Real Property Mbe 2009-2010

Front 1

Sale and Conveyancing

Back 1

most significant areas tested on MBE

Adverse Possession
Conveyancing
Recording
Security Interests

Front 2

Strategy for answering real property questions?

Back 2

1. ID and Describe the 3 interests in land
2. How can these interests be ACQUIRED, RETAINED, or TRANSFERED

Front 3

Identify the three main tested interests in land.

Back 3

Estate - right to own property
Easements -right to enter another's land
Restrictive Covenants

Front 4

Distinguish Freehold estates v. Nonfreehold estates

Back 4

Freehold Estates give possession under some legal title or right to hold
1. Fee Simple-including defeasible fees
2. Life Estates
3. Fee Tail

Nonfreehold estates give mere possession [i.e. leases]
1. Landlord Tenant Estates

Front 5

What is the main feature of a present possessory estate?

Back 5

POSSESSION

Front 6

First, list the 4 main features of a Fee Simple Absolute - FSA.

Second, how is a FSA created?

Back 6

1. It invests the holder of the fee w/ full possessory rights, now and in the future. -
2. The holder can sell it, divide it, or devise it; and if she dies intestate, her heirs will inherit it.

3. It must be fully Alienable- a. There can be No DIRECT attempt to put restrains on transfer of ownership.If so, restrictions are void.
b. Conditions, however are permissible [b/c not restriction on transferablity
c. Modern Exception: rights of first refusal are permissible.
4. It is a freehold that is potentional infinite in duration

Creation, currently there is a presumption of FSA unless language shows a different intent; the CL required "To A and heirs" and if it just said "to A " it was only a life estate.

Front 7

What is the rule for Restraint on FSA?

Back 7

GR: Any attempt to put a direct restraint on alienation is VOID, i.e. ignore the restriction. E.g. J wills the farm in upstate NY to Y, but provided that if Y tries to sell the farm, it goes to S.

R: Distinguish condition from restriction on transferability. Conditions may be imposed. i.e ...provided that if Y allows P onto the property, then farm goes to s.

Front 8

What is the Modern Exception to Restriction on Alienation

Back 8

It upholds validity of rights on first refusal. So future interest holder has option to buy land before the transferee sells it.

E.g. J wills farm to Y, but provided that if Y tries to sell farm during her lifetime, then S has right of first refusal; that is S has the option to buy the land b/f S sells it to anyone else.

Front 9

Define Fee Tail and How is it created?

Back 9

Fee Tail was a device used at common law to lock the property into the grantees family.

Creation: " To A and the heirs of his body" (these exact words); or ''To A and his or her bodily heirs''

Modern presumption =

Hint 9

today, this language will be presumed to create a Fee Simple UNLESS bar exam question asks you to apply the CL rule

Front 10

Define Life Estate

Back 10

It is an estate measured by the life of the grantee [i.e. the life tenant]
• Most life estates — created, for example, by a grant “to Jane for life” —

It may be granted expressly or arise by implication
It may be indefeasible [so that it will end only when LT dies], or
it may be made defeasible in the same way fee estates can be defeasible [e.g. determinable, subject to a condition subsequent, subject to an executory interest].

Front 11

Are these 2 conveyances life estates?

''To A for 200 years''
"To A for life, but in no event for more than 10 years"

Back 11

No. They are both an estate for years

Front 12

Define Life estate Pur Autre Vie

What is the inheritability rule?

Back 12

It is a life estate measured by the life of someone other than the LT.

Modern R: the grantee's life is the measuring life. However, If the life tenant dies before the measuring life and no special occupant is named by the grantor, the life estate passes to the estate of the life tenant and continues in place until the measuring life dies.

Creation: this estate may be granted expressly or may arise by implication.
1. Expressly: To Elvis for life
2. Implication: usually created by necessary implication from terms of a will (i.e. to A after the death of my wife)

Front 13

Life estate created by implication

Back 13

In his will, Lyndon leaves the ranch ''to Luci and Lynda after the death of my wife Lady Bird.''

Lady bird has an implied life estate - her life estate is created by necessary implication from the terms of the testator's will

Front 14

What happens to life estate, if the measuring life dies before LT?

Back 14

life estate terminates BECAUSE the life estate is measured by the life of someone else- Not the life tenant

Front 15

What is the Modern Rule for Transferring a Life Estate?

Back 15

If the life tenant dies before the measuring life dies, the life estate just passes to the estate of the life tenant and continues until the measuring life dies.

E.g. Some yrs ago, Garth conveyed his large mansion ''to Reba for life''. Later, Reba sold her life estate to to her agent AL. If Al dies before Reba then the life estate passes to the estate of Al and continues until Reba dies.

Is the modern rule the same as the general rule

Front 16

Modern Rule - What happens to LE if LT attempts to convey away the LE?

[Restraint on Alienation]

Back 16

LE terminates.

E.g. Bill conveys whiteacre to Paula for life, then to Monica, but provides that ''if Paula tries to sell her life estate'', then her life estate terminates and the property goes to Monica in fee simple.

Front 17

Define Doctrine of Waste: Rights and Duties of LT

Back 17

A LT is entitled to all the ordinary uses and profits of the land; but he cannot do any act that would injure the interests of the person who owns the remainder or the reversion. If he does, the future interest holder may sue for damages and/or enjoin such acts.

Three types: voluntary, permissive, and ameliorated

Front 18

Affirmative [Voluntary] waste - General rule

Back 18

A life tenant may not consume or exploit natural resources on the property [e.g. timber, minerals, oil] UNLESS 1. he is doing so in reasonable amounts where it's necessary to repair and maintain the land; 2. he is expressly given the right to exploit such resources in the grant; 3. if prior to the grant the land was used in exploitation of such natural resources; and 4. the land is suitable only for such exploitation.

Front 19

Exceptions to Voluntary Waste

Back 19

life tenant may consume or exploit natural resources on the property

1. in reasonable amounts where necessary for REPAIR and MAINTENANCE of the land;
2. when the life tenant EXPRESSLY GIVEN THE RIGHT TO EXPLOIT such resources in the grant;
3. when PRIOR TO THE GRANT, THE LAND WAS USED IN EXPLOITATION of such natural resources, so that in granting the life estate the grantor most likely intended the life tenant to have the right to exploit [but see open mines doctrine];
4. in many states where the LAND IS SUITABLE ONLY FOR SUCH EXPLOITATION [e.g. a mine]

Hint 19

Note - Any change of use in land is voluntary waste for which the life tenant may be liable to the holder of future interest.

Front 20

Open Mines Doctrine

Back 20

Under the open mines doctrine, if mining was done on the land prior to the life estate, the life tenant can continue mining - but is limited to the mines already open.

However, the sale of harvestable crops does not involve waste.

Front 21

When does permissive waste occur?

What is LT obligated to do to avoid liability for permissive waste?

Back 21

When the LT allows the land to fall into despair or fails to take reasonable measures to protect the land.

1. Repairs:GR - LT has obligation to make ordinary repairs but not replacements or permanent improvements.

2. Taxes:GR-the tenant MUST pay ALL taxes on the property.

3. Mortgage Debt: LT must pay interest on any mortgage while the holder of future interest must pay the principal.

Front 22

Permissive waste - Repair rules

Back 22

a. The life tenant's repair obligation is limited to the amount of rents/profits received from the land.

b. However, if there are no rents/profits, obligation is limited to reasonable rental value of the land ONLY if the life tenant is using the land.

c. LT is under no obligation to make permanent improvements on the land, no matter how wise it may seem to do so.

Front 23

Permissive waste - Taxes

Back 23

a. LT's obligation is limited to the amount of rents/profits received from the land.

b. If there are no rents/profits, obligation is limited to reasonable rental value of the land only if tenant is using the land.

c. Holder of future interest must be sure taxes are paid b/c a tax sale will eliminate his interests b/c buyer takes free and clear of any interests.

Front 24

Permissive waste - Mortgage debt

Back 24

LT's interest obligation is limited to the amount of rents/profits received from the land;
b. However, if there are no rents/profits, then the obligation is limited to reasonable rental value of the land IF the team is using the land.

Front 25

Is LT obligated ti insure the premises?

Under the modern view is LT responsible remainderman for damages caused by 3rd party tortfeasor?

Back 25

No.

No. LT's action against such 3rd party is limited to the damages of the life estate.

Front 26

Ameliorated Waste

4 words to remember

1. Changed conditions, and
2. relatively worthless

Back 26

This occurs when the life tenant alters the property substantially but yet to the increases the value of the land.

General Rule: if changed conditions have made the property relatively worthless, life tenant can alter the property without injury liability to the order of the future interest


Modern Rule: A LT can substantially alter or even demolish existing buildings if 1. the market value of the future interests is not diminished; and either 2. the remaindermen do not object; or 3. a substantial and permanent change in the neighborhood conditions deprived the property in its current form of reasonable productivity or usefulness.

Hint 26

E.g. Old residential mansion is now surrounded by heavy industry. LT wants to tear down the mansion, thus making underlying land much more valuable for other uses. Holder of FI objects. LT can tear down.

Front 27

Seisin

Back 27

All freehold estates carry with them the concept of seisin.

R: the holder of seisin is the taxpayer

At the moment that each and every conveyance of Blackacre takes effect, property law wants to know who has seisin at all times and under all possible circumstances.

Remember there are NO GAPS in seisin

Front 28

Future Interests

Back 28

Definition: Interest (interest EXISTS NOW), but POSSESSION does not take place (if it takes place) until some time IN THE FUTURE.

Front 29

2 Categories of future interests:

Back 29

1. Future interest retained by the Grantor:
a. Reversion
b. Possibility of Reverter
c. Right of reentry

2. Future interest ginven to Grantee:
a. Remainder
b. Executor interests

Front 30

***What is the GR of Reversion?

Back 30

GR: a reversion in the Grantor arises whenever the grantor conveys away LESS than the FULL durational estate that the grantor had, (NOTE: the ages of the parties is irrelevent)

- is either vested or contingent
- is not subject to the RAP.
- is freely transferable at death, devisable by will, and descendible by inheritance, but A can't convey more than they have.

Front 31

Example of Reversion

Back 31

E.g. O to A for life, Later, A conveys Blackacre to B for life
1. A originally had a life estate, but now has reversion for life.
2. B has a life estate measured by B's life and by A's life.
3. O has a reversion in fee simple
E.g. What if B dies b/f A, then B's interest terminates and Blackacre goes back to A.
E.g. What if A dies b/f B does, the B's interest terminates b/c A could convey only a life estate measured by A's life; and property goes back to O by way of reversion [see pg 7 MS]

Front 32

Reversions are...

Back 32

1. transferable; 2. devisable by will; 3. descendible by inheritance. And 4. the holder of reversion may sue possessory owner for waste and may recover against 3rd-p wrongdoers for damages to property being that it injures the reversion.

E.g. O conveys Blackacre to A for life. A = life estate; O = reversion in fee simple b/c a FS is less than a LE
NOTE - AGES of the parties aren't relevant in an estate Q, but may effect value

Front 33

Possibly of Reverter
Magic Words: "as long as, while, during, until"

Possibility of Reverter ONLY goes with

Back 33

FSD, which will end automatically on the occurance of the stated event.
GR: Whenever the grantor conveys a fee simple determinable (FSD), the grantor automaically retains a possibility of reverter.

Subrules: 1. a possibility of reverter goes only with a grant of FSD. 2. The possibility of reverter is freely transferable at death and not inter vivos. 3. A possibility of reverter is vested and not subject to rule against perpetuities

Front 34

Right of re-entry in the Grantor [or Power of Termination]

Back 34

1. Used when Grantor conveys a Fee Simple Subject to Condition Subsequent. (i.e., O→A; provided, however, that if liquor is ever consumed on promises than O or O’s heirs shall have the right to reenter and retake the premises).
a) Rule: Title does not revert to Grantor automatically—he must expressly reserve the right to reenter and retake property, otherwise title remains in grantee.

Front 35

What r the magic words of right of re-entry?

And how do u create?

Back 35

Magic words: “Provided, however; But if; On condition that.”

1. To create a FSCS, the magic words must be followed by language where the Grantor EXPRESSLY Reserves the right to re-enter and retake the property
2. Note: language “for the purpose of” has no effect on title!

Front 36

Difference between Fee Simple Absolute & Fee Simple Determinable

Back 36

Estate is FSD because Grantor is imposing a condition

Front 37

Types of Future Interests given to Grantee

Back 37

1. Remainder
2. Executory Interest

Front 38

What is a remainder

Back 38

It's a future interest arising in a third person grantee that comes NATURALLY and IMMEDIATELY on the TERMINATION of the preceding estate.— and is either vested or contingent

E.g., if a grant is “to A for life, and then to B,” B's future interest is a remainder.

Front 39

When is a remainder vested?

Back 39

It's vested if nothing stands in the way of its becoming possessory on the natural expiration of the preceding estate. I.e. TAKER is ASCERTAINABLE and there's NO CONDITIONS to taking

Hint 39

O to A for life; and the on A's death to B and heirs.

O has nothing; and at moment of conveyance, B has a vested remainder in the fee simple.
Even if B dies b/f A, the property will go to B's estate. The property never goes back to O.

Front 40

When is taker ascertainable?

Back 40

1. If I pass the person everyday on my way to work, and
2. If there's no condition

Front 41

When is a remainder contingent?

Back 41

1. When it's created in unborn or unascertainable persons, OR
2. estate it's Subject to a condition precedent. i.e., taking the estate hinges on an event happening; e.g. B survives A.
O→A for life; then to B and his heirs IF B survives A.
1) If B does not survive A, then property reverts back to O (reversion).

Hint 41

O to A for life, then to B and his heirs when B is 21. At the time of this conveyance, B is 15.

A - LE
B - Contingent remainder in FS b/c there's an age contingency & ''to B and heirs''

If B dies b/f he turns 21, then O has reversion

If B turns 21 & A is still alive, then B's interest becomes a vested remainder b/c he satisfied the age contingency.

Front 42

Class gifts: Vested remainder subject to open

Back 42

Definition: Where remainder interest is conveyed to a class of unnamed persons whos members are not yet fully known, the class remains open to allow for future persons who would qualify as class members.

E.g. O to A for life, then to A's children. A has 3 children B,C,D when O made the grant.
A = LE; B,C,D = Vested remainder Subject to Open b/c it allows for the birth of future siblings.

Hint 42

General Rule: If Grantee is not in existence (i.e., not ascertainable) at the time the conveyance takes effect, then the remainder is contingent on the Grantee being born and therefore ascertainable.
a) O→A for life, then to A’s children (but no kids born yet).

Front 43

Define Rule of Convenience

Back 43

It is a rule of construction and not a rule of law. It's based on policy of including as many people in the class as possible

It is applicable in the absence of an expression of intent to include all persons who meet the class description regardless of when they are born.

Under the rule, a class closes when some member of the class can call for a distribution of her share of the class gift.

Front 44

Class gifts: Why is conveyance of a Vested Remainder Subject to Open?

aka Vested remainder subject to partial divestment.

Back 44

to allow for the birth of future siblings - each new sibiling's interest automatically vests. Thus, unborn child has a contingent interest, i.e. hinges on them being born.
O to A for life, then to A's children. At time O makes this grant, A has 3 kids B, C and D. This conveyance to A's children is referred to as a class gift

Front 45

List 3 scenarios involving the Rule of Convenience

Back 45

1. Outright gift - class closes at time gift is made. If no class members are alive at T's death, all afterborn children who come within the class designation are included regardless of how inconvenient it is to hold the class open.
2. Postponed gift - class closes at time fixed for distribution
3. Disposition subject to Age contingency

Front 46

Majority Rule of Age Contingency

Back 46

If A dies and B is only 18, then O has reversion and holds the property in FS subject to an executory interest and B holds executory interest.

Front 47

Class gifts: When does a class gift close? I.e., The Rule of Convenience

Back 47

GR - A class closes whenever any member of the class is entitled to a distribution of her share of the gift. (Thus apply rule of convenience unless Testator expressly says otherwise = rule of construction, not rule of law!)
later class members lose out unless they were in gestation at time of testator's death.
a) Members of a class who dies before the closing of the class are eliminated. Their gift lapses UNLESS anti-lapse statute applies!

Hint 47

Testator's will devises blackacre ''to A's children.'' At the time the will is executed, A has 2 children, B and C. After the will is executed and before the testator dies, A has another child, D, and one of the other children, B dies. Then the testator dies. Finally, 2 yrs after testor's death, A has another child E.

Unless E was in gestation, blackacre goes to C and D b/c only child alive when Testator died.

Front 48

Problems with Contingent Remainders

Back 48

GR - If the grantee is not in existence [i.e. not ascertainable] at the time the conveyance takes effect, then the remainder is contingent on the grantee coming into the picture.

O to Harry for life, then to Harry's widow. At time conveyance is made, Harry is married to Sally.

Harry - LE
H's widow - Contingent remainder [3rd p, naturally & immediate]
Sally takes Nothing when conveyance is made.
O - Reversion

Hint 48

E.g. O to A for life, then to A's children. At time conveyance is made, A has no children.

A - LE
A's children - contingent remainder
O - Reversion just in case A dies never having children [need to know where property goes for tax purposes]

Front 49

Remainder vs. executory interest

Back 49

Remainder never affect the estate that comes before them. Only takes naturally & kindly

Executory interest cuts short the estate that comes before it.

Look for 1. Magic words ''but if','' ''then to'' AND 2. Punctuation - look to see if a contingency is made part of the first estate given to grantee OR if it has been a part of the gift over following the early estate.

Front 50

When does an Executory interest arise?

Back 50

when a grantor gives property to one person, provided that they use it a certain way. If the person fails to use it properly, the property transfers to a 3rd party.

Hint 50

E.g. O→A so long as property is used for school; but if property ever used for anything other than a school, then to B and his heirs. A has a FS subject to executory interest—B has an executory interest (not a remainder—B’s interest follows FSA!).

Front 51

Vested Remainder in Fee Simple Subject to Executory Interest [a.k.a Vested Remainder Subject to Total Divesment]

Back 51

1. A future interest is executory if it either cuts short the interest of another (shifting executory interest) OR if it divests the transferror at some later time (springing executory interest.)
a) The language of the condition is made part of the giftover following the earlier estate
1) Language to watch for: “but if,” or “then, to”
2) O→A for life, then to B and heirs; but if at B’s death, B is not survived by issue, then to C and her heirs.

Front 52

Future Interests and the Law of Waste

Back 52

Holders of executory interests have no standing to sue for waste!

But holder of remainderman does have standing to sue.

Front 53

Defeasible fees are

Back 53

fee simple estates of potentionally infinite in duration that can be terminated by the happening of a specified event.

Front 54

What are the types of defeasible fees?

Back 54

1. FS Determinable - an estate that automatically terminates on the happening of a stated event & goes back to grantor.

2. FS Subject to Condition Subsequent - grantor must take affirmative steps to terminate estate of the grantee if stated event occurs.

3. FS Subject to Executory Interest - is an estate that, upon the happening of a stated event, is automatically divested in favor of a 3rd person rather than the grantor.

Hint 54

Ex. of FSD - O to A so long as no alcoholic beverages are consumed on the premises.

Ex. of FSSCS - O to A and his heirs, on the express condition that the premises are never to be used for the sale of liquor, & in the event that it is so used, then O or her heirs may enter and terminate the estate conveyed.

Ex. of FSSEI - O conveys land to church; provided, however, that if the premises ceases to be used for church purposes, title shall pass the the American Heart Assoc.

Front 55

Are Vested Remainders; Contingent remainders; & Executory Interests transferable? If so, how?

Back 55

1. All vested remainders are transferable, devisable, & descendable [indefeasibly vested, vested subject to open, & vested subject to total divestment]
2. Contingent remainders and executory interests are transferable Inter vivos [a gift that takes affect on death]
3. Contingent remainders & executory interests usu. devisable and descendible unless, the holder's survival is a condition to the interest taking.

Front 56

RAP: Rule.

Back 56

No interest will be valid unless it must vest—if it is going to vest at all—within 21 years after the death of some life in being who was alive at the moment the conveyance was made.

e.g. O to A and his heirs so long as no liquor is consumed on the premises; and if liquor is ever consumed on the premises, title shall go to B and his heirs.
A - FSSEI
B - EI in FS
O - Nothing b/c he intended to convey away his entire interest in Blackacre

Hint 56

Note - Public policy promotes free transferability of land by preventing remote vesting.

Front 57

What interests are exempt from RAP?

Back 57

1. Charity to charity
2. Vested remainders except those open to class
3. Reversionary interests--reversion, possibility of reverter, and right of reentry

Front 58

RAP: Applies to

Back 58

1. Executory Interests
2. Contingent Remainders; and
3. Vested Remainders Subject to Open

Hint 58

Always ask your yourself - could the future interest possibly vest in the grantee outside the time period of the rule [i.e. is it possible that everyone alive at the time of the grant dies--plus more than 21 yrs go by--before that interest might vest]? If yes, then interest is void.

Front 59

What happens if future interest is void under RAP?

Back 59

it does not exist ( so cross out language that violates rule).

Then determine what interests are left after applying the RAP.

Hint 59

e.g. O to A and his heirs so long as no liquor is consumed on the premises; and if liquor is ever consumed on the premises, title shall go to B and his heirs.

Cross out ''and if liquor is ever consumed on the premises, title shall go to B and his heirs.''

The interests left are
A - FSD
B - Nothing
O - Possibility of reverter b/c whenever liquor is consumed on the property, Blackacre will revert to O.

Front 60

When is validity of an interest under RAP determined?

Back 60

GR - at the time conveyance is made--at the time interest is created. . If transfer is made by will, RAP applies to time of Testator’s death; if deed, when deed takes effect.

Not a wait and see approach like Ohio's statute under which the validity of an interest following an estate is determined on the basis of the facts as they exist at the end of the life estate.

Front 61

RAP Savings Clause

Back 61

1. Used to save grant from violating RAP by ensuring that vesting occurs within time period of RAP. Sets up a time period for vesting. Language used:

a) O→A and heirs as long as liquor not consumed on property; and if liquor is consumed “during the lifetime of A or B or within 21 years after the death of the survivor of A or B” then title shall pass to B.
1) A has FSD subject to EI
2) B has valid EI; and
3) O has Possibility of Reverter (if liquor consumed, then reverts to O)

Hint 61

Why include a Savings Clause? B/c language is included in order to save a grant from violating RAP by making sure that vesting must occur w/n the time period of the rule.

Front 62

Right of First Refusal and RAP

Back 62

1. Rule: Contingent interests in property, such as options and rights of first refusal, violate RAP IF they could possibly be exercised outside the time period of RAP.
a) O→A and his heirs; but if A and his heirs ever try to sell property, then B and her heirs have right of first refusal.
1) RAP applies and voids John/heirs interest.

Hint 62

e.g. Bilbo conveys blackacre to Frodo and his heirs; but if Frodo and his heirs ever try to sell the property, Gandalf and his heirs have a right of first refusal

RAP applies to right of first refusal b/c it could be exercised outside the time period of the rule.

The grant of the right of first refusal violates RAP b/c it's entirely possible that the condition could be violated--triggering Gandalf's right of 1st refusal- way outside the time frame of the rule.

Exercise of 1st refusal doesn't have to occur w/n lives of the named parties; instead exercise could occur anytime in the future.

So cross out offending language and Gandalf gets nothing and Frodo has FSA.

Front 63

Charity-to-charity exception

Back 63

1. Rule: RAP does not apply in charity-to-charity conveyances.
a) O→St. Anne’s as long as property used for church; and if it ceases to be so used, then to Red Cross.
1) RAP does apply, but is not violated due to charity-to-charity exception.

Front 64

Class Gifts and RAP

Back 64

Gift to an open class conditioned on members surviving beyond age 21 violates RAP because the conveyance loses its link to the life in being.
a) O→A for life, then to A’s children who reach age 30. A has no children at time of conveyance.)
1) Violates RAP.

Hint 64

What if the language of conveyance was ''to such of A's children as reach 21?''

Then gift would be valid b/c it's clear at the moment of conveyance is made - that a child will be born to A and will reach age 21, if at all, w/n 21 yrs [plus any period of gestation] of some life in being, - that is, w/n 21 years of someone ho was alive at the moment of conveyance is made. Here, we use A as the measuring life.

Front 65

Fertile Octogenarian Rule and RAP

Back 65

Women are conclusively presumed to be able to bear children, regardless of age or medical condition.
a) O→A for life, then to M’s children who reach 30. M is now 87 and has 3 children in their 60’s.
1) Violates RAP—all children could die and Mary could have another child regardless of her age.

Attempted grants -
Mary has LE
Mary's children - Vested remainder subject to open - to allow for birth of future siblings who reach age 30.

Mary's existing children who have already reached age 30 - take Nothing

GR - If RAP operates to void the gift over to any member of the class b/c their interest might vest outside the time frame of the rule, then all class members lose.

After applying RAP, Mary has LE, Mary's children take nothing, and O has reversion.

Front 66

Types of concurrent estates

Back 66

1. Joint tenancy
2. Tenancy in common
3. Periodic tenancy
4.Tenancy by the entirety

Front 67

How is a joint tenancy created?

Back 67

Four unities must be present at the outset

List the 4 unities - the TTIP test
1. Unity of Time - all JT interests must have vested at the SAME TIME
2. Unity of Title - the grant to all JT must be by the SAME INSTRUMENT
3. Unity of Interest - all JT must take the SAME KIND and SAME AMOUNT of interest.
4. Unity of Possession - all JT must have SAME/IDENTICAL rights of possession

Front 68

To create a JT, the language of conveyance

Back 68

must clearly reflect the grantor's intent.

Anytime intent of grantor is unclear, the modern rule will presume that a Tenancy in Common is created.

''As to JT's, with rights of survivorship;'' or
''In JT with right of survivorship.''

Front 69

The Joint Tenancy carries what?

Back 69

a right of survivorship, i.e. when one joint tenant dies, the property is freed from his concurrent interest and the surviving joint tenant retains an undivided right in the property.

Hint 69

e.g. In 1968, 22 acres of downtown LA property are conveyed to John, Paul, Ringo, and George as JTWRS.

Later, in 1980, John dies. Now Paul, Ringo and George each own an undivided 1/3 interest. John's estate gets nothing.

Front 70

How can a J/T be terminated?

Back 70

1. Voluntary termination by Right of Partition
2. Involuntary termination by Severance

Front 71

Describe Voluntary Termination of JT—Right to Partition

Back 71

Any JT may be relieved of common ownership by requesting that property be partitioned.

How to Partition: Lines are drawn and party seeking partion is no longer a JT—owns portion outright.

Partition can occur by voluntary agreement, OR by judicial action.

Front 72

Involuntary Termination of JT—Severance

Back 72

1. Severance occurs whenever any one of the 4 unities is disturbed. However, JT cannot be severed by a Testator’s will (must be severed during JT’s lifetime).

Front 73

How does an inter vivos conveyance by one JT sever joint tenancy?

Back 73

An inter vivos conveyance by one jt of her undivided interest destroys the joint tenancy so that the transferee takes the interest as a tenancy in common, not as jt.

Front 74

List 5 ways to sever JT

Back 74

1. Inter Vivo Conveyance by one joint tenant
2. Sale
3. Mortgage
4. Contract of Sale
5. Creditors Sale of Interest in JT

Front 75

Severance of JT by Sale

Back 75

after severance, new owner of severed portion takes as tenant in common.
1) Unity of time and title is disturbed. However, unsevered portions remain intact.

Hint 75

E.g. In 1971, Ringo conveys his 1/4 interest in JT by deed to Zorro. On conveyance severance occurs. Zorro, the buyer gets a 1/4 interest in the property, which he takes as tenancy in common.

John, Paul, and George still hold their interests as JT and their right of survivorship remains in tact.

When John dies in 1980, John's interest will automatically go to Paul and George as the surviving JT.

Front 76

What happens to joint tenancy if there is more than two joint tenants?

Back 76

If property is held in joint tenancy by 3 or more JTs, a conveyance by one JT destroys the joint tenancy only as to the conveyor while the other JTs continue to hold in joint tenancy.

Front 77

Severance of JT by Mortgage - Two theories

Back 77

1. Lien Theory state (majority rule)
• No severance of JT after mortgage b/c when mortgage is executed, a Lien attaches to the title, but title is not transferred to borrow.
- Utilities are not disturbed when mortgage is executed.

2. Title Theory state (minority rule)
• There is a severance of JT after mortgage. When mtg is executed, title passes to mortgagee, even though it goes back to mortgagor when mtg is satisfied.

- utilities are disturbed when mtg is executed.

Hint 77

e.g. In 1971, Ringo mortgages his 1/4 interest in the JT

Front 78

Severance of JT by Contract of Sale

Back 78

severance occurs when K of sale is signed, not when the closing occurs. This is due to the doctrine of equitable conversion.

E.g. On Jan 1st, Ringo enters into a contract of sale of his interest in the JT, with closing to be on April 1st.

The severance occurs on Jan 1st when the contract of sale was signed - b/c of the doctrine of equitable conversion

Front 79

Severance of JT by Creditor's Sale of the interest in JT [Foreclosure]

Back 79

No severance until judicial sale actually takes place.
• Note: if foreclosed party dies before creditor’s sale, there would be no severance—title goes to surviving joint tenants!

Suppose Ringo had business reversals and a creditor sought to reach his interest in the JT.

If Ringo dies before the creditor's sale, there would be no severance b/c it doesn't occur until the judicial sale actually takes place.
So title passes to surviving JT and judgment creditor has no recourse against the property.

Front 80

Describe Tenancy in common

Back 80

1. TC is a concurrent estate w/ no right of survivorship. Each owner has an undivided interest in the property so No unities are required except for unity of Possession, which means each co-tenant is entitled to posses the whole of the property.

2. TC is default tenancy. So if a JT is not properly created, then it results in TC.

3. TC is freely alienable by inter vivos, testamentary transfer - i.e. each tenant can do what they want.

4. Is subject to claims of tenant's creditors

4. Any tenant can force a partition.

5. In TC, there's no right of survivorship

Hint 80

E.g. In 1968, J, P, R, and G are conveyed property as tenants-in-common. In 1980, J dies. At the moment of death, J's estate, P, R, and G each hold an undivided 1/4 interest in tenants in common.

Front 81

Tenancy by the Entirety

Back 81

1. Rule: at common law, any grant of a concurrent estate to a Husband and Wife would give rise to TE provided 4 unities were present.

2. Right of Survivorship: Yes

3. Right of Partition: No

Front 82

TE is not severable by unilateral effect of one of the co-tenants. But TE can be terminated by:

Back 82

a) Death
b) Mutual agreement (in writing)
c) Divorce [estate is over], or
d) Execution by joint creditor of both husband and wife (creditor of just one party cannot reach property) must get knowledge of both co-tenants

Front 83

Rights/Duties of co-tenants [aka Incidents of Co-Ownership] See pg 33-34 MS

Back 83

1. Possession - each co-tenant has the right to possess the whole of the property - consistent with the same right in every other co-tenant. A co-t out of possession can't bring a possessory action unless there's been an 'ouster' by the T in possession. [A claim of right to exclusive possession can constitute an ouster.

2. Accountability - Co-tenant in possession does not have to share profits received from land; except for:
a) Ouster (accounting is required IF one co-tenant is either keeping a co-tenant off the property; OR claiming a right of exclusive possession).
b) Agreement to share (if co-tenants have express agreement to share profits)
c) Lease of property by a co-tenant to third party.
d) Depletion of natural resources.

3. Contribution - Concerns right of one co-tenant to force others to pay their fair share of some expenditures made on property.
a) It depends on type of expenditure made on the property:
1) Improvements: no right of contribution
2) Repairs: right of contribution for necessary repairs
3) Mortgage: right of contribution is required for any mortgage signed on the property by all co-tenants.
4) Taxes: right of contribution is required towards all governmentally imposed obligation such as payment of property taxes or assessments for curbs, streets, sewers, etc.

4. Duty of Fair Dealing-- If one co-t purchases or otherwise acquires a lienholder's [mortgagee's] claim against the co-tenancy property, she must give the other co-ts a reasonable time to pay their share and acquire a proportionate interest.

Front 84

Non-freehold estates

Back 84

a) Estate for years (tenancy for years)
b) Periodic tenancy
c) Tenancy at will
d) Tenancy at sufferance

Front 85

Tenancy for years

Back 85

1. Continues for a fixed period of time—there must be a beginning and and ending date.
a) Can be any period, no matter how short (even 4 days!)
2. Statute of Frauds: any tenancy for years for over one year must be in writing (therefore, a one year tenancy may be oral).
3. Termination: Tenancy for years terminates automatically at terminate date—no notice is required to terminate.
a) LL reserves right to terminate if T breaches any of the leasehold covenant-- reserved power is called right of reentry
b) Tenant is liable for entire period of rent, not just monthly rent.
c) Can be terminated by T surrendering his leasehold interest, but must do so in writing if lease is for more than a year.

e.g. L leases blackacre to J for 2 yrs, commencing on Jan 1, 1996 at a monthly rent of $500 payable in advance on the first of each month.

At the time J signed the lease, she committed to pay L a total of $12,000 to be paid $500 a month over 24 months.

Hint 85

e.g. Arnold transfers the ranch to Sylvester for a period from June 1, 2004 to June 5, 2004

Front 86

Periodic Tenancy

Back 86

1. Continues for successive periods (repeats) until terminated by proper notice by either LL or T.
2. Can be created
a. by an Express agreement;
b. by Implication [- If lease does not specify how long tenancy is to last, it is presumed to be a periodic tenancy measured by term of payment]; or
c. by Operation of Law
1. Oral lease that violates SoF: LL and tenant enter into oral lease for 5 years that violates SoF, but then LL accepts rent check from tenant that covers 1 year. A periodic tenancy will be implicitly created, and the period covered by the rent check accepted by LL determines the period of tenancy.
2) Holdover tenant: Tenant holds over after expiration of valid lease and has not vacated property. However, tenant sends another rent check to LL and LL accepts it. This will create periodic tenancy for period of time covered by check.

Front 87

Termination of Periodic Tenancy

Back 87

A periodic tenancy is automatically renewed until proper notice of termination is given by either party. Notice must satisfy 2 requirements:
1) Time: an amount of time equal to length of period of tenancy (except for year-to-year tenancy, which requires 6 months notice).
2) Date: to be valid, the effective date specified in notice must be at the end of the period of tenancy (i.e., tenancy ending on the 30th of the month must be sent on the 30th).
3) Notice must be in writing and must actually be delivered

Front 88

Tenancy at Will

Back 88

1. Terminable at the will of either the LL or tenant at any time and without notice.
2. Creation:
a) Express agreement that lease can be terminated at any time
- Absent such agreement, periodic rent payments will cause a court to treat it as a periodic tenancy.
3. Termination: TW can be terminated without notice and by operation of law if either party dies; T commits waste; T attempts to assign his tenancy; LL transfers his interest in the property; or LL executes a term of lease to 3rd party

Ex): Death of either party,
waste by tenant,
assignment by tenant;
transfer of title by LL; and
lease by LL to 3rd party.

Front 89

Tenancy at sufferance: Holdover tenant

Back 89

Creation: One situation only! Arises when tenant wrongfully remains in possession of property after expiration of a lawful tenancy.

Front 90

Termination of Tenancy at Sufferance: Holdover Tenant

Back 90

LL has 2 options to terminate:
1) LL may treat the holdover T as a trespasser and evict him under an unlawful detainer statute and to recover damages OR
2) LL may elect to treat T as new periodic tenant.

No notice is required

Front 91

List the rules for how a LL can impose a new period tenancy when T is a Holdover T

Back 91

Rules:
a) Less than a year: If old expired tenancy was for less than a year, new tenancy will be measured by the period covered by rent payment.
- In case of residential property, new period will usually be month-to-month.
b) Commercial property: if old, expired tenancy was for a year or more, new periodic tenancy that LL may elect to impose will be for year-to-year.
c) LL may not impose a new periodic tenancy if it is not reasonable under the circumstances (i.e., tenant was delayed for a few hours when moving out).
d) Raised Rent: if LL gives tenant notice of increase in rent before expiration of lease, then LL may properly demand payment of the higher rent amount if T holds over.

Front 92

Describe Duties of a Tenant in Leasehold estates

Back 92

1. To Pay Rent (LL is not permitted to retain a security deposit beyond the extent of his recoverable damages)
2. To Maintain Premises (if lease is silent, T is subject to common law duty not to commit waste). But see covenant to repair.
a. Covenant to Repair: an express promise by a T to repair and maintain property makes tenant an absolute insurer of the property.
-- Common law: T not responsible for ordinary wear and tear
-- Modern law: T covenants to repair everything, including wear and tear UOA.
-- Modern view:if the leased premises are destroyed w/o T's fault, T generally will not be required to rebuild the structure - even if the lease includes the T's covenant to repair unless the lease expressly includes this type of repair.
3. T has a duty not to use premises for illegal purpose

Front 93

T's Duty to Repair [Doctrine of Waste]

Back 93

1. Voluntary Waste - T intentionally or negligently damages the premises; or T exploited minerals on the property.

2. Permissive waste - T has no duty to LL to make any substantial repairs; however, T has duty to make ordinary repairs to keep the property in the same condition as the commencement of the lease term, excluding ordinary wear and tear.

3. Ameliorative waste - T is obligated to return the premises in the same nature as character as received, even if alterations increase the value of the property.
a. T will be liable for the cost of restoration.
b. Modern exception - If through the passage of time, premises has significantly reduced in value, courts will permit change in character of the premises so long as 1. change increases value of premises; 2. changed is performed by a long-time T; and change reflects a change in the nature and character of the neighborhood.

Front 94

LL's Remedies when T fails to pay rent

Back 94

a) Common law: LL can sue for damages (but only amount in arrears), and could not terminate lease.
b) Modern law: LL can sue for damages and terminate lease, thereby evicting T from the property.
c) Ohio Law - requires LL to provide 3 days notice of eviction to T

Front 95

LL's Remedies when T unjustifiable abandons property - 2 Options

Back 95

1. Accept T’s offer of abandonment [surrender] by re-taking property and terminating lease; OR
-- T then has no further rent obligations.
-- If LL repossesses or relets the premises, T's liability depends on whether LL accepted a surrender of the premises. If surrender is not found T is still liable for difference btw the promised rent and the fair rental value; unless LL's reletting or use of the premises for her own profit constitutes acceptance of surrender, abandoning T is free from any rent liability accruing after abandonment

2. Release the property and hold T liable for any deficiency
-- Common law: LL has no duty to mitigate. I.e. LL could leav the property vacant for the remainder of the lease and hold T liable for the rent amt.
-- Modern law: LL has duty to mitigate. I.e. make a reasonable effort to relet the property.
• But if the rent LL can get is less than what defaulting T had originally promised to pay, then original T still liable for any deficiency LL suffers.

Front 96

Duties of LL - 2

Back 96

1. Duty to Deliver Possession of Leased Premises
-- Majority view - LL must deliver actual possession to T at beginning of the lease, if LL can't then he is in total breach of K).
-- Minority view - LL's obligation is to merely give T the legal right to possess. [Defense against breach due to HT]

2. Duty regarding Condition of Premises
- Common law: LL had no duty to deliver premises in habitable condition
- Modern law: LL has implied warrant of habitability (residential only) which obligates LL to provide (and to maintain) leased premises are reasonably suited for residential use.

Hint 96

Note: look for facts showing failure of holdover T to vacate.

Front 97

T's remedies for LL's breach of implied warranty of habitability

Back 97

1. T may move out and end lease
2. T may stay on property and sue for damages or
3. a number of states allow T to make reasonable repairs and deduct this cost from future rent payments

Front 98

LL's Implied Covenant of Quiet Enjoyment

Back 98

(LL impliedly promises not to interfere with T’s quiet enjoyment of leased premises—applies to all leases, residential, agricultural or commercial).

LL may breach in 3 ways:

Front 99

LL may breach implied covenant of quiet enjoyment by...

Back 99

1. Total eviction (LL physically evicts T)
2. Partial eviction (LL physically excludes T from portion of lease property OR a 3rd party, who holds paramount title, retakes property and physically excludes T from portion of leased property)
a) Remedy: T may stay on remaining portion and is not obligated for any rent (but only when LL partially evicts—if 3rd party does, then rent is proportionately reduced to reflect amount taken).
3. Constructive eviction (LL fails to provide some obligatory service AND that failure makes property uninhabitable). Three elements to est. CE:
a) LL fails to provide some service (must be LL, not 3rd party!)
b) There is substantial interference with T’s quiet enjoyment; and
c) T abandons in reasonable time.

Front 100

Retaliatory Eviction

Back 100

LL may not evict T for exercising her legal rights—if LL evicts on such grounds w/n 90 to 180 after T exercises her rights, a retaliatory motive is presumed. To overcome the presumption, LL must show a valid non-retaliatory reason for his actions.
a) Ohio law: LL must give 3 days notice prior to eviction.

Front 101

To be an assignment, ...

Back 101

the transfer must be on the same terms as the original lease except that the T may reserve a right of termination [reentry] for breach of terms of the original lease that has been assigned.

Front 102

Assignments and Subleases

Back 102

Absent an express restriction in the lease, a T may freely transfer his leasehold interest in whole or in part. If he makes a complete transfer of the entire remaining term, he's made an assignment. If retains any part of the remaining term, the transfer is a sublease.

Front 103

The Key to answering ALL questions on assignments is to remember that a lease involves both of the following

Back 103

1. A lease is a K creating Privity of K b/w the parties to the lease agreement.

2. A lease is also a conveyance of an estate, of an interest in land, thereby creating Privity of Estate b/w the parties. It exists ONLY between a present Landlord and a present Tenant.
1) Both are separate and independent grounds for liability on lease obligations.
• T is liable if either grounds are met!

Front 104

In what 2 ways can Assignees be liable for Payment of Rent?

Back 104

GR - T is liable to LL for rent if there is either privity of contract (assignee promised L he'd be liable for rent for remainder of lease term) or privity of estate (T is the present tenant).

Hint 104

E.g. LL leases to T1. Later, T1 assigns to T2. Still later, T2 assigns to T3.

1. What if LL brings suit against T1 after T1 assigned to T2, who's liable for rent? P of E - no assigned lease down the line; P of K - yes T and LL are parties to original lease agreement.

2. LL sues T2 for rent b/f T2 assigns to T3. P of K = no only agreement evident is the original made b/w LL and T1. P of E = yes there's a present relationship b/w LL and T2.

3. LL sues T2 for rent after T2 assigns to T3. No P of K and no P of E b/c T2 is not the present T. T3 is the present T and thus T3 and LL are in P of E.

Front 105

Privity of Estate exits

Back 105

only b/w present LL and present T.

Front 106

Privity of Contract exists

Back 106

only where there is an agreement [promise] b/w LL and the particular T from whom the LL seeks to recover the rent.

i.e. assignee promises to be liable for the rent of the remainder of the lease term [or liable on his the original contractual obligation w/ the LL

Front 107

Assignee's Liability on other Covenants

Back 107

Other lease covenant to pay rent will always run with the land and therefore is enforceable based on either P of E or P of K.

Covenants contained in the lease will run with the land if the original parties so intend and the covenant touches and concerns land (i.e., makes land more valuable or more useful).
1) Example: Promise to fix fence will run with land; promise to pick up mail will not (considered personal obligation).

Front 108

Is a Successive Landlord liable on the lease? - T sues LL

Back 108

Original LL continues to be liable to original T because of privity of K
Yes, assignee LL is liable to tenants for performance of all covenants made by the LL in the lease provided they touch and concern the land

Successor LL may be liable to original T IF there is:
1) Privity of contract, or
2) Privity of estate and lease covenant runs with the land (look for touch/concern)

Hint 108

E.g. LL 1 owns an apartment building. LL1 leases an apartment to T. sometime later, LL1 sells the apartment building to LL2.

1. Can T sue LL2 to enforce a covenant in the original lease?
P of K = no unless LL2 expressly assumes the obligation by agreeing to be bound by the terms of the lease.

P of E = yes, if the covenant runs with the land, b/c there's a privity of estate [present relationship] b/w the T and LL2

2. Can T sue LL1 to enforce a covenant in the lease?
- P of E = no, estate was transfered down the line
- P of C = yes, T and LL1 are original parties to the original lease.

Front 109

Can a lease contain a covenant not to assign or sublet the premises w/o the consent of the LL?

Back 109

Yes it may, but the covenant may be waived
1. if LL knows of the assignment or sublease and does not object - i.e. LL knowingly accepts rent from assignee; or
2. if the LL grants consent to one transfer, he waives his right to avoid future transfers.

Front 110

Non-Assignment Clause

Back 110

is a clause in the lease that says the T may not assign or sublet w/o the express permission of the LL.

And even though the clause is a restraint on alienation, the Clause is fully enforceable, but courts will strictly construe such clauses so that non-assignment clause does not prohibit a sublease (and vice versa).

Hint 110

Violation of Either Type of Clause: Makes transfer voidable at option of LL

Waiver: permission that is given for one waiver means that clause is waived for any future waivers (unless LL expressly states otherwise at time of consent to waiver).
1) In addition, LL’s acceptance of rent check from assignee will waive prohibition.

Courts are quick to find waiver

Front 111

General Rule for Subleases

Back 111

transfers only a portion of interest in estate.

GR - Subleasee is only liable to original leasee for whatever rent the 2 of them agree upon. However, subleasee may be liable to the LL if he expressly assumes the rent covenant or other covenants on the main lease.

And sublease is not personally liable to LL for rent or any performance obligation made by the original lease b/c there is no contractual relationship w/ LL [i.e. no privity of contract] and subleasee doesn't hold the tenants full estate [i.e. no privity of estate].

Hint 111

E.g. LL leased apartment to T for 1 year starting January 1st, in May, T transferred June, July, and August to T2. During these three months no one pays rent to the LL. LL wants to sell T2. Can LL recover rent from T2? NO

- no privity of estate b/w LL and T2 since T1 kept the estate.

- no privity of k b/w LL and T2 since there's no evidence of any independent agreement [express assumption] b/w the to parties.

Front 112

Can LL terminate subleases?

Back 112

Yes, even though subleasee is not personally liable to LL, LL can still terminate the main lease for non payment of rent or breach of other covenants stated in the lease.

Sublease is terminated at the same time LL terminates main lease

Front 113

Define Condemnation [Eminent Domain] of Leasehold Interests

Back 113

The state takes property that is under a lease pursuant to the exercise of state's power of eminent domain

Front 114

Condemnation [Eminent Domain] of Leasehold Interests: Partial or Complete

Back 114

1. Partial Condemnation: Does not release T from obligation to pay full rent. But T will share in condemnation award. T will get amount equal to rent that was to be paid over for the remainder of the lease term for that portion of the property that was condemned.

2. Complete Condemnation:
a) Completely extinguishes the lease and T is excused from paying any further rent.
b) T will share in award only to extent that the fair rental value of property exceeds amount of rent due under lease.
Ex): Property FRV is $3000/month. Rent due under lease is $1000/month. T will share in aware to extent that $3000/month exceeds the $1000/month—so T will get $2000 multiplied by number of months remaining on lease.

Front 115

Condemnation of leasehold interest: full or partial
What are the two issues that arise when the state takes property that is under a lease pursuant to the exercise of state power of eminent domain?

Back 115

1. Is that tenant's rent obligation excused?
--- not if it's a partial taking; T must still pay for rent
--- yes if it's a complete taking, which extinguishes the lease
2. Will the tenant share in the condemnation award?
--- partial taking? yes
--- complete? yes only to extend that the FRV of property exceeds the amount of rent due

Front 116

Tort liability: LL [Common law]

Back 116

Common law: No duty imposed on LL for any injuries sustained to T (or T’s invitee) during period of lease.

List 5 exceptions to this rule

Front 117

List 5 exceptions to CL rule where No duty is imposed on LL for any injuries sustained to T (or T’s invitee) during period of lease

Back 117

1. Latent Defects: LL under duty to disclose latent (hidden) defects that he knew of or had reason to know of. There is a duty to disclose, but not to repair.
2. Furnished Short-Term Residence: LL is liable for defects even if he did not know (or have reason to know) of said defect. Lease must be for 3 months or less.
3. Common areas under LL’s Control: If LL exercises dominion or control over an area, he must also exercise reasonable care (i.e., elevator, hallway, foyer).
4. Negligent Repairs Undertaken by LL: LL is liable if he attempts to repair and injury occurs b/c repairs were done negligently or b/c it creates deceptive appearance of safety
5. Property for Public Use: 3 requirements:
a) LL must/should know of dangerous conditions;
b) LL must/should know T will not fix the defect b/f admitting public;&
c) LL must/should know the public will be using the premises.

Front 118

Tort liability: LL [Majority view]

Back 118

1. LL owes general duty of reasonable care towards residential Ts and will be liable for injuries resulting from negligence if he:
a) Had notice of a defect; and
b) Had an opportunity to fix it.

Front 119

Tort liability: T

Back 119

T is always liable to a 3rd party invitee for negligent failure to correct dangerous conditions on the leased premises, regardless of whether the LL may be held liable as well.

Front 120

Fixtures

Back 120

a. Chattel that has been so affixed to land that it ceases being personal property and has become part of realty. May not be removed by Seller or Tenant—becomes part of property.

Front 121

When is an item of personal property to be treated as a fixture?

Back 121

Look for intent for item to remain with real property:

Express Intent - if there's an agreement b/w the parties - the terms of the agreement control.

Where there is no agreement b/w the parties 4 factors determine intent

Front 122

When there is no agreement between the parties as to whether property is to be treated as a fixture, what four factors are relevant to determine intent?

Back 122

1. Degree of Attachment (the more that has to be done to install, more likely it is a fixture)
2. General Custom (whether item is something normally left behind or taken)
3. Degree of Harm to Premises on Removal (if T can remove item w/o substantial damage to premises in then courts tend to allow inference that there was no intent fr the item to become a fixture).
4. Trade Fixtures [Chattels or items of personal property used in a trade or business] -- Can always be removed.
- e.g. power saw in lumber mill

Front 123

What happens when a 3rd person claims a lien on chattel [fixture] attached to land?

Back 123

normally, which ever is recorded first in local real estate records wins, which constitutes constructive notice.

Exception - pmsi in affixed chattel takes priority over prior recorded mortgage on land as long as SI is recorded [i.e. a fixture filing] w/n 20 days after chattel is affixed to land

Front 124

What happens if 3rd party claims lien on land to which chattels affixed?
Is the item subject to lien mortgage?

Back 124

Generally, no provided that removal would not substantially damage a building in existence when the mortgage was given.

Front 125

If an item of personal property is not a fixture, when can the item be removed?

Back 125

T situation - the items must be removed BEFORE T vacates at the end of the lease.

Sellers situation - Seller must remove the items BEFORE CLOSING - or seller will lose the chattel.

Front 126

Easement Diagram

Back 126

Front 127

Easement

Back 127

Is the grant of a non-possessory interest that entitles its holder to some form of use or enjoyment of another's land, called the servient tenament.

An easement is either appurtenant to the land or held in gross.

1. Easement appurtenant
2. Easement in Gross

Hint 127

2 types of easements

Front 128

Easements Appurtenant

Back 128

Easement is Appurtenant when it benefits its holder in his physical use or enjoyment of his property.

The burdened property is referred to as the servient estate.

The benefited property is referred to as the dominant estate

Hint 128

the song ''it takes 2 baby''

Front 129

Easements in Gross

Back 129

Easement in Gross when its holder only has some personal or pecuniary advantage that's not related to the use or enjoyment of his land.

there is no dominant estate

Classic example = utility easement-the right to lay power lines

also the right to fish in anothers pond

Front 130

Methods of Creating Affirmative Easements = PING

Back 130

1. Express Grant of easement to someone else.
2. Implication
3. Necessity
4. Prescription

Front 131

What 3 requirements are needed to create an express easement?

Back 131

1. easement must be in writing
2. be signed by the holder of the servient estate; and
3. satisfy all the deed formalities

Hint 131

Note - Cross-reference w/ lecture on conveyance of an interest in land, including deed formalities and recording statutes.

Note - Easements of a year or less do not to be in writing.

Front 132

Implied easements--Previous use by Common Grantor

Back 132

are easements implied from existing use.

Even if there is no express agreement, a common owner or grantor satisfies previous-use requirement if his use of property was continuous, apparent, and reasonably necessary.

Ex. A owns 2 lots. Lot 1 is hooked up to a sewer drain located on lot 2. A sells lot 1 to B, with no mention of B's right to continue to use the drain on A's remaining lot 2.

Front 133

Easement by Necessity

Back 133

An easement of right of way will be implied by the necessity if grantor conveys a portion of his land w/ no way out except over grantors remaining land.

The location of this easement will be chosen by the owner of servient estate

Hint 133

Land locked

Front 134

What are the 4 requirements to establish a Prescriptive Easemant?

Back 134

(similar to adverse possession). Use must be:
1. Continuous use
2. Open and notorious
3. Actual use
4. Hostile - Adverse to true owner (without permission; but oral permission is enough to destroy adversity).

For the statutory period (but if no statutory period, use common law of 20 yrs)
-- Can use period seasonally (if appropriate for property).

Hint 134

Remember COAH

Permission defeats the acquisition of an easement by prescription

Front 135

What is the Scope of an Easement

Back 135

scope is determined by the terms that created it. Thus, holder of an easement cannot unilaterally expand the use of the easement.

E.g. A grants an easm't to use A's private road to get to and from B's parcel, blackacre. Later, B purchases the adjacent greenacre, w/ its small marina. B cannot unilaterally expand the use of the easm't to benefit greenacre.

Front 136

Transfer of the Dominant Estate -Benefit of the easement

Back 136

1. Easement Appurtenant Transfer: Benefit is transferred automatically along with the dominant estate (even if not mentioned in deed)
a) Rule: All who subsequently succeed in title to dominant estate become entitled to benefit of easement appurtenant (EA cannot be transferred separately from estate).

2. Easement In Gross Transfer: Commercial easements (i.e., RR track, utilities) may always be transferred, but personal easements (i.e., fishing in pond) may not be transferred.

Front 137

Transfer of the Servient Estate: Burden of the Easement

Back 137

Rule: Easements are always binding on subsequent holders of servient estates (even if not mentioned in deed).
a) But subsequent holder had to have notice of easement (i.e., BFP [bonafide purchaser for value] buys property without notice of easement).
b) Notice Requirements:
1) Actual notice or knowledge
2) Constructive notice (doc. creating the easement is recorded in direct chain of title)
3) Inquiry notice (notice arising from Buyer’s inspection of land and the visible appearance of the easement on the land or B's inspection of the public records contained in B's direct chain of title)

Front 138

2 Presumptions where easement is silent on use

Back 138

1. UOS, an easement is presumed to be perpetual [i.e. last forever]

2. The use presumed is that of reasonable development of Dominate Estate [i.e. development which would likely have been contemplated by the parties at the time the easement was granted.]

Hint 138

Where use of easement is excessive, [beyond the scope of what originally contemplated.

Note - An easement can be used only to benefit the dominate estate

Front 139

Remedy for Excessive Use of land =

Back 139

1. Enjoin the excessive use, But do not terminate the easement

Front 140

Repairing Easements

Back 140

1. Rule: Dominant estate (owner of benefit of easement) must make necessary repairs to easemtn, and must make reasonable restoration of servient estate after making repairs (i.e., utility company must restore ditch dug to lay pipe).
a) Servient estate has no repair obligation.

Front 141

Termination of Easement

Back 141

1. Rule: easement will generally end by reason of its own terms (i.e., length of time)

Front 142

8 Exceptions to termination of easements = END CRAMP

Back 142

1. Estoppel
2. Necessity
3. Destruction
4. Condemnation
5. Release
6. Abandonment
7. Merger
8. Prescription = COAH

Front 143

For easement to be extinguished by estoppel, what 3 elements must be satisfied?

Back 143

1. there must be some conduct or assertion by the owner of the easement;
2. a reasonable reliance by the owner of the servient estate;
3. coupled with a change in position.

E.g. A tells B that A will no longer be using her right of way across B's parcel. in reasonable reliance, B builds a swimming pool on B's parcel, thereb depriving A of the easement. In equity, A is estopped from enforcing the easement.

Front 144

When is an Easement terminated by Necessity?

Back 144

when the necessity that gave rise to implied easement ceases to exist, then implied easement automatically terminates

Front 145

Termination of Easement by Destruction

Back 145

Involuntary destruction of a structure in which there is an easement extinguishes it (but not voluntary destruction).

Front 146

Termination of Easement by Condemnation

Back 146

(eminent domain taking) extinguishes all easements.

Front 147

Termination of Easement by Release

Back 147

release must be in writing and comply with deed formalities

Front 148

Termination of easement by Abandonment

Back 148

mere non-use does not constitute abandonment.

Must have a manifestation of intent to abandon by the holder of the dominant estate by taking some physical action that would show an intent to abandon. Abandon by Action.
1) Physical action (i.e., barricade to path, etc.)

Front 149

Termination of easement by Merger or unity of ownership:

Back 149

Dominant and servient estates merge by virtue of transfer to same owner. Easement is terminated.

Front 150

Termination of Easement by Prescription

Back 150

owner of servient estate must stop the use of the easement and must keep it stopped for period of time required by applicable statute of limitations. [typically 20 years]

Front 151

What is a License?

Back 151

A license, unlike an easement, is having the permission of the owner—the licensor—to enter his land for a specific purpose.

Unlike an easement, the license can be rescinded at any time.

A license will also terminate upon the death of either the licensee or the licensor, or if the licensor sells the land. Hence, although a license is similar to an easement, a license is not actually an encumbrance on the real estate and does not transfer with the title

Front 152

When are licenses irrevocable?

Back 152

1st R - If an easement is attempted but fails due to SOF, a license is created.

2nd R - If money is spent on the property in furtherance of a license, then the license becomes irrevocable

3rd R - If a license is coupled with an interest it's irrevocable as long as the interest lasts.
a. purchaser of chattel located on seller's land is given privilege to enter seller's land for the purpose of removing the chattel.
b.T's right to posses land is lawfully terminated, T can still reenter land at reasonable time to remove his chattel.
c. owner of future interest is privileged to enter land at reasonable time ad reasonable manner to determine whether waste is being committed.

Hint 152

e.g. Donald grants Marla an ''oral agreement.'' Later Marla goes out on Donald's land, clears up the weed-strewn path and puts an expensive and tasteful flagstone walkway in, leading down to the beach.

Marla has acquired a license and it has become irrevocable.

Marla's license can be enforced under principles of estoppel.

Front 153

Easements v. Profits

Back 153

1. Like an easement, a profit is a non-possessory interest in land and gives holder of profit the right to enter land of servient tenament and take away a natural resources [e.g. timber, coal, etc.]

2. a profit may be appurtenant or in gross.

3. For purposes of the bar exam, use the easement rules to analyze any situation involving profits. i.e. creation, scope, termination

4. Alienability - a profit appurtenant folllows the ownership of dominant tenement. a profit in gross may be assigned or transferred by the holder

Front 154

Exclusive profits v. Nonexclusive profits

Back 154

if owner of servient estae grants the sole right to take a resource from her land, then the grantee takes an exclusive profit and is solely entitled to the resources.

when a profit is nonexclusive, the owner of the servient estate may grant similar rights to others or may take the resources herself.

Front 155

Define Restrictive Covenants

Back 155

Is a promise to refrain from doing something related to the land.

E.g. ''I promise not to build for commercial purposes.''

Front 156

Name the 2 categories of restrictive covenants

Back 156

1. Covenants running with the land at law = Use if plaintiff wants money damages. Elements = HP, VP, I, N, TC

2. Equitable Servitude = Use if plaintiff wants injunction. Elements = VP, I, N, TC

Both involve a written promise [usu. contained in a deed] that imposes a restriction on the use of the land. Only difference is how to enforce.

Front 157

Requirements to enforce a restrictive covenant at law

Back 157

1. Intent - parties must intend the restriction to run with the land
2. Notice - to person against whom enforcement is sought
-- Actual
-- Constructive - restriction is contained in a deed that has been recorded in the B's direct chain of title
-- Inquiry
3. Touch and Concern - (if performance of the covenant (promise) makes the land more valuable or more useful, the covenant touches and concern the land. Note: Covenants not to compete DO touch and concern land)
4. Privity

Hint 157

- to determine kind of privity must be present to enforce promise as a covenant at law, you must distinguish the BENEFIT from the BURDEN of the covenant.

If subsequent owner [i.e. successor-in-interest] is P, then u know that person is trying to est. that Benefit of covenant runs to the P.

If successor-in-interest is D, then u know P is trying to est. that Burden of covenant runs to and binds the D.

Front 158

Distinguish Horizontal Privity from Vertical Privity

Back 158

1) Vertical Privity (those who subsequently obtain the property subject to covenant. Rule: the successor must take the full estate held by predecessor)
2) Horizontal Privity (refers to the original parties to promise—must share some interest in the land independent of the covenant, and there must be conveyance of land between original parties.
o To enforce burden, need H and V privity.
o To enforce benefit, only need vertical.

Front 159

When will covenant run w/ the land?

Back 159

When it is capable of binding successors.

First ask, Does the burden of A's promise to B run from A to A-1?

Then ask, Does the benefit of A's promise to B run from B to B-1?

Front 160

How to determine privity in order to enforce restrictive covenant at law

Back 160

a) If successor in interest is defendant (i.e., the plaintiff is trying to establish burden of covenant), then the plaintiff needs both vertical and horizontal privity.
b) If successor in interest is plaintiff (trying to establish benefit of covenant), then plaintiff needs only vertical privity.

Front 161

List the elements necessary for burden to run = WITHN

Back 161

1. writing - original promise btw A and B was in writing.
2. Intent - original parties intended that the covenant would run
3. Touch and concern the land - promise must affect the parties' legal relations as land owners and not simply members of the community at large.
4. Horizontal and Vertical privity are both needed for burden to run
5. Notice - A-1 has notice of the promise

Front 162

4 requirement to enforce the BURDEN of a covenant at law

S and D agreed on a covenant as neighboring landowners. S said he would pay to build a fence if D would pledge that she and her heirs, successors and assigns would maintain the fence. Their agreement was written, signed and recorded.
Later D sold her lot to F. Assume that S sues to recover damages for F's failure to maintain the fence in accordance with terms of the agreement between S and D. Who wins - S or F?

Back 162

S must be able to est. [I, N, TC, HP, and VP] to collect money damages from Frazier

Hint 162

S will not be able to enforce the restrictive covenant against F in a suit at law b/c there is no HP b/w S and D, the original parties to the agreement since as neighboring landowners they do not share any interest in land apart from a promise contained in their covenant agreement.

However, if S had originally owned both lot A and B and later sold lot B to D and the deed contained a promise by D for herself and her heirs, successors and assigns to maintain fence that S promised to build b/w the 2 lots; and later D conveyed lot B to F who failed to maintain the fence, then S will be able to enforce the burden of this promise as a covenant at law against F b/c HP requirement is satisfied.

Front 163

List the elements necessary for the benefit of A's promise to B to run from B to B-1 = WITV

Back 163

1. Writing
2. Intent
3. Touch and concern
4. Vertical privity

HP is not required for benefit to run

Front 164

Requirements to enforce the BENEFIT of a covenant at law

After S and D signed and recorded their original agreement as neighboring landowners, S sold his property to his friend N. N now seeks to recover damages for D's failure to maintain the fence in accordance with the terms of her agreement w/ S. Who wins - N or D?

Back 164

N must est. [I, TC, and VP] to enforce the benefit.

N wins b/c he does not have to show HP. Only VP is required for the benefit to run and bind a successor in interest. So N as the owner of a succeeding possessory estate can enforce the benefit if this promise as a covenant at law.

Hint 164

Now what if later on D sells lot B to F, can N enforce this restriction as a covenant at law and recover damages from F for his failure to maintain the fence in accordance with the terms of the original agreement b/w S and D?

Now both the plaintiff [norm] and the defendant [frazier] are successors-in-interest.

As P, N can show VP so that the benefit of this covenant runs to N, the successor-in-interest to S's lot. BUT there is still no HP, so N as P, will not be able to est. that the burden of this covenant runs to and binds F, who, as defendant, is the successor-in-interest to D's lot.

Front 165

How is Real Covenants Terminated?

Back 165

Same as all other non-possessory interests,
1. by holder of benefit executing a release in writing;
2. by merger [fee simple title to both the benefited and burdened land comes into the hands of a single owner]; and
3. condemnation of burdened property.

Front 166

Equitable Servitudes:

Back 166

Same covenant as Restrictive Covenant, but remedy comes from court of equity).

Thus, if P is seeking an injunction or specific performance rather than money damages, then the promise must be enforced as an equitable servitude.

Regardless of whether the covenant runs w/ the land at law, equity will enforce against the assignees of the burdened land who have NOTICE of the covenant.

Front 167

To create an Equitable Servitude that will bind the successor - WITNES

Back 167

1. Writing
2. Intent that the restriction be enforceable by successors-in-interest
3. restriction must Touch and Concern the land
3. Notice to Subsequent Purchaser = AIR
-- Actual
-- Constructive [record]
-- Inquiry
No Privity is required

Hint 167

S and D signed and recorded their original agreement as neighboring landowners. Later D sells her lot to F. S now seeks an injunction against F to force F to repair the fence in accordance w/ the term of the original agreement with D. Who wins - S or D?

S b/c no privity is required to enforce promise as an equitable servitude.

Front 168

Enforcement of Subdivision Restriction (reciprocal negative servitude)

Back 168

Doctrine is relied on to allow EACH LOT OWNER in a residential subdivision to enforce a restriction on use against every other lot owner in the subdivision if it meets the following requirements:
a) Intent to impose servitude on all land in subdivision (i.e., can be shown in common building plan, pattern of development, or almost all the deeds contain restriction).
b) Notice – to be bound by a covenant not in her deed, a grantee must have had notice of the covenants in the deeds of others in the subdivision.(actual-direct knowledge of covenants, constructive or inquiry notice-neighborhood appears to conform to common restrictions)
1) Distinguish restriction from Dedication of land towards public use (i.e., subdivision plan has 10 acres of the land marked out for use as a city park).

Hint 168

BB developer bought 200 acre farm on edge of city w/ plans to develop it as a residential subdivision. BBD subdivides farm into 100 lots of 2 acres each. BB files a residential subdivision map showing location of the lots. A buys lot 1 and in deed is placed a single family residence restriction and deed is recorded. Plaintiff B buys lot 2 w/ same restriction and deed is recorded. Later 5 other lots are sold each w/ the same single residence restriction and is recorded. Pressed for money BBD sells remaining 5 lots to CCo. which plans to build a glue factory on the land. No restrictions are put in the the deed, and CCo. was not told about the subdivision. A sells lot 1 to C, but there's no subdivision restriction included in deed C received from A. C has now decided to build an office high rise building on lot 1.

Can B stop CCo. from building glue factory? YES. Can B stop C from building office high rise? YES

B the plaintiff [or any other lot owner in that subdivision] may enforce this use restriction if she can est. that there is an Intent to impose a servitude [a restriction on use] on all land in the subdivision, and that the lot owners had notice.

Front 169

Defenses to Subdivision Restriction:

Back 169

a) Unclean hands: Π seeking enforcement is violating similar restriction on his own property.
b) Acquiescence: Π let other neighboring land owners commit same violation
c) Latches: Π sat by during construction and only complained after building was done
d) Estoppel: Benefited party acts in a way that a reasonable person would believe that the covenant was abandoned, and the burdened party acts in reliance thereon. Benefited party will be estopped from enforcing covenant.
e) Changed Neighborhood Conditions: If neighborhood has changed significantly since time the servitude was created, and it would be inequitable to enforce the restriction, injunction will be withheld. Instead, Holder of Benefit can bring action at law for damages.
--- Zoning that is inconsistent w/ private restriction imposed by ES will not of itself bar the injunction, but will be used as good evidence to show neighborhood conditions have changed sufficiently to make injunction unjust.

Front 170

Termination of Covenants and Servitudes

Back 170

An equitable servitude may be extinguished by:
a) Written deed of release from benefit holder
b) Merger of benefited and burdened estates
c) Condemnation of burdened property; or
d) Changed conditions: neighborhood has changed so significantly that enforcement would be inequitable (i.e., subdivision is now surrounded by industry). Note: All the houses must be affected!!! All or nothing.

Front 171

Adverse Possession

Back 171

Title to real property may be acquired by adverse possession.

Title ny adverse possession results from the operation of the SOL for trespass. I.E. If true owner does not, w/n the statutory period, take action to eject a possessor who claims adversely to the owner, the title vests in the possessor.

Front 172

To establish title by adverse possession,...

Back 172

the possessor must show an actual entry giving exclusive possession that is open and notorious, adverse [hostile] and continuous throughout the statutory period.

Front 173

6 Requirements: HELUVA

Back 173

a) Hostile (X is on land without owner’s permission)
b) Exclusive (X must be excluding others from possessing the property)
c) Lasting (possession must last for the statutory period [apply the relevent time period as specified in the facts of the question] OR if no time period is specified, use the common law period of 20 years)
d) Uninterrupted (the kind of continuous use that an ordinary owner of the property would make)
e) Visible (X's use ad possession of the property is open and notorious sufficiently apparent to put true owner on notice)
f) Actual (X must actually possess the property—but 2 see exceptions to this requirement)

Hint 173

1. O, true owner does not have to know what's going on.
2. X, adverse possessor, does not have to think he owns it.

Front 174

What are the 2 exceptions to Actual Possession

Back 174

1. Doctrine of Constructive Adverse Possession, and
2. Lease lands - leasing land to a 3rd party constitutes possession for purposes of adverse possession

Front 175

Explain Doctrine of Constructive Adverse Possession

Back 175

expands kernel of actual possession out to the full extent of the color of title under which the adverse possessor makes his claim of right to the property.
b. Two Limitations:
1. Amount of land actually possessed must bear a reasonable relation to the whole (i.e., 80 acres out of 100 okay; 5 acres out of 100 not okay).
2. Property must be unitary, which means one seamless whole (i.e., parcels must be connected—can’t have road or other property dividing it).

Hint 175

X goes on to property under a color of title to a 100 acre farm, but actually possesses only 85 acres of the farm. The statutory period runs, and all the other requirements of AP are satisfied.

What is the color of title? X makes some claim to the title to the land but his claim is not void.

What has X obtained? X obtains the 85 acres that he actually possessed plus the other 15 acres b/c of doctrine of constructive ap.

Front 176

What are the 2 Limitations to Constructive AP?

Back 176

1. The amount of land that is actually possessed must bear a REASONABLE relation to the whole, and
2. the property must be unitary, which means parcel of land must be one seamless whole. i.e. not divided by a road.

Front 177

What is the rule regarding co-tenancies and AP?

Back 177

No sharing with owner - NO AP against a co-tenant unless the co-tenant in possession excludes [OUSTERS] the other co-tenants from possession and the statutory period runs.

The exclusion starts the clock running for purposes of adverse possession.

Note- exclusion doesn't prevent 2 or more people from working together to obtain title by AP. If they do so, the will obtain title as tenants in common.

Hint 177

Waylon and Willie are joint tenants on a farm in central Texas. In a desparate attempt to avoid the IRS who are pursuing him for unpaid taxes. Willie flees Texas to NY where he spends the next 25 yrs driving a cab. After that time he figures the heat is off and returns to Texas only to find Waylon claiming title to the farm by adverse possession.

Willie wins b/c Waylon did nothing to exclude Willie

Front 178

When does SOL clock start to run for AP against future interest concerning Life Tenant and Remainderman

Back 178

the AP clock does not start to run against the holder of a future interest until that interest becomes possessory.

Until the prior present estate terminates, the holder of the future interest has no right to possession, and thus no cause of action against a wrongful possessor.

Hint 178

R conveys the farm to N for life, remainder to W. Then G comes on the unoccupied land and begins a period of AP. G satisfies all 6 requirements of AP.

G gets the present possessory estate which is N's life estate.

G can get the rest of the fee simple [i.e. W's remainder] but only if G satisfies all 6 requirements for AP against the holder of the remainder.

Front 179

When does SOL clock start to run for AP against future interest concerning Fee Simple Determinable and the Possibility of Reverter

Back 179

the happening of the condition starts the clock running for purposes of AP.

Hint 179

Pat conveys his LA mansion to his daughter Deb, for so long as no liqour or tobacco is consumed on the premises. A few months later Pat stops by and sees daughter Deb. He finds Deb hosting a party w/ 50 guests each w/ a class of vodka in one hand and nothing in the other. Pat storms off. At that point, he has a coa to recover possession of the property. If he does not bring action w/n the period specified by the applicable SOL [and if Deb or her successors have the requisite open, notorious, continuous, and AP] his action will be barred.

Deb has FSD; Pat has Possibility of reverter

Front 180

When does SOL clock start to run for AP against future interest concerning Fee Simple on Condition Subsequent and the Right of Reverter?

Back 180

the clock will not start until the Grantor exercises his right of entry

Most cts hold that the holder of right of entry must bring his action w/n a reasonable time after event occurs. If he fails to do so, his actions is barred by laches.

Hint 180

Pat conveys his LA mansion to his daughters Deb provided however if liquor or tobacco is consumed on the premises I reserve the right to reenter and retake the property. He stops by and finds vodka and cigarette party in full swing.

Deb has FSCS; Pat has Right of reentry

Front 181

What is the rule regarding AP - Tacking?

Back 181

An AP can tack together successive periods of adverse possession in order to satisfy the statutory period provided there's privity b/w successive adverse holders. (also holds true for the true owners—AP can take land from successive periods of true ownership).
1. Privity is satisfied if the subsequent possessor takes by descent, by devise, or by deed purporting to convey title [oral transfer of possession is sufficient to satisfy the privity requirement.

2. No Gaps in possession - If there happens to be a gap in possession, and possession had not passed directly from Burt and Loni to Brad and Angelina, it breaks tacking—no AP.

Front 182

List the adverse possession – disabilities and state when the SOL clock starts to run?

Back 182

Infancy, Incarceration, and Insanity. If a true owner is suffering from any of these three disabilities at the time of AP begins, then the clock for AP will not start to run until the true owner is free of the disability.

Front 183

What are the 4 main rules regarding AP and Disabilities?

Back 183

1) Intervening Disability: Does not stop the clock. If disability was not in existence on day AP began, the clock continues to run during intervening disability.
2) No Tacking of Disabilities: Ex): Minor became insane shortly before turning 18. AP clock runs when he turns 18—you cannot tack the disabilities together.
3) Government Land: No AP against govt. lands.
d) Marketable Title: Tile acquired by AP is not marketable—you must request “quiet title” through court action.

Front 184

Contract of sale [i.e. Land Sale Contracts

Back 184

Contract of sale of real property is governed by all K law principles. K of sale exists from moment it is signed until deed is transferred at closing (escrow period).

Front 185

SOF requires that any K for sale dealing with real property must be

Back 185

in writing and signed by party to be charged (writing must include description of property, names of parties and price).

Front 186

Exception to SOF's rule in K of sale is

Back 186

the Doctrine of Part Performance - A ct may give specific performance of a K despite the absence of a writing if
1. the oral K is certain and clear, and
2. the acts of partial performance clearly prove up the existence of a K.
-- i.e. Buyer takes possession of the property, and
buyer paid full [or close to full] purchase price; or
buyer built improvements on property.

Front 187

Doctrine of equitable conversion

Back 187

Under this doctrine, once the K is signed, equity treats the property as buyer's land, and therefore, if the property is destroyed [w/o fault of either party] b/f the date set to close, the BUYER BEARS RISK OF LOSS b/c he is deemed the owner.

Thus, B must pay the K price despite a loss due to fire or or other tragedy, UOS

Front 188

Death of a party before close of escrow

Back 188

Because of the doctrine of equitable conversion, if either party to the K dies before closing, equity will still order specific performance of the K if necessary.

If S dies b/f closing, the B will close the sale with S's estate [B will deliver purchase price to S's estate]; and S's interest is in personal property.

If B dies b/f closing, S will close w/ B's estate [S will deliver title to the property to B's estate]; and B's interest is in real property.

Front 189

What is the general rule for Marketable title?

Define Marketable title

Back 189

GR - Every land sale K contains an implied warranty that the seller will deliver marketable title to the buyer at close of escrow.

A title that a reasonably prudent buyer would be willing to accept. It need no be a perfect title, but the title must be free from questions that might present an unreasonable risk of litigation. i.e. an unencumbered fee simple with good record title

Front 190

What are the requirements for closing re: marketable title

Back 190

To satisfy warranty, S must provide B with 3 things:
a) Proof of title (give B some tangible evidence of title)
b) Title free of encumbrances (but okay to have encumbrances that are known to B).
1) Includes easements, mortgages, restrictive covenants, as well as any other type of private restrictions not disclosed to B.—does not include zoning or housing violations, but does include a VIOLATION of a zoning ordinance.
c) Valid title ripens on the day of the closing (B cannot demand until closing, but if B finds out, he must notify S and give him a reasonable time to cure).

Front 191

What if B determines that S's title is not marketable?

Back 191

B must notify S of any defect in title and allow S a reasonable time to cure the defect - even if that means postponing the day of closing.

Front 192

What circumstances render title unmarketable?

Back 192

1. Defects in record chain of title e.g. there's a variation in the description of the land from one deed to another; a deed in the chain was defectively executed; title acquired by AP; a future interest held by unborn or unascertainable party.
2. Encumbrances - Mortgages and Liens unless S satisfies mtg or lien at the closing with proceeds from the sale; Easements unless its a beneficial easement that was visible or known to B, Restrictive Covenants; and Encroachments unless (i) it is very slight [only a few inches] and doesn't inconvenience the owner whose land it encroaches, (ii) the owner encroached upon says he will not sue on it, or (iii). it has existed for so long that it has become legal by AP.
4. Existing violation of a Zoning Ordinance

Front 193

What are buyer’s remedies for breach of marketable title? i.e. S can't reasonably cure

Back 193

Rescind [walk away from the deed], sue for damages for breach, get specific performance (which will be coupled with reduction in the purchase price to reflect defects in title), or require the seller to quiet title

Front 194

What is Time of Performance for Land Sale Contracts?

Back 194

K will specify date of closing, but parties have a reasonable time to perform even if late (up to 2 months) UNLESS contract says that time is of the essence in which case, the late party is in total breach.
Time will also be considered "of the essence" if: Circumstances indicate it was the parties intention; or one party gives the other notice that she desires to make time of the essence and does so w/n a reasonable time prior to the designated closing date.
b) Ohio Distinctions:
1) Party cannot force specific performance if there is a delay in equity, but can seek damages caused by delay.

Front 195

Remedies for Breach of K for Sale of Real Property

Back 195

1. Damages - the difference b/w the K price and the value of the property os of the date of breach.
-- Liquidated damages clause [B's deposit can be forfeited in event of B's breach]- clause will be enforced so long as the amount is reasonable, should not exceed 10% of the K price.

2. Specific Performance - available to B b/c land is unique, and is available to S.

Front 196

Is S liable for Defects on property discovered after closing?

Back 196

Depends.
1. Under CL: Caveat emptor- B can't recover from S b/c B alone is responsible for checking the quality and suitability of goods before a purchase is made.
(but CL exception says S cannot Actively Conceal Defects; Misrepresent by fraud; or Fail to disclose defects if S knows or has reason to know of defect, defect is not apparent and S realizes B probably won't find it by ordinary inspection, and defect is so serious to cause B to reconsider the purchase)
a) Still applies today for all property sales [commercial, industry, agriculture] except residential homes!
2. Under Modern law (residential sales only): S has duty to disclose to B any serious defects in property that S knows of and which are not obvious to B
a) Also may have implied warranty of fitness or merchantability in the case of a new residential home that is being sold by the builder/professional/seller. [e.g. MI homes]

Front 197

To have a valid Deed...

Back 197

all formalities must be met. The deed must be in writing and signed by the grantor as required by the SOF. The deed must also identify the land; description of land is sufficient if it provides a good lead as to identity of the property sought to be conveyed [meaning, grantor's intention is clear and his intention can be proved w/o difficulty]. The parties must also be identified by name or by describing them in some other way; and the deed must evidence an intention to transfer reality.

Front 198

2 requirements that must be satisfied for deed to pass title

Back 198

1. Execution
2. Delivery

Front 199

How do you effectively delivered a deed

Back 199

Delivery refers to the grantor's intent; it is satisfied by words or conduct evidencing the grantor's intention to pass title immediately and irrevocably even if right of possession is postponed until some future time. Thus, physical transfer of a deed alone may not establish delivery need intent.

-- Recording a deed raises a presumption of delivery, even if the grantee knows nothing about the deed.
-- Once delivery occurs title passes. Returning the deed to grantor has no effect on title.
-- If grantor dies and deed is still in grantor's possession, there is a presumption of no delivery, which may be rebutted by grantee.

Delivery must be accepted. Acceptance of delivery will be implied unless the facts show otherwise.

Hint 199

Consideration is not required in order for the deed to be valid

Front 200

Execution of the Deed

Back 200

1. Deed is subject to SOF, just like K of sale [must be in writing signed by seller]
2. Deed must describe the land with sufficient accuracy in order to pass title. Property may be described in various ways; i.e. by reference to a government survey, by metes and bounds, by courses and angles, by reference to a recorded plat, to adjacent properties, by the name of the property, or by a street and number system.
-- description is also sufficient if it provides a good lead. ''a conveyance of all my land,''

-- If cannot identify property, then the deed is void for vagueness and nothing gets transferred.
-- Parole Evidence may be used to clarify deed description. e.g. land description reads ''my condo in Miami beach.'' PE show that seller owns only one condo in Miami.
c.f. inadequate description - A grants to B my condo in Miami, and it turns out that A owns 3 condos in Miami - conveyance fails for lack of description.

Front 201

When is PE admissible to prove delivery of a deed?

Back 201

PE may be used in (i) showing the intent of the grantor regarding delivery; (ii) showing grantor did not intend deed to have any present effect at all; (iii) showing that a deed absolute on its face was intended by parties to be a mortgage; and (iv) when a deed is transfered to a 3rd party w/ conditions in commercial transactions [i.e. deed deposited with escrow holder]

PE is inadmissible to prove a delivery was subject to a condition when transfer is directly to the grantee.

Front 202

What is the "relation back" doctrine?

Back 202

In an escrow transaction, title does not pass to grantee until performance of the named condition.

However, where justice requires [e.g. grantor dies b/f titles passes; grantor becomes incompetent], the title of the grantee will relate back to the time of the deposit of the deed in escrow.

Front 203

How is delivery of a deed enforceably accepted?

Back 203

In most states acceptance is presumed if conveyance is beneficial to the grantee.

In other states, acceptance is presumed only where the grantee is shown to have knowledge of the grant and fails to indicate rejection of it.

It usually relates back to the date of delivery of deed in escrow. However, many courts refuse to relate back an acceptance where it would defeat the rights of intervening 3rd parties such as BFPs, attaching creditors of the grantor, or surviving joint tenants.

Front 204

Problems arising with Conditional Deliveries

Back 204

1. If the grantor hands over the deed but tries to condition delivery, then delivery is of a future interest and is valid.

2. If a deed is absolute on its face, but is delivered to grantee with an oral condition, the plurality rule says to ignore the oral condition and consider delivery complete.

3. Delivery Conditioned on Grantee's Payment of Purchase Price - is valid provided:
-- grantor makes delivery of deed to a 3rd p in escrow;
-- grantor instructs escrow agent to deliver deed to grantee when the condition is satisfied [oral instruction sufficient for bar exam]; and
-- Under majority view, if grantor invokes his right to recover deed prior to occurrence of the condition, the grantee can only object if there's an enforceable written K [e.g. escrow instructions]
-- Under minority view, once grantor delivers the deed to escrow agent, the grantor cannot get the deed back; as long as the grantee satisfies the condition, the grantee gets the property.

Hint 204

Ex of 1. Deed language is ''to A, but not until I die,'' and the deed is handed to grantee. O has LE, A has vested remainder in fee simple.

Front 205

Covenants for title

Back 205

There are 3 types of deeds used to convey property interests other than leaseholds;
1. quitclaim deeds
2. general warranty deeds
3. special warranty deeds
The major difference b/w these deeds is the scope of assurances [covenants of title] they give to the grantee and grantee's successors regarding the title being conveyed.

Front 206

Quitclaim deeds

Back 206

Grantor makes no promises regarding title, i.e. he only conveys his interest in property —there are no warranties as to validity of title.

Front 207

Define Statutory Special Warranty Deed

Back 207

Statutes in may states provide that the use of the word grant in a conveyance creates by implication the following 2 limited assurrances against acts of the G'or: (i) that prior to the time of the execution of such conveyance, the G'or has not conveyed the same estate or any interest therein to any person other than the grantee; and (ii) that the estate conveyed is free from encumbrances made by the G'or

Front 208

General Warranty Deed

Back 208

Grantor makes six promises (3 present covenants that are personal to grantee and do not run with land; and 3 future covenants, that do run with the land and can be enforced by all subsequent purchasers.
1. Present Covenants:
a) Covenant of Seisin (G’or has possession and title)
b) Covenant of Right to Convey (G’or has power and authority to make grant)
c) Covenant Against Encumbrances (G’or promises there are no physical or title encumbrances other than previously disclosed)
2. Future Covenants:
a) Covenant for Quiet Enjoyment (grantee will not be distured in possession by 3rd party’s lawful claim of title)
b) Covenant of Warranty (G’or agrees to defend against reasonable claims of title by 3rd party and compensate grantee for any loss sustained by claim of superior title).
c) Covenant for Further Assurances (if S omitted something required to pass valid title, S will perform any acts reasonably necessary to pass good title).

Front 209

Breach of covenant of titles

Back 209

Present covenants are breached, if at all, at the time of conveyance.
a) Covenants of Seisin and Right to Convey are breached at the time of conveyance if the G'or is not the owner of the interest she purports to convey or has not been authorized to convey.
b) Conveyance against Encumbrances is breached and a coa arises at the time of conveyance is the property is encumbered even if G'ee knew of the encumbrance [most jx]

Future covenants are breached only upon 3rd party interference with the possession of the grantee or her successors.
-- these covenants are viewed as continuous b/c their benefit runs with the G'ee's estate. thus they can be breached a number of times.
-- A covenantor is not liable on her covenant of warranty or futher assurances unless the party seeking to hold her liable gives her notice of the claim against the title she conveyed

Where there is a breach in warranty, plaintiff's damages will be limited to the amount of purchase price received by the warrantor plus incidental damages.

Hint 209

B conveyed property to R with a covenant of warranty, an the purchase price was $5,000. Later on, R conveyed the ranch to N w/ no warranty and here the purchase price was $10,000. Still later, N is ousted by true owner.

N can't sue R, but N can sue B b/c the covenant of warranty is a future interest and as such it runs w/ the land, which means it can be enforced by any subsequent purchaser. N can only recover $5,000 from B since B only received $5,000 from R.

Front 210

Estoppel by Deed Doctrine

(aka After-Acquired Title)

Back 210

If a G'or purports to convey an estate in property that she doesn't then own, her subsequent acquisition of title to the property will automatically inure [i.e. vest] to th benefit of the G'ee.

Because G’or gives an implied covenant that title will be conveyed to grantee, the grantee may sue in equity to compel transfer of title from G’or once G’or acquires title to property.
1. But a Subsequent Sale to BPF will cut off rights of earlier grantee, leaving grantee with no remedy against BFP

Front 211

Conveyancing by Will

Back 211

1. Ademption: if Testator devises land he does not own, the gift is adeemed (fails and may not by replaced by other property); but if property was in escrow at time of Testator’s death, then devisee will get proceeds from property.

2. Exoneration: Common law: If the devised property is subject to mortgage or other Lien, that lien must be exonerated from T’s estate. [i.e. he devisee is entitled to have the lien paid off from T's residuary estate-property will pass to devisee free of the lien]

3. Lapse and Anti-Lapse Statute: At CL, if the beneficiary died before T, the gift in the will lapsed - the gift was void.
Modern rule - anti-lapse statute prevents lapse by allowing the gift to pass to certain relatives of the predeceasing beneficiary.

Note: if Q doesn't give anti-lapse statute apply CL.
Modern rule: Devisee takes property subject to mortgage.

Front 212

Ownership Interests in Trust

Back 212

a. Express Private Trust: created, in writing, by a settlor who transfers title to real property to a trustee. Trustee holds and manages the property subject to a fiduciary duty to use the highest care and skill for the benefit of the beneficiaries of the trust.
a) Creation of Trust: can be created inter vivos by deed OR by testamentary trust (in will).
b) Trustees: Trustee holds legal title to real property. Trusts are subject to RAP.
c) Charitable Trust: Similar to express private trusts, but charitable trusts do not have named beneficiaries. Beneficiaries are either established charities (i.e., Mercy Connections) OR large groups of people (i.e., victims of Hurricane Katrina).
• Note: remember charity-to-charity¬ exception to RAP
b. Cy Pres Doctrine (“as near as can be”). Court may alter terms of charitable trust to further Settlor’s intent

Front 213

Recording

Back 213

1. Common Law: “First in time; first in right
2. Recording Statutes: Purpose was to change common law and protect subsequent purchaser in certain situations.
1. But if SP does not satisfy requirements of applicable recording statute, then apply common law rule of FITFIR and under CL, SP always lose.

Note- an unrecorded deed is just as valid as b/w the original parties as a recorded deed. RECORDING only serves to give NOTICE of the deed.

Front 214

Mechanics of Recording

Back 214

1st the Clerk files copy of deed and makes a note of volume and page number

2nd the Clerk indexes info in Grantor and Grantee index
1. Grantor index: alphabetical listing by name of grantors (notes name of grantee, brief description of property and cites to book/page no.)
2. Grantee index: clerk lists same info alphabetically by grantee.

Front 215

Different types of Recording acts - List all 3 statutes

Back 215

1. Notice statute (Ohio): protects subsequent grantees who are BFP's (purchasers for value) and who takes without notice of the earlier transaction.
--- Sole inquiry is notice (recording imparts constructive notice)

2. Race statute: Whoever records first, wins—notice is irrelevant.
--- SP does not have to be a BFP

3. Race-Notice statute: protects all subsequent grantees who are BFP's for value who:
a. take w/o notice; and
b. are the 1st to record

Front 216

Strategies when Fact Pattern Lists Statute

Back 216

1) Look for words “notice” or “in good faith” in statute language (notice OR race-notice)
2) Look for words “recorded first” OR “first recorded” (race-notice)
• If not, then notice statute
3) If “notice” or “in good faith” is not included, then race statute.

Front 217

Who is protected by recording acts?

Back 217

Only BFPs are entitled to prevail against a prior transferee under ''notice'' and ''race-notice'' statutes.

Front 218

BFP

Back 218

a. BFP is a bona fide purchaser for value who takes without notice.
b. Purchase for Value (any consideration is okay, i.e., more than a “mere peppercorn”)
1. Watch out for sham consideration, but “bargain basement sale price” is okay.
2. Transferee who is heir, donee or devisee is NOT a BFP for value!!!
3. Shelter Rule Exception: person who takes from BFP (includes heirs, donees, etc.) will prevail against any interest BFP would have prevailed against.

Hint 218

Shelter Rule Ex: O sold Blackacre to A, but A did not record. Later, O sold Blackacre to B, a BFP who paid value and had no notice of the conveyance to A. B recorded promptly. Still later, B gave a deed to Blackacre to C as a gift. The jurisdiction has adopted a race-notice statute.

C prevails over A b/c of the terms of the race-notice recording statute, and takes shelter under the rights of B who is a true BFP b/c B paid value and took w/o notice of the earlier conveyance to A. B prevails over A b/c he recorded 1st under the terms of the race statute.

Front 219

BFP must take w/o notice: 3 types of notice

Back 219

1. Actual: if SP had actual notice of prior unrecorded conveyance, then SP in not a BFP.
--- Shelter rule exception: Anyone (even those who actually know of earlier conveyance) can shelter under the rights of a BFP.

2. Record notice: in order to impart record notice, a deed must be recorded in the buyer's direct chain of title - so SP can find it and inspect it.

3. Inquiry notice: to be a BFP who takes w/o notice, the SP must examine the land and must make inquiry as to any unexplained uses or possessions.
--- SP will be charged with notice of whatever such a physical inspection of the property would reveal.

Front 220

Subsequent Interests protected by Recording Acts

Back 220

Subsequent Mortgagees are treated as purchasers.

Judgment Creditors: the majority of courts hold that a plaintiff who obtains a judgment lien is NOT protected b/c either
1. the plaintiff is not a BFP b/c he did not pay value for the judgment, or
2. the judgment attaches only to property ''owned'' by the defendant, and not to property the defendant has previously conveyed away, even if that conveyance was not recorded.

Hint 220

Ex. O sold blackacre to A who did not record. B a judgment creditor of O, files a lien against O's real property. B did not know that O had earlier sold Blackacre to A.

B is not protcted even though he did not know of A's prior unrecorded deed.

Front 221

Title Searching

Back 221

2 steps:
1. Construct a Chain of Title - using Grantee Index: look up S's name and find name of S's G'or; then look up name of that person's G'or, and so on, going backwards in time for whatever period of time os required by marketable title statute (usu. 30 to 60 yrs). the

2. Adverse each link - using the G'ors index (pull the chain of ownership to see if their are any weak links of ownership):
look up the name of the last G'or found in the chain of title just constructed and see if that person recorded any interest on the property; starting from the time they passed the title onto the next link in the chain of title.
---- Specifically look to see if the G'or placed any encumbrances (easements, mortgages, etc.) on the property. Alternatively, look to see if G'or conveyed the property to someone else b/f passing the property on to the next link in the chain.
---- Repeat search for each G'or in the chain of title leading down to prospective seller.

Front 222

Concept of Legal Blinders- what to search for

Back 222

Title searcher will only look to see what Grantor did during period of record ownership (therefore, will not find a deed that is recorded before or after time of record ownership—i.e., “wild deed” that is outside chain of title)

2 possible ways that a deed maybe filed at the court house - but not be recorded in the chain of title.
1. if the deed was recorded too early, or
2. if the deed was recorded too late

Front 223

Deeds Recorded Too Late

Back 223

A deed recorded after the G'or is shown by the record to have parted with title through another [SP] is not constructive notice in most states.

Hint 223

Ex. O sells to A, no recording. Then O sells to B and B records promptly. Next, A records. Finally, C sells the farm to C and C had actual notice of the earlier sell to A.

C is not charged with constructive notice of the prior sale to A b/c A recorded his deed too late and therefore it's recorded outside the direct chain of title.

Front 224

Role of Inquiry Notice in Title Search

Back 224

1st Rule - Where a reading of the deeds on records discloses an unrecorded transaction, then the SP has to make inquiry in order to take without notice and qualify as BFP. ---- Subsequent purchasers are on notice of anything mentioned in a deed recorded in chain of title.

2nd Rule - Remember -- to qualify as a BFP w/o inquiry notice, the SP must make a physical inspection of the property and must investigate any unexplained possessions or any unexplained uses of the property.

Front 225

Three types of Security Interests

Back 225

1. Mortgage (mortgage on property given by the Mortgagor (debtor) in exchange from loan from mortgagee (creditor)). If loan is not repaid, property may be foreclosed on.
a) Equitable Mortgage (an absolute deed with a separate promise of reconveyance)
b) Sale Lease Back with option to repurchase—also a mortgage.
1) Both of these are treated like mortgages and foreclosed on like mortgages.
2. Deed of Trust: Given by Debtor to 3rd party trustee who holds deed of trust until loan is paid in full. If loan is not paid, trustee can obtain ct order for a foreclose sale OR sell property at public auction.
3. Land Sale Contract: Arrangement where Debtor signs a contract promising to make payments to Seller. However, S keeps title to property until loan is paid in full.

Hint 225

E.g. of Equity Mtg: G'or [borrower] owes the G'ee [lender] money and gives the G'ee a deed that is absolute on its face. Separately, G'ee promises to reconvey the land to G'or when the debt is paid. There's no mention of the word ''mtg'' anywhere, and the deed is absolute. Ct treats this as a mtg.

E.g. of Sale leaseback w/ option to repurchase: Landowner sold his napa valley estate to lender, but immediately leased it back w/an option to repurchase it at the end of the lease. The lease payments are about what you would expect mtg payments to be in amount, and the repurchase price is nominal.

Front 226

Mortgages and Deeds of Trust: Rules and Protections

Back 226

1. Debtor’s Equitable Right of Redemption: at any time up until the moment of the FC sale, the Debtor can redeem the property by paying amount in arrears plus interest unless mortgage includes an “acceleration clause.”
---- If there is an acceleration clause, D must pay the entire balance of mtg in order to redeem.
2. Waiver: Right of redemption cannot be waived in the original mtg or deed of trust, but it can be waived later if there is separate consideration for the waiver (i.e., D loses job and lender agrees to extend due date of loan).
---- Attempt to waive right of redemption in mtg or DoT is generally referred to as clogging the equity of redemption and is prohibited.
3. Statutory Redemption: half the states allow the mtgor [borrower] a statutory right to redeem the property for some fixed period of time AFTER the FC sale has occurred [typically 6 months to a year]

Front 227

Foreclosures

Back 227

must be at public auction

Front 228

Priorities on Payment of Multiple Mortgages

Back 228

GR: where single property has multiple mtg's priority is allocated by CL First in time, First in right - unless that order is changed by terms of the applicable recording statute.
a) Voluntary Subordination: priority can be changed by contract (i.e. senior mtg may agree to subordinate to a junior mtg - a mtg that comes later in time)
b) Purchase Money Mortgage: (mortgage taken out to buy property, as opposed to home equity loan, etc., receives priority over any other mortgages executed at about the same time, even if recorded first. Favored class.
• Also PMM given by Seller gets priority over bank PMM.
c) Change in Senior Mortgage (if mortgagor does anything to increase the senior mortgage—i.e., borrow more money/refinance—senior mtg loses place in line but only to extent of the change

Front 229

Foreclosure Eliminates Junior Interest

Back 229

GR: FC wipes out all Jr. interests [liens, easements, leases, etc.], but FC does not wipe out Sr. interests - they continue in place; the buyer will take the property subject to Sr. interest.

Protections to Holder of Jr. interest: holders of Jr interests have the right to pay off any mtg being foreclosed on in order to keep their Jr interests from being wiped out.

---- Note: all junior interests must be named as parties in order for their interest to be eliminated in FC.

Hint 229

Note: Unlike Sr. interests, Jr. interests do not continue in place, i.e. don't run w/ the land, although they will be paid off if there's enough money received in FC sale.

Front 230

List the order of payment of proceeds from a FC sale

Back 230

1. Pay the costs of the FC
2. Pay off the mtg that was foreclosed on
3. Pay off Jr. interests -- in order of priority.
4. Pay any remaining balance to Mortgagor-Landowner

Front 231

Anti-Deficiency Statute

Back 231

if mtg is foreclosed on and the sale does not raise sufficient funds to pay off the mtg, on bar exam, allow al mortgagee/creditor to sue the debtor personally for the balance due on the note.

Front 232

Land sale K

Back 232

Forfeiture Clause: If D misses payment, then S can cancel entire K and keep all payments and retake property.

---- Forfeiture clauses are enforceable (but S is limited to that remedy and cannot also obtain damages, etc.)

Front 233

Transfer of security interest by mortgagor

Back 233

GR: whenever Grantor transfers title to the property, the Buyer/Grantee automatically takes the property subject to the mortgage.
---- But grantee will not be personally liable unless grantee specifically assumes the mortgage, and in that case, both B and S are liable.
• Exception: Any modification of the obligation between Creditor and the new Grantee will relieve the original Mortgagor from liability.

Hint 233

E.g. C mortgaged the farm to Nat'l bank. Later she sold the farm to M ''subject to the mortgage to Nat'l bank.'' M agreed to assume the mtg. 2 yrs later, M sold farm to P and he took property ''subject to the mtg of Nat'l bank.'' Subsequentlt, P failed to pay the mtg. Nat'l bank foreclosed on its mtg, and the farm was sold for less than the balance due on the mtg. Who can Nat'l bank sue for deficiency?
- C b/c she signed the note;
- M b/c she assumed the note
- Not P b/c he didn't assume the mtg.

If facts show that after assuming the mtg, M and bank enter into modification of the mtg, then C will no longer be liable on the mtg.

Front 234

Transfer of security interest by mortgagee

Back 234

GR: Mortgagee/creditor can freely transfer the Note, and the mortgage will always follow the note it secures.

Transferee of note is called:
1) Holder in Due Course: The HDC (assignee of note) is not bound by payments to a prior mortgagee even if the mortgagor knew nothing about the transfer of the note to the successor mortgagee. Need 4 requirements:

3. Due on Sale Clause
a) If mortgagor transfers property without mortgagee’s consent, the balance of the loan becomes immediately due and payable (enforceable).

Front 235

To be treated as a HDC, what 4 requirements are needed?

Back 235

1. Note must be Negotiable, which means that it must be either payable to ''bearer''; OR payable ''to the order of'' a named person.
2. Original note must be Endorsed by the named payee.
3. Original note must be delivered to the transferee.
4. The transferee must take the note in Good Faith and must be Pay Value for it.

Front 236

Security interests in Fixtures

Back 236

GR - 1. Seller of a fixture who provides a Purchase Money Security Interest (PMSI) must make a UCC Article 9 fixture filing within 20 days after attachment.

If Seller makes filing in timely manner, then S can repossess fixture without regard to priority of an earlier mortgage.

But if he fails to file, his security interest is subordinate to earlier mortgage.

Front 237

Lateral support of Land

Back 237

Rule: A landowner has the right to have her land supported by adjoining landowners; and landowner is strict liable if his excavation causes adjacent land to subside [i.e. slip or cave in]

1. Improvements: If land is improved by buildings and adjacent excavation causes subsidence, the adjacent landowner is strictly liable ONLY if land would have collapsed in its natural state i.e. collapse would've occurred even without the weight of the improvements.

-- If land would not have collapsed in its natural state, the excavating landowner is liable for loss or damage to the buildings if his ecavation is found to have been done negligently.

Hint 237

E.g. D and G are adjoining landowners. D goes out and, using all due care, excavates D's land right up to G's property line. Even though D used all due care, G's land collapsed in to the excavation. D is liable for the collapse.

What if not only G's land collapsed, but the house and barn on his land collapsed into the excavtion? The D is going to be strictly liable for damages to improvements on house and barn as well.

Front 238

Describe the Right to Subjacent support -- Support of the surface from the bottom.

Back 238

When landowner conveys to G'e the right to take mineral from beneath the land, the G'or retains the right to have the surface supported unless the conveyance expressly includes authority to destroy the surface if 'reasonably necessary' to extract the mineral.

This right extends not only to the land in it's natural state but also to all buildings existing on the date when subadjacent land was severed from the surface.

Note - the underground occupant is liable for damages to subsequently erected buildings ONLY if he was negligent. He will also be liable for negligently damaging springs and wells.

Front 239

Describe the 2 major systems for allocation of Water in Watercourse [e.g. Streams,Rivers and Lakes including underground watercourses].

Back 239

1. Majority Rule: Riparian Rights: Affects property that borders on lakes and streams
a) Domestic purpose: Can use all the water you want
b) Non-domestic purpose: Limited to reasonable use
2. Minority Rule: Prior Appropriation (mostly out west—first in time takes, i.e. 1st person who makes beneficial use of water from a lake or stream has that right protected against those who come later, so long as the use continues)

Front 240

Under the Riparian Doctrine...

Back 240

water doesn't belong to the public generally or to the state but rather to riparian proprietors who own land bordering watercourses. i.e. all landowners whose property is adjoining to a body of water.

Front 241

What Right does a Riparian owner have?

Back 241

1. Natural Flow Theory - a riparian owner is entitled to the water in the bordering stream or lake subject to the limitation that he may not substantially or materially diminish its quantity, quality, or velocity.

2. Reasonable Use Theory - all riparian owners share the right of reasonable use.

In determining whether an owners use is reasonable, courts generally balance the utility of the use against the gravity of the harm.

Factors are 1. the Purpose of the questioned use; 2. the Destination to which the water is taken for use; 3. the Extent of the use; 4. the Pollution of water by use; 5. whether the use involves Alteration in the manner of flow; and 6. Miscellaneous types of conduct that may give rise to litigation. = MAPPED

Under both of these theories, water use is categorized as natural or artificial use. Natural use includes those necessary for daily sustenance of human beings [household consumption, gardening, minimal no. of livestock]. Irrigation and manufacturing are artificial.
Natural use prevails over artificial

Front 242

Under the Prior Appropriation Doctrine...

Back 242

the water initially belongs to the state, but the right to divert and use it can be acquired by an individual whether or not he is a riparian owner.

For bar exam, it's sufficient to not that 1. appropriative rights were originally determined simply by priority of beneficial use; 2. if there is a decrease in stream flow, priority is accorded in terms of time of appropriation; 3. in many states, an appropriative right can be severed from the land it servicd when acquired and transfered, provided no injury is caused to existing uses; and 4. an appropriative right [unlike riparian] can be lost by abandonment [intent and nonuse].

Front 243

What are the 4 rules regarding Water Rights of Underground water [percolating water or well water]?

Back 243

a. Absolute Ownership Doctrine - Owner of the lad overlying the source of the basin may extract as much water as she wishes and use it for whatever purpose she desires [including export.]

b. Reasonable Use Doctrine - Majority rule - in 25 states a Landowner is entitled to reasonable use of ground water, exporting is allowed only to the extent that it doesn't harm other owners who have rights in the same aquifer [i.e. body of permeable rock than can contain or transmitt water.

3. Correlative Rights Doctrine - in California, owners of overlying land own the underground basin as joint tenants, and each is allowed a reasonable amount of her own use.

4. Appropriative Rights Doctrine - in some western states, the prior appropriation doctrine applies to underground water as well as watercourses. Priority of use determines appropriative rights. In most western states, rights to percolating water are now determined by a state water board which controls annual yield, prohibits water waste, etc.

Front 244

Water Rights of Surface Water [Runoff or Flood water]: 2 Competing Approaches

Back 244

A landowner can use surface waters w/n her boundaries for any purpose she desires; however
1. Natural Flow Approach: Owner cannot refuse to take natural drainage, cannot divert surface water unto the land of another, and cannot alter the rate or manner of natural flow where such actions would injure others above and below. But very impractical, so courts allow owner to take reasonable means to deal with surface waters.

2. Common Enemy Approach: surface water is a common enemy so any Owner can do anything he wants to; can build dikes or change drainage to get rid of it. However, many courts have held landowners to a standard of ordinary care to avoid unnecessary and negligent injury to the land of others.

3. Reasonable Use Doctrine - as in nuisance and watercourse cases, it requires the balancing of the utility of the use against the gravity of the harm.

4. Capturing Surface Water - a landowner can capture [e.g. by dam, rain barrels] as much surface water as he wishes. It can be diverted to any purpose on or off the land. Owners below have no cause of action unless diversion is malicious.