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305 Cards in this Set
- Front
- Back
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Real Property Fundaments
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I. Identify the type of ownership interest
II. What characteristics are inherent in such ownership and what rights and duties arise from that form of ownership? III. Are there any limitations of such ownership? (Public land and use control) IV. Adverse Possession |
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Fee Simple Absolute
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Absolute ownership of property.
"To Moe and his heirs." "From Curly to Moe" |
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Life Estate
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Ownership for the period of a measuring life.
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Four Types of Life Estate
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Simple Life Estate:
"To Moe for life." Life Estate Pur Autre Vie: "To Moe for Curly's life." Curtesy: Husband received a life estate in all Wife's property on her death. Dower: Wife receives a life estate in 1/3 Husband's property accumulated during marriage. (Curtesy and dower have been abolished by intestate succession under modern law.) |
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Fee Simple Defeasible
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Land subject to the possibility of being taken away.
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Fee Simple Determinable on a Special Limitation
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Estate **automatically** reverts to grantor if a certain condition occurs:
"To Larry (so long as/while/during/until/unless) a stated condition occurs. |
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Fee Simple Defeasible Subject to a Condition Subsequent
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Grantor retains a right to reclaim / re-enter the property if a contingency occurs
"To Moe upon condition that/ provided that/ but if used for any other purpose than X." |
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Leasehold Land
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Tenancy for Years: "July 1998 until February 2008."
Periodic Tenancy: "Month-to-Month" Estate for a year or less which automatically renews itself at the end of each period. Tenancy at Will: Either party may terminate *under modern law, requires reasonable notice* Tenancy at Sufferance: Estate where T stays after expiration of lease. No Lease Agreement: Generally, a tenancy at will is created which may transmute into a periodic tenancy if periodic rent is paid by T. |
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Notice Requirements
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Tenancy for Years: Terminates automatically at the end of the term.
Periodic tenancy: Under statute 30 days, at CL 6 mo. for year to year, 30 days for month to month. Tenancy at will: Terminates at will. CL does not require notice, ML requires "reasonable notice." Tenancy at sufferance: No notice required. L may retake possession and sue for damages. No Lease Agreement: Termination at CL requires no notice, ML requires 30 days. |
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Tenants Rights and Duties
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Tenant has a duty to pay rent
Tenant has a duty to avoid waste and pay for resulting damages. |
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Tenant's Defenses to Non-Payment of Rent
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-Purpose of leasing property becomes impossible
-Lease involves an illegal purpose -Landlord's breach of covenant of quiet enjoyment -Retaliatory Eviction: T informs authorities of L's wrongdoing, and L retaliates by raising rent or eviction. -Destruction of Premises: Not a defense at CL, but at ML gives T ability to pay pro rata based on percentage of property rendered unusable. |
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Landlord's Breach of Implied Covenant of Quiet Enjoyment
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Issue: Has L substantially interfered with T's beneficial enjoyment of the land.
Rule: Actual / Partial eviction occurs when L deprives T of possession; Constructive eviction occurs when L substantially interferes with T's enjoyment of the leasehold, or where L has a duty to act or where the condition is within L's control. Effect: T must vacate the premises within a reasonable time and sue for damages. **Breach of one duty is generally held to be independent of the obligations of the other party.** |
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L's Breach of Implied Covenant of Habitability:
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Covenant is implied in every residential lease and requires the leased premises to be in condition fit for living purposes (look at the housing codes/standards or dangers to T's health)
T's remedies: Vacate and sue for damages, stay and withhold rent until issues are resolved, repair and deduct or pay fair-market-value for rent. L cannot retaliate. |
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Three Types of Waste
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Voluntary: T's negligent / intentional conduct results in damage to the property
Permissive: T's omission to act results in damage to the property. Ameliorative:T's conduct substantially alters the leased premises. (Modern law allows beneficial structural changes under a long-term lease.) |
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Landlord's Rights
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L may evict T for non-payment of rent.
L has no duty to mitigate rent when T abandons property. If T surrenders premises and L accepts, then T's liability to pay rent ceases. L does not have to refund T's advance rental payment, but must refund security deposit, minus actual damages to T at end of lease. |
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Landlord's Duties
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Duty to maintain common areas (e.g. driveways, common hallways.)
L is responsible for injuries caused by hidden defects on leased property that he knows or should know of that aren't apparent to T on reasonable inspection. If L agrees to repair, then he is liable for the injury of any foreseeable P. L has a duty to make the premises meet the implied covenant of habitability. When L covenants against assignments or leasing, courts will construe strongly against him. |
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Assignment and Sublease of a Leasehold
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Assignment: T hands over all rights and duties of the property to assignee. Assignor and assignee both liable for rent.
Sublease: Sublease occurs when T transfers less than the entire interest in lease. T remains liable for rent, and sublessee is liable to T. |
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Concurrently Owned Estates
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Joint Tenancy
Tenancy by the Entirety Tenancy in Common |
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Joint Tenancy
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Language: "Fred and BamBam as joint tenants"
Each tenant owns an undivided fraction of the whole, subject to the right of survivorship (e.g. the survivor takes all) Requires the Four Unities: Time, Title, Possession, Interest |
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Tenancy by the Entirety
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Estate owned by H and W subject to the right of survivorship.
Four Unities are Required: Time, Title, Interest and Possession. Interest is not severable EXCEPT: -in case of death or divorce, joint conveyance by H& W to a 3rd party, conveyance by one spouse to the other, execution by creditor of BOTH H & W, or mutual agreement of the spouses. |
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Tenancy in Common
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(Statutory preferred status)
"Moe and Larry as tenants in common" Each tenant owns an undivided fraction of the property, the shares do NOT have to be equal, freely alienable by intervivos or testamentary transfer, passes by succession and is subject to claims by T's creditors. |
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Rights and Duties of Co-Tenants
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1) Right to demand partition (physical division of property)
2) Right to possess all parts of property 3) Right to co-T in possession to retain profits from her use without sharing. 4) Co-T's must pay taxes and interest on mortgage, and co-T's. 5) Co-T's not responsible for costs of improvements made by Co-T in possession, although they may be responsible for costs of preservation of property. 6) Co-Ts are in a fiduciary relationship to one another |
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Future Interests
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Grantor's Interest:
Reversion Possibility of Reverter Right of Re-Entry Grantee's Interest: Remainders Executory Interest |
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Grantor's Interests
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Reversion: Estate remaining when an estate less than a fee-simple is granted--e.g. a life estate "Moe to Larry for life"
Possibility of Reverter: Reversion to the grantor when the contingency in a fee-simple determinable on special limitation occurs. "Moe to Larry so long as he grows corn." Right of Re-Entry: The right of re-entry in the grantor when the contingency specified in the fee simple defeasible occurs: "From Moe to Curly, provided that Curly grows corn." |
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Grantee's Interests
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Remainders: Future interest created in one other than the grantor on the end of a prior estate. Remainder must be expressly created and is alienable, devisable and inheritable.
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Vested Remainder
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Remainder to ascertained and existing person which becomes possessory at the time the preceding estate ends. "To Moe life, remainder to Curly and his heirs."
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Vested Remainder Subject to Complete Divestment
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A remainder to an ascertained and existing person, subject to a condition subsequent: "To Mo for life, remainder to Larry and his heirs, but if Larry dies without a child, then to Curly and his heirs."
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Vested Remainder Subject to Open
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A remainder to a group of persons, at least one of whom is living and ascertained at the time of the creation of the interest. "To Mo for life, remainder to Mo's child and their heirs."
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Contingent Remainders
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Remainders created in favor of an unborn, unascertainable person OR subject to a condition precedent "To Moe for life, remainder to Curly and his heirs if Curly attains 21."
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Executory Interests
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Future estate in a party other than the grantor which becomes possessory only by the taking away of the estate from the grantee of a vested remainder or a defeasible fee. these interests are freely alienable, devisable and descendable and are indestructable.
Two types: Springing and Shifting. |
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Springing Executory Interest
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Divests GRANTOR of estate. E.g. "To Mo for life, and ten years after Mo's death, to Curly." Or "To Curly for life, remainder to Larry and his heirs a year after Curly's death."
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Shifting Executory Interest
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Divests a third person of his estate:
"To Curly for life, remainder to Mo adn his heirs, but if Mo fails to attain 21, to Larry and his heirs." OR "To Larry and his heirs, but if Larry dies without children, then to Curly and his heirs." |
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Four Rules of Future Interests
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Rule in Shelly's Case
Doctrine of Worthier Title Doctrine of Merger Rule Against Perpetuities |
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Doctrine of Merger
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If one person owns two successive (e.g. present and future) estates, they merge. "Larry to Curly for life, remainder to Mo and his heirs." And, Mo conveys his interest to Curly, then the two estates merge and Curly has a fee simple absolute.
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The Rule in Shelly's Case
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If a grant creates a freehold in a grantee, and a remainder interest in her heirs, the grantee receives a fee simple absolute. "Larry to Moe for life, remainder to Moe's heirs." Moe has a fee simple absolute.
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The Doctrine of Worthier Title
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The grantor cannot give a remainder to her own heirs: "Curly to Larry for life, remainder to Curly's heirs." This is a void conveyance, and Curly's heirs take a reversion by descent.
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The Rule Against Perpetuities
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1) Executory interest or contingent remainder at issue?
2) Will interest be owned by ascertained, existing person not subject to a condition precedent within 21 years of some life in being? 3) check the date of the instrument 4) Determine who the life-in-being is. 5) Add 21 years. 6) Ask, will the interest vest or fail? |
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Incorporeal or "Use" Rights in Land
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1) Easement
2) License 3) Covenant 4) Equitable Servitude 5) Implied Reciprocal Servitude 6) Profits |
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Easements
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Creates a right in the easement holder to go onto land in the possession of another and use it.
Appurtenant / In Gross. Positive / Negative. |
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Easement Appurtenant
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Easement is related to a piece of land and benefits that land owner in his use and enjoyment thereof (e.g. right-of-way easement) Requires for its existence two pieces of land owned by two different persons.
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Easement in Gross
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Easement is specific to a person, not to a piece of land (e.g. Bob given an easement to take gravel from Carl's land). Conveyance of real estate does not typically convey easement in gross, unless it's a commercial transaction.
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Affirmative Easements
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Entitles holder of benefit to make affirmative use of servient estate (right of way, laying utility lines, draining water, etc.)
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Negative Easement
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Prevents owner of servient estate from doing something that would otherwise be lawful.
Five types of negative easements: -Light -Air -Lateral Support -Subjacent Support -Artificial Stream control |
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Easements are Created By:
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Implied Grant
Implied Reservation Express Grant or Reservation Estoppel Necessity Dedication Prescription. |
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Implied Grant
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Created in favor of the grantee on severance of land which was formerly owned as a whole. Owner must have used the easement for the same purpose as it will be used for in the implied grant--this is called a quasi-easement. The quasi easement becomes a dominant easement when the tenement is conveyed;. The existence of the quasi-easement must be:
-Apparent from reasonable inspection of the land -Used continuously -Reasonably necessary to the use fo the dominant tenement. |
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Implied Reservation
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Created in favor of the grantor on severance of a common ownership. Same requirements as in easement by implied grant, but requires STRICT necessity
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Express Grant or Reservation
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Created by written grant or by reservation in a written conveyance
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Estoppel
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Created where the intention to create an easement exists, but is invalid for non-compliance with SoF. Requires DETRIMENTAL RELIANCE by easement holder--in other words, $ spent on reliance of easement.
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Easement by Necessity
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Easement created where dominant and servient tenements were once under common ownership.
Requires strict necessity--substantial impracticality to own dominant estate w/o easement. Terminates when necessity ceases. |
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Easement by Dedication
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Created in favor of public use
Can be formal or informal creation (either formally by deed, or by any other means manifesting an intent to dedicate to the public and actual public use.) |
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Easement by Prescription
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Basically the same as adverse possession:
Actual Adverse Notorious Exclusive Continuous Hostile Open C/L period = 10 years. |
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Rights and Duties of Easement Owner
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Maintain and repair easement, but may not substantially change.
May only use the easement for the activities reasonably contemplated (e.g. if original use was a private drive, a commercial thoroughfare is overburdening the easement) Where the scope of the easement is not specified, a reasonable scope will be implied. |
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Rights and Duties of Servient Tenement Holder
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May make use of his property that does not interfere with the easement holder's right and has no duty to maintain easement.
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Easements Termination
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Abuse--servient tenement holder may obtain injunction and damages
Terms of agreement (when stated contingency occurs) Agreement (written release) Merger--of dominant and servient estates. Ending of necessity Abandonment--manifested by non-use Changed circumstances (e.g. destruction of servient estate) Estoppel: Where holder represents intent to abandon and servient tenement so relies. |
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Covenants
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Agreement between two parties regarding land; may be either affirmative or negative (as to easements)
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Equitable Servitude
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An agreement between to parties not to do something regarding land use.
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Implied Reciprocal Servitude
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Where a common plan exists--where one lot is restricted, the remaining land has a similar restriction implied upon it.
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Profits
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Creates the right to take something from the land of another (e.g. sand, gravel, wood) Necessarily includes an easement for access to material subject to the profit.
Two Types: Profits Appurtenant and Profits in Gross |
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Profit Appurtenant
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Creation of profit is attached to a certain dominant tract. May be exclusive or non-exclusive.
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Profit in Gross
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Creation of profit unrelated to any land owned by the profit holder. Profit is assignable, but not divisible unless it is non-exclusive.
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License
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Personal privilege to use land granted by a landowner to another. A license is not an interest in land and may be created orally (not subject to the SoF) Only the intention to create an easement is required to create a license, and licenses are revocable at any time at the will of the licensor.
Three Exceptions; |
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Exceptions to At-Will Revocation of Licenses: Consent + Property Interest
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Where licensor consents to license, it is irrevocable so long as the "property interest" lasts.
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Exceptions to At-Will Revocation of Licenses: Estoppel
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Where license is executed (e..g licensee detrimentally relies on license) there is a split in authority as to whether the license is revocable.
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Revocation of License
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After a license is revoked, the licensee has a reasonable period of time to remove any property.
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Interests Running with the Land:
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Running with the land permits a successive property owner to enforce the interest
1) Does the covenant involve a benefit / burden? (Benefit is an agreement enhancing value of land, Burden is an agreement which makes land less valuable.) 2) Does the interest "Touch and Concern" the land? 3) Did the original parties intend that the interest run with the land and that successive owners would be bound by the interest? 4) Determine what type of non-possessory interest is at issue (easement, profit, covenant, or equitable servitude) and determine whether notice and privity requirements have been met. |
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Notice and Privity:
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A negative equitable servitude runs with teh land where there is a common plan and notice (either actual, constructive or inquiry); a license does not run with the land unless estoppel applies or it is coupled with an interest in the land.
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Exceptions to Notice and Privity:
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For a burden of easement, profit or equitable servitude to run, NOTICE to the party to be bound is required: actual or constructive (through recording acts) actual notice or inquiry notice.
For a covenant to run, a burden requires HORIZONTAL PRIVITY (e.g. privity of estate between original K parties or where both parties hold interests in the same piece of land AND the covenant touches and concerns the land AND vertical privity, where covenant accompanies a conveyance of land interest. A benefit requires vertical privity. |
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Vertical & Horizontal Privity
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W conveys land to X subject to an easement that W and X are the original parties to. W and X are in horizontal privity.
X owns land that has the burden of an easement. He sells to Y. X and Y are in vertical privity. |
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Rights in Land
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Party Walls
Right to Lateral and Subjacent Support of Land Rights to Water Fixtures |
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Party Walls:
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If the wall is built on the property of one party, the other adjoining owner is granted an appurtenant easement to use that wall for support. If the wall is on the property of both, then each owner owns that part of the wall that rests on his land. A promise to maintain or pay for the wall will run with the land.
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Right to Lateral and Subjacent Support
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Ownership of land carries with it the absolute right to have land supported in its natural state by adjoining land (lateral support) as well as the right to underground support (subjacent support). Landowner who causes damage to buildings on adjacent lands is strictly liable only if the land would have collapsed in its regular state. Even where the land would not have collapsed in its natural state, a landowner who is negligent will be held liable.
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Rights to Water
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Depend on the character of the water:
1) Watercourses (streams, rivers and lakes) give owners whose land they touch the right to use water with the land, and forbid owners from altering the natural flow of the watercourse. Under Prior Appropriation system, the first party to use the water gets it, regardless of whether the party owns the land. ML sets up a licensing scheme. Ground water; CL allowed absolute ownership by owner of overlying land for any reason. ML allows the same right, but water may only be used for the overlying land. Surface water: CL permits landowner to make any use he wants of his land, regardless of the effect on the flow of surface water, while ML holds taht owner of lower land must receive surface water in its natural flow from higher land and cannot block drainage. |
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Fixtures
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A chattel regarded as part of real property and which passes with the property.
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Identifying fixtures-Look to:
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-Intent of the parties
-Degree of actual physical annexation -Extreme weight of chattel -Ease of removal without damage to property -Whether the article is peculiarly adapted to the realty. -Whether article is essential to building's use Local customary items. |
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Eminent Domain
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The power of government to take private property for public purposes
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Limits on Eminent Domain Power
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5th Am requires both Due Process and just compensation.
Courts will usually NOT ask whether the taking will achieve intended public purposes. Court WILL ask whether compensation was just. Where gov't does not take ALL the land, owner may get severance damages reflecting the decrease in value of O's remaining land. Where taking increases the value of the land, fed. law sets off the increase against the FMV of the land taken. |
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Just Compensation
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Fair market value of the property.
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Zoning Power
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Power to divide land into districts where certain uses of land are permitted or prohibited, generally through local zoning ordinances.
Zoning is intended to segregate incompatible uses and protect established uses from economic loss that might be imposed by new uses. |
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Limits on Zoning Power
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Equal Protection protects against "spot-zoning" and requires comprehensive planning.
If the land-use regulation destroys the land's economic value, it is considered an exercise of eminent domain. NO CLEAR TEST as to what constitutes a taking. However, look to: -Reasonableness of taking -Weight of public/private interest involved. |
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Exceptions to Zoning Ordinances
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Amendment of ordinance by local legislation.
Issue of conditional use permits, provided specified conditions exist. A variance may be granted where the zoning ordinance precludes any reasonable use of the land, and the public will not suffer any substantial detriment from the variance. Contract zoning, which allows the city to K with developers to rezone land if it developed in a certain way. Floating zones: Permit landowners to replace existing zoning restrictions with uses permitted under specified circumstances. Planning unit development (PUD) allows developer to vary residential spaces and uses on tract for appropriate commercial and business uses in order to make housing developments more self-sufficient. |
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Land Sale K's
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1) Must be in writing and signed by seller (but, partial performance will take it out of the SOF)
2) Must contain essential terms, including description of property, identification of parties, price, manner of payment, etc. (Parol evidence admissible to resolve LATENT ambiguities, but not essential terms. 3) Subject to implied covenant of marketability; requires title be reasonably free from doubt which a well-informed, prudent buyer would be willing to accept. Buyers must wait and see, if seller's title is marketable, then sellers title is marketable and closing occurs and K and deed merge, and seller's liability on covenant ceases. 4) Transfer of land title generally require a deed. |
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Risk of Loss
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Prior to closing, the doctrine of equitable converson places risk of loss of subject matter of land K on BUYER under the majority rule. Under the Uniform Act, risk of loss is placed on seller unless buyer has possession or title.
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Deed Requirements
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1) Must be in writing and signed by grantor.
2) Must identify parties 3) Must show intent to transfer an interest 4) Must contain description of land conveyed. -Rules of construction: Where the description is conflicting or inconsistent, the methods of description are given the following priority: Natural monuments, artificial monuments, courses, distances, name, quantity Must be delivered: Requires objective manifestation of grantor's intent that the instrument of conveyance take immediate effect. If grantor fails to deliver deed during lifetime, title does not pass to intended grantee. If grantor retains control over deed, there is no delivery. Deed must be accepted by grantee. Some states presume acceptance, others presume acceptance if grantee has knowledge of the deed. |
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Presumptions
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If grantee has the deed, there is a rebuttable presumption that it has been delivered; if Grantor has the deed, then contra presumption.
Acknowledgement and recording of deed creates a presumption that the deed has been delivered. Dating of the deed is irrelevant, but if delivery is established then there is a presumption that the deed was delivered on that date. |
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Conditional Delivery
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Delivery may be subject to a condition precedent.
IF grantor conditions on death, grantor has a life estate & grantee has vested remainder. Grantor may deliver a deed in escrow to a third person with instructions that the deed be delivered to the grantee when the condition occurs. The date that title passes relates back to the time the deed is delivered to escrow holder. Grantor can recover deed from escrow agent prior to condition precedent, unless there is a written K. |
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Covenants of Title
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Six generally found in warranty deed:
1) Covenant of Seisin: Grantor promises he has the estate he is conveying. 2) Covenant of Right to Convey: Grantor promises he has authority to make the grant. 3) Covenant Against Encumbrances: Grantor promises that no physical or title encumbrances exist. 4) Covenant for Quiet Enjoyment: Grantor promises that Grantee's possession will not be disturbed by another party's claim. 5) Covenant of Warranty: Grantor agrees to defend against reasonable claims of title by third party. 6) Covenant of Further Assurances: (not one of the actual covenants): Grantor promises to perform acts reasonably necessary to perfect title conveyed. |
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Breach of Covenants
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Covenants (Seisin, Right to Convey, or Against Encumbrances) are breached, if at all, at the time of conveyance and generally do not run with the land. (i.e. remote grantees can't sue on the covenant)
Covenant Against Encumbrances: most states find breach, even if grantee knew of encumbrance (physical or title), but others find no breach where grantee knew (including CONSTRUCTIVE knowledge) of the encumbrance (i.e. obvious easement.) Covenants of Quiet Enjoyment, Warranty, Further Assurance are not breached until someone interferes with possession of the grantee. (remote grantee can due at the time his possession is disturbed.) Grantor must have notice of claim to be liable, and does not have to defend against wrongful claims. Remote grantee may sue anyone "up the line," but her recovery is limited to the extent of money received by grantor, while other jurisdictions limit recovery to the lesser of what she paid or what grantor received. |
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Recording Act
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Purpose: The recording acts are based on C/L priority favoring BFP for value w/o notice, w/ legal interest in land, over prior equitable interests, where grantor conveyed the same property twice. Applies to any conveyance, transfer or mortgage of real property. Leases over one year, but not interests created by implication or operation of law.
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Estoppel by Deed
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Applies where deed conveys a particular estate: N/A to quitclaims. If grantor conveys land he does not own, but later acquires it, land goes to grantee.
There is a split in authority as to what happens to land if grantor later conveys it to a BFP subsequent to conveying to grantee. Under the majority rule, the grantor is personally estopped from claiming he did not later acquire title for grantee, and thus, BFP will take. Under minority rule, title passes to original grantee by operation of law, and thus takes to the exclusion of any BFPs. |
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Grantee Records
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1) Grantee records her deed in the county in which the property is located
2) Deed is copied and indexed. 2 types of index: Grantor-Grantee Index: an alphabetical index listed under the last name of the grantor or grantee. Tract Index: an index by lot & block number. 3) Acknowledgment or witnesses may be required in some states. 4) Deed must comply w/ necessary formalities, or it does not give constructive notice to BFPs; however, in most states, it is sufficient if subsequent taker has actual notice. 5) Failure to record does not affect rights of grantor & grantee; only relates to the rights of subsequent purchasers. |
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How to Conduct a Title Search
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1) Tract Index: Title searcher will find all conveyances on one page, but must also examine other public records.
2) Grantor-Grantee index: Searcher begins with name of grantor, and checks to see if grantor has already conveyed property to another; the searcher then follows the same procedure for predecessors of the grantor until he reaches the root of title. Other public records must also be checked. Courts are split as to whether an error in indexing will result in a deed being held not to have been recorded. In most states, a deed which is outside the chain of title (i.e. deed woudl not be discovered in a reasonable title search) is deemed not to be recorded. |
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Three Major Types of Recording Acts
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Notice Statute: The last BFP has priority (e.g. "no conveyance shall be good against any BFP unless the same be recorded)
Race-Notice Statute: First BFP to record wins (e.g. "every conveyance which shall not be recorded is void as against any subsequent BFP whose interest shall be first duly recorded.") Race Statute: (Very common): First person to record wins irrespective of notice. |
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Bona Fide Purchaser
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BFP: Must be a "purchaser" "without notice" and pay a "valuable consideration" (must be more than nominal, but doesn't have to be fair market value)
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Tacking and Tolling due to disability of true owner
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Tacking: There need not be continuous possession by the same person. Adverse possessor can tack on his own possession the periods of adverse possession of his predecessors, if they are in privity.
Tolling: SOL does not begin to run if true owner is under some disability to sue when cause of action first accrued. (e.g. minority, imprisonment, insanity). However, "tacking" of the disabilities is not allowed. |
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Adverse Possession
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Title to real property and easements may be acquired by adverse possession. The SOL begins to run when claimant goes adversely into possession of true owner's land
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Elements of Adverse Possession
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Hostile (intend to claim land)
Adverse (in derogation of owner's right) Notorious Open (sufficiently apparent to put owner on notice.) Actual Continuous (although property may be used as the true owner used it--e.g. a hunting camp used only during hunting season--but used EVERY hunting season.) Exclusive (owner and adverse possessor can't possess at the same time. |
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Sale of Mortgaged Property
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Sale to BFP cuts of mortgagee's interest (but mortgages are generally recorded so, no BFP.)
Grantee who takes "subject to mortgage" is not personally liable on the mortgage note, but hte mortgage is satisfied out of land as between mortgagor and grantee. Grantee who assumes mortgage is personally liable on mortgage debt, as is original mortgagor on promissory notes, absent novation. If deed is silent, transfer is treated as "subject to mortgage" if purchase price reflects existence of mortgage debt. |
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Mortgages
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Landowner (mortgagor) borrows money, and gives mortgage on land to secure promise to repay.
Lender (mortgagee) has the right to satisfy debt out of land if loan is not repaid. The transaction normally includes both a promissory note and mortgage. |
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Effect of Mortgage on Mortgagee-Mortgagor Rights
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In majority of states, mortgagee has lien. In other states the mortgagee has title. Treatment of parties is identical in both.
Mortgagor is entitled to possession until foreclosure Foreclosure is by judicial sale. Mortgagee has statutory right to redeem. Deficiency judgment possible where proceeds of the sale are less than the debt, if statutes permit. |
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Who is Protected by the Recording Act?
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General Rule: Only BFPs protected under notice and race-notice statutes.
Purchasers: Buyers are not always protected. Mortgagees: Most statute protect mortgagees. Creditors: Generally creditors normally not protected by recording acts; but creditors who become purchasers by buying in a judicial sale are protected. Some statutes protect creditors against subsequent (but not PRIOR unrecorded) purchasers. Person who buys from heir: Is protected against prior unrecorded conveyances of the ancestor. Person who takes from a BFP: Will prevail against any interests which the transferor BFP would have prevailed against, even if BFP's transferee has actual notice of a prior unrecorded conveyance. However, if transferee previously held title, then this rule does not apply, since transferee could simply wash title through BFP to be protected. |
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AZ:
Estates in Land Present Possessory Estates Defeasible Fees |
AZ courts have indicated that, generally a fee simple subject to condition subsequent will be found only when some words specifically referring to reversion or re-entry have been used. Absent such words, a fee simple absolute will generally be found.
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AZ:
Estates in Land Present Possessory Estates Transferability of Possibilities of Reverter and Rights of Entry |
In AZ, all future interests are fully alienable, both by deed and by will.
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AZ:
Present Possessory Estates Construction of Instruments containing conditional language |
Construe as covenant rather than condition.
A fee estate is not considered defeasible merely because there are words in the conveyance indicating the use the grantor intends for the land. E.g. "to the County for a courthouse and jail and for no other purpose" Ct. held that this was a fee simple absolute--the quoted language indicated only possibly a restrictive covenant, but that even if it were construed as such, it would still not be binding on the county: 1) Benefit did not run with the land since there was no benefited land. 2) It may have been personal to the grantor, but he is dead and cannot enforce it. 3) There were "changed circumstances" (the county's need for a bigger jail) and the court would no longer enforce the covenant. |
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AZ:
Present Possessory Estates Fee Tail |
An attempt to create a fee tail results in a fee simple instead.
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AZ:
Present Possessory Estates Life Estates by Marital Right |
Neither dower nor curtesy exist in AZ, because community property serves the interests they were intended to serve. Moreover, AZ did nto adopt the "elective share" and "augmented estate" provisions of the UPC when it adopted the UPC generally.
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AZ: Future Interests
Destructibility of Contingent Remainder |
By statute, AZ has abolished this doctrine. The statute clearly applies when destructibility would occur because of the termination of the prior estate before the remainder is ready to take. It would probably be construed to apply to all cases of destructibility by merger as well
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AZ: Future Interests
Doctrine of Worthier Title (Rule Against Remainder in Grantor's Heirs) |
AZ abolished this doctrine in 1995
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AZ Future Interests
Rule Against Perpetuities |
By statute, AZ not only continues to follow the common-law RAP, but provides for an alternate vesting period that validates non-vested interests if they IN FACT vest or terminate within 90 years after their creation--applies to interests created in or after 1995.
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AZ: Future Interests
Rule Against Perpetuities: Gift Over to Second Charity |
AZ courts have said in dictum that the Rule does not apply to charitable trusts. It is unclear whether this means only situations in which both the immediate and the subsequent interests are to charities as is generally the law.
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AZ: Future Interests
Rule Against Perpetuities: Gift Over to Second Charity: Trusts |
The RAP does not apply to a trust whose trustee has the power to sell the trust's assets and at least one time after the creation of the trust, at least one person who was living when the trust was created has an unlimited power to terminate the trust.
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AZ: Future Interests
Rule Against Perpetuities: The Administrative Contingency |
The AZ courts have held that a conveyance to take effect on completion of a building to be constructed did not violate the Rule, even though the building might not be finished within 21 years. The court took a "practical" view of the facts, and would probably do so with the other "administrative contingency" cases ("upon probate of my will," "at the end of the war." etc.) and uphold them
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AZ: Future Interests
Rule Against Perpetuities: Perpetuities Reform Legislation |
AZ has adopted the Uniform Statutory Rule Against Perpetuities.
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AZ: The Rule Against Restraints on Alienation:
Reasonable Restrictions on Commercial Transactions |
AZ Ct. of Appeals upheld a clause in a Dairy Queen franchise agreement that prohibited the franchisee from assigning the franchise (including the real estate) without the franchisor's consent. The test was reasonableness, and the court found the restraint reasonable.
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AZ: The Rule Against Restraints on Alienation:
Right of First Refusal |
This is a K by which an owner of land promises to make it available for purchase y A before selling it to anyone else. A is permitted to buy on whatever terms the owner proposes to accept from another. Such a right, if not limited as to time, is sometimes held to violate the Rule Against Perpetuities, or to be an invalid restraint on alienation.
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AZ: The Rule Against Restraints on Alienation:
Right of First Refusal: TEST for reasonableness |
1) Purpose to be served by it
2) Its duration; and 3) The method by which the price will be determined (i.e. is it fair?) |
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AZ: The Rule Against Restraints on Alienation:
Right of First Refusal: Violates the RAP if outside the stat. period |
In the past the courts have tied to get around this outcome by finding tha tit is unreasoanble to suppose the parties intended the right to be exercised beyond 21 years, and thus upholding the validity of a right with no time limit. This will no longer be necessary for any current case or interests created in 1995 or after, as the new statutory period of 90 years which uses the wait-and-see approach to vesting will virtually always save options and rights of first refusal.
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AZ: Concurrent Estates
Creation of Joint Tenancy |
In AZ a strawman conveyance is no longer required. (i.e. a joint tenancy with right of survivorship may be created by a transfer from a sole owner to himself and others (or from multiple owners to themselves and others)
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AZ: Concurrent Estates
Express Language Required for Creation of Joint Tenancy |
The AZ statute presumes that a conveyance to multiple grantees creates a tenancy in common, with the following exceptions:
-Executors and trustees are presumed to take as joint tenants; and -Husbands and wives are presumed to take as community property A joint tenancy can be created in any type of grantee (and the general presumption overcome) by the use of express words. The statute probably requires that the word "survivorship" be used, rather than merely such words as "joint tenants" |
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AZ: Concurrent Estates
Joint Tenancy--Severance: Mortgages |
A deed of trust, given by one of several joint tenants does not cause a severance. If the signing joint tenant survives, the lender has a deed of trust on the entire estate. Because a deed of trust is more similar to an ordinary deed than it is a mortgage, (esp. in AZ, which follows the lien theory of mortgages,) it would seem obvious that likewise a mortgage will not cause a severance.
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AZ: Concurrent Estates
Joint Tenancy--Severance: Executory K by All Joint Tenants |
AZ has several cases in which divorcing couples, previously joint tenants, were alleged to have caused a severance. In Estate of Estelle, the settlement agreement said they would sell their house and divide the proceeds equally. This was held to indicate an intent to sever, and was effective to do so. Compton v. Compton agreed, but held that a mere agreement to divide the proceeds if a sale occurred would not cause a severance.
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AZ: Concurrent Estates
Joint Tenancy--Severance: Executory K by All Joint Tenants: Status of Proceeds of Sale of Joint Tenancy Property |
If joint tenants sell their property, there is generally no right of survivorship in the proceeds of the sale. However, if the parties form the intent to hold the proceeds JTWROS, the court will enforce that intent. Parol evidence of such intent is admissible.
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AZ: Concurrent Estates
Joint Tenancy--Severance: Murder of one Joint Tenant by Another |
In AZ, if one joint tenant feloniously kills another, the killer's interest is severed, and the interest becomes a tenancy in common. Thus, the killer keeps his original fractional share, but has no right of survivorship in the share of the decedent.
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AZ: Concurrent Estates
Tenancy by The Entirety |
AZ does not recognize this from of co-tenancy. In effect, community property accomplishes many of the same policy objectives in AZ.
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AZ: Concurrent Estates
Tenancy in Common |
Where tenants in common receive the land as a gift, it is presumed that they own equal shares unless the grantor specifies to the contrary. Where tenants in common purchase their interests, their shares are presumed to be proportional to their financial contributions. However, the parties contrary interests will override this presumption, and parol evidence of such intent is admissible. In Carroll v. Lee, an unmarried couple had lived together for 14 years. The male co-tenant had contributed most of the cash payments for the real estate, and claimed a commensurate share of ownership. But, the court found very strong parol evidence that the parties had intended to own in equal shares, and held that they owned equally.
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AZ: Concurrent Estates
Incidents of Co-Ownership: Ouster |
If the co-tenant in possession commits an ouster, he loses his right to contribution.
In Morga v. Friedlander, one of two atty co-tenants paid rent on the underlying estate, but then changed the locks and removed the other attys name from the door. This was held to be an ouster, barring him from contribution for the rent he had paid. |
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AZ: Concurrent Estates
Remedy of Partition: SOL |
In a partition action, the court will do an accounting, settling amounts owed by the co-tenants to one another for rent, repairs, taxes and the like. There is no SOL on these matters and the court will go back in the co-tenants ownership as far as necessary to establish a complete accounting.
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AZ: Concurrent Estates
Remedy of Partitiion: Improvement |
In a partition sale, the co-tenant who made improvements is entitled to recover the increment they made to value, even if this is more than their cost.
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AZ: Concurrent Estates
Taxes and Mortgages: Contribution can be compelled |
Several AZ cases contain dictum that "a joint tenant has a right to contribution from other joint-tenants for expenditures made for all." e.g. mortgage interest, essential maintenance.
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AZ: Concurrent Estates
Duty of Fair-Dealing Among Co-Tenants |
In one AZ case, a partition sale was held of property worth $6K. One of the co-tenants was the successful bidder witha bid of $59. The court held such a bid shocking to its conscience in light of the duty of fair dealing, and set the sale aside.
However, in a tax sale there is no violation of the duty of fair dealing if (i) Each co-tenant's interest is assessed as a separate tax parcel; and (ii) one buys the other's interest at the tax sale. Co-tenants are not agents of one-another. Thus, one co-tenant cannot bind another by signing a petition of annexation of the property into a municipality. Each co-tenant's signature counts only for his proportionate share of ownership. |
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AZ: Landlord and Tenant
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ARIZONA:
Need to know: ARLTA General AZ Landlord Tenant Law |
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AZ:
ARLTA: |
Applies only to dwelling units.
EXCLUDED: 1) Residence at an institution providing medical, educational, counseling or religious services 2) Occupancy by a purchaser of land under a K sale 3) Occupancy by a member of a dwelling operated by a fraternal or social organization 4) Transient lodging in a motel, hotel or recreational facility 5) The dwelling unit of a tenant manager who lives on the premises being managed. 6) Condominium or cooperative units occupied by teir owners (a rental by the owner of the unit to a tenant is covered) ; and 7) Public housing. |
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AZ::
Nature of Leasehold: Tenancies for Years |
AZ courts prefer to construe a tenancy as having a fixed term rather than as perpetual in cases of ambiguity
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AZ: Nature of Leasehold
Periodic Tenancies: Notice |
ARLTA: Non-ARLTA
w--w 10 dys 1 wk* m-m 30 dys* 10 dys * = tenancy must end at end of "natural" period e.g. wk/mo. etc. Year to year terminates at the end of each year unless landlord gives written permission. w/ permission termination occurs @ time specified in permission. |
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AZ: Nature of Leasehold
Tenancy at Sufferance |
A tenant who holds over w/landlord's permission is not a tenant at sufferance OR a tenant at will.
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AZ: Nature of Leasehold
Hold-Over Doctrine |
Landlord may seek forcible entry and detainer to remove the holdover.
In non-ARLTA cases, if landlord does not seek FDE, ALL holdovers become m-to-m tenants except roomers who pay weekly become week-to-week tenants. If a tenant holds over willfully and in bad faith, landlord may recover damages equal to the greater of two months rent or double-actual-damages. |
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AZ: Nature of Leasehold
Forcible Entry Statutes |
Under ARLTA even when lease has been terminated, landlord self-help eviction (e.g. changing locks, cutting off utilities, etc.) is prohibited.
Self-help eviction is still permitted in non-residential tenancies--landlord may re-enter and take possession) AZ has a FED statute which permits landlord to recover possession for breach of lease or breach of ARLTA. |
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AZ: Nature of Leasehold
Children |
Landlord who discriminates against families with children is guilty of a petty offense unless there is a restrictive covenant in place or the property is in a subdivision designed, advertised, and and used exclusively for adults.
A person who rents to families with children in violation of such a covenant or subdivision design is guilty of a petty offense. |
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AZ: Leases
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Covenants by landlords and tenants in a lease are mutually dependent in AZ. If L breaches a covenant and thereby deprives T of a significant inducement for making the lease, T can terminate the lease.
In an action by one party against another, the SOL (6yrs) begins to run when the P knew or reasonably should have known of D's breach. |
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AZ: Leases
Unconscionability |
A ct. may refuse to enforce an unconscionable provision in a lease.
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AZ: Leases
Atty's Fees |
A T may not waive his rights under ARLTA. T may not agree in lease to pay a L's atty fees unless agreement is reciprocal. In an FED action, the prevailing party is always entitled to atty's fees whether the lease so provides or not.
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AZ: Leases
Mobile Home Space Leases |
Similar to the ARLTA but apply only to MH sites.
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AZ: Leases
Mobile Home Space Leases Written Lease |
A signed, written rental agreement must be executed--L and T may agree to any term, but if they can't agree, the term is 12 mo.
Req. good faith. On expiration of lease, m-to-m tenancy arises, unless either party requests a new written agreement. On written notice, 90 days prior to expiration, L may increase or decrease rent to be owed in new term |
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AZ: Leases
Mobile Home Space Leases No Right of Access |
L has no right of access to the mobile home unless T consents.
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AZ: Leases
Mobile Home Space Leases Use as Dwelling |
Absent another agreement, T must use MH only as a dwelling, and may sublet only with L's consent.
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AZ: Leases
Mobile Home Space Leases Termination |
L may terminate or refuse to renew a tenancy only for good cause, and must give a specific reason.
Good cause includes default on any lease provision, non-payment of rent, change in use of land, and a pattern of T violating Mobile Home Parks Act. |
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AZ: Leases
Mobile Home Space Leases Change in Land Use |
If a change in land use forces T to move, T is entitled to payment from the Mobile Home Relocation Fund.
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AZ: Leases
Mobile Home Space Leases Registration Form |
L must require each T to fill out a registration form showing the owner and the lienholder of the MH, and must keep it on file.
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AZ: Leases
T Duties and L Remedies T's Duty to Repair |
Under ARLTA, the tenant must comply with codes, keep property clean and safe, remove garbage, keep plumbing fixtures clean, use facilities and appliances in a reasonable way, not deliberately or negligently damage property, and not disturb her neighbors' peaceful enjoyment.
" If T fires a gun, inflicts serious harm on, or threatens, intimidates or assaults the landlord, his agent or other tenants, the landlord may terminate the lease immediately" |
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AZ: Leases
T Duties and L Remedies T's Duty to Pay Rent: Percentage Commercial Leases |
In commercial leases that call for both fixed and percentage rent, ct. will imply covenant by the T to remain in continuous operation if the fixed rent alone is so low as to give landlord unfair return. Thus, T is not permitted to close the business and merely pay the fixed rent.
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AZ: Leases
T on Premises but Fails to Pay: Non-ARLTA Cases |
In non-ARLTA cases, the L may terminate the lease and bring FED action if rent is 5 days delinquent or if T violates any provision of the lease (even a nonmaterial breach) No written notice of default is required, and once the lease has been terminated, no further notice is necessary before filing FED action.
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AZ: Leases
T on Premises but Fails to Pay: ARLTA Cases |
L may terminate the lease and file a FED action if rent remains unpaid for 5 days after written notice to "quit or pay rent" No further notice necessary prior to filing FED. Up to date of judgment in FED action, T may reinstate lease by paying delinquent rent plus L's atty fees.
Once judgment for possession has been served on T, L may isntruct the utility co. to turn off utilities. |
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AZ: Leases
T on Premises but Fails to Pay: Non-ARLTA Cases: FED |
Issues are limited to
1) whether there is an existing lease, and 2) whether it should be terminated for nonpayment or rent or other breach by T. Counterclaims or offsets by T are not allowed. Issues of validity of L's title are not permitted--T cannot attack L's title to avoid rent liability. Validity of lease K may NOT be tried in FED action. |
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AZ: Leases
T on Premises but Fails to Pay: ALL Cases: FED |
In all FED actions, L may recover a judgment for any delinquent rent. However, other amounts the T has agreed to pay but failed to pay, such as property taxes, are not recoverable in FED proceedings, unless designated in lease as "additional rent"
When T fails to pay, L may hold T's personal property for a period of 21 days from the day a writ of restitution or writ of execution is executed. To reclaim, T shall pay L only the cost of removal and storage. |
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AZ: Leases
Landlord's Lien for Delinquent Rent |
ARLTA has abolished L-Lien on T's goods in residential leases
In non-residential leases, L may assert a lien on T's goods if the rent is delinquent. Even goods of a person who is not technically tenant, assignee or sub-T may be liened if the person owes rent. |
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AZ: Leases
Landlord's Lien for Delinquent Rent: Assertion of Lien |
L may seize the goods, and if the rent is not paid within 60 days, may sell at auction. No judicial process required.
L can assert lien even where he has wrongfully excluded T, and even though he has seized more goods than necessary to satisfy rent claim. (L must return surplus, if any, after auction) |
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AZ: Leases
Landlord's Lien for Delinquent Rent: Assertion of Lien: Priority |
L's lien takes priority from the date the lease commences, if goods present on premises that day, or on the later date that the goods are brought on the premises. If Art. 9 security interest is perfected before the goods are brought on the land, it will have priority. ALL PURCHASE MONEY security interests in goods take priority.
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AZ: Leases
Tenant Abandons Premises |
ARLTA: Premises are abandoned if T is absent 7+ days without notice to L, rent is 10+ days delinquent, and no evidence other than T's property that T is still occupying property. OR T absent 5+ days, rent unpaid 5 days, and T's property absent. When T abandons, L permitted to take possession of goods, and after attempting to notify T, sell them 10 days later.
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AZ: Leases
T Abandons: L's Duty to Mitigate |
In both ARLTA and non-ARLTA cases, L has a duty to mitigate damages by trying to re-let. Under ARLTA, if he fails to do so, old lease terminated. Non-ARLTA, L's claim reduced by amount tha tL could have earned by a reasonable attempt to relet.
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AZ: Leases
T Abandons: L's Right to Sue Immediately |
L may sue immediately for the present value of damages if the lease so provides.
If L re-lets to new T who will pay more rent than previous T, original T is not entitled to claim the difference, nor to have the difference applied to T's liability for L's loss during the time L was seeking a new tenant. |
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AZ: Leases
L's Right to Enter Premises |
T may not unreasonably withhold consent if L needs to enter premises to inspect, repair, etc. L must give 2 days notice of intent to enter, except in an emergency where she can enter without notice or consent.
If T refuses reasonable access to L, or if L makes unlawful or harassing entries, T can get an injunction or damages, or can terminate lease. |
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AZ: Leases
L Duties and T Remedies Utilities |
Under ARLTA, L must comply with building codes, keep property in habitable condition, keep common areas safe and clean, maintain all facilities and appliances supplied by him, provide trash removal, and supply water, heat and air conditioning, unless these facilities are under T's exclusive control and connected directly to utility lines.
L and T may agree in good faith that T will perform specified repairs or maintenance. In single-family-residence, they may also agree that T will provide trash-removal, heat, water and a/c. Such agreements must be in writing, with adequate consideration. If L obtains utilities and resells them to T's, he may not charge Ts more than his cost, plus admin. fees. |
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AZ: Leases
L Duties and T Remedies Duty to Deliver Possession of Premises |
L obligated to give T exclusive possession and remove any holdover.
T has specific remedies, including terminating tenancy on 5 days notice, suing person in wrongful possession for damages and recovering damages from L. If L acted willfully and in bad faith, T can recover the greater of two months rent, or double actual damages. |
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AZ: Leases
L Duties and T Remedies Quiet Enjoyment |
T may terminate lease if property is damaged or destroyed by fire or other casualty. Under ARLTA, no contrary agreement is enforceable. ARLTA: T may terminate if enjoyment is substantially impaired (old statute: required property to be "untenantable") . T may continue to occupy part of premises, if lawful and abate the rent pro rata.
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AZ: Leases
L Duties and T Remedies Constructive Eviction |
Under AZ law, only an intentional act of L will suffice for CE.
Thompson: Employees of another T in the same building were pissing on a party wall causing T's premises to stink. Ct held L not liable b/c acts were not L's. Conditions must be VERY bad for constructive eviction. A zoning ordinance that prevents T's intended use is not a constructive eviction |
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AZ: Leases
L Duties and T Remedies Implied Warranty of Habitability |
ARLTA adopts this warranty because it require Ls to comply with local codes affecting health and safety.
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AZ: Leases
L Duties and T Remedies Implied Warranty of Habitability: Remedies |
If L fails to repair, T may:
1) Claim damages or terminate lease after notice and time to cure. Damages may include the reduced rental value of premises, injury to personal property, medical expenses, mental distress, and even lost profits for a business carried on in residential premises. 2) T may repair and deduct 3) If essential services cut off, T may, after reasonable notice: -obtain services and deduct cost from rent due. -recover damages equal to diminution in fair rental value -Obtain reasonable substitute housing at a cost of up to 125% of the old rent, and recover different from L -If cutoff was deliberate, recover from L the actual cost of reasonable substitute housing (up to amount of old rent) AND be excused from paying old rent. 4) T may raise L's default as defense if L sues to terminate lease 5) If L unlawfully ousts or cuts off utilities, T may terminate lease and recover 2 mo. rent / or twice actual damages (whichever is greater) 6) Terminate for material breach of the lease or ARLTA provisions re: health or safety. (Lease breach w/ 10 days notice, ARLTA breach w/ 5 days notice) If T given notice to cure and does so, but then commits a similar breach in the lease term, L may terminate lease following 10 day notice. (Inoperable toilet is a breach of ARLTA health/safety, even when apt. has a 2nd working toilet.) |
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AZ: Leases
L Duties and T Remedies Destruction of Premises |
Both AZ prior law and ARLTA permit T to terminate if property damaged or destroyed by fire or other casualty. Under ARLTA, no contrary agreement is enforceable, and T may terminate if enjoyment substantially impaired. Prior statute required "untenantable"
Under ARTLA, T may continue to occupy (if lawful) and abate rent pro rata. |
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AZ: Leases
L Duties and T Remedies Implied Warranty of Habitability: Retaliatory Actions |
Under ARLTA: L may not raise rent, reduce services, or terminate tenancy for T's:
1) Complaining to gov't about code violations. 2) Complaining to L about violation of legal duties. 3) Organizing or joining tenant's organization. 4) Complaining to gov't about wage-price law violations Adverse actions by L within 6 mo. of T filing one of the above are presumed retaliatory/illegal. L can always terminate tenancy if T is the cause of code violation or in default on rent. T NOT protected from eviction for activities other than those listed in the statute (e.g. miners evicted for joining in strike) Retaliatory defense available to periodic and fixed term leases: L's refusal to renew 1-yr lease b/c T had complained about bad plumbing was retaliatory |
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AZ: Leases
L Duties and T Remedies Implied Warranty of Habitability: Retaliatory Actions: Security Deposits |
Security deposit not to exceed 1.5 mo. rent. Includes pre-paid rent, but not amount stated to be non-refundable. L must give T refund and/or itemized list of deductions within 14 business days after termination of tenancy.
Failure to do so creates liability to T for property and money due the T with damages double the amount wrongfully withheld (interpreted to mean treble damages) |
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AZ: Leases
Assignments and Subleases Consequences of Sublease |
AZ stat: every person in possession of land on which rent is due is liable for his proportionate share of the rent agreed to in the lease.
Sub-Ts would be personally liable for rent for the time they are in possession. This statute does not apply to a purchaser under a real estate sale K who takes possession prior to closing. |
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AZ: Leases
Assignments and Subleases Covenants Against Assignment/Sublease: Reasonbleness |
If lease contains clause requiring L's permission for sublease, L can only withhold consent on reasonable grounds, unless lease gives him clear right to be arbitrary.
If L purports to terminate lease, b/c T made an unconsented to assignment, T may defend by showing that L's refusal to consent was unreasonable. L's desire for higher rent is not a good ground. L MAY demand reasonable credit info about proposed new tenant and withhold consent if it is not made available to him. |
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AZ: Leases
Assignments and Subleases Assignments by L: |
Assignment by L is treated on the same principles as assignments by T's. New L can recover for breach of repair or waste by T.
If L sells to BFPV the ARLTA relieves him of liability for any future breaches or the lease or ARLTA. He remains liable for security deposits owed to the tenants. |
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AZ: Leases
Tort Liability of L and T: Duty of Care BOTH R & NonR tenancies |
General duty of reasonable care: Cases hold L to ordinary negligence standard ("did he act as a reasonably prudent person under the circumstances)
L must know of defect or have reason to know of defect. L has duty to inspect common areas adn keep them safe--even where hazard is caused by a T. L has been liable for soaking T's apartment with chemical, and lying to treating physician about nature of chemical was held liable. L of MHP liable for refusing to allow T to erect fence to keep T's ch. from going into busy st. liable for ch's injury. L who leased stable liable for injuries to T who hit her head on a low-hanging shed roof when her horse bolted. |
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AZ: Leases
L's Liability for Criminal Conduct |
L's duty to use reasonable care extend to dangerous activities including prevention of harm from foreseeable criminal intrusions.
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AZ: Leases
L's Duty to Warn: Exception |
L under no duty to warn T of a condition that T reasonably believes T will discover, unless L has reason to believe that T will not appreciate the risk. If T has had adequate opportunity to discover hazard, L is not liable to T or his guests.
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AZ: Leases
L's Liability for Nuisance |
If T commits nuisance on leased premises, L will be liable provided he has notice of it, and ability to remedy (e.g. by terminating lease)
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RIGHTS IN THE LAND OF ANOTHER
Easements: Quasi-Easement |
Only reasonable necessity rather than strict necessity is required. Ct. of App. rejected implied easement for view where house that interfered w/ P's views was built shortly after their own house was completed, and where in any event, the view was not necessary.
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RIGHTS IN THE LAND OF ANOTHER
Easement by Necessity |
Landlocked owner has private power of eminent domain to condemn an easement for access, transmission lines, canals, drains and tramways. He must pay compensation, and owner who uses this statute is still bound by zoning ordinances.
Common law of easement of necessity also available in AZ and statute may not be used if a common law easement of necessity exists. If a landowner subdivides so as to leave himself landlocked, he can't claim an easement by necessity. |
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RIGHTS IN THE LAND OF ANOTHER
Prescriptive Easement |
Time: 10 years
Adverse: if servient owner attempts to physically bar adverse use, but easement claimant breaks down barrier, the statutory period is not interrupted--in fact they demonstrate that the required hostility exists. However, in the absence of any proof of permission, hostility is presumed. |
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RIGHTS IN THE LAND OF ANOTHER
Easement by Prescription: Continuous Use |
Prescriptive use must be regular, but does not have to be frequent. Zuni tribe was awarded a prescriptive easement for a route used as a religious pilgrimage, even though they used it every four years over a period of more than 65 years.
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RIGHTS IN THE LAND OF ANOTHER
Easement: Changes in Use |
If the grant of the easement gives it a specific width, the servient owner may not obstruct that full width with curbs, even though the dominant owner is using only a portion of it. But, if no specific width is mentioned, then a reasonable restriction in the width is permitted.
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RIGHTS IN THE LAND OF ANOTHER
Easement: Use of Servient Estate |
The servient owner may maintain a gate across a road right-of-way as long as it is necessary to the servient owner and does not unreasonably interfere with a passage.
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RIGHTS IN THE LAND OF ANOTHER
Easement: Use of Servient Estate, Additions to Dominant Estate |
Dominant owner is not permitted to use the easement for any land other than that of the original dominant land, even if the burden on the easement would not be increased by such use. In one case the ct. required a redesign of a shopping ctr. so that an easement appurtenant to one portion of its parking lot could not be used by customers to reach another portion of the parking lot.
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RIGHTS IN THE LAND OF ANOTHER
Termination of Easements by Prescription |
An easement may be terminated by the servient owner's adversely blocking it off. However, this is effective only if the easement holder is actually attempting to make use of the easement.
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Covenants Running with the Land at Law: SOF
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AZ SOF applies to covenants and oral covenants are not binding. However, lot owners who relied on an oral promise by a developer to leave abutting land as a golf-course were permitted to enforce it on estoppel / part performance theory.
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Covenants Running with the Land at Law:
Horizontal Privity |
For enforcement at law, AZ requires privity between original parties to the covenant. Placing the covenant in a deed between the parties would apparently be sufficient.
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Covenants Running with the Land at Law:
Touch and Concern |
In AZ a covenant to pay dues to an owner's association to maintain common recreational facilities touches and concerns the land. However, the covenant will be construed narrowly; thus, a covenant to pay dues "for costs and expenses incurred in maintenance" does not obligate the owners to pay for buying additional common areas or for other costs unrelated to maintenance.
A covenant to supply water to specific land also touches and concerns the land. However, a covenant by a water supplier to refund a deposit made by the original water purchaser does not run with the land so as to be collectible by a subsequent owner of the land. |
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AZ:
Equitable Servitudes: Implied from Common Scheme |
AZ cts will find a "common scheme" only if the covenants specifically refer to the fact that such a scheme exists, or if they state the extent of the land to be governed by identical covenants. The mere presence of identical covenants in a set of deeds is not enough.
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AZ:
Equitable Servitudes:Equitable Defenses to Enforcement |
AZ cts will decline to enforce a covenant in equity if it has been abandoned (as shown by non-enforcement) or if circumstances have changed within the subdivision that enforcement would no longer be sensible. Changed conditions outside the subdivision, although nearby, will not produce this result.
Moreover, increased gov't regulation, even if it makes the use of the land under the covenant uneconomical, is not the sort of changed condition that will result in a court's refusal to enforce the covenant. Covenant that prohibits group homes for the mentally retarded violates the Developmental Disabilities act of 1978, and therefore is unenforceable, as a matter of public policy. |
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AZ:
Equitable Servitudes: Termination |
If the covenants provide that they can be amended or revoked by some percentage vote of the owners, then the required percentage can make any uniform change--even making association membership voluntary and eliminating the association's power to impose assessments. Amendment that imposes non-uniform changes is only binding if 100% of the affected landowners vote for it.
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AZ:
Equitable Servitudes: Waiver |
An owner's association may have the power to grant waivers of the covenants--however, granting waivers of a rule against grape-stake fences to some owners who asked in advance, does not obligate the association to grant waivers to another homeowner who did not ask in advance.
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AZ:
Adverse Possession: Generally |
NO more than 160 acres of land may be gained by adverse possession unless claimant holds under color of title
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AZ:
Adverse Possession Requirements |
Applicable statutory period in AZ is 10 years, with shorter periods in some circumstances--e.g. 2 years for real property is sufficient to establish possession against someone who shows no better right.
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AZ:
Adverse Possession Requirements Open and Notorious Possession |
Not essential that true owner have actual notice of the adverse possession, but the AZ cases treat such notice as strengthening the adverse possessor's claim
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AZ:
Adverse Possession Requirements: Actual and Exclusive Possession |
The adverse possessor must hold the land exclusive of the true owner, and also exclusive of competing adverse possessors.
Possession must be actual. Grazing livestock is not sufficient unless land is fenced or livestock are tethered to confine them to the disputed land. However, if land is fenced, it is not necessary for the adverse possessor to prove that his livestock actually grazed up to the fenceline. Tenant's possession accrues in favor of the landlord, provided the landlord has authorized the tenant to possess the disputed land. |
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AZ:
Adverse Possession Requirements: Continuous Possession |
Only the degree of continuity of possession to which the land is reasonably susceptible is required. A vacation cabin occupied for two to three weeks each summer for 30 years was held to be sufficient.
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AZ:
Adverse Possession Requirements Tacking Permitted |
AZ permits tacking if there is privity among successive adverse possessors. Privity can be established by informal oral transfer from one possessor to the next. A writing will suffice but is not necessary.
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AZ:
Adverse Possession: Hostility |
In AZ merely means acting like the owner. Whether the adverse possessor knows she is on someone else's land is immaterial.
Actual notice to the true owner of the adverse possessor's hostile possession is necessary in cases where the AP might be assumed to have permission to be on the land (e.g. where adverse possessor is close relative of true owner, or where AP is a former owner who remains on the land after selling it to a new owner.) |
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AZ:
Adverse Possession: Future Interests |
Non-possessory interests are not cut off by an adverse possessor. AP does not begin to run against holder of future interest until his interest becomes possessory.
AP will not begin to run against holder of mortgage or deed of trust on property until lender has acquired right of possession of land. |
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AZ:
Adverse Possession: Land that Can't Be Adversely Possessed |
In AZ, no title by AP can be obtained against fed., state or local gov't land.
If mineral estate has been severed from surface estate, AP of the surface will not give possessor title to minerals--this can be accomplished by active exploration or production of minerals. . |
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AZ:
Adverse Possession: Special Short Statutes |
Three special statutes in AZ shorten the statutory period for adverse possession:
1) Three years if the instrument is not in the regular chain of title 2) Five years if the claimant holds a city lot and paid taxes on it and if the deed is recorded 3) Five years if the claimant has cultivated and used the land, and if the deed is recorded. |
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AZ
CONVEYANCING: LAND SALE K's SOF Applicable |
AZ SOF applies to Ks for sale of land. Like most state statutes, it requires a writing signed by the party to be charged--i.e. the person resisting enforcement of the K. There is no requirement that the person seeking to enforce the K have signed it.
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AZ
CONVEYANCING: LAND SALE K's Doctine of Part Performance |
AZ permits enforcement in equity--but not in law--of oral land sale K if "part performance" is shown. However, the cases are not consistent in defining the acts necessary to constitute part performance. Under one widely cited case, the purchaser must either
1) Make substantial improvements; OR 2) Take possession and make a partial payment on the purchase price in reliance on the K. Other cases suggest that a broader range of acts might estop the purchaser from asserting the lack of a writing. |
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AZ
CONVEYANCING: LAND SALE K's Risk of Loss |
AZ follows the doctrine of equitable conversion. Unless the parties K otherwise, risk of loss is on the purchaser during the executory period. However, if the vendor is insured, he must credit the purchaser with the insurance proceeds when enforcing the K.
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AZ
CONVEYANCING: LAND SALE K's Marketable Title: "Marketability Defined" |
Marketable title is one that is:
1) free from reasonable doubt 2) Free from reasonable probability of litigation 3) Not clouded by outstanding covenants; encumbrances, etc. 4) Of record |
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CONVEYANCING: LAND SALE K's
Merger |
Ordinarily the implied covenant of marketable title is merged into the deed at delivery. Grantor can't thereafter bring an action for title defect based on the K, but can instead proceed under the deed warranties of title, if any. However, this rule may be overriden by a showing that the parties intended the K covenants of title to survive delivery.
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CONVEYANCING: LAND SALE K's
Time of Performance |
AZ follows the usual rule that time is not generally of the essence. Either party CAN make time of the essence by a reasonably timed notice to the other.
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AZ
CONVEYANCING: LAND SALE K's Remedies for Breach of the Sales K-- Special Rules for Unmarketable Title |
If the title is unmarketable, the purchaser can recover her earnest money with interest and any out-of-pocket expenses, but apparently cannot recover loss-of-bargain damages so long as the vendor acted in good faith.
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AZ
CONVEYANCING: LAND SALE K's Warranty of Fitness or Quality |
AZ imposes such a warrant on builders of houses. P can recover both in K (for breach) and in tort (for damages for negligence) Separate SOLs apply to each theory. Under the K theory, privity is not required, and a subsequent owner can recover from the original builder.
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AZ
CONVEYANCING: LAND SALE K's IMPLIED Warranty of Fitness or Quality |
Also applies to the sale of a finished residential lot, although the developer has built no house upon it. The developer is liable for for improperly filling the land.
While there is no implied warranty of quality in the sale of a used house, a seller does have a duty to disclose known defects that purchaser does not know. (e.g. termite infestation) |
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AZ
CONVEYANCING: DEEDS Form and Content |
By statute, the words "grant" or "convey" in a conveyance imparts a warrant that, at the time of the execution of the instrument, the grantor has not conveyed the same estate or any right, title, or interest therein to one other than the grantee and that the estate is free from encumbrances including tax, assessments and all liens.
An action will lie to enforce these covenants as though expressly stated. |
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AZ
CONVEYANCING: DEEDS Description of Land and Parties |
A deed to or from a fictitious person is void, but if the court can determine the identity of the actual person intended, it will reform the deed to reflect that person's name.
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AZ
CONVEYANCING: DEEDS Attestation and Acknowledgement |
AZ follows the unusual rule that a deed is invalid if not acknowledged before a notary or other proper officer. (in most states such a deed is valid, but unrecordable)
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AZ
CONVEYANCING: DEEDS Description of Land Conveyed |
A conveyance of "20 acres (otherwise unidentified) out of" a larger parcel conveys an undivided fractional share of the whole parcel.
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AZ
CONVEYANCING: Delivery and Acceptance- Presumptions Relating to Delivery |
AZ delivery is required for a conveyance to pass.
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AZ
CONVEYANCING: Delivery and Acceptance- Conditions not Contained in Deed |
In AZ, if a deed that is absolute on its face is delivered with oral conditions, the conditions drop out and the conveyance is immediately effective.
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AZ
CONVEYANCING: Delivery and Acceptance- Where Grantor Gives Deed to Third Party |
AZ law makes the escrowee in a land conveyance a fiduciary of the parties, and liable for failure to comply with his instructions. Escrowee has an implied duty to disburse the purchase proceeds to the seller after paying all the other property charges. However, he has no implied duty to check or examine the title to the property or to obtain title insurance for the purchaser.
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AZ
CONVEYANCING: Delivery and Acceptance: Breach of Escrow Conditions: |
If escrowee delivers a deed to the grantee in violation of his instructions, no title passes to the grantee.
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AZ: Covenants for Title and Estoppel by Deed
Covenant of Right to Convey |
Married person, 18+ may convey her separate property without being joined by her spouse in such conveyance. Conveyance or encumbrance of community property is not acknowledged by both H and W.
Generally a family homestead can't be conveyed or encumbranced by a spouse without the other spouse's consent. Consent is shown by each spouse signing and acknowledging conveyance. Consent of a non-owner spouse is not required where the homestead property is conveyed or encumbered by an owner spouse who holds title to the property as sole and separate property. |
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AZ: Covenants for Title and Estoppel by Deed
Statutory Special Warranty Deed |
If the words "grant or "convey" are used, deed is deemed to warrant that:
1) Grantor has not previously conveyed a conflicting estate to any other person; and 2) Estate is free of encumbrances. "Future Covenants" --SOL commences only when a claim of paramount title is asserted, not at delivery of deed. Statute protects grantee's "heirs and assigns" so the covenant will probably be held to run with the land. If property is sold subject to a lien or encumbrance (not including taxes, easements or covenants) the buyer has the right to avoid the sale unless she is assured she will take title free of lien upon completion of all payments she is required to make. |
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AZ: Conveyancing
Recording: What can be recorded--instrument affecting interest in land |
A security interest in a lienhold must be recorded in the real estate records, not as a UCC financing statement.
A resulting trust or equitable lien is outside the scope of recording act. Even a BFPV will take subject to such an interest even if it is not recorded. A person who records a false or forged document is liable to the true owner for $5K, or three times the actual damages, whichever is greater. Recording such a document is also a misdemeanor. |
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AZ: Conveyancing
Requirements for Recordation: -Disclosure of Beneficial Owners |
AZ has an unusual statute that requires that every conveyance in which the grantor or grantee acts in a representative capacity (e.g. as trustee) must also name the principals or beneficiaries for whom he acts. Failure to do so makes the conveyances "voidable" which presumably means that it is unrecordable.
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AZ: Conveyancing
Mechanics of Recording |
If transferor of land does not record the transfer within 60 days, he is liable to transferee for any resulting damages.
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AZ: Conveyancing
Notice Statutes |
AZ's act is of the pure notice type, it makes unrecorded conveyances void as to subsequent purchasers "for valuable consideration without notice" However, a deed is still valid as between its parties without recordation.
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AZ: Conveyancing
Judgment Creditors |
AZ: Judgment creditor who obtains judgment lien on land is considered to have paid value, and hence can be a BFPV. Therefore, the lien will take priority over a prior unrecorded deed. This is a relatively unusual approach.
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AZ: Conveyancing
Record Notice: Chain of Title |
There are no AZ cases on these issues. Not likely courts would hold a deed to be ineffective because it was wild, or recorded exceptionally early or late.
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AZ: Conveyancing
Merchantable Title Act. |
Ain't got one.
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AZ: Conveyancing
Generally, No Inquiry from Quitclaim Deed |
Can be a BFPV despite having taken by quitclaim deed.
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AZ: Conveyancing
Inquiry from references in recorded instruments |
AZ adopts the view that references in recorded documents to unrecorded documents impart notice of the latter.
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AZ: Conveyancing
Inquiry from Possession |
Appearance of the premises may impart notice under AZ law. In one case, drugstores sign on its space in a shopping center was held to give notice of the drugstore's lease, although it was not properly recorded.
Buyer has a duty to inquire of the seller if the circumstances indicate some other party is in possession or is making some claim. |
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AZ: Conveyancing
Valuable Consideration |
In AZ, the consideration must be more than nominal--love and affection is also insufficient.
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AZ: Conveyancing
Valuable Consideration: Recordation has no effect on resulting trust or equitable lien |
A resulting trust or equitable lien is outside the scope of the recording act; thus, even a BFPV of land will take subject to such an interest, even if it is not recorded.
However, if equitable lien could have been recorded--as mechanic's lien--but was not, BFPV will take free of it. |
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AZ
SECURITY INTERESTS Types of Security Interests: Mortgage |
Must be foreclosed by judicial action. AZ follows the lien theory, which states mortgagor retains legal title, and gives mortgagee a lien on the land and rents that are a part of the fee interest.
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AZ
SECURITY INTERESTS Types of Security Interests: Mortgage Dragnet Clauses |
Mortgage secures not only the loan being made at the time, but all other indebtedness that the borrower may incur or owe to the lender in the future. AZ cts have construed dragnet clauses strictly and have enforced them to secure a later, unrelated indebtedness only when :
Subsequent debt is similar in nature to original loan; or Documents for later indebtedness specifically stated that it is scured by original mortgage |
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AZ
SECURITY INTERESTS Types of Security Interests: Mortgage Limitations on Payment Schedule |
Normally, no legal limitations on nature of payment schedule, however ARS limits baloon payments. No payment can exceed twice the smallest payment. It applies only to junior (not first) mortgage/deed of trust loan on owner occupied properties made by entities in the lending business with an amount not exceeding $10K, and a term of up to 3 years. It does not apply to federally or state chartered lenders or to purchase money loans made by home sellers.
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AZ
SECURITY INTERESTS Mortgage Formalities |
Must be created with formalities of grant deed (writing, signature, words of conveyance, legal description) Deed of trust statute does not specify formalities, but presumably those applicable to grant deeds govern.
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AZ
SECURITY INTERESTS Mortgages: Assignment of Rents |
Mortgage or deed of trust on income producing properties will usually contain a clause assigning the rents to the lender. The purpose is to give the lender a source of funds to apply against the debt without waiting for foreclosure. Clause is triggered only by debtor's default in payments.
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AZ
Mortgages: Assignment of Rents Methods of Collecting Rents |
Lender may reach rents prior to foreclosure by:
1) Having a receiver appointed to operate the property and receive rents 2) Take possession, operate the property directly, collect rents 3) Collect rent directly from tenants 4) Obtain injunction requiring borrower to turn rents over to lender |
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AZ
Mortgages: Assignment of Rents Proof to be Made by Lender |
To use any of these remedies, lender need only show a default by borrower.
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AZ Security Devises
Deed of Trust |
Creature of statute. Borrower-Landowner transfers legal title to trustee who is separate from the lender. Lender can instruct the trustee to foreclose if the borrower defaults. Foreclosure may be by power of sale, which means no judicial action is required. If deed of trust fails to name trustee, it is still valid, and beneficiary can name a trustee.
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AZ Security Devises
Mortgages and Deed of Trust |
Security devises--do not obligate the borrower to repay, and are not effective unless an obligation is created separately (e.g. by a promissory note)
The obligation must be for a dollar amount that can be computed or liquidated. A preexisting debt is a valid obligation for a mortgage to secure. Mortgage need not describe nature of the debt. |
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AZ Security Devises
Installment Land K |
Device by which buyer can finance sale of land. Seller signs a K with buyer that gives buyer possession of land in exchange for monthly payments until full purchase price plus interest is paid off. When final installment is paid, seller gives buyer the deed transferring title.
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AZ Security Devises
Absolute Deed--Equitable Mortgage |
If borrower gives lender what appears to be absolute deed, it may be deemed a mortgage. To so conclude, ct. must be shown by clear and convincing evidence that purpose of transaction was to act as security for a debt. Evidence so indicating would include:
-Borrower's financial exigency -Expectation or promise by borrower to repay -Expectation or promise by lender to reconvey the property upon repayment. -Clause which makes repurchase price rise periodically as a substitute for interest -Borrower continues to pay property taxes, insurance, etc. NOTE: if deed is deemed an equitable mortgage, lender must foreclose judicially, as with any other mortgage. |
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AZ Security Devises
Absolute Deed--Equitable Mortgage DISTINGUISH: Promises to Pay and Assignments of Rent |
A promise by a landowner not to convey her property until a debt is paid is not an equitable mortgage. Neither is a mere assignment of rents an equitable mortgage.
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AZ:
Transfers by Mortgagor and Mortgagee Assignment by Mortgagee |
Assignment or indorsement of nte automatically transfers mortgage;
However, an assignment of a mortgage does not automatically transfer ownership of the note. |
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AZ:
Transfers by Mortgagor and Mortgagee Due on Sale Clauses |
Garn Act: Due on sale clauses are enforceable nationwide. In AZ both statutes and judicial decisions purport to limit ability of lenders to enforce due on sale clauses, but these state law limitations have been completely preempted by Garn Act with respect to any transfer of property after 10/15/87. Hence, AZ lenders may now enforce Due-On-Sale clause, even tho' their only purpose is to raise the interest yield on their loan portfolios
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AZ:
Transfers by Mortgagor and Mortgagee Enforceability of Due on Sale Clauses |
Garn Act makes DOS clauses unenforceable in certain situations where property is residential and contains 4 or fewer dwelling units. The more important of these situations are:
1) Creation of junior liens with no tx of title 2) Transfers on death 3) Leases of 3 years or less with no option to purchase 4) Tx resulting from marriage dissolution or legal separation 5) Transfers to an inter-vivos trust, where borrower remains a beneficiary of trust. |
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AZ: Enforceability of Due on Sale Clauses
PrePayment Penalties Incident to Due on Sale Enforcement |
Regulations under the Garn Act prohibit lenders from demanding prepayment penalty where payoff results from lender's exercise of due on sale clause. This applies to 1-4 family homes. On other types of property if the mortgage contains a due-on-sale clause and provides for a pre-payment fee when exercised, the fee is enforceable.
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AZ: Enforceability of Due on Sale Clauses
PrePayment Penalties Incident to Due on Sale Enforcement-Runs with the Land |
DOS clause binds not only original mortgagor, but also all future owners of the land; they too are subject to an acceleration of the debt if they make a further transfer of the land without the mortgagee's consent.
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AZ: Possession before Foreclosure
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AZ follows lien theory of title
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AZ:
Foreclosure: Acceleration of Debt |
For the secured creditor to realize on teh security of a mortgage or deed of trust, it must be foreclosed by an auction type sale. If the debt called for installment payments (rather than a single lump-sum payment) creditor will first accelerate the debt through acceleration clause which provides that if debtor is in default, creditor may cause the full outstanding balance to become due and payable.
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AZ:
Foreclosure: Must be Foreclosed by Judicial Action |
Creditor must elect an action to foreclose (with possible deficiency judgment in certain situations) or a direct action on the debt (waiving the security)
This election of remedies is not applicable to deeds of trust foreclosed by trustee's sale. Creditors holding a deed of trust may concurrently foreclose (using a trustee's sale) and pursue an action on the note. Once a foreclosure is completed, the latter action is treated as one for a deficiency. If an action for the deficiency is not commenced within 90 days of foreclosure sale, the mortgagee waives the right to sue for deficiency. |
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AZ:
Foreclosure Sale: |
Held by the sheriff. Will not usually be set aside by the court, even when price bid is inadequate.
However, on application by the debtor no later than 30 days after sale, court will determine property's fair market value, and if greater than the sale price, debtor's account is credited with the fair market value rather than the sale price amount. |
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AZ:
Foreclosure--Statutory Redemption |
Redemption by debtor up to the time of sale is an equitable right. It requires payoff of the full balance of debt. Its result is to leave the land in the debtor's hands, free of the mortgage.
Redemption is not available after foreclosure of deed of trust by power of sale. |
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AZ:
Foreclosure--Statutory Redemption: Made by Debtor / Junior Lienor |
Redemption may be wiped out by foreclosed debtor or by any junior lienor wiped out by the foreclosure
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AZ:
Foreclosure--Redemption |
Debtor can redeem w/in 6 mo. of foreclosure sale. (30 days if property is non-agricultural and debtor has abandoned it.) Junior lienors have 5 additional days each, in order of priority, to redeem after debtor's 6 mo.
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AZ:
Foreclosure--Amount Necessary to Redeem |
Redemption amount is the following:
1) Price paid by successful bidder; plus 2) Interest from teh date of sale at 8% 3) Any property taxes paid by the sale purchaser; plus 4) In the case of junior lienors redeeming, the amount of the liens held by previous redemptioners. |
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AZ: Foreclosure
Redemption: Credit for Rents |
Purchaser at sale receives possession and the right to rents immediately, but must give credit in the event of a redemption, for any rents he has collected.
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AZ: Foreclosure
Modification of Priority |
Ordinarily priorities among competing mortgages and deeds of trust are determined by the chronological order in which they were executed and delivered. Of course, if a mortgage is not recorded, it may lose its priority to a subsequent BFPV.
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AZ: Foreclosure
Subordination Agreements |
Mortgagees may voluntarily agree to subordinate their priority--i.e. to accept a lower priority than they would otherwise have. Such subordination agreements may be made unconditionally or subject to the fulfillment of conditions.
AZ ct. will not imply conditions on subordination agreement. If subordination agreement states that the mortgagee is subordinating to a construction loan there is no subordination for a loan not used for construction purposes. |
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AZ: Foreclosure
Purchase Money Mortgages |
All PMM are presumed to have priority over non PMM, executed as part of the same transaction.
PMM to vendors are presumed to have priority over PMM to 3rd party lenders. PMMS are also presumed to have priority over judgment liens or other liens that attach when real property is acquired. This is true for both PMM to vendors and those to 3rd party lenders. |
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AZ: Foreclosure
Optional Future Advances |
AZ follows the majority view. Optional future advance loses priority to intervening liens of which the future advance lender has actual knowledge.
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AZ; Foreclosure
Deficiency Judgments |
Normally available if the sale proceeds are insufficient to pay debts plus expenses and costs. Creditor must ask for deficiency in the foreclosure action and not in later separate suit.
Deficiency judgment is limited to the difference between the balance owing on the mortgage and the property's fair market value. In effect, this means that for the purpose of computing the deficiency, assume property sold at FMV (even tho' it may have sold for much less) |
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AZ: Foreclosure
NO deficiency judgment on PMM on house |
NO deficiency judgment on PMM on 1-2 family house on 2.5 acres or less, and this is true even if house is held for investment rather than owner occupancy.
PMM is one to finance the purchase of the house, whether given to the seller or a 3rd party lender. However, the following are not considered PMM: -A construction loan to a developer to build a house -A mortgage placed on House #1 to secure a loan of money to purchase House #2. (PMM must be placed on house being purchased) If debt is not PM, and the holder forecloses judicially, he can have a deficiency judgment. The fact that he also received some surplus from the nonjudicial foreclosure of a prior deed of trust does not change this reuslt. |
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AZ: Foreclosure
Foreclosure Only Remedy if Anti-Deficiency Statute Applies: |
If Anti-Deficiency Statute applies, the mortgagee may NOT bring a direct action on the debt, but may only foreclose on the mortgage. Hence, if the facts are such that the anti-deficiency statute applies, AZ follows a one-action rule similar to that of CA and several other western states. Not only the foreclosing mortgagee but all junior mortgagees are prohibited from suing on their debts, even if their security has been wiped out by the prior foreclosure.
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AZ: Foreclosures
SOL: 6 years |
SOL on a promissory note in AZ is 6 years. Limitation period for an action to foreclose a mortgage securing a note is the same--6 years.
This 6 year period is also applicable to a power of sale foreclosure of a deed of trust. |
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AZ: Foreclosures
Acceleration |
Normally, acceleration requires notice to debtor, or some other action that clearly warns him that the debt is now due in full.
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AZ: Foreclosure
Default without Notice |
If a deed of trust provides for acceleration upon default, without notice, the commencement of a foreclosure action by the beneficiary of the deed of trust is sufficient to act as acceleration.
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AZ: Foreclosure
Effect of Accepting Late Payments |
If the creditor has established a pattern of accepting late payments without objection, this often acts as a waiver of the debtor's duty of timely performance. Creditor is required to notify debtor that she will henceforth require timely payments and will allow debtor a reasonable time to catch up.
Where mortgage or deed of trust is involved, it has been held that if the notice is not given, creditor may be prohibited from foreclosing or using remedy of sale. However, whether notice will be required is determined on the facts of each case. |
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AZ: Foreclosure
Deed of Trust Foreclosure |
Deed of trust may be foreclosed as a mortgage. more commonly, foreclosed without judicial action in a sale held by the trustee. If trustee's sale is employed, statute must be carefully followed or the sale is void.
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AZ: Foreclosure
Deed of Trust Foreclosure Notice: |
Notice of foreclosure must be given in the following ways:
1) publication: once a week for 4 weeks, not to be less than 10 days prior to sale. 2) Posted on the property and at any building that serves as location of a superior court of the county wherein the trust property is to be sold, at least 20 days prior to sale 3) Sent by mail at least 90 days prior to foreclosure sale to parties to the deed of trust, to those having recorded interest in the property, and to those who have recorded a request for such notice. 4) Recorded in the county recorder's office. |
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AZ: Foreclosure
Deed of Trust Foreclosure: Reinstatement of Loan |
Up to the date of sale, debtor may reinstate the loan and avoid the sale by paying the arrearages (not the full outstanding balance) plus costs, expenses, fee for trustee and recording and atty's fees of the lender.
The right to reinstate may be exercised at any time up to 5 p.m. on the day before the foreclosure sale if a power of sale is used, or up to the date of filing if judicial foreclosure is used. |
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AZ: Foreclosure
Deed of Trust Foreclosure: Compliance Presumed on Trustee's Deed |
Once the sale is held, the trustee's deed to the successful bidder is presumptive evidence of compliace with the statute, and is conclusive in favor of BFPV or encumbrancers. Even the beneficiary who bids at the sale may be considered BFPV if he has no knowledge of any defects in the sale. A party can attack a sale and set it aside only if she was injured by the defect in the sale.
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AZ: Foreclosure
Deficiency may not exceed difference between debt and fair-value |
The deficiency may not exceed the difference between the debt (including expenses and costs) and the property's FMV on the date of the sale.
Debtor is not entitled to jury trial on the issue of FMV. |
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AZ: Foreclosure
Deficiency not permitted on 1-2 family dwelling |
on 1-2 family dwelling on less than 2.5 acres, no deficiency judgment is allowed. This prohibition applies whether debt is purchase money or not.
Applies to original loans as well as renewal or refi loans, as long as secured by the same deed of trust, and no additional funds are advanced to the borrower. Prohibition does not apply to construction loans made to developers that have never been used as dwellings. Does not apply to blanket trust on more than two dwelling units. |
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AZ: Foreclosure
Language of Deed of Trust May Limit Deficiency Recovery |
If the deed of trust prohibits the lender from recovery of a deficiency judgment, such language is valid.
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AZ: Foreclosure
Limitations Do Not Apply to Judicial Action Foreclosure |
Do not apply if deed of trust is foreclosed as a mortgage by a judicial action. Suit on promissory note without foreclosure is permissible if loan was not a PMM and no power of sale foreclosure is pending.
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AZ Foreclosures:
Deed of Trust Foreclosure Statute |
Constitutional--does not violate DP clause despite failure to provide for heairng or personal service of notice. No state action.
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AZ Foreclosures:
Suit on Note By Sold-Out Junior |
If a junior deed of trust is destroyed by foreclosure of a senior lien, the junior can bring an action on the note. It is not necessary for the junior to release its deed of trust before doing so.
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AZ ForeclosuresL
Concurrent Power of Sale Foreclosure and Action on a Debt |
Permissible to pursue concurrently. If foreclosur is completed, action on debt becomes action for deficiency
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AZ: Foreclosure
Installment Land K's: Equity of Redemption |
Forfeiture clauses typically upheld in AZ. However, by statute there is a grace period within which the purchaser may cure his defect by paying arrearages with accrued interest. The statute does nto apply to earnest money K's, thus earnest money K purchasers have no statutory grace period in which to cure their defaults.
Grace peirod runs from the date of the default and is based on the amount of total purchase price which buyer has paid: <20% = 30 days 20-30% = 60 days 30-50% = 90 days >50% = 9 months. When does grace not apply: When no payments have been made when default occurs. Does not apply to earnest money Ks but only to installment Ks. |
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AZ: Foreclosure
Installment Land K's: Waiver |
If the seller has a pattern of accepting late payments, then seh will be deemed to have waived the "time of the essence" clause.
-Seller must give notice to require strict compliance: NO forfeiture without warning. Notice must be sent at least 20 days prior to the date seller will require purchaser to pay the monies due. Statutory grace period runs from the time stated in notice: Statutory grace period will run from the reasonable time stated in teh notice, not the date of default, if there has been a waiver. |
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AZ: Foreclosure: Installment Land Ks
Election of Remedies: Foreclosure |
Forfeiture may be accomplished by judicial process or by notice once notice of election to forfeit has been given to the necessary parties at least 20 days prior to effective date of forfeiture. The seller must record a notice of election with county recorder and serve it on the purchaser. The courts may give relief from foreclosure if it would be highly unjust (e.g. if the buyer has made substantial improvements on the land.)
If seller declares forefeiture, she is deemed to have elected forfeiture as her sole remedy. She cannot also get a deficiency judgment, even if she took a separate note for the K balance. |
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AZ: Foreclosure: Installment Land Ks
Election of Remedies:Specific Performance |
Seller may sue in specific performance as an alternative to forfeiture.
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AZ: Foreclosure: Installment Land Ks
Election of Remedies: Seller's Right to Foreclose |
If K provides that seller may elect to accelerate the unpaid principal balance due to the seller on the purchaser's failure to pay, seller may enforce the acceleration only by foreclosing the K in the manner provided by law for foreclosure of real property. If purchaser is in defaul tunder the K ofr reasonas other than failure to pay, the seller may foreclose only as a mortgage in teh manner provided by law for foreclosure of mortgages on real property. If notice of intent to foreclose K has been filed, forfeiture by judicial process or notice will not be completed until foreclosure action is first dismissed and a notice of election to forfeit is served.
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AZ: Foreclosure: Liability for Waste or Property Defects
Debtor or 3rd Parties |
Lender under deed of trust may maintain an action for physical abuser or destruction, waste or impairment of security.
Recovery is not limited by provisions for deficiency judgments. Similar recovery could be had under a mortgage. |
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AZ: Foreclosure: Liability for Waste or Property Defects
Construction Lenders |
Not liable for defects in construction if activities did not go beyond those of an ordinary lender.
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AZ: Natural Rights
-Right to Lateral Support |
Cause of action arises when subsidence occurs, not when excavation was performed. With each ADDITIONAL subsidence comes a new cause of action. Prospective damages are NOT recoverable.
No COA if subsidence was "act of G-d" or withdrawal of percolating water. If excavator gives adjoining landowner notice of excavation and is not negligent in excavating, adjoining property owner must protect his land and any improvements. If the excavator spends money to protect adjoining land, he is not entitled to reimbursement from the adjoining owner. |
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AZ: Natural Rights
-Right to Lateral Support ---Modification of CL re: lateral support by local ordinance |
Tucson Building Code modified common law of lateral support by requiring notice of excavation to protect against surprise, and shifting the burden from the adjoining landowner to the excavator if the excavation is in excess of 12 feet.
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AZ: Natural Rights
-Water Rights |
Two classes of water:
-Percolating and other water (e.g. surface water and water in defined underground streams) Percolating ground water in major urban and agricultural areas is governed in the AZ Groundwater Code. In the remainder of the state, percolating groundwater is governed by the reasonable use doctrine. Surface and underground stream water is governed by the prior application doctrine |
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AZ: Natural Rights
-Water Rights: Prior Application Doctrine: Watercourses, Surface Water and Underground Streams |
AZ Q has abrogated CL doctrine of riparian water rights in AZ. System of prior appropriation exists by statute for surface water and underground streams. Administered by Dept. of Water Resources.
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AZ: Natural Rights
-Water Rights: Prior Application Doctrine: Watercourses, Surface Water and Underground Streams: Application, Amount & Priority |
Application: Proposed water user must apply for a permit from dept. and show nature and amount of proposed use, and that it is a beneficial use.
Amount & Priority: Permit will fix allotment to the permittee. In cases of conflicting application highest to lowest priority: -domestic & family, stock watering and irrigation, power and mining, recreation and wildlife. In case of a water shortage, holders of later permits must yield to those granted earlier. |
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AZ: Natural Rights
-Water Rights: Prior Application Doctrine: Watercourses, Surface Water and Underground Streams: Transfer and Abandonment |
Water rights are transferable with the approval of the department. Rights may not be gained by prescription, but may be lost by abandonment.
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AZ: Natural Rights
Groundwater |
Groundwater Code, adopted in 1980 governs groundwater in Maricopa and Pinal counties, the Tucson area south to the Mexican border, and the Prescott-Chino Valley area. Groundwater means water under the earth's surface that is not in a stream with ascertainable bed and banks.
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AZ: Natural Rights
Groundwater Code |
1) Authorizes dir of Dept. of Water Resources to make necessary studies and designate "active management areas"
2) Prohibits expansion of irrigation use in certain areas while grandfathering permits certain preexisting irrigation uses 3) Provides for a system of groundwater withdrawal permits to be issued by director 4) Regulates transportation of groundwater from one area of the state to another. 5) Sets up a planning process for groundwater resources. |
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AZ: Natural Rights
Groundwater Code Legislature's Power to Modify Groundwater RIghts |
Valid, but results in a compensible taking.
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AZ: Natural Rights
Reasonable Use Doctrine |
Water outside active management area is subject to reasonable use doctrine. Similar to common law doctrine of riparian rights--overlying owner may use the water only for beneficial enjoyment of the land from which it is obtained. If one overlying owner diverts the water to other land and this impairs the supply, other overlying owners have an action in damages.
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Cooperatives, Condos and Zoning
Zoning: |
Rezonings are legislative, not adjudicative. DP is not required.
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Cooperatives, Condos and Zoning
Zoning: Non-Conforming Use |
City gov't may regulate non-conforming use so as to make them less valuable, as long as it does not make their use economically impossible.
City may not terminate non-conforming use because it is not actually used for a year. CIty must show evidence of owner's intent to abandon it. |
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Cooperatives, Condos and Zoning
Zoning: Special Use Permits |
IF a permit issues, and neighbors object, they must exhaust their admin appeal to the Board of Adjustments before suing in court for a review.
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Cooperatives, Condos and Zoning
Zoning: Special Use Permits: Legal Effect of General Plan |
AZ statutes require cities to develop a "general plan"
In one case, Phx general plan was the basis for an attack by neighboring landowners on the approval of a 500' office building. Ct. found that city's general plan was satisfactory, although it missed several required statutory elements. Ct. held that the city's zoning was required to conform to general plan only in a loose rational-basis realtionship sense. |
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Cooperatives, Condos and Zoning
Zoning: Definition of Family |
Ordinance that defines family for purposes of a single-family residential zonig district as not including a home of five,elderly unrelated adults.
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Cooperatives, Condos and Zoning
Zoning:Taking of Property |
A Scottsdale ordinance barring all development of land within the McDowell mountains and leaving the land with no economic value constitutes a taking. Owner is entitled to monetary damages to compensate for the loss of use of the land during the time development was prohibited.
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Cooperatives, Condos and Zoning
Zoning:Exactions Imposed on Subdividers |
As a condition fo approval of a subdivision, a city may require developer to construct a sewer sytem and dedicate it ot the city. This is not an unjust enrichment, or an unQ taking.
Fee imposed on subdividers to pay for the cost of expanding city water supplies and treatment facilities is valid if: 1) Fee will result in beneficial use 2) Fee bears a reasonable relationship to the burden the subdivision imposes on the city. |
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Cooperatives, Condos and Zoning
Zoning by Initiative |
Zoning ordinances ordinarily adopted by legislative bodies of cities and counties. Zoning ordinance to create open space buffer zones adopted by voters in an initiative election was invalid on the ground that it usurped the city's power, delegated by the legislature, to perform comprehensive planning.
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