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138 Cards in this Set
- Front
- Back
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What are the two steps in a conveyance of real estate?
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Land contract, and closing, where deed becomes the operative document.
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Four requirements of land contract
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Writing, signed by parties to be bound, describe the land, state consideration
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What remedy if the parcel sold is smaller than contract states?
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Specific performance with pro rata reduction in purchase price
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Doctrine of part performance - equity will decree specific performance of an oral contract for sale of land when 2 of 3 are satisfied:
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B takes possession, B pays all or part of the purchase price, B makes substantial improvements
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Because of the doctrine of equitable conversion, what happens when a contract for sale of real estate is signed?
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B owns the land and bears risk of loss unless the contract says otherwise
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What does it mean to provide marketable title?
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Title free from reasonable doubt - unencumbered fee simple
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What are the implied promises in every land contract (2)?
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Title from reasonable doubt, not to make any false statements of material fact (majority: also failure to disclose latent material defects)
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What three circumstances render title unmarketable?
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Adverse possession (of even part of land), encumbrances (servitudes/mortgages/liens - unless buyer waived), zoning violations
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Seller is on the hook for…
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lies and material omissions
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Will a general disclaimer of liability (property sold 'as is' or 'with all faults') excuse seller from liability for fraud or failure to disclose?
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No
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Does a land contract contain implied warranties of fitness or habitability?
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No - the standard is caveat emptor, except for the sale of a new home by a builder-vendor
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How does the deed pass legal title from seller to buyer?
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LEAD - LAWFULLY EXECUTED AND DELIVERED
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Is 'all of O's land in Essex County' sufficient for a deed?
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Yes
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Is 'some of my land in Sussex County' sufficient in a deed?
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No - even w/ research we won't know what 'some' means
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What does a deed do?
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Passes legal title from seller to buyer
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What is the standard for description of land in a deed?
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Unambiguous description
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Delivery requirement could be satisfied when:
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Grantor physically or manually transfers the deed to the grantee
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Is it OK to use mail/messenger/agent for delivery of a deed?
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Yes
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Does delivery of a deed require physical transfer of the document?
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No
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What is the standard for delivery of a deed?
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Whether grantor had present intent to be bound, irrespective of whether the deed itself was literally handed over
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Does a deed need to recite consideration?
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No
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Need consideration pass to make a deed valid?
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No
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What defeats delivery of a deed, despite grantor's present intent to be bound?
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Recipient's express rejection of the deed
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What happens if a deed that is absolute on its face is transferred to grantee with an oral condition?
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The oral condition is void and delivery is done.
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How does delivery of an executed deed by escrow work?
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Grantor delivers executed deed to escrow agent, with instructions that deed be delivered to grantee once certain conditions are met. Once the conditions are met, title passes automatically to grantee.
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What happens if grantor dies or becomes incompetent before escrow conditions are met?
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Title will still pass
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What covenants does a quitclaim deed contain?
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None - grantor isn't even promising that he has title to convey
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What is the worst deed buyer could hope for?
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A quitclaim deed
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What is the one saving grace in a quitclaim deed?
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Grantor did implicitly promise in the land contract to provide marketable title at closing. But the promise is short lived - grantor is off the hook re problems that manifest post-closing
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What is the best deed a buyer could hope for?
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The general warranty deed
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Why is a general warranty deed so great?
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It contains present and future covenants that warrant against all defects in title including those due to grantor's predecessors
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When does the statute of limitation for breach of a present covenant begin to run?
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At the instance of delivery
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What does the covenant of seisin do?
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Promises that grantor owns the estate
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What does the covenant of right to convey promise?
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That grantor has the power to make the transfer (of majority age, etc…)
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What is the covenant against encumbrances promise?
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That there are no servitudes or liens against Blackacre.
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What are the three present covenants?
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Covenant of seisin, covenant of right to convey, covenant against encumbrances
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What does the covenant for quiet enjoyment promise?
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Grantee won't be disturbed in possession by a third party's lawful claim of title
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What are the three future covenants?
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Covenant for quiet enjoyment, covenant of warranty, covenant for further assurances
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What does the covenant of warranty promise?
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Grantor promises to defend grantee should there be lawful claims of title brought by others
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What does the covenant for future assurances promise?
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Grantor promises to do whatever future acts are reasonably necessary to perfect the title if it later turns out to be flawed
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When is a future covenant breached?
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Only when grantee is disturbed in possession
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When does the statute of limitations for breach of a future covenant begin to run?
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When grantee is disturbed in possession
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What is a statutory special warranty deed?
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Contains two promises that grantor makes only on behalf of himself - NOT his predecessors in interest
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What promises does grantor make in a special warranty deed?
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He hasn't conveyed Blackacre to anyone other than grantee, Blackacre is free from encumbrances made by grantor
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When can 2d purchaser B defeat first purchaser A in a notice jurisdiction?
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If B is a bona fide purchaser she wins (but note - B can't be a bona fide purchaser if A records before B buys, because B would be on record notice)
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When can 2d purchaser B defeat first purchaser A in race-notice jurisdiction?
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If B is a bona fide purchaser, B wins only if she records properly before A does
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Who do recording acts protect?
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Bona fide purchasers and mortgagees.
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What is a bona fide purchaser?
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One who purchases Blackacre for value, without notice that someone else purchased Blackacre first
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How much consideration must B provide?
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'Substantial pecuniary consideration'
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Do recording statutes protect donee's heirs/devises?
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No, unless the shelter rule applies.
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What three kinds of notice may be attributed to buyer B?
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AIR - ACTUAL, INQUIRY (whatever an exam of the land would show, whether he inspects or not; if recorded instrument makes reference to an unrecorded transaction, grantee is on inquiry notice of whatever a reasonable follow-up would show about the transaction, RECORD - B is on record notice of A's deed if at the time B takes A's deed was properly recorded)
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Which two types of notice are imputed?
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Inquiry, record
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Does a buyer of land have a duty to inspect to see whether someone else is in possession?
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Yes - this plays into inquiry notice
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Notice statute
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A conveyance of an interest in land shall not be valid against any subsequent purchaser for value without notice thereof, unless the conveyance is recorded
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What must B do to prevail in a notice jurisdiction?
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Be a BFP.
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Race-notice statute
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Any conveyance of an interest in land shall not be valid against any subsequent purchaser for value, without notice thereof, whose conveyance is first recorded.
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What must B do to prevail in a race-notice jurisdiction?
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Be a BFP and win the race to record
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'… unless the conveyance is recorded' refers to?
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A - it's a notice statute
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'… whose conveyance is first recorded' refers to?
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B - it's a race notice-statute
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What effect if A properly records before B purchases?
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A wins! A's proper notice puts later buyers on record notice, thereby defeating their status as BFPs
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To give record notice to subsequent takers, the deed must be recorded properly, within…
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the chain of title
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What is the chain of title?
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The sequence of recorded documents capable of giving notice to later takers
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How is the chain of title established?
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Through a title search of the grantor/grantee index
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What are the three chain of title problems?
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Shelter rule, rule of the wild deed, rule of estoppel by deed
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Shelter rule
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One who takes from a BFP will prevail against any entity that the transferor-BFP would have prevailed against.
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Who does the shelter rule protect?
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B, the BFP, by making it easier for B to successfully transfer
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Rule of the wild deed?
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If a deed, entered on the records, has a grantor unconnected to the chain of title, the deed is a wild deed. It is incapable of giving record notice of its existence - it's a nullity
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What is the recording of a wild deed?
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A nullity. A subsequent bona-fide purchaser wins in a notice jurisdiction and wins if she records in a race-notice jurisdiction.
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Rule of estoppel by deed?
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One who conveys realty in which he has no interest is estopped from denying the validity of the conveyance if he later acquires that previously transferred interest
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Can one assume that no one sells land until they first own it?
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Yes - that's part of the rule of estoppel by deed
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In a mortgage, what do parties intend the land to be?
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Collateral
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A mortgage is the union of which two elements?
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Debt, and a voluntary lien on debtor's land to back up or secure the debt
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Need a mortgage be in writing?
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Yes usually
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What are other terms for a legal mortgage? (5)
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Note, deed of trust, mortgage deed, sale-leaseback, security interest in land
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When does an equitable mortgage arise?
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When a mortgagor gives a mortgagee a deed that is absolute on its face, rather than a note or mortgage deed
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Is parol evidence admissible to show the original intent in a dispute between mortgagor and mortgagee related to an equitable mortgage?
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Yes
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What if mortgagee who holds a deed related to an equitable mortgage sells Blackacre to bona fide purchaser X?
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X owns Blackacre - O's only recourse is to sue the mortgager for fraud and sale proceeds
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Rights once mortgage has been created - debtor-mortgagor
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Title and right to possess
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Rights once mortgage has been created - creditor-mortgagee
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Lien
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Mortgage automatically follows
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A properly transferred note
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Creditor-mortgagee can transfer interest by
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Endorsing note and delivering it to transferee, or executing a separate document of assignment
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If a note is endorsed and delivered, the transferee is eligible to become
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A holder in due course
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The holder in due course takes the note/may foreclose despite
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Personal defenses that could've been raised against the original mortgagees
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Personal defenses include (5)
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Lack of consideration, fraud in the inducement, unconscionability, waiver, estoppel
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Holder in due course is still subject to these seven 'real defenses':
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MAD FIFI4 (MATERIAL ALTERATION, DURESS, FRAUD IN THE FACTUM - lie about the instrument, INCAPICITY, ILLEGALITY, INFANCY, INSOLVENCY)
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To be a holder in due course, what five criteria must be met?
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Note must be negotiable, made payable to the named mortgagee; the original must be endorsed, signed by the named mortgagee; the original must be delivered to the transferee; transferee must take the note in good faith without notice of any illegality; transferor must pay more than nominal value
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If O, debtor-mortgagor, sells Blackacre, which is now mortgaged,
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The lien remains on the land, so long as the mortgage was properly recorded
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A later buyer takes subject to a …
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properly recorded lien
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If B assumes O's mortgage, who is personally liable?
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O and B are personally liable. B is primarily liable, O is secondarily liable
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If B takes O's property 'subject to the mortgage,' who is personally liable?
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Only O.
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What is B's risk, if he takes O's property subject to the mortgage?
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B assumes no personal liability, but if recorded the mortgage sticks with the land - if O does not pay, the mortgage may be foreclosed
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What if the proceeds from the sale of Blackacre at foreclosure are less than the amount owed?
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Mortgagee brings a deficiency action against debtor
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What if proceeds from the sale of Blackacre at foreclosure are greater than the amount owed?
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Junior liens are paid in order of priority. Remaining surplus goes to debtor
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In a foreclosure sale, who takes off the top?
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Attorney fees, foreclosure expenses, accrued interest in <foreclosing?> bank's lien
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How are sale proceeds divided among mortgagees?
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In order of priority; each claimant is entitled to satisfaction in full before a subordinated lienholder may take.
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Which interests will foreclosure terminate?
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Junior interests/mortgagees/lienholders
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Which parties must the foreclosing party join?
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Those with subordinate mortgages and the debtor-mortgagor.
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What is the effect of failing to include a necessary party in a mortgage action?
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It results in the preservation of the party's claim, despite the foreclosure and sale - his mortgage remains on the land.
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What is the effect of foreclosure on a senior interest to the mortgage being foreclosed?
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The buyer at the sale takes subject to the interest - he is not personally liable, but he takes the risk that senior creditor will foreclose (so he should pay senior creditor, and lower the price he pays for Blackacre accordingly)
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As a creditor, you must…
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Record
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Once recording, priority is determined by the norm of
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First in time, first in right
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What is a purchase money mortgage?
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A mortgage given to secure a loan that enables the debtor to acquire the encumbered land
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What priority does a purchase money mortgagee have?
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Super-priority! Assuming he records, first priority, because he financed the parcel
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What is an after-acquired collateral clause?
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AKA a floating lien - 'whether now owned or hereafter acquired'
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What is a subordination agreement?
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Senior creditor may agree to subordinate its priority to a jr. creditor
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At any time prior to the foreclosure sale…
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debtor may try to redeem the land
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Once a valid foreclosure has taken place…
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the right of redemption is gone
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May a debtor/mortgagor waive the right to redeem in the mortgage document itself?
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No - this is clogging of the equity, violates public policy
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What is statutory redemption?
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It gives the debtor-mortgagor a statutory right to redeem for some fixed period after the foreclosure sale has occurred, for the foreclosure sale price (not the amount of the original debt)
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In states with statutory redemption, may the mortgagor possess Blackacre during the statutory (grace) period?
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Yes, in most states
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What is the effect of redeeming under statutory redemption?
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It undoes the foreclosure sale
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What is the standard for lateral support?
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Negligence
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When does strict liability attach to lateral support claims?
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Only if P can prove that because of D's actions, P's land would've collapsed even in its natural state
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Riparian doctrine
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Water belongs to those who own the land bordering the watercourse, known as riparians
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What right do riparians share?
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Reasonable use of the water
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When is a riparian liable
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If his use unreasonably interferes with others' use
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What is the prior appropriation doctrine?
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Water belongs initially to the state; the right to divert and use it can be acquired by any individual (not necessarily a riparian); rights are determined by priority of beneficial use - usually first in time, first in right
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Groundwater is also known as
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percolating water
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Who may use groundwater and under what conditions?
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Surface owner, but use may not be wasteful
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What is surface water?
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Water that comes from rain, springs, melting snow, which have not reached a natural watercourse or basin
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How may a landowner combat the flow of surface water?
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By changing drainage or making any other changes/improvements on his land (in many courts - without causing unnecessary harm to others' land)
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Trespass
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An invasion of land by tangible physical object
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What action may a landowner take to remove a trespasser?
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An action in ejectment
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Private nuisance
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Substantial and unreasonable interference w/ another's use and enjoyment of land
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What is a hypersensitive plaintiff
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One that has a super-specialized nuisance issue (e.g., objects to high frequency sound heard by dogs but not people)
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Eminent domain comes from which Amendment
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Fifth
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What is eminent domain?
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Government's power to take a private property for public use in exchange for just compensation
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What is an implicit or regulatory taking?
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A regulation that works an economic wipeout of the investment
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What is the remedy for a regulatory taking?
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Government must compensate owner or terminate the regulation and pay owner for damages occurring while the regulation was in effect
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What is the root of zoning power?
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Police powers
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What does zoning power allow?
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Governments may enact statutes to reasonably control land use
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What does a proponent need to get a variance?
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To show undue hardship and that the variance will not decrease neighboring property values
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How is a variance granted?
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Administrative action
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What happens when a use becomes nonconforming because of a new zoning option?
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It can't be eliminated all at once unless just compensation is paid (otherwise, it'd be an unconstitutional taking)
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What is an exaction?
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Amenities that government seeks in exchange for granting permission to build, such as streetlights, parks, wider roads
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When is an exaction unconstitutional?
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When it is not reasonably related in nature or scope to the impact of the proposed development
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What effect does destroying a deed have on title?
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None - a deed only evidences title
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When there is a mistake or inconsistency in the description of property, which takes precedence, physical description or quanty description?
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Physical description
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