Real Property Attack Rule Statements

Real Property Checklist

(1) Has property been acquired; (2) who has an interest in the property; (3) are there limits on land use

Adverse Possession

(1) continuous; (2) statutory period; (3) open and notorious; (4) actual; (5) exclusive; and (6) hostile

Land Sale Contract SoF Requirements

(1) Writing; (2) parties identified; (3) signed by one to be bound; (4) describes land; and (5) lists consideration

Land Sale SoF Exception

conveyance or part performance (2 of payment, improvement, possession)

Marketable Title and Trigger Issues

Implied promise that the seller will provide marketable title at closing. Marketable title is free from reasonable doubt. Triggers include encumbrances, record chain of title, easements, and use restriction

Equitable Conversion

If contract is executed, buyer has equitable title prior to closing and bears the risk of loss. If seller still has insurance, then the insurance recovery can reduce the purchase price

Legal Damages Remedy

Difference between the contract price and the market price

Specific Performance

All land is unique and land sale contracts are subject to specific performance

Mortgage

Subject to SoF but equitable mortgages may be enforced. Mortgagee (lender) has a security interest in the land and a right to foreclose for nonpayment

Mortgage Foreclosure

Best done by judicial foreclosure. Priority of payment is (1) attorneys fees; (2) PMM or secured senior interests; (3) secured junior interests; and (4) unsecured interests

Deficiency judgments and antideficiency

In a deficiency judgment, the property is worth less than the amount owed, and the lender can sue the debtor personally only if: (1) there was a judicial foreclosure; and (2) the loan was not a PMM. Antideficiency allows a lender to receive no more than is owed, with the proceeds being returned to the buyer

Deed of Trust and Installment Contract

Deed of trust is like a mortgage except the debtor is the settlor and the deed of trust is given to a third-party trustee. Installment contracts are regular payments where usually the buyer does not get full ownership until he pays the last installment

Deed

A deed is a document that transfers legal title when it is lawfully executed and properly delivered

Deed requirements:

(1) identification of parties; (2) in writing and signed by grantor (witnessed or notarized); (3) adequate description of the property; (4) words of intent (“grant” OK); and (5) no consideration is required

Types of Deeds

Quitclaim (whatever interest the grantor has with no guarantees); General warranty (warrants against defect in title and contains all six covenants); and Special Warranty (grantor only makes the guarantees for his own conduct)

Present Covenants

Breached at the time of sale if ever. (1) seisin (grantor owns what he purports to own); (2) right to convey; and (3) covenant against encumbrances (breached even if grantee had notice)

Future Covenants

Warranty of title (will defend against lawful claims asserted by others); Quiet enjoyment (grantee not disturbed in possession) and further assurances (grantor will take actions necessary to perfect title)

Delivery of Deed Requirements

(1) Intent of present transfer (inferred from recording or physical delivery); (2) acceptance by the grantee

Damages if Covenants Breached

For title issues, the lesser of the purchase price or the cost to defend or perfect title. For encumbrances, the lesser of the difference between the amount paid and the value or the cost of removing the encumbrance

Issues Arising from Deeds by Wills

(1) ademption; (2) exoneration; and (3) lapse and antilapse

Recording Act Types

(1) common law “first in time first in right”; (2) race; (3) notice; and (4) race-notice

Types of Notice

(1) actual; (2) inquiry (reasonable person would make further inquiry, such as other person in possesion or an easement); and (3) record (constructive) (arises from proper chain of title)

Wild Deed

A wild deed is one that is recorded but not in a way that makes it reasonably findable in a grantor-grantee index. Wild deeds do not provide record notice

Estoppel by Deed

If one purports to convey an interest in land he does not own, but he subsequently obtains the interest, he cannot deny the conveyance. Does not apply to quitclaim deeds.

Shelter Doctrine

One who takes from a BFP gets the protection of the BFP, even if they had notice of a prior interest

Present Freehold Estates

(1) FSA; (2) Fee tail (heirs of his blood); (3) fee simple defeasible; and (4) life estate

Fee Simple Defeasible Types

(1) Fee simple determinable; (2) fee simple subject to condition subsequent; (3) fee simple subject to executory interest

Fee Simple Determinable

Automatically terminates at the occurrence of a specified event. Grantor retains a possibility of reverter. Key words are “so long as” “during” “while” or “unless”

Fee Simple Subject to Condition Subsequent (FSSCS)

Potential to terminate upon condition of occurrence but not automatic. Grantor retains a right of reentry, which must be exercised to be effective. Key words include “but if” “provided that” “upon condition that”

Fee Simple Subject to Executory Limitation (FSSEL)

automatically terminates a preceding estate at the occurrence of a stated event. The estate passes to a third person who has an executory interest (subject to RAP)

Life Estate

Right to the estate for the grantee’s life, or a third party’s life if pur autre vie. Fully defeasible and conveyable. Subject to Waste. Creates a Reversion if defeasible or a remainder if not defeasible.

Types of Future Interests

(1) possibility of reverter; (2) right of reentry; (3) reversion; (4) Remainder (vested, contingent, or alternative contingent); or (5) executory interest (shifting or springing)

Reversion

Created when the holder of an estate conveys less than the entire estate. Fully vested and not subject to RAP

Remainder

Future interest that only becomes possessory on expiration of a prior estate created by the same instrument. Never follows a defeasible fee

Vested Remainder

Created in an ascertained person and not subject to a condition precedent (not subject to RAP)

Contingent Remainder

Created in an unascertained party or is subject to a condition precedent, or both

Alternative contingent remainder

occurs when both contingent remainders have capacity to take over and it pivots on the same condition (e.g. to A for life, then to B and his heirs if B marries C, otherwise to D)

Executory Interest

Interest in favor of a future grantee and follows an FSSEL. Shifting executory interests always follow a defeasible fee and cut short prior interest. Springing executory interests do not cut short the prior interest.

Restraint Against Alienation

Absolute restraints are void. Reasonable restraints will be upheld, such as restraint for a specific purpose or a limited time

Destructibility of Contingent Remainders

At common law, a contingent remainder was destroyed if it was still contingent when the preceding estate ended. Modernly, it gets converted to a springing executory interest.

RAP

No interest is good unless it MUST vest, if at all, no later than 21 years after some life in being at the creation of the interest

Interests Subject to RAP

(1) contingent remainders; (2) executory interests; (3) options “in gross” or right of first refusal; (4) class gifts; and (5) powers of appointment

Interests Not subject to RAP

(1) vested remainders, (2) reversions; (3) possibility of reverter; and (4) right of reentry

Concurrent Estate Types

(1) joint tenancy; (2) tenancy in common; (3) tenancy by the entirety

Joint Tenancy

Two or more people have a single unified interest in a property with a right of survivorship. Modernly, must be created with specific language.

Requirements of Joint Tenancy

Unity of (1) time; (2) title; (3) interest; and (4) possession. Also (5) express language of creation

Severing a Joint Tenancy

Can be done by conveyance, mortgage (some states) or lease (some states). A conveyance with three or more joint tenants creates a tenancy in common for the grantee but otherwise preserves the joint tenancy between the others

Mortgages and Joint Tenancy

One tenant may not unilaterally encumber the interest of another joint tenant. Under Lien theory (majority) the execution of a mortgage does not severe the tenancy. Under title theory (minority) executing a mortgage ends the joint tenancy for the mortgagor’s share. In either scenario, the joint tenancy is severed if the property is foreclosed on and sold

Tenancy By the Entirety

Similar to joint tenancy but between spouses. Not available in CP states like California. Neither tenant can unilaterally convey their share, encumber the entire property, or break the right of survivorship. Can only be severed by death, divorce, mutual agreement, or execution by a joint creditor.

Co-Tenant Possession and Profits

A co-tenant in possession has no duty to account to other cotenants for (1) the rental value of his own occupancy; or (2) any profits retained from his use, except for (a) exploitation of the land that may reduce value; and (b) rent collected from third parties. Also solely responsible for own losses stemming from use of property

Ouster

If a cotenant has refused occupancy to his cotenant and claims an exclusive right of possession, this is ouster. Ousting cotenant must account for fair rental value of the premises and the ousted cotenant can bring an action to regain possession

Co-Tenant Accounting

(1) Proportional responsibility for taxes and mortgage interest; (2) may seek contribution for payments in excess of share; (3) no duty to reimburse improvements, except necessary repairs; and (4) generally must share net rents from 3Ps or net profits from land exploitation

Partition

Can be partition in kind (split of land according to interests) or by sale (land is sold and proceeds are split proportionally).

Vested Remainder Types

Indefeasibly vested remainder (certain to acquire); vested remainder subject to divestment (subject to a condition subsequent); and vested remainder subject to open (created in a class and subject to dimunution)