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MBE Subjects II_Real Property Outline

MBE Subjects II_Real Property Outline

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Published by Lal Legal
MBE bar exam lecture notes for Real Property
MBE bar exam lecture notes for Real Property

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Published by: Lal Legal on Jun 11, 2014
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 1
REAL PROPERTY BAR NOTES I. RIGHTS IN LAND/CLASSIFICATION OF ESTATES
There are four testable areas in real property: (1) classification of present and future estates; (2) competing claimants; (3) land use; (4) landlord/tenant law.
A. Present Possessory Estates
1.
Types of Freehold Estates
 –
 Best Type
a.
Fee Simple Absolute
 (1)
 A fee simple absolute is an outright gift of property to the grantee and the grantee’s heirs. It
 can only be terminated if grantee dies without heirs, and then the property goes to the government but that is unusual.
Present
FeeLifeTerm
AbsoluteDefeasibleTail
ConcurrentOwnership
Joint TenancyTenancy in CommonTenancy by the Entirety
Future
Grantor Third Party
Possibility of Reverter Right of Entry/Power of TerminationReversionExecutory InterestRemainder 
 
EXAM TIP
 
 2
(2) At common law, the following words were needed to create a fee simple absolute:
―and his heirs‖ or ―and her heirs.‖ If a conveyance simply said A to B, that was a life estate. The common law had to say ―to B and his heirs‖ for the conveyance to be a fee simple absolute.
 (a) Under modern law: Now it is the opposite. A conveyance that
says ―from A to B for life‖
assumes that the property is presumed to be fee simple absolute. b.
Defeasible Estates
 A defeasible estate is a fee estate that can terminate upon the happening of some event or occurrence. Three types: (1)
Fee Simple Determinable
(a) A de
terminable estate is created when the grantor uses durational language i.e. ―so long as‖ or ―while‖ or ―until‖
 
EXAMPLE:
 
―A to B for so long as liquor is not served on the premises.‖ ―A to B while liquor is not served on the premises.‖ ―A to B until liquor is no longer served on the premises.‖
 (b) A determinable estate terminates automatically on the happening of a named future event. It reverts back to the grantor.
 
(2)
Fee Simple Subject to a Condition Subsequent
(a) Can be created when
certain conditional language is used i.e. ―but‖ and ―on condition that‖ and ―provided that.‖ There are other requirements to make it happen.
EXAMPLE:
 
―A to B but if B stops using the premises for residential purposes, the estate shall terminate.‖ ―A to B
 
on condition that B uses the premises for residential purposes.‖ ―A to B provided that B uses the premises for residential purposes.‖
 (b) If language is ambiguous: With unclear language, treat as fee simple subject to a condition subsequent. (3)
Fee Simple Subject to Executory Interest
(a) Can be created by either durational language or conditional language. (b) On the happening of the event that will terminate the fee estate the property passes to a third party. Distinguished from fee simple determinable and fee simple subject to condition subsequent because in those two cases, property passes back to grantor.
EXAMPLE:
 A to B so long as B uses it for residential purposes, then to C.
EXAMPLE:
 A to B on condition that B uses the premises for residential purposes. If B fails to do so, the property will pass to C. c.
Fee Tail
 (1) At early common law, it was an attempt to limit ownership of property to linear descendants. Most  jurisdictions do not have this anymore.
EXAMPLE:
 A to B and the heirs of his body. (2) Under modern law: treat as fee simple absolute. 2.
Life Estate
 a.
 A life estate lasts for the duration of someone’s life.
EXAMPLE:
 
―A to B for life.‖
 b. A life estate
pur autre vie 
 is when someone other than grantee is the measuring life.
EXAMPLE:
 
―A to B for the life of C.‖ As long as C is alive, B owns the property. If B dies before C, it becomes part of B’s estate and will continue so long as C is still alive.
 c. Life estates can be made defeasible., i.e. subject to conditions and durations.
EXAMPLE:
 
―A to B for life, as long as B farms the land.‖
 3.
Non-freehold Estates
 
 3
a.
Term Estate
(1) A term estate is anytime someone is granted ownership of property or possession that is not
determined by someone’s life.
EXAMPLE:
 
―A to B for 50 years.‖ ―A to B for 1 year.‖
 b. This is a present possessory interest but essentially a landlord/tenant relationship.
B. Future Interests
1.
Reversionary Interests Created in a Grantor
a.
Possibility of Reverter
(1) A possibility of reverter is the future interest that is created in the grantor whenever the grantor creates a fee simple determinable. This is durational language.
EXAMPLE:
―A to B so long as B farms the land.‖ This creates the possibility of reverter in the grantor for the period of B’s life.
 (2) Creation: Reversion is automatic. (3) Upon the happening of the event: If B stops framing the land, property automatically passes back to grantor.
EXAMPLE:
 
―To A so long as A uses the property for residential purposes.‖ Presume a fee simple
determinable since durational language is used. As soon as the instrument is exercised, the possibility of reverter is automatically created. If A stops using the property for residential purposes, the property automatically reverts back to the grantor. (4) At strict common law:
a POR was not transferable. It had to pass to grantor’s heirs by deed/will.
 (5) Under the modern trend: Now POR is freely transferable. b.
Right of Reentry (Power of Termination)
 (1) A right of reentry is the future interest that can be created in grantor when grantor attempts to create a fee simple subject to condition subsequent. (2) Creation: In order for ROR to exist, it has to be spelled out in conveyance.
EXAMPLE:
 
―A to B provided that B uses the premises for residential purposes.‖ If B ever stops
u
sing the premises for residential purposes, A or A’s heirs can enter and retake the property.
 If conveyance does not spell out re-entry right, then it is fee simple subject to condition subsequent. If ROR is not spelled out, it does not exist and no future
interest in grantor. A or A’s heirs can sue B
for contractual damages but cannot renter the property. (3) Upon the happening of the event: If B stops using premises for residential purposes, the estate will not automatically revert back to grantor or his heirs. The grantor has to exercise right of reentry. (a) Courts favor fee simple subject to condition subsequent over fee simple determinable so there is not the automatic forfeiture. Courts hate forfeitures so ambiguity in text gets treated as condition subsequent. (4) At strict common law: ROR was transferable only by will or interstate succession. (5) Under modern law: Free transferability in most jurisdictions today. c.
Reversion
(1)
A reversion is a future interest created in the grantor in a situation where grantor fails to provide for property to go somewhere. EXAMPLE:
 
―A to B for life.‖ Grantor has given a life estate to B but the grantor has not provided for
who is going to own the land after B dies. Will return the property to A after B dies.
EXAMPLE:
 
―To B for life, then to B’s oldest child for life.‖ After the death of B’s oldest child, there
will be a reversion back to the grantor.
EXAMPLE:
 
―A to B for 10 years.‖ There wil
l be a reversion back to A after 10 years.

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