REAL PROPERTY

REAL ESTATE K

General Rule Part Performance Exception

K must be Claimant does two of the following three:

1. In writing 1. Takes Possession

2. Signed by the party to be charged 2. Substantial Part Payment of the price
K of sale is signed 3. Essential Terms - parties, price, description of 3. Substantially Improvement of the land
land

Negotiation: Negotiator must have an agency relationship and legal capacity to do negotiate.

Payment:

Exclusive Right to Sell K: Broker is paid no matter who finds the B - even if it is the S herself

Exclusive Agency K: Broker obtains a commission only if his agent is the procuring cause of the sale

Disclosure:

S can’t actively conceal defects.

S doesn’t have to disclose defects unless they’re not obvious, knows/should know, and defect is serious

Warranty: for new homes sold by a builder, there is an implied warranty of fitness.

Marketable Title = Reasonably Free from Defects What makes title Unmarketable? DEVA

MT must be rendered on the day of closing Defect in the chain of title

Mortgage can be paid off with the proceeds of a sale Encumbrance - mortgage/easement K not mention
K satisfy/exclude warranty of marketable title
Violation of a zoning ordinance

Title Acquired by Adverse Possession

Tip: housing/building code violation is ok

B Has Equitable Title

Once K is signed, legal and equitable title split B's interest is in the real prop

B Bears the risk of loss

S Keeps Legal Title

S's interest is the money (personal prop) that S will get from the sale.

Deed must be executed and delivered

Closing Occurs
Execution: Deed identifies parties, describes the land, has words of grant, is signed by S.

Delivery: Intent to pass title presently. Presumed if deed is in the grantee's possession or if it is recorded.

Delivery Occurs Quit Claim Deed gives no warranties.

Warranty Deed gives six covenants -present and future-

1. Right to Convey
2. Seisin
3. No Encumbrances

4. Further Assurances
5. Quiet Enjoyment
6. Warranty

Merger occurs, so now B can ONLY SUE on the deed! He can no longer sue on the K.
 RECORDING ACTS
Common Law
First in time, first in right
No need to record interest to have title
Recording acts have power to change the common law result
Notice Act
Subsequent BFP for value w/o notice can obtain superior title
Race-Notice Act
Subsequent BFP for value w/o notice who records first can obtain superior title
Tip: if you are given a statute to apply, look for the words without notice and
first records to indicate a race-notice act. A notice act will look similar but will
not have any language about recording first.
Notice can be actual, inquiry, or record notice - AIR
Purchasers
Mortgagees and those who pay consideration are purchasers
Donees, heirs, and judgment lien creditors are not purchasers.
Shelter Rule Exception
Allows grantees not protected by the recording act to prevail by sheltering under
the rights of those who conveyed the land to them.
Forged Deed and Defective Documents Do Not Give Notice – No Protection
Estoppel by Deed
If grantor transfers prop to grantee (when he does not have title to prop) by
warranty deed and then later acquires title, the title will automatically go to the
grantee unless the grantor later gave the land to a BFP.
Title Insurance – Not Required
Purchaser's protection against unknown defects of record in the chain of title
ADVERSE POSSESSION & TRANSFER BY LAW OR BY WILL
Adverse Possession Requirements - CHANGE
1. Continuous
2. Hostile
3. Actual open
4. Notorious
5. It must go on for statutory period (20 years) - Tacking is permitted
6. Exclusive
Note: if true owner has a disability (JiM: jail, insane, minor) at the time adverse
possessor enters the statutory time period is tolled until the disability is lifted.
Transfer By Will: if prop is specifically devised but testator does not own it
when he dies, the gift adeems (fails). There are exceptions (e.g., if insurance
proceeds were paid after death, the beneficiary will take those). If beneficiary
dies before testator, the gift will lapse (unless the jdx has an antilapse statute
that saves the gift).
Exoneration: At common law, if testator makes a specific devise of real estate
that is subject to a lien, devisee is able to have the lien exonerated and paid off
by the testator's residuary estate. (Most states have abolished this doctrine.)
MORTGAGES AND SECURITY DEVICES
Transfer By Mortgagor -Debtor
If mortgagor gives away her interest subject to the mortgage, the original
mortgagor is liable on the mortgage.
If transferee assumes the interest, both the original mortgagor and the new
transferee are liable. Tip: remember the wen party assumes liability as
well.
If the is a novation, only the new transferee is liable
Due-On-Sale Clause: if mortgagor transfers interest in land w/o
mortgagee's consent, full loan balance becomes due immediately – valid
Lien Theory - Mortgagee has a lien on the land (majority)
Title Theory – Mortgage has title to the land (some)
Foreclosure: Bank can begin foreclosure proceedings upon default.
Equity Right of Redemption: This allows a debtor to redeem the prop by
paying everything due under the mortgage prior to foreclosure. This right cannot
be waived in the mortgage or deed of trust but may be waived later for
consideration.
Acceleration clauses: this states the entire balance is due fi a payment is missed,
and it is enforceable.
Other ways to Discharge a mortgage: full payment or the mortgagor can give
a deed to the mortgagee in lieu of foreclosure.
Who gets paid first in a Foreclosure Proceeding: The party that forecloses
and
anyone "junior" to it is paid off in order of priority. All junior parties must be
parties to the proceeding. Note: a purchase money mortgage (PMM) (i.e., when
the money loaned is used to purchase the prop) is senior to a non-PMM.
Increasing Amount Due: if a mortgagee voluntarily increases the amount due
under a mortgage, the increase in debt becomes junior to existing mortgages.
(This does not apply if the increase was a mandatory future advance.)
Redemption after foreclosure - statutory right of redemption: this allows the
debtor to get prop back after the foreclosure sale by paying the full purchase
price within a period of time (e.g., six months).
Other types of security devices include an absolute deed as security (the parties
don't call it a "security interest" but one essentially gives a deed as security), a
deed of trust (similar to a mortgage, but a trustee proceeds with foreclosure),
and an installment land K (one pays of land in a "lease" and gets title to the land
once al payments are made).
PRESENT INTERESTS FUTURE INTERESTS

FS Absolute - To A or To A and her heirs Held by Grantor

A has the estate forever Right of Entry

Total restraint on transfer of ownership is not permitted Possibility of Reverter
Limited conditions and rights of first refusal are permitted Reversion

Life Estate - To A for life Held by Grantee

LT cannot commit waste Remainder: usually follows a life estate.

LT must pay taxes, interest on the mortgage, make repairs
Restrictions on Alienation are permitted. Vested, remainderman is ascertained and it is certain to become possessory.

FS Determinable (FSD) - To A for so long as A is in college Contingent, the remainderman is

A has a FSD 1. Unborn

O has a possibility of reverter 2. Unascertained
3. Uncertain to vest due to a condition
Measured by time
Words required - so long as, until, while, and during Executory interest (EI)
This estate ends automatically when the time period ends.
Shifting
FS Subject to Condition Subsequent (FSSCS)
B divests a TP of his interest.
To A but if A cries, O reserves a RE
Springing
A has a FSSCS.
O has a right of entry B divests O of his interest

Conditional: measured by the occurrence of an event

Words required - a right of entry must be reserved for O
You will see conditional words too - but, if, upon condition
This estate ends when O enters.

Tip: if you see FSD/FSSCS language, courts prefer to find a FSSCS

FS Subject To Executory Interest (FSSEI) - To A but if A smokes to B

A has a FSSEI
B has the executory interest
You will see durational/conditional language, but it will go to party B

RULES AFFECTING THESE GIFTS

Class Gifts – Made to Unnamed Persons

Unless otherwise stated, the class closes when any member of the class can call for a distribution.

Cy Pres

When a gift to a charity fails, the court may reform it to match the donor's intention if:

(1)| Prop is given for a charitable purpose;

(2) Purpose is impossible, impracticable, or illegal to carry out;
(3) Settlor must have manifested a general intent to devote the prop to a charitable purpose

Rule Against Perpetuities

No interest is good unless it must vest, if at all, not later than 21 years after a life in being at the creation of the interest.

Uniform Statutory Rule states that an interest is good (a) if it is valid under common law, or (b) if it vests or terminates within 90 years after its creation.

Fair Housing Act - Bars discrimination based on race, ethnicity, religion, national origin, gender, and disability in the sale or rental of a dwelling.

Conflict of Laws - General rule: the law of the situs ("the place where the prop is located") controls.
FIXTURES, ZONING, AND ASSOCIATIONS

Fixtures

Fixtures pass with real prop

Look at the intent to make the item a fixture and the following factors:

(1) Damage removal would cause,

(2) Adaptation of item to realty
(3) Manner in which it is attached
(4) Nature of the item.

Trade fixtures are chattels that are used in business - they are not considered fixtures.

Zoning: states may enact zoning regulations.

Variance: a variance from an ordinance may be granted if the prop owner shows he has a unique hardship.

Preexisting Uses: Many zoning ordinances protect a preexisting use. But, as soon as that prop is sold to new party, the preexisting use no longer is protected.

Prop Associations

Owners of lots agree to contribute to the support of common prop.

In order to create it, there must be a master deed and privity between the original purchasers and the developer.
Restrictions generally carry a presumption of reasonableness and usually are enforced.

RIGHTS IN LAND

REAL COVENANTS

PINT is required to enforce a covenant:

(1) Privity - Horizontal & Vertical (only vertical is needed for the benefit to run),
(2) Intent for the covenant to run
(3) Notice of the covenant
(4) Touch and Concern the land (make it more valuable)

The remedy is money damages.

EQUITABLE SERVITUDES

INT is required to enforce a servitude

The remedy is an injunction
Equitable defenses are available (e.g., laches, unclean hands).

EASEMENTS

Creation – Four Methods

(1) Express: a signed writing is required.

(2) Implied by prior use: common apparent use by a landowner who subdivides land.
(3) Implied by necessity: land is land locked.
(4) Prescription: one uses the land openly, notoriously, continuously, and without permission from the owner for the statutory period of time.

Transfer: The dominant estate passes automatically. The servient estate passes only if the new owner has notice of the easement.

Use: reasonable development is permitted but the easement must be used for its original purpose.

Termination

(1) Merger (if one owns the dominant and servient estate, the easement ends)
(2) Release (a signed writing)
(3) Abandonment (act + intent to abandon; tip: mere nonuse is not enough to abandon an easement)
(4) Estoppel (a statement by the dominant estate holder and reliance by the servient estate holder)
(5) Prescription (the easement is blocked for the statutory period)
(6) End of Necessity (this applies only for an easement by necessity)

LICENSES - A license can be created orally. It is revocable at will unless coupled with an interest or reliance.

PROFITS - Right to go onto land and take a resource away

 CONCURRENT ESTATES LANDLORD AND TENANT

JOINT TENANCY - JT TYPES OF TENANCIES

Creation - TTIP Periodic: No specific end date

For Years: Specific end date - not necessarily years
1. Time At Will: Either party may terminate w/o notice
2. Title Holdover: TT stays past the end date of his lease
3. Interest
4. Possession
5. Express Language - as JTs with a right of survivorship RIGHTS AND DUTIES

Destruction TT must pay rent and not commit waste. LL can require a security deposit.

JT can be partitioned or severed by GSAM Residential Prop

1. Giving it away – Not by will LL must keep prop in habitable condition - implied warranty of habitability
2. Signing a K of sale
3. Actual judicial sale by a creditor Constructive Eviction
4. Granting a mortgage in a title theory state
5. NOT BY WILL 1. Something renders the premises unusable
2. LL fails to act after notice
Right of Survivorship - Yes 3. TT leaves - TT must actually leave to win an eviction action.

TENANCY IN COMMON ASSIGNMENT VS SUBLETTING

Creation Assignment

The right to possess the whole is needed 1. TT assigns his entire interest
2. TT is liable on the lease under privity of K
Right of Survivorship - No 3. Assignee is liable under privity of estate

Sublease
TENANCY BY THE ENTIRETY
1. TT rents his land to a sublessee but has some interest left
Creation 2. Sublessor is liable on the lease under privity of K and estate
3. Sublessee is not liable to LL on the lease - may be sued by sublessor
Similar to a TJ but the parties must be married.
Tip: nonassignment and nonsublease clauses are enforceable, but they are
Destruction strictly construed and courts will try to find a waiver.

1. Death
2. Divorce TERMINATION
3. Mutual Agreement
4. Mutual Creditor of both executing on its interest Eviction

TT not pay rent but lives in apt; LL can evict TT.

RELATIONS AMONG COTENANTS
Surrender
Possession
TT pay rent but abandons apt; LL can treat it as surrender - excuses future rent
Each TT may possess the whole
Duty to Mitigate
Profits
LL must try to mitigate damages by re-renting the land.
TT does not have to share profits he makes through his own efforts from land

Exceptions

1. Ouster
2. Depletion of natural resources that decreases the value of the land
3. Lease to a third party

Right to Contribution - taxes, mortgage payments, and necessary repairs