Present Possessory Interest & Future Interest
A. Fee Simple (present estate)
B. Also define present estate and future interest
A. Fee simple: Fee Simple is presumed in the absence of express contrary intent. (i.e. “To A”) is sufficient to create a fee simple absolute.
Fee Simple Absolute -- Absolute ownership of indefinite or potentially Infinite duration. It is freely transferable, devisable by will, and descendible through intestacy.
B. A present possessory estate is an interest that gives the holder the right to present possession.
Who is the Mortgagor v. The Mortgagee
bonus: what may a mortgage also be referred to as
Mortgagor= debtor owes money to the lendor (borrower)
Mortgagee= the creditor
*Mortgages may also be referred to as: mortgage deed” “deed of trust” “Security Interest In Land” “Sale lease Back
Recording statutes protect against subsequent purchasers (not donees, heirs, or devisees unless the shelter rule applies)
Two steps to real estate conveyance (and what type of title passes)
An easement is a grant of nonpossessory property interest that entitles its holder to some form of use or enjoyment of another’s land. (express easements require writing to satisfy SOF).
A. Easement Appurtenant: An easement is appurtenant when it benefits its holder in his physical use or enjoyment of his own land.
Benefit passes with the transfer of benefitted land of dominant tenament*****
B. Easement in gross- Easement in gross if it confers upon its holder only some personal or pecuniary advantage that is not related to their use or enjoyment of their land. Servient land burdened but NO dominant parcel (takes ONE) Holder has personal commercial use unrelated to the use and enjoyment of the land.
***NOT TRANSFERRABLE UNLESS FOR COMMERCIAL PURPOSES
Defeasible Fees (What are they and types) (present estate)
we will review this (page 2-4 of present possessory estates outline)
Defeasible fees are fee simple estates that can be terminated upon happening of a stated event. To be defeasible means to be capable of forfeiture.
A. Fee simple determinable (possibility of reverter)
B. Fee simple subject to condition subsequent (with right to reentry)
C. Fee Simple to an executory Interest
Two documents needed to create a mortgage
Promissory Note: Personal obligaed mortgage (seek remedy for default)
Mortgage: agreement that syas if the mortgager quits paying, and can be sold to pay mortgager
3 TYPES OF RECORDING STATUTES: Who wins?
which do you need a BFP
Race (1st to record)- B wins if first to record property before A
Notice** (no notice, and last to take): B wins if BONAFIDE PURCHASER WHEN TOOK and LAST TO TAKE WINS.
Race-Notice (NO NOTICE, and records first)***: B wins if BFP and records properly before A does.
Escrow Period (who bears the risk of loss and exception to this)
This period the buyer has land in equity and risk of loss moment the contract was signed.
RISK OF LOSS: If destroyed due to no fault, buyer has ROL unless K authorizes otherwise.
Exception: Even though the risk of loss is on the buyer, the property damage or destroyed, the seller must credit any fire or casualty insurance proceeds they receive against the purchase price the buyer will pay.
Seller entitled to possession until closing*
SURCHARGED EASEMENT
an easement said to be surcharged, means legal scope was exceeded. The holder of an easement has right to use another’s land but no right to possess it.
THIS DOES NOT give power to terminate it (by law) but can enjoin excess use and sue for damages.
Life Estate (present estate)
Rules on Alienation
(Seperate topics)
A. Measured by the life or lives of one or more persons. Life estate is an estate that must be measured in explicit lifetime terms, but never in the terms of years. “For A for life” "pur autre vie"
This also results when the life tenant conveys their life estate to another.
Ex: If A conveys their interest to B, B has a life state for the life of A.
B. Rules on Alienation:
Due on Sale Clause
Assumption Agreement
Due on sale clause: If a mortgagor transfers interest without lenders consent, this clause in most modern mortgages, will allow lender to demand full payment of the loan.
Assumption agreement: If grantee signs an assumption agreement, they become primarily liable to the lender, while the original mortgagor is secondarily liable as a surety.
How to become a bonafide purchaser
(1) purchaser or mortgage lender (not received by gift, will, or inheritance)
(2) Valuable consideration paid (even basement bargain sales)
(3) take without Notice (see other slide that discusses the notice types)
Quit Claim: Worst deed for buyer. No promises. just conveyance of what they have at the time.
General Warranty: Warrants against all the defects including those contributing to grantor’s predecessors. Covenants of: (1) Quiet enjoyment, (2) warranty (grantor will defend against reasonable claims of title by third P and compensate grantee for loss) (3) future assurances: grantor will perfect if title later turns to be imperfect.
Special Warranty:
Affirmative Easements (definition) and Types (with their definitions) (THINK PING)
(1) Prescription: anology to adverse possession (COAH)
Continous and uninterrupted
Open and Notorious
Actual (need not be exclusive like adverse)
Hostile (w/o servient owner’s consent, permission will defeat it)
(2) Implication: (created by operation of law)
pre-existing use quasi easement
A. subdivision plot (sold in subdivision with reference to a recorded plat or map that shows streets leading to the lots, implied easement to access and use streets to getto their lot)
Profit a Prendre- implied easement to pass over the surface of the servient land and use it as reasonable necessary to extract from the servient property its minerals or product of the servient property by the terms of the profit.
(3) Necessity: No way out except over some part of the grantors land
(4) Grant: signed in writing by servient tenant, unless so brief it is outside the SOF.
Future Interest
A. Reversion v. Remainder; B. Contingent Remainders; C. Type of Vested Remainders; D. Type of executory interest (will review more page 3-7 of outline)
A. If the future interest is held by O, it is called a reversion. If it is held by a third party, it is called a remainder
B. Contigent Remainders
C. Vested remainder types:
D. Executory Interest
a. shifting
b. springing
Recording Statutes and Mortgages (does a mortgage stick with the land when passed down?)
Recording statute protects mortgagees.
If recorded, mortgage sticks with the land.
Grantee takes subject to the original mortgage (no personal liable) only original debtor personally liable. Mortgage remains on land if properly recorded.
Types of notices
Actual notice: Literal Notice prior to closing (b learns of A)
Inquiry Notice (Constructive): if inspection (i.e. walk through) would have revealed
Record notice: On notice if properly recorded in chain of title (previous)
Recording puts on notice : If 1st records before 2nd acquires that is a game changer.***
How they are created and what court does with them:
VOID deed
VOIDABLE deed
(1) VOID DEED: those forged, never delivered, issued to a nonexistent grantee... Courts will set aside property even if passed to bona fide purchaser.
(2) Executed by minor, without capacity, fraud in inducement, duress, undue influence, mistake, breach of fiduciary duty.... Courts will set aside only if the property has not passed to a bona fide purchaser.
Terminating an Easement (THINK END CRAMP)
A. Estoppel – Servient owner material changes position in reasonable reliance holder will not
Oral intent to abandon needs to be: accompanied by writing or abandonment if not.
B. Necessity – needs to end (writing requirement)
C. Destruction – of servient land
D. Condemnation— of servient land by govt or privity entity (I.E. housing code)
Courts split on if easement holder entitled to compensation
E. Release – by holder to servient owner.
F. . Abandonment— physical action (mere words expressing wish to abandon not enough)
Includes long period of non-use
G. Merger –- easement and servient land held by same person) title to become vested. Easement does not return just because title severed again.
(MISSING ONE)
RAP (definition, steps, and exceptions)
(We will review this in depth.. see pages 7-10 of second property outline).
RAP provides that certain kinds of future interests are void if there is any possibility that the interest might vest more than 21 years after a person alive at the time of the grant has died.
REMEMBER THIS FOR EXAM PURPOSES: RAP only applies to contingent remainders, executory interests, vested, vested remainders subject to open, options to purchase, and right of first refusal. The grantor’s interests are SAFE.
Steps:
(1) determine the interest
(2) how does the future interest holder take? what needs to happen
(3) find the measuring life
(4) will we know if the future interest can take
PROCEEDS: during a foreclosure...(1) Who gets paid first & (2) who has to be joined.. what type of creditors
(3) What is a Purchase Money mortgager
(review redemption section*)
(1) Order of Satisfaction: 1st: foreclosing party 2: junior creditor and their priority 3: mortgagor (debtor)
(2) Necessary Parties: All junior lienholders and debtors *juniors must be named because their interest terminates at foreclosure* whoever comes short when the money is gone... a deficiency judgment takes place.
Senior creditors are not required because their interest remains unaffected even if not satisfied (the new buyer will take subject to them).
(3) Purchase Money Mortgage: Lenders security interest in real estate that their loan enables debtor to acquire. 1ST IN LINE IF PROPERLY RECORD (JUMPS THE LINE)*** (pay special attention to these... they HIDE in MBE).
EXAM TIP: if landowner enter modification with senior/mortgagee racking its interest rates or making the agreement more burdensome, the original mortgage will be given priority over the modifications
and their impact
Shelter Rule: Anyone who takes from a BFP will prevail against any interest the BFP would have prevailed against. In other words, the transferee “takes shelter” in the status of her transferor and thereby, “Steps into the shoes” of the BFP even though she otherwise fails to meet the requirements of BFP status.
Wild deed: recorded deed that is not connected to the chain or title (incapable of giving constructive notice)
(1) Implied Promises in a Land K (Types) (Remedies and exceptions to these) (2) When does the Land K die?
Bonus: Owners Policy v. Lenders policy (who does it protect)
1 (a) Marketable title (free from defects-defects in record chain, encumbrances, zoning violations, future interest in unborn or unascertained parties)
Remedies: buyer must notify and reasonable time to cure defects, recession is ok if fail to cure (recission, damages, specific performance, w/ abatement, and quiet title suit).
(b) Grantors implied promise to not mater false statements of material fact (seller liable for failure to disclosure LATENT material defects if they (i) know of the defect (2) buyer unlikely to discover the defect (3) defect so serious buyer would reconsider the purchase
(c) general disclaimer: NO, specific disclaimer: YES.
(d) Implied warranties of fitness or habitability: NONE. unless**** a new home built by seller directly. Date may be extended to allow time to cure.
EXCEPTION: IF CLOSING OCCURS AND THE K AND DEED MERGE... SELLERS LIABILITY ON IMPLIED CONTRACTUAL COVENANT ENDS*****
(2) ****The land K dies when the deed comes about.*** (deed signed by the grantor with an unambigious description, identifying the transfer and intending to transfer). if absolute on its face oral conditions dropped from the deed.
Bonus:
Owners policy: protects only the person who owns the policy
Lenders policy: follows any assignment of the mortgage loan
License, Covenants, & Equitable Servitudes (DEFINE)... we will review the outline together for this one. (page 14-17)
(1) License: The license is just a mere privilege to enter another’s land for some delineated purpose.
(2) Covenants are a written promise to do or not do something related to the land.
(3) Covenant enforced in equity against successors “promise in equity” regardless of whether it runs with the land, (LIKE A COVENANT BUT THE REMEDY TO VIOLATING THIS IS TO DO SOMETHING** NOT MONEY DAMAGES)