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139 Cards in this Set
- Front
- Back
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Present Possessory Estates
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Freehold estate gives owner title to or right to hold property - non-freehold gives mere possession
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Types of Freehold Estates - Fee simple absolute
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Fee Simple absolute - largest possible estate in land - unimpeded right to sell or convey all or part - unimpeded right to devise - may last in perpetuity (passes to owners heirs by intestacy)
Words used to create fee simple absolute: O conveys to A and his heirs, or even just "to A" |
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Defeasible Estates
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Freehold estate
estate that may terminate before its maximum duration has run Fee simple determinable, subject to condition subsequent, and subject to executory interest |
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Fee Simple Determinable
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determinable estate terminates automatically on happening of a named future event
words include: for so long as, during, while, until Created in one clause and with a limitation built into one clause O conveys to A and his heirs for so long as the premises are used for an educational purpose Followed by possibility of reverter, which may be implied |
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Fee simple subject to a condition subsequent
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may be cut short if the estate is retaken by grantor or third party on the happening of a named future event - NOT automatic - just gives grantor the right to take it back
words: provided, however; however if; but if; on condition that; or in the event that Created in two separate clauses, with the condition stated in the second clause |
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Fee simple subject to executory interest
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estate that is automatically divested in favor of a THIRD PERSON on the happening of a named event
Ex. O conveys to A for so long as the premises are used for charity, but if they cease to be used for charity, then to B fee simple subject to an executory interest is followed by shifting exec interest **subject to RAP!!** |
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Fee Tail
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freehold estate descended to grantee's lineal descendants only
O coveys to A and the heirs of his body - can be gender specific (pride and prejudice!) Fee tail followed by reversion in grantor or remainder in third party - becomes possessory if and when grantee's lineal line has failed Disfavored in modern law! Most states just give grantee fee simple absolute |
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Unclear Grants
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Covenant is preferred over a defeasible estate because the award is money damages rather than forfeiture
Fee simple subject to condition subsequent is preferred over fee simple determinable because it's not automatic |
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Life Estate
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Lasts for duration of grantee's life
Life estate pur autre vie - estate where duration is measured by life of someone other than grantee Life estates can be made defeasible |
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Life Estate's Duty to Repair, Mortgages, Taxes, and Special Assessments
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duty to maintain property in reasonable state of repair, ordinary wear and tear excepted - BUT, duty NOT limited to extent of income derived or reasonable rental value
Mortgages - duty to pay interest on mortgage to extent of profits derived from property (tenant for years/periodic tenants have no duty) Taxes - must pay all ordinary taxes, to extent of profits derived from property (tenant for years/periodic tenant has no duty UNLESS lease is perpetual or long term with option to renew forever; tenant holds without obligation to pay rent; or has erected improvements for own benefit) Special Assessments - life tenant must pay full cost of special assessments if life of public improvement is less than duration of life tenant's estate. Equitable apportionment applied for longer-lasting improvements (curbs and streets). Tenant for years/periodic tenant has no duty |
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Non-Freehold Estates (leasehold estates)
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estate limited in duration
O transfers to A for term of 10 years LL holds a reversion following leasehold estate |
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Future interests (list)
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Reversionary Interest (Possibility of Reverter, Right of Entry, Reversion); Executory Interest (shifting or springing); Remainder (contingent and vested)
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Possibility of Reverter
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future interest in the grantor that follows a determinable estate
creation of a fee simple determinable estate automatically creates possibility of reverter in grantor transferable, devisable, and descendible (law, will, or intestacy!) SOL begins to run as soon as limitation occurs, because property automatically reverts to grantor on occurrence of the limitation NOT subject to RAP |
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Right of Entry
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future interest in grantor that follows fee simple subject to condition subsequent or life estate subject to condition subsequent
creation of right of entry requires grantor to reserve right in the conveyance no automatic reverter - grantor must exercise right of entry and affirmatively retake property descendible, devisable SOL does not begin until grantor attempts to exercise the right of entry NOT subject to RAP |
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Reversion
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future interest retained by grantor when grantor transfers less than a fee interest to a third person
Reversion is transferable, devisable, and descendible |
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Executory Interests
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future interest in a third person that cuts short the previous estate before it would have naturally terminated
Any interest created in a third party that follows granting of a fee will always be exec interest Shifting: interest that cuts short a prior estate created by same conveyance - interest passes from one grantee to another Springing: interest that follows a gap in possession or divests the estate of the transferor - passes from grantor to grantee transferable, descendible, and devisable IS subject to RAP! |
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Contingent Remainders
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future interest created in third person which is intended to take effect after NATURAL termination of preceding estate
Contingent if: takers are unascertained OR interest is subject to condition precedent and, therefore, does not fall in automatically on the natural termination of the previous estate transferable, descendible, and devisable Subject to RAP! |
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Doctrine of Destructibility of Contingent Remainders
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contingent remainder in real property is destroyed by any of the following:
if it fails to vest by natural termination of prior vested estate (to A for life, remainder to B and her heirs if B reaches 21 - A dies and B is not yet 21? contingent remainder DESTROYED!) Doctrine of merger - holder of present and future interest takes fee simple absolute and merger occurs when one party who possesses a present or future interest in the subject realty, by subsequent transactions, obtains all outstanding present and vested estates in that property. Can occur by surrender of present estate to owner of future estate; by release of future estate to owner of present estate; OR when all holders of present and future vested interests convey all interests to a third party If holder of present possessory estate surrenders his interest before contingent remainder vests, remainder DESTROYED many jxs don't do this anymore! if contingent remainder has not vested at natural termination of prior vested estate, contingent remainder will become exec interest subject to RAP |
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Vested Remainders
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requires its takers to be ascertained or ascertainable at the time remainder is created
must fall in automatically at the natural termination of previous estate, meaning there can be no conditions precedent to taking transferable, descendible, and devisable fully vested remainder is not subject to RAP - BUT remainder that is vested subject to open IS subject to RAP |
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Special Types of Vested Remainders
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vested subject to open (or partial divestment) - remainder that has been made to a class AND has at least one member who is ascertainable and who has satisfied any conditions precedent to vesting, but may have other members join the class later
Vested remainder subject to total divestment - presently vested but may be terminated on the happening of a future event |
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Shelly's case and Doctrine of Worthier Title
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Shelly's Case - rule against remainders in grantee's heirs
Doctrine of Worthier Title - rule against remainders in grantor's heirs (applies only to inter vivos transfers) - presumption that grantor meant to give himself a reversion |
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Waste
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Possessor of a life estate or leasehold interest has right to possess, use, and enjoy property during duration of his estate, but he can't do anything that adversely affects future interest that follows the life estate!
Voluntary Waste - voluntary commission of an act that has more than a trivial injurious effect or change in property - BUT natural resources may be consumed for repair and maintenance of property, with permission of grantor, or under open mines doctrine (both for life tenants and tenants for years - if grantor exploiting natural resources of mine, it's okay for grantee to continue) Involuntary or Permissive Waste - if life tenant or leasehold tenant permits premises to fall into disrepair, or fails to pay mortgage interest payments, taxes, or tenant's share of special assessments Ameliorative waste - if an act of life tenant increases value of premises by permanently altering it - this is allowed now IF: market value of remainderman's interest is not impaired, and either remainderman permits it, or a substantial and permanent change in the neighborhood has deprived property of reasonable current value holder of reversion has standing to sue for past or future waste - so does vested remainderman - contingent remainderman has standing to sue to prevent future waste but not past waste damages |
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Restraints on alienation
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condition placed on ownership of real property that restricts free conveyance of that property
Disabling restraint = A may not convey - always void!! Forfeiture restraint - A loses estate if he attempts to convey - valid for lie estates and future interests, but NOT enforceable for fee simple estates Promissory restraint - A promises not to convey - valid for life estates and future interests, but not enforceable for fee simple estates. Plus, breach doesn't void conveyance; just makes promisor liable for breach of contract damages Partial restrains may be enforced - court must weigh duration and number of persons excluded |
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Rule of Convenience
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class closes when a member of the class is entitle to distribution - all the family classes - anyone conceived before class closes is in
if class has no members at the time gift is made, all members of the class, whenever born, will be included and may take - class stays open until all possible members are born |
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Postponed Gift to a Class (with no condition precedent)
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if class is already closed at time the postponement ends (like at the end of a present possessory life estate), all members of class will be included and will take
if class has members but is not yet closed at time postponement ends, all members of class conceived at the time it ends will be included and may take - but no one born after! if class has no members at time postponement ends, all members of class, whenever born, may take! |
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Immediate Gift to Class Coupled with a Condition Precedent
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immediate gift to a class may be coupled with a condition precedent - there, class closes when first member of class satisfies the condition. All then-born class members of class are included and may take if and when they satisfy the condition - afterborn children will be excluded
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Gift to a class with a combination of postponements
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class gift may be made with a combination of postponements combined with a condition precedent - there, postponement is deemed to end, and class closes when last condition is satisfied. All members of class born before the class closes are included, and they may take if and when they satisfy the condition - however, afterborn persons excluded
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Rule Against Perpetutities
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no interest is good unless it must vest, if at all, not later than 21 years after some life-in-being at the creation of the interest
Only applies to options to purchase land not incident to lease, powers of appointment, rights of first refusal, remainders subject to open, contingent remainders, and exec interests if there is ANY chance that the interest might vest more than 21 years after life in being, void - "might have been" rule part of the gift that violated RAP is void - remainder of the gift is left intact! |
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Fertile Octogenarian
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O --> A for life, remainder to A's children for life, remainder to A's grandchildren
it's always assumed that you can have more children - A's children will take at A's death, so they're okay, BUT grandchildren might take more than 21 years after A dies, so not okay |
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Unborn Widow
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O--> A for life, remainder to A's widow for life, remainder to A's children living at the death of A's widow
the widow can take at A's death, but A's children might take more than 21 years after O or A die, so not valid! widow might not even be born yet, so she is not a measuring life |
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Charity-to-Charity Rule
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O-->to A charity for so long as liquor is not served on premises, but if it is then to B charity
shifting exec interest in a fee - not okay generally because heir of A could violate condition - BUT we let it go if both are charities |
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Rule of Convenience
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O-->such of A's children as shall reach age of 25 - closes class as soon as one hits 25
what if none of A's children are 25 yet and A is still alive? void by RAP |
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Uniform Statutory RAP
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nonvested interest in real or personal property is invalid unless it satisfies RAP or vests or terminates within 90 years of creation (the wait and see test)
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Powers of Appointment
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general power of appointment: gives the holder of the power the right to appoint property to anyone, including holder of the power - basically ownership of the property
must be exercisable, but not necessarily exercised, during period allowed by RAP Special power of appointment gives holder right to appoint property to limited class of persons - only valid under RAP if it must be exercised in a manner than causes interest in property thereby created to vest within period of RAP |
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Concurrent Estates (types)
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exists when two or more people share concurrently an interest in real property
Tenancy in common, Joint Tenancy, and Tenancy by the Entirety |
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Tenancy in common
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each co-tenant owns an undivided interest in the whole of the property with no right of survivorship
this is the default rule! No special words are required to create tenancy in common Requires only unity of possession - each tenant in common has the right to possess the whole of the property Tenant in common may transfer his interest inter vivos: voluntarily, through conveyance, lease, mortgage, etc. OR involuntarily - foreclosure on a mortgage of tenant's interest, etc. Tenant in common may devise, and his interest may also descend by intestacy |
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Joint Tenancy
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each co-tenant owns an undivided interest in the whole of the property and has a right of survivorship
Words required: to A and B as joint tenants and not as tenants in common, with full right of survivorship" Four unities required: unity of time (JTs must take at the same time), unity of title (must take by same instrument); unity of interest (must take equal shares of the same type in the land); unity of possession (each has right to possess the whole) usually you can't create a joint tenancy with yourself and someone else because of the unities - need a straw man each can transfer his interest voluntarily OR involuntarily, thereby severing joint tenancy - BUT can't devise and doesn't get descended by intestacy If destroyed, creates tenancy in common |
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Joint Tenancies and Mortgages
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If both join in a mortgage of subject property, that will not effect the joint tenancy
BUT if only one does, what happens depends on whether jx follows title or lien theory of mortgages: title theory - execution of mortgage by one jt causes legal interest of that co-tenant to be transferred to mortgagee - this means mortgage severs jt because unities have been destroyed! lien theory - mortgagee only receives a lien on the property, so NO severance occurs! but foreclosure WILL sever jt |
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Tenancy by the Entirety
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reserved for married couples, which gives each spouse an undivided interest in the whole of the property and a right of survivorship
there's generally a presumption of tenancy by the entirety if a conveyance is made to a husband and wife, even if not identified as husband and wife in the deed in states that recognize this, an attempted conveyance by either spouse is wholly void Ohio does NOT recognize this! |
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Rights and Duties of Co-Tenants
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each entitled to possess whole property; ouster when one co-tenant wrongfully excludes another co-tenant from possession of whole or any part of jointly held property; out of possession tenant gets a share in rents and net profits - but can't collect rent from the other co tenant himself unless there was ouster; contribution may be compelled for necessary repairs; co tenant in sole possession receives reimbursement for mortgages or taxes only to the extent his payment exceeds market value of property
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Partitions
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Each co-tenant has right to seek partition of the property
Voluntary partition - usually accomplished by exchange of mutual deeds among co-tenants or by sale of property and division of proceeds Involuntary partition - accomplished by court action, usually at insistence by one but not all co-tenants - may be in-kind (physical division) or sale - physical partition is preferred when partition cannot produce equal shares, party receiving larger portion must make cash payment to the other |
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Adverse Possession Elements
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open, visible, notorious possession that is actual and exclusive, hostile, and under claim of title, and continuous for the statutory period
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Actual
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gives notice to the world at large that someone is possessing the premises
needs to be on property physically Constructive adverse possession requires color of title and actual possession of at least a significant part of the premises - then AP will constructively possess whole property as described in deed UNLESS: land divided into 2 or more distinctive lots - then only one actually occupied AND if 3rd person is in possession of part of premises, constructive possession will not extend to portion 3rd party possesses |
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Hostile and under claim of title or right
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a person possesses hostilely if he holds premises in a manner that is inconsistent with rights of the owner
majority: hostility judged objectively - so possessor's state of mind is irrelevant! as long as AP intends to be on premises, regardless of whether he knows premises owned by someone else, it's hostile Minority: AP must act in good faith - must believe land is his |
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Mistaken boundaries
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Objective majority view - possession is hostile so long as AP intends to claim land as his own, even if he is unsure as to location of boundary
Subjective minority view: possessor must actually knew he has crossed over the boundary ALSO: oral agreement to settle boundary dispute is enforceable if parties subsequently accept line for a long period of time - also, if on party makes a representation through words or acts to the other concerning the location of a common boundary, and other party changes position in reliance on that rep, first party may be estopped from denying validity of rep |
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Continuous for the statutory period
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sometimes AP can satisfy this even if he hasn't been on the premises every day - seasonal use may suffice if that constitutes best use of the property!
requisite time - common law is 20, Ohio is 21! Tacking: APs can meet time period by tacking onto possession by previous AP. This is allowed if possessor and predecessor are in privity of estate (intentional transfer of possession from one person to the next). You can't tack if you dispossess the previous possessor Tolling: when statute will not run for a period of time - you need a disability AT THE TIME the AP ENTERS (nonage, legal incompetence, imprisonment) |
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Statute of Frauds and real property - requirements
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Requires: writing, signed by party you're trying to enforce agreement against WITH: description of property, description of the parties, price, and any conditions of price or payment if agreed on
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Exceptions to Statute of Frauds
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Doctrine of part performance - may be used to enforce an otherwise invalid oral contract, as long as acts of part performance unequivocally prove the existence of the contract - FACTORS:
payment of all or part of purchase price, taking of possession, and making substantial improvements Equitable and promissory estoppel may also be used to prove an oral contract for sale of land: equitable estoppel - based on an act or representation promissory estoppel - based on a promise (detrimental foreseeable, actual reliance based on a promise with injustice absent enforcement) - but NOT in Ohio!! |
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Equitable Conversions
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Purchaser becomes equitable owner of title at the time of execution of binding K
Under common law, risk of loss is on the BUYER on execution of a binding contract for sale of real property - majority rule Under Uniform Vendor and Purchaser Risk Act: risk of loss is placed on the seller UNLESS legal title or possession of property has passed to the buyer (minority rule) |
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Marketable Title
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All contracts for sale of real property include implied promise to convey marketable title - title reasonably free from doubt in both fact and law
Can't contain: Defects in Chain of title (acquired by adverse possession; defective execution of a deed; significant variation of description of land from one deed to the next) Encumbrances - a right or interest that another person has in real property that diminishes value of property but is consistent with conveyance of a fee interest (mortgages, liens, burdensome easements, covenants and servitudes) - seller can satisfy mortgage or lien with proceeds of sale, though Encroachments (significant one renders title unmarketable - not slight - also okay if owner says he will not rely on it as basis for suit) Zoning restrictions (existence of zoning restriction does NOT make title unmarketable - zoning violation might though!) physical defects in property do NOT render title unmarketable |
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Remedies for Purchaser if Title unmarketable
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rescission, money damages for breach of contract, specific performance with an abatement of the purchase price!
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Duty to Disclose Defects
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Latent defects known to seller but not readily observable - duty to disclose! Duty usually only applies to commercial builders and developers of new residential homes
material defects that affect health and safety of occupants - duty to disclose! |
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Implied Warranty of Quality
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Applies to sale of new homes
does not apply to commercial structures imposed on contractors, developers, and other commercial vendors of real property covers significant latent defects caused by D's poor workmanship defects must be discovered within a reasonable time |
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Seller's remedies for buyer's breach at law
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traditionally, if buyer breaches a contract for sale of real property, seller is entitled to expectation damages, measured by difference between contract price and the market price at the time of the breach
Foreseeable consequential damages - such as mortgage interest payments that the seller is required to make after the buyer's breach reasonable reliance damages - repairs and cost of inspections seller has to return to buyer the amount by which down payment exceeds damages caused by buyer's breach liquidated damages - contract can contain a liquidated damages clause, which states seller may retain entire amount of down payment if buyer breaches - most courts allow this if it's reasonable: injury caused by breach is one that is difficult or incapable of accurate estimation (judged at the time K was made) AND liquidated damages are a reasonable forecast of the harm caused by breach punitive damages if breach was willful |
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Remedies in Equity
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If buyer breaches, seller may elect to seek rescission of the contract
Need mutuality of remedy - because buyer entitled to specific performance, seller is also entitled to specific performance - BUT some courts hate this now |
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Buyer's Remedies for Seller's Breach of Contract at Law
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Expectation damages - difference between market price at time of breach and contract price (or resale price and contract price)
foreseeable consequential damages - like lost profits reliance damages - cost of inspections restitution of down payment - English rule - buyer gets down payment plus interest and reasonable expenses incurred in investigating title, BUT no expectation damages that exceed down payment unless seller acted in bad faith or assumed the risk American rule - if seller fails to deliver marketable title, buyer not restricted to restitution of his down payment - can get expectation damages plus reasonably foreseeable consequential damages (majority) Buyer can get punitive damages if seller's breach willful |
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Buyer's remedies for seller's breach in equity
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rescission of contract for sale, accompanied by restitution of the down payment
traditionally, each piece of land is considered unique, so if seller breaches, buyer can seek specific performance. If seller fails to deliver marketable title, buyer can sue for specific performance with an abatement in purchase price that reflects decrease in value caused by title defect |
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Passage of Property at Death
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Seller dies after execution of contract for sale but before closing? legal title passes to heir or devisees! But they MUST honor sales agreement, and the purchase money passes as personalty
If BUYER dies after execution of contract for sale but before closing, party that takes decedent's realty may demand a closing and exoneration of liens from personal estate of decedent |
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Merger
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traditionally, covenants in contract of sale merge into deed at closing - BUT modern trend says merger does not apply to matters that are collateral to or not mentioned in the deed
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Covenants of Title - types of deeds
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Types of Deeds generally used in conveyances of real property:
General warranty deed - seller warrants that no title defects have occurred during his ownership of the property, and that there are no defects in the chain of title from which he derived title special warranty deed - seller warrants that no title defects have occurred during his ownership of the property, but NOT that there are no defects in chain of title from which he derived title quitclaim deed - seller does not make ANY warranties - just conveys whatever interest he may have |
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Present Promises/covenants in general or special warranty deeds
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Present covenants - broken, if at all, at time of conveyance. American rule says present covenants are considered to be personal and do not run with the land. They are:
Covenant of seisin - promise that he owns and possesses estate granted (encumbrances don't mean breach) Right to convey - grantor promises he has right to convey property (similar to seisin, but sometimes trustees have seisin but not right to convey if trust deed prohibits it, and owner of life estate may be seised but may not have right to convey if life estate is subject to valid restraint on alienation) Covenant against encumbrances - grantor promises that there are no encumbrances on the property (encumbrance: any right in a third person that diminishes value or limits the use of land granted - mortgage and judgment liens, taxes, leases, water rights, easements, and restrictions on use) BUT if encumbrance expressly noted in deed, that's not a basis for breach Also, if defect renders title unmarketable, usually also breaches covenant against encumbrances - EXCEPT violation of zoning ordinances |
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Future covenants in warranty deeds
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may be broken AFTER time of conveyance - they run with the land
Covenant of quiet enjoyment - grantor covenants that grantee will not be disturbed by superior claim Covenant of warranty - grantor guarantees he will assist in defending against lawful claims and will compensate grantee for losses sustained by assertion of superior title (basically the same as quiet enjoyment) Covenant of further assurances - grantor promises to take whatever steps may be required to perfect defects of title (like to defend lawsuit, or execute curative deed) Future covenant not breached until grantee or successor is evicted or otherwise damaged |
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Remedies for Breach of covenant by grantor
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Monetary recover capped at amount grantor/D received for property, plus interest
breach to seisin, right to convey, general warranty, and quiet enjoyment? can recover full purchase price or percentage thereof breach of covenant against encumbrances? damages measured by cost of removing defect or diminution in value if defect can't be removed specific performance available for the covenant of further assurances |
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Statute of Limitations
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for present covenants, SOL begins to run when the deed is delivered
For future covenants, SOL begins when a third party asserts a superior title |
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Requirements for Effective Transfer by deed - donative intent
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Donative intent - grantor must intend to transfer an interest immediately to grantee - if he wants it to take effect only on his death, will formalities!
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Requirements for effective transfer - delivery
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Delivery - usually accomplished through physical act of handing deed over - but could be words! Presumption of delivery occurs if: deed is later found in grantee's possession, deed is properly executed and recorded, or deed contains attestation clause that attests to delivery
handing deed to grantor's agent does NOT constitute valid delivery - needs to get to grantee or grantee's agent, which then triggers the relation back doctrine! Doctrine of Relation Back - handing deed to third party constitutes valid delivery if grantor relinquishes all control over deed - if to an escrow agent, delivery dates back to when grantor handed deed to escrow agent If grantor hands deed to 3rd party and places conditions on delivery and 3rd party conveys to another person but then condition happens? original grantee gets it dating back to when 3rd party got the deed! the more conditions grantor places on conveyance, more likely conditional conveyance will fail Death escrow (deliver this on my death) is a present transfer of a life estate with remainder to grantee if grantor expressly retains right to reclaim deed from third party, transfer of title through escrow agent will FAIL |
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Requirements for effective transfer - acceptance
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Acceptance presumed if conveyance is beneficial to grantee!
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Parol evidence and transfer
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Parol evidence is always admissible to show that deed absolute o its face is intended as a mortgage and that grantor did not intend deed to have present effect
proof of oral conditions on deeds if delivery is to a 3rd party? okay! if delivery made to grantee with oral condition, conveyance valid, but oral condition may NOT be proved (minority: conveyance is void) |
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Description hierarchy
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Natural monuments prevail over all other descriptions - then artificial monuments - then courses and angles - then distances (these are all metes and bounds descriptions) - then general description (like "Blackacre")
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Recording statutes (generally)
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recordation of deed of conveyance is not required to validate transfer of title - BUT becomes important when two or more parties claim that the owner has conveyed (or mortgaged) the property to them
recording statutes generally apply to conveyances of freehold interests, easements, profits, covenants, servitudes, mortgages, assignments, and liens title based on adverse possession or prescription is NOT recordable recordation will not cure defects in a deed caused by lack of delivery, forgery, or fraud |
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Race Statutes
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person who records first prevails!
will read: No conveyance of land...shall be valid to pass any property interest...but from the time of registration thereof in the county where the land lies if you record first, you win even if you had notice of the first person's deed |
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Notice Statute
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unrecorded conveyance or other instrument is invalid as against a subsequent bona fide purchase for value and without notice
to prevail, you must prove: you took subsequent in time to another person claiming ownership of real property in question; you were a bona fide purchaser for value, and you took property WITHOUT actual, constructive, or inquiry notice you MUST pay value to prevail (all of the purchase price) Typical notice statute: No conveyance etc.... shall be good...against creditors or subsequent purchasers for valuable consideration and without notice, unless the same be recorded according to law" |
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Types of Notice
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Actual Notice - exists if claimant actually sees the deed under which other party is claiming, or otherwise knows of the conveyance
Constructive or Record Notice - exists if other party's deed is recorded in proper place in the record books (wild deeds - recorded outside chain of title - NO constructive notice) Inquiry notice - exists if appearance of property is such that claimant should have asked more questions about title to property |
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Race-Notice Statute
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unrecorded conveyance or other instrument is invalid against a subsequent BFP, without notice, who records first
To prevail, you must prove: you took subsequent in time to another person claiming ownership; you were a BFP; you took property without actual, constructive, or inquiry notice; and you recorded first Typical: every conveyance...is void as against any subsequent purchaser... whose conveyance is first duly recorded, and as against any judgment affecting title, unless conveyance shall have been duly recorded prior to record notice" |
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Title Search - recording a conveyance
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In tract index jxs, searcher looks at legal description of the tract of land followed by chronological listing of all conveyances involving that piece of land - always provides constructive notice of a claim to property
Grantor and grantee index - searcher establishes chain of title by searching two index books - first, back in time within grantee-grantor index - then, forward within grantor-grantee index to see if any grantor conveyed an interest to someone outside of backwards chain (majority) |
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Shelter Rule
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provides protection for a subsequent purchaser who does not satisfy applicable recording statute - a person who is a successor in interest to a person protected by recording statute is also protected!
Exceptions: subsequent person may not take advantage of shelter rule IF that person: attempts to wash his deed by conveying to a third person and then immediately taking a reconveyance of the property OR commits fraud in respect to the deed majority says: estoppel by deed is an equitable remedy that is applied on a case by case basis - minority says after-acquired title is a legal theory that provides for automatic flow-through of property |
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Marketable Title Act
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provides a cut-off point which limits the time period during which a subsequent purchaser is required to search the records (usually 30 or 40 years) - any interest not recorded or refiled within required period is extinguished
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Mortgages in general
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mortgage is a conveyance of an interest in real property made to secure performance of an obligation, which often arises out of a loan of money made to facilitate purchase or development of real property. Typically evidenced by 2 documents:
mortgage deed and promissory note (mortgage note) |
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Mortgage Deed
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document that conveys an interest in real property designed to secure performance of a debt - because a mortgage involves a transfer of an interest in realty, it MUST be evidence by a writing that is properly executed and delivered to mortgagee
MUST include following elements: Identity of parties: mortgagor is owner of real property who borrowed money, and mortgagee is lender of money borrowed, to whom mortgage is made Description of the property: sufficient detail to put a subsequent BFP on notice (possibly more than is necessary for SOF) Intent to create a security interest: should contain evidence of intent - recordable document, generally subject to terms of applicable recording statute |
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Mortgage note
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represents mortgage obligation - an IOU that creates personal liability in the mortgager! Typically includes the following:
loan amount, interest rate (which may be fixed or adjustable), clause permitting prepayment but exacting a penalty for the privilege of prepayment, clause that permits mortgagee to declare entire amount of mortgage obligation due and payable if mortgagor defaults (acceleration clause!), and a due on sale clause - requires entire balance due on the note to be paid before property may be transferred by mortgagor/seller to a buyer When mortgagor pays the mortgage note, mortgagee executes a doc that releases the mortgage, which should then be recorded |
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Title Theory of Mortgage
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title theory for determining nature of interests held by mortgagor and mortgagee: Mortgagee holds title for security purposes only - mortgagor owns land (traditionally, mortgagee receives title to mortgaged real property) and has right to take possession of and to collect rents and profits from property!
mortgagee's title to property is subject to condition subsequent that divests title from mortgagee if mortgagor repays the loan by the due date! until he repays loan in timely fashion, mortgagor retains only an equitable interest in the property |
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Lien Theory
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mortgagee receives a lien, and the mortgagor retains legal and equitable title and possession to the mortgaged real property unless and until foreclosure occurs - majority AND Ohio!
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Intermediate theory
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mortgagor retains legal title until default occurs - after default, legal title and possession pass to mortgagee, who may then begin to collect rents and profits (similar to title theory)
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Mortgage-Related Waste
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My Rubbish Makes the Castle Ruined!
Mortgage, Reduce Value, Maintain, Taxes, Covenants, Rents person holding remainder in mortgaged property has a duty to pay the principal - life tenant has a duty to pay the interest on a mortgage, but his duty is capped at rents and profits derived from third person in possession, or reasonable rental value of premises if he's in possession mortgagor or life tenant of mortgaged property commits waste IF, without mortgagee's consent, mortgagor or life tenant: makes physical changes to real property, negligently or intentionally, that reduce value; fails to maintain and repair property in a reasonable manner (except things that third parties do that aren't his fault); fails to make timely payments of taxes; fails to comply materially with morgage covenants repsecting physical care, maintenance, construction, demolition, or insurance against casualty of property; or retains rents to which mortgagee has right of possession |
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Remedies for mortgage-related waste
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foreclosure or exercise of other remedies available under the mortgage for default on the secured obligation, if the waste has impaired mortgagee's security
injunction prohibiting future waste or requiring correction of waste already committed, but only to the extent that the waste has impaired or threatens to impair the mortgagee's security recovery of damages, limited by the amount of waste, to the extent that the waste has impaired the mortgagee's security |
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Foreclosure
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when there is a default on an obligation secured by a mortgage, mortgagee may:
obtain judgment against anyone personally liable on the obligation - and then, to the extent judgment not satisfied, foreclose the mortgage on the real estate for the balance OR foreclose the mortgage and, to the extend proceeds of foreclosure sale do not satisfy obligation, obtain judgment for the deficiency against any person who is personally liable - can force sale of real property secured by mortgage after you default on your promissory note Foreclosure sale happens by either power of sale or court order: power of sale - occurs without judicial action, pursuant to a power of sale clause in mortgage docs judicial foreclosure sale MUST: be public, be properly noticed, be conducted in a reasonable manner, and result in a fair sale price (not necessarily market price - arrived at as a result of mortgagee's due diligence in conducting foreclosure sale - sale price needs to be SO inadequate that it shocks the conscience to set aside the sale) Foreclosure sale terminates mortgagor's interest in mortgaged real estate Proceeds of mortgage foreclosure sale are distributed in following order: costs of the sale, security interest foreclosed, junior lienholders terminated by sale, and then to the mortgagor if any proceeds remain |
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Junior Interests and senior interests
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second or later mortgages are destroyed by a foreclosure sale
However, junior mortgage not extinguished if the junior mortgagee is not made a D in the judicial proceeding culminating in a foreclosure sale and does not receive notice of that sale senior interests not participating in foreclosure are not affected by foreclosure sale |
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Deficiency Judgments
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If proceeds of a foreclosure sale are not sufficient to cover the liens foreclosed, mortgagee/creditors may obtain deficiency judgment against mortgagor (or party that has assumed mortgage) personally, based on the note
States sometimes require mortgagee to set a minimum foreclosure sale price (upset price) or require deficiency judgments to be sought at time of foreclosure, or prohibiting deficiency judgments at all if private sale, or at least scrutinizing fairness of those closely |
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Redemption (equitable and statutory)
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Mortgagor's interest in mortgaged property is called the equity (short for equity of redemption)
Any time after default but before foreclosure, mortgagor has the right to redeem the property by paying the debt due! Right to redeem may NOT be waived (clogged) at the time mortgage is created 1/2 of states have statutory redemption! Fixed time period (6-12 months) after foreclsoure sale for the mortgagor to redeem by matching the foreclosure price |
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Priorities - Purchase-money mortgage
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Purchase-money mortgages win over liens!
Purchase-Money Mortgage - mortgage given to a vendor of the real estate or third-party lender, to extent that proceeds of loan are used to acquire title to the real estate or construct improvements on real estate, IF mortgage is given was part of same transaction in which title is acquired purchase-money mortgage is given priority over a lien (judgment lien or homestead claim) that attaches to property through actions of purchaser/mortgagor, even if the lien was recorded first! |
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Priorities - modification
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Junior mortgage wins over a prejudicially modified senior mortgage!
if a senior mortgage is modified, junior mortgage prevails over that modification if the modification materially prejudices the holder of the junior mortgage, such as by: increasing amount of principal, OR increasing the interest rate (if rate under original mortgage fixed) Modifications that normally do NOT materiall prejudice the holder of the junior mortgage include: extension of the mortgage maturity date and rescheduling installment payments |
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Transfer by mortgagor
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Subject to the mortgage: if mortgager transfers property subject to the mortgage, and mortgage payments are not made, mortgagee may foreclose and force th eproperty to be sold! However, transferee of the property does not have personal liability for the debt!!
Assumes the Mortgage: if transferee of mortgaged property assumes the mortgage, and mortgage payments are not made, mortgagee may foreclose and force property to be sold, AND transferee of mortgage has PERSONAL LIABILITY and can be held liable for any deficiency! Novation - where transferee of real property and the mortgagee agree that transferee will assume mortgage and the mortgagor will be released from liabilty |
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Transfer by Mortgagee
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Mortgagee may also transfer his itnerest. Mortgage generally follows transfer of the mortgage note. If the note is negotiable, transferee may qualify as a holder in due course, who takes free and clear of personal defenses (like lack of consideration, duress by nonphysical threat, fraud in the inducement)
However, transferee will take subject to REAL defenses - like infancy, duress by physical threat, and fraud in the factum |
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Mortgage Alternatives
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Deed of trust - debtor/note-making is the settlor, who gives deed of trust to a trustee who is closely connected with the lender. In the event of default, trustee is directed to proceed with a foreclosure sale. Deeds of trust generally treated like mortgages!
installment land-sale contract - buyer takes possession under a contract of sale and makes payments to the seller. Seller delivers deed and legal title only when payments have been completed! If buyer defaults, installment land-sale contract usually provides for forfeiture of all installments paid, allowing lender to re-take property. However, some states require foreclosure proceeding for an installment land-sale contract - in some, if foreclosure occurs, seller is required to refund to buyer all isntallments already paid, as long as these payments are more than damages suffered - in many, buyer who defaults is granted a grace period to pay off loan (buyer may keep land while paying under new payment schedule) IF seller has accepted late payments from buyer, seller may be deemed to have waived his right to demand timely payment! If this is the case, when seller wishes buyer to begin paying in a timely manner, he must send the buyer written notice and allow buyer a reasonable amount of time to make back payments owed |
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Easements
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easement: interest in the land of another
Nature of Easements: Affirmative, negative, appurtenant, or in gross Affirmative - gives the hodler the right to do something on the land of another - most easements are affirmative! Negative- gives holder the right to PREVENT landowner from doing something on his land. Common law recognizes only negative easements for light, air, water, and lateral or subjacent support. A writing is ALWAYS required to create a negative easement! Easement appurtenant - requires a dominant and sevient tenement Easement in gross - personal in nature, resulting in a servient but not a dominant estate |
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Creation of Easements and easements in writing
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May be created expressly through writing, by implication, by prescription, or by estoppel
Writing: SOF generally requires a writing to create an easement, because it is an interest in land! |
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Easements by implication
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Implication - affirmative easements can be created by implication, either by prior use or by necessity
Prior Use - requires severance of title to land held in common ownership; an existing, apparent, and continuous use when severance occurs (quasi-easement) AND parties intended use to continue after division of land since use is reasonably necessary for the enjoyment of the dominant part at the time of severance (some courts require STRICT necessity if implied easement reserved and not granted - either way, use alone cannot constitute an easement because an owner cannot have easement across own property) Implied by necessity: requires severance of title to land held in common ownership AND strict necessity for easement at time of severance |
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Easement by Prescription
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An affirmative easement may be created by prescription, which requires proof of the use of property that is: open and notorious, actual, continuous (traditionally 20 years); hostile; and exclusive
some courts require prescriptive use to be exclusive, which in this context mean use is NOT shared with the whole world - but the user may share use of easement with the owner! |
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Easement by estoppel
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Requires proof of an act or representation by owner of the burdened estate in respect to the easement, justifiable reliance on that act or representation by owner of the benefited estate, and damages suffered by owner of benefited estate if easement not recognized
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Transfer of Easements
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Both benefit and burden of an easement may be transferred according to these rules:
when dominant tenement transferred, benefit of easement or profit appurtenant FOLLOWS transferred estate, even if deed of conveyance does not specifically mention easement or profit! used to be you couldn't transfer easements in gross - NOW you can if grantor of easement so intends, and easement is commercial In the case of an express easement, transfer of servient estate will result in an accompanying transfer of the burden, so long as the holder of the dominant tenement has complied with provisions of relevant recording statute |
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Termination of easements
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Easements can be terminated:
When the time period ends, if it was created for a specific term when holder of dominant estate releases his interest to holder of servient estate when dominant and servient estates come into common ownership by abandonment (requires proof of intent to abandon AND an affirmative act in furtherance of that intent) by estoppel (requires proof of: act or representation in respect to easement, justifiable reliance on that act or representation, and damages) by prescription (use adverse to the easement for the statutory period) OR when a gov't body acquires servient estate through exercise of eminent domain |
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Profits
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a profit a prendre - nonpossessory interest in land
holder of profit has right to take resources from the land of another profits, unlike easements, permit the right to remove something from land, as opposed to mere use of land examples of resources include soil, timber, and minerals profits can only be created expressly or by prescription with exception of creation, all rules governing alienation and termination of easements are applicable to profits |
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License
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a license is a privilege, usually to do something on someone else's property
neither writing nor consideration is required to create a license! personal - not transferable unless owner so intends expires on death of licensor or the conveyance of the servient estate generally revocable at will of licensor - EXCEPT: license coupled with an interest - exists when one person owns personal property on the land of another and has a privilege incidental to such personal property to come on the land to use or recover the personalty OR an executed license - is based on estoppel and often involves bustantial expenditure of funds in reliance on promisor's promise to allow the promisee to use the land - deemed to be equivalent of an easement |
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Covenants that Run with the land
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promise that attaches to land - covenantor promises to do or refrain from doing something on his land
running covenatns include promises to pay rent, condominium common charges, or maintenance fees For covenant to run with the land, following elements MUST be satisfied: Writing - promise that attaches to land, therefore, must be embodied in writing that satisfies SOF intent - must include language showing parties' intent for covenant to run privity - horizontal privity is relationship between original covenantor and covenantee - usually satisfied by conveyance of land between them, which occurs in same deed that includes covenant. May also exist when covenant is created in a lease or in the transfer of an easement - horizontal privity requires for BURDEN to run, but not benefit Vertical privity - relationship between original party and successor in interest - P must show that successor stepped into the shoes of the original party by taking hte entire itnerest held by the original party (both have fee simple, for example) - required for BOTH burden and benefit to run (for burden to run, privity of estate will exist only when holder of servient estaet transfers all os his interest to new owner - for benefit to run, privity of estate can exist when holder of dominant estate is transferring ALL OR PART of his interest) Touch and concern - a covenant must exercise direct influence onthe occupation, use, or enjoyment of the premises. Benefit touches if it increases value of benefited property. Burden touches if it decreases value of burdened property - traditionally, both had to touch for either side to run notice - originallynot a requirement, but now determined according to terms of recording statute - notice under recording acts NECESSARY for burden to run now! |
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Equitable servitude
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Court may enforce equitable servitude IF:
P can establish at law all elements for a covenant that runs with thte land, but P seeks equitable relief, OR P is missing an element for covenant running with the land, but he can demonstrate relaxed requiremetns for an equitable servitude If P is lacking writing: can show covenant trhough part performance or estoppel IF lacking intent in writing: establish intent by showing common scheme - typically exists in a subdivision. If a sufficient number of lots in a subdivision are burdened by the same covenant, court may find common scheme binds all of the lots inthe subdivision, including those that do not have it written into the deed If lacking horizontal or vertical privity: neither is required for enforcement of equitable servitude! Intent must be shown for both benefit and burden - touch and concern must still be domeonstrated for both - parameters of notice for burden to run are determined according to recording statute |
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Implied Reciprocal Servitude
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owner of two or more lots, so situated as to bear relation, sells on with restrictions of benefit to land retained - then servitude becomes mutual and owner of lots may not do anything forbidden to owner of lot sold!
You need: Declaration Containing restrictions common scheme (shown by large percentage of lots expressly burdened, oral repesenations to buyers, statements in written ads, or recorded plat maps or declarations) - if common scheme evident at time of conveyance, burden will be imposed enforcement - original subdivider may enforce benefit UNLESS he has sold all the property if common scheme present, suit may be brought by purchaser of lot conveyed AFTER the lot with express restriction |
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Zoning
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state possesses power to regulate for health, safety, and welfare - encompasses zoning!
can CHALLENGE a zoning ordinance under due process and equal protection, and possibly 1A if regulating billboards or aesthetics |
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Eminent Domain
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Under Takings Clause of 5A, private property may not be take for public use without just compensation
Public Use Requirement - any advantage or benefit to the public - permits taking when facility for which property was taken provides public with benefit or advantage, such as for urban renewal - lowest level of scrutiny Just Compensation - generally fair market value - BUT does not account for intangibles like sentimental value - gov't NOT required to pay just compensation if it takes property for nuisance prevention |
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Taking
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occurs when gov't exercises eminent domain power to take private property
Per se taking - occurs when gov't action results in a PERMANENT physical occupation of private property - no balancing test needed - in contract, if it's temporary, a taking analysis requires the balancing of importance of public benefit achieved against extent of economic injury governmental regulation - may constitute a taking if it goes too far - balancing test! economic impact on property owner, extent to which regulation interferes with distinct investment-backed expectations, and character of governmental action money damages may be awarded for regulatory taking - damages may be awarded for time period between enactment of ordinance and judicial declaration of a taking |
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Exaction Fee
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fee or dedication exacted from property owner who seeks to develop his property as a means of offsetting potential impact of the development - either monetary or nonmonetary!
monetary exaction - impact or in-lieu fee that is assessed against developer to pay for public benefits, like roads and parks, that arise as a result of the development nonmonetary exaction - dedication of an interst in land within a subdivision for streets or parks that are needed as a result of development (must substantiall advance legit state interest! need an essential nexus between exaction and state interest - reasonably related to impact alleged) must be rough proportionality between exaction and impact of development - court must make an individualized determination othat exaction is related in both nature and extent to impact of proposed development - thus burden shifts to gov't to justify exaction! |
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Nuisance
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Public nuisance - unreasonable interference with a right common to general public - public health, safety, or convenience, or is proscribed by statute
Remedy - damages or injunction - individual P must have suffered harm that is DIFFERENT from that suffered by other members of the public exercising the right common to the general public that was the subject of the interference Private nuisance - substantial and unreasoanble invasion (intentional or negligent) of another's interst in his use and enjoyment of land - to determine existence, ct balances utility of conduct against gravity of harm caused Coming ot the nuisance - factor that may be considered in weighing utility of conduct against gravity of harm - but NOT a complete bar to suit Standing: to sue for private nuisance affecting parcel of land: possessors of land, owners of easements and profits in land, and owners of nonpossessory estates in the land that are detrimentally affected by interferences with its use and enjoyment Damages and injunctive relief may be recovered for private nuisance |
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Support Rights
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Lateral - adjacent improved land only liable if land would have collapsed in its natural state
adjacent unimproved land only liable if subsiding is caused by excavation subjacent - liable to buildings existing when subjacent estate severed BUT only liable for subsequently erected buildings if negligent |
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Water Rights - riparian rights
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Riparian rights - rights in water enjoyed by owner of land that abuts navigalbe natural river, stream, or lack (navigable = can be used for commerce)
natural flow doctrine - landowner is entitled to unlimited for domestic or natural uses - can use commercially if it does not substantially diminish flow reasonable use doctrine - owner may make reasonable use of water so lang as it does not interfere unreasonably with rights of other riparian owners prior appropriation doctrine - awards right to first person to take water for beneficial purposes also governs underground water |
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Diffuse surface water
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Diffuse Surface Water - water from rain or melted snow that runs over surface of land outside recognizable body of water
Common enemy rule - owner may use any method available to keep diffuse surface water from coming onto his land civil law rule - owner not permitted to interfere with flow of diffuse surface water reasonable use rule - owner may use reasonable means to alter flow of diffuse surface water, even if surrounding landowners are harmsed |
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Percolating Underground Water
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water that percolates through subsurface of land
Rule of capture - possessor of land may take as much water percolating under his land as he desires (also called absolute ownership) Reasonable use test - same as riparian correlative rights test - all owners of land situated over pool of underground water have equal rights to use the water prior appropriation sometimes is the thing too |
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Crops/Emblements
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Naturally growing crops = fructus naturales - considered part of the land, so they pass with conveyance of land and are subject to a mortgage on the land unless specifically excluded
selling fructus naturales is a conveyance in interest in land, UNLESS immediate severance of crop by either seller or buyer is contemplated must be made by writing that satisfies SOF if trunks or roots of them are located on property line of adjoining landowners, landowners own trees as tenants in common Fructus industriales/ emblements - annual growing crops that result from human cultivation and labor - also part of the land and will pass with conveyance - BUT a life tenant, periodic tenant, and tenant at wil have right to harvest them if planted before end of term - tenant for term of years has NO SUCH RIGHT UCC - Ks for sale of timber and growing crops apart from land - doesn't distinguish between natural and industrial - Art. 2 Art. 0 - perfected security interest in crops growing on realty has priority over conflicting interest of holder of a lien on realty or owner of realty if debtor has record title to or possession |
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Creation of a Lease and types
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Creation - expressly, either orally or writing (SOF generally needed for more than 1 year)
implied lease may be created by conduct of parties when written lease is invalid - if so, resulting tenancy is periodic - also implied when holdover tenant pays rent and LL accepts Types of Leases: Term of Years, Periodic, At WIll Tenancy at Sufferance |
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Term of Years
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definite beginning and end. No notice required to terminate lease for term of years
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Periodic
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set beginning date and continues from period to period (like month to month) without set termination date until proper notice given
may be created expressly or by implication with holdover tenant modernly, termination may take place on any date, and notice period is measured by rent payment clause up to max of six months |
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At-Will
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no fixed duration - lasts only as long as LL and tenant desire!
Terminates if: either party dies, tenant commits waste, tenant attempts to assign his interest; LL tries to assign his interest; or LL transfers premises to 3rd part for term of years if lease give LL unilateral right to terminate, most courts find tenancy at will that may be terminated by EITHER LL or tenant if lease give tenant unilateral right to terminate, he usually gets either life estate or fee simple, depending on language used in lease (occasionally either can terminate though) |
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Tenancy at Sufferance/Holdover Tenancy
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occurs when tenant remains in possession of leased premises after end of lease term - NOT a true tenancy - in most staet, LL may recover possession and receive reasonable rental value for holdover period
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Duties of tenant (list)
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Pay rent, don't commit waste, repair, other duties as contracted
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Pay rent
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common law - tenant's duty not relived if premises destroyed because he still got actual land! unless he only rented portion of building
modern rule - if premises are destroyed, you don't have to pay unless you intentionally or negligently caused destruction |
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Waste
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Can't commit permissive waste (primarily in respect to repairs) - not limited to extent of income derived from reasonably rental value of property
Tenant may also not commit ameliorative waste (except possibly long-term tenant) which life tenants can do |
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Repair
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Common law - LL has no duty to repair premises during term of lease, but tenant did for minor repairs to keep building's interior safe from water and wind - BUT neither had duty to rebuild if destroyed by act of God
Modern: in absence of contrary agreement, tenant not required to rebuild if destruction not his fault tenant responsible for repairing premises from casualties - damages from storms and fire - also for rebuilding or replacing premises if destroyed by those LL required to repair damages resulting from casualties |
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Other duties as contracted
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parties are free to covenant for duties that they would not bear under common law
General covenant to repair - tenant required to repair premises (except ordinary wear and tear, and possible acts of God) covenant to repair without exception - tenant must make all repairs, regardless of how caused |
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LL's duties (list)
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deliver possession of premises, water and heat, duties in lease document, quiet enjoyment, implied warranty of habitibility
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Deliver possession of premises
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Majority/English: requires delivery of actual possession
Minority/American: only delivery of legal RIGHT to possession (if there's a holdover tenant LL still fulfilled his duty) |
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water and heat and duties in lease document
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state law creates certain duties - running water and heat
lease doc too! |
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Covenant of quiet enjoyment
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every lease contains this covenant, whether express or implied
LL promises that tenant will not be disturbed by LL (or someone claiming to be LL) during his possession of premises. Tenant may treat lease as terminated and withhold rent if it has been breach by ACTUAL or CONSTRUCTIVE EVICTION Actual Eviction - majority rule - tenant relieved of all liability for rent, even if tenant continues to occupy rest of premises - BUT restatement calls for rent abatement only for partial eviction Constructive Eviction - LL's act must substantially and permanently interfere with tenant's use and enjoyment of premises AND tenant must move out! Acts constituting constructive eviction: withholding something essential to full enjoyment included within lease (like heat) and withholding something required by statute LL duties at common law - if breached, constructive eviction: making and keeping premises habitable in short-term lease of furnished dwelling, disclosing latent defects existing in premises known to LL and undiscoverable by tenant at time lease was made, maintaining common areas used by all tenants; refraining from making fraudulent misreps concerning condition of leased premises; or in some jxs, abetting immoral conduct or abetting nuisances on properties owned by LL that may affect least premises Majority rule - constructively evicted from only PART of premises? rent abatement sometimes you can get money damages if not enough for constructive eviction |
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Implied warranty of habitability
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modernly, LL deemd to have this warrant - guarantees that LL will deliver and maintain premises that are safe, clean, and fit for human habitation
To prove LL has breached this: tenant must show a defect in essential residential facilities (can be either patent/obvious or latent/nonbovious) Also to claim breach, tenant must provide LL with notice of defect, and allow LL reasonable time to make necessary repairs only covers residential leases! in some jxs, housing code violation = automatic breach if implied warranty of habitability is found in common law, breach may be found if premises are unhabitable in view of a reasonable person If LL breaches: tenant excused from further performance nder lease; may vacate premises but doesn't have to; may treat lease as canceled, and rent is abated; tenant may seek money damages or other traditional contract or tort remedies |
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LL's remedies for tenant's breach of duty
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Material breach - usually failure to pay rent
eviction damages rent acceleration (tenant can defend on grounds of non-compliance by LL or destruction of premises) Abandonment - if tenant vacates without intent to return and fails to pay rent LL can: retake premises, ignore an abandonment and continue to hold tenant liable for rent, OR reenter and relet premises - LL has duty to mitigate modernly Traditionally, LL allowed to use self-help to remove a breaching tenant - NOW it's prohibited or carefully constrained - LL must seek court action to reenter Security deposit may be retained by LL only to extent necessary to cover actual loss that deposit was intended to secure Retaliatory eviction - prohibited in most states! |
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Tenant's remedies for LL's breach
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Vacate and terminate lease
withhold rent repair and deduct from rent LL not liable to tenant with consent of tenant for injuries caused by condition of premises, EXCEPT when: undisclosed dangerous condition exists that is known or should have been known to LL but is unknown to tenant; condition exists dangrous to persons outside premises; parts of land retained in LL's control but are available for use by tenant; LL has contracted to repair; or LL has been negligent in making repairs |
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Assignments
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occurs when tenant transfers to a third person all of his rights, title, and interest in leased premises - assignee comes into privity of estate with LL
therefore, if rent is not paid, LL may sue assignee, so long as assignee remains on premises - however, LL may NOT sue assignee after assignee has trasferred premises to ANOTHER person, unless assignee has assumed duty to pay rent Rule in Dumpor's Case - once waived, covenant against assignment is unenforceable as to the next assignment (does not apply to subleases) |
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Sublease
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when tenant transfers less than all of his rights, title, and interest - subtenant does NOT come into privity of estate with LL, so absent express assumption of duty to pay rent, LL may not sue him directly
covenants against assignments and/or subleases are construed STRICTLY against LL |
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Fixture
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Permanently attached to real property - disinterested observer would consider it to be part of realty
when one person owns chattel and land to which it is fixed, it becomes a fixture IF: annexed to real property, appropriated to use of land; and annexor intends it to be a fixture chattel deemed annexed if it is permanently attached to real property or to something appurtenant to real property; would be difficult to move solely based on its own weight; or is constructively annexed to property by being specially designed for property or fixture on property annexed chattel may becom fixture if it is so necessary or convenient to the use of land that it is commonly regarded as part of land (look at nature of land or structure to which affixed) intent to annex chattel is a question of fact judged objectively, according to reasonable person standard! |
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Transfers, severance, and change of ownership of fixtures
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when both chattel and land are owned by same person, deed to real property will transfer al fixtures on property - but buyer and seller may agree that seller may remove certain fixtures from property before title is transferred to buy
owner of chattel may affix it to land also owned by that person which later becomes encumberd by mortgage - if so, morgage extends to BOTH land and fixture - if chattel attached to land ALREADY encumbered by a morgage, prior mortgage also encompasses chattel, even though mortgagee thereby receives a security interest greater than one bargained for by mortgagee if fixture and land to which attached are subject to common ownership, owner is free to sever chattel physically and permanently from premises - so fixture regains its status as personal property! constructive severance of a fixture may occur when owner of land expressly reserves fixture in a contract of sale for land or deed of conveyance UCC art 2 says contract for sale of structure to be removed from realty is a contract for sale of goods if structure is to be severed from land by seller! |
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Trade Fixtures
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chattel that is annexed to land by tenant to advance business or trade during tenancy
May be removed during tenancy (you're responsible for repairing damages caused by removal) must be removed within reasonable time after lease ends |
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UCC Security Interest in Fixture
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Security interest in a fixture is subordinate to mortgage or other lien on land to which fixture is attached - BUT in following cases, lien on fixture may be given priority:
PMSI in fixture gets priority over conflicting lien on property IF purchaser of fixture controls property AND security interst attaches before fixture is affixed and is perfected by fixture filing Non-PMSI in fixture has priority over lien on property if purchaser of fixture has record title to or possession of real property and security interest in the chattel: is perfected by a fixture filing before interest of holder of lien or owner is recorded AND has priority over any conflicting interest of a predecessor of lien holder or owner security interset in readily movable goods (office machines!) has priority if it is perfected by any method permitted by Article 9 AND a security interest in fixture also has priority over lien onrealty to which fixture is attached if lien was obtain by legal or equitable proceedings AFTER security interest in fixture was perfected by any means permitted under article 9 |
