Property Outline PROPERTY OUTLINE I TYPICAL NON DEFEASIBLE FREEHOLD ESTATES a Fee

					                               PROPERTY OUTLINE


I.    TYPICAL NON-DEFEASIBLE FREEHOLD ESTATES
      a. Fee Simple Absolute
              i. ―To A‖ or ―To A and his heirs.‖
             ii. Freely devisable, descendible, and alienable.
      b. Fee Tail
              i. ―To A and the heirs of his body.‖
             ii. Disallowed in most states – if created, courts will treat as a fee simple.
            iii. If recognized, there are future interests. If the property goes back to O, O
                 has a reversion. If it goes to a third party, the third party has a remainder.
      c. Life Estates
              i. ―To A for life‖ or ―To A for B’s life‖
             ii. Life estate por autre vie: life estate measured by the life of another
            iii. Life estates may be freely transferred, but only to the extent of ―the life‖
            iv. O has a reversion; B has a remainder.

II.   DEFEASIBLE ESTATES
      The grantor must be clear. A mere expression of desire, hope, or intention is
      insufficient -- to A “for the purpose of X” or “in the hope that X” won’t work.
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      a. Fee Simple Determinable
               i. ―To A so long as,‖ ―To A until,‖ ―To A during‖ (durational language)
              ii. If the stated condition is violated, A’s property interest automatically
                  terminates.
             iii. This estate is freely devisable, descendible, and alienable. But when A
                  transfers the property, he transfers it subject the restriction.
             iv. When A has a fee simple determinable, O has a possibility of reversion.
                 Fee   Simple        Determinable        Possibility Of      Reverter   .
                 Frank Sinatra       Didn’t              Prefer      Orville Redenbacher
      b. Fee Simple Subject to Condition Subsequent
             i. ―To A, but if X occurs, then back to O.‖
            ii. When X occurs, the estate does not automatically terminate. The Grantor
                (O) must enforce the provision. Thus, O has ―the right of re-entry‖
                (a.k.a. ―the power of termination‖).
      c. Fee Simple Subject to an Executory Limitation
             i. ―To A, so long as no X, but if X, then to B,‖ or
                ―To A, but if Y occurs, then to B.‖
            ii. Unlike the other defeasible estates, it goes to B instead of returning to O.
           iii. B has a shifting executory interest.


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III.   MORE ON LIFE ESTATES
       a. Generally, life tenants are entitled to all ordinary use and profit from the land.
       b. Limitations—
             i. The life tenant must not commit waste—she must not do anything to hurt
                 the future interests (remainders, reversion). There are 3 kinds of waste:
                     1. Voluntary / Affirmative Waste
                              a. The life tenant must not consume or exploit natural
                                  resources on the property unless one of four exceptions
                                  apply: PU R G E
                                        i. Prior Use: prior to the grant, the land was used for
                                           exploitation of natural resources.
                                               1. Open Mines Doctrine: the life tenant may
                                                   not mine the land, except that he may
                                                   continue to operate mines that are already
                                                   open on the land when he assumes the life
                                                   tenancy.
                                       ii. Reasonable Repairs: the life tenant may consume
                                           natural resources to maintain and make reasonable
                                           repairs to the property.
                                     iii. Grant: The life tenant may exploit the land if the
                                           grantor expressly granted him that right.
                                      iv. Exploitation: when the land is only suitable for
                                           exploitation (e.g., a quarry), the life tenant may
                                           exploit the land.
                     2. Neglect / Permissive Waste
                              a. The life tenant must maintain the premises in reasonably
                                  good repair.
                              b. The life tenant must pay the land taxes, to the extent of the
                                  income or profits from the land. If there are no profits or
                                  income, she is responsible for the taxes to the extent of the
                                  fair market rental value of the property.
                     3. Ameliorative Waste
                              a. The life tenant may not change the character of the property
                                  without all of the remaindermen’s consent, even if the
                                  change would improve the FMV.

       c. Life tenants must maintain and reasonably repair the life estate.
              i. If the life tenant makes grand, long-term repairs to the property—e.g., a
                  new roof—she may seek contribution from the future interest holders.




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IV.   FUTURE INTERESTS
      a. The Possibility of Reverter
             i. Held by the Grantor
            ii. Accompanies the Fee Simple Determinable.
      b. Right of Re-Entry / Power of Termination
             i. Held by the Grantor
            ii. Accompanies the Fee Simple Subject to a Condition Subsequent.
      c. Reversion
             i. Held by the Grantor
            ii. Follows life estates and leasehold estates
      d. Remainders
             i. A remainder follows an estate of known, fixed duration. It cannot cut the
                preceding estate short. Thus, it follows a life estate or a term of years.
            ii. There are two kinds:
                    1. Contingent Remainders:
                            a. A remainder created for either: (1) an unascertained person,
                               or (2) subject to a condition precedent, or (3) both.
                            b. Unascertained people are typically unborn people or
                               ―heirs,‖ because heirs are only determined when A dies.
                            c. Condition precedent: Before B takes, condition satisfied.
                               EX: ―O to A, but if B graduates, then to B.‖
                               EX: ―O to A, but when B turns 21, then to B.‖
                            d. The Destructibility Rule
                                    i. AT COMMON LAW: if B’s remainder was contingent
                                       when the preceding estate ended, B’s remainder was
                                       destroyed.
                                   ii. THE MODERN VIEW: The Rule is abolished. If B
                                       hasn’t met the condition precedent, estate reverts to
                                       O and B has a springing executory interest.
                            e. Shelly’s Rule
                                    i. AT COMMON LAW: When O left the estate to A for
                                       life, remainder to A’s heirs, A had a fee simple.
                                   ii. THE MODERN VIEW: If O intends A only to have a
                                       life estate, O has a life estate, A’s heirs have a
                                       contingent remainder, and O has a reversion.
                            f. Doctrine of Worthier Title
                                    i. If: O  A, remainder to O’s heirs – O has a
                                       remainder and O’s heirs don’t have any interest.
                                   ii. This is a rule of construction rather than law. O
                                       may overcome it with a clear expression of intent.



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              2. Vested Remainders: there are 3 kinds
                      a. Indefeasibly Vested Remainders
                               i. The remainderman is certain to acquire an estate in
                                  the future, with no conditions (strings) attached.
                              ii. O  A, remainder to B
                             iii. If B predeceases A, his remainder interest passes to
                                  his heirs.
                      b. Vested Remainder Subject to Total Divestment
                           (AKA Vested Remainder Subject to Complete Defeasance)
                               i. The remainderman has a vested remainder that may
                                  be cut short because of a condition subsequent.
                              ii. EX: O  A, remainder to B, but if B marries, then
                                  to C.
                      c. Vested Remainder Subject to Open
                               i. This is a remainder given to a class, where at least
                                  one person holds it as a vested interest.
                              ii. The class is open so long as additional class
                                  members may join.
                             iii. Each vested interest is subject to dilution until the
                                  class closes. A class closes when any member can
                                  demand possession.
                                      1. For kids: children in gestation when the
                                          class closes are included in the class.
e. Executory Interests
   Executory interests follow defeasible estates.
       i. Shifting
              1. A shifting executory interest ―shifts‖ the estate from the holder of
                  the defeasible estate to the future interest holder.
      ii. Springing
              1. A springing executory interest arises when a defeasible estate
                  reverts back to the Grantor before passing to the third party that
                  holds the executory estate.
              2. EX: O A (life), then to B if B is 21 or older.
                  If B is 18 when A dies, O takes a fee simple (by reversion) subject
                  to B’s springing executory interest.




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V.   THE RULE AGAINST PERPETUTITIES
     a. Keep in mind that the RAP only applies to contingent remainders, executory
        interests, and certain kinds of vested remainders subject to open.
             i. It also applies to a right of first refusal.
            ii. It does not apply to an interest held by the Grantor or vested remainders.
     b. The RAP ―kills‖ interests that aren’t definite within 21 years of a life in being.
             i. If you can determine whether or not future holders will take – and which
                ones will take – within 21 years of a life in being, the RAP doesn’t apply.
                Otherwise, the RAP ―kills‖ the portion of the grant that fails the test.
     c. General Rules
             i. A gift to an open class that is conditioned on the members surviving to an
                age beyond 21 violates the RAP – and ―bad as to one, bad as to all.‖
            ii. The RAP kills an executory interest with no time limit on the time within
                which it must vest.
                     1. When a defeasible estate doesn’t have a time limit on the
                         ―triggering event,‖ the RAP kills the resulting executory interests.
                     2. Exception: the Charity-to-Charity exception
                         EX: to the Boy Scouts of America, so long as it is used as a
                         campground, otherwise to the YMCA.




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VI.   CONCURRENT ESTATES
      a. Joint Tenancies
              i. Joint tenants must take their interest subject to the 4 Unities – ―T-TIP:‖
                      1. Time (they must take at the same time)
                      2. Title (they must take by the same title)
                      3. Interests (they must take identical shares /interests)
                      4. Possession (they must each have the right to possess the whole)
                 And the Grantor must clearly express the right of survivorship.
             ii. The joint tenancy can be destroyed by unilateral conveyance.
                      1. SPAM: Sale, Partition, and Mortgage
                      2. BUT: only a minority of states follow the mortgage-severance rule.
            iii. If there are 3+ joint tenants and 1 transfers her interest, the remaining joint
                 tenants enjoy a JTWROS. Transferee holds as a tenant in common.
            iv. A joint tenant severs her share as soon as she contracts for sale / mortgage.
                      1. The Doctrine of Equitable Conversion: ―equity regards as done
                         that which ought to be done.‖
             v. Joint tenants may also sever the tenancy without going through SPAM
                 (Sale, Partition, and Mortgage). They can sever it through three kinds of
                 voluntary partition:
                      1. By voluntary agreement
                      2. Partition in kind (judicial action)—physical division of the lot.
                         The court will only part a property ―in kind‖ if it is in all of the
                         parties’ best interests. Typically, partition in kind works best with
                         readily divisible properties.
                      3. Forced sale (judicial action). Typically, a forced sale works best
                         for commercial / residential properties that aren’t readily divisible.

      b. Tenancy by the Entirety
             i. A marital interest in property where the married couple is treated as a
                single unit. Each spouse has a right of survivorship.
            ii. If the jurisdiction recognizes tenancy by the entirety, conveyances to a
                married couple are presumed to be tenancies by the entirety unless clearly
                stated otherwise.
           iii. 1 spouse cannot encumber the tenancies’ property. Creditors of only 1
                spouse cannot attach property belong to the tenancy by the entirety.

      c. Tenancy in Common
            i. Each co-tenant owns a part that is freely devisable, descendible, and
               alienable. Further, each co-tenant enjoys the right to possess the whole.




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VII.    RIGHTS AND DUTIES OF CO-TENANTS
        a. Co-tenants must not commit waste (voluntary, permissive, or ameliorative).
                i. A co-tenant in possession may demand contribution for reasonable and
                    necessary repairs, so long as he informed the other co-tenants of the need.
               ii. While there’s no right to contribution for improvements (ameliorative
                    waste), at partition the ―improving co-tenant‖ may recover any increase in
                    FMV of the property that resulted from his improvements
        b. Ouster: when a co-tenant wrongfully excludes other co-tenants from the property.
                i. After committing ouster, the co-tenant would be liable to the others for
                    rent. (Absent ouster, no co-tenant has to pay others for rent.).
               ii. After committing ouster, other tenants may demand an accounting.
              iii. While, generally, co-tenants may not seize the property through adverse
                    possession, through ouster they satisfy the missing element: ―hostility.‖
        c. A co-tenant who leases property to a third party must account to his co-tenants for
           their fair share of the profits.
        d. Each co-tenant is responsible for his share of taxes and repairs, in proportion to
           his ownership share in the property.
        e. Any joint tenant or tenant in common has the right to bring an action for partition

VIII.   LANDLORD / TENANT LAW
        a. Leasehold estates come in four flavors:
               i. Tenancy For Years
                      1. A lease for a fixed period of time—any time the termination date is
                         set up front, you have a tenancy for years.
                      2. No notice is needed for termination, because the term date is set.
                      3. To satisfy the statute of frauds, a tenancy for years greater than one
                         year must be in writing.
              ii. Periodic Tenancy
                      1. A lease that continues for successive intervals until either LL or T
                         give proper notice of termination.
                      2. It may be created expressly or implicitly.
                              a. An implicit periodic tenancy arises when:
                                      i. The lease contract doesn’t specify duration, but it
                                         calls for rent payments at set intervals;
                                     ii. The parties contract to an oral term of years in
                                         violation of the statute of frauds; or
                                    iii. The LL decides to holdover a Tenant by Sufferance.
                                         The LL and T now have a Periodic Tenancy defined
                                         by the way T tendered his rent.




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        3. Unless otherwise specified in the leasehold contract, either LL or T
           may terminate by:
              a. Giving written notice
              b. at least equal to one ―period,‖ and
                      i. (For a periodic tenancy of one year or more, notice
                          must be at least six months.)
              c. it must end at the conclusion of a natural lease period.

iii. Tenancy at Will
        1. This is a tenancy without a fixed duration. Either LL or T may
           terminate the contract at any time.
               a. Although LL may terminate at any time, most jurisdictions
                    require a reasonable notice to vacate.
        2. Unless the parties expressly create a tenancy at will, the court will
           treat it as a periodic tenancy defined by the term of rent payments.

iv. Tenancy at Sufferance
       1. If T wrongfully holds over, he creates a Tenancy by Sufferance.
          LL may elect either to evict T or hold him liable for rent.
       2. If a commercial tenant was aware that LL intended to raise the rent
          and failed to move out, T will be held liable for the increased rent.




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b. Tenant’s Duties
      i. Liability to Third Parties
             1. T must maintain the premises in reasonably good repair. T is
                 liable for injury to invitees even if LL expressly promised to make
                 repairs and maintain the premises.
             2. Generally, T has the same tort liability as any land possessor.

       ii. Duty to Repair
              1. T must maintain the premises and make ordinary repairs.
              2. T must not commit waste (voluntary, permissive, ameliorative).
              3. T must not remove fixtures (even fixtures that she bought and
                  installed!). By removing fixtures, T commits waste.
                      a. A fixture is a once movable chattel that has become part of
                          the realty. The test is objective: whether, objectively, it
                          shows the intent to permanently improve the realty.
                      b. EX: HVAC systems, custom windows, light installations.

      iii. Duty to Pay Rent
              1. If T still possesses, LL may evict T through judicial action or
                  continue the lease and sue for rent due. If LL evicts T, he is still
                  entitled to rent for the tenancy in sufferance.
                      a. LL must not engage in self help! He cannot change the
                          locks, forcibly remove T, or remove any of T’s possessions.
              2. If T is out of possession at breach, LL has 3 options (S I R):
                      a. Surrender:
                          LL may treat T’s breach as an implicit surrender of the
                          premises, and may accept. Surrender occurs when T, by
                          words or actions, shows that he wants to give up the lease.
                               i. If the remaining term is > one year, LL must write a
                                   letter accepting surrender and send it to tenant’s last
                                   known address to satisfy the Statute of Frauds.
                      b. Ignore:
                          LL may ignore the abandonment and continue to hold T
                          accountable for missed rent payments.
                               i. Note: this is a minority view and is not universal
                      c. Re-let:
                          LL may re-lease (re-let) the premises to another tenant but
                          hold T1 accountable for any deficiency.
                               i. Note: this is the majority view, that LL must at least
                                   try to re-let the premises to mitigate his losses.



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c. Landlord’s Duties
      i. LL’s Duty to Deliver Possession
             1. ―American Rule‖: LL needn’t put T in actual possession of the
                 premises; instead, LL need only give T legal possession.
             2. Majority Rule (―English Rule‖): LL must transfer actual / physical
                 possession of the premises to T at the beginning of the lease.

       ii. The Implied Covenant of Quiet Enjoyment
              1. Applies to both residential and commercial properties: T has the
                 right to quiet use and enjoyment of the premises, without
                 interference from LL.
                     a. Breach by Wrongful Eviction: occurs when the LL
                         wrongfully evicts or excludes T from the premises
                     b. Breach by Constructive Eviction: occurs when the LL
                         frustrates T’s quiet enjoyment of the premises through
                         inaction (failure to fix a problem). Elements: SI N G
                         Substantial Interference: needn’t be permanent, but it
                              should be at least chronic.
                         Notice: T must notify LL and LL must fail to act.
                         Goodbye…: T must vacate within a reasonable time after
                              LL fails to fix the problem.
                     c. Generally, the LL isn’t liable for the acts of other tenants.
                         However:
                              i. LL must not allow nuisance on the premises, and
                             ii. LL is responsible for controlling common areas.

      iii. The Implied Warranty of Habitability
              1. Applies only to residential properties.
              2. Tenant may –NOT– waive it by contract.
              3. Residential premises must be fit for basic human habitation;
                 premises must meet bare living requirements. Standards may be
                 set by local housing codes or independent court conclusions.
              4. Typical issues: no heat in winter, no plumbing, no running water
              5. When breached, T may: (M R3)
                     a. Move out & end the lease.
                     b. Repair & Deduct (if allowed by local statute).
                     c. Reduce Rent, or withhold it until court determines the
                         FMV. Typically, T needs to put rent into escrow.
                     d. Remain in Possession, pay rent, and sue for damages.
              6. NoRetaliatory Evictions! LL may not evict T for reporting him.



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d. Assignments & Subleases
       i. LL may prevent T from assigning or subletting without LL’s prior, express
          written approval. However, once LL allows T to transfer, he impliedly
          waives the right to object to future transfers (unless expressly reserved).
      ii. Restraints on alienation are strictly construed. Thus, if LL expressly
          prohibits T from assigning without LL’s written consent, the express
          prohibition against assignment will not apply to T’s subsequent sublet.
     iii. Assignment: T transfers all of his remaining leasehold interest to T2.
              1. LL and T remain in privity of contract. T1 is still liable for rent if
                  T2 fails to pay. (However, T2 may indemnify T1 by contract.)
              2. LL and T2 are now in privity of estate. LL and T2 are thus liable
                  to each other for all of the covenants that ―run with the land‖ (e.g.,
                  the responsibility to pay rent, the warranty of habitability).
     iv. Sublease: T transfers some, but not all, of his leasehold interest to T2.
              1. LL and T remain in privity of contract. LL has no relationship
                  with T2. T1 must continue to pay the rent each month.

e. Landlord’s Tort Liability
   (when the tenant learns of LL’s tort liability, she C L A P S)
       i. Common areas: LL must maintain all common areas.
      ii. Latent defects: LL has a duty to warn T of all hidden defects of which LL
          has actual or constructive knowledge.
     iii. Assumption of Repair: a LL who voluntarily repairs the premises must do
          so with reasonable care—if he does it negligently, he will be liable.
     iv. Public Use Rule: a LL who leases public space (e.g., convention center)
          and who knows because of the nature of the defect and the length of the
          lease that T will not repair is responsible for any defects on the premises.
      v. Short term lease / Furnished Dwelling: LL responsible for all defects on
          site that harm T.




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IX.   EASEMENTS
      a. The scope of an easement is determined by the original grant or creation.
         Unilateral expansion is not allowed.

      b. Negative Easements
             i. The negative easement prevents the servient estate from doing something.
                They are only recognized in 4 categories: L A S S
                   1. Light
                   2. Air
                   3. Support
                   4. Streamwater (from an artificial flow)
                   5. Minority of states recognize a negative easement for scenic views.
            ii. Negative easements may only be created expressly.

      c. Affirmative Easements
             i. If an affirmative easement exists, the owner of the servient estate has
                granted the owner of the dominant estate a right to do something on the
                servient estate.
            ii. An affirmative easement can be created in 4 ways: P I N G
                    1. Prescription (same elements as adverse possession): C O A H
                             Continuous
                             Open & Notorious
                             Actual
                             Hostility
                    2. Implication:
                            a. Grantor owns two adjoining lots. Essentially, he enjoys an
                                 easement over his own property.
                            b. He transfers the dominant estate to someone else without
                                 any express mention of the easement in the conveyance.
                            c. The easement will exist as an implied easement (aka an
                                 easement implied from existing use) if:
                                     i. The use was apparent, and
                                    ii. The parties assumed that the use would survive the
                                        division because it was reasonably necessary to the
                                        use and enjoyment of the dominant estate.
                    3. Necessity: an easement by necessity will be presumed if grantor
                        conveys a portion of his land (landlocked parcel) with no way out
                        except over some part of grantor’s remaining land
                    4. Grant: an express grant, in writing (to satisfy Statute of Frauds)




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           iii. There are two types:
                   1. Easements Appurtenant
                           a. If two parcels are involved, it is an easement appurtenant.
                           b. The benefit automatically passes with the land, even if not
                               mentioned in the conveyance.
                           c. The burden passes automatically unless the new owner is a
                               BFP without notice of the easement.
                   2. Easements in Gross
                           a. If only one parcel is involved, it is an easement in gross.
                               EX: placing a billboard on property, right to fish or swim in
                               your neighbor’s pond, utility co.’s right to lay power lines.

           iv. Terminating an Easement: there are 8 ways, E N D C R A M P
                  1. Estoppel: if the servient estate owner changes her position in
                     reasonable reliance on the dominant estate owner’s assurances that
                     the easement won’t be enforced, the easement terminates.
                  2. Necessity ends: an easement by necessity ends when the necessity
                     no longer exists.
                  3. Destruction: destruction of the servient land (other than by willful
                     conduct of the servient owner) terminates the easement.
                  4. Condemnation: eminent domain on the easement terminates it
                  5. Release: an express, written release terminates the easement
                  6. Abandonment:
                         a. Abandonment requires more than mere non-use. The
                             owner of the dominant estate must show that, by physical
                             action, he has abandoned the easement and never intends to
                             use it again.
                  7. Merger:
                         a. If both parcels are subsequently owned by the same party,
                             the easement terminates.
                  8. Prescription: the servient estate holder may terminate the easement
                     by taking it through adverse possession (C O A H).

X.   LICENSES
     a. An oral easement creates a freely revocable license.
     b. A license is a mere privilege to enter another’s land for some delineated purpose.
     c. Licenses are freely revocable at the will of the licensor, unless promissory
        estoppel prevents him from revoking it.
            i. Estoppel applies when the licensee has invested substantial money, labor,
               or both in reasonable reliance on the license’s continuation.



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XI.     PROFITS
        a. Profits entitle the holder to enter a servient estate and remove natural resources.
           They are, in effect, easements in gross.
        b. As an easement in gross, all the ―rules of easements‖ apply.

XII.    COVENANTS
        a. Promises (often contractual) to do or refrain from doing something.
        b. Like easements, covenants can be negative or affirmative.
        c. Note: if plaintiff seeks money damages, treat it as a covenant. If plaintiff
           pursues an action in equity, assume that it’s an easement.
        d. The burden of a covenant runs with the land when: W I T H N
                i. Written: the original covenant must be in writing
               ii. Intent:the original parties must have intended the covenant to run
              iii. Touch and Concern the Land: the promise must affect the parties’ rights as
                   landowners and not merely as members of the community at large
                       1. Note that fees (e.g. homeowner’s fees) touch and concern the land.
              iv. Horizontal and Vertical Privity: horizontal privity exists (if at all) between
                   the original parties, and vertical privity between an original party and his
                   successors.
                       1. Vertical privity would only be lacking if the subsequent owner
                           took through adverse possession.
               v. Notice: may be actual or constructive
        e. The benefit of a covenant runs with the land when: W I T V
                i. Writing
               ii. Intent
              iii. Touch and concern the land
              iv. Vertical privity

XIII.   EQUITABLE SERVITUDES
        a. This is a promise that is enforceable in equity against successors. It runs with the
           land so long as W I T N is met: writing, intent, T&C, and notice.
        b. Generally arises in the context of an implied equitable servitude—a.k.a. the
           general or common scheme doctrine. When a builder subdivides lots and builds
           them all according to a common scheme, the courts will find implicit reciprocal
           negative servitudes to keep unrestricted subsequent takes from working against
           the common scheme.
                i. In such cases, notice may be in the A I R—actual, ―inquiry‖, or record.




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XIV. ADVERSE POSSESSION –
     a. C O A H
             i. Continuous: uninterrupted for the statutory period
            ii. Open & Notorious: possession like that of the usual owner, in the
                circumstances
          iii. Actual: it must be a real entry—symbolic/hypothetical use isn’t enough
           iv. Hostile: must not be with the true owner’s permission
     b. Tacking is permitted, so long as there’s privity—satisfied by any non-hostile
        nexus between the parties such as blood, contract, will, or deed.
     c. SOL won’t run against a true owner who’s disabled at the start of adverse
        possession. However, should the true owner become disable in the midst of
        adverse possession, the disability has no impact.
             i. Common disabilities include infancy, insanity, and imprisonment.

XV.    LAND CONVEYANCE: THE LAND CONTRACT
       a. Must be in writing to satisfy the Statute of Frauds, signed by ―the party to be
          bound,‖ unless the Doctrine of Part Performance is met through:
                i. Grantee’s taking possession
               ii. Grantee’s paying any portion of the purchase price
              iii. Grantee’s making of substantial improvements to the property.
       b. If the amount of land recited in the contract > the actual conveyance, purchaser is
          entitled to a reduction equal to the reduction in FMV of the purchase.
       c. Per the Doctrine of Equitable Conversion, the buyer bears the risk of loss once the
          parties sign the agreement of sale (unless the parties contract otherwise).
       d. There are two implied promises in all land sale contracts:
                i. At closing, seller promises to convey marketable title.
                       1. Marketable title is free from reasonable doubt, defects, and threats
                           of litigation.
                       2. Title isn’t marketable if it rests on adverse possession.
                       3. Mortgages and servitudes render property unmarketable unless the
                           buyer waives them.
                       4. Title is similarly unmarketable when the lot violates a zoning
                           ordinance, because it’s subject to a threat of litigation.
               ii. Seller promises not to make any false statements of material fact.
                       1. Seller is liable both for material lies and omissions.
                       2. Unless the land contract contains a general disclaimer of liability
                           (―property bought as is‖ or ―with all faults‖).
              iii. Land contracts don’t have implied warranties of fitness or habitability.
                       1. Except: when buyer purchases new construction, the seller may be
                           held liable for defects that weren’t patently obvious to the buyer.



                                           15
XVI. LAND CONVEYANCE: THE CLOSING
     a. The controlling instrument is the deed.
     b. Legal title passes from buyer to seller by L E A D:
            i. Lawfully Executed and Delivered
           ii. The deed needn’t recite consideration (though it may).
                    1. Consideration isn’t necessary to validate a deed.
          iii. The deed’s description of the land needn’t be perfect. It must contain,
                however, an unambiguous description and ―a good lead.‖
          iv. Delivery doesn’t require a physical transfer of paperwork.
                    1. The test for delivery requires present intent to transfer title.
                    2. If the recipient rejects delivery, title does not transfer.
                        Rejection defeats delivery.
                    3. Delivery by escrow is okay.

XVII. LAND CONVEYANCE: TYPES OF DEEDS
      a. Quitclaim
             i. This deed contains no covenants. Grantor doesn’t even promise that he
                has title to convey. If any issues arise post-closing, seller is off the hook.
      b. Special Warranty Deed
             i. Grantor promises that:
                    1. He has not previously conveyed the property; and
                    2. The property does not have any encumbrances created by the
                         grantor.
      c. General Warranty Deed
             i. This deeds warrants against all defects in title, including those created by
                Grantor’s predecessors.
            ii. General Warranty Deeds contain six covenants. Three pertain to the
                immediate, and three are future covenants.
                    1. Immediate: SOL runs from instant of title transfer:
                             a. Covenant of Seisin: O promises that he owned this estate.
                             b. Covenant of Right to Convey
                             c. Covenant Against Encumbrances
                    2. Future promises: not breached until A is disturbed in possession
                             a. Covenant for Quiet Enjoyment: O promises that A won’t
                                be disturbed in possession by B’s lawful claim of title.
                             b. Covenant of Warranty: O will defend A.
                             c. Covenant for Further Assurances: O promises to do
                                whatever’s necessary to clear title in the future if problems
                                arise.




                                            16
XVIII. THE RECORDING SYSTEM
       OA, OB: Who wins?
       a. In a NOTICE system, B wins so long as B is a Bona Fide Purchaser.
               i. In a notice jurisdiction, it doesn’t matter who records first… except that, if
                   A properly records, B wouldn’t have record notice.
              ii. Typically: ―A conveyance of an interest in land shall not be valid against
                   any subsequent purchase for value, without notice thereof, unless the
                   conveyance is recorded.‖
       b. In a RACE / NOTICE system, B wins only if B is a Bona Fide Purchaser and B
          is the first to record (if B is a BFP and ―wins the race‖ to record).
               i. ―Any conveyance of an interest in land shall not be valid against any
                   subsequent purchaser for value, without notice thereof, who conveyance is
                   first recorded.‖
       c. A BFP is someone who purchases for value without notice of a prior sale.
               i. Value: substantial consideration (bargain sales still count)
                        1. Those who receive by gift or inheritance are not BFPs.
              ii. Notice: Remember, 3 kinds of notice: A I R
                        1. Inquiry Notice: Buyer has a duty to inspect real estate before the
                            transfer of title to see whether anyone else is in possession. If
                            someone else is in possession, B has inquiry notice.
                                a. Further, if a recorded instrument references an unrecorded
                                    possessor, B is on inquiry notice of whatever a reasonable
                                    follow-up would reveal.

XIX. THE RECORDING SYSTEM: CHAIN OF TITLE ISSUES
     a. The Shelter Rule
            i. One who takes from a BFP will prevail against anyone that the BFP would
               have prevailed against. Thus, if O transfers to A (who records), then O
               transfers to B (who records), and then A transfers to C, C will defeat B.
     b. The Problem of the ―Wild Deed‖
            i. If there’s a break in your chain of title you have a ―Wild Deed.‖ Any
               recording of a ―wild deed‖ is void against subsequent purchasers,
               even as against subsequent purchasers who have notice.
     c. Estoppel By Deed
            i. One who conveys an estate that he doesn’t actually have an interest in is
               estopped from denying the validity of that conveyance if he later acquires
               the previously conveyed interest/estate.




                                             17
XX.   MORTGAGES
      Two elements: (1) debt, (2) secured by a lien on debtor’s land.
      a. Mortgages must be in writing to satisfy the Statute of Frauds.
      b. Equitable Mortgage: when Debtor and Creditor understand that land is security
         for a mortgage and Debtor gives Creditor the deed instead of executing a note,
         this is an equitable mortgage.
               i. If Creditor subsequently sells the land to X, Debtor’s only recourse is to
                  sue Creditor for fraud and the sale proceeds. X lawfully owns the land.
      c. Any party may transfer its mortgage interest. The mortgage automatically follows
         a properly transferred note.
               i. The Creditor (the Mortgagee) can properly transfer the note by endorsing
                  it and delivering it to the Purchaser, or by executing a separate assignment.
              ii. To be a holder in due course:
                       1. The note must be negotiable and payable to the named mortgagee
                       2. The original note must be indorsed by the named mortgagee
                       3. The mortgagee must deliver the original note (not a photocopy)
                       4. Transferee must take in good faith & without notice of illegality,
                       5. and The transferee must pay value for the note.
             iii. A holder in due course takes the note free of any ―personal defenses‖ that
                  could have been raised against the original mortgage, including fraud,
                  unconscionability, waiver, estoppel, etc. However, the holder in due
                  course is still subject to ―real defenses:‖ MAD FIFI4
                       1. Material Alteration
                       2. Duress
                       3. Fraud in the Factume (a lie about the instrument)
                       4. Incapacity
                       5. Illegality
                       6. Infancy
                       7. Insolvency
      d. If the mortgagor sells the property, the mortgage runs with the land so long as the
         mortgage was properly recorded. Recording statutes treat mortgages like deeds.
               i. If Buyer ―assumes the mortgage,‖ both O and B are liable.
              ii. If Buyer ―took land subject to the mortgage,‖ only O is liable on the note--
                  however, if O fails to pay, the bank may seize the land that B bought.
      e. Foreclosure:
               i. Creditors with subordinate interests are necessary parties to foreclosure
                  actions. Funds from a forced sale go to the foreclosing creditor first and
                  trickle down. If there are deficiencies, junior creditors may bring a
                  deficiency action against the debtor but cannot look to their lien for
                  satisfaction.



                                           18
XXI. MORTGAGE’S PRIORITY OVER OTHER MORTGAGES
     a. First in time, first in right.
     b. Except: the purchase-money mortgage. A PMSI Lender has first priority against
        the property that he financed, even against earlier lenders who took a SI in AAP.

XXII. MORTGAGES: REDEMPTION
      a. Equitable Redemption: at any time prior to a judicial foreclosure sale, Debtor may
         redeem the land by paying off the debt owed (plus interest).
             i. Neither party may waive the right to redeem.

XXIII. LATERAL SUPPORT
       a. If excavation causes a neighbor’s improved lands (built-upon lands) to cave in,
          the excavator can be held liable under negligence theory.
       b. Excavator may be held liable under strict liability if plaintiff can prove that
          excavator’s acts would have caused his land to cave in even in its natural state
          (without any buildings on it), but this is a very difficult burden to overcome.

XXIV. WATER RIGHTS
      a. For riverways, there are two major doctrines:
              i. Riparian Doctrine: water belongs to those who own land bordering the
                 watercourse. They are entitled to reasonable use of the water. A riparian
                 will be liable to other riparians if her use interferes with others’ use.
             ii. Prior Appropriation Doctrine: The water initially belongs to the state but
                 the right to divert and use it can be acquired by any individual (including
                 non-riparians).
                     1. First in time, first in right.
      b. For groundwater, landowners may make reasonable use of groundwater so long as
         the use isn’t wasteful.
      c. For surfacewater, there’s a ―common enemy‖ rule. Landowners may do anything
         to combat it.
              i. Many courts, however, have modified this rule to prohibit unnecessary
                 harm to others’ land.

XXV. TAKING // EMINENT DOMAIN
     a. Under the Fifth Amendment, the government can take private lands if it does so
        for public use and provides just compensation.
     b. A regulation may be a taking if it completely wipes out the owner’s investment.
        In such cases, the gov’t must eliminate the regulation or pay just compensation.




                                           19
XXVI. ZONING
      a. Government may enact statutes to reasonably control land use for police powers.
      b. To qualify for a variance, the plaintiff must show:
              i. Undue hardship
             ii. Variance won’t decrease neighboring property values.
      c. Non-Conforming Use:
              i. Occurs when a once lawful, still-existing use is deemed nonconforming by
                 a later-created zoning ordinance.
             ii. The non-conforming use must be permitted for a reasonable time, or the
                 government must treat it as a taking and provide just compensation.
      d. Exactions (the money government seeks in exchange for granting permission to
         build) are inherently suspect.
              i. Lawful exactions must be reasonably related both in nature and scope to
                 the impact of the proposed development.




                                         20

				
DOCUMENT INFO
Description: This is a bar review outline that I created. It's direct and to the point. (You can rely on this. As a point of reference, I was about 3 points from the highest essay score in PA. These served me well.)