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424 Cards in this Set

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Define Present Possessory Estate
A present possessory estate is an interest that gives the holder the right to present possession.
What are the types of present possessor estates?
1. Fee Simple Absolute
2. Fee Simple Determinable
3. Fee Simple Subject to Condition Subsequent
4. Fee Simple Subject to an Executory Interest
5. Fee Tail (abolished)
6. Life estate (and life estate pur autre vie) (may be defeasible)
Define Fee Simple Absolute
a fee simple absolute is the largest estate recognized by law. It can be sold, divided, devised, or inherited and has an indefinite or potentially indefinite duration. Today, a fee simple is presumed in the absence of express contrary intent (words of inheritance are not longer necessary)
Defeasible Fees
Defeasible fees are fee simple estates (i.e., of uncertain or potentially infinite duration) that can be terminated upon the happening of a stated event.
List the different types of defeasible fees.
1. Fee simple determinable (and possibility of reverter)
2. Fee simple subject to condition subsequent
3. Fee simple subject to an executory interest
Define Fee Simple Determinable
A fee simple determinable terminates upon the happening of a stated even and AUTOMATICALLY REVERTS to the grantor. It is created by durational language, such as "for so long as," "while," "during," or "until." A fee simple determinable can be conveyed, but the grantee takes subject to the estate's being terminated by the specified event.
Are statements of motive or purpose sufficient to create a determinable fee?
No! Statements of motive or purpose are NOT sufficient to create a determinable fee.

To create a fee simple determinable, words limiting the duration of the estate MUST be used. Watch for grants such as "for the purpose of" and "to be used for"; they are merely expressions of motive.
For a fee simple determinable, what is the correlative future interest in the Grantor?
Possibility of Reverter-- whenever a grantor conveys a fee simple determinable, he AUTOMATICALLY retains a possibility of reverter, which is a reversionary future interest. A possibility of reverter is transferable, descendible and devisable.
Define Fee Simple Subject to Condition Precedent
A fee simple subject to a condition subsequent is an estate in which the grantor reserves the right to terminate the estate upon the happening of a stated event; i.e., the estate does not automatically terminate-- the grantor must take some action. The estate is created by use of conditional words, such as "upon the condition that," "provided that," "but if," and "if it happens that"
For a Fee Simple Subject to Condition Precedent, what is the correlative future interest in the Grantor?
The right to terminate, reserved by the grantor, is called a right of entry. It must be expressly reserved.

In contrast with a possibility of reverter, it does not arise automatically.

Some courts hold that rights of entry are not transferable inter vivos, but most states agree that they are devisable, and all states agree they are descendible.
Exam Tip: what will a conveyance that contains both durational language and a power of termination be construed as creating
It will likely be construed as creating a fee simple subject to a condition subsequent, because the foreiture is optional at the grantor's election rather than automatic. Policy disfavors forfeiture of estates.
Define Fee Simple Subject to an Executory Interest
If a fee simple estate terminates upon the happening of a stated event (because it is determinable or subject to a condition subsequent) and then passes to a third party rather than reverting to the grantor or giving the grantor a right to terminate, the third party has an executory interest.
What type of estate is created by this language and in whom:

"To A and his heirs for so long as liquor is not sold on the premises; in that event, to B."
A = has a fee simple subject to an executory interest.

B = has an executory interest.
What type of estate is created by this language and in whom:

"Blackacre to XYZ Church, but if it is used for anything other than church purposes, then to B."
A = has a fee simple subject to an executory interest.

B = has an executory interest.
Define Fee Tail
The fee tail is an estate where inheritability is limited to lineal heirs. It is created by the words "to A and the heirs of his body." Most jurisdictions have abolished the fee tail, and an attempt to create one results in a "fee simple."
Define Life Estate
A life estate is one measured by the life or lives of one or more persons. It may be created by operation of law (e.g., dower) or by conveyance.
Define Life Estates and Marital Right (Legal Life Estates)
Dower and curtesy were the common law interests of a spouse in the real property of the other spouse. These interests could not be defeated by conveyance or by creditors. Most states have abolished dower and curtesy in favor of a statutory right to a portion of a spouse's estate.
What are conventional life estates?
1. For the life of the Grantee
2. Life estate pur autre vie
Define a life estate for the life of grantee.
The usual life estate is measured by the life of the grantee (e.g., "to A for life"). This type of life estate may be implied from language such as "to B after the life of A."
Define Life Estate Pur Autre (Life of Another).
A life estate "pur autre vie" is measured by a life other than the grantee's (e.g., "to A for the life of B"). A life estate pur autre vie also results when the life tenant conveys his life estate to another (e.g., if A, the holder of a life estate, conveys his interest to B, B has a life estate for a life of A).
Is it possible to create a life estate that is defeasible?
Yes! Although a life estate is usually indefeasible (i.e., it ends only when the life tenant dies), it is possible to create a life estate that is defeasible in the same ways that fee estates can be defeasible. A life estate can be determinable, subject to a condition subsequent, and subject to an executory interest (e.g., "to A for life so long as alcohol is not used on the premises" or "to A for life, but if A is divorced, to B."
What are the rights and duties of a life tenant or what is the doctrine of waste?
A life tenant is entitled to any ORDINARY uses and profits of the land but cannot do anything that injures the interests of a remainderman or reversioner. A future interest holder may sue for damages or to enjoin such acts, and if she spends money to perform the life tenant's obligations, she is entitled to reimbursement.
What is Affirmative (Voluntary) Waste--Natural Resources
Exploitation of natural resources (e.g., minerals) by a life tenant is generally limited to situations when:

1. necessary for repair or maintenance of the land.

2. the land is suitable only for such use; or

3. it is expressly or impliedly permitted by the grantor. Under the open mines doctrine, if mining was done on the land prior to the life estate, the life tenant can continue mining-- but is limited to the mines already open.
What is Permissive Waste
A life tenant is obligated to:

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

Permissive waste occurs when a life tenant fails to do so. However, this duty is limited to the extent of the income or profits generated from the land (or to its reasonable rental value, if there is not income or profit). A life tenant is NOT obliged to insure the premises for the benefit of remaindermen and is not responsible for damages cause by a third-party tortfeasor.
What is ameliorative waste?
Ameliorative waste is a change that benefits the property economically. This waste was actionable at common law, but now a life tenant may alter or even demolish existing buildings if:
1. the market value of the future interests is not diminished; and either
the remaindermen do not object, or
3. a substantial and permanent change in the neighborhood conditions (e.g., change from residential to 90% industrial) has deprived the property in its current for of reasonable productivity or usefulness.

Compare--Leasehold Tenants: leasehold tenants remain liable for ameliorative waste even if the neighborhood has changed and the market value of the premises was increased.

Compare-- Worthless Property: if the land is practically worthless in its present state, the life tenant may seek a partition sale, the proceeds of which are put in trust with income paid to the life tenant
What happens when a life tenant renounces his life estate?
If a life tenant who receives the estate by will or intestacy renounces his interest, the future interest following the life estate is generally accelerated so that it becomes immediately possessory.
What is an estate for years, periodic estate, estate at will, tenancy at sufferance?
These are present estates that arise out of LL-T relationship.
List the types of Future Interests in transferees.
1. Indefeasibly Vested Remainder
2. Vested Remainder Subject to to Total Divestment
3. Vested Remainder Subject to Open
4. Contingent Remainder
5. Shifting Executory Interest
6. Springing Executor Interest
What is future interest?
A future interest gives its holder the right or possibility of future possession of an estate. It is a present, legally protected right in property.
What kind of future interests can be vested in the transferor?
1. Possibility of Reverter
2. Reversions
What is the possibility of reverter?
It is a future interest connected with defeasible fees.

There are no RAP problems with these type of future interests.
What is a reversion?
A reversion is the estate left in a grantor who conveys less than she owns (e.g., O conveys "to A for life"; O has a reversion). It arises by operation of law; it does not have to be expressly reserved. A reversion is alienable, devisable, and inheritable. Its holder can sue for waste and for tortious damage to the reversionary interest.
Are reversionary interests (possibilities of reverters and reversions) subject to RAP?
No. All reversionary interests are vested and, thus, not subject to the RAP.
What is a remainder?
a remainder is a future interest in a TP that can become possessory on the natural expiration of the preceding estate. It cannot divest a prior estate, and it cannot follow a time gap after the preceding estate. A remainder must be expressly created in the instrument creating the preceding possessory estate.
What does B have?

O conveys "to A for life, then to B and his heirs"
B has a remainder
What does B have?

O conveys "to A for life, then to B and his heirs one day after A's death"
B does NOT have a remainder (because there is a gap)!
Can a remainder follow a fee simple?
No, never! Because a remainder cannot "cut short" a preceding estate, it can NEVER follow a fee simple, which is of potentially infinite duration. Executory interests are the future interests that cut short preceding estates or follow a gap after them.
List the types of remainders?
1. Indefeasibly vested remainder
2. Vested remainder subject to open
3. vested remainder subject to total divestment
4. Contingent remainder
What is an indefeasibly vested remainder?
A vested remainder is one created in an EXISTING AND ASCERTAINED person, and NOT subject to a condition precedent. The remainderman has a right to immediate possession upon normal termination of the preceding estate. An indefeasibly vested remainder is a vested remainder that is not subject to divestment or diminution.
What is a vested remainder subject to open?
This is a vested remainder created in a class of persons (e.g., "children") that is certain to become possessory, but is subject to diminution-- e.g., by the birth of additional persons who will share in the remainder as a class.
O conveys "to A for life, then to B and his heirs; but if B dies unmarried, then to C and his heirs."

What do B and C have?
B = has a vested remainder subject to complete divestment by C's executory interest.

C = has an executory interest
O conveys "to A for life, then to the children of B." A & B are living and B has one child, C.

What does C have?
C = has a vested remainder subject to open.
What is the preference where language of a conveyance is ambiguous?
Where language is ambiguous, the preference is for vested remainders subject to divestment rather than contingent remainders or executory interests. Policy favors early vesting of estates.
What are contingent remainders?
Contingent remainders are those created in unborn or unascertained persons, or subject to a condition precedent.
What must be satisfied before a remainderman has a right to possession with respect to contingent remainders?
A condition precedent .
When is a condition a condition precedent?
a condition is precedent if it must be satisfied before the remainderman has a right to possession.
O conveys "to A for life, then to B and his heirs if B marries C.

Why is B's remainder contingent?
B's remainder is contingent because he must marry C before he can take possession.
O conveys "to A for life, then to B and his heirs if B marries C, otherwise to D and his heirs."

What do B and D have?
B & D = have alternative contingent remainders.
The holder of this type of remainder is certain to acquire an estate in the future with no strings attached.
Indefeasibly vested remainder.
What does the comma rules help us distinguish between?
Contingent remainders & vested remainders subject to complete defeasance.
What is the difference between contingent remainders & vested remainders subject to complete defeasance?
a condition precedent creates a contingent remainder and a condition subsequent creates a vested remainder subject to complete defesance.
What is the comma rule?
The comma rule helps us distinguish between a condition precedent, which creates a contingent remainder, and a condition subsequent, which creates a vested remainder subject to complete defeasance.

Comma Rule: when conditional language in a transfer follows language that, taken alone and set off by commas, would create a vested remainder, the condition is a condition subsequent, and you have a vested remainder subject to complete defeasance.

By contrast, if the conditional language appears before the language creating the remainder, the condition is a condition precedent, and you have a contingent remainder.
O conveys "to A for life, remainder to B, provided, however, that if B dies under the age of 25, to C." A is alive and B is 20 years old.

What is this?

What do A, B, C, & O have?
Example of a vested remainder subject to complete defeasance.

A = has a life estate.
B = has a vested remainder subject to complete defesance
C = has a shifting executory interest

However, B must live to 25 to retain his interest in his estate. Otherwise, B's heirs lose it all, and C or C's heirs take.

O = has reversion because it is possible that neither C nor C's heirs will exist if and when the condition is breached.
O conveys "to A for life, and if B has reached the age of 25, to B."

What is this?

What do A & B & O have?
this is an example of a contingent remainder.

A = has a life estate
B = has a contingent remainder
O = has a reversion. If B dies under 25, the estate reverts back to O or O's heirs.

If B is still alive but under 25 at the time of A's death, B cannot take. Instead, the estate reverts back to O or O's heirs, who hold it subject to B's springing executory interest. (If and when B reaches 25, B divests O).
Explain vested remainder subject to open.
A remainder is vested in a group of takers, at least one of whom is qualified to take. But each class members' share is subject to partial diminution because additional members can still join in.
"To A for life, then to B's children." A is alive. B has two children B and C.

What do C and D have?
Vested remainder subject to open.
How many types of classes are there in a vested remainder subject to open?
Two-- Open classes and closed classes.
What is an open class with respect to a vested remainder subject to open?
Open class = a class is open if others can still join.
What is an open class with respect to a vested remainder subject to open?
Closed class = a class is closed when no others can join in.
What is the common law rule of convenience? When is it applied?
Under the rule of convenience, in the absence of express contrary intent, a class closes (i.e., no one born after that time may share in the gift) when some member of the class can call for distribution of her share of the class gift.

Apply the common law rule of convenience to determine if a given class has closed.
O conveys "to A for life, then to the children of B." If B is childless at that time, what results?
the remainder will be contingent.

A remainder created in unborn or unascertained persons is contingent because until the remainderman is ascertained, no one is ready to take possession if hte preceding estate ends.
At common law, what resulted if a contingent remainder failed to vest before or upon the termination of the preceding freehold estate.
the contingent remainder was destroyed.

Most states have abolished the destructibility rule. In those states, B's interest in the above example would be converted to an executory interest upon A's death because it will divest O's reversionary estate when B turns 21.
What is the doctrine of merger?
When one person acquires all of the present and future interests in land except a contingent remainder, under the common law, the contingent remainder is destroyed.

When considering whether estates merge to destroy a contingent remainder, remember that if the life estate adn the next vested interest were created by the same instrument, there is NO MERGER. (This would defeat the grantor's obvious intent). Merger may occur only when one person later acquires immediately successive estates.
O conveys "to A for life, then to B's children." If, before B has any children, O purchases A's life estate, O will have a life estate pur autre vie and a reversion. What results?
These interests merge, and the contingent remainder in B's unborn child is destroyed.
What is the Rule in Shelley's Case?
This is the rule against remainders in grantee's heirs. At common law, if the same instrument created a life estate in A and gave the remainder only to A's heirs, the remainder was not recognized, and A took the life estate and the remainder.

The Rule in Shelley's case has been abolished in most states.
O conveys "to A for life, then to B for life, then to the heirs of A."

Under Rule in Shelley's Case, what results?
The rule transforms the remainder in A's heirs into a remainder in A (No merger, however, because the reamainder for life in B is vested).
What is the Doctrine of Worthier Title?
This is the rule against remainders in grantor's heirs.

Under the Doctrine of Worthier Title, a remainder in the grantor's heirs is invalid and becomes a reversion in the grantor.

The doctrine of worthier title is generally treated as a rule of construction (i.e., it does not apply if an intent to create a remainder in heirs has been clearly manifested). DOWT applies only to inter vivos transfers (NOT WILLS), and only if the word "heirs is used.
O grants Blackacre "to A for life, then to the heirs of O."

What results under Doctrine of Worthier Title?
Under DOWT, A has a life estate and O has a reversion.
What is the womb rule?
This relates with determining whether a class has closed in a vested remainder subject to open.

This rule allows unborn persons in gestation to join into a class that closes before his/her birth, but which he/she would be member if born.
The bar examiners will expect you to know three things with respect to each of these present possessory estates. What are these three things?
1. What language will create the estate?
2. Once identified, what are the estate’s distinguishing characteristics?
a. Is the estate devisable (i.e., can it pass by will)?
b. Is the estate descendible (i.e., can it pass by the statutes of intestacy if its holder dies intestate (without a will))?
c. Is the estate alienable (i.e., is it transferable inter vivos or during the holder’s lifetime)?
3. Which future interests, if any, is the estate capable of?
Fee Simple Determinable.

How do you create it?

What are its distinguishing features?

Accompanying future interests?
ii. How to create
“To A for so long as…” or “To A during…” or “To A until…”
1. Grantor must use clear durational language. If the stated condition is violated, forfeiture is automatic.

iii. Distinguishing characteristics
This estate, like all of the Defeasible fees, is devisable, descendible, and alienable, BUT is always subject to the condition.

iv. Accompanying Future Interest? YES!
It is the possibility of reverter in the grantor.
Fee Simple Subject to Condition Subsequent

How do you create it?

What are its distinguishing features?

Accompanying future interests?
i. NEW YORK DISTINCTION
In NY, the fee simple subject to condition subsequent is called fee on condition.
1. How to create
“To A, but if X event occurs, grantor reserves the right to reenter and retake.”

Here grantor must use clear durational language AND must carve out the right to reenter (i.e., there must be an explicit recitation of the grantor’s right to reenter and retake if the condition subsequent is violated).


2. Distinguishing Characteristics
This estate is NOT automatically terminated, but it can be cut short at the grantor’s option, if the condition occurs.


3. Accompanying future interest?
a. Right of entry, synonymous with power of termination.
b. NEW YORK DISTINCTION
In New York, this is referred to as the right of reacquisition.
Fee Simple subject to executory limitation.

How do you create it?

What are its distinguishing features?

Accompanying future interests?
i. How to create
“To A, but if X event occurs, then to B [B is a third party, so forfeiture works in favor of a third party, instead of O].


ii. Distinguishing characteristics
This estate is just like the fee simple determinable, only now, if the condition is broken, the estate is automatically forfeited in favor of someone other than the grantor.

iii. Accompanying future interests? YES!
Shifting executory interest.
Life Estate

How do you create it?

What are its distinguishing features?

Accompanying future interests?
a. How to create
This is an estate that must be measured in explicit life-time terms and NEVER in terms of years!


i. Life Estate
O conveys “To A for life”

A has a life estate.
A is known as a life tenant.
O has a reversion, meaning that at the end of A’s lifetime, the estate reverts back to O or O’s heirs.

Contrast with: “To A for 50 years, if she lives that long,” or “To A for life, but in no event more than 10 years,” both of which create the terms of years (a leasehold interest), and NOT the life estate.


b. Distinguishing characteristics of the life estate
The life tenant’s entitlements are rooted in the important doctrine of waste

Note two general Rules
i. The life tenant is entitled to all ordinary uses and profits from the land.
ii. The life tenant must not commit waste—she must not hurt the future interest holder (waste).

iii. The life estate’s accompanying future interest?
1. If held by O, the grantor, it is called a reversion.
2. If held by a third party, it is called a remainder.
What are the exceptions to the prohibition against waste for life tenants?
b. Exceptions (PURGE)
i. PU: Prior Use, meaning that prior to the grant, land was used for exploitation.

Here, the life tenant may continue to exploit, unless otherwise agreed.

** Prior use and the Open Mines Doctrine. If mining was done on the land before the life estate began the life tenant may continue to mine, but is limited to mines already open. Thus, life tenant must not open any new mines.
ii. R: Repairs. The life tenant may consume natural resources for repairs and maintenance.
iii. G: Grant. The life tenant
iv. E: Exploitation, meaning land is suitable only to exloit.
What are the differences between the rule prohibiting ameliorative waste on the MBE and in NY?
The life tenant must not engage in acts that will enhance the property’s value, unless all future interest holders are known and have consented. The rationale behind this rule is to prevent the life tenant from making unilateral changes and to recognize the sentimental value of the land for future interest holders.

a. NEW YORK DISTINCTION
In New York, a life tenant can make unilateral changes to the property unless the remaindermen object. This rules is more permissive and places the onus on the remaindermen to object. It liberalizes the restraints on the life tenant.
How many categories of future interest are there? How do we distinguish among them?
There are six categories of future interests, and we classify them based on whether they are retained by the grantor or instead by the transferee.
How many future interests are capable of creation in the grantor and what are they?
There are only three future interests capable of creation in the grantor
1. The possibility of Reverter
It accompanies only the fee simple determinable. (FSDPOR)
2. The Right of Entry, also known as the Power of Termination
It accompanies only the fee simple subject to condition subsequent.
3. The Reversion: this is your fall back answer.
A reversion is the future interest that arises in a grantor who transfers an estate of lesser quantum than she started with, other than a fee simple determinable or a fee simple subject to condition subsequent.
What types of future interest is held by someone other than the grantor?
If our future interest is held by someone other than the grantor, it has to be either:
1. A vested remainder
There are three species:
a. indefeasibly vested remainder,
b. the vested remainder subject to complete defeasance (also known as the vested remainder subject to total divestment), and
c. the vested remainder subject to open).

2. A contingent remainder; OR

3. An executory interest
There are two species:
a. The shifting executory interest; and
b. The springing executory interest.
What are our three tasks in assessing future interests in transferees?
1. We must distinguish vested remainders (of which there are three kinds), from contingent remainders;
2. We must distinguish the three kinds of vested remainders from each other; and
3. We must distinguish all remainders from executory interests
What is a remainder?
a. Remainder:
A remainder is a future interest created in a grantee that is capable of becoming possessory upon the expiration of a prior possessory estate created in the same conveyance in which the remainder is created.
b. Remember:
The remainderman is sociable, patient, and polite
i. Remainderman is sociable. He never travels alone.
In other words, remainderman always accompanies a preceding estate of known fixed duration. That preceding estate is usually a life estate or a term of years.
1. Example
“To A for life, then to B,” or “To A for ten years, then to B.”
ii. Remainderman is patient and polite.
Remainderman never follows a defeasible fee. Rather, he waits patiently for the preceding estate to naturally end. He never interrupts of divests the previous estate holder.

**Remainderman cannot cut short or divest a prior transferee. In other words, if your present estate is a defeasible fee, your future interest is NOT a remainder. Instead it will be an executory interest, if held by someone other than O, the grantor.
Remainders are either vested or contingent. Please explain the difference.
a. Vested Remainder
A remainder is vested if it both created in an ascertained person and is not subject to any condition precedent.
b. Contingent Remainder
A remainder is contingent if it is created in an unascertained person OR is subject to a condition precedent or both.
c. NEW YORK DISTINCTION
***In New York, any future interest in a transferee that is subject to a condition precedent is called a remainder subject to a condition precedent.
What are the following statements examples of?

i. Example 12
“To A for life, then to B’s first child.” A is alive. B, as yet, has no children.
ii. Example 13
“To A for life, then to B’s heirs.” A is alive. B is alive. Because a living person has no heirs, while B is alive his heirs are unknown.
iii. Example 14
“To A for life, then to those children of B who survive A.” A is alive. We don’t yet known which, if any, of B’s children will survive A.
1. Do not know which of B’s children will survive A, bc A is still alive.
A remainder that is contingent because it is created in a yet unborn or unascertained person.
What are the following statements examples of?

“To A for life, then, if B graduates from college, to B.” A is alive. B is now in high school."

“To A for life, and, if B has reached the age of 21, to B.” A is alive. B is 19 years old."
b. These are examples of remainders that are contingent because it is subject to a condition precedent.
“To A for life, then, if B graduates from college, to B.” A is alive. B is now in high school. Before B can take, he must graduate from college. He has not yet satisfied this condition precedent."

What estates result in B & O?
B therefore has a contingent remainder
O has a reversion. (If B never graduates, O or O’s heirs take).

If B graduates from college during A’s lifetime: B’s contingent remainder is transformed automatically into an indefeasibly vested remainder.
“To A for life, and, if B has reached the age of 21, to B.” A is alive. B is 19 years old. Again, B must satisfy a condition precedent before B can take.

What estates result?
B therefore has a contingent remainder.
O has a reversion. (If B never reaches 21, the estate reverts back to O or O’s heirs).

If B attains the age of 21 during A’s lifetime: B’s contingent remainder is transformed automatically into an indefeasibly vested remainder.
What types of vested remainders are there?
1. The indefeasibly vested remainder.
2. The vested remainder subject to complete defeasance.
3. the vested remainder subject to open.
What is an executory interest?
Executory interests are future interests in TPs that either DIVEST a transferee's preceding freehold estate ("shifting interests") or FOLLOW A GAP in possession or CUT SHORT a grantor's estate ("springing interests").
A shifting executory interest always follows what?
A defeasible fee and it cuts short the estate of someone other than the grantor.
In a grant from O "to A and his heirs when A marries B"

What does A have?
A has a SPRINGING executory interest because it divests the GRANTOR'S estate.
In a grant from O "to A for life, then to B and his heirs; but if B predeceases A, then to C and his heirs,"

What does C have?
C has a SHIFTING executory interest because it divests a TRANSFEREE'S preceding estate.
Are executory interests subject to the rule against perpetuities?
Yes. Executory interests are not considered vested and thus are subject to the RAP, but executory interests are NOT destructible.
If a TP's future interest does not follow the natural termination of the preceding estate, what must it be?
An executory interest; a remainderman cannot follow a fee simple.
Does NY recognize both executory interests and contingent remainders?
No!

New York has abolished the distinction between executory interests and contingent remainders. Instead, contingent remainders and executory interests are called remainders subject to a condition precedent.
O conveys “To A, if and when he marries.” A is unmarried.

What do O & A have? Is there a RAP problem?
A has springing executory interest.
O has a fee simple subject to A’s springing executory interest.

Rule Against Perpetuities
The conveyance does not violate RAP because we will know by the end of A’s life if the condition has been met.
O conveys “To A, if and when he becomes a lawyer.” A is in high school.

What do O & A have? Is there a RAP problem?
A has springing executory interest. (Because if and when A becomes a lawyer, she will divest O of his fee simple).

O has a fee simple subject to A’s springing executory interest.

Rule Against Perpetuities
This conveyance will not violate RAP because we will know by the end of A’s life if the condition has been met.
Are vested remainders and executory interests transferable?
Vested remainders are fully transferable, descendible and devisable. At common law, contingent remainders and executory interests were not transferable inter vivos, but most courts today hold that they are freely transferable. Contingent remainders and executory interests are descendible and devisable, provided survival in not a condition to the interest's taking.
Is a future interest that is transferable subject to involuntary transfer?
Yes, it is reachable by creditors.
What are class gifts?
A "class" is a group of persons having a common characteristic (e.g., children, nephews). The share of each member is determined by the number of persons in the class. A class gift of a remainder may be vested subject to open (where at least one group member exists) or contingent (where all group members are unascertained).
What is the womb rule?
Persons in gestation at the time the class closes are included in the class.
Survival & Class Gifts-- must one survive until the class closes to take in a future gift?
Survival of a class member to the time of closing is usually unnecessary to share in a future gift-- unless survival was made an express condition (e.g., "to A for life and then to his surviving children").

However, certain terms are construed to create implied survivorship conditions (e.g., widow, issue, heirs, next of kin).
EXAM TIP:

Generally, when the instrument creating a gift of a future interest in an open class becomes effective, existing class members have a vested remainder subject to open.

BUT... watch for a condition precedent, which will prevent the remainder from vesting.
For example, "to A for life, remainder to those of B's children who survive A" creates a contingent remainder in B's children even if they are in existence-- and even if B is dead-- because the remainder is contingent on surviving A.
What is a trust?
A trust is a fiduciary relationship with respect to specific property (res) wherein the trustee holds legal title to the property subject to enforceable equitable rights in a beneficiary. The creator of a trust is the settlor, who must own the property at the time of trust creation and must have had the intent to create the trust.
Does the RAP apply to trusts?
Yes!

RAP applies to the equitable future interests of the beneficiaries in a private trust just as it does to "legal" future interests.
How can a trust be created?
A trust can be created by WILL (testamentary trust), inter vivos transfer of the trust res, or inter vivos declaration that the settlor is holding property in trust. All trusts of real property must be in writing. Not that a settlor may bequeath (by will) property to a trust created during his lifetime-- i.e., he may "pour it over" into the trust.
What is a charitable trusts
A charitable trust must have a charitable purpose. The rules governing charitable trusts differ from those applicable to private trusts in three important ways:

1. a charitable trust must have indefinite beneficiaries,
2. it may be perpetual (i.e., the RAP does not apply); and
3. the cy pres doctrine (which allows a court to select a alternative charity when the purpose of the settlor becomes impracticable or impossible, applies.

Charitable trusts may be enforced by an action of the attorney general of the state.
Does the RAP apply to a shift from a private to charitable use or from a charitable to private use?
YES!
What is RAP?
Under RAP, no interest in property is valid unless it must vest, if at all, not later than 21 years after some life in being (the measuring life) at the creation of the interest.

If there is ANY POSSIBILITY that the interest might vest more than 21 years after a life in being, the interest is void. The Rule applies to contingent remainders, executory interests, vested remainders, subject to open (class gifts), options to purchase (no attached to a leasehold), rights of first refusal, and powers of appointment.
When does the perpetuity period begin to run?
The time the interest is created and the perpetuity period begins to run depends on the instrument and the interest created:

1. For interests granted by WILL = it runs from the date of the testator's death.

2. For DEEDS = it is the date of delivery.

3. For IRREVOCABLE TRUSTS = from the date that it is created

4. For a REVOCABLE TRUST = from the date it becomes IRREVOCABLE.
When does an "interest" for purposes of RAP vest?
When it becomes
1. possessory, or
2. an indefeasibly vested remainder or vested remainder or a vested remainder subject to total divestment.
What is the key to RAP questions with rest to vesting interests?
The key is when the interest COULD POSSIBLY vest-- not when it is likely to vest or even when it did.

You must examine the grant at the time of its CREATION and be sure taht if the interest vests it will be w/in the period of RAP (LIB + 21 yrs). If there is ANY possibility that it could vest beyond the period, it is void.
Unless other measuring lives are specified, who is the measuring life?
The one connected with the vesting of the interest.

Any lives may be denominated measuring lives, provided that they are HUMAN and of reasonable number.
Which interests are exempt from RAP?
Except for vested remainders subject to open, the RAP does not apply to vested interests. Thus, other vested remainders, reversions, possibilities of reverter, and rights of entry are not subject to RAP.

Moreover, there is a charity-to-charity exception to the RAP (i.e., RAP does not apply to any disposition over from one charity to another), and an exception for options to purchase held by a current tenant.

Thus, the grantor's interests (reversions, possibility of reverter, rights of entry) are safe from RAP); you don't need to consider them!
What are the consequences of violating RAP?
Violation of RAP destroys on the offending interest. The exception is the rare case of "infectuous validity" where the testator would probable have preferred the entire gift fail.
What are common pitfall cases that violate RAP?
1. executory interest following a defeasible fee.
2. Age contingency beyond age 21 in an open class
3. Fertile Octogenarian
4. Unborn Widow or Widower
5. Administrative contingency
6. Options and rights of first refusal
What does the following language create and does it comport with RAP?

"to A for so long as no liquor is consumed on the premises, then to B"
This creates a executory interest followed by a defeasible fee.

An executory interest followed by a defeasible fee is only valid if the condition is specific to the fee holder or expressly limited to the perpetuities period.
Under RAP, when an interest is void, it is stricken and the interests are classified as if the void interest were never there.

Thus, what would be the effect of this conveyance under RAP?

1. O conveys "to A for so long as no liquor is consumed on the premises, then to B"

2. O conveys "to A, but if liquor is ever consumed on the premises, then to B."
1. B's interest would be stricken, A would have a fee simple determinable, and O would have a possibility of reverter.

2. B's interest and the condition are stricken and A has a fee simple absolute.
Does the following conveyance comport with RAP?

"To A for life, then to those of A's children who attain the age of 25."
The remainder in A's children violates RAP and is void.

Some states have enacted perpetuities reform legislation that reduce such age contingencies to 21.
What is the Fertile Octogenarian?
A woman is conclusively presumed to be capable of bearing children, regardless of her age or medical condition.

A few states have enacted perpetuities reform statutes taht raise a presumption that women over a certain age (e.g., 55) cannot bear children. Also, medical testimony regarding a woman's childbearing capacity is admissible in these states.
Does the following conveyance comport with RAP?

"To A for life, then to A's children to life, then to A's grandchildren in fee."
The remainder in A's grandchildren is invalid despite the fact that A is 80 years old under the fertile octogenarian rule.
What is the "unborn widow or widower" RAP problem?
Because a person's widow (or widower) is not determined until his death, it may turn out to be someone who was not in being at the time of the disposition.

However, where necessary to sustain a gift, a few state statutes raise a presumption that any reference to a person's spouse, widow, or widower is to a person in being at the time of the transfer.
Does the following conveyance comport with RAP?

O conveys "to A for life, then to A's widow for life, then to A's surviving issue in fee."
In the absence of a statute to the contrary, the gift to A's issue is invalid because A's widow might be a spouse who was not in being when the interest was created. This is an example of the "unborn widow or widower problem."

Compare: remainder "to A's children" would be valid because, unlike issue, they would be determined at A's death.
What problems do administrative contingencies raise with respect to RAP?
A gift conditioned to an administrative contingency (e.g., admission of a will to probate) violates the rule.
Does the following conveyance comport with RAP?

A gift "to my issue surviving at the distribution of my estate"
No. This is invalid because the estate might be administered beyond the period of the Rule.

This is an example of the administrative contingency problem.
What problems do options and rights of first refusal raise with respect to RAP?
Generally, an option to purchase or right of first refusal that is structured so that it might be exercised later than the end of the perpetuities period is void. (A significant minority of courts will construe the option as lasting only for a reasonable time).

Exception: RAP does not apply to options to purchase held by the current lessee.
Does the follow comport with RAP?

When O conveys Blackacre to A, he includes a clause in the deed that states, "A, his heirs, and assigns promise taht upon finding a ready, willing, and able buyer for Blackacre, Blackacre will be offered to O, his heirs, or assigns on the same terms.
No. This right of first refusal can be exercised well beyond a life in being plus 21 years, and thus violates the Rule.
EXAM TIP: watch for a fact pattern on the exam where a tenant has an option to purchase beyond the perpetuities period.
REMEMBER: RAP does NOT apply to such an option held but a CURRENT tenant or his assignees, but it does apply to a former tenant and to any party to whom th current tenant might transfer the option separately from the lease (in jurisdictions permitting such a transfer).
How does RAP apply to Class Gifts?
Bad-as-to-One, Bad-as-to-All" Rule: if the interest of any class member may vest too remotely, the whole class gift fails.

For the class gift to vest, the class must be closed and all conditions precedent must be satisfied for EVERY member.
What is the "Gift to Subclass" Exception?
Each gift to a subclass may be treated as a separate gift under the Rule.
Doe this comport with RAP?

"Income to A for life, then to A's children for their lives. Upon the death of each of A's children, the corpus is to be distributed to that child's issue, per stirpes.
The gifts to each of A's children's issue are considered separately. Thus, the gifts to issue of A's children living at the time of the disposition are good, but the gifts to the issue of afterborn children of A violate RAP and are void.

This applies the "gift to subclass" exception.
What is the "per capita gift" exception?
A gift of a fixed amount to each member of a class is not treated as a class gift under the rule.
How would treat this conveyance and determine whether or not it violates RAP?

"$1,000 to each of my great-grandchildren, whether born or before or after my death."
This greats gifts to individuals, each of whom is judged separately under the Rule.
What is Franzese's Four-Step Technique for assessing potential RAP problems?
a. ONE: Determine which future interests have been created by the conveyance. The RAP potentially applies only to contingent remainders, executory interests, and certain vested remainders subject to open. (remember “COVER PA”)
i. The RAP does NOT apply to:
1. any future interest in O, the grantor,
2. to indefeasibly vested remainders, OR
3. to vested remainders subject to complete defeasance

b. TWO: Identify the conditions precedent to the vesting of the suspect future interest.

c. THREE: Find a measuring life. Look for a person alive at the date of the conveyance and ask whether that person’s life or death is relevant to the condition’s occurrence.

d. FOUR: Ask: Will we know, with certainty, within 21 years of the death of our measuring life, if our future interest holder(s) can or cannot take? If so, the conveyance is good. If not (if there is any possibility, however remote, that the condition precedent could or could not occur more than 21 years after the death of a measuring life), the future interest is void.
Apply Franzese's Four-Step Technique to assess whether this conveyance violates RAP.

ii. Example 29
“To A for life, then to the first of her children to reach the age of 30.” A is 70. Her only child is 29 years old.
ONE: Classify the future interest
Contingent Remainder

TWO: What are the conditions precedent to the vesting of the future interest?
A must die, having a child to reach the age of 30

THREE: Find a measuring life
A = measuring life.

***Why not B? Because the grant is NOT B-specific. When B raises his hand, the conveyance is NOT about him. The conveyance just says “first child.”

FOUR: Will we know with certainty, within 21 years of the death of our measuring life, if a future interest holder can take? In other words, is there any possibility, however remote, that A would not have a child to reach 30 until more than 21 years after A’s death? YES!

The common law RAP is miserable. It presumes that anything is possible.

THEREFORE:
A has a life estate
O has a reversion.
B has nothing!
What are two bright-line rules of the common law RAP?
a. A gift to an open class that is conditioned on the members surviving to an age beyond 21 violates the common law RAP.

“Bad as to one, bad as to all.”
To be valid, it must be shown that the condition precedent to every class member’s taking will occur within the perpetuities period. If it is possible that a disposition might vest too remotely with respect to any member of the class, the entire class gift is void.

b. Many shifting executory interests violate the RAP. An executory interest with no limit on the time within which it must vest violates the RAP.
Does the following comport with RAP?


i. Example 30
“To A for life, then to such of A’s children as live to attain the age of 30.” A has two children, B and C. B is 35 and C is 40. A is alive.

If not, what results?
B and C’s vested remainder subject to open are voided by common law RAP and bad as to one, bad as to all because the condition is based on a member in the class attaining an age that is greater than 21. A is still alive, and could have another baby and the condition precedent may not be met within 21 years of A’s death, the measuring life. Because transfer is too remote to the new born, the entire class is tainted/poisoned.

Thus, under the common law RAP, we are left with a life estate in A and a reversion in O.
Does the following conveyance comport with RAP?

i. Example 31
“To A and his heirs so long as the land is used for farm purposes, and if the land ceases to be so used, to B and his heirs.”

If not, what results?
1. Classify the future interest
a. B has a shifting executory interest

2. What are the conditions that will trigger B’s entitlement?
a. The land must cease to be used for farm purposes.

3. Find a measuring life.
a. A is the measuring life.

4. Will we know with certainty, within 21 years of the death of our measuring life if a future interest holder is certain to take?
a. No! A might abide by the condition during her lifetime. The condition may not be breached, if ever, until hundreds of years have passed.

Once the offensive future interest is stricken, we are left with: “To A and his heirs so long as the land is used for farm purposes.”

Thus, A now has a fee simple determinable.

O now has a possibility of reverter.

There is no RAP problem because RAP does not apply to future interests in O.

ii. Compare the preceding example to: “To A and his heirs, but if the land ceases to be sued for farm purposes, to B and his heirs.

Same result as in the preceding example, except that now, once the offensive future interest (“to B and his heirs”) is stricken the conveyance is not grammatically sound.

Thus, the entire conditional clause is stricken.

Therefore, A now has a fee simple absolute.

O has nothing.
What is the "wait and see" doctrine or the "second look" doctrine?
Under this majority reform effort, the validity of any suspect future interest is determined on the basis of the facts as they now exist, at the end of the measuring life.

This eliminates the “wait and see” or “anything is possible” line of inquiry. We wait until the measuring life comes to an end and then we take a second look at the conveyance—on the basis of the facts as they have actually manifested.
What is The Uniform Statutory Rule Against Perpetuities (USRAP)?
Codifies the common law RAP and, in addition, provides for an alternative 90 year vesting period. To gauge the integrity of conveyance use RAP or 90 year vesting period.
What do both the “wait and see” and USRAP reforms embrace?
i. The cy pres doctrine: “as near as possible”

If a given disposition violates the rule, a court may reform it in a way that most closely matches the grantor’s intent, while complying with the common law RAP. This allows the court to redraft a given conveyance to avoid violation of RAP and comply with the grantor’s intent.

ii. The reduction on any offensive age contingency to 21 years
This enables the grant to survive.
What is the cy pres doctrine?
i. The cy pres doctrine: “as near as possible”

If a given disposition violates the rule, a court may reform it in a way that most closely matches the grantor’s intent, while complying with the common law RAP. This allows the court to redraft a given conveyance to avoid violation of RAP and comply with the grantor’s intent.
Does the NY Perpetuities Reform Statute embrace the "wait and see" or "cy pres" doctrine?
No!
i. The New York Perpetuities Reform Statute
New York applies the common law rule against perpetuities, and has rejected the “wait and see” and the “cy pres,” except for charitable trusts and powers of appointment, to be taken up in Trusts.
How does the NY Perpetuities Reform Statute deal with an interest that would be invalid under RAP because it is made to depend on any person's having to attain an age in excess of 21 years?
1. Under the New York perpetuities reform statute, where an interest would be invalid because it is made to depend on any person’s having to attain an age in excess of 21 years old: the age contingency is reduced to 21.
Did the NY Perpetuities Reform Statute modify the fertile octogenarian principle? If so, how so?
2. The common law fertile octogenarian principle is modified by the New York perpetuities reform statute. The New York statute presumes that a woman over the age of 55 cannot have a child. The possibility that the person may have a child by adoption is disregarded.
What is the NY Suspension Rule?
3. The New York “suspension” rule (tested with Trusts and Wills): The rule of suspension of the absolute power of alienation applies the common law RAP to restrictions on the power to sell or transfer.
a. Thus, an interest is void if it suspends the power to sell or transfer for a period of lives in being PLUS 21 years.
b. In other words, for a conveyance to be valid under the suspension rule, there must be persons in being who could join together in a conveyance of the full fee simple title within lives in being PLUS 21 years.
What is the Rule against Restraint on Alienation?
Generally, any restriction on the transferability of a legal (as opposed to an equitable) interest is void.
How many types of restraints on alienation are there?
There are three types of restraints on alienation.
1. disabling restraints, under which attempted transfers are ineffective.
2. forfeiture restraints, under which an attempted transfer forfeits the interest; and
3. promissory restraints, under which an attempted transfer breaches a covenant.
What is the effect of a disabling restraint on ANY legal interest?
Such restraint is VOID.
What type of restraints on fee simple estates are valid?
No.

All absolute restraints on a fee simple estate are void. Thus, the grantee may freely transfer the property.

However, restraints on fee simple estates for a limited time and reasonable purpose may be upheld (e.g., a restraint limited to the joint lifetimes of co-owners as a reasonable way to ensure that neither will have to reside with a stranger.
What is the effect of judicial enforcement of a discriminatory restraint?
Judicial enforcement of restraints prohibiting the transfer or use of property to or by a person of a special racial, religious, or ethnic group is DISCRIMINATORY STATE ACTION forbidden by the fourteenth amendment.

Discriminatory restrictions may also violate the Fair Housing Act.
What type of restraints on life estates are valid?
Forfeiture and promissory restraints on life estates are valid, but disabling restraints are void.
What type of legal interests does the Rule Against Restraints Against Alienation apply to?
The Rule Against Restraints on Alienation applies only to legal interests. Restraints on teh alienation of equitable interests (e.g., spendthrift clauses in trust instruments) are valid.
What types of restraints on the alienation of Future Interests are valid?
Restraints on vested future interests generally are valid to the extent that restraints on present interests of the same type are valid (e.g., forfeiture and promissory restraints on vested remainders for life are valid, but disabling restraints on vested remainders for life are void.
Are the following restraints on alienation valid?

1. reasonable restrictions in commercial transactions;
2. rights of first refusal
3. restrictions on assignment and sublease of leaseholds (e.g., requiring LL's consent)
Yes.
What are the three forms of concurrent ownership?
a. The Joint Tenancy: two more own with the right of survivorship.
b. The Tenancy By The Entirety: a marital interest between married partners with the right of survivorship.
c. The Tenancy In Common: two or more own with the right of survivorship.
What are the distinguishing characteristics of a joint tenancy?
a. Distinguishing Characteristics:
i. Right of survivorship—when one joint tenant dies, his share passes automatically to the surviving joint tenants.
ii. Joint tenant’s interest is alienable (transfer it while you’re alive, but it is NOT devisable or descendible because of the right of survivorship.
How is a joint tenancy created?
b. Creation of a Joint Tenancy
i. The four unities

Remember this “T-TIP”

Joint tenants must take their interests

T: at the same time.
T: by the same title (in the same instrument)
I: with identical interests
P: right to possess the whole

ii. Grantor must clearly express the right of survivorship

Joint tenancies are disfavored. Thus, in addition to the four unities, grantors must clearly state right of survivorship. (Note Joint Tenancies are not favored because it allows takers to circumvent the probate system, and the powers be don’t like that.)
Because joint tenancies are disfavored, what presumption do courts apply with respect to classifying concurrent estate conveyances?
Courts presume that any conveyance to two or more persons is a tenancy in common.

Thus, to create a joint tenancy, the conveyance must expressly and clearly state the right of survivorship.
Must one use a straw to create a joint tenancy in New York still?
No.

By statute, New York has dispensed with the need for a straw. In New York, tell the bar examiners that D is permitted to convey directly to himself and to Paul as joint tenants.
How does one sever a joint tenancy?
Remember “SPAM”: Sale, Partition, And Mortgage
Explain the how a joint tenancy can be severed by a sale?
1. A joint tenant can sell or transfer her interest during her lifetime.
She may do so secretly, even without the other tenant’s knowledge or consent.

One joint tenant’s sale severs the joint tenancy as to the seller’s interest because it disrupts the four unities.

Thus, buyer is a tenant in common.

To the extent that we started with more than two joint tenants in the first place the joint tenancy remains intact.
a. Example 34

(1) O conveys Blackacre “To Phoebe, Ross, and Monica as joint tenants with the right of survivorship.

Each owns 1/3 plus the right to use the whole because of the four unities.

Phoebe then sells her interest to Chandler. What is the state of the title?

(2) Later, Ross dies, leaving behind his heir, Rachel. What is the state of the title?
(1) Phoebe’s act severs the joint tenancy as to Phoebe’s interest. Ross and Monica still hold 2/3 as Joint Tenants, and Chandler holds 1/3 as their tenant in common.

(2) Monica takes Ross’s share.

Thus, Monica now holds 2/3s with Chandler, who holds 1/3. Monica and Chandler are tenants in common.

Rachel takes nothing.
In equity, what is the effect of a joint tenant entering into a contract for the sale of her share of the joint tenancy?
2. In equity, a joint tenant’s mere act of entering into a contract for the sale of her share will sever the joint tenancy, as to the contracting party’s interest.
This is because of the doctrine of equitable conversion, which provides that “equity regards as done that which ought to be done.”
A joint tenancy can be severed through partition. How may one accomplish a partition?
1. Partition by voluntary agreement: allowable peaceful way to end the relationship.

2. Partition in kind: a court action for physical division of Blackacre, if in the best interest for all.
a. Example: when Blackacre lends itself to a physical division (farm, vineyard, etc.)

3. Forced sale: a court action, if in the best interest of all, where Blackacre is sold and the sale proceeds are divided equally.
There are two different theories as to whether one joint tenant's execution of a mortgage or a lien on his share of the joint tenancy will sever the joint tenancy. What are those two theories?
1. Mortgage Theory: One joint tenant’s execution of a mortgage or a lien on his or her share will sever the joint tenancy as to that now encumbered share only in a minority of states—to follow the title theory of mortgages.

2. Lien Theory: By contrast, the majority of states follow the lien theory of mortgages, whereby a joint tenant’s execution of a mortgage on his or her interest will not sever the joint tenancy.
Does NY follow the mortgage theory of lien theory of mortgages?
4. NEW YORK DISTINCTION
New York follows the lien theory of mortgages.
What is the effect of an inter vivos conveyance by a joint tenant on the joint tenancy?
A voluntary conveyance by a joint tenant of her undivided interest destroys the joint tenancy. The transferee takes as a tenant in common. When there are more than two joint tenants, conveyance by one destroys the joint tenancy only to the extent of the conveyor's interest.
List three transactions that may not result in a severance of a joint tenancy
1. Judgment lien-- this type a judgment becomes a lien. If such a lien is acquired against a joint tenant, it does not sever the joint tenancy until it is actually sold at a foreclosure sale.

2. Mortgages-- in a lien theory state

3. Leases-- states are split as to whether one joint tenant's lease of her interest causes a severance.
What effect does a testamentary disposition of a joint tenancy have?
No effect.

A will is ineffective to work a severance because at death the testator's interest vanishes.
What effect does on joint tenant murdering another joint tenant on the joint tenancy?
Conceptually, a JT who murders the other JT should not lose her right of survivorship. In some jurisdiction, statutes change this result; in others, a constructive trust is imposed for the decedent's estate.
How do you create a tenancy by the entirety?
b. How to create: between married partners with the right of survivorship (note—this cannot be created in a couple to be engaged))
i. In those states to recognize the tenancy by the entirety, it arises presumptively in any conveyance to married partners unless stated otherwise.
ii. This is a very protected form of co-ownership.
What are some distinguishing characteristics of a tenancy by the entirety?
ii. This is a very protected form of co-ownership.

Remember “CAN’T TOUCH THIS”

1. Creditors: of only one spouse cannot touch this tenancy. It is special. It exists within the sanctity of the marriage relationship.

Note: In New York, one spouse may mortgage his interest and his creditors may enforce against that interest, but only as to the debtor spouse’s share. Further, the non-debtor spouse’s rights, including the right of survivorship, must not be compromised.

2. Unilateral Conveyance: neither tenant, acting alone, can defeat the right of survivorship by a unilateral transfer to a third party.
Define Tenancy by the Entirety.
A tenancy by the entirety is a MARITAL estate akin to a joint tenancy. In some common law jurisdiction, it arises presumptively in any conveyance to a husband and wife.
How can a tenancy by the entirety be severed?
Only death, divorce, mutual agreement, or execution by a joint creditor of BOTH the husband and wife can sever a tenancy by the entirety.

An individual spouse CANNOT convey or encumber tenancy by the entirety property. A deed or mortgage executed by only one spouse is ineffective.
What are three common features of a Tenancy in Common?
i. Each co-tenant owns an individual part and each has a right to possess the whole.
ii. Each interest is devisable, descendible, and alienable. There are no survivorship rights between tenants in common.
iii. The presumption favors the tenancy in common.
Rights & Duties of Co-Tenants (TIC)

Possession
Each co-T has the right to possess all portions of hte property but has no right to exclusive possession of any part. A co-T out of possession cannot bring a possessory action unless she is "ousted" (e.g., another co-T claims right to exclusive possession).
Rights & Duties of Co-Tenants (TIC)

Rents & Profits
In most states, a co-T in possession has the right to retain profits from her own use of the property (i.e., she need not share profits with the other co-Ts absent ouster of an agreement to the contrary).

She must, however, share net rents from TPs and net profits gained from exploitation of land, such as mining.
Rights & Duties of Co-Tenants (TIC)

Effect of One Concurrent Owner's Encumbering the Property
A joint tenant or tenant in common may encumber her interest (e.g., by mortgage or judgment lien), but may not encumber the interests of other co-Ts. If, e.g., one TIC mortgages her interest, the mortgagee can foreclose only in the mortgaging co-T's interest.

If a joint tenancy is involved, a mortgage (in a lien tehory state) or lien does not sever the joint tenancy, but a foreclosure sale will.

Note-- in the case of a joint tenancy, a mortgagee or lienor runs the risk that the obligated co-T will die before foreclosure, extinguishing the mortgagee's or lienor's interest.
Rights & Duties of Co-Tenants (TIC)

Remedy of Partition
Any co-T has a right to judicial partition, either in kind (physical division of land among co-Ts) or by sale and division of the proceeds. Courts prefer partition in kind but will permit partition by sale when a fair and equitable physical division of the property cannot be made. Although generally this right may be exercised at any time, restraints on partition by co-tenants are valid, provided they are limited to a REASONABLE TIME.
(TIC) Expenses for Preservation of Property-- Contribution

Co-Tenant Repairs
A co-T who pays more than her pro rata share of necessary repairs is entitled to contribution from the other co-ts, provided she has notified the other co_ts of the need for repair.
Expenses for Preservation of Property-- Contribution

Co-Tenant Improvements
There is no right of contribution for the cost of improvements unless there is a partition.
Expenses for Preservation of Property-- Contribution

Co-Tenant Taxes and Mortgages
Contribution can be demanded for taxes or mortgage payments paid on the entire property. However, reimbursement to a co-T in sole possession is limited to the extent that expenditures exceed the rental value of her use.
Tenancy in Common-- what is the duty of fair dealing?
A confidential relationship exists among co-Ts; e.g., one co-T's acquisition of an outstanding title or lien that may affect the estate is deemed to be on behalf of the other co-Ts. It is difficult for one co-T to adversely possess against other co-Ts.
If a co-T in a TIC is in exclusive possession, is she liable for rent to the other co-Ts?
No. Absent ouster, a co-T in exclusive possession is NOT liable to the others for rent.
Can one co-T acquire title to the whole TIC through adverse possession?

What about implied ouster in NY?
Unless he has ousted the other co-tenants, one co-tenant in exclusive possession for the statutory adverse possession period cannot acquire title to the exclusion of others.
1. NEW YORK DISTINCTION
In New York, a co-tenant may acquire full title through adverse possession if he is in exclusive possession for 20 continuous years. This is a theory of “implied ouster” (This if from a recent New York Court of Appeals Case. It is ripe for testing.
(TIC) Expenses for Preservation of Property-- Contribution

What are co-Ts respective responsibilities with respect to carrying costs?
Each co-tenant is responsible for his or her fair share of the carrying costs (such as taxes and mortgage interest payments, based upon his individual share.
(TIC) Expenses for Preservation of Property-- Contribution

What are co-Ts respective responsibilities with respect to repairs?
The repairing co-tenant enjoys a right to contribution for reasonable & necessary repairs provided that she has told the other of the need.
(TIC) Expenses for Preservation of Property-- Contribution

What are co-Ts respective responsibilities with respect to improvements?
During the life of the co-tenancy, there is no right to contribution for “improvements.” However, at partition, the improving co-tenant is entitled to a credit, equal to increase in value cause by her efforts. This would be considered ameliorative waste.

Attendantly, at partition, the so-called “improver” bears full liability for any drop in value caused by her efforts.
(TIC) Expenses for Preservation of Property-- Contribution

What are co-Ts respective responsibilities with respect to waste?
A co-tenant must not commit waste. (Recall the three species of waste: voluntary, permissive, and ameliorative)

Voluntary = willful destruction
Permissive = neglect
Ameliorative = changes that increase value

**Note: a co-tenant can bring an action for waste during the life of the tenancy to recover damages.
Does a co-T have a right to bring an action for partition?
Yes!

A joint tenant or tenant in common has a right to bring an action for partition.
What are the four leasehold estates?
1. Tenancy for years
2. Periodic tenancy
3. Tenancy at will
4. Tenancy at sufferance
What is a tenancy at years?
This is a lease for a fixed period of time.

It states from the outset when it will terminate.
How do you terminate a tenancy of years? Is notice required?
Because a tenancy of years states from the outset when it will terminate, no notice is required to terminate the leasehold.
Are there any SoF problems for a tenancy of years greater than one year?
Yes.

iii. A term of years greater than one year must be in writing to be enforceable, because of the statute of frauds.
What is a periodic tenancy?
i. Defined
This is lease which continues for successive intervals until L or T give proper notice to terminate.
How is a periodic tenancy created?
Expressly or through implication.
How is a periodic tenancy created expressly
The periodic tenancy can be created expressly. For example, L conveys to T from month-to-month, or year-to-year, or week-to-week. Notice, there is an open-endedness to this type of conveyance.
How is a periodic tenancy created through implication?
The periodic tenancy can also arise by implication, in any one of three ways:
1. Land is leased with no mention of duration, but provision is made for the payment of rent at set intervals.

2. Oral term of years in violation of the statute of frauds creates an implied periodic tenancy measured by the way rent is tendered.

3. The holdover: in a residential lease, if L elects to holdover a t who has wrongfully stayed on past the conclusion of the original lease an implied period tenancy arises, measured by the way rent is now tendered.
a. Example 40
L and T negotiate on the telephone for a commercial lease. They orally agree on a five-year lease with rent at $1000 a month.

Is this a tenancy for years?
NO! It violates the statute of frauds.

What if T sends L a check for $1000 and L accepts it?

T’s first rental payment renders his interest an implied periodic tenancy, with the intervals based on the way rent is tendered.
a. Example 41
T holds over after the expiration of her one-year lease, but sends another month’s rent check to L, who cashes it. What tenancy now exists?
An implied month-to-month periodic tenancy.
In NY, if a LL elects to holdover a T, what type of leasehold results?
In New York, the landlord who elects to holdover a tenant creates an implied month-to-month periodic tenancy, unless otherwise agreed.
How is a periodic tenancy terminated?
1. Generally, written notice must be given to terminate a periodic tenancy
2. At common law, one must give notice at least equal to the length of the period itself, unless otherwise agreed.
a. Thus, in a month-to-month periodic tenancy, one month’s notice is required.
b. The one exception, if the tenancy is from year-to-year or greater, only six month’s notice is required.
c. Note—by private agreement, the parties may lengthen or shorten these common law prescribed notice provisions.
3. The period tenancy MUST end at the conclusion of a natural lease period.
a. Example 42
L leased Blackacre to T on January 1, 2010, for a period tenancy of month-to-month. On May 15, 2010, T sends written notice of termination. For how long is T bound?
T is bound until June 30 because the periodic tenancy must end at the conclusion of the natural lease period.
Define tenancy at will.
i. This is a tenancy for no fixed duration
1. For example, “To T for as long as L or T desires.”
Can parties impliedly agree to a tenancy at will?
No!

ii. Unless the parties expressly agreed to a tenancy at will, the payment of regular rent will cause a court as an implied periodic tenancy.
How may a tenancy at will be terminated, generally?

Is there a NY Distinction?
iii. The tenancy at will may be terminated by either party at any time, but a reasonable demand to vacate premises is typically needed.
iv. NEW YORK DISTINCTION
In New York, the LL terminating a tenancy at will bust give a minimum of 30 days written notice of termination.
What is a tenancy at sufferance?
i. It is created when T has wrongfully held over past the expiration of the lease. We give this wrongdoer a leasehold estate (the tenancy at sufferance), to permit L to recover rent.
How long does a tenancy at sufferance last?
ii. The tenancy at sufferance lasts only until L either evicts T or decides to hold T to a new tenancy.
In New York, what is the legal affect of a LL accepting an additional month's rent of a holdover tenant?
iii. NEW YORK DISTINCTION
In New York, LL’s acceptance of rent subsequent to the expiration of the term will create an implied month-to-month periodic tenancy, unless otherwise agreed.
What duties do Tenants have?
i. T’s liability to third parties
ii. T’s duty to repair
iii. T’s duty to pay rent
What is T's liability to TPs in tort?
i. In tort, T is responsible for keeping the premises in good repair.
ii. In tort, T is liable for injuries sustained by third parties T invited, even where L promised to make all repairs.
L leases a building to T, expressly promising to maintain the premises in a state of good repair. T’s invitee trips over a loose floorboard and sues T. If invitee sues T, what result?
T will lose, it doesn’t matter that we would advise T to seek indemnification from L. Vis-à-vis the plaintiff, who is a guest, T will be held liable!
What is T's duty to repair when the lease is silent?
1. Standard: maintenance and ordinary repairs
2. No Waste: T must not commit waste (voluntary, permissive or ameliorative)
3. Abide by the law of fixtures: don't remove fixtures (usu. tested with waste doctrine)
What is the law of fixtures?
a. When a tenant removes a fixture she commits voluntary waste.

b. A fixture is a once movable chattel that, by virtue of its annexation to realty objectively shows the intent to permanently improve the realty. Common examples, include:
i. Furnace
ii. Custom storm windows
iii. Heating systems
iv. Certain lighting installations
c. T MUST NOT REVOE A FIXTURE, NO MATTER THAT SHE INSTALLED IT!

FIXTURES PASS WITH OWNERSHIP OF THE LAND

If you have a T who has installed something that will cause substantial damage to remove, then it’s a fixture. Don’t’ get wrapped up with T’s subjective intent… it does NOT matter!
Janet Jackson, a tenant, installs a beautiful heirloom chandelier in the dining room. At the conclusion of the leasehold, as she is about to remove it, Landlord demands that the chandelier stay put.

What results?
If the chandelier qualifies as a fixture, it must stay put.
How can you tell when a tenant installation qualifies as a fixture?
i. Express agreement controls
1. Any agreement between LL&T on point is binding. This recognizes freedom of contract—a private agreement will be honored.
ii. In the absence of agreement, T may remove a chattel that she has installed so long as removal does not cause substantial harm to the premises.
iii. If removal will cause substantial damage, then in objective judgment T has shown the intent to install a fixture—it stays put!
What is T's duty to repair when T has expressly covenanted in the lease to maintain the property in good condition for the duration of the lease?

Is there a NY Distinction?
1. At common law, historically: T was liable for any loss to the property, including loss due to the forces of nature, including loss due to no fault of T’s own.
2. Today, the majority view, is that T may end the lease when the premises are destroyed without T’s fault. This modern view is in accord with a modern T’s reasonable expectations.
3. NEW YORK DISTINCTION
In New York, absent tenant’s express undertaking to restore the premises in the event of their destruction, if the premises are destroyed through no fault of the tenant, tenant may quit the premises and surrender possession without any further duty to pay rent.
a. She can surrender the premises, vacate and cease paying rent!
If T breaches his duty to pay rent and is still in possession of the premises, what may the landlord do? What is the LL prohibited from doing?
1. The landlord’s only options are to evict through the courts or continue the relationship and sue for rent due. If the landlord moves to evict, she is nonetheless entitled to rent from the tenant until the tenant, who is now a tenant at sufferance, vacates.
2. LANDLORD MUST NOT engage in self-help, such as changing the locks, forcibly removing the tenant, removing tenant’s possessions.

Self-help is flatly outlawed, and is punishable civilly and criminally.

NEW YORK DISTINCTION
In New York, self-help is flatly prohibited and entitles tenant to treble damages.
If T breaches his duty to pay rent, but IS NOT in possession of the premises, what may the landlord do? What is the LL prohibited from doing?
1. For example, T wrongfully vacates with time left on a term of years lease.

Remember SIR

2. S: Surrender
L could choose to treat T’s abandonment as an offer of surrender, which L accepts.

What is surrender? T shows by words or actions that she wants to give up the lease.

If the unexpired term is greater than one year surrender must be in writing to meet the statute of frauds.

3. I: Ignore
L can ignore the abandonment and hold T responsible for the unpaid rent, just as if T were still there. This option is available on in a minority of states.

4. R: Re-Let
L can re-let the premises on the wrongdoer tenant’s behalf, and hold him or her liable for any deficiency.

**Majority Rule:
L must at least try to re-let.
This is a mitigation principle.

5. NEW YORK DISTINCTION
Generally, New York does not require LL to mitigate damages when tenant abandons the premises. Thus, in New York there is NO duty to mitigate.
What are the LL's duties to the T?
1. Duty to delivery possession
2. The implied covenant of quiet enjoyment.
3. The implied warranty of habitability
4. Prohibition against retaliatory eviction.
What is the LL's duty to deliver possession under the English Rule?
i. English Rule (majority)
Requires that LL put T in physical possession of the premises. Thus, if at the start of T’s lease a prior holdover T is still in possession, L has breached his duty and the new T gets damages.
What is the LL's duty to deliver possession under the American Rule?
ii. American Rule (minority)
This position only obliges LL to provide T with “legal possession” (not physical possession) of the premises. LL need only give T the keys or have T sign a lease. Holderovers are the T’s problem. This is a vestige of the frontier mentality, where L might be 100s of miles away from the leased land, so it was only practical (efficient) to require Ts to deal with holdovers.
What types of leases does LL's implied covenant of quiet enjoyment apply to?

What does this right entail?
Both residential and commercial leases.

T has a right to quiet use and enjoyment without interference from LL.
How can the LL breach its implied covenant of quiet enjoyment?
1. Breach by actual wrongful eviction
2. Breach by constructive eviction.
How does a LL breach its implied covenant of quiet enjoyment by actual wrongful eviction?
This occurs when LL wrongfully evicts T or excludes T from the premises.

Actual eviction terminates the T's obligation to pay rent.
How does a LL breach its implied covenant of quiet enjoyment by constructive eviction?
If the LL does s/t (or more often, fails to provide a service he has a legal duty to provide) that renders the property uninhabitable, the T may TERMINATE the lease and seek DAMAGES.

The conditions must be the result of the LL's actions (no a neighbor's or TP's), and the T must vacate the premises within a reasonable time.
What must a T prove to establish she has been constructively evicted?
To recall the elements of constructive eviction, remember SING
1. SI: Substantial Interference
Due to LL’s actions or failures, there is a substantial interference with T’s right to quiet use and enjoyment of the premises.
a. This does not have to be a permanent problem, a chronic problem could be sufficient (i.e., roof leaks every time it rains).
2. N: Notice
T must notify LL of the problem & LL must fail to act meaningfully
3. G: Goodbye—this is imperative
T must vacate within a reasonable time after LL fails to fix the problem.
a. Even though T may endure a hardship if T has to vacate, this does not matter in the eyes of the law. Courts will not allow a T to plead constructive eviction unless T vacates the premises.
What is partial eviction and how does it breach the LL's implied duty of quiet enjoyment?
Partial actual eviction occurs when the T is physically excluded from only part of the leased premises.

Partial eviction by the LL relieves teh T of the obligation to pay rent for the ENTIRE premises, even though the T continues in possession of the remainder.

Partial eviction by a TP with paramount title results in an apportionment of rent (i.e., the T is liable for the reasonable rental value of the portion she continues to possess.
Is LL generally liable for acts of TPs or other Ts? Are there exceptions to the general rule?
1. General Rule: LL is generally not liable for the acts of third parties or other tenants.
2. Two exceptions:
a. L must not permit a nuisance on site.
b. L must control common areas.
To which types of leases is the implied warranty of habitability applicable?

Can this warranty be waived by the T?
i. Applicability
Applies only to RESIDENTIAL leases. It only applies to places where people can dwell.

ii. The applied warranty of habitability is NON-WAIVABLE.
It is considered so essential to living in dignity that it cannot be waived.
What is the implied warranty of habitability?
iii. Standard
The premises must be fit for basic human dwelling (modest standard)

The appropriate standard may be supplied by housing codes or by case law.

The sorts of problems to trigger breach of the implied warranty of habitability include no heat in winter, no plumbing, no running water. These are infirmities that are incompatible with the implied warranty of habitability.
What is T entitled to when the LL breaches the implied warranty of habitability?
iv. T’s entitlements when the implied warranty of habitability is breached

Remember MR3: Move, Repair, Reduce, Remain

M: Move out and end the lease, but T DOES NOT have to. This is different from constructive eviction. T is given more breathing room here!

R: Repair and deduct, allowable by statute in a growing number of jurisdictions. T may make the reasonable repairs and deduct their cost from future rent.

R: Reduce Rent or withhold all rent until the court determines fair rental value. Typically, T must place withheld rent into an escrow to show her good faith.

R: Remain in possess, pay rent and affirmatively seek money damages.
Can a LL evict a T if T reports LL for a house code violation?
NO! This is considered retaliatory eviction and it is flatly prohibited.

d. Retaliatory eviction: if T lawfully reports L for housing code violations, L is barred from penalizing T, by, for example, raising the rent, ending the lease, harassing t, or taking other reprisals.
i. Rationale—law wants to protect/incentivize good faith whistle-blowing tenants that report breaches.
What are a T's right to assign or sublease his lease with a LL?

Are there NY distinctions?
i. In the absence of some prohibition in the lease, a T may freely transfer his or her interest in whole (thereby accomplishing an assignment) or in part (thereby accomplishing a sublease)

In the lease, L can prohibit T from assigning or subletting without L’s prior written approval.

**However, once L consents to one transfer by T, L waives the right to object to future transfers by that T, unless L reserves the right.
ii. NEW YORK DISTINCTION
In New York, unless the lease provides otherwise, a residential T may not assign without L’s written consent. LL can unreasonably withhold consent to assign, in New York, a T in a residential building having four or more units as the right to sublease subject to L’s written consent. Consent to sublease cannot be unreasonably withheld. Unreasonably withheld consent is deemed consent.
What are the consequences of an assignment?
an assignee stands in the shoes of the original T in a direct relationship with the LL; (i.e., the assignee and the LL are in privity of estate, and each is liable to the other on all covenants in the lease that "run with the land."
With respect to a lease, what covenants run with the land?
A covenant runs with the land if the original parties to the lease so intend and if the covenant "touches and concerns" the land (i.e., benefits the LL and burdens the T (or vice versa) with respect to their interests in the property).
With respect to a lease, to whom does an assignee owe rent?
because a covenant to pay rent runs with the land, the assignee owes rent directly to the LL.

After assignment, the original T is no longer in privity of estate with the LL but remains liable on the original contracutal obligation to pay rent (privity of contract).

If the assignee reassigns the leasehold interest, his privity of estate with the LL ends, and he has no liability for the subsequent assignee's failure to pay rent.
What are the consequences of a sublease?
A subleasee is the tenant of the original lessee adn usually pays rent to the original lesee, who then pays the LL.

A sublessee IS NOT personally liable to the LL for rent or for the performance of any of the covenants in the main lease unless the sublessee expressly assumes the covenant.
What remedies does a LL have if lessee and sublessee do not pay rent?
LL may terminate the main lease for nonpayment of rent or breach of other covenants if the lease so states or the power is given by the statute. The sublease automatically terminates with the main lease.

Also, many states allow a LL who does not receive rent to assert a lien on personal property found on the premises; this applies to a sublessee's property as well as that of the original tenant.
What are the rights of a sublessee?
A sublessee cannot enforce any covenant made by the LL in the main lease, except a residential sublessee may be able to enforce the implied warranty of habitability against the LL.
How are covenants against assignments or subleases construed?
Lease covenants restricting assignment and sublease are strictly construed against the LL. (Thus, a covenant prohibiting assignments does not prohibit subleasing and vice versa).
When is a valid covenant against assignment considered waived by the LL?
If T assigns his lease to s/o else and LL is aware of it and does not object (e.g., by knowingly accepting rent from the assignee).

Once the LL consents to one transfer, the Rule in Dumpor's Case provides that he waives the covenant as to future transfers unless he expressly reserves it.
If a T assigns or sublets in violation of a provision in the lease prohibiting it, is the transfer void? If not, what results?
The transfer is not void, but LL usu. may terminate the lease OR sue for damages.
Can a LL assign the rents and reversion interest he owns? Does he need T's consent?
Yes, LL can do this. This is usually done by deed when the LL conveys a building to a new owner.

T's consent is not required.
What are the rights of LL's Assignee against LL's Ts (Attornment) after LL assigns the rent and reversion interest he owns?
Once Ts are given reasonable notice of the assignment, they must recognize and pay rent to the new owner as their LL. The benefit of all T covenants that touch and concern the land runs with the LL's estate to the new owner.
What are the liabilities of LL's Assignee to LL's Ts after LL assigns the rent and reversion interest he owns?
The burden of the LL's covenants that touch and concern the land runs with the LL's estate to the assginee; thus, the assignee is liable for the performance of those covenants. The original LL also remains liable on all the covenants he made in the lease.
What results an entire leasehold is taken by eminent domain?
If the entire leasehold is taken by eminent domain, the T's liability for rent is extinguished because both the leasehold and reversion have merged in the condemnor and there is no longer a leasehold estate.

The lessee is entitled to compensation.

Note-- this is not the rule if the taking is partial or temporary.
What results if there is a temporary or partial taking of a leasehold?
If the taking is temporary or partial, the T is not discharged from the rent obligation, but is entitled to compensation (i.e., a share of the condemnation award) for the taking.
Under the common law, what was the LL's liability in tort to the T?
a. Common Law
The common law of caveat lessee (let the lessee beware) is the norm. In tort, LL was under no duty to make the premises safe.
What are the 5 most important exceptions to the common law rule that LLs have no duty to make a premises safe for the tenant?
b. The Five Most Important Exceptions To The Common Law Rule

Remember: when the tenant learns of these exceptions to the harsh common law, he or she CLAPS

i. C: Common Areas
1. L must maintain all common areas—hallways and stairwells, typically.
ii. L: Latent Defects Rule (duty to warn)
1. L must warn T of all hidden (latent) defects that L knows about or should know about. However, this is simply a duty to warn, not a duty to repair!
iii. A: Assumption of Repairs
1. An LL who voluntarily makes repairs must complete them with reasonable care.
iv. P: Public Use Rules
1. LL who leases public space (such as convention hall or museum) and who should know, because of the nature of the defect and the length of the lease that T will not repair, is liable for any defects on the premises.
a. Here, the deformity is NOT insignificant. This is a substantial defect on the premises, such that T would neither have the ability, expectation, or time to fix it.
b. Example—four day lease of a museum for prom.
v. S: Short term lease of furnished dwelling
1. L is liable for any defect on site, even in tort.
2. T neither has the time or expectation that T will be liable for fixing the defect.
What is the modern trend with respect to LL's liability in tort to T?
Many courts are now holding that a LL owes a general duty of reasonable care toward residential Ts, and will be held liable for injuries resulting from ordinary negligence if LL had NOTICE of a defect and an OPPORTUNITY to repair it.
What is LL's duty to repair defects arising after the T takes possession?
A LL generally is held to have notice of defects existing before the T took possession but is NOT liable for defects arising after the T takes possession unless the LL knew or should have known of them.
What is the LL's legal duty to repair?
If the LL has a statutory duty to repair (e.g., housing codes), he is liable for injuries result from his failure to repair or negligent repair.
What about LL's liability for security?
Some courts hold LL's liable for injuries to Ts inflicted to Ts inflicted by TP criminals where the LL failed to comply with housing code provisions dealing with security, maintain ordinary security measures, or provide advertised extraordinary security measures (e.g., surveillance cameras).
What is constructive annexation?
Under the common law, an article of personal property that is so uniquely adapted to the real estate that makes no sense to separate it (e.g., keys to a door, custom curtain rods) may be considered a fixture even if it not physically annexed to the property.
Fixtures--

When items are incorporated into the realty so that they lose their identity (e.g., bricks, concrete), what results?
These items will be deemed to be "fixtures, as are items that are identifiable but whose removal would cause considerable amount of damage.
What does accession describe?
The annexor's intent to make chattel a permanent part of the real estate
Accession-- LL-T when there is an agreement.
An agreement between the LL and T is controlling on whether an annexed chattel is a fixture.
Accession-- LL-T when there is NO agreement.
Absent an agreement, a T is deemed to lack the intent to permanently improve the property, and thus may remove his annexed chattels if removal does not substantially damage the premises or destroy the chattel. Annexed chattels must be removed by teh end of the lease term (or w/in a reasonable time after the termination of an indefinite tenancy), and the tenant is responsible for repairing any damage by the removal.
Accession-- Life Tenant and Remainderman
The same rules apply in the life tenant-remainderman context as in LL-T situations, except that the life tenant's representative may remove annexations within a reasonable time after the life tenant's death.
Accession--Licensee or Trespasser and Landowner
Licensees are treated much like tenants, whereas trespassers normally lose their annexations.

Thus, absent a statute, an adverse possessor or good faith trespasser cannot remove fixtures (e.g., house erroneously constructed on a parcel that possessor believed she owned). Seom courts, however, allow a good faith trespasser recovery measured by the value added to the land (not construction costs).
What results when a seller of chattel that the O affixes to his land retains a security interest in the chattel and the O also mortgages the land and defaults on both obligations. Who has priority?
As between the seller of chattel and the mortgagee, the general rule is that the first to record his interest wins. However, under the UCC, a seller wins if the 'fixture filing" is recorded w/in 20 days after the chattel is affixed to the land. The seller must compensate the mortgagee for damage or repair caused by removal.
What is an easement?
a. Defined: the grant of a non-possessory property interest that entitles its holder to some form of use or enjoyment of another’s land, called the servient tenement.
i. Common Examples: the privilege to lay utility lines on another’s land; the easement giving its holder the right of access across a tract of land (these are affirmative easements).
Easements are either affirmative or negative--

What are affirmative easements?
i. Affirmative easement (most easements are affirmative easements):
Affirmative easements give the easement holder the right to do something on servient land
Easements are either affirmative or negative--

What are negative easements?
ii. Negative easements:
The negative easement entitles its holders to prevent the servient landowner from doing something that would otherwise be permissible. Negative easements are generally recognized in only four categories:

NEGATIVE EASEMENTS CAN ONLY BE CREATED EXPRESSLY BY WRITING SIGNED BY THE GRANTOR. THERE IS NO NATURAL OR AUTOMATIC RIGHT TO A NEGATIVE EASEMENT.

Remember LASS

1. L: Light
2. A: Air
3. S: Support
4. S: Stream water from an artificial flow.

5. S: scenic view—a minority of states recognize this fifth negative easement. Such an easement entitles its holder to assert a right against the servient land holder to not build anything on their property that would obstruct the dominant land holder’s scenic view.
An easement is either appurtenant to land or it is held in gross.

What is an easement appurtenant to the land?
i. Appurtenant
The easement is appurtenant when it benefits its holder in his physical use or enjoyment of his property. How will you know when you’ve got an easement appurtenant?

Remember “It Takes Two, Baby!”

Two parcels are involved. A dominant tenement derives the benefit and a servient tenement bears the burden.

1. Example 47
A grants B a right of way across A’s land, so that B can more easily reach his land. B’s land is benefited by the easement. In easement parlance, it is the dominant tenement. A’s land is the servient tenement. Notice that two parcels are involved.

B has easement appurtenant to B’s dominant tenement.
An easement is either appurtenant to land or it is held in gross.

What is an easement held in gross?
ii. In Gross
The easement is in gross if it confers upon its holder only some personal or pecuniary advantage that is not related to his use or enjoyment of his land. Here, servient land is burdened. However, there is no benefited or dominant tenement.

**Common Examples:
1. Right to place a billboard on another’s lot.
2. Right to swim in another’s pond
3. The power company’s right to lay power lines on another’s land.

**The servient land is burdened—This is the commonality between all of these examples—but there is NO dominant tenement.

**Example—Bean growers of America got an easement to place a billboard on your property that says “Eat beans and you’ll never have to stop for gas.” You reply, “THAT’S GROSS!” I reply, “Yes, that’s right! It’s an easement in gross!”
Is an appurtenant easement transferable?
i. The appurtenant easement passes automatically with the dominant tenement, regardless of whether it is even mentioned in the conveyance.
1. Example 48
A has an easement entitling her to cut across B’s lawn to get more easily to her land.

This is and easement appurtenant

A’s land is dominant
B’s land is servient

Now A sells her parcel to Mr. X, with no mention of the easement. Does Mr. X enjoy the easement? Yes! The easement will pass automatically with the dominant land.
ii. Note: that the burden of the easement appurtenant also passes automatically with the servient estate, unless the new owner s a bona fide purchaser w/o notice of the easement.
Is an easement in gross transferable?
iii. An easement in gross is NOT transferable unless it is for commercial purposes
1. Example 49
A has an easement entitling her to swim in B’s lake. This is an easement in gross (only one parcel involved, here!). It is not transferable because it is personal to A (its holder).
2. Example 50
Starkist has an easement to use B’s lake to fish for bait for Starkist’s tuna company. This is an easement in gross. It is transferable because the easement in gross is for commercial purposes.
How do you create an affirmative easement?
e. Creation of an affirmative easement

Remember PING

i. P: By prescription
1. An easement may be acquired by satisfying the elements of adverse possession.

Remember COAH

a. C: continuous use for statutory period
b. O: open and notorious use
c. A: actual use
d. H: hostile use—w/o servient owner’s consent.
**Note—permission defeats the acquisition of an easement by prescription. An easement by prescription requires that the use be hostile.

2. NEW YORK DISTINCTION
In New York, the appropriate statutory period is ten years.
ii. I: By implication (also known as the easement implied from existing use)
1. Example 51
A owns two lots. Lot 1 is hooked up to a sewer drain located on lot 2. A sells lot 1 to B, with no mention of B’s right to continue to use the drain on A’s remaining lot 2. The court may nonetheless imply an easement on B’s behalf if:
a. The previous use was apparent and
b. The parties expected it to survive division because it is reasonably necessary to dominant land’s use and enjoyment.
iii. N: By Necessity
1. The landlocked setting. An easement of right of way will be implied by necessity if grantor conveys a portion of his land with no way out except over part of grantor’s remaining land.
iv. G: by grant
1. An easement to endure for more than one year must be in a writing that complies with the formal elements of a deed.
2. This is because of the statute of frauds. The writing to evidence the easement is called a deed of easement.
What is the scope of an easement?
The scope of an easement is set by the terms that created it. A unilateral expansion of an easement is not allowed.
How is an easement terminated?
Remember END CRAMP


i. E: Estoppel
Here the servient owner materially changes his or her position in reasonable reliance on the easement holder’s assurances that the easement will not be enforced.

ii. N: Necessity
Easement created by necessity expire as soon as the needs ends. However, if the easement, attributable to necessity, was nonetheless created by express grant it will not end when the need ends.

iii. D: Destruction of the servient land
Destruction of the servient land, other than through the willful conduct of the servient owner will end the easement.

iv. C: Condemnation
Condemnation of the servient estate by eminent domain ends the easement.

v. R: Release
A written release, given by the easement holder to the servient owner.

vi. A: Abandonment
The easement holder must demonstrate by physical action the intent to never use the easement again

**Note: Abandonment requires physical action by the easement holder


vii. M: Merger Doctrine (also known as Unity of Ownership)
The easement is extinguished when title to easement and title to servient land become vested in the same person.


viii. P: Prescription
The servient owner may extinguish the easement by interfering with it in accordance with the elements of adverse possession.

Remember COAH

1. C: continuous interference
2. O: open & notorious
3. A: actual interference
4. H: Hostile to the easement holder
Terminating Easements:

1. Example 53
A tells B that A will no longer be using her right of way across B’s parcel. In reasonable reliance, B builds a swimming pool on B’s parcel, thereby depriving A of the easement.

What results?
In equity, A is estopped from enforcing her easement.
Terminating Easement

O conveys a portion of his ten-acre tract to A, with no means of access out except over a portion of O’s remaining land. The parties reduce their understanding to express writing. Thereafter, the city builds a public roadway affording A access out.

What results?
The easement persists because the parties reduced their understanding to express writing. Therefore, even though the need ended, the easement does not!
Terminating Easement

A has a right of way across B’s parcel. A erects a structure on A’s parcel that precludes her from ever again reaching B’s parcel.

What results?
That is the sort of action to signify abandonment. By contrast, mere non-use, or mere words, are insufficient to terminate by abandonment.
Terminating Easement

1. Example 56
A has a right of way across B’s parcel, to enable A to better reach her parcel. A’s land is dominant. A is the holder of an easement appurtenant. B’s land is servient. Later A buys B’s parcel.

What results?
As a result, A’s easement ends because A does not need the easement anymore. She now owns the land.

**Note: if complete unity of title is achieved, the easement is EXTINGUISHED. Even though there may be later separation of title, the easement is NEVER revived.

For example, assume now that A later sells the parcel over which she once enjoyed the right of way. The easement is not reinstated. To create a new easement, A must start from scratch.
Terminating Easement

A has an easement of right of way across B’s parcel. B erects a chain link fence on B’s parcel, thereby precluding A from reaching it.

What results?
Over time, B may succeed in extinguishing the easement through prescription.
What is a license?
a. Defined:
A license is the mere privilege to enter another’s land for some delineated purpose.
Are licenses subject to the statute of frauds?
b. Statute of Frauds:
Licenses are NOT subject to the SoF. Thus, you do not need a license to create a license.
Can a license be revoked?
c. Freely Revocable:
Licenses are freely revocable, at the will of the licensor, unless estoppel applies to bar revocation.
i. Ticket Cases
Tickets create freely revocable licenses. As a property right, a landowner can freely revoke a ticket, BUT this revocation may later lead to contract liability for breach of contract.
ii. Neighbors talking by the fence
1. Example 58
Neighbor A, talking by the fence with neighbor B, says, “B, you can have that right of way across my land.” This oral easement is unenforceable. It violates the SoF. An oral easement, instead, creates a freely revocable license.
iii. Estoppel
Estoppel will apply to bar revocation only when the licensee has invested substantial money or labor or both in reasonable reliance on the license’s continuation.
What is the Profit?
a. The profit entitles its holder to enter the servient land and take from it the soil or some substance of the soil (minerals, timber or oil)
b. The profit shares all the rules of easement. Everything that applies to easements applies to the profit. BUT the profit is a different subset of the servitudes family. It is not a subset of easement.
What is a covenant?
a. Defined:
The covenant is a promise to do or not to do something related to land. It is UNLIKE the easement because it is not the grant of a property interest, but rather a contract or promise regarding land. A covenant starts out as a mere contract, but it is called a covenant because it relates to land.
What is a negative covenant?
b. Negative Covenants
Covenants can be negative (known as restrictive covenants): The restrictive covenant is a promise to refrain from doing something related to land.
i. For example—I promise not to build for commercial purposes on my land or I promise not to paint my shutters brown or I promise not to have a farm on my back property.
ii. History—negative covenants were created because negative easements were so narrowly construed that there were not an effective tool to enforce promises “not” to do something on a piece of land.
What is an affirmative covenant?
c. Affirmative Covenants
Covenants can be affirmative. The affirmative covenant is a promise to do something related to the land.
i. For example—I promise to maintain our common fence.
d. How can you tell whether to construe a given promise as a covenant or as an equitable servitude?
Remedy sought!

i. On the basis of the remedy your plaintiff seeks. If the plaintiff seeks money damages, construe a given promise as a covenant. If the plaintiff seeks an injunction, construe the given promise as an equitable servitude.
When will a covenant run with the land?
When it is capable of binding successors?
In answering the question of whether a covenant runs with the land, two contests must be answered?

For example:
Neighbor A promises neighbor B that A will not build for commercial purposes on A’s property. A’s parcel is burdened by the promise. B’s parcel is benefited. Later, A seller her burdened parcel to A-1. B sells his benefited parcel to B-1. Now, A-1 has commenced manufacture of a steak sauce plant on the premises. B-1 wishes to precede against A-1 for money damages. Will B-1 succeed? It depends on whether the facts support the conclusion that the burden and benefit run with the land.Neighbor A promises neighbor B that A will not build for commercial purposes on A’s property. A’s parcel is burdened by the promise. B’s parcel is benefited. Later, A seller her burdened parcel to A-1. B sells his benefited parcel to B-1. Now, A-1 has commenced manufacture of a steak sauce plant on the premises. B-1 wishes to precede against A-1 for money damages. Will B-1 succeed? It depends on whether the facts support the conclusion that the burden and benefit run with the land.
1. Does the burden of A's promise to B run from A to A-1?
2. Does the benefit of A's promise run from B to B-1?

** Note-- ALWAYS do the burden side first. It is harder for burdens to run with the land than it is for benefits to run with the land.
What are the elements necessary for a burden to run with the land?
Remember WITHN

The elements necessary for the burden to run

1. W: Writing
You need a writing. The original promise between A & B needs to be in writing.
2. I: Intent
A & B must intend for covenant to run with the land. A&B need this requisite intent.
a. Note: courts are generous in finding the requisite intent.
3. T Touch and concern the Land
The covenant must touch and concern the land, as landowners, and not mere as members of the community at large.
a. The promise must affect the parties’ legal relations as landowners and not simply as members of the community at large.

b. **Note: Covenants to pay money to be used in connection with the land (such as homeowners’ association fees) and covenants not to compete do touch and concern the land.
4. H: Horizontal and Vertical Privity—both are required!
a. Horizontal Privity
This refers to the nexus between the original parties A&B. It requires that they be in succession of estate, meaning that they were in a grantor/grantee or LL/T or mortgagor/mortgagee relationship.
i. Horizontal privity is hard to establish. Its likely absence is the reason a burden will not run with the land. Thus, succession of estate is a very exacting construct because it requires an exacting relationship.
b. Vertical Privity
This refers to the nexus between A and A-1. It simply requires some non-hostile nexus, such as contract, devise, or descent. The only time that vertical privity will be absent is if A-1 acquired her interest through adverse possession.
5. N: Notice
A-1 had notice of the promise when she took.
What are the elements necessary for a benefit to run with the land?
Question is really asking if the benefit succeeded to grantee / whether B-1 has standing to make this claim.

Remember WITV

1. W: Writing
The original promise between A&B must be in writing.
2. I: Intent
The original parties, A&B, must have intended the benefit to run with the land.
3. T: Touch and Concern
The promise must affect the parties as landowners.
4. V: Vertical Privity
There must be a non-hostile nexus between B and B-1.

**Note: Horizontal privity is not required for the benefit to run.
This is why it is easier for benefits to run with the land than burdens to run with the land.
What is an equitable servitude?
a. Defined
The equitable servitude is a promise that equity will enforce against successors. It is accompanied by injunctive relief.
How do you create an equitable servitude?
b. To create an equitable servitude that will bind successors

Remember WITNES

i. W: Writing
The original promise must be in writing
ii. I: Intent
The original parties must intend that the original promise would be enforceable by and against assignees.
iii. T: Touch and Concern
The promise must affect the parties as landowners.
iv. N: Notice
The assignees of the burdened land has to have had notice of the promise.

**NOTE: PRIVITY IS NOT REQUIRED TO BIND SUCCESSORS
What are the basic methods of creating an easement?
1. Express Grant
2. Express Reservation
3. Implication
4. Prescription
How do you create an easement by express grant?
Any easement must be in writing and signed by the holder of the servient tenement unless its duration is brief enough (commonly 1 year or less) to be outside of the coverage of a particular state's SoF.

A grant of easement must comply with all the formal requisites of a deed.
How do you create an easement by express reservation?
An easement by reservation arises when a grantor conveys title to land but reserves teh right to continue to use the tract for a special purpose.

EXAM TIP: watch for fact patterns in which a grantor reserves an easement for someone else. Under the majority view, an easement can be reserved only for the GRANTOR. An attempt to reserve an easement for anyone else is VOID.
How do you create an easement by implication?
An easement by implication is created by operation of law; it is an exception to the SoF. There are three types of easements by implication:

1. Easement implied from existing use ("quasi-easement")
2. Easement implied without any existing use
3. Easement by necessity.
An easement may be implied from existing use if:
1. prior to the division of a single tract;
2. an apparent and continuous use exists on the "servient" part;
3. That is reasonably necessary for the enjoyment of the "dominant" part; and
4. The court determines that the parties intended the use to continue after division of the land.
Easements may be implied without any existing use in only two limited situations, describe these situations.
1. Subdivision Plat: when lots are sold in a subdivision with reference to a recorded plat or map that also shows streets leading to the lots, buyers of the lots have implied easements to use the streets to access their lots.

2. Profit a Prendre: the holder of the profit a prendre has an implied easement to pass over the surface of the land and to use it as reasonably necessary to extract the product.
When can a license become irrevocable?
1. Estoppel: if a licensee invests substantial amounts of money or labor in reliance on the license, the licensor is estopped to revoke. The license becomes an easement by estoppel, which lasts until the holder receives sufficient benefit to reimburse him for his expenditures.

2. License coupled with an interest: a license couple with an interest is irrevocable as long as the interest lasts. For example, the vendee of a chattel may enter the seller's land to remove the chattel, and a future interest holder may enter and inspect the land for waste.
What does a failed attempt to create an easement result in?
It results in a license. Thus, if a grantor orally grants an easement for more than one year, it is unenforceable because it is not in writing. The grantee does not have a valid easement but he does have a license.
How may a covenant be terminated?
As with all other non-possessory interests, a covenant may be terminated by:
1. written release,
2. merger of the benefited and burdened estates, or
3. the condemnation of the burdened property.
Generally, as with real covenants, equitable servitudes are created by covenants contained in a writing that satisfies the SoF. There is ONE EXCEPTION-- what is it?
Negative equitable servitudes may be implied from a common scheme for development of a residential subdivision. Thus, if a developer subdivides land, and some deeds contain negative covenants while others do not, the negative covenants will be binding on all parcels provided there was a common scheme of development and notice of the covenants.
Common Scheme-- Implied negative easements.

When will reciprocal negative servitudes be implied?
Only if, at the time the sales in the subdivision began, the developer had a plan that all parcels would be subject to the restriction.

The scheme may be evidenced by:
1. a recorded plat,
2. a general pattern of restrictions, or
3. oral representations to early buyers
Common Scheme-- Implied negative easements.

What results if the scheme arises after some lots are sold?
No implied servitude can arise with respect to the lots already sold w/o express covenants.

So remember, if Lots 1-5 are sold w/o a restrictive covenant and the deeds to Lots 6-50 contain one, the covenant cannot be enforced as a servitude against the owners of Lots 1-5.
How can a grantee be bound by a covenant that is not in her deed?
To be bound by a covenant not in her deed, a grantee must have had notice of the covenants in the deeds of the others in the subdivision.

Notice may be ACTUAL (direct knowledge of covenants), INQUIRY (neighborhood appears to conform to common restrictions), or RECORD (prior deed with covenant in grantee's chain of title).
Is privity of estate required for an equitable servitude to be enforceable by and against assignees?
No!

In contrast to real covenants, which require vertical and horizontal privity of estate for burdens to run, and vertical privity for benefits to run, no privity of estate is required for an equitable servitude to be enforceable by and against assignees.
ii. Two elements of the general or common scheme doctrine, what are they?
1. When the sale began, the subdivider (A) had a general scheme of residential development which included D’s lot.
2. The defendant lotholder (B) had notice of the promise continued in the prior deeds.

There are three forms of notice potentially imputed to defendant

Remember AIR

a. A: Actual notice
Defedant had literal knowledge of the promise in the prior deeds.
b. I: Inquiry notice
(synonymous with the law of the land) Both are forms of constructive notice—neighborhoods conforms to common restrictions
c. R: Record notice
This is the form of notice sometimes imputed to buyers on the basis of public documents.

3. Note on Record Notice
With respect to record notice, the courts are split. Some take the view that a subsequent buyer is on record notice of the contents of prior deeds transferred to others by a common grantor. The better view, taken by other courts, is that the subsequent buyer does NOT have record notice of the contents of those prior deeds transferred to others by the common grantor.
a. This is seen as the better view because it is less burdensome to the defendant title searcher.
b. New York takes this view.
What are the equitable defenses to enforcement of an equitable servitude?
1. unclean hands- the person seeking enforcement is violating a similar restriction on his own land

2. Acquiescence - a benefited party acquiesced in a violation of the servitude by one burdened party

3. Estoppel - A benefited party acted in such a way that a reasonable person would believe the covenant was abandoned

4. Laches - the benefited party fails to bring suit against the violator w/in a reasonable time

5. The neighborhood has changed so significantly that enforcement would be inequitable.

6. i. Changed conditions
The changed circumstances alleged by the party seeking release from the terms of an equitable servitude must be so pervasive that the entire area or subdivision has changed.

What is NEVER good enough? Mere pockets of limited change.
What is adverse possession?
A. Basic Concept
a. Possession, for a statutorily prescribed period of time can, if certain elements are met, ripen into title.
What are the elements of adverse possession?
B. Elements of adverse possession

Remember COAH

For possession to ripen into title, it must be
a. C: Continuous
Uninterrupted for the statutory period

Note: in New York, the statutory period is ten years.

b. O: Open and Notorious
The sort of possession the usual owner would make under the circumstances
c. A: Actual
Entry must be literal. This element cannot be accomplished hypothetically or symbolically—you can’t make entry by a letter of intent.
d. H: Hostile
Possessor does have the true owner’s consent to be there.
Is the adverse possessor's intent or mental state relevant for a claim of adverse possession?

MBE v. NY
a. FOR THE MULTISTATE: possessor’s subjective state of mind is irrelevant.

b. FOR NEW YORK: the possessor must have a good faith belief (albeit a mistaken one) that the land that he is occupying is indeed his.
i. In New York, it is considered bad faith, and an impediment to a successful adverse possession claim, for the claimant to know that he is occupying another’s land. Thus, in New York only hostile possessors of land that have a good faith belief that the land that they are possessing is theirs will be able to gain title to that land through adverse possession.
Adverse Possession--

When is tacking allowed?
a. One adverse possessor may tack on to his time with the land his predecessor’s time, so long as there is privity which is satisfied by any non-hostile nexus such as blood, contract, deed, or will.

Note-- tacking is NOT allowed when there has been an ouster.
Adverse Possession

When is tacking NOT allowed?
tacking is NOT allowed when there has been an ouster.
Adverse possession--

When will the statute of limitations not run with respect to those who have disabilities?
a. The statute of limitations will not run against a true owner who is afflicted by a disability AT THE START of the adverse possession. Common disabilities include insanity, infancy, and imprisonment.

This rule does not apply if the TO developed a disability after the AP had already commenced.
How can an equitable servitude be terminated?
Like other nonpossessory interests, an ES may be extinguished by:

1. written release from the benefit holders
2. merger of the benefited and burdened estates, or
3. condemnation of the burdened property.
Party Walls & Common Driveways

How will a court treat a wall erected partly on the property of each of two adjoining landowners?
They court will treat it as belonging to each owner to the extent it rests upon her land.

Courts will also imply mutual cross-easements of support, with the result that each party can use the wall or driveway and neither party can unilaterally destroy it.
Party Walls & Common Driveways

How is a Party Walls or Common Driveway created?
A written agreement is required by the SoF for the express creation of a party wall or common driveway agreement, but an "irrevocable license" can arise from detrimental reliance on a parol agreement. Party walls and common driveways can also result from implication or prescription.
Party Walls & Common Driveways

If party wall or common driveway owners agree to be mutually responsible for maintaining the wall or driveway, what is the effect?
The burden and benefit of these covenants run to the successive land owners of each parcel.
Why does possession of one co-tenant usually fail to entitle that co-T to obtain title to the whole estate through adverse possession?
Possession of one co-T is usu. not adverse to his co-Ts because each co-T has the right to possession of all the property. A co-T must oust others or make an explicit declaration that he is claiming exclusive dominion to create adverse possession.
Adverse possessor-- what is the effect of the covenants in true owner's deed on the adverse possessor?
If an adverse possessor uses the land in violation of a restrictive covenant in the owner's deed fro the limitations period, she takes free of the restriction. If, however, the possessor's use complies with such a covenant, she takes title subject to the restrictions.
What type of land can never be adversely possessed?
Title to government-owned land and land registered under a Torrens system cannot be acquired by adverse possession.
Conveyancing--

A. Every conveyance of real estate consists of a two-step process, what are they?
a. Step I: The land contract, which endures until Step II
b. Step II: the closing, where the deed because our operative document.
a. The Land Contract And The Statute Of Frauds

The land contract must comport with the SoF. What is the requisite standard?
i. Standard: the land contract must:
1. be in writing
2. signed by the party to be bound / the party against whom enforcement is sought,
3. describe Blackacre, and
4. state some consideration
Land contracts--

ii. Defect in Land Description: When the amount of land recited in the land contract is more than the actual size of the parcel, the grantee’s specific remedy is:
1. Specific performance with a pro rata reduction in price (note—specific performance is always the preferred remedy with the sale of land).
Land Contracts

iii. Exception to SoF: the one exception to the statute of frauds is the Doctrine of Part Performance. If, on the facts, you have two of the following three items, the doctrine of part performance is satisfied and equity will decree specific performance of an oral contract for the sale of land. List these three items.
1. B takes possession of the land
2. B pays all or a part of the purchase price for the land; AND/OR
3. B makes substantial improvements
Land Contract--

When does the risk of loss pass to the buyer?

MBE vs NY
i. When ownership passes (MBE): apply the doctrine of equitable conversion (equity regards as done that which ought to be done). Thus, in equity, once the contract is signed, B owns the land, subject to the condition that he pays the purchase price at closing.
1. Destruction:
a. MBE:
If, in the interim between contract and closing, Blackacre is destroyed through no fault of either party, B bears the risk of loss, unless the contract says otherwise.
i. Note: modern day contracts will usually reallocate loss to the party in possession of the property.
b. NY DISTINCTION:
In New York, so long as the buyer is without fault, the risk of loss remains with the seller until the buyer has title or takes possession.
i. NY view is much more progressive.
Land Contracts--

What are the two implied promises in every land contract?
1. Marketable title
2. No fraud or misrepresentation
Land Contracts

What is marketable title?
1. Standard:
Title free from reasonable doubt, which means free from lawsuits and the threat of litigation.
Land Contracts

There are three circumstances that will render title unmarketable. What are they?
a. Adverse possession:
If even part of the title rests on adverse possession, it is unmarketable. Seller must be able to provide good record title.
b. Encumbrances:
Marketable title means an unencumbered fee simple. Thus, servitudes and mortgages render title unmarketable, unless the buyer has waived them.
i. Note: Seller has the right to satisfy any outstanding mortgage or lien at the closing, with the proceeds of the sale. Thus, buyer cannot claim title is unmarketable because it is subject to a mortgage prior to closing, so long as the parties understand that the closing will result in the mortgage being satisfied or discharged.
c. Zoning violations:
Title is unmarketable when Blackacre VIOLATES a zoning ordinance. Note, only a violation of a zoning ordinance will render title unmarketable. This results because this violation then becomes a threat of legal action. However, the mere presence of a zoning ordinance will not render title unmarketable.
Land Contract

Seller impliedly promises not to make any false statements of material fact when entering into the land contract.

What is the effect of omissions or disclaimers?
1. Representations & Omissions
The majority of states now also hold seller liable for failing to disclose latent material defects. Thus, seller is liable for his material lies and his material omissions (silence is NOT golden here!).

2. Disclaimers
If the contract contains a general disclaimer of liability (for example, “property sold as is” or “with all faults”), this disclaimer will NOT excuse the seller from liability for fraud or for failure to disclose.
Land Contracts--

Is there an implied warranty of habitability in a land contract?
No!

d. No Implied Warranties of Fitness or Habitability: the land contract contains no implied warranties of fitness or habitability.
i. Common Law Norm: is caveat emptor (buyer beware!)
ii. Exception: the implied warranty of fitness and workmanlike construction applies to the sale of a new home by a builder-vendor.
Closing--

What is the operative legal document after the closing?
The deed.

The deed passes legal title from the seller to the buyer.
Closing--

b. How does the deed pass legal title from seller to buyer?
Remember that the deed must be LEAD (Lawfully executed and Delivered)
Closing--

What is required for a deed to be lawfully executed?
i. Lawful Execution of a Deed:
1. Standard: the deed must be in writing and signed by the grantor.
a. Note: the deed need not recite consideration, nor must consideration pass to make a deed valid.

2. Description of the Land: does not have to be perfect for the deed to be valid and enforceable instrument.
a. What is required: the law requires only an unambiguous description and a good lead.
Closing--

How is the delivery requirement satisfied?
1. Overview:
a. The delivery requirement could be satisfied when grantor physically or manually transfers the deed to the grantee.
i. It is permissible here to use the mail or an agent or a messenger.

b. However, delivery does not necessarily require actual physical transfer of the deed, itself.

2. Standard:
The standard for delivery is a legal standard, and is a test solely of present intent.
a. Ask: did grantor have the present intent to be bound irrespective of whether or not the deed itself was literally handed over?
Closing--

What is the effect of a recipient's rejection of the deed with respect to the delivery requirement?
3. Effect of Rejection:
a. Express Rejection:
Recipient’s express rejection of the deed defeats delivery.
b. Oral Conditions Void:
If a deed, absolute on its face, is transferred to grantee with an oral condition, the oral condition drops out—it is NOT provable and delivery is accomplished
1. Rationale: oral conditions can raise too many issues of fraud.
Can the grantor complete delivery through an escrow agent?

If so, what are it's advantages?
4. Delivery by Escrow:
Grantor may deliver an executed deed to a third party, known as an escrow agent, with instructions that the deed be delivered to grantee once certain conditions are met. Once the conditions are met, title passes to the grantee.
a. Advantage of Escrow:
If grantor dies or becomes incompetent or is otherwise unavailable before the express conditions are met, title still passes from escrow to the grantee once the conditions are met.
iii. Covenants for title and the three types of deeds.

What is a quitclaim deed?
1. Quitclaim Deed:
It contains no covenants. Grantor isn’t even promising that he has the title to convey. This is the worst deed a buyer could hope for.
a. Marketable Title:
However, grantor does implicitly promise in the land contract to provide marketable title at THE CLOSING. This is a finite promise. Any problems post-closing and grantor is off the hook. Thus, this promise is only good until closing.
iii. Covenants for title and the three types of deeds

What is a general warranty deed?
2. General Warranty Deed
This is the best deed a buyer could hope for. The general warranty deed warrants against ALL defects in title, including those due to grantor’s predecessors.
iii. Covenants for title and the three types of deeds

What is a special warranty deed?
3. Statutory Warranty Deed
Provided for by statute in many states, this deed contains two promises that grantor makes only on behalf of himself. **Note: Grantor makes no representations on behalf of his predecessors in interest.
a. Grantor promises that he has not conveyed his estate to any other grantee.
b. Grantor promises that Blackacre is free from encumbrances made by Grantor.
c. NY DISTINCTION
In New York, the special warranty deed is called a bargain and sale deed.
2. General Warranty Deed

a. Covenants
The general warranty deed typically contains SIX covenants The first three are PRESENT covenants and the last three are FUTURE covenants.

What are the present covenants and when are they breached?
i. Present Covenants:
Present covenants are breached, if ever, at the time the deed is delivered. Thus, the SoL for breach of present covenant begins to run from the instant the deed is delivered.
1. Covenant of Seisin
Promise that grantor owns estate.
2. The Covenant of the Right to Convey
Promise that grantor has the power to transfer title. Meaning, grantor is under NO disability, he is of sound mind and of requisite age, and there are no temporary restraints on alienation.
3. The Covenant Against Encumbrances
Promise that there are no servitudes or mortgages on Blackacre.
2. General Warranty Deed


a. Covenants
The general warranty deed typically contains SIX covenants The first three are PRESENT covenants and the last three are FUTURE covenants.

What are the future covenants and when are they breached?
ii. Future Covenants
A future covenant is breached, if ever, until grantee is disturbed in possession. Thus, the SoL for breach of future covenant will not begin to run until that future date.
1. Covenant for Quiet Enjoyment
Promise that grantee will not be disturbed in possession by a third party’s lawful claim of title.
2. Covenant of Warranty
Promise that Grantor will defend Grantee against lawful claims of title by others
3. Covenant for Further Assurances
Promise that Grantor will do what is needed in the future to protect the title if it turns out to be flawed.
What are the two bright line rules with respect to the recording system statutes?
**Remember Two Brightline Rules:
1. If B is a BONA FIDE PURCHASER, and we are in a NOTICE jurisdiction, B wins, regardless of whether or not she records before A does.
2. If B is a BONA FIDE PURCHASER and we are in a race-notice jurisdiction, B wins if she records properly before A does.
Why do we have recording statutes?
a. Purpose for Recording Acts: First recording acts exist only to protect bona fide purchasers and mortgagees (creditors!)
Who counts as a bona fide purchaser?
b. Bona fide purchasers: one who
i. Buys Blackacre for value AND
ii. Without notice that someone else got there first.
A purchaser must give value in consideration for a land purchase to be a bona fide purchaser of the land. What are two routine value questions?
c. Value: two routine value questions
i. Bargain basement sales:
As long as B remits substantial pecuniary consideration, he is a buyer (i.e., you can be deemed a buyer even if you pay $50k for property with a FMV of $100k).
ii. The case of the doomed donee
Recording statutes do NOT protect donees, heirs, or devisees, unless the shelter rule applies.
What does chain of title refer to?
CHAIN OF TITLE, which refers to that sequence of recorded documents capable of giving record notice to later takers. In most states, the chain of title is established through a title search of grantor/grantee index.
Chain of Title--

What are three discrete chain of title problems?
1. The Shelter Rule
2. The Problem of the Wild Deed
3. Estoppel by Deed
Chain of Title--

What is the shelter rule?
i. The Shelter Rule
One who takes from a BFP will prevail against any entity that the transferor or BFP would have prevailed against. In other words, the transferee “takes shelter” in the status of her transferor, and thereby “steps into the shoes” of the BFP even though she otherwise fails to meet the requirements of BFP status.
1. Rationale:
The shelter rule aims to protect B, the BFP, by making it easier for B to transfer successfully.
Chain of Title--

What is the problem of the wild deed?
ii. The Problem of the Wild Deed
If a deed, entered on the records (A to B) has a grantor unconnected to the chain of title (O to A), the deed is a wild deed. It is incapable of giving record notice of its existence.
Chain of title--

What is estoppel by deed?
iii. Estoppel by Deed:
One who conveys realty in which he has not interest (here X) is estopped from denying the validity of the conveyance if he later acquires the previously transferred interest.
2. Example 71
O conveys to A, who does not record. Later O conveys to B, a BFP, who records. B then conveys to C, who is a mere donee or who has actual knowledge of the O to A transfer. In the contest of A versus C, who prevails?
C will win, in both a notice and race-notice state because of the shelter rule. C steps into the shoes of B, who was a BFP who recorded first.
1. Example 72: O sells Blackacre to A, who does not record. Then, A sells to B. B records the A-to-B deed.

Note: the A to B deed, although recorded, is NOT connected to the chain of title, because it contains a missing grantor. The O to A link is missing from the records. Therefore, the A to B deed is a wild deed. The recording systems takes offense to wild deeds—it pretends that it does NOT exist.

O, our initial grantor and dirty double dealer, then sells Blackacre to C. Assume that C has no actual or inquiry knowledge of the O-to-A or A-to-B conveyance. C records. O has skipped town. In the contest of B vs. C, who prevails?
C will win, in both a notice and a race-notice state. C wins in a notice state because at the time C takes she is a BFP. C wins in a race-notice state because she is a BFP who wins the race to record (wild deed is incapable of giving record notice).
1. Example 73: In 1950, O owns Blackacre. He is thinking about selling it to X, but for now decides against it. In 1950, X, who does not own Blackacre, sells it anyway, to A. A records. In 1960, O finally sells Blackacre to X. X records in 1960. In 1970, X, a double dealer, sells Blackacre to B. B records.

What results?
Effect: B owns Blackacre in 1970, as long as he is a BFP. B will win in a notice system because he is a BFP. B will also win in a race-notice system because he is a BFP and he won the race to record. This results because A’s 1950 recording is a nullity. A recorded too early. B’s title searcher would not find A’s deed because one is entitled to assume that no one sells land until they first own it. Thus, B’s title searcher would not discover X’s 1950 pre-owned transfer to A.
What is a mortgage?
a. Definition:
A mortgage is the conveyance of a security interest in land, intended by the parties to be collateral for the repayment of a debt.
What elements must be present to create a mortgage?
b. Elements
A mortgage is the union of two elements:
i. Debt, and
ii. A voluntary transfer of a security interest in debtor’s land to secure the debt
Are there any SoF requirements with respect to mortgages?
Yes.


d. Statute of Frauds
A mortgage typically must be in writing to satisfy the SoF. This is the legal mortgage.
What is an equitable mortgage?
i. A landowner needing to raise money may “sell” the land to a person who will pay cash and may give the “buyer an absolute deed rather than a mortgage.” This may seem to be safer than a mortgage loan to the creditor and may seem to have tax advantages. However, if the court concludes, by clear and convincing evidence, that the deed was really given for security purposes, they will treat it as an “equitable” mortgage and require that the creditor foreclose it by judicial action, like any other mortgage.
b. What factors does a court consider when determining whether to treat an absolute deed as an equitable mortgage:
i. The existence of a debt or promise of payment by the deed’s grantor;
ii. The grantee’s promise to return the land if the debt is paid;
iii. The fact that the amount advanced to the grantor/debtor was much lower than the value of the property,
iv. The degree of the grantor’s financial distress, and
v. The parties’ prior negotiations.
Mortgages--

i. C lends O $100k so that O can purchase Blackacre. C takes as collateral a security interest in Blackacre, the very parcel that C’s extension of value enabled O to acquire. C is a purchase money mortgagee.

What results?
Assuming that C records properly, he has first priority n the parcel he financed.
Mortgages--

i. C1 lends $200k to O, taking a security interest in all of O’s real estate holdings, “whether now owned or hereafter acquired.” (This clause is called an “after-acquired collateral clause.” It is also referred to as a floating lien. It is permissible and can be extremely helpful and efficient. C1 records the mortgage note. Six months later, C2 lends O $50,000 to enable O to acquire a parcel known as Blueacre, taking back a security interest in Blueacre and recording the interest. Subsequently, O defaults on all outstanding obligations. All that he has left is Blueacre. Who has first priority, C1 or C2?
1. C2, the purchase money mortgagee has first priority in Blueacre, the parcel it financed. This is a fair and equitable result because but for the purchase money mortgagee’s infusion of money into the deal, Blueacre would never have been purchased (assuming the PMM was properly recorded).
Mortgages--

What are the rights of the debtor with respect to the land?
a. Debtor-Mortgagor
Once a mortgage has been created, unless and until foreclosure, the debtor-mortgagor has title and the right to possess the land.
Mortgages--

What are the rights of the creditor with respect to the land?
b. Creditor-Mortgagee
The creditor-mortgagee has a lien and the right to look to Blackacre if there is a loan default.
Mortgages--

With respect to transferring interests in mortgaged property, what are the rights of the parties?
a. Rights of Parties
All the parties to a mortgage can transfer their interests. The mortgage automatically follows a properly transferred not.
Mortgages--

How can a creditor transfer his interest in mortgaged property?
i. Transfer: The creditor-mortgagee can transfer his interest by:
1. Endorsing the note & delivering it to the transferee, OR
a. If the note is endorsed and delivered, the transferee is eligible to become a holder in due course. This means that he takes the note free of any personal defenses that could have been raised against the original creditor.
2. Executing a separate document of assignment
Mortgages--

What are personal defenses against the enforcement of a mortgage against a piece of property and what are their effect?
ii. Personal Defenses:
Personal defenses include: lack of consideration, fraud in the inducement, unconscionability, waiver by estoppel.
1. Effect: However, the holder of the mortgage may, in due course, foreclose the mortgage despite the presence of any such personal defenses.
Mortgages--

A holder in due course of a mortgage is still subject to real defenses. What real defenses are there?
iii. Real Defenses
By contrast, the holder in due course is still subject to “real” defenses that the maker might raise.

Remember MAD FIFI4

a. M A: Material Alteration
b. D: Duress
c. F I F: Fraud in Factum (a lie about the instrument)
i. Ex: a debtor who does not speak much English is told that he is signing a credit card application, but in reality he is signing a mortgage. This is fraud in the factum.
d. I: Incapacity
e. I:Illegality
f. I:Infancy
g. I: Insolvency
Mortgages--

What criteria must be met for someone to be a holder in due course?
1. In due course: to be a holder in due course of the note, the following criteria must be met:
h. The note must be negotiable, made payable to the named mortgagee;
i. The original note must be endorsed, signed by the named mortgagee;
j. The original note must be delivered to the transferee. A photocopy is unacceptable;
k. The transferee must take the note in good faith, without notice of any illegality; AND
l. The transferee must pay value for the note, meaning some amount that is more than nominal.
If a debtor-mortgagor sells Blackacre, which is now mortgaged, what results?
The lien will remain on the land so long as the mortgage instrument has been properly recorded.
i. Example 75: On January 10, Madge took out a $50,000 mortgage on Blackacre with First Bank. First Bank promptly and properly recorded its interest on January 10. Thereafter, on January 15, Madge sold Blackacre to Buyer. Buyer had not actual knowledge of the lien. Buyer promptly and properly recorded its deed.

What results?
Buyer holds subject to First Bank’s mortgage. All recording statutes apply to mortgages as well as deed. Thus, a later buyer takes subject to a properly recorded lien.

It does not matter which recording statute this jurisdiction has enacted. In a notice state, Buyer takes subject to the lien because buyer is on record notice of the lien at the time the buyer takes. In a race-notice state, Buyer takes subject to the lien because buyer is on record notice & First Bank won the race to record.
ii. Example 76: Assume now that on January 10, Madge took out a $50,000 mortgage on Blackacre with First Bank. On January 15, Madge sold Blackacre to Buyer. Buyer had no knowledge of the lien. On January 20, First Bank recorded its mortgage in Blackacre. On January 30, Buyer recorded his deed to Blackacre. Does Buyer hold subject to First Bank’s mortgage?
This time it depends on which recording statute has been enacted.

Race-notice: buyer loses because he lost the race to record.

Notice: buyer wins so long as he was a BFP when he took. In a notice state, a subsequent BFP prevails over a prior grantee or mortgagee who has not yet recorded properly at the time BFP takes.
Land Contracts--

What is the doctrine of equitable conversion?
Under this doctrine, once a contract is signed, equity regards the buy as the owner of the real property. The seller's interest (the right to the proceeds of sale) is considered personal property. The bare legal title that remains in the seller is considered to be held in trust for the buyer. The right to possession follows the bare legal title, however; thus, the seller is entitled to possession until closing.
Land Contracts--

Risk of Loss-- explain who bears the burden?
If the property is destroyed (without fault of either party) before closing, the majority rule places the risk on the buyer.

Some states, however, have enacted the Uniform Vendor and Purchaser Risk Act, which places the risk on the seller unless the buyer has title or possession at the time of loss.

EXAM TIP: even though the risk of loss is on the buyer, if the property is damaged or destroyed, the seller must credit any fire or casualty insurance proceeds he receives against the purchase price the buyer is required to pay.
Land Contracts--

What happens if a party to a land sale contract dies before the contract is completed?
Under the doctrine of equitable conversion, the seller's interest will pass as personal property and the buyer's interest passes as real property. Thus, if the seller dies, bare legal title passes to his heirs or devisees, but they must give up title to the buyer at closing. If the buyer dies, his heirs or devisees can demand a conveyance of the land at closing.

EXAM TIP: if the property is specifically devised by will, check to see whether ademption or exoneration rules apply.
Land Contracts--

How might title be rendered unmarketable?
1. Defects in Record Chain of Title (on MBE title acquired through adverse possession is unmarketable).

2. Encumbrances (mortgages, liens, restrictive covenants, easements, and significant encroachments render title unmarketable. However, an easement that is beneficial, visible, or known to the buyer does NOT impair marketability of title).
i. EXAM TIP: remember that a seller has the right to satisfy a mortgage or lien AT CLOSING with the proceeds of the sale. Thus, a buyer cannot claim that title is unmarketable at closing bc it subject to a mortgage prior to closing, if the closing will result in marketable title.

3. Existing Violation of Zoning Restrictions (zoning restrictions, in of themselves, do render title unmarketable)
EXAM TIP: if the closing has already occurred, which answer choices should you avoid?
Those referring to the implied covenant of marketability of title.

Once closing occurs and the deed changes hands, the seller is no longer liable on this implied contractual covenant. The seller is then liable only for express promises made in the deed.
Land Contracts--

What is buyer's remedy if title is not marketable?
The buyer must notify the seller that his title is unmarketable and give him reasonable time to cure the defects.

If the seller fails to cure the defects, the buyer's remedy include rescission, damages, specific performance with abatement, and a quiet title suit.

But if closing occurs, the contract and deed merge, and the seller's liability on the implied contractual covenant
Land Contracts--

EXAM TIP: should seller be let off the hook for unmarketable title if the contract calls for a quitclaim deed?
No!

Don't be fooled into choosing the answer that lets the seller off the hook for title defects because the contract calls for a quitclaim deed. A quitclaim deed does not in any way affect the implied covenant to provide marketable title.
If a debtor-mortgagor sells Blackacre, which is now mortgaged, what results?
The lien will remain on the land so long as the mortgage instrument has been properly recorded.
i. Example 75: On January 10, Madge took out a $50,000 mortgage on Blackacre with First Bank. First Bank promptly and properly recorded its interest on January 10. Thereafter, on January 15, Madge sold Blackacre to Buyer. Buyer had not actual knowledge of the lien. Buyer promptly and properly recorded its deed.

What results?
Buyer holds subject to First Bank’s mortgage. All recording statutes apply to mortgages as well as deed. Thus, a later buyer takes subject to a properly recorded lien.

It does not matter which recording statute this jurisdiction has enacted. In a notice state, Buyer takes subject to the lien because buyer is on record notice of the lien at the time the buyer takes. In a race-notice state, Buyer takes subject to the lien because buyer is on record notice & First Bank won the race to record.
ii. Example 76: Assume now that on January 10, Madge took out a $50,000 mortgage on Blackacre with First Bank. On January 15, Madge sold Blackacre to Buyer. Buyer had no knowledge of the lien. On January 20, First Bank recorded its mortgage in Blackacre. On January 30, Buyer recorded his deed to Blackacre. Does Buyer hold subject to First Bank’s mortgage?
This time it depends on which recording statute has been enacted.

Race-notice: buyer loses because he lost the race to record.

Notice: buyer wins so long as he was a BFP when he took. In a notice state, a subsequent BFP prevails over a prior grantee or mortgagee who has not yet recorded properly at the time BFP takes.
Land Contracts--

What is the doctrine of equitable conversion?
Under this doctrine, once a contract is signed, equity regards the buy as the owner of the real property. The seller's interest (the right to the proceeds of sale) is considered personal property. The bare legal title that remains in the seller is considered to be held in trust for the buyer. The right to possession follows the bare legal title, however; thus, the seller is entitled to possession until closing.
Land Contracts--

Risk of Loss-- explain who bears the burden?
If the property is destroyed (without fault of either party) before closing, the majority rule places the risk on the buyer.

Some states, however, have enacted the Uniform Vendor and Purchaser Risk Act, which places the risk on the seller unless the buyer has title or possession at the time of loss.

EXAM TIP: even though the risk of loss is on the buyer, if the property is damaged or destroyed, the seller must credit any fire or casualty insurance proceeds he receives against the purchase price the buyer is required to pay.
Land Contracts--

What happens if a party to a land sale contract dies before the contract is completed?
Under the doctrine of equitable conversion, the seller's interest will pass as personal property and the buyer's interest passes as real property. Thus, if the seller dies, bare legal title passes to his heirs or devisees, but they must give up title to the buyer at closing. If the buyer dies, his heirs or devisees can demand a conveyance of the land at closing.

EXAM TIP: if the property is specifically devised by will, check to see whether ademption or exoneration rules apply.
Land Contracts--

How might title be rendered unmarketable?
1. Defects in Record Chain of Title (on MBE title acquired through adverse possession is unmarketable).

2. Encumbrances (mortgages, liens, restrictive covenants, easements, and significant encroachments render title unmarketable. However, an easement that is beneficial, visible, or known to the buyer does NOT impair marketability of title).
i. EXAM TIP: remember that a seller has the right to satisfy a mortgage or lien AT CLOSING with the proceeds of the sale. Thus, a buyer cannot claim that title is unmarketable at closing bc it subject to a mortgage prior to closing, if the closing will result in marketable title.

3. Existing Violation of Zoning Restrictions (zoning restrictions, in of themselves, do render title unmarketable)
EXAM TIP: if the closing has already occurred, which answer choices should you avoid?
Those referring to the implied covenant of marketability of title.

Once closing occurs and the deed changes hands, the seller is no longer liable on this implied contractual covenant. The seller is then liable only for express promises made in the deed.
Land Contracts--

What is buyer's remedy if title is not marketable?
The buyer must notify the seller that his title is unmarketable and give him reasonable time to cure the defects.

If the seller fails to cure the defects, the buyer's remedy include rescission, damages, specific performance with abatement, and a quiet title suit.

But if closing occurs, the contract and deed merge, and the seller's liability on the implied contractual covenant
Land Contracts--

EXAM TIP: should seller be let off the hook for unmarketable title if the contract calls for a quitclaim deed?
No!

Don't be fooled into choosing the answer that lets the seller off the hook for title defects because the contract calls for a quitclaim deed. A quitclaim deed does not in any way affect the implied covenant to provide marketable title.
Land Contracts--

Explain rules regarding time of performance
Presumption: time is NOT of the essence in real estate contracts.

Thus, closing date is NOT absolutely binding, and a party late in tendering her own performance can still enforce the contract if she tenders w/in a REASONABLE TIME (e.g., two months) after the closing date.

However, presumption can be rebutted or overcome if:
1. the contract so states
2. the circumstances indicate that was the parties' intent, OR
3. one party gives the other party notice that time is of the essence.
Land Contract--

What results if time is of the essence and one party fails to tender performance on time?
The party who fails to tender performance is in breach and may not enforce the contract.

Even if time is not of the essence, a party who is late in tendering performance is liable for incidental losses.
Land Contracts--

What results if neither party tenders performance?
The buyer's obligation to pay and the seller's obligation to convey are concurrent conditions. Thus, neither party is in breach until the other tenders performance (even if the closing date passes). If neither party tenders performance, the closing date is extended until one of them does so.
Land Contracts--

When is a party's tender excused?
A party need not tender performance if the other party has repudiated the contract or it is impossible (e.g., unmarketable title that cannot be cured) for the other party to perform.
Land Contracts--

What are a nonbreaching party's remedies for breach of the sales contract?
The nonbreaching party is entitled to damages (difference between contract price and market value on date of breach, plus incidental costs) or, because land is unique, specific performance. Note that if the buyer wishes to proceed despite unmarketable title, she can usually get specific performance with an abatement of the purchase price.
Land Contracts--

What are earnest money deposits? Are they enforceable?
Sales contracts usually require the buyer to deposit "earnest money" with the seller, and provide that if the buyer defaults in performance, the seller may retain this money as liquidated damages. Courts routinely uphold the seller's retention of earnest money if the amount appears to be reasonable in light of the seller's anticipated and actual damages.
Land Contracts--

What are seller's liabilities for defective property?
1. Warranty of fitness or quality-- new construction only (Ks of sale and deeds of real property carry no implied warranty of qualities or fitness for purpose. However, a majority of courts now recognize a warranty of fitness or quality in the sale of a new house by the builder.

2. Negligence of Builder-- a person may sue a builder for negligence in performing a building contract. Some courts permit the ultimate vendee to sue the builder despite lack of privity.

3. Liable for defects--
(i) misrepresentation-- seller liable for defects which he knowingly or negligently made a false statement to the buyer if the buyer relied on the statement and it materially affected the value of the property.
(ii) Active concealment of defects
(iii) Failure to disclose defects latent defects-- (a) S must know or have reason to know about defect; (b) defect must be latent, and (c) defect must be serious.

Note-- a general disclaimer is not sufficient to over S's liability for the about defects.
Land Contracts--

Who does a title insurance policy protect?
Only the person who owns the property and does not run with the land to subsequent purchasers.
Mortgages--

d. Personal Liability: Who is personally liable on the debt if O, our debtor-mortgagor, sells Blackacre to B?
i. If B has “assumed the mortgage”
Both O and B are personally liable. B is primarily liable and O remains secondarily liable.
ii. If B takes “subject to the mortgage”
B assumes no personal liability. Only O is personally liable. But, if recorded, mortgage remains on land. Thus, if O does not pay, the mortgage may be foreclosed.
Foreclosure--


a. Procedures
Assuming that our mortgage-creditor must look to the land for satisfaction, how must he or she proceed?
i. The mortgagee must foreclose by proper judicial proceeding. At foreclosure, the land is sold. The sale proceeds go to satisfying the debt.
Foreclosure--
b. Proceeds
What if the proceeds from the sale of Blackacre in foreclosure are less than the amount owed on the mortgage?

c. Surplus
By contrast, what if there is a surplus?
i. Mortgage brings a deficiency judgment against the debtor.

i. Junior lien-holders are paid in order of priority & the remaining surplus goes to the debtor.
d. Example 77: Assume that Blackacre has a FMV of $50,000 and is subject to three mortgages executed by its owner, Madge. First Bank, with first priority, is owed $30k. Second Bank with second priority is owed $15k, and Third Bank with third priority is owed $10k. Assume that First Bank’s mortgage is foreclosed, and that Blackacre is sold for $50k. How will the funds be distributed?
i. Off the top:
Attorneys’ fees and foreclosure expenses, and any accrued interest on the First Bank Mortgage.
ii. Sales Proceeds
The sale proceeds are then used to pay off the mortgages in the order of their priority. Each claimant is entitled to satisfaction IN FULL before a subordinated lienholder may take. Thus, First Bank takes $30k in full. Then, Second Bank takes $15k in full. The remaining balance is applied toward Third Bank ($5k).

Third Bank should be able to proceed for a deficiency judgment.
Foreclosure--

What is the effect of foreclosure of a senior mortgage on a junior mortgages?
a. Extinguishing Junior Claims / Necessary Parties: Foreclosure will terminate junior to the mortgage being foreclosed but will not affect senior interests. (This means that junior lienholders will be paid in descending order with the proceeds from the sale, assuming funds are left over after full satisfaction of superior claims. Junior lienholders should be able to proceed for a deficiency judgment. But once foreclosure of a superior claim has occurred, with the proceeds distributed appropriately, junior lienholders can no longer look to Blackacre for satisfaction.

i. Those with interests subordinate to those of the foreclosing party are necessary parties to the foreclosure action.

ii. The debtor-mortgagor is also considered a necessary party and must be joined, particularly if creditor wishes to proceed against debtor for a personal deficiency judgment.

iii. Failure to include a necessary party results in the preservation of that party’s claim, despite the foreclosure and sale. Thus, if a necessary party is not joined, his mortgage remains on the land.
Foreclosure--

What affect does foreclosure of a junior have on a senior lien?
b. Senior Claims: Foreclosure does not affect any interest senior to the mortgage being foreclosed. The buyer at the sale takes subject to such interest. This means that a buyer is NOT personally liable on the senior debt, but, as a practical matter, if the senior mortgage is not paid, sooner or later, the senior creditor will foreclose against the land.
What is a mortgage?
ii. Handout Definition:
A mortgage given to secure a loan that enables the debtor to acquire the encumbered land.
How does a creditor get priority for a mortgage?
a. Recording: As a creditor, you MUST record mortgages. Until a creditor properly records its mortgage, it does not have any priority.
i. Determining Priority: Once recorded, priority is determined by the norm of the first in time, first in right.
What is a purchase money mortgage?
i. Definition:
A PMM is
1. a mortgage given to the vendor of the property as a part of the purchase price, or

2. a mortgage given to a third-party lender, who is lending the funds to allow the buyer to purchase the property.
What is the priority of a PMM with respect to prior recorded mortgages and subsequently recorded mortgages?
iii. Priority:
A PMM is considered to have priority over prior non-PMMs on the property, even if such mortgages or liens are recorded first. However, PMM priority is subject to being defeated by subsequent mortgages or liens by operation of the recording acts.
Vendor PMM vs. Third-Party PMM-- who has priority?
iv. Vendor PMM versus Third-Party PMM
As between two PMMs, one of the vendor and one to a third-party lender, the vendor’s mortgage is usually given priority over the third-party lender’s.
Third Party PMM versus Third-Party PMM-- who has priority?
v. Third Party PMM versus Third-Party PMM
If two PMMs are given to two third-party lenders, their priority is determined by the chronological order in which the mortgages were placed on the property, the recording act, and a subordination agreement (if any). Note that in these cases, the recording acts are often of no use because two purchase money mortgagees will almost always know of each other’s existence and, thus, have notice.
Foreclosure--

What is the right of redemption in equity under the common law?

When is it extinguished?
How is it exercised?
What about acceleration clauses?
Can it be waived?
a. Redemption in equity:
Equitable redemption is universally recognized up to the date of sale. At any time prior to the foreclosure sale the debtor has the right to redeem the land and free it of the mortgage.
i. When Right is Extinguished
Once a valid foreclosure has taken place, the right to equitable redemption is gone / cut off.
ii. Exercising the Right
The right of equitable redemption is exercised by paying off the missed payments, plus interest, plus costs.
iii. Acceleration Clause
If the mortgage or note contains an acceleration clause, the mortgagee is permitted to declare the full balance due in the event of default if the mortgage contains an acceleration clause, the full balance, plus accrued interest, plus costs must be paid to redeem.
iv. No Waiver
A debtor/mortgagor cannot waiver the right to redeem in the mortgage itself. This is known as clogging the equity of redemption and it is strictly prohibited. A debtor is not allowed to waive his right to redemption on the front-end because it is seen as repugnant to public policy.
Foreclosure--

What is the statutory right of redemption?
What is the rule in NY?
b. Statutory Redemption
Recognized in one-half of the states, statutory redemption gives the debtor-mortgagor a statute right to redeem for some fixed period AFTER the foreclosure sale has occurred (typically six months to one year). Where recognized, statutory redemption applies AFTER the foreclosure occurs. The amount to be paid is usually the foreclosure sale price, rather than the amount of the original debt.
i. In most states recognizing statutory redemption, the mortgagor will have the right to possess Blackacre during the statutory period.
ii. When a mortgagor redeems, the effect is to nullify the foreclosure sale and restore the owner to title.
iii. NEW YORK DISTINCTION
In New York, there is NO statutory right to redemption.
Lateral Support

a. If the land is improved by buildings and an adjacent landowner’s excavation causes that improved land to cave in, what is the excavator's liability in tort (negligence vs. strict liability)?
A. Negligence
a. If the land is improved by buildings and an adjacent landowner’s excavation causes that improved land to cave in, the excavator will be liable only if negligent.

B. Strict liability
a. Strict liability does not attach to the excavator’s actions unless plaintiff shows that, because of defendant’s actions, plaintiff’s improved land would have collapsed, even in its natural state. In other words, for strict liability to apply, plaintiff must show that the improvements on his land (shrubs, fountain, structure) did not contribute to his land’s collapse.
What are the two major systems for determining the allocation of water in watercourses, such as streams, rivers, and lakes?
The Riparian Doctrine
The Prior Appropriation Doctrine
What is the Riparian Doctrine?
i. The water belongs to those who own the land bordering the water course. These people are known as riparians, who share the right to reasonable use of the water. Thus, one riparian will be liable if his or her use unreasonably interferes with others’ use of the water.
What is the Prior Appropriation Doctrine?
b. The Prior Appropriation Doctrine—more egalitarian
i. The water belongs initially to the state, but the right to divert it and use it can be acquired by an individual, regardless of whether or not he happens to be a riparian-owner.

ii. Rights are determined by priority of beneficial use. The norm for allocation is first in time, first in right. Thus, a person can acquire the right to divert and use water from a watercourse merely by being the first to do so. Any productive or beneficial use of the water, including use for agriculture, is sufficient to create the appropriate right.
What is the rule with respect to Groundwater, also known as percolating water: Water beneath the surface of the earth that is not confined to a known channel.
a. The surface owner is entitled to make reasonable use of ground water. However, the use must NOT be wasteful.
What is the common law rule with respect to surface waters: those which come from rain, springs or melting snow, and which have not yet reached a natural watercourse or basin?
a. The common enemy rule: surface water is a nemesis. A landowner may change drainage or make any other changes/improvements on his land to combat the flow of surface water. Many courts have modified the common enemy rule to prohibit unnecessary harm to others’ land.
What are the rules with respect to trespass and nuisance?
A. The possessor of land has the right to be free from trespass and nuisance

a. Trespass: invasion of land by tangible, physical object.
i. To remove a trespasser, bring an ejectment action.

b. Private nuisance: substantial and unreasonable interference with another’s use / enjoyment of the land.
i. Note: unlike trespass, nuisance does NOT require tangible, physical invasion. Thus, odors and noise could give rise to a nuisance, but not a trespass.
ii. Nuisance and the hypersensitive plaintiff: there is no nuisance when the problem is the result of the plaintiff’s super-sensitivity or specialized use of the land.
What is the definition of eminent domain?
A. Definition
a. Government’s Fifth Amendment Power to take private property for public use in exchange for just compensation.
Eminent Domain--

What is a taking?
B. Explicit Takings
a. These are acts of governmental condemnation. For example, the government condemns your land to make way for a public highway.
Eminent Domain--

What is an implicit or regulatory taking?
C. Implicit or Regulatory Takings
a. A governmental regulation that, although not intended to be a taking, has the same effect.
i. For example, you buy land in North Carolina for development. Three months later, the government imposes a ban on all development. Note that you have not been the target of an overt condemnation. Still, you argue that the regulation is an implicit taking. It has worked an economic wipeout of your investment.
Eminent Domain--

What is a landowner's remedy for a regulatory taking?
D. Remedy for a Regulatory Taking
a. The remedy for a regulatory taking—the government must either:
i. Compensate the owner for the taking OR
ii. Terminate the regulation and pay the owner for damages that occurred while it was in effect.
Zoning--

Under what powers can the government regulate land use?
A. Definition
a. Pursuant to its police powers, the government may enact statutes to reasonably control land use.
Zoning--

What is land use?
B. The Variance
a. The variance is principal means to achieve flexibility in zoning.
i. To obtain a variance, a proponent must show:
1. undue hardship, AND
2. that the variance will not decrease neighboring property values.
b. A variance is granted or denied by administrative action (typically a zoning board).
Zoning--

What is a nonconforming use?
C. Nonconforming Use
a. A once lawful, existing use now deemed nonconforming by a new zoning ordinance. It cannot be eliminated all at once unless just compensation is paid. Otherwise, it could be deemed an unconstitutional taking.
Zoning--

What is an unconstitutional exaction.
D. Unconstitutional Exactions
a. Definition: exactions are those amenities the government seeks in exchange for granting permission to build.
i. Example 83: you are a developer seeking permission to build a 200-unit residential development in the town of Utopia. The town tells you that it will grant you the requisite permit if you agree to provide several new streetlights, a small park and wider roads. To pass constitutional scrutiny, these exactions must be reasonably related both in nature and in scope to the impact of the proposed development. If they are not, these exactions will be unconstitutional.

b. Note: exactions are viewed by the court as inherently suspect.