Real Estate Law

Tenth Edition

Copyright ©Kaplan, Inc.

All rights reserved.
 Part One: Nature of Real Estate
Law

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 Unit 1: Introduction to Law and
Legal Systems

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 LEARNING OBJECTIVES
After successfully completing this unit, you will be able to
• list and explain the sources that a person might use to
determine the answer to a question
• regarding real estate law;
• define diversity jurisdiction and federal question
jurisdiction;
• diagram the relationships and describe the function of each
of the following: state supreme court, intermediate
appellate court, courts of general jurisdiction, and special
courts; and
• describe the benefits of alternative dispute resolution, the
forms it may take, and how it may be imposed.

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 KEY TERMS
• alternative dispute resolution (ADR)
• appeal
• common law
• diversity jurisdiction
• judge-made law
• jurisdiction
• preemption doctrine
• precedent
• statutory law
• trial court

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 I. LAW AND SOURCES OF LAW
A. Constitutions
B. Statutory Law
1. The Role of Statutes
2. Court Interpretation of Statutes
3. Codification of Appellate Judge-Made
Law
C. Administrative Rules and Regulations

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 II. COURT STRUCTURE
A. Trial and Appellate Courts
1. Trial Courts
2. Appellate Courts
B. State and Federal Courts
1. Jurisdiction of State Courts
2. Jurisdiction of Federal Courts
3. Federal Preemption Doctrine

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 B. State and Federal Courts (cont.)
4. State Court System
a. State Trial Courts
b. State Intermediate Appellate
Courts
5. Federal Court System
a. U.S. District Courts
b. U.S. Courts of Appeal
c. U.S. Supreme Court
6. Alternative Dispute Resolution

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 Unit 2: Real and Personal
Property

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 LEARNING OBJECTIVES
After successfully completing this unit, you will be able to
• explain the difference between real property and personal
property;
• indicate legal consequences that exist as a result of the
difference between personal and real property;
• explain the difference between fixtures and trade fixtures;
• define property, secured transaction, attachment, and
perfection; and
• express the conditions that must exist for a security interest
in a fixture to have priority over a recorded interest in the
real estate and a subsequent interest in the real estate.

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 KEY TERMS
• attachment
• fixture
• fixture filing
• perfection
• personal property
• property
• real property
• secured transaction
• trade fixture

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 I. PROPERTY
A. Real Property
B. Personal Property
C. Real and Personal Property: Legal
Problems
D. Fixtures
E. Trade Fixtures
F. Growing Crops

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 II. SECURED TRANSACTIONS
A. Attachment
B. Perfection
C. Fixture Filing

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 Unit 3: Land, Water, and Air
Rights

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 LEARNING OBJECTIVES
After successfully completing this unit, you will be able to
• compare and contrast the legal principles of riparianism (riparian
rights) and prior appropriation;
• indicate how statutory permit systems have influenced riparianism
and prior appropriation;
• apply the following principles using real or hypothetical cases:
reasonable use, natural flow, rule of capture, and correlative rights;
• compare and contrast ownership and nonownership theories
related to oil and gas rights; and
• describe the developments that have taken place in ownership of
air rights as a result of the development of air transportation.

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 KEY TERMS
• ad coelum doctrine
• correlative rights doctrine
• fracking
• land
• littoral land
• mineral rights
• natural flow doctrine
• navigable waters
• nonownership theory
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• nuisance
• ownership theory
• percolating water
• prior appropriation
• real estate
• reasonable use doctrine
• riparian land
• rule of capture
• surface water
• trespass
 I. LAND
A. Real Estate

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 II. WATER
A. Surface Water
1. Riparian Land
2. Littoral Land
B. Surface Water Rights Theories
1. Riparianism
2. Natural Flow
3. Reasonable Use
4. Prior Appropriation
5. Beneficial Use

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 II. WATER
A. Statutory Permit Systems
B. Subterranean Water
1. Common-Law Rule
2. Reasonable Use Rule
C. Navigable Waters

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 III. MINERAL RIGHTS
A. Acquisition of Mineral Rights
1. Mineral Deed
2. Mineral Reservation
3. Mineral Lease
4. Mineral Rights Option

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 IV. OIL AND GAS
A. Ownership Theory
B. Nonownership Theory
1. Rule of Capture
C. State Statutes
D. Fracking

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 V. AIR RIGHTS
A. Prah v. Maretti
Supreme Court of Wisconsin
321 N.W.2d 182 (Wis.1982)

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 VI. COMMON-LAW LIMITATIONS
A. Nuisance
B. Trespass
C. Premises Liability

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 Part Two: Legal Interest in Real
Estate

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 Unit 4: Estates in Land

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 LEARNING OBJECTIVES
After successfully completing this unit, you will be able to
• define fee simple, dower, and homestead exemption;
• explain the difference between the two terms in each
of the following: freehold estate and nonfreehold
estate, fee simple determinable and fee subject to
condition subsequent, fee simple and defeasible fee,
and allodial system and feudalism;
• describe the basic concepts underlying the doctrine of
estates and explain how these concepts derived from
feudalism and tenure; and
• apply legal principles related to obligations of a life
tenant, given a hypothetical or real case.
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 KEY TERMS
• allodium
• defeasible fee
• dower
• estate
• fee simple absolute
• fee simple determinable
• fee simple subject to
condition subsequent
• feudalism
• freehold estate
• life estate

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 ESTATES IN LAND
I. ALLODIUM
II. FEUDALISM
A. Tenure
B. Tenure in the United States
III. ESTATES

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 IV. FREEHOLD ESTATE
A. Fee Simple or Fee Simple Absolute
B. Defeasible Fee
1. Fee Simple Determinable
2. Fee Simple Subject to Condition Subsequent
C. Life Estate
1. Rights and Duties of Life Tenants
2. Legal Life Estates
D. Future Estate
E. Current Status of the Future Interest
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 Unit 5: Co-Ownership

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 LEARNING OBJECTIVES
After successfully completing this unit, you will be able to
• explain the differences, if any, that exist between the rights
and obligations of owners who hold as joint tenants,
tenants in common, and tenants by the entireties regarding
creation, attachment of creditors, termination, and
disposition upon death;
• define right of survivorship, the four unities, fiduciary duty,
REIT, joint venture, community property, and separate
property; and
• compare and contrast the advantages and disadvantages of
the following forms of ownership when used as vehicles for
investment in real estate: tenancy in common, subchapter
S corporation, partnership, limited partnership, and REIT.

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 KEY TERMS
• community property • limited partnership
• co-ownership • partition
• corporation • partnership
• fiduciary duty • S corporation
• joint tenancy • syndicate
• joint venture • tenancy by the entirety
• limited liability • tenancy in common
company (LLC) • tenancy in partnership
• trust

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 CO-OWNERSHIP
I. CO-OWNERSHIP
II. JOINT TENANCY
A. Rights of Joint Tenants
B. Severance of Joint Tenancy
III. TENANCY IN COMMON
A. Rights of Tenants in Common
IV. PARTITION

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 CO-OWNERSHIP
V. TENANCY BY THE ENTIRETY
A. Termination
VI. COMMUNITY PROPERTY
A. Separate Property

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 CO-OWNERSHIP
VII. REAL ESTATE SYNDICATE
A. Corporation
B. Partnership
1. Limited Partnership
C. Joint Venture
D. Limited Liability Company (LLC)
E. Trust
1. Fiduciary Duty
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 Unit 6: Condominiums,
Cooperatives, Time-Shares, and Real
Estate Investments

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 LEARNING OBJECTIVES
After successfully completing this unit, you will be able to
• define condominium, common elements, cooperative, and
time-share;
• explain the difference between financing a condominium
and a cooperative; general common elements and limited
common elements; and condominiums that are securities
and ones that are not; and
• compare and contrast condominium declaration and
bylaws, condominium association and board of directors,
condominium mortgage and cooperative mortgage, and
advantages of condominium ownership and cooperative
ownership.

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 KEY TERMS
• assessments • exemption
• bylaw • individual unit deed
• common elements • real estate investment
• condominium trust (REIT)
• condominium • rules and regulations
association • time-share
• cooperative
• declaration

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 I. CONDOMINIUM
A. Formation of a Condominium
B. Declaration
C. Bylaws
D. Rules and Regulations
E. Individual Unit Deed
F. Common Elements
G. Condominium Association
H. Assessments
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 II. COOPERATIVE
A. Financing a Cooperative

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 CONDOS AND TIMESHARES
III. DIFFERENCES BETWEEN CONDOMINIUMS
AND COOPERATIVES
IV. TIMESHARES

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 V. REAL ESTATE INVESTMENTS
A. Common Forms of Ownership
B. Real Estate Investment Trust (REIT)

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 Unit 7: The Leasehold

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 LEARNING OBJECTIVES
After successfully completing this unit, you will be able to
• define tenancy, periodic tenancy, holdover tenant,
gross lease, and percentage lease;
• explain the difference between a term and a periodic
tenancy, and a tenant at sufferance and a trespasser;
• explain the contractual requirements of a valid lease,
the role of the statute of frauds, and the rules
regarding lease renewal; and
• compare and contrast the property and contract
aspects of the lease, the types of leasehold estates, the
types of leases, and the terms ordinarily contained in
various types of leases.
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 KEY TERMS
• gross lease • rent
• ground lease • right of possession
• holdover tenant • statute of frauds
• lease • tenancy at sufferance
• leasehold estate • tenancy at will
• net lease • term tenancy
• percentage lease • triple net lease
• periodic tenancy

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 I. LEASEHOLD ESTATE
A. Term Tenancy
B. Periodic Tenancy
C. Tenancy at Will
D. Tenancy at Sufferance
E. Holdover Tenant

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 II. LEASE
A. Essential Elements of the Lease
1. A Valid Contract
2. Statute of Frauds
3. Parties
4. Description of the Premises
5. Statement of a Lease Term
a. Rent

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 II. LEASE
B. Legal Use of the Premises
C. Right of Possession
D. Recording the Lease
E. Types of Commercial Leases
1. Other Types of Leases
F. Lease Renewal

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 Unit 8: The Landlord-Tenant
Relationship

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 LEARNING OBJECTIVES
After successfully completing this unit, you will be able to
• define security deposit, covenant of quiet enjoyment,
eviction, constructive eviction, sublease, and assignment;
• explain the difference between the common-law duty to
repair and the implied warranty of habitability, sublease
and assignment, and contract and tort damages; and
• compare and contrast implications of an assignment and of
a sublease, retaliatory eviction and constructive eviction,
wrongful abandonment and subsequent action of
surrender and acceptance, and duties of landlord and
tenant.

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 KEY TERMS
• assignment • reformation
• building code • rent control law
• constructive eviction • rent paid in advance
• covenant of fitness of the • rescission
premises • security deposit
• covenant of quiet enjoyment • sublease
• covenant to deliver possession • third-person guaranty of rent
• eviction • tort
• exculpatory clause • trade fixture
• implied warranty of habitability • Uniform Residential Landlord and
• mitigation of damages Tenant (URLT) Act
• waste
• wrongful abandonment
• wrongful eviction

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 I. LESSOR’S SECURITY
A. Rent Paid in Advance
B. Security Deposit
C. Third-Person Guaranty of Rent

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 II. LESSOR’S OBLIGATIONS
A. Covenant of Quiet Enjoyment
B. Covenant to Deliver Possession
C. Covenant of Fitness of the Premises
D. Implied Warranty of Habitability
E. Duty to Repair
F. Duty to Pay Taxes
G. Building Code Compliance
H. Rent Control
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 III. LESSOR’S REMEDIES
A. Eviction
B. Action for Rent or Damages
1. Action for Rent or Damages

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 IV. LESSEE’S OBLIGATIONS
A. Duty to Repair
B. Avoid Waste
C. Duty to Insure
D. For Trade Fixtures

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V. LESSEE’S ACTIONS AND REMEDIES
A. Wrongful Eviction
B. Constructive Eviction
C. Damages, Reformation, and Rescission
D. Rent Withholding
1. Third Party–Related Transactions
E. Sublease
1. Impact of a Sublease

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V. LESSEE’S ACTIONS AND REMEDIES
F. Assignment
1. Impact of an Assignment
G. Sale of the Leased Premises
H. Tort Liability
I. Measure of Damages
J. Exculpatory Clauses

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 Unit 9: Easements and Other
Nonpossessory Rights

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 LEARNING OBJECTIVES
After successfully completing this unit, you will be able to
• articulate the principal differences between the terms in each of
the following pairs: easement and license, easement appurtenant
and easement in gross, license and profit, easement by reservation
and easement by grant;
• explain the differences between the easement created by necessity
and other types of easements created by implication;
• explain the similarities between the easement created by necessity
and the other types of easements created by implication;
• describe the elements that must exist for an easement to be
created by prescription; and
• describe the ways in which an easement may terminate.

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 KEY TERMS
• abandonment
• dedication
• dominant estate
• easement
• easement appurtenant
• easement by implication
• easement by necessity
• easement by prescription
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• easement in gross
• estoppel
• express grant
• express reservation
• license
• prescription
• profit à prendre
• release
• servient estate
 I. EASEMENT
A. Easement Appurtenant
B. Party Wall
C. Easement in Gross

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 II. CREATION OF EASEMENTS
A. Creation of an Easement by Expression
B. Creation of an Easement by Implication
1. Necessity
2. Plats and Maps
3. Dedication
C. Creation of an Easement by Prescription
1. Prescription Easements for Light and Air
D. Statutory Easements

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 III. TERMINATION OF EASEMENTS
A. Release
B. Merger
C. Estoppel
D. Abandonment
E. Prescription
F. Conveyance
G. Eminent Domain

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 EASEMENTS AND OTHER
NONPOSSESSORY RIGHTS
IV. PROFIT À PRENDRE
V. LICENSE

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 Part Three: Purchase Agreements

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 Unit 10: Basic Contract Law

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 LEARNING OBJECTIVES
After successfully completing this unit, you will be able to
• list and explain the elements of a valid contract;
• interpret a contract by application of the rules of
contract interpretation;
• compare and contrast the following remedies for
breach of contract: specific performance, rescission,
damages, and foreclosure; and
• distinguish contractual discharges that occur by
operation of the parties from those that occur by
operation of law.

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 KEY TERMS
• acceptance • damages
• anticipatory breach • discharge
• assignment • liquidated damages
• breach of contract • offer
• capacity • rescission
• consideration • specific performance
• contract • substantial
performance

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 I. CONTRACT
A. Case Example
• Sam promises to buy his friend Amy a steak if
she agrees to meet him for dinner after work.
Amy agrees. Sam shows up, but Amy does not.
Because this is merely a social arrangement,
Amy has incurred no liability as a result of her
failure to show.
• See Balfour v. Balfour, 2 K.B. 571 (1919).

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 II. ELEMENTS OF CONTRACTS
A. Offer
1. Revocation
2. Rejection
3. Lapse of Reasonable Time
4. Destruction of the Subject Matter
5. Death of the Offeror
6. Mental Incapacity of the Offeror
7. Illegality of the Subject Matter

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 II. ELEMENTS OF CONTRACTS
B. Acceptance
1. Manifest Intent
2. Transmittal of Acceptances and Revocation
3. Reality of Assent
C. Consideration
1. Promissory Estoppel

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 II. ELEMENTS OF CONTRACTS
D. Capacity
1. Insane Persons
2. Minors
3. Drugged Persons
E. Lawful Purpose

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 BASIC CONTRACT LAW
III. CONTRACT INTERPRETATION
IV. ASSIGNMENT

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 V. BREACH OF CONTRACT
A. Anticipatory Breach
B. Substantial Performance
C. Remedies for Breach of Contract

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 VI. DISCHARGE
A. Operation of the Parties
B. Operation of Law

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 Unit 11: Real Estate Purchase
Contract

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 LEARNING OBJECTIVES
After successfully completing this unit, you will
be able to
• identify the requirement of a written
memorandum,
• describe the broker’s authority relevant to the
contract, and
• identify and explain clauses commonly
included within a real estate purchase
contract.
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 KEY TERMS
• 1031 exchange • memorandum
• closing • parol evidence
• contingency clause • real estate purchase
• earnest money contract
• evidence of title • seller assist
• home warranty plan • statute of frauds

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 I. REAL ESTATE PURCHASE
CONTRACT
A. Statute of Frauds
1. Part Performance
B. Parol Evidence

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 II. PROVISIONS OF THE REAL ESTATE
PURCHASE CONTRACT
A. Date
B. Parties
C. Property Description
D. Price
E. Contingency Clause
F. Possession
G. Evidence of Title

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 II. PROVISIONS OF THE REAL ESTATE
PURCHASE CONTRACT
H. Form of Deed
I. Property Inspection
J. Home Warranty Plan
K. Earnest Money
L. Signing
M. Attestation and Acknowledgment

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 II. PROVISIONS OF THE REAL ESTATE
PURCHASE CONTRACT
N. Closing
O. Seller Assist
P. Proration
Q. 1031 Exchanges

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 Unit 12: Agency and Brokerage

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 LEARNING OBJECTIVES
After successfully completing this unit, you will be able to
• compare and contrast the legal consequences of the open listing,
exclusive listing, and exclusive-right-to-sell listing;
• compare and contrast express and implied authority;
• define listing, multiple listing, and procuring cause;
• explain the reasons why courts in a number of states have ruled
that a broker is not entitled to a commission if the buyer defaults;
• define dual agency and list actions that might create a dual agency
by implication;
• explain the benefits and disadvantages for buyer and seller of using
a transaction broker; and
• recognize and apply the following legal concepts in hypothetical or
real cases: procuring cause; ready, willing, and able; and implied
authority.

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 KEY TERMS
• agency
• authority
• broker
• buyer broker
• designated agency
• dual agency
• exclusive agency
• exclusive right to sell
• express authority
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• implied authority
• independent contractor
• licensing laws
• listing
• multiple listing service
(MLS)
• net listing
• open listing
• ready, willing, and able
• real estate sales associate
• transaction broker
 I. AGENCY
A. Agency and Real Estate Transactions
B. Creation of Agency

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 II. BROKER
A. Independent Contractor
B. Listing
C. Net Listings
D. Authority
E. Implied Authority
F. Broker’s Duties to Seller
1. Good Faith and Loyalty
2. Skill and Care
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 II. BROKER
G. Broker’s Duty to Buyer
1. Dual Agency
2. Designated Agency
3. Transaction Brokers
H. The Broker’s Commission
1. Procuring Cause
2. Ready, Willing, and Able
I. When Commission Is Earned
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 II. BROKER
J. Termination of Agency
1. By Acts of the Parties
2. By Operation of Law
K. Real Estate Sales Associate
L. Licensing Laws
M. Unauthorized Practice of Law

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 II. BROKER
N. The Electronic World
O. Websites
P. Electronic Contracting
Q. Prohibited Communications

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 Unit 13: Fraud and
Misrepresentation

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 LEARNING OBJECTIVES
After successfully completing this unit, you will be
able to
• define the two major classifications of fraud and
identify the necessary elements and available
remedies in a fraud action,
• indicate the circumstances under which a waiver
may occur, and
• discuss the possible damage remedies in an
action for fraud.

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 KEY TERMS
• fraud
• negligent
misrepresentation
• puffing
• scienter
• waiver

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 I. FRAUD
A. Intentional
B. Misstatement of a Past or Present Fact
1. Puffing
C. Opinion
D. Statements of Law
E. Silence

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 I. FRAUD
F. Reliance
G. Material
H. Remedies Available to the Injured Party
I. Negligent Misrepresentation
J. Waiver

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 Part Four: Closing the
Transaction

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 Unit 14: Involuntary Liens
Against Title

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 LEARNING OBJECTIVES
After successfully completing this unit, you will be able to
• define mechanic’s lien, judgment lien, vendor’s lien, tax
lien, and attachment;
• identify claimants who may assert mechanic’s lien rights,
types of work that are subject to mechanics’ liens, and
ownership interests subject to mechanics’ liens;
• indicate how mechanics’ liens and judgment liens are
terminated; and
• contrast the major differences in state law for the time a
mechanic’s lien becomes effective, the time a judgment
lien attaches, and the liability of an owner to a
subcontractor who has been paid in full by a prime
contractor.
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 KEY TERMS
• attachment
• judgment lien
• lien
• lis pendens
• mechanic’s lien
• perfection of lien
• tax lien
• vendor’s lien

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 I. LIEN
• Case Example
• Revisi, a contractor, obtained a long-term lease on land outside of
Utica, New York, for construction of a small warehouse. Wilson
Building Supply furnished all materials for the project. When Revisi
did not pay his bills, amounting to $275,000, Wilson obtained a
material supplier’s lien (mechanic’s lien) on the building.
• Shortly thereafter, the state acquired Wilson’s lumberyard as part of
a slum clearance project. This left the company without facilities,
and it demanded possession of Revisi’s building on the basis of the
lien.
• No court would award Wilson Building Supply possession of Revisi’s
warehouse on the basis of the material supplier’s lien, even if the
lien exceeded the value of the property. A lien simply does not give
the holder of the lien title or the right to possession or use.

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 II. TYPES OF LIENS
A. Mechanic’s Lien
1. Claimants
2. Ownership Interest
3. Type of Work
4. Contract
5. Consent
6. Permanency
7. Perfection of Lien
8. Termination

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 II. TYPES OF LIENS
B. Judgment Lien
1. Requirements
2. Legal Effect
3. Termination

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 II. TYPES OF LIENS
C. Vendor’s Lien
1. Requirements
2. Priority

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 II. TYPES OF LIENS
D. Tax Lien
1. Priority
2. Foreclosure of Tax Liens
3. Federal Tax Lien

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 Unit 15: Deeds

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 LEARNING OBJECTIVES
After successfully completing this unit, you will be able to
• define attestation, acknowledgment, escrow, and
power of attorney;
• compare and contrast warranty and bargain and sale
deed, warranty and quitclaim deed, bargain and sale
and quitclaim deed, and general warranty and limited
warranty deed;
• name the covenants in the general warranty deed and
briefly indicate the protection each provides;
• apply legal principles related to delivery of deed; and
• apply legal principles related to restrictive covenants.

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 KEY TERMS
• affirmative covenant • quitclaim deed
• bargain and sale deed • restrictive covenant
• deed • special warranty deed
• deed restrictions • warranty deed
• fiduciary deed
• general warranty deed

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 I. DEED
• The deed is the primary method of
transferring title to real estate. Title is the
totality of rights and obligations possessed by
an owner. The term is also used in the sense
of evidence of ownership. Therefore, the deed
is one of the critical documents in the real
estate transaction

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 II. TYPES OF DEEDS
A. Warranty Deed
1. General Warranty Deed
2. Special Warranty Deed
B. Bargain and Sale Deed
C. Quitclaim Deed
D. Fiduciary Deed

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 III. ESSENTIAL ELEMENTS OF A DEED
A. Words of Conveyance
B. Competent Grantor
1. Minors
2. Mentally Incapacitated
3. Corporations
4. Partnerships

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 III. ESSENTIAL ELEMENTS OF A DEED
C. Identifiable Grantee
D. Adequate Legal Description
E. Proper Execution
1. Power of Attorney
F. Delivery and Acceptance

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 IV. DEED RESTRICTIONS
A. Restrictive Covenant
B. Affirmative Covenant
C. Covenants, Conditions, and Restrictions
D. Termination

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 Unit 16: Land Descriptions

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 LEARNING OBJECTIVES
After successfully completing this unit, you will be
able to
• plot a simple metes-and-bounds description,
given a series of compass directions, monuments,
and distances;
• plot a parcel of land in a section, given its
geographic determinants;
• plot the location of a section, given its tier and
range coordinates; and
• define adjoiners, township, section, and plat.

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 KEY TERMS
• call
• legal description
• metes and bounds
• plat
• rectangular survey
system
• section
• township

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 I. LEGAL DESCRIPTION
• Case Example
• The Rogers owned a large piece of land. The land
included a lake in which there were several
islands. Seventy acres of land jutted into the lake,
forming a peninsula. When the tides were high
and the wind right, this peninsula was separated
from the mainland by a watercourse. Boats could
traverse the watercourse at these times. At other
times, only an inch or two of water was in the
watercourse.
©Kaplan, Inc.
 I. LEGAL DESCRIPTION
• The Rogers deeded all their mainland holdings to Inches
and the islands to Burgess. A dispute arose between
Burgess and Inches over ownership of the 70 acres. Burgess
contended that the jutting piece of land was an island and
belonged to him. Inches argued that it was part of the
mainland and he was the owner. A court eventually
resolved this dispute in favor of Inches. In doing so, it
considered the testimony of fishermen who sometimes
traversed the watercourse, aerial photographs, the original
government survey (which did not show the watercourse),
a motion picture of a boat navigating the watercourse, and
the testimony of surveyors.
• Burgess v. Pine Island Corp., 215 So.2d 755 (Fla. 1968).

©Kaplan, Inc.
 II. REFERENCE TO OTHER
DOCUMENTS
A. Metes and Bounds
B. Rectangular Survey System
C. Plat

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 III. BOUNDARY DISPUTES
A. Sales Personnel and Property Description

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 Unit 17: Involuntary Transfers

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 LEARNING OBJECTIVES
After successfully completing this unit, you will be able to
• list and briefly explain the elements necessary for a person to acquire title
by adverse possession and apply these elements, given a hypothetical or
real case;
• explain the elements that must exist for the state to acquire title by
condemnation and apply these elements, given a hypothetical or real
case;
• define probate, elective share, intestate, testator, testate, bequest,
eminent domain, escheat, and accretion;
• compare and contrast per stirpes and per capita distribution;
• explain the influence of the English Statute of Distribution on law in the
United States;
• list and briefly explain the elements necessary for a will to be valid; and
• explain the statute of descent and distribution.

©Kaplan, Inc.
 KEY TERMS
• administration of the • just compensation
estate • per capita distribution
• adverse possession • per stirpes distribution
• condemnation • probate
• elective share • public use
• eminent domain • statute of descent and
• escheat distribution
• intestate succession • testate succession
• involuntary alienation • will

©Kaplan, Inc.
 I. INVOLUNTARY ALIENATION
A. Adverse Possession
1. Elements of Adverse Possession
2. When Adverse Possession Does Not
Apply
3. Purpose of Adverse Possession
B. Eminent Domain
C. Aftermath of Kelo

©Kaplan, Inc.
 II. TRANSFER OF PROPERTY ON
DEATH
A. Intestate Succession
1. Statute of Descent and Distribution
B. Testate Succession
1. Historical Background
2. Family Protection

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 III. ADMINISTRATION OF ESTATES
A. Proof of Death

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 Unit 18: Recording and
Assurance of Title

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 LEARNING OBJECTIVES
After successfully completing this unit, you will be able to
• define actual, implied, and constructive notice; race-
notice and notice statutes; and chain of title,
acknowledgment, and abstract of title;
• explain the reasons for the existence of the recording
statutes, the effect of mistakes made in the recording
process, and the extent of the title protection provided
by the lawyer and the insurance company; and
• compare and contrast the types of recording statutes,
the usual recording system with the Torrens system,
and the several methods of protecting title.
©Kaplan, Inc.
 KEY TERMS
• abstract of title • legal notice
• acknowledgment • notice statutes
• actual notice • race statutes
• chain of title • race-notice statutes
• constructive notice • recording statutes
• implied notice • title insurance
• inquiry notice • Torrens certificate

©Kaplan, Inc.
 I. RECORDING STATUTES
A. Acknowledgment
B. Legal Notice
C. Types of Recording Statutes

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 II. THE RECORDING PROCESS
A. Chain of Title
B. Mistakes in Recording
C. Mistakes in the Instrument

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 III. ASSURANCE OF TITLE
A. Abstract of Title
B. Attorney’s Opinion
C. Title Insurance
D. Torrens Certificate

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 Unit 19: Closing the Real Estate
Transaction

©Kaplan, Inc.
 LEARNING OBJECTIVES
After successfully completing this unit, you will be able to
• describe the roles of the broker, the attorney, and the
settlement clerk in a real estate closing;
• list and explain the various things a buyer and a seller
must accomplish in anticipation of the closing;
• explain the flow of documents at the closing;
• identify the Loan Estimate Disclosure form and explain
it; and
• fill out a Closing Disclosure Form.

©Kaplan, Inc.
 KEY TERMS
• affidavit of title
• broker
• closing
• Closing Disclosure form
• Loan Estimate form
• Real Estate Settlement
Procedures Act (RESPA)
• settlement clerk
• settlement costs booklet

©Kaplan, Inc.
 I. CLOSING OR SETTLEMENT
A. Broker
B. Attorney
C. Settlement Clerk

©Kaplan, Inc.
 II. PREPARATION FOR CLOSING
A. Buyer’s Preparation
1. Obtaining Financing
2. Examining Title
3. Securing Hazard Insurance
4. Determining Amount Needed at
Closing
5. Inspecting Premises

©Kaplan, Inc.
 II. PREPARATION FOR CLOSING
B. Seller’s Preparation
1. Obtaining Evidence of Title
2. Preparing the Deed
3. Removing Encumbrances
4. Gathering Utility Bills and Receipts
5. Bringing Sundry Certificates

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 III. ACTION AT THE CLOSING
A. Seller’s Actions
B. Purchaser’s Actions

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 IV. REAL ESTATE SETTLEMENT
PROCEDURES ACT (RESPA)
A. Home Loan Toolkit
B. The TILA-RESPA Integrated Disclosure Rule
C. Loan Estimate Form
D. Closing Disclosure Form
E. Abusive Practices

©Kaplan, Inc.
 V. POSTCLOSING PROCEDURES
• Case Example
• At closing, Fred Thomas, seller, is unable to produce
any paid receipts for water bills for the last year. Frank
Hander, purchaser, is wary of closing without an
assurance that any unpaid bills will be borne by the
seller. An escrow account is set up with $400 funded
from the purchase price, an amount everyone agrees
would be more than sufficient to pay any unpaid water
bills for a year. After closing, contact with the water
company reveals an unpaid water bill of $90. The
escrow agent will pay the amount out of the escrow
funds and send the remaining $310 to the seller.

©Kaplan, Inc.
 Unit 20: Escrow Closing

©Kaplan, Inc.
 LEARNING OBJECTIVES
After successfully completing this unit, you will be able to
• define escrow, first delivery, second delivery, escrow
agent, and relation back;
• compare and distinguish the escrow transaction from a
conventional real estate closing;
• identify the parties to an escrow transaction and
describe the flow of documents;
• list and describe the requirements of an escrow; and
• explain the consequences of the doctrine of relation
back.

©Kaplan, Inc.
 KEY TERMS
• delivery
• escrow agent
• escrow agreement
• real estate escrow
• relation back

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 I. REAL ESTATE ESCROW
A. Escrow Closing Distinguished
B. The Escrow Transaction

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 II. ADVANTAGES OF ESCROW
A. Convenience
B. Protection Against a Party’s Change of
Mind

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 III. REQUIREMENTS OF AN ESCROW
A. Valid Deed
B. Enforceable Contract
C. Delivery
D. Escrow Agent
E. Escrow Agreement
F. Condition

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 IV. TITLE PASSAGE
A. Relation Back
1. Death and Disability
2. Dower
3. Intervening Liens

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 Unit 21: Mortgages

©Kaplan, Inc.
 LEARNING OBJECTIVES
After successfully completing this unit, you will be able to
• define mortgagor, mortgagee, mortgage note, equity of redemption, assignment,
estoppel certificate, and novation;
• explain how a deed of trust differs from a mortgage;
• discuss the advantages and disadvantages to a mortgagee and a defaulting
mortgagor of using a deed in lieu of foreclosure instead of judicial foreclosure;
• compare and contrast title, lien, and intermediate theories of mortgage; FHA
insurance and VA loan guarantees; judicial foreclosure and power of sale
foreclosure; and judicial foreclosure and strict foreclosure;
• explain the purpose of a purchase money mortgage, openend mortgage, and
package mortgage;
• explain how a due-on-sale clause works to limit the sale of mortgaged premises;
• explain the rights of the parties to possession of mortgaged premises upon
default; and
• compare and contrast a sale of mortgaged premises “subject to” the mortgage
with a sale in which the buyer “assumes and agrees to pay” the mortgage.

©Kaplan, Inc.
 KEY TERMS
• acceleration clause • deed in lieu of foreclosure
• adjustable-rate mortgage • deed of trust
(ARM) • deficiency judgment
• annual cap • default
• annual percentage rate • due-on-sale clause
(APR) • Equal Credit Opportunity
• assumption Act (ECOA)
• balloon payment • equitable right of
mortgage redemption
• construction mortgage

©Kaplan, Inc.
 KEY TERMS
• fixed-rate mortgage • lifetime cap
• foreclosure • long-term escrow
• graduated-payment • mortgage
mortgage • mortgage insurance
• Housing and Economic • nonjudicial foreclosure
Recovery Act of 2008 • note
• judicial foreclosure • novation
• lien theory

©Kaplan, Inc.
 KEY TERMS
• open-end mortgage
• package mortgage
• possession
• purchase money
mortgage (PMM)
• reverse annuity mortgage
• satisfaction of mortgage
• secured debt
• short sale
©Kaplan, Inc.
• statutory right of
redemption
• strict foreclosure
• subprime mortgage
• title theory
• Truth in Lending Act
(TILA)
• usury
• wraparound mortgage
• yield spread premium
(YSP)
 I. MORTGAGE
A. Secured Debt
B. Note
C. Title and Lien Theory
D. Content of Mortgage
E. Deed of Trust

©Kaplan, Inc.
 II. LOAN APPLICATION AND
COMMITMENT
• Lenders are legally required to honor the
terms of their loan commitments, particularly
when the borrower has relied upon those
terms to detriment.

©Kaplan, Inc.
 III. RIGHTS AND OBLIGATIONS OF
PARTIES
A. Possession
B. Rents and Profits
C. Protecting the Security
D. Taxes and Assessments

©Kaplan, Inc.
 IV. PRIORITIES
A. Mortgages and Leases
B. Mortgages and Mechanics’ Liens

©Kaplan, Inc.
 V. DEFAULT
A. Acceleration Clause
B. Equity of Redemption
C. Statutory Right of Redemption

©Kaplan, Inc.
 VI. FORECLOSURE OF MORTGAGE
A. Judicial Foreclosure
1. Foreclosure Sale
B. Nonjudicial Foreclosure
C. Strict Foreclosure

©Kaplan, Inc.
 VII. ALTERNATIVES TO FORECLOSURE
A. Deed in Lieu of Foreclosure
B. Short Sale

©Kaplan, Inc.
 VIII.TYPES OF MORTGAGES
A. Purchase Money Mortgage (PMM)
B. Construction Mortgage
C. Open-End Mortgage
D. Wraparound Mortgage
E. Package Mortgage

©Kaplan, Inc.
 VIII.TYPES OF MORTGAGES
F. Fixed-Rate Mortgage
G. Adjustable-Rate Mortgage
H. Balloon Payment Mortgage
I. Graduated-Payment Mortgage
J. Reverse Annuity Mortgage
K. Subprime Mortgage

©Kaplan, Inc.
 IX. MORTGAGE INSURANCE
A. Conventional Mortgage Insurance
B. Federal Housing Administration Mortgage
(FHA Government-Insured Loan)
C. Veterans Affairs (VA) Guarantee on Loans

©Kaplan, Inc.
 X. LAWS AFFECTING MORTGAGE
LOANS
A. Usury
B. Truth in Lending Act (TILA)
1. Credit Advertising
C. Yield Spread Premium
D. Equal Credit Opportunity Act
E. Real Estate Settlement Procedures Act
(RESPA)

©Kaplan, Inc.
 X. LAWS AFFECTING MORTGAGE
LOANS
F. USA PATRIOT Act
G. Fair and Accurate Credit Transaction Act
H. Housing and Economic Recovery Act of
2008
I. Predatory Lending Practices

©Kaplan, Inc.
 XI. SALE OF MORTGAGED REAL
ESTATE
A. Due-on-Sale Clause
B. Assumption
C. Novation
D. “Subject To”

©Kaplan, Inc.
 Unit 22: Land Installment
Contracts

©Kaplan, Inc.
 LEARNING OBJECTIVES
After successfully completing this unit, you will be able to
• compare and contrast the conventional real estate
purchase contract with the land installment contract,
• identify and explain typical terms included within a
land installment contract,
• analyze a given factual situation to determine if it
would be advisable for a party to enter into a land
installment contract, and
• explain how courts and legislatures have mitigated the
impact of forfeiture as a remedy for a buyer’s breach of
a land installment contract.

©Kaplan, Inc.
 KEY TERMS
• after-acquired title
• forfeiture
• indemnification
• land installment
contract
• waste

©Kaplan, Inc.
 I. LAND INSTALLMENT CONTRACT
A. Title Problems
B. After-Acquired Title
C. Contract Terms
1. Price
2. Waste, Removal, and Inspection
3. Assignment
4. Mortgage
5. Conveyance
©Kaplan, Inc.
 II. ADVANTAGES AND
DISADVANTAGES
A. Advantages to the Buyer
B. Advantages to the Seller
1. Attract Buyers
2. Tax Break
3. Incidents of Legal Ownership
C. Disadvantages to the Buyer
1. Problems Created by the Death of the Seller
2. Unwillingness or Inability to Transfer Good Title
3. Failure to Record
D. Disadvantages to the Seller

©Kaplan, Inc.
 III. REMEDIES
A. Sellers’ Remedies
1. Forfeiture
2. Foreclosure
B. Buyers’ Remedies
1. Specific Performance
2. Rescission
3. Damages
4. Foreclosure
©Kaplan, Inc.
 Unit 23: Fair Housing Law

©Kaplan, Inc.
 LEARNING OBJECTIVES
After successfully completing this unit, you will be able to
• define separate but equal, equal protection, steering,
redlining, and blockbusting;
• explain the difference between separate but equal and
equal protection, administrative and judicial remedies,
and permitted and prohibited forms of discrimination;
and
• compare and contrast the range of protected
classifications under the modern civil rights acts and
the use of administrative and judicial remedies.

©Kaplan, Inc.
 KEY TERMS
• blockbusting
• equal protection
• fair housing
• familial status
• redlining
• steering

©Kaplan, Inc.
 I. FAIR HOUSING
A. Equal Protection

©Kaplan, Inc.
 II. FEDERAL FAIR HOUSING
LEGISLATION
• A. Fair Housing Act (1968) as Amended
• 1. Coverage
• 2. Prohibited Actions
• 3. Aggrieved Parties
• 4. Equal Opportunity Posters

©Kaplan, Inc.
 III. OTHER ILLEGAL ACTS
A. Blockbusting
B. Redlining
C. Steering

©Kaplan, Inc.
 IV. IMPLEMENTATION OF THE FAIR
HOUSING ACT
A. Fair Housing Act and Persons with Disabilities
1. Reasonable Modification
2. Reasonable Accommodation
3. Group-Home Accommodations
B. Fair Housing Act and Familial Status
C. Statutory Remedies
1. Administrative Enforcement
2. Attorney General Litigation
3. Private Litigation

©Kaplan, Inc.
 Unit 24: Land Use: The
Constitution and the Plan

©Kaplan, Inc.
 LEARNING OBJECTIVES
After successfully completing this unit, you will be able to
• define restrictive covenant, diminution in value test,
and environmental impact statement;
• explain the difference between private and public land
use restriction; and
• compare and contrast limitations of restrictive
covenants and regulations under the police power,
eminent domain and regulatory taking, economic-
based and natural-resource-based analysis in
regulatory takings law, comprehensive planning and
exclusionary practices, and social value choices and
ecological imperatives.

©Kaplan, Inc.
 KEY TERMS
• comprehensive plan
• ecological constraints
• environmental impact
statement (EIS)
• growth management
• police power
• privity of estate
• restrictive covenant

©Kaplan, Inc.
 I. PRIVATE RESTRICTIONS ON LAND
USE
A. Restrictive Covenants

©Kaplan, Inc.
 II. PUBLIC RESTRICTIONS ON LAND
USE
A. The Police Power
B. Constitutional Limitations
C. Planning
1. The Comprehensive Plan
2. Growth Management Systems
3. Community-Based Strategic Planning

©Kaplan, Inc.
 Unit 25: Regulation of Land
Development

©Kaplan, Inc.
 LEARNING OBJECTIVES
After successfully completing this unit, you will be able to
• define zoning, nonconforming use, planned unit
development, performance standard, subdivision
exaction, impact fee, and land ethic;
• explore the pros and cons of large zoning, zoning for
agriculture use, protecting wetlands, prohibiting
growth on shores and in the floodplain, and regulating
based on aesthetics; and
• compare and contrast land as a commodity and land as
a natural resource, zoning changes and variances,
ecological imperatives and value choices, and
subdivision exactions and impact fees.

©Kaplan, Inc.
 KEY TERMS
• aesthetics • performance standards zoning
• cluster development • planned unit development
• coastal zone (PUD)
• conservation easements • special-use permit
• critical area • subdivision regulations
• enabling legislation • transferable development
• floodplains rights (TDRs)
• variance
• historic preservation
• wetlands
• impact fee
• incentive zoning • zone change
• zoning
• large-lot zoning
• nonconforming use • zoning exceptions
• overlay zoning

©Kaplan, Inc.
 I. ZONING
A. Nonconforming Use
B. Zone Change
C. Variance
D. Zoning Exceptions
E. Special-Use Permit

©Kaplan, Inc.
 II. VARIATIONS AND SPECIAL USES
OF TRADITIONAL ZONING
A. Cluster Development
B. Large-Lot Zoning
1. Advantages
2. Disadvantages
3. Judicial Responses
C. Planned Unit Development (PUD)

©Kaplan, Inc.
 II. VARIATIONS AND SPECIAL USES
OF TRADITIONAL ZONING
D. Performance Standards Zoning
E. Agricultural Lands Zoning
F. Subdivision Regulations
1. Subdivision Exactions and Impact
Fees
G. Incentive Zoning

©Kaplan, Inc.
 III. LAND ETHIC: ECOLOGICAL
IMPERATIVES AND VALUE CHOICES
A. Wetlands
B. Floodplains
C. Coastal Zone
D. Critical Areas
E. Historic Preservation
F. Aesthetics
G. Overlay Zoning

©Kaplan, Inc.
 Unit 26: Environmental Law

©Kaplan, Inc.
 LEARNING OBJECTIVES
After successfully completing this unit, you will be able to
• define Superfund, National Priority List, National
Contingency Plan, potentially responsible parties, point
sources of pollution, criteria pollutants, sick building
syndrome, and green development;
• explain the implications of joint and several liability, strict
liability, being added to the NPL, and locating in a clean air
versus a dirty air area; and
• compare and contrast removal actions and remedial
actions, acts triggering responsibility under federal versus
state CERCLA statutes, and Clean Air Act statutory structure
versus Clean Water Act statutory structure.

©Kaplan, Inc.
 KEY TERMS
• brownfield
• Clean Air Act
• Clean Water Act
• Comprehensive Environmental
Response, Compensation, and
Liability Act (CERCLA)
• criteria pollutant
• effluent standards
• environmental tobacco smoke
(ETS)
• green development
• indoor pollution
• innocent landowner defense
• Leadership in Energy and
Environmental Design (LEED)
©Kaplan, Inc.
• national ambient air quality
standards (NAAQS)
• National Contingency Plan (NCP)
• natural resource damages
• potentially responsible party
(PRP)
• prevention of significant
deterioration (PSD) region
• sick building syndrome
• state implementation plan (SIP)
• smart growth
• Superfund
 I. CERCLA
A. Superfund
B. Implementing the Cleanup
C. Liability
D. Defenses
E. Damages
F. Brownfield Initiative
G. State CERCLA-Type Statutes

©Kaplan, Inc.
 II. CLEAN WATER ACT
A. Statutory Structure: Industrial Dischargers

©Kaplan, Inc.
 III. CLEAN AIR ACT
• mandates that the EPA regulate pollutants
that are harmful to public health and welfare

©Kaplan, Inc.
 IV. OTHER LEGISLATION
• There are many other statutes—federal, state,
and local—that directly or indirectly affect real
estate transactions.

©Kaplan, Inc.
 V. INDOOR POLLUTION
A. Environmental Tobacco Smoke (ETS)
B. Drinking Water
C. Radon
D. Asbestos
E. Lead-Based Paint
F. Sick Building Syndrome

©Kaplan, Inc.
 IV. GREEN DEVELOPMENT
A. Smart Growth
B. Costs and Benefits of Green Development

©Kaplan, Inc.
 V. GLOBAL WARMING
• Federal legislation has been written to stave
off the worst effects of global warming,
including the Climate Security Act; to this
date, however, the legislation has not been
passed into law.

©Kaplan, Inc.