Va Bar - Real Property

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Fee simple absolute

Back 1

"To A" or "To A and his heirs"

You get everything.

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Defeasible fees and accompanying future interest (3 types)

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1. Fee simple determinable --> possibility of reverter
2. Fee simple subject to condition subsequent --> right of entry AKA power of termination
3. Fee simple subject to executory limitation --> executory interest (shifting or springing)

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Fee simple determinable

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Grantor must use clear durational language to create: "To A for so long as . . ." or "To A during . . ." or "To A until . . ."

If the stated condition is violated, forfeiture is automatic.

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Fee simple subject to condition subsequent

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Grantor must use clear durational language AND carve out the right to re-enter: "To A, but if X event occurs, grantor reserves the right to re-enter and retake."

The estate is NOT automatically ended when the condition occurs, but after that it can be cut short at the grantor's option.

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Fee simple subject to executory limitation

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"To A, but if X occurs, then to B." A then has a fee simple subject to B's shifting executory interest. (Shifting because it cuts short A's estate.)

This estate is just like the fee simple determinable only now, if the condition occurs, the state is automatically terminated in favor of someone _other_ than the grantor.

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Defeasible fees: two limitations

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1. Words of mere desire, hope, or intention are insufficient to create a defeasible fee. For example, "To A for the purpose of constructing a daycare center" or "To A with the hope that he becomes a lawyer" etc. do not create a defeasible fee.

2. Absolute restraints on alienation are void. Need a reasonable, time-limited purpose on restrictions of sale or transfer.

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Life estate

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An estate measured in explicit lifetime terms. (Can be a third party's life, called a life estate pur autre vie.)

"To A for life." O has a reversion, or if the property goes to a third party after A's death, then they have a remainder.

Distinguishing characteristic: life tenant's entitlements are subject to the doctrine of waste. In general, she is entitled to all ordinary uses and profits from the land, but cannot do anything to hurt the future interest holders.

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3 species of waste

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1. Voluntary (affirmative) waste: overt conduct that causes a decrease in value.

2. Permissive waste (neglect): when land is allowed to fall into disrepair.

3. Ameliorative waste: when you increase the value of the property without the consent of all future interest holders. (Honor sentimental value.)

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Voluntary waste and natural resources: PURGE

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PU: Prior use -- life tenant can continue to exploit natural resources to the extent they were being exploited prior to the grant.
Open mines doctrine: life tenant can continue mining if there was some before, but cannot open new mines--confined to the ones currently existing.

R: Reasonable repairs--life tenant may consume natural resources for repairs and maintenance.

G: Grant--the life tenant may exploit if granted the right.

E: Exploitation--if the land is only good for exploitation (e.g., a quarry) then the life tenant may exploit the natural resources.

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Permissive waste and the obligation to repair

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Life tenant must simply maintain the premises in reasonably good repair.

Taxes: must pay all ordinary taxes on the land.

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Future interests creatable in the grantor: 3 types

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1. Possibility of Reverter (from fee simple determinable)

2. The Right of Entry (aka power of termination) (from fee simple subject to a condition subsequent)

3. Reversion (from life estate or leasehold interest)

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Future interests creatable in transferee: 2 main types (each of which has two subtypes)

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1. Remainder (contingent or vested)

2. Executory interest (shifting or springing)

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Vested remainder: 3 sub-types

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1. Indefeasibly vested remainder: holder is certain to acquire an estate in the future with no strings attached. Example: "To A for life, then to B."

2. Vested remainder subject to complete defeasance/total divestment: holder's right to possession could be cut short because of a condition subsequent. Example: "To A for life, remainder to B, provided, however, that if B dies under the age of 25, then to C." A is alive, B is 20 years old. A has a life estate, B has a vested remainder subject to complete defeasance, C has a shifting executory interest, and O has a remainder.

3. Vested remainder subject to open: a remainder is vested in a group of takers, at least one of whom is qualified to take; however, each member's share is subject to partial diminution because additional members can still join the class. Example: "To A for life, then to B's children"; B has two children, who have a vested remainder subject to open.

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Executory interest: 2 sub-types

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1. Shifting executory interest--if it comes from after the end of another transferee's estate

2. Springing executory interest--if it comes after the end of the grantor's estate

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Remainder

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A future interest created in a grantee that is capable of becoming possessory upon the expiration of a prior possessory estate created in the same conveyance in which the remainder is created (pretty much just after a life estate or leasehold for years).

Remainders are sociable, patient, and polite:
(i) Sociable: never travels alone, always accompanies a preceding estate of known, fixed duration, usually a life estate or term of years.
(ii) Patient: never follows a defeasible fee, waits for previous interest to end.
(iii) Polite: never cuts short or divests a prior transferee.

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Vested vs. contingent remainders

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A remainder is vested if it is BOTH (i) created in an ascertained person AND is not subject to any condition precedent.

Contingent remainders are all others. E.g., "To A for life, then to B's children who survive A" or "To A for life, then, if B graduates from college, to B."

For contingent remainders, O has a reversion in case the contingent remainder never vests!

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Rule of destructibility

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At common law (which hated contingent remainders), a CR was destroyed if it was still contingent at the time the preceding estate ended.

Example: "To A for life, and if B has reached the age of 21, to B." Now A has died, leaving behind B who is still only 19. At common law, B's CR was destroyed so O or O's heirs would take in fee simple absolute.

Today, though, the rule of destructibility has been abolished, so in the above example O or O's heirs would hold the estate subject to B's springing executory interest; once B turns 21, she takes.

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Rule in Shelley's case

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At common law, the rule would apply in one setting only: "To A for life, then, on A's death, to A's heirs." A is _still alive_.

Historically, the present and future interests would merge, giving A a fee simple absolute.

NB: this was a rule of law, not a rule of construction, so it applied even in the face of grantor's contrary intent.

Today, the rule in Shelley's case has been abolished and A would have a life estate, A's heirs would have a contingent remainder, and O would have a reversion (in case A died w/o heirs).

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Doctrine of worthier title (aka rule against a remainder in grantor's heirs)

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Applies when O, who is alive today, tries to create a future interest in his heirs. Example: "To A for life, then to O's heirs."

If the DoWT did not apply, A would have a life estate and O's heirs would have a contingent remainder (since a living person has no heirs).

Instead, the DoWT says that the remainder in O's heirs is void, thus A has a life estate and O has a reversion. This doctrine promotes the free transfer of land because it allows O and A to later team up, combine their interests, and sell the property in fee simple to a third party.

NB: this is a rule of construction, not a rule of law, so grantor's intent controls--if grantor REALLY makes clear that he intends to create a contingent remainder in her heirs, then that intent is honored.

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Open vs. closed classes

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Open classes: members can still join.

Closed classes: nobody else can join anymore.

You'll know a class is closed when any member can demand possession.

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Executory interest vs. remainders

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Executory interests are ones created in a transferee which is not a remainder and takes effect by cutting short some interest in either another transferee (shifting) or in the grantor (springing).

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Shifting executory interest

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Cuts short another transferee's estate.

Examples: "To A and her heirs, but if B returns from Canada sometime next year, to B and his heirs" or "To A, but if A uses the land for nonresidential purposes at any time during the next 20 years, then to B."

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Springing executory interest

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Cuts short the grantor's estate.

Examples: "To A, if and when he marries" or "To A, if and when he becomes a lawyer."

(O has a fee simple subject to A's springing executory interest.)

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Rule against perpetuities (RAP) -- which estates does it apply to?

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Only to contingent remainders, executory interests, and certain vested remainders subject to open.

NOT to future interests in O, or to indefeasibly vested remainders, or to vested remainders subject to complete defeasance.

NB: if RAP applies, just strike the part that violates it; this may create a fee simple determinable in a transferee, or it could create a reversion in O.

Exception: A gift shifting from one charity to another will not violate the RAP. Example: "To the American Red Cross, so long as the premises are used for Red Cross purposes, and if they cease to be so used, then to the YMCA."

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RAP and open classes

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Bad as to one, bad as to all.

If a gift to an open class that is conditioned on the members surviving to an age beyond 21 violates the common law RAP--to be valid it must be shown that the condition precedent to _every_ class member's taking will occur within the perpetuities period, otherwise the entire class gift is void.

Example: "To A for life, then to such of A's children as live to attain the age of 30." A is alive and has two children, B and C, ages 35 and 40. B and C's vested remainders subject to open are VOIDED by the common law RAP.

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RAP and shifting executory interests

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An executory interest with no limit on the time within which it must vest violates the RAP.

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Reform of the RAP

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Instead of hypotheticals, wait 90 years from the creation of the interest and evaluate things then--strike any future interests that violate the common law RAP as if they couldn't have vested w/in 21 years of a measuring life.

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***Cy pres***

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If a given disposition violates the RAP, a court may reform it in a way that most closely matches the grantor's intent while still complying with the RAP.

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Concurrent estates: 3 types

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

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Joint tenancy: creation (4 unities and 1 condition)

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4 unities required:
(i) Time - joint tenants have to take an interest at the same time.
(ii) Title - have to take an interest via the same title/instrument.
(iii) Identical interests - have to have the same interest.
(iv) Possess - have to have the right to possess the whole.

Grantor must _clearly express_ the right of survivorship

Front 31

Severance of a joint tenancy (SPaM)

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1. Sale
2. Partition
3. Mortgage

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Severance of a joint tenancy via sale

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When one joint tenant sells or transfers her interest, that severs the joint tenancy, even if done secretly, because it destroys the 4 unities. Buyer is a tenant in common. (If there were more than 2 joint tenants to begin with, their joint tenancy remains intact between themselves; e.g., if there were 3 JTs and one sells her interest, the buyer is a tenant in common with a 1/3 interest in the property, the other two original JTs are joint tenants over the other 2/3 interest of the property.)

Also note that in equity, a JT's mere act of entering into a contract for sale of her share will sever the JT because of equitable conversion.

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Severance of a joint tenancy via partition (3 variations)

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1. By voluntary agreement: peaceful and amicable.

2. Partition in kind: a court action for physical division of the property if in the best interests of all; works best for farms or other sprawling estates.

3. Forced sale: another court action; if in the best interests of all, the property is sold at auction and proceeds divided proportionally; works best when it's a single building.

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Severance of a joint tenancy via mortgage

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One JT executing a mortgage or lien on her share will sever the joint tenancy as to that now encumbered share ONLY in the minority of states that follow the title theory of mortgages (VA is not such a state).

In states that follow the lien theory of mortgages, like VA, executing a mortgage on your interest does NOT sever a joint tenancy.

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Tenancy by the entirety: creation

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Just like a joint tenancy but to a married couple. Any conveyance to a married couple presumptively constitutes a tenancy by the entirety.

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Severance of a tenancy by the entirety

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Unlike a JT, you CANNOT sever a TBE via unilateral transfer--such an attempted transfer is void. Also, creditors of a single spouse cannot get at the property.

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Tenancy in common (3 features)

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1. Each co-tenant owns an individual part, and each has a right to possess the whole.

2. Each interest is descendible, devisable, and alienable. There are no survivorship rights.

3. Presumption favors a tenancy in common (disfavors joint tenancies).

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Co-tenant rights (7)

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1. Possession: each is entitled to possession and enjoyment of the whole. If one co-tenant wrongfully excludes another from possession, he has committed wrongful ouster.

2. Rent from co-tenant in exclusive possession: if one co-tenant leaves for 3 months, he can't demand rent from the co-tenant who had exclusive possession that whole time. Absent ouster, a co-tenant is not liable to the other(s) for rent.

3. Rent from third parties: must be apportioned according to the share of the co-tenants' interests.

4. Adverse possession: can't be done by co-tenants without ouster.

5. Repairs - a co-tenant has the right to contribution for reasonable and necessary repairs provided that she has told the others of the need; the costs will be split according to undivided shares.

6. Improvements: during the life of the co-tenancy there is no right to contribution for improvements; however, at partition, the improving tenant is entitled to a credit equal to any increase in value caused by her efforts--by the same token, though, she also bears the full liability for any drop in value caused by her efforts.

7. Partition - co- and joint tenants have the right to bring actions for partition.

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Co-tenant duties (2)

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1. Carrying costs: each co-tenant is responsible for her fair share of carrying costs, such as taxes and mortgage interest payments based upon her undivided share.

2. Waste: co-tenants must not commit waste (whether voluntary, permissive, or ameliorative). A co-tenant can bring a waste action against another during the life of the co-tenancy.

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Four leasehold (aka nonfreehold) estates

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1. Tenancy for years
2. Periodic tenancy
3. Tenancy at will
4. Tenancy at sufferance

Front 41

Tenancy for years

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A lease for a fixed period of time: you know the termination date from the start.

No notice of termination is needed because you have it when you start the lease.

A term of years greater than one year must be in writing to be enforceable because of the statute of frauds.

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Periodic tenancy: creation

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A lease that continues for successive periods until either Lessor (L) or Tenant (T) give notice to terminate.

Can be created expressly ("To T from month to month/year to year/week to week") or by implication, which can happen in three different ways:
(i) Land is leased with no mention of duration, but provision is made for payment of rent at set intervals--periodic tenancy is implied with period equal to the intervals for payment.
(ii) Oral term of years in violation of the statute of frauds: creates a periodic tenancy which, again, is measured by the way rent is tendered. Example: Oral agreement for a 5-year lease at the cost of $1,000/month--invalid under statute of frauds, but if T sends a check for $1,000 and L cashes it, an implied periodic tenancy is created with the period set at one month.
(iii) Holdover: If L holds over T after expiration of a RESIDENTIAL lease, an implied periodic tenancy is created (based on how rent is paid); for commercial leases it's year to year if rent was determined annually even if they paid monthly.

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Periodic tenancy: termination

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Written notice must be given. Default is that it must be given ahead of time at least equal to the period itself (i.e., one month ahead for a month to month tenancy), but if it is a year to year tenancy it is 6 months at common law (3 months in VA).

By private agreement, L and T can lengthen or shorten this notice period.

NB: the periodic tenancy must end at the conclusion of a natural lease period; i.e., if you have a month to month tenancy starting on the 1st of each month, and you give notice of termination on May 15th, you're bound until June 30th.

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Tenancy at will

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A tenancy for no fixed duration. "To T for as long as T desires."

Unless parties expressly agree to a tenancy at will, payment of regular rent will create an implied periodic tenancy.

Tenancy at will may be terminated by either party at any time BUT a reasonable demand to vacate is usually needed.

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Tenancy at sufferance

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Created when T has wrongfully held over past the expiration of a lease. T is given a leasehold in this situation solely so that L can recover rent.

This tenancy lasts only until L either evicts T or elects to hold T to a new tenancy.

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Tenant's duties (3)

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1. Liability to third parties

2. Duty to repair

3. Duty to pay rent

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Tenant's liability to third parties

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T is responsible for keeping the premises as a matter of tort law. T is liable for injuries sustained by third parties T invited onto the property, even where L promised to make the repairs.

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Tenant's duty to repair

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When lease is silent: T must maintain the premises and make ordinary repairs and must not commit waste (often tested via fixtures doctrine).

When T has expressly covenanted in the lease to maintain the property in good condition for the duration of the lease, then historically T was liable for any loss to the property, including loss due to force of nature--have to reconstruct! Today, the majority view is that T may end the lease when premises destroyed w/o T's fault (VA follows this rule).

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Fixtures

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When a tenant removes a fixture, she commits voluntary waste.

A fixture is a removable chattel that, by virtue of its annexation to realty, _objectively_ shows the intent to permanently improve the realty.

Common examples: heating systems, custom storm windows, furnace, certain lighting installations, etc.

***T must not remove a fixture, even if she installed it!!*** Fixtures pass with ownership of the land!!!

To tell if something is a fixture,
(a) Express agreement controls.
(b) Otherwise, T may remove a chattel she installed so long as removal won't cause substantial harm to the premises. If doing so would cause substantial harm then T has _objectively_ manifested intent to install a fixture and it must stay put!

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Tenant's duty to pay rent (2 breach scenarios)

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1. If T breaches and is still in possession, landlord's only options are to evict through courts or continue relationship and sue for rent. Landlord MUST NOT engage in self help, e.g., changing the locks, forcibly removing T, removing T's stuff, etc.--punishable civilly AND criminally!

2. If T breaches and is out of possession, e.g., wrongfully vacating with time left on a term of years lease, remember SIR:
* Surrender: L could choose to treat T's abandonment as an implicit offer of surrender, which L accepts. (Surrender is T showing by words or actions that she wants to give up the lease.) If the unexpired term is for more than one year, surrender must be in writing to meet the statute of frauds (L sends writing of acceptance to T's last known address).
* Ignore the abandonment and hold T responsible for the unpaid rent, just as if T were still there (this is only available in a minority of states).
* Re-let the premises on the wrongdoer tenant's behalf and hold her liable for any deficiency.

Majority rule: L must at least TRY to re-let as a mitigation principle.

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Landlord's duties (3)

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1. Duty to deliver possession

2. Implied covenant of quiet enjoyment

3. Implied warranty of habitability

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Duty to deliver possession

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Majority rule (called the English rule, and followed by VA) requires L to put T in actual physical possession of the premises at the start of the lease. If a prior holdover is still in possession, L has breached and new T gets damages.

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**Implied covenant of quiet enjoyment**

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Applies to both residential and commercial leases. T has a right to quiet use and enjoyment of the premises without interference from L.

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**2 ways to breach implied covenant of quiet enjoyment**

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1. Breach by actual wrongful eviction: occurs when L wrongfully evicts T or excludes T from the premises.

2. Breach by constructive eviction: 3 requirements, remember SING:
(i) Substantial Interference due to L's actions or failure to act (like rain flooding the apartment every time it rains);
(ii) Notice: T must tell L of the problem and L must fail to act meaningfully; and
(iii) Goodbye (aka Get out): T must vacate w/in a reasonable time after L fails to fix the problem.

Is landlord generally liable for other tenants violating your quiet enjoyment? No. Two exceptions:
(i) L must not permit a nuisance on-site; and
(ii) L must control common areas.

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**Implied warranty of habitability**

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Applies _only_ to residential leases.

Standard: Premises must be fit for basic human dwelling, bare living requirements must be met. Very low standard.

Appropriate standard may be supplied by a housing code in the jurisdiction or by case law.

Examples of breach: no heat in winter, no plumbing, no running water.

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**T's remedies when implied warranty of habitability is breached** (MR^3)

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Any of four options. Remember MR^3:
* Move out and end the lease (but cf. constructive eviction where this is required; here it is just one of four possibilities)
* Repair and deduct costs--allowable by statute in many jurisdictions.
* Reduce rent or withhold all rent until the court determines fair rental value. Typically T must place withheld rent into escrow to show her good faith.
* Remain in possession, pay rent, and affirmatively seek money damages.

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Retaliatory eviction

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If T lawfully reports L for housing code violations, L is barred from penalizing T by raising rent or ending the lease or harassing T or taking other reprisals. If L does any of these things, she is liable for retaliatory eviction.

Front 58

Assignment and sublease

Back 58

Absent some prohibition otherwise, T may freely transfer her interest in whole (assignment) or in part (sublease).

Even if there is a clause prohibiting one or both, though, once L consents to one transfer by T she waives the right to object to future transfers by T unless she reserves the right.

Front 59

Assignment

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When T1 transfers her entire interest to T2. Results in L and T2 being in privity of estate, meaning T2 and L are liable to each other for all of the covenants in the original lease that run with the land, e.g., promise to pay rent, to paint, or to repair.

L and T2 are NOT in privity of contract unless T2 assumed all promises in the original lease.

L and T1 are no longer in privity estate, but they remain in privity of contract. Thus, L and T1 are secondarily liable to each other.

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Sublease

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T1 assigns part of her interest to T2.

L and T2 are in neither privity of estate nor of contract. They share NO nexus. T2 is responsible to T1 and vice versa. Relationship between L and T1 remains entirely intact.

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Landlord's tort liability (common law rule and 5 CLAPS exceptions)

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Common law rule: caveat lessee: Let T beware! L is under no liability to make premises safe.

Exceptions--CLAPS:
1. Common areas: L must maintain all of them (e.g., hallways, stairwells, etc.)
2. Latent defects rule: L must warn T of hidden defects that L knows about or should know about. NB: this is only a duty to warn, not to repair.
3. Assumption of repairs: If L voluntarily undertakes repairs, must complete them w/reasonable care.
4. Public use rule: If L leases a public space (think convention hall or museum) and should know, because of the nature of the defect and the length of the lease, that T will not repair, L is liable for any defects on the premises.
5. Short term leases of furnished dwellings: L is liable for any defect which proximately injures T.

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Easements

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The grant of a non-possessory property interest that entitles its holder to some form of use or enjoyment of another's land (the servient tenement).

Common examples: right to lay utility lines or access to cross a tract of land.

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Negative easements (LASS)

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Entitles its holder to prevent the servient landowner from doing something that would otherwise be permissible. Generally only recognized in 4 categories:
* Light
* Air
* Support
* Stream water from an artificial flow

(In a minority of states there's a fifth: scenic view)

**Negative easements can _only_ be created EXPRESSLY, by writing signed by the grantor!**

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Easements appurtenant and in gross

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An easement is appurtenant when it benefits its holder in her physical use or enjoyment of her property. If there are TWO tracts of lands involved, you have an easement appurtenant. The benefitted (non-servient) tenement is called the dominant tenement.

An easement is in gross if it confers upon its holder only some personal or pecuniary advantage that is NOT related to her use or enjoyment of her land. Only one parcel of land involved! Examples: right to place a billboard, right to fish/swim, right to lay power lines.

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Transferability and easements

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An easement appurtenant passes _automatically_ with the dominant tenement, regardless of whether it is even mentioned in the conveyance. It passes automatically with the servient estate too UNLESS the new owner is a bona fide purchaser w/o notice of the easement.

An easement in gross is not transferrable unless it is for commercial purposes.

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Creating an affirmative easement: 4 ways (PING)

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1. Prescription: an easement may be acquired by satisfying the elements of adverse possession, COAH (continuous, open/notorious, actual, hostile).

2. Implication (aka easement implied from existing use): if previous use was apparent and the parties expected the use would continue because it is reasonably necessary to the dominant land's use and enjoyment, then a court will imply an easement.

3. Necessity: landlocked setting. An easement of right of way will be implied by necessity if grantor conveys a portion of her land with no way out except over part of grantor's remaining land.

4. Grant: an easement to endure for more than one year must be in a writing that complies with the formal elements of a deed because of the statute of frauds. This writing is called a deed of easement.

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Scope of an easement

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Determined by the terms or conditions that created it.

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Termination of an easement (END CRAMP)

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1. Estoppel: if the servient owner materially changes her position in reasonable reliance on the easement holder's assurances that the easement will not be enforced.

2. Necessity: easements created by necessity expire as soon as the need ends; however, if the easement, attributable to necessity, was nonetheless created by express grant, it won't end when the need ends!

3. Destruction of the servient land, other than through the willful conduct of the servient owner.

4. Condemnation of the servient estate by eminent domain.

5. Release: a written release, given by the easement holder to the servient owner.

6. Abandonment: easement holder must demonstrate by _physical action_ the intent to never use the easement again--think putting up a wall that prevents holder from ever using the easement again. Mere nonuse or words are NOT sufficient to constitute abandonment.

7. Merger doctrine (aka unity of ownership): easement is extinguished when title to the easement and title to the servient land become vested in the same person. Easement is not revived even if the two parcels are split up again later.

8. Prescription: the servient owner may extinguish the easement by interfering with it in accordance with the elements of adverse possession (remember COAH).

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License (5 things to know)

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1. A mere privilege to enter another's land for some delineated purpose.

2. Not subject to statute of frauds, so no writing required.

3. Freely revocable at the will of the licensor (unless estoppel applies).

4. Attempt to create an oral easement results in a license.

5. Estoppel applies to bar revocation of a license only when the licensee has invested substantial money or labor or both in reasonable reliance on the license's continuation.
In VA, an irrevocable license is called an equitable easement.

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Profit

Back 70

Entitles its holder to enter the servient land and take from it the soil or some substance of the soil (minerals, timber, oil, etc.). Shares all the rules of easements (except that if it's overused a profit is automatically terminated, whereas an easement remains and the servient land-owner can just sue for damages/injunction).

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Covenants

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A promise to do or not do something related to land. UNLIKE an easement in that it does not grant a property interest, but rather a contractual limitation or promise regarding land.

Negative covenants (known as restrictive covenants) are the most common: a promise to refrain from doing something related to land. Examples: not use land for commercial purposes, or not paint shutters brown, no basketball hoops, etc.).

Affirmative covenants are promises to do something related to land, e.g., promise to paint a common fence.

Terminology: one tract is burdened and another is benefited.

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***Difference between a promise as a covenant or as an equitable servitude***

Back 72

Entirely on the basis of the remedy sought. If P seeks money damages, construe it as a covenant; if P seeks an injunction, construe it as an equitable servitude.

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When will a covenant run with the land (and thus bind successors)?

Back 73

Only if both the burden and the benefit run with the land. Do the burden analysis first because it's harder for a burden to run with the land than a benefit.

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When a burden runs with the land (WITHN)

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Requirements for the burden of a covenant to run with the land:
1. Writing: original promise between A and B had to be in writing.
2. Intent: original parties had to intend the covenant to run with the land (courts are generous in finding this element).
3. Touch and concern the land: promise must affect the parties' legal relations as landowners and not simply as members of the community at large. NB: Covenants to pay money to be used in connection with the land (e.g., homeowners' association fees) as well as covenants not to compete DO touch and concern the land.
VA exception: covenants not to compete DO NOT run with the land--very unusual.
4. Horizontal AND vertical privity.
a. Horizontal privity refers to a nexus between A and B, the original parties, requiring that they be in succession of estate meaning they were in a grantor/grantee or landlord/tenant or mortgagor/mortgagee relationship. This is HARD to establish, its absence is likely to be a sticking point.
b. Vertical privity refers to the nexus between A and A1 (later owner of burdened tract). It simply requires a non-hostile nexus such as contract, devise, or descent--basically anything except for A1 acquiring her interest via adverse possession. (This is much easier to establish than horizontal privity.)
5. Notice: A1 had notice of the promise when she took.

Front 75

When does a benefit run with the land (aka does B have standing to bring a claim)? (WITV)

Back 75

1. Writing: original promise between A and B must have been in writing.

2. Intent: original parties must have intended benefit to run with the land.

3. Touch and concern: promise affects parties as landowners.

4. Vertical privity: non-hostile nexus between B and B1.

NB: Horizontal privity is NOT required for the benefit to run.

Front 76

Equitable servitudes

Back 76

A promise that equity will enforce against successors. It looks a lot like a covenant but is distinguishable because it is accompanied by injunctive relief.

Front 77

Requirement for equitable servitudes to run with the land (WITN-ES)

Back 77

1. Writing: generally, but not always, original promise was in writing.

2. Intent: parties intended the promise would bind successors.

3. Touch and concern the land: promise affects parties AS landowners.

4. Notice: successors of _burdened_ land had notice of the equitable servitude.

ES = equitable servitude.

NB: privity is not required to bind successors--equity is more malleable than covenants.

Front 78

Implied equitable servitude (aka reciprocal negative servitude) (2 elements)

Back 78

General or common scheme doctrine. Applies when there are a bunch of lots sold by one developer and results in a reciprocal negative servitude.

(i) When the sales of the lots began, the subdivider had a general scheme of residential development which included the lot in question now; and
(ii) The defendant lotholder had notice of the promise contained in prior deeds.

Front 79

Three forms of notice potentially imputed to defendants in an implied equitable servitude situation (AIR)

Back 79

1. Actual notice, meaning D had literal knowledge of the promises in prior deeds.

2. Inquiry notice, meaning the neighborhood conforms to the common restriction (aka lay of the land). NB: VA does not allow for inquiry notice--must be one of the other two.

3. Record notice, meaning notice is imputed based on public records.

Front 80

Equitable defenses to enforcement of an (implied?) equitable servitude

Back 80

(Just one?)

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

Never good enough: mere pockets of limited change.

Front 81

Adverse possession (COAH)

Back 81

Elements:

1. Continuous use: must be uninterrupted for the statutory period (15 years in VA for title, easement by prescription is 20 years).

2. Open and notorious: the sort of possession that the usual owner would make under the circumstances.

3. Actual: entry must be _literal_.

4. Hostile: No permission from owner to be there; in fact, permission defeats an AP claim!

***NB: Possessor's state of mind is IRRELEVANT!***

Front 82

Tacking

Back 82

One adverse possessor may tack on to his time with the land his predecessor's time, so long as there is privity, which is satisfied by any non-hostile nexus (e.g., blood, contract, deed, will). Tacking is NOT allowed when there has been an ouster.

Front 83

Disabilities and adverse possession

Back 83

Statute of limitations on AP will not run against a true owner who is afflicted by a disability at the START of the AP.

Common disabilities include insanity, infancy, and imprisonment.

But if disability hits the owner AFTER adverse possession has begun, there will be no tolling of the statute.

Front 84

Two steps of conveying real property

Back 84

1. Land contract, which endures until step II.

2. The closing, where the deed becomes our operative document.

Front 85

Land contract 3 requirements

Back 85

1. Land contract must be in writing, signed by the party to be bound (don't know who that will be at the outset--whoever is the D in the later litigation);

2. Must describe the property;

3. Must state some consideration.

Front 86

Land contract description of property

Back 86

When the amount of land recited in the contract is more than the actual size of the parcel, the buyer can get specific performance with a pro rata reduction in price.

Front 87

Land contract exception from statute of frauds (best 2 of 3)

Back 87

Normally land contracts have to be in writing, but if you have any 2 of the following 3 requirements met then equity will decree specific performance of an oral contract for the sale of land:

1. Buyer takes possession;
2. Buyer pays all or part of the price; and/or
3. Buyer makes substantial improvements.

Front 88

Risk of loss in a land sale contract

Back 88

Equitable conversion applies: once buyer signs the land contract, she owns the land (subject of course to paying the price at closing) as far as equity is concerned.

Ergo, B bears the risk of loss if the property is destroyed by no fault of either party between contract and closing! (Contract can state otherwise, this is just the default.)

Front 89

2 Implied promises in every land contract

Back 89

1. ***Seller promises to provide marketable title _at closing_***

2. Seller promises not to make any false statements of material fact.

Front 90

Marketable title (and 3 ways to fail)

Back 90

Marketable title = title free from reasonable doubt, free from lawsuits and the specter of litigation.

3 things make title unmarketable:

1. Adverse possession: if even part of the title rests on AP, it is unmarketable. Seller must be able to provide good record.

2. Encumbrances: must be an unencumbered fee simple. Thus servitudes and mortgages render title unmarketable, though buyer can waive them.
NB: seller has right to satisfy an outstanding mortgage or lien at the closing with the proceeds of the sale--B can't claim title is unmarketable because of a mortgage prior to closing so long as the parties understand that the closing will result in the discharge or satisfaction of the mortgage.

3. Zoning violations: when the property violates a zoning ordinance, that makes title unmarketable because it subjects the property to litigation.

Front 91

Seller's promise not to make any false statements of material fact

Back 91

In a land contract, the seller promises not to make any false statements of material fact.

In addition, most states now also hold seller liable for failing to disclose latent material defects--aka seller is liable for material lies AND omissions.

Even if a contract contains a general disclaimer of liability (e.g., "as is" or "with all faults"), it won't reliever seller of liability for fraud or failure to disclose.

Front 92

Land contract warranties

Back 92

No implied warranties of fitness or habitability. Caveat emptor!

Exception: implied warranty of fitness and workmanlike construction applies to the sale of a new home by a builder-vendor.

Front 93

Closing

Back 93

Controlling legal document becomes the deed, not the land contract anymore. The deed passes legal title from seller to buyer.

Front 94

Two requirements for a deed (LEAD)

Back 94

LEAD: Lawfully Executed And Delivered.

1. Lawful execution

2. ***Delivery***

Front 95

Lawful execution of a deed

Back 95

First requirement for a deed. It must:
(i) Be in writing, signed by the grantor. Deed need not recite consideration (but, quick review, what did have to?), nor must consideration pass to make a deed valid.
(ii) Describe the land: doesn't have to be perfect, but must be unambiguous and a good lead (O conveys "all of O's land" is enough, but "some of my land in Essex County" is not).

Front 96

Delivery of a deed

Back 96

Second requirement for a deed.

Can be satisfied when grantor physically or manually transfers the deed to grantee; using the mail or an agent or messenger is permissible here.

***However, delivery does NOT require actual physical transfer of the instrument itself--delivery is a _legal_ standard and is a test solely of PRESENT INTENT. If grantor had the present intent to be bound by the deed it doesn't matter whether it was handed over.***

Recipient's express rejection of the deed defeats delivery. Otherwise there is a presumption of acceptance.

Front 97

Delivery of a deed, absolute on its face, with an accompanying oral condition

Back 97

Oral condition drops out, it is not provable, delivery is done.

Front 98

Delivery of a deed by escrow

Back 98

Is OK.

Front 99

Three types of deed

Back 99

1. Quitclaim Deed
2. General Warranty Deed
3. Statutory Special Warranty Deed

Front 100

Quitclaim deed

Back 100

Contains NO covenants/promises/warranties. Grantor isn't even promising that she has title to convey!

Remember, grantor had to promise (implicitly) that she would provide marketable title _at closing_, but this deed says that any problems that come up post-closing are none of her business--peace!

Front 101

General Warranty Deed (6 covenants)

Back 101

Mother Teresa of deeds, best a buyer could ask for. Warrants against ALL defects in title, including those due to grantor's _predecessors_!

Contains 6 covenants; first three are present covenants, meaning it can be breached, if ever, only at closing--thus, the statute of limitations for their breach begins to run from the instant of delivery:

1. Covenant of seisin: grantor promises that she owns Blackacre.

2. Covenant of right to convey: grantor promises that she has power to transfer, meaning no temporary restraints on the power to sell, not under any disabilities.

3. Covenant against encumbrances: no servitudes or liens on Blackacre.

Next 3 are future covenants, meaning they are not breached, if ever, until grantee is disturbed in possession; thus, statute of limitations for breach of them begins to run from that future date of disturbance.

4. Covenant for quiet enjoyment: grantee won't be disturbed in possession by a third party's lawful claim of title (AKA promising that there isn't anyone with better claim out there).

5. Covenant of warranty: grantor promises to defend grantee against lawful actions of title brought by others.

6. Covenant for further assurances: grantor will do whatever is needed in the future to protect the title.

Front 102

Statutory Special Warranty Deed (2 promises)

Back 102

Creature of statute provided for in many states. Only contains two promises and only on behalf of grantor, not on behalf of her predecessors in interest:

1. Grantor hasn't conveyed Blackacre to anyone other than the grantee; and

2. Blackacre is free from encumbrances made by grantor.

Front 103

Recording system: 2 bright line rules

Back 103

1. If B is a bona fide purchaser for value (BFP) and we're in a notice jurisdiction (like VA), B always wins against previous buyers. Doesn't matter whether or not she records first.

2. If B is a BFP and we are in a race-notice jurisdiction, B wins if she records before A.

Front 104

Bona fide purchaser for value (2 requirements)

Back 104

One who:

1. Buys Blackacre for value; and

2. Without notice that someone else got there first.

Front 105

What counts as value for BFP purposes? 2 scenarios

Back 105

1. Bargain basement sale: as long as B pays substantial pecuniary consideration, that's enough. It can be well below market price.

2. Doomed donee: recording statutes don't protect donees, heirs, or devisees unless the shelter rule applies.

Front 106

Forms of notice in a recording system (AIR)

Back 106

1. Actual: if prior to B's closing she learns of prior transfer to A.

2. Inquiry (VA does NOT recognize this): whether she looks or not, B is on inquiry notice of whatever an examination of Blackacre would show--if she sees A in possession, she's on inquiry notice of a prior transfer; also, if a recorded instrument makes reference to an unrecorded transaction, grantee is on inquiry notice of whatever a reasonable followup would show.

3. Record: if A's deed was recorded before B takes. NB: must be recorded properly, aka in the chain of title so it can be found.

Front 107

Notice statute

Back 107

"A conveyance of an interest in land shall not be valid against any subsequent purchaser for value, without notice thereof, unless the conveyance is recorded."

If B is a BFP when she takes, she wins against any prior transferees.

Last BFP to enter the scenario wins!

Front 108

Race Notice statute

Back 108

"Any conveyance of an interest in land shall not be valid against any subsequent purchaser for value, without notice thereof, whose conveyance is first recorded."

Key is the phrase "FIRST recorded".

To prevail, B must be (i) a BFP and (ii) win the race to record.

Front 109

VA recording system

Back 109

By statute, we're a notice jurisdiction. However, a 2008 VA Supreme Court case said in dicta it could be race notice. Tell examiners that scenario, but basically go with notice alone.

Front 110

Shelter rule

Back 110

One who takes from a BFP will step into her shoes and thus prevail against anyone that BFP would have prevailed against.

Example: O conveys to A, who does not record. Then O conveys to B, a BFP, who records. B then conveys to C, who is a mere donee or who has actual knowledge of the O-to-A transfer. In the contest of C vs. A, who wins? C because of the shelter rule (regardless of whether it's a notice or race-notice jurisdiction).

Front 111

Wild deed

Back 111

If O sells to A, who does not record, and then A sells to B, who records the A-to-B deed, that is a wild deed because it is not connected to chain of title--it is incapable of giving record notice of its existence and thus is as good as not recording at all: B's recording is a nullity!

Front 112

Estoppel by deed

Back 112

O owns Blackacre in 1950 and is thinking about selling it to X but decides against it for now. X sells Blackacre to A anyway. A records.

In 1960, O finally sells Blackacre to X. X records.

In 1970 X sells Blackacre to B. B records.

As between X and A, who owned Blackacre from 1960-1970? A, because of estoppel by deed: if you convey property you don't have but then later acquire, you're estopped from denying the validity of the first conveyance.

But who owns Blackacre after 1970? B! Go through the analysis: whether it's notice or race notice, B wins: A's recording was a nullity because it was a wild deed.

Front 113

Creation of a mortgage: 2 elements

Back 113

A mortgage is a conveyance of a security interest in land intended by the parties to be collateral for the repayment of a debt. Requires 2 things:

1. A debt; and

2. A voluntary lien in debtor's land to secure the debt.

Mortgage typically must be in writing to satisfy the statute of frauds: this is the legal mortgage; the writing can be called the note, the mortgage deed, a deed of trust, a sale-leaseback, or a security interest in land.

Front 114

Mortgagor

Back 114

The debtor, the person who owns the land used as collateral for the money she borrowed.

Front 115

Mortgagee

Back 115

The creditor, the person who takes a security interest in the mortgagor's land and can foreclose if the mortgagor defaults on the loan.

Front 116

Equitable mortgage

Back 116

Creditor lends O money and the parties understand Blackacre will be collateral for the debt, but instead of executing a note or mortgage deed, O gives creditor a deed to Blackacre that is absolute on its face--this is called an equitable mortgage.

Parol evidence is admitted to show the parties' true intent.

NB: if creditor sells Blackacre to bona fide purchaser X, X owns it! O's only recourse is to sue creditor for fraud and the sale damages.

Front 117

Parties rights under a mortgage

Back 117

Unless and until foreclosure:
* Debtor-mortgagor has title and the right to possess;
* Creditor-mortgagee has a lien--that's it.

Front 118

Transferability of mortgage interests

Back 118

All parties to a mortgage can transfer their interests. The mortgage automatically follows a property transferred note.

Front 119

Transferring a creditor-mortgagee's interest (2 ways)

Back 119

1. Endorsing the note and delivering it to the transferee; or

2. Executing a separate document of assignment.

Front 120

Holder in due course: 5 requirements

Back 120

If a mortgagee transfers her interest to a transferee by endorsing and delivering the note, the transferee becomes a holder in due course, which means that she takes the note free of any _personal defenses_ that could have been raised against the original mortgagee--great position to be in!

However, even a holder in due course is subject to real defenses the mortgagor might raise.

Requirements to be a holder in due course:
1. Note must be negotiable aka payable to the named mortgagee;
2. The original note must be indorsed (signed by the named mortgagee);
3. The original signed note must be delivered to the transferee--a photocopy is unacceptable;
4. The transferee must take the note in good faith, without notice of any illegality; and
5. The transferee must pay VALUE for the note, meaning some amount more than nominal.

Front 121

Personal defenses (5)

Back 121

A holder in due course takes a note free of any of these personal defenses that could have been raised against the original mortgagee:
1. Lack of consideration;
2. Fraud in the inducement (a lie about the property itself or some collateral matter--not fraud about the nature of the document signed);
3. Unconscionability;
4. Waiver; and
5. Estoppel

Front 122

Real defenses (MaD FIFI^4)

Back 122

These can be raised by the mortgagor even against a holder in due course:
* Material alteration
* Duress
* Fraud in the Factum (a lie about the instrument itself, not about the property)
* Incapacity
* Illegality
* Infancy
* Insolvency

Front 123

Transferring a mortgagor's interest

Back 123

If O, a debtor-mortgagor, sells Blackacre, which has been mortgaged, the lien remains on the land as long as the mortgage was properly recorded (a mortgage is treated just like a sale under recording system statutes, so whether this is a notice or race-notice jurisdiction, if the mortgage was properly recorded then buyer takes Blackacre subject to it).

Front 124

Liability on mortgage after mortgagor transfers her interest

Back 124

If B has "assumed the mortgage," then both O and B are personally liable on the mortgage: B is primarily liable, and O is secondarily liable.

If B takes "subject to the mortgage," then B assumes no personal liability--only O is personally liable on the mortgage. But, if recorded, the mortgage sticks to w/the land, so if O doesn't pay the mortgage may be foreclosed.

Front 125

Foreclosure

Back 125

Mortgagor defaults on the debt, leaving mortgagee with no other option but to proceed against Blackacre and be made whole. Foreclosure is done by proper judicial action: land is sold at auction and the sale proceeds go towards satisfying the debt.

If proceeds don't satisfy the debt, mortgagee can bring a deficiency action against the debtor-mortgagor.

On the other hand, if there is a surplus after sale, junior liens are paid in order of their priority, then remaining surplus goes to the debtor.

Front 126

Foreclosure priority

Back 126

1. Off the top from the foreclosure sale proceeds come attorney's fees, foreclosure expenses, and any accrued interest on foreclosing party's lien (usually all assumed to be 0 for bar purposes).

2. Then proceeds are used to pay off mortgages in order of seniority, starting with foreclosing party's lien and going down to junior liens.

3. Any surplus left over goes to the debtor.

Front 127

Effect of foreclosure on various interests

Back 127

Foreclosure will terminate interests junior to the mortgage being foreclosed, but will NOT affect _senior_ interests.

Thus, those with interests subordinate (junior) to those of the foreclosing party are necessary parties to the foreclosure action and must be joined. Failure to join one of them results in their interest NOT being extinguished--their lien remains.

The debtor-mortgagor a necessary party and must be joined too--especially if the creditor wishes to proceed against her for a personal deficiency judgment!

Buyer at the foreclosure sale takes _subject to_ any liens senior to those of the foreclosing party.

Front 128

Purchase money mortgage

Back 128

A mortgage given to secure a loan that enables the debtor to purchase already-encumbered land. Assuming the purchase money mortgagee properly records, she has FIRST priority as to the parcel she financed--it jumps in front of any prior mortgages on the land!

Front 129

After-acquired collateral clauses, aka floating liens

Back 129

These give Creditor a security interest in all of debtor's real estate holdings, "whether now owned or hereafter acquired," and they are permissible.

Front 130

Subordination agreements

Back 130

Allowed--freedom of contract! If a senior creditor wants to subordinate her priority to a junior creditor, we'll let her.

Front 131

Redemption

Back 131

Buying back your house. REMEMBER: 2 different kinds--equitable and statutory. Do not confuse them!

Front 132

Equitable redemption

Back 132

Universally recognized. At any time prior to the foreclosure sale, the debtor can try to redeem the land by paying off the missed payment(s), plus interests, plus costs (unless there's an acceleration clause, in which case you gotta pay it all).

Once a valid foreclosure sale has taken place, though, the right to _equitable_ redemption is GONE.

Front 133

Acceleration clause

Back 133

Permits the mortgagee to declare the full balance due in the event of default. If a mortgage or note contains an acceleration clause, the full balance of the debt, plus accrued interest, plus costs must be paid to exercise equitable redemption.

Front 134

Clogging the equity of redemption

Back 134

Waiver by the debtor of the right to equitable redemption in the mortgage itself. This is PROHIBITED!

Front 135

Statutory redemption (definition, amount, effect)

Back 135

Recognized in half the states (but NOT Virginia).

Gives the debtor-mortgagor a statutory right to redeem for some fixed period _after_ the foreclosure sale has occurred (typically 6 months to a year).

The amount to be paid is usually the foreclosure price, NOT the amount of the original debt.

When a mortgagor redeems, the effect is to nullify the foreclosure sale.

Front 136

Lateral support

Back 136

If land is improved by buildings and an adjacent landowner's excavation causes that improved land to cave in, the excavator will be liable only if _negligent_.

However, strict liability will attach if P shows that, because of D's actions, P's improved land would have collapsed even in its natural, unimproved state--aka the improvements (shrubs, fountain, structures, etc.) did not contribute to his land's collapse. <-- Very hard burden to meet.

NB: VA does not ever have strict liability, only negligence.

Front 137

Riparian doctrine

Back 137

For streams, rivers, and lakes, this doctrine says that the water belongs to those who own the land bordering the water course. These people are known as riparians, who share the right of reasonable use of the water. Thus, one riparian will be liable if her use unreasonably interferes with others' use.

Cf. prior appropriation doctrine

Front 138

Prior appropriation doctrine

Back 138

For streams, rivers, and lakes, this doctrine says that the water belongs to the state, initially, but the right to divert it and use it can be acquired by an individual, regardless of whether or not she happens to be a riparian owner.

Rights are determined by priority of beneficial use: First in time, first in right. Any productive or beneficial use, including for agriculture, is sufficient to create the appropriation right.

Cf. riparian doctrine

Front 139

Groundwater (aka percolating water)

Back 139

Water beneath the surface of the earth that is not confined to a known channel.

Surface owner is entitled to make reasonable use of it. However, the use must NOT be wasteful.

Front 140

Surface waters

Back 140

Water that comes from rain, springs, or melting snow and have have not yet reached a natural watercourse or basin.

See also: common enemy rule

Front 141

Common enemy rule

Back 141

Surface water is considered an enemy to be eradicated, so a landowner may change drainage or make any changes/improvements on her land to combat the flow of surface water.

Many courts have modified this rule to prohibit unnecessary harm to others' land.

Front 142

Trespass

Back 142

Invasion of land by tangible, physical object (or a person). To remove a trespasser, bring an ejectment action.

Front 143

Private nuisance

Back 143

Substantial and unreasonable interference with another's use and enjoyment of land.

Does NOT require tangible, physical invasion of land; odors and noise can give rise to nuisance, but cannot constitute a trespass.

Front 144

Unreasonable interference in nuisance context

Back 144

The benefit of D's action is outweighed by the harm to P's property.

Front 145

Substantial interference in a nuisance context

Back 145

Must interfere with the normal person's use and enjoyment of the land--i.e., if you're hypersensitive to some small nuisance, you will lose.

Front 146

Eminent domain

Back 146

Government's 5th Amendment power to take private property for public use in exchange for just compensation.

Front 147

Types of takings under eminent domain (2)

Back 147

1. Explicit takings: Acts of governmental condemnation.

2. Implicit or regulatory takings: a governmental regulation that, although not intended to be a taking, has the same effect. The economic effect of the regulation must be that your property loses virtually ALL of its value.

Front 148

Remedy for a regulatory taking

Back 148

Government must either (i) compensate the owner, or (ii) terminate the regulation and pay owner for damages that occurred while it was in effect.

Front 149

Variance

Back 149

A means to achieve flexibility in zoning: basically, an exception to a zoning ordinance for a specific building.

Proponent must show (i) undue hardship, and (ii) that the variance won't decrease neighboring land values.

Variances are granted or denied by administrative actions from a zoning board.

Front 150

Nonconforming use

Back 150

A once lawful, existing use now deemed nonconforming by a new zoning ordinance. It cannot be required to be eliminated immediately unless just compensation is paid--otherwise it would be an unconstitutional taking!

Front 151

Unconstitutional exactions

Back 151

Exactions are amenities government seeks in exchange for granting permission to build.

To pass constitutional scrutiny, they must be reasonably related in nature and scope to the impact of the proposed developments.