PRESENT ESTATES

Four Categories of FREEHOLD ESTATES

• Fee Simple Absolute
• Fee Tail
• Defeasible Fee
• Life Estate

FEE SIMPLE ABSOLUTE

• CREATION: "To A" or "To A and his heirs"
• Distinguishing Characteristics:
  • Absolute ownership of potentially infinite duration
  • Freely devisable/alienable/descendible
• NO Accompanying Future Interests
  

Fee Tail

• ABOLISHED IN NEW YORK
  
• Creation: "To A and the heirs of his body"
• Distinguishing Characteristics:
  
  • historically, title passes to lineal descendants no matter what
  • today, creates fee simple absolute
• Accompanying Future Interests:
  • Grantor: Reversion
  • Third Party: Remainder

Defeasible Fees - Three Types

• Fee Simple Determinable
• Fee Simple Subject to Condition Subsequent
• Fee Simple Subject to Executory Limitation

Defeasible Fees -- General Rules

• Creation requires use of clear durational language
  • words of mere hope or desire are insufficient
• Absolute restraints on alienation (not linked to any reasonable, time-limited purpose) are void
  • e.g. To A so long as never sells

Fee Simple DETERMINABLE

• NY name: Fee on Limitation
• Creation: "To A for so long as/during/until"
  • grantor must use clear durational language
  • Forfeiture = AUTOMATIC if stated condition violated
• Distinguishing Characteristics:
  • Devisable/descendible/alienable SUBJECT to stated condition
• Accompanying Future Interests:
  • Possibility of Reverter in grantor

Fee Simple Subject to Condition Subsequent

• NY Name = Fee on Condition
• Creation: "To A but if [event] occurs, grantor reserves the right to reenter and retake"
  • grantor must use clear durational language AND carve out right ot reenter
• Distinguishing Characteristics:
  • Estate NOT automatically terminated... terminated at grantor's election if stated condition occurs
• Accompanying Future Interest: Power of Termination, Right of Reentry
  • NY Name: Right of Reacquistion

Fee Simple Subject to

Executory Limitation

• Creation: "To A but if X occurs, then to B"
• Distinguishing Characteristics:
  • If condition broken, estate automatically forfeited in favor of someone other than grantor.
• Accompanying Future Interest: Shifting Executory Interest

Life Estate

• Creation: "To A for life"
  • Life estate pur autre vie = life estate measured by life other than grantee's (e.g. To A for life of B)
• Distinguishing Characteristics: WASTE
  • Life tenant is entitled to all ordinary profits and uses of land
  • Life tenant must NOT commit WASTE
• Acconpanying Future Interest:
  
  • If held by O, called reversion
  • If held by third party, called remainder
    

Life Estate and WASTE

• Voluntary/Affirmative Waste: actual overt conduct causing drop in value.  Natural Resources and Waste:
  • Life tenant must not consume or exploit natural resources on property UNLESS...
    • Prior Use: prior to grant land was used for exploitatoin
    • Reasonable Repairs
    • Life tenant GRANTED that right
    • Land suitable only for exploitation
• Permissive Waste/Neglect: life tenant must MANTAIN the premises in reasonably good repair
  • Obligation to pay all ordinary taxes to the extent of the premises' fair rental value
• Ameliorative Waste: life tenant must not engage in acts that will enhance the property's value UNLESS all future interest holders are known AND consent.
  • NY: Life tenant may make reasonable improvements unless remaindermen object.
    

Future Interests...

Capable of Creation in...

Grantor

• Possibility of Reverter
  • accompanies ONLY fee simple determinable
• Right of Reentry, aka Power of Termination
  • accompanies ONLY fee simple subject to condition subsequent
• Reversion
  • FI that arises in grantor who transfers an estate of lesser quantum than what he started w/ (other than fee simple determinable/subject to condition subsequent.

Future Interests...

Capable of Creation in...

Transferees

• Vested Remainder
  • Indefeasibly Vested Remainder
  • Vested Remainder Subject to Complete Defeasance
  • Vested Remainder Subject to Open
  • Remainder DEFINED: FI created in a grantee that is capable of becoming possessory upon the expiration of a prior possessory estate created in the same conveyance in which the remainder is created.
• Contingent Remainder
• Executory Interest
  • Shifting Exec. Interest: follows an interst of another person, cuts short someone other than grantor
  • Springing Executory Interst: cuts short grantor
    • NY: called Remainder Subject to Condition Subsequent, treated same as Contingent Remainder

Distinguishing

VESTED and CONTINGENT

Remainders

• VESTED IF both created in an ascertained person AND not subject to any condition precedent
• CONTINGENT IF created in an unascertained person OR subject to condition precedent
  • Condition = condition precedent IF...
    • it apperas before the language creating the remainder or is woven into the grant to remaindermen

Contingent Remainders and...

Rule of Destructibility

• Rule of Destructibility of Cont. Remain.:
  • Historically: Contingent remainders destroyed if still contingent at time precedeing estate ended
  • Today: rule ABOLISHED... thus after estate ends, grantee has springing executory interest
• 
  

Contingent Remainders and...

RULE in SHELLEY'S CASE

• Fact Pattern: O coneys to A for life then on A's death to A's heirs.  A = alive.
• Historically: Rule applied to merge Present and Future interests to give A fee simple absolute.
  • Rule in Shelley's Case as Rule of Law... applied even in face of contrary intent
• Today: Rule = ABOLISHED. A has life estate. A's heirs have contingent remainder.

Contingent Remainders and

DOCTRINE of WORTHIER TITLE

• Applies when O is alive and tries to create future interst in his heirs... "To A for life, then to O's heirs."
  
  • rule of construction, not law... intent controls
• Doctrine's Application: renders remainder in O's heirs a reversion to O
• NY: Doctrine ABOLISHED w/r/t transfers after 1967...
  • O's heirs would get their reversion

Three kinds of

VESTED REMAINDERS

• Indefeasibly Vested Remainders: holder = CERTAIN to acquire an estate in the future
  • e.g. "To A for life, remainder to B"
• Vested Remainder Subject to Complete Defeasance: remainderman's right to possession could be cut short by occurrence of a condition subsequent
• Vested Remainder Subject to Opern: remainder is vested in group at least one of whom is qualified to take possession BUT each class member's share is subject to partial dilution by additional takers joining class

Vested Remainder Subject to Open

and

Rule of Convenience

• Class closes whenever any member can demand possession
• EXCEPTION: WOMB RULE
  • e.g. "to A for life then to all of A's children"
  • Child of A's in womb at time of A's death will share w/ A's other children
  • If A's children predecease A, their share goes to devisees/heirs

RULE AGAINST PERPETUITIES

(RAP)

• Rule: Certain kinds of future intersts are void if there is any possibility, however remote, that the interst will vest more than 21 years after the death of a measuring life.
• RAP DOES NOT APPLY to...
  • future intersts in the grantor
  • indefeasibly vested remainders
    
  • vested reamainders subject to complete defeasance
• RAP does apply to...
  • contingent remainders
  • executory intersts
  • certain vested remainders subject to open

RAP...

Two Bright Line Rules

• Gifts to an open class conditioned on members surviving to age beyond 21 VIOLATE RAP
• Executory intersts w/ no time limit in which they must vest VIOLATE RAP

RAP...

EXCEPTIONS

• Charity-to-Charity Gifts excepted from RAP...
  • Transfer to one charity with possibility property will SHIFT to a second charity

New York Reforms to

RAP

• Rejects "wait and see" and "cy pres" reforms
• Where interests would be invalid b/c depends on person's having to attain an age in excess of 21 years, such age restriction is reduced to 21 years
• Fertile Octogenerian Principle Modified: women over age 55 deemed unable to have children
  • ignores adoption possibility
• Suspension Rule: interest is void if suspends the power to sell for period longer than LIB + 21 years

Concurrent Estates:

Three Forms

• Joint Tenancy: two or more own with right of survivorship
  
• Tenancy in Common: two or more own with NO right of survivorship
• Tenancy by the Entirety: two married partners own with right of survivorship

Joint Tenancy

• Distinguishing Characteristics: RIGHT OF SURVIVORSHIP
  • when one joint tenant dies, his share goes automatically to surviving joint tenants
• Creation: FOUR UNITIES
  • Joint tenants must take their interests
    • at same TIME
    • by same TITLE
    • must take Identical Interests, and
      
    • have right to POSSESSION of WHOLE
  • Grantor must clearly express the right of survivorship

Joint Tenancy and

SEVERANCE

• SPAM: Sale, Partition and Mortgage
• Sale: J.T. can sell interst during lifetime, may do so secretly
  • sale severs joint tenancy as to seller's interest
  • buyer takes as tenant in common
• Partition: Can occur three ways...
  • by voluntary agreement
  • by partition in kind: court action for physical division of land when in best interest of all parties
  • by forced sale: court action when in best interest of all. sale proceeds divided by all tenants
• Mortgage: In majority of states following lien thoery, jt's execution of mortgage on his interst DOES NOT SEVER the joint tenancy

Tenancy by Entirety

• Creation: Can only be created by married partners who share right of survivorship
• Protection from Creditors: Creditors of only one spouse cannot touch the tenancy
  • NY: One spouse may mortgage his interest and creditors may enforce against the interst but only as to idebtor spouse's share. Further, the non-debtor's rights including right of suvivorship may NOT be compromised.
  • Unilateral Conveyance: neither tenant, acting alone, can defeat the right of survivorship by unilateral transfer to a 3rd party

Tenancy in Common

Basics

• Distinguishing Characteristic:
  
  • each co-tenant owns and each has right to possess the whole
  • each interest is divisible, descendible and alienable
  • NO SURVIVORSHIP RIGHTS

Tenancy in Common:

Rights and Duties of Co-Tenants

• Possession:
  
  • each co-tenant is entitled to possess the whole; excluding one co-tenant from possession of whole or any part = wrongful ouster
• Rent from co-tenant in exclusive possession: absent ouster, a co-tenant in exclusive possession is NOT liable to others for rent
• Rent from 3rd parties:
  • co-tenant who leases all/part of the premises to a 3rd party must account to co-teannts providing to them their faire share of rental income
• Adverse Possession: Unless he has ousted other co-tenants, a co-tenant in exclusive possession for statutory period CANNOT acquire title to exlusion of others (HOSTILITY  element absent)
  • NY Distinction: exclusive possession for 20 years = IMPLIED OUSTER, Adv. Poss. applies
• Carrying Costs: each co-tenant responsible for his fair share of carrying costs (taxes/mortgage pymts) based upon his share
• Repairs: repairing co-tenant enjoys right to contribution for necessary repairs PROVIDED others are notified of the need
• Improvements:
  • During life of co-tenancy, NO right to contribution for improvements
  • At partition, improving co-tenant entitled to credit equal to any increase in value caused by his efforts
  • At partition, improving co-tenant bears full liability for any drop in value caused by his efforts
• Waste: Co-tenant must not commit waste; co-tenant may bring action for waste during life of co-tenancy

4 Leasehold (Non-Freehold) Estates

• Tenancy for Years: lease for fixed period of time
• Periodic Tenancy: lease which continues for successive intervals UNTIL L or T gives proper NOTICE of termination
• Tenancy at Will: no fixed duration
• Tenancy at Suferance: created when T has stayed unlawfully past expiration of lease

Tenancy for Years

• lease for fixed period of time set at beginning of lease
• NO Notice required to terminate
• Term of years greater than one year must be in writing to be enforced (SoF)

Periodic Tenancy

• lease which continues for successive intervals UNTIL L or T gives proper notice of termination
• Creation:
  • Express creation: "L conveys month-to-month"
  • Creation by implication: land leased w/ no mention of duration but provision is made for pymt of rent at set intervals
    • oral term of years in violation of SoF creates implied periodic tenancy
• Termination: Notice must be given.
  • How much notice?
    • CL: At least equal to the length of the period itself, unless otherwise agreed.
      • EXCEPTION: Where tenancy is year to year or greater, only six months notice.
        

Tenancy at Will

• tenancy for no fixed duration
  • "To T for as long as L or T desires."
• Creation: parties must expressly agree to tenancy at will... otherwise, payment of regular rent causes courts to treat as implied periodic tenancy
• Termination: May be terminated at either party at any time...
  • BUT: Reasonable demand to vacate is uaually needed.

Tenancy at Sufferance

• Creation: Whenever T stays unlawfully past expiration of lease
  • Permits L to collect rent
• Duration: Lasts only until L either evicts T or elects to hold T to a new tenancy

Tenant's Duties

• T's Liability to 3rd parties
• T's Duty to Repair
• T's Duty to Pay Rent

Tenant's Liability to 3rd Parties

• Tenant is responsible for keeping the premises in reasonably good repair
• T = liable for injuries sustained by 3rd parties invited by T, EVEN where L expressly promised ot make all repairs.

Tenant's DUTY to REPAIR

• If lease is SILENT:
  • Standard = MAINTENANCE... T must maintain the premises and make ordinary repairs
  • T must not commit waste (voluntary, permissive, ameliorative)
  • Fixtures: Pass w/ ownership of land (does not matter if T installed it) IF removal will cause subst'l damage
• If T promises in lease to mantain property in good condition:
  • Historically, T = liable for any loss to property, including due to force of nature
  • MAJORITY: T may terminate lease if premises are destroyed w/o T's fault

Tenant's DUTY to PAY RENT

• If T breaches while in possession of the premises:
  • Landlord's only option = evict through court or continue relationship and sue for rent due
  • L must NOT ENGAGE in SELF-HELP
    • NY: Self-help entitles T to treble damages
• If T breaches and is NOT in possession ("SIR")
  • Surrender
    • L may treat T's abandonment as offer of surrender which L accepts.
    • If unexpired term is greater than one year, surrender must be in writing to satisfy SoF
  • Ignore Abandonment... hold T responsible for unpaid rent as if T still there
    • MINORITY RULE, not available in most states
  • Re-Lease the premises on wrongdoer tenant's behalf and hold him liable for difference
    • NY does not require L to mitigate damages when T abandons

Landlord's Duties

• Duty to Deliver Possession
• Implied Covenant of Quiet Enjoyment
• Implied Warranty of Habitability

L's Duty to Deliver POSSESSION

• English (Majority) Rule: L must put T in actual physical possession of the premises
  • If at start of T's lease a holdover T is in possession, L has breached and new T gets damages
• American (Minority Rule): L need only provide T with legal possession

Implied Covenant of Quiet Enjoyment

• Applies to BOTH residential and commercial leases
• T has righ to quiet use and enjoyment of premises w/o interference from L
• Breach by Actual Wrongful Eviction: occurs when L wrongfully evicts T or excludes T from premises
• Breach by Constructive Eviction: Three elements required
  • Substantial Interference: due to L's actions/failures to act
  • Notice: T must notify L of the problem and L must fail to respond meaningfully
  • T must leave the premises
• L NOT liable for acts of other teannts
  • EXCEPTIONS:
    • L must not permit a nuisance on site
    • L must control common areas

Implied Warranty of Habitability

• Applies ONLY to RESIDENTIAL leases
• Non-Waivable
• Standard: Premises must be fit for basic human habitation
• T's Rights When Breached: Move Repair Reduce Remain
  • Move out
  • Repair and Deduct cost of repairs from future rent
  • Reduce Rent (or withhold) until court determines fair rental value. (Typically T must place rent in escrow to show good faith)
  • Remain in possession, pay rent and sue for money damages

Assignment v. Sublease

of Non-Freehold Estates

• In absence of prohibition in lease, T may freely transfer his interest in whole or in part
• NY: Unless lease provides otherwise, residential T may not assign w/o L's consent. T's sole remedy = seek release from lease.
  • EXCEPTION: Residential building w/ four or more units... T ahs right to sublease subject to L's written consent which may not be unreasonbly withheld.
• L may, in the lease, prohibit T from assigning/subleasing w/o L's prior written approval.
  • If L consents to one transfer, waives right to object to future transfers unless expressly reserves that right

Assignment

• L and T2 are in privity of estate
• L and T2 are NOT in privity of contract, UNLESS T2 assumed all promises in the original lease
• L and T1 are NOT in privity of estate, HOWEVER they remain in privity of contract
  • Consequence: L and T1 are secondarily liable to each other

Sublease

• L and sublesse are in NEITHER privity of estate nor privity of contract
• L and sublessee share NO NEXUS. Original relationship b/w L and T remains fully intact

Landlord's TORT Liability

• CL = caveat lessee (let T beware)
• 5 Exceptions to CL ("CLAPS")
  • Common Areas: L must mantain all common areas
  • Latent Defects: L must warn T of hidden defects L knows of or should reasonably know of
  • Assumption of Repairs: L who volunteers to make repairs MUST complete them w/ reasonable care
  • Public Use: L who leases public space (convention hall/museum) and who should know b/c of nature of defect and length of lease (short term) that T will not repair is liable for any defects on the premises
  • Short Term Lease of Furnished Dwelling
    • L = liable for any defect on site

Servitudes - 5 Flavors

• Easement: grant of non-possessory property interest that entitles its holder to some form of use/enjoyment of another's land
• License: mere privilege to enter another's land for some delineated purpose
• Profit: right to enter land and take from it soil or some substance of the soil
• Covenant: Contractual promise to not/do something related to land.
• Equitable Servitude: promise that equity will enforce against successors

Easements - General

• DEFINED: Grant of non-possessory property interest that entitles its holder to some use or enjoyment of another's land
• Affirmative Easements = right to do something on servient land
• Negative Easements = right to prvent servient owner from doing something otherwise permissible
  • Must be created EXPRESSLY by writing signed by grantor
  • Generally recognized in only Four Categories:
  • Light, Air, Support, Stream water from an artificial flow,
  • Minority: Scenic View

Easements - Appurtenant v. Held in Gross

• Appurtenant to Land v. Held in Gross
  • Easement = appurtenant when benefits holder in his physical use/enjoyment of his property
    • Appurtenant requires 2 parcels of land
  • Easement = Held in Gross when benefits holder in some personal/pecuniary way not related to his use of own land

Easements - TRANSFERABILITY

• Appurtenant Easements pass automatically w/ dominant tenement regardless of whether mentioned in the conveyance
• Easements in Gross NOT transferable UNLESS for commercial purposes

Easements - CREATION

• Affirmative Easements:
  • Prescription: a la adverse possession
    • requires Continuous, Open and Notorious, Actual and Hostile Use for statutory period
      • NY: Period = 10 years
  • Implication: implied from prior use
    • parties expected use would survive division b/c reasonably necessary to dominant land's use and enjoyment
  • Necessity: land-locked setting
    • easement of right of way will be implied by necessity
  • Grant: express writing
    • easement to endure for more than one year must be made in writing that complies w/ formal elements of a deed

Easements - TERMINATION

(END CRAMP)

• Estoppel: servient owner materially changes his postiion in reasonable reliance on easement holder's assurances it no longer exists
• Necessity ends (unless created by express grant)
• Destruction of servient land, other than through willful conduct of servient owner
• Condemnation of servient estate by eminent domain
• Release: written release given by easement holder to servient owner
• Abandonment: easement holder must demonstrate by physical action intent to never use the easement again
• Merger (Unity of Ownership): title to easement and servient land vested in same person
• Prescription: servient owner may extinguish by interfering with it in accordance w/ elements of adverse possession (COAH)

The License

• Defined: Mere privilege to enter another's land for some delineated purpose
• NOT subject to SoF... no writing required
• Freely Revocable at will of licensor (unless estoppel applies)
  • estoppel applies ONLY when licensee has invested subst'l money/labor in reasonble reliance on license's continuation
• e.g.: Tickets

The Profit

• Entitles its holder to enter servient land and take from it soil or some substance of the soil
  • e.g. minerals, timber, oil
• Profit shares all rules of easements

The Covenant

General

• Promise to not/do something related to land
  • Unlike easements, not a grant of property interest but rather a contractual limitation/promise regarding land
• Negative Covenants: promise to refrain from doing something related to land
• Affirmative Covenants: promise to do something related to land

The Covenant

RUNNING WITH THE LAND...

BASICS

• EFFECT of running w/ the land: Covenant is binding on successors to dominant/servient owners' interests
• BOTH the Burden and Benefit of the promise from S to D must run with the land.
  • Requires WRITING, INTENT, TOUCH and CONCERN, HORIZ/VERT PRIVITY, NOTICE
    

THE COVENANT

RUNNING WITH THE LAND

Does the BURDEN run?

• DOES THE BURDEN (of S's promise to D) RUN (from S to S1)? (WITHN)
  • Writing: original promise from S to D must be in writing
  • Intent: parties must have intended that covenant would run
  • Touch and Concern: promise affects parties as landowners... promise of and pertaining to the land
    • Horizontal + Vertical Privity: both needed for burden to run
    • Horizontal Privity: requires grantor/grantee type relationship... no hostile takings
    • Vertical Privity: requires non-hostile nexus (contract, devise, descent but NOT AP)
  • NOTICE: S-1 must have had notice of the promise when he took title to the sevient land.
    

THE COVENANT

RUNNING WITH THE LAND

Does the BENEFIT run?

• Writing
• Intent: original parties intended that benefit would run
• Touch and Concern
• Vertical Privity: some non-hostile nexus must exist b/w D and D-1

EQUITABLE SERVITUDES:

Creation

• Promise that equity will enforce against successors
• CREATION: (WITNES)
  • Writing: promise in writing (not always)
  • Intent: original parties intedned that promise would be enforceble by and against successors
  • Touch and concern: promise affects parties as landowners
  • Notice: assignees of burdened land had notice of the promise
  • ES = Equitable Servitude
  • NOT REQUIRED: Privity horizontal or vertical

IMPLIED EQUITABLE SERVITUDE:

General or Common Scheme

Doctrine

• If doctrine applies: court will imply a negative reciprocal servitude to hold unrestricted lot holders to a restrictive covenant
• TWO ELEMENTS:
  • When sale began, subdivider had general scheme of residential development
  • Defendant lotholder had NOTICE of the promise contained in the deeds.
    • Three Forms of Notice (AIR):
      • Actual Notice: D had literal knowledge of the promise in the prior deeds
      • Inquiry Notice: neighborhood conforms with the common restriction
        • lay of the land
        • constructive notice, imputed
      • Record Notice: Notice imputed based on contents of prior deeds transferred to others by common grantor
        • NY Rule: Subsequent buyer NOT IMPUTED to have notice of contents of prior deeds transferred to others by common grantor

Equitable Servitudes and...

EQUITABLE DEFENSES

• Equitable DEFENSES to enforcement of equitable servitude
  • Changed Conditions:
    • Changed circumstances that are so pervasive that the entire area/subdivision has changed
    • Piecemeal or Limited change NOT SUFFICIENT

Adverse Possession

Elements & Effect

• Effect: gives rise to title
• ELEMENTS (COAH):
  • Continuous use
    • NY Statutory period = 10 years
  • Open and notorious use
    • use typical owner would make
  • Actual use
    • entry cannot be hypothetical/symbolic
  • Hostile use
    • possessor enters w/o owner's consent
  • Possessor's State of Mind:
    • MS: irrelevant
    • NY: possessor must have good faith belief that the land he occupies is actually his

Adverse Possession

Tacking & Disabilities

• TACKING: One adverse possessor may tack on to his time in possession the time his predecessor possessed the land, IF there is PRIVITY b/w the possessors.
  • Privity = non-hostile nexus
    • blood, contract, deed, will
• DISABILITIES: SoL will not run against a true owner who is afflicted by a disability at the start of the adverse possession
  • e.g. insanity, imprisonment, infancy
  • BUT: statute not tolled if disability arises after entry

Land Conveyances

(Purchase & Sale of Real Estate)

2 Steps

• Land K, endures until closing
• Closing: deed becomes operative document

The LAND CONTRACT

and

Staute of Frauds

• SoF requires K to be in writing, state a consideration and signed by party to be charged
  • EXCEPTION: Doctrine of Part Performance
    • Equity enforces oral K for land (specific performance) where 2 of 3 met:
      • buyer in possession
      • buyer pays part/all of purchase price
      • buyer makes subst'l improvements
• Remedy where size of land in K is smaller than the actual parcel = specific performance w/ pro rata reduction in price

The LAND CONTRACT

and

RISK of LOSS

• MS: Doctrine of Equitable Conversion applies...
  • Once K is signed BUYER "owns" land, bears risk of loss
    • Thus, if property destroyed b/w signing and closing not due to fault of either party, B bears risk of loss
• NY: So long as buyer is w/o fault, SELLER bears risk of loss until buyer has title or takes possession

The LAND CONTRACT

and

IMPLIED PROMISES

• Seller promises to Provide Marketable Title at Closing
  • Standard = title free from reasonable doubt, threat of litigation
  • Three Circumstances Render Title Unmarketable
    • Adverse Possession: where part of title rests on A.P., unmarketable; seller must be able to provide good record title
    • Encumbrances: servitudes/mortgages render title unmarketable
      
      • seller has right to satisfy outstanding mortgages at closing w/ proceeds of sale
    • Zoning Violations
• Seller promises to not make false stmts of material fact
  • Majority rule: seller also liable for failing to disclose latent material defects
  • "Property Sold As Is" Clause: does not excuse liability for fraud/failure to disclose
• Land K contains NO IMPLIED WARRANTIES of fitness or habitability
  • EXCEPTION: Sale of new homes by Builder-Vendor
    • Implied warranty of fitness and workmanlike construction applies

The Closing:

• Deed only passes legal title from seller to buyer IF... (LEAD)
  • "Legally Executed and Delivered"
• Lawful Execution
  • Deed must be in WRITING
    • need not recite the consideration
  • Description of the Land:
    
    • Unambiguous description + good lead
      • "all of O's land" = sufficient
      • "some of O's land" =/= sufficient
    • need not be perfect
• Delivery requirements:
  • Physical delivery NOT required (but is sufficient)
  • Standard = PRESENT INTENT
    • Did grantor have present intent to be immediately bound irrespective of whether deed literally handed over?
  • Delivery by ESCROW = VALID
    • advantage: if seller dies before title passes, title still may pass from escrow to buyer
  • REJECTION by recipient DEFEATS DELIVERY

Covenants for title

• Warrants against ALL defects of title including those of grantor's predecessors
• PRESENT COVENANTS (SoL begins to run upon closing)
  • Covenant of Seisin: grantor owns the property he claims to convey
  • Covenant of Right to Convey: grantor has power to make the transfer
  • Covenant against Encumbrances: no servitudes or liens on the property being transferred
• FUTURE COVENANTS (SOL begins to run only when breached)
  • Covenant of Quiet Enjoyment: grantee won't be disturbed by 3rd party's lawful claim of possession
  • Covenant of Warranty: grantor promises to defend grantee should there be lawful claims of title brought by others
  • Covenant of Further Assurances: grantor promises to do whatever is reasonably necessary in future to perfect title

Covenants for Title

• Contains NO covenants
• Grantor only transferring whatever title he has to grantee
  • not promising he has any title to convey
  • BUT: Implicit promise in land K to provide marketable title at closing (only helpful pre-closing)

Covenants for title

• Contains two promises grantor makes only on behalf of himself (makes no reps on behalf of his predecessors)
  • Promises he has not conveyed property to anyone other than grantee
  • Property is free from encumbrances made by grantor

Recording System

• If B = BFP and in a NOTICE jurisdiction, B wins regardless of whether he records before A.
• If B = BFP and in a RACE-NOTICE jurisd, B wins ONLY if proeprly records prior to A.

Recording System:

• Bona Fide Purchasers and Mortgagees
  • BFP = for value AND without notice
    • VALUE:
      • any pecuniary consideration
      • NOT donees, devisees, heirs
    • NOTICE (AIR):
      • Actual Notice: B knows of A's purchase
      • Inquiry Notice: B on notice of whatever an exam of the property would reveal
        • also: if recorded instrument makes reference to unrecorded instrument, grantee is on inquiry notice of whatever a reasoanble follow up would have shown
      • Record Notice: grantee has record notice of all properly recorded deeds within grantor's chain of title

Recording Statutes:

• If at time B takes, he is a BFP (value, no notice), B wins.
  • does not matter if A records before B
• LAST BFP to enter WINS

Recording System:

• RULE IN NEW YORK!!!
• To prevail, B must 1) be a BFP AND 2) record prior to A.

Chain of Title Problems

• SHELTER RULE: one who takes from BFP prevails against any entity that transferor-BFP would have prevailed against
  • even if that party would not themselves qualify as BFP
• WILD DEEDS: Wild Deeds DO NOT GIVE RECORD NOTICE to potential grantees
  • Wild Deed = deed recorded but unconnected to the chain of title (missing link)
• ESTOPPEL BY DEED: one who conveys realty in which he has NO INTEREST is estopped from denying the validity of that conveyance if he later acquires title to the interest he earlier purported to convey
  • Rule only applies in fight b/w grantor-grantee and NOT b/w competing grantees

MORTGAGES

• CREATION: must be in writing to satisfy SoF
• Mortgage DEFINED: conveyance of security interest in land intended by parties as collateral for repayent of monetary obligation

EQUITABLE MORTGAGES

aka Deed of Trust, Sale-Leaseback

• e.g. loan secured by land but instead of granting mortgage, O gives creditor an absolute deed to the land
• Parol Evidence = freely admissible b/w O and creditor to show parties' true intent
  • BUT: If creditor sells to BFP, BFP prevails over O.
    • O's recourse = sue creditor for fraud + sale proceeds

Mortgages and...

Transfering Interests

• All parties to mortgage can freely transfer their intersts
• Creditor/mortgagee transfers interest by...
  • Endorsing the note and delivering to transferee OR
    • transferee = holder in due course
  • executing separate document of assignment

Mortgages and

HOLDERS in DUE COURSE

• Criteria for being holder in due course
  • note must be negotiable, payable to named mortgagee
  • original note must be endorsed by named mortgagee
  • original note must be delivered to transferee
  • transferee must take in good faith w/o notice of any illegality, AND
  • transferee must pay (more than nominal) value for note
• Holder in Due Course takes free of any personal defenses that may be asserted against mortagee
  • personal defenses = lack of consideration, fraud in inducement, unconscionability, waiver, estoppel
  • Still subject to real defenses (MAD FIFI^4):
    • Duress, Fraud in the Factoom, Incapacity, Illegality, Infancy, Insolvency

Mortgages and

FORECLOSURE

• Mortgagees must foreclose by proper judicial action
• If sale proceeds < amount owed: mortgagee may bring deficiency action against debtor.
• If proceeds > amount owed: junior liens paid off in order of priority, remaining surplus goes to debtor
• Order of distribution of funds:
  • Attorney's fees, expenses of foreclsoure, accrued interest, senior >> jr. mortgages (each paid in full before next in priority receives anything)

Mortgages and...

FORECLOSURE

EFFECT of Foreclosure

• Interests junior to the mortgage foreclosed are TERMINATED
  • Senior Intersts NOT AFFECTED
• Parties w/ junior interests = NECESSARY Parties to foreclosure action
• Debtor-Mortgagor = NECESSARY Party
• Failure to Include Necessary Party = preservation of that party's claim after the foreclsoure (will ahve right to foreclosre on property against the buyer)

Mortgages and

PRIORITIES

• Once recorded: first in time prevails.
• Purchase Money Mortgages:
  • DEFINED: mortgage given to secure loan that enables debtor to acquire encumbered land
  • Priority: Prevails over all earlier mortgagees and if filed within 20 days, over all later mortgagees.

Mortgages and

REDEMPTION

• Redemption in Equity: at any time prior to foreclosure sale, debtor has right to redeem the land and free from mortgage
  • Exercised by paying off missed payments + interest + costs
  • ACCELERATION CLAUSES: result = require debtor to pay off entire blanace of debt to redeem
  • Debtor may NOT waive right to redeem in the mortgage itself
• Statutory Redemption: Gives debtor statutory right to redeem for some fixed period after the foreclosure sale has occurred
  • NY DOES NOT RECOGNIZE STATUTORY REDEMPTION RIGHT

LATERAL SUPPORT

• If land is improved by buildings and adjacent landowner's excavation causes improved land to cave in, excavator = liable ONLY IF NEGLIGENT
  
• Strict Liability attaches ONLY if P shows that b/c of D's actions, P's improved land would have collapsed EVEN IN ITS NATURAL STATE

Water Rights

• WATERCOURSES - Two Major Systems:
  • RIPARIAN DOCTRINE: water belongs to those who own the land bordering the watercourse (riparians)
    
    • all riparians share the right of reasonable use of water
  • PRIOR APPROPRIATION DOCTRINE
    • Right to divert water can be acquired by anyone regardless of whether = riparian.
    • PRIORITY of BENEFICIAL USE
      • First in time = first in right
        • any productive/beneficial use of water (including agro use) sufficient to create appropriation right
• Surface Water: Common Enemy Rule
  • landowner may change drainage/make other changes on his land to combat the flow of surface water.
• Ground Water: surface owne entitled to make reasonable use of ground water, however use must not be wasteful

POSSESSOR'S RIGHTS

• Possessor has right ot be free from trespass and nuisance
  • Trespass =  invasion of land by physical tangible object
  • Nuisance = substantial and unreasonable interference with another's use and enjoyment of land
    • e.g. odors, noise
    • Hypersensitive Users NOT protected by nuisance law

Eminent Domain

• Defined: G'vt's 5th amend. power to take private property for public use in exchange for just compensation
• Explicit Taking = acts of government condemnation
• Implicit Taking = g'vt regulation that although not intended to be a taking, has the same effect
  • e.g. ban on all development
  • economic wipeout of landowner's investment
• REMEDY for Regulatory Taking:
  • Government must either:
    • compensate owner for the taking, or
    • terminate the regulation and pay owner for damages that occurred while in effect

ZONING

• Pursuant to police power, g'vt may enact statutes to reasonably contorl land use
• Variance = principal means to achieve flexibility in zoning
  • variances granted or denied in admin action..
  • proponent must show undue harship AND that variance won't work detriment to surrounding property values
• Nonconforming Use = once lawful, existing use now deemeed nonconforming use by new zoning ordinace...
  • cannot be eliminated by g'vt all at once UNLESS just compensation is paid
• Unconstitutional Exactions: must be reasonably related in nature and scope to the impact of the proposed development... if not are unconstitutional
  
  • Exactions = those amenities government seeks in exchange for granting permission to build