REAL PROPERTY

FIRST: IDENTIFY AND DESCRIBE INTEREST IN LAND (estate; easement; restrictive covenant) SECOND: How can these interests be ACQUIRED, RETAINED or TRANSFERRED?

I.

ESTATES IN LAND Freehold vs. Non-freehold A. PRESENT POSSESSORY ESTATES: freehold and non-freehold 1. key word for estates possession (if you have the right to possess, you have an estate) 2. estate w/future right of possession future interest 3. non-freehold estates landlord-tenant estates B. IDENTIFYING AND DESCRIBING FREEHOLD ESTATES (fee simple, inclu. defeasible fees; life estate; fee tail) 1. FEE SIMPLE ABSOLUTE (FSA) a. potentially infinite duration b. FSA must be fully alienable no direct restraints on transfer of ownership of FSA c. exception: right of first refusal is a valid restraint on alienation i. J wills farm to Y, but if Y tries to sell farm during her lifetime, then S has a right of first refusal. d. language of creation i. at common law: to A and his heirs ii. majority change: courts will presume a fee simple granted unless language shows a clear intent to do otherwise e. defeasible fees i. fee simple determinable ii. fee simple on condition subsequent iii. fee simple subject to executory interest 2. FEE TAIL a. At CL, a device to lock property into the grantees family.

b. language of creation: i. to A and the heirs of his body ii. to A and his bodily heirs c. modern presumption: language presumed to create FSA unless bar exam asks to apply CL rule 3. LIFE ESTATE a. defined: present possessory estate in land that is usually measured by the life of the grantee b. creation: 2 ways: i) expressly; or 2) by implication c. key RULE: LE never measured by time only by life. d. by implication: to Luci and Lynda a/f death of my beloved wife Lady Byrd i. LB has LE created by necessary implication from terms of testators will. e. life estate pur autre vie (life estate measured by the life of another) i. O to Tarzan for the life of Jane 1) T has a life estate for Janes life. 2) What if Tarzan dies while Jane (measuring life) is still alive? a) at CL: seisin is vacant; anybody takes (until J dies) b) modern rule: if life tenant dies b/f measuring life dies, life estate passes to estate of deceased life tenant and continues until measuring life dies. c) if Jane dies first, Ts life estate terminates. f. transfer of life estate i. Garth to Reba for life. Reba sells LE to Al. 1) R has a LE and is measuring life. 2) Al has a life estate pur autre vie. 3) If A dies b/f R, LE passes to As estate and continues until Rs death. g. restraints on alienation

i. modern rule: allows provision that terminates life estate if LT attempts to convey away life estate 4. RIGHTS AND DUTIES OF LIFE TENANT: DOCTRINE OF WASTE: Life tenant must maintain the estate a. Tenant for life is entitled to all ordinary uses and profits of the land; but he cant do any act that would injure the interests of the person who owns remainder or reversion b. voluntary waste: any affirmative action beyond right of maintenance that causes harm to the premises i. tenant may continue normal use of the land ii. any change of use = voluntary waste; and t may liable to holder of future interest iii. general rule: depletion of natural resources constitutes voluntary waste UNLESS consumption of such resources constitutes normal use of land open mines doctrine 1) sale of harvestable crops does NOT constitute waste c. permissive waste: failure to maintain. T must do 3 three things to avoid liability for permissive waste. i. repairs 1) rule: LT has obligation to make ordinary repairs but not replacements. 2) limitation: Liability limited to amount of rents and profits received from the land. 3) If no rents and profits, repair obligation limited to reasonable rental value of land IF tenant is using the land. 4) If no rents and profits, and t not using land no repair obligation ii. taxes 1) rule: LT must pay all taxes on the property. 2) limitation: obligation extends only to amount of rents and profits received from land.

3) if no rents and profits: obligation extends to reasonable rental value of the land 4) if no rents and profits and t not using land, no obligation to pay taxes?????? 5) if t fails to pay taxes: holder of future interest needs to be sure taxes are paid b/c tax sale will eliminate the future interest. And buyer at tax sale takes property free and clear of future interest. 6) GEORGIA: if tenant fails to pay taxes, life estate is forfeited. iii. mortgage debt 1) rule: LT must pay interest on mortgage indebtedness but NOT required to make principal payments. (holder of future interest must pay principal) 2) limitation: obligation limited to amount of rents and profits received 3) if no rents and profits obligation limited to reasonable rental value of land IF tenant is using land d. ameliorative waste: i. rule: AW occurs where LT alters property substantially but LTs activity increases value of the land 1) changed conditions: if changed conditions have made property relatively worthless, then LT can alter property w/out incurring liability to holder of future interest 2) remember: changed conditions & relatively worthless e. can give LTs right to sell any property for support and maintenance 5. SEISIN a. all freehold estates carry concept of seisin b. means that holder of seisin is taxpayer c. at the moment of each and every conveyance of Blackacre, property law wants to know who has seisin at all times and under all possible circumstances. 4

C. FUTURE INTERESTS 1. What is a future interest? a. Rule: interest exists now but possession will not take place, if at all, until some time in the future. 2. MBE Questions: 2 categories a. classification rules* b. rule a/g perpetuities 3. Classification Rules: 2 Categories of Future Interests a. FIs retained by the GRANTOR i. reversion ii. possibility of reverter iii. right of entry b. FIS retained by GRANTEE i. remainder ii. executory interest D. FUTURE INTERESTS IN THE GRANTOR 1. Reversion; follows life estate: arises in grantor whenever grantor conveys away less than the full durational estate that grantor had a. O to A for life. i. A life estate ii. O reversion b. see Hypo 11, p. 9-10 c. transferability i. not subject to RAP; reversions are vested ii. freely transferable on death iii. freely transferable inter vivos 2. Possibility of Reverter; follows fee simple determinable a. O to A and his heirs for so long as no liquor is consumed on the premises. i. A: fee simple determinable ii. O: possibility of reverter b. fee simple determinable (possibility of reverter) i. terminates: AUTOMATICALLY on the occurrence of some event

ii. rule: whenever grantor conveys FSD, grantor automatically retains a possibility of reverter iii. magic words 1) for so long as 2) while 3) during 4) until 3. RIGHT OF ENTRY a. O to A and her heirs; provided, however, that if liquor is ever consumed on the premises then O or Os heirs shall have the right to re-enter and retake the premises. i. A: fee simple on condition subsequent ii. O: right of entry b. fee simple on condition subsequent i. terminates: when O does something to retake the property; does NOT go back to grantor automatically when condition is broken 1) title stays in grantee until grantor exercises right of entry ii. magic words 1) provided however 2) but if 3) on condition that iii. creation 1) to create fscs magic words must by followed by language where grantor expressly reserves right to enter and retake c. transferability i. not subject to RAP vested ii. freely transferable on death iii. NOT freely transferable inter vivos* (crucial difference b/w right of entry and possibility of reverter) E. FUTURE INTERESTS IN GRANTEE 1. Remainders

a. remainder: future interest in a 3rd party grantee that comes naturally and immediately on the termination of the preceding estate b. remainders are either vested or contingent 2. Vested Remainder a. rule: remainder is vested if nothing stands in the way of its becoming possessory on the natural expiration of the preceding estate, i.e. i. taker is ascertainable ii. no conditions to taking b. O to A for life; and then on As death to B and his heirs. i. A: life estate ii. B: remainder in fee simple 3. Contingent Remainders a. O to A for life, then to B and his heirs if B survives A. i. A: life estate ii. B: contingent remainder in fee simple iii. O: reversion b. survivorship clauses; age contingencies 4. Class Gifts: Vested Remainder Subject to Open a. rule: Where remainder interest is conveyed to a class of unnamed persons whose members are not yet fully known, class remains open to allow for future persons who qualify as class members by satisfying class description b. O to A for life, then to As children. At time O makes this grant, A has 3 children, B, C and D. i. A: life estate ii. B,C,D: vested remainder subject to open iii. O: nothing iv. class closes on As death b/c when A dies, A cannot have any more children and property will be distributed to As children in fee simple. 5. Class Gifts: Time for Vesting and Rule of Convenience

a. rule: under a rule of convenience, the class CLOSES for a CLASS GIFT whenever any class member is entitled to distribution. b. this is a rule of construction, not a rule of law. therefore, apply this UNLESS language of grant specifies different intent of grantor c. Hypo 20: 6. Executory Interests a. To identify: An EI operates to cut short the estate that comes before it. (Remember, remainders are patient) b. Hypo 23: O to A so long as the property is used for residential purposes; and if the property is ever used for something other than residential purposes, then to B and his heirs. i. A: fee simple subject to executor interest ii. B: executor interest 1) B interest is not a remainder b/c remainders NEVER follow a fee simple. c. 24: O to A for life, then to B and his heirs; but if at Bs death, B is not survived by issue, then to C and her heirs. i. A: Life estate ii. B: vested remainder in fee simple subject to executory interest (aka vested remainder subject to total divestment or VRS to executory limitation) iii. C: executory interest 1) C takes EI b/c language of condition is made part of the grant over to C 7. Future Interests and the Law of Waste a. holders ofexecutory interests do not have standing to sue for waste b. holders of remainders have standing to sue for waste F. RULE AGAINST PERPETUTITES 1. Rule: No interest will be valid unless it must vest, if at all, w/in 21 years a/f the death of some life in being who was alive at the time the conveyance was made.

2. ask: could FI possibly vest in grantee outside the time period of the rule (i.e. is it possible that everyone alive at the time of the grant dies plus more than 21 years go by before that interest might vest)? if the answer is yes, interest is VOID. 3. applies to a. executory interests b. contingent remainders c. vested remainders subject to open d. rights of first refusal i. if right of first refusal given to ascertainable persons no RAP problem ii. if right held by heirs and assigns, it might vest too remotely RAP problem 4. cheat your way through a. Step 1: last person mentioned by proper name w/a future interest will get the property b. Step 2: next subsequent party not mentioned by proper name will get the property c. Step 3: everybody following that person loses out, and property reverts back to grantor and grantors heirs 5. examples a. Drills (2) To my son for life, then to my eldest grandchild living at my sons death for life, remainder to my great grandchildren b. to my neighbor so long as the property is used for residential purposes, but if the property ceases to be used for residential purposes, to the American Cancer Society) i. Executory Interest in ACS is void under RAP b/c it might vest beyond lives in being plus 21 years. ii. Charity to charity exception does not apply b/c neighbor is not a charitable organization

II.

CONCURRENT ESTATES IN LAND A. JOINT TENANCY 1. creation rule: Four unities must be present at the outset in to order to create a joint tenancy AND language of conveyance must clearly reflect grantors intent to create a joint tenancy (must use words right of survivorship) a. Four Unities TTIP i. time- all JT interests must vest at the same time ii. title: grant to all JTs must be by same instrument iii. interest: all JTs must take same kind and same amount of interest iv. possession: all JTs must have identical/same rights of possession. b. right of survivorship: surviving tenants take automatically on death of a joint tenant c. right of partition i. rule: If any joint tenant wants to be relieved of burdens of common ownership, can do so by asking that property be partitioned. ii. in partitioning, lines are drawn and party seeking is no longer a JT and will own portion outright. iii. partition can occur by voluntary agreement iv. if parties cant reach an agreement, then judicial action seeking a partition may be brought 2. SEVERANCE INVOLUNTARY Termination of JT a. rule: severance occurs when any one of the four unities is disturbed (JT cannot be severed by will) b. Sale c. Mortgage i. majority rule (Georgia) in a lien theory state, there is no severance of JT if one tenant mortgages his interest. When mortgage is executed, a lien attaches to the title, but title is not transferred. Therefore, the unities are NOT disturbed.

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ii. minority rule: In a title theory state, there is a severance of the joint tenancy b/c when mortgage is executed, title passes from mortgagor to mortgagee, even though title goes back to mortgager when mortgage is satisfied. Four unities are disturbed. d. Contract of Sale i. rule: in a contract of sale, JT is severed on the date contract is signed b/c of the doctrine of equitable conversion. e. Creditors Sale of Interest in JT i. rule: no severance until the judicial sale actually takes place. B. TENANCY IN COMMON 1. 1 unity required: possession means each co-tenant is entitled to possess the whole 2. modern presumption is in favor of TIC. If JT is not properly created, then it results in a TIC. 3. freely alienable 4. any TIC can force a partition 5. no right of survivorship C. TENANCY BY THE ENTIRETY 1. four unities + unity of marriage 2. right of survivorship 3. no right of partition 4. not severable by unilateral act of co-tenant 5. termination a. death b. mutual agreement in writing c. execution by a joint creditor 6. Georgia: does not recognize TIC D. INCIDENTS OF CO-OWNERSHIP 1. Possession a. rule: each co-tenant has right to possess whole of the property 2. Accountability

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a. issue: whether co-tenant has to SHARE PROFITS that co-tenant received from the land b. rule: one co-tenant does not have to account to another for his share of the profits, subject to 4 exceptions c. 4 exceptions i. ouster: accounting required if co-tenant is either keeping a co-tenant off the property or claiming a right of co-possession ii. agreement to share iii. lease of property by co-tenant to a third party iv. depletion of natural resources 3. Contribution a. concerns right of co-tenant to force the others to pay fair share of expenditures made on property b. rule: right to contribution depends on what type of expenditure made on property i. home improvements contribution no right of yes, but only for

ii. repairs (fixing the barn) necessary repairs

iii. paying mortgage yes, contribution required for any mortgage on property that has been signed by all co-tenants iv. paying taxes yes, contribution required toward all governmentally imposed obligations such as property taxes, assessments for curbs, streets, sewers, etc. III. NON-FREEHOLD ESTATES (4 LL-T estates: Tenancy for Years; Periodic Tenancy; Tenancy at Will; Tenancy at Sufferance) A. ESTATE FOR YEARS 1. Key phrase specified time i. must specify: a. beginning date b. end date 2. Statute of Frauds any tenancy for over 1 year must be in writing i. one year tenancy may be oral 3. Notice

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i. rule: no notice required to terminate. ii. Georgia: In GA, tenancy for years presumed to exist if lease period is 5 years or more. Anything less than 5 years is presumed to be a usufruct. B. PERIODIC TENANCY 1. key phrase 3. creation i. by express agreement ii. implication: if no agreement as to duration a. rule: If lease doesnt specify how long tenancy is to last, then presumed to be a periodic tenancy measured bythe rent payment iii. by operation of law occurs in 2 situations a. oral lease that violates SOF b. holdover tenant i. holdover tenant is a tenant who was on property under a valid lease but the lease has expired and the tenant nonetheless remains on the property repeating, for period specified in grant 2. estate rolls on and on, until one party gives proper notice

ii. rule: when LL accepts a rent check from a holdover tenant, periodic tenancy is created by operation of law for period specified in the rent check 4. termination i. periodic tenancy terminates by giving proper notice ii. to be valid, notice must satisfy 2 independent criteria: a. enough time: amount of time equal to length of tenancy EXCEPT in case of year to year tenancy, which generally requires only 6 months b. effective date: to be valid, effective date specified in notice must be at the end of the period, whenever that period may be C. TENANCY AT WILL 1. Either party can terminate at any time, without notice. 2. no notice required 3. termination by operation of law

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i. death of either party ii. waste by tenant iii. assignment by tenant iv. transfer of title by landlord v. lease by landlord to 3 party 4. Georgia: while recognizing tenancy at will, Georgia law requires notice to terminate i. LL ii. T must give 60 days to tenant must 30 days to LL HOLDOVER TENANT

D. TENANCY AT SUFFERANCE

1. arises in only 1 situation: refers to bare possession that tenant has over the property when T wrongfully holds over 2. LLs 2 Options i. Sue to evict: LL may sue in trespass and to recover for damages a. Georgia: In GA, LL must continue to provide utilities until eviction is complete ii. Impose new periodic tenancy a. LL may elect to treat tenant as new periodic tenant. b. If expired tenancy for less than 1 year, new tenancy measured by period covered by rent payment i. in case of residential property new period usu. month-to-month

c. in case of commercial property; if expired lease for 1 year or more new periodic tenancy may be yearto-year d. LL may not impose a new PT if it is NOT reasonable under the circumstances (Ts moving van late by a few hours) iii. Raised Rent: If LL gives T notice of increased rent b/f expiration of the lease, then LL may properly demand payment of the higher rent amount E. DUTIES OF THE TENANT 1. Duty to Pay Rent 2. Duty to Maintain Premises

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i. where lease is silent T still subject to CL duty not to commit waste a. if leased premises destroyed w/out Ts fault, T will be given option to terminate the lease. ii. where lease includes covenant to repair a. express covenant by T to repair and maintain makes T an absolute insurer of the property w/exception that, at CL, T not responsible for ordinary wear and tear b. modern majority view once T covenants to repair, T liable for everything including ordinary wear and tear unless parties agreement expressly excludes this responsibility 3. Landlords Remedies i. T fails to pay rent a. CL LL could sue for damages; but LL allowed to collect only amount in arrears b. TODAY all states allow LL to sue for damages AND to terminate lease, thereby evicting T from property c. Georgia: By statute, 7 day grace period for T to pay rent ii. T unjustifiably abandons a. LL accepts Ts OFFER of abandonment i. surrender LL can treat Ts abandonment as offer to surrender and accepts Ts offer by retaking premises and terminating lease

ii. T has no further rent obligation b. T can RELET premises, holding T liable for DEFICIENCY i. Under modern majority rule, LL must make reasonable effort to relet premises in order to mitigate Ts damages (no such duty at CL)

ii. If rent LL can get is less than what T obligated to pay, T liable for deficiency F. DUTIES OF LANDLORD 1. Duty to deliver premises: LL must deliver possession to T when lease begins. If LL cannot deliver actual possession, LL is in breach of the lease. 15

2. Duty regarding Condition of leased premises i. modern rule: implied warranty of habitability: applies only in the case of RESIDENTIAL property ii. warranty obligates LL to provideand maintain leased premises that are reasonably suited for residential use usu. means fit for basic human habitation iii. retaliatory eviction: If T lawfully reports LL for housing code violations, LL is barred from penalizing T. iv. Ts remedies for breach of implied warranty of habitability a. T can move out and end the lease. in which case T under no further rent obligation b. T can stay on property and sue for damages c. make reasonable repairs and deduct cost from future rent payments d. Georgia: LL has no duty to repair UNLESS Ts interest is a usufruct. In which case, if LL fails to make necessary repairs w/in a reasonable time, T can make repairs and deduct. 3. Implied Covenant of Quiet Enjoyment i. rule: every lease includes LLs implied promise not to interfere w/Ts quiet enjoyment of leased premises. ii. promise is included in every lease residential, commercial or otherwise. iii. LL breaches in 1 of 3 ways a. total eviction obvious b. PARTIAL EVICTION: occurs where LL physically excludes T from only some portion of leased property i. If this happens, T can stay on whats left and stay for free

ii. can also occur where some third party, who holds paramount title, retakes property and physically excludes T iii. rule: if partial eviction by someone other than the LL, rent is proportionately reduced to reflect amount taken. c. constructive eviction occurs where LL fails to provide some service (doesnt involve actual 16

exclusion) that LL obligated to provide AND that failure makes property uninhabitable. i. three requirements to establish constructive eviction 1) must be LLs (and not 3rd partys) failure to provide some service 2) substantial interference w/Ts quiet enjoyment of property 3) T must abandon w/in a reasonable time. G. ASSIGNMENTS AND SUBLEASES (Transfer of LL-T estates) Property aw favors free transferability of interests in land! 1. Define assignment transfer ALL: 2. Define sublease transfer only a part 3. Georgia: T cannot transfer usufruct w/out first obtaining LLs consent. 4. Key to answering all assignment questions is to remember that a lease involves BOTH i. a lease is a contract, creating PRIVITY OF CONTRACT b/w the parties to the lease agreement. ii. a lease is also a conveyance of an estate, of an interest in land, thereby creating PRIVITY OF ESTATE b/w the parties 5. Assignment: Liability of Successive Assignees for Payment of Rent i. rule: T is liable to LL for rent IF there is EITHER privity of estate or privity of contract ii. privity of ESTATE ONLY exists b/w present LL and present tenant iii. privity of CONTRACT exists only where there is an agreement b/w LL and particular T from who LL seeks recovery iv. Hypo 55 6. Assignees Liability on other Lease Covenants i. covenant to pay rent always runs w/land and therefore enforceable based on either privity of estate or privity of contract

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ii. other covenants general rule: covenant will RUN w/land if it touches and concerns the land a. common sense approach to test and concern: if performance of covenant (promise) make the land MORE VALUABLE OR USEFUL, then covenant touches and concerns the land. 7. Liability of Successive Landlords on Lease: T sues LL i. rule: Original LL continues to be liable to original tenant b/c of privity of K ii. rule: SUCCESSIVE LLs may be liable to T if there is either privity of K or privity of estate. iii. hypo 57 8. SUBLEASE: Subtenants Liability for Rent i. rule: LL can recover rent from anyone w/whom he is in privity (either estate or contract) ii. rule: in case of a sublease, sublessor keeps estate; not transferred to sublessee which means no privity either way. 9. NON-ASSIGNMENT CLAUSES (valid and enforceable): i. what it is: clause in the lease that says T may not assign or sublet w/out express consent of LL ii. validity: even though a form of restraint on alienation, today all courts say such clauses are valid and thus enforceable. iii. effect of LLs consent to assignment a. rule re WAIVER of nonassigment sublease clause: Permission given once means that a nonassignment clause is waived altogether unless LL states otherwise at time of giving permission b. acceptance of rent also waives clause permanently iv. if T makes an assignment of violation of a nonassigment clause, transfer is not void. However, LL may terminate lease if provided by clause. Or he may sue for damages if he can prove any H. CONDEMNATION OF LEASEHOLD INTEREST: FULL OR PARTIAL 1. Two issues arise when state takes property thats under a lease pursuant to states exercise of eminent domain i. First, is Ts rent obligation excused? ii. Second, will T share in condemnation award.

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iii. To answer, must first determine whether all or only a portion of leasehold property has been taken by the state. 2. Partial Condemnation i. First ISSUE: Does T have to continue to pay rent for that portion of property taken by state? YES a. rule: a partial taking by eminent domain does not release T from obligation to pay full rent. ii. Second ISSUE: Will T share in condemnation award? a. rule: In case of a partial condemnation, T will get amount equal to rent that was to be paid over remainder of lease for that portion of property that was condemned. 3. Complete Taking i. Continue to pay rent? a. rule: No, complete taking extinguishes lease and T is excused from paying any further rent. ii. Share in condemnation award? a. rule: in the case of a complete taking, T will share in condemnation award only to extent that the fair rental value of the property exceeds amount of rent due under the lease. I. TORT LIABILTY OF LANDLORD AND TENANT 1. general common law rule: No duty imposed on the landlord 2. 5 exceptions i. LATENT DEFECTS: LL under a duty to disclose latent defects which LL either knows or has reason to know of. a. latent defect defect that T does not know of and a reasonable person in Ts position would not discover b. scope LL must disclose but under no duty to repair ii. SHORT TERM LEASE OF FURNISHED DWELLING a. rule: Rental of a furnished dwelling for a short period of time makes LL liable for defects, even if LL neither knows nor has reason to know of such defects. b. for bar exam purposes, short term = 3 months iii. COMMON PASSAGEWAYS under LLs Control

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a. LL will be liable if LL failed to exercise reasonable care (negligence standard). iv. NEGLIGENT REPAIRS undertaken by LL a. Court treats LLs conduct in making earlier repairs as creating deceptive appearance of safety and courts treat this conduct as negligence. v. PUBLIC USE EXCEPTION a. 3 requirements to invoke: i. LL must know (or should know) of major defects.

ii. LL must know (or SK) that T will not fix defect. iii. LL must know (or SK) that public will be using premises. 3. TENANTS TORT LIABILITY i. rule: T ALWAYS liable to 3rd party invitee for negligent failure to correct dangerous conditions the leased premises, regardless of whether LL may be liable as well. I. FIXTURES A. Rule: Fixtures become part of the real property. 1. 2. Therefore, sellers or tenants cannot remove fixtures. Key question: when is an item of personal property to be treated as a fixture? a. analysis turns on INTENT: did the one doing the installing intend that the item of personal property remain w/property as a real fixture? express intent: if express agreement b/w parties, terms of the agreement control.

b. 3.

Where there is NO AGREEMENT, FOUR FACTORS are relevant to determine intent: a. FIRST, degree of attachment: more that has to be done to remove, more likely there is intent for item to remain w/the property SECOND, general custom: is this the type of things that sellers or tenants normally take w/them when they leave? THIRD: degree of harm to premises on removal i. courts tend to favor Ts on this point.

b. c.

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ii.

if T can remove item WITHOUT substantial harm to premises, courts gen. allow inference that there was NO intent that item become a fixture trade fixtures are items of personal property used in trade or business.

d.

FOURTH: trade fixtures: not considered fixtures. i.

e. 4.

hypo 69

If item of personal property is not a fixture, WHEN can it be removed? a. b. tenants situation: b/f T vacates at the end of the lease sellers situation: seller must remove item before closing or seller will lose chattel.

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II. EASEMENTS (know creation and termination) NON-POSSESSORY interest in land involving a RIGHT to USE the land. Key concept: right of use A. Classify the easement: 1. easement appurtenant: any time easement DIRECTLY BENEFITS the USE and enjoyment of SPECIFIC PARCEL of land, its classified as an easement appurtenant. a. b. 2. BURDENED PROPERTY: servient tenement BENEFITED property: dominant tenement

easements in gross: occurs where there is NO DOMINANT estate b/c there is only ONE PARCEL of land involved, which is property BURDENED by the easement or the servient tenement. a. classic example: utility easement

B. Method of creation 1. EXPRESS easement arises from: a. b. c. express grant of easement to someone else; express reservation of easement when land sold to another person subject to statute of frauds: general rule is that EXPRESS easements must: i. ii. iii. d. 2. be in writing; signed by the holder of the servient estate; and satisfy all deed formalities

NOTE: easements of a year or less do not have to be in writing. previous use by a common grantor i. previous use must satisfy three requirements: 1) 2) 3) ii. iii. apparent (open and obvious); continuous; reasonably necessary (extremely inconvenient otherwise)

IMPLIED easement easements by implication arise in 2 ways: a.

quasi easement ?????? hypo 72

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b.

EASEMENT BY NECESSITY: absolute right of access rule i. ii. owner of servient estate can choose location of easement so long as choice is a reasonable one

3.

easement by PRESCRIPTION a. 4 requirements i. ii. use must be hostile/adverse to true owner; use must be continuous and uninterrupted (lasting for the specified statutory period); 1) iii. iv. seasonal use may satisfy requirement use is visible and notorious use is without owners permission oral permission enough to destroy hostility needed to establish a prescriptive easement GEORGIA: Statutory period for a prescriptive easement is 20 years for wild land and 7 years for improved land.

v.

C. TRANSFER OF EASEMENTS 1. Transfer of BENEFIT of easement a. transfer of easement APPURTENANT dominant estate i. in the case of an EA, benefit is TRANSFERRED AUTOMATICALLY along w/the dominant estate, whether or not easement is mentioned in deed. rule: all who subsequently succeed to title to dominant estate become entitled to the benefit of the EA. EA cannot be TRANSFERRED separately from dominant estate. easements in gross that are commercial can always be transferred easements in gross that are personal cannot be transferred.

ii.

iii. b.

transfer of easement IN GROSS i. ii.

2.

Transfer of SERVIENT estate burden of the easement a. rule: easements are always binding on subsequent holders of servient estates even if the easement is not specifically

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mentioned in the deed of conveyance provided subsequent holder had NOTICE of the easement. D. SCOPE OF USE OF EASEMENT 1. 2. rule: specific terms of the easement control. where easement is silent: 2 presumptions a. b. FIRST: unless otherwise specified, easement is presumed to be perpetual it lasts forever. SECOND: use presumed is that of reasonable development of dominant estate i. rule: reasonable development is that development which would likely have been contemplated by the parties at the time the easement was granted.

3.

remedy for excessive use: enjoin excessive use but do NOT terminate easement rule: benefit holder (dominant estate) responsible for making repairs rule: benefit holder always has right to enter servient estate to repair easement rule: holder must make reasonable reservation of servient estate a/f making repairs rule: unless easement says otherwise, holder of servient estate has no repair obligation Estoppel a. 2 requirements i. ii. representation of relinquishment of estate by holder of dominant estate holder of servient estate must make a change in position in reliance on that representation

E. REPAIR OF THE EASEMENT 1. 2. 3. 4.

F. TERMINATION OF EASEMENT (END CRAMP) 1.

2. 3. 4. 5.

Necessity Destruction Condemnation Release (Deed of) a. to be valid, release must be in writing rule: mere non-use does not constitute abandonment Abandonment by Action a.

6.

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b.

intent must be manifested by holder of dominant estate taking some physical action that would show intent to abandon rule: when dominant and servient estates come together in same instrument, easement is terminated rule: once necessity gave rise to an implied easement ceases to exist, implied easement will automatically terminate

7.

Merger (Unity of Ownership) a.

8.

Prescription a.

G. EASEMENTS FOR VIEW AND SUNLIGHT 1. 1. one rule: no implied easements for view or sunlight what is a license? a. b. c. d. e. 2. limited privilege to USE land in possession of licensor Not a property interest contract right revocable at will of licensor if revocation wrongful, licensor may have to pay contract damages rule: ticket holders dont acquire any property rights in the ticket, but may sue for damages for breach of K. first rule: if easement is attempted but FAILS due to SOF, a license is created second rule: if money spent on property in furtherance of an oral license, license becomes irrevocable. H. LICENSES

tickets all tickets are licenses. a.

3.

IRREVOCABLE LICENSES a. b.

I. PROFITS 1. 2. 3. gives right to go on land of another and take away a natural resource along w/profit goes implied easement to go on land use easement rules to analyze issues involving profit

III. RESTRICTIVE CONVENANTS AND EQUITABLE SERVITUDES A. Restrictive covenant gives holder the right to restrict some third party in the use of third partys land 1. RCs fall into 2 categories

25

a. b. 2.

covenant running w/land at law; equitable servitudes

both involve a WRITTEN PROMISE that imposes a restriction on the use of land. ONLY DIFFERENCE is theory used to ENFORCE the terms of the restriction. INTENT: parties must intend that restriction run with the land NOTICE to person a/g enforcement sought a. b. actual notice CONSTRUCTIVE notice: notice given b/c restriction contained in deed that is duly recorded in buyers direct chain of title inquiry notice CR: conveyancing and recording rule: if performance of covenant/promise makes land more valuable or useful, covenant touches and concerns the land As used here, privity refers to a conveyance b/w the parties Two kinds of privity: vertical and horizontal to determine what kind of privity: distinguish benefit and burdens of covenant in other words, who is successor in interest? i. ii. is SII is P, person trying to establish that the benefit of the covenant runs to P. If facts show that SII is D, know that P is trying to establish that BURDEN of covenant runs to and binds D VERTICAL privity: refers to those who subsequently obtain property subject to covenant. Successors must take entire estate held by predecessor AND HORIZTONAL PRIVITY: refers to original parties to the promise 1) these 2 parties must share some interest in land independent of the covenant

B. 4 Requirements to enforce a restrictive covenant at law (PINT) 1. 2.

c. d. 3. a. 4.

TOUCH & CONCERN LAND

PRIVITY: Who is SUCCESSOR IN INTEREST? a. b. c. d.

e.

BURDEN: SII is D requires both V and H privity i.

ii.

26

2) f.

to establish HP, must be a conveyance of property b/w original parties

BENEFIT: SSI IS P i. VERTICAL privity: on benefit side, rule is: holder of any succeeding possessory estate may enforce the benefit of the promise as a covenant at law. NO HP required

ii. 1. 2. 3. 4. 5. 6. 1. 2. 3. 4. intent notice

C. 4 requirements to enforce BURDEN of a COVENANT: SII is D

touch and concern privity a. vertical and horizontal hypo 88 hypo 89 intent touch and concern privity vertical ONLY Hypo 90

D. 3 requirements to enforce BENEFIT of COVENANT AT LAW: SII IS P

E. EQUITABLE SERVITUDES: 3 requirements to obtain an INJUNCTION to enforce BURDEN of promise as an ES 1. 2. 3. 4. INTENT that restriction be enforceable by SII restriction must TOUCH AND CONCERN the land NOTICE to subsequent purchaser NO PRIVITY is required to enforce promise in equity as an ES

F. by contrast, only 2 requirements to enforce a BENEFIT of a covenant as an ES 1. 2. 1. intent touch and concern This doctrine is relied on to allow EACH LOT OWNER in residential subdivision to enforce a restriction on use a/g every other lot owner in the subdivision. hypo 93 27

G. RECIPROCAL NEGATIVE SERVITUDE

2.

3.

IMPLIED RECIPROCAL NEGATIVE SERVITUDE when developer subdivides land into several parcels and some deeds contain negative covenants and others do not, an equitable servitude (negative covenant enforceable by injunction may be IMPLIED where: a. there is a COMMON SCHEME of development: i. CS may be proven by evidence of INTENT to impose a SERVITUDE (restriction on use) on ALL land in the subdivision no actual notice CONSTRUCTIVE (or record) notice: Purchaser on record notice if restriction is contained in buyers chain of title. inquiry

b.

NOTICE i. ii.

iii. 4. 5.

distinguish DEDICATION DEFENSEs to enforcement of covenant as an equitable servitude a. b. c. d. unclean hands: P has made same use of her property acquiescence: P let other neighboring landowners do same thing on their lots laches: P sat by while D built office building and only complained a/f building project was completed estoppel: P represented that she had no problems w/Ds plans to construct an office building

H. TERMINATION OF COVENANTS AND SERVITUDES 1. 2. 3. Deed of Release Merger Unity of Ownership CHANGED CONDITIONS a. rule: if all lots in entire subdivision are affected, then use restriction will be eliminated

IV. ADVERSE POSSESSION Where a statute of limitations in EJECTMENT cuts off true owners RIGHT to RECOVER POSSESSION of her LAND. Once this statute runs, true owner loses title to the property. ISSUE is whether X being on true owners land is merely a trespass or whether X has obtained title to the land by adverse possession. To establish title by adverse possession, X must show that possession was (i) open and notorious (ii) actual and exclusive, (iii) continuous, (iv) hostile, (v) and for the statutory period of ____ years. CHONAE A. Six Requirements HELUVA 28

1. 2. 3.

Hostile: X is on land w/no right to be there. Exclusive: X must be excluding others from possessing the property. Lasting: a. b. c. possession must LAST for STATUTORY PERIOD if no time period specified, use CL rule of 2 years GEORGIA: SOL of AP is 20 years UNLESS adverse possessor has written evidence of title, in which case period is 7 years.

4. 5. 6.

Uninterrupted: kind of continuous use that an ordinary owner would make Visible: Xs use and possession of property is out in the OPEN Actual: a. b. X must ACTUALLY POSSESS land to obtain title 2 exceptions i. ii. constructive adverse possession leased land

7.

2 things NOT required a. b. O, true owner, doesnt have to know whats going on X, adverse possessor, doesnt have to know what hes doing

8.

GEORGIA: In GA, good faith is required in order to establish AP

B. CONSTRUCTIVE POSSESSION First exception to Actual Possession Requirement 1. rule: D of CAP expands kernel actual possession out to the full extent of the color of title under which AP makes his claim of right to the property two limitations a. b. 3. first rule: amount of land actually possession must bear a reasonable relation to the whole. second rule: property must be unitary, which means parcel of land must be one seamless whole

2.

hypo 96: X goes on to property under color of title to a 100 acre farm, but actually possesses only 85 acres of the farm. Statutory period runs, and all other requirements of AP satisfied. a. color of title: X makes some claim to title to land, but claim is not valid

29

b.

What has X obtained? X obtains 85 acres that X actually possessed and X gets other 15 acres b/c of D of CAP.

C. LEASED LAND: 2nd exception to actual possession requirement 1. rule: leasing land to a 3rd party constitutes possession for purposes of AP. rule: NO AP a/g co-tenant UNLESS co-tenant in possession excludes other co-ts from possession and statutory period runs exclusion/ouster starts running of the clock for purposes of AP Life Tenant and Remaindermem a. 2. Rule: AP clock does NOT start to run a/g holder of a FI until that interest becomes possessory. rule: in case of FSD, happening of the condition starts the clock running for purposes of AP. Under law of future interest, title went automatically back to grantor (on POS) when condition operated rule: in case of FSCS, clock will not start to run until grantor exercises right of reentry

D. AP AGAINST CONCURRENT OWNERS 1. 2. 1.

E. AP and FUTURE INTERESTS

FSD and Possibility of Reverter a.

3.

FSCS and Right of Reentry a.

F. TACKING 1. 2. 1. 2. 3. 4. rule: an adverse possessor can tack together successive periods of AP in order to satisfy statutory period no gaps in possession! Infancy Incarceration Insanity RULE: if a true owner is suffering from any of the three disabilities at the time the period of AP begins, then clock for AP will NOT start to run until true owner is free of disability Intervening Disability a. rule: does NOT STOP clock. If disability was in existence on day AP beings, it will not keep clock from running.

G. DISABILITIES: THREE Is

5.

30

b.

GEORGIA: In GA, SOL tolled during period that true owner is suffering under a disability, even if disability not in existence at time period of AP began.

6.

No tacking of disabilities

H. NO AP AGAINST GOVERNMENT LAND I. TITLE ACQUIRED BY AP IS NOT MARKETABLE 1. To make it marketable title, must be a court action to quiet title. V. CONVEYANCING Conveyancing is a 2-step process: First, comes the contract of sale. Later, at the closing comes the actual conveyance at which time real property concepts control once again. A. CONTRACT OF SALE & ESCROW PERIOD 1. BACKGROUND a. b. c. 2. K of sale of RP governed by K law principles (CROSSOVER) K exists from moment signed until deed is transferred at closing. this time period is referred to the escrow period (K principles apply during escrow period). rule: Any K for sale of any interest in RP must be in WRITING and signed by the one who is sued signed writing must include: i. ii. iii. 3. description of property name of parties price

STATUTE OF FRAUDS a. b.

DOCTRINE OF PART PERFORMANCE: EXCEPTION TO SOF a. 2 requirements i. ii. b. oral K must be certain and clear; and acts of partial performance must prove up existence of a K B paid full or close to full purchase price; or B built improvements; or

to satisfy 2nd requirement: look for B to take possession AND i. ii.

31

iii.

in general look to see that B took possession of property and then took some further action (in partial performance of the K) that clearly proves up existence of a K

c.

GEORGIA: In GA, acts of part performance that are sufficient to allow specific performance consist of: i. ii. iii. payment of full purchase price possession of prop along w/ partial payment of purchase price; or poss. of prop along w/substantial improvements to property

4.

RISK OF LOSS: DOCTRINE OF EQUITABLE CONVERSION a. b. At common law, buyer bears risk of loss. under this doctrine, once k is signed equity treats property as the buyers land, and therefore, the buyer bears the risk of loss. rule: B/c of doctrine of EC, if either party dies before closing, equity will still order SP of the contract if necessary. RULE: Every land sale K contains an implied warranty that S will deliver marketable title to B at close of escrow i. marketable title: title that reasonably prudent B would accept, which means minor defects do not matter; does not have to be perfect proof of title: give B some tangible evidence of title title free of encumbrances: S must give B title free of encumbrances that is, no easements, no restrictive covenants, no mortgages, no options, etc. other than those that have previously been disclosed to buyer - IS THIS RIGHT??? valid legal title as of date of closing: S must give buyer valid legal title on day of closing rule: B must NOTIFY S of any defect in title and allow S reasonable time to cure defect even that means postponing closing for 1 day

5.

DEATH OF A PARTY BEFORE CLOSE OF ESCROW a.

6.

MARKETABLE TITLE a.

b.

to satisfy this warranty: S must provide B w/3 things i. ii.

iii. c.

If B determines TITLE IS NOT MARKETABLE? i.

32

d.

Bs Remedies for Ss failure to deliver marketable title i. ii. iii. rescission B rescinds, walks away damages for breach of K: measure by difference b/w K price and value of property as of date of breach specific performance: coupled w/a reduction in the purchase price to reflect defects in Ss title

7.

TIME OF PERFORMANCE a. b. Generally speaking, K will specify date for closing. if one party fails to perform on date specified i. c. no problem as long as performance rendered w/in a reasonable time (2 months) K says otherwise; or facts make clear that parties intend that time is of the essence

rule: Time is NOT of the essence in land sale Ks UNLESS: i. ii.

d. e. 8.

if K includes TOE clause and its violated? rule: party who FAILED TO PERFORM no time is in BREACH of K and cannot enforce K.

REMEDIES FOR BREACH OF K FOR SALE OF REAL PROPERTY a. DAMAGES i. ii. MEASURE of damages is DIFFERENCE b/w K price and value of property as of date of breach LIQUIDATED DAMAGES: LD clause is provision that says Bs deposit can be forfeited in event of Bs breach. Clause will be enforced so long as amount is reasonable, which means it should not exceed 10% of K price available to both buyer and seller

b. 9.

SPECIFIC PERFORMANCE i.

DEFECTS ON PROPERTY AS OF DATE OF CLOSING - If defects in title can B rescind? a. b. at CL, rule one of Caveat Emptor: B cannot recover from S. CL exception actively concealing defects

33

i.

rule: AT CL, while S has no obligation to disclose any defects to B, S cannot actively conceal such defects. modern trend: impose duty to disclose to prospective B serious defects in property that S knows of and which are not obvious to B. now majority rule in cases involving residential property in majority of states today, implied warranty of fitness (or merchantability) that applies ONLY to sale of new residential housing by a builder-seller CL rule of caveat emptor applies in all other situations

ii.

c.

modern rule implied warranty of fitness: i.

ii. d.

GEORGIA: GA law has not adopted implied warranty of habitability in case of sale of new housing by builderseller. However, if builder-seller conceals defects, builder will be liable.

B. DEED FORMALITIES 1. rule: once deed accepted at closing, contract is extinguished. a. on closing, K merges into deed and all K provisions extinguished UNLESS: i. ii. 2. K specifies they survive at closing; OR included in the deed itself

rule: TWO requirements must be satisfied for DEED to PASS to TITLE: a. b. EXECUTION DELIVERY Statute of Frauds i. ii. iii. deed itself is subject to SOF, just like K of sale. means that there must be a writing signed by the seller. GEORGIA: Required deed by properly attested in order to be recorded. Thus, must be 2 witnesses in order for deed to be properly attested and one must be a NOTARY.

3.

EXECUTION a.

b.

RULE: deed must describe land w/sufficient accuracy in order to pass title.

34

i. ii. iii. iv. v. 4.

means description must enable you to ID property that is being transferred. if you cant ID property, then deed is VOID for VAGUENESS and nothing gets transferred. hypo 112 & 113 rule: parol evidence may be used to clarify deed description land description by metes and bounds will control over description by acreage or any other description

DELIVERY OF DEED a. RULE: legal test for delivery is solely a question of whether grantor had necessary INTENT to pass title. no physical transfer is required. rule: recording deed raises presumption of delivery, even if grantee knows nothing about deed. once DELIVERY occurs, title passes. Returning deed to grantor has no effect on title. parol evidence may be used in showing intent of grantor. if grantor fails to deliver deed during his lifetime, no conveyance of title takes place i. presumption of NO delivery which may be rebutted by grantee.

b. c. d. e.

5.

CONDITIONAL DELIVERY PROBLEMS a. b. What if grantor hands over deed BUT tries to CONDITION delivery on some event? FIRST: delivery of a future interest i. hypo 116: To A, but not until I die, and deed is handed to grantee. This is a valid delivery of a future interest. 1) 2) c. i. O: life estate A: vested remainder in fee simple

SECOND: oral conditions X to H but in handing over deed X tells H of course, this wont become effective unless you kill G. plurality rule: ignore condition and consider complete

ii.

35

d.

THIRD: delivery conditioned on grantees payment of purchase price i. rule: this type of conditional delivery valid provided: 1) 2) 3) grantor makes delivery to 3rd party in escrow; Grantor instructs escrow agent to deliver deed to grantee when condition satisfied once grantor delivers deed to escrow agent, grantor cannot get deed back; as long as grantee satisfies condition, grantee gets property

6.

DELIVERY MUST BE ACCEPTED a. b. c. rule: delivery of a deed is valid only if accepted. rule: acceptance implied unless facts show otherwise. CONSIDERATION is not required in order for deed to be valid.

C. COVENANTS OF TITLE 1. 2. 3. Quitclaim Deeds a. grantor makes no promises re: TITLE If grantor makes any promises re: title, called covenants for title. General Warranty Deeds deeds that include 6 traditional forms of covenants for title a. 3 PRESENT Covenants PRESENT covenant is breached, if at all, at moment conveyance is made; and therefore B can sue on a present covenant IMMIEDIATELY. These 3 are personal covenants and do not run w/the land. i. ii. Covenant of Seisin Covenant of Right to Convey 1) these two covenants represent Ss promise that S has title and possession and can validly convey both S promises there are no encumbrances other than those previously disclosed to B.

iii.

Covenant against Encumbrances 1)

2)

36

b.

3 FUTURE Covenants- future covenant is NOT breached immediately. A future covenant is breached, if at all, at some later date when GRANTEE IS DISTURBED IN POSSESSION. Future covenants run w/the land and therefore can be enforced by all subsequent purchasers. i. ii. Covenant of Warranty Covenant of Quiet Enjoyment 1) these 2 represent Ss promise to protect B a/g anyone who comes along later and claims paramount title to property If S omitted something required to pass valid title, S promises to do whatever is necessary to pass title to B.

iii.

Covenant of Further Assurances 1)

iv.

GEORGIA: Rule is that all 6 covenants of title run with the land and therefore can be enforced by any subsequent purchaser.

4.

BREACH of a covenant of title a. damages rule: where there is a breach of warranty, Ps damages will be limited to amount of purchase price received by the warrantor + incidental damages damages = purchase price + incidentals

b. 1.

D. ESTOPPEL BY DEED DOCTRINE defined: a. b. 2. a. under this doctrine, courts say grantor gave an implied covenant that title will be conveyed to grantee. therefore, grantee can sue to compel transfer of title RULE: Sale to a BFP will cut off rights of an earlier grantee and therefore will cut off grantees right to rely on estoppel by deed doctrine.

Subsequent Sale to a BFP: confusing

E. CONVEYANCING BY WILL 1. ADEMPTION a. b. rule: if will purports to devise specific parcel of land, but testator does not OWN at time of death, gift is adeemed. means that testamentary gift fails and it will NOT be replaced by other property

37

c.

exception: ademption doctrine does not apply to a gift of property that subject to an executory contract of sale (in escrow) at time of testators death; instead, devisee will receive proceeds from sale of property if devised property is subject to a mortgage, lien must be exonerated from testators estate. Devisee entitled to have lien paid off from testators residuary estate. Property will pass to devisee free of lien. Growing trend is to abolish this doctrine. AT COMMON LAW, if beneficiary died BEFORE testator, gift in will LAPSED that is, gift was void. MODERN RULE: states adopted anti-lapse statutes that prevent lapse by allowing gift to pass to certain relatives of predeceasing beneficiary.

2.

EXONERATION a. b. c.

3.

LAPSE AND ANTI-LAPSE STATUTES a. b.

F. OWNERSHIP INTERESTS IN TRUST 1. What is a TRUST? a. EXPRESS, private trust is: i. ii. iii. iv. 2. 3. created in writing, by a settlor who TRANSFERS TITLE to real property to a TRUSTEE, who holds and manages property subject to a FIDUCIARY DUTY to use highest care and skill for benefit of BENEFICIARIES OF a trust

CREATION of a trust: trust can be created intervivos by deed OR by a will at death. TRUSTEES a. b. c. d. hold legal title to real property. must act in accordance w/Settlors written instructions. subject to fiduciary duty if trustee dies, court can appoint a substitute. Trust IS subject to RAP.

4.

Trusts and RAP a.

38

b. c. 5. a.

rule operates in exactly same manner in case of trusts, as it did earlier. hypo 120 defined i. ii. do NOT have named individuals as beneficiaries instead, beneficiaries of trusts are EITHER established charities OR large groups of persons

CHARITABLE TRUSTS

b. c.

REMEMBER: charity to charity exception to RAP applies cy pres doctrine: court may alter terms of a charitable trust in order to further Settlors intent

VI. RECORDING RETENTION of interests in real property once such interests are acquired is what fundamentally distinguishes real property from personal property. A. ESSENTIAL PURPOSE OF RECORDING STATUTES 1. 2. 3. 4. PURPOSE: to CHANGE common law rule of first in time, first in right in order to PROTECT the interests of SUBSEQUENT PURCHASERS in certain situations generally, purpose is to let SP keep property provided that the SP can meet requirements of the applicable recording statute. if SP does not satisfy requirements of applicable recording statute, then just apply CL rule first in time, first in right AND under CL rule, SPs always lose. An unrecorded deed is just as valid as b/w original parties as a recorded deed. RECORDING only serves to give notice of terms of the deed. How does recording occur? a. First step: court clerk files a copy of the deed in a book. i. b. clerk then makes note of volume and page number where copy of deed can be found. grantor index: clerk lists transaction alphabetically by grantor, noting the name of grantee, a brief description of property, and citing to volume and page number

5.

B. MECHANICS OF RECORDING 1.

second step: clerk then indexes information in 2 indices: i.

39

ii. 1.

grantee index: same info alphabetically by grantee

C. DIFFERENT TYPES OF RECORDING ACTS NOTICE jurisdiction: a. notice statute protects subsequent grantees who are Bona Fide purchasers, i.e. a purchaser who takes without notice of the earlier transaction. sole inquiry is notice and therefore a notice statute protects a subsequent purchaser for value who takes w/out notice of the earlier conveyance. recording is only important to the extent it imparts constructive notice notice irrelevant rule: whoever records FIRST keeps property protects all subsequent grantees who are BFP for value who i. ii. 4. take WITHOUT NOITCE; and are the FIRST to RECORD

b.

c. 2.

RACE jxn: a. b.

3.

RACE-NOTICE jxn a.

GEORGIA: a race-notice jurisdiction

D. RECOMMENDED STRATEGY FOR IDENTIFYING RECORDING STATUTE E. EXAMPLES OF RECORDING STATUTES F. BONA FIDE PURCHASER RULE: A BFP is a bonafide purchaser for value who takes without notice 1. Purchase for VALUE a. rule: unless there is an explicit claim of fraud, ANY considerations that is out of pocket is enough to be considered value bargain basement sale: if purchaser pays way below FMV, purchaser paid sufficient value to qualify as PFV transferee is heir, donee or devisee: RULE: one who purports to take property as an heir, devisee or doness cannot be a BFP and therefore cannot prevail over the claim of an earlier grantee shelter rule EXCEPTION: anyone (even heirs, donees, or devisees) can shelter under the rights of BFPs.

b. c.

d. 2.

NOTICE 3 kinds

40

a.

ACTUAL: had actual notice of prior unrecorded conveyance, then SP is not a BFP i. shelter rule exception: anyone even those w/actual notice can shelter under rights of a BFP constructive notice arising from the record to impart record notice, deed must be recorded in buyers direct chain of title so that SP can find it and inspect it in order to be a BFP who takes w/out notice, the SP must examine the land and must make inquiry as to any unexplained uses or possessions. SP will be charged w/notice of whatever such a physical inspection of property would reveal

b.

RECORD notice i. ii.

c.

INQUIRY notice i.

ii.

G. SUBSEQUENT INTERESTS PROTECTED BY RECORDING STATUTES 1. subsequent mortgages MBE fav a. b. 2. a. VII. generally protects subs. mortgages CR: hypo 133 rule: judgment creditors are NOT protected by recording statutes

judgment creditors

TITLE SEARCHING AND PROBLEMS WITH CHAIN OF TITLE 1. Construct a chain of title using GRANTEE index a. look up sellers name and find name of sellers grantor; then look up name of that persons grantor, and so on, going back in time for whatever period required by marketable title statute look up name of last grantor in chain of title just constructed and see if that person recorded any interest in the property, starting from the time they got the property until the time they passed title on the next link in the chain of title specifically, look to see if grantor placed any encumbrances on the property repeat search for each grantor

A. TITLE SEARCHING

2.

Adverse each link using GRANTOR index a.

b. c.

41

3.

Concept of Legal Blinders a. title searcher only looks at grantors actions during period of record ownership

B. DEEDS RECORDED TOO LATE 1. 2. Recording outside Chain of Title Role of Inquiry notice in title search a. first RULE: where reading of deed on record discloses an unrecorded txn, SP has to make inquiry in order to take w/out notice and qualify as a BFP second RULE: remember to qualify as a BFP without inquiry notice, SP must make a physical inspection of the property and must investigate any unexplained possessions or unexplained uses of the property.

b.

VIII. SECURITY INTERESTS IN REAL PROPERTY A security interest in real property is a device used to secure a loan on the property. Typically, the loan is reflected in promissory note given by borrower and the security interest is reflected in a separate written instrument. A. DEFINE 3 DIFFERENT TYPES OF SECURITY INTERESTSS 1. MORTGAGE a. b. c. given by the debtor (MORTGAGOR) to the creditor (MORTGAGEE) if the loan is not paid in full, sheriff sells land at a courtordered foreclosure sale equitable mortgage: absolute deed w/separate promise of reconveyance i. grantor/borrower owes grantee/lender money and gives grantee a deed that is absolute on its face. Separately, grantee promises to reconvey land to grantor when debt is paid

d. 2. a. 3.

sale leaseback w/option to repurchase given by debtor to a third party trustee, who holds the deed of trust until the loan is paid in full.

DEED OF TRUST

LAND SALE CONTRACT: installment land sale K refers to arrangement where debtor signs K promising to make payments to seller/lender BUT seller keeps title to property until loan is paid in full GEORGIA: GA permits use of a deed to secure a debt. Where security deed is used, title passes to grantee/lender until debt is paid off. 42

4.

B. PROTECTIONS OF MORTGAGES AND DEEDS OF TRUST 1. Debtors Right of Redemption Equity of Redemption a. RULE: at any time right up until moment of foreclosure sale debtor can redeem property by amount that is due and payable the amount in arrears (plus interest) UNLESS mortgage includes an ACCELERATION CLAUSE acceleration clause i. if mortgage includes this, Debtor must pay off ENTIRE BALANCE of mortgage in order to redeem the property RULE is that right of redemption cannot be waived in original mortgage or Deed of trust BUT can be waived later attempt to waive in original mortgage called clogging

b.

c.

waiver i.

ii. d.

statutory right of redemption: half states allow mortgagor/borrower a statutory right to redeem for some fixed period of time AFTER the foreclosure sale (usu. 6 months to 1 year)

2. 3.

Foreclosure by Public Auction Sale Priorities on Payments of Multiple Mortgages a. RULE: where multiple mortgages on a single property, PRIORITY allocated based on CL rule first in time, first in right, UNLESS order changed by terms of applicable recording statute therefore, if a mortgage was not recorded or recorded too late, may have to apply terms of applicable recording statute to determine how to allocate priorities apply recording statute like you would a deed priorities changed by K voluntary subordination i. e. senior mortgage may agree to subordinate to a junior mortgage PMM is mortgage taken out to BUY the property rule: PMM receives priority over any other mortgages executed at about the same time, even if other mortgages are recorded first

b.

c. d.

Purchase Money Mortgage i. ii.

43

iii. f.

PMM by seller gets priority over PMM given by a third party lender, such as a bank RULE: if mortgagor does anything to increase a senior mortgage, then that senior mortgage loses its priority over junior mortgages BUT ONLY to the extent of the modification

Changes in Senior Mortgages i.

4.

Foreclosure eliminates Junior Interests a. RULE: Foreclosure wipes out all junior interests BUT fc does not wipe out senior interests; they continue in place and buyer will take property subject to senior interest protections to folders of jr. interests: have right to pay off mortgage being foreclosed on in order to keep interests from being wiped out i. jr. interests are a necessary party to any fc proceeding. If they are NOT made party to any fc, then jr. interests not eliminated by fc.

b.

5.

Payment of Proceeds from a FC Sale a. b. c. d. pay costs of fc pay off mortgage foreclosed on pay off jr. interests in order of priority pay any remaining balance to mortgagor/borrower

6. 1. 2.

Anti-Deficiency Statutes forfeiture clause: if debtor misses payment, S can cancel K, keep all monies paid to date, and retake property enforceability of forfeiture clause: will be enforced, even though courts hostile to them Mortgagors (Grantors) Transfer of Property a. b. c. RULE: whenever grantor transfers title, grantee automatically take property subject to mortgage. grantees personal liability on mortgage: not personally liable unless grantee specifically assumes mortgage REMEMBER: mortgage still has to be paid or mortgagee will foreclose on property. So grantee is subject to losing property in a fc sale.

C. LAND-SALE CONTRACTS

D. TRANSFER OF SECURITY INTERESTS IN REAL PROPERTY 1.

44

d. 2.

any modification of obligation by creditor/mortgagee and grantee will relieve original borrower of liability rule: mortgagee can freely transfer note and mortgage will always follow note is secures says that if mortgagor transfers property w/out mortgagees consent, entire balance of the loan becomes immediately payable and due.

Mortgagees (Creditors) Transfer of Note: a.

3.

Due on Sale Clauses a.

E. SECURITY INTERESTS IN FIXTURES 1. rule: seller of a fixture who provides a purchase money security interest in the chattel must make a UCC article 9 fixture filing w/in 20 days after attachment. if S of that chattel made that UCC filing in a timely manner, S may the fixture remove w/out regard to priority of earlier mortgage the earlier security interest on the property. On the other hand, if fixture is not made in a timely manner, then Ss security interest in the chattel is subordinate to earlier mortgage.

2.

3.

IX. RIGHTS OF SUPPORT A. LATERAL SUPPORT: support from both SIDES 1. 2. rule: landowner has right to have her land supported by adjoining landowners and strict liability results if land is not supported rule: strictly liable only if land would have collapsed anyway, even w/out buildings on it Problems involving right of subjacent support arise a. b. c. 2. 3. where the MINERAL RIGHTS have been LEGALLY SEVERED from the SURFACE RIGHTS

B. SUBJACENT SUPPORT: Support of Surface from the BOTTOM 1.

rule: surface owners have right to have their land supported from bottom and strict liability will result if land is not supported scope of right of subjacent support: right extends to land and to IMPROVEMENTS existing on land as of date mineral rights were severed in fee simple

X. WATER RIGHTS A. RIVERS AND LAKES 1. MAJORITY RULE: RIPARIAN RIGHTS

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a. b. c. d. 2. a. b.

riparian refers to those whose property borders on lake or stream rule: DOMESTIC use: riparian owner may use ALL water needed for domestic use rule: NON-DOMESTIC use: riparian owners limited to standard of reasonable use for non-domestic purposes GEORGIA: Georgia is a riparian rights jxn. rule: First in time takes! general rule: first person who makes beneficial use of water from a lake or stream has that right protected a/g those who come later, so long as use continues priority in time determines all rights

MINORITY RULE: PRIOR APPROPRIATION

c. 1.

B. UNDERGROUND WATER (percolating or well water) rule: landowner entitled to make reasonable use of ground water, although landowner must use it on property and NOT export it elsewhere GEORGIA: By statute, rule in Georgia is that a landowner may take out up 100,000 gallons of water a day w/out first obtaining a permit. NATURAL FLOW a. in theory, natural flow approach requires a landowner NOT to make any changes at all in flow of flood water as it rushes across surface of land i. ii. 2. impossible to follow this approach as a practical matter and still make productive use of the land therefore, modern courts allow landowner to take REASONABLE MEANS to deal w/surface waters

2.

C. SURFACE WATER (runoff or flood water) 1.

COMMON ENEMY APPROACH a. b. c. rule: landowner can do anything he wants w/floodwater reasonable or not surface water is a common enemy and any owner can change its course to get rid of it GEORGIA: Georgia appears to follow natural flow approach.

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