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Fee Simple Absolute
- Absolute ownership, potentially infinite duration.
- Devisable, descendible, alienable.
- No future interest.
Fee Simple Determinable
- "To A . . . so long as/until/while . . ."
- Always subject to a condition.
- Upon the happening of a stated event, the land is to revert to the grantor.
- Alienable, devisable, descendible, subject to condition.
- Future Interest: Possibility of Reverter (Grantor)
Fee Simple Subject to Condition Subsequent
- "To A, but if X event happens, grantor reserves the right to reenter and retake."
- Grantor must carve out right of reentry.
- Alienable, devisable, descendible, subject to condition.
- FUTURE INTEREST: Right of Entry / Power of Termination (held by grantor).
- NOTE: grantor reenter OR can choose to look the other way.
Fee Simple Subject to Executory Limitation
- "To A, but if X, then to B."
- Alienable, devisable, descendible, subject to condition.
- KEY: If the condition is broken, estate is automatically forfeited.
- Executory Interest held by third party.FUTURE INTEREST: shifting executory interest -- always held by 3rd party.
- "To A for life." or "To A for the life of B."
- Measured by life of transferee or by another life -- pur autre vie.Alienable, devisable, descendible, subject to condition.
- FUTURE INTEREST: Reversion (if held by grantor), Remainder (if held by 3d party)
- NOTE: life estate always in explicit life term, not years.
Devisable, Descendible, Alienable
- Devisable: pass by will
- Descendible: pass by intestacy
- Alienable: transferable intervivos.
Living Person -- have heirs?
No -- a living person has no heirs.
- Fee Simple Determinable
- Possibility of Reverter
Words of mere desire/hope/intention and the fate of the "defeasible" fee
- Desire, hope intention language (including "for purpose of" or "with the expecation that") ≠ defeasible.
- Instead, grantee gets a FEE SIMPLE ABSOLUTE.
Absolute Restraints on Alienation
- Absolute bans on power to transfer sans a reasonable time-limited purpose are VOID.
- IE. "A to O so long as she never sells it."
Life Estate & Waste
- GEN: Life tenant cannot commit waste.
- Voluntary: overt conduct causing a drop in value.
- Permissive: Land falls into disrepair. Must keep premises in reas. good repair.
- > > NOTE: LT must pay all ordinary taxes on the land, to the extent of income from land profits.
- Ameliorative: LT must not engage in acts that will enhance the prop's value unless all future interest holders know and consent.
NOTE: If a L.E. tenant makes an IMPROVEMENT to the property, that person is not required to repair it should it fall into disrepair (ie. bridge).
Life Estate, Waste and Natural Resources
- Permissive Waste Subject...
- LT cannot consume natural resources on the property UNLESS: Prior Use: prior to the use, land used for exploitation. Can continue unless grant sez otherwise. Repair: natural resources can be consumed for repairs, maintenance, ect. Grant: can exploit if granted right. Exploitation: can exploit if land only suitable for exploitation.
Future Interests: Back to Grantor
- Reverter (FSD)
- Renentry (FSSTCS)
- Reversion: Conveyance of less than what grantor started with.
- "To A for Life" or "To A for [x] years" or "To A for life, then to B for [x] years."
Future Interests: Remainders -- GEN (Transferee)
- Remainders: always accompany a preceding estate of known, fixed duration: life estate or term of years.
- Wait patiently for the earlier estate to naturally end.
Future Interests: Vested Remainders (Transferee)
Vested Remainder: No condition precedent. Transferor ascertainable.
- Indefeasibly Vested Remainder: no condition attached.
- Vested Remainder Subject to Complete Defeasance: Right of possession can be cut short due to a subsequent condition. Look for language set off by commas ("to B, provided, however . . ."). If condition appears before interest, likely a condition precedent.
- Vested Remainder Subject to Open: vested group of takers, but others can join at time of grant. A class is closed when no more members can join (and any member can demand possession).
- NOTE: "To A for life, then to B's children." Class closes not only at B's death, but also at A's death (r. convenience). The exception is the womb rule -- child in the womb at A's death will share. If a child in the class predeceases A, their share goes to their devisees or heirs.
Future Interests: Contingent Remainders (Transferee)
- Contingent Remainder: unascertained person OR subject to condition subsequent, or both.
- Unborn/unascertained: "To A for life, then to B's heirs" and B is still living.
- Condition Precedent: language appears before that creating the remainder. IE. "To A for life, then, if B graduates..."
- Post-destructibility rule: if LT dies before condition precedent for future interest holder, interest reverts back to grantor subject to B's springing executory interest.
- Doctrine of Worthier Title ("O to A for life, then to O's heirs."): a remainder in the grantors heirs becomes a reversion in the grantor.
Future Interests: Shifting Executory Interests (Transferee/Grantor)
- Executory Interests:
- Shifting Executory Interest: Cuts short someone oether than grantor (defeasible fee).
- Springing Executory Interest: Cuts short grantor's interest ("To A. if and when she marries.")
Rule: Certain interests void if there's any possibility that the given interest may vest more than 21 yrs after the death of a measuring life.
Application: applies only to contingent remainders, executory interests, and certain vested remainders subject to open.
- (1) ID appropriate interest(s)
- (2) ID the conditions precedent to the vesting of the suspect future interest.
- (3) Measuring life -- person alive at date of conveyance -- person's life/death relevant to the condition?
- (4) Ask: know, with certainty, that w/in 21 yrs of death of measuring life, the future interest holder(s) can take?
- If YES: conveyance good.
- If NO: void (ie. eliminated, original interest usually becomes a life estate, grantor -- reversion).
RAP: When it Begins to Run
Will: date of T's death.
Deed: date of delivery.
Irrevocable Trust: date of trust creation.
Revocable Trust: date in which the trust becomes irrevocable.
RAP: Brightline #1
- A gift to an open class that is conditioned on the members surviving to an age beyond 21 violates the common law RAP.
- "Bad as to one, bad as to all." Entire class gift is therefore VOID.
RAP: Brightline #2
- "Many shifting executory interests violate the RAP. An executory interest with no limit on the time within which it must vest violates RAP."
- IE. "To A and heirs so long as the land is used for farm purposes, and if the land ceases to be so used, to B."
- Result: FSD for A. Grantor has poss of reverter.
- BUT: "To A and his heirs, but if land ceases to be used for farm purposes, to B + heirs."
- Result: FSA for A. Grantor has nothing.
RAP and Charities
GIft from one charity to another will NOT violate RAP.
RAP and the Wait & See Rule
Validity of suspect interest determined on the basis of facts at the end of the measuring life.
RAP and Cy Pres Doctrine
Doctrine: as near as possible -- result most close to what grantor intended.
Tenancy by the Entirety
In the case of divorce: TbtE shifts to JT.
- Tenancy B/wn marital partners w/ right of survivorship.
- Presumptive: Any conveyance to married partners unless stated otherwise.
- Note: Creditors of only one spouse cannot touch tenancy.
- Note: Neither tenant, acting alone, can defeat TbtE.
NOTE: Judgment obtained by a creditor against an individual spoouse in a TbtE is not a lien on the property, but rather a lien upon that spouse's expectant interest in obtaining the entireties property by survivorship or divorce.
- UNILATERAL ACTION: Each tenant owns the entire estate and prevents the other from acting individually.
- >> IE. If property TitE and you get a lease signed by only one party, not a valid lease.
- >> If other widow opposes the lease, and the lease is greater than 3 years, she can claim the SoF defense.
- >> NOTE: One of the owners can act as an agent for the other, but such agency agmt must be in writing.
Joint Tenancy (GEN)
- JT: Two or more own w/ right of survivorship -- when one dies, his share goes to survivors.
- JT Interest is alienable: can transfer, but cannot devise or descend. In otherwise, can't pass to heirs, but can IVT it.
- KEY: Right of Survivorship -- when one JT dies, the surviving JT becomes the sole owner of the entire interest in the property.
- >> CANNOT dispose of your interest as a JT in a will.
Joint Tenancy (Creation)
- Creation: T-TIP
- T: Same TIME
- T: by same TITLE (instrument)
- I: Identical INTERESTS
- P: Right to POSSESS WHOLE.
- NOTE: Grantor must clearly state right of survivorship.
- NOTE: Can use a strawman for T-TIP.
Joint Tenancy (Severance)
- SPAM: Sale, Partition And Mortgage
- Sale: JT can sell or transfer interest during her lifetime. Can be done w/o other's knowledge. Buyer has TiC.
- Partition in kind: Court action for physical division of property IF in best interests of all (ie. agri rural tract).
- Forced Sale: Court action in best interests of all -- sold and divided (buildings).
- >> MAJ: Mortgage/lien does not sever a JT UNTIL foreclosure/default proceedings are initiated. If a JT with a mortgage or lien dies before the initiation of such proceedings, the creditor's interest evaporates.
- >>MIN: Execution of a mortgage/lien on his share severs the JT.
Joint Tenancies (PA)
- KEY: If two people buy a piece of property together in PA, it is treated as a tenancy in common, not a joint tenancy, unless the parties express an intent to treat it otherwise.
- >> If not clear in language, look to the INTENT of the parties.
- >>>> The language "joint tenants and as in common with the right of survivorship" held by PA court to create a JT with right of survivorship.
- >>>>>> Look for both "JT" and "right of survivorship" in same sentence.
Tenancy in Common
- Two or more own w/ no right of survivorship.
- Each T owns a part and has a right to the whole.
- Each interest: divisable, descendable, alienable.
- No survivorship rights bwn TiCs.
- Absent ouster, one tenant not in space cannot get rent. But if one tenant rents, both tenants get to share rental income.
- Carrying costs: all Ts responsible for carrying cost -- based on undivided share.
- Repairs: repairing cotenant has a right to contribution for reasonable/nec. repairs provided he tells the other of the need.
- Improvements: no right to contribution -- unless, at partition, increase in value tied to improvement. then credit.
Periodic Tenancy: Termination
- L must usually provide written notice.
- Notice must be at least equal to the length of the period itself -- unless otherwise agreed.
- NOTE: a periodic tenancy must end at the conclusion of a natural lease period.
Tenancy at Will: Termination
- No fixed duration
- Unless parties agree to a TaW, courts treat it as an implied periodic tenancy.
- May be Terminated at any time but requires reasonable demand to vacate.
Tenancy at Sufferance
- Occurs when T wrongfully holds over past the expiration of the lease.
- Acquires a leasehold estate.
- Termination: lasts until L either evicts T or holds T to a new tenancy.
- 3rd Party Liability: T liable to third party invitees, even where L promises to make all repairs.
- T Duty to Repair: Maintain premises and make ordinary repairs. No waste. Not that if T removes a fixture, he commits voluntary waste. Fixtures pass with ownership of the land. Judge looks for intent to install fixture or damage caused by removal.
- T Duty to Pay Rent:
- If this duty breached and T in possession, then L can either evict through courts or sue for rent due. L must not use self-help (civ & crim probs).
- If T breaches and NOT in possession: SIR.
- Surrender: L could treat as surrender (by words or actions, T shows that she wants to give up lease).
- Ignore: Hold T responsible, just as if T was there (minority option).
- Relet: relet and hold liable for any deficiency.
- MAJ RULE: must try to mitigate -- relet.
- MAJ: L need provide not only legal, but also PHYSICAL, possession.
- MIN: L need only provide legal -- not physical -- possession.
Landlord Duties: Implied Covenant of Quiet Enjoyment
- GEN: T has right to quiet use/enjoyment of the premises w/o interference from L (residential + commercial).
- BREACH: (gen) when L wrongfully evicts or excludes T from premises.
- >> NO BREACH where it is a holdover situation and L is having trouble evicting a former tenant.
- >> L must control common areas and not permit a nuisance on site. Otherwise, NL for acts of other Ts.
- BREACH (constructive eviction): SING
- Substantial Interference -- due to L's actions/inactions.
- Notice -- T must notify L of problem and L must fail to act meaningfully.
- Goodbye -- T must vacate w/in reasonable time after L fails to fix problems.
NOTE: Implied Cov of Quiet Enjoyment Questions usually tied to constructive eviction.
Landlord Duties: Implied Warranty of Habitability
- Premises must be fit for basic human dwelling.
- T's options in the event of breach:
- Move out, repair and deduct cost from future rent, abate rent (usually put in escrow), remain in possession (pay rent while seeking damages).
Assignment v. Sublet (General)
- ASSIGNMENT: Complete transfer of the entire remaining term.
- SUBLET: Anything less than the complete transfer of the entireremaining term.
- GEN: Because restraints on alienation are strictly construed, a covenant prohibiting assignment does not prohit subleasing, and vice versa.
- >> Prohibition against assignment NOT constructed as a prohibition against subleasing.
NOTE: If any time or interest is reserved by a tenant assignor, than the act is not an assignment, but instead is a sublease.
- In an assignment:
- >> L and T2 are liable to each other for all the covenants in the original lease.
- >> L and T1 are in privity of contract and are secondarily liable to each other.
Landlord Tort Liability
- Common areas: must maintain (halls/stairs).
- Latent Defects Rule: L must warn T of hidden defects L knows about or should know about (warn, not repair).
- Assumption of Repairs: L who voluntarily makes repairs must complete them with reasonable care.
- Public Use Rule: L who leases a pub space and knows b/c nature of defect / length of lease that T will not repair -- liable for defects.
- Short term lease of furnished dwelling: lable for any defects on site.
Affirmative Easement (Creation)
- Prescription: Use that is COACH -- continuous, open+notorious, actual under a claim of right and hostile -- all for req statutory period.
- Implication: Implied from prior use.
- >> At time land is severed, a use of one part existed from which it can be inferred that an easement permitting its continuation existed.
- >> Use must be apparent and continuous at the time the tract is divided.
- Necessity: Division of tract divides one lot of means of access out.
- Grant: writing by grantor
- NOTE: If greater than one year, writing (SOF)
Affirmative Easement (Gen)
- Def: Use of a nonpossessory property interest that entitles its holder to some form of use/enjoyment of another's land.
- IE: Utility lines on another's land. Access to cross.
- Damages: include injunction or damages.
Real Covenant (Gen and Creation)
- GEN: Promise to do (ie. paint a fence) or not to do (ie. build for commercial purposes) something related to land.
- Creation: Writing signed by grantor.
- Burden runs w/ successor of burdened lot if (WITHN): Writing, Intent, Touch+concern (must affect parties' legal rights as land owners), Horizontal+veritcal privity, Notice.
- Benefit tuns to successor of benefitted property if (WITV): Writing, Intent, Touch+Concern, only Vertical privity.
- Damages: $
- Vertical privity: simply requires a non-hostile nexus ie. contract, devise, descent. Only time absent is if adverse poss.
Equitable Servitude (Type of Covenant -- equitable remedy)
Successors bound if (WITN):
- GEN: Promise that equity will enforce against successors.
- CREATION: Writing signed by grantor.
- DAMAGES: injunction.
- KEY: Privity NOT required.
writing, intent, touch+concern (affect parties' rights as landowners), notice.
Distinguishing Between Covenants and Equitable Servitudes
GEN: Both concern promises to do/refrain.
Covenant: P seeks money damages.
Equitable Servitude: P seeks injunction.
- Entitle holder to prevent the servient landowner from doing something that would otherwise be permissible. Generally four categories: LASS -- light, air, support, streamwater (artif. flows).
- Creation: only be writing signed by grantor.
- Damages: Injunction or relief.
Implied Equitable Servitudes (Reciprocal Negative) -- Residental Subdivisions
- MAJ: A residential restriction contained in prior deeds conveyed by common grantor will bind subsequent grantees whose deeds contain no such restriction IF:
- At the start of the subdividing, grantor (1) had a common scheme including D's lot AND (2) unrestricted lot holders (incl. defendant) had notice in the prior deeds.
- NOTICE (AIR): Actual (literal), Inquiry (neighborhood conforms to common restriction), Record (pub records)
- Where common scheme: subsequent purchasers with notice are bound.
- Damages: injunction.
- Defense: Changed circumstances -- so persuasive that entire area should be changed. Mere pockets of limited change insuff.
GEN: If a benefitted party acquiesces in a violation of a servitude by one burdened party, he may be deemed to have abandoned the servitude as to other burdened parties.
- GEN: benefits its holder in his physical use or enjoyment of his property.
- REQ: Dominant tenement (benefited) and servient tenement (burdened).
- KEY: passes automatically w/ dominant tenant, even if not mentioned in conveyance.
Easement in Gross
- Holder gets some personal/pecuniary benefit not related to his use/enjoyment of the land. Servient land burdened. NOTE: No dominant (benefited) tenement.
- IE: right to place billboard on another's lot, fish in another's pond, lay power lines.
- KEY: not transferrable unless for commercil purposes. swim no, commercial fishing yes.
Easement (Termination) -- END CRAMP
- END CRAMP
- Estoppel: Servient owner materially changes position in reasonable reliance on the easement holder's assurances that it will not be enforced.
- Necessity: Easement created by necessity expire as soon as the need ends.
- Destruction: Destruction of servient land (other than willful conduct of servient owner)
- Condemnation of Servient Estate.
- Release: Written release by easement holder to servient owner.
- Abandonment: Easement holder must demonstrate by physical action: intent to never use the easement again.
- Merger: Easement extinguished when title to the easement and title to the servient land are vested int he same person.
- Prescription: adverse possession elements -- COACH.
- Privilege to enter another's land for a delineated purpose.
- Not subject to SOF but FREELY REVOCABLE unless estoppel (sub. money/labor) applies.
- IE. event tickets.
- Note: an oral easement creates a freely revocable license.
- GEN: Right to enter servient land and take from it the soil or other substance (ie. minerals, hunting, ect.).
- >> Share all the rules of easements.
- NOTE: Different types of profits --
- >> Appurtenant Profits: Serves a dominant estate and can only be transferred WITH the dominant estate.
- >>>> Look for language indicating that the right is "for the benefit of the [dominant estate]."
- >> Gross Profits: Does not exist to serve the dominant estate. May be transferred separate from the dominant estate.
Covenant v. Easement
Covenant -- Contract right rather than a grant of a property interest (easement).
Adverse Possession (COAH)
- C: Continuous for the statutory period (PA = 21 years!)
- O: Open and Notorious
- A: Actual -- Literal.
- H: Hostile -- No consent by owner.
Note: Possessor's subjective state of mind is irrelevent.
Adverse Possession (General)
- Tacking: an APer can tack on his time to that of his predecessor if they're in privity.
- Privity is established by a non-hostile nexus such as blood, contract, deed or will.
- Tacking ≠ allowed when the previous party was ousted.
Disability: SoL will not run against a true owner afflicted by a disability (insanity, infancy, imprisonment) at the start of adverse possession.
PA: If land with an adverse possession claim is conveyed to another, the deed must specifically describe the property for which adverse possession is being claimed in order for tacking to take effect.
- >> If no mention, actual owner may claim abandonment.
Conveyance (Two Steps)
- I. Land contract
- II. Closing -- where deed becomes the operative document.
GEN: Title to property passes to the grantee upon effective delivery.
- DELIVERY: Presumed if --
- (1) Deed handed to grantee;
- (2) Deed acknowledged by grantor before a notary;
- (3) Deed is recorded.
- NOTE: Destroying a deed or returning it to a grantor has no effect -- such an act constitutes neither a cancellation or a conveyance.
- >> If statement re: not accepting occurs AFTER converance is complete, then presumed to be effective.
Land Contract (SoF and Exception)
Contract: Must satisfy SoF -- be in writing and signed by the party to be bound. Must also ID property and amount.
- Exception: Doctrine of Part Performance -- can take a contract out of the SoF requirements.
- >> Satisfied when two of the following three occur:
- (1) Buyer takes possession, (2) Buyer pays all/part of the purchase price, AND/OR (3) Buyer makes improvements.
Land Contract (Error in Land Recital)
When error in land recital, buyer can seek specific performance with a pro rata reduction in the purchase price.
Land Contract (Ownership and Risk)
Doctrine of Equitable Conversion: once the contract is signed, the BUYER owns the land -- subject to the condition that he pays the purchase price at closing. As a result, if between the contract and the closing, the property is destroyed through no fault of either party, BUYER bares the risk of loss.
Exception: Contract can provide otherwise.
Land Contract (Implied Promises)
- (1) Marketable Title: Seller must provide MT at closing -- free from reasonable doubt (lawsuits and threat of litigation).
- Three circumstances render a title unmarketable: adverse possession (even if just a part of the property), encumbrances (servitudes and liens a problem unless waived by buyer), AND zoning violations (violation = threat of litigation).
- (2) Promise Not to Make False Statements of Material Fact: Seller is liable for defects about which he knowingly or negligently made false statements of fact to the buyer IF the buyer relied on them and they materially affect the property's value.
- This duty includes an obligation to disclose Latent Material Defects. Duty arises when seller knows or has reason to know of the defects, defects are not apparent and buyer unlikely to discover them, and the defect is serious enough to have caused the buyer to reconsider the purchase.
- Active concealment -- Seller liable for defects if he took steps to conceal them.
Contract v. Deed: Implied Warranties
MERGER: Once the closing occurs and the deed changes hands, the contract and deed merge AND the seller is no longer liable on the contractual warranty. The seller is only liable for promises made in the deed!
SO: If deed is delivered and has no warranty of title, then no redress for the buyer.
Land Contract (Disclaimers of Liability)
- Cannot disclaim fraud, concealment or failure to disclose.
- BUT: if disclaimer identifies specific types of defects (ie. roof), it will likely be upheld.
Land Contract (Unmarketable Title -- Remedies)
If title is unmarketable, seller must notify buyer and the latter must give him an opportunity to cure. If no cure, Buyer can rescind, collect damages, seek specific performance w/ abatement, and/or initiate a quiet title suit.
NOTE: A quitclaim deed does NOT affect the warranty to provide marketable title.
Land Contract (Fitness and Habitability)
No implied warranty for F+H UNLESS sale of a new home by a builder-vendor (rec. by most courts).
Deed = controlling document. A lawfully executed deed has two primary reqs:
(1) Lawful execution:
in writing, signed by grantor. The description of the land need not be perfect -- just unambiguous (ie. "all" ok, "some" not). Key: Need not site consideration, nor must consideration pass to make the deed valid
- (2) Delivery (Intent!): Transfer of deed to granter through personal delivery, mail, agent or messenger.
- NOTE: Does not require actual physical transfer of the deed. Standard is one of INTENT (did grantor present the intent to be bound irrespective of whether the deed was handed over?)
- NOTE: Recipient's express rejection of the deed DEFEATS delivery.
- NOTE: Oral conditions that accompany deeds that are good on their face drop out.
- NOTE: Delivery can also be acomplished by escrow (deed delivered once certain conditions met). If grantor dies or becomes incompetent b/f express conditions met, deed still passess when satisfied.
Sale of Land (Passage of Title on Death)
- If death before contract is completed (closing), seller's interest passes as personal property while buyer's interest passes as real property.
- If seller dies, bare legal title passes to his heirs, but they must give up title to buyer at closing.
- If buyer dies, his heirs can demand conveyance of land at closing.
GEN: No covenants. Grantor doesn't even promise title to convey. Any problems post-closing and the seller is off the hook.
General Warranty Deed
- Warrants against all defects in title, incl. those due to the grantor's predecessors. Typically contains:
- Covenant of Seisin: ownship -- S owns conveyed property.
- Covenant of Right to Convey: Power to make transfer, no restraint on alienation.
- Covenant Against Encumbrances: No servitudes/liens on the property.
- Covenant for Quiet Enjoyment (future): grantee won't be disturbed in possession by a 3d party's lawful claim of title.
- Covenant of Warranty (future): Grantor will defend grantee against others' lawful claims of title.
- Covenant for Further Assurances (future): Grantor will do what's neded to perfect title.
Special Warranty Deed (Statute)
- Two promises made by the grantor (but NOT on behalf of his predecessorts in interest):
- (1) Promise that grantor hasn't conveyed the property to anyone other than the grantee; AND
- (2) Property is free from encumbrances made by grantor.
Recording Acts (General)
- Exist to protect (1) bona fide purchasers (buy for value and w/o notice that someone got there first); and (2) mortgagees (creditors).
- NOTICE TYPES:
- (1) Actual: prior to B's closing, B learns of A.
- (2) Inquiry: Whatever a reasonable examination of the property would show regardless of whether B looks (B has duty to inspect). If a recorded instrument refers to an unrecorded transaction, grantee on inquiry notice of whatever a follow up would reveal.
- (3) Record: Deed is recorded in the chain of title (within sequence). Usually grantor/grantee index.
- GEN: Subsequent BFP prevails over a prior grantee who failed to record.
- >> KEY: Subsequent purchaser had no actual or constructive notice at the time of conveyance.
Race Notice Statute (PA)
To prevail, the second grantee must not only be a BFP, but also win the race to record.
PA: Race notice!
- NOTE: To be a BFP, cannot have notice about the prior purchase.
- >> Notice includes actual, constructive and inquiry.
Race Notice v. Notice
KEY: If the statute has the words "records first" or "first records" in it, then it's RACE NOTICE.
Recordings and the Shelter Rule
- SHELTER RULE: One who takes from a BFP will prevail against any entity that the transferor-BFP would have prevailed against.
- >> Prevail in both notice and race notice jdxs.
- If a deed, entered on the records, has a grantor unconnected to the chain of title, the deed is a wild deed.
- It is incapable of giving record notice of its existence.
- MORE??? P. 79
Estoppel by Deed
One who conveys realty in which he has no interest is estopped from denying the validity of that conveynce IF he later acquires that previously transferred interest.
- Created by the conveyance of a security interest in the land, intended by the parties to be -- collateral.
- Union of (1) debt and (2) voluntarylien in debtor's land to secure that debt.
- SoF: Mortgage must typically be in writing (note, deed of trust, mortgage deed, sale-leaseback, sec. interest in the land)
- Debtor: mortgagor (title + right to possess)
- If sells land, lien remains, so long as the mortgage was properly recorded.
- Creditor: mortgagee (lien)
- Can transfer interest by:
- (1) endorsing the note and delivering it to the transferee; OR
- (2) Executing a separate document of assignment.
- --> If note is endorsed and delivered, transferee is eligible to become a holder in due course.
Holder in Due Course (Reqs, Defenses - MAD FIFI4)
- Holder in due course:
- (1) Note must be negotiable, made to the named mortgagee.
- (2) Original note must be signed by mortgagee.
- (3) Original note must be delivered to transferee.
- (4) Transferee must take the note in GF and w/o notice of illegality.
- (5) Transferee must pay value.
Holder takes the note free of any personal
defenses (waiver, estoppel, lack of consideration, fraud in inducement, ect.) that could have been raised against the original creditor, BUT holder is still subject to real
- Real Defenses -- MAD FIFI4
- Fraud in Factum
- Incapacity, Illegality, Infancy, Insolvency
Mortgages and Sales
If a debtor-mortgagor sells property with a properly recorded mortgage, the mortgage remains on the land.
- Personal Liability:
- If "B" ASSUMES the mortgage -- B is primarily liable, while the original seller is secondarily liable.
- If "B" takes SUBJECT TO mortgage -- B assumes NO personal liability. Original seller is personally liable. >> But, if mortgage is properly recorded, it sticks to the land and the property may be foreclosed by the mortgagee.
- NOTE: In the "subject to" case, if a junior mortgagee forecloses and a senior creditor fails to be paid, then that senior creditor can foreclose on the property.
NOTE: In a notice
jdx, a subsequent BFP prevails over a prior grantee/mortgagee who has not yet recoded properly at the time the BFP takes.
- REVIEW p. 85
- If proceeds from foreclosure less than amount owed: mortgagee can bring a deficiency action against the debtor. Applies also to junior creditors not fully paid off by the sale. In order for mortgagee to pursue a personal deficiency judgment, he must join the debtor-mortgagor, a necessary party.
- If surplus: junior lien holders paid in order of priority. Any remaining surplus is returned to the debtor.
- Priority of Payment:
- (1) Att'y Fees
- (2) Foreclosure Expenses
- (3) Accrued Interest on first bank's lien.
Foreclosure Process and Necessary Parties
All those with interests subordinate to the foreclosing mortgagee are necessary parties and must be joined. A failure to join such parties will result in the preservation of their claims, despite the foreclosing and sale. As a result, if not joined, their mortgages will remain on the land.
Debtor-mortgagor also is a necessary party. He is required to be joined if foreclosing party wants to pursue a deficiency judgment.
- A mortgage given to secure a loan that enables the debtor to acquire the encumbered land.
- IE: A lends B $100K so that B can purchase property, and A takes as collateral a security interest in the property.
Gen Rule: first in time, first in right.
- NOTE: PMMs have priority over prior non-PMM, even if the latter are recorded fist.
- BUT: Subsequent mortgages/liens may defeat prior PMMs under the recording act rules.
After-Acquired Collateral Clause
Floating lien : floats from debtor's present assets to newly acquired assets.
Superpriority: a purchase-money-mortgagee has superpriority over other creditors, including after-acquired collateral clause purchasers.
Creditor Subordination Agreements
- GEN: Debtor can try to redeem his property any time PRIOR TO the foreclosure sale.
- >>Must pay off missed payments, costs and interests, and if there's an acceleration clause, full balance and interest + costs must be paid. Redemption nullifies the foreclosure sale.
- >>Redemption right expires after sale.
- Non-waivable right.
GEN (AFTER-FORECLOSURE): debtor has the right to purchase the foreclosed property for the foreclosure price -- as opposed to the amount of the debt -- for a set period (usually 6 months to 1 yr). And in such states, debtor can usually possess the property during the statutory period.
NOTE: Varies from state to state
Lateral Support and Excavations
Excavator liable only if negligent.
For SL to apply, P must show that the improvements on his land did not contribute to his land's collapse.
Water Rights -- Water in Watercourses (Streams, Rivers, Ect.)
Prior Appropriation Doctrine:
- Riparian Doctrine: Water belongs to those who own the land ordering water course.
- >> A riparian will be liable if his use unreasonably intereferes with another's use.
Rights to water use determined by priority of beneficial use. First in time, first in right. Under this doctrine, any productive or beneficial use of the water
(incl. use for agriculture) is sufficient to create an appropriation right.
Water Rights (Groundwater)
Groundwater: surface owner can make reasonable use of groundwater, but cannot be wasteful.
Water Rights (Surface Water -- Rain, Spring, Melting Snow)
- Common Enemy Rule: landowner may change drainage or make any other changes to his land to combat the flow of surface water.
- NOTE: Many courts have modified the common enemy rule to prohibit unnecessary harm to the land of others.
- Trespass: owner has right to remove trespasser, to bring an ejectment action.
- Private Nuisance: substantial and unreasonable interference w/ another's use/enjoyment of land. No physical invasion required. But, no nuisance if P hypersensitive.
Eminent Domain and Takings
- Regulatory Takings: economic wipeout of value of the land.
- Government must either compensate the owner or terminate regulation and compensate for past damages.
- Variances permitted if (1) undue hardship and (2) variance won't decrease nearby property values.
- IE. Prior inconsistent use.
Non-conforming uses: if once lawful use deemed non-conforming, then it cannot be eliminated all at once unless just compensation paid; otherwise, could be a taking.
- Amenities government seeks in exchange for granting permission to build.
- Must be reasonably related in nature and scope to the impact of the property developement. If not, unconstitutional.
Implied Right to Clear Encumbrances of Title in Sale
- GEN: Seller allowed to use the proceeds of a sale to clear title if the seller can ensure that the purchaser will be protected.
- >> A seller's offer to escrow funds, for example, is an acceptable guarantee.
Contract v. Deed: Controlling Document
- GEN: Terms of a deed generally control the seller's liability.
- NOTE: While law implies that a marketable title is to be conveyed where the contract is silent, once a buyer accepts a deed, the doctrin of merger comes into play and the contract is merged into the deed.
- POST-MERGER: Any contract provisions for quality of title, express or implied, are no longer effective.