Term
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Definition
Right to exclude
Right to transfer
Right to use and posses |
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Term
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Definition
| Cause of action to get property back |
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Term
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Definition
| Cause of action to get monetary damages |
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Term
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Definition
protects rights of possession, as opposed to rights of ownership.
Finder of the property has a superior right to the property over all except the true owner. |
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Term
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Definition
| if you are in lawful possession of someone else’s property, this creates duties and obligations of the bailee. The overwhelming view of the courts is that the bailee has a standard of a reasonable person under the circumstances (the basic negligence standard). |
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Term
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Definition
Functions as a method of transferring interests in land without the consent of the prior owner, and even in spite of the dissent of such owners.
A minority of jurisdictions require good faith, that you believed it was your property. Most courts apply the objective test, i.e., it doesn’t matter what your state of mind is. |
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Term
| Elements of Adverse Possession |
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Definition
Actual and exclusive
Open and Notorious
Adverse and Hostile
Continuous for the statutory period |
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Term
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Definition
| a claim founded on a written instrument (a deed, a will) or a judgment or decree that is for some reason defective and invalid; in some states, this is essential to acquisition by adverse possession. |
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Term
| constructive adverse possession |
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Definition
| If the property described in the written instrument in question is larger than the property you are actually possessing, you are constructively possessing all the property that the instrument describes. |
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Term
| What constitutes continuous possession? |
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Definition
| possess the property in question in the way that “ordinarily marks the conduct of owners in general in holding, managing, and caring for property of like nature and condition.” |
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Term
| When is tacking allowed to meet the requirements of adverse possession? |
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Definition
if the successive occupants are in “privity”
Privity: The connection or relationship between 2 parties, each having a legally recognized interest in the same subject matter
There must be a voluntary transfer of an estate or possession |
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Term
| Acquisition by Gift: 3 requirements |
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Definition
Intention: may be shown by oral evidence
Delivery: requires objective acts
a.Manual delivery (preferred if possible and practical to do so)
b.Constructive delivery: handing over a key or some object that will open up access to the subject matter of the gift
c.Symbolic delivery: handing over something symbolic of the property given, like handing over a written instrument declaring a gift of the subject matter
Acceptance: typically the law will assume acceptance when intent and delivery is met. There are a few circumstances where there is evidence that a gift was rejected, but generally the law will presume acceptance. |
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Term
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Definition
Gift inter vivos: gift between living persons; immediately effective and irrevocable
Gift causa mortis: gift made in contemplation of and in expectation of immediate approaching death (substitute for a will) |
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Term
| Requirements of an intervivos gift |
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Definition
| (1) that the donor intend to make an irrevocable present transfer of some present interest in the object and (2) that there be a delivery of the gift, either by a physical delivery of the subject of the gift or a constructive or symbolic delivery such as by an instrument of gift, sufficient to divest the donor of dominion and control over the property. Acceptance by the donee is essential to the validity of an inter vivos gift, but when a gift is of value to the donee, as it is here, the law will presume an acceptance on his part. |
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Term
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Definition
“to A and his heirs.”
Now just "to A" |
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Term
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Definition
issue per stirpes: if any child of the decent dies before the decedent leaving children who survive the decedent, such child’s share goes to his or her children by right of representation
Ancestors: By statute parents usually take as heirs if the decedent leaves no issue.
Collateral: all persons related by blood to the decedent who are neither descendants nor ancestors (brothers, sisters, nephews, nieces, uncles, aunts, and cousins)
Escheat: If a person dies without any heirs, the property escheats to the state where the property is located. |
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Term
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Definition
magic words: "To A and the heirs of his body."
When A’s bloodline runs out and the fee tail ends, the land will revert to the grantor or the grantor’s heirs by way of reversion or, if specified in the instrument, will go to some other branch of the family.
Today the fee tail can be created only in Delaware, Maine, Massachusetts, and Rhode Island. |
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Term
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Definition
"To A for Life"
A life tenant can convey a life estate pur autre vie to another party (a life estate measured by the grantor’s life, not the grantee’s) |
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Term
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Definition
| The Restatement provides that an absolute restraint on fee simple is void but a partial restraint (e.g., limiting conveyance to certain persons or putting a time limit on the restraint) is valid if, under all the circumstances of the case, the restraint is found to be reasonable in purpose, effect, and duration. |
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Term
| Concept of economic waste |
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Definition
| A should not be able to use the property in a manner that unreasonably interferes with the expectations of B; designed to avoid uses of property that fail to maximize the property’s value. |
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Term
| Two types of economic waste |
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Definition
Affirmative waste – occurs when the voluntary acts of the present estate owner significantly reduce the value of the property
Permissive waste – inaction of the present estate owner falling below a standard of reasonable care to protect the value of the estate (adverse possession is an example of permissive waste by a life tenant) |
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Term
| Leasehold Estates: 3 modern forms |
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Definition
Tenancy for a term of years – a lease from L to T for a period of time fixed in advance
Periodic Tenancy – a lease from L to T for an initial fixed period that automatically continues until either the L or T terminates (i.e., "month-to-month" residential leases)
Tenancy at will – a lease with no fixed duration that endures only so long as both L and T desire |
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Term
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Definition
a fee simple that will end automatically when a stated event happens, immediately giving the original transferor the legal right to possession
(1)Magic words: "to A so long as, while, during, unless, until...etc."
(2)Future interest for grantor: possibility of reverter
(3)The words of special limitation (the defeasance language) are expressed in time or duration – they are viewed as an inherent part of the definition of the estate’s length
(4)Often these are “convey the property to A so long as he uses it for public purposes.” |
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Term
| Fee simple subject to condition subsequent |
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Definition
a fee simple that does not automatically terminate but may be cut short or divested at the transferor’s election when a stated condition happens
(1)Magic words: "to A provided that,on condition, but if...etc."
(2)Future interest for grantor: right of entry (also known as power of termination)
(3)Once the condition occurs, the future interest holder (O having the right of entry) has the power to take affirmative action to end the estate. If the holder fails to exercise this option, the estate continues. |
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Term
| Fee Simple Subject to Executory Limitation |
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Definition
Created when the grantor creates either a fee simple determinable or a fee simple subject to condition subsequent and, rather than retain a future interest herself, creates one instead in a third party
(2)Thus, “O to A and his heirs so long as …, then to B and his heirs” or “O to A and his heirs, but if …, then to B and his heirs”
(3)Now a third party, rather than the grantor, has the future interest which is known as an executory interest
(4)Upon the happening of the specified event, the fee simple determinable (or fee simple subject to condition subsequent) in A automatically terminates, and B has the right to immediate possession |
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Term
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Definition
| Unreasonable delay in pursuing a right or claim in a way that prejudices the party against whom relief is sought. |
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Term
| Future interests in the Transferor |
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Definition
•Reversion: when the grantor has provided to the other party a lesser estate than what the grantor actually has
•Possibility of reverter-happens automatically-FSD
•Right of entry-FSSTCS |
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Term
| Future Interests in the Transferee |
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Definition
•Remainders
1) Vested
-Indefeasibly vested
-Vested subject to partial or total divestment
-Vested subject to partial and total divestment
2) Contingent (If it’s contingent, in common law it can be destroyed).
Executory interests
1.Shifting
2.Springing |
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Term
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Definition
1)Fee simple
2)Fee tail
3)Life Estate
4)Tenancies |
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Term
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Definition
a.The reversion is the future interest that arises when the grantor transfers to another a lesser estate than the grantor has, and does not at the same time transfer the balance of the estate to a third party (usually a fee tail or a life estate)
b.Reversions can be sold, devised and inherited
c.Some reversions are only “possible” and not certain to become possessory estates, but are still called reversions and never “possibility of reversion” |
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Term
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Definition
a.The possibility of reverter is the future interest that arises when the grantor creates a FSD estate of the same quality as her own, and does not give the balance to a third party in the same conveyance
b.If a conveyance creates both a possibility of reverter and a reversion, call the future interest a reversion
c.If a conveyance creates only a possibility of reverter, call the future interest a possibility of reverter |
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Term
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Definition
The right of entry is the future interest that arises in the grantor following an estate subject to condition subsequent when there is not in the same conveyance a gift over of the future interest to a third party
b.If O creates a right of entry in a conveyance of a lesser estate than she has, thus creating a reversion at the same time, this is known as a right of entry incident to a reversion |
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Term
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Definition
| A future interest in a transferee is a remainder if simultaneously created with the prior interests and comes into possession, if at all, precisely at the natural termination of the prior vested estate. (If an interest cuts into or divests a prior estate or interest, it is an executory interest, not a remainder.) |
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Term
| A remainder is vested if: |
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Definition
| given (1) to an ascertained person and is (2) not subject to any condition precedent other than the natural termination of the prior estate |
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Term
| A remainder is contingent if |
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Definition
| given to unascertained persons or if subject to a condition precedent other than the natural termination of the prior estate |
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Term
| A condition is precedent if |
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Definition
(a) the condition precedes the grant or (b) the grant and the condition are in the same phrase regardless of their order.
If the words of condition are in a separate clause or phrase following the phrase giving the grant, the remainder is vested and the following phrase thus states a condition subsequent (or divesting condition). |
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Term
| Technical Reversion Rule: |
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Definition
| If a grantor has a fee simple, that grantor will not have a reversion in fee simple if she transfers a possessory fee simple or a vested remainder in fee simple. In all other cases, the grantor transferring a present possessory interest will have a reversion in fee simple. |
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Term
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Definition
a. Always divest a prior vested estate – whether in a previous grantee or the grantor.
b.Always considered contingent interests, because they are subject to a condition precedent and do not vest until they become possessory. |
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Term
| 2 types of executory interests |
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Definition
Shifting executory interest: divests a previous grantee.
Springing executory interest: divests a grantor. |
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Term
| The Rule Against Perpetuities |
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Definition
No interest is valid unless it must vest, if at all, no later than 21 years after some life in being at the creation of the interest (i.e., it limits the period of time between the creation (by deed, or by a will effective at death) of a contingent future interest in a third party, and its vesting in interest.
a.If it is at all possible that a contingent future interest in a third party could vest in interest after the time limit of the RAP, then the interest is void from the outset. |
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Term
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Definition
1. Analyze the conveyance to identify the interests subject to the rule
2. What is the vesting event?
3. Is there a validating life? |
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Term
| 3 types of concurrent interests |
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Definition
1. Tenancy in Common
2. Joint Tenancy
3. Tenancy by the Entirety |
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Term
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Definition
-most commonn of the three
-Each tenant in common holds an undivided, fractional share of the whole interest; the interest of each is descendible and may be conveyed by deed or will.
-If a possessory estate, each is entitled to simultaneous possession and enjoyment of the whole parcel of land.
-The unity of possession is the only unity essential to a tenancy in common
-No right of survivorship.
-ANy conveyance to 2 or more unmarried ppl is presumed to be TIC
-A tenant in common may sell, mortgage, lease or otherwise transfer all or part of her interest without the consent of other co-tenants, and such transfers do not end the tenancy in common |
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Term
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Definition
-Joint tenants have the right of survivorship
-Four “unities” essential to joint tenancy
(a)Time – the interest of each joint tenant must be acquired or vest at the same time.
(b)Title – all joint tenants must acquire title by the same instrument or by a joint adverse possession. A joint tenancy can never arise by intestate succession or other act of law.
(c)Interest – All must have equal undivided shares and identical interests measured by duration.
(d)Possession – Each must have a right to possession of the whole. After a joint tenancy is created, however, one joint tenant can voluntarily give exclusive possession to the other joint tenant. |
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Term
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Definition
-The four unities (plus a fifth – the unity of marriage) are required, and the surviving tenant has the right of survivorship.
-Neither husband nor wife, acting alone, has the right to judicial partition of property held as tenants by the entirety. Can be terminated only by divorce, death of one spouse, or agreement of both spouses.
-Exists today in fewer than half the states. |
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Term
| Uniform Simultaneous Death Act: |
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Definition
If joint tenants die at the same time, then the joint tenancy is treated like a tenancy in common.
-If one joint tenant murders the other joint tenant, it is treated as a tenancy in common. |
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Term
| Title theory of mortgages: |
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Definition
| Title transfers from mortgagors to mortgagee at time the mortgage is executed. |
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Term
| Lien theory of mortgages: |
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Definition
| The mortgagee has a lien on the property, but title does not transfer until and unless the mortgagor defaults on the loan. |
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Term
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Definition
partition in kind
partition by sale |
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Term
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Definition
The law tends to prefer this.
(a)If the court can do this, it tends to be an equitable remedy, and the court will try to do it in ways where each party’s interest in the property will be respected.
(b)So if it gets difficult to divide the property into parcels worth the same amount, the court can order the person that gets the more valuable piece to pay owelty (an amount of $ a party would be required to pay to even things out). |
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Term
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Definition
-If it’s impractical or impossible to divide the property in kind equitably, then the court will order the sale of the property, and the proceeds are divided in accordance with the parties’ respective interest in the property.
-Judicial preference for partition in kind over partition in sale: This deprives people of their property rights, more so than partition in kind. Money is often a poor substitute for your property. |
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Term
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Definition
Ouster: necessitating the payment of rent to non-occupying tenants requires that the occupying tenant take action that prevents the use and enjoyment of the property by the non-occupying cotenants.
-Majority rule: must prove ouster in order to collect rent from co-tenant for occupying the whole of the property
-Minority rule: you need not prove ouster to collect rent |
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Term
| Effects of Lease on Joint Tenancy |
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Definition
Majority view: Lease does not sever joint tenancy.
Minority view: Lease does sever joint tenancy. |
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Term
| Tenancy by the Entirety Post Married Women’s Property Acts -GROUP 1 STATES |
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Definition
-these acts did not change the common law tenancy by the entirety
States that fell in this group no longer recognize the estate at all. These states no longer recognize tenancy by the entirety at all, so there are no more Group I states. |
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Term
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Definition
-these acts had the purpose of giving the wife the same rights as the husband had
-Wife acquires the right to possession of one-half and the right to alienate her interest in the same manner as the husband could at common law
-Neither spouse can destroy the right of survivorship in the other, but the creditors of each can levy on his or her interest, subject to the possessory right to one-half and survivorship right to the whole of the other spouse
---Creditor thus becomes a tenant in common with the non-debtor spouse for the joint lives of the spouses |
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Term
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Definition
-(majority approach) – both husband and wife have equal rights to possession during the marriage
-Both husband and wife are forbidden to alienate his or her interest in the property without the consent of the other
-Because neither spouse can alienate their interests without the other’s consent, neither his nor her creditors can reach the entirety property (This is the holding of the Hawaii court in the Endo case.) |
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Term
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Definition
-creditors cannot levy on the debtor’s right to possession but can levy on the debtor spouse’s right of survivorship
-Thus, creditors cannot interfere with the spouses’ use and enjoyment of the property, but take all if the non-debtor spouse dies first (Tennessee is in this group) |
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Term
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Definition
1. Term of years
2. Periodic Tenancy
3. Tenancy at will
4. Tenancy at sufferance |
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Term
| Tenancy for a term of years |
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Definition
a. Key characteristic is an advance agreement that the tenancy will last for a designated period
b.The tenancy lasts for a period of time that is either (a) fixed in advance, or (b) computed using a formula agreed to in advance
c.Tenancy automatically expires when the agreed period ends, without any need for tenant or landlord to provide the other with notice of termination
d.The tenancy can be defeasible; that is, it can terminate upon the occurrence of a stated future event (e.g., L leases to T for a 25-year term, so long as Blackacre is used as a farm). This creates a term of years determinable.
e.Most leases will contain provisions permitting termination upon the tenant’s breach of specified lease terms, such as non-payment of rent, waste, and illegal use of the premises |
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Term
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Definition
-Lasts for an initial fixed period and then automatically continues for additional equal periods until either the landlord or tenant terminates by giving advance notice
-If neither L or T gives notice, the tenancy will continue indefinitely
-Any period of duration may be used (month-to-month, year-to-year, etc.)
-A periodic tenancy may arise based on the conduct of the parties, even in the absence of any express agreement
-At common law, either L or T could terminate the tenancy by delivering oral or written notice to the other. Each had the unfettered right to end the tenancy for any or no reason
-At common law, termination of a year-to-year tenancy required 6months advance notice, while shorter tenancies required notice equal to the period involved
-At common law, the tenancy could not be terminated in the middle of a fixed period; it must terminate at the end of a fixed period
-Some jurisdictions have statutory provisions that change the common law. Some jurisdictions allow you to terminate a year-to-year with less than six months notice; some allow you to terminate after 30 days, even if it ends in the middle of a period. |
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Term
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Definition
-Has no fixed duration and endures only so long as both L and T desire
-At common law, the estate ended immediately – without any advance notice – on the day T abandoned the premises or L delivered notice of termination
-Today, most tenancies at will arise by implication, not from express agreement.
-At common law, any form of notice would terminate the tenancy immediately. Even absent notice, any conduct by L or T sufficient to demonstrate intent to terminate suffices to do so. If either party dies, it ends the tenancy at will immediately. |
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Term
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Definition
-Not a true estate in land and does not create a landlord-tenant relationship
-Arises when a person in rightful possession of land wrongfully continues in possession after that right ends. Most commonly arises when you have a holdover tenant, but it can arise when you have a trespasser.
-Because a tenancy at sufferance is not an estate, no notice or other action by the landlord is required to terminate it. Instead, the landlord may evict the wrongful tenant at any time
-A holdover tenant creates a tenancy at sufferance, giving the landlord under the common law an option, in his discretion (and regardless of the tenant’s wishes), to either (a) evict the tenant as a trespasser, or (b) hold the tenant to a new tenancy |
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Term
| Factors affecting whether a lease is formed: |
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Definition
a.The intention of the parties
b.The number of restrictions on use
c.The exclusivity of possession
d.The degree of control retained by the granting party
e.The presence or absence of incidental services |
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Term
| Statute of Frauds generally |
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Definition
| Commonly, the state statutes of frauds provide that leases for more than one year must be in writing. All but a few jurisdictions permit oral leases for a term less than a year. |
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Term
| Is a landlord, without any express covenant to deliver possession of the property, required by law to deliver possession of the property? |
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Definition
The English rule says that there is an implied duty that the landlord has an obligation to ensure physical possession for the tenant.
The American rule says that there is no such obligation, unless there is an express agreement in the contract; it is therefore the tenant’s responsibility to evict the holdover tenant. |
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Term
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Definition
| if the instrument purports to transfer the lessee’s estate for the entire remainder of his term, it is an assignment, regardless of its form or the parties’ intentions. |
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Term
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Definition
| a transfer of the lessee's estate for less than the remainder of his term |
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Term
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Definition
| Privity of estate- exists between two parties when the landlord conveys a lesser estate to the tenant (or when the first tenant conveys a lesser estate to a second tenant through a sublease). When the lessee assigns all his rights under the lease to a third party, the privity of estate is now between the landlord and the new tenant. |
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Term
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Definition
| Privity of contract exists between the parties to a lease contract. If a landlord leases to a tenant, the privity of contract between landlord and tenant is not destroyed, even if the tenant assigns all his rights and obligations under the lease to a new tenant. |
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Term
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Definition
| When the first tenant conveys his entire estate to a second tenant through an assignment, which includes payment of rent by the second tenant directly to the landlord, then the landlord can sue the second tenant for unpaid rents on both a privity of estate theory and as a third party beneficiary to the contract, which gives him the rights to sue as if there were privity of contract between the landlord and the second tenant. |
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Term
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Definition
Minority rule: Where a lease provides for assignment only with the prior consent of the lessor, such consent may be withheld only where the lessor has a commercially reasonable objection to the assignment, even in the absence of a provision in the lease stating that consent to assignment will not be unreasonably withheld.
Majority Rule: Where a lease contains an approval clause, the lessor may arbitrarily refuse to approve a proposed assignee no matter how suitable the assignee appears to be and no matter how unreasonable the lessor’s objection. |
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Term
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Definition
Minority view-The only lawful means to dispossess a tenant who has not abandoned nor voluntarily surrendered, but who claims possession and rights adverse to those claimed by landlord, is by resort to judicial process.
Majority View-If self-help is allowed, the court is going to look very closely at the way in which it was done and the risks of violence. |
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Term
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Definition
| a quick and efficient means by which to recover possession (and, in some jurisdictions, rent) after termination of a tenancy |
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Term
| Does a landlord seeking damages from a tenant who’s defaulted have a duty to mitigate damages? |
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Definition
Majority Rule: Landlord is required prove mitigation of damages when a tenant defaults.
-Justification: The smaller the injured party can make his damages, the less likely litigation will be necessary. It’s a fairness and equity rule.
Minority Rule: Landlord is not required to mitigate damages.
-Justification: The idea is that the landlord doesn't have possession of the property anymore, so even though the tenant is in default and breach, the right of possession still resides in the tenant and interference with that right has been frowned upon. |
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Term
| Disputes between landlord and tenant regarding the condition of the premises arise in essentially two ways: |
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Definition
-The tenant might wish to vacate, or to stay but pay less (or no) rent.
-The tenant (or an invitee of the tenant) might be injured by allegedly defective premises and claim damages against the landlord in tort. |
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Term
| Discuss the covenant of quiet enjoyment in relation to constructive eviction |
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Definition
| Where there is a covenant of quiet enjoyment, whether express or implied, and it is breached substantially by the landlord, the doctrine of constructive eviction is a remedy for the tenant. Under this rule any act or omission of the landlord (or his representative) which renders the premises substantially unsuitable for the purpose for which they are leased, or which seriously interferes with the beneficial enjoyment of the premises, is a breach of the covenant of quiet enjoyment and constitutes a constructive eviction of the tenant. |
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Term
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Definition
-Where the premises are found to be in violation of statutory prohibitions, the court may find the lease to be an illegal contract and therefore unenforceable.
-Minor technical violations do not render a lease illegal, nor do violations of which the landlord had neither actual nor constructive notice.
-From the tenant’s point of view, the chief attraction for the illegal lease defense is the leverage it provides: the tenant can withhold rent and still stave off the landlord’s inevitable action to evict for nonpayment. |
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Term
| When a landlord breaches the warranty of habituality what options does the tenant have? |
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Definition
| When the landlord breaches the implied warranty of habitability, tenant can withhold rent, repair defects and deduct this cost from rent payments, seek rent already paid, and seek punitive damages in the appropriate cases. |
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Term
| How have jurisdictions treated the warranty of habituality? |
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Definition
-the implied warranty for habitability does not render pointless the doctrines of quiet enjoyment, constructive eviction, and illegal leases.
(a)A good handful of jurisdictions has yet to adopt the warranty.
(b)The warranty, even where generally applicable, commonly does not apply across the board to all residential leases (single-family residences might be excluded, for example, or agricultural leases, or long-term leases).
(c)A majority of jurisdictions has declined to extend the idea to an implied warranty of fitness or suitability for purpose in commercial leases. |
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Term
| Standard breach of the warranty of habituality |
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Definition
(a)The standard of the implied warranty of habilitability, and the shortcomings that amount to breaches of the standard, appear to vary among jurisdictions, but the differences are probably more nominal than real when it comes to actual cases.
(b)Generally speaking, an “adequate standard of habitability” has to be met, and a breach occurs when the leased premises are “uninhabitable” in the eyes of a reasonable person.
(c)Housing code provisions and their violation are compelling but usually not conclusive. |
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Term
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Definition
Most jurisdictions today, whether by statute or judicial decision, forbid retaliatory action by landlords renting residential space (few if any extend the prohibition to commercial leases).
-A fairly common approach is to create a rebuttable presumption of retaliatory purpose if the landlord seeks to terminate a tenancy, increase rent, or decrease services within some given period (commonly anywhere from 90 to 180 days) after a good-faith complaint or other action by a tenant based on the condition of the premises. Retaliatory acts beyond the stated period are also usually prohibited, but the tenant bears the burden of proof.
-ther constraints: anti-discrimination measures and rent control laws. |
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Term
| The landlords tort liability |
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Definition
-The common law held landlords liable for tenant injuries (and perhaps for injuries to third parties on the leased premises) only when the landlord negligently breached the limited duties that arise from the handful of exceptions introduced earlier in connection with our discussion of quiet enjoyment and constructive eviction.
-A few jurisdictions have cited the warranty of habituality as a reason to impose a general standard of care – a negligence standard – on landlords under all circumstances.
-The majority of jurisdictions neither impose strict liability nor recognize a general duty of care on the part of landlords; rather, they hold to the conventional common law exceptions. |
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Term
| Tenant’s duty not to commit waste |
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Definition
| this duty is breached if a tenant makes “such a change as to affect a vital and substantial portion of the premises; as would change its characteristic appearance; the fundamental purpose of the erection, or the uses contemplated, or a change of such a nature, as would affect the very realty itself, extraordinary in scope and effect, or unusual in expenditure.” |
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Term
| Four Stages of Real Estate Sales Transaction |
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Definition
a.Locating a buyer
b.Negotiating the contract (usually pre-printed forms)
c.Preparation for the closing (executory period). A real estate contract is executory. The purpose of the contract is to smoke out whatever problems may be present with the property, so if the problems are insurmountable, the parties can rescind the contract. |
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Term
| Preparation for closing a real estate transaction |
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Definition
1. Buyer's contractor or inspector will inspect the property and provide a written report
2. Inspection for termite infestation
3. Buyer will apply for financing of purchase price from a financial institution
4. A title report will be prepared as to the state of the title to the property held by the seller
5. Most contracts contain a mortgage contingency – if buyer cannot obtain a mortgage loan before closing the contract is rescinded |
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Term
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Definition
(1) Buyer will execute a written promissory note in favor of lender secured by a first priority mortgage that will encumber the property
(2) Purchase loan is made by lender
(3) Sales price is paid to the seller
(4) Commission is distributed to brokers
(5) Seller conveys title to buyer through a written warranty deed
(6) Buyer receives a title insurance policy insuring her title to the property
(7) Deed and mortgage are immediately recorded |
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Term
| Minimum contract requirements for real estate transactions |
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Definition
1. Purchase price and how it is to be paid, including the amount of cash required, any planned financing, its cost, interest charges, and length of the mortgage
2. Legal description of the property
3. Good title furnished by the seller, as indicated by an abstract of title, certificate of title, or a policy of title insurance
4. Warranties of title, including title restrictions and any other rights and limitations to which the title may be subject
5. Date of transfer of possession
6. Party responsible for risk of fire or other hazard pending closing or transfer of possession
7. Prorations of utility bills, property taxes, and similar expenses
8. Itemization of furnishings, appliances, shrubbery, air conditioners, other personal property, and fixtures included in the sale
9. Basic terms of any escrow agreement
10. Provision for return of initial payment (earnest money or binder deposit) if the sale is not completed
11. Signature of the parties |
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Term
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Definition
-Generally, title is considered to be unmarketable if there are liens or mortgages or interests, easements, covenants; generally you have to have those restrictions disclosed and the buyer agrees to take the property subject to the restrictions. Usually the encumbrances need to be removed before you can sell it.
-Essentially, marketable title means that if it's reasonably probable that the purchaser would be exposed to a nonfrivolous lawsuit with respect to the state of the title, then it is not marketable |
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Term
| Problem of adverse possession and marketable title |
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Definition
| If you have title based on adverse possession, you have title so it is marketable. You certainly can convey your title to someone else because adverse possession is good title. But there are practical concerns (maybe the mortgage company doesn't want to loan money on property acquired through adverse possession – it may be that the case is not open and shut, and you may have to have litigation to prove acquisition by adverse possession). A title insurance company may not be willing to execute a policy for title in a case like this. |
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Term
| Classes of Contracts Covered by Statute of Frauds |
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Definition
(1) Contracts for the sale of goods for the price of $500 or more (UCC § 2-201)
(2) Contracts that cannot be performed within less than one year (the one-year provision) Some states have separate provisions governing leases because of this category.
(3) Contracts involving transfers of interests in real estate (the land contract provision)
(4) Contracts to answer for the debt or duty of another (the suretyship provision)
(5) Contracts by an executor or administrator to pay for the debts of the estate from her own assets (the executor-administrator provision)
(6) Contracts made upon consideration of marriage (the marriage provision) |
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Term
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Definition
(1) Is the contract within the statute – that is, a contract that the statute requires to be in writing?
-If the answer is no, the Statute of Frauds does not apply.
-If the answer is yes, move to Step Two.
(2) If the contract is within the statute, is there a sufficient memorandum to comply with the statute’s writing requirement?
-If the answer is yes, then the Statute of Frauds is satisfied.
-If the answer is no, move to Step Three.
(3) If the contract is within the statute, and no sufficient memorandum exists, is the contract nonetheless enforceable because some exception to the statute is applicable? |
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Term
| General Requisites of a Memorandum-the writing |
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Definition
| a contract under the Statute of Frauds is enforceable if it is evidenced by any writing (The writing doesn’t necessarily have to be the contract; there just has to be some written evidence that the contract exists) |
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Term
| Exception to the statute of frauds |
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Definition
Action in Reliance; Specific Performance
(a)Restatement (2d) of Contracts, § 129: A contract for the transfer of an interest in land can be specifically enforced notwithstanding failure to comply with the Statute of Frauds if it is established that the party seeking enforcement, in reasonable reliance on the contract and on the continuing assent of the party against whom enforcement is sought, has so changed his position that injustice can be avoided only by specific enforcement. This gives you SPECIFIC PERFORMANCE. |
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Term
| Enforcement by Virtue of Action in Reliance |
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Definition
Restatement (2d) of Contracts, § 139:
-A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce the action or forbearance is enforceable notwithstanding the Statute of Frauds if injustice can be avoided only by enforcement of the promise. The remedy granted for breach is to be limited as justice requires. This doesn’t necessarily give you specific performance. |
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Term
| In determining whether injustice can be avoided only be enforcement of the promise, the following circumstances are significant: |
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Definition
a) the availability and adequacy of other remedies, particularly cancellation and restitution;
b) the definite and substantial character of the action or forbearance in relation to the remedy sought;
c) the extent to which the action or forbearance corroborates evidence of the making and terms of the promise, or the making and terms are otherwise established by clear and convincing evidence; (so the main function is: we want to be convinced that there actually was an agreement)
d) the reasonableness of the action or forbearance;
e) the extent to which the action or forbearance was foreseeable by the promisor. |
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Term
| Definition of Marketable Title |
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Definition
| A marketable title to real estate is one which is free from reasonable doubt, and a title is doubtful and unmarketable if it exposes the party holding it to the hazard of litigation. To render the title to real estate unmarketable, the defect of which the purchaser complains must be of substantial character and one from which he may suffer injury. Mere immaterial defects which do not diminish in quantity, quality or value the property contracted for, constitute no ground upon which the purchaser may reject the title. |
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Term
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Definition
| Definition: If there is a specifically enforceable contract for the sale of land, equity regards as done that which ought to be done. The buyer is viewed in equity as the owner from the date of the contract (thus having the “equitable title”); the seller has a claim for money secured by a vendor’s lien on the land. The seller is also said to hold the legal title as trustee for the buyer. |
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Term
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Definition
1. General warranty deed
2. Special warranty deed
3. Quitclaim deed |
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Term
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Definition
-Provides the most title protection
-Contains six specific covenants of title warranting against any defect in the grantor's title |
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Term
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Definition
| Contains same title covenants found in General Warranty Deed, but applies them only to defects caused by acts or omissions of the grantor (you don't warrant against acts and omissions of third parties that may have created defects in the title) |
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Term
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Definition
| : Contains no title covenants |
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Term
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Definition
1. covenant of seisin
2. covenant of right to convey
3. covenant against encumbrances |
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Term
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Definition
| (seisin means possession of the freehold): Warrants that the grantor is the owner of the estate described in the deed; covers both type of estate and the quantity of land being conveyed |
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Term
| Covenant of right to convey |
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Definition
warrants that the grantor has the legal right to transfer title
-Overlaps considerably with covenant of seisin, but can operate independently (if you have a life estate and you convey a fee simple absolute, you have breached the covenant of seisin and the covenant of the right to convey); the best example of them acting independently is conveyance of trust property |
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Term
| Covenant against encumbrances |
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Definition
Warrants that there are no encumbrances on the land conveyed
-An encumbrance is a right or interest held by a third party – other than a present freehold estate or future interest – that reduces or restricts the use of the land
-Common examples include mortgages, easements, restrictive covenants, leases, tax liens, judgment liens, mechanic’s liens |
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Term
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Definition
1. Covenant of warranty
2. Covenant of quiet enjoyment
3. Covenant of furthur assurances |
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Term
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Definition
| Grantor’s promise to defend and indemnify the grantee who suffers an eviction or similar interference with possession by a person with superior or “paramount” title |
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Term
| Covenant of quiet enjoyment |
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Definition
| Warrants that the grantee’s possession and enjoyment of the property will not be disturbed by anyone holding superior title (in modern law this has been subsumed by the covenant of warranty) |
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Term
| Covenant of further assurances |
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Definition
| Promise that the grantor will execute any additional documents or take any other actions necessary to reasonably perfect the title conveyed to grantee |
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Term
| Requirements for a Valid Deed |
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Definition
a. Must be in writing (SOF)
b. Must be signed by the grantor (SOF)
c. Must identify the grantor and grantee
d. Must contain words of conveyance
e. Any words indicating an intent to immediately convey title will do (e.g., "grant," "convey," "transfer," "give")
f. Must describe the property |
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Term
| Difference between forgery and fraud |
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Definition
a. A forged deed is void. (A void deed has no effect and never will have an effect, so the parties in a void deed can’t just “let it slide.”)
b. A deed that is procured by fraud is voidable. (A voidable deed means that at the option of the wronged party, you can come in and void the deed, but you don’t have to.) |
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Term
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Definition
fraud in the inducement and fraud in the execution
-Fraud in the execution is treated by a vast majority of states like forgery, i.e., it is a void deed. Fraud in the execution means that there is some fraud in the nature of the document itself.
-A fraud in the inducement is voidable. With fraud in the inducement, no one is trying to hide the fact that a deed is what is being signed, but the procuring of that document contained some element of fraud.
-matters in chain of title for BFP's |
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Term
| Whether an alleged latent violation of a land use statute or regulation, existing on the land at the time title is conveyed, constitutes an encumbrance such that the conveyance breaches the warranty against encumbrances? |
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Definition
| Latent violations of land use regulations that are not on land records, unknown to the seller and which no enforcement action has been taken against, do not constitute a breach of the warranty against encumbrances. |
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Term
| Whether or not the covenant of seisin runs with the land so that an action on it may be maintained by a remote grantee? |
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Definition
| The majority rule is that FUTURE COVENANTS ARE SAID TO RUN WITH THE LAND. |
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Term
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Definition
| If a grantor does not own the property when he conveys it to a grantee, but later acquires title to the property, the grantee can invoke estoppel by deed to acquire the property from the grantor. |
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Term
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Definition
| for a deed to be valid, there has to be an effective delivery. An undelivered deed is void. There has to be either conduct or intent to show that the conveyance is effective immediately. Most of the time, there is actually a manual delivery. But it's not the fact of the physical handing over of a document from one person to another. That can be evidence of delivery in that it shows the grantor's intent of immediately passing title. You don't have to actually hand the deed over to have delivery. You can execute it and put it in a lock box, but if your actions show intent to immediately transfer title, then delivery has happened. |
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Term
| Whether a deed executed with the alleged intent to be conditioned upon the grantor preceding the grantee in death is a valid conveyance of the property? |
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Definition
| A conditional delivery is and can only be made by placing the deed in the hands of a third person to be kept by him until the happening of the event upon which the deed is to be delivered by the third person to the grantee. |
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Term
| Minority rules regarding delivery |
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Definition
(a) When the deed is handed over to the grantee but the extrinsic evidence shows that the deed is to “take effect” at the death of the grantor, a few courts have held that there is no delivery and that the transfer is testamentary and void.
(b) The condition will be enforced, even if the deed is delivered to the grantee to be held in escrow until and if the condition is fully met. |
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Term
| Whether a symbolic but temporary delivery of a deed to the grantee is sufficient to constitute legal delivery? |
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Definition
| When a grantor delivers a deed under which he reserves a right of retrieval and attaches to that delivery the condition that the deed is operative only upon death and further continues to use the property, these actions are really the grantor attempting to make the deed a will, which is unallowable. |
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Term
| Three types of recording acts |
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Definition
1. race statute
2. notice statute
3. race-notice statute |
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Term
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Definition
| The first person to record wins even if he knows about a previously unrecorded conveyance. Only in a few states (Louisiana, North Carolina) |
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Term
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Definition
A subsequent bona fide purchaser or creditor for value prevails over prior claimants as long as the subsequent purchaser acquires the interest without notice of the prior claim.
(a) A subsequent bona fide purchaser without notice prevails immediately upon closing.
(b) The subsequent purchaser is not required to record at all to prevail against prior unrecorded claimants (although the subsequent purchaser must record to protect his or her interest against yet later subsequent purchasers). |
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Term
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Definition
A subsequent bona fide purchaser or creditor who first records prevails against a person claiming a prior, unrecorded interest as long as the subsequent purchaser did not have notice of the preceding interest when she acquired her interest (she can know about the interest when she records the document as long as she did not have notice when she purchased).
(a) If the first purchaser in a race-notice state records first, she prevails.
(b) The second or subsequent purchaser must acquire her interest without notice of the preceding interest and must record first. |
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Term
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Definition
| The shelter rule says that a grantee from a bona fide purchaser would be able to obtain the shelter of the previous bona fide purchaser’s status. |
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Term
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Definition
(1) Actual Notice: the subsequent purchaser or her agent had actual notice of a prior claim
(2) Constructive Notice
-Record Notice: knowledge or notice a purchaser could gain by searching the deed records.
-Inquiry Notice: knowledge or notice based on facts that would cause a reasonable person to make inquiry into the possible existence of an interest in real property. |
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Term
| Latent defects in deeds in regards to constructive notice of BFP |
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Definition
Majority Rule: It is constructive notice if there is a latent defect.
Minority Rule: A deed with a defective acknowledgment does not count as constructive notice. But if the defect on the deed is patent and not latent, then more states would say that there is no constructive notice. |
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Term
| Persons Protected by the Recording System |
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Definition
1. By judicial construction, the recording statutes have been held, almost universally, not to protect donees and devisees, even in race jurisdictions.
2. Most courts require more than a nominal value, such as a “substantial amount, or an amount “not grossly inadequate.”
3. A buyer, who prior to the payment of any consideration receives notice of an outstanding interest, pays the consideration at his or her peril and is not protected as a bona fide purchaser. The pro tanto rule protects buyers to the extent of payment made prior to receiving notice, but no further. |
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