Interests in Land I. Estates Freehold Estates Fee Simple Absolute – Created by assumption unless language shows a clear intent to create another estate 1. Runs forever and is fully alienable No restraints on transfer of ownership No restraints on alienation 2. Ignore any restriction that attempts to put a direct restraint on alienation 3. Right of First Refusal is okay Life Estate – Can be created by implication 1. Measured by life not time Life used to measure can be the life of someone other than the life estate holder (life estate pur autre vie) If life tenant dies before the measuring life dies, life estate passes to the estate of the tenant until the measuring life dies 2. Life estates may be terminated by attempts to transfer or sell 3. Rights and Duties of the Life Tenant All a life tenant can do is maintain the estate (continue normal use of the land in its present condition) If the life tenant does more or less than merely maintain the estate, then the life tenant is guilty of waste o Voluntary Waste – affirmative action beyond the right of maintenance liability to holder of future interest o Permissive Waste – failure to maintain Repair not replacement Taxes (if not paid, holder of future interest should pay to keep property from tax sale) Interest on mortgage (principle paid by holder of future interest) *Life tenants obligation limited to the among of income received from the land or rental value of the land *Life tenant does not have to insure the property o Ameliorative Waste – affirmative act increases the value of the land and substantially alters it Future Interests Future Interests Retained by Grantor 1. Reversion – interest kept by grantor when grantor gives less than the duration; estate grantor had (ex. O to A for life) Never subject to RAP 1
Can be freely transferred If everything is given away there is no reversion (Ex. O to A for life, then to B and her heirs) 2. Possibility-of Reverter – Given only when a grantor gives a fee simple determinable Fee Simple Determinable is one that ends automatically upon the occurrence of some event Never subject to RAP Freely transferable Look for – so long as, while, during, or until 3. Right if Entry (Power of Termination – Grantor gives a fee simple on condition subsequent Grantor must exercise the right of entry -- title does not automatically go back to grantor if the condition is violated Must be expressly reserved Not subject to RAP Cannot be transferred inter vivos (transfer by will or by intestate succession is okay) Look for – provided however, go and retake, but if, upon condition that Future Interests Given a Grantee 1. Remainder Vested remainder – Becomes possessory on the expiration of the estate that comes before it (ex. O to A for life, then to B and her heirs) Vested remainder subject to open (vested remainder subject to partial divestment) – the remainder interest is to a class whose members are not yet fully known the class remains open to allow for future persons who qualify as members of the class Contingent remainder – Something must happen before the remainder can become possessory o Condition - remainder is contingent if a condition must be satisfied o Grantee not in existence – grantee’s interest is contingent on grantee being born o Identity of he exact taker unknown
2. Executory Interest – Operates to cut short the estate that comes before it If a future interest in a grantee cuts short an earlier estate, it MUST be an executory interest Holders of an executory interest cannot sue life tenant for waste Rule Against Perpetuities (RAP) 1. Rule: No interest is good unless it must vest, if at all, no later than 21 years after some life in being at the creation of the interest
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Only applies to: contingent remainder, executory interests, and vested remainders subject to open If there is any chance that an interest might vest outside of a life-in being +21 years, that interest is void Perpetuity saving clause – saves a grant from being voided by RAP Options and rights of first refusal do violate RAP, if they could be exercised out of the time period RAP is not violated by a gift from one charity to another charity. Class gifts – Look for: 1) Age contingency in an open class (anyone regardless of age is capable of having children for the purposes of RAP), if one is bad, all lose and 2) The Unborn Spouse (gift cannot vest until the widow/widower dies), ex. O to A for life, then to A’s widow for life, then to A’s children who are then living If transfer by will look at time of testator’s death, if by deed look at the situation at the time of deed.
Concurrent Ownership Joint Tenancies 1. Rights: Right of Survivorship – surviving joint tenant automatically take on the death of a joint tenant Right of Partition – any joint tenant can ask to have property partitioned by group agreement or court order 2. Creation – Requires “four unities” and express language of grant (ex. “as joint tenants with right of survivorship) Time – all interests must have vested at the same time and place Title – the grant to all joint tenants must be by the same instrument Interest – all joint tenants must take the same kind and the same amount interest Possession – a;; must have same rights of possession 3. Destruction Partition – voluntary destruction Severance - an involuntary destruction (occurs when one of the four utilities are disturbed) o Conveyance – one of the joint tenants transfers their interest destroying only the seller’s joint tenancy. (Buyer now tenant in common, all other joint tenants continue to hold joint tenancy.) o Mortgage (in a title theory state, if lien theory (majority) no severance) o Contract of Sale – severance occurs when a contract of sale is signed under the Doctrine of Equitable Conversion o Creditors’ sale of interest on joint tenancy 3
Tenancies-in Common –Default tenancy 1. Right to partition 2. No right of survivorship 3. Possession only necessary unity Rights and Duties Incident to Co-Ownership 1. Possession – Each co-tenant has the right to possess al the property consistent with the other co-tenants’ right to also possess it all. 2. Accountability – Requirement that one co-tenant may have to account to another for a share of profits the co-tenant received. Generally, not required except: Ouster – Accounting is required if one co-tenant is either keeping a co-tenant off the property, or claiming a right of exclusive possession Agreement to share Lease by the co-tenant to a third party Depletion of natural resources 3. Contribution – right if one co-tenant to force others to pay their share of some expenditure co-tenant made Non-freehold (Landlord-Tenant) Estates 1. Tenancy for years – tenancy for a specified period of time (must be in writing if over one year) 2. Periodic tenancy – an ongoing, continuing, repetitive estate, until one party gives valid notice Types: periodic tenancy by express agreement periodic tenancy by implication – lease silent as to duration (tenancy measured by rent payment) periodic tenancy by operation of law o Oral lease violating the Statute of Frauds – acceptance of the rent by the landlord creates a periodic tenancy by operation of law o Hold-over case - tenant stays after expiration of the lease, then landlord accepts rent (new periodic tenancy by operation of law) Termination occurs by giving proper notice Time – equal to the period Right effective day of the termination (last day of the period) 3. Tenancy at Will – Either party can terminate without notice. Five other ways it terminates: o Death of either party o Waste by the tenant 4
o Assignment by the tenant o Transfer of title by the landlord o Lease by landlord to someone else 4. Tenancy at Sufferance – possession of a holdover tenant. Landlord can: o Hold tenant as a trespasser and sue to throw T off property and recover damages of the holdover; or o Impose new periodic tenancy on T o Residential property – the new period will always be month-to-month o Commercial property – new period is determined as follows: If old tenancy was for a year or more, the new tenancy is year-toyear If the old tenancy was less than a year, new tenancy is measured by the rent period of the old tenancy o Landlord cannot impose new tenancy on the holdover tenant if it is not reasonable o Landlord must tell holdover tenant of the new higher rent before the lease expires
Duties of Landlord and Tenant Tenant’s duties 1. If lease is silent on the tenant’s duties, tenant must pay rent o If tenant does not pay, landlord can sue for damages and throw the tenant off the property. not commit waste 2. If lease says tenant must repair and maintain, then tenant is liable for all damage to the property, regardless of the cause makes tenant absolute insurer of the property includes even ordinary wear and tear 3. If a tenant abandons the leasehold, landlord can: treat abandonment as an offer of surrender and accept \the offer by retaking the premises (Tenant’s liability ends as of that date) rerent the premises on tenant’s account and hold tenant liable for any deficiency Landlord’s Duties 1. To give tenant possession of the premises when the lease begins, if not lease is breached 2. To deliver residential premises in a habitable condition (implied warranty of habitable). If not, tenant can: move out and end the lease stay and sue for damages
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3. Implied covenant of quiet enjoyment. Landlord can breach by: total eviction of tenant – terminates lease and ends tenant’s obligation to pay rent partial eviction of tenant – does not terminate lease, tenant can stay and pay no rent o if partial eviction not by landlord, tenant’s rent is apportioned to reflect the amount taken away constructive eviction. For tenant to be excused: o Landlord has to have done the act o Must be a substantial interference with the covenant of quiet enjoyment o Must be an abandonment of the premises within a reasonable time after the breach Assignments and Subleases Assignment – when tenant transfers everything 1. Lease is both a conveyance and contract, and these are separate and independent grounds of liability liability of conveyance comes from Privity of Estate – exists only between the present landlord and present tenant liability of contract comes from Privity of Contract – exists where there is an agreement between the parties, or where the assignee “expressly assumes” the obligations under the lease. 2. Other covenants run with the land if they Touch and Concern the land Test: If performance of the covenant makes the land more valuable or more useful, then it meets the T&C test and runs with the land Sublease- when tenant transfer’s a portion of the lease period, holding some time back 1. Sublessee is not liable to L because there is no POE or POC Non-assignment clause or non-sublease clause 1. Valid and enforceable but narrowly construed (non-assignment clause does not mean no subleases) 2. Violation of clause makes the transfer voidable at the landlord’s discretion 3. Permission given once means the clause is waived for all time 4. Acceptance of rent by the landlord gives permission for a transfer (clause waived) Condemnation (eminent domain) 1. Partial Taking – does not release tenant from the obligation to pay full rent, but tenant gets amount equal to the rent that will have to be paid over the remainder of the lease for the property taken 2. Full Taking – Extinguishes the lease and the tenant is excused from paying rent Tenant shares in the condemnation award only to the extent that the fair rental value of the lease exceeds the rent due under the lease.
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Landlord’s Tort Liability General Rule: No duty of landlord to tenant or to tenant’s invitees for injuries on the premises during the life of the lease. Five exceptions: 1. Latent defects – Landlord is under the duty to disclose latent defects which L either knows or has reason to know of 2. Short term lease of furnished dwelling (3 months of less) – Landlord is liable for defects even if landlord neither knows nor has reason to know of them 3. Common areas under landlord’s control – If injury is in an area subject to landlord’s control then landlord is liable if landlord failed to use reasonable care 4. Negligent repairs – Landlord is liable for injury resulting from landlord’s repair of a defect in the premises, even if landlord used all due care in making the repair (deceptive appearance) 5. Exception for Public Use – Landlord is liable for injury from defects in the premises, if: Landlord must know or should have known of major defects, and Landlord must know or should have known that tenant would not fix the defect, and Landlord must know or should know the public will be using the premises Tenant’s Tort Liability Tenant is always liable to third party invitees for negligent failure to correct dangerous conditions on the premises, regardless of whether landlord may be contractually liable or not. II. Fixtures A. Intent that item stay with real property to makes it fixture B. If the attached item became a fixture, chattel cannot be removed by the seller or the tenant C. If there is an agreement controlling on the matter, that controls, if no agreement, look at: Degree of attachment of the item – The more that has to be done to attach it to the property, the more likely the intent was that it stay General custom with this item Degree of damage to the premises on removal o Tenants are favored: No substantial damage, no intent, tenant can remove Trade fixtures, which are chattels used in a trade or business, and they are not fixtures Washers and dryers are not fixtures
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D. Chattel can be removed o If tenant can remove the chattel, it must be removed before the end of the lease o If owner can remove the chattel, it must be removed before closing III. Easements Easement – a non-possessory interest in land involving a right of use 1. Types: o Easement appurtenant – easement directly benefits the use and enjoyment of a specific piece of land o Easement in gross – where there is no dominant estate (classic example: utility) 2. Creation: o Express easement o Arises with an express grant of an easement to someone else, or the reservation of an easement when land is sold to another o Easement is an interest in the land, and must comply with the statute of frauds and with all the deed formalities o Easements must be in writing, signed by the holder of the servient estate and executed like a deed o Easements by implication o Previous use by a common owner that is 1)continuous, 2) apparent, and 3) reasonably necessary o Absolute right of access situation – an implied easement by necessity exists when property is landlocked o The owner of the servient estate can choose the location of the easement so long as the location is a reasonable one o Easement by prescription – arises like title by adverse possession o Use must e adverse to the owner o Use must be continuous and uninterrupted for the statutory period (20 years unless give another time period) o Use must be either visible and notorious, or with the owner’s knowledge o Use must be without the owner’s permission 3. Transfer: o If the easement is appurtenant, it goes automatically along with the dominant estate, whether it is mentioned in the conveyance, and cannot be transferred separately from the dominant estate o If the easement is in gross, then easements in gross that are commercial can always be transferred, but easements in gross that are personal cannot be transferred o Easements are always binding on subservient estates, even if the easement is not in their deeds provided there was notice 4. Use: o If easement is silent there are two presumptions o Easement is perpetual
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o Reasonable development of the dominant estate Easement can only be used to the dominant estate 5. Repair: o Holder of easement must keep the easement in repair and can go on the servient estate to repair the easement o Holder of the easement must make reasonable restoration of the servient estate after repairs o Holder of the servient estate has no obligation of repair 6. Termination of easements o Unity of ownership, or merger – once terminated it is dead and never revives o A valid release that complies with the statute of frauds and all deed formalities terminates an easement o Abandonment – intent to abandon must be manifested by taking some physical act on the property itself that would show the intent to abandon (non-use not enough) o Termination by estoppel o There must be a representation of relinquishment by the holder of the dominant estate; and o Change of position in reliance by the holder of the servient estate o Termination by prescription o Owner of servient estate must stop the use of the easement and keep it stopped for the statutory period o End of necessity – once the necessity that created an easement by necessity ceases to exist, so does the easement Licenses License is a limited privilege of use, and not a property interest; it is only a contract right, and it is revocable a the will of the licensor 1. Tickets o Always licenses o Give no in rem rights, only contract rights o Can always be revoked, but contract damages may be secured 2. Irrevocable license – license plus money spent on property furthering the license o Anytime an easement is attempted but fails due the statute of frauds, there is a license o If money is spent on the property in furtherance of that oral license, the license becomes irrevocable Profits A profit gives the right to go onto land and take a natural resource away o Includes an implied easement to go on the land to take away the resource III. Restrictive Covenants
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1. Covenants Running with the Land at Law (Plaintiffs wants damages) – Enforced at law with four requirements: intent that it run with the land notice to the person against whom the enforcement is sought must touch and concern the land – must make the land more valuable or useful (not no compete covenants) privity – a conveyance of the property from one party to another o Horizontal privity – always refers to the original parties to the covenant o Vertical privity – refers to those who subsequently obtain the property subject to the covenant If a successor in interest is a Δ, than for plaintiff to get damages the burden must run and you need both horizontal and vertical privity If the Δ is not a successor in interest, then for the benefit to run to successor-ininterest Π and let plaintiff get damages, you need only vertical privity
2. Equitable Servitudes (Plaintiff wants injunction) - Enforced in equity there is: Intent that the restriction be enforceable by successors-in-interest Notice to the subsequent purchaser; and The restriction must touch and concern No privity is required **Special case: Equitable servitudes in subdivisions (or reciprocal negative servitudes) – Mutual rights of enforcement Requirements: Actual notice to create a servitude on all the land in the subdivision (subdivision plan) Record notice (**need to fill this in from full outline) Defenses (only for equitable servitudes) Unclean hands (Π did the same thing as Δ) Acquiescence (Π let neighbor on other side do same thing) Laches (Π sat by while Δ built the office building and only now, after Δ gas finished it, does Π complain) Estoppel (Π said earlier she did not mind if Δ put up an office building) Termination – can always be done by release or by unity of ownership – Look for changed circumstances GETTING, KEEPING, AND TRANSFERRING I. Adverse Possession One question: When does X’s being on the land constitute adverse possession, so that title is obtained, and when is it merely trespass? (HELUVA) 1. Requirements Hostile – being on the property with no right to be there
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Exclusive – X must be excluding others from the property Lasting – the possession must last for the statutory period. (20 years if none given) Uninterrupted – Must be the kind of continuous use an ordinary owner would make Visible – out in the open (open and notorious) Actual – must actually possess the land to get title (exceptions: constructive adverse possession, and leasing of land not owned) ** Owner does not have to know trespasser is on the land ** X does not have to think that X owns the property. No need of claim of right by adverse possessor 2. Special Rules for adverse possession Doctrine of Constructive Adverse Possession (exception to the need for actual possession) o Can give title to trespasser under color of title (really only owns part of land not whole thing) o The amount actually possessed must bear some reasonable relation to the whole; and o The property must be unitary Leasing land to someone else qualifies as possessing it for adverse possession purposes Adverse possession against concurrent owners o Can only occur when the possessor excludes the other co-tenant from possession (clock starts at exclusion) Future interest situations: o Life estate plus future interest – clock does not start to run against the holder of a future interest until the life tenant dies (interest has become possessory) o Fee simple determinable – the happening f the condition starts the clock running for the purposes of adverse possession o Fee simple on a condition subsequent – clock won’t start to run until the grantor exercises the right of entry Tacking – can tack periods of adverse possession, but the period must pass directly from one adverse possessor to another Disability - being a minor, being unsafe, or being in jail o If the owner is under a disability at the time the adverse possession begins, the adverse possession clock does not start to run until O is free of the disability o If the disability arises after the adverse possession begins, it’s an intervening disability , and it is ignored No tacking of disabilities No adverse possession of government land Titles acquired by adverse possession are not marketable (need court declaration)
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II. Conveyancing 1. Contract of sale Governed by all contract laws; and Statute of frauds – any contract of sale of an interest in property must be in writing and signed by the one who is sued o Description of the property o Names of the parties o Price Exception to statue of frauds: Doctrine of Part Performance o Oral contract must be certain ad clear (no ambiguities); and o Acts of part performance must clearly prove up a contract o Look for claimant in possession, and paying full purchase price or erecting improvements (finding this allows specific performance of the oral contract) Legal effect of the contract of sale between time of signing of contract and closing: Four requirements: o Risk of loss if property is damaged or destroyed before the closing, buyer loses once contract is signed, it is buyer’s land and buyer’s risk because equitable conversion (meaning title is in the buyer for all practical purposes), even if the seller remains in possession and control. o Death of a party before closing Equitable conversion preserves the rights as set in the contract, and death of a party before closing does not affect them If seller dies before closing, buyer closes with seller’s estate; seller’s interest is personal property If buyer dies before closing seller closes with buyer’s estate; buyer’s interest is real property. o Marketable title – Every land sale contract has implied warranty that at closing, seller will give buyer marketable title. Seller must give buyer: Proof of title (abstract or copy of all the deeds recorded in chain of title) Title free of encumbrances (no easements, no restrictive covenants, no mortgages, no options, etc, that are not mentioned in the contract) Existence of a valid option to purchase is an encumbrance on the title and makes it unmarketable Zoning is not an encumbrance unless a violation of zoning ordinance Violation of housing or building codes is not an encumbrance A mortgage on the property is not an encumbrance if the mortgage is to be satisfied out of the proceeds of the sale Valid legal title on the day of closing (ON DAY) Remedies of buyer if seller’s title is unmarketable
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o Buyer must notify seller and give seller reasonable time to cure before attempting remedies, below: o Rescission – buyer walks away o Damages o Specific performance – buyer takes what the seller can give and price gets lowered to cover defect Time of Performance Time is not of the essence in land sale contracts Performance must be tendered within a reasonable time after the closing date (2 months okay) Remedies for breach of the sales contract: o Damages – measure the difference between the contract price and value of the land on the day of the breach o Liquidated damages – buyer’s deposit can be forfeited as liquidated damages so long as it is not more than 10% of sales price o Specific performance of a land sale contract – always available to both buyer and seller Defects in the property – land not fit for ordinary purposes and buyer wants to rescind o General rule: Buyer cannot recover (Caveat emptor) o Exceptions: Seller must disclose serious defects that the seller knows of and are not obvious to the buyer (Seller cannot actively conceal) There is an implied warranty of fitness or merchantability for new homes sold by the builder-seller
2. Deed Once the deed is accepted, the contract merges into deed and is destroyed, and all the contract provisions are lost unless included in deed. Requirements: o Execution Deed is subject to the statute of frauds, seller must sign the deed Description of the land need not be very specific minor discrepancy okay metes and bounds controls over all descriptions o Delivery of deed – does not always mean physical transfer. Legal test is solely a question of intent to pass title If facts show intent to pass title, the mere safeguarding of the paper by grantor does not show lack of delivery Recording a deed raises a presumption of delivery, even if grantee never sees the deed and knows nothing about it
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Once delivery occurs, title passes, and later returning deed to grantor or tearing up deed has no effect. In showing intent of grantor regarding delivery, can use parol evidence – statements, conduct, anything If grantor dies and still has the deed in grantor’s possession, there is a presumption of no delivery Conditional delivery – grantor hands over deed, but tries to condition delivery on some event Where condition is in deed – if deed says it will not become effective until death of grantor, this is a valid delivery of a future interest Oral condition – if the condition is made orally at the time of delivery of the deed, disregard the condition Making delivery conditional on grantee paying the purchase price o Is valid provided grantor makes delivery to a third party in escrow, with instructions to deliver to grantee when the condition is satisfied (and oral instructions are OK) o Once deed goes to escrow agent, grantor cannot get deed back o Acceptance of the deed by grantee is presumed unless the facts show otherwise (only way a grantee cannot accept is to reject) o No consideration is needed for a deed
3. Covenants for title Types: o if grantor makes NO promises regarding title, grantee gets Quit Claim Deed (grantee gets whatever grantor owns and grantor promises nothing) o if grantor makes promises regarding title, they are covenants for title o deeds with the six traditional covenants for title are called general warranty deeds o present covenants - can sue immediately on these, thus they are personal to the grantee and do not run with the land covenant of season = covenant of the right to convey- these represent promise to the seller that seller has title and possession and can validly convey both covenant against encumbrances - grantor promises no easements, no restrictive covenants, no liens, etc o future covenants – not breached immediately, but only later, when grantee is disturbed in possession (true owner shows up) runs with the land and can be enforced by all subsequent purchasers covenant for quiet enjoyments and covenant of warranty represent the promise of seller that seller will protect buyer against anyone who later shows up to claim title
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covenant of further assurance – if seller forgot to do something to pass valid title, seller promises to do whatever necessary
Damages: o if there is a breach of the warranty, damages are limited to purchase price by warrantor plus incidental damages Estoppel by deed: o If A deeds property to B that A does not own, and then A later does acquire title, then B will get title because grantor gave an implied covenant that title would be transferred to grantee o But, if grantor transfers to a BFP after getting title then the original grantee loses and cannot rely on estoppel by deed III. Recording of Interests o Recording acts can also protect subsequent mortgages but recording acts do not protect judgment creditors o recording a deed is not necessary to make it valid, it is only done to give notice Recording Acts 1. notice acts – protect subsequent grantees who are bona fide purchasers 2. race-notice acts – protect subsequent grantees who are bona fide purchasers for value who take without notice and are first to record 3. pure race acts – notice is irrelevant; whoever records first wins Bona fide purchaser 1. Bona fide purchaser for value, without notice For value – o Bargain basement sale – in absence of an explicit claim of fraud, any consideration that is out-of-pocket is enough to be considered value o It is irrelevant that amount paid does not meet or come close to fair market value o One dollar is not really enough o One who purports to take property as an heir, donees, or devisees cannot be a BFP and can never defeat the claim of someone who has prior conveyance from owner Shelter Rule Exception Anyone (even heirs, donees, and devisees) can shelter under the rights of a BFP “Without notice” – three kinds that can defeat a subsequent purchaser
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o actual notice – if subsequent purchaser actually knew prior unrecorded conveyance, that person loses o record notice – a constructive notice that arises from the record. It is enough that the deed was recorded at the courthouse in order to give subsequent purchaser notice of it, it must be recorded in the chain of title o inquiry notice o subsequent purchasers are on notice of anything mentioned in a deed in the chain of title o subsequent purchasers must make inquiry of land and unexplained possessions or uses IV. Security interests 1. Types: o mortgages – given by a debtor (mortgagor) to a creditor (mortgagee) o absolute deed – with separate promise of reconveyance situation (equitable mortgage) o sale/leaseback with option to repurchase o deed of trust – given by the debtor to a third party trustee who holds it until the loan is paid off o if loan isn’t paid, then trustee may either get the court to order a sale o the trustee may sell property on trustee’s own at public auction o installment land contract – debtor signs a contract promising to make payment and seller keeps title until loan is paid off consequences of having mortgage or deed of trust 1. equity of redemption o at any time up to the foreclosure sale, debtor can redeem the property o right of redemption cannot be waived in the mortgage or deed of trust, but may be done later if separate consideration o an attempt to waive the right of redemption in the security interest is known as clogging 2. foreclosure must be by public auction sale, regardless of how the sale occurs, whether by court order or otherwise 3. if there are multiple mortgages, priorities are: first in time, first in right Priority: o mortgage priorities may be changed by contract o purchase money mortgages are given priority over other mortgages executed at the same time, even if the other mortgages get recorded first o a PMM given by the seller gets priority over a PMM given by a third party lender o if owner does anything to increase a senior mortgage then that mortgage loses priority over junior ones 4. foreclosures wipe out all junior interests but do not wipe out senior interests 5. use proceeds of foreclosure sale in this order o pay the cost of the foreclosure
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o pay the mortgage that was foreclosed o pay off the junior interests, in order o anything left goes to mortgagor 6. if mortgage is foreclosed and there is not enough money to pay off the mortgage, let mortgagee sue debtor for balance due consequences of having installment land contract o A forfeiture clause provides that if debtor misses a payment, seller can cancel the contract; keep all the money paid to date, and get the property back Transfers of security interests o Mortgagor can transfer title to property and mortgage just tags along, and transferee takes subject to the mortgage o Mortgagor continues to be personally liable on the note o Unless the grantee specifically assumes the mortgage, grantee is not personally liable o Even if assumed mortgagor is still responsible as surety o Any modification of the obligation discharges the original mortgagor liability o Mortgagee can freely transfer the note, and the mortgage tags along with the note o A holder in due course is not bound by payments to an old mortgage, not even if the mortgagor knew nothing of the transfer o Due on sale clauses – “if the mortgagor transfers without the mortgagee’s consent, the full amount of the loan is immediately due and payable” Fixture filing o If a fixture filing is not made within 20 days of attachment then the security interest in the chattel is subordinate to the earlier mortgage on the real property o If the fixture filing was properly done then the supplier of the chattel can remove it without regard to any earlier mortgage or other security interest in the property I. Special Rights Right of Support 1. Lateral support – support from the sides (strict liability) 2. subjacent support – support of the surface from the bottom (strict liability) o holder of mineral rights is strictly liable for failure to support the surface of the land o right to support is for existing structures Water Rights
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1. Rivers and lakes o Riparian rights (majority system) – refers to those whose property borders on a lake or a stream o Owner can use all the water needed for domestic purposes o If use not domestic, owner is limited to reasonable use o Prior appropriation – first in time takes, priority in time determines all rights 2. Water under the ground o landowner is entitled to reasonable us of ground water o must use water on property 3. Surface water o natural flow approach o common enemy – can do anything with floodwater, whether reasonable or not
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