PROPERTY MBE

OWNERSHIP

ESTATES IN LAND

Fee Simple Absolute:

• 100% of ownership forever.

Life Estate:

• Rights and control for life.
• Cannot commit waste.
• “O to A for life.”

Reversion:

• Interest goes back to grantor.

Interest & Taxes:

• Life tenant must pay INTEREST & TAXES.

Remainder:

• Interest after a life estate.
• “then to.”

Vested Remainder: Automatic transfer.

vs.

Contingent Remainder: Subject to an event.

Vested Remainder Subject to Open/Partial Divestment:

• Refers to a class of people.
• One must be alive.

Vested Remainder Subject to Total Divestment:

• If a person’s interest can be wiped out.

Fee Simple Determinable:

• “so long as” or “as long as.”

Possibility of Reverter:

• AUTOMATICALLY reverts to grantor if condition is not met.

Fee Simple Subject to Condition Subsequent:

• If a future event occurs, then grantor has right of reentry.
• “but if.”

Right of Reentry:

• Grantor must act to get the land back.

RULE AGAINST PERPETUITIES

• Interest must vest within 21 years of the life in being.

CONCURRENT ESTATES

Joint Tenancy:

• Right of Survivorship.
• Trumps a will.
• Conveyance SEVERS a Joint Tenancy to a Tenancy in Common.

Tenancy in Common:

• NO Right of Survivorship.

Tenancy by the Entirety:

• Joint Tenancy between married people.
• Right of Survivorship.
• No conveyance without consent.
• Severed by divorce.

Partition:

• Court divides property in two.
• Granted unless not practical.

Contribution – Taxes & Mortgage:

• Co-tenant: May seek contribution.
• Sole possessor: Only recover amount that exceeds market value.

Contribution – Rent:

• Out of possession co-tenant may SHARE in RENT & PROFITS.
• BUT not from a tenant in possession.
• UNLESS they are damaging the property.

Contribution – Repairs & Improvements:

• No contribution for REPAIRS, unless necessary & requested.
• No contribution for IMPROVEMENTS, unless increase rents/profits.

LANDLORD-TENANT

Periodic Tenancy:

• (Start date) – (A period of time)
• Renews unless a termination date.
• Notice required to terminate.

Tenancy for Years:

• (Start date) – (An end date)
• NO notice required.

Tenancy at Will:

• Terminable at will.
• Reasonable amount of time to terminate.

Tenancy at Sufferance:

• Holdover Tenant.
• Terminates by leaving or eviction.

Landlord Duties:

• Actual possession.
• Duty for basic repairs.
• Warranty of Habitability.
• Warranty of Quiet Enjoyment.

Tenant Duties:

• Duty to Pay Rent.
• Cannot commit waste.

ASSIGNMENT & SUBLEASE

Assignment:

• Assign the rest of the lease term.
• New tenant primarily liable.
• Original tenant secondarily liable unless novation.

Sublease:

• Give away a portion of lease.
• Original tenant liable unless novation.

Covenant Against Assignment or Sublease:

• STRICTLY CONSTRUED.

FAIR HOUSING ACT

• Federal law prohibits discrimination in sale/ rental.
• Race, color, religion, sex, disability, family status, pregnancy.

FIXTURES

• Chattel affixed to property.
• Removal would cause damage.

CONFLICT OF LAWS

General Rule:

• Generally, law of the state where property is located will apply.
• Exceptions:
  • Choice of law clause.
  • Collateral issues use local law.

RIGHTS IN LAND

EASEMENT

• The right to use someone else’s land.

Creation of an Easement:

• Writing.
• By Prescription.
• By Implication.
• By Necessity.
  • AdaptiTip: An easement can be positive or negative.

Time:

• An easement will last FOREVER, unless terminated.

Easements are terminated by:

• Agreement.
• Time.
• Merger.
• Abandonment.
  • AdaptiTip: Non-use is not enough for abandonment.

COVENANTS

• Promise for a promise.
• Always created by writing.
• Generally last forever.

A Covenant “runs with the land” if:

• Writing.
• Intent.
• Notice.
• Privity.
• Touch & Concerns the land.

EQUITABLE SERVITUDE

• Looks like a Restrictive Covenant.
• Seek equitable relief: Injunction.

Implied Reciprocal Servitude:

• Common Scheme & Notice

LICENSE

• Right to enter.
• Freely revocable by grantor.
• UNLESS coupled with an interest.

PROFIT

• Right to enter the land & take something off the land

TAKING

Elements of a Taking:

• Government taking private property for “public use.”
• Requires “just compensation.”
  • AdaptiTip: Public use is a very broad definition

WATER RIGHTS

• Reasonable use of water.
• Reasonable amount of water.
• Reasonable means to alter flow of rain/snow.

Crops:

• Generally, go with the property.
• Natural: “real property.”
• Man-made: “personal property.”

Crops - Exceptions:

• Express agreement.
• Tenant with right to harvest.

SUPPORT RIGHTS
Adjoining Undeveloped Property:

• Strict Liability for damage.

Adjoining Developed Property:

• Strict Liability if damage would have happened anyway.
• Or else negligence.

Digging on Adjoining Land:

• Negligence for damage.

NUISANCE

Private Nuisance:

• Unreasonable interference with use & enjoyment.
• Reasonable person standard.

Public Nuisance:

• Affects public at large.
• Private plaintiff must prove special damages.

COMMON INTEREST OWNED COMMUNITY

• Lot owners must pay dues to an association

Property Owners Association:

• Owners required to belong to association & pay dues

Condominium:

• Created by statute.
• Must file a declaration & plat.

Condominium Owners:

• Pay taxes, insurance, mortgage for their unit.
• Own common areas as tenants in common.
• Cannot separate ownership of unit & common areas.

Co-Op:

• Corporation owns building & leases units to shareholders.
• One mortgage on WHOLE PROPERTY.
• Tenant pays share of fee for taxes & mortgage

Forming a Common Interest Owned Community:

• Declaration.
• Association.
• Board.
• Developer.

Developer:

• Developer gives power to Association.
• Association has 2 years for 2/3 vote to terminate Developer.
• Developer cannot change declaration (unless stated).

Board:

• Acts on behalf of Association to manage the community.

Rules:

• Must be “reasonably related to further a legitimate purpose” of the Association.

Powers of the Community:

• Levy assessments & fees.
• Manage/improve common areas.
• Create rules.
• Impose fines.
• Conduct reasonable inspections.
• Revoke privileges.
• Litigate as the Association.

Duties of the Community:

• Treat members fairly.
• Ordinary care in managing property/finances.
• Reasonable access to information.

Burden:

• BURDEN on members to prove breach by Association.

Duties of Board Members:

• Act in good faith.
• Standard of Care: an ordinary director of a common interest owned community.
• Board members not jointly/severally liable.

MORTGAGES

Purchase Money Mortgage:

• Money used to purchase the property.
• Always gets priority.

Redemption:

• Paying off debt to prevent foreclosure

Equitable Right of Redemption:

• Time from NOTICE to SALE.
• Never Waived

Statutory Redemption:

• Period of time AFTER foreclosure sale

Lien Theory:

• Bank only has a LIEN.
• Owner holds TITLE.
• Owner can sell.

Title Theory:

• Bank holds TITLE.
• Owner only has equitable interest.
• Owner cannot sell.

Joint Tenancy:

• Lien Theory: Mortgage does not sever.
• Title Theory: Mortgage SEVERS into tenancy in common.

Assume the Mortgage:

• New buyer takes over payment.
• Original owner secondarily liable unless novation.

Subject to the Mortgage:

• Original owner liable for payment.
• BUT bank CAN foreclose on new owner.

Deed in Lieu of Foreclosure:

• Sign deed to bank & skip foreclosure proceedings.

Mortgages Taken AFTER Are Wiped Out:

• Must be given notice.
• Joined to suit.

Mortgages Taken BEFORE Stay:

• Buyer takes Subject to.

Deficiency Judgment:

• Collect the remaining money not recovered by foreclosure sale.

Installment Land Contract:

• No title until all payments made.
• Seller can take back after default.

CONTRACTS

REAL ESTATE CONTRACT

• AdaptiTip: Conveying title involves two separate documents:
  • Real Estate Contract.
  • Deed Statute of Frauds:
    • Contracts MUST be in writing, or
    • Part Performance
• AdaptiTip: A contract can be removed from SOF by Part Performance with 2 out of 3:
  • Payment.
  • Possession.
  • Valuable Improvements.

Real Estate Contract Terms:

• Price.
• Parties.
• Description.
• Conditions.
• Signed by party to be charged.

Equitable Conversion:

• Transfer of equitable title.
• Risk of loss shifts to the buyer.

Legal Title:

• Seller does not need legal title on day of signing.

Marketable Title:

• Implied covenant to convey title free of encumbrances.

Time:

• Time is NOT of the essence, unless stated.

Merger:

• At closing, the CONTRACT MERGES into the DEED.
• Can no longer sue under the contract.

Seller’s Duty to Disclose:

• Material defects that CANNOT be seen by the buyer.

TITLES

DEEDS

• Transfers legal title on day of closing.

Present Warranties:

• Seisin.
• Right to Convey.
• Covenant against Encumbrances.
  • AdaptiTip: If Present Warranties are breached, they are breached on the day of closing.

Future Warranties:

• Quiet Enjoyment.
• Warranty.
• Further Assurances.
  • AdaptiTip: Future Warranties last forever General.

Warranty Deed:

• Promise for all 6 warranties since property was developed/created.

Special Warranty Deed:

• Promise for all 6 warranties since seller had title.

Quitclaim Deed:

• No promises regarding title.

FORMALITIES OF CLOSING

Writing:

• To satisfy Statute of Frauds.

Delivery of Deed:

• Intent of the seller to give up control.

Acceptance of Deed:

• Presumed unless rejected.

Merger:

• At closing the Contract & Deed MERGE.

Description of the Property:

• Must be “reasonably definitive.”

TRANSFER OF PROPERTY BY WILL OR LAW

• AdaptiTip: If there is no will, property will pass according to intestate laws.

Liens:

• Estate pays off liens.

ADVERSE POSSESSION

• Acquire legal title if:
  • Continuous.
  • Actual.
  • Open and Notorious.
  • Hostile.
  • Exclusive Tacking:
    • Intentional transfer from one person to another

DRAFTING & ENFORCING DOCUMENTS

Drafting Documents:

• Non-attorney can draft documents.
• BUT not give legal advice.

Equal Dignity Rule:

• Agent may sign deed on behalf of grantor.
• Need permission in writing.
• Exceptions:
  • Officer of Corporation with authority.
  • Signing agent.
  • No writing – Grantor is estopped if he tried to induce reliance.

RECORDING STATUTES

Notice Statute:

• Key words: “subsequent purchaser for value without notice.”
• Last Bona Fide Purchaser prevails.

Bona Fide Purchaser:

• Pay for property.
• Take property without notice.

Race Statute:

• First person to record prevails.

Race Notice Statute:

• First Bona Fide Purchaser to record.
• Key words: “first recorded.”

Shelter Rule:

• One who takes from a BFP will prevail against anyone the transferor-BFP would have prevailed against.

Wild Deed:

• A recorded deed outside the chain of title.

After-Acquired Title:

• If Grantor acquires title after closing, title will pass AUTOMATICALLY to grantee.