Real Property Grid for Bar Exam

I. Estates In Land Present Estates Estate Fee Simple Absolute Creation Language “To A” “To A and his heirs” Distinguishing Characteristics 1. Absolute ownership of potentially infinite duration Descendible Alienable Devisable Vocab Shifting Executory Interest – Resulting Future Interest NONE A living person has no heirs. Property Grid – Final Review 1 Defeasible Fees Estate Fee Simple Determinable (trigger/reflexive) Creation Language Distinguishing Characteristics 1. Estate terminates automatically upon happening of the stated event. Descendible Alienable Devisable – always subj. to Will automatically revert to the condition 1. Estate is not automatically ended upon stated event. 2. Grantor retains the option to cut short the estate. 1. Estate is automatically forfeited in favor of someone other than Shifting Executory Interest Right of Entry (Power of Termination) FSDPOR Resulting Future Interest Possibility of Reverter – Grantor Clear Durational Language For as long as During While Until Grantor upon stated event. Fee Simple Subject to a Condition Subsequent Clear durational Language Fee Simple Subject to Executory Limitation “upon condition that” “provided that” “but if” “if it happens that” For as long as During While Until Clear Durational Language - grantor if a stated condition occurs. Will automatically revert to 3P upon the stated event. 1. Words of mere desire, hope, etc. are insufficient to create a defeasible fee. Clear Durational Language required for a Defeasible Fee. 2. Absolute restrains on alienation are void. A ban on the power to sell or transfer is void unless ban is linked to any reasonable, time limited purpose. Property Grid – Final Review 2 Life Estate Estate Life Estate Life Estate pur autre vie Creation Language Measured explicit by a person’s life; never a term of years Waste Voluntary/ Affirmative Waste Actual overt conduct which causes a decrease in property value (willful act of destruction). 1. LT must not consume/exploit natural resources on the property. 2. Exceptions – PURGE a) Prior Use – LT may exploit when prior use of the land was for exploitation (unless otherwise agreed to cease) b) Reasonable repairs—LT may consume natural resources for the purpose of conducting repair/maintenance c) Grant – LT may exploit the estate when he is expressly granted to do so. d) Exploitation – land is suitable only for exploitation (LT on a quarry). Permissive Waste Occurs when land is allowed to fall into disrepair or when LT fails to reasonably protect the land. 1. LT must simply maintain premises in reasonably good repair; A pattern of neglect = liability. 2. LT must pay all ordinary taxes on the land to the extent he receives profits from the land. a) If there are no income/profits from the land, LT must pay all ordinary taxes to the extent of the premises’ FRV. Ameliorative Waste LT must not engage in acts that will enhance the property’s value, unless all FI holders are known and consent. “To A, for the life of B” “To B for life” Can also be a defeasible fee – “to a for life, but if…” Distinguishing Characteristics 1. Life Tenant is entitled to all ordinary uses and profits from the land. 2. LT must not commit waste (Russell Crowe/ telephone) Remainder – if LE is held by 3P Resulting Future Interest Reversion – If held by the Grantor Property Grid – Final Review 3 Future Interests Future Interests Capable of Creation in the Grantor 2. Right of Entry/ Power of Termination 3. Reversion Paired with the Fee Simple Subject to a Condition Subsequent A Future Interest in the grantor which equals an estate of lesser quantum left over after the grant of an estate to a grantee. Future Interests Capable of Creation in Transferees 2. Contingent Remainder 3. Executory Interest Vested v. Contingent Remainder A FI created in the grantee that is capable of becoming possessory upon the expiration of a prior possessory estate created in the same conveyance in which the remained is created. 1. Always accompanies an estate of known, fixed duration (usually a LE or term of years) 2. Never follows a Defeasible Fee (where grantor will either possess or transfer) Vested Remainder Contingent Remainder Created in an ascertained person and not subject to any condition precedent Either (a) created in an unascertained person or (b) subject to a condition precedent or both. “to A for life, then to B’s heirs” “to A for life, then to B if he graduates HS” “to A for life, then to B” a) Shifting Executory Interest b) Springing Executory Interest 1. Vested Remainder a) Indefeasibly Vested Remainder b) Vested Remainder Subject to Complete Defeasance (aka Vested Remainder Subject to Total Divestment) c) Vested Remainder Subject to Open 1. Possibility of Reverter Paired with the Fee Simple Determinable (FSDPOR) Property Grid – Final Review 4 Rules regarding Contingent Remainders Rule Name Rule of Destructibility of Contingent Remainders Rule Statement A contingent remainder was destroyed if it was still contingent at the time the preceding estate ended. The Common Law rule has been abolished. Rule in Shelley’s Case If the same instrument created a Life Estate in A and gave the remainder only to A’s heirs, the remainder was not recognized. The Common Law rule has been abolished. Doctrine of Worthier Title A remainder in Grantor’s heirs is invalid and becomes a reversion in the Grantor “to A for life, then to O’s heirs” Contingent remainder in O’s heirs is void. A – Life Estate O – reversion O has a reversion, since A could die without heirs. “to A for life, then to A’s heirs” B takes when he turns 21. A would take the LE and REM. Example “To A for life, and if B has reached the age of 21, to B.” A has Died, B is 19 Result CL – remainder would destruct and O/heirs would take FAS Modern – O/heirs take subject to B’s springing executory interest. Property Grid – Final Review 5 Vested Remainder Indefeasibly Vested Remainder Holder is to acquire an estate in the future with “to A for life, remainder to B” A is alive; B is alive A – Life Estate B – Indefeasibly Vested Remainder no strings attached. Vested Remainder Subject to Holder is to acquire an estate in the future that can be cut short because of a condition subsequent. Comma Rule – when conditional language in a transfer follows language that, taken alone and set off by commas, would create a vested remainder, the condition is a condition subsequent, which yields a VR subject to complete defeasance. “To A, remainder to B, however, if B dies before 25, then to C.” A – Life Estate B – Vested Remainder Subject to Complete Defeasance C – Shifting Executory Interest Complete Defeasance (aka VR Subj. to Total Divestment) Vested Remainder Subject to Remainder is vested in a group of takers, at least one of whom is qualified to take possession, but each class member’s share is subject to partial diminution because additional takers, not yet ascertained, can still qualify as class members. Classes are either Open or Closed Class closes when group takes possession Womb Rule “To A for life, then to B’s children. A is alive; B has 2 children, C & D. C/D – VR subject to Open Open Property Grid – Final Review 6 Executory Interests Executory Interest Shifting Executory Interest A future interest created in transferee, which is not a remainder and which takes effect by cutting short some interest in the grantor, another person or heirs. A future interest that always follows a defeasible fee and cuts short “to A and his heirs, but if B returns from Canada next year, to B and his heirs.” A – FS subject to B – Shifting Executory Interest (This is not a remainder because remainders cannot follow defeasible fees.) Springing Executory Interest Rule Against Perpetuities RAP Four Step Technique No interest is valid unless it may vest, if at all, not later than 21 years after some life in being. If there is any chance that an interest might vest 21 years after the life in being has died, the interest is void. someone other than the Grantor A future interest that cuts short an estate held by the grantor. “to A, if and when he marries” A – Springing Executory Interest O – FS subject to CS (A’s Sp E I) 1. Determine which future interests have been created by a conveyance a) RAP applies only to: - Contingent remainders - Executory Interests - Vested Remainders subject to open which have not vested in time. 2. Identify the conditions precedent to the vesting of the (applicable) Future Interest 3. Find a measuring life 4. Determine whether the FI holders will be able to take within 21 years after the death of the measuring life. Bright Line RAP rules 1. A gift to an open class that is conditioned on the members surviving to an age beyond 21 is invalid. 2. Many Shifting Executory Interests violate the RAP. (See CMR p.15) 3. Charity to Charity exception Barbri RAP technique 1. Last person mentioned by proper name & all prior parties will take. Property Grid – Final Review 7 2. Next subsequent person after last named person takes 3. All additional parties after the next subsequent person (to the last proper name) lose. 4. Property reverts back to the grantor and his heirs. II. Concurrent Estates (Joint Tenancy/ Tenancy In the Entirety/ Tenancy In Common) Joint Tenancy Distinguishing Characteristics Creation 1. Two+ persons own property with the right of survivorship. 2. Joint Tenants’ interest in the property is alienable, but is not devisable or descendible a) One JT may sell or transfer his share at any point during his lifetime. 1. Four unities must be present – T-TIP a) Time – JTs must take together at the same time. b) Title – JTs must take via the same instrument c) Identical – Each JT has identical, equal interest in the estate (look for straw man) Severance (S P A M) d) Possess – Each JT has an identical right to possess the whole estate. 2. Grantor must clearly express right of survivorship to distinguish the conveyance as a JT. 3. Disfavored (avoids transfer taxes)– therefore, extra hoops – 4 unities and clear right to survivorship required. 1. JT can sell/transfer his interest during his lifetime. a) Can do so secretly (even w/out others knowledge or consent) b) One joint tenant’s sale severs the joint tenancy as to the seller’s interest b/c it disrupts the 4 unities i) Thus, buyer is a tenant in common c) If there were two or more joint tenants in the first place, the joint tenancy remains in tact as b/w the other, non-transferring joint tenants 2. In equity, a joint tenant’s mere act of entering into a contract for the sale of her share severs the joint tenancy as to that contracting party’s interest. a) This is b/c of the doctrine of equitable conversion  “equity regards as done that which ought to be done” Property Grid – Final Review 8 1. By Voluntary Agreement  an amicable to end a relationship ( parties privately agree) Severance by Agreement Severance by Mortgage 2. Partition in Kind  action for physical division if in the best interests of all parties (sprawling tract) 3. Forced Sale  action to sale & split proceeds if it in the best interests of all parties (building) 1. Title Theory – A JT’s execution of a mortgage/lien on his share will sever the JT as to that now encumbered share. 2. Lien Theory (maj.) –A JT’s execution of his/her interest will not sever the Joint Tenancy. Tenancy By the Entirety Creation Very Protected form of ownership 1. Estate held by husband and wife who take as fictitious one person with the right of survivorship 2. In states that recognize this, it arises presumptively in any conveyance made to H and W unless clearly stated otherwise 1. Creditors of only one spouse cant touch this tenancy 2. Unilateral conveyance a) Neither tenant, acting alone, can defeat the right of survivorship by a unilateral conveyance to a 3P. - T & C – married, own as tenants by entirety. T then secretly transfers his interest to J. J has nothing. Tenancy in Common Creation and Characteristics 1. Each Co-Tenant owns an individual part of the estate, and each has the concurrent right to possess the whole. 2. There are no survivorship rights with T-I-C; Each interest is descendible, devisable and alienable. 3. Courts favor a presumption of Tenancy In Common Property Grid – Final Review 9 Rights and Duties of Co-Tenants Possession 1. Each co-tenant is entitled to possess and enjoy the whole. 2. A co-tenant has committed wrongful ouster when he wrongfully excludes another co-tenant from possession of the whole or any part. Rent from Co-Tenant in exclusive possession Rent from 3P Adverse Possession 1. A Co-Tenant who leases any of the premises to a 3P must account to other Co-Tenants for fair share of income. 1. Unless he has ousted the other Co-Tenants, one Co-Tenant in exclusive possession for the stat. adverse period cannot acquire title to the exclusion of others. a) Hostility, which is not present until there is an ouster, must be present to satisfy Adverse Possession. Carrying Costs Repairs Improvements Each Tenant is responsible for CC (taxes, mortgage) to the extent of the undivided share he holds (pro rata) The repairing Co-Tenant enjoys a right to contribution for reasonable and necessary repairs, provided he has notified the other Co-Tenants of the need. 1. During the life of the Co-Tenancy, there is no right to contribution for improvements. 2. However, at partition, the improving Co-Tenant is entitled to a Credit equal to any increase in value caused by his efforts. 3. The improving Co-Tenant also bears full liability for any decrease in value which result from his “improvements”. Waste (A/V, P, A) Partition 1. A Co-Tenant must not commit waste. (Vol/Aff., Permiss, Amel) 2. A Co_tenant may bring an action for waste during the lifetime of the Co-Tenancy. 1. A Joint Tenant or Tenant In Common has a right to bring an Action for Partition. 1. Absent Ouster, a co-tenant in exclusive possession is not liable to other co-tenants for rent. Property Grid – Final Review 10 III. Landlord – Tenant Leasehold Estates Tenancy for Years Defined Indicators Notice for Termination Statute Of Frauds issues A lease for a fixed, determined period of time. (day month, year, years) (aka Term of Years ) A Tenancy for Years is ascertainable from its established termination date. No notice is required to terminate because the termination date in know from the outset. A Term of Years greater than one year must state from the outset when it will terminate. (1) Tenancy for Years; (2) Periodic Tenancy; (3) Tenancy at Will; (4) Tenancy at Sufferance Periodic Tenancy Defined Creation A Periodic Tenancy is a lease that continues for successive intervals until either L or T gives proper notice and terminates. 1. Expressly – by stating two periods of time (month –month) (year – year) 2. By Implication a) A lease agreement makes has no mention of duration, but contains a provision for regularly scheduled payments. b) An oral term of years in violation of the Statute of Frauds creates an implied tenancy in the manner that rent is collected. c) The Holdover – In a residential lease, if L elects to holdover T who has wrongfully stayed past the conclusion of his original lease, an Implied Periodic Tenancy arises—measured by the manner that rent is collected. i) if the holdover is a commercial tenant, the Periodic Tenancy will be year to year, so long as the original lease was over one year. ii) Note: If the landlord informs a tenant (residential or commercial) of a rent increase before the holdover begins, rent for the new periodic tenancy is for the increased amount. Termination 1. Termination of a Periodic Tenancy usually requires written notice. Property Grid – Final Review 11 2. At Common Law, a party must give notice of at least equal length to period of tenancy unless otherwise agreed. a) Exception – If a tenancy were for a period of greater than one year, parties are required to give 6 months notice. 3. By private agreement, the parties may lengthen or shorten these CL prescribed notice provisions (Freedom to K) 4. The Periodic Tenancy must end at the conclusion of the natural lease period. Leasehold Estates Tenancy for Years Periodic Tenancy Tenancy At Will Defined Indicators Termination A Tenancy at Will is a leasehold for no fixed period of duration. (lease “to T for as long as he would like”) Unless the parties agree to a Tenancy at Will, the payment of regular rent will cause a court to treat the tenancy (not as a Tenancy at Will, but) as an Implied Periodic Tenancy. The Tenancy at Will maybe terminated by either party at any time. Tenancy At Sufferance Defined/Creation 1. Created when T has wrongfully held over past the expiration of a lease. a) tends to be short lived b) Wrongdoer is granted a leasehold estate in order to permit T to recover rent. Duration The Tenancy at Sufferance lasts only until either: L evicts T, or L elects to hold T to a new lease term Property Grid – Final Review 12 B. Tenants Duties and Landlord Remedies (1) Liabilities to 3Ps; (2) Duties to Repair; (3) Duties to Pay Rent 1. T is responsible for keeping the premises in reasonably good repair. 2. T is liable for injuries sustained by 3Ps T invited, even where L has expressly promised to make all repairs. 1. T’s Duty to Repair when the lease is silent a) T must maintain the premises and make ordinary repairs (standard maintenance) b) T must not commit waste (V/P/A) 2. T’s Duty to Repair when T has Expressly Covenanted in the Lease to Maintain Property in Good Condition for the Lease a) At CL, T was responsible for any loss to Property during leasehold, incl. loss attributable to forces of nature. b) Today, Maj. view is that T is no longer liable when he is not at fault; T may terminate after no-fault destruction. Tenant’s Duties Liabilities to 3Ps Duties to Repair Law of Fixtures (included in Duties to Repair) 1. A fixture is a once removable chattel which, by virtue of its annexation to reality, objectively, demonstrates the intent to permanently improve the realty. a) Ex: heating systems, custom made storm windows furnace, certain lighting installations 2. T must not remove a fixture, even if he installed it. a) A tenant who removes a fixture commits voluntary waste. 3. Fixtures pass with ownership of the land; Title goes to the realty owner. 4. Standard to determine if an item qualifies as a fixture a) Express agreement controls – the agreement between L and T on this issue is binding. b) In the absence of an agreement, T may remove chattel that he has installed so long as the removal does not cause substantial harm to the premises. c) If removing the object will cause substantial harm, then objectively, T has shown intent to install the object permanently. Property Grid – Final Review 13 Duty to Pay Rent 1. When T breaches duty to pay rent and is in possession of the premises a) L’s only options are to evict through the courts or continue the relationship and sue for rent. b) L must not engage in self-help (locks, forcible removal, removing possessions, etc.) 2. When T breaches duty to pay rent and is out of possession – S I R a) Surrender (1) L could choose to treat T’s abandonment as an implicit offer of surrender which L accepts. (2) “Surrender” = T demonstrates by words or actions that she wishes to give up the leasehold (3) If the unexpired term is greater than one year, surrender must be in writing to satisfy the Statute of Frauds. b) Ignore (1) Ignore the abandonment and hold T responsible for unpaid rent, just as if T were still there. (2) Only available in a minority of states c) Re-Let the premises on the wrongdoer tenant’s behalf and hold him or her liable for any deficiency. (1) Majority Rule – L must attempt to mitigate damages for lost rent by re-letting the room. Property Grid – Final Review 14 C. Landlord Duties and Tenant Remedies (1) Deliver Possession; (2) IC of QE; (3) IWH; (4) Retaliatory Eviction Otherwise, L is in breach and owes damages to T. Duty to Deliver Possession Majority (“English Rule”) – L must put T in actual, physical possession of the premises at the start of the lease. Minority (“American Rule”) – L does not have to put T in phys poss; L owes merely legal possession at start. Implied Covenant of Quiet Enjoyment 1. T has the right to quiet use and enjoyment of the premises w/o interference from L. a) Applies to both Residential and Commercial leases 2. Breach by Wrongful Eviction a) Occurs when L wrongfully evicts or excludes T from the premises. 3. Breach by Constructive Eviction a) Elements – SING (Dido and leaking window) (1) Substantial Interference – Chronic (needn’t be perm.) problem attributable to T actions/failure to act. (2) Notice – T must give L adequate notice and opportunity to repair (as a matter of fairness). (3) Get Out – T must vacate the premises within a reasonable time after L fails to correct the problem. Implied Warranty of Habitability 1. Applies only to residential leases; not to commercial leases 2. Implied Warranty of habitability is non-waivable 3. Standard a) Premises must be fit for basic human habitation. b) The appropriate standard may be supplied by local housing code or independent judicial conclusion c) Typical problems include: failure to provide heat in winter, lack of plumbing, lack of running water 4. T’s entitlements when the implied warranty of habitability is breached: MR3 a) Move out and terminate the lease b) Repair and deduct, allowable by statute in a growing number of jurisdictions. T may make the reasonable repairs and deduct their cost from future rent c) Reduce rent or withhold all rent until the court determines fair rental value. Typically, T must place withheld rent into an escrow account to show her good faith Property Grid – Final Review 15 d) Remain in possession, pay rent, and affirmatively seek money damages. Retaliatory Eviction 1. GF doctrine to protect T, who lawfully reports L for housing code violations, L is barred from penalizing T by, raising rent or ending the lease, or harassing T, or taking of any reprisals whatsoever Assignments and Subleases Assignment Defined 1. In the absence of some prohibition in the lease, a T may freely transfer his or her interest in whole (thereby accomplishing an assignment) or in part (thereby accomplishing a sublease). a) In the lease, L can prohibit T from assigning or subletting without L’s prior, written consent b) However, once L consents to one transfer by T, L waives the right to object to future transfers unless L reserves the right expressly Effect 1. L rents from T; subsequently assigns his leasehold interest to T2 2. In an assignment, L and T2 are in privity of estate a) L and T2 are liable to each other for all of the covenants in the original lease that “run with the land” b) Common Examples: (1)Promise to pay rent;; (3)Promise to repair; lease a) L and T1 (1) L and T1 are no longer in privity of estate (2) L and T1 remain in privity of contract (3) Thus, L and T1 are secondarily liable to each other (2)Promise to paint premises; (4)Promise to pay taxes 3. L and T2 are not in privity of contract unless T expressly assumed the performance of all promises in the original Sublease Sublease 1. L and sublessee are in neither privity of estate nor privity of contract Property Grid – Final Review 16 a) They share no nexus 2. Instead, T2 is responsible to T1 and vice versa Landlord/Tenant Tort Liability Common Law Exceptions to Common Law 1. Caveat Lessee – In tort, L was under no duty to T to make the premises safe CLAPS 1. Common areas a) L must maintain all common areas such as hallways or stairwells 2 .Latent Defects Rule a) L must warn T of hidden defects of which L has knowledge or reason to know b) Note  this is simply a duty to warn, not the duty to repair 3. Assumption of Repairs a) L has no duty to repair, but once L begins repairs, L must complete with reasonable care b) If L (as a volunteer) makes the repairs negligently, L is liable 4. Public use rule a) L who lease public space (such as a convention hall or museum) 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 any defects on the premises 5. Short term lease of furnished dwelling a) L is responsible for any defects which proximately harms T (b/c of nature of the lease.) Rights in the Land of Another – Easements, Profits, Covenants and Servitudes Easements Defined 1. An Easement is he grant of a nonpossessory property interest that entitles its holder to some form of use or enjoyment of Property Grid – Final Review 17 another’s land called the servient tenement 2. Easements can be affirmative or negative a) Most easements are affirmative (1) the right to go onto and do something on servient land 3. Easements are classified as either Appurtenant or Held In Gross Negative Easement 1. Entitles its holder to prevent the servient landowner from doing something that would otherwise be permissible. a) Generally recognized in four categories - LASS (1) Light; (2) Air; (3) Support (4) Stream water from an artificial flow 2. Negative easements can only be created expressly, by writing signed by the grantor. There is no natural or automatic right to a negative easement Easement Appurtenant 1. There is an appurtenant easement when it benefits its holder in his physical use or enjoyment of his property a) “It takes two”  two parcels of land must be involved! (“It takes two baby, to have an easement appurtenant!”) Dominant tenement – parcel of land that derives the benefit Servient tenement – parcel that bears the burden Ex: A has an easement entitling her to cut across B’s lawn to get more easily to her land. Easement In Gross 1. An easement in gross confers upon its holder only some personal or pecuniary advantage that is not related to his use or enjoyment of his land. 2. The servient land is burdened 3. There is no benefited or dominant tenement (there’s not two, just 1 parcel of land involved) 4. Common Examples: a) Right to place a billboard on another’s lot b) Right to fish/swim in another’s pond c) Utility company’s right to lay power lines on another’s land Transferability 1. Transferability of Appurtenant Easements a) Passes automatically with the dominant tenement, regardless of whether it is even mentioned in the conveyance b) The burden of the easement appurtenant also passes automatically with the servient estate, unless the new owner is a bona Property Grid – Final Review 18 fide purchaser without notice of the easement 2. Transferability of an Easement in Gross a) Not transferable unless it is for commercial purposes Creation of an Affirmative Easement – PING Prescription 1. An easement may be acquired by satisfying the elements of adverse possession a) Continuous use for the given statutory period b) Open and notorious c) Actual use d) Hostile use  i.e. w/o consent of the owners (permission defeats this element!) Implication 1. Aka the “easement implied from existing use” (both parcels must have had a common owner) 2. An easement may be implied where the previous use had been apparent and the parties expected that the use would survive division b/c it is reasonably necessary to the dominant land’s use and enjoyment Necessity (falls under Implication) 1. The “landlocked setting” 2. An easement of right of way will be implied by necessity if grantor conveys a portion of his land with no way out except over some part of grantor’s remaining land Grant 1 Statute of Frauds requires that an easement greater than one year must comply with the formal elements of a written deed. 2. The writing to evidence the easement is called a deed of easement Scope of an Easement Scope 1. The scope of an easement is determined by the terms of the grant of the conditions that created it a) Unilateral expansion is not allowed! Property Grid – Final Review 19 Termination of an Easement – END CRAMP Estoppel Necessity Servient owner materially changes his position in reasonable reliance on the easement holder’s assurances that the easement will no longer be enforced 1. Eaements created by necessity expire as soon as the necessity ends. 2. If the easement attributable to the necessity was nonetheless created by express grant, it does not end automatically when the necessity ends Destruction Condemnation Release Abandonment Merger Doctrine (aka Unity of Ownership) Destruction of the servient land (other than through willful conduct of the servient owner) will destroy the easement Condemnation of the servient estate by governmental eminent domain power will terminate the easement A written release, given by the easement holder to the servient owner The easement holder must demonstrate by physical action the intent to never make use of the easement again The easement is extinguished when title to the easement and title to the servient land become vested in the same person If complete unity of title is achieved, the easement is extinguished. Even though there may be later separation of title, the easement is not automatically revived Prescription 1. The servient owner may extinguish the easement by interfering with it in accordance with the elements of adverse possession but this time we also need interference – C O A H Property Grid – Final Review 20 Licenses Defined 1. A license is a mere privilege to enter another’s land for some delineated purpose 2. Licenses are not subject to the statute of frauds. Thus, you don’t need a writing to create a license 3. Licenses are freely revocable, at the will of the licensor, unless estoppel applies to bar Revocation Examples 1. Ticket Cases  tickets are freely revocable licenses 2. Neighbors talking by the fence  nothing good comes of this!   “Oral easements” are unenforceable b/c they violate the statute of frauds Oral easements actually create freely revocable licenses 3. Estoppel applies to bar revocation only when the licensee has invested substantial money or labor or both in reasonable reliance on the license’s continuation Profits Profits 1. Profits entitle the holder to enter the servient land and take from it: the soil or some substance of the soil such as minerals, timber, or oil. 2. The profit shares all of the rules of easements Real Covenants Defined Negative (Restrictive) Covenants Affirmative Covenants Covenants v. Eq. Serv. 1. A covenant is a contractual limitation or promise to do/not do something related to land. a) It is a promise regarding the land, unlike the easement, which is a grant of a property interest A Negative Covenant is a promise to refrain from doing something related to the land (Ex: I promise not to uproot our common garden.) An Affirmative Covenant is a promise to do something related to the land (Ex: I promise to maintain our common fence) 1. Decipher b/w the two on the basis of the relief the plaintiff is seeking a) If P seeks $$ damages = covenant Property Grid – Final Review 21 b) If P seeks an injunction = equitable servitude Will a Covenant run with the land? Defined Determine Existance A valid covenant will burden one tract of land to the benefit of a separate adjoining tract. A Covenant will exist of both the burden and the benefit run 1. There are five elements necessary for the burden to run with the land - WITHN a) Writing  the original promise b/w A and B must have been in writing b) Intent  the original parties must have intended that the covenant would run (1) Note – courts are generous in finding the requisite intent c) Touch and concern the land (1) The promise must affect the parties’ legal relations as landowners and not simply as members of the community at large (2) Covenants to pay money for related use to the land (H/O assoc. fees) and covenants not to compete T & C the land! d) Horizontal and Vertical Privity (see below) e) Notice  A1 (burdened parcel) must have had some notice of the promise when she took 2. Assuming the burden runs, does the benefit of A’s promise to B run from B1 to B2? – Remember WITV a) Writing  the original promise from A to B must have been in writing b) Intent  the original parties intended that the benefit would run c) Touch and Concern  the promise affects the parties as landowners d) Vertical Privity  some non-hostile nexus b/w B1 and B2 Horizontal Privity 1. Refers to the nexus b/w the originally promising parties 2. Requires that they be in succession of estate (meaning that they were in one of the following relationships): Property Grid – Final Review 22 a) Grantor / Grantee Vertical Privity b) Landlord / Tenant c) Mortgagor / Mortagee 1. Refers to the nexus b/w A and A1 2. Requires some non-hostile nexus, such as: contract, devise, or descent. 3. The only time vertical privity will be absent is where A1 acquired her interest through adverse possession Defenses to Enforcement of a Covenant Equitable Servitudes Defined Creation 1. Unclean Hands 2. Acquiescence 3. Estoppel 4. Changed Neighborhood Conditions An equitable servitude is a promise, accompanied by Inj. Relief, that equity will enforce against successors. 1. Creation of an ES will bind successors. 1. Writing  generally (but not always) the original promise was in writing 2. Intent  the original parties intended that the promise would be enforceable by and against assignees 3. Touch and Concern  the promise affects the parties as landowners 4. Notice  the assignees of the burdened land had notice of the promise 5. Equitable Servitude is created Note – Privity is NOT required to bind successors to an Equitable Servitude. Implied Equitable Servitude Defined A court will apply a reciprocal negative servitude to hold unrestricted lot holders to restrictive covenants (Reciprocal Negative Servitude aka Implied Equitable Servitude). Elements 1. When the sales began, the sub-divider had a general scheme or residential development which included the defendant lot now in question 2. The defendant lot holder had notice of the promise contained in the prior deeds Notice Requirement 1. Three Forms of Notice Potentially Imputed to Defendants - AIR: a) Actual  defendant had literal knowledge of the promises in the prior deeds b) Inquiry  the neighborhood conforms to the common restriction (aka the “lay of the land”) c) Record  the form of notice sometimes imputed to buyers on the basis of the publicly recorded documents Property Grid – Final Review 23 2. Courts are split in this area: a) Some –buyers are on record notice of the contents of prior deeds transferred by a common grantor b) Better View – subsequent buyers do not have record notice of the contents of those prior deeds transferred to others by the common grantor (i.e. less burdensome to D’s title searcher and more efficient Equitable Defenses to enforcement of an Equitable Servitude Equitable Defenses 1. Changed Conditions  the “changed conditions” alleged by the party seeking release from the terms of an equitable servitude must be so pervasive that the entire area or subdivision has changed a) Limited or piecemeal change is not good enough! Adverse Possession Defined Elements Possession for a statutorily prescribed period of time can, if certain elements are met, will ripen into title via AP. 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 cannot be hypothetical/fictitious (i.e. can’t be a symbolic letter) 4. Hostile  possessor doesn’t have true owner’s permission to be there Note  Possessor’s subjective state of mind is irrelevant; Irrelevant if possessor did /not know he encroached Tacking 1.An adverse possessor may tack on to his land with the land his predecessor’s time so long as there is privity, a) satisfied by any non-hostile nexus such as blood, contract, deed, or will b) Tacking is not allowed when there has been an ouster Disabilities 1. SOL will not run against a true owner afflicted by a disability at the inception of the adverse possession. LAND AND CONVEYANCING – THE PURCHASE AND SALE OF REAL ESTATE Every conveyance of real estate consists of a two-step process: Step I  the land contract, which endures until Step II (relatively short lived contract) Property Grid – Final Review 24 Step II  the closing, where the deed becomes our operative document The Land Sale Contract Land Contract and SOF 1. Standard – The land contract must be: a) In writing b) Signed by the party against whom enforcement is sought (i.e. by the D) c) Describe the land d) State some consideration 2. When the amount of land recited in the land contract is more than the actual size of the Parcel a) B’s remedy is specific performance with a pro rata reduction in purchase price = to the land deficiency Doctrine of Part Performance 1. Exception to the Statute of Frauds requirement 2. If, on the facts, there are two of the following three elements, DPP is satisfied and equity will decree specific performance of an oral contract for the sale of land: a) B (buyer) takes possession of the land; b) B remits all or part of the purchase price; and / or c) B makes substantial improvements to the premises Problem of Risk of Loss (Eq. Conv.) 1. Apply the doctrine of equitable conversion  “equity regards done that which ought to be done 2. In equity, once the contract is signed, B owns of the land, subject to the condition that he pay the purchase price at closing 3. Destruction  if, in the interim b/w contract and closing, is destroyed through no fault of either party, B bears the risk of loss unless the contract says otherwise Two Implied Promises in Every Land Sale Contract – (1) S to convey MT; (2) S promises no false statements of material fact Seller Promises to Convey Marketable Title at Closing Standard Title free from reasonable doubt (i.e. free from lawsuits and the threat of litigation) Property Grid – Final Review 25 Problems Three Circumstances will Render Title Unmarketable: 1. Adverse Possession a) If even a portion of the title rests on adverse possession, it is unmarketable. b) Seller must be able to prove good record title 2. Encumbrances **(BAR)** a) Marketable title means an unencumbered fee simple. b) Thus, servitudes and mortgages render title unmarketable, unless the buyer has waived them c) Seller has the right to satisfy an outstanding mortgage or lien at the closing, with the proceeds of the sale. 3. Zoning Violation – Title is unmarketable if the property violates a zoning ordinance Seller promises not to make any false statements of material fact. No False Material Statements 1. Majority of states now hold seller liable for failing to disclose latent, material defects 2. If the contract contains a general disclaimer of liability a) the disclaimer will not excuse seller from liability from fraud or failure/disclose The land contract contains no implied warranties of fitness of habitability No Implied Warranty of Fitness 1. Common Law Norm – Caveat Emptor – a) Exception  The implied warranty of fitness and workmanlike construction applies to the sale of a new home by a builder-vendor The Closing Execution Lawful Execution of a Deed 1. The deed is now the controlling document 2. In order for the deed to pass legal title from seller to buyer, it must be LEAD 1 Standard  the deed must be in writing signed by the grantor a) Need not recite consideration, nor must consideration pass to make a valid deed 2. Description of the Land does not have to be perfect a) Must simply have an unambiguous description and a good lead Property Grid – Final Review 26 Lawful Delivery of a Deed 1. Delivery requirement could be satisfied when grantor physically or manually transfers the deed to the Grantee a) Permissible to use the mail, an agent, or a messenger 2. Standard for delivery is a legal standard (not a literal standard), and is a test solely of present intent. a) Ask  Did the grantor have the present intent to be immediately bound irrespective of physical delivery 3. Recipient’s express rejection of the deed defeats delivery 4. If a deed, absolute on its face, is transferred to grantee with an oral condition, the oral condition drops out. It is not provable and delivery is considered accomplished 5. Delivery by escrow is permissible Delivery by escrow 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 the conditions are met, title passes automatically to grantee 2. Advantage of Escrow  if grantor dies or becomes incompetent or is otherwise unavailable before the express conditions are met, title will still pass from escrow agent to grantee once conditions are met. Covenants for Title and Three Types of Deeds Quitclaim Description (Shaggy) 1. Contains no covenants – the worst deed buyer could hope for. a) Grantor isn’t even promising that he has title to convey. b) Grantor did implicitly promise in the land contract to provide marketable title at closing – but this is a time limited promise. Any problems that arise post-closing  seller is off the hook. General Warranty Deed Description Present Covenants (Mother Theresa) 1. Warrants against all defects in title, including those attributable to grantor’s predecessors 2. Contains Six Covenants (3 Present/3 Future) A present covenant is breached, if ever, at the time the deed is delivered. Thus, the statute of limitations for breach of a present covenant begins to run from the instant of delivery. Property Grid – Final Review 27 1. Covenant of Seisin – Grantor warrants that he owns the estate he now claims to convey 2. Covenant of Right to Convey -- Grantor promises that he has the power to make this transfer (i.e. there are no temporary restraints on grantor’s power to sell) 3. Covenant Against Encumbrances -- Grantor promises that there are no servitude or mortgages on the land Future Covenants Such a covenant is not breached, if ever, until grantee is disturbed in possession. Thus, the statute of limitations for breach of a future covenant will not begin to run until after that future date. 4. Covenant for Quiet Enjoyment – Grantor promises that grantee will not be disturbed in possession by a 3rd party’s lawful claim of title (not making the same conveyance to another grantee) 5. Covenant of Warranty -- Grantor promises to defend if any lawful claims of title asserted by others arise. a) if there is someone else out there w/ superior title to grantee, grantor will defend 6. Covenant for Further Assurances -- Grantor promises to perform whatever future acts are reasonably necessary to perfect grantee’s title if it later turns out to be imperfect (defend v. a claim of blue ink when black was req’d) Statutory Special Warranty Deed Defined 1. 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) a) Grantor promises that he has not conveyed this estate to anyone other than grantee b) Grantor promises that the estate is free from encumbrances made by the grantor. The Recording System Hypothetical Three Bright Line Rules “Double Dealer” Scenario  O conveys to A. Later, O conveys (the same parcel) to B. O (dirty double dealer) has skipped town. Who wins as between A and B? Recording acts exist to protect only bona fide purchasers and mortgagees (i.e. creditors) 1. If B is a bona fide purchaser and we are in a notice jurisdiction, B wins, regardless of whether or not she records Property Grid – Final Review 28 before A does 2. If B is a bona fide purchaser and we are in a race notice jurisdiction, B wins if she records properly before A does 3. Recording statutes DO NOT protect donees, heirs, or devises unless the Shelter Rule applies Bona Fide Purchaser Two Routine Value Questions Purchases B/A for value; and Without notice that someone else got there first 1. Bargain Basement Sale a) If B pays $50,000 for land with FMV of $100,000, B is still a purchaser for value as long as he remits substantial pecuniary consideration as a purchaser for value 2. Case of the Doomed Donee a) If B was O’s heir, devisee, or donee, in a recording statute question, B loses (subject to the Shelter Rule) Three forms of Notice that a buyer may be charged with – AIR 1. Actual  prior to closing, buyer 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 land would reveal a) Buyer of real estate has a duty to inspect the premises before transfer of title, to see, for example, whether anyone else is in possession. If another is in possession, B is on inquiry notice of that fact, regardless of whether buyer actually bothered to inspect or not  Thus, in our model, if A had taken possession, B would be on inquiry notice of that fact, thereby defeating B’s status as a BFP b) If a recorded instrument makes reference to an unrecorded transaction, grantee is on inquiry notice of whatever a reasonable follow-up would have revealed. 3. Record Notice  buyer is on record notice of A’s deeds if at the time B takes, A’s deed was properly recorded within the chain of title The Recoding Statutes: Notice Statutes 1. Typical Language: “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.” 2. Thus, if, at the time B takes, he is a BFP, he wins!! It wont matter that A may ultimately record first, before B does. It wont matter in the A vs B contest, that N never records Result: As long as B is a BFP when he takes, he is victorious over A Property Grid – Final Review 29 Race-Notice Statutes PA is a Race-Notice Jurisdiction 1. Typical Language: “A conveyance of an interest in land shall not be valid against any subsequent purchaser for value without notice thereof, whose conveyance is first recorded.” 2. To prevail, B must: a) Be a BFP; and b) Win the race to record 3. Result – If A had promptly and properly recorded, her proper recordation places subsequent buyers on record notice, thereby defeating their status as BFPs. Chain of Title 1. To give record notice to subsequent takers, the deed must be properly recorded within the chain of title: a) “Chain of title” refers to that sequence of recorded documents capable of giving record notice to subsequent takers b) In most states, the chain of title is established through a title search of the grantor / grantee index Three Discrete Chain of Title Problems Shelter Rule 1. One who takes from a BFP will prevail against any entity that the transferor-BFP would have prevailed against. a) The transferor takes “shelter” in the status of her transferor, and thereby “steps into the shoes” of the BFP even though she otherwise fails to meet the requirements of BFP status Example: O conveys to A, who doesn’t record. Later, O conveys to B, a BFP, who records. B then conveys to C, who is a mere donee or has actual knowledge of the O to A transfer. In the contest of A vs C, who prevails?   Wild Deed 1. Rule  If a deed, entered on the records (A to B), has a grantor unconnected to the C wins, in both a notice and a race-notice state, b/c of the Shelter Rule C steps into the shoes of B, who was a BFP who first recorded. 2. Example: - O sells B/A to A, who does not record. - Then, A sells to B and B records 3. Ex continued: - O (initial grantor) then sells B/A to C. Assuming C has not actual or inquiry b) C wins in a race-notice state b/c she is a BFP who won the race to record b/c B recording is treated as a nullity Property Grid – Final Review 30 chain of title (O to A), the deed is a wild deed. It is incapable of giving to A-to-B deed. - The A to B deed, although recorded, is not connected to the chain of title b/c it contains a missing grantor. - The O to A link is missing from the public records. - - Therefore, the A to B deed is a wild deed knowledge of the O-to-A or A-to-B conveyance. C records. O skips town. In contest of B v C, who wins? C wins in both a notice and a race-notice state. C wins in a notice state b/c at the time C takes, she is a BFP record notice of its existence (i.e. it is a nullity!) Estoppel By Deed 1. Rule -- One who conveys realty in which he has no interest (here, X) is estopped from denying the validity of that conveyance if he subsequently acquires the interest that he had previously transferred. Example: In 1950, O owns B/A. He is thinking of selling it to X, but for now, decides against it. In 1950, X, who doesn’t own B/A, sells it to A anyway. A records. In 1960, O finally sells B/A to X and X records. In 1970, X (double dealer) sells B/A to B and B records. 3. Who owns B/A in 1970?a) B provided he is a BFP B wins in a notice system b/c he is a BFP Thus, under estoppel by deed, A loses everything. Don’t feel badly for A b/c she didn’t check the validity of the title she got! B wins in a race - notice system b/c he is a BFP who wins the race to record b/c A’s 1950 recording is a nullity. A recorded too early so her deed is not connected to the chain of title. B’s title searcher would not find A’s deed b/c one is entitled to assume that no one sells land until they first own it. Thus, B’s title searcher would not discover X’s 1950 pre-ownership transfer to A VI. SECURITY INTEREST IN REAL ESTATE Mortgages Defined 1. A mortgage is the conveyance of a security interest in land, intended by the parties to be collateral for the repayment of a monetary obligation 2. A mortgage is the union of two elements: (a) A debt; and (b) A voluntary transfer of a security interest in debtor’s land to secure the debt Property Grid – Final Review 31 Vocab/Writing 1. Vocabulary a) Debtor  mortgagor b) Creditor  mortgagee 2 The mortgage typically must be in writing to satisfy the Statute of Frauds. This is the legal mortgage a) “Legal Mortgage” is also known as: - the mortgage deed - security interest in land - a sale leaseback - the note - a deed of trust Equitable Mortgage 1. O owns B/A. Creditor lends O a sum of money. The parties understand that B/A is the collateral for the debt. However, instead of executing a note or mortgage deed, O hands Creditor a deed to B/A that is absolute on its face. This is called an equitable mortgage 2. As b/w O and Creditor  Parole evidence is freely admissible to show the parties’ true intent 3. If Creditor proceeds to sell Blackacre to BFP “X”  X owns the land. a) O’s only recourse is to proceed against Creditor for fraud and recover the proceeds from the sale. Parties’ Rights Upon Creation of a Mortgage 1. Unless and until foreclosure, debtor-mortgagor has title and the right to possession 2. Creditor-mortgagee has a lien  i.e. the right to look to the land if there is a default Transfer of Interest Defined 1. All parties to a mortgage can transfer their interests. The mortgage automatically follows a properly transferred note. 2. Creditor-mortgagor can transfer his interest by: a) Endorsing the note and delivering it to the transferee; or b) By executing a separate document of assignment 3. If the note is endorsed and delivered, the transferee is eligible to become: a holder in due course which means that he takes the note free of any “personal defenses” that could have been raised against the original mortgagee Property Grid – Final Review 32 Personal Defenses 1. Thus, the holder in due course may foreclose the mortgage despite the presence of any such personal defense 2. Personal Defenses include: a) Lack of consideration b) Fraud in the inducement c) Unconscionability d) Waiver and estoppel d) Incapacity f) Infancy g) Insolvency e) Illegality Real Defenses 1. By contrast, the holder in due course is still subject to “real” defenses. – MAD FIFI4 a) Material Alteration b) Duress c) Fraud In the Factum Criteria to become a HDC 1. To become a Holder in Due Course of the note: a) The note must be negotiable, made payable to the named mortgagee b) The original note must be endorsed, signed by the named mortgagee c) The original note must be delivered to the transferee. A photocopy is unacceptable. d) The transferee must take the note in good faith without notice of any illegality; AND e) The transferee must pay value for the note, meaning some amount that is more than nominal Effect of AfterMortgage Sale 1. .If O (debtor-mortgagor) sells Blackacre, which is now mortgaged, the lien remains on the land so long as the mortgaged instrument has been properly recorded Note  Recording statutes can protect mortgagees a) In a notice state, a subsequent BFP prevails over a prior grantee or mortgagee who has not yet properly recorded at the time the BFP takes. 1. If B has “assumed the mortgage” a) Both O and B are personally liable b) B is primarily liable and O remains secondarily liable 2. If B takes “subject to the mortgage” a) B assumes no personal liability on the debt, only O is personally liable b) BUT if recorded, the mortgage remains on the land c) Thus, if O does not pay, the mortgage may be foreclosed Post-Sale Liability for the Mortgage Foreclosure Procedure If mortgagee-creditor must look to the land for satisfaction, how must she proceed? Property Grid – Final Review 33 1. The mortgagee must foreclose by: proper judicial proceeding. a) At the foreclosure, the land is sold and the sale proceeds go to satisfying the debt. 2. If the proceeds from the sale are less than the amount owed: a) The mortgagee can bring a personal action against the debtor for a deficiency judgment 3. If there is a surplus from the sale: a) Junior Liens (creditors with lesser priority) are paid off in order of their priority b) Any remaining surplus goes back to the debtor 4. NOTE  before any creditors are paid off, the following must be paid (in order): a) Attorney’s fees, expenses of the foreclosure, Any accrued interest on the creditor’s foreclosing mortgage Effects of Foreclosure on Various Interests Pecking Order for Payment Foreclosure will terminate interests junior to the mortgage being foreclosed, but will not affect senior interests. 1. Hence, junior lienholders will be paid in descending order with the proceeds from the sale, assuming funds are leftover after full satisfaction of superior claims. Junior lienholders should be able to proceed for a deficiency judgment. 2. But once foreclosure of a superior claim has occurred, with the proceeds to be distributed appropriately, junior lienholders can no longer look to Blackacre for satisfaction 3. Those with interests subordinate to those of the foreclosing party are necessary parties to the foreclosure action 4. The debtor-mortgagor is also considered a necessary party and must be joined, particularly if creditor wishes to proceed against debtor for a personal deficiency judgment. 5. Failure to include a necessary party results in the preservation of that party’s claim, despite the foreclosure and sale. Thus, if a necessary party is not joined, his mortgage will remain on the land. Interests Senior to the Mortgage Foreclosure does not affect any interest senior to the mortgage being foreclosed. a) The buyer at the sale takes subject to such interest. b) This means that buyer IS NOT personally liable on the senior debt but, as a practical matter, if the senior mortgage is not paid, sooner or later, the senior creditor will foreclose against the land. Property Grid – Final Review 34 Barbri Technique 1. Draw a horizontal line placing chronologically the lien holders from left to right, senior to most junior, and include the amount of mortgage and whether it was recorded (also who is liable to lienholder where given). 2. Circle the party bringing foreclosure, the party bringing foreclosure and any lienholder to the right gets satisfied (if possible) or is otherwise extinguished. 3. Any lienholder’s interest to the left stays on the land and the next buyer takes subject to those mortgages. (Note: If the jurisdiction allows for deficiency judgment, an unsatisfied lienholder whose lien has been extinguished can hold the original mortgagor liable as well as any transfer to a party who “assumed” the mortgage.) Priorities Requirements for Priority 1. As a creditor, you must record. Until you properly record your mortgage, you have no priority 2. Once recorded, priority determined by: first in time, first in right (unless there’s a notice-statute) a) First to record properly, takes first and so on Purchase Money Mortgage The purchase money mortgage is a mortgage given to secure a loan that enables the debtor to acquire the encumbered land 1. “Purchase money mortgagee”  the creditor that gives the mortgage to secure a loan 2. The Purchase Money Mortgagor’s Superiority a) “After Acquired Collateral Clause”  permits creditor to obtain a security interest in all of the debtor’s real estate holdings “whether now owned or hereafter acquired” b) However, (see p. 89) where a second mortgage was obtained on a second property, C2 will have first priority as to that second obtained property b/c C2 is a purchase money mortgagee. Subordination Agreements 1. Subordination Agreements are permissible a) By private agreement, a senior creditor may agree to subordinate its priority to a junior creditor Possession Before Foreclosure Property Grid – Final Review 35 Lien Theory Mortgagee is considered the holder of a security interest only and the mortgagor is deemed the owner of the land until foreclosure Title Theory Legal title is in the mortgagee until the mortgage has been satisfied or foreclosed, and the mortgagee is entitled to possession upon demand at any time Redemption Redemption in Equity An equitable redemption is universally recognized up until to the date of sale. 1. At any time prior to the foreclosure sale, the debtor has the right to redeem the land and free it of the mortgage 2. Once a valid foreclosure has taken place, the right to equitable redemption is cut off a) Exercise equitable redemption by paying off missed payment(s) plus interest and costs Acceleration Clauses 1. Acceleration clauses permit the mortgagee to declare the full balance due in the event of a default 2. If the mortgage contains an acceleration clause, the full balance plus accrued interest plus costs must be paid to redeem 3. Thus, a redemption clause is bad for a financially distressed debtor. Clogging the equity of Redemption 1. A debtor / mortgagor may not waive the right to redeem in the mortgage itself a) This is known as clogging the equity of redemption and is prohibited. *(BAR)* Statutory Redemption Description and Effect 1. Recognized in ½ the states and gives the mortgagor-debtor a statutory right to redeem for some fixed period after the foreclosure sale has occurred (usually 6 months to 1 year). 2. When a mortgagor redeems, the effect is to nullify the foreclosure sale. The redeeming owner is restored to title. Property Grid – Final Review 36 3. Where recognized, statutory redemption applies only after foreclosure has occurred a) Amount to be paid is usually the foreclosure sale price rather than the original amount of the debt 4. In most states to recognize statutory redemption, the mortgagor will have the right to possession of Blackacre during the statutory period. Water Rights Riparian Doctrine 1. The water belongs to those who own the land bordering the water course 2. These people are called riparians, who share the right to reasonable use of the water 2. Thus, one riparian will be liable if his or her use unreasonably interferes with others’ use. Prior Appropriations 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 now he happens to be a riparian owner 2. Rights are determined by priority of beneficial use. a) The norm for allocation is first in time first in right. b) Thus, a person acquires the right to divert and use water from a watercourse merely by being the first to do so. c) Any productive or beneficial use of the water, including use for agriculture, is sufficient to create the appropriation right. Groundwater (percolating water) Surface Water 1. Groundwater – Water beneath the surface of earth that is not confined to a known channel. 2. The surface owner is entitled to make reasonable use of ground water; however, the use must not be wasteful 1. Water which comes from rain, springs or melting snow, and which has not reached a natural watercourse or basin a) Common Enemy Rule – surface water is a common enemy (1) A landowner may change drainage or make any other changes / improvements on his land to combat the Property Grid – Final Review 37 flow of surface water. (2) Many courts have modified the common enemy rule to prohibit unnecessary harm to other’s land. Natural Flow Theory 1. A L/O cannot alter the rate or manner of natural flow of surface waters (i.e. rain, melted snow) where such actions would injure others above or below him. Property Grid – Final Review 38