Property Bar Outline

7/27/2019 Property Bar Outline

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Estates in Land

A.Generally: An interest in real property that is presently or may become a possessory interestB.Present Possessory Estates

1.Fee Simple Absolutea)Unimpeded right to sell, convey, devise

2.Defeasible Feesa)Fee Simple Determinable

(1)Terminates automatically upon the happening of some event(2)Look for these words (in one clause):

(a)For so long as(b)During(c)

While(d)Until

(3)Interest Created in Grantor(a)Possibility of Reverter

(i)Arises automatically (doesnt need to be expressly retained)(ii)Transferable

(b)Interest Created in Third Party - Executory Interestb)Fee Simple Subject to Condition Subsequent

(1)Estate may be cut short upon the happening of a future event(2)Look for these words (in 2 separate clauses):

(a)Provided, however(b)However if(c)But if(d)On the condition that(e)In the event that

(3)Future Interest in Grantor(a)Right of Entry this is not au tomatic(i)Must expressly reserve the right, otherwise it is just a covenant or easement

(ii)May also waive the right to reenter(iii)Silence is not a waiver but detrimental reliance may make the court treat it as such under equitable theories

(4)Future Right in Third Parties(a)Executory Interest(b)Subject to the Rule against Perpetuities

(5)Where language is ambiguous, courts will normally find a fee simple subject to condition subsequent because fee simple d eterminable callsfor automatic termination

c)Fee Simple Subject to an Executory Interest(1)Estate where upon the happening of a future event the estate is automatically divested in favor of a third person(2)Subject to the Rule against Perpetuities(3)Conditions and Limitations Violating Public Policy

(a)If it penalized marriage or encourages divorce - struck down(b)If it is to give support until marriage or to give support upon the event of divorce, usually upheld

d)Fee Tail(1)Mostly abolished - limited grantee to give land only to his lineal descendants

e)Life Estate(1)Two Kinds

(a)Conventional Life Estate(i)For the life of the grantee(ii)Can be defeasible same ways a fee simple can

(b)Life Estate Pur Autre Vie(i)Life estate measured by the duration of a life other than the grantees

(2)Rights and Duties of Life Tenant - Waste(a)Affirmative Waste - Natural Resources

(i)Generally, a life tenant cant exploit natural resources(ii)Exceptions

(a)Where necessary for repair and maintenance(b)If given express permission(c)When prior to grant the land was used in exploitation of such(d)

If the land is only suitable for such exploitation(iii)Open Mines Doctrine

(a)If mining already done, life tenant can continue - but only the mines that are already open(b)Permissive Waste

(i)Failure to make repairs and maintain land limited to the extent of the income or profits derived from the land or reasonablerental value(ii)Duties

(a)Keep land and structures in a reasonable state of repair(b)Pay interest on encumbrances (reversioners or remainder man pay principal)(c)Pay all ordinary taxes(d)Public Improvements

(i)One that will only last during life estate - life tenant pays all(ii)One that will last after his estate is gone - apportioned between him and holders of future interests

(e)No obligation to insure and no liability for torts of third parties(c)Ameliorative Waste


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(ii)Passes from grantor to grantee(4)Differences between Executory Interests and Remainders

Executory Interest Remainder

Estate it follows: Estate other than life estate (fee simple) Life Estate

How it becomes possessory: Cuts off prior estate At natural termination of prior estate

Can it vest? No Yes

Do the Rule in Shelleys Case or Destructability rules

apply?

No Yes

c)Transferability of Remainders and Executory Interests(1)Vested Remainders are Transferable, Devisable, and Descendable(2)Contingent Remainders and Executory Interests are Transferable Inter Vivos(3)Contingent Remainders and Executory Interests are Usually Devisable and Descendible

(a)Unless survival is a condition to taking(4)Any Transferable Future Interest is Reachable by Creditors(5)Interests held by unborn or unascertained people cant be transferred by guardian (so at all)

d)Class Gifts(1)Definitional Problems

(a)Children: Usually children from all marriages and adopted children, not stepchildren or grandchildren(b)Heirs: Under laws of intestacy(c)Issue or Descendants: Lineal offspring(d)Class Members in Gestation: Someone born within 10 months of time set for distribution

(2)Rule of Convenience(a)A class closes when some member of the class can call for a distribution of her share of the class gift(b)Outright Gift

(i)If any members are aliveclass closes at testators death(ii)If no class members alive at testators death class stays open as long as new members can be added and all are included

(c)Postponed Gift: class closes at time fixed for distribution(d)Dispositions Subject to Condition of Reaching Given Age

(i)Class closes when(a)Preceding estate, if any, terminates, and(b)The first class member reaches the specified age

(e)This is only a rule of construction and transferor can specify a different schemee)Survival

(1)Future interest are usually devisable unless conditioned on survival(2)Express words of survival could be to As surviving children or to As children then living (3)May be implied (gifts to a persons issue, etc.)

D.Trusts1.Private Trust Concepts and Parties

a)Settlor: creates the trustb)Trustee: holds legal titlec)

Beneficiaries: person for whose benefit trust is created, have equitable titled)Res: property that is the subject of the trust

e)Rule against Perpetuities applies to the equitable future interests of beneficiaries2.Creation of Trusts

a)Inter Vivos Conveyanceb)Inter Vivos Declaration

(1)Deed and delivery unnecessary but if real property is involved it must be in writing and sigend by settlorc)Testamentary Conveyanced)Pour-Over Into Existing Trust

3.Charitable Trustsa)Beneficiaries

(1)Must have indefinite beneficiaries reasonably numerous and not individually identifiedb)Rule against Perpetuities

(1)Does not apply to trusts that are entirely charitable(2)If more than one future interest, both must be charitable

c)Cy Pres(1)If purposes of charitable trust are impossible to fulfill, are illegal, or have been completely fulfilled, court can redirect to a different purposeas near as possible to settlors intent

d)Enforceable by state Attorney GeneralE.Rule Against Perpetuities

1.Generallya)Any interest is void if there is a possibility, however remote, that the interest may vest more than 21 years after some life in being at the creationof the interest

b)Applies to(1)Contingent remainders(2)Executory interests(3)Class gifts (even vested remainders)(4)Options and rights of first refusal(5)Powers of appointment

2.Analysis of the Rulea)When the Period Starts


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(1)At the time the interest is created(2)Will: at ts death(3)Revocable Trust: when irrevocable(4)Irrevocable Trust: Date trust is created(5)Deed: Date it is delivered with intent to pass title

b)Must vest(1)Becomes vested when

(a)It becomes a present possessory estate(b)It becomes an indefeasibly vested remainder of a vested remainder subject to total divestment

(2)Wait and See Rule: some states dont use possibility and instead wait and see if the interest actually vests in the given per iodc)If at all

(1)Interest does not have to vest within the period in order to be valid some contingent remainders never vest because the condition is notsatisfied

d)Lives in being(1)Some life connected with the vesting of an interest even those without a beneficial interest(2)Can use specific people listed but not something like everyone in NYC or all the descendants of queen Victoria

e)Interests Exempt from Rule(1)Gift over to second charity(2)Vested Interests(3)Reversionary Interests

f)Consequences of Violating Rule(1)Normally the interest is stricken but all others in the instrument are good(2)Exception: Infectious Invalidity

(a)If the invalid gift is an essential part of the transferors dispositive scheme (and to strike this interest and give effect to the otherswould subvert his intent) if it is determined transferor would prefer the whole disposition fail, it is all void

3.Common Pitfallsa)Executory Interest Following Defeasible Fee

(1)To A as long as no alcohol is consumed on the property; and if alcohol is consumed on the property, then to B(a)Note the durational language makes this an executory interest followingfee simple determinable(b)Fails, estate terminates upon happening of event and grantor has possibility of reverter

(2)To A, but if alcohol is consumed on the premises then to B(a)Conditional terms mean afee simple subject to condition precedent(b)Here, the condition is stricken and it becomes a fee simple absolute

b)Age Contingency Beyond Age 21 to an open class(1)To A for life then to As children who reach 21 ok(2)To A for life then to As children who reach 25 not ok

c)Fertile Octogenarian: Women are conclusively presumed to be able to have children no matter their age or healthd)Unborn Widow or Widower

(1)You cant tell who a persons widow is if they are still alivee)Administrative Contingency

(1)Can't be based on a will being probated, a war ending, etcf)Options and Rights of First Refusal

(1)Treated as executory interests(2)Reasonable time may be inferred which is invariably less than 21 years(3)If the option is held by a current tenant then not applied

4.Application to Class Giftsa)Bad as to one, bad as to all

(1)Requires that(a)Class must close within perpetuities period AND(b)All conditions precedent for every member of the class must be satisfied, if at all, within period

b)Class closing rules may save itc)Gifts to subclasses may save as each is a different giftd)If there is a separate gift of a fixed sum to each class member, the rule does not apply

5.How to analyzea)Determine what interests are createb)Apply the Rule

(1)Determine the measuring life or lives and see if interest vestsc)If mentioned, apply reform statute

F.Rule Against Restraints on Alienation1.Generally

a)Types of Restraints(1)Disabling Restraints: make any attempted transfer ineffective(2)Forfeiture Restraints: make an attempted transfer result in a forfeiture(3)Promissory Restraints: Makes an attempted transfer a breach of a covenant

b)A disabling restraint on any legal interest is void2.Restraints on a Fee Simple

a)Total Restraints are voidb)Partial Restraints

(1)Tries to restrict transfer to specific persons, by a specific method, or until a specific time(2)Reasonable Restraints Doctrine: restraints for a limited time and for a reasonable purpose may be upheld

(a)A conveys half of his residence to his brother and included a covenant that neither would convey their interest without the consent ofthe other, limited by their joint lifetimes prevents either from having to live with a stranger

(3)Discriminatory Restraints: Not Valid


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(ii)Divorce(iii)Mutual Agreement(iv)Execution by a Joint Creditor of the Husband and Wife

(4)Individual Spouse Cannot Convey or Encumberc)Tenancy in Common

(1)Generally(a)Concurrent estate with no right of survivorship each owner has distinct, undivided interest in the property(b)Interest is freely alienable and subject to creditors(c)Each tenant is entitled to possession of the whole estate(d)Presumed interest for multiple grantees

2.Incidents of Co-Ownershipa)Possession

(1)Each co-tenant has the right to possess all portions of property and can't bring an action unless there is an ousterb)Rents and Profits

(1)In most jurisdictions, a co-tenant in possession has the right to retain profits by her use and doesnt have to pay the other rent for her use(2)BUT rents and profits from third parties must be shared

c)Effect of One Concurrent Owner Encumbering the Property(1)A joint tenant or tenant in common can mortgage her own interest but not the other tenants(2)Foreclosure will only be as to that persons interest(3)A lien or mortgage not foreclosed on will be extinguished at the death of the mortgagor

d)Ouster(1)If one tenant wrongfully excludes another, there is an ouster and the other is entitled to fair rental value of the property for the time hedeprives the other(s) of possession

e)Partition(1)Can divide land into parts and distribute or sell and distribute money petition in kind (division of land) preferred(2)Restraint on Partition by Co-Tenants: valid if for a reasonable time

f)Expenses for Preservation of Property: Contribution(1)Repairs(a)A co-tenant who pays more than her pro-rata share of the cost of necessary repairs is entitled to contribution from of ther co-tenants

in actions for accounting or partition

(2)Improvements(a)No contribution or set-off in an accounting only recouped in partition

(3)Taxes and Mortgages(a)Each co-tenant has a duty to pay her share of taxes and mortgage payments(b)A tenant who is not in sole possession can pay and then compel contribution(c)A co-tenant in sole possession will only get reimbursed for the amount that exceeds the rental value of the property

g)Duty of Fair Dealing Among Co-Tenants(1)If one gets an outstanding title or lien that may affect the estate of all, it is assumed to have been gotten by all(2)If one purchases or acquires a lienholders claim against the property, she has to give the others a reasonable time to pay their share andget a proportionate interest

(3)EX: A and B are co-tenants and dont pay taxes. A buys property at tax sale for $10,000. If B will pay $5,000, many courts will make A put itback in co-tenancy.

II.Landlord and TenantA.Nature of Leasehold

1.Generallya)Estate in land where tenant has present possessory interest in leased premises and landlord has reversion

2.Typesa)Tenancy for Years

(1)Fixed period of time(a)Expires at end of time without either party giving notice

(2)Creation(a)Usually a written lease statute of frauds applies if over a year(b)If state law sets maximum time and lease is over that or has an option to renew beyond it, the entire lease is usually void

(3)Termination(a)Automatically on termination date(b)Breach of Covenants (gives landlord right of reentry)

(i)Failure to Pay Rent(a)Usually landlord can reenter even if right not reserved

(c)Surrender(i)If tenant gives up interest to landlord and landlord accepts

(ii)Sometimes requires same formalities as lease creationb)Periodic Tenancies

(1)Generally(a)Continues from year to year or some part of a year until terminated by proper notice of either party(b)Begin date is certain but termination date is never certain(c)All conditions and terms carried over from term to term unless lease says otherwise(d)Dont violate rules on length because either party can terminate at any time

(2)Creation(a)Express Agreement(b)By Implication (may not say it is for periods but rent is paid at specific intervals)(c)Operation of Law

(i)Tenant holds over(ii)Lease is invalid


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(3)Termination(a)Lease is automatically renewed until proper notice(b)Guidelines are usually

(i)Tenancy ends at end of natural lease period(ii)Year to year: 6 months notice(iii)Less than one year: a full lease period in advance

(c)Notice usually has to be in writing and delivered to landlordc)Tenancies at Will

(1)Generally(a)Both landlord and tenant can end at any time(b)A lease that gives only landlord the right will have a similar right implied in tenant

(2)Creation(a)Both parties expressly agree that either may terminate at any time(b)Periodic rent payments can create presumption of periodic tenancy

(3)Termination(a)By either party giving notice(b)Terminates by operation of law if

(i)Either party dies(ii)Tenant commits waste(iii)Tenant attempts to assign tenancy(iv)Landlord transfers his interest in the property(v)The landlord executes a term lease to a third party

d)Tenancies at Sufferance(1)Where tenant wrongfully remains in possession after expiration of lawful tenancy(2)Tenant is liable for rent(3)Lasts until landlord evicts no notice required

3.Hold-Over Doctrine: When a tenant continues in possession after termination of his rights, landlord has two choices of actiona)Eviction(1)Landlord may treat tenant as a trespasser and evict

(2)Creation of a Periodic Tenancy(a)Landlord may bind tenant to new periodic tenancy

(i)Terms(a)Use those from expired tenancy(b)Commercial Leases

(i)If original was for one year or more: year-to-year tenancy results(ii)If original was for less than one year: term is decided by how rent was due and payable under old lease

(c)Residential Leases(i)Month-to-month, unless tenant was roomer paying weekly rent then week-to-week

(d)If landlord notifies tenant before termination of the tenancy that after termination rent will increase, tenant will have topay that if he stays as long as i t is reasonable

(3)What Does Not Constitute Holding Over(a)Tenant only holds over a couple of hours or leaves a few articles of personal property behind(b)Delay is not tenants fault(c)Seasonal lease

(4)Double rent jeopardy(a)If tenant willfully remains after landlords written demand for possession, some states let landlord collect double rent

(5)Forcible Entry Statutes(a)Most states dont let landlord forcibly enter and kick tenant out or even change the locks(b)Must go through ejectment

B.Leases1.A lease is a contract containing the promises of the parties2.Covenants are independent of one another so a partys performance does not depend on the others3.Where one party breaches the other can go after damages but not terminate4.Exceptions: nonpayment of rent, actual/constructive eviction, implied warranty of habitability

C.Tenant Duties and Landlord Remedies1.Tenants Duty to Repair

a)Types of Waste(1)Voluntary (Affirmative) Waste

(a)Intentional or negligent damage to premises, exploiting resources(b)Tenant is liable

(2)Permissive Waste(a)Tenant does not have duty to make substantial repairs unless lease says so(b)Must make ordinary repairs to keep property in same condition as when he got it

(i)Like fix leak in roof(c)If he fails to do so, he is liable for resulting damage but not for the cost of repair(d)Even if burden on landlord to fix, he has a duty to report problems

(3)Ameliorative Waste(a)Tenant has to return property in same condition as he got it in and can't even make positive substantial alterations(b)Liability cost of restoration(c)Modern Exception

(i)If the value of the premises has been significantly reduced in value, courts will permit a change as long as it increases value, isperformed by a long-term tenant, and reflect the change of the nature or character of the neighborhood

b)Destruction of the Premises Without Fault


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(1)No waste(2)Common Law: In absence of lease language, neither party has a duty to restore but the tenant has to keep paying rent(3)Majority: Tenant can terminate lease

c)Tenants Liability for Covenants to Repair(1)Residential Leases: even if the tenant covenants to repair, the landlord will usually be obligated to do so if damages arent caused by thetenant because the landlords obligations arent usually waivable

(2)Nonresidential Leases: tenants covenant to repair is enforceable and landlords claim that tenant breached will be assessed by comparingthe property condition at start of lease with condition at termination

(a)Rebuilding after Structure Damage or Casualty Destruction(i)Covenant does not usually apply to damage or destruction from casualty, structural defect, or third partys acts unless expresslyin covenant

(b)Ordinary Wear and Tear(i)Covenant to repair usually construed to include unless expressly excluded

2.Duty to Not Use Premises for Illegal Purposea)Landlord cant be a party to illegal useb)Occasional unlawful conduct does not breach dutyc)Landlords Remedies

(1)Terminate lease and recover damages (if conduct first stopped by public authority, must do so i n reasonable time)(2)Keep lease in force and seek injunctive or monetary relief

3.Duty to Pay Renta)When Rent Accrues

(1)All at once at end of payment term but if terminated not on term agreed on, then proportionate amount of rent must be paidb)Rent Deposits

(1)If a security deposit, landlord can't keep it beyond his damages(2)If it is a bonus (like last months rent) landlord can keep after tenant is evicted

c)Termination of Rent Liability Surrender4.Landlord Remedies

a)Tenant on Premises but Fails to Pay Rent: Evict or sue for rentb)Tenant Abandons: Do Nothing or Repossess(1)If tenant unjustifiably abandons landlord has 2 options

(a)Landlord Does Nothing: Tenant Remains Liable(i)Landlord can let premises be idle and collect rent from abandoning tenant unless he provides a suitable substitute(ii)Majority requires landlord to mitigate or recovery against tenant will be reduced

(b)Landlord Repossesses: Tenants Liability Depends on Surrender(i)If there is no surrender, tenant is liable for difference between promised rent and the fair rental value of the property(ii)If landlord uses or relets in a way constituting acceptance of surrender, abandoning tenant is not liability for rent accruing afterabandonment

(iii)Acts that Constitute Acceptance of Surrender(a)Landlord resumes possession himself

(iv)Acts that do Not Constitute Acceptance of Surrender(a)Landlord enters to make repairs, gets back the keys, tries to relet on behalf of tenant

D.Landlord Duties and Tenant Remedies1.Generally

a)Subject to modification by lease, statute, or the implied warranty of habitability, landlord has no duty to maintain or repair2.Duty to Deliver Possession of the Premises

a)Landlord Duty: Must deliver actual possession(1)Note that minority says just l egal right to possession

b)Tenant Remedy: Damages3.Quiet Enjoyment

a)Implied in every lease is a covenant that neither the landlord nor someone with paramount title will interfere with tenants quiet enjoyment maybe breached in 3 ways

(1)Actual Eviction(a)When landlord, paramount title holder, or hold-over tenant excludes the tenant from the entire leased premises(b)Terminates tenants obligation to pay rent

(2)Partial Actual Eviction(a)When tenant is physically excluded from only part of the premises (need not be a substantial part)(b)Remedies differ on whether partial eviction was caused by landlord or someone with paramount title

(i)By landlord: entire rent obligation relieved(ii)

Third Person: rent apportioned(3)Constructive Eviction

(a)If the landlord does an act or fails to provide some service that he has a legal duty to provide and it makes the property uninhabitable,the tenant may terminate the lease and seek damages if the following conditions are met:

(i)Act that causes the injury must be by the landlord or persons acting for him(ii)The resulting conditions must be very bad, so that the courts can conclude that the premises are uninhabitable(iii)Tenant must move out if he does not in a reasonable time then he has waived the right to do so

4.Implied Warranty of Habitabilitya)Standard: Reasonably Suited for Human Residence (local code or court will decide)b)Remedies

(1)Tenant can move out and terminate lease(2)Tenant may make repairs and offset costs against future rent obligations(3)Tenant may reduce or abate rent to an amount equal to the fmv in view of the property defects(4)Tenant can stay there and pay rent but seek damages against landlord

5.Retaliatory Eviction


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a)If tenant exercises the legal right to report violations or other rights under the statute, the landlord cannot terminate in retaliation or otherpenalization like raising rent or reducing services

b)In about the states, if act is within 90-180 days of triggering act by tenant, retaliation is presumedc)Some let the court decide

6.Discrimination is not allowedE.Assignments and Subleases

1.Generallya)Unless lease says different, a tenant can freely transfer leasehold interestb)Assignment: Complete Transferc)Sublease: If he retains any part

2.Consequences of Assignmenta)Generally

(1)Transfer must be on same terms and give all interest except tenant can reserve a right to reenter if assignee breaches the terms of theoriginal lease(2)Assignee has privity of estate with landlord and is liable on all covenants that run with the land

b)Covenants that Run with the Land(1)Includes covenants to do or not do a physical act, to pay money, or regarding duration of lease

c)Rent Covenant Runs with the Land(1)Assignee owes rent directly to landlord for the time he ahs privity(2)Reassignment by Assignee: Terminates Privity of Estate

(a)He is not liable for 2ndassignees failure to pay rent unless he promised the landlord he would be and created privity of contract(i)If the assignee promised original tenant then the landlord may be able to go after as a third party beneficiary to tenant andassignees contract

(3)Original Tenant Remains Liable(a)No longer in privity of estate but is in privity of contract still so he can be held to original contractual obligation to pay

3.Consequences of Subleasea)Generally

(1)Sublessee is considered tenant of original lessee and pays original lessee rent who then pays to landlordb)Liability of Sublessee for Rent and Other Covenants(1)Generally

(a)Sublesse is liable only to original lessee and not to landlord(2)Termination for Breach of Covenants

(a)Landlord can still terminate main lease for nonpayment of rent or other covenants this automatically terminates sublease(3)Distress Landlords Lien

(a)In many states a landlord who doesnt get rent when due can assert a lien on property left on premises this can extend to property osublessee

c)Assumption by Sublessee(1)Sublessee can assume rent and other covenants in the main lease but must be express(2)He is then personally liable to landlord as a third party beneficiary of the assumption agreement

d)Rights of Sublessee(1)Can enforce all covenants made by original lessee but not those of landlord in the main lease

4.Covenants Against Assignment or Subleasea)Strictly construed against landlord so covenant forbidding one won't apply to the otherb)If landlord knows and does not object (like accepts rent from assignee) the covenant is deemed waivedc)If landlord grants consent to one transfer, he has consented to any others unless he expressly reserves such right before or at the time of consentd)A transfer in Violation of a Lease is not void but landlord can terminate the lease or sue for damagese)Some state require covenant to be reasonable but not the majority

5.Assignments by Landlordsa)Right to Assign: Landlord can sign rent and reversion interest almost always without consent of tenantb)Rights of Assignee Against Tenants: Once tenant has reasonable evidence of transfer, he must pay rent to new landlord (and keep all othercovenants that run with the land)c)Liabilities of Assignee to Tenants

(1)Assignee is liable for covenants that run with the land (privity of estate) and original landlord is liable (privity of contract)F.Condemenation of Leaseholds

1.Entire leasehold taken by imminent domain: rent liability stops2.Partial or temporary taking: tenant entitled to compensation

G.Tort Liability of Landlord and Tenant1.Landlord Liability

a)Concealed Dangerous Conditions(1)If when lease is entered the landlord knew or should have known of a dangerous condition that tenant could not discover upon reasonable

inspection, the landlord has a duty to disclose or he will be liable for injury(2)If disclosure is made, if tenant accepts premises, she has assumed risk to herself and her guests

b)Common Areas(1)Duty of reasonable care liable for injuries from a dangerous condition that could have been reasonably discovered and made sage

c)Public Use(1)Landlord is liable for injuries to the public if at the time of the lease he

(a)Knows or should know of dangerous condition(b)Has reason to believe that the tenant may admit public before repair, AND(c)Fails to repair

(2)Extends only to people entering for the purpose for which public invited(3)Tenants promise to repair does not alleviate duty

d)Furnished Short-Term Residence: Landlord liable if premises are defective and injure tenante)Negligent Repairs


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(1)Even if landlord has no duty to repair if he attempts to he is liable if repairs are done negligently or give a deceptive appearance of safetyf)If landlord covenants to repair: still liable if landlord is under covenant to repair

2.Modern Trend: General Duty of Reasonable Carea)Once landlord has notice of defect he is liable for his ordinary negligenceb)Not liable for defects arising after tenant takes possessionc)If there is a statutory duty to repair and he fails, there is at least evidence of negligenced)May be liable for reasonable security or more if he advertised high security

3.Tenant Liabilitya)May be liable to third parties for conditions or activities on the premises

III.FixturesIV.Rights in the Land of Another: Easements, Profits, Covenants, Servitures

A.In General1.Nonpossessory interests in land create a right to use land possession by someone else

B.Easement1.Introduction

a)The holder of an easement has the right to use a tract of land but not to possessor enjoyb)Types of Easements

(1)Affirmative Easement(a)Holder can enter the servient estate and make affirmative use of it like a right-of-way easement or right to maintain utility lines

(2)Negative Easement(a)No right of entry just stopped owner from otherwise legal activity now a restrictive covenant

c)Easement Appurtenant(1)When the right of special use benefits the holder of the easement in his physical use or enjoyment of another tract of land(2)Must be 2 tracts

(a)Dominant Tenement: has benefit of easement(b)Servient Tenement: subject to easement right

(3)Use and Enjoyment(a)Benefits must directly benefit dominant tenement in his physical use and enjoyment not just making land more valuable(4)Benefit is incident of possession of the dominant estate all who possess title to the land will get it but can't be conveyed separate from

the land

(5)Transfer of Dominant or Servient Estate(a)If dominant estate is transferred the easement will go with it regardless of whether it is in the deed(b)If the servient parcel is transferred, its new owner takes subject to the easement unless she is a BFP without notice(c)Notice can be

(i)Actual knowledge(ii)Visible appearance(iii)Notice from public records

d)Easement in Gross(1)Created where the holder of the easement interest acquires a right of special use in the servient estate independent of his ownership orpossession of another tract of land

(2)Can be personal or commercial usually only transferable if commercial2.Creation of Easements

a)Express Grant(1)SOF applies and usually has to be in same manner as conveyance. Duration is presumed perpetual unless says otherwise.

b)Express Reservation(1)Owner conveys title but reserves right to use for a special purpose

(a)Usually only applies to grantorc)Implication

(1)Created by operation of law and arises in 3 situations(a)An intended easement based on a use that existed when the dominant and servient estates were severed(b)Easement implied by recorded subdivision plat or profit a prendre(c)Easement by necessity

(2)Easement Implied from Existing Use (Quasi-Easement)(a)If prior to a tract being divided, a use exists on the servient part that is reasonably necessary for the enjoyment of the dominant partand a court determines the parties intended use to continue after division

(b)Existing Use When Tract Divided: must be apparent and continuous(c)Reasonably Necessary: Depends on factors like cost and difficulty of alternatives and whether price reflects expected continued use(d)Grant or Reservation

(i)Easement in favor of grantee is an implied grant, in favor of grantor is a reservation(3)Easement Implied Without Any Existing Use

(a)Subdivision Plat(b)Profit a Prendre: profit to remove valuable resources implies right to travel across land to get them

(4)Easement by Necessity(a)When an owner sells part of a tract of land and that deprives one of access to a public road or utility line, a right of way by absolutenecessity is created over the lot with access to the road or utility line

(b)The owner of the servient parcel can locate the easement as long as it is reasonably convenient(c)Terminates when necessity ceases

d)Prescription(1)Generally

(a)Like adverse possession(b)Use must be open and notorious, adverse and continuous and uninterrupted for the statutory period.

(2)Open and Notorious: User must not try to conceal must be discoverable upon inspection(3)Adverse: Need not be exclusive but can't have owners permission


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(4)Continuous: Not constant but continuous claim and periodic use(5)When Prescriptive Easements Cannot be Acquired

(a)Negative easements(b)Easements on public land(c)An easement by necessity can't become a prescription but use after the necessity ends may be adverse

3.Scopea)Generally

(1)Courts are called in to determine scope and intended beneficiaries(2)Interpretation based on reasonable intent of the parties

b)General Rules of Construction(1)Where language is general, the following rules apply:

(a)Ambiguities are resolved in favor of the grantee (unless conveyance is gratuitous)(b)Subsequent conduct of the parties respecting the arrangement is relevant(c)The parties are assumed to have intended a scope that would reasonably serve the purposes of the grant and to have foreseenreasonable changes in the use of the dominant estate

(2)Specifics will govern if they are therec)Absence of Location

(1)Area that is sufficient for what use is permitted, exact location decided by owner of the dominant estated)Changes in Use

(1)Without express language, assumed to be intended to meet present and future needs(2)But basic change in nature of use is not allowed

(a)Widening to fit cars that are larger is okay(b)Putting in telephone poles on a road use easement no ok

e)Easements by Necessity or Implication(1)Extent of necessity determines scope(2)Quasi-easement will give starting place(3)Modifications ok for reasonably foreseeable changes in use

f)Use of Servient Estate(1)Owner may use as she wishes as long as her conduct doesnt interfere with performance of the easement(2)Duty to Repair

(a)If only servient estate using it is her job if both servient and dominant estate then court will apportion costsg)Intended Beneficiaries: Subdivision of Dominant Parcel

(1)If extending the benefit to each parcel will unreasonably overburden the servient estate court will not likely let it run to al l case by casebasis

h)Effect of Use Outside Scope of Easement(1)Called surcharge(2)Owner of servient estate can get injunction and maybe damages(3)Does not terminate easement

4.Termination of Easementsa)Stated Conditions

(1)If expressly supposed to end at some time it will(2)Examples of valid terminations:

(a)So long as repairs are maintained(b)So long as X owns dominant estate(c)Until the dominant estate is used for commercial purposes

b)Unity of Ownership(1)Ownership requirements:

(a)Owner of dominant estate gets interest in servient estate of equal or greater duration than that of easement(b)Owner of servient estate gets interest in dominant estate equal to or greater than her interest in servient estate

(2)Upon complete acquisition of title, the easement is extinguished(3)No revival if later separated

c)Release(1)Both owners concurrently execute release subject to SOF (if easement over 1 year) and formalities(2)Easement Appurtenant

(a)Can be conveyed to the owner of the servient estate (usually only goes with land)(3)Easement in Gross

(a)Usually inalienable but can be conveyed to servient estate holderd)Abandonment

(1)Generally(a)Owner demonstrates by physical action an intention to permanently abandon easement

(b)He must manifest intention never to use again(i)Railroad tracks example quit using is one thing, come pull them up show intent not to use

(2)Physical act is required (no writing needed)(3)Mere words are insufficient (unless accompanied by nonuse)(4)Mere nonuse is insufficient (unless accompanied with other evidence)

e)Estoppel(1)If assertions of abandonment lead to reasonable reliance and change in position of the owner of the servient es tate then the easementholder may be estopped from claiming easement still exists

(2)Requirements(a)Some conduct or assertion by easement holder(b)Reasonable reliance of servient estate owner(c)Change in position of servient estate holder

f)Prescription


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(1)Long continued use of servient estate in a way that indicates no easement exists will end easement right(2)Must interfere as to create a cause of action in favor of easement holder(3)Must be open, notorious, continuous, nonpermissive

g)Necessity(1)Expire when necessity ends

h)Condemnation(1)Extinguishes easement courts split on whether compensation due

i)Destruction of Servient Estate(1)Involuntary destruction of a structure extinguishes(2)Voluntary destruction will not

j)Compare: Licenses(1)Generally

(a)Not an interest in land but a privilege to come on(b)SOF doesnt apply(c)Licensees arent entitle to compensation in takings

(2)Assignability(a)Personal to licensee and not alienable(b)Attempts to transfer will result in revocation by operation of law

(3)Revocation and Termination(a)Licensor can revoke at any time if he manifests intent to do so(b)May be formal or just obstructing continued use(c)Ends by operation of law at death of licensor or conveyance of servient estate(d)Public Amusement Cases

(i)Tickets issued by theaters, etc.(a)Traditional rule is that this is a license(b)Licensor terminates at will

(ii)Breach of Contract(a)If license granted pursuant to contract then termination may be a breach(b)Courts may order money damages but sustain lincensors right to terminate license

(4)Failure to Create and Easement(a)SOF requires easement of longer than 1 year to be in writing(b)If a party attempts to create oral easement, this creates a license unless later executed (like holder spends a lot of money in reliance),then easement may be found

(5)Irrevocable Licenses(a)Estoppel Theory

(i)If licensee invests substantial money or labor in reliance on a license, the licensor may be estopped from revoking and it maybecome an affirmative easement

(ii)Majority says it lasts until owner gets enough benefit to reimburse him for what he spent(b)License coupled with an interest

(i)Vendee of Chattel(a)If a purchaser of chattel upon sellers land is given privilege to enter land of seller to remove chattel and there is not anexpress condition to the contrary, the purchasers right is irrevocable

(b)Must enter at reasonable time and manner(ii)Termination of Tenancy

(a)If a tenants right to possess land has been lawfully terminated, the tenant can still reenter at reasonable time and mannerto get his personal chattels

(iii)Inspection for Waste(a)The owner of a future interest in land can go on it (reasonable time and manner) to see if waste is being committed

C.Profits1.Generally

a)A nonpossessory interest in landb)Holder can take soil or substance

2.Creationa)Same as easements

3.Alienabilitya)Follows ownership of dominant estateb)Profit in gross can be assigned or transferred by holder

4.Exclusive v. Nonexclusive Profitsa)

When owner grants sole right to take a resource from her land, the grantee has an exclusive profit and can't even take herselfb)Nonexclusive means she can grant to others and take herself

5.Scopea)Determined by express language or nature of use always allows owner to come onto land to remove

6.Apportionment of Profits Appurtenanta)Benefit will attach upon subdivision only if no increased burden to dominant estate

7.Apportionment of Profits in Grossa)If exclusive holder may transfer to as many transferees as he likesb)Nonexclusive usually not divisible

8.Terminationa)Same as easement usuallyb)Misuse or increasing burden can be surcharge which extinguishes the profit

D.Covenants Running with the Land1.Requirements for Burden to Run

a)Intent


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(1)Covenanting parties must have intended that successors in interest be bound(a)Express or inferred from circumstances

b)Notice(1)If covenant not recorded, a BFP without notice who records her own deed will take free of covenants(2)This can be constructive or actual notice

c)Horizontal Privity(1)At the time the promisor entered into the covenant with the promise, the two must have shared some interest in the land independent ofthe covenant

(2)This can be landlord and tenant, landowner and easement holder, grantor and granteed)Vertical Privity

(1)To be bound, a successor in interest must hold the entire durational interest held by the covenantor at time covenant madee)Touch and Concern

(1)Generally(a)Effect must be to make land more useful or valuable to benefitted party(b)Must affect legal relationship of the parties as landowners and not merely the community at large

(2)Negative Covenants(a)Must restrict holder of servient estate in his use of the parcel

(i)Can't build over two stories high(3)Affirmative Covenants

(a)Must require holder of servient estate to do something, increasing her obligations in connection with enjoyment of the land(i)Must keep building in repair or pay HOA fees

2.Requirements for Benefit to Runa)Intent

(1)Covenantors must have intended successors in interest to covenantee to be able to enforceb)Vertical Privity

(1)Owner of any succeeding possessory estate can enforce benefit(2)Majority no longer require horizontal privity for benefit to run

(a)Result is that if horizontal privity is missing then the benefit may run to successors of dominant estate but burden is not enforceableagainst successors in servient estatec)Touch and Concern

(1)Must benefit covenentee and successors in their use and enjoyment of benefitted land3.Modern Status of Running of Burden and Benefit

a)Horizontal and Vertical Privity(1)Negative Covenants

(a)Treated like easements which run to successors as interests in land(b)Run to those who succeed to an estate of the same duration as that of the original parties, usually including an adverse possessor

(2)Affirmative Covenants(a)Do not run to persons who hold lessor estates than those held by original parties and special rules apply

b)Touch and Concern(1)Real covenants are presumed valid unless illegal, unconstitutional, or against public policy

4.Specific Situations Involving Real Covenantsa)Promises to Pay Money

(1)If money used in way to benefit land it will runb)Covenants not to Compete

(1)Some courts allow some dontc)Racially Restrictive Covenants

(1)Not permitted5.Remedy

a)Breach is money damages and not injunctionb)If equitable relief is sought then promise must be enforced as an easement

6.Terminationa)Release in writingb)Mergerc)Condemnation

E.Equitable Servitudes1.Generally

a)If wants injunction or specific performance, he must show a covenant qualifies as an equitable servitudeb)This is a covenant that, regardless if it runs with the land at law, equity will enforce against the assignees of the burdened land who have notice ofthe covenantc)Usually remedy is enforcement

2.Creationa)Created by covenants in a writing that satisfies the SOFb)Exception: Negative equitable servitudes may be implied from a common scheme for development of a residential subdivision

(1)Servitudes Implied from Common Scheme(a)When a developer subdivides land into several parcels and some deeds contain negative covenants and some dont, negativecovenants or equitable servitudes binding all the parcels can be implied under the doctrine of reciprocal negative servitudes (negativeonly)

(b)Requirements(i)Common Scheme

(a)Implied only if at the time that sales began, the developer had a plan that all parcels in the subdivision would be developedwithin the terms of the negative covenant(b)If the scheme arises after lots are sold, it can't burden lots previously sold without express covenants(c)Common scheme can be evidenced by recorded plat, a general pattern of prior restrictions, or by oral representations


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(ii)Notice(a)Can be actual notice, inquiry notice, or record notice

3.Enforcementa)Requirements for Burden to Run

(1)Intent (express or implied)(2)Notice(3)Touch and Concern

b)Requirements for Benefit to Run(1)Will run with the land if intended and the servitude touches and concerns the land

c)Privity is Not Requiredd)Implied Beneficiaries of Covenants General Scheme

(1)If a covenant in a subdivision deed is silent as to who holds the benefit, any neighbor in the subdivision is entitled to enforce if a generalscheme is found

(2)Example:(a)A subdivides her parcel into Lots 1 through 10.

(i)A conveys Lot 1 to B, who covenants to use it only for residential purposes.(ii)A conveys Lot 2 to C, who makes a similar covenant(iii)A conveys the balance of the lots to other grantees by deeds containing the residential restriction.

(b)Subsequent Purchaser (C) v. Prior Purchaser (B)(i)C usually can enforce if there was a common plan at the outset

(c)Prior Purchaser (B) v. Subsequent Purchaser (C)(i)In most jurisdictions, B could enforce even though A made no covenant to B that the rest of the land would be so used

(a)Some say because B is a third-party beneficiary of Cs promise to A (b)Some say there is an implied reciprocal servitude that is enforced rather than the stuff on Cs deed

4.Equitable Defenses to Enforcementa)Unclean Hands: won't enforce if person seeking enforcement isnt in keeping with the restriction on his own land b)Acquiesence: If you allow a prior violation go you can't enforce now unless the prior violation was so far from your land that it did not affect yourpropertyc)Estoppel and Laches: If you let them think youve abandoned the covenant and they reasonably rely or if you wait too long, too badd)Changed Neighborhood Conditions: Injunction relief may be withheld but you might get damages

(1)Zoning: if it becomes inconsistent with a private restriction may evidence changing neighborhood conditions(2)Entering the Wedge: if parcel is on outer edge, changed conditions outside of the subdivision will not help bar an injunction if it is shownthat lifting the restriction on one parcel will produce changed conditions for surrounding parcels (domino effect)

5.Terminationa)Written release, merger, condemnation

F.Relationship of Covenants and Zoning Ordinances1.Both must be complied with and neither provides an excuse for violating the other2.Enforced differently private or public

G.Party Walls and Common Driveways1.Written agreement usually required but irrevocable license can arise if detrimental reliance can also be by implication or prescription2.Cross easements for support satisfy horizontal privity so it will run with land

V.Adverse PossessionA.In General

1.If trespasser on real property for statutory time and owner does not take legal action to eject, the owner is barred from so doing and title vests inadverse possessor

B.Requirements1.In general:

a)Actual Entry giving Exclusive Possessionb)Open and Notoriousc)Adversed)Continuous

2.Running of Statutea)Starts at point true owner could start bringing suitb)Suit must be pursued to judgment but if suit filed i n statutory time and judgment later, judgment will relate back

3.Actual and Exclusive Possessiona)Actual Possession Gives Notice

(1)Constructive Possession of Part(a)Notice gives owner awareness of occupant and extent of occupation(b)

Actual possession of part of a track is sufficiently adverse as to give title to the whole as long as there is reasonable proportionbetween part actual possessed and the whole of the unitary tract and possessor has color of title of the whole

b)Exclusive Possession No Sharing with Owner(1)Exclusive means no sharing with owner or public(2)If two people share together they become tenants in common

4.Open and Notorious Possessiona)Is the kind a usual owner would make of landb)Sufficiently apparent to put true owner on notice that a trespass is occurring

5.Hostilea)Generally

(1)Possessor does not have permission to be on the land(2)Majority says it does not matter whether possessor thinks she is on her own land, she knows she is trespassing on someone elses land, orshe has no idea who owns the land

b)If Possession Starts Permissively Must Communicate Hostility(1)Possession doesnt start until possessor makes it clear she is claiming hostilely


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(a)May notify, may refuse true owner to come onto land, or by other act inconsistent with original permission(2)Co-Tenants

(a)Ouster required must refuse entry, declare he is claiming exclusive dominion over the property(3)If Grantor Stays in Possession Permission Presumed

(a)If after she conveys land a grantor stays there, she is deemed to be there at grantees permission unless she openly repudiates theconveyance

(b)Same for landlord and tenant if tenant stays(4)Boundary Line Agreements

(a)If a boundary is fixed by agreement of adjoining landowners but it turns out to not be the true line, most courts fix ownership as perthe agreed line if:

(i)There was original uncertainty about the true line(ii)The agreed line was established (agreed by both)(iii)There has been lengthy acquiescence in the agreed line by adjoining landowners/successors

(a)Establishment can be implied through acquiescence but a showing of uncertainty is still required6.Continuous Possession

a)Requires degree of occupancy and use that an average owner would makeb)Intermittent Periods not enough unless a real owner would use that wayc)Tacking

(1)Separate periods can be tacked if there is privity between successive holdersmeaning they take by descent, devise, or purportedconveyance

(2)Oral transfer is enough for privity7.Payment of property taxes not required but is a good claim of right

C.Disability1.Effect of Disabilities Statute Does not Start to Run

a)Only if the true owner was under disability when the cause of action first accruedb)Might be minority, imprisonment, insanity

2.No tacking of disabilitiesa)Only a disability of the owner is considered disability of successors in interest won't count3.Maximum tolling period is 20 years

D.Adverse Possession and Future Interests1.Statute doesnt start to run against holder of future interest until it becomes possessory until prior estate terminates future interest holder has noright of possession and so no cause of action

2.Possibility of Reverter: Statute begins to run on happening of event3.Right of Reentry: Happening does not trigger statute triggered when/if right asserted

a)But most courts hold that the holder of the right to reenter must bring action in reasonable time after event occurs or action is barredE.Effect of Covenants in True Owners Deed

1.If used in accordance then takes subject to if used in violation, she takes free ofF.Adverse possession does not apply to government owned land

VI.ConveyancingA.Land Sale Contracts

1.SOF is Applicablea)Requirements

(1)Description of the property(2)Identification of the parties(3)Price and manner of payment

b)Doctrine of Part Performance(1)A court can give specific performance of a contract (not damages) even if no writing if additional facts are present(2)Theories to Support Doctrine

(a)Evidentiary Theory(i)Courts say that if acts done by a party can be explained only by reference to an agreement, these acts unequivocally establish theexistence of an oral contract

(b)Hardship or Estoppel Theory(i)If acts done by a party in reliance on the contract would result in hardship to such an extent that it would be fraud on that partywere the contract not enforce, the other party is estopped from asserting SOF defense

(3)Acts of Part Performance(a)Possession by purchaser(b)Making substantial improvements(c)Payment of all/part of purchase price

(4)Can Seller Obtain Specific Performance Based on Buyers Acts?(a)Evidentiary Theory

(i)Immaterial who performed acts(b)Hardship or Estoppel Theory

(i) must be the one whose action would result in hardship(a)Usually seller can't rely on buyers acts but still see if seller has done anything that would cause hardship if SOF defenseused by buyer

2.Doctrine of Equitable Conversiona)Generally

(1)Once contract is signed, equity regards purchaser as owner of the real property and sellers interest is in personal property the right tothe proceeds of the sale

(2)But legal title still with seller so he has right to possession until closingb)Risk of Loss

(1)Majority Rule: risk on seller(2)Some states say it is on seller unless buyer has legal title or possession at time of loss


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(3)Casualty Insurance(a)If seller has it then he has to give the buyer credit against the purchase price in the amount of the insurance proceeds

c)Passage of Title on Death(1)Death of Seller

(a)Must still sell with proceeds to estate if property was specifically devised that devisee gets proceeds(2)Death of Buyer

(a)Takers of his real property can demand conveyance(i)Some states say purchase price is paid from estate(ii)Some say they have to pay price unless will says otherwise

3.Marketable Titlea)Marketability Title Reasonably Free from Doubt

(1)Generally(a)In every land sale contract there is an implied covenant that at closing the seller will provide marketable title(b)Usually this means unencumbered fee simple with good record title

(2)Defects in Record Chain(a)Generally

(i)Title can be unmarketable because of a defect in the chain like a significant variation in the description of the land, a deed thatwas defectively executed, or evidence that a prior grantor lacked capacity

(ii)An ancient lien won't make it unmarketable if there is proof of satisfaction or the SOL has run(b)Adverse Possession

(i)Almost always unmarketable even though some modern courts allow in some specific circumstances(c)Future Interest Held by Unborn or Unascertained Parties

(i)Usually current and future holders can't work together to sell because a GAL can be appointed to represent in litigation it is notok to do that for conveyance purposes

(3)Encumbrances(a)Generally

(i)Mortgages, liens, easements and covenants make title unmarketable unless waived(b)Mortgages and Liens(i)Seller has right to satisfy at closing with proceeds from the sale simultaneous with transfer of title(c)Easements

(i)If it reduces the value of the property it renders title unmarketable beneficial easement usually won't(ii)Some courts say a buyer agrees to take subject to an easement that was notorious or known to her at time she entered contract

(d)Covenants(i)Restrictive covenants make title unmarketable

(e)Encroachments(i)A significant encroachment is a title defect, regardless of it is a neighbor encroaching on sellers l and or vice versa(ii)However, it won't render title unmarketable if:

(a)It is very slight and does not inconvenience the owner of the land it encroaches(b)The encroached-upon owner has indicated he will not sue(c)It has existed so long that it has become legal by adverse possession in a state that recognizes adverse possession title asmarketable

(4)Zoning Restrictions(a)Do not usually affect marketability(b)But if there is an existing violation it does

(5)Waiver(a)Any of the above can be waived in the contract of sale

b)Quitclaim Deed(1)Does not affect implied covenant of marketability unless it is so provided

c)Time of Marketability(1)Usually seller provides title at closing so buyer can't rescind prior on grounds that sellers title is not marketable(2)Installment Land Contract

(a)Sellers obligation is to furnish when delivery is to occur when buyer makes final payment(b)Buyer can't withhold payments on grounds sellers title not marketable before then(c)But buyer may get rescissionary relief before if he shows seller can't cure defects in time or in compelling situation, court may orderseller to quiet title

d)Remedy if Title Not Marketable(1)Generally

(a)If buyer determines sellers title is unmarketable, must notify seller and give reasonable time to cure, even if it means ext endingclosing date(b)If seller fails to cure, buyer has several remedies

(i)Rescission, Damages, Specific Performance(a)Unless contract says otherwise, buyer can rescind sue for damages for breach, get specific performance with abatement ofthe purchase price, or sometimes make seller quiet title

(b)Seller cannot sue for damages or specific performance(ii)Merger

(a)If buyer permits closing to occur, the contract merges with the deed and (in absence of fraud) seller is no longer liable onthe implied covenant of marketable title

(b)Buyer may have an action for violation of promises made in the deed4.Time of Performance

a)Presumption: Time is not of the essence closing date stated in contract is not absolutely bindingb)Presumption overcome if

(1)Contract so states(2)Circumstances say it was the parties intention


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(3)One party gives the other notice that she wants time to be of the essence and does so in reasonable time before closingc)If time is of the essence, a party who fails to tender performance on the set date is in total breach and loses right to enforced)If time is not of the essence a party who is late is liable for incidental damages she caused

5.Tender of Performancea)Obligations to pay and convey are concurrent neither party is in breach until other party performsb)When tender is excused

(1)If one party repudiates or it is impossible to performc)If neither party tenders then closing date is automatically extended indefinitely until one of them does sod)If buyer determines sellers title unmarketable he must give seller reasonable time to cure

6.Remedies for Breach of Sales Contracta)Damages

(1)Usually the difference between the contract price and the market value of the land on the date of breach + incidental damages(2)Liquidated Damages

(a)Sales contracts usually require buyer to deposit earnest money with the seller and provide that if the buyer defaults the seller cankeep the money as liquidated damages

(b)Many courts will uphold amount of 10% of sales price without further inquiry into reasonableness retention of most deposits upheldb)Specific Performance

(1)Buyers Remedy(a)Equity court will order seller to convey title if buyer tenders the purchase price(b)If seller can't give marketable title but the buyer still wants to go through with sale, she can usually get SP with an abatement of thepurchase price in an amount reflecting the title defect

(2)Sellers Remedy(a)Courts will usually give SP for seller if buyer is in breach(b)Some courts recently won't if the property is not unique

c)Special Rules for Unmarketable Title(1)If title unmarketable not due to sellers bad faith, about half the courts will limit recovery of damages to incidental out of pocket costs andreturn of earnest money other half regular remedies

7.Sellers Liability for Defects on Propertya)Warrant of Fitness or Quality New Construction Only(1)Applies to contracts for the sale of a residential building under construction or to be constructed no ability to inspect(2)Majority extends to a sale of a new house by the builder

b)Negligence of Builder(1)One who contracts for construction can always sue for negligence under the building contract some courts allow ultimate vendee to, too

c)Liability for Sale of Existing Land and Buildings(1)Generally: may be liable for defects in improvements under several theories:

(a)Misrepresentation (Fraud)(i)Seller must make false statement of fact (oral or written) that materially affects the value of the property on which buyer relied(ii)Statement can be one seller knew was false or made negligently

(b)Active Concealment(i)Same as above but seller liable without a statement if he deliberately concealed issue

(c)Failure to Disclose(i)Factors

(a)Seller knows or has reason to know of defect(b)Defect is not obvious and buyer unlikely to discover by ordinary inspection(c)Defect is serious and would cause buyer to reconsider purchase if known

(ii)More likely to impose liability if property is residence, defect is dangerous, and seller created the defect or tried and failed torepair it

(d)Disclaimers of Liability(i)As is clauses or specific disclaimers

8.Real Estate Brokersa)Broker who gets listing and others participating are the sellers agentb)Have fiduciary duty to seller but have to disclose material information to buyer if they have actual knowledgec)Agents used to gets commission if they find someone ready, willing, and able to buy but now usually not until sale closes

9.Title Insurancea)Insures good record title of property exists as of the policy dateb)Can be taken out by mortgage holder or property owner but it only protects the holder

B.Deeds Form and Content1.Formalities

a)Must meet SOF: writing signed by grantorb)Description of Land and Parties

(1)Must be unambiguous(2)If part left blank grantee can fill in but if description blank it is void but if to dead grantee it is void

c)Words of Intentd)Consideration not Requirede)Seal Unnecessaryf)Attestation and Acknowledgment Unnecessaryg)Signature

(1)Can be done at grantor request in his presence(2)Corporations two officers and seal(3)Grantee signature not required

2.Defective Deeds and Fraudulent Conveyancesa)Void and Voidable Deeds

(1)Generally


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(a)A deed that is defective may be void or voidable(b)If void, cant overcome(c)If voidable, not set aside for BFP

(2)Void(a)Deeds that are:

(i)Forged(ii)Fraud in the Factum (grantor didnt realize he was executing a deed

(b)Voidable(i)Executed by one without capacity(ii)Fraud in the inducement(iii)Duress(iv)Undue influence(v)Mistake(vi)Breach of fiduciary duty

b)Fraudulent Conveyances(1)If formalities are met a deed can still be set aside by grantors creditors(2)Conveyance is fraudulent if made

(a)With actual intent to hinder, delay, or defraud any creditor(b)Without receiving a reasonably equivalent value in exchange for the transfer where the debtor was insolvent or became insolvent dueto the transfer

(3)Not set aside if grantee took in good faith for reasonable value3.Description of Land

a)May be made by reference to a survey, by metes and bounds, by courses and angles, references to a plat, references to adjoining land, or streetand numberb)Sufficient

(1)All my land in Richland County is ok good lead on what is conveyedc)Insufficient Title Stays with Grantor

(1)One acre off the western end of my tractd)Parol Evidence is admissible to clear up ambiguity(1)Generally admissible

(a)O A my house in Columbia evidence can come in to show which house O owned(2)But if description is inadequate conveyance would likely fail

(a)Like if O owned 3 homes in Columbia but if there is also a written agreement that shows which one they meant, it can be used toreform

e)Rules of Construction(1)Natural monuments prevail over other methods of description(2)Next are artificial monuments(3)Angles beat distances(4)Last are general descriptions

f)Land Bounded by Right of Way(1)Title Presumed to Extend to Center of Right of Way

(a)If description says bounded by the highway, this works(b)Exceptions if there is evidence to rebut

(i)Express language(ii)Description like running along the street

(c)Water bounds need more definite language(d)From a right of way means the edge

(2)Variable Boundary Line Cases(a)Slow and imperceptible changes in course of a river or stream changes property rights(b)A sudden avulsion or an encroachment of a body of water does not

g)Reformation of Deeds(1)Granted if mutual mistake or scriveners error(2)Only granted on unilateral mistake if non-mistaken party induced by misrepresentation, etc(3)No reformation if passed to BFP

C.Delivery and Acceptance1.Delivery

a)In General(1)Delivery refers to grantors intent(2)

Must be words or conduct showing grantors intent that the deed have some present operative effect (that title passes immediately and irrevocably even if right of possession doesnt

(3)Sometimes can be conditional but if condition happens, date of delivery relates backb)Manual Delivery

(1)Physical transfer can be by mail, through agent, etc.c)Presumptions Relating to Delivery

(1)Delivery presumed if deed is:(a)Handed to grantee(b)Acknowledged by grantor in front of notary and then recorded

(2)Continued possession of the deed without intent grantor meant to pass title without delivery raises presumption of non-delivery andpossession of deed by grantee raises presumption of delivery

d)Parol Evidence(1)Majority rule is that any type of parol evidence from before or after a lleged delivery is allowed to show grantors intent

(a)Can be used to show there was intent or that there was no intent for it to have present effect(2)If a deed is unconditional on its face and is given directly to grantee, parol evidence is not allowed to it was subject to a condition


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(3)Parol evidence is always admissible to show that a deed absolute on its face was meant to be a mortgage(4)Transfer of Deed to BFP

(a)Situation: O gives A a deed to be examined by As attorney and A wrongfully records it and sells it to B, a BFP(i)O usually beats B, BUT(ii)If O was negligent in giving A the deed, B beats O

2.Retention of Interest by Grantor or Conditional Deliverya)No Delivery: If grantor executes deed but dies before delivery, no title passesb)No Recording: If grantor executes and delivers but doesnt record, title passes even if they thought it would only pass when recordedc)Express Condition of Death of Grantor: Creates life estate in grantor and future estate in granteed)An oral condition not written in deed usually voide)Test: grantor must relinquish absolute and unconditional control

3.Grantor Gives Deed to Third Partya)Generally

(1)Conditional delivery is permissible(2)Three different situations:

(a)Grantor gives to third party with no conditions(b)Grantor in commercial context gives to a third party with conditions(c)Grantor gives to third party in donative context

b)Transfer to Third Party with No Conditions(1)If O gives to B a deed to give to A delivery(2)If O gives deed to B to give to A at some point upon Os later instructions no delivery(3)Depends on if O retains right to recall basically

c)Transfer to Third Party with Conditions (Commercial Transaction)(1)Situation

(a)O gives A the deed and tells A to give it to B when B pays the purchase price to Os account(b)There is a present operative effect that title will transfer automatically upon payment and O will only keep title if B doesnt pay(c)This is delivery

(2)Parol Evidence is admissible to show condition(3)Grantors Right to recover Deed(a)Majority: If grantor tries to recover before condition, the grantee can only object if there is a written contract or written escrowinstructions

(b)Minority: No revocation even if there is no written contract(4)Breach of Escrow Conditions

(a)If grantee wrongfully gets deed from escrow holder before condition, title does not pass(b)A few cases say that if grantor picked the escrow agent then he is estopped against a BFP

(5)Relation Back(a)In escrow, title does not pass until performance of the condition but in certain situations, the title of the grantee will relate back tothe time of the deposit in escrow

(b)Usual situations:(i)Grantor dies doctrine applied to avoid rule that title must pass before death if instrument not in a will(ii)Grantor becomes incompetent(iii)Creditor (not BFP or mortgagee) attaches grantors title

(c)Not applied if intervening party is BFP or Mortgagee(d)Not applied to escrow grantee with knowledge before she performed

d)Transfers to Third Party with Conditions (Donative Transaction)(1)Condition Unrelated to Grantor Death

(a)No delivery when given to escrow agent because grantor can get it back but if condition occurs and grantee gets delivery it iseffective to convey to grantee

(b)If O executes to A and gives deed to B to give to a upon Os death, most courts say grantor can 't get it back because the intent was topresently convey a future interest but make sure the intent was to presently make a future interest

(i)If this is conditioned on A surviving O, then no delivery4.Acceptance

a)Usually presumed if grantee has knowledge and does not rejectb)Usually relates back to the date of delivery

(1)Not if it defeats BFP, attaching creditors, or surviving joint tenants5.Dedications

a)To public bodyb)Offer by written or oral statement, giving a map or plat, opening land to public usec)

Acceptance needed can be resolution, approval of map, assumption of maintenance, improvementsD.Covenants for Title and Estoppel by Deed

1.Generallya)Three types of deeds

(1)General Warranty(a)Includes six covenants, promises no defect made by grantor and all owners before him

(2)Special Warranty(a)Fewer covenants, usually only protects against defects caused by grantor

(3)Quitclaim(a)No covenants

2.Covenants for Title in a General Warranty Deeda)Usual Covenants

(1)Covenant of Seisin: Grantor has interest she purports to convey(2)Covenant of Right to Convey: Power and Authority to Grant(3)Covenant Against Encumbrances: Easements, Profits, Mortgages, Liens, etc


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(4)Covenant of Quiet Enjoyment: No one else has a lawful claim of title(5)Covenant of Warranty: Grantor agrees to defend against and other reasonable claims of title(6)Covenant of Reasonable Assurances: Grantor will perform whatever acts are reasonable necessary to perfect title if needed

b)None are implied and anything in contract of sale is gone unless there is fraud or mistakec)Breach of Covenants

(1)Seisin right to convey and covenant against encumbrances are present and are breached, if at all, at time of conveyance(2)Quiet enjoyment, warranty and further assurances are future covenants and are breached upon interference with possession(3)Covenants of Seisin and Right to Convey

(a)If breached grantee has a cause of action and the SOL starts to run at conveyance(b)Usually if grantee reconveys that person has no cause of action against covenantor

(4)Covenant Against Encumbrances(a)Cause of action arises at conveyance(b)Some say it depends on if grantor knew of the encumbrance(c)Some states say grantee has constructive notice of visible encumbrances(d)No cause of action for remote grantee in most states

(5)Future Covenants(a)When a third party interferes with possession(b)Runs to successive Grantees(c)Party must give her notice(d)To be a breach there must be a disturbance of possession like paying off another claim, etc

d)Damages and Remote Grantees(1)Situation: OABC(2)C can sue any of them if all gave general warranty(3)In some states, C can recover the consideration they received even if it is more than C paid(4)Other states say C can only get what C paid

3.Special Warranty Deeda)Statutes in many states say that using the word grant in a conveyance creates by implication two limited assurances against the acts of thegrantor:

(1)Grantor has not previously conveyed the same estate or an interest in it to another(2)Estate is free from encumbrances by grantor

4.Quitclaim Deeda)Grantor releases any interest they had

5.Estoppel by Deeda)If a grantor purports to convey an estate she does not own her subsequent acquisition of title to the property will automatically inure to thebenefit of the grantee

b)Applies to warranty deedsc)Usually only applies as against the grantor

(1)But if the original grantee recorded the deed then that might be enough notice to prevent later purchaser from being BFPd)Remedies of Grantee

(1)May accept title or sue for breachE.Recording

1.Requirementsa)Any instrument affecting an interest in land can be recorded: deed mortgage, sale contract, lis pendensb)Grantor must acknowledge before notary usually to be able to convey

2.Types of Recording Actsa)Notice Statutes

(1) Subsequent BFP wins over prior grantee who did not record(2)Looks at whether purchaser had actual or constructive notice(3)If O A, A doesnt record and then O B, B wins, even if A goes and records before B does but, if O C then B loses to C

b)Race-Notice Statutes(1)Subsequent BFP wins only if she records before prior grantee and did not know about prior grantee

c)Race Statutes(1)Whoever records first wins even if it is later purchaser who knew about prior one (rare)

3.Who is protecteda)BFP

(1)Purchaser(2)Without notice(3)For value

b)Purchasers(1)Donees, heirs and devisees are NOT protected, but those buying from them are

(2)Mortgagees are usually treated as BFPs, lien holders are not(3)Transferees from BFPs are usually protected even if the transferee from the BFP had actual knowledge of the prior interest - but not iftransferee previously had title and notice

(4)Purchaser in an Installment Land Contract(a)If only part payment made then protected to extent of payment(b)Court can award a share as tenant in common proportionate to payments made(c)Give to prior claimant with lien to later buyer in amount of payments made(d)Award to second claimant and give prior one lien for balance due(e)Shelter rule applies if contract is to transferee from a BFP

c)Without Notice(1)Generally

(a)No one has duty to title search but subsequent purchaser is charged with notice that one would provide(b)Notice is measured at time of conveyance not time of recording


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(2)Actual Notice(a)Counts no matter what source

(3)Record Notice(a)Records notice must be in the chain of title and not a wild deed(b)Deeds Recorded Late

(i)Situation:(a)May 1: OA(b)May 15: OB (a donee)(c)June 1: B records(d)June 15: A records(e)July 1: BC (C has no actual notice of A)

(ii)Results(a)B v. A: A wins because B is not BFP(b)C v. A: In notice state, C wins because A recorded late and it was not in Cs chain of title

(i)But in a race-notice state, A would give C constructive notice but if B was a BFP then shelter rule applies(c)If A wants to protect file lis pendens in Bs name to give notice

(iii)Deeds Recorded Before Grantor got Title(a)Situation:

(i)June1: O owns Blackacre but A conveys it to B who immediately records(ii)July 2: O conveys Blackacre to A and A records(iii)August 3: A conveys Blackacre to C, BFP without actual notice

(b)Majority: C is protected over B because A didnt own when she conveyed to B so it is outside the chain of title(c)Minority: B is protected because as soon as A got good title it automatically transferred to B

(iv)A deed in the chain that references an instrument that isnt may give constructive notice of that instrument (v)Restrictive Covenants Deeds from a Common Grantor

(a)Subdivision Restrictions(i)If some deeds have restrictions and some dont, most courts dont put burden on later buyer to read all deeds fromthat purchaser so they dont apply to him (ii)Same goes to an easement not in both deeds

(vi)Some states cut off title search date(4)Inquiry Notice

(a)If inquiry necessary then grantee charged with notice it would have given(b)Fact that deed is quitclaim doesnt require inquiry(c)If recorded instrument references something not in chain of title or there is a li nk missing in the chain of title, then there is a duty toinquire

(d)Anything that an inspection of the premises or inquiry of the possessor would have revealed is deemed noticedd)Valuable Consideration

(1)Protection only if valuable consideration given at time of transfer(2)Must have substantial pecuniary value(3)Not enough to get to satisfy old debt

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