Property II

  1. Marketable Title
    that quality of title a reasonably prudent business person would accept once he or she is advised of the facts and is fully aware of their consequences.
  2. Some factors that might render title unmarketable
    • - breaks in the chain of title,
    • - liens (e.g., mortgage, judgment, tax)
    • - easements the purchaser has not agreed to accept,
    • - encroachments by improvements on the property (e.g., fences, patios or driveways) into set-back lines or easements or over the boundary line into neighboring property, and
    • - encroachments by improvements on neighboring property into the subject property

    • Unless the contract provides otherwise,
    • the buyer bears the risk of loss
    • for damage to the property
    • occurring between the contract
    • date and the closing date,
    • provided the seller did not cause the loss.

    • Also, The “loss" to which this risk extends has been broadened in modern times to include:
    • • Physical damage to the property, and
    • • "Loss" resulting from rezoning of
    • the property for a use different from the one present when the parties contracted.
  4. Equitable Conversion: Uniform Vendor & Purchaser Act: (Followed in NC)
    • Places the ultimate risk of a material loss on the one
    • in possession, unless, prior to the loss, there has been a transfer of legal title to the one not in possession.


    • Modern Majority: Seller holds insurance proceeds in trust for buyer
    • Mass Rule: If substantial buyer can rescind; IF not substantial either can enforce
    • English View: Buyer bears the loss
    Traditional Approach
    The traditional approach is caveat emptor.

    • Seller has no affirmative duty to disclose
    • UNLESS
    • 1) there is a fiduciary relationship between the seller and buyer,
    • 2) the seller concealed a defect, or
    • 3) the seller gave partial disclosure that was incomplete.
  6. Implied Duty to Disclose Latent Defects - Modern Jurisdictions
    Seller has an implied duty to disclose to the purchaser all defects of which the seller is aware or ought to be aware and which the purchaser is not likely to discover through reasonable inspections.

    **Consider those facts that typically affect a property's value or desirability and whether the purchaser is likely to discover those facts when conducting a typical real estate inspection**
  7. Duty to Disclose Patent Defects
    No Duty to disclose a Patent Defect that can be discovered upon reasonable inspection.
  8. REMEDIES for Breach- STD
    • - Specific Performance
    • - Termination of the Contract
    • - Damages
  9. Remedy of Specific Performance
    • The one seeking the remedy must show:
    • 1) he or she has clean hands (i.e., has acted equitably in the formation and performance of the contract);

    • 2) has no adequate remedy at law (typically by showing damages would be an inadequate remedy, and by showing
    • 3) the subject matter of the breached contract is unique

    Generally, real estate is unique; has performed or is ready, willing and able to perform, all that is required of him or her under the contract.
  10. Factors that influence Courts to not award Specific Performance
    • the one having to perform is subjected to
    • extreme hardship;
    • extreme embarrassment;
    • extreme economic difficulty; or
    • is not capable of performing the task ordered by the court.
  11. Doctrine of Merger
    The duty to deliver marketable title is a contractual duty. The seller's contractual obligations ceased when Seller delivers a deed to Purchaser and Purchaser accepted it.

    **Because of the merger doctrine, once the seller closes with the buyer by delivering a deed transferring title, the seller no longer has any obligations under the contract. Therefore, after that time, the buyer may not sue the seller based on the contract. The seller's rights, if any, arise solely under the deed. The only obligations the seller will then have from the particular transaction will arise from thewarranties, if any, the seller included in the deed.**
  12. Covenant
    A promise made by the promisor to the promisee which the promisee may enforce against the promisor in court.
  13. Covenants that Run with the Land
    • - Duty to pay rent
    • - Duty to Insure Buildings on leased premises
    • - To pay taxes on leased premises
    • - option to purchase leased premises
    • - Not to sell liquor on leased premises
    • - To build a structure on leased premises
    • - Not to assign or sublease premises
    • - to supply water, light, heat on the leased premies
  14. Covenants that DO NOT run with the land
    • - Not to Compete in Business
    • - To pay promissory Note of Covenantee
    • - To pay taxes on land other than the leased premises
    • - Purely Personal Covenants
  15. Analyzing a Covenant
    • - Is there a restriction on the LAND?
    • - Is the restriction VALID?
    • - Is the offending conduct PROHIBITED?
    • - Does the offended party have the RIGHT to enforce?
    • - Do we have an offending party that we can enforce AGAINST?
    • - Does the offending party have a DEFENSE?
    • - What is the appropriate REMEDY?
  16. Covenants - 1st Factor - Restriction on the Land
    Is there acceptable evidence the parties intended there be a limitation on the use of the property by the one currently owning or possessing it, even if the one currently owning or possessing it was not the original promisor?
  17. Covenants - 2nd Factor - Is the restriction VALID?
    • Majority Jdx - Covenant must comply with Statute of Frauds
    • Minority Jdx - Does not have to comply with Statute of Frauds

    • In either Jdx - invalid if the covenant:
    • - Against Public Policy (absolute restraint on alienation, constraints on competition, unconscionable)
    • - Violates Federal/State Statutory Provision
    • - Violates Federal / State Constitution Provision
  18. Covenants - 4th Factor - Offended Parties that have the right to enforce?

    3 theories
    Original Promisee as long as he/she retains an interest in the benefited property

    • Successors IF:
    • - original parties INTENDED that the benefit would pass to a successor of the benefitted property.
    • -The promise must TOUCH & CONCERN the benefitted land the promisee owned or had a right to use at the time of the promise.
    • - PRIVITY of ESTATE must exist:
    • HORIZONTAL Privity: Exchange of property and A promise
    • VERTICAL privity - Any party that the original party transfers possession to (adverse possessors are NOT in privity

    • 3rd Party Beneficiary
    • - Under Common Scheme of Development
    • - For one other than the original promisee to be found to be a beneficiary of a restriction, at the time of the promise, the parties must have expressly or impliedly evidenced the intent for there to be a third party beneficiary.
  19. COVENANTS - 5th Factor - Can we enforce against this Offending Party?
    - unless the original covenanting parties evidence a contrary intent, the original promisor is under the burden of the restriction as long as he or she retains an interest in the burdened property.

    • Successors IF:
    • -original parties INTENDED that the benefit would pass to a successor of the benefitted property.
    • -The promise must TOUCH & CONCERN the benefitted land the promisee owned or had a right to use at the time of the promise.
    • - HORIZONTAL Privity: Exchange of property and A promise
    • - VERTICAL privity - Any party that the original party transfers possession.
    • NOTICE
    • - Actual / Constructive / Inquiry
  20. COVENANTS 6th Factor -Does the Offending party have a Defense against
    • Waiver
    • Release
    • Estoppel
    • Intent (intend for the restriction to end)
    • Impossibility
    • Frustration of Purpose (performance would not accomplish the purpose for which the original parties created the restriction)
  21. COVENANTS - Creation
    • Express
    • instrument that transfers property & contains
    • 1) the words of the promise and
    • 2) the signature of the one who is obligated by
    • the promise.

    • Implied - instrument that transfers property & contains
    • 1) words of promise
    • 2) OMITS Signature of the one who is obligated by the promise

    • Estoppel
    • based on good faith detrimental reliance on an act which the actor knew or should have known would induce the actions by the alleged promisor, that would entitle the purchaser to rely on the appearance of a covenant. (purchaser relying on a developer's representations of property/community)
  22. Recording Acts
    • Pure Notice
    • Pure Race
    • Race / Notice
  23. Recording Acts - Pure Notice Jdx
    • a subsequent purchaser of land will be protected from the claim of a prior grantee, if the subsequent purchaser acquires the land
    • (1) for value, (protects purchaser not a donee)
    • (2) in good faith
    • (3) without notice of the prior title claim
    • ***prior purchaser's failure to file deed results in the failure to put the subsequent purchaser on notice***
  24. Recording Acts - Race/Notice Jdx
    Under a race-notice statute, a subsequent purchaser of land will be protected from the claim of a prior grantee if the subsequent purchaser acquires the land

    • (1) for value, (protects purchaser not a donee)
    • (2) in good faith,
    • (3) without notice of the prior claim, and
    • (4) subsequent purchaser records his/her deed before the prior claim is recorded.

    • **if the neither party records, first in time, first in right applies!!!**
    • **taking possession of the property puts any subsequent purchasers on inquiry notice & thus is dicculty to prove that the subsequent purchaser did not/should not have known of the prior purchaser***
  25. Recording Acts - Pure Race Jdx
    NC is a Pure Race Jdx

    • Under a pure race statute, a subsequent
    • purchaser of land will be protected from the claim of a prior grantee if the subsequent purchaser
    • (1) is a purchaser for value, and
    • (2) records his/her deed before the prior claim is recorded.

    **IF NEITHER PARTY RECORDS, the first purchaser has a superior claim of title under the first-in-time principle**
  26. License - Defined
    Permits one person to come onto the land in possession of another without being a trespasser. It is not an interest in land and is revocable at the will of the licensor.
  27. Creation of Easement can be done:
    • Expressly
    • - By Grant
    • - By Reservation

    • Impliedly
    • - By Necessity
    • - Prescriptive Easement
    • - Implied by Prior Use
  28. Easement - Define
    An easement is an interest in land that gives its owner the right to enter the land of another and make a limited use thereof.
  29. Easements - Express - requirements to create
    An easement creates interests in a servient land and like all interests in land is subject to the SofF

    • THUS MUST BE In a Writing Indicative of:
    • 1) the grantor
    • 2) grantee
    • 3) servient land
    • 4) Intention to create an easement
    • 5) Signed by the grantor.

    Can be done Expressly by Deed of easement; Or during the sale of property By Grant; By Reservation
  30. Implied Easements Rule
    Implied easements arise as a matter of law and do not require the consent of the servient landowner for their creation.
  31. Implied Easement by Necessity
    • 1) prior common ownership of the dominant and servient parcels;
    • 2) severance of the common ownership; and
    • 3) AT THE TIME OF THE SERVERENCE necessity for access off landlocked land of the dominant and servient parcels
  32. Prescriptive Easement
    • BOP is on the party claiming a Prescriptive Easement
    • Use must be:
    • - Open & Notorious (easily discovered upon visual inspection)
    • - Adverse (without permission & under claim of right)
    • - Continuous & Uninterrupted (must do more than complain)
    • - for the Statutory Time (allows tacking if there is privity)
  33. Easement by Implication
    • - Unity of Title (past common ownership)
    • - Open (visible upon inspection)
    • - Continuous
    • - Reasonably Necessary for the use and enjoyment
  34. Factors for Easement Implied by Prior Use
    Must first find Common ownership, then establish that

    • (1) prior use was not merely temporary/casual, and
    • (2) continuation of the prior use was reasonably
    • necessary to enjoyment of the parcel, estate, or interest previously benefited by the use, and
    • (3) existence of the prior use was apparent or known to the parties, or
    • (4) the prior use was for underground utilities
    • serving either parcel.

    It is also possible for an easement of necessity to arise if the common owner simultaneously transfers both parcels. This might occur when the common owner dies and through his will devises one parcel to one person and the other parcel to another.
  35. Termination of an Easement

    • Presriptive Use
    • Expressly
    • Necessity ends (if easement was created by necessity)
    • Merger
  36. Lease- Rule & Requirements
    A lease involves the conveyance of an estate in land and thus is subject to the SofF.

    • To satisfy the SofF
    • -identify lessor
    • -identify lessee
    • -state the terms of the lease
    • - set forth the amount of rent
  37. Landlord Tenant Law - Tenant Duties
    • Duty to Pay Rent
    • Rent is the consideration paid by a tenant to the landlord for the use and enjoyment of the land.

    • Duty to Repair
    • The tenant is under a duty to make ordinary repairs. The landlord retains the duty to make substantial repairs, the tenant does possess a duty to report the need for such repairs to the landlord in a reasonable time. (can contract to have tenant do repairs but it will not the implied warranty of habitability)
  38. Landlord/Tenant - Duty to Pay Rent is extinguished by:
    • Rent is Extinguished/Suspended by:
    • - release by Landlord
    • - Merger (leasehold estate merges w/ Fee Simple estate)
    • - Expiration of the Lease
    • - Eminent Domain that takes the Leasehold & reversion
  39. Landlord's Duty for Dangerous Conditions
    • Generally a landlord is not liable to tenant or others entering into the leased premises for dangerous or defective conditions.
    • -exceptions
    • 1- latent defects
    • 2- where the condition is dangerous to others outside the premises (safety law)
    • 3- Defective premises used for admission to the public
    • 4- Negligent Repairs
    • 5- Failure to Repair
  40. Landlord Tenant Law - Constructive Eviction
    A material breach by the landlord which violates the tenant's implied covenant of quiet enjoyment constiutes a constructive Eviction if it renders the premises uninhabitable and the tenant quits the premises in a TIMELY fashion
  41. Landlord's Duties

    Deliver Quietly & Habitually Repair
    • - Duty of Delivery
    • - Implied Covenant of Quiet Enjoyment
    • - Warranty of Habitability
    • - Duty to Repair
  42. Landlord Tenant Law - Landlord's Duty to of Delivery
    • Duty to Deliver Possession of Premises
    • English Rule/Common law - A landlord must deliver
    • - legal right to possession
    • - actual possession

    • American Rule - A landlord must deliver
    • - legal right to possession ONLY
    • (no duty of actual delivery)
  43. Implied Covenant of Quiet Enjoyment
    • The covenant that the landlord will not interfere with tenant's quiet enjoyment.
    • This can be breached in three ways.
    • 1) Total eviction of the tenant through direct physical invasion by landlord.
    • 2) Partial eviction – when the landlord keeps the tenant off part of the leased property (even locking a single room). Tenant can stay on the remaining property without paying any rent.
    • 3) Partial eviction by someone other than landlord

    Constructive - Results from conduct or neglect by the landlord which makes the premises uninhabitable. The tenant must actually vacate the premises within a reasonable time & then cease paying rent.
  44. Landlord Duty - Implied Warranty of Habitability
    If landlord violates ,the tenant can terminate the lease and move out and sue the landlord for damages (use breach of implied warranty of habitability as a defense when the landlord attempts to collect rent).
  45. Types of Leases
    • - Term of Years (has an end date)
    • - Periodic Tenancy (continuing tenancy that will not terminate until one party gives timely notice... 30 days or a full period)
    • - Tenancy at Will (Can be terminated by either party without advance notice)
    • - Tenancy at Sufferance - a tenant in wrongful possession after the expiration of their tenancy "holds over"
  46. Assignment/Sublease Rule
    A tenant may freely transfer her leasehold interest in whole or part. If she transfers her entire remaining estate she has made an assignment. If she retains any part of her leasehold interst, the transfer is a sublease.
  47. Assignment
    • If the transfer is an assignment, the assignee stands in the shoes of the original tenant.
    • The assignee is in Privity of estate as the assignee's interest succeeds to an interest in the land of the lessor.
    • The assignee is not in privity of contract as the assignee was not a party to the contract and unless it is agreed to in the sublease has not agreed to be bound by the terms of the head lease.
  48. Conveyancing by Deed
    • - parties
    • - description of property
    • - interest in property
  49. Special Warranty Deed
    • Warranties only from the point that the seller
    • took title.

    • So the purchaser can go after the original owner
    • if there is a general warranty deed from the Original Owner to the seller.
  50. Quit Claim Deed
    No Warranty on Deed
  51. Covenants - Present & Future
    • Present Covenant
    • Suing the person that sold it to you since the seller didn’t have good title to the land

    • Future Covenant
    • Breached when someone with superior title comes onto the land to take possession
Card Set
Property II
Property II - Easements, Covenants, Equitable Conversion, Duty to Disclose Latent Defects, Recording Acts, RemediesM