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LANDLORD/TENANT LAW Delivery and Possession Traditional: just conveyance, pre-literate Modern: contracts are an overlay of traditional conveyance

concepts Leasehold Estate: o Life Estate o Tenancy of Estate for Years: lease for a specific period of time. o Tenancy at Will: gives the lessee the right to possession until the estate is terminated by either party o Tenancy in Sufferance: looks like a lease but without payment or documents.. A Tenant remains in possession after termination Landlord has FOUR options: Landlords Duty: o Landlord has a duty to put the lessee in possession of the premises at the beginning of the tenancy, not to interfere with quiet enjoyment, and to provide habitable premises. o 1) Delivery of Possession Actual Possession: L puts T in physical possession and no former T is holding over Legal Possession: L gives T the right to physical possession, but not necessarily actual possession English Rule: L is required to delivery actual possession as well as the implied-bylaw legal possession of property. If he doesnt, L is liable for and had a remedy against the hold over and T2 can rescind his lease. Reasoning: The L has more experience and would have better knowledge if a tenant was going to holdover Do nothing and re-let property in which the TaS stays in possession and is liable for value of occupancy. Treat the holdover as trespasser and evict. Agree to accept rent on month-to month becomes periodic tenant Enter into a new lease w/holdover. Becomes ordinary lessee with estate for years.

American Rule: L is required to deliver only legal possession. Therefore, L does not default under the lease if T1 wrongfully holds over and T2s remedy is against the holdover. Actual possession is up to the tenant. Tenants may contract around this rule by requiring landlords to deliver actual possession.

o 2) Covenant of Quiet Enjoyment Implied in every lease: Landlord guarantees that tenant will not be barred from possessing the property by paramount title holder or anyone else. Landlord guarantees that property will be livable. If property is not habitable, then tenant is constructively evicted.

o 3) Implied Warranty of Habitability -

Tenants Duties: o To pay rent o Not to damage premises, but to maintain them o Not to disturb other tenants o No illegal activities on property

BoA v. Vallely: BoA takes TD (leashold) to secure Ts obligation. Depending on continued existece of leasehold so can foreclose. But T defaults on promissory note and lease obligations. L terminates leasehold collateral is gone. Solution: when BoA documents the TD/loan, gets agreement from L saying that if T defaults on the aw, L wont terminate without giving the lender an opportunity to cure Ts arrearages (CURE AGREEMENT)

Assignment and Sublease Privity of Contract: PK is created by the lease and contains covenants that do not run with the land. Liability that extends from contractual relationship. Parties are liable to each other for any personal covenants in the lease. o Ex. Personal promises ,A promise not to sell balloons or buy all output. o *There can be multiple people in privity of contract o *All personal and real covenants. Privity of Estate: is created by legal possession of the land and is a mutual, immediate, and simultaneous interest in the title to the premises. Parties are liable for covenants that run with the land. o Arise simply from holding of property and land. L has created the estate. o Ex. Paying rent whoever has possession must pay rent to L Residential: you must trim the tree that encroaches Commercial: you must have business in this section of mall

o *Only ONE person can be in privity of estate with L AND obligated to perform real covenants even if not in the lease. SUBLEASE: a partial transfer of the unexpired term and possessory rights where sublessor retains a reversionary interest (right of reentry).

o *(L always retains reversionary interest in property b/c at end of master lease, possession goes back to L.) SUBLEASE WITH ASSUMPTION: T2 expressly assumes the leases responsibilities from T1. T2 assumes all covenants and obligations that come with that lease including CCRs and lease. Assumption creates PK between L and T2, L and T1 have PK and PE; T1 and T2 still have PK and PE.

* L becomes third-party beneficiary of the contractual promise between T1 and T2. The purpose of the assumption of Kual liability is to benefit L. L has standing to sue T1 or T2.

o T2 is liable for personal covenants, and not real covenants. (But can put PE into contract.) o INCORORATION BY REFERENCE: The parties may sweep real covenants into the master lease when only PK exists to create an artificial PE Melchor v. ROLM: Sublease, not an assignment. A covenant to arbitrate is a land use covenant (but a personal covenant if written in the lease). The court reaches right conclusion for wrong reason by mistaking sublease for an assignment. Because ROLM assumed, there is PK between Melchor and ROLM. Since right to arbitrate was written in the lease (contract), arbitration is enforceable.

ASSIGNMENT: a transfer of ALL of the lessees possessory rights and interest in the estate or of the entire remaining term. T1 may not retain any interest in the estate.

o There is indemnity for T1 from a T2 in an assignment (quasi-contractual relationship). o Partial Assignment: T1 transfers his entire estate in that portion of the land. o *L can seek rent from T1(assignor under PK) or from T2 (assignee under PE). o L is not a third-party beneficiary. His rights against the assignee are in PE. o Conditt: Could have been both but court deemed it an assignment. ASSIGNMENT WITH ASSUMPTION: T2 assumes the leases responsibilities from T1. T2 assumes all the covenants that comeswith the lease. o If T2 defaults, T1 (guarantor) can still sue T2, in addition to L being able to sue T1 and T2.

How to Distinguish between Assignments and Sublease o Reversionary Interest: At common law, transfer by T1 is sublease if T1 retains a reversionarity interest in the property. If t1 doesnt retain a reverstion, transfer is an assignment. Reversion is a period of time within the duration of the leasehold when T1 will again be entitled to possession. o Right of Re-entry Retained: T1 transfers leasehold to T2 and DOES NOT retain a reversion, but retains a right of re-entry if a covenant is breached. Typical case is where T1 transfers entire remainder of term to another (assignment), at a higher rent, with a right to reenter if rent is not paid. Common Law: Assignment (all v. less than all rule): Under CL, transfer with right of re-entry is assignment because T1 retained NO reversion. Right of re-entry is viewed as merely means of enforcing T2s contractual obligations

Modern (Rest. 2nd): Sublease Courts have held that such a transfer is a sublease. Reservation of right to re-enter is seen as a contingent reversionary interest, so transfer is a sublease even though no actual reversion is retained by T1. Intent Rule: Intent of parties determines whether transfer is asst or sublease.

o Ernst v. Conditt (Intent Based Ruling). L (P) leased property to T1 for one year who began a business but sold business and transferred remainder of lease to T2 (D). L negotiated 2-year lease w/T2 calling it a sublease and specifiying that T1 would remain liable under original lease and amendment. T2 defaulted and L sued T2. T2 claimed it was a sublease and that T1 was liable. Court determined that the parties intention was an assignment despite language of T1 remaining liable (esp. because he retained no reversionary interest). There was an express assumption by Conditt (T2) in the language of the K . 3rd Party Beneficiary: In assumption by Conditt, he makes a promise to T1 to assume liability for the benefit of LL. T2 would be promisor, T1 is promisee and LL is assignee of promisee for Spencers case purposes.

BREAKING PRIVITY (Remedies) Novation and Release/Surrender: agreement between the L and T to release each other from all obligations. Destroys PK because both have to agree to release each other from contractual obligations. L is then free to contract with another Tenant. o In a sublease, this is a new lease. All three parties consent and there is no liability for T1. Exoneration: o If L and T2alter the lease materially, T1 is exonerated from his obligations because they made changes without his knowledge or consent. (Releases T1 from liability). o If T1 consents ot changes, there is no exoneration. Finance: secondary obligor (T1) exonerated if creditor (L) materially alters Bankruptcy: if T1 files for bankruptcy, he is not responsible for T2s default. Sublease: if the terms of the K change between L and T2, then in the case of a sublease it is not only an exoneration, but also a novation because its not just an extension or modification its a whole new deal.

ADDITIONAL INFORMATION Non-assuming grantees: take property subject to any encumbrances but in the event of foreclosure, face no other personal liability. I.e, T2 could lose property if T1 defaults but would not face any liability after foreclosure. Flow of Funds: Some courts look at the flow of funds to determine whether an assignment or sublease, but this is not dispositive. o i.e. if T2 pays rent to L, could be an assignee OR an assuming sublessee. o i.e. if T2 pays rent to T1 , could be a regular sublessee OR assignee who wants tot remain anonymous.

Skimming: Assignee T2 pays to T1 and he steals the money. Solution: Joint escrow account, where L can take the $ from the account. It restricts the freedom of the Master Tenant and protects the subtenant. Recapture Clause: protects L and allows him to get the increased rental value of the property over time as it is transferred from one tenant to the next. LIFE ESTATE: Grantor gives grantee right to live on the property for her life with the remainder in fee transferred subsequently to the named remainder men. The Life Estate grantee is transferred the actual possession of the land with the common law title belonging to the remainder men. REMAINDERMEN RECEIVE TITLE AFTER DEATH OF LIFE TENANT. o Adverse Possession does not begin to run in favor of a grantee under a deed from a life tenant until the falling in of the life estate by the death of the life tenant.

FEE SIMPLE ABSOLUTE: Grantor is transferring whole bundle of rights with no limitations on ownership.

SALE OF PROPERTY
A. ORDER a. Parties enter into Contract of sale b. Seller promises to deliver marketable title at the passage of deed. c. Enter into Escrow. d. Conditions of Escrow are satisfied. e. Deed passes, causes a merger, extinguishes obligation under the K of sale. B. CONTRACT OF SALE a. EQUITABLE CONVERSION: Once the contract of sale is signed, the property belongs to the buyer in equity and he holds equitable title. The seller holds legal title as trustee for the buyer. i. Since the buyer is the owner, he is taking on the risk of the property and will be responsible for any damages before delivery but may compel specific performance from the seller. The Uniform Vendor/Purchaser Act places the burden of loss on the vendor to cure the risk. b. MERGER: once the deed is delivered (taken out of escrow, and payment is made), the buyer is deemed satisfied with the contract of sale and it merges into the deed, which supersedes any earlier document. i. Buyer cannot sue the seller on promises contained in the contract of sale and can only sue on the warranties contained in the deed. ii. Ex: K calls for marketable title, and buyer accepts deed with no warranties. Buyer cannot sue seller for title defect on that K provision. c. TIME IS OF THE ESSENCE CLAUSE: This is included in every deed and compels performance. The deal will close after a certain date. i. Buyer says, Get it done or the deals off, or you can compenstate me for the time lose. C. DEEDS

a. DEED: final act of the parties issued after escrow conditions precedent as been satisfied and expressing the terms of their agreement. b. QUITCLAIM: The seller warrants nothing and is selling the property as is, regardless of problems. c. SPECIAL WARRANTY: The seller warrants against defects of his own making only and not the acts of others. i. If there is a defect because of the conveyance from sellers grantor to the seller, the seller may be liable because he was a party to the transaction. d. GENERAL WARRANTY: The seller warrants against all defects in title and guarantees perfect title, whether they arose before or after the grantor took title. e. CARVE OUT: An explicit statement in the deed stating the grantor will give a deed subject to certain encumbrances to protect himself from liability under both present and future covenants. f. WARRANTIES OF TITLE/COVENANTS: i. Warranties are personal covenants. A title defect could trigger warranty liability. ii. PRESENT COVENANTS: Must be breached upon conveyance to trigger a cause of action. 1. Covenant of Seisin: the seller warrants that he owns the estate he is going to convey. 2. Right to Convey: the seller warrants that he is actually allowed to convey the property. 3. Covenant Against Encumbrances: The grantor warrants that the land is not encumbered by liens, mortgages, easements or covenants. 4. Whether the Present Covenant Runs: a. Majority View: Present covenants do not run with the land and cannot be enforced by subsequent grantees. b. Minority View (Rockafellor): A cause of action is impliedly assigned by the original grantee to a subsequent grantee. c. Example: A conveys to B without title. Thus, B has a chose in action against A for breach of seisin. B onveys tot C. i. Majority: C cannot sue, chose not assigned to C. ii. Minority: C could sue A. iii. FUTURE COVENANTS: These are broken, if at all, in the future. Statute of limitations runs from the moment of breach. 1. General Warranty: Grantor will defend against lawful claims and compensate grantee for losses if someone asserts superior title. If the grantee wins, the grantor doesnt owe him anything. 2. Quiet Enjoyment: Grantor warrants that Grantees possession will not be disturbed by paramount title. a. Requires actual interference with grantees actual possession by someone holding superior title.

b. Brown: Brown was never in actual possession of 2/3 mineral rights so his quiet enjoyment wasnt breached. c. BREACHES OF QUIET ENJOYMENT i. Actual Eviction: If T is evicted due to paramount title, the obligation to pay is terminated. ii. Constructive Eviction: If L allows premises to become and remain uninhabitable without correcting the interference in a reasonable amount of time, T must actually move out to terminate the lease. 3. Further Assurances: Grantor will execute any documents necessary for perfecting title. (Includes recording a prior conveyance if it will allow grantee to have perfect title.) 4. Implied Warranty of Habitability: (CA) if premises are uninhabitable, interference with possession will result in no obligation to pay rent. iv. Breaching Covenants contained in deeds. 1. Brown v. Lober: P acquired a parcel of property from Bost under GWD. Unbeknownst to P, Bosts grantor had reserved a 2/3 interest in mineral rights. P contracted to sell the minteral rights for $6,000, but was forced to lower the price to $2,000 when buyer learned for prior reservation rights. 10-year SoL prevented Brown from using for breach of covenant of seisen and he chose to sue Bosts executor (D) for breach of covenant of quiet enjoyment. In effect, Brown claimed that the existence of the rights reservation constituted a constructive eviction. Rule: The mere existence of a superior title does NOT constitute a breach of quiet enjoyment. You need actual possession and actual interference to breach QE. In order for P to win, he should have been in the ground possessing those rights. v. Transferability of Warranty: 1. Chose in Action: Right to bring an action (sue) to recover debt, money or thing. 2. Right to Rely: Party relying on a promise of another. If reliance is to the detriment of the purchaser, the seller is responsible. 3. Estoppel: Something you say or do that influences the decisions of a 3rd party, then you are bound by that statement/action. (Estoppel by Deed below) 4. Rockafellor v. Gray: Gray held mortgage on a certain parcel which was obtained by Rockafellor. When payment smissed. Gray foreclosed on the mortgage. This resulted in attainment of the property through sheriffs deed by Connelly (D). Connelly conveyed property by GWD to Dixon. Dixon sold it to H&G by SWD. In 1920, Rockafellor sued to vacate foreclosure sale because court lacked proper jd over him because he was notified of foreclosure. H&G field cross-petition, for a judgment against Connelly in the even that Rockafellor succeeded in vacating foreclosure. H&G claimed that Connelly breached covenant of seisen when he sold property to Dixon, which he in truth never really owned. a. Majority Rule: Chose in action can only be passed as far as immediate grantee. b. Minority Rule: Chose in action can be passed to remote grantees.

c. Iowa follows minority rule so covenant of seisin runs w/the land, if it is breached, chose in action is passed by assignment to subsequent grantees. d. If Dixon conveyed to H&G through quitclaim, would H&G still have right to sue Connelly? Yes, even though QC contains no warranty, it could itself be representation of title OR rights were passed because H&G relied on GWD in record chain of title. g. FORGED/FRAUDULENT DEEDS i. Forged Deed: Innocent Grantor Forger Grantee (forges deed) BFP4V 1. GRANTOR wins because he did not put the deed in the stream of commerce and the deed never passed. BFP could have investigated. ii. Fraudulent Deed: Grantor Fraudulent Grantee BFP4V 1. BFP wins and the deed passes because the grantor was in the best position to avoid the harm by being more vigilant. D. TITLE a. MARKETABLE TITLE: A title reasonably free from doubt. Although perfect title is not required, it must be free of the unreasonable hazard of litigation (Once sale is final, marketability is not an issue.) i. Free and Clear Title: Title is perfect and there are no imperfections in the property. ii. Title Insurance can be obtained to assure the purchaser that the title contains no undisclosed encumbrances. If defect does arise, company will pay for the loss of value. b. IMPLIED MERCHANTIABILITY of TITLE: In the absence of a contrary agreement or carve-out, there is an implied undertaking in the contract that the vendor has marketable title. i. Implied even if conveying by QC deed because contract calls for conveyance of land, and the seller cannot convey land unless he has title to it. c. UNMARKETABLE TITLE: A title containing defects such as encumbrances or anything that will expose the holding party to an unreasonable hazard of litigation (threatened litigation.) UNLESS CARVED OUT. i. Defects in Title: Defect in some prior instrument that is part of chain of title. (Title describes property incorrectly, signatures are not notarized.) ii. Adverse Possession: A person claiming title by adverse possession can convey marketable title. 1. In order to prove marketable title by AP, court MUST conclude: a. Outstanding claiming (true owner) could not succeed if they made a claim b. There is no real likelihood that any claim will be asserted. d. ENCUMBRANCES: Make the title unmarketable unless the buyer waives them. i. Liens: the right to seize and resell the property to satisfy a debt or obligation. ii. Mortgage iii. Coventants/CCRs 1. Covenant: private land use covenant. No trees over 20.

2. The mere existence of a CC&R will make the property unmarketable because they vary with the property and not normally known. o Zoning Restrictions or Ordinance: The mere existence of an ordinance does not make the title unmarketable because it is easily ascertainable information. However, a violation of the restriction does render the title unmarketable. o Easements: Easement that lessens the value of the property (neighbor using servient parcels driveway), makes title unmarketable. Easement that benefits the property does not necessarily make title unmarketable. o If seller promises marketable land and it is NOT and they have NOT carved it out: Purchaser may elect to rescind prior to the date of closing of the escrow. o A waiver of en encumbrance in the contract of sale is not a waiver of a violation of the encumbrance. There can be an express waiver of all violations of the encumbrances also. ESTOPPEL BY DEED: (After Acquired Title) If a grantor conveys title to a grantee and subsequently acquires said title, he is assumed to be holding it for the grantee and is estopped from claiming it as his own. Once the grantor gets title, it automatically passes on to his grantee because they justifiably relied on his conveyance. o Presumably only valid defense with GWD because the grantor is making a representations that the grantee relies upon. o QC Deeds: Majority: QC does not impeach BFP status of a subsequent purchaser because, although the seller did not warrant anything, the deed itself was a representation that the grantor had title to give.

NEMO DATquod non habet: One cannot give that which one does not have, thus a grantor can only convey to the grantee what he originally had. o Exception: Fraudulent deed, BFP wins even though grantor was giving fraudulent deed. o Brown v. Lober: nemo dat. Bost said that he was truly giving Brown the mineral rights, but it wasnt true. Bost couldnt give what he didnt have (he only owned 1/3 rights.) Should have said I give GWD, subject to all encumbrances of record including 2/3 mineral rights. Brown never went into possession, so there was no constructive eviction or breach of quiet enjoyment because there was no way for the remote grantor to interfere with possession.

E. DELIVERY a. LEGAL DELIVERY: Delivery is satisfied when it evidences the grantors INTENT to convey title and there is ACTUAL physical delivery. i. Valid execution of deed requires a writing signed by grantor containing an adequate description of the parcel. ii. Valid delivery requires words or conduct of the grantor showing he has an intent to make the deed operative and pass interest immediately to the grantee. b. CONDITIONAL DELIVERY: is effective upon the satisfaction of a condition only if the deed is given to a neutral third party. If the conditional delivery is handed directly to the grantee, it immediately vests absolute title in the grantee and the condition evaporates. i. Provision could mean there is no delivery and deed is not effective until condition happens. (Deed is nullity b/c it has not been delivered) OR

ii. Provision means that grantor intends that deed be legally effective now, but passing only an interest that is subject to a condition precedent. iii. Sweeney v. Sweeney: M deeded property to J (Rec.) for the purpose of keeping property from Ms wife if M died first. A 2nd deed was executed, transferring property back to M (in case J died first)(Unrec). M gave both deeds to J. J gave the unrecorded deed to his alwyer, who lost it in a fire. M lived on the property and exerted full control voer it unitl death, w/o interference from J. Rule: Where a deed has been formally executed and delivered, the rebuttable presumption that grantee assented to delivery can be overcome only be evidence that no delivery was intended. 1. Court took freeze-frame approach and found intent at moment of delivery. If J died first, M would argue that 2nd deed to M was good. But J intended that delivery was on condition that J predeceased M. Conditional delivery to grantee vests absolute title in grantee. c. BLANK DEED: i. A deed missing the name of the grantee is considered a nullity until the name is filled in. (Thus, the purchaser can become a SBFP4V whenever he wishes.) (SUBSEQUENT PURCHASER) 1. If it is filled in by the grantee himself, he must have either express or implied permission from the grantor ii. A blank deed can also be seen as a conditional deed in which it becomes effective upon the satisfaction that it is signed. Therefore, if it is handed directly to the grantee the condition is void and grantee gets title immediately. (FIRST PURCHASER) F. RECORDING a. NOTE: Recordation is not necessary for a valid conveyance. A deed is valid between grantor and grantee if it is delivered. Recording just protects the buyer against subsequent purchasers. b. COMMON LAW: Whomever has a prior right to the land in the prior time will hold common law title, regardless of recordation, unless a purchaser can qualify for protection under the applicable recording act. c. RECORDING STATUTES i. RACE: Jurisdiction allows the first person that properly records to prevail regardless of knowledge. ii. NOTICE: A subsequent purchaser who does not have knowledge of any prior unrecorded conveyances will automatically prevail regardless of whether he records. If the prior conveyance is recorded, the subsequent purchaser is deemed on notice and will not prevail. iii. RACE-NOTICE: A prior unrecorded conveyance will not prevail over a subsequent bona fide purchaser for value who first records. 1. Subsequent = must be after original purchaser. 2. Bona Fide = must not have constructive or actual notice of previous purchaser. 3. Purchaser = One who take an interest in property by sale, mortgage, lien gift or other voluntary transaction creating an interest in the property. a. Doesnt include non-consensual conveyances such as judgment liens or wills)

4. For Value = in exchange for value. 5. Who First Records! d. SHELTER DOCTRINE: A subsequent purchaser may shelter under his grantors BF status, regardless of whether he is bona fide because the grantor has sold the purchaser the right to win over A. (Take from BFP = automatically a BFP). Prevents collusion/conspiracy between parties. i. Example: 1. O A (Unrec) 2. O B (BFP, Rec) 3. A Records 4. B C (Rec) 5. C prevails though C had notice of As recording. C can shelter under Bs BFP status because A had not recorded when B purchased. e. JUDGMENT AFFECTING TITLE: A subsequent purchaser (B) can invoke the statute to divest A of his prior unrecorded interest if O and B are in dispute over an IN REM action. B must record a Notice of Action before A. f. MECHANICS of RECORDING i. Copy of deed filed w/recording office. Officer records conveyance in Grantor-Grantee Index (alpha by grantor) and Grantee-Grantor Index (alpha by grantee). g. TITLE SEARCH: i. GRANTEE-GRANTOR INDEX 1. This is the first step a subsequent purchaser takes to see if title is good. He searches for Os name starting with the present date and goes backwards to find out who was Os grantor (X). 2. Once he finds the X O conveyance indexed under Os name (as grantee), the searcher does not look any further and looks backward under Xs name (as grantee) until he establishes a CHAIN OF TITLE. ii. GRANTOR-GRANTEE INDEX 1. The second step is for the subsequent prchaser to look for the root of titleholders name (X) and see whom he conveyed it out to to determine whether any previous owners conveyed any other interest in the property outside the chain of title. 2. Bs grantor (Os) name should be last on the grantee list, if it is not, the title may belong to someone else. h. NOTICE i. ACTUAL NOTICE: comes from actually knowing or being told about a prior conveyance or purchaser. I just sold this to someone else. ii. CONSTRUCTIVE NOTICE: 1. Record: Notice of a prior interest that would be revealed by an appropriate search of public records. 2. Latent/Patent Defects in Recording:

a. LATENT: A document that is not defective on its face, such as an INVALID ACKNOWLEDGMENT, is not entitled to be recorded and is deemed UNRECORDED so DOES NOT give constructive notice. i. Minority: A grantors faulty recording means that he did it was not entitled to be recorded, so it was not recorded. Thus, a subsequent purchaser would see that his grantor did not have title and is not bona fide. b. PATENT: A document that is patently defective on its face is not entitled to be recorded, is deemed UNRECORDED, and thus purchaser is actual notice that there is a problem. i. Searchers are expected to look at the deeds they are searching for and a defect on the surface of a document erases the searchers BF status. 3. Improper Indexing: a. Majority Rule: If by the mistake of a government employee, a document is improperly indexed, it DOES impart constructive notice and the error in indexing falls on the subsequent purchaser. b. Luthi Rule: If by the mistake of the recording party, a document is improperly indexed, it DOES NOT impart constructive notice to a subsequent searcher. (Recording party is in best position to avoid the harm and has duty to re-check the index. Searcher cannot avoid the problem.) 4. Invalid Acknowledgement: Messersmith v. Smith a. FACTS: C and F (Cs nephew) each owned of property. C QC her of property to F, not rec until July. In April, C entered into oil/gas lease w/ Smith (Rec in April). On its face, deed seemed notarized, but notarization was defective b/c it had been taken over the phone. i. Smith then transferred his interest to Seale (Rec in May), before Fs deed was recorded and thus would cut off Fs interest in land as Seale would be SBFP4V. F argued that since Smiths deed had defective acknowledgement, it was not really recorded. b. HOLDING: Deed between C and Smith was invalid because of latent defect, and thus Seale could not be SBFP4V because there was gap in chain of title, and thus he should have been on constructive notice not bona fide. Applying Zimmer rule. i. Under Majority Rule: Seale would not be required to investigate the accuracy of acknowledgements, unless there was a patent defect. Defective deed was recorded and in his chain of title, and there was only a latent defect, which under majority rule, does not put SP on constructive notice. 5. Incorrect Name/Misspelling a. Idem Sonans: A misspelling that sounds identical to the name being searches gives constructive notice and impeaches BFP status. (NOT a majority rule. ) i. Bears a huge burden on the title searcher when the recorder or grantee should ensure the name is spelled correctly.

b. Orr v. Byers: Because the name was material, it did NOT give constructive notice. 6. Incorrect Property Descriptions a. Mother Hubbard Clause: A deed intended to convey all of the grantors RP interest in a certain area is valid between parties to instrument but DOES NOT give constructive notice to a subsequent purchaser UNLESS he had actual knowledge of the transfer and if the property is not enumerated within. b. If the description is too general, the clause will be a nullity because 1) the SP cannot tell which property is being conveyed and 2) it may indicate there was no intent to deliver. c. Luthi v. Evans: O assigned interests in 7 oil/gas leases located in Coffey County to Tours (D) by means of Mother Hubbard instrument (did not specifically detail property being conveyed.) Later, O assigned Kufahl lease (in Coffey Co. and NOT mentioned in 1st instrument) to P. Title search did not reveal it. Rule: An instrument that describes property to be conveyed as all of grantors property in a certain county is NOT sufficiently specific as to be effective against subsequent purchasers unless that have actual knowledge of transfer. i. Land conveyed must be described w specificity. 7. Deeds from Common Grantor of Multiple Lots a. Majority: Because the burden of a collateral title search would be excessive, deeds out to other lots are not in purchasers chain of title and he should not be bound by them b. Minority: If a purchaser acquires title to a lot in a subdivision, it is HIS (purchasers) duty to check the deeds of other lots to see whether there are any ordinances or restrictions of any sort that he might be held to. i. He is deemed to be on inquiry notice he should inquire what the other lots have because his might hold the same restrictions. c. Guillette v. Daly Dry Wall: (A grantee is bound by restrictions in deeds within a subdivision form a common grantor. Bad Rule) i. Gilmore (O), owner of subdivision, conveyed one of its lots to Guilette (A). 1. O A w/ CCRs (interest in Lot D) 2. O B no CCRs (Lot D subject to) refers to plan only ii. Would have been impossible for B to know about such restrictions since restriction was only in As deed. When B decided to build multi-family dwelling, Guillete sued him based on CCRs in his deed. iii. Here, chain of title means All deeds out from a common grantor in a subdivision. Court said that B should have checked all the deeds out from O in subdivision, in spite of undue burden. If B is permitted to build apartment buildings, other neighbors in subdivison will bring suit and cause mass litigiation. (Bad Rule sicne B has to check every single deed).

iv. Guillette Could Have Avoided Problem: Declaration of Restrictions or Straw Man. 8. Break in Title: A break in the chain of title may impart constructive notice to a subsequent purchaser. 9. Wild Deed: A deed that is outside chain of title is unfindable and treated as unrecordable without a root of title. Wild Deed = Unrecorded = Gives NO Constructive Notice. a. Board of Ed v. Hughes: i. Hoerg (O) Hughes (A) QC grantee name blank (Unrec) ii. Hoerg (O) D&W (B) QC (Unrec) iii. D&W (B) Board (C) GWD (Unrec) 1. C Records Wild Deed 2. A Records fills in name 3. B records iv. Court said deed was nullity unitl grantees name was inserted and found Hughes to be a SBFP4V. v. Schechter: Hughes had CL title and C cannot successfully invoke statute b/c D&W Board was a wild deed it was not recorded. vi. Zimmer Rule: Board was nto BF because didnt search title (all prior conveyances must be recorded and D&W had not yet recorded when Board purchased.) b. Sabo v. Horvath: i. INQUIRY NOTICE: i. If a purchaser is aware of suspicious circumstances, he is deemed to know the additional facts that inquiry would uncover, whether he inquired or not. ii. Deeds from Common Grantor of Subdivision: see above. iii. Reference to a Prior Deed: If a deed references another deed, the purchaser is deemed to be on inquiry notice and must look at the prior deed to see whats in it. iv. Inquiry from Quitclaim Deed: 1. Majority: QC deed is does not give inquiry notice and purchaser is not precluded from attaining the status of an innocent purchaser. 2. Minority: Because a QC is suspicious, a subsequent purchaser must make an inquiry into the reason for its issuance. v. Inquiry from Possession: 1. If someone is living on the property, the subsequent purchaser has constructive notice of this actual possession and notice that someone else may have title. vi. Inquiry into Unrecorded Instruments: 1. If a recorded instrument refers expressly to an unrecorded instrument, the purchaser has an obligation to make inquiry into the contents of the instrument. (Like lot plan.)

j. ZIMMER RULE: A race/notice statute protects the SBFP4V who records first ONLY if all prior conveyances in his chain of title are also recorded. If you buy from someone who is not recorded you are not a BFP in chain of title may impart constructive notice to subsequent purchaser. O A (Unrec) O B (Unrec) B C (BFP4V, Recorded) OD Deed from B C is Wild Deed. It is not linked up to the root of title. Deed from O B was unrecorded. If someone did a title search, would not see O B. Therefore, the could not find B C. So C is not really recorded and cannot qualify as SBFP4V.

Anyone who buys from someone who does not have record title is NOT A BFP!

FINANCE
A. THE BASICS a. LIEN: Secures a debt by allowing the lien holder to seize and sell the property in the event of a default i. Nonconsensual: judgment liens, statutory liens, attachment liens. ii. Consensual: The debtor grants an interest. b. PROMISSORY NOTE: a document that evidences the debt that is owed. c. TRUST DEED: A document that evidences the lien that secures the property and conveys the title of RP to a Trustee who administers the trust on behalf of the beneficiary (creditor). i. PMTD: A purchase money trust deed where the debt is being used to pay for the property that is being bought. (Can be lender-held or vendor-held) ii. Leasehold Deed of Trust: Tenant wants to build on the property. iii. A creditor DOES have the option of NJF and JF d. MORTGAGE: Similar to a Trust Deed but there is NO TRUSTEE involved and there is NO OPTION of an NJF. A mortgagee must bring a judicial foreclosure. e. SECURED TRANSACTION: A transaction in which a debt is issued and secured with some type of collateral, such as real property, that serves as a source of repayment in the event of a default. The debtor grants a lien in favor of the creditor usually to lower the interest rate or risk. i. The Seller will receive a Promissory Note, the buyer takes the property and the lender takes back the security interest or Trust Deed (Note + Lien) which is held by the Trustee until the debtor repays. If the debtor defaults, the lender can foreclose on the lien, grab the assets and sell. f. UNSECURED TRANSACTION: An transaction in which a debt is issued and isnt secured with any type of collateral, thus the creditor cannot enforce any obligation to pay. g. GUARANTY: i. REAL: One persona gives a personal guaranty that another persons debt will be paid.

ii. SHAM: When one creates a corporation for the purpose of taking out a loan, and then the same person gives a guaranty on this loan, allowing a creditor to receive waivers from the debtor that would not otherwise be allowed. 1. If a guaranty is found by the court to be a sham, the waivers will be VOID. iii. COLLATERALIZED: The guarantor secures his guaranty with his own asset or RP and gives a TD to the creditor. iv. PARTERNSHIPS/CORPORATIONS: 1. General Partnerships: a. If a general partner issues a guaranty, waivers are NOT valid because of the Alter Ego/Sham Guaranty problem (Assuming they had a Gradsky waiver.) 2. Limited Liability Partnerships: a. If a limited partner issues a guaranty, any waivers are VALID and the Creditor can sue the Guarantor after an NJF (if there was a Gradsky waiver) 3. Corporations a. The Creditor can usually sue after the NJF unless there is an Sham Guaranty problem. v. RIGHTS OF THE GUARANTOR (in the event of the default) 1. Indemnification: Guarantor has the right to sue the debtor for any debt he has paid to the creditor. 2. Subrogation: If the guarantor has paid the creditor the debtors debt, the guarantor may assume the rights of the creditor against the debtor. (More secured than indemnification.) a. Guarantor pays off the creditor and steps into his shoes. Has rights of the vi. EXONERATION: 1. The terms between the creditor and debtor (primary obligor) cannot be changed without written consent of the secondary obligor (Guarantor). vii. RULE OF EXHAUSTION: A creditor must exhaust all legal actions against the debtor before the guarantor may become liable. 1. 2856 Gradsky Waiver: Allows a guarantor to waive all of his defenses and rights so that a creditor can go directly after a guarantor for the payment of a debt. a. ONLY GUARANTOR can waive 580(d) and use 2856 waiver. B. FORECLOSURES a. JUDICIAL: A court ordered foreclosure whereby the creditor must notify the debtor of the sale, the property is sold, and the court issues the creditor a deficiency judgment. i. JF allows the creditor to get a deficiency judgment on the note if the debtor is solvent. 1. Deficiency: the amount still owed on a secured debt after the judicial sale of the property fails to yield sufficient proceeds to cover the debts full amount.

2. Fair Value Rule (726(b)): When the property is sold at JF below its FMV, the deficiency judgment can only be the difference between the loan amount and the FMV, not the actual sale price. ii. JF also allows the Right of Redemption to the debtor Gives the debtor a right within one year to buy back the property at the sale price. b. NON-JUDICIAL: Creditor holds an auction or trustees sale without involvement of the court. (Debtor still must be notified or sale can be nullified.) i. NJF DOES NOT allow a Right of Redemption so the creditor CANNOT GET A DEFICIENCY JUDGMENT. c. CREDIT BIDS: i. PARTIAL CREDIT BID: The bank submits a bid on the property that does not cover the entire debt and buys back the property with the debt he collects. (Essentially paying himself back partially deficiency.) ii. FULL CREDIT BID: The bank accepts the property as payment in full of the debt to the bank and releases the debtor from further liability. (Has no claims against the debtor or guarantor.) C. ANTI-DEFICIENCY STATUTES a. 2819: Creditor has a duty not to impair the rights of the guarantor against the debtor. b. 580(d): Prevents the creditor from obtaining a deficiency judgment against the DEBTOR if he elects to NON-JUDICIALLY FORECLOSE. i. Makes up for the debtors loss of right of redemption in an NJF. ii. Creditor CAN NOT obtain a deficiency judgment against a GUARANTOR due to ESTOPPEL. 1. If a creditor elects a remedy that bars it from recovering from the debtor, they have violated their duty to the guarantor (under 2819) by impairing his right to recover and THUS are estopped from recovering from him. 2. If the guarantor subrogates the creditors rights, and steps into his shoes, he will not be able to recover anything from the debtor because the creditor chose an NJF. iii. Creditors employ a 2856 Gradsky Waiver so guarantor can waive all his defenses and rights and creditor can sue him directly, regardless of whether they JF or NJF. iv. NOTE: 580(d) is creditor specific, therefore, if a senior lienholder NJFs, a junior may still obtain a deficiency judgment. An SOJL may still sue on the note, but it is now unsecured because the security as been foreclosed by the Senior. c. 580(b): A VENDOR may not get a deficiency judgment on any PMTD, and a lender may not get a deficiency judgment on an owner occupied residential dwelling PMTD. RESIDENTIAL VENDOR No Deficiency COMMERCIAL No Deficiency*(Spangler) YES Deficiency

LENDER No Deficiency i. *SPANGLER EXCEPTION:

1. In the event a vendor sells land to a developer for a commercial development, and the vendor agrees to subordinate his lien to the subsequent construction loan, 580(b) does NOT bar recover by the SOJL of the unpaid balance of the purchase price (DEFICIENCY). a. Because: this is not a standard PMTD and the success (therefore VALUE) of the property depends on the purchaser. Value is therefore unpredictable to the vendor. ii. RULE: 580b does NOT bar refinance lenders from getting a deficiency judgment because it is a new money transaction (not a PMTD to purchase land with that money.) iii. RULE: 580b is NOT waivable by the debtor! iv. RULE: Guarantor is not protected by 580b and the creditor can get a deficiency judgment even if guarantor has not waived any defense because the creditor cannot do anything to alter the rights of the Guarantor. (He is barred from a DJ no matter which remedy he elects!) d. 726(a) ONE-FORM OF ACTION RULE: There can be only one form of action for the recovery of any debt, or enforcement of any right secured by a TD. The only action permitted is foreclosure; any other action is a violation of the rule and invokes severe sanctions. i. Action: An ordinary proceeding in court here that hinders the debtors ability to finance the lawsuit. 1. Ex. If relief is granted or there is a judgment Violation. If just a complaint is filed No Violation. A tangible impairment of the debtors rights most likely Violation. ii. A 726a violation results in forefeiture of the lien on the debtors assets. iii. Application: 1. If the bank goes after some other assets of the debtor instead of the secured property, the debtor can use 726a as an affirmative defense, forcing the bank to instead go after the security. 2. The debtor can also raise it as a SANCTION instead of defense, which would destroy the lien on the property. a. REMEMBER: The debt still exists, though now its unsecured because there is no lien. The creditor is unsecured, and will probably be hard for him to collect on the debt. iv. Can be invoked by: 1. Co-obligors or anyone whos rights are impaired by Cs election of remedies. 2. Sham Guarantor (really the debtor) 3. Regular Guarantor: Bank impaired rights by violating 726, impairs Gs rights under 2819. 4. Junior Lienholders vaults them into first place, even if debtor is silent. (Have interest in property. e. 726(C) JUNIOR INTERESTS i. A JF does NOT automatically extinguish all junior interest (liens or leases.)

ii. An NJF automatically wipes out all junior interests (leases, TDs that were made AFTER the first TD.) 1. Way To Keep A Lease After an NJF: a. SNDA Clause: Subordination Non-Disturbance Attornment Clause, states that regardless of the leases place as an interest, tenancy will NOT be disturbed if tenant is not in default. The tenant agrees to recognize the new purchaser as landlord. b. The attornment rule creates an entirely new lease, because otherwise the tenant would become month-to-month after the junior lease is destroyed.

Subordination: o Dover Rule Liens which attach after the foreclosure of the TD are extinguished. Leases can be subordinate if the lease is created after the TD was recorded. Subordination: subordinates one interest under another. Non-Disturbane: After foreclosure, terms of the lease do not change. Possession will not be disturbed so long as T continues to comply with the lease. Agree to remain as T if ownership changes and accept the new L as a L. Flip side of ND look for heirs and assigns

o SNDA Agreements: put into a lease agreement

Attornment:

**SNDA keeps a lease from being extinguished.

DOCTRINE OF RELATION BACK: When a purchaser gets property at an NJF or NJ, the TD relates back to the state of title at the date of execution. SO the purchaser does NOT take TD1 subject to the other liens on the property. The junior lienholders are assuming a risk that TD1 will foreclose. AFTER ACQUIRED TITLE DOCTRINE: Similar to Estoppel by Deed, After a JF, one cannot shed a second TD by re-acquiring the property. Once acquired by the original owner, the second TD would reattach itself.

POST MIDTERM

EASEMENTS & LICENSES


LICENSE: Permission to use the land of another (licensor). If parties fail to expressly create an easement (no writing), a license may result. Allows a licensee to enter and do something on the land that otherwise constitute a trespass. *Licenses are a contractual right, NOT an interest in land. REVOCABLE: Most licenses are revocable at the WILL of the licensor UNLESS: IRREVOCABLE: 1) LICENSE MADE IRREVOCABLE BY ESTOPPEL: License made irrevocable based on reliance. o 1) Servient owner must consent to dominant owners use of servient estate. o 2) Dominant owner (licensee) has constructed substantial improvements on the LICENSORS land relying on the license. Willard: Some courts allow irrevocable license for improvements on LICENSEES LAND.

o 3) License incudes the right to erect structures and acquire interest in the land (easement) by the construction of improvements on the land. Licensor may not revoke the license and restore his premises after the licensee erected improvements at considerable expense. o NOT an Easement: It is not a grant in a permanent easement in the land. If the improvement goes away, the license goes with it. o Duration: Irrevocable for as long as the nature of the license calss for it. o *Does NOT need to be recorded to be enforceable. 2) License that is coupled with an interest: Cannot be revoked. I.e. The right to remove a chattel of the licensee.

EASEMENT: irrevocable right to use another persons land for a specific purpose. Grant of an interest in land that entitles a person to use land possessed by another Tenements: o DOMINANT TENEMENT: Enjoys the benefit of the easements o SERVIENT TENEMENT: Has the burden of the easement (allows the dominant tenement to use easement on his land) **Easement is an interest in land, so the burden passes to subsequent owners of the servient land.

EASEMENT APPURTENANT: Easement that is tied to a dominant parcel. o Whoever owns the dominant parcel gets the benefit of the easement o It is attached to the dominant tenement and passes with the tenement to any subsequent owner. Cannot be separated from the Dom. Tenement (UNLESS owners of both tenements make a new agreement to turn it into an easement in gross.) EASEMENT IN GROSS: Easement without a dominant parcel. o Thus, only named parties get the benefit of the easement.

o Assignable only if there is the requisite intent (like licenses) o Commercial easements in gross are assignable. Type Of Easements: o AFFIRMATIVE: The owner of an affirmative easement has the right to go onto the land of another and do some act on the land (interest in the land of another) Runs with the land. o NEGATIVE: The owner of a negative easement can prevent the servient land owner from doing some act on the servient land. English CL FOUR Types of Negative Easements: Land Air Water Support

**Cannot have an easement on your own land.

CREATION OF EASEMENTS: 1) Express Grant: Recorded and covered by the statute of frauds. 2) Reservation: Grantor conveys land, reserving an easement, the land conveyed is the servient tenement. a. Ex. A conveys to B. B conveys easement to A. b. Reservation is the re-grant of a new easement, not previously existing. c. In Favor of a 3rd PARTY: i. Common Law: Easement NOT reserved in favor of 3rd party ii. Minority View: Easement may be reserved in favor of 3rd party (Willard) 3) Estoppel 4) IMPLIED EASEMENTS a. Usually easements appurtent and are not recordable. b. EASEMENTS IMPLIED BY PRIOR USE: 1. QUASI-EASEMENT: When an owner makes use of one part of his land for the benefit of another part of his land. ii. Must be in existence at the time of division. (Landlord CANNOT have easement in his own land. Quasi-easement resembles easement if tract divided into two) 5) EASEMENT BY NECESSITY a. When a party sells a parcel and he becomes the landlocking parcel, he has constructive knowledge that there will be an easement over his parcel. b. Requirements: i. Implied only over a landlocking parcel. ii. Exists when tract is severed (Othen) 1. Landlocked party must prove that no other avenue of egress is available.

iii. Must be a strict-necessity (not mere convenience) iv. Must have been unity of ownership prior to the severance. EASEMENTS IMPLIED by PRIOR USE Implied Grant: grantor grants easement to grantee of dominant tenement. (Easement implied in favor of the grantee. Grantee retains the dominant tenement. Implied Reservation: grantor reserves an easement over the servient tenement, which is sold to the grantee. Easement created in favor of the grantor. Grantee retains the servient tenement. PREREQUISITES FOR CREATION: o 1) Something like a quasi-easement owner of parcel uses one party of his property for the benefit of another part. o 2) At the moment the property is severed into two or more parcels, an easement implied by prior use is created. QUASI-EASEMENT: When an owner makes use of one part of his land for the benefit of another part of his land. o RULE: A quasi-easement ripens into an easement upon conveyance because of prior use. CL: Requires strict necessity Modern Multi-Factor Test: Prior Use Reservation or grant Necessity Know or should have known Intent of parties at moment of severance. Apparent o reasonably be found upon inspection. (doesnt necessarily mean visible sewage line, Van Sandt) o Prior use must have been known to the parties at the time of conveyance, or at least within the possibility of knowledge. o Rationale: Parties Expecations: if the property is used in a certain way, you expect it to be continued being used in that way. Landlocking: Grantor could not possibly want to sell property thereby locking the land. Continuous to prove intent. Reasonable necessity. From one grantor who splits his lot and sold a part of it

Quasi-Easement Has to be:

Conveyance:

DOCTRINE of EXTINGUISHABLE by MERGER If dominant and servient parcels go under one ownership, it extinguishes the easement. (If the property is then resplit, the easement must be recreated. It is not automatic.)

ASSIGNABILITY OF EASEMENTS Easements in Gross o An easement in gross can be assigned if it is of a commercial character (used primarily for economic benefits rather than personal satisfaction Miller) Easements Appurtenant o Since the easements pass automatically to assignee, they are assignable. DIVISION OF EASEMENTS ONE-STOCK RULE: All parties have a right of ownership to an easement must operate as ONE entity. o Use of easement cant be divided BUT whatever flows from the easement CAN be divided. o All decisions must be made with knowledge and approval of all parties. Generally easement in gross is divisble when creating instrument so indicates OR when the easement is exclusive. (Owner has sole right to engage in activity) REQUIREMENTS (For easement to be divisible): o Not contrary to the intent of the original parties. Division of an exclusive easement is usually consistnent with intent of parties than a division of a non-exlcusive easement.

o Does not place an unreasonable burden on the servient estate. Benefit of Non-Dominant Land o An easement appurtenant granted for the benefit of LOT 1 , cannot be extended by the owner of the dominant estate to be used for the benefit of LOT 2, even if the same person owns both. o If an easement is appurtenant to a particular parcel, any extension of the easemnt is a misuse of the easement. Extensions would increase the burden of the servient parcel. MINORITY RULE: If there is no increase in burden on the servient parcel, the easement can be extended.

-----------MOREMORMEOMROEMORMEOMREOMEOMEOMRE

COVENANTS Analysis:
A. What was the covenant in breach?

B. Who was the Promisor (B). C. Who was the Party ultimately in Breach (B or C) D. Who was the Promisee (A) E. Who is the party trying to enforce the covenant (A or D) a. EXAM: b. Is there a real covenant that runs with the land? c. If so, can the burdened party use the recording statute to escape? d. Can the promisee or his assignee or heir claim an Eq. Serv? e. But if it is an implied interest (not recorded/recordable), then jump to ES. f. If it is an ES as a separate right, got to ES immediately. Covenant is a PROMISE to do or not do a certain thing. TWO TYPES o Real Covenants o Equitable Servitudes DIFFERENCE: o Availiability of remedies. o Breach of Real Covenant remedy is damages in suit at law o Breach of Equitable Servitude remedy is injunction or enforcement of a consensual ien (secures promise to pay money) in a suit in equity. REAL COVENANTS: enforceable in a court of law Real covenant is a promise relating to land use. They are promises TO DO something on the land (maintain a fence), or to NOT DO something (not build commercially in residential area). One landowner obtains the right to compel another to do or not do something on second landowners land. Its an interest in real property that attaches to the estate. Must be written and it is recordable. NOTE: The 4 negative easements could all be accomplished w/negative covenants, so argue both ways. Breach results in monetary damages. CREATION: o MUST be in writing (SoF) o RC will not be implied, nor can it arise by prescription. TYPES: o Affirmative Covenant: requires performance of specified act or payment of $$. o Negative Covenant: restricts use of property. More common than affirmative. ESTATES: o Benefited Estate: estate entitled to enforce a covenant (dominant easement)

Estate that benefits OR in law suit, estate that seeks to enforce the covenant

o Burdened Estate: bound to comply with a covenant (servient easement) REMEDIES (for breach of real covenants) o In Law: if promisee wants money damages (Real Covenant got this at common law.) o In Equity: If the promisee wants an injunction or specific performance (Equitable Servitudes got this at common law.) o *Now both remedies are available for both courts have combined. SPENCERS CASE Analysis o Major Issue: Whether the burden of the covenant will run to subsequent owners of the promisors land (Burden Running) Minor Issue: Whether the benefit will run to successors of the promisees land. Relaxed need for HP and VP. Express: I intend to bind you and all heirs and assigns Implied: Only if the subject matter of the covenant is in esse (exists) at the time of covenanting. Covenant restricting land use almost always touches and concerns Trad. Rule: if covenant is to pay money personal affirmative covenant which does NOT touch and concern. Neponsit Test o 3) Privity Parties must be in horizontal and vertical privity Horizontal Privity: Original promisor and promisee must be in privity of estate. An interest in land must pass between them at the time of covenant formation or the burden will not run. Interest in land and covenant must pass simultaneously (Concurrent Conveyances) Interest in land need not be reciprocal (Easement will do) nor do covenants need to be reciprocal. Covenant must affect legal relations of the parties. Must flow from ownership Must be connected to the land

o 1) Intent for promise to run.

o 2) Touches and Concerns the Land

Vertical Privity: Assignee of promisor must succeed to promisors entire estate. Estate must be of the same nature (quantum of time, NOT size of estate.) Sublease: NO vert. priv. because estate is not of the same nature (lesser in time) Assignment: IS vert. priv. because estate of the same nature.

o Partial Assignment: only assigning part of the land. STILL vert. priv because length of time is the same (Estate = Time) EXCEPTION: Master tenant may be bound by burden of covenant if LL is promisor even though master tenant is not succeeding to entire estate.