PMBR CD #1

Perhaps the most difficult part of the bar exam. Key to success on the bar exam is organization. 5 classifications of interest in Real Property

a. Freehold estates give possession to property under some legal title.i. Fee simple

ii. Fee tailiii. Life estates

b. Non-freehold estates give mere possession, no legal title. (landlord-tenant law)

i. Tenancy for yearsii. Tenancy from period to period

iii. Tenancy at williv. Tenancy at sufferance

c. Concurrent estates i. Joint tenancy

ii. Tenancy by the entiretyiii. Tenancy in common

d. Nonpossessory interests in land (incorporeal)i. Easements

ii. Profitsiii. Covenants running with the landiv. Equitable servitudesv. Licenses

e. Future interestsi. Reversions

ii. Possibility of reverteriii. Right of re-entryiv. Remainders

1. Contingent remainders2. Vested remainders

v. Executory interestsf. Rights incident to possession

i. Adverse possessionii. Lateral subjacent support

iii. Water rights

g. Conveyancingi. Recording statutes

ii. Deedsiii. Equitable conversion doctrine

h. MortgagesII. Freehold estates – give possession to land under some legal title

a. Fee simple absolute – Potentially infinite duration – maximum estate person can own.

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i. Most extensive estate a person can own; largest estate known to law

ii. Largest estate known, potentially of infinite durationiii. Common law: To convey, words at common law had to be “To B

(the grantee) and his heirs”1. The words “and his heirs” used in a deed were construed as

words of limitation.a. They described the quantum / size of the estate that

was transferred to the grantee.iv. At Modern law, we designate the owner to the grantee X

conveys land to B.v. Words of purchase indicate the grantee or the person that takes the

property.vi. Conveyance to B would create a fee simple absolute today without

necessarily including “and his heirs” or “and her heirs.”b. Fee simple defeasible

i. Fee simple determinable1. Fee simple estate created to continue until the happening or

non-happening of a certain event2. Possibility of reverter

a. When that event occurs, the estate terminates automatically; automatic reversion to the grantor upon the happening or non-happening of that stated event.

3. Ex: X, owner in fee, conveys Blackacre to A, so long as the property is used as a school.

a. If the property is no longer used as a school, title automatically reverts to the grantor upon the happening or non-happening of that stated event.

4. Words for fee simple determinable:a. “so long as”b. “during”c. “until”d. “while”

5. Fee simple determinable has a possibility of reverter since the grantee’s estate may end on the happening or non-happening of an event

6. Possibility of reverter : Possibility that event occurs; but if that event does occur (i.e., when the property is no longer used as a school, for residential purposes, or where liquor is sold on property), there is an automatic reversion to the grantor on the happening or non-happening of a stated event.

7. Automatic reversion ii. Fee simple subject to condition subsequent

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1. Fee simple estate that may be terminated on the happening or nonhappening of a stated event or contingency.

2. Ex: X, owner in fee, conveys Blackacre to A and his heirs, but if the land is not used as a farm, X may reenter the land.

3. Right of re-entry for broken condition4. When the event occurs (if land no longer used as a school,

if liquor is sold on the premises), the grantor or his heirs have the right / option of re-entering and reacquiring ownership to the property or possession to the property.

5. Compare: Fee simple determinable – automatic reversion back to the grantor on the happening of a stated event; right of re-entry – reversion is not automatic.

6. Words: (words of condition)a. “On condition that”b. “Subject to the condition that”c. “But if”

iii. Fee simple subject to executory interest1. Fee simple estate whereupon the happening or

nonhappening of a stated event, ownership passes from one grantee to another grantee.

2. Shifting executory interest :a. Ownership passes from one grantee to another (i.e.,

from A to B).b. Ex: X, owner in fee, conveys Blackacre to A and his

heirs, as long as the land is used as a farm, and if the land is not used as a farm, then to B and his heirs.

c. Ex: X, owner of Blackacre in fee simple, conveys Blackacre to A and his heirs, but if A dies without issue living at his death, then to B and his heirs.

i. Title passes from A to B if A dies without any issue living at his death.

3. Springing executory interest a. Ownership passes from the grantee back to the

grantor; then, after some time, ownership passes from the grantor to another grantee.

c. Fee tail (rarely tested on the exam)i. At common law, a fee tail was usually created by the words:

1. “To B (or the grantee) and the heirs of his body”ii. Inheritance was restricted to the lineal descendants of the grantee.

iii. It was permissible for the grantor of a fee tail to restrict the inheritance to a particular group of lineal descendants of the grantee by proper words of limitation. **

1. Ex: A grant to a male and the male heirs of his bodya. This created a fee tail male.

2. Ex: A grant to a female and the female heirs of her body.

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a. This created a fee tail female.iv. Lineal heirs for purposes of a fee tail are sons, daughters,

grandchildren, and great-grandchildren.v. Collateral heirs include cousins, nieces, nephews, uncles, and

aunts.d. Life estate

i. Freehold estate where the duration is measured by the life or lives of one or more human beings.

ii. Ex: X conveys Blackacre to A for life.1. A has a life estate.

iii. A life estate pour autre vie is a freehold estate where the duration is measured by someone else other than the grantee.

iv. Ex: X conveys Blackacre to A for the life of B.1. Example of life estate pour autre vie where duration of

estate is measured by someone other than grantee.v. Dower

1. Widow is entitled, on the death of her husband, to a life estate of 1/3 of the lands her husband was seised in fee simple during the marriage.

vi. Curtesy1. Tenancy by curtesy is a life estate to which the husband

was entitled to all of his wife’s lands.2. Requirements:

a. Husband had to be married to wifeb. Wife must be seised in the land in fee simple or fee

tail during the marriage.c. Wife must have issue born by the husband.d. Wife must predecease the husband.

III. Future interestsa. Reversions

i. Estate remaining in the grantor who has conveyed a lesser estate than that owned by the grantor.

ii. Ex: X, owner in fee, conveys Blackacre to B for life.1. Here, a reversion back to the grantor

iii. A reversion arises as a matter of simple subtraction.1. If A has 5 apples and gives 3 away, he has 2 apples left.2. 2 apples left, like a reversion in real property.3. Here, X owns a fee simple estate.4. He (X) conveys only a life estate, so hence the interest left

in the grantor is a reversion.iv. Created where the grantor creates an expirable or a lesser estate

compared to what he owns.1. If the grantor is the owner of a fee simple estate and

conveys a life estate, at the expiration of the life estate, you have a reversion back to the grantor.

2. Fee tail, life estate, contingent remainder that does not vest.

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b. Possibility of reverter (fee simple determinable)i. Interest retained by the grantor of a determinable estate for a fee

simple determinableii. Possibility of reverter, once the stated event occurs, the estate

ripens into an automatic reversion – a possessory estate – automatic reversion back to the grantor.

1. Possibility b/c if the event does not occur, obviously no reversion back to the grantor.

iii. X, owner in fee, conveys land to A, as long as the land is farmed.1. X has possibility of reverter.2. If the land is not farmed, ownership reverts back to the

grantor on the happening of that stated event.iv. Created where a grantor creates a fee simple determinable

c. Rights of re-entry for condition brokeni. Also called power of termination

ii. Created in the grantor subject to a condition subsequent.iii. Right of re-entry means that there isn’t an automatic reversion of

the grantor upon the happening or non-happening of that stated event.

iv. Rather, the grantor or his heirs have the option of re-entry **v. Created when the grantor creates a fee simple on condition

subsequent.d. Remainders – Future interest created in a third person which is intended to

take effect after the natural termination of the preceding estate.i. Every remainder must be preceded by either a fee tail or a life

estate.ii. Contingent (not vested)

1. Any remainder which is created in favor of an ascertained person, but is subject to a condition precedent, or is created in favor of an unborn or unascertained person.

2. Ex: To B for life, remainder to C and his heirs, if C marries before B’s death.

a. C has a remainder contingent upon his marriage before B dies.

3. Ex: A to B for life, remainder to C for life, if C survives X.a. C has a contingent remainder upon X’s

predeceasing both B and C because the contingency of C’s surviving X must happen on or before the termination of B’s life estate.

iii. Vested1. Remainder created in an ascertained and existing person

that is not subject to any condition precedent except the normal termination of the preceding estate.

2. Ex: A owner in fee conveys Blackacre to B for life with remainder to C and his heirs.

a. C has a vested remainder.

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3. Ex: A conveys or devises to B for life, then to C and her heirs.

a. C has a vested remainder.i. We know it will take effect after the

termination of B’s life estate.ii. C is an ascertained and existing person, not

subject to any condition precedent.4. Ex: A conveys to B and the heirs of her body and then to C

and her heirs.a. C has a vested remainder.

5. Ex: A conveys to B for life and then to C for lifea. C has a vested remainder.

i. It must take effect before the termination of the preceding life estate – namely, B’s.

6. Types:a. Remainders absolutely vested

i. Limited to ascertained or identifiable person without words of condition and not subject to divestment.

ii. Ex: A conveys Blackacre to B for life and then to C and her heirs.

1. C has a remainder absolutely vested.b. Remainders vested subject to partial divestment

(also called remainder vested subject to open)i. A remainder is subject to being partially

divested when the remainderman is in existence and ascertained, but the amount of her estate is subject to being diminished in favor of other members of a class. **

ii. Ex: Common kind of class gift.1. A devises land to B for life, then to

the children of B in fee.2. At the time of B’s death, B has one

child, C. 3. C’s remainder is vested because she

is in existence, ascertained, and she or her heirs are certain to acquire a possessory interest on the expiration of B’s life estate.

4. Common law standards:a. The seisin can pass to her

immediately on B’s death.b. But, C’s interest is subject to

open because of after born children of B because they

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can come within terms of the gift.

c. Remainders vested subject to complete divestmenti. A remainder is vested subject to complete

divestment when the remainderman is in complete existence and ascertained and her interest is not subject to a condition precedent, but her right to possession or enjoyment of her interest on the expiration of that prior interest is subject to a termination by reason of an executory interest, power of appointment, or right of re-entry.

ii. Ex: A conveys to B for life, then to C and her heirs, but if C dies, leaving no surviving children, then to D and his heirs.

1. Here, C has a remainder vested subject to complete divestment on the death of C without any surviving children.

2. D’s interest is not a remainder, but an executory interest.

3. If C dies without any children, then ownership transfers to D.

iv. Creation of remainder1. Remainder must be in favor of a transferee (usually a

grantee) who is one other than the conveyor.2. The remainder must be created at the same time and in the

same interest as the prior particular estate which supports it or precedes it.

3. Preceding estate must be of lesser duration than the interest of the conveyor or the grantor, so that there may be an interest to pass on to the remaindermen.

a. Ex: X is the owner of Blackacre in fee and he conveys Blackacre to Y, for life, a lesser estate than the fee, and then at the expiration of Y’s life estate, title then passes to Z. Z has a vested remainder which takes effect after the natural expiration of the preceding life estate.

v. Preceding estate had to be either a fee tail or a life estate.vi. Today:

1. Modern law: Preceding estate may be a fee tail, life estate, or a estate for years.

a. Preceding estate cannot be a fee simple estate.vii. Today: (multistate)

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1. All remainders are considered transferable and alienable (common law, they weren’t).

viii. Contingent remainder is not subject to claims of creditors. (multistate)

ix. A vested remainder is subject to the claims of creditors. (multistate)

x. A remainder cannot take effect cutting short the prior estate, but after the natural termination.

xi. Contingent remainders come within the rule against perpetuities; however, it does not apply with vested remainders.

xii. Vested remainderman has a claim against prior estate holder (the life tenant) for waste; contingent remainder has no such right. (multistate)

xiii. Where we have a vested remainderman, the remainderman has a right to compel the prior estate owner to pay taxes and interest on encumbrances. (multistate)

e. Executory interest – Cuts short a prior estate.i. Shifting

1. Cuts short or terminates a preceding estate in favor of the grantee.

2. Ex: A conveys to B for life, but if B becomes bankrupt, then to C and his heirs.

a. B has a life estate, subject to an executory shifting interest in C, with a reversion in A.

b. C’s interest is not a remainder because it does not await the natural expiration of B’s life estate.

3. Ex: A, owner in fee, conveys Blackacre to B and his heirs, but if B marries C, then to C and his heirs.

a. Here, C has a shifting executory interest, that if B marries C, then B’s preceding estate is cut short and rights of possession or ownership goes from one grantee to another, namely C.

b. Ownership passes from A the grantor to B, and then happening on the stated event, to C.

4. From transferee to transferee upon happening of conditioned event

ii. Springing1. Ex: A, owner in fee, conveys Blackacre to B and his heirs,

but if B marries C, 1 year later, to C and his heirs.2. Ownership passes from the grantor, A, to B, the grantee,

then there is a lapse of time – 1 year later, so if B marries C, then rights to possession of the property would revert to A, the grantor or his heirs, and then after 1 year, ownership / right of possession would then pass on to C, the second grantee.

3. Grantor to grantee upon happening of conditioned event.

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4. Always involves lapse of time (even 1 day) between happening of event and the other transferee getting the interest.

iii. An executory interest is a future contingent interest created in favor of a transferee in the form of a springing or shifting use which, upon the happening of the contingency described, will be executed into a legal estate and which cannot be construed as a remainder.

iv. Elements:1. Always in favor of the transferee, who is someone other

than the transferor or grantor.a. An executory interest therefore should never be

confused with a reversion, possibility of reverter, or right of reentry for condition broken.

i. Right of possession reverts back to grantor for a remainder.

2. It is always contingent and can never become vested because when it vests, either as a future or present interest, it ceases to become an executory interest.

3. An executory interest cuts short a prior estate on the happening or nonhappening of a certain event.

a. Compare: remainder follows the natural termination of the preceding estate

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PMBR CD #2

I. Contingent remaindera. Cannot follow a fee simple interest of any kindb. Any interest which follows a fee and is held by a third person must be an

executory interest. **i. Ex: If A conveys property to B and his heirs, but if B sells liquor

on the premises, then to C and his heirs.1. C has a shifting executory interest.2. C’s interest cannot be a contingent remainder b/c a

remainder cannot follow a fee simple estate and it cannot cut short a preceding estate.

II. Executory devises and interestsa. Executory devises are identical with springing and shifting interests, but

executory devises are created by will.i. Springing and shifting uses or interests are created by deed or

grant inter vivos.III. Rule in Shelley’s case (abolished in most jurisdictions)

a. Common law:i. If in a conveyance or a will, a freehold estate (usually a life estate)

is given to a person and in the same conveyance or will, a remainder is limited to the heirs of that person (of the grantee), then the grantee takes both the freehold estate and the remainder.

ii. In essence, the grantee ends up with a remainder in fee and the remainder to his or her heirs is cut off.

iii. Ex: Where X, owner in fee, conveys Blackacre to B for life, with remainder to B’s heirs.

1. In a jurisdiction that has adopted the rule in Shelley’s case, the remainder to B’s heirs is cut off, they don’t get anything and B ends up with fee simple estate.

2. B takes both his freehold estate and the remainder.3. There is a merger of the life estate with the remainder and

B ends up with a fee simple estate and the remainder to his heirs is cut off.

IV. Doctrine of Worthier Title (Rule against remainders in grantor’s heirs)a. Almost exactly the same as the Rule in Shelley’s caseb. Applies to situations where the grantor, X, owner in fee, conveys

Blackacre to B for life with remainder to X’s heirs.i. The remainder is in the grantor’s heirs.

ii. Compare: Rule in Shelley’s case: remainder is in the grantee’s heirs.

iii. Jurisdiction that follows this doctrine:1. The remainder to X’s heirs at the expiration of B’s life

estate, is cut off – abrogated and you then have a reversion in fee back to the grantor (X) or his heirs.

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c. In its application to wills, the rule in its testamentary aspect requires that the heir take by descent rather than by purchase or devise.

i. Doctrine gets its name b/c the heir takes by descent rather than devise.

ii. It was said that title by descent was worthier or better than title derived by purchase or devise.

iii. Reason for this:1. A descent of land barred the right of entry of the person

deseised.2. If the title were acquired by purchase, the deseisee’s right

of entry was not barred.V. Rule Against Perpetuities

a. No interest is valid unless it vests if at all not later than 21 years after some life in being at the time of its creation of the interest.

b. Only contingent interests, executory interests, and options to purchase land in the future are covered by this rule.

i. Any contingent interest which does not meet the rule are void ab initio.

c. “Must vest”i. Any contingent interest must vest within 21-years, or fail within

the 21-years.ii. If the contingent interest is absolutely certain to vest or fail entirely

within the period of the rule, then it is valid.d. “Not later than 21-years of some life in being”

i. Includes lives in being provided that they are not so numerous as to prevent practical determination of when the last life in being dies plus 21-years and gestation period.

e. “At the creation of the interest”i. Period of the rule begins when the interest is created.

1. In a will, it’s when the testator dies.2. In a deed, it’s when the deed is executed.

f. The rule is directed against remoteness in vesting.i. Sole test: Must the interest vest or fail within the 21-year period

permitted by the rule.1. If it may vest, it is void.2. If it must vest, it is not void – it’s valid.

g. Interests subject to the rule:i. Contingent remainders

ii. Executory interestsiii. Options to purchase land that are not incident to a lease, but rather

contained in a deed instrument.1. Options to purchase land that is in a lease, not subject to the

Rule.2. Most frequently tested on the bar (multistate)

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a. Ex: Farpo owned Rosemead, a tract of land, and conveyed the property to Reak. The deed contains the following provision:

i. Right of first refusal whereby anytime before the year 2222 the grantee has a modified offer for purchase of said premises which she is to accept, then the grantee is to furnish a right of first refusal to the grantor or the heirs.

ii. Right of first refusal violated the rule against perpetuities because the grantor has this right or her heirs, had until 2222 in which to exercise this option to purchase land or right of first refusal. The fact that the right of first refusal was given to the grantor or her heirs – we don’t know who the heirs are – until the grantor dies. As such, the option to purchase the land in the future might violate the rule b/c it might vest too remotely.

iii. The grantor conveyed property to the grantee and in the deed, it gave the grantor the right of first refusal that if the grantee received an offer for sale of property, the grantee had to submit the offer to the grantor and the grantor had right of first refusal to purchase the same property.

1. Grantor’s right of first refusal here did not violate the Rule b/c the grantor was the measuring life b/c we’ll know within the grantor’s lifetime whether the land will be purchased by another.

iv. Right of first refusal held by grantor or heirs until sometime in the future – will violate rule; but where right of first refusal is held by grantor and you know within the grantor’s lifetime whether the right will be exercised, no violation of the rule. (multistate)

iv. Powers of appointmentVI. Class gifts (Remainders subject to open)

a. If a remainder interest is given to a class of persons, it is deemed vested only when the class is closed and all conditions precedent for every member of the class, have been satisfied.

b. The entire class gift is void if the interest of one member of the class might violate the rule.

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c. The class closing rule – class is closed when no one born after the date can share the gift.

i. Class can show physiologically, or1. Class closes physiologically when the parent of the class

dies.2. Ex: A gift to A’s children would close physiologically at

A’s death.ii. Under the rule of convenience

1. A class can close earlier so as not to violate the Rule Against Perpetuities.

2. Whenever any member of the class has the right to demand possession of his or her share, the class can close.

3. Gifts which would normally violate the Rule can be saved.VII. Powers of appointment

a. General power of appointment is considered the equivalent of ownership of property.

b. If one has a power of appointment over property, he or she can exercise such power and alienate or transfer property.

c. If one can alienate property, the Rule is not offended.d. In order for Rule not to be violated, the power to exercise the power of

appointment must be within the time period allowed by the Rule.VIII. Restraints in Alienation

a. Restraints on alienation – provisions in deeds, wills, mortgages – that restrict the grantee’s power to convey property to others.

b. Whether a particular restraint is valid depends on many considerations:i. Kind of estate

1. Where you have a fee simple interest, any direct interest on a fee simple is invalid.

2. But, where you have lesser restraints, restraints on alienation of non-freehold estates (tenancy – periodic tenancy or a tenancy at will) are commonly upheld.

a. Ex: Nonassignment clause in a lease is a common example of restraint on alienation of a nonfreehold estate that is upheld as valid.

ii. Kind of restraint1. Disabling restraint2. Forfeiture restraint3. Promissory restraint

iii. Extent of estate1. Restraint may only limit grantee with respect to time.2. Restraint may also restrain a person.

a. Restraint on a person is invalid.b. Ex: Grantee is prohibited from alienating property

to certain racial or religious or social groups – violation of 14th amendment Equal Protection clause.

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iv. Preemptive rights (right of first refusal)1. Partial restraint on alienation - -held as valid.

IX. Concurrent estates – Ownership or possession by two or more persons at the same timea. Ownership or possession by two or more persons at the same time.b. 3 types of concurrent estates:

i. Joint tenancy1. A form of co-ownership where each tenant owns an

undivided interest in the whole estate.2. Distinguishing aspect: right of survivorship – upon the

death of one tenant, the title passes to the surviving joint tenant.

3. Creation – 4 unities requires at common law:a. Unity of time (interest must vest at the same time)b. Unity of title (interest acquired by the same

instrument)c. Unity of interest (interest of the same type and

duration)d. Unity of possession (each of the joint tenants are

given identical rights of a joint tenant)4. Always created by a deed or will, never by descent

(intestacy).5. ** Under modern law, joint tenancies are disfavored.

a. There must be a clear expression of intent to create a joint tenancy, otherwise it will not be exercised.

6. A is the owner of Blackacre, conveys it to B and C and to their heirs.

a. Typical words for creating joint tenancy at common law, but not today.

b. Today, in order to create a joint tenancy, A would have to state in his conveyance that he conveys Blackacre to B and C and their heirs as joint tenants.

i. If the words joint tenants are not used, a tenancy in common is created – modern law.

7. Where one of the joint tenants conveys his interest inter vivos, the joint tenancy is severed and a tenancy in common results.

8. A joint tenancy is destroyed by a suit by partition which can be brought by any of the joint tenants. (on the multistate)

9. Joint tenancy may be severed by a mortgage in a title theory jurisdiction or a contract to convey.

ii. Tenancy by the entirety – seized of the entirety1. Co-ownership by husband & wife.2. Common law: regarded as one legal entity.

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3. Similar to joint tenancy4. Right of survivorship

a. Where you have husband predeceasing the wife, then title to the property – ownership passes – to the survivor.

5. 5 unities – husband and wife:a. Time, title, interests, possession, person

6. In most states, neither spouse could dispose of any interest held by tenancy by the entireties.

a. In order to dispose of the property, both spouses needed to participate in the conveyance.

7. Death destroys tenancy by the entirety8. Divorce destroys tenancy by the entirety

a. Divorced persons become tenancy in common.9. Execution by a joint creditor of both husband and wife

would constitute a severance.a. Creditor of one spouse cannot levy on the state

owned by the entirety.10. Partition – neither spouse is entitled to have a partition at

common law (but you can with joint tenancy).iii. Tenancy in common (each holds undivided ½ interest)

1. A concurrent estate in which cotenants each own an undivided, separate and distinct share of the property.

2. A tenant in common does not own the whole property as in a joint tenancy. **

3. Each tenant can dispose of his part or fraction thereof by deed or will.

4. The only unity is the unity of possession inasmuch as each tenant is entitled to the whole of each estate.

5. No right of survivorship; upon death of tenant in common by intestacy, no right of survivorship – heirs don’t take.

6. Compare: Joint tenancy, right of survivorship does attach.7. Tenancy in common may be destroyed by partition, merger

(merger when the entire title vests in one person, either by purchase or otherwise ).

8. Conveyance – this interest is freely alienable. Each cotenant can freely convey or transfer his or her interest by conveyance inter vivos or testamentary disposition.

a. There is no destruction of tenancy in common by conveyance.

9. Ouster when one cotenant ousts from possession her cotenant (i.e., wrongful exclusion from possession), the ousted tenant has a cause of action against the possessor not to put her out and to regain possession of the property.

10. There is no fiduciary relationship between or among tenants in common.

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c. Rights and duties of tenants by the entireties, joint tenants, tenants and common:

i. Possession In all forms of concurrent ownership, each tenant has the right to possess and enjoy the whole of the property.

ii. Rents and profits1. Majority of estates tenant in possession has the right to

retain profits gained by the use of the property.2. Tenant in possession need not share profits with a cotenant

out of possession, unless there has been an ouster.a. If there is ouster, the ousted tenant may hold the

tenant in possession for the profits collected during the time ousted.

iii. Taxes1. Where one tenant pays the entire taxes, that tenant may

compel contribution by the other tenants.iv. Repairs and improvements

1. A tenant has no right of contribution against other tenants with regard to repairs and improvements that one has made on the property.

2. But if a partition has been had (in equity court – action or suit for partition), then the court may make an equitable division of the proceeds and the court will take into account expenditures made by one tenant by way of an accounting.

X. Mortgagesa. Minority of states – title theory:

i. A mortgage is regarded as a transfer of title and destroys or severs the joint tenancy.

b. Majority of states – lien theory:i. A mortgage is regarded as a lien and one joint tenant’s execution

of mortgage does not result in a severance.XI. Leases

a. Majority: A lease does not effectuate a severance of the joint tenancyXII. Contracts to convey

a. In most states, a contract to convey results in the severance of the joint tenancy despite the fact no conveyance actually occurs (contracts to convey – in equity; equitable interest in the property).

XIII. Landlord-tenant lawa. Leasehold involves a conveyance of an estate (conveying right to possess

property to another person for a limited period of time) and also constitutes a contract. (essay)

i. B/c it involves a conveyance in land, it comes within the Statute of Frauds and must be in writing to be enforceable.

b. Lease must be in writing and must contain the following elements to satisfy the Statute of Frauds:

i. Must identify the lessor and lessee

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ii. Describe the leased landiii. State the term of the lease iv. Set forth the amount of the rent that needs to be paid

c. Contract aspecti. Modern leases contain many covenants – impose contractual

obligations on the part of the landlord and tenantii. Most courts treat leases as contracts rather than conveyances

(even though a lease involves both elements).d. Tenant’s duties

i. Duty to pay rent1. Rent is viewed as the consideration paid by a tenant to her

landlord for the use and enjoyment of the land.2. When rent accrues – at common law, rent is not

apportionable as to time – it does not accrue from day to day, as does interest on money loans. If a lease provides for payment of an annual rent on the last day of the calendar year and the lessor accepts a surrender of the leasehold at any time of the year, she can collect no rent for any portion of such year.

a. Ex: If lease provides for annual rent on last day of calendar year & lessor accepts surrender of leasehold for that portion of the year, the lessor may not accept rent since rent does not accrue from day to day.

ii. Destruction of premises1. At common law, tenant remains liable to pay rent even

though because of fire, storms, etc., or other natural events, this does not relieve the tenant of obligation to pay rent. **

iii. Rent is extinguished or suspended by:1. Release by the landlord2. Merger

a. Where the tenant acquires title to the property (purchases the property), then the tenant’s leasehold interest merges with the fee, relieving tenant’s obligation to pay the rent.

3. Expiration of the lease4. Eminent domain – takes both the leasehold and the

reversiona. Rent is extinguished by eminent domain. Entire

taking of leasehold or partial?i. Where entire leasehold is taken by eminent

domain (all of the leasehold condemned for full balance of the lease term), the tenant’s duty to pay rent is extinguished.

ii. Where there is a partial or temporary taking – if it’s for a short period of time or for a

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period less than the remaining term or if only a portion of the rented property is condemned, the tenant is not discharged from her obligation to pay rent.

1. Ex: Landlord leases office building to tenant and there’s a large parking lot with the agreement and if the parking lot is condemned, by the condemnation of part of the leasehold premises does not relieve the tenant of the obligation to pay rent.

5. Constructive evictiona. Extinguishes tenant’s obligation to pay rent.b. Material breach of the landlord which violates the

tenant’s in quiet covenant of quiet enjoyment if it renders the premises uninhabitable, then the tenant must quit the premises in a timely fashion in order to be relieved of the duty to pay rent.

6. Frustration of purposea. Modern law.b. Relieves tenant’s duty to pay rent.c. Complete or almost a complete frustration of

purpose (e.g., sole use of the premises becomes illegal – lease premises for the sale of raccoon furs and then the state enacts a statute prohibiting the sale of raccoon furs – making it illegal, the frustration of purpose would relieve tenant of his or her obligation to pay rent).

7. Surrendera. Express agreement of the parties where the landlord

gives the tenant permission to surrender, this relieves tenant of his obligation not pay rent.

8. Duty of repaira. Tenant has an affirmative duty to make ordinary

repairs on the premises.b. Tenant cannot commit waste on the leased

premises.i. Voluntary waste – Life tenant or tenant for

years1. Injury of premises or land caused by

an affirmative act of tenant, such as exploiting minerals on the land (or removes timber of the property) unless the land was previously so used or as so provided in the lease,

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this would constitute voluntary waste.

ii. Ameliorating waste1. Change in the physical

characteristics of the occupied premises by an unauthorized act of the tenant, but which increases the value of the land.

2. Ex: Where a tenant razes an old outmoded building on premises and erects a modern building which raises the value of the property from $50,000 to $200,000.

3. Note: a tenant is not liable for ameliorating waste b/c it increases the value of the land.

iii. Permissive waste1. Injury of premises or land caused by

tenant’s failure to act when a tenant is under a duty to act.

2. Ex: There is a leak in the roof and it’s raining outside and water is pouring down – one of the shingles is detached which causes the roof to leak and a rainstorm, water enters the premises and damages the hardwood floor. A tenant is under obligation to make ordinary repair and in this situation the tenant is liable for the damage or the permissive waste that has injured the property. **

iv. Equitable waste1. Injury to the reversionary interest in

land which is inconsistent with good husbandry and is recognized only by the equity court and does not constitute legal waste.

2. Ex: Where the tenant is about to commit an act which constitutes equitable waste, the equity court can enjoin the tenant from doing that act, but no damages.

3. Where you have the expression “without the impeachment of waste” in the lease, then you’re having a

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situation dealing with equitable waste.

4. Ex: A is the fee simple owner of Blackacre. On Blackacre, there is a 6-story apartment building…we have A, fee simple owner, conveying the apartment building, granting B a life estate in the apartment building. B can collect the rent with respect to the rents of all of the tenants in the apartment building. Say, B, wants to raze this 6-story apartment building. B would be enjoined if she threatened to raze the apartment building and construct a single family home b/c this would cause injury to the reversionary interest to the grantor or grantor’s heirs.

5. Normally, granting a life estate here would have to include the words “without impeachment of waste” in the conveyance. Then, B, would not be permitted to raze the 6-story apartment building and build a single family home, this would constitute equitable waste and this would be enjoined by the court in equity.

e. Tenant’s tort liability – duty of care to licensees, invitees, trespassersi. A tenant, in order to determine the duty of care which a possessor

of land owes a licensee, invitee, trespasser.ii. Generally, no duty of care owed to trespasser unless an anticipated

or discovered trespasser, then the possessor has duty to warn the tresspasers of known dangerous conditions which the trespasser would not normally discover himself or herself.

iii. For a licensee, the duty of care generally owed is the duty to warn of known dangerous conditions.

iv. Duty owed to invitee:1. Duty to inspect and make safe.

f. Landlord’s dutiesg. Bar exam question dealing with landlord – tenant law, usually tested on

landlord duties, tenant duties, assignments, subleases. (multistate)

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PMBR CD #3

I. Landlord dutiesa. Duty to deliver possession of premises

i. American rule: Landlord does not have obligation to actually delivery possession of premises to the tenant.

1. A lessee does not acquire the legal interest in the premises until he actually takes possession in the property .

2. In the event there is a trespasser or a holdover tenant (tenant at sufferance), the tenant’s exclusive remedy is against the wrongdoer and the tenant has no action against the landlord.

a. Tenant’s only recourse is to evict or go after the wrongdoer.

ii. English rule (common law rule): Landlord impliedly warrants that the tenant will have the legal right to possession at the beginning of the leasehold term

1. Contrary to the American ruleb. In every lease, there is an implied covenant of quiet enjoyment.

i. Eviction by the landlord reaches the covenant of quiet enjoyment and relieves the tenant of his obligation to pay rent.

ii. This covenant ensure the tenant that his possession will not be disturbed by someone with a superior legal title to the land including the landlord. See Restatement 2d § 4.1-4.3. (http://www.law.cornell.edu/topics/landlord_tenant.html)

c. Actual eviction occurs when the landlord or paramount title holder excludes the tenant from the leased premises.

d. Constructive eviction results from conduct or neglect on the part of the landlord which renders the premises uninhabitable.

i. The tenant may quit the premises in a timely fashion and no longer be obligated to pay rent.

e. Duty to deliver possessionf. Quiet enjoymentg. Premises suitable for particular purpose

i. Landlord does not impliedly warrant that leased premises is particular purpose.

ii. Landlord is not liable for dangerous conditions existing on the leased premises.

iii. Doctrine of caveat emptor prevails (“buyer beware”).iv. Exceptions :

1. Where there is a hidden defect – if at the commencement of a lease, there is a hidden defect, a landlord may be liable for the tenant, guest, invitees, licensees, if at the commencement of the lease, there is a hidden defect which

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the landlord knows about or should know about and which the tenant is not likely to discover.

a. Rationale: Landlord is liable where he or she has enticed the lessee into a trap.

2. Where there is a completely furnished dwelling; landlord in a lease for a short period of time for a completely furnished dwelling impliedly warrants fitness of the premises and the furnishings.

a. If injury results from defects, the tenant or other people entering the premises may recover against the landlord.

h. Landlord is under no duty to repair. At common law and in absence of lease covenant or statute, landlord is under no duty to repair. Tenant is under a duty to repair and to perform ordinary repairs, not a landlord.

i. A landlord may be liable where the landlord undertakes the repairs (the tasks of making ordinary repairs) and does so in a negligent fashion, then the landlord may be liable in tort from the resulting injuries.

II. Leasehold estatesa. Tenancy for a term – tenancy for years

i. Fixed duration set forth in the lease – 6 months, 4 years, 5 years, etc.

b. Periodic tenanciesi. Tenancy from month to month, week to week, etc.

ii. Continuing type of tenancy and not the inception of a new tenancy at the beginning of each period.

iii. Automatic renewal:1. Tenancy does not terminate at the end of each period, but

automatically renews( week to week, month to month, etc.), unless one of the parties give notice of his or her intent to terminate.

iv. Failure to give notice to terminate:1. 30-days notice (usually statutory); if notice is not in

compliance with the statutory compliant, it is ineffective.a. Ex: 30-day notice period and one of the parties

gives 29-days, notice is not effective.2. If no termination (that’s valid), then automatic renewal.

c. Tenancies at willi. An estate that is terminable at the will of either the landlord or

tenant.ii. Common law – can be terminated without advance notice (unlike

periodic tenancy).iii. Continues indefinitely until terminated by one of the parties.

d. Tenancies at sufferance

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i. Tenancy arises where you have a holdover tenant, where a tenant wrongfully remains in possession after the expiration of the lawful tenancy.

ii. Liability of a holdover tenant:1. Once tenant at sufferance is removed from land, then from

relation back to period of wrongful holdover period to the landlord as trespasser.

e. Absent no prohibition restricting or prohibiting transfers in a lease, a tenant may transfer her leasehold interest in whole or in part.

i. If she makes a complete transfer of her entire remaining estate, she has made an assignment.

ii. Conversely, where she has retained any part of her leasehold estate, then the transfer is a sublease.

iii. Ex: Landlord leases premises to tenant for 5-years. After Year 3, tenant decides to go to Europe and tenant is planning on staying in Europe for the rest of her life, so she transfers the remaining 2-years under her tenancy for years to her friend, Judy.

1. This would be an assignment.2. Tenant is transferring the entire remaining balance to her

friend Judy, the assignee.iv. Ex: 5-year tenancy. After Year 2, Cathy has a job position in CA

for 1-year (internship), she’s been in possession for 2, she now wants to transfer…leave the state for 1 year…but she plans to reoccupy her apartment for Years 4 & 5, so she enters into a sublease with her friend where she transfers the premises to her friend for 1-year…since she retains part of the leasehold, then the transfer constitutes a sublease.

v. Effect of assignment by tenant (assignor), the tenant is still in privity of contract with the landlord even where you have an assignment. **

1. There is no longer privity of estate between the tenant and landlord.

2. There is still privity of contract between the tenant and landlord.

vi. You have an assignment and a leasehold agreement entered into between tenant and landlord and then the tenant assigns his rights to the assignees – this is where the tenant transfers her entire remaining balance under that leasehold, in which case, the tenants and landlord – no privity of estate. But there is privity of contract (i.e., covenant to pay rent).

1. Q: Between the assignee and landlord after an assignment?a. There is both privity of estate and privity of

contract.b. Assignee is bound to perform the original covenants

in the lease and is held liable to the landlord…

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because these covenants run with the land and are based on privity of estate and privity of contract.

2. Q: What about a second assignment?a. Where the assignee reassigns her interest, her

privity of estate ends **, and unless the first assignee has assumed the covenants under the lease, then there is no privity of contract either.

b. Second assignee will be in privity of contract and privity of estate with the landlord.

c. There may be privity of contract where the first assignee has expressly or in writing has assumed the covenants under the lease, such as the covenant to pay the rent. **

vii. Effect to pay rent:1. Tenant and sublessee – no privity of contract and no privity

of estate.2. However, the original tenant (original lessee) remains in

privity of contract and in privity of estate with the landlord.3. A sublease creates no legal relationship between the

landlord and subtenant.4. The original tenant remains the landlord’s tenant and the

sublessee is the tenant of the original tenant (his landlord).5. The original tenant therefore remains obligated under the

covenants in the lease (i.e., covenant to pay rent).viii. Assignment of the landlord

1. Landlord’s reversionary interest is assignable.2. The sale of an occupied apartment building constitutes such

a transfer.3. A landlord can convey his ownership interest in the

premises or the property.4. Recognition of the new landlord by the tenant is called

attornment.ix. Lease covenants:

1. Covenants against assignments or subleases are strictly construed.

2. In a lease, you may have a clause prohibiting assignments or subleases.

a. Many leases contain these clauses not to do these things without the consent of the landlord.

b. These are strictly construed.c. A covenant that prohibits subleasing does not

prohibit assignment and vice versa.III. Fixture

a. Chattel which becomes real property. (multistate)b. For a chattel to become a fixture:

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i. It must be the intention of the annexor that the chattel become a fixture.

1. Various considerations in determining the intent of the annexor:

a. Nature of the articleb. Manner of annexation to the landc. Injury to the landd. Completeness with which the chattel is integrated

with the use to which the land is being put. **e. The relation which the annexor has with the land,

whether the annexor is a licensee, tenant at will, or the owner of the property.

ii. The chattel must be annexed to the reality either actually or constructively.

iii. The chattel must be appropriated for the purpose for which the land is to be used.

c. Trade fixturesi. Chattels annexed to the land by the tenant for pecuniary gain

during her tenancy.ii. They are removable by the tenant – tenant for life, tenant for years,

tenant at will.IV. Rights in the land of others – nonpossessory interests or incorporeal interests

in real propertya. Profits

i. Profits a prendre / profits:1. The right of one person to go onto the land of another and

extract or remove something therefrom, such as sand, timber, or vegetable.

b. Easementsi. The right of one person to go on land in possession of another and

make limited use of that property, such as for ingress or egress.ii. Ex: You grant someone an easement for ingress / egress – to use a

walkway.iii. Easement holder does not have right to remove substance in the

property, but only has right to enter the person’s property and make limited use – ingress or egress.

iv. Two types of easements:1. Easements appurtenant

a. Requires 2 parcels of land – dominant tenement and adjoining servient tenement.

b. It is the owner of the dominant tenement (a.k.a. dominant tenant) has the right to enter onto the servient tenement and has the right to make use of that tenement for ingress or egress.

c. Servient tenement is the land subject to the easement.

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d. Easement appurtenant runs with the land (adjoining tracts of land).

i. Ex: Jones is the owner of the dominant tenement. Smith is the owner of the servient tenement. If Smith gives Jones the right to enter onto the servient tenement for ingress and egress.

1. Q: What happens if Jones conveys his property to Baker and Smith conveys his property to Carl?

a. Easement appurtenant runs with the land because it can be enforced by or against successors in interest to the original contracting party.

b. If Jones conveys his property to Baker, Baker can enforce that easement against Smith or Carl.

2. Easements in grossa. Easement in gross – you don’t have 2 adjoining

tracts of land; one parcel of land burdened with the easement.

i. Ex: You only have a servient tenement subject to easement.

ii. Ex: City installs a sewer line across your backyard or a city installs telephone lines across your front yard.

iii. Easement in gross is personal – it is intended to benefit the holder personally, rather than in connection with any land that owner may own – here, no adjoining dominant tenement.

iv. Easement in gross can run with the land.v. Ex: The City constructs a sewer line in your

backyard. Jones is the owner of the property and Jones conveys the property to Smith. Certainly, that easement is going to run with the land and is going to burden the land as far as Smith or any successor in interest may be concerned.

3. 2 basic classifications of easements:a. Affirmative easements

i. Entitle the easement holder (usually, the dominant tenement holder where you have

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an easement appurtenant) to make some affirmative use of the dominant tenement.

b. Negative easementi. Prevents the servient tenement owner from

doing some act or making a particular use of her land.

ii. Ex: B, is the owner of Blackacre, located between the ocean and A’s property. A owns Whiteacre. B agrees in writing not to construct any structure on his property that interferes with A’s view of the ocean. B has a negative easement – B is promising to refrain from building on his property so that A’s view of the ocean will not be impaired. Negative easement prevents the servient tenement owner from doing some act or making a particular use of his or her property.

4. Creation of easementa. An easement is an interest in land.

i. It comes within the Statute of Frauds – where you have a K for a sale or transfer for an interest in land, that K comes within the statute of Frauds and it must be in writing in order to be enforceable.

1. It usually must be created in a writing in order to be enforceable.

2. Easement is an interest in land, and therefore must be in writing – deed or other similar type of written instrument.

b. 2 types of easements not in writing:i. Easements by implication (or necessity)

1. Where you have a subdivisional scheme.

a. Ex: Baker owns a 100-acre tract of property and decides she is going to subdivide her property and sell off 100 1-acre lots to various buyers. Baker sells these individual lots to X, Y, S, U. There is a highway bordering on the eastern tract of the property. Baker sells this lot to Y, but in Y’s deed, no mention is

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made as to an easement for ingress or egress over U’s land. The only access Y has to the highway is over U’s land. Here, Y has an easement by implication over U’s property by ingress and egress. Usually, implication arises where reasonably necessary or strictly necessary for the benefit of the dominant tenement owner. Also called an easement by necessity.

2. Easement by implication can arise by grant or by reservation

a. Where Baker is the owner of this subdivision and baker, the grantor, conveys this lot to Y, if Y, who is the dominant tenement owner, is to be benefited by the easement across U’s property where Y is the grantee, then this is an easement by grant where the easement benefits the grantee. The grantee simply has to show that the easement was reasonably necessary.

b. But, where you have an implication by implication or implied reservation, the easement benefits the grantor.

c. Ex: Baker, owner of the property, sells this lot to C and Baker retains these three lots here. Baker’s only access to the highway is across C’s property. In this situation, it is the grantor who is benefited by the easement. Even though there was no mention of the easement in C’s deed, we would say that

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if Baker’s only access to the highway is by the property, this is an easement by implication.

d. In order for the grantor to have an easement, grantor is to show that the easement is strictly necessary.

e. For the grantee, the grantee only has to prove that the easement is reasonably necessary.

ii. Prescriptive easements (easements by proscription)

1. Adverse usea. Use must be without

permission (nonpermission)2. Open3. Notorious4. Continuous5. Use must be continuous for the

statutory periodv. Easement may be extinguished by:

1. Mergera. Where the fee simple title to both the servient and

dominant tenements come into the hands of a single person.

b. Ex: Where both the dominant and servient tenements come under single ownership, acquiring title to both parcels of land.

c. Ex: Dominant tenement owned by Baker. This is the servient tenement which is owned by Able. Say Baker has the easement / right to enter Able’s property for ingress / egress. Let’s say that Able purchases Baker’s land in which case Baker’s easement is extinguished by merger.

d. Where the servient tenement owner purchases the other parcel of land, then the easement is extinguished by merger. (tested on the multistate)

2. Written releasea. Where the holder of the benefit of the easement –

the holder of the benefit easement (normally, the dominant tenement owner) may execute a release terminating the easement.

3. Abandonment

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a. Clear showing by the dominant tenement owner that she intends to abandon the use will extinguish the easement.

b. Mere nonuse, no matter how long continued, will not extinguish an easement.

c. Where you have nonuse coupled by the intent to abandon, this would be sufficient to terminate an easement.

d. Ex: Baker owns a large tract of land and many years ago, back in 1950, he gave the B&O RR company an easement over the northern half of his property to run the railroad lines. The B&O RR Co. used that easement and trains traveled over that tract of land, but within the last 5 years or 7 years, B&O has decided not to run its trains over that line and is no longer using the easement. This mere nonuse will not extinguish the easement. The easement will be extinguished if B&O removes the tracks – this will show nonuse coupled with an intent to abandon – this will extinguish the easement.

e. Excessive use does not forfeit or extinguish the easement.

f. Excessive use – then it is up for the servient owner to bring an action of equity to curb the excessive use, that goes beyond the conditions of the easement, seeking injunctive relief in order to enjoin the excessive use from continuing.

4. Prescriptiona. An easement can be extinguished or terminated by

prescription – when the servient tenement owner has used her land continuously and uninterruptedly for the statutory period of prescription in a way that is inconsistent with and adverse to the easement and without the consent of the dominant tenement owner.

i. The easement is then extinguished by prescription.

5. Destruction of the servient tenementa. If the easement is in a structure (i.e., staircase or

hallway for purposes of ingress or egress) and there is an involuntary destruction of the structure (by fire or flood), then this will extinguish the easement.

6. Estoppela. B has a right of way over A’s Blackacre and tells A

that he has no intention of using the right of way again and has not used it for several years.

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b. A then goes build a house over B’s right of way. B has seen the construction – the house being built everyday. B says I have a right of way, I’m going to continue to use that roadway for ingress or egress. B will be estopped from using the easement. Example of estoppel.

c. Where the servient tenement owner in reasonable reliance of the conduct or oral assurances of the dominant tenement owner, uses the servient tenement in a manner inconsistent with the use of the easement, this will result in extinguishment of the easement by estoppel.

7. Condemnation / eminent domaina. Where you have condemnation of the servient

estate, this will extinguish the easement.b. Modern view: Where you have termination of an

easement by condemnation or eminent domain, the holder of the easement (dominant tenement owner) is entitled to compensation for value lost. (multistate)

i. Same rule applies to profits. Where you have the termination of a profit or easement by condemnation, then the profit holder or easement holder is entitled for compensation for the value that is lost. Profit holder or easement holder not necessarily owner of property (just right to exploit).

c. Licensesi. Mere permission to come on to land of another without being

viewed as a trespasser.ii. Unlike an easement, a license is not an interest in land. It is merely

a privilege, a revocable privilege, at the option of the licensor to come on to the land for that limited purpose.

1. Generally, a license is revocable, but where the license is coupled with an interest, it is irrevocable.

iii. Ex: If you go to a shopping mall (the Beverly Center) and you go into the parking lot and in the mall facilities, you pull your car in, park your car, and you go shopping. This is a license – mere privilege to park your car would constitute a license. If you had to pay for the parking, then arguably now this interest could be viewed as a contract or it could be viewed as a license coupled with an interest that could make it irrevocable.

1. If you park your vehicle on someone’s property, where you have a mall-type facility, where you don’t have to pay, this is a license.

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iv. Ex: You’re a sports spectator and you go to watch the baseball team play, your sitting in your seat at the stadium is a license. If you misbehave (throwing things at players, etc.), they can evict you from the stadium. The license is revocable.

1. Property interest in sitting in the seat – license.2. Tort classification – invitee (paying customer) (tort law).

Duty of care to inspect and make safe for you (owner owes you this).

d. Covenants running with the lande. Equitable servitudes

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PMBR CD #4:

I. Licensesa. A license is generally revocable.b. If a license is coupled with an interest, it is irrevocable.c. Ex: A is the owner of Blackacre and A sells B 100 bushels of potatoes

which are stored in a shed or warehouse on Blackacre and at the same time that A sells B 100 bushels of potatoes, A gives B permission / a license to enter Blackacre to remove the potatoes. Here, B has a irrevocable license b/c B’s right to enter into the property is coupled with an interest (i.e., the purchase of the potatoes).

d. A license is not the same thing as a lease.i. Licensee never had possession of the land.

ii. Licensee simply has mere permission to enter onto the land.iii. Lessee or a tenant always has possession of the land.

e. A license is not the same thing as an easement.i. Easement – substantial, noncorporeal interest in the land of

another.1. An easement generally must be a writing complying with

the Statute of Frauds.ii. License is not an interest in land, does not have to comply with the

Statute of Frauds, does not have to be in writing.II. Covenants running with the land

a. Hybrid between a contract and an easement.b. More than just a personal contract, but less than an easement in the sense

that a covenant is not an interest in the land.c. A covenant running with the land is attached or connected with the estate

since it may be enforced against or by someone who was not one of the original parties – it may be enforced by successors in interest to the original convenantor and convenantee (original convenanting parties).

d. There must be a covenant which must be in writing which is signed and complies with the Statute of Frauds.

e. It must be the intent of the convenantor and convenantee that that convenant run with the land.

i. As long as the words “assigns” or “successors” is used in the instrument, then the intention is clear that the covenant was intended to run with the land.

f. Covenant must touch and concern the land.i. Covenant must make the land more value (increase utility) or less

valuable (or curtail the use).g. There must be privity of estate between the parties.

i. One of the contracting parties succeeds to an interest in the land of another.

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ii. Ex: Privity of estate between a landlord & tenant; privity of estate between grantor and grantee. Grantor is succeeding to estate of landlord. Grantee is succeeding to estate of tenant.

h. Generally enforceable with actions at law.i. Breach of convenant is similar to breach of contract.

ii. Nonbreaching party brings damages to recover for breach of contract or covenant.

iii. Breach of contract recovers money damages.iv. But sometimes -- Damages may be inadequate, may seek

injunctive relief.i. Terminated

i. Covenant running with land may be extinguished in the same way as an easement or profit.

1. Covenant running with the land may be extinguished bya. Mergerb. Abandonmentc. Estoppeld. Release

III. Equitable servitudesa. Restriction on the use of land enforceable in equity.b. In order to have an equitable servitude, 3 requirements must be satisfied:

i. There must be a writing, complying with the Statute of Frauds.ii. The intention of the parties determines who may and who may not

enforce the equitable servitude. Intention on the parties to bind the land with this servitude.

iii. Notice. The transferee or grantee must take the land with either actual or constructive notice of the existence of the servitude.

1. Cannot be enforced by a person who gives value but has no notice of the servitude, namely a BFP. You have to have notice.

2. Notice may be:a. Actual noticeb. Constructive notice (record notice; declaration of

restrictions in subdivision or common development scheme, recorded with the Recorder’s Office); one who purchases lot of land would be on constructive or record notice of the restriction.

c. Inquiry noticei. We have a subdivision scheme or common

development scheme.c. Equitable servitude usually arises in these common development schemes:

i. Baker is the owner of a 100-acre tract of land and subdivides the property and intends for a common development scheme that this subdivision will be restricted to residential use or restricted to only building single family homes.

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ii. Equitable servitudes may be established in common development schemes.

1. Multistate if you see a common development scheme, question probably deals with equitable servitude.

2. Say, Baker wants to restrict the common development scheme and in the deed to 90 lot owners, he contains restriction saying restricting use of lot to residential use only. Baker sells 90 lots; each of deeds have this restriction. 2 years later, Baker than develops and sells off these last 10 lots but fails to include any mention of the restriction. In this type of restriction, these lot owners may still be bound with the restriction even though it’s not in the deed b/c they’re deemed to have inquiry notice (they should be aware of the common developmental scheme) since all other lots have this restriction residential scheme. Therefore the lot owners may be bound by the equitable servitude.

iii. 3 methods of imposing:1. Declaration of restrictions

a. Where the grantor files this with the recorder’s office, evincing an intention to restrict the use of the lot in the subdivision for residential purposes.

b. Where this is done, all of the other lot owners have constructive notice and are bound by the restriction.

2. Where all of the lot owners get together and execute a formal agreement themselves.

3. Where the owner in a subdivision places restrictions on some of the lots, sell those off, retains some lots himself or herself…you have situation of inquiry notice where people that buy the last lots even though they don’t have notice of equitable servitude, they are put on a inquiry notice.

iv. Where the grantor or person who is developing common development scheme files a declaration of scheme with the recorder’s office – evinces intention to restrict the use of lots in the subdivision for residential purposes and sets forth intention to set up a comprehensive scheme for the subdivision – covenant running with the land.

1. Where you have this declaration of restrictions, it is each lot within the tract that is going to be bound by such restrictions. It doesn’t even have to be adjacent lot owners.

v. Equitable servitude vs. covenant running with the land:1. If you see a restriction and you aren’t sure whether it

should be enforced as a covenant running with the land or equitable servitude:

a. Explain both covenant running with the land and equitable servitudes.

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b. Covenant running with the land:i. Privity of estate is required.

c. Privity of estate is not required for an equitable servitude.

i. Person acquiring the property must take the land with actual or constructive land of the restriction.

d. Multistate :i. What is the remedy?

1. One lot owner to bring suit to enjoin the nonconforming use from being made, this is an equitable servitude – b/c this is a restriction in equity. If remedy is in equity, the restriction is usually an equitable servitude.

2. Where remedy is an action brought at law for money damages, you must have covenant running with the land.

vi. Extinguishment of equitable servitude:1. Can be extinguished or terminated by release, merger,

abandonment, etc.2. Tested :

a. Changed neighborhood conditions may also operate to terminate an equitable servitude.

i. Where the purpose of the servitude becomes meaningless or impossible of attainment b/c of changed neighborhood conditions, this results in extinguishment in equitable servitude.

ii. Ex: Change in neighborhood conditions (commercial development – office buildings, or gas station built on neighborhood, etc.), where purpose of servitude is meaningless, then change in neighborhood conditions will extinguish an equitable servitude.

iii. Zoning changes will not terminate an equitable servitude which are inconsistent with the restrictions in the common plan.

IV. Rights incident to possession and ownership of landa. Adverse possession

i. Adverse possession doctrine is based upon the statute of limitations for recovery of real property.

ii. Statute of limitations operate not only to bar one’s right to recover real property held adversely by another but may operate to oust

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adverse possessor with title to the property as though he had received a conveyance by deed.

iii. Ex: Somebody occupies property of another, adversely without permission, openly, notoriously, continuously and for the statutory period (for the statute of limitations), then he can acquire title by adverse possession and divest the rightful owner of the right of property.

iv. Requirements:1. Use must be adverse (without permission)2. Actual and exclusive

a. Sole, physical occupancyb. If the owner of the property is still occupying the

land, then your use (adverse possessor’s use) is not actual and exclusive.

3. The use must be hostile and adverse (without permission)4. The use must be open and notorious (not secret and

clandestine)a. Adverse possessor must present to the world that he

or she is the owner of the property.5. The use must be continuous and without interruption for

the statutory period – 7-years, 20-years, etc.6. For the statutory period.7. Use must be peaceable (no forcible physical eviction or

eviction by court action).a. All elements must exist in order for adverse

possessor to take title away from the rightful owner.v. Frequently tested on bar exam :

1. Limitation of adverse possessor’s claims:a. Adverse possessor cannot acquire a larger estate

than he or she claims in the property.i. Ex: If the adverse possessor only claims a

life estate in the property, then he may not acquire a fee simple title in the property.

b. Adverse possessor cannot claim title to less than a freehold estate.

i. No one claiming less than a freehold estate may get title by adverse possession.

ii. Must claim a life estate, fee tail, or a fee simple.

c. Statutory period on adverse possession begins to run when a cause of action accrues against the adverse possessor.

d. Recording statutes have no application to adverse possession.

e. Tacking : There need not be continuous possession of the property by a single individual. The period

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of adverse possession may be tacked on by one adverse possessor to another, as long as there is privity between the two individuals.

i. Privity exists between adverse possessors if the interest of one is passed onto the other by descent, deed, will, written contract, oral contract, oral gift, or mere permission.

2. Disabilitya. One who is under a disability whether due to

minority, imprisonment or insanity. At the time of the accrual of the cause of action by the adverse possession, is given by statute – most states permit a person under the disability to toll (stopped) the running of adverse possession until the disability is removed.

i. Statute of limitations is for example 10-years or 20-years in fact pattern. Facts say that this jurisdiction has this statute in effect – the statute which tolls the running for removal of disability is phrased in this fashion: “an action for the recovery of land shall be commenced within 10 years or 20 years after the right of action first occurred, but if a person entitled to bring such action at the time the cause occurs is within the age of minority ,of unsound mind, or in prison, such person shall bring such action within 10 years after the disability has been removed.”

1. Where you have disability, that person has an extra period of time (ex: 10 years after with which to bring an action against the adverse possessor). Tolling – takes into account the disability.

3. Title acquired by adverse possession is a substantive law title (good as gold).

a. Recording statutes don’t have application to title acquired by adverse possession.

4. Honest mistake : Where a person occupies property of another openly, notoriously, continuously for the statutory period under mistaken belief that he or she is the rightful owner of the property.

a. Minority view : Possessor does not hold title adversely unless the person intended to hold the property against the whole world, including the

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rightful owner in order for adverse possession statute to run.

i. Where the adverse possessor wrongfully believes he’s the rightful owner, you don’t have the subjective intent to adversely possess.

b. Majority: If you have an honest mistake, you can still acquire title via adverse possession.

i. The possession alone, not the subjective intent of the adverse possessor, is what is important.

ii. Visible adverse possession + intent to possess constitutes adverse character and not the subjective belief of the adverse possessor.

b. Lateral and subjacent supporti. Right of landowner to have land supported laterally by neighboring

land is an inherent land.ii. Right of lateral support:

1. Land in its natural condition without any buildings or artificial structures by excavation or otherwise withdraws lateral support from his neighbor’s land is absolutely liable reliable of negligence – absolutely liable for damage caused to the land.

iii. Where you have artificial structures on the land and the land in its natural condition would have been injured by the taking away of lateral support:

1. English rule (minority rule – minority of states):a. Recovery would include both damage to the land

and damage to the artificial structures.2. American rule (majority view)

a. Recovery is limited to damage to the land and does not include damage to the artificial structures on the land. **

iv. Negligent excavation:1. English rule + American rule:

a. If there is negligence on the part of the excavator / wrongdoer who removes lateral or subjacent support, then the D is liable for the damage which naturally and proximately flows from his negligence, including recovery for damage for both land and artificial structures.

v. Subjacent support:1. Same rules apply (right to below the land, as opposed to the

sides) as lateral support.vi. Interference with underground water.

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vii. If one excavates and this releasing semifluid or semisolid material from his neighbor’s land causing his neighbor’s land to sink, there is liability.

c. Water rightsi. Lakes and streams on the surface

1. Riparian water rights (riparian land – land with natural watercourse, such as a river)

2. this doctrine is predominant in a majority of states – all attracts of land which abut or touches lakes or streams is riparian. To be riparian, one only needs to be an owner of riparian land.

3. Natural flow theorya. Each riparian owner has a fundamental right to have

the stream or lake remain substantially in its natural state, free from any unreasonable diminishment in quantity and free from pollution.

b. Each riparian may use the water for natural or artificial uses so long as he or she only uses it on riparian land and only does sensibly so as not to affect the quantity or quality of the water.

4. Reasonable use theory a. Each riparian owner has a fundamental right to

make maximum use of the water in the lake or stream provided that such use does not unreasonably interfere with the like use of other riparians.

b. Each riparian owner may use the water for any beneficial use, either on riparian or nonriparian lands, so long as he or she does not unreasonably interfere with the reasonable use of other riparians.

5. Ex: (multistate)a. A, an upper riparian, along a stream of water,

diverts the water from the stream for the purpose of irrigating his riparian and nonriparian lands. The diversion of the water causes the level of the water to go 6 inches below its natural or normal level. However, there is plenty of water in the stream to support all of the uses to which the lower riparian can put the water use to. Under the natural flow theory, an injunction would issue b/c B has the right to have the level of the water maintained. A’s use reduced the water level by 6 inches…violating natural flow theory. However, under the reasonable use theory, the injunction would not be granted b/c B can show no injury to himself as a lower riparian

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b/c in the facts…plenty of water left for the lower riparians.

ii. Natural and artificial uses1. Natural uses – uses necessary for daily sustenance of

human beings:a. Household usesb. Consumption usesc. Domestic purposes (gardening for example)

2. Artificial usesa. Irrigationb. Powerc. Miningd. Industrial uses

3. Majority rulea. Use of water for natural purposes is paramount and

takes precedence over use of the water for artificial purposes.

b. One exception (minority view):i. 17 states follow prior appropriation.

Generally, western states follow this. In these western states that follow this doctrine, the prior use of the water is protected. Prior beneficial use of the water is protected. Even though use of the water may adversely affect lower riparian water rights, first in time, first in right. No equality of rights, no reasonable rights. Whoever makes prior rights of the water, the beneficial use is protected.

iii. Underground or percolating waters1. Waters below the surface of land2. Subject to absolute ownership and control of the surface

owner (common law).a. If withdrawal of percolating water affects adversely

the neighboring land owner, the rule is that it is too damn bad. No legal redress in this situation.

3. Reasonable use theory (American rule – majority):a. Owner of surface land may withdraw percolating

water from underneath of the land and must make reasonable use of the water. If the surface owner makes unreasonable use of the water which affects neighboring land, neighbor has cause of action against the surface land.

iv. Surface waters1. Common law rule (common enemy rule):

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a. Majority: A land owner has unlimited discretion in dealing with surface waters.

b. Surface waters = common enemyc. Landowner has unlimited discretion in dealing with

surface waters – can build dikes or drain the water – and not be held liable to his or her neighbors.

d. Surface rights (& subterranean rights) & above surfacei. Surface rights include natural vegetation such as trees, shrubs,

growing crops (chattels attached to the land)ii. Fructus naturales

1. Trees, grasses, shrubs – these are viewed as being fructus naturales and are considered to be part of the land. They are considered to be a natural part of the land / real property. If trees, etc., are owned by property line of adjoining landowners, then the landowners own the trees as tenants in common.

2. Passes with conveyance of land.3. Those crops which come from nature’s bounty, without the

aid of man – trees, shrubs, grasses.4. Viewed as real property until they are severed from the

land.iii. Fructus industriales

1. Comes from man’s industry / Man’s annual planting, cultivating ,fertilizing, harvesting: grains, beans, corns, pineapple, citrus fruits.

2. Called emblements: usually annual crops.a. But, if crops such as apples, pears, grapes,

raspberries, oranges, grapefruit, lemons…some of these crops are perennial, but they are still referred to as emblements (even if they are perennial crops).

3. Personal propertyiv. Multistate :

1. If a tenancy is an estate for years, having a definite time of beginning and a definite date of termination, the tenant’s right to remove growing crops or emblements is terminated when the tenancy is closed. Any crops remaining becomes the property of the landlord. (where the tenant grows fructus industrials crops). If the tenant has severed the crops at the end of the tenancy, but the severed grain remains on the land, then this is viewed still as personal property and the crop belongs to the tenant.

2. Where you have a tenancy of will, if the tenancy is of uncertain duration, having no certain date of termination, tenant has a reasonable time to remove crops which are planted after the termination of the term. This is regularly applied in a tenancy at will. If you have a tenancy at will,

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the rule is that a tenant is permitted to remove all growing crops (all fructus industrials crops) after such tenancy if such crops are planted in the ground at the notice of termination and the tenant is given sufficient time to remove such crops.

3. Minority view: rarely tested (contrary to rule of emblements) (followed in FL): on the death of the life tenant, the title of an immature orange crop vests in the remainderman (contrary to common law view); personal representative of deceased life tenant is entitled to recover the sums invested in cultivation of the crop. The life tenant will not be entitled to proceeds of the crop.

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PMBR CD #5:

I. Conveyancing and mortgagesa. Conveyances in the US:

i. Statutes usually provide that freehold estates may be conveyed by deed or other instruments.

ii. A writing which evidences an intention to convey an estate will be sustained, however, even though it does not necessarily constitute a deed instrument (even though conveyances are usually by deeds), as long as it is sufficient to satisfy the Statute of Frauds.

1. Where you have a K that deals with sale or transfer of interest in land, it must be in writing in order to be enforceable under the Statute of Frauds.

2. Statute of Frauds is satisfied if a sufficient memorandum is in writing and signed by the person sought to be charged or the grantor.

3. Flexibility as to what constitutes a sufficient memorandum.iii. Must be present in the writing for a valid conveyance (Statute of

Frauds):1. Writing must identify the grantor & grantee2. Sufficient description of the land conveyed.

a. Description is adequate if it provides a good lead of the property sought to be conveyed.

b. Ex: All of my land in LA county is sufficient for land to be conveyed.

c. Insufficient description – description is too indefinite to describe the land, then title remains in grantor, subject to suit for reformation of the deed.

i. Parole evidence is admissible to explain or supplement a written description or clear up an ambiguity.

ii. 2 basic types of ambiguity:1. Patent ambiguity

a. Appearing on face of the document or deed.

2. Latent ambiguitya. Appearing after presentation

of evidence.3. Purchase price must also be included4. Promises on both sides, where the grantor promises to

convey the property and the grantee agrees to pay the purchase price for the property.

5. Writing must be signed, usually by the grantor or the party to be charged.

iv. Oral promise to convey land where you have the doctrine of substantial part performance.

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1. Purchaser can enforce the oral K where:a. Where the purchaser pays the seller part or all of the

purchase price and the buyer takes possession of the property or where the buyer pays part or all of the purchase price and makes improvements on the land.

i. The oral K is taken out of the Statute of Frauds and made enforceable where this applies.

b. Delivery and acceptance of deedsi. In order to have a valid conveyance, you must have delivery of the

deed.1. A deed is not effective to transfer property unless it has in

fact been delivered.ii. Physical transfer of the deed is not necessary to make a valid

delivery.iii. Delivery refers to the grantor’s subjective intent.iv. Valid delivery / effective delivery, we look to grantor’s intent:

1. Can be satisfied by words or conduct, showing that the grantor’s intent is that the deed have some operative effect.

2. Title may pass even though the right to possession may be postponed to some future time.

v. Ex: A draws an instrument conveying Blackacre to B and hands the instrument to b for safekeeping. Although handed to the grantee, not a valid delivery, b/c no evidence that the grantor intended that the deed have present operative effect (i.e., make present transfer of the land).

vi. Ex: A draws up an instrument conveying Blackacre to B and attempts to give instrument to B personally, but is unable to find him. A quits possession of property and treats B as the owner. Nearly all courts have held there is sufficient delivery b/c it was the present intent of the owner to make a valid conveyance.

c. Delivery issuesi. Where the grantor retains the deed or the grantee gets physical

possession of it, or1. Where the deed is in the possession of the main grantee, the

rebuttable presumption has been raised that this is an effective delivery.

2. Where deed is in the possession of the grantor, the presumption is that there has not been a valid delivery.

3. The fact the deed is recorded raises presumption that there has been made.

4. Parole evidence is admissible to prove grantor’s intent (conduct or statements by grantor, before or after delivery)

ii. …the grantor gives the deed to a third person for transmission to the grantee.

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1. Conditional delivery (where deed is given to third party) is permissible.

2. Where you have transfer to a third party with no condition, A giving C a deed ,naming B as a grantee and instructing C to give deed to B.

a. Majority view : valid delivery has occurred.i. Since it was the grantor’s intent to make the

deed presently operative.3. Transfer of property with conditions:

a. Escrow – certain conditions must be satisfied before deed is passed on to the grantee.

i. A giving C a deed ,naming B as a grantee and instructing C to give deed to B, when B has paid remaining balance of purchase price.

ii. A valid conditional delivery has occurred; deed has a present operative effect even though conditions to be met in the future. Transfer will occur automatically upon occurrence of condition and A, the grantor, will retain title, only if the conditions have not been met and do not occur.

iii. Where grantee wrongfully acquires deed from escrow holder without performing conditions (payment of the purchase price), then grantor retains the title. No valid delivery here.

II. Equitable conversiona. Treats interest in land as if land had already been converted to personal

property.b. Applies where we have a seller, the owner of the property, enters into a

real estate sales agreement with the buyer, to sell Blackacre and they agree on a purchase price, $100,000, and then the parties enter into an executory real estate sales contract. Buyer pays seller a deposit. They enter into the real estate sales agreement on September 1st. The date for closing is set for November 1st.

c. According to the doctrine, during the period from September 1st after the real estate sales agreement is entered into and the closing date of November 1st when the buyer has the time to do a title search and come up with the payment price, the seller by this doctrine is deemed to be the equitable owner of the balance of the purchase price and the buyer is deemed to be the equitable owner (beneficial owner) of the property.

i. Legal title still remains with the seller.ii. During the executory stage of the sales contract…

iii. The risk of loss is on the buyer. During Sept. 1st to Nov. 1st, risk is on the buyer, if the property is destroyed by fire or flood. The

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buyer must take out insurance on the property to protect this expectancy interest he has at the closing date when title will pass to him.

d. Applies where there is an enforceable obligation to sell land (real estate sales contract), buyer is regarded as the equitable owner of the land and the seller is the equitable owner of the purchase price.

e. What if the vendor dies on Oct.15th? When the vendor dies during the existence of the existence of a specifically enforceable K, the beneficial interest descends as personal property and the heir only gets a bare legal title which she must convey to the purchaser when the purchaser performs and the proceeds of the sale then goes to the vendor’s estate and then pass on by inheritance to his or her heirs.

i. Vendor’s death does not negate the real estate sales K.ii. Vendee can still enforce the K.

f. When the vendee (purchaser) dies during the existence of the real estate K period, the right to receive the land goes to her heirs, but the duty to pay the purchase price falls on her personal representatives (executrix, administrator, etc.) – can still enforce the real estate sales K, can buy the K, then title to the property can pass on to the decedent’s heirs.

i. Risk of loss is on the vendee for casualty loss which happens during the executory period of the sales contract.

III. Marketable titlea. In an absence of agreement to the contrary, an implied undertaking in a

real estate K that a vendee has marketable title. The K usually provides that the vendor will provide good and marketable title to the vendee. Where the vendor does not give this duty, vendee may rescind the K.

i. The deed supersedes the real estate K.ii. If a deed is delivered and contains no warranty of title, the deed

supersedes the K which is no longer in effect.iii. If the vendee goes through the sale and accepts the deed without

any warranties of title, the deed will supersede the K.b. Vendor is only obligated to deliver good and marketable title at the time of

the closing. Vendee may not rescind K before that.c. Ex: Jones entering into a K to sell Blackacre to Smith. Smith does her title

search and discovers on October 15th that there is an encumbrance on the property (easement on the land). Smith contacts Jones, saying you aren’t giving good and marketable title, I’m rescinding the K. Can the vendee do this? No b/c the vendor has until the date of the closing to render good and marketable title.

d. Defects rendering title unmarketable:i. Outstanding mortgages

ii. Existence of restrictive covenantsiii. Outstanding reverter rightsiv. Encumbrances which the vendor cannot or will not removev. Easement upon any appreciable part of the property

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vi. Variations in the names of the grantors and grantees in the chain of title

vii. Outstanding dower interestIV. Boundary line agreements

a. Judicial recognition is extended to boundary line agreements even though there is no right.

b. Even though the parties can orally make a boundary line agreement and compliance with the Statute of Frauds is not required.

i. Oral agreement is valid and enforceable and does not have to come within the Statute of Frauds.

V. Covenants in deeds respecting titlea. 3 of these are breached, if at all, when the deed is delivered.b. Covenants for seisinc. Covenants for right to conveyd. Covenants against encumbrances

i. 3 covenants are in the present tense.e. Covenant of quiet enjoymentf. Covenant of general warrantyg. Covenant of further assurances

i. Cover breaches that occur after the deed is delivered (in the future).

h. 3 types of deeds:i. General warranty

ii. Special warranty1. Meets statutory requirements2. Containers fewer assurances

iii. Quit claim1. No assurances and no warranties; grantee takes whatever

the grantor has in the property.i. When a deed provides for usual covenants, this generally construes a

general warranty deed.i. Generally includes covenants for seisin, right to convey, against

encumbrances, quiet enjoyment, general warranty.j. Covenants for seisin and right to convey:

i. Very similar / synonymousii. Guarantee to the grantee that the grantor owns the estate which the

deed purports to convey.k. Covenant against encumbrances

i. Property conveyed – no outstanding mortgages, liens, or restrictions - -easements or profits – that does not diminish value of property.

l. Covenants of quiet enjoyment and covenants of general warrantyi. Construed to have the same legal effect

ii. Defend the grantee-covenantee against all legal claims by grantor or third parties who would evict the grantee-covenantee.

m. Covenant for further assurances

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i. Not used much in the USii. Undertaking on the grantor’s part – to do something on his or her

part to perfect the grantee’s title.n. None of the covenants protect the grantee against trespass or regression of

a mere wrongdoer.o. First 3 covenants cannot run with the land b/c they are personal choses in

action when they are breached at the time the deed is delivered:i. Covenants for seisin

ii. Covenants for right to conveyiii. Covenants against encumbrances

p. But these 3 covenants (quiet enjoyment, general warranty, further assurances) run with the land and can be enforced by remote grantees that take through the covenantee grantee.

q. Recovery:i. Covenants are contracts of indemnity and they indemnify grantee

for his or her loss.ii. Damage must be shown for recovery by the grantee.

VI. Estoppel by deed (Quiet title doctrine)a. If a person executes a deed purporting to convey an estate in land which

he does not have, or does not own, or he purports to convey land of a larger estate which he does not own, then according to this doctrine, that estate passes to the grantee.

b. Ex: O is the record title owner of Blackacre. A, mistakenly believes that he is the owner of the property. A conveys a deed to B, purporting to convey title to Blackacre. A mistakenly believes he is the owner and makes this deed to B. After the A-B deed transaction-conveyance, O does convey Blackacre to A. In jurisdiction that follows the doctrine, once O makes conveyance to A, then title inures to the benefit of B by application of estoppel by deed or after quiet title doctrine.

c. Subsequent BFPsi. A makes a conveyance to B.

ii. O is the owner of the property. Thereafter, O conveys to A. If A goes ahead and after acquiring that deed from O, A conveys the property to C and C knows nothing about the A-B transaction – B did not record and C is viewed as a BFP who paid consideration without any prior notices, the majority rule is that a subsequent BFP prevails over that prior grantee (i.e., B) in a majority of states.

VII. Recording Actsa. Provide a means for giving constructive notice of ownership.b. 3 basic types:

i. Pure race1. Whoever records first, prevails.

ii. Pure notice

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1. The subsequent BFP who pays value without notice of any prior conveyances or prior notices of encumbrances on the property prevails, whether or not she records first.

iii. Race-notice1. Combines essential features of pure race & pure notice.2. Race-notice – subsequent BFP who paid value without

notice but records first prevails.c. Typical notice statute

i. “Conveyance of an estate in land shall not be valid against any subsequent purchaser for value, except such persons having actual notice of it, unless the conveyance is recorded.”

1. Ex: On Jan. 1st, O conveys Blackacre to A. A does not record. On Jan 15th, A conveys Blackacre to B who gives valuable consideration and has no notice of the conveyance to A. B prevails over A and B is a BFP without notice of conveyance.

d. Only BFPs are protected under notice and race-notice statutes.i. Mortgagees are also protected – treated as BFPs – and they, too,

are protected.VIII. Mortgages

a. Interest in land created by a written instrument providing security for an outstanding debt.

b. Whenever you take out a mortgage on property, the mortgagor (person who takes out a mortgage with the bank), you execute the promissory note which is evidence of the debt; you also execute the mortgage (the security of the debt).

c. The mortgagor is the property owner who takes out the mortgage with the bank.

d. The bank is viewed as a the mortgagee.e. Ex: You take out a $500,000 mortgage on your property with the bank.f. Multistate:

i. Mortgagor conveys property to a buyer (sells). Exam: Whether the buyer is going to be personally liable to the bank for the mortgage debt still outstanding.

ii. Look to the deed of conveyance from the mortgagor to the buyer:1. If the deed states that the buyer assumes the mortgage, then

the buyer is personally liable to the bank for that mortgage debt.

2. On the other hand, if the deed is silent as to the existence of the mortgage or if the deed states that the land is subject to the mortgage, then the buyer is not liable personally to the bank for that mortgage debt.

3. In personam actiona. Is the buyer personally liable for the mortgage debt?

i. He is if the deed contains language that the buyer assumes the mortgage debt.

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4. In rem actiona. If the buyer should fail to make mortgage payments,

then the bank can foreclose because its security interest is an in rem type interest and the bank can bring a foreclosure action where there is a default by the buyer.

g. Mortgages come within the recording statutes and they must be recorded in order to protect a mortgagee.

i. If a mortgage is not recorded and a mortgagor conveys property to a buyer without notice of that mortgage in a notice or race-notice jurisdiction, a buyer can take the property free and clear of the mortgage if it’s not recorded by the mortgagee. **

h. Equity of redemption (statutory redemption)i. The mortgagor takes out a $500,000 mortgage on the property with

the mortgagee. The mortgagor then defaults. After the default and before the mortgagee brings a foreclosure action, the common law permits the mortgagor to pay off the mortgage debt and then reacquire clear title to the property.

ii. But, mortgagor may default and then the mortgagee institutes a foreclosure action, there’s a foreclosure sale, and the mortgagee sales the property to Baker for $700,000. After the foreclosure sale, the mortgagor then attempts to repay the bank the $500,000 he owes the bank. This is known as statutory redemption. In most states, by statute, most states permit the mortgagor ….most states give the mortgagor 6 months to 12 months after the default…to repay the bank the mortgage indebtedness even though there’s been a foreclosure sale and title has passed to Baker. Mortgagor can still pay off debt to bank – mortgagor is entitled at his election for redemption against mortgagee for value of land or the proceeds from the foreclosure sale **.

iii. State that follows statutory redemption – if the mortgagor owed $500,000, bank sold property for $700,000 and then mortgagor pays off the mortgage indebtedness, the mortgagor would be entitled to receive from the bank the difference from the foreclosure sale or the $200,000.

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