MBE Property Flashcards

Question

MORTGAGES > **Equitable Redemption**

Answer 1

**Equitable Redemption** — Period of time from *Notice of Foreclosure* until *sale* (of the property) that residents can pay off debt and keep property. * Can NEVER be waived! Public policy

Answer 2

**Statutory Redemption** — Period of time from *Sale* until *whatever the statute provides* that residents can pay off debt and still keep property. * Not automatic, by statute only

Answer 3

**WHO HAS TITLE?** *Stay on property so long, and you get TITLE* * Until the person acquires title, the person is a trespasser. * The adverse possessor acquires the same estate held by the person who has legal possession at the time that the adverse possession began. (If they had a life estate, adverse possesor gets a life estate etc.) * New title relates back to the date of the person’s entry onto the property. There is no transfer of title from the former owner. * Property owned by the government cannot be adversely possessed. **VVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVV** **ELEMENTS** (ECHO) **1) CONTINUOUS** (for the statutory period) The adverse possessor *continuously* uses the land for a statutorily prescribed amount of time. Time begins running when the adverse possesor *enters* the land and they become the legal owner of the property by operation of law when the statute of limitations runs out of time. * *The “continuous” requirement* is not literal. Seasonal or infrequent use may suffice if the use is consistent with the type of property being possessed (e.g., a vacation home, farmland). * *Tacking (privity requirement)* - adverse possessor can tack on her predecessor’s time on the property to satisfy the statute of limitations. Must be in privity with the prior adverse possessor. Privity is an exchange of some sort between the adverse possessors. * *Disabilities* -- The statute of limitations will not run against a true owner who has a disability at the time the adverse possession begins (e.g., infancy, insanity, or imprisonment). * *Interruptions* -- A true owner can interrupt the adverse possession period by ejecting the adverse possessor. This will stop the adverse possession clock. **2) OPEN & NOTORIOUS** An adverse possessor’s use must be open and notorious. * Use must be such that it would put a reasonable true owner on notice of the adverse use. * The use cannot be hidden; the trespasser must use the property as if she was the true owner. **3) HOSTILE** The adverse possessor must possess the land *without the owner’s permission.* Must *objectively demonstrate an intent to claim the land* as his own, regardless of his subjective intent. * Minority rule (subjective): Inquires into the adverse possessor’s state of mind * Good faith jurisdiction: Hostile if by *mistake.* they think the land is unowned or that they are the rightful owner. * Bad Faith jurisdiction: "Aggresive trespass." They *know* that land is not theirs. **4) EXCLUSIVE** An adverse possessor cannot share possesion with the true owner. * If two people possess the property together, they acquire title as tenants in common. VVVVVVVVVVVVVVVVVVVVVVVVVVVVVV *Scope of Possession* * Adverse possession generally traces the legal boundaries of the property * Includes subsurface rights, unless those rights already belong to a third party * Easements can also be acquired by adverse possession (or prescription). *Exception—constructive adverse possession* * Adverse possessor enters under color of title from an invalid instrument (e.g., fraudulent deed) and occupies a portion of the property described in the instrument. The adverse possessor is in actual possession of the occupied land and constructive possession of the remaining land described in the deed.

Answer 4

**BASELINE** -- *In the absence of a recording statute, or the common-law rule controls* The baseline for recording problems is the common-law rule. * It follows the “first in time, first in right” principle * i.e., under the common-law rule, the *first grantee to receive a deed wins* * *Other example:* Race Notice Jurisd. -- 2 subsequent taker, none record, go by this

Answer 5

**1) WHO IS PROTECTED?** * *Subsequent Purchasors* —not donees. **2) Who is NOT Protected?** * Grantees who acquire title by gift, intestacy ,or devise are NOT protected by recording acts. * policy behind recording acts is that we want to protect those who make economic investments by acquiring property, not people who just inherit **3) NOTICE** *Actual*— when the subsequent grantee has real, personal knowledge of a prior interest; *Constructive* (i.e., record notice) — The fact that a deed has been recorded does not always mean that a purchaser will be charged with notice of it, needs to have been *recorded in a fashion that a searcher could reasonably find it.* (chain of title) * *EXCEPTION: Wild deeds* - A recorded deed that falls outside the chain of title is a "wild deed" that fails to give record notice to subsequent purchasers. * Example, O owns BlackAcre: * O to A - not recorded * A to B - B records (wild deed) * O to C - Even though B recorded, its a *wild deed* and thus C does not have notice for Blackacre. C can still be a BFP. *Inquiry* — when a reasonable investigation would have disclosed the existence of prior claims. (2 scenarios) * i) Dude on the land: When there is someone else living on or using the land. had they visited the land, they would have discovered. * ii) Mentioned interest: When there is an interest mentioned in the deed to some other transaction; had the subsequent grantee inquired, he would have discovered the interest. XXXXXXXXXXXXXXXXXXXXXXXX 1) Race Jurisdiction 2) Notice Jurisdiction 3) Race Notice Jurisdiction XXXXXXXXXXXXXXXXXXXXXXXX **Shelter Rule** a person who receives a property interest from a BFP is entitled to the same protection under the recording act as the BFP * Even though purchaser might have notice of a prior interest/conveyance, they stand in BFP’s shoes and have same protection. **Estoppel by Deed** * Arises when a grantor conveys land the grantor does not own * If a grantor subsequently acquires title to the land, the grantor is estopped from trying to repossess on grounds that he didn’t have title when he made the original conveyance.

Answer 6

**RULE: First purchaser for value who records, wins!** * even if the purchaser had notice of an earlier competing property interest. (Not a BFP) *Key language* * “First recorded” or “First to record”

Answer 7

**RULE: Last BFP with NO NOTICE, wins!** VVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVV **BFP = 2 Elements** "innocent purchasor" *1) Paid value for land* * Release of existing debt * Substantial amount not grossly inadequate in relation to property interest's value No value * Security for existing debt (eg, judgment lien) * Nominal payment (eg, $1) * Recital of consideration in deed * Gift, devise, or inheritance *2) NO NOTICE of an earlier competing property interest* * Actual Notice * Constructive (Record) Notice — Exception: Wild Deeds, Deed recorded late * Inquiry Notice VVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVV *Key language* * “In good faith” or “Without notice” *"Notice" Recording Act* protects subsequent purchasers for value who lack notice of prior interests in the same property (i.e., bona fide purchasers) ## Footnote Handout definition: A subsequent purchaser wins if she *acquires without notice* of a prior, unrecorded conveyance.

Answer 8

**RULE: FIRST BFP who records, wins!** VVVVVVVVVVVVVVVVVVVVVVVVVVVVVVV **BFP = 2 Elements** "innocent purchasor" *1) Paid value for land* * Release of existing debt * Substantial amount not grossly inadequate in relation to property interest's value No value * Security for existing debt (eg, judgment lien) * Nominal payment (eg, $1) * Recital of consideration in deed * Gift, devise, or inheritance *2) No notice of earlier competing property interest* * Actual Notice * Constructive (Record) Notice — Exception: Wild Deeds, Deed recorded late * Inquiry Notice VVVVVVVVVVVVVVVVVVVVVVVVVVVVVVV *Key language* * “In good faith” or “Without notice” and * “First duly recorded” or “First recorded”

Answer 9

**Shelter Rule** a person who receives a property interest from a BFP is entitled to the same protection under the recording act as the BFP * Even though purchaser might have notice of a prior interest/conveyance, they stand in BFP’s shoes and have same protectin. **Estoppel by Deed** * Arises when a grantor conveys land the grantor does not own * If a grantor subsequently acquires title to the land, the grantor is estopped from trying to repossess on grounds that he didn’t have title when he made the original conveyance.

Answer 10

Real property can be conveyed by will and by statutes that govern intestate succession for property that does not pass by will. **Conveyance by Will and Operation of Law** A transfer of ownership of real property at death through a will can take effect through a * *specific devise* (e.g., “I leave my residence to my son”) or * a *residuary clause* (e.g., “I leave all other property to my daughter”) when the property is not specifically mentioned in the will. When a decedent does not leave a valid will or the will does not govern the real property, the property is transferred pursuant to the applicable state law of *intestate succession*. * When a decedent has no heir, as determined under state law, the property typically escheats to the state. **Doctrines affecting conveyance by will** *Lapse* * Causes devise to fail if beneficiary predeceases testator and no alternate beneficiary is named *Anti-Lapse* prevent a gift from lapsing if the gift was made to immediate relatives of the testator who leave issue who survive the testator. Gift would go to that surviving issue. * In most jurisdictions, the anti-lapse statute is limited to grandparents or a descendant of a grandparent of the testator (e.g., aunts, uncles, parents, siblings, children). A lapsed gift becomes part of the residuary estate. *Ademption* Causes devise to fail by either: * extinction – specifically devised property not owned by testator (or destroyed or fundamentally changed) at death * satisfaction – beneficiary received devised property (or other asset intended to satisfy devise) during testator's life *Exoneration* * Allows beneficiary of specifically devised real property to use estate's remaining assets to pay off any encumbrances on that property *Abatement* * Reduces devises that cannot be satisfied by assets remaining after testator's debts are paidResiduary devises abated first, followed by general & then specific devises

Answer 11

**Conveyance by Trust** A trust is a fiduciary relationship wherein one or more trustees are called upon to manage, protect, and invest certain property and any income generated therefrom for the benefit of one or more named beneficiaries. **a. Private trusts** -- The parties to a trust include the settlor (the person who creates the trust), the trustee (the person who holds legal title to the property), and the beneficiary (the party who holds equitable title). *A valid trust must have:* * i) Intent, the settlor must intend to make a gift in trust; * ii) Valid purpose, any purpose not illegal or against public policy; * iii) Res, the property that is subject to the trust; and * iv) Beneficiaries, those identifiable persons for whose benefit the trust is created and who hold equitable title to the property. *An inter vivos trust* is created when the settlor conveys his property (res) to the trustee while the settlor is alive. Alternatively, the settlor may simply declare that he is holding certain property in trust for certain beneficiaries, without there being an actual conveyance of the property. Remember that any conveyance of real property must include a writing that satisfies the Statute of Frauds. Another form of conveyance occurs when the settlor creates a trust by language in his will and transfers the property by devise in his will. This type of trust is called a *“testamentary trust”* and comes into being only on the death of the settlor. Finally, the settlor may create an inter vivos trust but not fund the trust until his death, by devise in his will. In this case, property “pours over” into the trust. **b. Charitable trusts** A charitable trust is one with a stated charitable purpose made to benefit the community at large or a particular segment of the community. A differentiating factor between a private trust and a charitable trust is the beneficiaries. As noted above, a private trust must have identifiable beneficiaries, whereas in a charitable trust, the beneficiaries must be reasonably numerous and unidentifiable. Another important distinction is that the Rule Against Perpetuities does not apply to trusts that are entirely charitable. Moreover, if a charitable trust can no longer serve the purpose for which it was created, the court can apply the doctrine of cy pres and redirect the trust to a similar charity or purpose. The attorney general of the state also has the power to enforce a charitable trust but not a private trust.

Answer 12

Right held by one person to make use of another person’s land (Not about Title) * Servient Estate: Land *burdened* by the easement * Dominant Estate: Land *benefited* by the easement **Affirmative Easement:** * The holder has the right to do something on someone else’s property. **Negative Easement:** Must be Express. Can't be Implied (rarely created by circumstances) * The holder has the right to prevent someone from doing something on her land. * (almost gone with restrictive covenants) **Easement Appurtenant:** The easement is *tied* to the use of the land. (goes with transfers) * An easement appurtenant is fully transferable; it is *tied to the land,* regardless of whether or not mentioned in conveyance **Easement in Gross:** The easement benefits the holder personally * there is no dominant estate, only a servient estate. * courts allow the easement to be transferred if there is intent for it to be transferable. **VVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVV** *Duty to Maintain - Contribution* * Owners of an easement have the right and the duty to maintain the easement unless otherwise agreed. * When an easement is shared, the owner who maintains or repairs the easement may seek *contribution* from (1) the other easement owners and (2) the servient-estate owner if he/she uses the easement.

Answer 13

An easement is a nonpossessory interest in real property that gives the easement holder the *right to use another's land* for a specific, limited purpose—eg, the neighbor's right to construct a driveway across the woman's property. * *As real property interests*, easements are **SUBJECT TO RECORDING ACTS** * Example: Under a notice recording act, a real property interest (eg, easement) cannot be enforced against a subsequent purchaser of a conflicting real property interest (eg, the land subject to the easement) who lacks notice of the prior interest. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX **1) EXPRESS EASSEMENTS** -- when it is affirmatively created by the parties in a writing that *satisfies the requirements for a deed.* (+ SOF) **By Grant** * An easement by grant is created when the owner of the servient estate grants another person an easement in the servient estate. **By Reservation** * An *easement by reservation* is created when a grantor conveys land but reserves an easement right in the land for the grantor’s use and benefit. * Eddie conveys Yellowacre to Sue. In the deed, Eddie “reserves the right to cross Yellowacre to reach the lake.” **2) IMPLIED EASEMENTS** -- *(Easements by Operation of Law; Non-Express Easements)* * An easement by implication is created by operation of law through factual circumstances rather than by written instrument. * Not subject to the Statute of Frauds * Not subject to recording statutes (unless the subsequent purchaser had notice of the easement) **Easement by Necessity** -- occurs when, after property is severed, a portion of the property becomes landlocked. * “Necessity” in a strict sense * Ends when it is no longer necessary *Conditions that Must be Met* * *Common ownership:* Dominant and servient estates were owned in common by one person; and * *Necessity at severance:* When the estates were severed into two separate estates, one of the properties became virtually useless without an easement. **Easement by Implication** -- Created by an *existing use* on a property. Common with division of property. Prior use before property divide. *Conditions that Must be Met* * *Common Ownership:* A large estate owned by one owner * *Use Before Severance:* The owner of the large tract uses the land as if there’s an easement on it. (quasi-easement) * *Use at Severance:* Use must be *continuous and apparent* (not concealed) at the time of severance. * *Reasonably Necessary*: Use must be reasonably necessary to the dominant estate’s use and enjoyment. (lesser standard than “strictly” necessary) **Easement by Prescription** -- Created by using land for "Statutory period of time." It’s like acquiring an easement by adverse possession. (without exclusivity requirement) * Dont Confuse. Adverse possesion = Acquire Title (possesion). * Easement by Prescription = legal right to keep on using it (use). **Easement by Estoppel** *Creation* * *Permission:* Starts with a permissive use (license) * *Reliance:* Continues when the second neighbor *relies* (reasonably and in good faith) on the first neighbor’s promise. (e.g., made improvements to the easement). * *Permission withdrawn:* Finally, the first neighbor withdraws permission. *Result:* If reliance was *detrimental* to the second neighbor, the first neighbor is estopped from withdrawing permission, in effect creating an easement. ## Footnote Because an easement is an interest in land, the *Statute of Frauds* applies. Must be memorialized in a *writing that is signed by the grantor* (the holder of the servient tenement) * *UNLESS* its duration is brief enough (less than a year) to be outside the coverage of a particular state’s Statute of Frauds.

Answer 14

**Scope of Easement** *Express Easements* * Determined by the *terms* of the easement when it was created * *Ambiguous terms* -- If the terms are ambiguous, the court considers the *intent* of the original parties as to the purpose of the easement. *Implied Easements* * Determined by the nature of the prior use or necessity *Trespass* * If the *use exceeds the scope*, the dominant tenant is tresspassing on the servient estate. **Changes in use** * Changes in use of an easement are tested under a *reasonableness* standard. * Presume the parties contemplated both its current use and its future use, which means the future use of an easement must be reasonably foreseeable. * Thus, an easement holder *may increase the manner, frequency, or intensity of an easement's use* so long as that increase does not unreasonably damage or interfere with the use or enjoyment of the servient estate. * *DOES NOT TERMINATE EASEMENT*; Remedy is Damages or Injunction from unreasonable use

Answer 15

Once an easement is created it lasts *FOREVER* unless terminated **1) Release** * The holder of the easement *expressly* releases it. * Must be in *writing* **2) Merger** * Owner of the easement acquires fee title to the servient estate. * The easement merges into the title. * An easement cannot be terminated by merger if there are any future interests (or other outstanding interests) in the dominant or servient estate. Where there is a future interest, use of the easement is suspended until the future-interest holder becomes entitled to possession **3) Abandonment** * Non-use, AND * Act demonstrating an intent to abandon. **4) Prescription** * The holder *fails to protect against the servient estate owner’s interference* for the statutory period. (adverse possesion-like) * interference that is continuous, actual, open, and hostile for a specific period **5) Sale to a Purchasor** **6) Estoppel** * The servient owner *detrimentally relies* on statements or conduct of the easement holder that the easement is abandoned. **7) End of Necessity** * An easement by necessity lasts as long as the easement is needed * If it is no longer necessary, the easement ends.

Answer 16

*NOT AN EASEMENT* **License** — Permission to enter and use another's land for specific purpose, REVOCABLE * most limiited weakest right in land use *Creation* * Orally, in writing, or by another act demonstrating licensor's intent to create license *Termination* * At any time upon revocation by licensor or * Automatically upon (1) death of licensor or licensee or (2) conveyance of licensed property, * *UNLESS* * the licensee detrimentally relied on it or the license is coupled with an interest. (*Easement by Estoppel*)

Answer 17

*NOT AN EASEMENT* **Profit** — The right to enter land to TAKE something (extract) off the land of another

Answer 18

**A real COVENANT** is an express promise to do (affirmative) or not do (negative/restrictive) something on land * The remedy for a breach of a real covenant is **DAMGES** ($) * *Promising parties are bound* to the covenant under contract law, * the covenant will only *BIND their SUCCESSORS in interest IF it runs with the land*. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX **Requirements to Run With the Land** -- **TWIN-P** * (To bind a successor) **1) Touch and concern** – covenant relates to the use, enjoyment, or occupation of the benefited and burdened lands (eg, maintaining drainage system on one parcel to benefit the other) **2) Writing** – covenant is in a writing that satisfies the statute of frauds (eg, deed) **3) Intent to run** – promising parties intended for the covenant to run to their successors in interest (eg, deed says "heirs and assigns") **4) Notice** – person to be BOUND had notice of the covenant * *Person to be BOUND* had *actual or constructive* notice of the covenant * Inquiry notice only suffices for equitable servitude * No notice needed to run the benefit **5) Privity** (Heavily Tested) *HORIZONTAL PRIVITY* -- Original promising parties simultaneously transferred the land and created the covenant in the same instrument (e.g., the deed). Also, there must be some shared property interest apart from the covenant itself (LL-Tenant, Buyer-Seller) *VERTICAL PRIVITY* -- successor of the burdened estate has a promising party's entire estate or ownership interest (strict) OR successor of the benefited estate has a possessory interest (relaxed) * *Strict Vertical Privity:* successor must take the original party’s ENTIRE interest. (FSA > FSA) * *Relaxed Vertical Privity:* the successor need only take an interest that is CARVED OUT of the original party’s estate. (FSA > FSD) *To run the Burden (bind)* * Horizontal privity AND Strict Vertical privity *To run the Benefit (ability to enforce)* * Relaxed vertical privity ## Footnote The remedy for a breach of a real covenant is DAMGES ($)* * if you dont want $ damages but just want an injunction, look for *equitable servitude.*

Answer 19

**EQUITABLE SERVITUDE** * "I don't want damages, but I want an **INJUNCTION"** * Another way to bind a successor to an original party’s promise. * Operates like a real covenant but with easier requirements; *No privity requirement.* *To bind a successor:* **TWIN** * **Touch and concern** - Promise inherently relates to the *land or the manner it is used,* or promise *affects both parties* in their capacity as owners of the land. * **Writing** - *Exception (Implied Reciprocal Servitude)* * **Intent** - Intent to run with Land. Intent for the servitude to bind their successors in interest "heirs and assigns" * **Notice** - at least inquiry XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX **Implied Reciprocal Servitude** -- It is a kind of equitable servitude that is implied and NEED NOT BE IN WRITING. Usually comes up in planned communities (e.g., condo, subdivision); * Developer must *intend* to create a covenant (i.e.,promise) on all plots in the subdivision; * Promises must be *reciprocal* (i.e.,benefits and burdens each and every parcel equally); * Must be *restrictive* rather than positive (i.e.,it must be a restriction on the owner’s use); * A successor must be on *notice* of the restriction (at least INQUIRY notice); and * Must be a *COMMON PLAN OR SCHEME* (if the common scheme arose after some of the lots were already sold, then the previously sold lots will not be incorporated into the common scheme or subject to the implied equitable servitude) *To prove there is a common plan, look for:* * A (recorded) map of the community showing the common scheme; * Marketing or advertising of the community; * Oral or written mention that the lots are burdened by common restriction. *Changed Circumstances Doctrine* -- Look for situations where the *restriction no longer makes sense* due to *drastic changes INSIDE the community area* since the restriction was put in place. * Critical question: Does the property subject to the restriction still retain some benefit from the restriction? *Equitable Defenses* * unclean hands (the plaintiff not acting in good faith) and * laches (unreasonable delay) *Terminates as an easement does (i.e., merger, release, etc.)* ## Footnote The benefit of enforcing an equitable servitude is held only by the original parties and their successors in interest.

Answer 20

**Common Interest Communities** - Real estate development in which individual units/lots are burdened by a covenant to pay dues to an *association* that *provide services* like maintaining grounds, providing facilities, etc. and *enforces the covenants:* The association is the “heavy” when your neighbor breaks the rules. *3 TYPES:* * *Owners’ Associations:* Where property owners belong and pay dues to an association or board; * *Condominiums:* Where individual units are owned outright, but common are as are owned collectively as tenants in common; * *Cooperatives:* Property is owned by a corporation made up of residents/shareholders that lease individual units to shareholders (residents). VVVVVVVVVVVVVVVVVVVVVVVVVVV **GOVERNANCE** * **RULE:** A common-interest community association, typically governed by a board, *must act reasonably when exercising its discretionary powers* *Declaration* -- The governing documents that outline the controlling covenants and restrictions, as well as the particulars about the association or board. *POWERS* -- The board has general powers to manage the common property and administer the residents. For example: * Levy assessments & charge fees * Manage, acquire & improve common property * Adopt rules governing use of property * Enforce governing documents & rules * Litigate in its own name * Amend declaration creating community * Basic test: A new rule must be reasonably related to further a legitimate purpose of the association (think: rational basis test). *Duties* To the community: The association *must deal fairly* with members of the community. * Good faith and fair dealing; * Prudence; * Ordinary care; * Business Judgment Rule controls (the board is shielded from honest but mistaken business decisions). XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX *Payment of Assesments* A member of a common-interest ownership community, such as a condominium, is not entitled to withhold payment of assessments to set off against a default by the association in fulfilling its duties to the member. Some Possible Defenses: * Unreasonable fees * No quorum at a meeting at which the amount of the monthly assessment was fixed, the owner can challenge the assessment as an ultra vires act that cannot be imposed unless and until it has been adopted at a meeting conducted in accord with the board’s own procedural rules

Answer 21

1) Fee simple (absolute) is absolute ownership of property for a potentially infinite duration and has no future interest. It is absolute ownership of potentially infinite duration. It is “freely alienable” because it is able to be transferred inter vivos, by will, or intestacy without restriction. A fee simple absolute has no accompanying future interest. * conveyances that are *ambiguous* (e.g., "to B") are considered fee simple by default. * Language that limits only the *purpose* of the transfer (e.g., "for the purpose of") creates an FSA. 2) A defeasible fee is ownership of potentially infinite duration. But, a defeasible fee can be terminated by the occurrence of a stated event. Defeasible fees are limited by specific durational or conditional language (e.g., "so long as," "but if"). Three defeasible fee simples are * (i) fee simple determinable, * (ii) fee simple subject to a condition subsequent, and * (iii) fee simple subject to an executory interest. A defeasible fee is freely alienable by the owner during his life, and upon his death, it is devisable (i.e., transferable by will) and descendible (i.e., transferable by intestacy).

Answer 22

**Fee Simple Absolute** (FSA) — Owns 100% for all time (*forever*) * LARGEST possessory estate * Passes to heirs and then to their heirs and then to their heirs. Nothing stopping it. * *No future interests* associated with a fee simple. You have the whole wheel of cheese. *Default Estate* * Fee simple absolute is the default estate; there is a default presumption that the grantor conveys the most that she has unless they limit/tell us otherwise. * Language that limits only the *purpose* of the transfer (e.g., "for the purpose of") creates an FSA. (e.g., "for the purpose of") * *Ambiguous grants* create a fee simple ("to B") **Magic Words** * *"O to A" and "O to A and his/her heirs"* | Fee Simple/Fee Simple Absolute = Same thing

Answer 23

**Defeasible Fee** — A defeasible fee is ownership of potentially infinite duration. But, a defeasible fee can be terminated by the occurrence of a stated event. Defeasible fees are *limited by specific durational or conditional language* (e.g., "so long as," "but if"). **Types of Defeasible Fees** * Fee Simple Determinable * Fee Simple Subject to Condition Subsequent * Fee Simple Subject to an Executory Interest *Alienable* * A defeasible fee is freely alienable by the owner during his life, and upon his death, it is devisable (i.e., transferable by will) and descendible (i.e., transferable by intestacy).

Answer 24

**Fee Simple Determinable** — Fee Simple that is *limited by DURATIONAL language*. A FSD *automatically terminates* on the happening of a stated event *and reverts* back to the grantor. *Durational language* * *so long as/as long as* * *while/during/until* * Ex: O conveys "To A (*fee simple*) SO LONG AS (*determinable*) A uses the property for agricultural purposes. **FUTURE INTEREST** (Who has it?) *GRANTOR - POSSIBILITY OF REVERTER* * Reverter — Interest *reverts back to grantor AUTOMATICALLY* as soon as the period ends (e.g., when the land is no longer used as a farm), *Third Party - Executory Interest* * Upon the occurrence of the stated event, the passage of the estate is automatic. | **D**urational---**D**eterminable

Answer 25

**Fee Simple Subject to Condition Subsequent** — a present fee simple that is limited in duration by specific *conditional language* (e.g., “provided that,” “on condition that,” “but if”). Upon the occurrence of the condition, the GRANTOR (or his successor interest) has the right to enter to terminate this estate. NOT AUTOMATIC. **FUTURE INTERESTS** - *ONLY GRANTOR (RIGHT OF RE-ENTRY)* * Right of Re-Entry — *NOT AUTOMATIC, required to take action* * Grantor can enter and terminate the estate by affirmatively demonstrating an intent to terminate. Until then, grantee's ownership interest is not terminated. * The right of re-entry is freely alienable during life, and it is devisable by will, or, alternatively, descendible through intestate succession upon death.

Answer 26

**Fee Simple Subject to Executory Interest** — A fee simple estate that is limited by specific conditional language (e.g., “provided that,” “on condition that,” “but if”), such that, upon the occurrence of the specified event or condition, title will *automatically* pass to a **THIRD PARTY** (i.e., someone other than the grantor - NO right of re rentry) **FUTURE INTEREST** - *Third Party* (Executory Interest) *2 types of executory interests:* * *Springing* executory interest: Divests the Grantor (Grantor > Executor) * *Shifting* executory interest: Divests a prior Grantee (Grantee > Executor) ## Footnote executor interes (jerks) remainder interests (patiently waits)

Answer 27

**1) Doctrine of Worthier Title** -- When a grantor conveys a *remainder in the GRANTOR's heirs* * Creates a presumption of a *REVERSION* to the grantor in *Fee Simple* *Example:* *Oliver conveys “to Anna for life, then to my heirs.”* * OLIVER retains a REVERSION in FSA **XXXXXXXXXXXXXXXXXXXXXXXXXXXXX** **2) Rule in Shelly's Case** -- When a grantor conveys a *remainder* in the *GRANTEE*'s heirs * Uses the doctrine of merger to create a *FEE SIMPLE* in the grantee *Example* Oliver conveys “to Anna for life, then to Anna’s heirs.” * What estate does Anna have under the Rule in Shelley’s case? Fee Simple (Absolute) ## Footnote (cutting out remainders in grantor/grantee's heirs)

Answer 28

**Life Estate** — "for life" Ownership limited in duration by a LIFE. Estate that will end upon the death of the measuring life. * Not inheritable, cant devise by will. Ends naturally at death. *Defeasible life estate* - is a present possessory interest that *terminates upon the end of the measuring life or the happening of a stated event.* * If title passes to someone other than the grantor when the present interest terminates, then the estate is followed by a remainder and an executory interest. **FUTURE INTEREST** *1) GRANTOR* — *REVERSION* * possession of the land goes back to the grantor after the life estate ends *2) THIRD PARTY* — *REMAINDER,* (vested or contingent) * Remainders—whether they are vested or contingent—are fully transferable during the grantee's lifetime, devisable by will, and inheritable through intestate succession. *VESTED* remainder — nothing can stop it. To be vested, need: * (i) ascertainable grantee and * (ii) no condition precedent * *Note:* If the holder of a vested remainder dies, the interest passes to the holder’s heirs. *CONTINGENT* remainder — Vesting is contingent on something happening * If the contingent remainder does not vest before it becomes possesory, the Grantor has a reversion. * *Destruction of contingent remainders* (common law) -- A contingent remainder was destroyed if it had not vested by the time the preceding estate terminated. * *Modern Rule* -- the grantor’s reversion becomes possessory, and the person holding the contingent remainder takes a springing executory interest, which becomes possessory if the condition precedent is met. VVVVVVVVVVVVVVVVVVVVVVVVVVVVVV **Life Tenant Duties** *1) Duty to pay ordinary taxes/ on the real property,* but only to the extent that the life tenant receives a financial benefit from the property. The financial benefit is determined differently depending on whether the life tenant: * *occupies the property* – fair market rental value of the property, or * *does not occupy the property* – income derived from the land *2) duty to prevent waste* - affirmative waste (ie, voluntary waste) permissive waste and ameliorative waste *3) duty to make ordinary repairs* - to preserve property

Answer 29

Class Gifts — **1) Vested Remainder SUBJECT TO OPEN** (i) Vested remainder in a class gift (class of people); and (ii) class memberhsip is unknown. * **RULE:** At least one person in the class must be vested for it to be *vested subject to open*; * if no one in the class has vested yet, the remainder is *contingent*. * When all members of a class are identified, the class is *closed*. vvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvv *RAP applies* *Rule of Convenience:* A class-closing mechanism to avoid application of RAP to a class gift. * If the grant does not have an express closing date, the Rule of Convenience closes the class when any member of the class becomes entitled to immediate possesion. *Example* * *Oliver conveys “to Anna for life, then to Ben’s children.” Ben has one child.* * When will this class close under the Rule of Convenience? On Anna's death. VVVVVVVVVVVVVVVVVVVVVVVVVVVVVVV **2) Vested remainder subject to complete divestment** * A vested remainder subject to divestment indicates that the occurrence of a condition subsequent will completely divest the remainder interest.

Answer 30

*Subject to the Rule Against Perpetuities (“RAP”)* **Executory Interests:** Future interest that *cuts short* (i.e., divests) a prior *vested* interest *2 TYPES* *Springing* executory interest: Divests the Grantor (Grantor > Executor) * Ex: Oliver conveys Blackacre “to Anna for life, then to Ben one year after Anna’s death.” * reverts to Oliver at Anna's death, then Ben divests Oliver's (grantor) interest one year later. * Ex: Oliver conveys Blackacre “to Anna after she is admitted to the bar.” *Shifting* executory interest: Divests a prior Grantee (Grantee > Executor) * Ex: Oliver conveys Blackacre “to Anna, but if the land is used for commercial purposes, to Ben.” * Anna has a Fee Simple Subject to Executory Interest * If land used for commercial purposes, Ben divests Anna's (grantee) interest

Answer 31

The Rule Against Perpetuities applies only to contingent future interests (eg, purchase options) and voids any such interest that may not vest for more than 21 years after some relevant life in being at the creation of the interest. * *RAP is not about whether an interest vests or fails. It is about whether we can KNOW FOR CERTAIN if it will vest or fail within RAP period.* (a life in being plus 21 years). Cannot have uncertainty. **Method—When, What, Who?** **1) When: Identifying when the interests are created** (RAP Period Begins, and the measuring lives used to show the validity of an interest must be in existence, at that time.) * *Inter vivos transfers:* At time of the grant * *Devise (will):* At testator’s death, not when the will is drafted **2) What: Determine if interests created are subject to RAP** *RAP applies to:* * Contingent remainders * Executory interests * Class gifts (Even if Vested Remainders), if not closed by rule of convenience **3) Who: Identify the relevant and, if applicable, validating lives** (When testing, always *kill and reproduce.* Anyone can die the next day, assume any living person, regardless of age, will reproduce) *Relevant life:* Person who affects vesting, mentioned or implied by the grant (e.g., prior life tenant, the parent where a conveyance is made to a child) *Validating life:* Person who tells us whether or not the interest vests or fails within the perpetuities period (validating lifetime plus 21 years) *Ask yourself: Whens the LAST moment in time we will know whether it vests or fails?* * Must have been alive when the interests were created; * Can validate her own interest; * If no validating life, then the interest is void and we strike it from the grant; if there is a validating life, the interest is good. **VVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVV** **RAP VIOLATIONS** “An interest is void if there is any possibility, however remote, that the interest may vest *more than 21 years after some life in being* at the creation of the interest" * *at the creation of the interest.* = Conveyance - at time of grant/ Will - At testator’s death * If a situation can be imagined in which the interest might not vest within the perpetuities period, the interest is void *Test 1: If there is either a Determinable or Subject to condition subsequent, ANY SUBSEQUENT GRANTEE IS VOID!* **Test: find Validating Life, Ask if, at the time interests are created, whether we will we have closure/clarity within perpatuities period** *(reproduce/kill)* * Effect of violation: We strike out the violating interest, as if the interest was never created in the first place. *Reproduce and Kill* * Remember: Property law assumes that anyone who is alive can reproduce, have more children. Living people have the nasty habit of breeding. * Property law assume anyone can die the next day *Examples* *1) Oliver conveys “to Anna for life, then to Anna’s first child who reaches the age of 22.”* * This conveyance violates RAP. (violates if you can tell a story where it can be outside a life + 21 years) * It is a contingent remainder, and possible for the contingent remainder (in Anna’s first child) to vest more than 21 years after Anna’s life. (You can make a story where Anna has a child immediately and then dies right after) * Anna’s first child, if not born yet, can't be a validating life, and even if alive, is not a validating life because the child could die. *2) Oliver conveys, “to Anna so long as the property is used as a farm, then to Ben.”* * Anna has a fee simple subject to an executory interest and Ben has an executory interest. * This conveyance violates RAP. It is possible that Ben’s executory interest will vest more than 21 years after Anna’s or Ben’s death. * Even if Anna dies, the property can continue to be used as a farm by her heirs for way more than 21 years. *3) Oliver conveys “to my grandchildren who reach 21.” Oliver has two children, Anna and Ben, and three grandchildren under the age of 21.* * This conveyance violates RAP. * It is possible that Oliver could have another child—call her C—who gives birth to a grandchild after Oliver, Anna, and Ben have died. This grandchild will not reach age 21 until more than 21 years after the deaths of the measuring lives (C is not a validating life because she was not in existence when the interest was created). * (assume any living person, regardless of age, will reproduce) vvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvv *EXCEPTIONS TO RAP* * Charity to Charity * Options held by current tenant to purchase a fee interest in the leasehold property * Options (or right of first refusal) in a commercial transaction ## Footnote *Practical tension:* * Parents want to keep property in the family but do not trust their children * *v.* * courts’ unease about uncertainty **RAP prevents *remote* vesting.** (very far into the future) * Testing for certainty * Operates like a statute of limitations for contingent future interests. Why 21 years? * Approximately 2 generations—a life plus 21 years; * Beyond that, we can’t say what will happen. * Law says "you can tie up your property for 2 generations after that, we need to know whether it will vest or fail"

Answer 32

(RAP > Class Gifts) **"ALL OR NOTHING RULE"** * If even one potential person could throetically join the class beyond the perpetuities period, the entire class gift is void. *example* *Oliver conveys “to Anna for life, then to her children who reach 25.” At the time of the conveyance, Anna’s son Ben is 26 and her daughter Carmen is 18.* * The Gift does NOT survive RAP * Remember: Living people have the nasty habit of breeding. Property law assumes that anyone who is alive can still have children. * Anna could have another kid (call her Dana) after the conveyance. Dana can’t be a validating life. Dana could vest more than 21 years after Anna, Ben, and Carmen’s death. ALL OR NOTHING DOESN'T APPLY IN 2 SCENARIOS: * Transfers of a specific dollar amount to each class member * Transfers to a subclass that vests at a specific time vvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvv *Rule of Convenience* -- A class-closing mechanism to save a class from being invalidating under RAP. * For purposes of avoiding RAP, the class closes as soon as any member of the class becomes entitled to immediate possesion.

Answer 33

Comes into play when *more than one party has an interest* in the *same piece of real property* * *estates and future interest holders* * *Landlord v. tenant;* * *Co-tenant out of possession v. tenant in possession (concurrent estates);* * *Mortgagee (bank/lender) v. mortgagor (borrower).* A mortgagor in possession of the mortgaged property has a duty not to commit waste that would impair the mortgagee's security interest in that property. If the mortgagor breaches this duty, the mortgagee can recover damages for the impairment. *3 kinds of Waste:* *1) Affirmative waste* * Waste caused by *voluntary* conduct, which causes a *decrease* in value. *2) Permissive Waste* * Waste caused by *neglect* toward the property, which causes a *decrease* in value. *3) Ameliorative waste:* * Special situation where a life tenant or other person in possession changes the use of the property and actually *increases* the value of the property.

Answer 34

**WASTE** -- a life tenant generally must deliver the property to the future interest holder in substantially the same condition that it was in when she took possession, with allowance for normal wear and tear. **1) Permissive waste** -- when the life tenant “permits” the premises to deteriorate through neglect or a failure to preserve or protect the property. *a) Repairs* * A life tenant has a duty to prevent permissive waste by making *reasonable repairs* * Personal obligation of the life tenant *only to the extent* that the life tenant receives a financial benefit from the property (i.e., the amount of income generated by the property, or, *if the life tenant uses the property,* its fair rental value *b) Damage caused by natural forces or third parties* * life tenant is NOT responsible for damage caused by natural forces or third parties that the life tenant could not prevent. . *c) Insurance* * life tenant is NOT under an obligation to insure the land for the benefit of the future interest holder. **2) Voluntary waste** * Voluntary (or affirmative) waste occurs when the condition of the property is substantially changed due to the life tenant's *affirmative action.* *a) Diminution in value* * Generally, a life tenant's affirmative action that results in the diminution in value of the property is prohibited by the doctrine of waste. *b) No diminution in value* (ameliorative waste) * In most jurisdictions today, ameliorative waste is permitted when the change results in *reasonable use of the property*. * A life tenant has a duty not to change the premises if *the future interest holders have a reasonable ground for objection.* However, a reasonable ground for objection does not exist if a substantial and permanent change in neighborhood surroundings makes the change necessary to continue reasonable use of the property, and the proposed change is one that an owner of a fee simple estate would typically make. * In determining the reasonableness of a change, the life tenant's life expectancy and good faith in making the change are factors to be considered.

Answer 35

**Property TAXES** -- personal obligation of the *LIFE TENANT ONLY TO THE EXTENT THAT he receives a financial BENEFIT from the property.* * Future interest holder can sue unless the life estate holder is not using or renting the property. **Pre-existing MORTGAGE obligation** * The parties are *not PERSONALLY liable unless they ASSUMED the mortgage* BUT * *failure to pay may result in the loss of their property interest* * A mortgage obligation incurred before the creation of a life estate in the mortgaged property is subject to allocation between the life tenant and the future-interest holder. *Allocation of Mortgage Obligation* * Periodic payment of *interest only* – life tenant is responsible for interest payments; * Periodic payment of *interest & principal* – life tenant & future-interest holder are responsible for payments in proportion with their respective interests *Recoupment Actions* -- future interest holder can bring an action against the life tenant personally to recoup his payment of the life tenant's portion of the obligation, but *only to the extent of the life tenant’s financial benefit from the property.* * Any excess can be assessed against the life estate interest as a *lien* which can be enforced through a judicial sale. * A life tenant who pays a future interest holder's mortgage obligation is entitled to a similar remedy. **Assessment for public improvement** * An assessment for a public improvement (e.g., paving road, installing water or sewer lines) typically is *subject to allocation between the life tenant and future estate holder*

Answer 36

**1) Tenancy for Years** — Measured by any *FIXED* amount of time. It need not be measured in years. It can be for *any length of time*. *Creation* -- AGREEMENT by the landlord and the tenant * If the term is longer than one year, must be signed and in writing (to satisfy the Statute of Frauds) *Termination* -- occurs AUTOMATICALLY upon the expiration of the term. (no notice required, unless lease requires it) Can terminate before term is over if: * Tenant surrenders the lease * The tenant or the landlord commits a material breach of the lease (e.g., the tenant fails to pay rent). **2) Periodic Tenancy** — Estate that is *REPETITIVE* and ongoing for a set period of time *(month-to-month, year-to-year)* Renews automatically at the end of each period until one party gives proper notice of termination * *Presumed when lease has no specified termination date* *Creation* -- Parties must INTEND to create a periodic tenancy. Intent can be: * express (a signed lease) or * implied (payment of rent, operation of law [eg, holdover tenant]) *Termination* -- Renews automatically until proper NOTICE is given (written notice before start of last term) * Proper notice means the terminating party gives written notice before the start of what will be the last term. * Notice is effective on the last day of the period. * Larry leased Blackacre to Tara on a month-to-month basis. Tara gives notice of termination on February 15. The termination becomes effective March 31. **3) Tenancy at Will** — May be terminated by either landlord or tenant at any time, for any reason. Does not have a specific term and continues so long as the landlord and the tenant desire. *Creation* -- Can be created by express agreement or by implication *Termination* -- Can be terminated by either party without notice. (or by death of either party) * If the agreement gives only the landlord the right to terminate *at will*, the tenant ALSO gets the right to terminate *at will* by implication (unconscionable - unequal bargaining power) * If the agreement gives only the tenant the right to terminate at will, the landlord is NOT given the right to terminate at will *Death of either party* -- terminates the tenancy at will * this is not true for the tenancy for years or the periodic tenancy. **Tenancy at Sufferance** — Created when a tenant holds over (stays) after the lease has ended * Landlord is NOT required to give the tenant *notice* to vacate the premises before taking steps to recover possession of the property *Creation* -- by ACTIONS of the tenant alone *Termination* -- 3 ways to terminate * Tenant voluntarily leaves * Landlord evicts the tenant * Landlord re-rent to the tenant

Answer 37

**Landlord:** *1) Duty to Mitigate Damages* (Residential ONLY) - reasonable efforts to re-rent, LL entitled to the difference between the original rent and the rent received from the replacement tenant. * If the landlord does not make diligent efforts to mitigate, the tenant is *relieved* from the obligation to continue paying rent. * The landlord does not have to accept an unacceptable replacement tenant. *2) Holdover Tenant* -- can evict holdover tenant or can re-rent, treating the holdover tenant as a periodic tenant. * The landlord will continue the relationship by accepting rent (amount under the old lease is the amount due) * Exception: The landlord can impose a higher rent if the landlord had informed thetenant of the increase *prior* the expiration of the old lease. *3) Implied promise to Deliver physical possesion of property* * on 1st day of lease term. Legal possesion not enough. *4) Express Lease Provisions + Implied Warranties (Quiet Enjoyment + Habitability)* * *a) IMPLIED COVENANT OF QUIET ENJOYMENT* - (Commercial AND Residential) - Landlord assures the tenant that the premises are wholly and substantially *suitable* for the tenants intended purpose. Violated when the landlord, or someone connected to the landlord, renders the premises unsuitable for the intended purpose. The landlord must control: * common areas (lobby, hallway, or laundry room) * nuisance-like behavior of other tenants * *b) IMPLIED WARRANTY OF HABITABILITY* - (Residential ONLY) - The landlord has an obligation to maintain the property such that it is suitable for residential use. We are concerned conditions that threaten the tenant’s *health and safety (make repairs, make safe, a/c, mold, health).* The landlord’s failure to comply with applicable housing codes constitutes evidence of a breach; vvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvv **Tenant:** **1) DUTY TO PAY RENT** - *can be suspended if* (i) premises are *destroyed* (not by tenant) (ii) Patrial or complete *eviction* (partial: portion of the property) (iii) Landlord *materially breaches* Lease * implied promise to deliver possession * implied warranty (ie, quiet enjoyment, habitability) * express lease provision *1) Breach of Implied Warrant of Habitability* - *Tenant's Remedies* * Refuse to pay rent * Remedy the defect and offset the cost against rent * Defend against eviction *2) Breach of Implied Covenant of Quiet Enjoyment* (Commercial AND Residential) *Justifiable Abandonment of Property* * *"Constructive Eviction"* -- (Remedy > Withhold Payment; abandon property) * Premises were *unusable* for their intended purposes, substantially interferes with the tenant's use and enjoyment of the leased premises. (i.e., breach of the covenant of quiet enjoyment); * The tenant *notifies* the landlord of the problem; * The landlord *does not correct* the problem; and * The tenant *vacates* the premises *after a reasonable amount of time* has passed. *Unjustifiable Abandonment of Property* -- An unjustifiable abandonment is treated as an *offer* to surrender rights under the lease. If the landlord *accepts* the offer, the lease is terminated and the tenant is *NOT LIABLE for any future rent.* The offer can be accepted by: * express agreement or * retaking possession of the property coupled with (1) the landlord's own use of the premises or (2) re-renting the property to a third party. **2) DUTY TO AVOID WASTE** - implied in lease * The tenant has a duty not to commit affirmative (voluntary) waste or permissive (neglectful) waste * Damaging/reducing the value of the property *Duty to Repair* * In a residential lease, the Landlord is presumed to be responsible for repairs. The tenant must *notify* the landlord of any needed repairs. * In a commercial lease, the landlord can place the duty to repair on the tenant. *Increase Value* * A tenant may make changes to the property that increase the property’s value (“ameliorative waste”). * Landlords usually require permission before a tenant can make the change and can put a provision in the lease prohibiting the tenant from making improvements to the property.

Answer 38

**RENT PAYMENT** **1) Sublease —** Transfer for less than the entire duration of of T1's lease * *Original Tenant (T1)* remains primarily liable for rent payment. **2) Assignment —** Complete transfer of T1's remaining term * *New Tenant (T2)* becomes primarily liable for rent payment. (privity of estate) * *However,* Landlord *can still come for (T1)* unless they executed a *novation*. vvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvv **Permission** *to Assign/Sublease* -- *Silent Lease:* * Tenant may FREELY assign/sublet *Permission: If the lease requires the landlord’s permission to transfer* * Majority rule: A landlord may deny permission to a transfer only for a *comercially reasonable reason* * Minority rule: A landlord may deny permission at their discretion vvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvv **Transferring a landlord’s interest** Unless the lease states otherwise, a landlord may assign his/her rights under the lease to a third party (i.e., assignee-landlord) without the tenant's consent. The new landlord is bound by terms of the existing lease and cannot change the terms of the existing lease without the tenant’s permission. *Lease covenants:* * The new assignee-landlord can enforce covenants (i.e., promises) in the lease that run with the land. * Even if the intent to bind successors in interest is not explicitly stated in the lease, it is *generally presumed* when the covenant *touches and concerns the land.* ## Footnote * sublease: give away portion of your term * assignment: Give away rest and reaminder of lease term

Answer 39

**Condemnation** is the *taking of land* for public use or because it is unfit for use. * The *tenant is entitled to compensation* for the portion of the property that was condemned or the time he was dispossessed from the leased property. * Tenant's share of the *condemnation award* is equal to the fair market value of the condemned leasehold plus any amount necessary to compensate the tenant for any continued obligation to pay rent that may be required under the lease. * **Partial Condemnation** -- tenant must continue to make his rent payments. The tenant is entitled to compensation for the portion of the property that was condemned or the time he was dispossessed from the leased property. * **Complete Condemnation** -- the tenant is discharged from his rent obligation and is entitled to compensation for the taking. However, the *parties can expressly agree to alternative provisions in the lease*, and courts will typically enforce those agreed-upon provisions.

Answer 40

1) Tenant owes a duty of *reasonable care* to invitees, licensees, and foreseeable trespassers. 2) Landlord - Duty owed to invitees, licensees, and foreseeable trespassers: *Under Common Law* * Responsible in negligence for latent (hidden) defects about which the tenant has not been warned * Responsible for faulty repairs completed by the landlord (or the landlord’s agent) negligently * Responsible for negligence that causes injuries in common areas of the property. *Modern Trend:* The landlord owes a duty of *reasonable care*

Answer 41

**Fixtures:** Chattel that is SO attached to real property that it is treated as part of the real property when determining its ownership. *Attachment of Chattel* * *A fee simple owner* of real property is free, subject to governmental land use restrictions, to make improvements to the real property, including fixtures. * a *life estate or tenant*'s right to make improvements to real property is limited by the doctrine of ameliorative waste. *OBJECTIVE Intent for chattel to become fixture* (factors) In determining whether an object is a fixture that can be removed by a seller of real property, the seller’s subjective intent is not controlling. Instead, various factors are examined to ascertain the seller’s objective intent: * the *importance* of the chattel to the real property, * whether the chattel was *specially designed* for use on the real property, and * the amount of *damage* to the real property that removal of the chattel would cause. *Buyer or Mortgagee's right to Fixture* * When the chattel is a fixture, the buyer of the real property is generally entitled to the chattel unless the seller reserves the right to remove the fixture in the contract of sale. Similarly, the mortgagee is entitled to the chattel upon foreclosure of the mortgage unless the mortgage provides otherwise. *Removal of Fixture* * A life tenant or tenant may remove an annexed chattel within a reasonable time after the life estate ends if (1) the life tenant did not intend to permanently annex the chattel and (2) its removal will not cause substantial damage. ## Footnote * *SO* connected to the structure, *SO* built in to the foundation * Never infer damage to the property **Rule: If removing would cause damage, CAN'T REMOVE**

Answer 42

**The Fair Housing Act (FHA)** prohibits *DISCRIMINATION* in the *sale, rental, and financing* of dwellings (homes, apartments, etc.). It also prohibits *advertising* that states a discriminatory preference. *There are 3 EXEMPTIONS from the FHA:* (selling exception, no advertising exception) * *1) Single-family housing* that is sold or rented *WITHOUT a Broker* * *2) Owner occupied* buildings with *less than 5 living units*. * *3) Religious* organizations and *private clubs* *Protected Traits:* race, color, religion, national origin, sex, disability, familial status * *Sex* has now been interpreted to include sexual orientation and gender identity. * *Familial status* means families that have children under 18 or someone who is pregnant * *Disability* provision mandates *reasonable accommodations* for persons with disabilities (e.g., ramp, elevator, etc.) *What’s prohibited?* * Stating a discriminatory preference in an advertisement. * Refusing to rent, sell, or finance a dwelling; * Requiring different rents; * Falsely denying that a unit is available; * Providing different services to facilities; (exception: reasonable accommodation for disabilities) *Causation:* Prohibited behavior must be linked to the protected basis

Answer 43

**Basic Rule:** In cases about property, the *controlling law* is based upon *where the property is located* * property dispute that involves more than one state (e.g., the parties to the suit are in different states). *When do you care about this?* In many testable issues involving property: * Foreclosure; * Land contract dispute; * Equitable interests (e.g., trust property); * Intestate succession; * Interpreting conveyances. **When the basic rule DOESN'T apply:** * If the *instrument* in question *designates* an applicable jurisdiction; * In cases involving *marriage*, specifically with respect to classifying property as marital or separate, the domicile of the party may override * In *mortgage* cases, where the mortgage documents require repayment to be made in another state.

Answer 44

State and local governments may regulate the use of land through zoning laws. (for protection and safety) * States have authority to zone through police powers. * Local governments get power to zone through specific enabling acts. Objective: Segregate incompatable uses from being developed in the same area (e.g., residential v. commercial and industrial) * Cumulative zoning: The traditional approach in which residential use is permitted everywhere, commercial use is restricted to some areas, and industrial use is allowed in the fewest areas. * Mutually exclusive zoning: Some jurisdictions have developed an approach where only one type of use is permitted by zone. **Nonconforming Uses** *1) EXISTING Nonconforming Properties* -- When zoning is changed and a structure does not satisfy the zone’s requirements, it is called a “nonconforming use.” * The goal of the property owner is to get the non conforming use *grandfathered in.* * *Vested Rights* -- If the project is in process at the time that the zoning ordinance takes effect, the property owner must have the proper building permits by the time the ordinance takes effect. They must also show the project was in good faith. * A property owner whose nonconforming use predated a zoning change *may transfer the right to use the property in the preexisting nonconforming manner* to a subsequent transferee/buyer. *Not Allowed* * *Physical Expansion of the non conforming use* -- expansion of the property or buildings on the property * *Switching to another non conforming use* *2) POST-ORDINANCE Nonconforming Properties* -- When the property owner requests a change after the zoning ordinance is in place. * Owner applies for a variance, essentially permission to violate the zoning rules. * *Use Variance* -- Obtain the right to use property in a manner not permitted by zoning * *Area Variance* -- Focuses on restrictions concerning property development. *Standard* -- The person applying for a variance must show ALL of the following: * Compliance would create unnecessary *hardship*; * The hardship arises from circumstances *unique* to the property; * The owner did not create the hardship; * The variance is in keeping with the overall *purpose* of the ordinance; and * The variance will not cause substantial *harm* to the general welfare.

Answer 45

A zoning ordinance by its very nature subjects some property owners to different restrictions than other property owners. These restrictions may run afoul of various constitutional and statutory protections. *Fifth Amendment Takings Clause* * A taking has occurred when the governmental regulation results in a permanent physical occupation of the property. * If a regulation results in the elimination of any economically viable use of real property, a taking may occur. *Fourteenth Amendment Substantive Due Process* * A Fourteenth Amendment substantive due process challenge to a zoning ordinance need only satisfy the rational-basis test (i.e., a rational relationship to a legitimate governmental interest). * Unless a fundamental right has been violated * The right to housing is not a fundamental right. * However, the right of family members to live together is a fundamental right. *Fourteenth Amendment Equal Protection Clause* * A zoning ordinance that has discriminatory *intent* against a suspect class (e.g., race, national origin) is subject to strict scrutiny. * it is not sufficient for a challenger to show a discriminatory *effect* *First Amendment Free Speech Clause* * A zoning ordinance that restricts the location of adult entertainment businesses but does not outright ban such businesses does not violate the First Amendment’s Free Speech Clause. The government has a substantial interest in regulating the secondary effects that result from the operation of these businesses, such as increased crime. * By contrast, an ordinance that prohibited a resident from displaying a sign with a political message in her front yard violated the First Amendment’s Free Speech Clause. City of Ladue v. Gilleo, 512 U.S. 43 (1994). *Federal Fair Housing Act* The federal Fair Housing Act (FHA) prohibits discrimination on the basis of race, color, religion, national origin, sex, disability, and familial status. *Federal Religious Land Use and Institutionalized Persons Act* * Prohibits a land use regulation that imposes a substantial burden on the exercise of religion unless the government proves that the burden is in furtherance of a compelling governmental interest and is the least-restrictive means of furthering that interest. *State constitutional and statutory challenges* * A state constitution may provide a property owner with greater protection than the federal constitution does. * In addition, a property owner may challenge a zoning ordinance for its failure to conform to any state statutory protections.

Answer 46

**1) Riparian Rights** Doctrine of riparian rights holds that land owners who *border* a waterway own the rights to the waterway. Riparians share the right to *reasonable* use of the water, such that one riparian is liable to another for interference with the other’s use. * Water belongs to owners of adjoining land * *Reasonable use that does not unreasonably interfere with downstream use* permitted (reasonable-use doctrine) * *Domestic use trumps* commercial use * Water rights *cannot be sold or transferred separate* from adjoining land **2) Prior Appropriation** Doctrine * Water rights determined by *priority of beneficial use* ("first in time, first in right") * Water rights are unconnected to adjoining land & *can be sold or transferred* separately

Answer 47

**1) Lateral Support Rights** -- A landowner has a right to lateral support from adjoining land. * A neighboring excavating landowner cannot excavate so as to cause a cave in (i.e., subsidence) on an adjacent owner’s land. *Applicable standards:* * If the neighbor’s improvements (buildings) contributed to the cave in, the standard to apply to the excavating neighbor is *negligence* * If the neighbor’s improvements (buildings) did NOT contribute to the cave in; The standard to apply is *strict liability*. **2) Subjacent Support** -- The right to subjacent support (i.e., support from beneath the surface of one's land) arises when the owner of land grants the right to mine on his land to a third party. *Applicable standards:* * The owner of the mineral rights is *strictly liable* for any failure to support the land and any buildings on the land at the time the rights were conveyed. * The owner is liable only for *negligence* for damage to any improvements built after the conveyance of the rights.

MBE Property Flashcards

(73 cards)