept satisfaction of the underlying obligation if the mortgage note does not permit prepayment of the mortgage 1. If the note only permits installment payments, the mortgagee can refuse to accept any payment other than the installment due 2. Many states have enacted statutes that require mortgagee’s to accept prepayment
Real Property Mortgages: Transfers by the Mortgagee Discharge and Defenses: Prepayment Penalties	iii. The mortgage note may require a prepayment penalty if the mortgager wants to pay the mortgage off ahead of time 1. The mortgager does not have to discharge until both the prepayment and the penalties are paid
Real Property Mortgages: Transfers by the Mortgagee Foreclosure Generally	Foreclosure is the process that extinguishes the mortgagor’s equity of redemption and allows the mortgagee to use the mortgaged property to satisfy the underlying debt.
Real Property Mortgages: Transfers by the Mortgagee Types of Foreclosure: Bill in equity to foreclose (strict foreclosure)	a. In an equitable proceeding, the mortgagee asks the court to set a date for performance of the obligation and to order that, if there is no performance by that date, the mortgager’s equity of redemption be cut off
Real Property Mortgages: Transfers by the Mortgagee Types of Foreclosure: Foreclosure by entry of action	a. This method is used if the mortgagee’s contains no power of sale provision b. The mortgagee must enter the land and continue in possession for three years c. At the end of the statutory period, the mortgagor’s equity of redemption is automatically cut off
Real Property Mortgages: Transfers by the Mortgagee Types of Foreclosure: Foreclosure under a power of sale	a. Most common way of foreclosure b. Mortgagee’s must comply strictly with contractual the contractual and statutory provisions i. Statutes generally require that the foreclosure sale be by public auction after proper notice to the mortgager and advertisement of the sale
Real Property Mortgages: Transfers by the Mortgagee Types of Foreclosure: Foreclosure under a power of sale & Good Faith	c. Mortgagee must act in good faith i. The mortgagee must act in good faith and use reasonable diligence to protect the interests of the mortgagor ii. However, mere inadequacy of price is not grounds for setting aside the sale. The mortgagor can purchase the property at a low price, as long as the sale was conducted fairly and in compliance with the mortgage and applicable statutes. iii. Mortgagor may both bid on the property at the foreclosure sale and act as the auctioneer
Real Property Mortgages: Transfers by the Mortgagee Foreclosure: Rights of Omitted Parties	1. The mortgagee prior to foreclosure must run the title to determine all persons having an interest in the mortgage premises 2. These parties include the original mortgage or, any subsequent owner of the property who has received their interest through the mortgager, and junior mortgage holders; any attaching creditors; and any other person whose interest in the land is shown in the record title 3. These parties must be notified of the foreclosure proceeding so that they can object to it if they think it is improper and attend the foreclosure sale to protect their interests 4. If the sale takes place and they are not notified of the proceedings and made parties to a judicial proceeding if required in the jurisdiction then they can either set aside the sale as invalid or they can maintain their interest in the property.
Real Property Mortgages: Transfers by the Mortgagee Foreclosure: Deficiency and Surplus	1. The proceeds of a foreclosure sale are distributed as follows a. To the foreclosing mortgagee goes the sum of the unpaid balance of the obligation, the interest up to the time of foreclosure, and the costs of foreclosure b. Then, junior mortgagee’s and attaching creditors have access to the proceeds, in the order of their seniority under the recording statute c. Any surplus goes to mortgager
Real Property Mortgages: Transfers by the Mortgagee Foreclosure: Deficiency Judgment	a. In many states, the mortgagee has a right to a deficiency judgment if the property does not bring enough to satisfy his claim b. To collect a deficiency judgment the mortgagee has to give the mortgagor notice prior to the foreclosure sale of her intention to seek the deficiency c. Many states prohibit deficiency judgments.
Real Property Mortgages: Transfers by the Mortgagee Foreclosure: Relationships between competing mortgagee’s at foreclosure	a. The priorities of mortgagee’s are determined by the recording statute of the jurisdiction b. Thus the first mortgagee granted is not necessarily the first in priority c. The purchaser at the sale will take the property free and clear of all encumbrances except for those senior to the mortgagee’s being foreclose d. The party foreclosing can bid on his own mortgage without spending any real money since he will in effect only have to pay himself. e. The junior mortgagee’s will have to bid on the property to protect their interest in it
Real Property Mortgages Transfers by the Mortgagee Foreclosure: Relationship between mortgagee’s and holders of security interests	a. Mortgagee’s are usually written so that they cover and fixtures whether attached to the property at the time of the mortgage or later added b. Since fixtures may be the separate subject of security interests, there may be competing security interests in the same fixture
Real Property Mortgages Transfers by the Mortgagee Foreclosure: Fixtures that can be subject to security interests	1. Goods irretrievably incorporated into the realty cannot be the objects of security interests other than mortgages—all other fixtures can properly be the subject of separate security interests
Real Property Mortgages Transfers by the Mortgagee Foreclosure:Priorities of mortgages and security interests	1. Generally, only a security interest in a fixture that is recorded prior to the mortgagee’s takes priority over the market 2. Exception – the purchase money security interest prevails over even a prior mortgage, if it is perfected within a reasonable time (usually 20 days) after annexation of the fixture to realty
Real Property Mortgages Transfers by the Mortgagee Foreclosure:Rights of the superior holder of a security interest	1. If the holder of security interest prevails over the mortgagees, she may remove the fixtures 2. She will be liable to any damage done to the property by the removal but will not be liable for any loss of value of the real estate due to the removal.
Transfers by the Mortgagee Foreclosure:Statutory Right of Redemption	1. Many states allow the mortgager to recover the property for a reasonable amount of time after the foreclosure by paying the amount of the winning bid at the foreclosure sale 2. Makes property unmarketable for a period of time 3. Forces mortgagee to bid a fair price at the foreclosure sale. If she bids a nominal price, the property can be redeemed for that nominal price
Transfers by the Mortgagee Foreclosure: Deed in Lieu of Foreclosure	1. When a mortgage is in default, the mortgager and mortgagee can agree that the mortgager will deed the property to the mortgagee in satisfaction of the mortgage debt 2. Such procedure is valid and will transfer the ownership of the property to the mortgagee 3. Not a viable option if there are subsequent encumbrances on the property because the deed will not wipe them out as a mortgage foreclosure will 4. Mortgagee’s must make sure the deed is free and clear before agreeing to this procedure
Transfers by the Mortgagee Foreclosure: Marshaling 1. Equitable remedy, used when a mortagagee has a security interest in more than one piece of property, to protect as much as possible the rights of junior mortagees & subsequent purchasers. 2. Marshaling requires that the earliest conveyance be protected. Thus and property that has not been the subject of a conveyance must be foreclosed on first followed by the properties that were most recently the subject of conveyances.	1. Equitable remedy, used when a mortagagee has a security interest in more than one piece of property, to protect as much as possible the rights of junior mortagees & subsequent purchasers. 2. Marshaling requires that the earliest conveyance be protected. Thus and property that has not been the subject of a conveyance must be foreclosed on first followed by the properties that were most recently the subject of conveyances.
Titles Adverse Possession Acquiring Title	i. To acquire title by adverse possession, the possessor must show: 1. An actual entry giving exclusive possession that is a. Open and notorious b. Adverse and hostile, and c. Continuous through a statutory period (20 years at common law) d. Generally the possessor must wrongfully possess land, in such a way that the true owner should notice his possession, for the period of the statue of limitations for ejectment.
Titles Adverse Possession Time when statute begins to run: Hostile Possession	a. The statute begins to run when the owner becomes or should become aware of the possession b. Possession must be hostile i. In general (in order for the owner of the land to have cause of action) possession must be without the owner’s permission ii. KNOW: Malice is generally not required. Most jurisdictions will grant title by adverse possession to a possessor who thought the property was un-owned or who thought she owned the property.
Titles Adverse Possession Time when statute begins to run Special Cases: Co-tenant cases	1. Possession by a cotenant becomes hostile only when the cotenant either physically ousts the other Cotenants or affects a constructive ouster of non possessory Cotenants by expressly informing them that she is asserting exclusive domain over the property
Titles Adverse Possession Time when statute begins to run Special Cases: Permissive commencement cases	1. If possession commenced under a lease or in some other permissive manner then it does not become adverse until there is a explicit notification that possession is henceforth adverse, or there is activity known to the owner which is inconsistent with the lessees permissive use of premises
Titles Adverse Possession Time when statute begins to run Special Cases: Vendor-vendee cases	1. The seller of property who continues in possession even after she sells it it likewise deemed not to be using the premises adversely, unless she specifically notifies the purchaser or acts in a clearly inconsistent with the purchaser’s ownership of the property.
Titles Adverse Possession Time When Statute Begins To Run: Open and Notorious Possession	c. Possession must notify owner; open and notorious i. The statute of limitations does not run until the owner actually knows or should know of the possessor’s possession ii. The usual issue is whether the actions of the possessor are such that an owner without actual knowledge can be said to have constructive notice of the possession. iii. The type of possession necessary to qualify as open an notorious will depend on the type of land. The possession required will be the type of possession that the average owner of such land would exercise. 1. EX: suburban residence need only require occupancy but undeveloped land would probably need a fence erected or no trespassing signs iv. Physical presence on the land is indispensable
Titles Adverse Possession Time When Statute Begins To Run: Effect of Owners Disabilities	i. If the owner is disabled at the time his cause of action accrued use the statute of limitations does not run until the disability is removed ii. However, the running of the statute is not affected by disabilities incurred after the cause of action accrues
Titles Adverse Possession: Requirement of Continuous Possession Seasonal Use	a. The statutory period continues to run only as long as the possessor is in continuous possession. b. Seasonal use qualifies as continuous as long as the possessor uses the property during the appropriate season for each and every year of the statutory period c. “Tacking” between successive possessors i. An adverse possessors is entitled to count the period of possession of a prior possessor towards the statutory period, if he is in privity with the prior possessor ii. Any sort of consensual transfer of possession will put to adverse possessors into privity iii. The two are not in privity if the second possessor’s possession is adverse to the first possessor
Titles Adverse Possession: Requirement of Continuous Possession Continuity Between Successors: Tacking	c. “Tacking” between successive possessors i. An adverse possessors is entitled to count the period of possession of a prior possessor towards the statutory period, if he is in privity with the prior possessor ii. Any sort of consensual transfer of possession will put to adverse possessors into privity iii. The two are not in privity if the second possessor’s possession is adverse to the first possessor
Titles Adverse Possession: Requirement of Continuous Possession Continuity Between Successors: Effect of successive ownership	i. The statute does snot run against holders of future interest created prior to the possession. If a possessor takes possession during a limited estate the possessor can only acquire title to the present, limited estate. ii. On the other hand the statutory period is not affected by a transfer of title after possession has begun.
Titles Adverse Possession: Requirement of Continuous Possession Continuity Between Successors: Interruption of possession	i. If the possessor’s continuous possession is interrupted by the owner, the statutory period must start all over again. ii. Any of the following may cause such an interruption: 1. Possession by the owner; Possession by the owner must be exclusive. This is even if the owner’s possession is short lived and she does not eject the possessor. 2. Ouster 3. Judicial action: As long as the owner obtains a decree of ejectment
Titles Adverse Possession:Title Obtained by Adverse Possession Quality and Quantum of Title	a. The possessor takes a new title, his title is not subject to the defects found in the record owner’s title b. The possessor only takes the estate of the owners who no longer have a cause of action to reject an i. If the possessor first took possession during a life estate or estate for years, a bare 20 years of possession will only give him title to those estates
Titles Adverse Possession:Title Obtained by Adverse Possession Valid and Alienable	i. Title obtained by adverse possession is valid and alienable without a judicial decree or recording.. Thus, title by AP cannot be defeated by a subsequent conveyance by the record owner of title, even if to a bona-fide purchaser. ii. However, the adverse possessor will probably have to obtain a judicial decree of the validity of her title before it will be marketable for the purposes of a conveyance.
Titles Adverse Possession:Title Obtained by Adverse Possession Possession No Longer Required	i. After obtaining title by adverse possession, the possessor need not remain in possession
Titles Adverse Possession:Title Obtained by Adverse Possession Property acquired by possession and constructive adverse possession	i. Generally, the possessor of choirs title only to the property she is actually possessed ii. Under the doctrine of constructive adverse possession, if a possessor enters onto land and takes possession of part of it under “color of title” she will obtain title to the entire tract, even though she didn’t possess all of it as long as the parts not actually possessed are so related to the parts appert to be one tract, and as long as the parts not actually possessed were not possessed by someone else.
Titles Adverse Possession:Title Obtained by Adverse Possession Misc. Issues: Rights of AP before His Title Matures	1. While the adverse possessor is in actual possession before his title matures his in the owner of any crops he may harvest. 2. the AP has standing to bring and action in trespass against a third party in most states. The 3rd party cannot assert the AP’s lack of legal title as a defense.
Titles Adverse Possession:Title Obtained by Adverse Possession Misc. Issues:Title by AP vs. Easement by Prescription	1. To obtain easement by prescription it is only necessary to use the land during the period, but it need not be used to the exclusion of the rightful owner. The right obtained is only the right to continue to continue the use carried on during the period of adverse use. AP on the other hand requires possession excluding the rightful owner from the prop. And at the end of the statutory period ripens into title.
Titles Conveyance by Deed: Requirements of a Valid Conveyance	1. Must meet requirements of statute of frauds 2. Requirements of a valid deed a. Signature of the granter b. Name of the grantee c. Words of conveyance: must indicate and intention to convey real estate technical words are not necessary. i. While not required for validity of deed, the quantum of interest conveyed and the relationship between co owners should also be specified. If they are not it will be presumed that the total estate of the grantor was conveyed, and that the co-tenants took equally as tenants in common. d. Description of the property conveyed: the land conveyed must be identifiable from the deed. e. Acceptance
Titles Conveyance by Deed: Requirements of a Valid Conveyance Element Not Generally Required for a Valid Deed	a. Witnesses or acknowledgement b. Recording c. Consideration
Titles Conveyance by Deed: Necessity of A Grantee	1. The grantee need only be identifiable from the deed 2. The grantee need not sign the deed 3. The grantor need not be the one to place the grantee’s name on the deed 4. The grantor may hand over a deed without a grantee’s name and the conveyance will be valid for whomever is named later appears as the grantee
Titles Conveyance by Deed: Delivery Generally	1. There must be a delivery of the deed for title to be conveyed next line delivery signifies any intent to confer an immediate, irrevocable interest on the grantee- the grantor “delivers” the deed at the time that he intends to confer an immediate, irrevocable interest on the grantee.
Titles Conveyance by Deed: Delivery Delivery without physical transfer	a. A granter can deliver the deed without physically giving it to the grantee, you must execute the deed and somehow manifest intent to make it effective immediately
Titles Conveyance by Deed: Delivery Physical transfer without delivery	a. If the grantor hands over the deed without intending to immediately and irrevocably create an interest in the grantee, the deed will not pass title b. If the grantee has physical possession of the deed, the burden is on the grantor to prove that the deed was not delivered
Titles Conveyance by Deed: Delivery Physical transfer to third parties	a. Physical transfer to a third party only qualifies as a delivery if the grant or thereby intended to create an irrevocable and immediate interest in the grantee b. Unconditional transfer to agent qualifies as a delivery c. If the grantor may revoke the deed or there is a condition precedent to the deed becoming effective, the deed is usually not effective to pass title. d. Any deed that is ineffective due to a failure to meet the delivery requirement can be made effective only by a later delivery. e. Two exceptions to the general rue that a deed that is delivered to a third party and is only to become effective on the fulfillment of a condition is ineffective to pass title. One: if the deed is placed in commercial escrow as part of a binding purchase and sale agreement. Two: A deed can validly be put into death escrow (courts view this as life estate in the grantor and remainder in the grantee)
Titles Conveyance by Deed: Delivery Presumptions Based on Possession	a. If the grantor retains possession of the deed there a a rebuttable presumption that no delivery was intended. The presumption can be rebutted by showing through words and conduct of the grantor that she intended to pass title and that her possession of the deed was wither as a trustee or a custodian. b. If the grantee has possession there is a rebuttable presumption of delivery. The grantor may rebut the presumption by submitting evidence that no delivery was intended, the delivery was obtained by fraud, or that the deed was only intended as a mortgage.
Titles Conveyance by Deed: Delivery Land Description and Boundaries:Generally	1. There is a basic requirement that property be described in a manner sufficient to identify it in order for the deed to be valid. Any description of the property in the deed will be important in any subsequent disputes regarding the boundaries of the property.
Titles Conveyance by Deed: Delivery Land Description and Boundaries:Inconsistencies in Descriptions	2. Where different descriptions of land in the same deed are inconsistent the following rules of construction apply: a. Natural monuments prevail over artificial ones b. Natural and artificial monuments both prevail over distances c. Specific descriptions prevail over general ones
Conveyance by Deed: Delivery Land Description and Boundaries:Reference to a Plan	3. If a deed refers to a plan, the plan is incorporated into the deed, and the courses and distances on the plan are to be regarded in determining the true construction of the deed 4. If the grantor conveys property bounded by road and the grantor owns the fee under the road, the deed conveys property to the middle of the road, unless the grantor’s intent was to keep and exclusive interest in road (for instance if they owned the land on the other side) 5. Any distances in the deed are measured from the side of the road however even if the grantor owns to the middle. a. The same rule applies to waterways i. Know: that if a boundary to land is fixed only by reference to a waterway. Changes in the waterway may affect the property owned. An avulsion will not change the boundary lines but erosion and accretion will. v. Covenants of Title 1. Covenants of title are promises by a grantor in a deed in regard to the title the grant or is conveying a. Once the deed is delivered and accepted the grantee can only sue for defects in the title based on the covenants of the title in the deed. Any promises made by the grantor in the purchase and sale agreement are superseded and extinguished by the deed.
Conveyance by Deed: Delivery Covenants of Title: Types of Covenants Present Covenants	a. Present covenants i. Covenants of seisin 1. The grantor warrants that he has title to and possession of the property for the interest in the property conveyed ii. Covenant of the right to convey 1. Granter warrants that she has the right to convey the property to the grantee iii. Covenant against encumbrances 1. Granter warrants that there are no liens, mortgages, easements, or other interests in third parties which will diminish the ownership rights of the grantee, except those listed in the deed
Conveyance by Deed: Delivery Covenants of Title: Types of Covenants Future Covenants	i. Covenant of quiet enjoyment 1. The grantor warrants that the grantee and his successors will not be disturbed in their possession of the property by the grantor or someone with a claim of superior title to that of the granter ii. Covenant of warranty 1. Granter warrants that her title is good, and that she will assist in defending that title against claims by third parties iii. Covenant for further assurances 1. Granter promises that she will take whatever steps are necessary to perfect any defects in title 2. Not very common
Titles Covenants of Title: Types of Deeds	a. Quitclaim deed i. Contains no covenants ii. Conveys whenever the granter had without making any representations or promises as to the grantor’s title b. General warranty deed i. Contains all of the covenants discussed above except the covenant for further assurances ii. Makes the granter liable for any encumbrances or defects in the title that existed at the time of the conveyance, whether attributable to her or her predecessors c. Special warranty deed i. The special warranty deed contains the same covenants as the general warranty deed, but the granter is liable only for defects or encumbrances incurred during his ownership ii. In effect the grantor warrants that the property did not become encumbered and title did not become defective during grantor’s ownership.
Titles Covenants of Title: Actions for Breach of Covenants Time of Breach	i. Present covenants are breach at the time a conveyance if at all 1. Statute of limitations runs at time of conveyance even the title defect or encumbrance is not discovered until later. ii. Future covenants are not breached until the grantee’s title to the property is seriously and validly disputed 1. Mere existence of defects or encumbrance is not enough, must be actively enforced
Titles Covenants of Title: Actions for Breach of Covenants Who Can Sue	i. A grantee has a cause of action only against her immediate granter for breach of a present covenant ii. Future covenants run with the land 1. Once the grantor has made a future covenant, they are liable to any subsequent grantee in their chain of title for any defects or encumbrances that existed at the time they conveyed the property
Titles Covenants of Title: Actions for Breach of Covenants: Remedies Damages	b. Damages recoverable for breach of a covenant against encumbrances are the difference in value between the land without the encumbrance and the land with the encumbrance or the cost of removing the encumbrance, which ever is less. c. Damages recoverable for breach of a covenant of seisin or right to convey are the purchase price or the cost of perfecting title, which ever is less. d. The damages recoverable for breach of covenant of quiet enjoyment or warranty are the purchase price is the cost of defending title, whichever is less. e. The damages recoverable for breach of a covenant for further assurances are the cost of perfecting title or the purchase price, which ever is less.
Titles Covenants of Title: Actions for Breach of Covenants: Remedies Estopple By Deed	i. In special cases, if grantor did not have good title at the time she gave the warranty deed, but later acquired good title to the property, then the grantor is estopped to deny the validity of her warranty, and title to the property goes to the grantee. Under the prevailing view this happens automatically by operation of law, and is the only remedy available to the grantee.
Titles Conveyancing By Will: Generally	i. If indiv. dies leaving a valid will the will acts as an instrument on conveyance and transfers ownership of the property to the person to whom the property was devised. ii. If property is not specifically devised by will, the residuary clause of the will serves as the instrument of conveyance iii. If the will does not effectively dispose of property, then the law of interest to see of the state in which the property lies govern the devolution of the property to the decedent’s heirs iv. For disposition in any of these cases to be effective, there must be a probate of the decedent’s estate so that the will is allowed and their heirs determined and there is a record of the distribution of the estate v. There are three circumstance where the devise of the real estate made in the will is ineffective.
Titles Conveyancing By Will: Ademption	1. The will only operates on property that is owned by the decedent at the time of death 2. If the decedent disposed of the property during her lifetime, the devised is adeemed by extinction a. The devisee does not receive other property to compensate her
Titles Conveyancing By Will: Exoneration	1. The devise of the real estate is effective only if all of the debts and taxes of the state can be paid without selling the real estate to satisfy them 2. If the real estate is specifically devised, all of the property not specifically bequeathed or devised that is in the residuary estate will be sold first to satisfy debts and taxes 3. If the real estate is part of the residuary, then it will be sold to satisfy specific and general legacies, and will abate if there are not sufficient unallocated funds to satisfy both the expenses of the estate and the prior legacies 4. If the executor must sell to pay the debts or prior legacies, the devisee of real estate in the will is ineffective
Titles Conveyancing By Will: Lapse	1. The devise is only effective if the devisee survives the testator 2. It will lapse if the testator survives the devisee and will be disposed of by the residuary clause of the will, or if the devisee is to a sole residuary legatee, by intestacy 3. All jurisdictions have anti lapse statutes a. The devise to a relative survived by issue will go to the issue if the named relative dies before the testator b. Statutes vary on the closeness of relationship required
Titles Priorities and Recording Types of Priority: Recording Acts	a. A deed need not be recorded to be valid and conveyed good title b. An unrecorded deed is always valid against the grantor, however the grantee may lose his title if the grantor later grants the land to someone else c. A grantee must promptly and properly record the deed he receives from the grantor, or a subsequent purchaser without knowledge of his deed may be able to take good title from the grantor. d. The public recording system provides a method for a purchaser of land to give notice to the rest of the world that he is now the record owner of land.
Titles Priorities and Recording Types of Priority:Judgment Liens	a. The priority given to a judgment lien over other instruments depends on the statute in the jurisdiction b. Some states require that a judgment be recorded in the registry of deeds before it is a lien on property c. In some states a judgment is a lien as soon as it is rendered by a court even if not recorded i. The priority of such a lien is determined by the date of judgment d. Some states allow other liens filed at the same time, except for purchase money mortgages, to take priority over a judgment lien e. If a state gives automatic means status to a judgment, it is necessary to check for judgment liens in a title search
Titles Priorities and Recording Types of Priority:Fraudulent Conveyances	a. When an owner of property makes a fraudulent conveyance or when the conveyance is made to defraud creditors, designated creditors have rights in the property superior to the rights of the transferee i. They can act as if the property were still owned by the transferor and can use it to satisfy their claims against the transferor b. This act gives the creditor with a matured claim the right to have the fraudulent conveyance set aside or the right to disregard the conveyance and levy upon the property conveyed even though it in the hands of a third pers. This is so even if the creditors claim has not yet matured or if he become a creditor after an conveyance that was fraudulent as to him. c. However if the property is transferred for some value to an innocent purchaser who does not know that the transaction is a fraudulent conveyance, that purchaser has superior rights to the extent of the consideration furnished
Titles Priorities and Recording Types of Priority:Fraudulent Conveyances Protection of bona fide purchasers other than under statutes	a. The Bona fide purchaser may have the equitable and defense of laches in a suit which tries to take the property from him
Titles Priorities and Recording Scope of Coverage: Recorded documents generally	a. Usually the instrument must be notarized and a fee paid to record with a registry of deeds
Titles Priorities and Recording Scope of Coverage: Recorded documents: Mechanics of title Searches Tract Index	a. The tract index i. The tract index is used in some highly developed urban areas ii. All of the land is subdivided into small parcels known as tracts iii. The title examiner looks in the tract index under that particular tract, and fines references to the book and page numbers of all documents affecting that tract iv. Under the tract system, the only instruments that are proper record notice to a prospective purchaser are those indexed to that particular tract.
Titles Priorities and Recording Scope of Coverage: Recorded documents: Mechanics of title Searches Grantor Grantee Index: Generally	i. The most common type of indexing system ii. Two separate indexes 1. One arranged by grantor’s name 2. One arranged by grantees name
Titles Priorities and Recording Scope of Coverage: Recorded documents: Mechanics of title Searches Grantor Grantee Index: Process of Search	1. Find the deed to her grantor by starting w/ the most recent grantee index and working back in time until she finds the reference to the deed to her grantor this will tell her who granted the property to her grantor. 2. Same process in reverse starting with record owner of the property at the beg. and working forward in the grantor index. This should uncover any conveyances or encumbrances made by a particular grantor while she was record owner.
Titles Priorities and Recording Scope of Coverage: Recorded documents: Mechanics of title Searches Grantor Grantee Index: Instruments Recorded Out of the Chain of Title	1. Instruments not property in the chain of title may still serve as constructive notice to purchasers depending on the reason they are not in the chain of title and the law of the jurisdiction.
Titles Priorities and Recording Scope of Coverage: Recorded documents: Mechanics of title Searches Grantor Grantee Index: Instruments Related to Other Parcels of Land	1. In cases where a grantor owns other parcels of land she may make covenants or grant easement in conveyances of those other parcels which affect the parcel of land the purchaser want to purchase, w/o those restrictions ever apprearinf in the chain of title to the particular land in issue. 2. The majority rule is that a purchaser does not have constructive notice of a restriction on a piece of land that was contained in a conveyance of other land.
Titles Priorities and Recording Scope of Coverage: Recorded documents: Mechanics of title Searches Grantor Grantee Index: Instrument Which is Not in Chain of Title	1. All jurisdictions hold that a deed that is not part of any record chain of title is not constructive notice to a subsequent purchaser.
Titles Priorities and Recording Scope of Coverage: Recorded documents: Mechanics of title Searches Grantor Grantee Index: Correcting the Record	1. If a grantee knows that a conveyance in his chin of title is not properly recorded he can petition a court in equity to place a notice on the record where a title examiner will find it as part of a property title search. Such a notice will always operate as constructive notice of the grantee’s interest.
Titles Priorities and Recording Scope of Coverage: Recorded documents: Mechanics of title Searches Correcting the Record	1. If a grantee knows that a conveyance in his chin of title is not properly recorded he can petition a court in equity to place a notice on the record where a title examiner will find it as part of a property title search. Such a notice will always operate as constructive notice of the grantee’s interest.
Titles Priorities and Recording Elements Required for a Subsequent Purchaser to Obtain Superior Title	a. Subsequent purchaser must receive a valid deed i. Will not work if forged or obtained from an incapacitated grantor b. Subsequent deed must have been purchased i. Value must have been given for the deed ii. It must be more than nominal consideration, but need not necessarily be fair market value iii. The deed given in exchange for cancellation of a debt is purchased iv. The deed given as a security for a loan is purchased, as long as the lone and the deed are simultaneous c. Subsequent purchaser usually must have purchased without notice i. In most jurisdictions the subsequent purchaser must be a bona fide purchaser to prevail
Titles Priorities and Recording Elements Required for a Subsequent Purchaser to Obtain Superior Title: Types of Notice	1. Constructive notice a. A properly recorded deed is constructive notice to all b. In improperly recorded deed does not give constructive notice, unless it is actually discovered by a title examiner 2. Actual Notice a. A SP has actual notice of a prior conveyance anytime she knows or has heard of the prior conveyance. Any hearsay will suffice. 3. Inquiry Notice a. Many jurisdiction hold that a prospective purchaser is not entitled to “shur his eyes” to facts which would lead a reasonable person to inquire into possible adverse interests in land. The prospective purchaser is expected to inspect the land before buying.
Titles Priorities and Recording Elements Required for a Subsequent Purchaser to Obtain Superior Title: d. Subsequent purchaser may have to record first Types of Recording Systems	ii. Notice system 1. A subsequent Bona fide purchaser need not record to prevail over a prior deed in a notice system of recording 2. Subsequent purchaser takes good title by mearly purchasing without notice of the prior conveyance 3. If the subsequent bona-fide purchaser does not record his deed, he risks losing his title to yet another subsequent bona-fide purchaser. iii. Race-notice system 1. The subsequent Bona fide purchaser must report first in order to prevail over a prior grantee iv. Race system 1. Gives good title to whomever records first, regardless of whether that person had notice of prior conveyances
Titles Priorities and Recording Types of Recording Systems Parties Protected: Purchasers and Mortgagees	a. Purchasers of Ownership interests and mortgagees are always protected by the recording system. Donees not.
Titles Priorities and Recording Types of Recording Systems Parties Protected: Purchaser Under Installment Land Contract	a. In most states, a purchaser who has paid only part of the purchase price under and installment land contract is protected by the recording acts only to the extent of payment made. Usually handled one of three ways. i. Award contract purchaser a share or property as a tenant in common equal to payments made ii. Award the land to the prior claimant but give the contract purchaser a lien on the property to the extent of the amount paid iii. Award the land to the contract purchaser but give the prior claimant a lien on the property
Titles Priorities and Recording Types of Recording Systems Parties Protected: Creditors	a. Unsecured creditors are not protected by the recording system. Whether judgment lien creditors and attaching creditors are protected by the recording system against unrecorded deeds depends upon the specific reach of the state recording statute.
Titles Priorities and Recording Types of Recording Systems Parties Protected: Interests affected by recording system	a. The following need not be recorded: i. Title obtained by adverse possession ii. Easements obtained by implication, necessity, or prescription; iii. Short term leases
Titles Priorities and Recording Types of Recording Systems Parties Protected: Doctrine of Shelter	a. Once a subsequent Bona fide purchaser has achieved superior title as against a prior grantee, you can convey that priority to almost anyone, including someone who had notice of the prior conveyance b. However, a purchaser who is not a Bona fide purchaser cannot convey to a Bona fide purchaser and then buy the property back to obtain the status of a Bona fide purchaser
Titles Priorities and Recording Special Problems: Instruments recorded out of chain of title The deed recorded early – Estoppel by deed	i. Estoppel by deed operates in the situation or an individual is conveyed an interest in land by a warranty deed, but does not actually own the land until after that conveyance ii. In this situation, the title is transferred automatically to the grantee when the grantor acquires it iii. Because a person examining title will not find the conveyance from the grantor to the prior grantee in the chain of title, the majority rule is that a subsequent Bona fide purchaser can get good title, despite the doctrine of estoppel by deed
Titles Priorities and Recording Special Problems: Instruments recorded out of chain of titlea. The Instrument Recorded Late	i. Since the registry of deeds records and indexes instruments by the date they are received at the registry, rather than by the date of the conveyance, it is possible that a valid conveyance might not be recorded until after the grantor as convey the property a second time ii. The majority of jurisdictions hold that a purchaser does not have constructive notice of a late recorded instrument that is out of the chain of title
Titles Priorities and Recording Special Problems: Constructive Notice	a. A properly recorded and indexed deed defeats all subsequent grantees- it is notice to all. b. However, a subsequent purchaser need not actually check the registry of deeds to attain the status of a Bona fide purchaser c. If the prior deed is not recorded, the subsequent purchaser can be Bona fide even though they did not check the record d. An improperly recorded deed such as a deed that is not notarized or an improperly indexed deed is usually held not to be constructive notice. However, an improperly recorded deed can serve as actual notice if actually discovered by a title examiner.
Titles Priorities and Recording Special Problems: Forged Instruments	a. Forged documents, even if properly recorded and notarized and relied upon by a Bona fide purchaser, are ineffective to affect title b. Even if the forged document was back in a claim of title, so that the seller received an unfortunate be when he took title, the doctrine of shelter is inapplicable, and the buyer who takes through forged instrument will lose to the true owner
Titles Priorities and Recording Special Problems: Transfers from corporations and by agents	a. The deed signed by an officer of a corporation on its behalf or by an agent for principle only conveys the interest of the principle if the agent is authorized to sign the document worth the purchaser is protected under some theory of apparent authority or estoppel b. The common practice when a corporation conveys property is to place on the record a corporation vote authorizing the officer to execute the deed on behalf of the corporation c. Likewise, and agent executing a deed for an individual should place on record a power of attorney authorizing the action d. Without these documents on the record there is a flawed in the title
Titles Priorities and Recording Special Problems: Purchase Money Mortgages	a. In some jurisdictions, the seller who takes back the purchase money mortgage may be entitled to additional protection, so that her mortgage is valid against a trustee in bankruptcy even though she did not immediately protect her security interest by recording the purchase money mortgage b. Likewise, if there is a statute in the jurisdiction which gives judgments or government means an automatic attachment against after-acquired property, those statutes would not apply so as to give priority over purchase money mortgages

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