Duty to Disclose
This Latin phrase, meaning 'buyer beware,' describes the common law rule that sellers have NO duty to disclose defects to buyers
What is Caveat Emptor?
This is the general definition of marketable title. Title free from reasonable doubt and risk of litigation.
What is title that a reasonable, prudent purchaser would accept and pay fair market value for?
Unlike a fee simple or a leasehold, an easement is this type of interest in land — the holder may USE part of the land but does NOT possess it.
What is a non-possessory interest in land?
The scope of an express easement is set by this, and courts apply a general standard of what is 'reasonably necessary and proper' for the use granted.
What is the instrument (document) that created the easement?
An encumbrance is defined as any interest held by a third party that does THIS to the property's value.
What is diminish (lower) the value of the property in the hands of the landowner?
Under the modern majority rule, a seller must disclose defects that meet these THREE requirements.
What are defects: (1) within the seller's knowledge, (2) that materially affect the property's value, and (3) not known or readily discoverable by the buyer?
Marketable title is implied in EVERY contract for the sale of real property, even if not expressly stated. This means title must be marketable by THIS moment in the transaction.
What is closing (the seller has until closing to cure any title defects)?
In an easement appurtenant, this estate BENEFITS from the easement, and this estate is BURDENED by it.
What is the Dominant Estate (benefit) and the Servient Estate (burden)?
While a dominant tenant may change the DEGREE of use of an easement, they may not do this.
What is change the KIND (nature or type) of use?
The existence of this type of encumbrance (e.g., a zoning ordinance) does NOT make title unmarketable — only its VIOLATION does.
What is a public land use restriction (statute, ordinance, or other government regulation)?
Under the common law exception to caveat emptor, if a seller discloses SOME defects, she must do this.
What is disclose ALL defects? (No partial disclosure allowed.)
Title is UNMARKETABLE in these THREE situations.
What are: (1) seller's title covers less property than purported, (2) title is subject to an encumbrance, or (3) there is reasonable doubt about either of those?
This type of interest terminates when the licensor sells or transfers the burdened property, the licensor dies, OR the licensor revokes the licensee’s interest
What is a License?
When determining the scope of an easement by implication, courts look to this specific point in time.
What is the use of the easement BEFORE title was severed (prior use at the time of severance)?
These are three examples of PRIVATE encumbrances that would render title unmarketable
What are mortgages/liens, easements, and real covenants / equitable servitudes?
The duty to disclose does NOT apply to marketable title issues because of this assumption courts make about buyers.
What is the assumption that buyers will conduct a title search on their own and discover encumbrances, such as liens and easements?
Although the EXISTENCE of a public restriction (like a zoning ordinance) does NOT make title unmarketable, THIS does.
What is the VIOLATION of a public land use restriction?
An easement by necessity requires ALL of these elements
What is (1) unity of title — the dominant and servient estates were once commonly owned; (2) easement appurtenant AND (3) severance/conveyance created the strict necessity (the parcel is landlocked and needs access)?
A company has an easement appurtenant to its 5-acre factory lot. After a fire, it buys adjacent land and tries to use the easement to access the new parcel. This is prohibited because an easement appurtenant may only serve this.
What is the dominant estate only — an easement appurtenant cannot be extended to benefit other (later-acquired) land?
If a buyer's contract states 'buyer assumes responsibility for all encumbrances of note' and the buyer signs, this is the effect on encumbrances discovered during the executory stage.
What is the buyer becomes responsible for all encumbrances that existed at the time the contract was signed?
Under the common law, a seller's duty to disclose could be triggered even under caveat emptor if THIS type of relationship existed between buyer and seller.
What is a confidential (or fiduciary) relationship between the buyer and seller? (ex: financial advisor/investor, caregiver/patient)
A buyer discovers during the executory stage that the seller will clearly be unable to cure a title defect before closing. This is the remedy available to the buyer BEFORE closing occurs.
What is rescission of the contract?
To acquire an easement by prescription, a claimant's use must satisfy these four elements — and notably, this one element that adverse possession requires is NOT required.
What are: Hostile/adverse, Open & notorious, Continuous for the statutory period, and Actual use — and EXCLUSIVITY is NOT required for prescriptive easements?
A farmer has an easement appurtenant to cross his neighbor's land via a dirt path using a horse and buggy. Years later, the farmer wants to use the same path to drive heavy tractors and trucks for commercial farming operations. The servient estate owner objects.
What is the court will likely find this exceeds the scope of the easement, because while you may change the degree of use, you cannot change the kind of use — and shifting from personal travel to heavy commercial traffic changes the nature of the burden on the servient estate?
Even if a private encumbrance exists on a property, title will NOT be considered unmarketable if this occurs.
What is disclosure to the buyer and the buyer still agrees to purchase the property (buyer's informed acceptance removes the encumbrance as a title defect)?