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Four elements of adverse possession
- 1. Continuous
- 2. Open and Notorious
- 3. Hostile
- 4. Exclusive
Adverse possession- continuous element
- 3 phases:
- 1) entry: when adverse possessor enters the land
- 2) end: when the statue of limitations runs out of time --> adverse possessor becomes legal owner
- 3) middle: adverse possessor uses the property (b/w entry and end phase)
- *continuous CAN be seasonal or infrequent- as long as use is CONSISTENT with the type of property being possessed
- * can tack- if adverse possessor can't satisfy continuity requirement on her own, can tack on years from previous possessor
- *SOL will not run against a true owner who has a disability at the time adverse possession begins [note, it will run if disability AFTER adverse possession]
- * true owner can interrupt AP period by ejecting possessor. It will stop the clock
adverse possession: open and notorious element
Adverse possessor's use must be open and notorious such that puts a reasonable true owner on notice of the adverse use (can't be hidden, AP must use property as if true owner)
adverse possession: hostile
- possession must be adverse to the owner's interest (i.e. not permissive)
- no inquiry into AP's state of mind unless in a minority jurisdiction that either requires good faith based on mistake
or bad faith based on an aggressive trespass
- - If good faith, AP must have mistakenly possessed property thinking land is unowned
- - If bad faith, AP knows not the rightful owner
adverse possession: exclusive
Can't share possession with the true owner
*CAN share with another adverse possessor as tenants-in-common
lien state- definition
A jurisdiction that treats a mortgage as a lien that does NOT sever a joint tenancy
title state- definition
jurisdiction in which a mortgage SEVERS a joint tenancy and converts it to a tenancy in common
Mortgage liability- transferor (borrower) liability: transferor still liable for mortgage upon a transfer
transferor only not liable if mortgagee/lender releases mortgage or modifies transferor/borrower's obligation
property: mortgages: transferor/transferee: lender can accelerate payments with due-on-sale clause or due-on-encumbrance clause
due on sale clause: not enforceable against certain transfers of residential property (property with less that 5 dwelling units), including transfers of interest of a joint tenacy when borrower dies and transfers by will.
mortgage liability- transferee liability
Transferee either assumes
mortgage or takes property "subject to"
- - Both mortgagor/borrower AND transferee liable for mortgage upon default
- - Assumption agreement doesn't need to be in writing
- "Subject to":
- - Transferee is not personally liable upon default
if deed is silent or ambiguous
re. liability, transferee/buyer considered to have taken title subject to the mortgage
If bank transfers a mortgage to another bank what happens to the mortgage if 1) bank transfers the note and no mortgage? 2) If bank transfers the mortgage but no note?
- 1) Note follows mortgage, so mortgage transfers
- 2) Either i. the transfer is void or ii. the note and mortgage are considered one entity and note follows the mortgage
RULE re. possession before foreclosure: lien theory state vs. title state vs. intermediate title state:
lien theory: Mortgagee/lender cannot take possession prior to foreclosure because lender has a lien until foreclosure is complete. Mortgagor is owner up until foreclosure.
title theory: lender technically has the right, as the holder of title, to possess property at any time
intermediate title: (minority of jurisdictions) the mortgagor retains title until default, at which point lender can take possession
foreclosure: waste rule: homeowner cannot commit waste that will impair the lender's security interest
foreclosure: equity of redemption RULE
mortgagor may reclaim title and prevent foreclosure upon full payment of the debt
- *NOT a right in NY
- * must exercise before the foreclosure sale
RULE: priorities and exceptions
- -interests acquired before the interest being foreclosed (senior interests) survive the foreclosure.
- -interests acquired after are extinguished after the foreclosure
- 1) purchase money mortgage has priority over all other mortgages, even those earlier in time
- 2) A junior mortgage that satisfies the requirements of the state recording act may take priority over an unrecorded senior mortgage
- 3) subordination agreement in which senior mortgagee chooses to subordinate interest to junior interest
- 4) lender's mortgage modifications are subordinated if they are more burdensome
Absent statutory redemption (in states where allowed), the purchaser of property at a foreclosure sale takes the property __(1)___ of any junior mortgage and _(2)___ to any senior mortgage`
- 1. free and clear
- 2. subject to
contents of a deed- it must:
- 1. identify the parties
- 2. be signed by the grantor
- 3. include words of transfer
- 4. describe the property sufficiently (based on monuments, physical attributes OK)
Common law deed RULE
First to receive deed wins
What can be recorded?
- - deeds
- - mortgages
- - leases
- - options
- - judgments affecting title
- - easements or covenants
Who is NOT covered by recording acts
grantees who acquire title by:
- - gift
- - intestacy
- - devise
* idea is to protect those who make economic investments by purchasing property
Types of notice [crucial in applying two of the three recording acts] that someone owns deed on record
- 1) actual- subsequent grantee has real, personal knowledge of prior interest
- 2) constructive- prior interest is recorded
- 3) inquiry- a reasonable investigations would have disclosed existence of prior claims
Two common situations when someone has inquiry notice
- 1) someone else living on the land; had subsequent grantee investigated the land, he would have discovered the person in possession
- 2) interest mentioned in deed to some other transaction; had subsequent grantee inquired, would have discovered the itnerest
Three types of recording acts and terms associated with them
- 1) race: first to record wins, even if the subsequent purchaser had notice of prior, unrecorded conveyance
- - terms: "first recorded" or "first to record"
- 2) notice: subsequent purchaser has good title if she buys without notice of a prior, unrecorded conveyance
- - terms: "in good faith" or "without notice"
- 3) race-notice: subsequent purchaser has good title if two requirements are met:
- i. purchase without notice of a prior unrecorded conveyance AND
- ii. record first
- terms: "in good faith" AND "first recorded" type terms.
Six Implied covenants in a general warranty deed
- 1) seisen- the deed describes the land in question
- 2)right to convey- the grantor has the right to convey the property
- 3) no encumbrances- there are no undisclosed encumbrances on the property that could limit its value
- Future covenants-
- 4) quiet enjoyment- grantor promises to defend against future challenges to the grantee's title to the property
- 5) warranty- grantor promises to defend against future assertions of encroachment
- 6)further assurances- grantor promises to fix future title problems
property contracts: when the sales contract is made, buyer becomes subject to all losses if not fault of the seller under equitable conversion
property contracts: since risk of loss on the buyer, if seller has casualty insurance on damaged property, seller required to use insurance proceeds to lower purchase price the buyers owe
buyer holds equitable title, seller holds legal title
tenant may still be required to pay rent if landlord doesn't repair. tenant's rights and duties are independent of landlord's, and promise to do repairs are a collateral promise.
an effective gift requires a present transfer of an interest. If the transfer is to take effect in the future, it is a mere promise to make a gift and unenforceable for lack of consideration
a quitclaim deed usually contains no assurances
delivery of a deed is enough to be a conveyance, even if grantee didn't receive the deed; mave give deed to a third party and delivery still effective
an assignee of a leasehold not liable for back pay
a person who claims an easement by necessity over land needs to have used the land at the time the land was conveyed. So not able to use a private road that wasn't already being used as an easement when you were conveyed your land.
easement by necessity requires
- 1) existence of a quasi-easement at the time of conveyance
- 2) apparent use
- 3) continuous use
- 4) a reasonable necessity
fee simple with a condition grants a future right of re-entry; this is not automatically vested.
a change in character of a neighborhood may make a deed restriction unenforceable
pur autre vie: your interest based on the life of another (i.e. a brother gets an interest for as long as their uncle lives)
executory interest: takes away someone else's interest and transfers to some other person (to Sam for life, but if he has kids, to Chris)
deeds: while a recording act protects equitable and legal interests, it does not protect against such interests unless they have been recorded.
The key in notice jurisdiction is whether buyer has notice of a prior transfer when the buyer purchases property. If found out before purchase and before recording, only then is recording ineffective.
when there is a conflict between the mortgagee of real property and the holder of a security interest in a fixture, the first to record has the priority over the fixture.
property taxes are the responsibility of the life tenant
a landlord who is aware that a tenant has abandoned her lease must mitigate damages
if you don't assert your right to reverter, doesn't mean you waived the right.
life tenant: not responsible for the mortgage principal, only mortgage interest
if anti-ademption jurisdiction, when the seller dies before he conveys real property, the seller's estate must still honor the contract.
a covenant can be terminated by abandonment if the parties to the covenant act in an affirmative way that shows a clear intent to relinquish the covenant right.
title: a seller is not required to deliver marketable title until closing
land sale contracts: judgement liens are not the responsibility of buyers if made after they bought the property. if a creditor gets a judgment lien on a property after a grantor sells the property to a 3rd party, it will not be enforceable against the 3rd party's property because the property is no longer owned by the grantor.
land sale contracts: buyer bears the risk of loss (majority rule)
deeds: marketable title requirement: title must be free of an unreasonable risk of litigation at the time of closing
title/lien theory: in a title theory state, a lender is entitled to take possession at any time until the mortgage has been fully satisfied.
mortgages: a mortgage used to finance the purchase of property (purchase money mortgage) has priority over all other non-purchase money mortgages, even those recorded earlier.
land sale contracts: the promise of marketable title means title must be marketable at the time of closing. it does not have to be marketable before that!
ademption: if a will gives real property to a beneficiary but the property is sold, it will not be given to the beneficiary. BUT if an anti-ademption statute, the proceeds of sale will go to the beneficiary even though the property won't.
fixtures: when there is a conflict over a fixture, the first to record has priority over the fixture. So a holder of a security interest could have priority over a mortgagor if the holder of the security records first.
structures built on real property are fixtures. A wall may seem like an easement, but it's a fixture
a written easement that is not recorded is not enforceable against a bona fide purchaser if the purchaser doesn't have notice of the easement. BUT it may be enforced if purchaser has notice!
deeds: a fraudulent deed is not valid even if a bona fide purchaser relies on it.
deeds don't require consideration
tenancy in common- right to possess the whole property and lease share to a 3rd party
joint tenancy: severance: right of survivorship to just that interest is destroyed and converted to a tenancy in common when transferred. The remaining joint tenants still have a joint tenancy
joint tenancy: severance: any lien against one joint tenant's interest terminates upon that tenant's death, and the lien does not encumber the surviving tenant's interests.