EBR Real Property Deck 2

General Warranty Deed

• covenant of seisin: grantor has estate or interest she purports to convey

• covenant of right to convey

• covenant against encumbrances

• covenant for quiet enjoyment

• covenant of warranty: grantor agrees to defend on behalf of grantee any lawful or rxbl claims of title by third party

• covenant for further assurances: perform whatever acts are rxbly necessary to perfect title if it turns out to be imperfect

Breach of Covenants

• present covenants: breached at time of conveyance (seisin, right to convey, encumbrances)

• future covenants: breached only upon interference with possession of grantee or successors (quiet enjoyment, warranty, further assurances)

Special Warranty Deed

same covenants as general warranty deed but promises to warrant and defend title only against claims arising by, through, or under the grantor

Quitclaim Deed

release of whatever interest, if any, grantor has in the property

Estoppel by Deed

• if grantor purports to convey estate in property she does no then own, her subsequent acquisition of title to property will automatically inure to benefit of grantee

• if grantor transfers her after-acquired title to BFP, BFP gets good title

Common Law Recording

priority was given to grantee first in time

Notice Statutes

a subsequent BFP (person who gives valuable consideration and has no notice of the prior instrument) prevails over a prior grantee who failed to record. BFP must have had no actual or constructive notice at the time of conveyance.

Race-Notice Statute

subsequent BFP protected only if she records before the prior grantee

Race Statute

whoever records first wins

Shelter Rule

a person who takes from a BFP will prevail against any interest that the BFP would have prevailed against. true even where transferee had actual notice of the prior unrecorded interest

Without Notice

• actual notice: BFP did not actually know of any prior unrecorded conveyance

• record notice: BFP will be held to have record notice only if the deed in Q is recorded in the chain of title, recorded in fashion that searcher could rxbly find it; wild deed not connected to chain of title does not give constructive notice

• inquiry notice: if subsequent grantee is bound to make rxbl inquiry she will be held to have knowledge of any facts such inquiry would have revealed

Conveyance by Will

a will is ambulatory, it can be revoked or modified so long as testator is alive

Ademption

if property is specifically devised or bequeathed in testator’s will, but testator no longer owns property at time of death, gift is adeemed. gift fails and is not replaced by other property

Lapse and Anti-lapse Statutes

• lapse occurs when beneficiary of gift in will dies before testator. under common law, if lapse occurred gift was void. states now have statutes to prevent lapse

• most only apply when named beneficiary is descendant of testator

• if gift is made to class and some members of class die before testator, gift is given to surviving members of class

• does not apply if there is contrary will provision

Foreclosure - Redemption

• redemption in equity: at any time prior to foreclosure sale, mortgagor has right to redeem the land or free it of the mortgage by paying off amount due, together with accrued interest. acceleration clause requires full balance paid in order to redeem

• statutory redemption: gives mortgagor statutory right to redeem for some fixed period of time after foreclosure sale has occurred, usually 6 months or 1 yr. amount to be paid usually foreclosure sale price rather than amount of original debt

Priorities

generally, priority of mortgage determined by time it was placed on property. when mortgage foreclosed, buyer at sale will take title as it existed when mortgage was placed on property. thus foreclosure will terminate interests junior to mortgage being foreclosed but will not affect senior interests

Junior Interests Destroyed by Foreclosure

• junior interests to mortgage being foreclosed will be wiped out

• if a lien senior to that of mortgagee is in default, junior mortgagee has right to pay it off in order to avoid being wiped out by its foreclosure

• those with interests subordinate to those of foreclosing party are necessary parties to foreclosure action; failure to include necessary party results in preservation of that party’s interest despite foreclosure and sale

Change in Priority

• failure to record: second mortgagee records as BFP has priority over first

• subordination agreement

• purchase money mortgage: whether recorded or not has priority over other mortgages, liens, and other claims that arise prior to mortgagor’s acquisition of title; subject to being defeated by subsequent mortgages or liens by operation of recording acts, or altered through subordination agreement

• modification of senior mortgage: junior mortgage has priority over the modification

• optional future advances lose priority to junior lien

• subrogation: mortgage taken out for purpose of refinancing preexisting senior mortgage takes priority position of senior mortgage

Proceeds of Foreclosure Sale

used first to pay expenses of sale, attorney’s fees, court costs; then to pay principal and accrued interest on loan that was foreclosed; next to pay off any junior liens in order of priority; remaining proceeds distributed to mortgagor

Deficiency Judgment

if proceeds of sale are insufficient to satisfy mortgage debt, mortgagee can bring personal action against mortgagor for deficiency. number of states limit deficiency that can be recovered to difference btw debt and property’s FMV when FMV is higher than foreclosure price.