QUICKSHEET – PROPERTY LAW

OWNERSHIP OF REAL PROPERTY

1) Present Possessory Estates

a) Freehold Estates
i) Fee Simple Absolute
(1) Best estate: has all possible rights that a person may have in that parcel of land
(2) Creation: “to A and his heirs” (common law); “to A” (modern law)
ii) Defeasible Estates
(1) Defeasible estate = an estate that may terminate upon some happening or event before its
maximum duration has run
(2) Fee Simple Determinable
(a) Created by: durational language (“to A for so long as liquor is not served on the
premises”)
(b) Terminates automatically on happening of a named future event, and estate returns to
grantor
(3) Fee Simple Subject to a Condition Subsequent (FSSCS)
(a) Created by: conditional language as to occurrence of a condition that will terminate estate
(i) Power of termination must be expressly reserved to grantor
(b) If language is ambiguous, courts interpret it as an attempt to create a FSSCS
(4) Fee Simple Subject to Executory Interest
(a) Created by: either conditional or durational language
(b) Termination: on happening of event that terminates estate, property passes to
someone other than grantor
iii) Fee Tail
(1) Common law: an estate that descended to grantee’s children only
(2) Modern law: fee tails are disfavored and are treated as a fee simple absolute
b) Life Estate
i) Life estates last for duration of grantee’s life and can be made defeasible (i.e., “to B for life, so
long as B farms land”)
ii) “Life estate pur autre vie” = duration of estate is measured by life of someone other than grantee
(i.e., “to B for the life of C”)
c) Non-Freehold Estates
i) Term estate = estate that is limited in duration (basically a landlord-tenant relationship)

2) Future Interests
a) Possibility of Reverter
i) Possibility of reverter = future interest in grantor that follows a determinable estate
ii) Creation: a fee simple determinable automatically creates possibility of reverter; no special
language needed
(1) Upon happening of event: land automatically reverts back to grantor
iii) Transferability
(1) Common Law: could descend through intestacy but could not be devised or transferred
inter vivos
(2) Modern law: freely transferable, devisable, and descendible
b) Power of Termination (Right of Reentry)
i) Power of termination = a future interest in grantor when grantor attempts to create a FSSCS or a

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defeasible life estate

ii) Creation: not automatic, must be spelled out in conveyance
(1) Upon happening of event: does not automatically revert; grantor must do something to
retake property
iii) Transferability
(1) Common law: could descend through intestacy or will but could not be devised or trans-
ferred inter vivos
(2) Modern law: freely descendible and devisable but many jurisdictions still limit inter
vivos transfers
c) Reversionary Interest
i) Reversion = future interest retained by grantor when he transfers less than a fee to a third person
(i.e., “A to B for 10 years” à reversion back to A after 10 years)
ii) Transferability
(1) Common law: could descend through intestacy or will, but could not be devised or trans-
ferred inter vivos
(2) Modern law: freely transferable, devisable, and descendible
d) Remainder
i) Remainder = future interest created in a third person that is intended to take after natural termina-
tion of preceding estate (i.e., “A to B for life, then to C” à C has a remainder)
ii) Contingent remainder
(1) Any remainder that isn’t vested
iii) Vested remainder
(1) Rule—a remainder is vested at the point that it is:
(a) Created in an ascertainable person; and
(b) Not subject to any condition precedent other than termination of preceding estate
(2) Vested remainder subject to total divestment
(a) A remainder that is presently vested but may be terminated on happening of a future event
(i) “A to B for life, remainder to C, so long as liquor is never served on the premises”
à C has vested remainder but could lose it by serving liquor on premises
(3) Vested remainder subject to open
(a) A remainder to a class with at least one ascertainable member who has satisfied any
conditions precedent to vesting, but other members may join class later
(i) Class opening
1. Inter vivos conveyance: class opens at time of conveyance
2. Testamentary conveyance: class opens at death of testator
(ii) Class closing
1. The Rule Against Perpetuities (RAP) can void a future interest
a. Generally does not apply to vested interests except: vested remainder
subject to open
b. If any member of a class could potentially claim in a way that violates
the RAP, it will knock out entire class gift
2. Rule of convenience: class closes as soon as one member of the class
becomes entitled to immediate possession of property
e) Executory Interests
i) Executory interest = future interest in a third person that ends previous estate before it would
have naturally terminated
(1) Any interest created in a 3rd party that follows granting of a fee will always be an executory
interest
ii) Types of executory interests:
(1) Shifting executory interest: passes from grantee to grantee (most common)

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(2) Springing executory interest: transfers property from grantor to grantee or grantee to
grantee
iii) Subject to RAP
f) Rules Affecting These Interests
i) Waste
(1) Owner of less than a fee estate: cannot commit waste (i.e., harm property at expense of
person who will hold it after them)
(a) Voluntary waste = cannot intentionally or negligently damage property
(b) Permissive waste = must take reasonable steps to avoid damage
(c) Ameliorative waste = tenant makes improvements to the land
(i) Common law: tenant was not allowed to make substantial alterations unless
authorized to do so
1. Tenant could be liable for cost of restoring the land to its previous condition
(ii) Modern law: a tenant is now allowed to commit ameliorative waste if:
1. Market value of remainderman’s interest is not impaired; and
2. Permitted by remainderman; or
3. Substantial and permanent change in neighborhood that justifies
improvement
(2) A remainderman has standing to sue for past or future waste
(a) Vested remainderman: can sue for damages or an injunction to stop waste from
occurring
(b) Contingent remainderman: can sue for an injunction to stop waste from occurring (no
damages)

3) Special Problems
a) Rule Against Perpetuities (RAP)
i) Steps for dealing with a RAP problem:
(1) Identify type of interest RAP applies to: executory interest; contingent remainder; vested
reminder subject to open; purchase option; right of first refusal
(2) Is it possible to interpret facts so someone can claim an interest more than 21 years after
everyone currently alive is dead?
(a) If yes, the interest is wiped out and interpret the rest accordingly; if no, the interest will
stand
b) Restrains on Alienation
i) Total restraint
(1) On a fee: generally not valid
(2) On less than a fee: will be upheld if reasonable
ii) Partial restraint (i.e., purchase option and right of first refusal: both valid if reasonable)

4) Co-tenancy
a) Tenancy in common = each co-tenant owns an undivided interest in the whole of the property
i) Creation requires: unity of possession (each tenant has right to possess whole)
ii) No right of survivorship
b) Joint tenancy = each co-tenant owns an undivided interest in the whole of the property and has a right
of survivorship
i) Creation:
(1) Traditionally, a joint tenancy requires for unities (TTIP):
(a) Time (take at the same time);
(b) Title (take by the same instrument);
(c) Interest (take equal shares of the same type); and

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(d) Possession (each tenant has the right to possess the whole)
(2) Today, most jurisdictions require only interest and possession
ii) Severance can be done by inter vivos act if one of the parties:
(1) Seek a partition action
(2) Joint tenant sells his interest in the property
(3) Joint tenant mortgages his interest in the property
(a) Majority view (lien theory): mortgage is viewed as a lien on the property, will not sever
(b) Minority view (title theory): mortgage is viewed as a title to property, will sever
c) Tenancy by the entirety = a joint tenancy where the parties are married
i) Severance occurs when they jointly convey the property to another; one spouse conveys prop-
erty to the other; or divorce
d) Rights and duties of co-tenants
i) Possession
(1) Each co-tenant is entitled to possess the whole property
ii) Profits
(1) A profit produced by one of the co-tenant’s efforts: other co-tenants have no right to share
in those profits (unless they’ve been ousted from the property)
(2) A profit generated by a third party (i.e., rent): all co-tenants are entitled to a proportionate
share of the profit
iii) Expenses
(1) Taxes/mortgage payments: each co-tenant must pay proportionate share
(2) Repairs: a co-tenant may be permitted to reimbursement from rents collected
(3) Improvements: generally, a co-tenant is not entitled to reimbursement
(a) Exception: if property is sold, amount attributable to the improvement goes to tenant
who made the improvement

5) Landlord (LL)-Tenant
a) Creation: a lease can be oral or in writing (writing is necessary for leases longer that one year)
b) Types of Leases
i) Term of years
(1) A lease that has a definite beginning and end
(2) Creation: express agreement between LL and tenant for a term specified in the lease
(3) Termination: automatically at the end of the period; no notice is required
ii) Periodic tenancy
(1) A lease with a set beginning date and continues from period to period until proper notice is
given
(2) Creation: expressly or by implication with a holdover tenant
(3) Termination: LL or tenant must give appropriate notice of intent to terminate
(a) Rule: appropriate notice must be:
(i) in writing, if the lease/state statute so specifies, otherwise it can be oral; and
(ii) equal to the rental period up to a maximum of six months (i.e., one-year tenancy
à six-months’ notice)
(b) Timing of notice
(i) Common law: notice had to be given at the start of the rental period
(ii) Modern law: notice is good whenever given but does not take effect until the start
of the next rental period
iii) Tenancy at-will
(1) Creation: generally, express agreement of parties
(2) Termination: it terminates:
(a) freely as soon as either party decides (no notice requirement)

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(b) if either the LL or tenant dies

(c) if either party attempts to transfer their interest
iv) Tenancy at sufferance (holdover tenant)
(1) Creation: a holdover situation (i.e., tenant does not move out at end of the agreed-upon
tenancy)
(2) A holdover tenant becomes: a periodic tenant or a tenant at sufferance
(a) Determining factor is the LL:
(i) If LL wants tenant to remain on the land, tenant become a periodic tenant
(ii) If LL does not want the tenant to remain on the land, becomes a tenant at suffer-
ance until the LL can get tenant off the property
(b) Crucial factor: acceptance of rent
(i) If the LL accepts rent, this is evidence that LL wants tenant to stay

6) Common Disputes between LL and Tenant

a) Fight over Rent
i) How much rent the LL can sue for:
(1) Tenancy for years = tenant is liable for all unpaid rent in the lease
(a) Common law: LL could only sue for rent as it accrued
(b) Modern majority: follows anticipatory repudiation but LL has a duty to mitigate (i.e.,
make reasonable efforts to rent the property)
(2) Periodic tenancy = tenant liable for rental obligation until notice is given to terminate the
lease
(3) Tenancy at-will = tenant liable for amount of rent stated in the agreement that is already
owed
(4) Tenancy at sufferance = tenant liable for the reasonable rental value of the property
ii) Tenant’s defenses:
(1) Failure to deliver possession
(a) Majority rule: LL has obligation to deliver possession
(b) Minority (“American”) rule: LL has no obligation to deliver possession of the premises;
tenant must take it
(2) Tenant has been evicted
(a) Actual eviction = tenant is physically removed from all or party of the property (tenant
is excused from paying rent)
(b) Constructive eviction = the property is in such bad condition that tenant is essentially
being forced out (tenant must actually move out within a reasonable time)
(i) Total constructive eviction à defense to the payment of any rent
(ii) Partial constructive eviction à reduction in rent only
(3) Tenant surrenders premises to LL
(a) LL must accept the surrender and retake possession of the premises
(4) Destruction
(a) Common law: generally did not excuse payment of rent
(b) Modern law: destruction is a defense to payment of rent
(i) Exception: tenant intentionally or negligently causes the destruction
(5) Warranty of Habitability
(a) Requires LL to maintain the premises in a habitable condition
(i) Rule: to claim breach of implied warranty of habitability, the tenant must:
1. provide LL with notice; and
2. allow LL reasonable time to repair it

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(ii) Majority rule: applies to residential leases only

(iii) Minority rule: applies to residential and commercial leases
b) Condition of the Premises and Who has the Obligation to Maintain
i) LL’s obligations
(1) Common law: LL has no obligation to maintain or repair leased premises
(2) Modern law: warranty of habitability (see above)
ii) Tenant’s obligations
(1) Ameliorative waste
(a) Common law: no obligation to make improvements and LL could hold tenant liable
(b) Modern law: tenant can improve if expressly authorized or a change in circumstances
warrant the improvements to be made
iii) Fight over possession
(1) Rule: LL can retake the property if the tenant has committed a material breach of the lease
(a) Common law: LLs were entitled to use reasonable force to retake possession from the
tenant
(b) Modern law: majority of jurisdictions no longer allow use of any force and LL must use
legal process
iv) Dispute over improvements
(1) Common law: anything (except a trade fixture) affixed to the land became part of the land
and had to stay
(a) “Trade fixture” = item used in the course of the tenant’s trade or business
(i) Rule: trade fixture could be removed unless removal would cause substantial
damage to the property
(2) Modern law: if the fixture can be removed without effecting the premises, the tenant is enti-
tled to remove the fixture (no distinction between trade fixtures)
c) Assignment and subletting
i) LL’s transfer of interest
(1) Who is entitled to rent? Whoever is the LL of record on the date rent is due is entitled to
that rent
ii) Tenant’s transfer of interest
(1) Assignment = tenant transfers all of the remainder of the rental obligation
(2) Sublease = tenant transfers only a portion of the time left on the rental obligation
(3) Liability of parties
(a) Assignment:
(i) The assignee comes into privity of estate with LL
1. Assignee is liable to LL for rent unless he re-assigns to a new assignee who
takes over privity of estate
(ii) Tenant remains in privity of contract with LL
1. Tenant is liable to LL for rent, even after assignment, unless there is a
contract novation
(b) Sublease:
(i) The sublessee comes into privity of estate and privity of contract with the tenant,
owing the tenant rent
(ii) Tenant continues to owe rent to LL
iii) Transfer of interest in leases
(1) Generally, interests in leases are fully transferable
(2) To prohibit both an assignment and a sublease, the lease must specifically state that both
are prohibited

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RIGHTS IN LAND

1) Covenants that Run with the Land

a) Covenants
i) Creation: for a covenant to run with the land, the following elements must be met (mnemonic:
PINT):
(1) Privity
(a) Horizontal privity = relationship between original covenantor and covenantee
(i) Requires privity of contract in connection with land (i.e., LL/tenant, grantor/
grantee, mortgagor/mortgagee)
(b) Vertical privity = the relationship between an original party and the successor in
interest to the original party (privity of estate)
(i) In order for the burden to run, privity of estate will only exist when the holder of
the servient estate transfers all of his interest in the servient estate to the new
owner
(2) Intent that the covenant runs with the land
(a) The writing (Statute of Frauds applies) must include language that shows the parties’
intent for the covenant to bind successors in interest
(3) Notice
(a) The current owner of the servient estate must take with notice of the restriction
(requirement on servient side only)
(4) Touch and concern the use and enjoyment of the land
(a) Servient estate: restriction must reduce the use and enjoyment of the servient estate
(b) Dominant estate: increase the use and enjoyment of the dominant estate
b) Equitable servitudes
i) Creation: three elements of an equitable servitude (mnemonic: TIN)
(1) Touch and concern the land
(a) Burden must run with the servient estate; benefit with the dominant estate
(2) Intent
(a) The writing (Statute of Frauds applies) shows intent that the restriction run to future
landowners
(3) Notice
(a) Current owner of the servient estate took with notice
c) Implied reciprocal servitude
i) Elements:
(1) Restriction is party of a common scheme or plan for development of the area; and
(a) Factors to show “common scheme”: a large percentage of lots expressly burdened;
oral representations to buyers; statements in advertisements to buyers; or recorded
plot maps or other declarations
(2) Current owner of the servient estate takes with notice of the restriction
d) Terminating a covenant or equitable servitude
i) May be terminated by: written release; merger of the dominant and servient estates; abandonment;
estoppel, or changed circumstances so that the reason behind the restriction is no longer valid

2) Easements
a) Definitions
i) Servient estate = estate that is burdened by the easement (must always have a servient estate)
ii) Dominant estate = estate that is benefited by the easement (do not always have to have a domi-
nant estate)
iii) Easement appurtenant = benefits a parcel of land and has a dominant estate

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iv) Easement in gross = benefits a person or entity rather than a piece of land (no dominant estate)
b) Creation of Easements
i) Expressly – a writing must satisfy the Statue of Frauds
ii) By Implication
(1) Easement implied by prior use, which requires:
(a) Common ownership of dominant and servient estates, then severance;
(b) Prior use of quasi-easement;
(c) Use was apparent or could be discovered upon a reasonable inspection; and
(d) Reasonable necessity
(2) Easement by necessity, which requires:
(a) Common ownership of dominant and servient estates, then severance; and
(b) Strict necessity
iii) By Prescription (Adverse Possession)
(1) Someone actually, openly, notoriously, and exclusively uses land with hostile intent for the
statutory period
c) Scope of Easements
i) If express easement states use, then that is only allowable use. Apart from that, an easement can
be used to the extent that it is reasonably necessary to do so
(1) “Surcharging the easement” = going beyond what is reasonable
(a) Doesn’t terminate the easement, but the servient estate can sue for an injunction or
damages
ii) Holder of easement may do what is reasonably necessary to maintain the easement, even if it
interferes with the servient owner’s use of his property
d) Termination of Easements
i) Destruction of the servient estate
(1) Generally will terminate an easement unless the owner of the servient estate intentionally
caused the destruction
ii) Termination based on actions of the easement holder
(1) Merger of title: owner of the dominant estate also acquires the servient estate
(2) Written release expressly terminating his rights in the easement (must satisfy the Statute of
Frauds)
(3) Abandonment: an affirmative act in furtherance of the intent; and intent to abandon
(4) Estoppel: owner of the servient estate foreseeably and detrimentally relies on the holder’s
action/abandonment
(5) Severance: owner of dominant estate tries to sever the easement from the dominant estate
(only arises with easement appurtenant)
iii) Termination based on actions of the owner of the servient estate
(1) Prescription: owner of the servient estate interferes with the use of the easement for the
statutory period
(2) Servient estate is sold to a bona fide purchaser (pays value and takes without notice)
iv) End of necessity: for an easement created by necessity, the easement ends when the necessity
ends

3) Profits
a) The right to go on someone else’s land and take something off of it
b) Creation: can be created expressly or by prescription only (analysis is otherwise same as easements)
c) Termination: same as easements

4) Licenses
a) A privilege to go on land (a personal right, not an interest in the land)
b) Licenses are freely revocable at any time, for any reason, unless the license is:

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i) Coupled with an interest; or

(1) The licensee purchases personal property that is located on the licensor’s property and is
given permission to come onto the land to claim that property
ii) Executed
(1) The licensee expends money or labor in reliance on the license; license is irrevocable until
the person gets value out of the expenditure
c) Licenses are not transferable unless the licensor so intends
d) Licenses terminate on the death of the licensor or the conveyance of the servient estate

5) Support Rights
a) Lateral Support
i) General rule: someone has an absolute right to lateral support, so if someone fails to provide it,
the adjoining landowner will be strictly liable for any damages suffered
ii) If the land has been improved, ask: would the property have subsided anyway, or was it the
weight of the improvement that caused the land to subside?
(1) If the land would have subsided anyway: remains strictly liable
(2) If the weight of the improvement caused the land to subside, the adjoining landowner is
liable only if he: was negligent in depriving the property of lateral support
b) Subjacent Support
i) General rule: the right of support extends to:
(1) Land in its natural state; and
(2) Buildings existing on the date when the subjacent estate was severed from the surface
ii) However, the underground landowner is liable for damages to subsequently erected buildings:
only if he is negligent

CONTRACTS

1) Creation and Construction

a) The Statute of Frauds requires a writing for a transfer of an interest in real property
i) The writing must be signed by the party to be charged and must include:
(1) Description of the property;
(2) Description of the parties;
(3) Price; and
(4) Any conditions of price or payment if agreed on
b) Exceptions to the Statute of Frauds
i) Doctrine of part performance
(1) The acts of part performance unequivocally prove the existence of the contracts, must
establish at least two of the following:
(a) Payment of all or part of the purchase price;
(b) Taking of possession;
(c) Making substantial improvements
ii) Equitable and promissory estoppel to prove an oral contract for the sale of land
(1) Equitable estoppel is based on an act or a representation
(2) Promissory estoppel is based on a promise

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2) Equitable Conversion
a) Definition: there is a bifurcation of title when a land-sale contract is formed
i) Equitable title: passes to the buyer
ii) Legal title: remains with the seller until the deal closes
b) Majority rule: risk of loss is deemed to follow equitable title, so the risk of loss is on the buyer
c) Minority rule: risk of loss remains with the seller until the legal title or possession of the property
passes to the buyer

3) Marketability of Title
a) Marketable title = title reasonably free from defects in both fact and law (not perfect title)
i) Defects may include:
(1) Unpaid mortgage or lien;
(2) Covenant or easement that restricts use of land;
(3) Title acquired by adverse possession until the adverse possessor quiets title; or
(4) Existing condition on the land that violates a zoning ordinance
b) This covenant only manifests itself at the date of closing
i) Majority rule: a seller may use the proceeds of the sale to remove a cloud on title and make it
marketable

4) Merger
a) Land-sale contract merges into the deed, and since the covenant of marketable title is implied in the
contract, buyer cannot assert it and must sure on the deed
i) Quitclaim deed: an as-is deed (no warranties/covenants), and seller conveys whatever interest
he has and buyer can’t sue
ii) Warranty deed: buyer can sue on the deed through one of the covenants of title contained in the
warranty deed
(1) General warranty deed: contains all six covenants of title, which covers the period prior to
the sale
(a) Seller warrants there are no defects in the chain of title
(2) Special warranty deed: may contain some or all of the covenants, and may limit liability to
the period that the grantee owned the land
(a) Seller warrants that no defects have occurred during his ownership
b) Covenants of title in general warranty deeds
i) Present covenants (**do not run with the land and can be breached only at the time of closing**)
(1) Seisin (grantor promises he owns the property)
(2) Right to convey (grantor promises he has the power to convey the property)
(3) Covenant against encumbrances (grantor promises there are no encumbrances on the
property)
ii) Future covenants (**runs with the land and breach can be at the time of closing or afterwards**)
(1) Quiet enjoyment (grantor promises that grantee won’t be disturbed by a third party
asserting a valid claim to the land)
(2) Warranty (grantor promises he will defend the grantee against any third-party claim)
(3) Further assurances (grantor promises he will do everything reasonably necessary to perfect
grantee’s title)

5) Fitness and Suitability

a) Duty to disclose material latent defects known to the seller but not readily observable and not known to
the buyer
i) Applies to commercial builders and developers of new homes
b) Implied Warranty of Quality
i) Applies to sale of new or remodeled homes by builders and developers (does not apply to
commercial structures)

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ii) Defects must be discovered within a reasonable time after construction or remodeling (covers
significant latent defects)

MORTGAGES/SECURITY DEVICES

1) Types of Security Devices

a) Mortgages
i) Mortgages must be in writing to satisfy the Statute of Frauds
ii) Instruments that make up a mortgage:
(1) Mortgage (document that represents an interest in land)
(2) Note (represents the personal obligation of debtor to repay the debt)
(3) Creditor’s remedies: choice to sue in personam (on note); or an in rem foreclosing on the
land (through mortgage)
b) Deed of Trust
i) Debtor (the settlor) borrows money and executes deed to property, and a third person (the
trustee) keeps the deed until debtor pays debt
c) Purchase-Money Mortgage (PMM)
i) A mortgage that covers part or all of the purchase price (i.e., not a mortgage obtained to remodel
a home)
ii) A PMM that is recorded has priority over other types of mortgages

2) Security Relationship Theories

a) Lien theory
i) Mortgagee receives lien on property, mortgagor possesses property and has right to rents and
profits from property
b) Title theory
i) Mortgagee has rights to rents and profits from the property, mortgagor retains possession (until
default)
c) Intermediate theory
i) Lien theory applies until default (mortgagor has rights to possession, rents, and profits); then
upon default, title theory applied (i.e., mortgagee is entitled to possession, rents, and profits)
d) Duties
i) Rule: a person in possession has duty to manage property in a reasonably prudent manner (i.e.,
can’t commit waste)

3) Transfers by Mortgagor
a) Mortgagor can make three types of sales of land encumbered by a mortgage:
i) Buyer takes “subject to the mortgage” (i.e., buyer has no responsibility to pay on it, either before
or after foreclosure);
(1) Default rule if there is ambiguous language that does not point one way or another
ii) Buyer “assumes the mortgage” (i.e., buyer becomes personally liable for it, along with original
borrower); or
iii) Buyer “assumes the mortgage” plus a novation with the lender, so that buyer is only personally
liable for paying mortgage
b) In each case, the mortgage remains on the land and is available if the mortgagee needs to foreclose on it
c) Assumption
i) If grantee has assumed, then grantee is primarily liable and grantor is secondarily liable
(1) If debt falls into default: creditor can sue grantor, and grantor can get a court order compel-
ling grantee to pay debt
(2) If grantor makes payments following the transfer: grantor can sue grantee for
reimbursement

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d) Due-on-sale clause
i) Gives mortgagee the option to require entire debt be due and payable upon any transfer (enforce-
able if in the mortgage)

4) Transfers by Mortgagee
a) Mortgagee may transfer the note and mortgage, which travel together

5) Discharge of Debt and Mortgage

a) Prepayment of Mortgage
i) No right to prepay mortgage debt unless the terms of mortgage expressly authorize payment
b) Deed in lieu of Foreclosure
i) Mortgagor issues a deed in lieu of foreclosure, which takes subject to all mortgages on the property
(1) Junior lienholders are unaffected

6) Foreclosure
a) Types of foreclosure:
i) Judicial foreclosure (i.e., judicial proceeding with pleadings, service of process, etc.)
ii) Private sale/power of sale (i.e., private party conducts a public sale)
b) There is no limit to the number of mortgages that one may have (“first in time, first in right” principle applies)
i) Deficiency judgment = when foreclosure sale raises less money than the amount of the
outstanding debt
c) Debtor’s remedy is redemption
i) Redemption will stop the foreclosure if debtor pays off debt or brings loan current (all payments
due and fees paid)
d) An acceleration clause makes the entire debt become due on the happening of an event, such as a
default or sale.

TITLES

1) Adverse Possession (AP)

a) Three major components: physical, mental, time
i) Physical
(1) Rule: Adverse possessor actually, openly, notoriously, and exclusively occupies the land in
a manner sufficient to put the true owner on reasonable notice of the AP
(a) Minority rule: Requires adverse possessor to also pay taxes on the property
ii) Mental
(1) Rule: adverse possessor has to occupy the land with a sufficiently hostile intent
(a) Hostile = claiming the land as your own
(2) Two ways to satisfy this requirement:
(a) Claim of right (claiming the land as your own); or
(b) Color of title (falsely believing you have good title to the property under a deed)
(3) Permission to be on the land destroys hostile intent
(4) Split of authority on whether encroachment is hostile intent:
(a) Majority rule: a mistaken encroachment is sufficient hostile intent
(b) Minority rule: hostile intent exists only if the person who was doing the encroaching
intended to encroach
iii) Time
(1) Rule: adverse possessor has to be on the land continuously for the statutory period
(common law: 20 years)
(a) “Continuously” is a question of fact based on the nature of the land and the use to
which it is being put

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(2) Tacking
(a) Combines AP periods to meet the statutory requirement; musty be a transfer from one
adverse possessor to another
b) Scope of what the adverse possessor takes
i) Generally, can only claim the portion of the land actually occupied
(1) Exception: when claiming under color of title, adverse possessor gets all the land described
in the flawed deed
ii) Adverse possessor gets whatever the true owner has (i.e., if true owner sold sub-surface
rights, adverse possessor gets surface rights only)
c) Disability
i) A disability (infancy, incompetence, imprisonment) can suspend the running of the statute of
limitations if: the disability exists at the time the AP starts
(1) The AP period begins to run once the disability ends (i.e., true owner gets out of jail or turns
18)
d) Rights of the adverse possessor and true owner
i) True owners:
(1) Can eject the adverse possessor and collect damages up to the point the statutory period
has run
ii) Adverse possessor
(1) When the AP begins, the possessor is considered to be the owner against the entire world
except the true owner
(2) Once the statute of limitations runs, the adverse possessor is the true owner as of the date
he entered the land

2) Transfer by Deed
a) Three requirements for a valid conveyance: donative intent, delivery, acceptance
i) Donative intent
(1) Grantor must intend to transfer an interest immediately to the grantee, if the grantor intends
the deed to take effect only on the death of the grantor, will formalities must be observed
ii) Delivery of the deed
(1) Delivery exists if: grantor has the mental intent to transfer the property to the grantee
(2) Ways to deliver the deed:
(a) Give it to the grantee (rebuttable presumption of delivery)
(b) Retain the deed (rebuttable presumption of no delivery)
(c) Give deed to a third party (i.e., escrow) to give to grantee
(i) Relation-back doctrine: conveyance to grantee relates back to the date grantor
gave the deed to third party
(ii) If grantor expressly retains the right to reclaim deed from the third party, there is
no transfer of title
iii) Acceptance of the deed by the buyer
(1) Acceptance is presumed if the transfer is beneficial to grantee
(2) If grantee refuses to accept, there’s no transfer of property
b) Deed sufficient to satisfy the Statue of Frauds
(1) Four written requirements of a valid deed:
(a) Sufficient identification of the parties;
(b) Words indicating an intent to make a present transfer of the property;
(c) Sufficient description of the property; and
(d) Grantor’s signature (grantee doesn’t need to sign deed)
3) Transfer by Operation of Law and Will
a) When seller dies before closing
i) If seller dies after executing a sales contract but before closing, decedent’s personal representa-
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tive must complete the sale
(1) Money received goes to beneficiary who inherits the property
b) Ademption
i) Ademption by extinction: property is described in a will but isn’t in testator’s estate at time of
death
ii) Ademption by satisfaction: property was gifted during testator’s lifetime but the property is still
mentioned in the will
iii) If a gift of property was made during testator’s lifetime, but a general devise is in the will (e.g.,
“one-third of my estate”), then the property already received will not be adeemed by satisfaction
unless:
(1) Will provides for deducting the gift;
(2) Testator, in writing, declared that the gift was part of the general devise; or
(3) Devisee, in writing, acknowledged that the gift was part of the general devise
c) Exoneration
i) Majority rule: inherited property is taken subject to all outstanding liens and mortgages (estate
does not pay them off)
d) Lapse
i) Common law: if a beneficiary predeceases a decedent, any gift to the beneficiary fails
ii) Modern law: many states not have anti-lapse statutes (i.e., beneficiary’s heirs “stand in his shoes”
and get the bequest)

4) Title Assurance Systems

a) Recording Acts
i) Race Statute
(1) Rule: the person who records first prevails
ii) Notice Statute
(1) Rule: a purchaser for value who takes without notice of any other claim (a bona fide
purchaser) prevails
(a) Pays value = paying more than a nominal amount (i.e., purchase price or reasonable
amount)
(b) Types of notice: actual, constructive, or inquiry
iii) Race-Notice Statute
(1) Rule: an unrecorded conveyance is invalid against a subsequent bona fide purchaser who
records first
b) Indexes (how to record a conveyance)
i) Tract index (minority)
(1) A legal description of the tract of land followed by a chronological listing of all conveyances
involving that piece of land
(2) You would immediately see any recorded conveyance and will always have constructive
notice of a claim to property
ii) Grantor-grantee index (majority)
(1) Two sets of books where the conveyance is recorded: one arranged by name of grantor,
the other by name of grantee
c) Estoppel by deed
i) Applies to a situation where someone transfers title to property that they do not have but then
later acquire title to
(1) Majority rule: if grantor transfers title to property before he has title to property and then
attempts the transfer property to another person, the first grantee may go to court and
estop the grantor from denying title to him
(2) Minority rule: title automatically passes by operation of law to grantee (operation-of-law
theory)
d) Shelter rule
i) Protects a subsequent purchaser who wouldn’t otherwise have good title, “shelters” under good

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title of predecessor
e) Title Insurance
i) Title insurance can be purchased at the time of closing so that if there is a defect in the chain of title,
an unexpected encumbrance, or other similar problem, the buyer can make a claim under the
insurance policy

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