property crunch outline

8/2/2019 Property Crunch Outline

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Professor KaneFall 2011Anu Dhuga

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PROPERTYIFINAL EXAM OUTLINE

**EXAMNOTE:30 MULTIPLE CHOICE(12 ON ESTATES AND FUTURE INTERESTS[2 OF THESE

INVOLVING RAP]) AND ONE ESSAY QUESTION WITH MULTIPLE SUBPARTS.

(1) POSSESSION AND ACQUISITIONS:

1(a) Ownership vs. Possession:

A. Ownership: title to property; usually proven by showing documents by previous owner (or 1stpossessor) transferring title to present titleholder.

1. Title, or ownership, is relative; lawyers conceive of property as referring to relationships

among people with respect to things, not to a relationship between a person and a thing.

2. An owner always wins against a mere possessor.

B. Possession is proven by showing physical control and the intent to exclude others. **Possession is

easier to prove than ownership.

1. First possession: Making an unowned thing, or previously enjoyed by all, ones own.i. First-In-Time Rule: The first person to take possession of a thing owns it.

2. Subsequent possession: Something is already owned by someone else, A, and it comes

into Bs possession without As consent, B can become its ownerwithout being declaredowner, and be granted protection by the legal system.

3. Prior Possession rule: A prior possessor wins over a subsequent possessor in claims of

both personal property and real property; rule can be explicitly invoked only in support of

honest claimants - unless between 2 wrongdoers.

1(b) Acquisitions:

Acquisition by Capture: Capture Of Wild Animals

A. The exercise of dominion and control over a wild animal constitutes possession of the animal and

ownership is vested in the possessor.

1. Mortally wounding or trapping an animal or fish constitutes constructive possession,

provided the hunter pursues the wounded animal and, in the case of trapping, capture is

virtually complete.

2. Mere pursuit of a wild animal does not create a property right.

3. Killing or capture = Occupancy/Possession

4. Occupancy/Actual Possession = Intent to Appropriate + Deprive of Liberty + Subject in

your certain control

B. A trespasser's title to a killed or captured animal is inferior to that of the land's owner.C. The owner of a captured animal loses title if the animal escapes and resumes its natural state.

D. If a captured wild animal escapes, the captor retains title only if the escaped animal has been

tamed and forms a habit of periodically returning to the captor, or the animal is not indigenous to

the area, so that a potential captor is put on notice that it belongs to someone else.Hypo: Shoot an animal on my property and it is wounded. Animal then wanders off my property and

dies. You pick the animal up. Property owner had constrictive ownership first in time.


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Acquisition by Creation: Ownership of Intangible Things

A. Patents: Granted for novel, useful, and nonobvious processes or products

1. Lasts for 20 years from the date of the original application.

2. Not renewable and at expiration, the innovation enters public domain.

B. Trademarks: Words and symbols indicating the source of a product or service.

1. Lost when abandoned and when a mark becomes generic2. Owners of marks protected against use of similar marks by others when such use would

result in confusion.

Example: Drugs like Aspirin become generic.C. Copyrights: Protects the expression of ideas (not ideas themselves) in books, articles, music,

artistic works, and so on.

1. Protection begins when the work is set down in a tangible form.

2. Lasts normally until 70 years after the death of the author/creator subject to a right in

others to make fair use of the materials.

3. Work must be original and must be independent creations.

Acquisition by Find: Lost, Mislaid, And Abandoned ChattelsA. When an owner of a chattel accidentally and involuntarily parts with it and does not know whereto find it, the chattel is considered lost.

B. When an owner of a chattel intentionally puts the chattel in a certain place but forgets to retrieve

it, it is considered mislaid.

C. When the owner of a chattel intentionally and voluntarily relinquishes both title and possession it

is considered abandoned.

D. Title to a lost or mislaid chattel remains with the rightful owner. One who reduces a lost chattel to

possession is its finder and only acquires a possessory right to the chattel.

E. Rule of Armory: A finder's rights to a lost chattel are generally superior to all except the rightful

owner.

F. A finder's possessory right to a lost chattel found when the finder was on another's property withconsent (express or implied) is generally superior to that of the property's owner.

1. If one finds a chattel onprivate premises open to the public (e.g. the public area of a shop),

the finder's possessory rights are superior to all except the rightful owner.

2. If a chattel is found in aprivate portion of a landowner's premises, the landowner (not the

finder) acquires a possessory right to the chattel.

G. Mislaid Chattel:The owner of the property where a mislaid chattel is found acquires apossessory right to the chattel that is superior to all but the rightful owner.H. One who finds a chattel by virtue of a trespass generally does not acquire a possessory right

superior to that of the owner of the property upon which the finder has trespassed.

1. One who wrongfully (i.e., by trespass) obtains possession of a lost chattel may sue to

recover possession from a third party(i.e., persons other than the rightful owner or the ownerof the property) interfering with his possession.

2. One whofinds but then loses a chattel may sue to recover the chattel from a third person

who subsequently finds the same.

I. A landowner, not a finder, acquires a possessory right, based on constructive possession, to objects

(e.g., meteorites) embedded in soil located on his property.

J. Unclaimed gold, silver, currency, etc. intentionally concealed or buried by an unknown owner (i.e.,

a treasure trove) belongs either to the finder or to the landowner, depending on the jurisdiction.


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K. Due Care: As a quasi-bailee, a possessor must exercise due care toward a lost or mislaid chattel in

his custody.1. If a possessor knows, or can reasonably ascertain, a rightful owner's identity, he has a duty

to do so. A breach of this duty is grounds for a charge of larceny and an action for

conversion.2. A possessor's obligations persist until either sufficient time has passed to constituteabandonment, or the statute of limitations has run.

L. Gaining Title1. A possessor gains title to lost or mislaid property when either the statute of limitations has

run or the chattel is held to be abandoned.

2. Most jurisdictions have enacted estray statutes under which a lost or mislaid chattel is

placed with proper authorities who register it. If the chattel is unclaimed after a certain

amount of time, the possessor becomes the owner.

M. Statute of Limitations:Every jurisdiction has a statute of limitations prescribing the periodduring which the rightful owner must bring suit to recover possession of a lost or mislaid chattel.

Modern courts tend to depart from the rule applying adverse possession to chattels and apply the

discovery rule, which dictates that a rightful owner's cause of action accrues "when he first knew, orreasonably should have known through the exercise of due diligence, of the cause of action, including

the identity of the possessor . . ..N. Factors to consider in lost vs. mislaid property:

1. Status of where property is lost or mislaid private place vs. purely public2. Status of the found item embedded in soil or simply laid or abandoned3. Status of the finder trespasser vs. agent/employee

Acquisition by Gift

A. Generally: Inter vivos and causa mortis gifts deal onlywith non-real property. Real property

cannot be transferred without a writing due to the statute of frauds.

1. Inter vivos: giftmade with no knowledge or threatof impending death and are irrevocable.2. Causa mortis: gifts made with knowledge or under threatof immediate death and motivated

by that fact, and are revocable if donor recovers.

B. To accomplish a gift of personal property, the donor mustintent to make a gift, the property must

be delivered to the donee, and the donee must accept the property.

1. Intent: Donor must intend to transfer title. If donors intent is merely to transfer possession,this is not a gift.

i. Gifts causa mortis are revocable if the donor recovers from the threat of death that

motivated the gift. Intent of gift is presumed to be made only because of impending

death.

2. Delivery: Must be done physically, actual physical transfer, unless impractical or impossible,

which donor may then deliver symbolicallyor constructively.i. Symbolic: Usually a written instrument but could be anything that symbolizes the

gift. For example, a picture of the gift or a letter stating the giving of gift.

ii. Constructive: Some object that is the means of obtaining possession of the property

gives access to or control over the gift. For example, giving donee a password or pinnumber to show intent to give gift.

3. Acceptance: A gift is not complete until it has been accepted by the donee.


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C. Special Circumstances

1. Gift promises are legally unenforceable for want of consideration. For example, I promise to

give you this ring when I die.2. Engagement rings cannot be recoveredif donor is at faultfor breaking off the marriage.

D. Inheritance1.Inherit by Will: the testatorleaves property to her devisees or beneficiaries, who can be

anyone friends and relations, charitable or political organizations, pets, etc.2.Inherit by Intestate Succession: the governing state statute will determine who gets the

deceaseds property called heirs and typically include spouses and blood relatives.i. An heiris a person who (1) fits the statutory classification and (2) is alive at the time

of the descendants death.ii. An issue is a direct or lineal descendant your children and there children, and soon.

a. Issue is not synonymous for children.

b. Issue and descendants are synonymous and are a subset of heirs.

(2) ADVERSE POSSESSION:

A. Generally:The doctrine ofadverse possession obligates the titleholder of land to eject, within astatutorily prescribed period, a wrongful possessorof the land. Provided certain other elements are

satisfied, a titleholder who fails this obligation will lose title to the land in question to the

adverse possessor.

B. Elements of Adverse Possession- O.C.E.A.N1. Open and Notorious:Possession is "open and notorious" when the adverse possessoractually uses a reasonable percentage of the claimed land in a manner similar to that of

typical owners of similar land, and this use is sufficient to put the true owner or the

community on notice of his possession. Occupancy public in the sense that you live therelike the true owner would.

2. Continuous:The adverse possessor must "continuously" occupy the land throughout thestatutory period, in a manner consistent with the normal uses of similar land.Although

intermittent occupancy is insufficient, an adverse possessor need not occupy the land every day

of every year during the statutory period, (e.g., if the land is normally used only in the summer,

seasonal possession suffices to satisfy this requirement).3.Exclusive: People must assume that the adverse possessor is perceived as rightful owner.

4. Actual Entry: More than just mere use Use or property in a manner the average trueowner would under the circumstances.

5. No Permission: Hostile or Adverse and under a claim of right. Hostile when the adverse

possessor occupies land without the titleholder's consent and in a manner inconsistent withhis rights. Note: Permission defeats hostility.

i. Majority/Objective Rule: State of mind is generally irrelevant. As long as the owner

has not permitted occupancy, it is adverse.

ii. Good Faith Rule: State of mind is I thought I owned it. My bad.iii. Bad Faith Rule: State of mind is I knew I didnt own it, but I wanted it anyway.


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C. Claim of Right, Color of Title and Constructive Possession

1. Claim of right/claim of title when the adverse possessor indicates, by words or conduct

simply a way of expressing - that he holds the land as against all others. Term used to describe

the level of hostility.

2. Color of title a claim founded on a written instrument that is for some reason defective.*Note: Think of a document you can color.

i. A possessor who enters under color of title is one who has a defective deed or other

writing that purports to deliver title to the possessor, but which thepossessor does not

know to be invalid.

3. Constructive possession - under "color of title" (i.e., the possessor holds a defective

conveyance document) a portion of a large, unitary tract of land may gain title by adverse

possession to the whole tract as described in the defective document, even if never actually

possessing or using the entire tract.

D. Concurrently Held Land- To gain title by adverse possession to concurrently owned land, theadverse possessor must oust his cotenant.

E. Tacking:When possession is continuous, and the parties are in privity the time in possession ofsuccessive adverse possessors may be added together to fulfill the statutory period.1. In order to tackone period of adverse possession on to another, there mustbe privity

between the two adverse possessors.

i. Privity of Contract: relationship between parties to a contract. Generally only the

parties can sue one another on the contract.

ii. Privity of Estate: relationship between parties with concurrent or successive rights

in the same property.

iii. Privity of Possession: relationship between parties in a voluntary transfer of

possession of property.

F. Hypotheticals and Examples

1. O owns and possesses a 100-acre farm. A enters the back 40 acres under an invalid deedfrom Z, who had no interest, for the whole 100 acres. A works the back 40 acres for the

statutory period. Can A evict O?

No A could prevail only ifO was not in possession of the front 60 acres. As claim ofconstructive possession under color of title does not defeat actual possession, nor does it replace

the exclusivity requirement.2. X owns lot 1 and Y owns lot 2 next door. Neither is in possession. Z conveys both lots 1 and

2 to A under an invalid deed. A enters lot 1 and holds for the statutory period. A sues to evict

X and Y. Who wins?

A defeats X without needed the color of title doctrine if A actually occupied all of lot 1. If Aoccupied only part of 1 then A still gets it all under color of title.

Y defeats A because Y never had an ejectment claim against A. A color of title claim still requiresactual entry against the owner.3. What is X had conveyed lots 1 and 2 to A and A had entered only lot 1?

Then A has good title to lot 1 from X by conveyance.4. What about lot 2?

A never actually entered ay part of lot 2. You need actual entry against the owner to claimadverse possession. Also, Y never had an eviction claim against A as to which the statute of

limitations could begin to run.


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(3) POSSESSORY ESTATES:

A. An estate has two components possession and duration and the words of the grant are wordsof purchase (designate the grantee) and words of limitation (designate the time of interest

transferred).1. To B for life To B are words of purchase, andfor life are words of limitation.

B. Freehold Estates

1. Fee Simple Absolute: absolute ownership in the sense that its duration is perpetual it maylast forever.

i. Sample grant: To A, or To A and his heirs.ii. Freely alienable (able to be transferred to new ownership).

2. Fee Simple Determinable: potentially infinite ownership as long as the condition is not

violated. If violated, the estate automatically terminates and possession reverts back to

grantor possibility of reverter.i. Sample grant: To A and his heirs, so long as they use the land for specified purposes

only.ii. Critical words: so long as, until, while.

iii. Freely alienable and new holder is also subject to the condition.

iv. Defeasible.

3. Fee Simple Subject to a Condition Subsequent: unlikefee simple determinable, violation of

the condition does not lead to automatic forfeiture.

i. Sample grant: To A and his heirs, but if the land is used for other than specificpurposes, G or his heirs will have the right to enter and declare the estate forfeited.

ii. Grantee keeps possession until the grantor enters and terminates the estate.

iii. Can last forever if grantor decides not to terminate or if condition is not violated,

which means grantor did not convey all of his interestgrantor maintains the right to

enter and terminate estate.iv. Freely alienable and always subject to condition.

v. Defeasible.

4. Fee Simple Subject to An Executory Interest: just like ordinaryfee simple determinable or

one subject to a condition subsequent, exceptif condition is broken the estate goes to a third

party and not the grantor.

i. Sample grant: G grants to A and his heirs, but if the land is used to sell alcohol thento B and his heirs or B and her heirs shall have the right to enter and declare theestate forfeited, or but if A has no sons then to B and his heirs.

ii. The third partys right to the future possession is called an executor interest.5. Life Estate: lasts until the death of the grantee, whereupon possession of property reverts

to the grantor or his heirs; therefore, the grantor has only transferredpossession for thegrantees life.

i. Sample grant: To A for life.

ii. Whoever is named as the measuring life remains the measuring life.

a. O to A for life A is the measuring life, even if A transfers that estate to B (Bthen has a life estate pour autre vie an estate that lasts as long as A is alive).

iii. Defeasible if life estate is conditional upon a certain event, the occurrence of which

will entitle the grantor to either automatic reversion or to enter and reclaim possession.


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6. Fee Tail: purpose of this grant is to keep ownership of property within a family.

i. Sample grant: To A and the heirs of As body.ii. Descends to lineal descendants generation after generation and expires when the

original tenant in fee tail, A and all of As descendants, are dead. Then property willrevertto grantor or the grantors heirs by way ofreversion.

iii. Every fee tail has a reversion or a remainder.7. Term of Years: an estate that will last for some fixed period of days, months, or years.

i. Sample grant: O to A for 15 years.ii. A non-freehold estate merely a form ofleasingnot owning.iii. Subject to a reversion or remainder.

(4) FUTURE INTERETS:

A. Definition: Afuture interestis a present interest in future possession.

1. Transferors can reserve a future interest while transferring present possession to someone

else.

2. Transferees can receive a future interest instead of a present possessory interest.B. Interests retained by Transferor/Grantor: grantor who conveys his property to another can retain

part of his interest.

1. Reversion: automatically created if grantor transfers an estate of a shorter duration than

the one he holds.

i. Arises following the natural termination of a life estate or term of years.

ii. Waits patiently for the grantees estate to end naturally.iii. All reversions are retained interests which remain vested in the grantor.

iv. Can be divested if the condition necessary for reversion cannot be met.

a. For example, O grants To B for life, the toC, if she outlives B.Two things can

happen at Bs death: (1) If C is dead, then possession reverts to O because there are

no other takers; but if (2) C is alive, she takes possession in fee simple absolute andthe reversion is divested.

v. Grantors reversion will notinterrupt the grantees possessory estate.2. Possibility of Reverter: the residual future interest held by a grantor of afee simple

determinable only(also any determinable estate).

i. Waits patiently for the grantees estate to end naturally.ii. Can never be created in a grantee.

iii. Example, O conveys Blackacre to the Library Commission, so long as it is used for

library purposes. O has apossibility of reverterand the Library Commission has afeesimple determinable.

iv. Grantors possibility of reverter will notinterrupt the grantees possessory estate.

3. Right of Re-Entry: the residual future interest in the grantor of afee simple upon a conditionsubsequent, where the grantor expressly reserves the right to reenter and reclaim.

i. Only becomes possessory if condition is broken and to take possession, the grantor

must actually enter itand declare the prior possessors claim void.

ii. Can only be created by the grantor.

iii. Grantors right to entry willinterrupt the prior estate.C. Interests retained by Transferee/Grantee: grantee can receive a future interest ifthe transfer is

made to several sequential grantees or if the grantor places some condition to delay possession.


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1. Remainders: a future interest in one grantee which becomes possessory upon the natural

expiration of a prior life estate held by another grantee.

i. Vested: becomes possessory at the termination of the prior life estate and is subject

to no other condition precedent. *Test: Given to an ascertained person (born and

identified person) AND not subject to a condition precedent.

a. Indefeasibly vested remainders: certain to come and remain possessorynothing will prevent possession from happening eventually and once

possession occurs, it will last forever.

b. Vested remainders subject to complete divestment: subject to a condition

subsequent which if it occurs, will completely divest the remainder of his

interest.

c. Vested remainders subject to open (partial divestment): created in a class or

group of grantees, at least one of whom ispresently existing and entitled to

possession as soon as the preceding estate expires, but which is capable of

expansion to include as yet unknown people. *Subject to open, meaning the class

is left open for the entry of new members. Class closes if (1) it is no longer

physiologically possible to have new entrants, or (2) if the rule ofconveyance applies. The rule indicates that a class closes if any member of

the class is entitled to immediate possession and that result is consistent

with the intent of the grantor making the class.

d. Reversion: Vested remainder creates an executor interest in a third party.

e. Examples

O conveys to A for life, then to the children of B. At the time ofconveyance, B has one child, X.

o A has a life estate.o The children of B have a remainder in fee simple absolute.o X is ascertainable and there are no conditions for X to receive her

fee; therefore X has a vested remainder in fee simple absolute. O conveys to A for life, then to B and her heirs.

o B has an indefeasibly vested remainder certain to becomepossessory upon termination of the life estate.

o If B dies during As life, Bs remainder passes to Bs devisees onBs death; or if B dies without a will, passes to Bs heirs; or if Bdies without a will or heirs, then to the state.

o B or Bs successor in interest is certain to take possession uponAs death.

ii. Contingent: becomes possessory only at the termination of the prior life estate and

the fulfillment of some other condition precedent. *Test: Given to an unknown

person OR has a condition precedent (condition must be expressed in the grantand does not include natural expiration of prior estate or precatory wishes or

advisory suggestions - language in grant).

a. More than one contingency: sequential events where multiple contingencies

must occur and can be in the same estate.

b. Reversion: Contingent remainder creates a reversion in the grantor because

of the possibility that the condition will not be met.


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c. If condition is not met, the remainder is divested; if condition is met, the

remainder vests and the grantors reversion is eliminated.d. Examples

O conveys to A for life, then to C if C graduates cum laude from lawschool.

o A has a life estate.o C cannot cut short or take away As interest so C has a remainder.o C is ascertainable but there is a condition that C must do before C

possesses.

o O has a reversion in fee simple because O did not grant a vestedremainder in Os entire interest.

O conveys to A for life, then to B for life is B marries, then to C if Cis married. C is single at conveyance.

o B must marry to earn possession so Bs remainder in a life estateis contingent.

o C must be married to earn possession so Cs remainder in fee iscontingent.

o Untils Cs interests vest, O has a reversion in fee simple. O conveys to A for life, then to B if B survives A, otherwise to C.

o Bs condition is that he mustsurvive A before possession.o Cs condition is that B must not survive A before possession.o Both B and C are contingent remainders in fee simple, and

remainders are alternative because only one can vest.

o A has a life estate.o O has a reversion in fee at conveyance because no vested interest

in fee has been transferred.

2. Executory Interests: a future interest created in a grantee that mustcut shortor divest

another estate or interest in order to become a possessory estate. *Can never exist alonebecause they must have something to divest; Must be paired with (1) a possessory

interest, or (2) a vested remainder; Always operate on a pre-condition that is attacked;

Executed immediately and automatically upon occurrence of condition.i. Shifting executory interest: divests grantees by shifting the interest from one grantee

to another. To A for life, then to B; but if B fails to graduate, then C.a. Examples

O conveys to A, but if B should ever be released from prison, to B.o B has shifting interest that will divest A, another grantee, by

cutting short As fee simple if and when B is released.

O conveys to A for life, then to B, but if B does not survive A, thento C.

o C has shifting interest that will divest B, another grantee, of Bsvested remainder in fee simple if B does not survive A.

ii. Springing executory interest: divests grantors by springing out of the grantorsinterest. To C if C graduates.


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a. Examples

O, a teacher, conveys Blackacre to the first student in his class tobecome a judge.

o This unknown student is springing because the student gainsinterest by becoming a judge.

O conveys to A upon her marriage.o A has nothing yet because she must marry first.o This is not a remainder because she is not waiting for some prior

estate to end naturally; if she marries, she takes.

(5) SUMMARY OF PRESENT POSSESSORY ESTATES AND DEFEASIBLE FEES SIMPLE:

PRESENT POSSESSORY ESTATES

Present Estate Examples DurationFuture Interest

in Grantor

Future Interest

in 3P

Fee Simple

Absolute To A & his heirs Forever None None

Fee Simple

Determinable

To A & his heirs

so long as...

until...

while...

As long as condition is met,

then automatically to grantor

Possibility of

reverter

Fee Simple

Subject to

Condition

Subsequent

To A & his heirs,

but if...

upon condition that...

provided that...

however...

Until happening of named

event and

re-entry by grantor

Right of Entry

Fee Simple

Subject to an

Executory

Limitation

To A & his heirs, for so

long as..., and if not..., to B.

To A & his heirs, but if..., to

B.

As long as condition is met,

then to 3P.

Until happening of event.

(See fsd )

(See fs subjectto cond.

subsequent )

Executory

Interest

Executory

Interest

Fee TailTo A & the heirs of his

bodyUntil A and his line die out Reversion

None (but

remainder is

possible)

Life Estate

(may be

defeasible)

To A for life, or

To A for the life of B

To A for life, then to B

To A for life, but if..., to B.

Until end of measuring life

Until end of measuring life

Until end of measuring life or

happening of event.

Reversion

None

Reversion

None (but see

below)

Remainder

Executory

Interest


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DEFEASIBLE FEES SIMPLE

So Long As (naturallyexpires)

But If (cut short)

Future Interest

Retained byGrantor

Fee Simple Determinable

&

Possibility of Reverter

Fee Simple Subject to Condition

Subsequent

&Right of Entry

Future Interest

Created in

Transferee

Fee Simple Determinable

&

Executory Interest

Fee Simple Subject to an Executory

Limitation

&

Executory Interest

(6) RULES AGAINST PERPETUITIES:

A. Rule: No interest other than one in the grantor is good unless it must vest, or fails to vest if it is a

remainder, or become possessory or fails to become possessory, if at all, no mater than 21 years plus

a gestation period (child is considered alive from the time of conception is the child is later born alive)

after the death of all lives in being.1. Only interests subject to rule are: (1) contingent remainders, (2) executor interests, and (3)

vested remainders subject to open/partial divestment.

2. Interest is good if it will certainlyvest or certainly failto vest (1) within 21 years of its

creation, or (2) during the life of some person alive at its creation, or (3) upon the death of

some person alive at its creation.

i. If an effective measure or validation of life cannot be identified, the interest is void.

ii. Validating lives: only living persons who can affect vesting of the interest qualify

and these persons are testing to see if the interest must vest or fail within their lives or

within 21 years of their deaths.

a. Determine what events can affect vesting, then determine who can affect

those events.b. Typical examples are the preceding life tenant; the taker(s) of a contingent

interest; anyone who can affect the identity of those takers (e.g., A in a gift to

As children); and anyone who can affect the occurrence of the conditionprecedent.

B. Procedure to Determine if interest violates rule using example of: O grants "To A for life,

remainder to A's children for life, remainder to his grandchildren at the death of A's last

child," where A has two sons and a grandchild at the time of transfer.

1. A has a present possessory life estate (not subject to the rule); A's sons have a vested

remainder in a life estate, which is subject to open (and to the rule); A's grandchildren have a

vested remainder subject to open (and to the rule).

2.A, A's sons and grandchildren living at the time of transfer are all "lives in being.3. If A has another child within nine months, that child will also be a life in being.

4. A could have a son two years after the grant is made. Although the child affects the vesting

of his life estate with his brothers and has a causal effect on the class of grandchildren, he was

not alive at the time of transfer.

5. A, his two sons, and his grandchild could all die in a plane crash a year later, so that only

the third son remains alive. The perpetuities period starts.


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6. The surviving son's life estate becomes possessory upon the death of A, and the class is also

closed by that event, so that his estate does not violate the rule. However, he could live for

longer than 21 years, or he could die sooner. Thus there is no guarantee that the

grandchildren's remainder in fee simple will close (remember that it is vested already) or not

within 21 years. The remainder violates the rule and is struck out. Possession reverts to O, or his

heirs, after the surviving son dies.C. Class Gifts: same principles as above apply if class gift is not fully vested.

1. Look for anyone who is a beneficiary of the giftor anyone who can affect(1) a beneficiarysidentity, (2) the closing of the class, or (3) a condition on the gifts vesting.2. Open class: members may be added in the future and those members are unascertained

and will preventthe class interest from being vested.

3. Closed class: members are ascertainedbecause no new members can be added and does not

necessarilymake the class gift vest because there may be a contingency that must still be met,

such as surviving A or completing law school.

(7) CONCURRENT OWNERSHIP (COTENANCY):

A. General: Situations arise when more than one person owns the same interest in property at the

same time and the law provides some default rules to mediate conflict.

B. Three types of Cotenancy

1. Tenants in Common: persons own separate but undividedinterests in the same interest in

property.

i. Interest may be conveyed by deed(I convey my home to A and B) or will(I leave my

home to my children) or severance of ajoint tenancyor tenancy by entirety.

ii. No right of survivorshipso deceased tenants interest will pass to his heirs ordevisees.

iii. Must only have unity of possession each tenant is entitled to possess the whole

property.iv. Tenants can obtain unequal shares and different estates.

v. Examples

a. Two people who own a sailboat as tenants in common each own a fraction of

the entire boat, and they are each entitled to sail it, but they cannot prevent the

other from doing so.

b. O conveys Roadhouse to A and B as tenants in common. If A conveys his

interest to C, B and C are now tenants in common. If B dies, devising his interest

in Roadhouse to D, C and D are now tenants in common.

2. Joint Tenants: persons own an undivided share in the same interest in either real or

personal property, but the surviving joint tenant owns the entire state.

i. Right of survivorship exists so living tenant continues without regard to interest ofdeceased.

ii. Interests of tenants must be equal in every respect; so all tenants must take their

interests:

a. At the same time: each tenant must take an interest in the property at the

same time.

b. Under the same instrument: the interest must be created by the same

document.


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c. With the same interests: all tenants must have equal interests.

d. With the same right to possession: each tenant has the right to possess the

whole property.

iii. Ifanyof the four unities are not present, joint tenancy cannot be created, and ifany

of the unities are ever destroyed, the joint tenancy is also severed and becomes a

tenancy in common.iv. Only created by specific languageTo A and B as joint tenants with rights ofsurvivorship and not as tenants in common.v. Cannot be formed by inheritance.

3. Tenancy by the Entirety: a form of joint ownership available onlyto a husband and wife.

i. Must be between husband and wife, plus four unities (time, instrument, interests,

rights)

ii. Husband and wife safe as one person, so neither can unilaterally destroy the

tenancy by grant to a third party.

C. Responsibilities and Rights of Cotenants

1. Shared Expenses: generally, responsibilities areproportionate to the rights.

i. Every tenant has to preserve the estate by carrying costs of taxes and mortgagepayments, repairs and improvements, etc.

2. Share Use: generally, parties can agree to how to use property but if there

is no agree, the law will decide.

i. Tenancy in Common: each owns an undivided share of whole.

ii. Joint Tenancy: each owns the undivided whole.

iii. Tenancy by Entirety: each owns the whole and not a share.

3. Right to Use/Let Others Use: generally, any party can make full use of property as long as

they dont interfere with another parties right to make full use.i. A cotenant in possession generally doesnt have to pay rent, unless there is ouster;however, cotenants are liable for costs and repairs to the value of their share of the rent.

ii. Cotenants can rent out their interestin the property.iii. Most cotenants can use their interest in property as collateral.

4. Right to Convey/Encumber

i. Tenancy in Common:free to convey or encumber their interest.

ii. Joint Tenancy: can generally unilaterally encumbertheir interest.

a. A Joint Tenant who conveys their interestthereby converts that interest, and

only that interestinto a Tenancy in Common interest.

iii. Tenancy by Entirety: generally cannot unilaterally conveytheir interest.

a. If unilateral encumbrance is attempted (1) Majority states that creditors

cannot attach the separate interest of one spouse or(2) Minority states that the

creditor can attackone spouses right of survivorship.

5. Right of Devise/Descenti. Tenancy in Common: can leave their interests to devisees or heirs.

ii. Joint Tenancy: have no rights to leave to devisees or heirs and survivor has the right

of survivorship as to the whole.

iii. Tenancy by Entirety: have no separate rights to leave to devisees or heirs and

survivor has the rights of survivorship as to the whole.

D. Destruction of Cotenancy

1. Tenancy in Common


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i. Parties can agree on partition or seek partition in court.

2. Joint Tenancy:

i. Parties can agree on partition or seek partition in court.

ii. Death of a party destroys thatspecific parties interest.

iii. Murder of a party severs that joint tenancy relationship.

iv. Parties who convey title to their interests destroythe joint tenancy as to thatinterest only,

a. Problem: O to A, B, + C as joint tenants. (1) A conveys her interest to D,

and (2) then B dies intestate, leaving H as his heir.

(1) As conveyance severed the joint tenancybut only as to the interestconveyed. B and C remain joint tenants as to a 2/3 interest and they are

tenants in common with D as to the other interest.

(2) When B dies, Cs right of survivorship kicks in and H takes nothing. Dand C are tenants in common (D=1/3 and C=2/3)

3. Tenancy by Entirety

i. Parties can agree on partition but no one party can see partition in court.

ii. Divorce destroys the tenancy and usually becomes tenancy in common.E. Remedies Issues

1. Partition: If tenants want to terminate their cotenancy, they can mutually agree on a

division of the property or file partition with the courts. **Note: not available for Tenancy by

Entirety parties.**

i. Partition in Kind:physical division of the property ordered by courtunless a party

can prove either (1) that physical partition is impossible or extremely impractical,or

(2) that physical partition is not in the best interest ofall parties.

ii. Partition by Sale: a sale of the propertyconducted under the supervision of the court.

a. After sale, the net proceeds are divided among the co-owners inproportion to

their ownership interests.

b. If no evidence in title of unequal shares, courts will assume thateach co-owner is entitled to an equal part of proceeds.

2. Ouster: One party may notmove to eject another party because all parties have a cotenancy

right to possess, and usually occurs in two ways.

i. Tenantactually prevents or barsphysical entryby another tenant.

a. For example, tenant changes locks to property.

ii. Tenantdeniesanother tenants claim to title.a. For example, tenant makes express statements denying that the cotenant is

that is out of possession has any valid claim of ownership.

iii. Remedy for ouster is a market test:fair rental value of particular property and

tenant who is ousted is entitled to proportionate share of rent.

3. Accountingi. Rent: A cotenant who receives rents on the property from a third party is obligated

to account to his cotenants for those rents.

a. If amount received by a cotenant isgreater thancotenants share, then he isobligated to pay the excess to other cotenants.

ii. Profits: If a cotenantpermanently removes an assetfrom the land, he must account

to his cotenants their proportionate share of the value of the removed assets.


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iii. Taxes and Mortgage Payments: Each cotenant is obligated to pay their

proportionate share of taxes and mortgage payments, unless otherwise indicated.

iv. Repairs: A cotenant voluntarily making repairs has no affirmative right to be

reimbursedby other cotenants for their share of the repairs, unless:

a. Accounting for rents: If repairing cotenant is under a duty to accountto other

cotenants for rent, the repairing cotenantmay deduct from the rents due theother cotenants share of the repair costs incurred by repairing cotenant.

b. Partition: Upon partition, a repairing cotenant is entitled to be reimbursed

for the repair costs in excess of her share. Ifpartition by sale, it will be cash

reimbursement from proceeds before pro rata distribution to other cotenants.

Ifpartition in kind, the repairing cotenant will eitherreceive cash

reimbursement from other cotenants before physical division or will receive a

larger parcel.

v. Improvements: A cotenant making improvements has no affirmative rightto collect

from other cotenants because cotenants have no duty to improve property.

a. Exceptions: Upon partition or if improving cotenant is under a duty to

accountto other cotenants for rent, the improving cotenant is entitled torecoveronly the value added by the improvement, not the cost of improvement.

F. Summary Comparison of Joint Tenancy vs. Tenancy in CommonJoint Tenancy Tenancy in Common

Right of survivorship? Yes No

Must tenants have equal

shares?Yes No

Same estate required? Yes No

Alienable? Yes, but turns to TIC Yes

Devisable and inheritable? No Yes

Create by implication or

expressly?Express grant only Either

Right of possession of entirety? Yes YesPresumption in favor when

ambiguous?No Yes

G. Summary Comparison of Tenancy by Entirety Traditional vs. CommunityTraditional Community

At death of spouse:

Right of survivorship? No Sometimes

Divide property from before

marriage?Yes No

Real property pass to spouse w/o

probate?No Yes

At divorce:

Account for fault? No No

Account for length of marriage? No, unless reformed Yes

(8) REAL ESTATE TRANSACTIONS - CONTRACTS OF SALE:

A. Contracts of Sale: To be enforceable, a contract to convey real propertymust be in writing and

signed by the partyagainst whom it is sought to be enforced.

1. Brokers: The seller and buyer generally hires a broker to sell or buy the property on the

terms and conditions in the listing agreement.


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i. Brokers duties to the sellerinclude: good faith and fair dealing, listing, showing,

administrative assistance, helping to negotiate/maximize price, communicating

helpful information, limited/unlimited closing duties, and disclose defects to buyers

(in some states).

ii. Brokers duties to the buyerinclude: good faith and fair dealing, helping to

negotiate/minimize price, help with inspections and surveys, closings, disclosingmaterial defects, and communication.

iii. Listing Brokerlists and shows the property for the seller.

iv. Selling Brokerworks with the buyer, but is the sellers agent.2. Listings: A listing agreementis an employment contract between a real estate broker and a

seller.

i. Open listing: seller retains the rights to sell, but broker earns commission if he is the

first to procure an offer from a ready, willing and able buyer.

ii. Exclusive Agency listing: Only one broker(exclusive agent) can sell the property and

if another agent sells, he has to share commission with exclusive agent. **Note: Owner

can still sell and not pay.

ii. Exclusive Right to Sell: The owner must pay the broker if any buyer purchases theproperty during the specified duration of the listing, not matter who found the buyer.

B. Primary Issues with Contract of Sale

1. State of Frauds: No interest in land can be created or transferredunless it is in writing and

signed by the owner of the interest. **Note: there can be exceptions to this rule, and mostly both

parties must sign the contract.**i. Writing Requirements: A contract for sale must describe the real estate, state the

price, and have parties signatures.

a. Description: Metes and Bounds local geography, directions and distances,boundaries of land, etc. A legal description of the land more than just astreet address.

b. Price: If price was agreed to, it is an essential term to the contract. If price isnot agreed to, courts may imply and enforce a reasonable price.

2. Exceptions to the State of Frauds: There are two major exceptions part performance and

equitable estoppel.

i. Part Performance: A substitute for the writing requirementof the State of Frauds if:

(1) the buyer has paid some or allof the price, (2) the buyer has taken possession, and

(3) the jurisdictions will enforce a contract proven by clear and convincing evidence

even if it is not in writing,

a. Generally only applies in equityso available only in a suit seeking specific

performance, butnot damages.

ii. Equitable Estoppel: A substitute for the writing requirementif: (1) one party

reasonably reliance on the other parties oral promise to sell to their detrimentand (2)it would be unjustnot to enforce the sale.

iii. Leases of less than one or three years do not require writing.

3. Marketable Title: An implied condition of the contract that seller must convey, which if not

satisfied, the buyer is entitled to rescindthe contract.

i. Title that a buyer would accept, reasonably free of doubtthat there are any rival

claimants to title.


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a. Reasonable doubts whether the title exposes buyer to unreasonable risk oflitigation due to outstanding claimants/interests.

ii. Defects in title must be substantial and likely to injure the buyer to render title

unmarketable. Encumbrances make title unmarketable unless the encumbrance is: (1)

a beneficial easementknown to the buyer, or(2) a restrictive covenantthatdoes not

limitthe particular use specified in the contract.a. Encumbrances: An interest in some third party to use or affect the use of the

property in some substantial way will encumber the title.

(1) An easementallows others to physically use some aspect of the

property.

(2) A covenant, contractmarital right, option, orpreemptive rightmay

restrict the propertys use or alienability.(3) A lien allows a third party to use the property as security for a debt,

and if there is a default, to foreclose on the property.

iii.Zoning restrictions are not encumbrances and do not render title unmarketable.

iv. Property in violation of existing zoning laws at the time of the contract renders title

unmarketable for purposes of an action for specific performance.v. If there are breaks in the chain of title, such as a defective deed, title may be

unmarketable.

4. Duty to Disclose: Sellers are obligated by law to disclose all defects which have been

created by the seller, are known to seller and are not easily discoverable by the buyer, that

materiallyaffects the value or desirabilityof the property.

i. As Is Clause: Upheld if the defects are reasonably discoverable, seller does notknow of defect, and there is no fraud, including fraudulent representation.

ii. Merger Doctrine: Agreements in the contract that are unrelatedto title do not merge

into the deed.

a. Only applies to quality of title or quantity of land conveyed.

5. Implied Warranty of Quality: A cause of action thatonly arises after closing, and onlyapplies to builders, contractors, or other professionals involved in real estate transactions.

i. Does not apply to private sellers.

ii. Only applies to residential property.

iii. Applies tophysical characteristics of the land and applies to recent or new

construction.

iv. New rule allows for warranty to extend to subsequent purchasers.

a. Privity of contracts it not necessary for latent defects which manifest

themselves with a reasonable time after purchase and which cause economic

harm. **Note: Plaintiff has burden of proof to show that defect was caused by

defendants workmanship.**

C. Remedies for Breach of the Sales Contract: Some courts follow the rule allowing the buyerrescission and restitution, while other courts rule that the buyer is entitled to a benefit of the bargain

and consequential damages. Party requesting damages must be ready, willing, and able to

perform.

1. Specific Performance: Since land is considered unique, damages are considered to be

inadequate compensation for breach.


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i. If sellers title is defective and the buyer still wants the property, the buyer is entitledto an abatement of the price (reduction) to reflect the diminution in value due to the

defect.

ii. A seller entitled to specific performance is required to reduce the price if there is an

insubstantial defect in title.

iii: Equitable Conversion: If contract is specifically enforceable, equity deems it to havebeen performed for certain purposes.

a. Seller is deemed to have a claim to buyers money and buyer is deemed tohave received sellers title.b. Seller now owns the right to be paid and the buyer is the equitable owner of

property.

c. Important in death of a party, and risk of loss.

2. Rescission: Ifseller is in breach, the buyer can elect to rescindthe contract, recover partial

payments that were already made, and basically walk awayfrom the contract. If the buyer

breaches, the seller can also elect to rescindthe contract and sell the propertyto another

buyer.

3. Money Damages: The measure of damages is the benefit of the bargain, retention of deposit,and other out of pocketexpenses.

i. Benefit of the Bargain: The difference between the contract price and thefair market

value of the property at the time of breach.

a. Buyers: (FMV at breach Contract Price) + Depositb. Sellers: (Contract Price FMV at breach) Deposit

ii. Special/Consequential: Naturalandprobable expenses incurred as reliance on the

contract, such as interest paid on a mortgage.

iii. Retention of Deposit and Liquidated Damages: Provisions in contract allowing the

seller to keep the buyers depositas a way to protect the seller, are enforceable as long

as there is some reasonable relationship between the deposit amount and the actual

damages suffered.4. Limitations on Damages

i. Good faith vs Due Diligence: Good faith means no bad faith or intent to harm, and due

diligence means doing what a reasonable person would do in the same situation.

a. Where the mortgagee conducting a foreclosure sale lacksgood faith, damages

are the difference between the sale price and fair market value.

b. Where the mortgagee conducting a foreclosure lacks only due diligence,

damages are the difference between the sale price and a fair price.

ii. Unless buyer can prove the liquidated damages were a penalty, seller can keep them.

(9) REAL ESTATE TRANSACTIONS DEEDS:

A. Definition: A written documentthat effectuates a transfer of real property.

B. Requirements of a deed

1. Grantor identified

2. Grantee identified

3. Words of conveyance: An expression ofan intentto effect a transferof realty.

4. Land described: Any description thatclearlyandpreciselyidentifies the parcel enough.

5. Signed by grantor


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6. Notarization

7. Consideration

C. Forged and Fraudulently Procured Deeds

1. Forged deeds are void, and a subsequent good faith purchaser does not get good title.

2. Fraudulently procured deeds are voidable, meaning the true owner can void the deed until

a good faith purchaser gives value to it.D. Warranties of Title: A sellers warranties concerning the state of title are, if at all, in the deed andare notimplied.

1. General Warranty Deed: Warrants against all existing title defects, whether the defectarose

before or during the time the grantor had title.

o Present Covenants: Covenants or promises that are true at the time of conveyance.i. Covenant of Seisin: Promises the grantee that the grantor owns the estate he

purports to convey. E.g., I own the interest Im conveying.ii. Covenant of Right to Convey: The grantor pledges thatat the time he sells the

property and conveys the deed, he has the rightto do so. E.g., I have the right toconvey this interest.

iii. Covenant against Encumbrances: A promise that there are no outstandingencumbrances on the property. E.g., There are no encumbrances as of the date of the

transfer.

o Future Covenants: Covenants or a promise about the present state of title as it affectsthe granteesfuture use of the property.iv. Covenant of General Warranty: Promises that the grantor will defendant against

lawful claims of superior title and will compensate the grantee for any loss he sustains

by the successful assertion of title. E.g., I will defend against lawful claims and paydamages if you lose.v. Covenant of Quiet Enjoyment: Promise that the grantee will not be disturbedin

possession and enjoyment of the property by someone else asserting superior title. E.g.,

No one will assert better title that you in a way that interferes with your use andenjoyment.

vi. Covenant of Future Assurances: Promise by the grantor that he will cooperate with

the grantee by executing any documents required to perfect the title conveyed. E.g., Iwill sign any other documents needed to perfect the title.

2. Special Warranty Deed: Warrants against defects of title that arose during the grantors

time of holding title.

3. Quit Claim Deed: Contains no warranties of title and gives buyer no protection.

E. Delivery of Deeds

1. A deed is not effective to transfer title until it is delivered with the intent to immediately

conveyan interest.

2. Delivery manifests the grantors intent to be bound by the transfer.3. Manual delivery is usual way to delivery but does not always provide proof of intent and is

not always necessary in order for court to see if delivery occurred.

4.Rarely a problem in real estate transactions but issues commonly arises in donative

transfers.

F. Conditional Delivery of Deeds

1. Oral conditions on a deed delivered are usually notenforced and the deed is deemed to

convey unconditionedtitle.


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i. Some courts will enforce the condition and give title only ifthe condition has been

fulfilled.

ii. If condition is written, it is generally enforced.

2. Conditional delivery to a third party escrowis generally enforceable if it is irrevocable.

i. A delivery in escrowis a delivery to an impartial third party who holds the deed until

certain conditions are met.

(10) REAL ESTATE TRANSACTIONS MORTGAGES:

A. Definition: A mortgage is the principal device enabling people to acquire real property and loosely

refers to the entire transaction, which consists oftwo distinct element: the loan and the mortgage.1. Mortgage is evidenced by a document called a mortgagethis is a security agreement betweenthe parties by which the borrower gives the lender the right to sell the property if borrower defaults

on the loan.

2. The loan is evidenced by apromissory note a personal promise to repay the loan on the terms

contained in the note.

3. The lender secures repayment of the loan either by the mortgage or deed of trustto the property.i. A deed of trustto the property is a transfer of title of the property to a trustee for the

purposes of conveying it to the lender if the borrower defaults or back to the borrower if he

does not default.a. If borrower defaults, the lender or trustee has power to sell the property without

going to court.4. Power of Sale: A provision in a mortgage that gives the lender the ability to sell the property

without going to court, similar to a deed of trust, which makes the foreclosure sale more

expeditious and inexpensive.

B. Development of the Mortgage: Begins as a conveyance where lenders would require the borrower

to convey the property to the lender infee simple subject to condition subsequent. The mortgagors

interest in the property is known as the equity of redemption. **Note: Buyer/Borrower = Mortgagorand Lender=Mortgagee**

C. Types of Mortgages

1. First and Second Mortgages: The same property can be used to secure more than one loan.

i. First mortgage is given first in time.

ii. Second mortgage is given second in time and is taken subject to the rights of the

senior the first mortgage.a. Upon foreclosure, the holder of the second mortgage is entitled to share in

the sale proceeds only after the first mortgage is fully satisfied.

2. Fully Amortized Mortgage: A loan where the principal is retired over the life of the loan so

that the monthly payments are constantor vary with interest rates.

3. Balloon Payment Mortgage: A loan with very small to no payments during the life of theloan and full payment of the principal amount is required on the due date.

D. Foreclosure Options

1. Judicial Foreclosure: Unless provided otherwise, upon default, a mortgagee must give

notice and an opportunity to cure because asking a court to conduct foreclosure proceedings

and a sale of the property.

2. Deed of Trust: The borrower gives a person a deed to hold in trust as securityfor a loan. If

borrower defaults, this other person haspower to sell land withoutneed of the court.


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3. Power of Sale Mortgage: Similar to deed of trustand allows lender to sell property without

going to court.

E. Redemption After Default on Mortgage

1. Equity of Redemption: Judicially created right to redeem (oneself by bringing his/her

payments up to date within a reasonable time) from the borrower.

i. Borrower cannot ask lender to waive the equity of redemption.ii. Extinguished by theforeclosedsale.

2. Statutory Right of Redemption: Statutes that give lender the statutory rightto buy back the

propertyfrom the foreclosure sale buyer within a specified time period ranging from three

months to two years.

i. This right does not become operative until the borrowers equity is extinguished at aforeclosed sale.

MortgageDefault Notice Foreclosure & Equity Redemption Taken from Borrower Statutory Right to Redeem

F. Subject to Mortgage vs. Assuming the Mortgage

1. Under both methods of purchasing property, the buyer takes the property subject to the

lien and the mortgagee can foreclosure if there is a default.

2. Only a buyer who assumes the mortgage takes on personal liability as well.

(11) LAND CONTRACTS:

A. Generally: An arrangementwhereby the purchaser takes possession and the seller contracts to

convey title to the purchaser when the purchaser has paid the purchase price in regular installments

over afixed period of time.

1. Seller financing device under which the buyer makes a small down payment, takes

possession, and is responsible for all the normal expenses on owner.

2. Seller retains legal title until the buyer pays the entire purchase price over time only thendoes buyer get title.

(12) TITLE RECORDING SYSTEM:A. Deeds, mortgages, leases, option agreements, liens, wills, easements, and all additional

instruments affecting land titles can be recordedat the public records office.

1. A deed is valid and good against the grantorwithoutbeing recorded.

B. In order to do a title search, look at an index at the public records office, where currently there are

two types of indices used.

1. The Tract Index (search by property): Organization of the sequential recordings of deeds,

mortgages, and other instruments, on the basis of property descriptions. **This method is not

commonly used.

2. The Grantor/Grantee Index (search by name of parties):

i. There is an index for the grantors and an index for grantees.

ii. Example - How to search under this system:A enters into a purchase agreementwith O for the sale of land. A wants to do a title search to make sure O really owns

the land and has good title.

a. Look up O in the grantee index and find the deed granting the property to

him.

b. Once O is found, it is seen that Os grantor was P, there is a propertydescription and any recorded restrictions on the deed.


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c. Next look up P in grantee index and find the deed giving it to him, which is Q,

who is Ps grantor, and review this deed.d. Then look up Q in the grantee index and find the deed giving it to her, who is

R.

e. Go as far back as necessary, 60 years or less in some jurisdictions, to ensure

good title.R -> Q

Q -> P

P -> O

f. Now switch and search from the grantor index starting with R to confirm the

chain of title and make sure that there are no deviations from this chain of title,

duplicate conveyances to others, etc. **Note: Must look under each persons

name for each year after they acquired the property until next conveyance is

found. If R was deeded the property by someone in 1970, look under R in 1971,

1972, 1973, etc., until R conveys to Q proceed until O is reached.

g. It is important to search based on the date the deeds were signed not from the

dates they were recorded.C. Recording Acts: General common law rule is first in time, first in right,but recording acts are theexceptions to this rule.

1. Race Statute: The party that wins the records first wins and whether a subsequent

purchaser has knowledge of a prior purchasers claim is irrelevant.i. O -> A (does not record), then O -> B (of same parcel) B knows of deed to A and B

records. B prevails over A.

2. Notice Statute: The prevailing party does not have to record to win, but will remain

vulnerable to subsequent purchasers without notice if he/she does not, and must take

without notice and must pay value.

i. O -> A (who does not record), then O -> B (of the same parcel) who does not have

notice or knowledge of As deed. B prevails over A, even though B does not recordthe deed from O -> B.

3. Race-Notice Statute: The prevailing party mustpay value, take without notice, and record

before the prior purchaser.

i. O -> A (who does not record), then O -> B (of the same parcel) who does not have

notice or knowledge of As deed. Then A records, then B records.A prevails over Bbecause, even though B had no notice, B did not record before A.

4. Shelter Rule: A person who takes from a bona fide purchaser protected by the recording

statute has the same rights as his grantor, even if the subsequent purchaser had notice, and

applies only in a notice or race-notice jurisdiction.

i. O -> A (not recorded), then O -> B, who pays fair value and takes without notice of

O -> A. B records, then A records, then B -> C. B is protected as the subsequentpurchaser, but when A records, C will be on notice of As interest.

(13) MARKETABLE TITLE ACTS AND INQUIRY NOTICE:

A. There are three types of notice with respect to a prior claim on land:

1. Actual: Where a person is aware of conflicting interestin real property, often due to

anothers possession of the property.2. Record: Notice one has based onproperly recorded instruments.


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3. Inquiry: Based on facts that would cause a reasonable person to make inquiry into the

possible existence of an interestin real property.

B. Marketable Title Acts: Used to limit title searches to a reasonable period time, usually 30 to 40

years.

1. This eliminates old title defects with the passage of time so that when one person has

record title to land for a certain period of time, inconsistent claims are extinguished.2. Claimants of an interest in land must file a notice of claim every 30 or 40 years after the

recording of their instruments of acquisition topreserve their interestin jurisdictions where

such acts are present.

i. Notice of claim is either a recording of the old interest or claim, or a new recording

made to renew an interest or claim for an additional 30 or 40 years.

3. Example:

1889, O gives a 99-year lease to X which is recorded the same year. 1890, O -> A via deed reciting that it is subject to the recorded lease in X. 1920, A -> B via deed with no mention of the lease. 1941, B -> C via deed with no mention of the lease.

o Under a 40-year marketable title act, Cs title would be free and clear of the 99-year lease as of 1960, when the 1920 deed had been of record for 40 years,

assuming that X was not in possession and that X has not filed a notice of claim.

C. Exceptions to Marketable Title Acts: There are some exceptions to the extinguishment of rights

under the act.

1. Possession, serves as notice of an interest or claim under some statutes.

2. Mineral rights, easements, and claims of the federal governmentunder some statutes.

3. Example: Assume jurisdiction has 40-year marketable title act.

1959, O dies intestate and owns unimproved land. Os heir, H, doesnt know O owns land. 1960, F forges Hs name to a deed conveying land from H -> A. Forged deed is recorded. 1962, A -> B. 2002, Hs daughter and sole heir, C, discovers the 1960 forgery. C brings suit against B to establish title to land. C wins.

(14) TITLE INSURNACE:

A. Aguarantee provided by an insurance companythat the title is of a certain quality, which

commonly means the title is free from encumbrances other than those specifically excepted in the

title insurance policy. **Such guarantee is that the insurance company has searched the public records

and insures the policyholder against any defects in the records.

1. Insurance is purchased by the payment of one premium paid at the time the policy isissued.

2. Continues for so long as the insured maintains an interest in the property.

3. Purchased in the amount of the purchase price of the home on a homeowners policy, andis purchased in the amount of the loan of a lenders policy.4. Does not run with the land, so a subsequent purchaser must take out a new policy if

insurance is wanted.

B. Exceptions to title policies:


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1. Facts that a survey would show, which should be done prior to purchase, are usually

excluded.

2.Adverse possession is not protected under title policy.

property crunch outline

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