Texas Bar Exam Essays - Real Property
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What is Fee Simple Absolute?
Freehold estate, runs forever, fully alienable, but right of first refusal is ok.
What is a Life Estate?
Freehold estate, can be created expressly or by implication, can be measured by grantor’s life or pur autre vie (someone else’s life).
Are restraints on alienation permissible with a life estate?
What is waste? Is there more than one type?
Voluntary Waste – any affirmative action beyond the right of maintenance causing harm to the premises (depletion of natural resources is waste unless open mines).
Permissive Waste – inaction; life tenants fails to (i) repair, (ii) pay taxes, or (iii) pay interest on mortgage.
Ameliorative waste – occurs when the affirmative act alters the property substantially but increases the value of it. If changed conditions have made the property relatively worthless in its current use, the life tenant can tear it down without liability to the holder of the future interest (ex: where old house is now in center of industrial park).
How is life tenant’s obligation to prevent waste limited?
Life tenants obligation is limited to the amount of income received for the land of it the life tenant is personally using the property, the reasonable rental value of land.
What is Open Mines?
Life tenant is allowed to deplete natural resources (even though this would otherwise be waste) in cases where that is what the property was used for before the life tenant acquired their interest in the property.
Does a life tenant have to insure property?
What follows a life tenancy?
- Remainder (if property passes to a 3rd party) -OR-
- Reversion (if property goes back to grantor; interest kept by grantor when grantor gives less than the durational estate he had)
What is a remainder, and what are the different types of remainders?
A remainder becomes possessory upon natural expiration of estates coming before them.
Vested remainder – immediately possessory upon natural expiration of previous estate.
Contingent remainder – conditions must be met before the grantees are entitled to possession when the previous estate naturally expires.
Vested remainder subject to open – remainder interest is to a class whose members are not yet fully known and so the class remains open to allow for future persons who qualify.
What are the different types of defeasible estates?
Fee Simple Determinable – durational language (so long as), possibility of reverter, FSD ends automatically once condition happens.
Fee Simple Subject to Condition Subsequent – conditional language (provided that), right of re-entry (must be expressly reserved, FSSCS does not end automatically (grantor must exercise right of reentry).
Fee Simple Subject to Executory Interests? – FSD or FSSCS but instead of title reverting back to grantor, title passes to a third party; executory interests operate to cut short the estate that comes before it.
What are the different types of executory interests?
Shifting executory interest – operates by taking title from one grantee and giving it to another grantee.
Springing executory interest – operates by taking title from the grantor and giving it to a third grantee.
Can the holder of an executory interest sue a life tenants for waste?
What is the RAP?
Rule Against Perpetuities – no interest is good unless it vests, if at all, not later than 21 years after some life in being at the creation of the interest; determined at the time of creation.
With what types of interests might the RAP apply?
- (1) contingent remainders
- (2) executory interests
- (3) vested remainder subject to open
- (4) options and rights of first refusal
Are there any exceptions to the RAP?
Charitable gifts – RAP is never violated if the gift is from one charity to another charity.
What are the different types of concurrent ownership?
Joint Tenancy (WROS) – unity of time, title, interest, and possession
Tenancy in Common – unity of possession only; co-tenants entitled to accounting when (1) ouster, (2) agreement to share, (3) lease of the property by TIC to 3rd party, (4) depletion of natural resources.
Tenancy by Entirety – for married couples only???
How can JTWROS be destroyed?
Partition (court action)
Severance (Sale or Gift)
Mortgage in Title Theory State
Are co-tenants in a TIC entitled to accountings? If so, when?
Co-tenants entitled to accounting when (1) ouster, (2) agreement to share, (3) lease of the property by TIC to 3rd party, (4) depletion of natural resources.
Can one co-tenant force others to pay their share of expenses?
Only applies to repairs, mortgage payments, taxes, assessments, sewer fees.
For improvements, no contribution right, but can be recouped at partition or sale.
What is a non-freehold estate? What are the different types of non-freehold estates?
(1) Tenancy for Years – estate measured by a fixed period of time (no matter how short); must be in writing if over one year.
(2) Periodic Tenancy – repeating; ongoing, continuing, repetitive estate, until one party gives a valid notice.
(3) Tenancy at Will – either party can terminate at any time without notice.
(4) Tenancy at Sufferance – bare possession of a holdover tenant. At landlord’s sole option, the landlord can either (a) treat tenant as trespasser and throw off land, (b) impose new periodic tenancy (if residential, then month-to-month; if commercial and expired tenancy was for 1+ years, then year-to-year; if commercial and expired tenancy was for <1 year, then rent period of old tenancy).
How are periodic tenancies created?
- (1) express agreement
- (2) by implication – where lease is silent as to duration
- (3) by operation of law
- a. SOF violation but landlord accepts first payment
- b. Holdover tenant – tenant stays after expiration of lease and landlord accepts rent
How are period tenancies terminated?
Occurs by giving prior notice equal to period of tenancy (6 months if year-to-year)
How are tenancies at will terminated?
- (1) death of either party
- (2) waste by tenant
- (3) assignment by tenant
- (4) transfer of title by landlord
- (5) lease by landlord to someone else
What happens if landlord tells a tenant of a tenancy at sufferance that they are raising the rent?
If done before the expiration of the lease, and T holds over after expiration, landlord can impose the new periodic tenancy on the holdover tenant at the higher rent.
What a tenant’s duties?
- If lease silent:
- (1) pay rent
- (2) not commit waste
What is a tenant’s liability to landlord if the lease says that T must repair and maintain?
T is liable for ALL damage to property (including ordinary wear and tear).
What are a landlord’s duties?
- (1) give tenant possession of the premises when the lease begins
- (2) deliver residential premises in a habitable condition (reasonably situation for residential use)
- a. MBE – if breached, tenant can move out and end lease or sue landlord for damages
- b. Texas – NO implied warranty of habitability, only statutory requirement that landlord repair conditions that materially affect the physical health and safety of an ordinary tenant > tenant can move out; stay and repair and deduct the cost of repair; or sue the landlord.
- (3) Implied Covenant of Quiet Enjoyment (contained in every lease)
- a. Landlord can breach by
- i. Total eviction
- ii. Partial eviction (tenant deprived of use of part of lease property)
- iii. Constructive eviction (landlord fails to provide a service landlord is supposed to provide making premises uninhabitable)
What is construction eviction?
Tenant must show:
- (1) landlord did it
- (2) it was a substantial interference with covenant of quiet enjoyment
- (3) tenant abandoned premises within a reasonable time
What are a landlords remedies?
If tenant fails to pay rent, landlord can sue for damages and throw tenant off property.
If tenant unjustifiably abandons the lease, landlord can (i) treat abandonment as offer of surrender and accept the offer by retaking the premises and ending tenant’s liability on that date, OR (ii) re-rent the premises on tenant’s account and hold tenant liable for any deficiency.
What is an assignment and what is a sublease?
Assignment – tenant transfers everything, holding nothing back
Sublease – tenant transfers a portion of the lease period, holding some time back
Does a tenant have the right to assign or sublease his interest in property?
In Texas, there is NO right to assign or sublease UNLESS the lease gives permission.
MBE – tenant can assign or sublease unless the lease says otherwise.
Are sublessee’s liable to the original landlord?
No – there is no privity of estate or privity of contract.
Are assignee’s liable to the original landlord?
Privity of Estate – automatically exists between assignee and original landlord, so each liable to the other on privity of estate claims.
Privity of Contract – may exist between assignee and original landlord if assignee expressly assumed the obligations under the lease or made a contract with the landlord; in this case tenant can be liable to landlord under privity of contract claims as well.
Assignee can also be liable for covenants that run with the land (do real covenant analysis).
Are non-assignment or non-sublease clauses valid?
Yes – valid and enforceable, and makes attempted transfers voidable at the option of the landlord.
If there is a non-assignment or non-sublease clause, and landlord gives permission once, then the entire clause is waived for all time, unless the landlord states otherwise at the time of giving permission.
Permission can be implied (accepting payment from assignee).
What is the effect of a PARTIAL taking on a tenant’s duties under a lease on the land that was condemned?
Tenant not released from paying full rent, but gets an amount equal to the rent that will have to be over the remainder of the lease for the property taken???
What is the effect of a FULL taking on a tenant’s duties under a lease on the land that was condemned?
Extinguishes the lease and T is excused from paying rent.
Tenant shares in the condemnation award only to the extent that the fair rental value of the lease exceeds the rent due under the lease.
What is a latent defect and what is a landlord’s liability with regard to latent defects?
A latent defect is a defect that tenant does not know of, and a reasonable person in tenant’s position would not find.
- Landlord is under a duty to disclose (but not repair) latent defects which landlord either knows or has reason to know.
- What is a landlord’s liability on a short term lease of a furnished dwelling?
- Landlord liable for defects even if landlord neither knows nor has reason to know of them.
What is a landlord’s liability on common areas under the landlord’s control?
If injury is in an area subject to the landlord’s control, then landlord is liable if landlord failed to use reasonable care.
What is landlord’s liability for negligent repairs?
Landlord is liable for injury resulting from landlord’s repair of a defect in the premises, EVEN IF landlord used all due care in making the repair b/c landlord created the deceptive appearance of safety and is liable for that.
What is a landlord’s liability under the public use exception?
- Landlord is liable for injury from defects in the premises, if 3 requirements are satisfied:
- (1) LL must know or should know of major defects
- (2) LL must know or should know that T will not fix the defect; and
- (3) LL must know or should know the public will be using the premises
What is a tenant’s tort liability to 3rd parties?
Tenant always liable to 3rd party invitees for negligent failure to correct dangerous conditions on the premises, regardless of whether landlord may be contractually liable or not.
Can an owner remove fixtures prior to a closing on the sale of real property? Can a tenant remove fixtures when the lease ends?
If attached item becomes a fixture, chattel cannot be removed by either seller (BEFORE closing) or tenant (BEFORE the end of the lease). This is a test of intent – determine did the one doing the installing intend that the item stay with the real property as a fixture?
- The agreement controls, but if there is no agreement, look at:
- (1) Degree of attachment – the more that has to be done to attach, the more likely the intent was that it stay.
- (2) General custom – is this the type of thing that sellers or tenants normally take when they leave?
- (3) Degree of harm – Tenants are favored here; if tenant can remove the item without substantial damage to the premises, then courts allow an inference that there was no intent that the item was a fixture.
- (4) Trade fixtures – chattels are used in a trade or business are NOT fixtures.
What is an easement, and what are the different types of easements?
An easement is a non-possessory interest in land involving a right of use.
There are easement appurtenants (run with the land; directly benefits the use and enjoyment of two adjoining pieces of land; involves both a burdened estate and a servient estate), and easements in gross (benefit a person; there is no dominant estate)
How can easements be created?
Express easement – express and written grant or reservation
- Easement by implication – 2 kinds (necessity and prior use easements)
- (1) Easement by Necessity
- a. Previous common owner
- b. Property is landlocked
- c. Strict necessity
- d. Easement disappears when property is no longer landlocked
- (2) Easement by Prior Use
- a. Previous use
- b. By common owner
- c. That is continuous and apparent
- d. And use is reasonably necessary
- Easement by prescription – elements:
- (1) adverse use to the owner
- (2) use is continuous and uninterrupted for the statutory period
- (3) use is visible and notorious OR with owner’s knowledge
- (4) use is w/out owner’s permission
- (5) In Texas = 10 years; MBE = 20 years
Can easements in gross be transferred?
In Texas, easements in gross cannot be transferred UNLESS the language of the easement says so or it is a conservation easement.
MBE = No, if it is personal; Yes, if it is commercial
What rights and duties does the owner of an easement have?
- (1) to use the easement w/in the scope reasonably contemplated by the parties when the easement was created
- (2) must keep easement in repair and go on servient estate to repair easement
- (3) must make reasonable restoration of servient estate after repairs
How can an easement be terminated?
- (1) Unity of ownership or merger – both estates owned by same person
- (2) Valid release – must comply w/ SOF and deed formalities
- (3) Abandonment – intent to abandon + affirmative physical act
- (4) Termination by estoppel – (i) representation of relinquishment by holder and (ii) change in position in reliance by owner of servient estate
- (5) Termination by prescription – owner of servient estate prevents dominant estate’s use of the easement and does so for the statutory period.
- (6) End of necessity
What is a license, and when can it become irrevocable?
Limited privilege of use, and not a property interest; only a contractual right; revocable at will of licensor.
If money spent on property in furtherance of an oral license, then the license becomes irrevocable and can be enforced under theory of estoppel.
What is a profit?
Gives the right to go onto land and take a natural resource.
What is a restrictive convent and how can it be enforced?
A restrictive covenant gives the right to restrict someone else’s use of the land.
Restrictive covenants can be enforced at law or in equity.
- Covenant at Law Requirements (seeking money damages):
- (1) intent that it run with the land
- (2) notice to the person against whom enforcement is sought
- (3) covenant touches and concerns the land
- (4) horizontal & vertical privity (note: vertical privity NOT needed in Texas).
- a. For burden to run, vertical privity must transfer FULL estate
- b. For benefit to run, vertical privity need only be a part of the estate
- Equitable Servitude Requirements (seeking injunction):
- (1) intent that restriction be enforceable by a successor in interest
- (2) notice to the subsequent purchaser
- (3) restriction must touch and concern the land
- (4) NO privity is required.
What is an equitable servitude in the context of subdivisions?
- Reciprocal Negative Servitudes
- (1) intent to create a servitude on al the land in the subdivision (based on common building plan
- (2) notice – actual, constructive/record, or inquiry
What are equitable defenses to enforcement of a servitude?
- (1) unclean hands
- (2) acquiescence
- (3) latches – pla sat by while def built or violated restriction and only said something after completion
- (4) estoppel – pla said earlier that it was ok
How can an equitable servitude be terminated?
- (1) release
- (2) unity of ownership
- (3) changed conditions – ALL lots in subdivision must be affected
What are the elements of adverse possession?
- (1) hostile
- (2) exclusive
- (3) lasting (for statutory period)
- a. MBE = 20 years
- b. Texas = generally 10 years (for 160 acres of less)
- i. 3 year – color of title
- ii. 5 year – color of title and pays all taxes
- iii. 25 year – true owner was under a disability
- (4) uninterrupted and continuous
- (5) visible (open and notorious)
- (6) actual
What is Constructive Adverse Possession?
Trespasser goes on land under color of title – in this case possession of a part of the land allows adverse possession to constructively extend to the boundaries of the land described in the deed as long as the portion actually possessed had a reasonable relation to the whole.
How does adverse possession affect future interest holders?
- (1) If adversely possess life estate, only get life estate; clock doesn’t start running against FI holder until the life tenant dies.
- (2) Fee Simple Determinable – happening of violative condition starts clock running for purposes of adverse possession.
- (3) Fee Simple Subject to Condition subsequent – clock won’t start running until grantor exercises right of re-entry.
How does tacking affect adverse possession?
Can tack periods of different adverse possessor’s and true owners as long as there is privity.
Cannot tack different periods of disabilities.
What are different disabilities that will toll the period of adverse possession from starting if the disability was in effect WHEN the adverse possessor entered the land?
- (1) minor
- (2) insane
- (3) in jail
- (1) minor
- (2) armed forces during time of war
- (3) incapacitated person
Can you adversely possess government land?
What must a contract for the sale of real property contain? Are there any exceptions?
- 3 Ps:
- (1) property
- (2) parties
- (3) price
MBE Exceptions – Doctrine of Part Performance (any of the following elements: payment, possession, and/or substantial improvements).
Texas Exceptions – Full Performance (payment, possession, AND detrimental reliance (ex: substantial improvements).
Who bears the risk of loss on a contract to sell real property before actual closing?
MBE – Doctrine of Equitable Conversion: Risk of loss on buyer
Texas – Uniform Purchaser and Vendor’s Act: Risk of loss on seller (UNLESS buyer in possession).
What implied warranty is a contract for the sale of real estate?
- Implied warranty of marketability of title (one that a reasonable person would accept).
- (1) marketable title
- (2) title free of defects
- (3) valid legal title on day of closing
When must a contract for the sale of real property be performed?
If time is not of the essence, then performance must be tendered w/in a reasonable time after the date for closing.
If time is of the essence, the performance must be tendered on exact date listed for closing in the contract.
General rule – time is not of the essence in real estate contracts UNLESS the contract says so or the facts make clear that is what the parties expected.
Does a seller need to disclose defects on the property?
Yes, in Texas, seller must deliver a Seller’s Disclosure Statement to buyer listing all known defects. Buyer has 7 days to rescind contract after receive disclosure statement.
What are the requirements to transfer property?
- (1) Deed signed by seller
- (2) Describes land
- (3) States who grantee is
- (4) Grantor has intent to deliver deed
- a. Conditional delivery of deed
- i. If condition written in deed, there is valid delivery of a future interest
- ii. If oral condition at time of delivery, valid delivery and condition not enforceable
What are the covenants of title?
- Present Covenants (do NOT run with the land):
- (1) Seisin – true owner
- (2) Good right to convey – not necessarily the owner, but have the right to convey
- (3) Covenant against encumbrances – no easements, restrictive covenants, etc.
- Future Covenants (run with the land):
- (1) covenant for quiet enjoyment – seller will protect buyer against valid claims to title
- (2) covenant of warranty – seller will protect buyer against valid claims to title
- (3) covenant of further assurances – if seller forgot to do something to pass valid title, seller promises to do whatever is necessary to do so.
How much can a grantee recover from a grantor for breach of a covenant?
Damages limited to purchase price received by warrantor + incidentals
What is estoppel by deed?
If A deed property to B that A does not own, then A later acquires title, then B will get title EXCEPT that if F transfers to a bona fide purchaser after getting title, the original grantee loses title and cannot rely on estoppel by deed.
What are the three different types of recording acts?
(1) Notice Act – protects subsequent BFP who give value and take w/out notice (actual, constructive/record, or inquiry (there is a duty to inspect for residential))
(2) Race-notice Act – protects subsequent BFP who gives value and takes w/out notice and records first.
(3) Race Act – first to record wins.
What is the shelter rule?
Anyone can take shelter under the rights of a BFP even if they can’t claim recording act protection for themselves.
What are three different types of security interests?
(1) Mortgage – given by debtor (mortgagor) to creditor (mortgagee).
(2) Deed of trust – given by debtor to 3rd party trustee who holds it until the loan is paid off.
(3) Installment land contract – debtor signs a contract promising to make payment and seller keeps title until loan is paid off. In Texas, this is called a “contract for deed”
What is the equity of redemption? Can it be waived?
At any time up to the foreclosure sale, debtor can redeem the property. Normally, debtor only needs to pay the amount in arrears, but if the mortgage has an acceleration clause, debtor pays off entire balance.
Equitable right of redemption cannot be waived.
What are the requirements for a valid foreclosure sale in Texas?
- (1) Public sale at auction
- (2) Between 10 am and 4pm on 1st Tuesday of month
- (3) Sale must begin at time stated and not later than 3 hours after that time
- (4) At county courthouse in county where real property is located
- (5) Notice of sale must be given 21 days before sale by:
- a. Posting at county courthouse for EACH county where land is located
- b. Filing with EACH county clerk where land is located; AND
- c. Written notice by certified mail to EACH debtor obligated to pay the debt
- (6) Notice of Default must be given at least 20 days before Notice of Sale
What is the effect of foreclosure when there are multiple lienholders?
If senior mortgage foreclosed, then all junior interests are wiped out.
If junior mortgage is foreclosed, then buyer takes property subject to the senior mortgage.
How are the proceeds of a foreclosure sale distributed?
- (1) Costs
- (2) Lienholders (in order of priority).
- a. Purchase money security interest (PMSI) take priority over all others.
- b. In Texas, a validly perfected mechanics and materialman’s lien has priority over mortgages or other liens (including PMSI????)
- (3) Remainder to mortgagor
What is a deficiency judgment?
If mortgage is foreclosed and there is not enough money to pay off the mortgage, let the mortgage sue debtor for balance due.
MBE – deficiency judgments equal difference between the debt and the sale price.
Texas – deficiency judgment limited to the difference between debt and FMV of the property.
What types of support is an adjoining landowner entitled to?
Lateral support – a landowner has the right to land supported by the adjoining landowners, and strict liability results if land is not supported.
Subadjacent support – support of the surface from the bottom; strict liability results if surface not supported. Holder of mineral rights is strictly liable for failure to support the surface of the land.
What are Riparian Rights (majority rule)?
Majority Rule – refers to those whose property borders on a lake or stream. Owner can use all the water needed for domestic purposes. If use is non-domestic, owner is limited to reasonable use.
Prior Appropriation (minority rule) – first in time takes. Texas uses permit regulatory system; prior appropriation is the main factor.
What is the rule for underground water?
A landowner is entitled to reasonable use of ground water; must use it on the property and not export it elsewhere.
Texas follows the rule of capture – you can take all of the water from a well on your property even if you wind up taking all the water from your neighbor’s well.
What is the rule for surface water?
Natural flow approach (used by Texas) – drainage pipes or ditches to divert flood water is ok if reasonable.
Common enemy – can do anything with flood water, whether reasonable or not.
How do you create a homestead in Texas?
- Rural homestead:
- (1) intent to homestead (actual occupancy or preparing to occupy)
- (2) family = 200 acres
- (3) single adult = 100 acres
- (4) non-contiguous lots ok
- (5) residential or business
- Urban homestead:
- (1) intent to homestead (actual occupancy or preparing to occupy)
- (2) limited to 10 acres
- (3) residential or business
What debts can reach the homestead?
- (1) unpaid property taxes
- (2) loans tied to property – buying, financing, equity, or improving
What limitations are on a homestead owned by a husband and wife?
Neither can sell or encumber the homestead without the signature of the other.
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