Académique Documents
Professionnel Documents
Culture Documents
Property is equal to the thing itself and the value that people place in it.
Property refers to relationships among people with respect to things, not to a relationship between a person and a
thing.
Consider: In property cases ask whether the judgments are based upon case law or a conscience choice towards
pragmatic decision-making.
The principles of property should remain the same from a micro to a macro level and a federal to a state level.
Principle of First in Time, Doctrine of 1st possession or Occupancy Theory state that by possession / claim one has
separated this property from the commons.
See, Johnson v. M'Intosh
Acquisition by Capture:
Difference between physical possession vs. constructive possession.
What purpose does value play in property and ownership rights? See Pierson v. Post or Ghen v. Rich. Does the
value that Pierson gave to the fox (tiring it out, chasing it for a day) result in some degree of ownership over that
property (Livingston dissent)? Does the status of the property change as a result of an action?
When do customs & practices confer constructive possession over property? See Ghen v. Rich. Did the whaling
industry customs confer ownership over the whale, at least for a time, once the harpooner's labor led to the death of
the whale. How does the law determine which customs to recognize? Possible answer is to recognize only those
customs that confer possession to those customs that are unlikely to disturb the general understanding of man.
Theory of Relativity of Title: Multiple people can have title to the same property depending on the circumstances.
Acquisition by Creation:
When you acquire by creation you are not acquiring a part of the commons such as a chattel or real property. You
are using the commons plus your own efforts to create something new, which makes you first in time with regards to
this new property or quasi property because your property is part commons and part the fruits of your labor. The
law will recognize this creative process as adding value to the commons.
Property in the public commons in INS v. AP. The intent of a party that places its production in the public
commons is relevant to whether it abandons its property and how such property can be appropriated by another
party. INS was guilty of misappropriating the property of AP because even though AP published their paper in the
public sphere, the paper was the result of their creation and they retain the rights, at least for a time, to how that
property could be used.
RE: Intellectual property, patent and copyright laws in regards to acquisition by creation.
A person may also have possession of the property without physical possession if by adding value to a commons
they have exercised constructive possession over the common.
There is a lot of gray area in the property rights of the human body. We retain the rights over how our human body
is treated as a whole. In that sense we exercise ownership over our bodies. However such ownership is not
absolute. It does not extend to our right to sell our body parts or even sell the use of our bodies for certain uses such
as sex. Once a part of our body has been removed, especially after its removal for surgical purposes, we loose our
rights to the "property" and the ownership transfers to another.
In Moore, the plaintiff raised several property and tortuous issues such as:
1. conversion because the doctor's "stole" his body parties and used them for their own
purposes without getting Moore's permission. Court held no because statutes had been written to
super cede the law of conversion as it relates to the human body.
2. Abandonment in the context of surgically removed body parts. Are they abandoned by
implication unless the patient specifies otherwise?
3. Consent: Whether Moore consented to the use of his body parts for testing and what the
doctors should have informed him of prior to surgery.
4. If a part of my body is removed and I abandon that property, does the property still retain
value? Who has legal rights to this value?
Acquisition by Find
The title of the finder is as good against the world except for that of the true owner. See Armory v. Delamirie.
Policy goal is to reward possession and good behavior by encouraging people to report found property and acquire
the property if the true owner cannot claim it.
Ownership of the premises where property is found does not immediately confer ownership. See Hannah v. Peel
where the court looked to whether the locations owner was in a position to know of the existence of the possession
and how the finder found the possession.
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Mislaid Property - Is the result of the volitional placement of an item in area where the owner has been encouraged
to leave their property. For example, leaving a piece of clothing on a department store rack where one has been
invited to leave their property. The immediate result of lost or mislaid property is the temporary loss of someone's
property but depending on the circumstances of the loss, the owners property can be returned or reimbursed to a
different degree.
Treasure Trove Property: A particular type of found property. Usually there is a statutory time frame in which gold,
silver or jewelry would have to be buried before qualifying as a treasure trove. Key term is that the property must
have a sense of antiquity.
Abandoned Property: Property the true owner intentionally and voluntarily relinquished with the intent no longer to
own the object and without transferring the rights to another. Abandoned property belongs to its finder.
Bailment is the transfer and delivery by an owner or prior possessor (the bailor) of possession of personal property
to another (the bailee):
1) whose purpose in holding possession is often for safekeeping or for some other purpose more limited
than dealing with the object or chattel as would its owner, and
2) where the return of the object or chattel in the same, or substantially the same, undamaged condition is
contemplated.
A bailee cannot do anything to the goods without the bailor's consent. A presumption of negligence exists on behalf
of the bailee because the bailee, unless he can prove otherwise, is deemed to have exclusive possession of the bailed
property. See Staheli v. Farmer's Co-Op
3 Types of Bailment:
Actual (express) - The object of bailment is physically handed over. See Peet v. Roth Hotel Co.
Constructive - When a key or method of control over the bailed object is handed over. Implied in law based on the
circumstances. See, Shamrock Hilton Hotel v. Caranas
Symbolic - Receipt by the bailee of a thing symbolizing the object of the bailment. Usually a written instrument.
• General Negligence and Reasonable Care - Applies to bailments where mutual benefit exists
between the parties. The bailee is expected to exercise reasonable care for the bailed object and is liable for
negligence such as misdelivery. See Peet v. Roth Hotel Co. & Shamrock Hilton Hotel v. Caranas
• Absolute Liability - Even the slightest damage or negligent will render the bailee liable. Usually
these are commercial bailees such as repair shops.
• Misdelivery: Results in the highest level of liability. See Shamrock Hilton Hotel v. Caranas.
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What is "reasonable duty of care" will vary depending on the nature of the garage and the likelihood of harm being
done to the bailed object while its in the parking garage's care. Circumstances to consider: whether a garage is
enclosed or open, if the garage has guards or police sweep the lot, if the garage is aware of any danger to the car etc.
CONVERSIION
Definition: Using another’s property as your own. True owner has right to recover the property.
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Adverse Possession:
Claim of Right & Color of Title
Definition: Adverse possession is a process through which a person who uses property for a statutorily determined
period of time becomes the owner of the property and defeats all rights of the person with legal or record title. A
person takes ownership of property through adverse possession by using the property as would a true owner for a
statutorily determined period of time.
Adverse possession cannot be exercised against government land in a majority of states because the state
holds its land in a trust for its people.
The adverse possessor can only acquire the same legal interest in the property as the person he is adversely
possessing against. For example if the owner of the property only had a life estate, the adverse possessor
could only acquire the life estate until the future interest becomes possessory at which time, the statute of
limitations will run against him.
Claim of Right
Also known as a claim of title, this is the act of taking possession of land.
Color of Title
Refers to a claim founded on a written instrument such as a deed or will or a judgment or decree that is for some
reason defective and invalid. The defective or invalid deed could be the result of when the grantor does not own the
land conveyed by deed or is incompetent to convey, or the deed is improperly executed. Having a color of title is
better than just a claim of right in that the adverse possessor will have a shorter statute of limitations to meet and
will gain title to all the land in the defective or invalid title with only the adverse possession of a part of the deed
land.
Constructive Adverse Possession: This second benefit will only be conferred if the adverse possessor is
alone on the deeded land. If another adverse possessor w/ color of title is on the deeded land and neither
has been ejected by the true owner, the adverse possessor with the least amount of time on the property is
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granted only the land they adversely possessed and the AP with color of title with the most time on the
property is granted all the land in the deed minus the adversely possessed land of the other.
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Acquisition by Gift or Donative Transactions:
Historic Law - to make a gift of personal property, the donor must transfer possession ("hand over the property") to
the donee with the manifested intention to make a gift to the donee. The donee must accept the gift.
DELIVERY
Why is the delivery requirement still in existence? Here are three reasons why.
1 - Handing over the object makes vivid and concrete to the donor the significance of the act performed.
By feeling the "wrench of delivery," the donor realizes an irrevocable gift has been made.
2 - The act is unequivocal evidence of a gift to the actual witnesses of the transactions.
3 - Delivery of the object to the donee gives the donee, after the act, prima facie evidence in favor of the
alleged gift.
"What is sufficient for delivery must be tailored to the circumstances of the case." What is reasonably permitted
under the circumstances to confer a transfer of possessory interest.
Constructive Delivery - the handing over of a key or some other object that will open up access to the
subject matter of the gift. The object has been delivered under the law even though physical delivery has
not. The legal or functional equivalent of the possession. If a gift could have been delivered but wasn't and
the party is claiming they received the gift through constructive delivery, courts will be wary of saying that
delivery of the gift was established. The handing over of a key that provides access to a house or a lockbox
does not establish the donor's intent to give the donee the complete contents of the house or lockbox. Intent
must be shown that the donor intended to give all the contents or a particular item to donee. All remaining
items in which the intent of the donor cannot be demonstrated go to the donor's estate. See Newman v. Bost
or Evans v. Kellow.
Symbolic Delivery - the handing over of something symbolic of the property given.
There must be satisfactory possessory interest in the property. The person to whom title is being
transferred must have access to where the property is located. Example of a piano in Problem 5 p.
51 in Supplemental.
When analyzing if a gift has been made, what are we looking for?
1 - Who currently has possession of the property?
2 - Who would be the donor and donee?
3 - What intention did the donor express with regards to the property?
4 - How did the current possessor come into possession?
INTENTION
All gifts require that the donor intend to transfer ownership over the property to another. Intent must be clear and
demonstrated for each item being claimed as a gift.
A donor’s intent must be to make a present transfer, not a transfer to take effect in the future.
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Present Gift of future enjoyment:
A gift will be enforced if the court finds that it is a present gift of the right to the subject matter, even though the
enjoyment of the subject matter is postponed to a later date.
A holographic will speaks to intent but a holographic will cannot be a valid testamentary gift.
ACCEPTANCE
The law will presume an acceptance on the part of the donee and acceptance is essential to the validity of an inter
vivos gift.
3 TYPES OF GIFTS
Inter vivos, causa mortis and testamentary. Inter vivos & causa mortis are made during the lifetime of the donor
while testamentary is made after the donor's death.
• Inter Vivos - Unconditional, intentional gift made in the knowledge that the donor could either live or die.
The gift transaction must be completed during the lifetime of the donor. Absolute title switches from the donor
to the donee. Once a would be donor is dead, an inter vivos gift can't be made. Problem # 3 on Supplemental
p.51. The donor of an inter vivos gift cannot revoke their gift once it has been accepted.
• Causa Mortis - A type of inter vivos gift (a subset). Gift completed during the lifetime of the donor but it
has conditions placed upon it. The donor must be in apprehension of dying. The gift is revoked if the donor
survives. Only chattels can be gift causa mortis, real property cannot be given as a gift causa mortis. Refer to
the Problem # 4 on Supplemental p. 51 and Scherer v. Hyland.
• A gift causa mortis is made subject to three conditions implied by law, the occurrence of any one of which
will defeat the gift:
o the recovery of the donor from the sickness or his delivery from peril;
o revocation by the donor before his death; (such revocation must be express or affirmative or
implied by facts)
o death of the donee before the death of the donor.
• "Death must result from the same illness, disease, or peril producing the donor's initial expectation, not
some illness or event, although it is not necessary that the sole cause of the donor's death be the same as
that causing the donor's expectation of death."
• Testamentory Gifts - See the statute of intestasee. Any promise made during the lifetime of the donor to
give a gift to a donee, in which the gift is not delivered during the lifetime of the donor, is invalid unless made
through a will. Gifts made out of the estate of a deceased. Blood relations are paramount in the statute.
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Deed of Gift - Deed of gift is as good as delivery so long as it was done during the lifetime of the donor and that the
property being gifted does not have a sufficient alternative title or deed that's legally recognized. Ex. A gift of a
watch by written note is ok. A gift of a car is not because the car would have a title that is the legally recognized
deed whereas a watch does not have such a deed. Look to the type of property being delivered to determine if what
deed is required to transfer legal rights in property.
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BONA FIDE PURCHASER
The law in almost all states favors the bona fide purchaser over the original owner because between the bona fide
purchaser and the original owner, the bona fide purchaser had the least control over the property and would suffer
the greater injustice.
Summary
Under the UCC, Bona Fide Purchaser is a person who acquires title:
1. In a transaction in which a fair market value of the object is the consideration.
2. With an honest belief that he was acquiring title to the object and,
3. Under circumstances that would not lead him to think otherwise.
Alternative definition of Bona Fide Purchaser: a person who buys honestly and without notice of any conflicting
claim on the property bought, whether or not the purchaser is negligent.
Details
Power to Transfer; Good Faith Purchase of Goods; Entrustment.
From UCC § 2-403
a. A purchaser of goods acquires all title which his transfer had or had power to transfer except that a
purchaser of a limited interest acquires rights only to the extent of the interest purchased. A
person with voidable title has power to transfer a good title to a good faith purchaser for value.
When goods have been delivered under a transaction of purchase the purchaser (the middleman)
has such power even though:
1. The transferor was deceived as to the identity of the purchaser, or
2. The delivery was in exchange for a check which is later dishonored, or
3. It was agreed that the transaction was to be a "cash sale", or
4. The delivery was procured through fraud (you convince the owner to transfer title)
punishable as larcenous under the criminal law. A crime but not theft. Theft is an non-
consented transfer of possession whereas fraud is a consented transfer of title &
possession.
b. Any entrusting of possession of goods to a merchant who deals in goods of that kind gives him
power to transfer all rights of the entruster to a buyer in ordinary course of business.
(Remember: The goal is to protect the bona fide purchaser not the true owner. Consider this for
the retail marketplace and that this rule becomes less applicable the more unique an item
becomes.)
c. "Entrusting" includes any delivery and any acquiescence in retention of possession regardless of
any condition expressed between the parties to the delivery or acquiescence and regardless of
whether the procurement of the entrusting or the possessor's disposition of the goods have been
such as to be larcenous under the criminal law.
Buyer in an ordinary course of business: means a person who in good faith and without knowledge that the sale to
him is in violation of the ownership rights or security interest of a third party in the goods buys in ordinary course
from a person in the business of selling goods of that kind but does not include a pawnbroker.
Delivery: voluntary transfer of possession in the context of instruments, titles', chattel paper or certificated
securities.
Notice (of a fact) when: a) actual knowledge; b) receipt of notice c) or has reason to known of it given the
circumstances.
Purchase: taking by sale, discount, negotiation, mortgage, pledge, lien, issue or reissue, gift or any other voluntary
transaction creating an interest in property. A purchaser is someone who takes by purchase.
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Value: A person gives value for rights if he acquires them:
1. In return for a binding commitment to extend credit or for the extension of immediately available credit
whether or not drawn upon and whether or not a chargeback is provided for in the event of difficulties in
collection; or
2. As security for or in total or partial satisfaction of a pre-existing claim; or
3. By accepting delivery pursuant to a pre-existing contract for a purchase;
4. Generally, in return for any consideration sufficient to support a simple contract.
Void Title: title is no good because the seller has no interest in the property. Example - A bailee or a thief has no
title and cannot transfer good title. Contrast with Voidable title. The theft of property does not give voidable title
because the title was not relinquished by the property owner. Theft is distinguished from fraud because in fraud the
property owner voluntary gives up the possession.
Voidable Title: title is voidable if the true owner can rescind the transaction and get the property back. The true
owner can rescind the transaction until the holder of voidable title transfer title to a bona fide purchaser. A person
with voidable title has the power to transfer good title to a bona fide purchaser.
• Purchase from someone with apparent authority gives voidable title. See O'Connor's v. Clark.
• The voluntary relinquishing of title by fraud gives voidable title. See Phelps v. McQuade.
• The theft of property does not give voidable title because the title was not relinquished by the property owner.
Theft is distinguished from fraud because in fraud the property owner voluntary gives up the possession.
As a general rule, you cannot get better title than the immediate transferor. This rule as three exceptions:
1. If the purchaser buys the property on the apparent authority of the immediate transferor
he can acquire better title than his immediate transferor possesses. Voidable Title.
2. Fraud
3. Entrustment exception UCC Sec. 2-403. Notes at top of page.
Letter Rule
Is their a difference between false representation in person and false representation by letter? Does the same degree
of title change hands?
No. Look to the mechanics of due diligence at the time of Phelps v. McQuade. A person in front of you can be
evaluated and judged in a different manner than someone who contacts you by letter. It's easier to inspect a person
whose in front of you than a company that is only contacting you via letter. The risk belonged to the letter writer
(buyer) not the seller.
Does the letter rule still exist today? Maybe. The argument against the letter rule is because the availability of
modern information systems allows for quick background info on a company. This moves the risk from the buyer to
the seller. The argument for continuing with the letter rule is that even with the advantages of modern
communications, reliable information can still be hard to come by (more information doesn't mean the information
is accurate).
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SYSTEM OF ESTATES
Concept of the sovereign as ruler of the land. The sovereign is the embodiment & source of all powers.
This is the theoretical structure. The political circumstances of the power did not adhere strictly to this
theory. William conquers England. He controls all of his conquered lands. Land was the prime source of
wealth at the time. William grants lands to his subordinates lords who helped him conquer England. The
relationship between the lord and William (sovereign) is an oath by the lord and a grant of land by William.
Society at the time was pre-contractual. In exchange for the granting of lands, the lord would make an oath
of fealty to his sovereign.
Purposes of Oaths:
The oath would require the lord to provide services to the sovereign such as men, produce, religious services etc.
An oath could also require incidents (continuous exercise of control by a sovereign over a lord's family / wealth). If
a lord lost his life, the sovereign would become a ward of this lord's granted lands and then determine what to do
with the lands. This is at the time prior to hereditary grants of land.
Quia Emptores (1290) Prevented further sub-infeudation to avoid further economic disruptions.
The base of the pyramid is halted. If the lowest lord wants to profit on his land he now has the ability to sell his
land.
The effect of Quia Emptores was to commoditize land. Land now has a market price. This raised the monetary
system. Land becomes just another means of exchange and titles can be bought by freeman (source of wealth is
different from hereditary lordship). These freeman now have to make the oath's to their overlords. These freeman
now become fee holders.
Pre 1290 - Economic term for transactions was current return. (Referred to benefits derived from a tenant like rent,
regular well being produced)
Post 1290 - Economic terms for transactions was capitalization. (Refers to the permanent portion of the property
and maximization of complete value of the property)
Result is that the entire interest of the land would go to the new owner. But what interest was the new owner
buying? Logical answer - the sum total of the interests in the land before him. (Such as occupy, utilize and sell aka
alienation)
The new party (free holders) would receive the right to hold, alienate or bequeath the property. The freedom to
transfer property was restricted because of the sovereign's granting of the land. The sovereign retained final
authority over who could transfer / purchase land and who could marry.
Key Terms:
Estate - present or future possessory interests in property. There are four types of estates.
Fee Simple - Infinity
Fee Simple Absolute - complete ownership until the end of time.
Fee Simple Conditional - See Fee Tail (title only good for limited time)
Fee Tail (or fee simple conditional) - Until original grantee's lineage dies out. See notes below.
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Life Estate - for the life of the grantee
Terms of Years - fixed period measure in years, months, days or a certain date.
Freehold Estates - refers to fee simple, fee tail and life estates. Only freehold estates invested the holder with seisin.
Non-freehold Estates - refers to term of years estates or leaseholds.
Words of limitations - words that indicate who has the fee simple during his lifetime.
Words of purchase - words that identify the grantee
Heirs - persons who survive the decedent and are designated as intestate successors under the state's statute of
descent.
Issue - means a descendant, such a descendant can take to the exclusion of all other kindred.
Collaterals - All blood relatives to a decedent who are neither descendants nor ancestors.
Escheat - If a person dies intestate with no heirs, such persons property escheats to the state.
Devisability - the right to transfer or dispose of land after death. Also known as testamentary power.
Alienability - the right to dispose of land during one's lifetime. Also known as a power to alienate.
Incidents - duties and liabilities, in addition to services, owed by a tenant to his lord. Continuous exercise of control
by a sovereign over a lord's family and / or wealth.
Subinfeudation - the granting of a parcel of land to a subtenant in exchange for the service of a knight or some other
necessity.
Seisin - a particular kind of possession with particular consequences. A freeholder of an estate had seisin, which is
ownership by diff. name
Livery of Seisin - Prior to 1536, a freehold estate could be created or transferred only by a ceremony. In this
ceremony, known as the livery of seisin, a symbolic act of transfer was used because most people were illiterate.
There could not be any moment in time when the sovereign could not identify who had interest in the land.
Heritability - at the beginning of the Norman conquest, estate's were granted only for the lifetime of the tenant. No
system was in place for the tenant's heirs to be conferred their father's land. However within a few decades it
became expected that an heir would be given the option to retain their father's lands for a fee and an oath of fealty.
After several hundred years, land was granted in a fee simple to an heir and they heir only had to pay a fee upon
inheriting.
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The Fee Simple - "to A …" & A fee simple absolute owner "to A and his heirs.." has complete ownership over the
property until the end of time. A fee simple owner can enjoy the property, transfer it away by sale or gift during his
life, or devise it (by will) at his death. If he dies without a will, the estate goes to his heirs who would be designated
in a statute called an Intestacy Statute. A fee simple absolute owner had present occupation, alienability and would
go forever in time.
Fee Simple Absolute - A fee simple that cannot be divested nor will it end if any event happens in the future. "to A
and his heirs…"
Fee Simple defeasible - one that may last forever or may come to an end upon the happening of an event in the
future.
Fee Simple Determinable (or on a special limitation) - a fee simple that will end automatically when an event
happens. Look for language such as "to the Hartford School Board, its successors and assigns, so long as the
premises are used for school purposes." The title or interest will revert automatically following the occurrence of
the condition. See Revertion below.
Possibility of Reverter or Revertion - applies in all fee simple determinable instances. Once the fee simple
determinable ends, the property must go to someone and this someone has possibility of reverter. This possibility
can be expressly stated in the fee simple determinable or arise by operation of law.
Fee Simple subject to a condition subsequent - a fee simple that does not automatically terminate but may be cut
short or divested at the transferor's election when a stated condition happens. Look for language such as "to the
Hartford School Board, its successors and assigns, but if the premises are not used for school purposes, the grantor
has a right to re-enter and retake the premises." Such a right to re-entry are not devisable (cannot be conveyed as
an inter vivos gift or a testamentary gift) and can only be passed by inheritance.
Difference between a fee simple and a fee tail - A fee simple owner has permanent ownership over an estate and a
fee tail a method of transferring fee simple lands that allows such fee simple land to transfer only through the
designated descendants of A.
The right of alienability in the grantee is not affected by a fee simple defeasible or a fee simple subject to a condition
subsequent. The grantee (A) can sell to B all his rights to the property (alienability) but the conditions placed upon
the property stay with the grant of property, regardless of who has the right to the fee simple absolute minus the
condition. The grantor could then exercise its right of reversion or right of entry if the sale of the rights void the
condition.
Fee Tail
The Fee Tail - is a method of transferring title to land from A to all A's lineal descendants throughout time. The
goal of fee tail is to prolong ownership of the land throughout history and restrict the rights of all descendants to sell
or transfer title to someone outside this bloodline. The enactment of a fee tail encourage people to identify lands
with the great families not with the King. Think of a fee tail as a series of life estates from one heir to another and
another and another etc.
"to A and the heirs of his body" - This language creates both the fee tail and fee simple conditional. Examples of fee
tail language - "O to A & her heirs so long as A does not die without issue." or "O to A & her heirs but if A dies
without issue to B & her heirs." Comes up frequently in future interests. Reviewed again on November 14.
Fee Simple Conditional - The original method of transferring title to an heir. Someone with a fee simple absolute
would have a fee simple conditional once he had a male heir. The Quia Emptores abolished the use of fee simple
conditionals and replaced them with fee tail.
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Fee tails will end when an indefinite failure of issue occurs - which means that even after five generations if no issue
is available, then the property will revert back to O or the original grantor.
Failure of Issue:
Rule of definite failure of issue - You can have a fee tail but you only need one generation of issue to make the fee
tail into a fee simple or into a power of appointment. This applies in only the five states that allow fee tails.
Whether the issue must survive the possessory fee tail holder depends on the state. Professor Brown
suggests that the issue occurs when the child is born and issue cannot be relinquished if the issue dies
before the future interest becomes possessory.
Indefinite failure of issue vs. Definite failure of issue - Indefinite is classic common law from England. In
American, we have a definite failure of issue whereby only one generation of issue is required to acquire a fee
simple absolute.
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ESTATES
Estate - present or future possessory interests in property. There are four types of estates. The first 3 types are
called freehold estates (their grouped together based on the rights conferred) and the last type is referred to as non-
freehold estates (leases).
• Fee Simple - Infinity
• Fee Tail (or fee simple conditional) - Until original grantee's lineage dies out
• Life Estate - for the life of the grantee
• Terms of Years - fixed period measure in years, months, days or a certain date.
DEFEASIBLE ESTATES
Devises of defeasance & defeasible estates. Fee simples that can prematurely terminate.
Of which there are two types:
Fee Simple determinable -
• Type of language - "O conveys to A and his heirs so long as Blackacre is a farm." O retains the
possibility of reverter.
Fee Simple subject to a condition subsequent - Such a fee simple gives the grantor the right to re-entry upon an
occurrence.
• Type of language - "O conveys to A and his heirs so long as Blackacre remains a farm but if it
ceases to be a farm, O may re-enter."
See, Evans v. Habnee, Supreme Court case. The court had to determine by the ambiguity of the facts of the
case whether the grantor of the land, fr. Senator Bacon of GA, intended the land as a fee simple
determinable or as a fee simple subject to a condition subsequent.
See, Mahrenholz v. County Board of School Trustees, Issue: Whether the language in the deed (provided
that "this land to be used for school purpose only; otherwise to revert to Grantors herein.") gave the grantor
or his designate a right of reentry or a possibility of reverter? Rule of Law: Fee simple determinable or a
Fee simple subject to a condition subsequent. The difference between these two terms is solely a matter of
judicial interpretation of the words of a grant. Reasoning: Court found that the Hutton's (original grantor's)
had intended to create a fee simple determinable because of their use of the language "revert" and the lack
of any language such as upon condition that or provided that, as such language who have expressed the
intent to convey a fee simple condition to a subsequent. "The language 'this land to be used for school
purposes only ' is an example of a grant which contains a limitation within the granting clause. It suggests
a limited grant, rather than a full grant subject to a condition, and thus both theoretically and linguistically,
gives rise to a fee simple determinable."
LIFE ESTATE
The language to create a life estate is "to A for life."
"To A…" are the words of purchase. "…for life." are the words of limitations.
The life estate eventually replaced the fee tail. The death of the holder of the life estate terminates the life estate.
Every life estate is followed by a future interest - either a reversion in the transferor or a remainder in a transferee.
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Typical or basic will drafting today - O gives to A for life then to B & her heirs. (Husband gives to wife for life then
to their child & her heirs.) This is the usual occurrence of a life estate.
The holder of a life estate can exclude all others from the property including any holder of a future interest. The life
estate holder keeps all income and profits from the use of the land during the life estate. Conversely, the life estate
holder is responsible for all repairs and damages to the property and any holder of future interest is immune from
any repairs or damages.
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• See, Hypo on ExxonMobil, ExxonMobil has a faulty well that pollutes the property. Property has a life
tenant and a future interest holder. Who sues for the damage and for what amount? The life tenant has a
duty to sue to protect its property and to sue for the entire claim of damages because the statute of
limitations might expire before the remainderman obtain a possessory interest in the property. Look to the
statute of limitations against the right to bring the claim? Most states allow the life tenant to sue for itself
and the future interest holder. In a few states the life tenant is not allowed to sue for the future interest
holder but the statute of limitations on the future interest holder is tolled until they come into a possessory
interest. Brown suggested this should be avoided because the ability of the future interest holder to recover
years later would be negatively affected due to lack of evidence and the possibility of the defendant being
able to pay for damages.
TERM OF YEARS
Term of Years - In a term of years, seisin remained with the grantor (opposite of life estate where seisin transferred
to the grantee.)
Determinable term of years - O gives to A for 999 years if A so long live. A’s remaining years are devisable.
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FUTURE INTERESTS
Possibility of reverter - Future interest created whenever a fee simple determinable is created out of a fee
simple absolute. Look for language such as "so long as A…."
Right of Re-entry - Future interest created in the transferor or his heirs when an estate is transferred through
a fee simple with a condition subsequent.
Condition Subsequent: To A for life, remainder to B and her heirs, but if B does not survive A,
then to C and his heirs." A condition subsequent is an event that may occur in the future and if it
occurs, the holder can be divested of their present possessory interest. Look for “but if,” or
“provided that” language.
"to A for life, then to B and her heirs, but if B does not survive A to C and his heirs." C
has a shifting executory interest and B has a vested remainder subject to divestment.
Comparison between Possibility of reverter & right of re-entry: Neither are alienable but both are devisable
and inheritable. If the reversion is ambiguous, the preference is the right of re-entry.
• Partial or Open - to A for life then to the children of A & his heirs or to the children of B
& his heirs.
Difference is that a partial has an expanding class of people which is not closed until A or
B's death. This is unlike giving to heirs because heirs are a limited. Note: In order for
this partial divestment to occur, A would have had to have a child at the time the will is
effective.
• Complete - to A for life, then to B & his heirs so long as X lives on Tremont Street.
Vested subject to divestment.
Contingent Remainder - O to A for life then to B if B is 21 and then to B & his heirs or O to A for life then
to B and his heirs if B marries C. A contingent remainder is one where either the owner is unascertained or
possession of the property is subject to a condition precedent (a contingency). In all cases, the future
interest cannot be divested until the occurrence of some future event.
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Condition Precedent - has to be met prior to or before the end of the prior possessory
estate.
• Example - "…if B is 21 to B & her heirs." or "to A for life, then to B and her
heirs if B survives A."
Rule of Destructibility of Contingent remainder
• A remainder in land is destroyed if it does not vest at or before the termination
of the preceding freehold estate.
• If O conveys to A for life, remainder to the first son of A who reaches
21, then A dies, leaving a son aged 16, the contingent remainder is
destroyed; O's reversion becomes possessory. When the son reaches 21, he
still takes nothing.
Unascertained - "to A for life, then to the heirs of B."
• At the time of divestment, B's heirs are unknown. A class that will exist but is
unknown because B's heirs are unknown until B is dead.
Contingent remainder in unborn individuals at the time the will is effective
• O to A for life then to the children of A & her heirs and at the time of the
effectiveness of the will, A has no children. Contrast this with Vested Remainder
subject to partial divestment.
• Alternative Contingent Remainders
• O to A for life then to B & his heirs if B is 21, but if B is not 21, then to C & her
heirs. B & C have contingent remainders.
• Note: Distinguishing between vested and contingent interests becomes critical with regard to
future interests in third parties. Both remainders require the end of the prior estate and some
occurrence prior to transfer.
Executory Interest - A future interest in a transferee that must, in order to become possessory, 1) divest or
cut short some interest in another transferee (shifting) or 2) divest the transferor in the future (springing).
Think of condition subsequent.
Condition Subsequent: "To A for life, remainder to B and her heirs, but if B does not
survive A, then to C and his heirs." A condition subsequent is an event that may occur in the
future and if it occurs, the holder can be divested of their present possessory interest.
• "to A for life, then to B and her heirs, but if B does not survive A to C and his
heirs." C has a shifting executory interest and B has a vested remainder subject
to divestment.
• "O conveys to Hartford School Board, its successors and assigns, but if the
premises are not used for school purposes during the next 20 years, to B and her
heirs." The School Board has a fee simple subject to an executory interest that
will automatically divest the Board's fee simple if the condition happens. The
divestment is not optionally like a right of entry but automatic like a reversion.
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• Springing Interests - A freehold created to commence in
future.
• O to A when A marries B
• O transfers Blackacre to B to take effect if and when B agrees to farm
Blackacre. O has a fee simple subject to an executory limitation. B has a
springing executory interests.
• O to A for life, then when B is 21, to B & his heirs.
Trusts - an entity created to hold assets for the benefit of certain persons or entities, with a trustee managing
the trust (and often holding title on behalf of the trust). Purpose is to allow settlers to arrange their assets in
ways that maximize flexibility in property management as well as transfer wealth to future generations.
• Key distinction in a trust is the division between legal and equitable interests: The trustee
holds legal title to the property and manages the property for the beneficiaries of the trust. The
trustee has the right or buy property and invest the proceeds and its only duty to is to pay out net
income to the beneficiaries. When the trust expires, the beneficiaries retain the assets of the trust.
The beneficiaries are said to hold equitable interests or interests enforceable by courts of equity.
See In re Totten.
Statute of Uses – 1536. Recognized Uses (trust relationships and executory interests).
Raising a Use
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• If the person who receives the remainder via conveyance or devisance is the same person who would have
received the remainder had the property been transferred under the statute of intestancy, then the property
would transfer as though it was inherited.
• See, Estate of Annie Kern for example and info on anti-lapse statutes.
• Doctrine of Worthier Title does not apply to inter vivos gifts
Summary:
In Identifying future interests, you first must consider:
a. If it is reversionary or nonreversionary;
b. Then identify what type of interests;
c. Then what vesting category it belongs to;
d. Finally, what type of possessory estate the future interest will result in:
In classifying future interests after a life estate, you can bet on this rule: If the first future interest created is a
contingent remainder in fee simple (see 1st Example above), the second future interest in a transferee will also be a
contingent remainder. If the first future interest created is a vested remainder in fee simple (see 2nd example
above) the second future interest in a transferee will be a divesting executory interest.
When analyzing a future interest problem, read up to a comma, determine what future interest has been created, then
to the next comma and repeat. The order of the interests is essential to determining the relationship between future
interest holders.
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CONCURRENT INTERESTS
Legal vs. Possessory Concurrent ownership - Two or more parties have legal title to the property only have physical
possession of a divided portion of the property.
Severances
A severance is destruction of anyone of the four unities of joint tenancy. The effect is to destroy the joint tenancy
between the party responsible for the severance and its relationship to any other joint tenancy. Between this party
and the other joint tenants the interests is now as tenants in common. If there are more than 2 joint tenants, the
concurrent ownership interests of those joint tenants not responsible for severing the joint tenancy will remain as
joint tenants.
• Tenants in Common – Cannot be severed because it is the lowest level of concurrent ownership.
• Joint Tenants – Either party can sever the joint tenancy by destroying any of the four unities.
• Tenancy by Entirety – Severance requires the consent of both husband and wife.
Lien Theory states and Title Series states and Severance
• Title Theory - In title theory states, a mortgage is a grant on the property subject to a condition subsequent.
Such a mortgage severs a joint tenancy by destroying the four unities making the property held as tenants in
common.
In eastern states, the mortgaging of real estate requires the transferring of title. The mortgagee holds the
title until the satisfaction of the condition subsequent.
• Lien Theory - In lien theory states, a mortgage is a grant on the property subject to a condition precedent.
Popular in mid-western states where lots of farms are located. The mortgagee (lender of money) has to go to
court to acquire title to the property. A joint tenancy is not severed until the mortgagee is deemed the title
holder to the property.
Partition
A partition is the separation of the property according to the interests of the concurrent owners. Both tenants in
common or joint tenants may seek a partition of the property. Tenants by the entirety can only seek a severance
jointly or if the parties divorce. There are two types of partitions:
• Partition in kind – Property is physically divided according to each tenants interests. See, Delfino v. Vealencis
• Partition by sale – Property is sold and the proceeds of the sale are divided according to each tenants interests.
See, Delfino v. Vealencis
Right of Survivorship
• Full – Joint tenants and tenancy by entirety. The interests in the property ceases to exist at death
and is not inheritable.
• None – Tenants in common. The interest in the divided share of the property is fully devisable.
TENANTS IN COMMON
Tenants in common: Have separate but undivided interests in the property. The interest of each is descendible and
may be converted by deed or will. Ex. T devises Blackacre to A and B. A and B are tenants in common and A or B
can convey or devise their interest in Blackacre to another. Each tenant in common owns an undivided share of the
whole.
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Presumptions in US: The presumption in the US is for the creation of tenants in common rather than joint tenancy
when the terms are ambiguous.
JOINT TENANCY
Joint Tenants: Joint tenants are regarded as a single owner of property instead of two people with an undivided
share. If one of the joint tenants dies, no new interest in the property is created and the estate simply continues as
before with one less joint tenant. Each joint tenant was considered to be equal in all respects. 4 unities are essential
to a joint tenancy - time, title, interest and possession. See below for definitions. Note that if any of the four unities
are absent either at the creation of the joint tenancy or at any time during the joint tenancy, then the concurrent
interests becomes a tenancy in common. If any party to a joint tenancy conveys their interest to another, the joint
tenancy is dissolved and a tenancy in common exists but only for the party who severs the tenancy. A joint tenancy
will not arise as a matter of law. The intent must be demonstrated in the language of transfer to create a joint
tenancy. If no intent, the law will create tenants in common. The proper language in an instrument for a joint
tenancy is "as joint tenants with rights of survivorship."
Time: The interest of each joint tenant must be acquired or vest at the same time.
Title: All joint tenants must acquire title by the same instrument or by a joint adverse possession. A joint
tenancy can never arise by intestate succession or other act of law.
Interest: All must have equal undivided shares and identical interests measured by duration.
Possession: Each must have a right to possession of the whole. After a joint tenancy is created, however,
one joint tenant can voluntarily give exclusive possession to the other joint tenant.
A joint tenant does not have a right of inheritance unless they are the last surviving joint tenant. Right of
Survivorship.
Tenants in Common
A general rule for the sharing of benefits between cotenants is that "a cotenant in possession is not liable to his
cotenants for the value of his use and occupation of the property." Tenants in common each have an equal right to
occupation of the property and "unless the cotenant in actual possession denies to the other the right to enter, or
agrees to pay rent, nothing can be claimed for such occupation." See, Spiller v. Mackereth.
Joint Tenants
"It is a general rule that the act of one joint tenant without express or implied authority from or the consent of his
cotenant cannot bind or prejudicially affect the rights of the latter." "…a lease to all of the joint property by one
joint tenant is not a nullity but is a valid and supportable contract in so far as the interest of the lessor in the joint
property is concerned." The joint tenant or lessee in possession has all the rights of the joint tenant but not exclusive
rights to the property. See, Swartzbaugh v. Sampson.
MARITAL INTERESTS
TENANCY BY ENTIRETY
Limited to only a husband and wife and all four unities of joint tenancy. "Neither husband nor wife, acting alone,
has the right to judicial partition of property held as tenants by entirety." Contrast this with joint tenants who have
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the unilateral power to terminate the joint tenancy. Tenancy by entirety is used in a minority of states. Tenancy by
the entirety allows for a right of survivorship.
Curtesy
Male equivalent of a dowery. Abolished well before dowery.
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LAND TRANSACTIONS
General Notes:
Contract and Property law overlap in this area of law. The controlling law will make a difference in outcomes.
BROKERS
A Broker is the same thing as a real estate agent. In some states, a broker can perform the same services as an
attorney.
Traditionally, sellers were the only party that used a broker but the modern trend is for buyers and sellers to have a
broker. Most states will presume that the broker works for the benefit of the seller unless expressly stated otherwise
in the contract.
• General Listing - No express agreement between seller and broker. Dangerous to use because the seller has
the burden placed upon him to determine which broker is entitled to the commission. Broker can argue that
they brought a ready, willing and able buyer to the broker which the seller denied
Broker’s Commission
A real estate broker, under a brokerage agreement, is entitled to a commission from the seller only if: "When a
broker is engaged by an owner of property to find a purchaser for it, the broker earns his commission when (a) he
produces a purchaser ready, willing and able to buy on the terms fixed by the owner, (b) the purchaser enters into a
binding contract with the owner to do so, and c) the purchaser completes the transaction by closing the title in
accordance with the provisions of the contract. If the contract is not consummated because of lack of financial
ability of the buyer to perform or because of any other default of his…there is no right to commission against the
seller. On the other hand, if the failure of completion of the contract results from the wrongful act or
interference of the seller, the broker's claim is valid and must be paid." From Tristan v. Wait.
Offer to Purchase
The Offer to Purchase is an offer, which is held open by an option contract, from the potential buyer to seller.
Typically prepared by the seller's broker and is a standard form with blank spaces left for the parties to fill in the
terms particular to this sale. Document benefits the broker and can hurt both buyer and seller who may not be aware
that their signatures can bind them to a contract. Offer to purchase contains terms that satisfy the statute of frauds.
See copy of offer to purchase from Supplemental.
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Contract to convey a deed (good, clear, record or marketable are possible descriptions of the title). Once the
purchase and sales agreement is signed, the executory interval begins and lasts until the closing where the deed is
conveyed. The Purchase and Sale agreement merges with the deed at the time of closing. See copy of purchase and
sale agreement from Supplemental.
The time for the buyer to complain about the marketability or any problems with the house should be done after the
purchase and sale agreement is signed until the closing and the delivery of the deed (period is known as the
executory interval). Once the deed is delivered, the sellers' liability for the condition of the property or the deed is
limited.
• Clear (title) - holding ownership of real property without any claims by others on the owner's title
and no history of past claims which might affect the ownership.
• Record - Usually a deed with the history of the property is required to be record. An adverse
possessor is unlikely to have such a deed.
• Marketable - 2 definitions available before and in the Lohmeyer case. Brown uses the definition
from the Lohmeyer case - see case brief. Free from reasonable doubt as to who owns the land. Marketability is
a standard of reason after being apprised of all the facts, apart from price. See section below on marketable
title.
• Title - n. 1) ownership of real property or personal property, which stands against the right of
anyone else to claim the property. In real property, title is evidenced by a deed, judgment of distribution from an
estate or other appropriate document recorded in the public records of the county. Title to personal property is
generally shown by possession, particularly when no proof or strong evidence exists showing that the property
belongs to another or that it has been stolen or known to be lost by another. In the case of automobiles and other
vehicles, title is registered with the state's Department of Motor Vehicles, which issues a title document ("pink
slip") to the owner.
• Property - Deed and mortgage. The deed is where the contract ends and traditional property law comes in.
The deed is the record of the land transfer. Relevant terms are grantor and grantee. The mortgage is the method
of payment. Relevant terms are mortgagor and mortgagee.
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Marketable Title
Definition: Marketable title is a title not subject to such reasonable doubt as would create a just apprehension of its
validity in the mind of a reasonable, prudent and intelligent person, one which such persons, guided by competent
legal advice, would be willing to take and for which they would be willing to pay fair value.
"A marketable title to real estate is one which is free from reasonable doubt, and a title is doubtful and unmarketable
if it exposes the party holding it to the hazard of litigation. To render the title to real estate unmarketable, the defect
of which the purchaser complains must be of a substantial character and one from which he may suffer injury. Mere
immaterial defects which do not diminish in quantity, quality or value the property contracted for, constitute no
ground upon which the purchaser may reject the title (walk away from purchase and sale agreement). Facts must be
known at the time which would fairly raise a reasonable doubt as to title; a mere possibility or conjecture that such a
state of facts may be developed at some future time is not sufficient." – See, Lohmeyer v. Bower case.
Title Insurance
Purpose: Protects the buyer and lender by having the insurance company pay, up to total purchase price, for any
defects. However, the title insurance does not give good title because the title insurance cannot replace the defect,
the defect remains. Additional risk is that the title insurance company will stay afloat due to a history of crashes in
the business.
Equitable Conversion
Equitable conversion occurs during the executory interval (period between the signing of the purchase & sale
contract and the closing).
Defined: If there is a specifically enforceable contract for the sale of land, equity regards as done that which ought to
be done. The buyer is viewed in equity as the owner from the date of the contract (equitable title); the seller has a
claim for money secured by a vendor's lien on the land. Seller holds legal title to the property for the buyer.
Buyer – equitable title in property, legal title in money.
Seller – equitable title in money, legal title in property.
The interests are being converted and the equity is the specific performance of each party.
Risk of Loss
Most courts follow the theory of equitable conversion and find the buyer to bear the risk of loss from the date of the
purchase and sale agreement. However, some courts hold that seller is liable until the legal title (compared to the
equitable title) is transferred. In Mass, the degree of loss is determinative of which party bears the risk. A significant
loss is one that substantially effects a central consideration and is not limited to the physical damage. For example if
the loss is significant and the property was material to the contract, then the seller bears the risk of loss. If the loss
was minimal, either the buyer bears the risk or the cost of repairs is taken out of the purchase price. Equitable
conversion is Mass occurs at the closing not when the purchase and sale agreement is signed. Insurance can also be
incorporated into the contract or carried by either buyer or seller to manage the risk of loss.
Review the Purchase and Sale Agreement from Supplemental. Sec. 3, 4, 9, 12, 21, 26.
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What does a seller have to disclose? Latent conditions that materially effect the physical conditions of the house
(opposed to apparent) - a reasonable person would not readily be able to identify these problems. If a buyer or a
buyer's inspector could reasonably identify these conditions, the seller is unlikely to have a duty to disclose. Each
state places a different burden on the seller / seller’s broker on what needs to be disclosed. Sellers could have a duty
to disclose information ranging from latent defects in the house, to the criminal background of the neighbors or the
prior owners.
In each jurisdiction requiring disclosure, the defect must be material to be actionable. One of two tests of materiality
is applied: (1) An objective test of whether a reasonable person would attach importance to it in deciding to buy or
(2) a subjective test of whether the defect affects the value or desirability of the property to the buyer.
See the Purchase and Sale Agreement from Supplemental for specific provisions in the contract to disclose.
Does the seller have a duty to disclose? (1) Is the seller responsible for the condition? (2) Buyer could not
notice the condition (3) Would the seller have a duty to disclose this info?
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DEEDS
A Deed is a method of property transfer that must be in writing to satisfy the Statute of Frauds, and must contain (a)
the grantor’s name, (b) the grantee’s name, (c) words that indicate an intent to convey the property or an interest in
the property (the “words of grant”), (d) a description or identification of the property, (e) the interest being
transferred (though a fee simple will be assumed unless the deed stipulates a lesser interest), and (f) the grantor’s
signature. Sample copy of deed in the book.
Warranties of Title
Modern statutes have shortened the deed to real property from its long and verbose ancestors. A short form of deed
contains all of the following required elements for a conveyance: grantor, grantee, words of grant, description of the
land involved, signature of the grantor, and sometimes, attestation or acknowledgment.
Three types of deeds are currently in use in the US. These are forms of title assurance (opposed to title insurance).
These deeds relate only to the legal interests of the property and do not relate to the physical condition of the
property. Any of these warranties can have exceptions written into them.
o General Warranty Deed - warrants title against all defects in title, whether they arose before or after the
grantor took title.
• The promises of the deeds are only as good as the resources of the grantor.
• One does not give a general warranty deed unless they have to. Texas and New Hampshire
require it but a majority of states do not.
o Special Warranty Deed (referred to in Mass as a quitclaim deed) - contains warranties against the grantor's
own acts but not the acts of others. Grantor only gives warranty that he did not alter the title he received.
Grantor gives no warranty on the title he received.
o Quitclaim Deed (referred to in Mass as a release/fiduciary deed) - contains no warranties and merely
conveys whatever title the grantor has (if any) and the grantee cannot sue a grantor if the grantor has no title.
Frequently appears between family members, boundary disputes and when trustees sell property.
Covenants
Express Warranties included in a deed. Two types – Present and Future.
Present - A present covenant is broken, if ever, at the time the deed is delivered. These covenants only benefit the
immediate grantee. Any of the conditions giving rise to the claim must (almost always) be recorded in the land
records.
Seisen - warranty that the grantor owns the interest they are conveying.
o Measure of Damages – Return all or a portion of the purchase price.
Right to convey - warranty that the grantor can convey the interest that own
Measure of Damages
Warranty against encumbrances - No encumbrances such as mortgages, liens, easements etc other than
those mentioned in the deed.
Measure of Damages - If the encumbrance is easily removed (mortgage) the measure of damages
is the cost of removal. If the encumbrance is not easily removable (restrictive covenant or
easement), the measure of damages is the difference in value between the land with the
encumbrance and without the encumbrance. In all cases damages are limited by the total price
received by the warrantor.
Future - A future covenant promises that the grantor will do some future act. These are valid until the statute of
limitations run out. These covenants run with the land through subsequent owners.
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Warranty - grantor covenants to defend against and compensate the grantee for any lawful claims made
against the title.
Measure of Damages
Quiet enjoyment - almost identical to covenant of warranty and means that no one with superior title will
interfere with the grantee's possession. "until such time as one holding paramount title interferes with plaintiffs
right of possession, there can be no constructive eviction and, therefore, no breach of the covenant of quiet
enjoyment." Brown v. Lober
Measure of Damages - damages are measured by the value of the property lost (rather than the
portion of property) and the $ value is a measure of current value and is not constrained by the
purchase price. This is allowed because the covenant of quiet enjoyment is a future covenant so
the breach of the covenant of quiet enjoyment can occur many years after the covenant was made.
Further Assurances - requires the grantor to defend the grantee's title in any ensuing litigation and to
execute any document needed to cure a defect or possible defect in the conveyancing document.
Measure of Damages
Deeds in Massachusetts
Language from Mass Statutes. What is being granted in these phrases? Each phrase is short form for a series of
covenants.
• I grant with warranty covenants - Warranty Deed - See Mass Gen Laws ch. 183 Sect. 10
• I grant with special warranty covenants - Quitclaim Deed - See Mass Gen Laws ch. 183 Sect. 11
Whether an alleged latent violation of a land use statute or regulation, existing on the land at the time title is
conveyed but is not recorded in the land records, constitutes an encumbrance such that the conveyance breaches the
grantor's covenant against encumbrances? No. The concept of encumbrances cannot be expanded to include latent
conditions on property that are in violation of statutes or government regulations unless those violations have been
recorded in the land records. Frimberger v. Anzellotti. However, Brown noted that this is the traditional view and
courts are expanding the possible locations other than the registry of deeds where a violation can be recorded which
could result in a breach of the covenant against encumbrances.
Whether the covenant of seizin runs with the land or whether the covenant of seizin is a warranty only to the grantee
of the property? In a minority of states, the covenant of seizin runs with the property and a breach of the covenant
by the grantor creates an action that can be carried to subsequent owners so long as the statute of limitations has not
expired. Rockafellor v. Gray
Chose in Action:
A chose in action is a right by subsequent grantee's that assigns the same rights as the original grantee towards a
breach of a present covenant. A chose in action is the right to bring the claim based upon the interest (right to
action, promise, covenant) that is transferred. Covenants are chose in action that satisfy the requirements of seisin
because a deed is the equivalent of physical possession.
The deed has replaced the historical livery of seisin requirement that a grantor needed to have physical possession of
the property.
Does a quitclaim deed in the chain of title destroy the ability of subsequent grantee’s to recovery for future
covenants against grantor’s prior to the quitclaim deed? A quitclaim deed within a chain of deed does not cut off
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the future covenants from a prior general warranty deed. The quitclaim protects its grantor but does not affect the
covenants made by prior or future deeds.
The original grantee cannot sue the original grantor until the subsequent grantee sues the original grantee.
An escrow agent is not a seller’s agent so delivery to an escrow agent satisfies the delivery requirement for deed
transactions. Such a gift is irrevocable at death.
• Delivery good and condition enforced - A grantor or grantee can hold the deed in escrow and the
deed is conveyed only when the condition is satisfied. Legal delivery occurs at the moment the condition is
satisfied even though the physical delivery occurred prior.
Deed Descriptions
The language use to describe the parcel of land must give closure to the property.
Options for Deed Description - Attach a plan of the lot, refer to previous deed descriptions, verbal descriptions
(METES & Bounds - what property or landmark does this property abut, what is the distance between landmarks) or
(Courses & Distances - How far in one direction, then turn what direction etc.)
The use of a landmark such as a tree or a river, to which point of the landmark does the property run to? To the
banks of the river or to the center of the river? To the street or to the middle of the street? Look to the language and
each statute's case law defining each term.
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MORTGAGES
Mortgages as two instruments: 1) a promise to pay - promissory note and 2) a security device - the mortgage itself.
The mortgagor's interest in the property is known as equity which is short for equity of redemption. In most states it
is the mortgage that looks like a deed and it is recorded in the registry of deeds.
Promissory Notes:
A promissory note should contain the following terms: term, interest rate, amortization (systematic reduction in the
principal amount of the loan over its term), conditions for prepayment of the loan.
Mortgage Document:
A mortgage should contain the following terms: description of the property, mortgagor’s obligations regarding the
property (taxes, insurance etc), default provisions, mortgagee’s remedies, due on sale clauses (balance of loan due
upon sale).
• Assume and agree to pay - Will be in the deed from O1 to O2. O2, the owner of the property, assumes the
mortgage and the promissory note. This language, in a majority of states, makes the subsequent owner
personally liable for the value of the note. If a deficiency exists, O2 is personally liable. A minority of states
do not allow for the deficiency so the effect of assume and agree to pay is that of a subject to the mortgage
language.
o Deficiency - the balance between the sale price of the property at foreclosure and the value of the
promissory note.
Both of these organizations were established to create a secondary market for home mortgages.
o Fannie Mae - Federal National Mortgage Association
o Freddie Mac - Federal Home Loan Mortgage Corporation
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There are two types of foreclosures: A strict foreclosure and a deed of trust (power of sale)/
• Strict Foreclosure: Strict foreclosure is a judicial proceeding whereby the mortgagor is ordered to pay off the
mortgagee within a given period or be forever barred. The end result of this is a foreclosure sale where the
property is sold and the mortgagee(s) are paid off first and any proceedings go to the mortgagor. Mortgagor's
have also been given a statutory right of protection from a foreclosure purchaser by extending the time period
within which a mortgagor can pay back the debt.
• Deed of Trust or Power of Sale: The borrower conveys title to the land to a person (who is usually a third
person but may be the lender) to hold in trust to secure payment of the debt to the lender. The trustee is given
the power to sell the land without going to court if the borrower defaults. A deed of trust is an instrument
benefiting the mortgagee.
Measure of Damages:
The measure of damages for a mortgagee who fails to exercise due diligence is the difference between a fair price
for the property and the price obtained at the foreclosure sale.
Courts generally articulate two main standards for invalidating a foreclosure sale based on price:
• Shock the Conscience - the inadequacy must be so gross as to shock the conscience.
• Grossly Inadequate - the sale price must be grossly inadequate.
In either case, the courts infer that fraud or imposition is present in the sale of the property.
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TITLE ASSURANCES – THE RECORDING SYSTEM
The recording system is designed to record all transactions with regards to real property within a given location,
usually by county. The recording system supersedes the common law in determining legal interests in real property.
Key Terms of the Recording System are: Indexes, System Classifications, Notice, Inquiry, Instruments.
The following instruments are generally available for recording (look to the statute on recording within the state):
Deed, mortgage, lease, option, or other instrument creating or affecting an interest in land (easement or covenant), a
judgment or decree affecting title, affidavits containing statements of fact about the property.
The recording acts generally do not affect the validity of a deed or other instrument because a deed is valid and good
against the grantor upon delivery without recordation.
Under the recording acts, a subsequent bona fide purchaser is protected against prior unrecorded interests. The
recording acts refute the common law property rule of first in time, first in right.
The Indexes
Two types of recording indexes:
Tract Index: Documents are identified by a parcel identification number assigned to a particular tract. Not available
in most states, especially in the east because land was not identified by parcels. Land is divided into plats and then
subdivided into tracts.
• Difficulties with tract indexes: Impossible to search by grantor or grantee because the system is limited to
tracts alone, tracts can be subdivided and transferred in portions that do not correspond to the original tract
designation resulting in great confusion increasing over time.
Grantor - Grantee Index: Documents are identified by both grantor & grantee. Two indexes are maintained, one for
the grantor and one for the grantee. The grantor index is alphabetical and chronological under grantor's surname.
The grantee index is alphabetical by the grantee's surname. These indexes can be subdivided by the type of
instrument recorded or the period of time. The grantor index will list any encumbrances on the property but the
grantee will not.
Pure Race - When two persons hold competing claims to real property, the first person to record (not the first to
receive the deed, mortgage, etc.) prevails even if he knows of a prior conveyance. No requirement of good faith.
Benefit of such a system is the certainty provided by the registration of claims. This is in a minority of states
because of the potential for fraud / abuse.
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Race-Notice - Majority of states. A subsequent bona fide purchaser or creditor who first records prevails against a
person claiming a prior, unrecorded interest as long as the subsequent purchaser did not have notice of the preceding
interest when she acquired her interest (she can know about the interest when she records the document so long as
she did not have notice when she purchased).
• Notice: defined broadly to include several forms of identification to a subsequent purchaser.
o Actual: Actual notice or knowledge by the subsequent purchaser of a prior claim.
o Constructive: AKA Record notice refers to knowledge or notice a purchaser could gain by
searching the deed records. A purchaser is presumed to have notice of all legally recorded documents.
o Inquiry: A prospective purchaser or creditor is considered to have inquiry notice when they hear or
observe something that would cause an ordinarily prudent person to inquire further. If reasonable, then
purchaser / creditor has notice.
Usually observations obtained in routine checks of the property prior to purchase such as
state of property, tenants or long-term leasee's
Purchaser / creditor is on notice for any information contained within the recorded
documents in the registry.
• Questions to Consider for Notice
o Does the property come from a common grantor?
o Whether the promise is personal to the grantor or does it run with the land?
o And are future purchasers on notice of developers promise to restrict?
o And who can enforce the restriction?
o What notice is required to qualify as a bona fide purchaser?
o Do you need a uniform plan or just a common grantor?
o Do you need to examine anything outside of the recording system?
Notice or Pure Notice - A subsequent bona fide purchaser or creditor for value prevails over prior claimants as long
as the subsequent purchaser acquires the interest without notice of the prior claim.
o Notice in a pure notice statute is the same as in a race-notice (actual, constructive or inquiry).
o A purchaser can rely on the deed records as they exist on closing.
o Massachusetts is a Pure Notice statute state. Language in supp p. 117 / 813
Alternative definition of Bona Fide Purchaser: a person who buys honestly and without notice of any conflicting
claim on the property bought, whether or not the purchaser is negligent.
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Whether subsequent bona fide purchasers who acquired real property without notice of contrary claims to the
property has a greater claim than an unrecorded deed? Yes. Rule of Law: For the protection of bona fide
purchasers or creditors, an unrecorded deed is not binding unless they have notice of it even though such an
unrecorded deed would have full force against the grantor, grantee, their heirs and devisees. The absence of seisin
in the grantor is not a bar to the subsequent purchaser unless the subsequent purchaser was on notice of that
deficiency. Earle v. Fiske.
For the opposite view see Hill v. Meeker. Upon the conveyance of a deed, the grantor or his heirs no
longer holds that interest in the property and cannot grant any similar interest in the land because they are
without seisin. This case rejects the bona fide purchaser exception that was recognized in Earle v. Fiske.
When a grantee takes from the beneficiary of an estate, they take the risk of an unrecorded deed by the
grantor.
Be aware of statutory construction. Vitally important to follow the statute but not to give to the statute a meaning
that is unintended and contrary to the purposed behind the recording acts. If you don't record the instrument, you are
in danger of losing your interest.
• Notice within Registry - If chain of title determines that purchasing property is less than total property owned
by previous grantor, purchaser is on constructive notice of all covenants running with the land contained within
any deed from the common grantor to the prior, larger estate that were granted prior to subsequent purchaser.
o MA – Guilette Dry Wall: If during a chain of title search, you determine that the land your purchasing
was subdivided by a previous owner because of a cite plan of the subdivision, to satisfy notice, a
grantee must trace the grantor index for all other subdivided lots granted prior to your conveyance. A
subsequent grantee is on notice of all other subdivided lots and their covenants but not to those granted
after conveyance (this is because of privity of estate). All notice is within the registry.
• Inquiry Notice - If a subsequent purchaser is put on inquiry that the property may be part of a uniform plan or
contain easements / covenants, they are on constructive notice if such covenants were recorded, even if the
recordings are not within your chain of title (MA requirements).
o MI / NH – Sanborn v. McLean: Put to inquiry resulting in constructive notice if the easement was
recorded. In Michigan, if you are put on notice about possible restrictions on land, you must inquire
into the chain of title even if no uniform plan is found.
A subsequent purchaser can only be on constructive notice of those documents that would normally appear in the
record. Look to the statute for the types of recorded instruments.
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Deed Indexed Under Wrong Name or Wrong Initial
General rule is that the duty to ensure that its recording is correct is placed on the party placing the document in the
record and not on the subsequent purchaser / creditor nor on the officials at the registry. If you are going to have
something recorded the risk of error lies upon yourself. Possible problem with this opinion is the burden it places on
the party recording.
Stranger to the Title – a former owner of the property who has conveyed their interest within the chain of
title.
Summary of the previous cases - What is the chain of title? Its extent? Primary chain of title vs. notice outside the
chain of title. Does the jurisdiction have a narrow definition of notice vs. a broad view of notice?
Uniform Plan - A lot is uniform when the common grantor plans or declares as its purpose to restrict any particular
portion of the subdivision or lots thereon to residential or other use or includes within the common grantors deeds to
grantees specific restrictions indicating a uniformity of purpose. Was it the grantor's intention to have a covenant
run with the land? Do more lots have the restriction than don't? Is there uniformity to the grantor's use of the
restrictions? See, Buffalo Academy of the Sacred Heart v. Boehm Brothers (finding no uniform plan existed
because a majority of the deeds did not contain the same restrictions placed upon Kendall and no consistent or
uniform placement of the deed restrictions throughout other lots within the subdivision).
Reciprocity - Each subsequent lot owner shares the same rights as the common grantor in enforcing negative
covenants on land to which the common grantor had seisin to at the time of covenanting.
Inquiry Notice
Defined: Inquiry notice exists where a purchaser is in possession / knowledge of facts which would lead a
reasonable person in his position to make an investigation, which would in turn advise him of the existence of the
prior unrecorded right. Purchaser deemed on inquiry notice and therefore constructive notice even if he does not
inquire.
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Inquiry is actual when a subsequent purchaser has actual knowledge of such facts as would put a prudent man upon
inquiry, which if prosecuted with ordinary diligence, would lead to actual notice of the right or title in conflict with
that which he is about to purchase. Actual, open and visible occupation constitutes such as actual knowledge so
long as the purchaser knows of this occupation. In an inquiry notice state, once subsequent purchaser has actual
knowledge that would put a person on inquiry, they are considered to have constructive notice on all recordings.
See, Brinkman v. Jones
An occupant's possession is actual notice of his title and all persons with notice of such possession must at their peril
take notice of his full title in the premises, no difference what the record shows. See, Toland v. Corey & Galley v.
Ward
A notice of lease (term for how a lease is recorded) in the record places a subsequent purchaser on constructive
notice of the contents of the lease. See, Mr. Donut of America v. Kent.
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PRIVATE vs. PUBLIC LAND USE CONTROLS
Private – Easements and Covenants are examples of private actors placing control on land.
Public - Conditions placed upon the land by the sovereign. Public land use is a modern occurrence.
Private Land Use:
EASEMENTS
Easements permit the use of or places restrictions upon the use of a land of another.
Restatement Definition: An easement is an interest in land in the possession of another which (a) entitles the owner
of such interest to a limited use of enjoyment of the land in which the interest exists; (b) entitles him to protection as
against third persons from interference in such use or enjoyment; © is not subject to the will of the possessor of the
land; (d) is not a normal incident of the possession of any land possessed by the owner of the interest; and (e) is
capable of creation by conveyance.
Courts look to the intent of the parties in creating easements. This is a stark difference from property law such as
title recordings where the intent of the parties is not considered.
• Negative: Easements that give the holder the right to prevent the possessor of a servient estate from doing
some act on the servient estate.
Recognized Negative easements incl. - right of airflow, right to light, right to channeled
water, right to lateral support, view easements, solar easements and conservation easements.
• Remember that these types of easements do not exist unless they have been created through a deed. These
easements are not implied by law.
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the alleged dominant and servient estates; 2) that the roadway is a necessity, not a mere convenience; and
3) that the necessity existed at the time of severance of the two estates. "…the mere fact that the claimant's
land is completely surrounded by the land of another does not, of itself, give the former a way of necessity
over the land of the latter, where there is no privity of ownership." Othen v. Rosier. & Van Sandt v.
Royster.
Prior Use / Quasi Easement - Precursor to an implied easement. Implied on the basis of an apparent
and continuous (or permanent) use of a portion of the tract existing when the tract is divided.
• Prescription - Arises from the adverse use of a hostile party (adverse possession)
o Similar to Adverse Possession
o 6 elements:
Actual Use
• Affirmative easements only. No negative easements by prescription.
Open and Notorious Use
Hostile Use
Continuous and Uninterrupted Use
Exclusive Use (minority state requirement)
For the statutory period
COVENANTS
In real property, covenants can be personal or they can run with the land.
The difference between a grantor making a personal covenant not to do something vs. the grantor making a covenant
that runs with the land because he binds himself, his heirs or conveyers or devisees. Look to the language of the
conveyance to see if the grantor binds himself alone with regards to each separate covenant. Buffalo Academy.
The covenant is with the estate in land not simply in the land. The impact of this distinction is that unless a
subsequent owner has the same estate as the covenatee, the covenant cannot be enforced. Owner in fee simple
conveys property as life estate, the life estate holder is not in privity. However this distinction will not apply to
benefits that only require privity of estate or a lesser estate from the one in privity.
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A breach of a covenant results in a legal action for damages but not an equitable action. Only equitable servitudes
can be enforced through equitable relief.
Characteristics of Covenants:
All covenants that run with the land require these three elements:
• Intent to be Bound - evidenced by a writing that satisfies the Statute of Frauds.
o Any of these phrases indicates an intent for subsequent purchasers to be bound
A promisor agrees for himself, his heirs and his assigns to be bound
This covenant shall run with the land
This covenant is appurtenant to the land
• Touch and Concern (possibly abandoned by 3rd Restatement).
o The burden / servient must touch and concern the promisor's land. Horizontal and Vertical privity
required.
o The benefit / dominant must touch and concern the promisee's land. Horizontal privity required.
• Privity: Refers to privity of estate whereby the land must transfer between the promisor and promisee
(horizontal) plus a succession of estate from promisor to promisor's assignee (vertical).
o Horizontal - land must transfer between promisor and promisee. Required for burden and benefit.
Privity of estate between the original covenanting parties. Evidenced by any documented
transfer of interest that satisfies the Statute of Frauds.
o Vertical - land succeeds from promisor to promisor's assignee. Required only for burden. Benefit does
not require this.
Privity of estate between one of the covenanting parties and a successor in interest.
• All of this discussion takes place after we determine if the parties were on notice of the covenant.
See Buffalo Academy and Guilette Dry Wall.
Covenants that have been considered by courts to not run with the land
• Covenant not to compete (but they can still be enforced)
Equitable Servitudes
Similar to real covenants in that an intent to be bound and touch and concern are required but instead of privity,
equitable servitudes require notice (actual, constructive or inquiry). These tell people to not do something (negative)
or to do something (affirmative).
Brown’s Principle from Tulk on Equitable Servitudes & Covenants - Courts should not allow a technical
requirement of privity to deny standing when fairness dictates that the party seeking to enforce the covenant should
be able to. Remedy allowed is injunctions or specific performance. Damages are forbidden because the party who
is having the covenant enforced upon them is a subsequent purchaser.
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Exam taking notes:
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• Gift - (1) Did the donor intend and deliver the gift and did the donee receive
and accept the gift?
• Intent - Did the donor express his intent to give this property as a gift?
• Delivery - Was the delivery express, constructive or symbolic?
• Express - Was the property physically handed over?
• Constructive - Was there a key or other instrument handed
over to the donee?
• Symbolic - Was something symbolic of the subject matter of
the gift handed over?
• Acceptance - Is there any reason the acceptance should not be taken for
granted?
• Gift (2) Was the gift an inter vivos, causa mortis or testamentary gift?
• Inter vivos - Was the gift given during the lifetime of the donor with
the intent to permanently transfer title?
• Causa mortis - Was the gift given in apprehension of death? And death
occurred?
• Testamentary - Was the gift given after death through a will?
• Bona Fide Purchaser - Was the purchaser acting in good faith and did the seller
had void or voidable title?
• Good Faith - Did the buyer deal honestly, pay fair market value under
circumstances that appeared legit?
• Void - Did the seller to the BFP acquire mere possession from the true
owner?
• Theft - Possession was taken without the true owner
relinquishing title
• Voidable - Did the seller to the BFP acquire possession and title from
the true owner?
• Fraud or Apparent Authority (Entrustment) - Did the true
owner relinquish possession and title?
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• 3rd Party - Does the 3rd party receive a remainder or an executory interest?
• Remainder - Is the remainder vested or contingent?
• Vested - Does the possessory interest transfer immediately
upon the termination of the prior possession?
• Absolutely - Is the divestment in fee simple?
• Partial - Are the class of people in whom the
divestment is occurring limited but incomplete?
• Complete - Is the vested remainder subject to
divestment at the occurrence of something?
• Contingent - Does the possessory interest transfer only upon
the occurrence or definition of something?
• Unascertained - Is the designated future interest
holder unknown at the time of divestment?
• Condition Precedent - Does something have to occur
before divestment is realized?
• Executory Interest - Does the future interest cut short the prior
possessory’s estate?
• Shifting – Divests or cuts short some interest in prior
transferee.
• Springing – Divests the transferor in the future. Original
grantor may have a reversion that is divested by a condition
subsequent. AKA Fee simple subject to an executory
limitation.
• Rule in Shelley’s Case
• If an instrument creates a freehold in A and purports to create a
remainder in A’s heirs (or heirs of A’s body) and the estates are both
legal and equitable, the remainder becomes a fee simple (or fee tail).
• Doctrine of Worthier Title
• If a will devises to a person a freehold estate of the same quality and
quantity which such a person would have taken by descent if the
testator had died intestate, then such estate passes by descent and not by
devise.
• Concurrent Interests
• Types:
• Tenants in Common – Separate and divided shares in a common property.
• Joint Tenants – Equal and undivided shares in a common property.
• 4 unities
• Tenancy by Entirety
• 4 unities plus marriage
• Joint Bank Accounts
• Severance
• Partition
• By Sale
• In Part
• Land Transactions
• Brokers
• Fiduciary Relation
• Relationship to seller
• Contracts for Sale
• Offer to Purchase
• Purchase & Sale
• Good, clear record and Marketable Title
• Equitable Conversion
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• Risk of Loss
• Duty to Disclose Defects
• Implied Warranty of Quality
• Deeds
• Warranties of Title
• General Warranty
• Covenants
• Present
Seisen
Right to Convey
Warranty Against Encumbrances
• Future
Warranty
Right to Quiet Enjoyment
Further Assurances
• Special Warranty
• Covenants only that grantor did not alter title he received
• Quitclaim
• No warranties / covenants of any sort
• Estoppel by Deed
• Prior Grantor reacquires property
• Prior Grantor acquires seisin after conveying a deed
• Delivery of the Deed
• Intent
• Delivery
• Similar to Donative Transactions
• Deed Descriptions
• Must give closure to the property
• Mortgages
• Two Parts
• Promissory Note
• Mortgage Instrument
• Multiple Mortgagors
• 1st before 2nd, 3rd etc.
• Equity is foreclosed
• Subsequent Purchasers
• Subject to (Mortgage Only)
• Assume & Agree to pay (Mortgage + Promissory Note)
• Foreclosures
• Strict
• Power of Sale / Deed of Trust
• Mortgagee’s Duty
• Good Faith & Due Diligence
• Title Recordings
• Index
• Grantor – Grantee
• Tract Index
• Class of Recording Act
• Race
• 1st subsequent purchaser to record.
• Notice
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• 1st subsequent purchaser or creditor for value prevails over other
claimants as long as sub. Purchaser acquires without notice of prior
claim. Good faith & valuable consideration.
• Types of Notice
• Actual
• Constructive
• Inquiry
• Common Grantors
• Uniform Plan
NY – In chain of title?
MA – Within record?
NH – Inquiry into record
• Race-Notice
• 1st subsequent purchaser or creditor who first records prevails against a
person claiming a prior, unrecorded interest as long as the subsequent
purchaser did not have notice of the preceding interest when she
acquired her interest. In good faith & for valuable consideration.
• Land Use Controls
• Public
• Private
• Easements – Permits the use of or places restrictions upon the use of land of
another.
• Characteristics
• Appurtenant or In gross
• Dominant v. Servient
• Positive vs. Negative
• Creation
• Express
Grant
Reservation
• Implication
Necessity
• Prescription
Adverse Possession
• Public Trust Doctrine
• Covenants
• Burdens & Benefits
• Types
• Personal
• Running with the Land
Characteristics of Running with the Land
Intent to be bound
Touch and Concern
Privity
• Equitable Servitudes
• Requirements
• Intent to be bound
• Touch and Concern
• Notice (not privity)
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When analyzing a property problem, especially a future interest problem dealing with conditions subsequent or
precedent, read up to a comma, figure out what condition and interest is created and then read on to the next comma.
The order of the language within a grant is pivotal to the interests that are being granted.
What is the name of the reversionary interest retained by O in each of the following conveyances of land?
1. O conveys to A for life, then if B marries C, to B and her heirs as long as the land is used for
residential purposes.
a. If Before B marries C?
b. If After B marries C?
2. O conveys to A as long as A lives on the land.
3. O conveys to A for A’s life, A then conveys to B for B’s life.
4. O conveys to A for A’s life, A then conveys to B for the life of A as long as the property is used for
residential purposes.1
Essay & Multiple Choice 50/50 Emphasize on 2nd Semester and future interests.
Essay
2 questions (short & long)
Read once quickly, then again in detail
Purpose is to identify issues and the interests of all parties
Chronological organization most effective.
Provide all viable arguments as to why this person can or can not succeed on this
point.
Limit the use of black letter law or Rule Sections. Make sure you apply the rule to
the facts but you don't need to restate the rule.
Multiple Choice
Focus on the question
15-30 questions.
Notes from Exam Review - Raising a Use, Bargain & Sale on the Exam