Real property

I. freehold estates

1. Present Possessory Estates

2. Future Interests

   1. In Grantor

      1. Reversion: created when grantor grants estate of shorter term than his own

         1. O to A for life (O has reversion)

      2. Possibility of reverter: future interest held by a transferor of a fee simple determinable

         1. O to A so long as X (O has possibility of reverter)

      3. Right of Entry/ power of termination: created when grantor grants estate by a fee simple subject to a condition subsequent.

         1. O to A but if liquor served, O has right of entry (option to exercise right)

   2. In Grantee

      1. Remainder: future interest that has the possibility of becoming possessory at expiration of prior estate and cannot divest that estate. Cannot follow a fee simple of any kind

         1. Contingent Remainder: created in an unascertained person OR subject to a condition precedent, or both. Express condition attached to the remainder, which must be satisfied before possession: “to A if A reaches age 30.” OR “to A for life, then to A’s children” (where the condition is the birth of a child).

         2. Vested Remainder: created in an ascertained person, and possession subject to no other condition precedent

            1. Indefeasibly vested: holder is certain to acquire a possessory estate at some time in the future, and keep it permanently. O to A for life, then to B.

            2. Vested remainder subject to open: Remainder vested in a class of persons, at least one of whom is qualified to take possession, but more people can become members of the class.

            3. Vested remainder subject to defeasance: remainder that will be eliminated if a condition subsequent occurs. “to A for life, and then to B, but if B ever sells liquor on the land, then to C.”

      2. Executory Interest: Future interest in a grantee, which must shift or spring to become possessory.

         1. Shifting: Interest shifts in case of contingent event. Cuts short the prior estate (limits a fee simple held by a previous grantee)

            1. O to A for life, but if A drinks liquor, then to B

         2. Springing: Interest springs out in the future (limits a fee simple in the grantor)

            1. O to A for life, then to B if B graduates from law school

            2. O to A and his heirs if and when A marries a good Christian woman.

      3. Transferability: Vested remainders are fully transferable, descendible, and devisable. Contingent remainders and executory interests are fully transferable, descendible, and devisable, provided survival is not a condition to the interest’s taking.

      4. Class Gifts:

         1. The Rule of Convenience: absent express contrary intent, a class closes (i.e. no one born after that time may share in the gift) when some member of the class can call for distribution of her share of the class gift.

         2. Survivorship of a class member to the time of closing is usually unnecessary unless survival was made an express condition.

   3. Attributes:

      1. Waste:

      2. Fixtures:

   4. Validity:

      1. Destruction of Contingent Remainders: Contingent remainders are destroyed if not vested at time of termination of preceding estate.

         1. “To A for life, remainder to A’s children who reach 21” → if A has no children who are at least 21 at time of her death, property reverts to the grantor.

         2. Abolished in most jurisdictions → property reverts to grantor; A’s children have springing executory interest.

      2. Rule in Shelley’s Case: a remainder in a life tenant-grantee’s heirs is deemed to be in a life tenant herself.

         1. “To B for life, then to B’s heirs.” → B has a fee simple.

         2. Abolished in most jurisdictions → B’s heirs have a contingent remainder.

      3. Doctrine of Worthier Title: A remainder in the grantor’s heirs is ineffective, so grantor has a reversion.

         1. “To B for life, then to my heirs at law.” → B has a life estate; the grantor has a reversion

         2. Generally treated as a rule of construction only → grantor’s heirs have a contingent remainder.

      4. Restraints on Alienation (transfer): Certain conditions placed in the transferability of land will be void for public policy.

         1. 3 types of restrictions:

            1. Disabling: Can’t state that any transfers of land are no force or effect.

            2. Forfeiture: Can’t state the grantee forfeits the land if there’s a transfer.

            3. Promissory: Can’t have a covenant forbidding alienation.

         2. Effect of Rule

            1. If fee simple conveyed → all restrictions are unenforceable

            2. If life estate conveyed → disabling restraints will not be enforced. But others may be enforced.

            3. If leasehold conveyed → forfeiture and promissory restraints are enforceable. Disabling is also likely to be enforced by most courts.

      5. Restraints on Marriage:

      6. Rule Against Perpetuities: No interest in a property is valid unless it must vest, if at all, no later than 21 years after some life in being (“measuring life”) at the creation of the interest. If there’s any possibility the interest might vest more than 21 years after a life in being the interest is void.

         1. Result: the effect of every contingent or executory interest must be known w/ certainty no later than 21 years after the death of all “lives in being.”

         2. 4 Steps:

            1. Classify the future interests. REP only applies to: contingent remainders, executory interests, vested remainders subject to open (class gifts), options to purchase (not attached to a leasehold), rights of first refusal, and powers of appointment.

            2. What are the conditions precedent to the vesting of the future interest?

            3. Find a measuring life (anyone alive at time of transfer AND named in the transfer or inferred in transfer as being central to the conveyance).

            4. Will we know, with certainty, within 21 years of the death of the measuring life, if a future interest can take? Two possibilities

               1. Executory interest vest only when they become possessory

               2. Contingent remainders vest when the contingency occurs, and they become certain to become possessory

         3. Two Bright Line Rules

            1. A gift to an open class that is conditioned on the members surviving to an age beyond 21 violates the common law RAP.

            2. Many shifting executory interests violate the RAP. An executory interest with no limit on the time w/in which it must vest violates the RAP.

               1. “To A and his heirs so long as the land is used for farm purposes, and if the land ceases to be so used, to B” → violates RAP

               2. Charity-to-charity exception: “To the Red Cross, so long as the premisises are used for Red Cross purposes, and if they cease to so be used, then to the YMCA → does NOT violate RAP

         4. Reform of RAP

            1. “Wait and See”/ “Second Look” – majority approach under which the validity of any suspect future interest is determined on the basis of facts as they exist at the death of our measuring life.

            2. The Uniform Statutory Rule Against Perpetuities codifies the common law RAP, and in addition, provides for an alternative 90 year vesting period.

            3. Cy Press Doctrine: court can reform invalid interest to make it valid.

               1. A to B so long as X, then to C and her heirs

               2. A to B, but if B X, then to C

               3. A to B for life, then in fee simple to B’s children when and if they reach they age of 25. [Does not satisfy the “must vest” requirement, children may die before they reach 25.]

               4. A to B for life, remainder to the first child of B to finish law school. (Always infer the possibility of later born child)

               5. A to my grandchildren who shall reach age of 25 [21] (will or inter vivos)

               6. O to A for life, then to A’s widow for life, then to SLS.

3. Concurrent Ownership

1. Joint Tenancy: each tenant has the right to possess the entire parcel w/ right of survivorship.

   1. Upon death, co-owners interest is immediately transferred to the remaining joint tenants in equal shares. Right of survivorship  whichever tenant lives longest takes the property for herself.

   2. Creation: “To A and B as joint tenants with the right of survivorship.” 4-unity requirements (T-TIP): Them Titties Is Perfect (oYo)

      1. Time – the interests must be acquired at the same time

      2. Title – all joint tenants must acquire title by the same instrument

      3. Identical Interest – all joint tenants must have identical interests in the property (both as to duration and fractional share)

      4. Possession – each tenant must have an equal right to possess the whole property.

   3. Termination: The right of survivorship may be severed, and the estate converted to a tenancy in common by: SPAM – Sale, Partition And Mortgage.

      1. Joint tenant can sell or transfer her interest during her lifetime → the purchaser/transferee becomes a tenant in common, but the joint tenant remains in tact as between the other, non-transferring JTs

         1. A, B, C are joint tenants. C transfers interest to D; B dies; A owns 2/3 interest, D owns 1/3

      2. Mere fact of entering into a K for sale will severe the JT. Under the doctrine of equitable conversion the JT is severed on the date of K-ing.

      3. 3 ways to partition: by voluntary agreement, in kind (physical division via judicial action); forced sale (via judicial action).

      4. Effect of Mortgage:

         1. Minority view – title theory of mortgage: mortgage severs the JT as to that encumbered share

         2. Majority view – lien theory of mortgage: mortgage will NOT severe the JT

2. Tenancy in Common: each tenant has the right to possess the entire parcel no matter how small her fractional interest. But, there is NO right of survivorship.

1. Upon death, co-owners interest goes to heirs or persons designated in will

2. Fractional ownership only determines how the purchase price will be divided when the property is sold.

3. Creation: “To A and B” or “To A and B as joint tenants.” Only unity required is possession.

4. Termination: may be terminated by partition.

3. Tenancy by the Entirety: husband and wife each has an undivided interest in the whole estate and right of survivorship.

   1. Creation: “To H and W.” Most states presume a tenancy by the entirety in any joint conveyance to husband and wife where the four unities above are present.

   2. Termination: The right of survivorship may be severed by: (1) divorce, (2) mutual agreement, or (3) execution by a joint creditor. Tenancy CANNOT be terminated by involuntary partition.

4. Rights and Duties of Co-Tenants

   1. Possession: each co-tenant has right to possess all portions of the property, but has no right to exclusive possession of any party.

   2. Rents & Profits: a co-tenant in possession has the right to retain profits from her own use of the property. But, she must share net rents from 3^rd parties and net profits from explaining the land (i.e. mining).

   3. Encumbrance: Joint tenant may encumber (by mortgage or judgment lien) her interest, but may not encumber the interests of other co-tenants.

   4. Partition: Co-tenant has a right to judicial partition, either by physical division among co-tenants, or by sale and division of proceeds.

   5. Expenses: All co-tenants must contribute to necessary repairs. There is no right of contribution for the cost of improvements. All contribute to taxes or mortgage payment paid on the entire property. But, reimbursement to a co-tenant is sole possession is limited to the extent the expenditures exceeds the rental value of her use.

ii. Landlord And Tenant

1. Leasehold or Nonfreehold Estates

   1. Tenancy for Years (aka Estate for Years or Term of Years):

      1. A lease for a fixed determined period of time (e.g. from 1/1/03 – 8/1/03). Does not have to be a period of years. Known termination date from start.

      2. No notice needed to terminate the tenancy; it ends at the specified date.

      3. A term of years greater than one year must be in writing to be enforceable (statute of frauds)

   2. Periodic Tenancy

      1. A lease which continues for successive of continuous intervals.

      2. Creation:

         1. May be created expressly: “to T from month to month”

         2. Or by implication:

            1. Land is leased w/ no mention of duration, but provision is made for the payment of rent at set intervals.

            2. An oral term of years in violation of the statute of frauds creates an implied periodic tenancy, measured by the way rent is tendered.

            3. Holdover: in residential lease, if L elects to holdover T who wrongfully stayed on past the conclusion of the original lease, and implied periodic tenancy arises measured by the way rent is tendered.

      3. Termination: Must provide NOTICE

         1. Usually in writing

         2. Notice must be at least equal to the length of the period itself unless otherwise agreed.

            1. Month-to-month periodic tenancy → 1 months notice required

            2. But year-to-year periodic tenancy → only 6 months notice required

         3. Parties may lengthen or shorten notice provisions by private agreement.

         4. Periodic tenancy must end at the conclusion of a natural lease period (e.g. if lease started on 1/1, and T gives notice on 5/15, lease doesn’t end until 6/30).

   3. Tenancy at Will

      1. A lease for no fixed duration – “To T for as long as L or T desires”

      2. Need expressly agree to a tenancy at will, otherwise the payment of regular rent will cause a court to treat the tenancy as an implied periodic tenancy.

      3. May terminate by either party at any time. However, a reasonable demand to vacate is typically required.

   4. Tenancy at Sufferance

      1. When T has wrongfully held over past the expiration of the lease.

      2. Allows L to recover rent

      3. Lasts only until (1) L evicts T or (2) elects to hold T to a new tenancy.

2. Tenant’s Duties

   1. T’s Liability to Third Parties

      1. T is responsible for keeping the premises in reasonably good repair.

      2. T is liable for injuries sustained by 3^rd parties T invited, even where L has expressly promised to make all repairs.

      3. When invitees sue T → T always looses.

1. T’s Duty to Repair

   1. Where the lease is silent:

      1. T must maintain the premises and make ordinary repairs

      2. T must not commit waste (voluntary, permissive, or ameliorative)

      3. Fixtures (once movable chattel that, by virtue of its annexation to realty, objectively shows the intent to permanently improve the realty).

         1. T must NOT remove fixtures, even if she installed them. FIXTURES PASS WITH OWNERSHIP OF THE LAND.

         2. Where it is unclear that a chattel is a fixture, T may remove chattel that she installed as long as removal does not cause substantial harm to the premises.

   2. If the lease expressly proved that T has a duty to maintain the property in good condition for the duration of the lease.

      1. At CL, T was responsible for any loss to the property, including loss attributable to force of nature (earthquake, hurricane).

      2. Today, T may terminate the lease if the premises are destroyed w/out her fault.

2. T’s Duty to Pay Rent

   1. T has duty to pay rent

   2. If T breaches this duty, and remains in possession of the premises the landlord’s only options are to (1) evict through the courts or (2) continue the relationship and sue for damages. LANDLORD MUST NOT ENGAGE IN SELF HELP (changing the locks, forcibly removing the tenant). Self-help is punishable both civilly and criminally.

   3. If T breaches duty, but leaves the premises, landlord may SIR

      1. Surrender – treat the T’s abandonment as an implic offer of surrender which L accepts. But, if the unexpired term is greater than 1 year, surrender must be in writing to satisfy the statute of frauds.

      2. Ignore the abandonment and hold the T responsible for the unpaid rent, just as if T were still there. Only available in a minority of states.

      3. Re-let the premises on the wrong-doer tenant’s behalf and hold him liable for any deficiencies. Majority rule: L must at least try to re-let.

1. Landlord’s Duties

   1. Duty to Deliver Possession

      1. English Rule (Majority): L must put T in actual physical possession of the premises. Thus, if at the start of T’s lease a prior holderover T is still in possession, L is in breach and the new T gets damages.

      2. American Rule (Minority): L has not duty to put T in actual physical possession. Instead L need only provide T with legal possession.

   2. Implied Covenant of Quiet Enjoyment

      1. Applies to both residential and commercial leases.

      2. T has a right to quiet use and enjoyment of the premises w/out interference from L.

      3. Breached by actual eviction when L wrongfully evicts T or excludes T from the premises.

      4. Breached by constructive eviction when SING:

         1. Substantial interference: attributable to L’s actions or failure to act (chronic problem)

         2. Notice: T must give L notice of problem and L must fail to respond meaningfully.

         3. Get Out: T must vacate w/in a reasonable time after L fails to fix the problem.

   3. Implied Warranty of Habitability

      1. Applies only to residential leases. It is non-waivable.

      2. Standard: premises must be fit for basic human habitation. Bear living requirements. May look to local housing code or independent judicial conclusion.

      3. When breached T may MR³: Move, Repair, Reduce, or Remain

         1. Move out and terminate the lease

         2. Repair and deduct cost from future rent.

         3. Reduce rent or withhold all rent until the court determines fair rental rate. Typically T must palce withheld rent in escrow account to show good faith.

         4. Remain in possession, pay rent affirmatively and seek money damages.

   4. Retaliatory Eviction: if T lawfully reports L for housing code violations, L is barred from penalizing T, by, for example, raising rent, ending the lease, harassing T

2. Assignment v. Sublease

   1. Absent some prohibition in the lease, a T may freely transfer his or her interest in whole (by assignment) or in part (by sublease).

   2. Assignment: T1 transfers to T2 the remaining 10 months on a 2-year term of years.

      1. L and T2: Are in privity of estate: liable to each other for all of the covenant in the original lease that run with the land. But, they are NOT in privity of contract unless T2 expressly assumed all promises in the original lease.

      2. L and T1: Are no longer in privity of estate. But, they remain in privity of K, so L and T1 are secondarily liable to each other.

   3. Sublease: L and sublessee are in neither privity of estate nor privity of K. There share no nexus. T2 is responsible to T1 and vice-versa.

3. Landlord’s Tort Liability

   1. Caveat lessee (CL): let the tenant be ware. L is under no duty to make the premises safe.

   2. Exceptions to the common law: CLAPS

      1. Common areas: L must maintain all common areas

      2. Latent defect: L must warn T of hidden defects of which L has knowledge or reason to know. Duty to warn, NOT duty to repair.

      3. Assumption of repairs: L who voluntarily assumes repairs myst complete them with reasonable care.

      4. Public use rule: L who leases public spaces (such as a convention hall) and who should know, because of the nature of the defect and the length of the lease, that T will not repair, is liable for defects on the premises.

      5. Short term lease of furnished dwelling: L is liable for any defect which harms T.

III. Servitudes

1. Easements

   1. Affirmative Easements: The grant of a nonposessory property interest that entitles its holder to go onto and do something on another’s land, called the servient tenement.

      1. E.g. the privilege to lay utility lines on another’s land; the right of access across a tract of land.

      2. Created by: PING

         1. Prescription – adverse possession – remember COAH

            1. Continuous use for the given statutory period

            2. Open and notorious use

            3. Actual use

            4. Hostile use (w/out the servient owners consent).

         2. Implication – if previous use was apparent, and the parties expected the use would survive division because it the easement is reasonably necessary to the dominant land’s use and enjoyment.

         3. Necessity – landlocked setting – where grantor conveys a portion of his land with no way out, except over some part of the grantor’s remaining land.

         4. Grant – if more than 1 year, must be in writing

   2. Negative Easements: The grant of a nonpossessory property interest that entitles its holder to prevent the servient landowner from doing something that would otherwise be permissiable.

      1. Only 4 categories – LASS – light, air, support, or stream of water from an artificial flow (a minority of states, including California, also allow negative easements for scenic views).

      2. Can only be created expressly, by writing signed by the grator. There is no natural or automatic right to a negative easement.

   3. An easement is either appurtenant to land or held in gross

      1. Appurtenant: when it benefits the holder in his physical use or enjoyment of property.

         1. It takes 2 to make an easement appurtenant.

         2. It passes automatically with the dominant tenement, regardless of whether it is even mention in the conveyance and with the servient estate (unless the new owner is a bona fide purchaser without notice of the easement).

      2. In Gross: confers upon its holder only some personal or pecuniary advantage that is not related to his or her use of enjoyment of his land.

         1. E.g.: the right to place a billboard on another’s land; the right to swim or fish in another’s pond; the utility company’s right to lay power lines across the land

         2. Only 1 parcel involved.

         3. Not transferable unless it is for commercial purposes.

   4. Termination of an Easement – END CRAMP

      1. Estoppel – If servient owner materially changes her position in reasonable reliance on the easement holder’s assurance that the easement will no longer be enforced – the easement holder is estopped from enforcing the easement.

      2. Necessity: if created by necessity, it expires as soon as the necessity ends (but if created by express grant, no automatic end)

      3. Destruction of the servient land, other than through the willful conduct of the servient owner will terminate the easement.

      4. Condemnation of the servient estate by eminent domain will terminate the easement

      5. Release (written) given by the easement holder to the servient owner will terminate.

      6. Abandonment: easement holder must demonstrate by physical action the intent to never use the easement again.

      7. Merger doctrine: the easement is extinguished when title to the easement and title to the servient land become vested in the same person.

      8. Prescription – adverse possession – interference w/ an easement which is COACH.

2. The License: A mere privilege to enter another’s land for some delineated purpose

   1. Not subject to the statue of frauds, so no need for a writing

   2. Freely revocable at the will of the licensor, unless estoppel applies to bar revocation.

   3. The classic license cases:

      1. Tickets (movie, theatre, sports) → freely revocable license → you can get kicked out of the show at any time

      2. Neighbors talking by the fence → create unenforceable oral easement → freely revocable license

   4. Estoppel will apply to bar revocation only when the licensee has invested substantial $ or labor or both in reasonable reliance on the license’s continuation.

3. The Profit

   1. Entitles its holder to enter the servient land and take from it the soil or some substance of the soil (e.g. mineral, timber, oil).

   2. Shares all the rules of easement.

4. The Covenants

   1. Promise to do or not do something related to the land. It is UNLIKE the easement b/c it is NOT the grant of property interest, but rather a contractual limitation or promise regarding land.

   2. Can be negative (restrictive covenant): promise not to build for commercial purposes; or affirmative (affirmative covenant): promise to paint common fence.

   3. Distinguish equitable servitude based on the remedy

      1. If P seeks $ damages → covenant

      2. If P seeks injunctive relief → equitable servitude.

   4. Burden will run with the land when WITHN or WITCH VPN

      1. Writing – the original promise was in writing

      2. Intent – the original parites intended the covenant to run with the land

      3. Touch & Concern – the promise affect the parties’ legal relations as land owners

      4. Horizontal and vertical privity

         1. Horizontal – nexus between the original promising parties, need: grantor/grantee; landlord/tenant; mortgager/mortgagee

         2. Vertical – nexus between the seller and the purchaser: simply no hostility

      5. Notice to the purchase of the burdened parcel

   5. Benefit will run with the land if WITV

      1. Writing – the original promise was in writing

      2. Intent – the original parites intended the covenant to run with the land

      3. Touch & Concern – the promise affect the parties’ legal relations as land owners

      4. Vertical Privity – some non-hostile nexus

5. Equitable Servitudes

   1. Promise accompanied by injunctive relief.

   2. Will bind successors if WITNES (note: no need for privity)

      1. Writing – generally, but not always, the original promise was in writing

      2. Intent – parties intended that promise would bind successors

      3. Touch& Concern: promise effects the partys as land owners

      4. Notice – successor of burdened land has notice of the promise

      5. ES – equitable servitude

   3. Implied equitable servitude – the general or common scheme doctrine – an implied equitable servidude will hold an unrestricted lot holder to a restrictive covenant if:

      1. When the sale began, the subdivider had a general scheme of residential development which included the purchaser’s lot

      2. The lotholder had notice of the promise contained in the prior deeds – AIR

         1. Actual notice: D had literal knowledge of the promise in the prior deed

         2. Inquiry notice: the neighborhood conforms to the common scheme.

         3. Recorded notice: public recorded documents (note: split re whether this is actually notice. Some courts say a subsequent buyer is on record notice of the contents of prior deed transferred to others by a common grantor. The beter view is that the subsequent buyer does NOT have record notice of the contents of those prior deed transferred to others by the common grantor.

   4. Defense to Equitable Servitude

      1. Changed conditions – where the party seeking release from the terms of the equitable servitude must so that changed conditions are so pervasive that the entire areas has changed.

6. Adverse Possession: Possession for a statutorily prescribed period of time can, if certain elements are met, ripen into title.

   1. Elements – remember COAH

      1. Continuous – uninterrupted for the given statutory period

      2. Open and Notorious – the sort of possession that the usual owner would make under the circumstances

      3. Actual – the entry can’t be hypothetical. It can’t be symbolic.

      4. Hostile – the possessor doesn’t have the true owners consent to be there.

   2. Note: Possessor’s subjective state of mind is irrelevant – knowledge that she was encroaching on the land doesn’t matter

   3. Tacking: one adverse possessor may tack on to his time with the land his predecessors’ time so long as there is privity which is satisfied by any non-hostile nexus such as blood, contract, deed, or will. But note,

      1. Tacking is not allowed when there has been an ouster

      2. Ouster will defeat privitiy therefore, no tacking is allowed

   4. Disabilities: statute of limitation will not run against a true owner who is afflicted with a disability at the inception of the adverse possession.

      1. Common disabilities include: insanity, infancy, imprisonment

IV. Land Conveyance

1. Two Steps

   1. The land contract, which endures until Step II

   2. The closing, where the deed becomes our operative document.

2. The Land Contract

   1. The standard – satisfy the statute of frauds

      1. Must be in writing

      2. Signed by the party to be bound

      3. It must describe the land, and

      4. State some consideration.

   2. Exception to the statute of frauds – the doctrine of part performance – if on your facts, you have 2 of the following 3, the doctrine is satisfied and equity will decree specific performance of an oral contract for the sale of land.

      1. If B takes possession of the land

      2. B remits all or part of the purchase price and/or

      3. B makes substantial improvements to the premises.

   3. The problem of risk of loss

      1. Equity regards as done what is done – equitable conversion

      2. Thus, once the contract is signed, B is owner of the land, subject of course to the condition that he pay the purchase price at the closing

      3. Destruction: if in the interim between contract and closing, the property is destroyed through no fault of either party, the buyer bares the risk of loss unless the K says otherwise.

   4. Implied Promises

      1. Seller promises to provide marketable title at the closing.

         1. Standard: Title free from reasonable doubt (lawsuits, and the threat litigation)

         2. Three circumstances that will render the title unmarketable

            1. Adverse possession: if even a portion of the title rests on adverse possession, it is unmarketable, the seller must be able to provide good record title.

            2. Encumbrances: marketable title means an unencumbered fee simple. Thus servitudes (easements or covenants) and outstanding mortgages render title unmarketable unless the buyer has waived them.

               1. Note: seller has the right to satisfy an outstanding mortgage of lien at the closing, with the proceeds for the sale. Thus, buyer cannot claim title is unmarketable because it is subject to an outstanding mortgage or lean, so long as the parties understand that the closing will result in the mortgage being satisfied or discharged.

            3. Zoning Violations: title is unmarketable if the property violates a zoning ordinance.

      2. Seller promises not to make any false statement of material fact

         1. The majority of states now also hold seller liable for failing to disclose latent material defects – seller is responsible for his material lies and his material omissions.

         2. If the contract contains a general disclaimer of liability (for example, “property sold as is”) disclaimer will not excuse seller from liability for fraud or failure to disclose.

      3. The land contract contains no implied warranty of fitness or warranty

         1. The common law: “let the buyer be ware”

         2. Exception: for the sale of a new home by a builder-vendor.

3. The Closing

   1. Our controlling document is now THE DEED, which passes legal title from seller to buyer.

   2. The deed must LEAD – be lawfully executed and delivered.

      1. Lawful execution of a deed: the deed must be in writing, signed by the grantor.

         1. Note: the deed need not recite consideration, nor must consideration pass to make the deed valid.

      2. Description of the land does not have to be perfect. The law requires only an unambiguous description and a good lead.

         1. “All of O’s land” is sufficient – it provides a good lead, whereby we can research to determine what all of O’s land refers to.

         2. “Some of my land” is not sufficient – even with research we couldn’t determine what

      3. **Delivery**: could be satisfied when the grantor physically or manually transfer the deed to the grantee.

         1. It is permissible here to use the mail, or an agent, or a messenger.

         2. HOWEVER, delivery does not necessarily require actual physical transfer of the instrument itself.

            1. The standard for delivery is a legal standard, NOT a literal standard. It is a test solely of present intent. Ask: Did the grantor have the present intent to be immediately bound, irrespective of whether of not the deed itself has been literally handed over.

            2. Doesn’t matter if the deed is never physically delivered.

         3. Recipient’s express rejection of the deed there is no delivery

         4. If the deed, absolute on its face, is transferred to the grantee with an oral condition, the oral condition drops out, it is not provable, and delivery is deemed accomplished

            1. O conveys a deed to grantee, but says “it’s yours only if you survive me.” → the oral condition is stricken.

         5. Delivery by escrow is permissible.

            1. Grantor may deliver an executed deed to a third party, known as an escrow agent, with instructions that the deed be delivered to grantee once certain conditions are met. Once those condition are met, the deed passes automatically to grantee.

            2. The advantage of escrow: if grantor dies or becomes incompetent or is otherwise unavailable before the express conditions are met title will still pass.

   3. Covenants for title and the 3 types of deed.

      1. The quitclaim: it contains no covenants. Grantor isn’t even promising that he has title to convey. This is the worst deed a buyer could hope for. “It wasn’t me”

         1. But, note seller did promise implicitly in the land contract to provide marketable title at the closing – any problems to manifest thereafter, the grantor is not responsible.

      2. The general warranty deed: The best deed a buyer could hope for

         1. Warrants against all defects in title, including those attributable to grantor’s predecessors.

         2. Generally contains all 6 of the following covenants,

            1. Present covenants meaning a present covenants is breached if ever, at the time the deed is delivered. The relevant statute of limitations for breach of a present covenants begins to run at the time of delivery

               1. Covenant of seisin: grantor warrants that he owns the estate he now seeks to convey.

               2. *Covenant of right to convey*: grantor promises that he has the power to make this conveyance. Meaning there are no temporary restraints on grantor’s power to sell.

               3. Covenant against encumbrances: grantor promises that there are no servitudes or mortgages on the land.

            2. Future covenants, meaning: a future covenants is not breach, if ever until grantee is disturbed in possession. Thus, thus statute of limitations will not begin to run until that future date.

               1. Covenant for quiet enjoyment: grantor promises that grantee will not be disturbed in possession by a 3^rd party’s lawful claim of title.

               2. Covenant of warranty: grantor promises to defend grantee should there be any lawful claims of title asserted by others.

               3. Covenant of further assurances: grantor promises to do whatever future acts are reasonably necessary to perfect the title if it later turns out to be imperfect.

      3. The statutory special warranty deed: provided for by statute in many states, this deed contains two promises that grantor makes only on behalf of himself (Note: grantor makes no representations on behalf of his predecessors in interest).

         1. Grantor promises that he has not conveyed this estate to anyone other than grantee AND

         2. Grantor promises that the estate is free from encumbrances made by the grantor.

4. The Recording System

   1. Our model – the double dealer – O conveys Blackacre to A. Later, O conveys Blackacre, the same parcel, to B. O, our double dealer, has skipped town. In the battle of A v. B, who wins?

   2. Two brightline rules:

      1. If B is a bona fide purchaser, and we are in a notice jurisdiction, B wins, regardless of whether or not she records before A does

      2. If B is a bona fide purchaser and we are in a race notice jurisdiction, B wins ifshe records properly before A does.

   3. First, recording acts exist to protect only bona fide purchasers and mortgagees (creditors).

      1. Bona fide purchaser is one who

         1. Purchases Blackacre for value

         2. Without notice that someone else got there first

      2. Two routine value questions

         1. The bargain basement sale → still a BFP as long as B remits substantial pecuniary consideration.

         2. The case of the doomed donee → recording statutes do not protect donees heirs or devisees unless the shelter rule applies. So in a recording statute question if B is O’s hers, or devisee, or donee, B losses unless shelter rule applies

      3. Notice – if B got notice he is NOT a bona fide purchaser – remember AIR

         1. Actual – prior to B’s closing B gets literal knowledge of A’s existence

         2. Inquiry – whether he looks or not, B is on inquiry notice of whatever an examination of the parcel would reveal. Basically, B has a duty to inspect the premises before taking title to make sure that no one else is in possession. If a recorded instrument makes reference to an unrecorded trx, grantee is on inquiry notice of whatever a reasonable follow-up would have revealed.

         3. Record notice – B is on record notice of A’s deed if at the time B takes, A had properly recorded her deed within the chain of title.

   4. Whether bona fide purchasers get possession depnds on what type of jurisdiction you’re in

      1. In a notice state – “A conveyance of an interest in land shall not be valid against any subsequent purchaser for value, without notice thereof unless the conveyance is recorded.” So B wins as long as BFP at the time the deed takes.

      2. In a race-notice state – “Any conveyance of an interest in land shall not be valid against any subsequent purchaser for value, without notice thereof, whose conveyance is first recorded.”

         1. To prevail B must (1) be a BFP and (2) win the race to record

   5. 3 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. In other words, the transferee “takes shelter” in the status of her transferor, and thereby “steps into the shoes

         1. The shelter rule intends to protect B, our BFP, it wants to make B’s life easier by allowing B to successfully transfer the land if he wishes.

      2. The Problem of the Wild Deed: if a deed, entered on the record (A to B), has a grantor unconnected to the chain of title (O to A), the deed is a wild deed. It is incapable of giving record notice of its existence.

      3. Estoppel by Deed: one who conveys realty in which he has no interest, is estopped from denying the validity of that conveyance if subsequently acquires the interest that he previously transferred.

5. Mortgages

   1. A mortgage is a conveyance of a security interest in land, intended by the parties to be collateral, for the repayment of a monetary obligation. It’s a union between: (1) a debt and (2) a voluntary transfer of a security interest in debtors land to secure a debt.

   2. Two types of mortgages

      1. Legal mortgage = a mortgage evidenced by writing

      2. Equitable mortgage = ? Note: As between the immediate parties parol evidence is freely admissible to show the parties true intent.

   3. Parties’ Rights once the mortgage is created

      1. Unless and until foreclosure, debtor-mortgagor has title and right to possession

      2. Creditor-mortgagee has: a lean. The right to look to the land if there is a default.

   4. All parties to a mortgage can transfer their interest: the mortgage automatically flows by a properly transferred note.

      1. The 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.

         1. If the note is endorsed and delivered, the transferee is eligible to become a holder in due course. This means that he takes the note free of any personal defenses that could have been raised against the original mortgagee.

            1. Personal defenses include:

               1. Lack of consideration

               2. Fraudulent inducement

               3. Unconscionability

               4. Waiver

               5. Estoppel

            2. Thus, the holder in due course may foreclose the mortgage despite the presence of any such personal defenses.

            3. By contrast, the holder in due course is still subject to “real” defense that the maker might raise. MAD FIFI4

               1. Material Alteration

               2. Disability

               3. Fraud in the factur (a lie about the instrument)

               4. Incapacity

               5. Illegality

               6. Infancy

               7. Insolvency

         2. To be a holder in due course,

            1. The note must be negotiable, made payable to the named mortgagee

            2. The original note must be indorsed, signed by the named mortgagee

            3. The original note must be delivered to the transferee. A photocopy is unacceptable.

            4. The transferee must take the note in good faith, without notice of any illegality AND

            5. The transferee must pay value for the note, meaning some amount this more than nominal.

      2. The debtor-mortgagor may transfer his interest, but the lien remains on the land, so long as the mortgage instrument has been properly recorded.

         1. The subsequent buyer takes subject to a properly recorded lien.

         2. Plus, all recording statutes apply to mortgages as well as to deeds.

            1. See example on pg. 89-90 of in class work-book.

         3. Personal liability if debtor-mortgagor sells

            1. If buyer has assumed the mortgage: both grantor and buyer are personally liable. Buyer is primarily liable, while grantor is secondarily liable.

            2. If buyer takes subject to the mortgage: buyer assumes no personal liability, only the grantor is liable. But, if recorded, the mortgage remains on the land. Thus if grantor doesn’t pay the mortgage, the property may be foreclosed.

   5. Foreclosures

      1. Must employ proper judicial proceedings. At foreclosure the land is sold and the proceeds go to satisfying the debt.

         1. If proceeds from the sale are less than the amount owned, the mortgagor may assert a personal action against debtor for a deficiency judgment.

         2. If there’s a surplus from the sale: junior leans are paid off in order of their priority. And remaining surplus goes back to the debtor.

      2. Effect of foreclosures on various interests

         1. Foreclosure will terminate interests junior to the mortgage being foreclosed, but will not affect senior interests (this means that junior lienholders will be paid in descending order with the proceeds from the sale, assuming there are leftovers. But, once foreclosure of a superior claim has occurred, junior lienholders can no longer look to the property for satisfaction).

            1. Note: those with subordinate interests plus the debtor mortgagor are considered necessary parties. Failure to include a necessary party results in the preservation of the party’s claims, despite the foreclosure and sale. Thus, if a necessary party is not joined, his mortgage will remain on the land.

            2. Even in foreclosure, attorneys fees and interest are taken off the top.

         2. Foreclosure does not affect any interest senior to the mortgage being foreclosed.

            1. The buyer at the sale takes subject to such interest. This means that buyer is NOT personally liable on the senior debt

            2. But if the senior mortgage is not paid, sooner or later the senior creditor will foreclose against the property.

      3. Priorities:

         1. As a creditor, you must record. Until you properly record your mortgage, you have no mortgage.

         2. Once recorded, priority is determined by the first in time first in right

         3. Exception: purchase money mortgages

            1. A mortgage given to secure a loan that enable the debtor to acquire the land is superior

            2. An after acquired collateral clause (which permits mortgagor to take a security interest in all of the debtor’s estate holdings, whether owned now or later acquired) does not change this. The purchase money mortgage is always superior.

      4. Redemption

         1. Equitable redemption: at any time prior to the foresclosure of the sale the debtor has the right to redeem the land and free it of the mortgage (universally recognized).

            1. But, once a valid foreclosure has taken place, the right to equitable redemption is cut off.

            2. Execercised by paying off the missed payment(s) plys interest and costs.

         2. Statutory Redemption: gives the debtor a statutory right to redeem for some fixed period after the foreclosure sale has occurred (typically 6 mo. – a year)

            1. Recognized in about half the states

            2. The amount to be is usually the foreclosure sale price, rather than the amount of the original debt.

            3. In most states the mortgagor will have the right to possession during the statutory period.

            4. When a mortgagor redeems, the effect is to nullify the foreclosure sale, and restore the redeeming owner to title.

V. Other Concerns

1. Lateral Support

   1. If land is improved by buildings and an adjacent landowner’s excavation causes that improved land to cave in, the excavator will be liable only if he acted negligently.

   2. Strict liability does not attach to the excavator’s actions unless plaintiffs shows that, b/c of defendant’s actions, plaintiffs improved land would have collapsed even in its natural state.

2. Water Rights

   1. Two major systems for determining the allocation of water in water courses (e.g. streams, rivers, and lakes):

      1. The Riparian Doctrine:

         1. The water belongs to those who own the land bordering the water course

         2. These people are known as riparians who share the right of reasonable use of the water (natural use trumps unnatural use).

         3. Thus, one riparian will be liable if his or her use unreasonably interferes with others’ use.

      2. The Prior Appropriation Doctrine:

         1. The water belongs initially to the state, but the right to divert it and use it can be acquired by an individual regardless of whether or not she happens to be a riprarian owner.

         2. Rights are determined by priority of beneficial use.

            1. The norm for allocation is first in time, first in right. Thus a person can acquire the right to divert and use water from a water course merely by being the first to do so.

            2. Any productive or beneficial use of the water, including use for agriculture, is sufficient to create the appropriate right.

   2. Groundwater: water beneath the surface of the earth that is not confined to a known channel.

      1. The surface owner is entitled to make reasonable use of groundwater.

      2. However, the use must NOT be wasteful.

   3. Surface water: water that comes from rain, springs or melting snow, and which have not yet reached a natural watercourse or basin.

      1. The common enemy rule: a landowner may change drainage or make any other changes/improvements on his land to combat the flow of surface water.

      2. Many courts have modified the rule to prohibit unnecessary harm to others land.

3. Possessor’s Rights: the possessor of land has the right to be free from trespass and nuisance.

   1. Trespass: the invasion of land by tangible, physical object. To remove a trespasser, you bring an action for ejectment.

   2. Nuisance: substantial and unreasonable interference with another’s use and enjoyment of land.

      1. Note: unlike trespass, nuisance does NOT require tangible physical invasion. Thus, odors and noise could give rise to a nuisance but not a trespass.

      2. No nuisance if it’s the results of the plaintiff’s hyper sensitivity or specialized use.

4. Eminent Domain

   1. Government’s 5^th Am power to take private property for public use in exchange for just compensation.

   2. Explicit taking: government’s act of overt condemnation.

   3. Implicit or regulatory taking: a gov regulation that, although not intended to be a taking, has the same effect.

      1. Economic wipe-out of your investment

      2. Remedy: government must either (1) compensate the owner for the taking or (2) terminate the regulation and pay the owner for damages that occurred while the regulation was in effect.

5. Zoning

   1. Pursuant to its police powers, government may enact statutes to reasonably control land use.

   2. The government may grant a variance if, the proponent demonstrates (1) undue hardship, and (2) that the variance won’t work detriment to surrounding property values. Administrative action, typically a zoning board

   3. The non-conforming use: A once lawful, existing use now deemed non-conforming by a new zoning ordinance: It cannot be eliminated all at once, unless just compensation is paid. Otherwise, it could be deemed an unconstitutional taking.

   4. Unconstitutional exactions

      1. Those amenities that government seeks in exchange for granting permission to build

      2. Eg: new street lights, a small park, wider roads.

      3. To pass constitutional scrutiny, these exactions must be reasonably related both in nature and scope to the impact of the proposed development. If they are not, these exactions are unconstitutional.

e. Once the mortgage is