Cloned from: MBE - Real Property



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4 Forms of Present Estate
1) Fee Simple Absolute

2) Fee Tail

3) Defeasible Fees (FS Determinable; FS Subject to Condition Subsequent; FS Subject to Executory Interest)

4) Life Estate
3 Key Questions re. Present Estates?
1) What language creates the estate?

2) What are the estate's distinguishing characteristics regarding transfer of interests? (Devisable? Descendible? Alienable?)

3) Which future interests, if any, is the estate capable of?
3 Key Questions re. FSA
1) "To A" or "To A and his heirs" ("and his heirs" is no longer required)

2) Capable of infinite duration + freely devisable, descendible and alienable.

3) No future interests can exist (see Bruce Willis rule of property)
Bruce Willis rule of property
A living person has no heirs (like hairs, get it!?!);

A living person ONLY has prospective heirs
3 Key Questions re. Fee Tail
1) ONLY by "To A and the heirs of his body"

2) VIRTUALLY ABOLISHED in US today; passess to Grantee's lineal blood descendants no matter what happens (NOTE: if one tries to create a FT, the court will find a FSA)

3) In a Grantor => Reversion; In a 3P => Remainder
3)
3 Forms of Defeasible Fee
1) Fee Simple Determinable

2) Fee Simple Subject to Condition Subsequent

3) Fee Simple Subject to Executory Interest
3 Key Questions re. Fee Simple Determinable
1) "To A for so long as..." "To A during..." "To A until..." (NOTE: key is CLEAR DURATIONAL language)

2) Fully devisable, descendible, alienable BUT ALWAYS subject to the condition (see Mick Jagger rule of property)

3) Possibility of Reverter (in Grantor)

PNEUMONIC: Frank Sinatra Doesn't Prefer Orville Redenbacher (FSDPOR)
3 Key Questions re. Fee Simple Subject to Condition Subsequent
1) "To A, but if X event occurs, Grantor reserves the right to reenter and retake" (NOTE: must use clear durational language + expressly carve out the right to reenter)

2) NOT automatically terminated, BUT violation of condition gives O the option to cut short the estate

3) Right of Entry aka Power of Termination
3 Key Questions re. Fee Simple Subject to Executory Limiation
1) "To A, but if X event occurs, then to B" (NOTE: must include a 3rd party in whom the interest may pass)

2) Grant automatically terminates upon the occurrence or non-occurrence of the specified condition + passes to some person OTHER than the Grantor

3) Shifting Executory Interest
2 Important Rules of Construction re. Defeasible Fees (FSD, FSSCS, FSSEI)
1) Words of mere desire, hope, or intention are insufficient to create a defeasible fee (presumption against creation of defeasible fee b/c contrary to PP which favors the free alienablity of land)

2) Absolute restraints on alienation are void; ONLY permissible if REASONABLE + TIME LIMITED
3 Key Questions re. Life Estates (or Life Estates Pur Autre Vie)
1) explicit "life" "lifetime" terms; NEVER in terms of "years"

2) LT is entitled to ORDINARY USES + PROFITS from the land; is limited by duty to AVOID WASTE (affirmative; permissible; ameliorative)

3) Held by Grantor => Reversion; Held by 3rd Party => Remainder
3 Kinds of Waste
1) Affirmative/Voluntary Waste: overt conduct which causes a drop in value

2) Permissive Waste: damage caused by neglect

3) Ameliorative Waste: acts which enhance the property's value
LT's Duties w/ re. to Voluntary Waste and Natural Resources (PNEUMONIC)
RULE: LT cannot consume or exploit natural resources on the property, UNLESS 1+ of the 4 exceptions apply

PNEUMONIC for 4 Exceptions: PURGE


PU
: Prior Use (prior to grant the land was used for exploitation)

R: Repairs (may consumer resources necessary of rez. repairs and maintenance)

G: Grant (may exploit if permitted to by grant)

E: Exploitation (may exploit if the only suitable use of the land is such exploitation)
LT's Duties w/ re. to Permissive Waste
LT must MAINTAIN the premises in rez. good repair; need not improve; need not replace damage

LT must PAY ORDINARY TAXES, to the extent of income or profits from the land; (if no income/profits ==> pay ordinary taxes to the extent of the fair rental value)
LT's Duties w/ re. to Ameliorative Waste
LT must not unilaterally enhance the property's value

MAY enhance the value if ALL FUTURE INTEREST HOLDERS both KNOW and CONSENT
6 Forms of Future Interests + 2 Broad Categories
1) Future Interests Capable of Creation in the Grantor

a) Possibility of Reverter
b) Right of Entry/Power of Termination
c)Reversion

2) Future Interest in Transferees

a) Vested Remainder
b) Contingent Remainder
c) Executory Interest
Future Interests Capable of Creation in the Grantor
1) Possibility of Reverter (accompanies a FS Determinable)

2) Right of Entry/Power of Termination (accompanies FS Subject to Condition Subsequent)

3) Reversion (Def: Future interest that arises in a Grantor who transfers an estate of lesser quantum than she started with, other than a FS Determinable or FS Subject to Condition Subsequent)
Future Interest in Grantees
1) Vested Remainder
a) Indefeasibly Vested Remainder
b) Vested Remainder Subject to Complete Defeasance (aka subject to total divestment)
c) Vested Remainder Subject to Open

2) Contingent Remainder

3) Executory Interest
a) Shifting (cuts short another Grantee's interest)
b) Springing (cuts short Grantor's interest)
3 Questions re. Future Interests in Transferees
1) Distinguish Vested Remainders (3 different kinds) from Contingent Remainders;

2) Distinguish 3 kinds of Vested Remainders from one another;

3) Distinguish Vested and Contingent Remainders from Executory Interests
3 Key Characteristics of a Remainder
DEF: Remainder is a future interest / in a grantee / that is capable of becoming possessory upon the expiration of a prior possessory estate / which was created in the same conveyance as that which created the remainder

REM: Remainderman is always SOCIABLE (never created alone; must be a preceding estate; usually a LE or TOY), PATIENT (never becomes possessory until the prior estate expires) , and POLITE (never cuts short the prior estate; never follows a defeasible fee)
Difference between Vested and Contingent Remainders
1) Vested: must be (1) created in an ascertainable person, and (2) cannot be subject to any condition precedent

2) Contingent: is either (1) created in an unascertained person, and/or (2) is subject to a condition precedent
3 Limits on the Creation of Contingent Remainders
1) Rule of Destructibility of CRs:

a) Historically @ CL: CR is destroyed if still contingent @ the time the preceding estate ended

b) Modern: CR remains, even if it is contingent @ the time the preceding estate ended

2) Rule in Shelly's Case (only applies in grant "To A for life, then, on A's death, to A's heirs")

a) Historically @ CL: present + future interests merger => A receives a FSA (RULE OF LAW; not a rule of construction => applies even in the face of contrary intent by O)

b) Modern Approach: virtually abolished

3) Doctrine of Wortier Title (aka Rule Against a Remainder in Grantor's Heirs) (applies only when O, who is alive, tries to create a future interest in O's heirs; under the Bruce WIllis rule, no living person has heirs)

Rule: what would be a Contingent Remainder in O's heirs is void by the Bruce Willis Rule

Limit: b/c this is a rule of construction the Grantor's intent controls => if O clearly intends to create a contingent remainder hin his heirs, that intent is binding
3 Kinds of Vested Remainders
NOTE: only remainders are capable of being "vested"

1) Indefeasibly Vested Remainder: holder of the remainder is certain to acquire an estate in the future, with no strings attached (i.e. FSA)

2) Vested Remainder Subject to Complete Defeasance: holder of remainder is certain to acquire an estate in the future, but may lose that estate if certain conditions subsequent occur

3) Vested Remainder Subject to Open: a remainder vested in a group, at least on of whom is qualified to take

3_
2 Kinds of Class Capable of Holding a Vested Remainder Subject to Open
1) Open Class: others may still join the class (e.g. the children of my children)

2) Closed Class: the total membership of the class is established and others cannot join (Rule of Conveinance: class closes when any member can demand possession of the estate)
NOTE: "Womb Rule" if a child is in the womb at the time a class closes, that child is included in the class despite their not having been born
Remainders v. Executory Interests
1) Executory Interests: future interest / created in a transferee (3rd Party) / which is not a remainder / and which takes effect by EITHER (1) cutting short some interest in another person ("shifting") OR (2) cutting short some interest in the Grantor or their heirs ("springing")

NOTE: look out for the RAP
The RAP Rule
Certain kinds of future interests / are void if there is any possibility, however remote, that / the given interest may vest more than 21 years after the death of a measuring life
4 Step RAP Analysis
1) was a qualifying future interest created by the conveyance?

a) RAP applies: CR, EI, certain VR-StO
b) RAP inapplicable: Future Interest in Grantor (Reversion, RoE, PoR), Indefeasibly VR, VR-StCD

2) what are the conditions precedent to the vesting of the suspect future interest?

3) what is the measuring life (person alive @ the date of the conveyance + whose life/death is relevant ot the condition's occurrence)?

4) will we know, with certainty, within 21 years of the death of the measuring life, if our future interest holder(s) can or cannot take?

yes => conveyance is good;
no => conveyance is void
2 Bright Line Rules re. CL RAP
1) A gift to an open class that is conditioned on the members surviving to an age BEYOND 21 violates the CL RAP.

BAD AS TO ONE, BAD AS TO ALL (even if one or even a majority qualify)

2) Many shifting executory interests violate the RAP.  An executory interest with NO LIMIT ON THE TIME WITHIN WHICH IT MUST VEST violates the RAP.

EXCEPTION: Charity-to-Charity gifts are not subject to RAP
2 Distinct Reform Doctrines + 2 Common Reforms
1) "Wait and See" or "Second Look" Doctrine (MAJORITY): validity of any suspect future interest is only evaluated at the actual end of the measuring life (eliminates the "what if?" or "anything is possible?")

2) Uniform Statutory RAP (USRAP): codifies CL RAP + provides for alternative 90 year vesting period)

COMMON REFORMS

1) Cy Pres (as near as possible) Doctrine: if a grant violates the RAP => court may reform it in a way which most closely matches the Grantor's intent w/o violating the RAP)

2) Reduction of any Offensive Age Contingency to 21: if condition is that A reach 30 years, court will reform it to require that A reach 21 years (thus avoiding the RAP)
RAP Hint
1) Last person mentioned by proper name w/ a future interest will get the property;
2) the next subsequent person not mentioned by name w/ future interest will get the property
3) all other parties lose and the property reverts back to the grantor
Abandonment of an Easement
Abandonment ONLY occurs with
1) nonuse +
2) some affirmative act showing intent to abandon the easement
CL Doctrine of Equitable Conversion
Upon signing of contract for sale of land, the risk of loss passes to the buyer (buyer is the equitable owner)
RAP and Right of First Refusal
If held by heirs and assigns of Grantor, look for RAP problems
Race-Notice Jurisdiction
Ownership goes to the person without notice of a prior sale + records first
Due-on-Sale Clause in Mortgage; Effect on Buyer of Mortgaged Property
If you own property subject to a mortgage containing a DOS clause, the mortgagee must pay off the mortgage upon sale.

So long as subsequent purchaser of property knows of mortgage, it is incumbent upon buyer ensure the mortgage is paid by the seller
Effect of Taking Property "Subject to Mortgage"
No personal liability; at most the buyer is subject to eviction upon foreclosure
Proceeds of Foreclosure Sale
Proceeds go 1st to foreclosing party; balance goes to pay off subsequent mortgages; prior mortgages stay on the property

LIMIT: if foreclosing party doesn't give notice to subsequent lenders, the subsequent lenders take priority in payment
Effect of Violations of Zoning and Subdivision/Housing/Building Codes on Transfers of Ownership
Zoning Violation => breach of implied warranty of marketability; can't be remedied w/o changing law or land

Building Code Violation => no breach of implied warranty of marketability; can be remedied w/o changing law
General Warranty Deed
Grantor covenants against title defects created both by himself and all prior titleholders

NOTE: covenants DO NOT cover defects in the structure or suitability for the purpose sold
Adverse Possession
Possessor must show
1) an actual entry giving exclusive possession;
2) that is open + notorious;
3) that is hostile (adverse + under claim of right); and
4) continuous for the statutory period (NOTE: separate, continuous periods of possession by successive possessors may be tacked together to make up the full statutory period)
Shelter Rule
A person who takes from a BFPFV will prevail against any interest that the transferor-BFPFV would have prevailed against
Title Theory
Title is in a mortgagee (lender) until the morgage is satisfied or foreclosed => entitled to take possession on demand at any time.
Natural Flow Theory
Landowner cannot alter the rate or manner of natural flow of surgace waters where such actions would injure others above or below him.
Warranties of Quality and Fitness of a House Sold by Its Builder
General Rule: conveyance of real property contains no warranties of quality or fitness for the purpose intended

EXCEPTION: Builder selling new house => carries implied warranty that the new house is "designed and ocnstructed in a reasonably 'workmanlike' manner and suitable for human habitation
Removal of Fixtures Installed by Tenants
Majority: tenant may remove chattel that they have attached to the premises as long as the removal does not cause substantial damage to the premises or the virtual destruction of the chattel.  (UNLESS OTHERWISE K'd)  ALSO, lenders do not receive rights which didn't vest in the landlord => if LL can't stop removal, neither can lender
Duty of Seller to Clear Title of Encumberances
Seller of land is entitled to use the proceeds of a sale to clear title IF she can ensure that the purchaser is protected (e.g. place the sale funds in escrow)
Effect of Destroying Deed on Title Ownership
Once delivered, a deed merely evidences title => it's destruction-without more-has no effect on who holds legal title
Easement Implied by Law (Quasi-Easement Appurtenant)
Easement may be implied if

1) prior to the time a tract is divided, the use was

a) continuous up until the division
b) apparent
c) reasonably necessary for the enjoyment of the dominant tenemant

2) AND the parties intended the use to continue after the division of hte property
Marketable Title and Effect on Marketability of Unborn or Undescerable Future Interest Holders
qTitle which is reasonably free from doubt;

Title is unmarketable if present and future interests attempt to convey a FSA when there are undiscernable or unborn future interest holders
LL's Rights re. Holdover Tenants
When a T fails to vacate after the termination of his right of possession, a LL may

1) treat the holdover as a trespasser => evict;

2) bind the holdover to a new periodic tenancy, applying the terms and conditions of the expired tenancy
a) Commercial Tenant: year-to-year original lease -> year-to-year new lease
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