Real Property

Real property is property that includes land and buildings, and anything affixed to the land. For a business, real property would include warehouses, factories, offices, and other buildings owned by the business. Real property only includes those structures that are affixed to the land, not those which can be removed, such as equipment.

Property signifies dominion or right of use, control, and disposition which one may lawfully exercise over things, objects, or land. One of the basic dividing lines between property is that between real property and personal property. Generally, the term real property refers to land. Land, in its general usage, includes not only the face of the earth but everything of a permanent nature over or under it. This includes structures and minerals.

There are further divisions within the real property classification. The most important are freehold estates, nonfreehold estates, and concurrent estates. (Others are future interests, specialty estates, and incorporeal interests).

• Freehold estates are those in which an individual has ownership for an indefinite period of time. An example of a freehold estate is the “fee simple absolute”, which is inheritable and lasts as long as the individual and his heirs wants to keep it. Another example is the “life estate”, in which the individual retains possession of the land for the duration of his or her life.

• Nonfreehold estates are property interests of limited duration. They include tenancy for years, tenancy at will, and tenancy at sufferance.

• Concurrent estates exist when property is owned or possessed by two or more individuals simultaneously.

For the most part, states have exclusive jurisdiction over the land within their borders, and their law concerning the kind of interests that can be held and how they are created is not subject to federal law.

There are approximately thirty-three MBE Question, with each essay format broken down into two main issues. To properly answer property problems, organize each question into five key sections.

  1. A. Freehold estates. Give possession under some legal title. Three kinds of free hold estates, fee simple, fee tail and life estates.

Fee Simple.

1)    Fee simple absolute. The largest estate with potentially infinite duration. At common law where a grantor conveyed property to a grantee they had to include the words and his heirs. Modernly “and his heirs” is not required.

2)    Fee simple defeasible.

  1. Fee simple determinable has the possibility of a reverter back to the grantor upon the happening or a non-happening of a stated event.

Example: X conveys black acre to A so long as the property is used as a school. If the property is no longer used as a school, the title automatically reverts back to the grantor.

Words usually used in the creation of a fee simple determinable are: so long as, during, until, or while.

  1. Fee simple subject to condition subsequent. A fee simple estate that may be terminated upon the happening or non-happening of an event or contingency.

Example: X owner in fee conveys Blackacre to A and his heirs, but if the land is not used as a farm, then X may reenter the land.

There is a right of reentry for a broken condition, not an automatic reversion back to the grantor. Rather the grantor or the heirs have the option to reenter upon that broken condition or not.

Words usually used in the creation of a fee simple determinable, on condition that, subject to the condition that, but if.

  1. Fee simple subject to an executory interest is a fee simple estate where upon the happening or non-happening of a stated event, ownership passes from one grantee to another grantee. There is no reversion or option to reenter back to the original grantee.

Example: X owner in fee conveys Blackacre to A and his heirs as long as the land is used as a farm. If the land is not used as a farm the land is conveyed to B.

Example: X owner in fee conveys Blackacre to A and his heirs, but if A dies without issue living at his death, then to B and his heirs.

  1. Shifting executory interest where ownership passes from one grantee to another grantee.
  2. Springing executory interest where upon the happening or non-happening of an event ownership passes from the grantee back to the grantor and then after a lapse of time, to a second grantee.

Fee tail. At common law a fee tail was usually created by the words: To B and the heirs of his body. Inheritance was restricted to the lineal descendants of the grantee.

Lineal heirs are sons and daughters, grandchildren and great grandchildren.

Collateral heirs are cousins, nieces, nephews, uncles and aunts.

Example: A grant to a male and the male heirs of his body created a fee tail male.

Example: A grant to a female and the female heirs of her body created a fee tail female.

Life estates. A life estate is a freehold estate that is measured by the life or lives of one or more human beings.

Example: X conveys Blackacre to A for life.

A life estate per ultra vie is a freehold estate where the life is measured by someone other than the grantee.

Example: X owner in fee conveys Blackacre to A for the life of B.

Dower. Is a widow is entitled on the death of her husband to a life estate in 1/3 of the lands her husband was seized in fee simple during the marriage.

Curtsy. A life estate where a husband is entitled to all of his wife’s land. For the husband to have a life estate, they had to be legally married. The wife must be seized of land in a fee simple or a fee tail during the marriage. The wife must have issue born alive by the husband. The wife must pre-decease the husband.

  1. B. Non-freehold estatesgive mere possession, but no legal title. A leasehold estate is both a conveyance of an estate and a contract. It is a right to possession of property for a limited period of time. Since a lease is the conveyance of an estate it falls within a statute of frauds and must be in writing. Modernly leases contain many covenants, such as a quiet enjoyment clause, therefore most courts treat them as contracts rather than conveyances.
  • The writing must identify the lessor and the lessee.
  • Describe the land to be leased.
  • The term of the lease.
  • The amount of rent.

Non-freehold or leasehold estates.

1)    Tenancy for a term/tenancy for years. A fix duration of time, which must be set forth in the lease. Requires a writing under the statute of frauds.

2)    Periodic tenancies. Tenancy from period to period, which is a continuing tenancy and not the inception of a new tenancy at the end of each period. Month to month, week to week. This tenancy does not terminate at the end of each period, but automatically renews for the next period, unless one of the party gives notice to terminate. If advance notice to terminate the lease is not given the termination is ineffective.

Example: An advance 30 day notice requirement to terminate a lease and the tenant only gives 20 days notice. There would be an automatic renewal.

3)    Tenancy at will. An estate that is terminable at the will of either party. At common law this estate could be terminated without advance notice. A tenancy at will continues indefinitely until it is terminated by one of the parties.

4)    Tenancy at sufferance. A holdover tenant that wrongfully remains in possession after the expiration of a lawful tenancy. Doctrine of relation back. A holdover tenant will be liable for the wrongful holdover period to the landlord.

Tenant duties.

1)    The duty to pay rent. Rent is viewed as the consideration for the right to use and enjoy the land. At common law rent is not apportioned as to time.  Rent does not accrue from day to day.

Example: If a lease provides for payment of an annual rent on the last day of the calendar year and the lessor accepts a surrender of the leasehold any time during the year they can collect no rent for any portion of the year.

2)    At common law destruction of the premises due to fire, flood or other reasons that leaves the property uninhabitable does not relieve the tenant from their obligation to pay rent. Rent is extinguished by release by the landlord, merger, expiration of the lease, eminent domain, which takes both the leasehold and the reversion, constructive eviction, frustration of purpose and surrender.

3)    Rent is extinguished by eminent domain. However, there is a distinction between a partial taking and an entire taking. If all of the lease land is condemned for the full balance of the lease term the tenants liability to pay rent is extinguished. Where there is a partial, or temporary taking, or only a portion of the leased land is condemned, the tenant is not discharged from their obligation to pay rent.

Example: Tenant rents an office in a high-rise and also parking space, and the parking garage is condemned it does not release the tenant from the obligation to pay rent for the office space.

4)    Constructive eviction will extinguish a tenant obligation to pay rent. A constructive eviction is where there is a material breach by the landlord that violates the tenants implied covenant of quiet enjoyment and renders the premises uninhabitable and releases the tenant’s duty to pay rent. The tenant must quit the premises in a timely fashion.

5)    Frustration of purpose. Modernly releases a tenant from the obligation to pay rent.

Example: Where the sole use in the lease becomes illegal. A leases land to grow medical marijuana, and the state then declares it illegal to grow medical marijuana.

6)    Surrender. Where the tenant surrenders the property and the landlord gives the tenant permission to surrender there is no duty to pay rent.

7)    Duty to repair. A tenant has a duty to make ordinary repairs on the premises.

8)    Waste. A tenant cannot commit waste on the leased premises.

  1. Voluntary waste. Injury to the premises or land caused by an affirmative act on the land such as exploiting minerals, or timber unless the lease so provided. The tenant will be held liable for such waste.
  2. Ameliorating waste. A change in the physical characteristics of the occupied premises by an unauthorized act of the tenant, which increases the value of the land.

Example: Tenant tears down an old building and replaces it with a new one, and the new one improves the value of the land. A tenant is not liable for ameliorating waste.

  1. Permissive waste. Injury to the premises or land caused by a tenant’s failure to act when it is their duty to act.

Example: A leak in the roof, water pours in and causes damage to the hardwood floors. A tenant would be liable for such damages.

  1. Equitable waste. Injury to the reversion interest in land, which is inconsistent with good husbandry. Recognized only by the equity court. It does not constitute legal waste. An equitable court can enjoin a tenant from committing that act, but there is no recovery for damages because that is an action at law.

Look for language, without impeachment of waste.

Example: A is a fee simple owner of a six-story apartment building, conveys B a life estate in the apartment building. He can collect the rents from the tenants in the building. B wants to raise the apartment building and construct a single-family dwelling. B would be enjoined from tearing down the building because it would harm the grantor’s reversionary interest. Language such as without impeachment of waste would prevent B from tearing down the apartment building.

9)    Tenant tort liability. To determine the duty of care, which a possessor of land owes to a trespasser, licensee or invitee one must determine the classification of the person entering the land.

  • Trespasser. There is no duty of care owed to a trespasser, unless they are anticipated or discovered, then they must be made aware of known dangers the trespasser would not normally discover on their own.
  • Licensee. There is a duty to warn of known dangerous conditions.
  • Invitee. There is a duty to inspect and make safe.

10)  Fixtures. A fixture is a chattel that has become real property. For a chattel to become a fixture.

  • It must be the intention of the annexor that the chattel becomes a fixture. To determine if it is the intent of the annexor for that chattel to be a fixture the courts will consider the nature of the article, the manner of annexation to the land, injury to the land, the completeness with which the chattel is integrated with the use to which the land is being put, and the relation the annexor has with the land, are they a licensee, a tenant?
  • It must be annexed either actually or constructively,
  • It must be appropriated for the purpose with which the land is used.

Trade fixtures are generally removable. Chattels annexed to the land by the tenant for pecuniary gain during their tenancy.

Landlord duties.

1)    Duty to deliver possesion. American rule. The landlord does not have a duty to deliver possession of the property to the tenant. A lessee does not acquire an interest in property until they actually take possession of the property. If there is a trespasser, or holdover tenant that has possession the only legal recourse the lessee has is to evict the wrongdoer. The tenant has no cause of action against the landlord.

2)    English or common law rule. The landlord implicitly warrants that the tenant will have a legal right to possession at the beginning of the leasehold term.

3)    Quiet enjoyment. In every lease there is a implied covenant of quiet enjoyment.

4)    Eviction. An eviction breaches the covenant of quiet enjoyment and releases the tenant the obligation to pay rent.

  1. Actual eviction occurs when the landlord excludes the tenant from possession of the property.
  2. Constructive eviction results from conduct or neglect by the landlord that renders the premises uninhabitable. The tenant may quit the premises and would be no longer obligated to pay rent.

5)    Premises suitable for particular purpose. A landlord does not implicitly warrant that leased premises are suitable for any particular purpose. They are not liable for dangerous conditions existing on the premises. Caveat emptor. Buyer bewared.

Exceptions.

  1. Hidden defect. If at the commencement of a lease, there is a hidden defect that the landlord knows about, or should know about and the lessee would not likely discover it and a licensee or invitee that enters the property is injured, then the landlord would be held liable.
  2. Completely furnished dwellings. A landlord that leases a completely furnished dwelling for a short period of time implicitly warrants fitness of the premises and the furnishings.

6)    Duty to repair. At common law unless there is a statute or covenant, the landlord is under no duty to maintain the property in a state of repair. The tenant is under a duty to conduct ordinary repair. However, a landlord that undertakes the duty to repair and does so in a negligent manner may be held liable for resulting injuries.

Assignments and subleases.

Assuming there is no provision in a lease that prohibits transfers a tenant may freely transfer their leasehold interest in whole or in part.

1)    Assignment. Where a lessee transfers the entire remaining estate.

Example: Landlord leases to tenant for five years and after the third year tenant decides to move and not return and transfers the remaining two years to a third party.

Affects of an assignment. The tenant is still in privity of contract with the landlord even after vacating the premises. So, if the assignee fails to make the rental payment the landlord can still recover from the assignor for the rent due. Between the landlord and the assignee there is both privity of estate and privity of contract because covenants run with the land.

Where the first assignee makes a second assignment there is no privity of estate. Unless they have assumed the covenants under the lease, such as the covenant to pay rent, then there is no privity of contract either.

2)    Sublease. Where a lessee retains any part of a leased estate.

Example: Landlord leases to tenant for five years and after the second year tenant takes a job in another city but plans on returning after one year and taking possession again.

The tenant sublessor remains in privity of estate and privity of contract and continues to be liable for rent. There is no privity of estate or contract to the landlord by the sublessee. A sublease creates no legal relationship between the landlord and the subtenant. The subtenant is not liable to the landlord for rent.

A landlord’s reversionary interest is assignable and may convey away their ownership interest in the premises.

Covenant that prohibit assignments and subleases by the tenant without the permission of the landlord are strictly construed against the landlord.

  1. C. Future interests.

1)    Reversions. An estate remaining in the grantor who has conveyed a lessor estate than that owned by the grantor.

Example: X owner in fee conveys Blackacre to A for life. X owns a fee simple estate and conveys a life estate to A. Applies to fee tails, life estates and contingent remainders that does not vest.

2)    Possibility of reverter. The interest retained by the grantor of a fee simple determinable. Ripens into a possessory estate upon a happening or non-happening of an event. If the event doesn’t occur then the property does not revert back to the grantor.

Example: X conveys Blackacre to A and his heirs so long as the land is used for farming.

3)    Right of reentry for condition broken. A power created by the grantor subject to a condition subsequent. Title does not automatically revert back to the grantor. Here, there is an option to reenter.

4)    Remainders. A future interest created in a third-person, intended to take affect after the natural termination of the preceding estate.

Example: A owner in fee conveys Blackacre to B for life, with remainder to C and his heirs. C has a vested remainder. Every remainder must be preceded by a fee tail or a life estate.

The remainder must be in favor of a grantee not the grantor, and it must be created in the same time and in the same instrument as the prior estate that precedes it. At common law the preceding estate had to be either a fee tail or a life estate. Modernly the prior estate may include estate for years.

Distinctions of remainders.

  • Alienable.
  • Modernly all remainders are transferable.
  • Common law remainders were non-transferable.
  • A remainder cannot cut short a prior estate interest.

1)    Contingent remainder. Any remainder, which is created in favor of an ascertained person but is subject to a condition precedent, or is created in favor of an unborn or unascertained person.

A contingent remainder is not subject to claims of creditors.

A contingent remainderman has no right against a prior estate holder for waste.

Contingent remainder cannot compel the prior estate owner to pay taxes and interests on encumbrances.

Example: A to B for life, remainder to C and his heirs, if C marries before B’s death.

Example: A to B for life, remainder to C for life if C survives X.

2)    Vested remainder. A remainder created in an existing person that is not subject to any condition precedent except the natural termination of the preceding estate.

Vested remainders are subject to claims of creditors.

A vested remainderman has a right against a prior estate holder, usually a life estate tenant for waste.

A vested remainderman has the right to compel the prior estate owner to pay taxes and interests on encumbrances.

Example: A conveys Blackacre to B for life, then to C and her heirs. C is an ascertained person/existing person not subject to any condition precedent.

Example: A conveys to B and the heirs of her body, then to C and her heirs.

Example: A conveys to B for life, then to C for life.

Example: A owner of Blackacre in fee conveys to B for life, and then at the expiration of B’s life estate title passes to C.

Types of vested remainders.

  1. Remainders absolutely vested. Limited to an ascertainable person without words of condition and not subject to divestment.

Example: A conveys Blackacre to B for life, then to C and her heirs.

  1. Remainder vested subject to partial divestment. When the remainderman is in existence and ascertained, but the amount of their estate is subject to being open in favor of other members in a class.

Example: A devises land to B for life, then to the children of B in fee. At the time of B’s death, B has one child C, C’s remainder is vested because they are ascertainable upon the expiration of B’s life estate. Common law the property can pass immediately to C upon B’s death, but C’s remainder is subject to other children born by B.

  1. Remainder subject to complete divestment. When the remainderman is in existence their interest is subject to termination by an executory interest, power of appointment or a right to reentry.

Example: A conveys to B for life, then to C and her heirs, but if C dies leaving no surviving children, then to D and her heirs. D’s interest is an executory interest and if C dies without any surviving children then ownership passes to D.

5)    Executory interests. EI cut short a prior estate upon the happening or non-happening of a stated contingency and does not follow the natural termination of a preceding estate. Remainders always follow the natural expiration of the preceding estate.

EI are always contingent and can never become vested because when an interest vests, it ceases being an executory interest.

EI are always in favor of a transferee other than the grantor and should never be confused with a reversion or a possibility of a reverter, or right of reentry for a condition broken.

Distinctions between shifting and springing.

Springing EI. Ownership passes from the grantor to the grantee, then back to the grantor, there is a lapse of time and then title passes to the second grantee.

Example: A owner in fee conveys Blackacre to B and his heirs, but if B marries Z, then one year later to C and his heirs.

Shifting EI. Cuts short or terminates a preceding estate immediately in favor of another grantee.

Example: A conveys to B for life, but if B becomes bankrupt then to C and his heirs. C’s interest is not a remainder, because it does not await the natural expiration of B’s life estate. C’s interest is an EI because it cuts short B’s life estate if he becomes bankrupt.

Example: A owner in fee conveys Blackacre to B and his heirs, but if B marries Z, then to C and his heirs.

Distinctions between contingent remainder and executory remainder.

A contingent remainder can never follow a fee simple interest of any kind. Therefore, any interest which follows a fee and held by a third-person must be an executory interest.

Example: If A conveys Blackacre to B and his heirs, but if B sells liquor on the premises, then to C and his heirs.

An executory devise is created by will, where springing and shifting uses are created by grant or by deed intervivos.

Obscure Rules.

Rule in Shelley’s case. At common law, if a conveyance or will gives the grantor a life estate with the remainder to the grantee’s heirs, the grantor is getting is fee simple absolute and the remainder in fee to the heirs is cut off. The life estate and the remainder merge into a fee simple estate.

Example: A owner in fee conveys Blackacre to B for life, with remainder to B’s heirs. If Shelley’s rule applies, the conveyance is a fee simple absolute to B.

Doctrine of worthier title. The remainder reverts back to the grantor’s heirs.

Example: A owner in fee conveys Blackacre to B for life, with remainder to X’s heirs.

Rule against perpetuities. No interest is valid unless it must vest if at all, not later than 21-years after some life in being, at the creation of the interest.

The rule applies only to contingent, executory and options to purchase land contained in a deed instrument and powers of appointment. Options to purchase in a lease are not subject to the rule. Does apply to options to purchase land in the future.

  • Must vest means” Any contingent interest must become a vested interest or fail within the period of the rule.
  • If at all means: If the contingent interest is to vest or fail within the period of the rule then it is a valid interest.
  • Not later than 21-years after some life in being means: When the last person dies, plus 21-years, plus periods of gestation.
  • At the creation of the interest means: The period of the rule begins when the interest is created. In a deed the date of conveyance. In a will at the time of the testator’s death.
  • The rule is against remoteness in vesting.

Example: A owns a track of land and conveys the property to B. The deed contained the following provision; If any time before the year 2222, the grantee has a bonafide purchaser for land, then the grantor shall submit a right of first refusal, or their heirs, (at some time in the future) which can be exercised any time before 2222.

The right of first refusal violated the rule against perpetuities because we don’t know who the heirs are, and won’t know until after the grantor dies. The option to purchase in the future violates the rule because the property might vest too remotely. If the deed only stated the grantor had the right of first refusal the rule is not violated.

Class gifts/remainders subject to open. If a remainder interest is given to a class of persons it is deemed vested only when the class is closed and all conditions precedent, for every member of the class have been satisfied. The entire class gift is void if the interest of one person might possibly violate the rule. A class is closed when no one born after a specified date can share in the gift.

Powers of appointments are an equivalent interest in ownership of property.

Example: If A has a power of appointment in property they can alienate/separate or transfer property.

Restraints on alienation. Provisions in deeds, will or mortgages that restrict the grantees power to transfer property to others. Whether a restraint is valid depends on the kind of restraint, the estate being restrained and the extent of the restraint.

  • Any restraints imposed upon a fee simple is invalid.
  • Restraints on non-freehold estates, such as tenancies, periodic tenancies, or tenancies are upheld. Example: A non-assignment clause in a lease.
  • Restraints limiting conveyance based on discrimination against religious or racial minorities are invalid under the equal protection clause of the 14th amendment.
  • Preemptive rights or the right of first refusal constitute a partial restraint on alienation and are upheld.

  1. D. Concurrent Estates. Ownership or possession by two or more persons at the same time.

1)    Joint tenancy. A form of co-ownership where each tenant owns an undivided interest in the whole estate. There is a right of survivorship, which means upon the death of one tenant title passes to the survivor.

Created by a deed or will never by descent.

Modernly joint tenancies are disfavored and there must be a clear intent to create a joint tenancy, otherwise a tenancy in common is created.

Common law a joint tenancy was created under four unities.

  1. Time. Interest must vest at the same time.
  2. Title. Interest must be acquired by the same instrument.
  3. Interest. The same type and duration.
  4. Possession. Each of the joint tenants are given identical rights of enjoyment.

Example: Common law creation of a joint tenancy. A conveys Blackacre to B and C and their heirs.

Example: Modernly. A conveys Blackacre to B and C and their heirs as joint tenants.

A joint tenancy can be destroyed by:

  • Conveyance intervivos where one joint tenants conveys away their interest. Conveyance severs the joint tenancy and a tenancy in common is created.
  • Contracts to convey results in a severance of a joint tenancy, despite the fact that no conveyance actually occurs.
  • A suit for partition, which can be brought by any of the joint tenants.
  • Mortgages.

A minority of states follow title theory and regard a mortgage as a transfer of title, which destroys the joint tenancy.

  • A majority of states follow lien theory, and a mortgage is regarded as a lien and will not result in the destruction of a joint tenancy.
  • Leases. Don’t affect a joint tenancy.

2)    Tenancy by the entirety. Co-ownership by husband and wife. At common law considered one legal entity. One human being. There is a right of survivorship where husband or wife dies, title passes to the survivor.

Common law a tenancy by the entirety is created by five unities.

  1. Time.
  2. Title.
  3. Interest.
  4. Possession.
  5. Person. Unity of husband and wife.

Severance. Both spouses have to join in a conveyance.

Death of either spouse terminates a tenancy by the entirety.

Divorce eliminates the unity of person concept and destroys a TBTE. Divorced persons become tenants in common.

Execution by a creditor on both husband and wife constitutes a severance.

A creditor of one spouse cannot levy upon an TBTE.

Neither spouse has a right to partition at common law.

3)    Tenancy in common. A concurrent estate in which each co-tenant owns an undivided separate and distinct share of the property. A TIC doesn’t own the entire property as in a joint tenancy. Each tenant can dispose of their undivided portion by deed or will. The only unity is the unity of possession. There is no right of survivorship; there interest descends to their heirs.

Destroyed by partition, or merger when the entire title vests to one person by purchase or otherwise.

Alienable. Each interest is freely alienable by conveyance or testamentary disposition.

Ouster. Where one co-tenant wrongfully excludes the other from possession, there is a cause of action against the tenant in possession.

There is no fiduciary duty between tenants in common.

Rights and duties of concurrent estates.

Possession. In all forms of concurrent ownership each tenant has the right to enjoy the entire property.

Rents and profits. In a majority of states a tenant in possession has the right to retain profits gained by their use of the property. A tenant in possession need not share profits with a co-tenant out of possession, unless there has been an ouster.

Taxes. A tenant who paid taxes on the property may compel contribution by a co-tenant.

Improvements. A tenant has no right of contribution from the other co-tenant.
Partitions issues are brought in equity court and the court may divide proceeds, taking into consideration expenditures made by one tenant.

  1. E. Non-possessory interest in real property.

1)    Easements. A right of one person to go onto the land of another and make limited use of that property.

Example: Ingress or egress.

Example: The right to use a walkway.

Example: The right to use a driveway.

  1. Easement appurtenant.

Requires two adjoining parcels of land. A dominant tenement and an adjoining servient tenement whose land is burdened with an easement; the dominant tenement has the right to enter the servient land for purposes of ingress and egress.

EA run with the land.

Example: S gives J the right to enter onto the land for ingress/egress. J later conveys the dominant property to B, or S conveys their servient property to C. The easement can be enforced by and against successors in interest to the original parties.

  1. Easement in gross. There are no two adjoining parcels of land. There is only one servient tenement subject to an easement.

Example: City installs a sewer line across owner’s property.

Example: City constructs telephone poles across the land.

An easement in gross can run with the land.

Easement classifications.

Affirmative easements. Entitles the easement holder to make affirmative use of the servient tenement.

Example: The right to lay sewer lines on another person’s property.

Example: The right to enter another’s property for ingress/egress.

Negative easements. Prevents the servient tenement owner from doing some act, or making a particular use of their land.

Example: B owns Blackacre, which is located between the ocean and A’s property. B agrees in writing not to construct any structure that will interfere with A’s view of the ocean.

Easement creation.

An easement is an interest in land that comes within the statute of frauds and must be in writing to be enforceable.

Example: A deed instrument.

Easements required in writing.

1)    Easements by implication/necessity. A subdivision scheme.

Example: B owns a 100-acre tract of property and decides to subdivide it and sell one-acre parcels. B sells one lot to X, another to Y and another to Z. There is a highway bordering on the eastern tract of the property. B sells this lot to Y. Y’s land is landlocked and there is no access to the highway. In Y’s deed there is no mention as to an easement as to ingress/egress over Z’s land. Y has an easement by implication over Z’s property for purposes of ingress/egress. EBI arise where the easement is reasonably necessary, or strictly necessary for the benefit of the dominant tenement owner.

Easement by implied grant. Where the easement benefits the grantee they must show the easement is reasonably necessary.

Easement by implied reservation. Where the easement benefits the grantor.

Example: B sells a lot to Z and retains the lots surrounding Z’s, and B only has access to the highway across Z’s land. Grantor must show the easement is strictly necessary.

2)    Easement by prescriptions.

Similar to gaining title by adverse possession.

  1. There must be adverse use. Without permission.
  2. Open use.
  3. Notorious.
  4. Continuous for the statutory period.

Easement termination.

  1. Merger. Where a single owner acquires fee simple title to both the dominant and servient land.
  2. Written release. The holder of the benefit of the easement (dominant tenement owner) may execute a release terminating the easement.
  3. Abandonment. A clear showing by the dominant tenement owner that they intend to abandon the use will extinguish the easement. Mere non-use, no matter how long won’t extinguish an easement.

Example: B owns large tract of land, in 1950 he gave a railroad company an easement across the northern half of his property. For many years the company used the easement. However, for the past 5-7 years the railroad company has decided not to run its trains over the land and no longer is using B’s land. Mere non-use will not extinguish the easement. The easement would be extinguished if the railroad company removed the tracks. This will show a non-use coupled with abandonment and will suffice to extinguish the easement.

Excessive use will not extinguish an easement. The servient tenement may bring suit in equity for injunctive release to enjoin the non-conforming use from continuing.

  1. Prescription. The servient tenement owner has used their land continuously and uninterrupted for the statutory period of prescription in a way that is inconsistent with and adverse to the easement and without consent of the dominant tenement owner.
  2. Destruction of the servient tenement. An involuntary destruction of a structure by fire or flood.

Example: A staircase or hallway.

  1. Estoppel. Where the servient tenement owner in reasonable reliance on the conduct, or oral assurances of the dominant tenement owner uses the servient tenement in a manner that is inconsistent with the easement.

Example: B has a right over A’s property and tells A they have no intention of using the easement any longer. Based on B’s representation A builds a house over B’s right-of-way, and B sees the progress of the building, and when it is completed B says he wants the house raised and to continue to use the easement. B will be estopped.

  1. Condemnation or eminent domain. Modern view where there is a termination of an easement by condemnation or eminent domain, the holder of the easement, the dominant tenement owner is entitled to compensation for the value lost. The same rule applies to profits.

2)    Profits. The right of one person to go onto the land of another and extract or remove something from that property.

Example: Sand, timber, minerals, vegetables or fruits.

3)    Covenants running with the land. A hybrid between a contract and an easement. It is more than a personal contract, but less than an easement in that a covenant is not an interest in land.

A covenant running with the land may be enforced by successors in interest to the original parties.

Enforced by actions at law.

To create a covenant running with a land.

  1. There must be a writing signed in compliance with the statute of frauds.
  2. There must be an intent that the covenant runs with the land. As long as the words assigns, or successors, then the intention is clear the covenant was meant to run with the land.
  3. The covenant must touch and concern the land. This means the covenant must make the land more valuable and increase its utility, or curtail its value and decrease its utility.
  4. There must be privity of estate between parties. This means that one of the contracting party succeeds to an interest in the land of another.

Example: A privity of estate between a landlord and a tenant.

Termination of a covenant running with the land is extinguished the same way an easement is.

4)    Equitable servitude. A restriction on the use of land that is enforceable in equity. Usually created by filing a declaration of restrictions with the recorders office. It must be signed, acknowledged, recorded and show an intention to restrict the use of the land. Example, as in a subdivision for residential purposes. The servitude will run with the land and any lot owner in the subdivision can enforce the restriction.

  1. There must be a writing complying with the statute of frauds.
  2. Intention. Who may or may not enforce an ES. There must be an intention to bind the land with this servitude.
  3. Notice. The transferee, or the grantee must take the land with actual or constructive notice of the existence of the servitude. ES cannot be enforced against a person who has no notice of the existing servitude.

Constructive notice. A common development scheme such as a condo, where a deed does not contain a restriction, yet the restriction was recorded in the public records.

Inquiry notice. Where one owns a large parcel of land, subdivides it in a common development scheme with restrictions limited to residential use, or single-family dwellings.

MBE: A common development scheme is probably addressing an equitable servitude question.

Example: B owns 100 lots and sells off 90 of the lots restricted to residential use. Two years later B sells the remaining 10 lots, but fails to mention the restriction. These 10 lot owners may be bound by the restriction even though its not contained in their deed because they would be deemed to have inquiry notice. They would be aware of the fact that all the other 90 lot owners had the restriction and it would apply to them as well.

Methods of imposing an inequitable servitude.

  1. Declaration of restrictions. The grantor files with the recorders office, giving notice that he intends to restrict the subdivision for a particular purpose, such as residential. All lot owners will have constructive notice and be bound by that restriction.
  2. All lot owners execute a formal agreement themselves.
  3. An owner of a subdivision places a restriction on most of the lots, sells them off and retains some of them.

Distinction between CRWL and ES.

CRWL privity of estate is required. ES privity of estate is not required.

MBE: If one lot owner is bringing an injunctive relief action against another it’s an ES issue because it’s enforceable in equity. Where the remedy is an action brought at law for money damages, it’s a CRWL.

Extinguishment of an ES.

Same rules apply to easements, and CRWL.

Changed neighborhood conditions where the purpose of ES becomes meaningless or impossible.

Example: A subdivision with residential purpose, but the neighborhood has changed, surrounded by office buildings, gas stations, etc.

Subsequent zoning changes will not invalidate an ES that are inconsistent with the restrictions.

MBE: Usually extinguishment is dealing with changed neighborhood conditions.

5)    Licenses. Permission to enter land of another without being a trespasser. Unlike an easement a license is not an interest in land. It’s merely a revocable privilege at the option of the licensor to come onto the land for a limited purpose.

Example: Parking a car at a shopping mall parking lot without having to pay is a mere license to use.

Paying for parking may be construed as a contract, or a license coupled with an interest that could make it irrevocable.

Example: A spectator at a sporting event. If the spectator misbehaves the license is revocable.

Don’t confuse the property interest of sitting in a seat, which is viewed as a license, with the tort classification invitee. An invitee is owed a duty of care to inspect the property and make sure the premise is safe.

Irrevocable license.

Example of an irrevocable license: A owner of Blackacre sells 100 bushels of potatoes to B, which is stored in a shed on Blackacre. B has an irrevocable license to enter Blackacre and remove the potatoes because B’s license to enter the property is coupled with an interest, here to pick-up potatoes on the land of A.

License distinguished from a lease.

A licensee never has possession of the land. A leaseholder always has possession of the land.

License v. easement. An easement is a substantial non-possessory interest in the land of another, and must be in writing to comply with the statute of frauds. A license is non an interest in land and does not have to be in writing.

  1. F. Rights incidence to possession.

1)    Adverse possession. Based on a statute of limitations for real property. Operate to bar the recovery of property adversely held by another, but also to vest the adverse possessor with title to the property as though they obtained the property be deed.

  1. The use must be adverse/hostile without permission.
  2. Actual and exclusive. Sole physical occupancy.
  3. Open and notorious. Meaning not secret. Must represent to the world that he is the owner of the property.
  4. Continuous. Without interruption for the statutory period.

Limitation of AP claims.

  • An adverse possessor cannot acquire a larger estate than they claim in the property.

Example: AP claims a life estate they cannot also claim a fee simple title.

  • AP cannot claim title to less than a freehold estate. They must claim a life estate, fee tail or fee simple.
  • The statutory period on AP begins to run when a cause of action accrues against the AP.
  • Recording statutes have no application to adverse possession.
  • Tacking. There need not be a continuous possession by one the property by a single individual. The period may be tacked on by one possessor to another as long as there is privity between the two either by descent, deed, will, oral gift, contract or permission.
  • Tolling can run for a disabled person (imprisonment, insanity) until the disability is removed.

Example: Statutory period for adverse possession is 10 years. AP is on the property for 4-years, and in jail for the next 6. Returns upon release and takes AP of the land again for the next 6 years.

Honest mistake The AP is required to have a subjective intent to possess the land. Occupying the property of another adversely, openly, notoriously, for the statutory period, won’t take title because they don’t have subjective intent to hold it against the entire world.

The majority view is that possession alone, not the subjective view of the possessor is important.

2)    Lateral and subjacent supports.

Lateral support. Support on the sides of the land.

Subjacent support. Support underneath the surface of the land.

The right of a landowner to have their land supported by the neighboring land is an absolute right inherent in the land itself.

One who causes damage to the support of another’s land is absolutely liable for damages regardless of negligence.

Artificial structures:

  1. English minority view. Recovery will include both damage to the land and artificial structures.
  2. American majority view. Recovery is limited to the land not the artificial structures on the land.

Negligent excavation. Defendant is liable to all damages that flow from the negligence, including the land and artificial structures thereon.

Underground water. If one excavates on their land and it causes the neighbors land to sink due to the release of semi-fluid, or semi-solid material there is liability.

3)    Water rights.

  1. Lakes and streams on the surface.

Riparian water rights. Riparian rights are owned only by those that own land that abuts or touches a lake or stream.

  1. Natural flow theory. Each proprietor of land has a fundamental right to have the stream or lake remain substantially in its natural state. Free from any unreasonable diminishment in quantity and pollution.

Each riparian owner may use the water for either natural or artificial uses so long as they use it only on riparian land and does so reasonably so as not to affect the quality or quantity of the water.

  1. Reasonable use theory. Each riparian owner has a fundamental right to make maximum use of the water, either on riparian or non-riparian land from the lake or stream provided the use does unreasonably interfere with the reasonable use of other riparians.

Fundamental difference between the two riparian theories.

Example: A, an upper riparian diverts water from a stream for the purpose of irrigating his riparian and non-riparian land. The use causes the stream water level to drop six-inches below normal levels. There is enough water remaining for any reasonable use by lower riparians. B brings an injunction action to prevent A’s use.

  • Under the natural flow theory the injunction would issue because the lower riparian’s have the right to have the water maintain its natural level.
  • Under the reasonable use theory the injunction would not be granted because B can show no injury to himself as a lower riparian.

Water uses. Water is designated as either natural or artificial.

  • Natural use. The majority rule includes uses necessary for daily sustenance of human being such as household uses, consumption, or for domestic purposes such as gardening.
  • Artificial uses include irrigating, power, mining and industrial uses.
  • The majority rule is water used for natural purposes takes precedence over artificial use. Exception:

Prior appropriation doctrine. Mostly western states. The prior use of the water is protected, even where the water usage may unjustly affect lower riparian water rights. The rule is first in time, first in right.

  1. Underground/percolating water.

Common law. Waters underneath the surface of land is subject to the absolute control of the surface owner regardless if its withdrawal adversely affects neighboring landowners. They have absolute control and ownership of water beneath their land.

American reasonable use doctrine. A majority of states follow the rule that the owner of the surface land may withdrawal water underneath their land but they must make reasonable use, which does not adversely affects neighboring land.

  1. Surface waters.

Common law surface water is considered a common enemy and a landowner has unlimited discretion as to how to deal with it regardless of the affect it has on other landowners. They can build dikes or drain the water to get rid of it and not be held liable to their neighbors.

4)    Property interests above the soil. Surface rights in the area above and below the land. Includes natural vegetation such as trees, shrubs and growing crops and chattels attached to the land.

  1. Fructus naturales crops. Trees, grasses, shrubs considered part of the land, real property. Grown without the aid of man.

Trunks and roots located on the property lines of adjoining landowners are considered tenants in common.

FNC will pass with conveyance of land.

Real property until severed from land.

  1. Fructus industriales crops. Growing crops primarily from man’s industry. Include, annual crops, cultivating, harvesting of grains, beans, corn, citrus fruits, etc. Apples, pears, grapes, citrus, etc. are perennial crops but they are viewed as annual crops produced by man’s labor.

FIC are viewed as personal property.

Example: Estate for years. A tenancy in an estate for years having a definite time of beginning and a definite time of termination, the tenant right to remove crops is terminated when the tenancy comes to a close, any crop not removed by the end of the tenancy is the property of the landlord. If the crops are severed but remain on the land, it’s considered personal property belonging to the tenant.

Example: Tenancy at will. Where there is no certain date for termination, the tenant has a reasonable time after termination to remove crops, which are planted and growing at the time of notice of termination.

  1. G. Conveyances.

1)    Recording statutes. Statutes usually provide that freehold estates may be conveyed by deed or other instruments. A writing that evidences an intent to convey an estate will be sustained even though it will not necessarily constitute a deed instrument so long as it is sufficient to satisfy the statute of frauds.

  1. Contracts for the sale or interest in land must be in writing, and signed by the person sought to be charged – the grantor.
  2. For a valid conveyance the memo must identify:
  3. The parties. (grantor and grantee)
  4. Sufficient description of the land to be conveyed.
    1. Sufficient. All of my land in Orange County is sufficient to describe the land to be conveyed.
    2. Insufficient then title remains in the grantor. Parol evidence is admissible to explain or supplement a written description or to clear up an ambiguity.
      1. Patent ambiguity. One appearing on the face of the document and parol evidence is admissible to ascertain the party’s intent.
      2. Latent ambiguity. The ambiguity is not apparent on the face of the document. Parol evidence is admissible to clear up latent ambiguities.
    3. The purchase price.
    4. Promises on both sides. (Grantor promises to convey, grantee promises to pay the purchase price.)

2)    Deeds.

Doctrine of substantial partial performance. An oral real estate sales contract may be enforceable and removed from the statute of frauds requirement if:

1)    The purchaser pays the seller part or all of the purchase price.

2)    The purchaser takes possession of the property.

3)    The purchase pays all or part of purchase price and makes improvements.

Delivery and acceptance of deeds.

In order to have a valid conveyance the deed must be delivered.

Physical transfer of the deed is not necessary to make a valid delivery.

Delivery refers to the grantor’s subjective intent. Satisfied by words or conduct showing the grantor’s intent for the deed to have some operative affect.

Example: A draws and instrument conveying Blackacre to B, and hands the instrument to B for safekeeping. Handing the deed to B is not a valid delivery. Because there is no evidence that A intended the instrument to have present operative effect.

Example: A draws up an instrument conveying Blackacre to B. A attempts to give it to B personally but is unable to find him. A also quits possession of Blackacre and treats B as the owner of the property. Here, there is sufficient delivery because there was a present intent of the owner to make a valid conveyance, he has quit the property and intends for B to take possession.

Delivery issues on the exam usually arise under two situations.

Where the grantor retains the deed, or the grantee gets physical possession of it.

Where the grantor gives the deed to a third person for transmission of the deed.

Presumptions as to delivery:

  1. Where the deed is in the physical possession of the grantee it raises a rebuttable presumption that the deed has been delivered.
  2. If the grantor had retained physical possession of the deed, then the presumption is that there has not been a valid delivery.

Recorded deeds.

Raise the presumption that a valid delivery has been made.

Any kind of parol evidence is admissible to prove the grantor’s intent, including conduct or statements by the grantor, before or after delivery is admissible to prove their intent.

Third-party delivery to hold for the benefit of the grantee.

Conditional delivery is permissible.

Where there is transfer to a third-party with no conditions.

Example:

A gives names B as the grantee in a deed and instructs C to give to B. The majority rule is there has been delivery since it was A’s present intent to have the deed be operative.

Where there is transfer to a third-party with condition, such as an escrow condition. Usually certain conditions must be satisfied before the deed can be passed on to the grantee.

Example: A gives C a deed naming B as grantee and tells C to transfer the deed to B when B has paid the remaining balance due on the purchase price.

Under these circumstances a valid delivery has occurred. The deed has a present operative affect and the title will transfer automatically upon the occurrence of the condition, namely the payment of the balance of the purchase price. And A the grantor will retain title only if the conditions have not occurred.

Where there is a breach of escrow conditions where the grantee wrongfully acquires the deed from an escrow holder, prior to the performance of the conditions of the escrow agreement, title would not pass.

3)    Doctrine of equitable conversion. Treats interest in land as if it already has been converted to personal property. There is an enforceable obligation to sell land usually where there is an executory sales contract, the buyer is regarded as the equitable owner of the land and the seller is regarded as the equitable owner of the purchase price.

Example: Owner of Blackacre enters into a purchase agreement with buyer to sell land for 100k. Buyer pays a deposit and they enter into the agreement on Sept. 1st. setting a closing date for Nov. 1st.

During the executory stage of the contract, Sept. 1st to Nov. 1st, seller is the equitable owner of the balance of the purchase price and the buyer is the equitable owner of the property. Legal title remains with the seller.

During Sept. 1st to Nov. 1st the risk of loss is on the buyer. If the property is destroyed by fire or flood. The buyer must take out insurance on the property to protect their expectancy interest.

The risk of loss is on the purchaser.

  • Death of the seller during the executory stage of a real estate contract.

The seller’s death does not negate the enforceability of a real estate sales contract. When a seller dies during the executory stage of a contract the beneficial interest descends as personal property to seller’s heir, who can enforce the real estate sales contract. The proceeds go to the seller’s estate and pass on by inheritance to the seller’s heirs.

  • Death of the purchaser during the executory stage of a real estate contract.

The personal representative can enforce the sales contract, purchase the property and title will descend to the descendant’s heirs.

Marketable title. Absent to an agreement to the contrary, there is an implied undertaking in a contract that the seller has marketable title. The contract usually provided that the vendor would convey good and marketable title to the vendee. Where the vendor does not convey marketable title, the vendee may rescind the contract. There is an implied duty on the part of the vendor to convey marketable title to the vendee.

A deed supersedes a contract. If the vendee goes through with the sale and accepts the deed with out any warranties of title. If the purchaser decides to go through with the sale knowing the seller doesn’t have good title then the purchaser will have to bare the risk.

A seller is only obligated to delivery good and marketable title on the day of closing and a purchaser may not rescind before the closing date.

Example: A enters into a contract to sell Blackacre to B. They enter into the sales contract on Sept. 1st with closing on Nov. 1st. B does a title search on Oct. 15th and discovers an encumbrance on the property. B contacts A and says there is an encumbrance on the property, you cannot convey good and marketable title, and I’m rescinding the real estate sale contract. Can B rescind before Nov. 1st? No, because the seller has until the closing date to cure any and all defects that may exist on the property.
What defects render title unmarketable?

1)    Outstanding mortgages.

2)    Restrictive covenants.

3)    Outstanding reverter rights.

4)    Encumbrances in which the seller cannot or will not remove.

5)    Easements upon any appreciable part of the property.

6)    Variations in the names of the grantor or grantees in the chain of title.

7)    Outstanding dower interest.

Boundary line agreements.

Oral agreements for adjoining landowners to set a boundary line are valid and enforceable and does not come within the statute of frauds.

Covenants in deeds respecting titles.

1)    Covenant for season. Breached when the deed is delivered. Guarantees the grantor owns the estate the deed purports to convey.

2)    Covenant of the right to convey. Breached when the deed is delivered. Guarantees the grantor owns the estate the deed purports to convey.

3)    Covenant against encumbrances. Breached when the deed is delivered. Guarantees to the grantee that the property has no outstanding mortgages, liens or restrictions, easements or profits on the property.

4)    Covenant for quiet enjoyment. Breached after the deed is delivered. Defend the grantee against all lawful claims against the grantor or third parties who would evict the grantor either actually or constructively.

5)    Covenant for general warranties. Breached after the deed is delivered. Defend the grantee against all lawful claims against the grantor or third parties who would evict the grantor either actually or constructively.

6)    Covenant for further assurances. Breached after the deed is delivered. Not used much in the U.S. An undertaking on the grantor’s part to perfect the grantee’s title.

None of the covenants protect the grantee against trespass, or aggression of a mere wrongdoer.

The first three covenants cannot run with the land because they are personal. They are breached, if at all at the time the deed is delivered.

The last three covenants run with the land and can be enforced by remote grantees that take by the grantee.

Covenants in nature are contracts of indemnity and damages must be shown as a condition precedent to recover for breach of a covenant.

Types of deeds.

1)    General warranty. When a deed provides for usual covenants they’re usually a general warranty deed, and include the first five covenants.

2)    Special warranty. Usually statutory and contains fewer warranties and has more limited assurance.

3)    Quit claim deed. Contains no assurances, no warranties, the grantee takes whatever interest the grantor has in the property.

Estoppel by deed. If a grantor executes a deed to convey an interest in land they do not own to a grantee, or to convey a larger estate than they own to the grantee and the grantor then later acquires title to the property, the estate passes to the grantee.

Example: A mistakenly believes he is the owner of Blackacre and conveys a deed to B, but O is the record titleholder, and after conveyance, O then conveys Blackacre to A. Once title passes to A title goes to B by application of estoppel by deed.

Problem. A conveys land to B. O is the owner of land and thereafter conveys to A. A then conveys the land to C, who knows nothing of the A/B transaction. B fails to record his deed. C is viewed as a subsequent bonafide purchaser who paid value without notice of any prior conveyance. Majority rule is the subsequent bonafide purchaser prevails over the prior grantee.

Recording statutes. Provides a means for giving constructive notice of ownership. Only BFP are protected by notice and race notice statutes.

1)    Pure race. Whoever records first prevails.

2)    Pure notice. The subsequent BFP who paid value without notice of any prior conveyance prevails whether or not they record.

3)    Pure race notice. The subsequent BFP who paid value without notice of any prior conveyance prevails and records first prevails.

  1. H. Mortgages. An interest in land created by a written instrument providing security for an outstanding debt. The mortgagor is the property owner who takes out a mortgage with a bank. The bank is the mortgagee.

The mortgagor signs two instruments.

1)     A promissory note which is the evidence of the debt.

2)    Security for the debt.

The mortgage follows the note.

Example: The mortgagor conveys property to the buyer. To determine if the buyer is going to be personally liable for the mortgage debt, look to the deed of conveyance from the mortgagor to the buyer.

  • If the deed states the buyer assumes the mortgage the buyer is personally liable for the mortgage debt.
  • If the deed is silent, or if the land is subject to the mortgage, then the buyer is not personally liable to the bank for the mortgage debt.
  • The distinction is between an in personam (personal) action and an in rem action.
  • The mortgage is a security interest (in rem) and if payment is not made, the bank can foreclose where there is a default by the buyer.

Mortgages must be recorded to protect a mortgagee.

A mortgage like a deed must be recorded in order to protect a mortgagee.  Example: A mortgagor conveys property to a buyer without notice a mortgage exists and the bank never recorded it. In a race notice jurisdiction a buyer can take the property free and clear.

Equity of redemption. A statutory period where a mortgagor who defaults on a mortgage loan has time to pay the full debt even where the property is in foreclosure.

Common law. Mortgagor takes out a mortgage with a mortgagee. The mortgagor then defaults. After the default, but before the mortgagee brings foreclosure action, the mortgagor can pay off the debt to the mortgagee and retain clear title.

Example: Mortgagor takes out a mortgage with a mortgagee. The mortgagor defaults. The mortgagee brings a foreclosure action, and the mortgagee sells the property to buyer for 700k. After the foreclosure sale, the mortgagor repays the mortgage debt. In most states the mortgagor has six months to a year after the default to repay the mortgage debt, even thought there has been a foreclosure and sale to another purchaser. The mortgagor is entitled at their election to redemption against the mortgagee, for either the value of the land, or the proceeds from the foreclosure sale.

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  1. #1 by Brian MacGregor on July 7, 2015 - 6:28 pm

    Great legal post, and thank for for spelling it out with very useful examples.

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