Shared Flashcard Set


Real Property - JRH
Bar Prep

Additional Law Flashcards




The Present Estates
  • Four Categories of Freehold Estates:
    1. Fee Simple Absolute;
    2. The Fee Tail;
    3. The Defeasible Fees (3 Species); and
      1. Fee Simple Determinable
      2. Fee Simple Subject to Condition Subsequent
      3. Fee Simple Subject to Executory Limitation
    4. The Life Estate
Fee Simple Absolute (FSA)
  1. How to Create: "To A" or "To A and his heirs"
    • Today "and his heirs" isn't needed
  2. Absolute ownership of potentially infinite duration
    • Freely devisable, descendible, and alienable
  3. No Accompanying future interest

*Example 1 on pg. 3 of Handout*

The Fee Tail
  1. How to Create: "To A and the heirs of his body"
  2. Virtually abolished in US today, virtually never tested
    • Today attempted creation of a fee tail creates a FSA
Defeasible Fees
  • Three simple fees with "a catch":
    1. The Fee Simple Determinable
    2. The Fee Simple Subject to Condition Subsequent
    3. The Fee Simple Subject to Executory Limitation
  • Defeasible: Subject to forfeiture if conditions surface

Construction of Defeasible Fees
  • Two Important Rules of Construction:
  1. Words of mere desire, hope, or intention are insufficient to create a defeasible fee
    • Courts disfavor restrictions on free land use
    • Courts will not find a defeasible fee unless clear duration language is used
  2. Absolute restraints on alienation are void
    • Absolute Restraint on Alienation: An absolute ban on the power to sell or transfer that is not linked to a reasonable, time-limited purpose

*Examples 6-8 on pg. 6-7 of Handout*

Fee Simple Determinable (FSD)
  1. How to Create: "To A so long as...", "during", "until"
    • Grantor must use clear durational language
    • If stated condition is violated, forfeiture is automatic and immediate
  2. Devisable, descendable, and alienable, but always subject to the condition
    • "Mick Jagger" Rule of Property:
      • You may convey less than what you started with, but you can't convey more
      • "You can't always get what you want"
  3. Accompanying Future Interest:
    • Possibility of Reverter in the grantor
    • "Frank Sinatra Doesn't Prefer Orville Redenbacher": Fee Simple Determinable Possibility of Reverter
  • *Examples 2 and 3 on pg. 4 of Handout*
Fee Simple Subject to Condition Subsequent (FSSCS)
  1. How to Create: "To A, but if X ever occurs, grantor reserves right to reenter and retake"
    • Grantor must:
      1. Use clear durational language, and
      2. State the right to reenter
    • *Example 4 pg. 5 of Handout*
  2. This estate is not automatically ended, but it can be cut short at the grantor's option if the stated condition occurs
    • Remember James Brown: "my prerogative" to choose to terminate or look the other way
  3. Accompanying Future Interest: Right of entry, synonymous w/ the power of termination
Fee Simple Subject to Executory Limitation (FSSEL)
  1. How to Create: "To A, but if X event occurs, to B"
  2. This estate is just like the FSD but now if the condition is broken, the estate is automatically forfeited in favor of someone other than O, the grantor
  3. Accompanying Future Interest: Shifting Executory Interest

*Example 5 on pg. 6 of Handout*

The Life Estate (LE)
  1. How to Create: This is an estate that must be measured in explicit lifetime terms and never in terms of years
    1. O conveys: "To A for life"
      • A has a LE
      • A is known as the life tenant
      • O has Reversion: At the end of A's lifetime, the estate reverts back to O or O's heirs
      • *See "Contrast With" pg. 7 of Handout*
    2. The LE "pur autre vie":
      • A life estate measured by a life other than the grantee's
      • "To A for the life of B"
      • *Examples 9-10 on pg. 8 of Handout*
  2. The life tenant's entitlements are rooted in the important Doctrine of Waste
    • Two General Rules:
      1. The life tenant is entitled to all ordinary uses and profits from the land
      2. The life tenant must commit waste
    • Three Species of Waste:
      1. Voluntary or Affirmative Waste
      2. Permissive Waste, or Neglect
      3. Ameliorative Waste
  3. Accompanying Future Interest:
    • If held by O, called a Reversion
    • If held by a third party, it is a Remainder
Voluntary or Affirmative Waste
  • Overt Destruction
  • Voluntary Waste and Natural Resources:
    • General Rule: The life tenant must not consume or exploit natural resources on the property, unless one of 4 Exceptions apply (Think PURGE)
      1. PU: Prior Use
        • Prior to the grant, the land was used for exploitation
        • Prior Use and Open Mines Doctrine: If mining was done on the land before the life estate began, the life tenant may continue to mine, but is limited to mines already open; can't open new mines
      2. R: Repairs
        • The life tenant may consume natural resources for repairs and maintenance
      3. G: Grant
        • The life tenant may exploit if granted that right
      4. E: Exploitation
        • The land is suitable only to exploit
        • Example: coal mine or rock quarry
Permissive Waste or Neglect
  • Occurs when land falls into disrepair
    1. Obligation to Repair:
      • The life tenant must simply maintain the premises in reasonably good repair
      • Example: Base line duty is something like patching a leaky ceiling routinely
    2. Obligation to Pay all Ordinary Taxes:
      • The life tenant is obligated to pay all ordinary taxes on the land, to the extent of income or profits from the land
      • If there is no income or profit, the life tenant is required to pay all ordinary taxes to the extent of premises Fair Rental Value (FRV)
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
Future Interests
  • Six categories of future interests:
    1. The Possibility of Reverter
    2. The Right of Entry, aka Power of Termination
    3. The Reversion
    4. Vested Remainder
    5. Contingent Remainder
    6. Executory Interest
  • Classify them based on whether they are retained by the grantor or by a transferee
Future Interests Capable of Creation in the Grantor
  • There are only Three Future Interests capable of creation by the grantor
    1. Possibility of Reverter:
      • Accompanies only FSD
    2. Right of Entry:
      • Accompanies only FSSCS (Bobby Brown)
    3. Reversion:
      • Future interest that arises in a grantor who transfers an estate of lesser quantum than she started with, other than FSD or FSSCS
      • *See Example 11 on pg. 11 of Handout*
Future Interests in Transferees
  • If future interest is held by someone other than the grantor, it has to be either:
    1. A Vested Remainder (3 Species)
    2. A Contingent Remainder, or
    3. An Executory Interest (2 Species)
Three Tasks in Assessing Future Interests in Transferees
  1. Must distinguish vested remainders from contingent remainders;
  2. Must distinguish the three kinds of vested remainders from each other; and
  3. Must distinguish all remainders from executory interests
Remainder Generally
  • Remainder: Future Interest 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
  • "Remainderman is sociable, patient, and polite"
    1. Remainderman is sociable, never travels alone
      • Remainderman always accompanies a preceding estate of fixed duration
      • Preceding estate is usually a LE or a term of years
    2. Remainderman never follows a defeasible fee
      • Remainders wait patiently for the preceding estate to naturally end
      • Remainderman cannot cut short or divest a prior transferee
      • If your present estate is a defeasible fee, your future interest is not a remainder, it is an executory interest if held by someone other than O, the grantor
Difference Between Vested and Contingent Remainders
  • A remainder is vested if it is both created in an ascertained person and is not subject to any condition precedent
  • A remainder is contingent if it is created in an unascertained person or is subject to a condition precedent, or both
    1. Remainder that is contingent b/c it is created in as yet unborn or unascertained persons
      • *Examples 12-14 on pg. 13 of Handout*
    2. Remainder that is contingent b/c it is subject to a condition precedent
      • A condition is a condition precedent (CP) when it appears before the language creating the remainder or is woven into the grant to remainderman
      • *Examples 15-16 on pg. 14 of Handout*
Contingent Remainder Rules
  1. Rule of Destructibility of Contingent Remainders:
    • At C/L a CR was destroyed if it was still contingent at the time the preceding estate ended
    • Today Destructibility Rule has been abolished
    • *See Example 17 on pg. 14-15 of Handout*
  2. Rule in Shelley's Case:
    • At C/L the rule would apply in one setting only:
      • O conveys "To A for life, the, on A's death, to A's heirs." A is still alive
      • Historically: The present and future interests merge, giving A a FSA
      • Note: Rule in Shelley's Case is a rule of law, not a rule of construction
      • Would apply even in the face of contrary grantor interest
    • Today: Rule in Shelley's Case has been virtually abolished
      • Today when O conveys "To A for lie, then to A's heirs":
        1. A has a LE
        2. A's yet unknown heirs have CR
        3. O has a Reversion since A could die w/o heirs
  3. Doctrine of Worthier Title:
    • Still viable in most states
    • Applies when O, who is alive, tries to create a future interest in his heirs
    • *See Example 19 on pg. 15 of Handout*
    • Doctrine endeavors to promote free land transfer
    • Note: Doctrine of Worthier Title is a rule of construction, not a rule of law
    • Grantor's intent controls
      • If Grantor clearly intends to create a CR in his heirs, that intent is binding
Distinguishing 3 Kinds if Vested Remainders (VR)
  • Note: Only Remainders can be vested
  1. Indefeasibly Vested Remainder (IVR):
    • The holder of the remainder is certain to acquire an estate in the future with no strings attached
      • Think N'Sync album cover
    • *See Example 20 on pg. 16 of Handout*
  2. Vested Remainder Subject to Complete Defeasance (VRSCD):
    • Remainderman exists
    • His taking is NOT subject to any precedent
    • His right to possessions could be cut short b/c of a Condition Subsequent (CS)
    • Comma Rule: When conditional language in a transfer follows language that, taken alone and set off by commas, would create a VR, the condition is a CS, and you have a VRSCD
    • In Contrast, if the conditional language appears before the language creating the remainder, the condition is a CP and you have a CR
    • *See Examples 21-22 on pg. 17-18 in Handout*
  3. Vested Remainder Subject to Open (VRSO):
    • Remainder is vested in a group of takers, at least one of whom is qualified to take
    • Each class member's share is subject to partial diminution b/c additional members can still join in
    • *Example 23 pg. 18 of Handout*
A Class is Either Open or Closed
  • A class is open if others can join
  • A class is closed when no others can join
  • C/L Rule of Convenience:
    • The class closes when any member can demand possession (*Illustration on pg. 19 of Handout*)
    • Exception (The Womb Rule):
      • Same facts as example 23 pg. 18
      • A child of B in the womb at A's death will share w/ C and D
    • If C or D predeceases A, at C/L their share goes to their devises or heirs
Distinguish Remainders from Executory Interests (EI)
  • Executory Interest (EI):
    • Future Interest created in a transferee (or third party), which is not a remainder and which takes by either cutting short some interest in another person ("shifting") or in the grantor or his heirs ("springing")
  • Shifting EI:
    • It always follows a Defeasible Fee and cuts short someone other than the grantor
    • *Examples 24-25 on pg. 20 of Handout*
  • Springing EI:
    • Cuts off O, the grantor
    • *Examples 26-27 on pg. 20-21 of Handout*
Rule Against Perpetuities (RAP)
  • Rule: Certain kinds of future interests are void if there is any possibility, however remote, that the given interest may vest more than 21 years after the death of a measuring life
4 Step Technique for Assessing Potential RAP Problems
  1. Determine which future interests have been created by the conveyance
    • RAP potentially only to CRs, EIs, and certain VRSOs
    • RAP does not apply to any future interest in the grantor or to indefeasibly VRs, or to VRSCDs
    • *Example 28 on pg. 21 of Handout*
  2. Identify the CPs to the vesting of the suspect future interest
    • In Example 28 A must die leaving a child before a future interest holder can take
  3. Find all possible measuring lives
    • Look for the people alive at the date of the conveyance whose lives and/or deaths are relevant to the condition's occurrence
    • In Example 28 the measuring life is A
  4. Ask: Will we know for sure within 21 years of the death of any of the relevant measuring lives if the future interest holder(s) can take?
    • If so the conveyance is good
    • By Contrast: If we won't know for sure whether the future interest will vest (become certain) within 21 years of the death of any of the possible measuring lives, the future interest is good
    • Consider Step 4 for each possible measuring life
    • If the suspect future interest is sure to vest within 21 years of the death of any of the possible measuring lives, the future interest is good
    • *Example 29 on pg. 22-23 of Handout*
    • Fertile Octogenarian Rule: Presumes a person is fertile no matter what the age
Two Bright Line Rules of C/L RAP
  1. A gift to an open class that is conditioned on the members surviving to an age beyond 21 violates the C/L RAP (Memorize This!!)
    • "Bad as to one, bad as to all": To be valid, it must be shown that the CP to every class member's taking will occur w/in the perpetuities period; if it is possible that a disposition might vest too remotely w/r/t any member of the class, the entire class gift is void
    • *Example 30 on pg. 23 of Handout*
  2. Many Shifting EIs violate the RAP, an EI w/ no limit on time w/in which it must vest violates the RAP (Memorize This!!!)
    • *Example 31 on pg. 24-25 of Handout*
    • Charity-to-Charity Exception:
      • A gift from one charity to another will not violate the RAP; encourages people to be charitable
      • *Example 32 on pg.25 of Handout*
Reform of the RAP
  1. "Wait and See" or "Second Look" Doctrine:
    • What actually happened
    • Majority reform effort
    • Validity of any suspect future interest is determined on the basis of facts as they now exist at the end of the measuring life
    • This eliminates the "what if" or "anything is possible" line of inquiry
  2. Uniform Statutory RAP (USRAP):
    • Codifies the C/L RAP and, in addition, provides for an alternative 90 year vesting period
  3. Both the "Wait and See" and USRAP reforms embrace:
    • The Cy Pres Doctrine:
      • "As near as possible"
      • If a given disposition violates the rule, a court may reform in a way that most closely matches grantor's intent, while complying with RAP
    • Reduction of any offensive age contingency to 21 years
Concurrent Estates
  • Three Forms of concurrent ownership:
    1. Joint Tenancy (JT):
      • Two or more own w/ right of survivorship
    2. Tenancy by the Entirety (TBE):
      • Between married partners w/ right of survivorship
    3. Tenancy in Common (TIC):
      • Two or more own w/ no right of survivorship
Joint Tenancy (JT)
  1. Distinguishing Charcteristics
  2. Creation of a JT
  3. Severance of a JT
Distinguishing Characteristics of a JT
  1. When one joint tenant dies, his share goes to surviving joint tenants (Right of Survivorship (Ros))
  2. A joint tenant's interest is alienable; not devisable or descendable
Creation of a JT
  1. The Four Unities:
    • Remember "T-TIP"
    • Joint tenants must take their interests:
      • T: At the same Time,
      • T: By the same Title (same instruments),
      • I: Identical Interests, and
      • P: Right to Possess as a whole
  2. Grantor must clearly express RoS
    • JTs are disfavored, so in addition to the four unities, grantor must clearly state the RoS
  3. Use of a Straw:
    • A conveys land to a "straw"
    • "Straw" conveys to A and B as joint tenants w/ RoS
    • *Example 33 on pg. 28 of Handout*
Severance of JT
  • Remember SPAM:
    1. Sale
    2. Partition
    3. And
    4. Mortgage
Severance and Sale
  1. A joint tenant can sell or transfer her interest during her lifetime
    • Can do w/out other's knowledge or consent
    • One joint tenant's sale severs JT as to the seller's interest b/c it disrupts the four unities
    • Buyer is Tenant in Common (TIC)
    • If more than two joint tenant's, the JT remains intact as between the other, non-transferring joint tenants
    • *Example 34 on pg. 29 of Handout*
  2. In equity, a joint tenant's mere act of entering into a contract for the sale of her share will sever the JT as to that contracting party's interest
    • Doctrine of Equitable Conversion:
      • "Equity regards as done that which ought to be done"
    • *Example 35 on pg. 29 of Handout*
Severance and Partition
  • Three Variations:
    1. By Voluntary Agreement:
      • A peaceful way to dissolve the relationship
      • Not likely on Bar
    2. Partition in Kind:
      • Court action for physical division of Blackacre if in best interest of all parties
      • Example: Farm or Vineyard
    3. Forced Sale:
      • Court action, if in best interest of all parties, where Blackacre is sold and the proceeds are divided proportionally
      • Example: Building or House
Severance and Mortgage
  • The Rule: One joint tenant's execution of a mortgage or a lien on his share will sever the JT as to that now encumbered share only in the minority of states to follow the Title Theory of mortgages
    • Mortgage is functional equivalent of transfer of title
  • By Contrast: The majority of states follow the Lien Theory of mortgages
    • A joint tenant's execution of a mortgage on his interest won't sever JT
    • No title transfer
  • *Example 36 on pg. 30-31 of Handout*
Tenancy by the Entirety (TBE)
  1. Between married partners with RoS
    • In most states that recognize the TBE, it arises presumptively at C/L in any grant to married partners
    • But by statute some states demand clear statement to A and B as TBE to create TBE
  2. Very Protected Form of Co-Ownership
    • Remember MC Hammer "Can't Touch This Bitch"
      1. Creditors of only one spouse can't touch this tenancy
      2. Unilateral Conveyance
        • Neither tenant acting alone can defeat the RoS by unilateral transfer to a third party
        • *Example 37 on pg. 32 of Handout*
Tenancy in Common (TIC)
  • Three Features:
    1. Each co-tenant owns and individual part and each has a right to posses the whole
    2. Each interest is devisable, descendable, and alienable
      • No Ros between tenants in common
    3. The presumption favors the TIC
Rights and Duties of Co-Tenants
  1. Possession:
    • Each co-tenant is entitled to posses the whole
    • If one co-tenant wrongfully excludes another    co-tenant from possession of the whole or any part, he has committed Ouster
    • Ouster: Wrongful ejection, is actionable
  2. Rent From Co-Tenant in Exclusive Possession:
    • Absent ouster, a co-tenant in exclusive possession is not liable to the others for rent
  3. Rent From Third Parties:
    • A co-tenant who leases all or part of the premises to a third party must account to his co-tenants and give their fair share of rental income
    • CoA would be Accounting
  4. Adverse Possession:
    • Unless he has ousted the other co-tenants, one co-tenant in exclusive possession for the statutory adverse possession period cannot acquire title exclusively
    • The hostility element of adverse possession is absent
    • No hostility b/c no ouster
  5. Carrying Costs:
    • Each co-tenant is responsible for his fair share of carrying costs based upon his undivided share
    • Examples: Taxes; mortgage interest payments
  6. Repairs:
    • The repairing co-tenant enjoys a right to contribution for reasonable, necessary repairs provided that she told the others of the need
    • CoA would be Contribution
  7. Improvements:
    • During the life of the co-tenancy, there is no right to contribution for improvements
    • At Partition, the improving co-tenant is entitled to a credit equal to any increase in value he caused
    • Attendantly, at partition, the so-called "improver" bears full liability for any drop in value he caused; he will suffer a debt
  8. Waste:
    • A co-tenant must not commit waste
  9. Partition:
    • A joint tenant or tenant in common has a right to bring an act of partition
Landlord/Tenant Law
  1. The Four Leasehold or Nonfreehold Estates
  2. Tenant's Duties
  3. Landlord's Duties
  4. Assignment vs. Sublease
  5. Landlord's Tort Liability
Four Leasehold Estates
  1. Tenancy for Years (TY)
  2. Periodic Tenancy (PT)
  3. Tenancy at Will (TW)
  4. Tenancy at Sufferance (TS)
Tenancy for Years (TY)
  • A lease for a fixed period
    • Also called Term of Years or Estate for Years
    • That period could be one day, 2 months, 50 years
  • Have a TY when you know the termination day from the start
  • B/c a TY states from the outside when it will terminate, no notice is needed to terminate
  • A TY greater than 1 year must be in writing to be enforceable b/c of SoF
  • *Example 38 on pg. 35 of Handout*
Periodic Tenancy (PT)
  • A lease that continues for successive intervals until landlord (L) or tenant (T) give proper notice to terminate
  • PT can be created expressly
  • PT can also arise by implication in any one of 3 Ways:
    1. Land is leased with no mention of duration, but provision is made for the payment of rent at set intervals
      • *Example 39 on pg. 36 of Handout*
    2. An oral term of years in violation of SoF creates an implied PT measured by the way rent is tendered
      • *Example 40 on pg. 36 of Handout*
    3. The Holdover: In a residential lease, if L elects to hold over a T who has wrongfully stayed on past the conclusion of the original lease
      • Implied PT arises measured by the way rent is now tendered
      • *Example 41 on pg. 36 of Handout*
  • To terminate PT must give notice, usually in writing
    • At C/L at least equal to the length of period itself unless otherwise agreed
    • Exception: If the tenancy is year to year or greater, only need 6 months notice
    • Note: By private agreement, the parties may lengthen or shorten these C/L prescribed notice provisions
      • Freedom of Contract
    • Note: PT must end at the conclusion of the natural lease
    • *Example 42 on pg. 37 of Handout*
Tenancy at Will (TW)
  • Tenancy for no fixed duration
  • Unless the parties expressly agree to a TW, the payment of regular rent will cause a court to treat it as implied PT
  • TW may be terminated by either party at any time, but a reasonable demand to vacate is typically needed
Tenancy at Sufferance (TS)
  • Created when T has wrongfully held over past the expiration of the lease
    • We give this wrongdoer a a TS to permit L to recover rent
  • TS lasts only until L either evicts T or hold T to a new tenancy
Tenant's Duties
  1. T's Liability to Third Parties
  2. T's Duty to Repair
  3. T's Duty to Pay Rent
T's Liability to Third Parties
  • Matter of Tort Law
  • T is responsible for keeping the premises in good repair
  • T is liable for injuries sustained by third parties T invited, even where L promised to make all repairs
  • *Example 43 on pg. 38 of Handout*
T's Duty to Repair
  1. T's Duty to Repair when the lease is silent:
    • Standard: T must maintain the premises and make routine repairs other than those due to ordinary wear and tear
      • Routine Repair: Using Drano to unclog sink
      • Wear and Tear: Bathroom tiles need replacing after 8 years
    • T must not commit waste
      • Voluntary, Permissive, or Ameliorative
    • Law of Fixtures (Separate Card)
  2. T's Duty to Repair when T has expressly covenanted in the lease to maintain the property in good condition for the duration of the lease:
    • At C/L Historically, T was liable for any loss to the property including loss due to force of nature
      • T is basically a sitting duck
    • Today in the majority view T may end lease if the premises are destroyed w/out T's fault
Law of Fixtures
  • Tested with waste doctrine
  • When T removes a fixture he commits voluntary waste
  • Fixture: A once movable chattel that, by virtue of it's annexation to realty, objectively shows the intent to permanently improve the realty
  • Common Examples:
    • Heating systems
    • Custom storm windows
    • Furnace
    • Certain lighting installations
  • T must not remove a fixture no matter that she installed it
  • Fixtures pass with ownership of land
  • *Example 44 on pg. 40 of Handout*
  • How to tell when a T installation qualifies as fixture:
    1. Express Agreement controls:
      • Any agreement on point b/t L and T is binding
    2. In the absence of an agreement, T may remove a chattel that she has installed so long as removal won't cause substantial harm to the premises
      • If removal will cause substantial damage, in objective judgment T has shown the intent to install a fixture and fixture stays put
T's Duty to Pay Rent
  1. T breaches this duty and is in the possession of the premises:
    • L's only options are to evict through the courts or continue the relationship and sue for rent due
    • If L moves to evict, nonetheless entitled to rent from T until T, who is now a T at Sufferance, vacates
    • L must not engage in self-help such as changing the locks, forcibly removing T, removing T's things
      • Self-help is flatly outlawed
      • Punishable civilly and criminally
  2. T breaches this duty but is out of possession:
    • Example: T wrongfully vacates w/ time left on TY lease
    • Remember SIR
      1. Surrender: T shows by words or conduct that she wants to give up the lease
        • L could choose to treat T's abandonment as an implicit offer to surrender which L accepts
        • If unexpected term is greater than one year, surrender must be in writing
      2. Ignore the abandonment and hold T responsible for the unpaid rent, just as if T was still there
        • Available only in minority of states
      3. Re-let the premises on the wrongdoer T's behalf and hold T liable for any deficiency
        • Majority Rule:
          • L must at least try to re-let
          • This is a mitigation principle
L's Duties
  1. Duty to Deliver Possession
  2. Implied Covenant of Quiet Enjoyment
  3. Implied Warranty of Habitability
  4. Retaliatory Eviction
  5. Discrimination
Duty to Deliver Possession
  • Majority Rule requires that L deliver both legal (lawful lease) and physical possession to new T
    • L must put T in possession of the premises
    • If at start of T's lease a prior holdover T is still in possession, L has breached and new T gets damages
  • Note: In a minority of states L need only deliver legal possession to new T
    • If prior holdover T is still in possession at start of T's lease, it is up to new T to bring eviction proceedings against holdover T
Implied Covenant of Quiet Enjoyment
  • Applies to both residential and commercial leases
    • T has right to quiet use and enjoyment of the premises w/out interference from L
  1. Breach by Wrongful Eviction:
    • Occurs when L wrongfully evicts T or excludes T from premises
  2. Breach by Constructive Eviction:
    • Remember SING
      1. Substantial Interference:
        • Due to L's actions or failures
        • Could be chronic or permanent
      2. Notice:
        • T must notify L of the problem and L must fail to correct it
      3. Goodbye:
        • T must vacate w/in reasonable time after L fails to correct the problem
  • Is L liable for acts of other T's?
    • General Rule: No
    • Two Exceptions:
      1. L must not permit a nuisance on site
      2. L must control common areas
Implied Warranty of Habitability (IWOH)
  • Applies only to residential leases
  • Non-Waivable
  • Standard:
    • Premises must be fit for basic human dwelling
    • Bare living requirements must be met
    • Appropriate standard may be supplied by housing code or case law
    • Problems triggering breach of IWOH: No heat in winter, no plumbing, no running water, etc.
  • T's Entitlements when the IWOH is breached:
    • Remember Mr. Cubed (MR3)
    • M: Move out and end lease, but T don't have to
    • R: Repair and deduct
      • Allowable by statute in a lot of jurisdictions
      • T may make reasonable repairs and deduct costs from future rent
    • R: Reduce rent or withhold all rent until court determines FRV
      • T places withheld rent in escrow account to show good faith
    • R: Remain in possession
      • Pay rent and affirmatively seek money damages
Retaliatory Eviction
  • If T lawfully reports L for housing code violations, L is barred from penalizing T
    • Examples:
      • Raising rent
      • Ending the lease
      • Harassing T
      • Taking other reprisals
  • FHA bars discrimination in sale or rental of property
    • Doesn't apply to religious organizations, private clubs, and owner-occupied buildings w/ no more than 4 units
    • When FHA applies, L must allow disabled Ts to make reasonable modifications to existing premises at the Ts own expense
    • L must make reasonable accommodations in rules, policies, services to give disable tenants an equal opportunity to use dwelling
Assignment vs. Sublease
  1. In absence of some prohibition in lease, T may freely transfer interest in whole (Assignment) or in part (Sublease)
    • In the lease L can prohibit T from assigning or subletting w/out Ls prior written approval
    • Once L consents to one transfer by T, L waives the right to object to future transfers by that T unless L reserves the right
  2. The Assignment:
    • *Example 45-46 on pg. 45-46 of Handout*
  3. The Sublease:
    • L and sublessee (T2) are neither in privity of estate nor contract
    • T2 is responsible to T1 and vice versa
    • Relationship b/t L and T2 is w/out privity and relationship b/t L and T1 remains fully intact
L's Tort Liability
  • C/L of caveat lessee:
    • The Norm: In tort L was under no duty to make the premises safe
  • Five Most Important Exceptions to C/L:
    • Remember when T learns of exceptions T CLAPS
    • Common Areas:
      • L must maintain all common areas
      • Example: Hallways and stairwells
    • Latent Defects Rule:
      • L must warn T of hidden defects that L knows or should know about
      • Simply a duty to warn not duty to repair
    • Assumption of Repairs:
      • L who voluntarily makes repairs must complete them w/ reasonable care
    • Public Use Rules:
      • L who:
        • Leases public space (museum, convention hall), and
        • Who should know b/c of the nature of the defect and the length of the lease that T will not repair,
        • Is liable for defects on property
    • Short Term lease of furnished dwelling:
      • L is liable for any defect which proximately harm T
  1. Easement
  2. License
  3. Profit
  4. Covenant
  5. Equitable Servitudes
  • The grant of a nonpossessory property interest that entitles the holder to some form of use or enjoyment of another's land called the Servient Tenement (ST)
  • Common Examples:
    • Privilege to lay utility lines on another's land
    • Easement giving its holder right of access across a tract of land
  1. Easements can be Affirmative or Negative (NE)
  2. Easement is either Appurtenant (AE) or In Gross (EIG)
  3. Easement and Transferability
  4. Creation of AE
  5. Scope of Easement
  6. Termination of Easement
Affirmative and Negative (NE) Easements
  • Most easements are Affirmative: The right to do something on servient land (SL)
  • Negative Easements:
    • NE entitles its holders to prevent servient landowner from doing something that would otherwise be permissible
    • Generally recognized in only 4 Categories: LASS
      1. Light
      2. Air
      3. Support
      4. Stream water from an artificial flow
    • NE can only be created expressly, by writing signed by the grantor
      • No natural or automatic right to a NE
Easement Either Appurtenant to Land (AE) or Held In Gross (EIG)
  • AE when it benefits its holder in his physical use or enjoyment of the property
    • How to know if you have a AE
      • Two parcels involved; "It takes two baby"
      • A Dominant Tenement (DT) takes benefit
      • A ST suffers burden of easement
      • *Example 47 on pg. 51 of Handout*
  • EIG if it confers upon its holder only some personal or pecuniary advantage that is not related to his use or enjoyment of land
    • SL is burdened
    • No benefited DT
      • Common Examples:
        • Right to place billboard on another's lot
        • Right to swim in another's pond
        • Right to lay power lines on another's land
Easement and Transferability
  • AE passes automatically w/ the DT, regardless of whether it is even mentioned in conveyance
    • *Example 48 on pg. 52 of Handout*
    • Note: Burden on EA also passes automatically with servient estate unless the new owner is bonafide purchaser (BFP) w/out notice of easement
  • EIG is not transferable unless it is for commercial purposes
    • *Examples 49-50 on pg. 52 of Handout*
Creation of an Affirmative Easement
  • Can Arise in any of 4 Ways
  • Remember PING
    • Prescription:
      • Easement may be acquired by satisfying the elements of adverse possession (AP)
      • Note: Permission defeats the acquisition of an easement by prescription
        • Easement by Prescription requires that the use be hostile (never got permission to do what you're doing)
    • Implication:
      • Easement implied from existing use
        • Previous use was apparent, and
        • Parties expected it would continue b/c it is reasonably necessary to the dominant land's use and enjoyment
      • *Example 51 on pg. 53 of Handout*
    • Necessity:
      • The Landlocked Setting
      • An easement of right of way will be implied necessary if grantor conveys a portion of his land with no way out except over part of the grantor's remaining land
    • Grant:
      • Easement to endure for more than one year must be in a writing that complies w/ formal elements of a deed
      • B/c of SoF
      • The writing to evidence easement is called The Deed of Easement
Scope of an Easement
  • Determined by the terms that created it
  • Unilateral expansion not allowed
  • *Example 52 on pg. 54 of Handout*
Termination of Easement
  • Remember END CRAMP
  1. Estoppel:
    • Servient Owner (SO) materially changes position in reasonable reliance on the easement holder's assurances that the easement will not be enforced
    • *Example 53 on pg. 55 of Handout*
  2. Necessity:
    • Easements created by necessity expire as soon as the need ends
    • If the easement attributable to necessity was created by express grant it persists even when the need ends
    • *Example 54 on pg. 55 of Handout*
  3. Destruction:
    • Destruction of SL, other than through willful conduct of SO ends the easement
  4. Condemnation:
    • Condemnation of servient estate by eminent domain ends the easement
  5. Release:
    • A written release, given by easement holder, to the SO
  6. Abandonment:
    • Easement holder must demonstrate by physical action the intent to never use the easement again
    • Note: Requires physical action by the easement holder
    • Mere nonuse or mere words are insufficient to terminate by Abandonment
    • *Example 55 on pg. 56 of Handout*
  7. Merger Doctrine (aka Unity of Ownership):
    • Easement is extinguished when title to the easement and title to SL becomes vested in same person
    • *Example 56 on pg. 56 of Handout*
    • Note:
      • If complete unity of title is achieved, the easement is extinguished
      • Even though there may be later separation of title, the easement is not reinstated
  8. Prescription:
    • SO may extinguish the easement by interfering with it in accordance w/ elements of AP
    • *Example 57 on pg. 57 of Handout*
The License
  • A mere privilege to enter another's land for a delineated purpose
  • Licenses not subject to SoF
    • Don't need a writing to create license
  • Freely revocable, at the will of licensor, unless estoppel applies to bar revocation
  • Classic License Cases:
    1. Ticket Cases:
      • Tickets create freely revocable licenses
    2. Neighbors Talking by the Fence:
      • Always bad outcome follows
      • Oral easement creates freely revocable license
      • *Example 58 on pg. 58 of Handout*
    3. Estoppel:
      • Will apply to bar revocation only when the licensee has invested substantial money, labor, or both in reasonable reliance on the license's continuation
The Profit
  • Entitles its holder to enter the SL and take from it:
    • The soil or some substance of the soil, like minerals, timber, or oil
  • The profit shares all the rules of easements
The Covenant
  • Covenant is a promise to do or not do something related to land
    • Unlike an easement b/c it is not the grant of property interest
    • Rather a contractual limitation or promise regarding land
  • Usually negative (Restrictive Covenants (RC))
    • RC is a promise to refrain from doing something related to land
    • Example: Promise not to build for commercial purposes
  • Can also be Affirmative (AC)
    • AC is a promise to do something related to land
    • Example: Promise to paint our common fence
  • How to know whether to construe the given promise as a covenant or as an equitable servitude:
    • On the basis of remedy P seeks
    • If P seeks money damages, construe at law as covenant
    • If P wants injunction, construe as equitable servitude
  • In Covenant Parlance, one tract is burdened by the promise and another is benefited
    • When will the covenant run w/ the land?
      • *Example 59 on pg. 60 of Handout*
      • Two separate contests must be resolved
        • Contests on next 2 cards
First Contest: Does the Burden of A's Promise to B run from A to A1?
  • Always analyze burdened side first
  • Harder for burdens to run than for benefits to run
  • Remember WITHN
  • Elements Necessary for Burden to Run:
    1. Writing:
      • Promise between A and B was in writing
    2. Intent:
      • Original parties intended that the covenant would run
      • Note: Courts are generous in finding the requisite intent
    3. Touch and Concern the Land:
      • Promise must affect the parties' legal relations as landowners and not simply as members of the community at large
      • Note: Covenants to pay money to be used in connection w/ land (HOA fees) and covenants not to compete do touch and concern the land
    4. Horizontal and Vertical Privity both Required for Burden to Run:
      • Horizontal Privity (HP): nexus b/t original parties
        • Requires succession of estate, meaning they were in grantor/grantee, landlord/tenant, or mortgagor/mortgagee relationship
      • Vertical Privity (VP): nexus b/t A and A1
        • Requires some non-hostile nexus such as contract, devise, descent
        • Only time vertical privity will be absent is if A1 acquired interest through AP
    5. Notice:
      • A1 had notice of the promise when he took
Second Contest: Does the Benefit of A's Promise to B Run from B to B1?
  • Remember WITV
  1. Writing
    • Promise from A to B was in writing
  2. Intent
    • Original parties intended benefit to run
  3. Touch and Concern
    • Promise affects parties as landowners
  4. VP
    • Non-hostile nexus b/t B and B1
    • Note: HP is not required for benefit to run
    • Note: In most cases you'll be asked to assess whether both the burden and benefit run, don't get thrown if only one side has been transferred in a fact pattern
    • *See "For Example" pg. 62 of Handout*
Equitable Servitude (ES)
  • Promise that equity will enforce against successors
    • Accompanied by injunctive relief
  • To create ES that will bind successors:
    • WITNES:
    • Writing
    • Intent
    • Touch and Concern
    • Notice
    • Equitable Servitude
      • Note: Privity not required to bind successors
  • Implied ES (General or Common Scheme Doctrine):
    • *Example 60 on pg. 63 of Handout*
    • Two Elements:
      1. When the sales began, subdivider (A) had a general scheme of residential development which included Defendant's lot
      2. Defendant lotholder (B) had notice of the promise in the prior deeds
    • Three Forms of Notice potentially imputed to defendant:
    • Remember AIR
      1. Actual Notice: D knew of common restriction
      2. Inquiry Notice: Neighborhood conforms to common restriction
      3. Record Notice: Form of notice sometimes imputed to buyers on basis of public records
        • Inquiry and Record Notice are both forms of Constructive Notice
  • Equitable Defenses to enforcement of ES:
    • Changed Conditions:
      • Changed circumstances alleged by party seeking release from terms of ES must be so pervasive that the entire area has changed
      • Mere pockets of limited change never good enough
Adverse Possession (AP)
  • Basic Concept: Possession for a statutorily prescribed period of time can ripen into title if certain elements met
  • Elements: COAH
    • For possession to ripen into title it must be:
      1. Continuous
        • Uninterrupted for statutory period
      2. Open and Notorious
        • Sort of possession the usual owner would make under the circumstances
      3. Actual Entry
        • Giving exclusive possession
      4. Hostile
        • Possessor doesn't have owner's consent to be there
    • Note: Possessor's subjective state of mind irrelevant
  • Tacking:
    • One adverse possessor may tack on to his time w/ the land his predecessor's time, as long as:
      • There is privity
      • Satisfied by any non-hostile nexus, such as contract, deed, or will
    • *Example 61 on pg. 66 of Handout*
  • Disabilities:
    • SoL will not run against a true owner who is afflicted by a disability at the start of the AP
    • Common Disabilities: insanity, infancy, imprisonment
    • *Example 62 on pg. 66 of Handout*
Land Conveyance: The Purchase and Sale of Real Estate
  • Every conveyance of real estate consists of a 2 Step Process
  • Step 1: The Land Contract
    • Transfers equitable title from Seller (S) to Buyer (B)
    • Land Contract endures until step 2
  • Step 2: The Closing
    • Deed becomes operative document
    • Deed transfers legal title from S to B, giving B right to possession
Land Contract (LC)
  1. The LC and the SoF
  2. Problem of Risk of Loss
  3. Two Implied Promises in Every LC
  4. LC Contains no Implied Warranties of Fitness or Habitability
The LC and SoF
  • Standard:
    • Must be in writing
    • Signed by the party to be bound
    • Must describe Blackacre
    • Must state some consideration
  • When the amount of land recited in LC is more than actual size of parcel:
    • Specific Performance w/ pro rata reduction in price
    • *Example 63 on pg. 67 of Handout*
  • One Exception to SoF:
    • Doctrine of Part Performance:
      • If you have 2 of the following 3, the doctrine is satisfied and equity will decree specific performance of an oral contract for sale of land
        1. B takes possession,
        2. B pays all or part of the price, and/or
        3. B makes substantial improvements
The Problem of Risk and Loss
  • Remember, LCs give B equitable title
    • LC gives equitable title
    • Closing gives deed and legal title
  • In equity, once contract is signed B owns the land subject to the condition that he pay the purchase price at closing
  • Doctrine of Equitable Conversion:
    • Equity regards as done that which ought to be done
  • Important Result: Destruction
    • If in interim b/t contract and closing Blackacre is destroyed through no fault of either party, B bears the risk of loss unless contract states otherwise
Two Implied Promises in Every LC
  1. S promises to provide marketable title at closing
    • Standard: Title free from reasonable doubt, free from lawsuits and threat of litigation
    • Three Circumstances will render title unmarketable:
      1. AP: Even if part of title rests on AP it is unmarketable; S must be able to provide good record title
      2. Encumbrances: Marketable title means an unencumbered fee simple
        • Mortgages and Servitudes render title unmarketable unless B has waived them
        • Note:
          • S has right to satisfy outstanding mortgage or lien at closing w/ proceeds of sale
          • B can't claim title unmarketable b/c it is subject to a mortgage prior to closing so long as parties understand that the closing will result in mortgage being satisfied or discharged
      3. Zoning Violations: Title is unmarketable when Blackacre violates a zoning ordinance
  2. S promises not to make any false statements of material fact
    • Majority of states hold S liable for failing to disclose latent material defects
      • S is liable for material lies and omissions
    • If contract contains a general disclaimer of liability ("as is" or "with all faults") the disclaimer won't excuse S from liability for fraud or failure to disclose
LC Contains No Implied Warranties of Fitness or Habitability
  • C/L Norm: Caveat Emptor (buyer beware)
  • Important Exception:
    • Implied Warranty of Fitness and Workmanlike Construction
      • Applies to the sale of a new home by a builder-vendor
The Closing
  • Controlling document is now the Deed
  • Deed passes legal title from S to B
  • For Deed to pass legally from S to B it must be LEAD:
    • Lawfully
    • Executed
    • And
    • Delivered
Lawful Execution of a Deed
  • Standard: Must be in writing signed by the grantor
    • Note: Deed need not recite consideration and consideration don't have to pass to make a Deed
  • Description of the land doesn't have to be perfect but it must be unambiguous and provide a good lead
  • *Examples 64-65 on pg. 71 of Handout*
The Delivery Requirement
  • Delivery requirement could be satisfied when grantor physically transfers Deed to grantee
    • Permissible to use mail, an agent, or a messenger
  • Delivery doesn't necessarily require physical transfer of Deed itself
  • Standard for Delivery is Legal Standard
    • A test solely on present intent
    • Ask: Did grantor have the present intent to be bound irrespective of whether or not the deed was handed over
  • Recipient's express rejection of Deed defeats delivery
    • *Example 66 on pg. 71 of Handout*
  • If Deed, absolute on its face, is transferred to a grantee with an oral condition, the oral condition drops
    • Not provable, delivery is achieved
    • *Example 67 on pg. 72 of Handout*
  • Delivery by Escrow is permitted
    • Grantor may deliver executed Deed to a third party (escrow agent) w/ instructions that Deed be delivered to grantee once certain conditions are met
    • Once conditions are met title passes to grantee
    • Advantage of Escrow:
      • If grantor dies, becomes incompetent, or is otherwise unavailable before express conditions are met, title still passes from escrow agent to grantee once conditions are met
Covenants for Title and Three Types of Deeds
  1. Quitclaim
  2. General Warranty Deed
  3. Statutory Special Warranty Deed
  • Contains no covenants
  • Grantor isn't even promising that he has title to convey
  • Worst kind of Deed for B
General Warranty Deed (GWD)
  • Best Deed for B
  • Warrants against all defects in title
    • Includes those attributable to grantor's predecessors
  • GWD typically contains all 6 of the following Covenants:
    • First 3 are present covenants
      • Present Covenant is breached, if ever, at moment of delivery
      • SoL for for breach of present covenant begins to run from the instant of delivery
    • Next 3 are future covenants
      • Future Covenant is not breached, if ever, until grantee is disturbed in possession
      • SoL for breach of future covenant won't begin to run until that future date
Present Covenants
  • Covenant of Seisin:
    • Grantor promises she owns the estate
  • Covenant of Right to Convey:
    • Grantor has power to transfer
    • Grantor under no legal restraints
    • Grantor under no temporary disability
  • Covenant Against Encumbrances:
    • No servitudes or mortgages on Blackacre
Future Covenants
  • Covenant of Quiet Enjoyment:
    • Grantee won't be disturbed in possession by a third party's lawful claim of title
  • Covenant of Warranty:
    • Grantor will defend against lawful title claims brought by others
  • Covenant for Further Assurances:
    • Grantor will do whats needed in the future to perfect the title
The Recording System
  • Our Model: The course of the "double dealer"
    • O conveys Blackacre to A
    • O conveys Blackacre to B
    • O (double dealer) dips out
    • Battle b/t A and B
  • Two Brightline Rules
  • Two Routine Value Questions
  • Three Forms of Notice
Recording Brightline Rules
  1. If B is a Bona Fide Purchaser (BFP) in a Notice Jurisdiction, B wins regardless of whether or not he records before A does
  2. If B is a BFP in a Race-Notice Jurisdiction, B wins if he records properly before A does
  • Recording acts exist to protect only BFPs and Mortgagees (creditors)
  • A BFP is one who:
    • Buys Blackacre for value; and
    • W/out notice that someone else got there first
Recording Routine Value Questions
  1. The Bargain Basement Sale
    • If B remits substantial pecuniary consideration he is a buyer for value
    • *Example 68 on pg. 75 of Handout*
  2. The Case of the Doomed Donee:
    • Recording statutes do not protect heirs or devisees unless Shelter Rule applies
    • *Example 69 (giggity) on pg. 76 of Handout*
Three Forms of Notice B May Potentially Be Charged With


  1. Actual Notice (AN): Prior to B's closing, B learns of A
  2. Inquiry Notice (IN):
    • Whether B looks or not, on IN of whatever an examination of the land would show
      • B of real estate has duty to inspect before transfer of title
      • If another is in possession, B has IN regardless of whether B inspected or not
      • If A was in possession B would be on IN
      • B's status of BFP is defeated
    • If a recorded instrument makes reference to an unrecorded transaction, grantee is on IN of whatever a reasonable following would reveal
  3. Record Notice (RN):
    • B is on RN of A's Deed if at the time B takes A's Deed is recorded properly
Recording Statutes
  1. The Notice Statute:
    • "A conveyance of an interest in land shall not be valid against any subsequent purchaser for value, w/out notice thereof, unless the conveyance is recorded"
      • If at time B takes he is a BFP he wins
      • Won't matter that A may record first
      • Won't matter that B never records
      • Last BFP to take wins
  2. The Race Notice Statute:
    • "Any conveyance of an interest in land shall not be valid against any subsequent purchaser for value, w/out notice thereof, whose conveyance is first recorded"
      • To prevail B must:
        1. Be a BFP, and
        2. Win the race to record
  • *Example 70 on pg. 78 of Handout covers both*
Chain of Title Problems
  1. The Shelter Rule:
    • One who takes from a BFP will prevail against any entity that the transferor-BFP would have prevailed against
    • Transferee "takes shelter" in the status of her transferor
    • "Steps into Shoes" of BFP even though otherwise fails to meet requirements of BFP status
    • *Example 71 on pg. 78 of Handout*
    • Note: The Shelter Rule aims to protect BFP by making it easier for B to transfer successfully w/out being penalized for O's "double dealings"
  2. Problem of the Wild Deed:
    • Rule of the Wild Deed:
      • If a deed, entered on the records (A to B), has a grantor unconnected to chain of title (O to A), the deed is a wild deed
      • Incapable of giving record notice of existence
      • As if it were never recorded
    • *Example 72 on pg. 79 of Handout*
  3. 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 that previously transferred interest
    • *Example 73 on pg. 80 of Handout*
  • Our Model:
    • C, a creditor, is thinking of lending O 50k
    • O offers Blackacre as collateral
  1. Creation of Mortgage
  2. Equitable Mortgage
  3. Parties Rights in Mortgage
  4. Transfer of Interests in Mortgage
  5. Foreclosure
  6. Effects of Foreclosure
  7. Priorities
  8. Redemption (statutory and in equity)
  9. Consumer Protection Defenses to Foreclosure
Creation of Mortgage
  • Mortgage:
    • Conveyance of a security interest in land, intended by the parties to be collateral for the repayment of a debt
    • Union of Two Elements:
      1. A debt, and
      2. A voluntary transfer of a security interest  (or lien) in debtor's land to secure debt
  • Debtor: Mortgagor
  • Creditor: Mortgagee
  • Purchase Money Mortgage (PMM):
    • Mortgage given to secure a loan that enables debtor to acquire now-encumbered land
  • Non-Purchase Money Mortgage (NPMM):
    • Borrow money for something else and put up land as collateral for repayment of that loan
  • Mortgage must typically be in writing to satisfy SoF
    • Legal Mortgage: evidenced by writing
Equitable Mortgage
  • *Example 74 on pg. 81 of Handout*
  • Creditor loans O money, Blackacre is the collateral, instead of executing note or mortgage deed O hands creditor Deed to Blackacre that is absolute on its face
Parties Rights in Mortgage
  • Unless and until foreclosure, debtor-mortgagor has title and right to posses
  • Creditor-Mortgagee has a lien
Transfer of Interest in Mortgage
  • Mortgage automatically follows a properly transferred note
  • Creditor-Mortgagee can transfer his interest by:
    1. Endorsing the note and delivering it to the transferee, or
    2. Executing a separate document of assignment
      • If note is endorsed and delivered, transferee is eligible to become holder in due course
      • Takes note free of any personal defenses that could have been raised against original mortgagor
  • Personal Defenses include:
    1. Lack of Consideration
    2. Fraud in the Inducement
    3. Unconscionability
    4. Waiver
    5. Estoppel
      • Holder in due course may foreclose the mortgage despite any such personal defense
  • By Contrast: Holder in due course is still subject to "real" defenses that the original debtor-mortgagor (maker) might raise
    • MAD FIFI4, The Real Defenses (next card)
Transfer of Interest in Mortgage
  • Mortgage automatically follows a properly transferred note
  • Creditor-Mortgagee can transfer his interest by:
    1. Endorsing the note and delivering it to the transferee, or
    2. Executing a separate document of assignment
      • If note is endorsed and delivered, transferee is eligible to become holder in due course
      • Takes note free of any personal defenses that could have been raised against original mortgagor
  • Personal Defenses include:
    1. Lack of Consideration
    2. Fraud in the Inducement
    3. Unconscionability
    4. Waiver
    5. Estoppel
      • Holder in due course may foreclose the mortgage despite any such personal defense
  • By Contrast: Holder in due course is still subject to "real" defenses that the original debtor-mortgagor (maker) might raise
  • If debtor-mortgagor sells Blackacre, which is now mortgaged, the lien remains on the land so long as the mortgage was properly recorded
    • In a notice state a subsequent BFP prevails over prior grantee or mortgagee who has not yet recorded properly at the time the BFP takes
  • See (iii) on pg. 85 for personal liability on debt
  • *Example 75-76 on pg. 84-85 of Handout*
The Real Defenses (Mortgages)


  • Material change in instrument
  • Alteration of instrument
  • Duress
  • Fraudulent In the Factum (lie about the instrument)
  • Incapacity
  • Illegality
  • Infancy
  • Insolvency
Holder in Due Course (Mortgage)
  • To be a Holder in Due Course of the note, following criteria must be met:
    1. Note must be negotiable, made payable to named mortgagee;
    2. The original note must be endorsed, signed by named mortgagee;
    3. Original note must be delivered to the transferee;
      • Photocopy is unacceptable trash
    4. Transferee must take the note in good faith, w/out notice of any illegality; and
    5. Transferee must pay value for the note
      • Some amount that is more than nominal
  • How to proceed assuming mortgagee-creditor must look to land for satisfaction:
    • Mortgagee must foreclose by proper judicial action
    • At foreclosure land is sold
    • Sale proceeds go to satisfying the debt
  • If sale proceeds are less than amount owed, mortgagee brings deficiency judgment for remaining amount
  • If Surplus, junior liens are paid in order of priority
    • Any remaining surplus goes to debtor
    • *Example 77 on pg. 86 of Handout*
Effect of Foreclosures on Various Interests
  • Foreclosures will terminate interests junior to the mortgage being foreclosed but will not effect senior interests
    • Those with interests subordinate to those of the foreclosing party are necessary parties to the foreclosure action
    • Debtor-mortgagor also considered necessary party and must be joined, particularly if creditor wants to sue dat nigga for personal deficiency judgment
    • Failure to include necessary party results in preservation of that party's claim
    • If necessary party not joined, mortgage remains on land
  • Foreclosure doesn't effect senior interests
    • B at sale takes subject to such interests
    • B is not personally liable on senior debt
    • If senior mortgage not paid, will foreclose
    • *Example 78 on pg. 87-88 of Handout*
  1. As a creditor, you must record
    • Until you properly record your mortgage you have no priority
  2. Once recorded, priority is determined by norm of first in line first in right
  3. PMM: Mortgage given to secure a loan that enables a debtor to acquire encumbered land
    • *Example 79 on pg. 89 of Handout*
  4. Purchase Money Mortgagee's Super Priority
    • *Example 80 on pg. 89 of Handout*
  5. Subordination Agreements:
    • Are permissible
    • Senior creditor can subordinate its priority to a junior creditor
Redemption in Equity
  • Redemption in Equity:
    • Equitable Redemption is universally recognized up to date of sale
    • Any time prior to foreclosure sale, debtor can try to redeem the land
  • Once a valid foreclosure has taken place, the right to equitable redemption is gone
  • Equitable Redemption is exercised by passing off the missed payment or payments plus interests plus costs
  • Acceleration Clause:
    • Permits the mortgagee to declare the full balance due in event of default
    • If mortgage contains an Acceleration Clause, the full value + accrued interest + costs must be paid to redeem
  • Clogging the Equity of Redemption:
    • Prohibited
    • A debtor may not waive the right to redeem mortgage itself
Statutory Redemption
  • Recognized in half the states
  • Gives debtor-mortgagor of a statutory right to redeem for some fixed period after the foreclosure sale
    • Typically 6 months to 1 year
  • Where recognized, applies after foreclosure
    • Amount to be paid is usually foreclosure sale price rather than amount of original debt
  • In most states that recognize statutory redemption, mortgagor has the right:
    • To possess Blackacre during statutory period
  • When mortgagor redeems, effect:
    • Nullify the foreclosure sale
    • Redeeming owner is restored to title
Consume Protection Defenses to Foreclosure
  • Rules and Regulations designed to protect consumers from unfair lending practices
    1. Dodd-Franks Act (Act):
      • Requires residential mortgage lenders to determine a mortgagor's ability to repay before making the loan
      • Terms of loan must be understandable, and not unfair, deceptive, or abusive
      • A lender's violation of Act can be used by the mortgagor as a defense in lender's foreclosure action
    2. Consumer Rights During Foreclosure Process:
      • After mortgagor has defaulted, mortgagee must in good faith consider a request made by mortgagor for a loan modification or other alternative to foreclosure
      • Mortgagee cannot file foreclosure action while such a request is pending
      • If request is made after foreclosure action is filed, mortgagee cannot proceed to foreclose sale until request is resolved
Lateral Support
  • If land is improved by buildings and an adjacent landowner's excavation causes that improved land to cave in, excavator will be liable only if negligent
  • Strict Liability doesn't attach to the excavator's actions unless P shows that, b/c of D's actions, P's improved land would have collapsed even in its unadorned state
    • P must show that improvements on his land did not contribute to his land's collapse for Strict Liability to apply
Water Rights

Two Major Systems for Allocation in Watercourses:

  1. Riparian Doctrine:
    • Water belongs to those who own the land bordering the watercourse
    • These people known as riparians, who share the right of reasonable us of the water
    • One riparian will be liable if use unreasonably interferes w/ other's use
  2. Prior Appropriation Doctrine:
    • Water belongs initially to the state, but right to divert and use it can be acquired by an individual
    • Regardless of whether or not he happens to be a riparian owner
    • Rights are determined by priority of beneficial use
    • Norm for Allocation: first in line first in right
    • A person can acquire right to divert and use water from a watercourse merely by being the first to do it
    • Any productive or beneficial use of water, including use for agriculture is sufficient to create Appropriation Right
  • Groundwater (aka Percolating Water):
    • Water beneath the surface of the earth that is not confined to a known channel
    • Surface owner is entitled to make reasonable use of groundwater
    • Use must not be wasteful
  • Surface Waters:
    • Common Enemy Rule:
      • Surface water is a nemesis (like Doug and Alex Nguyen) and needs to be eradicated
      • Landowner may change drainage or make any other changes/improvements on his land to combat the flow of surface water
      • Many courts have modified rule to prohibit unnecessary harm to other's land
Possessor's Rights
  • The possessor of land has the right to be free from trespass and nuisance
    1. Trespass:
      • Invasion of land by physical object
      • To remove trespasser, bring ejection action
    2. Private Nuisance:
      • The substantial and unreasonable interference with another's land use
      • Note:
        • Unlike trespass, nuisance does not require physical invasion
        • Odors and noise could give rise to a nuisance, but not a trespass
      • Nuisance and the Hypersensitive P
      • *Example 81 on pg. 93 of Handout*
  • Land Use Motha Fucka
  • Pursuant to its police powers, gov may enact statutes to reasonably control land use
  1. The Variance
  2. Nonconforming Use
  3. Cumulative Zoning
  4. Unconstitutional Exactions
  • Principle means to achieve flexibility in zoning
  • Proponent of the variance must show undue hardship and that granting of variance will not work diminution to neighboring property values
  • Variance is granted or denied by administrative action, usually a zoning board
Nonconforming Use
  • A once lawful, existing use now deemed nonconforming by a new zoning ordinance
  • Cannot be eliminated all at once unless just compensation is paid
  • Otherwise it could be deemed an unconstitutional taking
Cumulative Zoning
  • There are two types of zoning ordinances:
    1. Cumulative
    2. Noncumulative
  • Cumulative Zoning Ordinance (CZO):
    • Created a hierarchy of uses of land
    • In order from highest use to lowest
      1. Single-family home
      2. Two-family home
      3. Apartment building
      4. Strip Mall
      5. Factory
    • Under CZO, land that is zoned for a particular use may be used for that particular use or for any higher use
    • *Example 83 on pg. 94 of Handout*
  • Noncumulative Zoning Ordinance (NZO):
    • Land may be used only for the purpose for which it is zoned
    • *Example 84 on pg. 94 of Handout*
Unconstitutional Exactions
  • Exactions:
    • Those amenities govs seek in exchange for grating permission to build
    • *Example 85 on pg. 95 of Handout*
Condominiums and Homeowners' Associations (HOA)
  • Condominiums:
    • Each owns the interior of her individual unit plus an undivided interest the exterior and common elements
      • Examples: Common stairways, landscaping, the front gate, community room, etc.
  • HOA:
    • Oversees the common elements of a condo properly
      • Owner of each condo is a member of the HOA
    • HOA passes rules in a Declaration of Covenants, Conditions and Restrictions (CCR) that prescribe what owners can and can't do w/ their property
    • Members of HOA vote to elect a board which governs and enforces CCR
    • Each condo owner must pay regular dues or fees to HOA to maintain common elements
      • If monthly fees aint enough to pay necessary expenses (major roof repair), HOA may impose additional one-time fees (special assessment) that each owner must pay
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