Real Property Flashcards

An owner signed papers and a deed to sell a piece of property to buyer one, who held his deed and did not record it. The next month the original owner sold the same property to a second buyer. Buyer two had information that buyer one had bought the property, but he knew that buyer one had not yet recorded a deed. Buyer two recorded five days later. The next day after the deed was executed and delivered to the second buyer, the original owner conveyed a deed to the same property to a third buyer, who was a good faith purchaser for value and who recorded his deed the very same day. Which buyer has superior title under a race-notice recording statute?

Answer: Buyer three has better title because he had no notice of any prior transactions and recorded first.

Under a race-notice recording statute, a subsequent purchaser for value takes priority over a prior unrecorded interest only if they (1) take without notice of the prior interest AND (2) record their deed first. Buyer 1 did not record. Buyer 2 had notice of Buyer 1, so B2 cannot prevail against B1. Buyer 3 is a good faith purchaser for value without notice and recorded first among those without notice, thus Buyer 3 prevails.

A man conveyed a large parcel of land to a friend. The deed stated that it was to “my friend as long as he uses the property to grow organic vegetables that are not genetically manipulated, and if that proper use is not maintained, the property will immediately revert to the grantor.” 11 years later, the friend was charged with using genetic engineering techniques in violation of the regulations of the state’s agricultural department. What kind of an interest, if any, did the grantor retain by the wording in the deed?

Answer: He retains a possibility of reverter.

The language 'as long as he uses the property' followed by a condition, and then 'immediately revert to the grantor,' creates a fee simple determinable in the grantee. The grantor retains a future interest called a possibility of reverter. This interest automatically becomes possessory upon the breach of the stated condition, meaning the property automatically returns to the grantor.

In 1970 a farmer purchased 50 acres of farm land. Several years later he built a house and lived on the property while also farming it. The property was landlocked, but there was a gravel road over the adjoining land directly to the nearest highway. Both the farmer’s land and the adjoining lot came from a larger parcel that was divided by the original owner. The farmer used the gravel road for farming and personal use. In 1991, a new owner purchased the adjoining land. She bulldozed the gravel road shut. The farmer filed an action in equity, asserting his absolute necessity to continue using the road to get to the highway. The new owner disagreed, and claimed that if an easement was granted by the court, it must be restricted to use only for crops at certain times, and that personal use should be disallowed or severely restricted because it was an unauthorized expansion of the original use. Which of the following would be the more likely decision of the equity court based on generally prevailing principles? The court will decree an express easement for the crops but the farmer’s personal use will be limited to twice daily. The court will decree that there is an easement in gross that can be used as long as the farmer pays a monthly charge to be determined by the new owner. The court will decree an implied license to use the adjoining property, which the new owner may terminate at any time. The court will decree an easement of necessity which includes the expanding reasonable use of the easement for any lawful use.

Answer: The court will decree an easement of necessity which includes the expanding reasonable use of the easement for any lawful use.

An easement by necessity arises when a parcel of land is landlocked and requires access over an adjoining parcel that was once part of the same larger tract. The scope of an easement by necessity is generally not limited to the original use but expands to accommodate any reasonable and lawful use of the dominant estate, provided it does not unreasonably burden the servient estate. Therefore, the farmer's personal use, in addition to farming, would likely be permitted as a reasonable expansion of the necessary access.

An elderly man died with a will that had the following clause: “After payment of such debts and funeral expenses, I give and bequeath to my beloved wife the farm on which we now reside and all my personal property, so long as she remains my widow; the remainder on her remarriage or death to go to my son John..” Which one of the following estates in real property most closely reflects the wife’s interest upon her husband’s death?

Answer: It is a life estate that ends on her remarriage or death, with a remainder over to the son.

The phrase 'so long as she remains my widow' creates a determinable life estate for the wife, meaning her interest will automatically terminate upon her remarriage or death, whichever occurs first. The subsequent clause, 'the remainder on her remarriage or death to go to my son John,' clearly establishes a remainder interest in the son. This remainder will become possessory upon the termination of the wife's life estate.

Two parties entered into an agreement of sale for a residential property. The title insurance company called the seller’s attorney to advise that one of the owners in the seller’s prior chain of title over 40 years ago had neglected to get a first mortgage with a private lender satisfied. It was likely that the mortgage was paid but that someone neglected to file a satisfaction notice with the recorder. If the problem had been corrected back then there was no evidence of it on the record. As such, the open mortgage now constituted a cloud on title. The title company required that the seller take action to clear title before final closing could be approved. Which of the following is the most likely way for the seller to clear title so that conveyance can be made.

Answer: An action of adverse possession against the bank holding the open mortgage of record.

A quiet title action is the appropriate legal proceeding to resolve competing claims to real property and remove a cloud on title, such as an old, unreleased mortgage. By naming the original mortgage holder and their potential heirs or assigns, the court can issue a judgment declaring the mortgage satisfied and clearing the title. This action makes the property marketable for sale.

A broker and a seller of residential real estate entered into an “exclusive right to sell” contract (an exclusive listing agreement) in which the broker had the exclusive right to sell the property for the period of nine months and would receive 6% of the sales price if the property was put under agreement during that nine-month period. The agreement also stated that “if the property is withdrawn from sale, transferred, conveyed, leased without the consent of Broker, or made unmarketable by the owner's voluntary act during the term hereof or any extension thereof," the broker would receive 6% of the selling price of the property as set forth in the listing agreement.” The broker began performing all of its duties in aggressively trying to sell the property, but shortly after the agreement, the seller advised that it didn’t want to sell anymore, and it thwarted all efforts of the broker to take further action to sell the property. The broker demanded the 6% amount set forth in the withdrawal of sale provision, but the seller claimed a right to change his mind. Will the court likely enforce the broker’s claim for 6% of the listed price?

Answer: Yes, because this is a typical enforceable contractual provision that the courts have upheld, and which reflected the intent of the parties in case of a premature rejection of the agreement by the seller.

'Exclusive right to sell' agreements often include clauses that entitle the broker to a commission if the seller withdraws the property from the market during the contract term. These clauses are generally enforceable as they compensate the broker for their efforts and the lost opportunity to earn a commission, reflecting the bargained-for exchange and the intent of the parties. The seller's unilateral decision to withdraw the property triggers this contractual obligation.

A man entered into a lease for an apartment with a landlord. The lease stated that the term was month-to-month. After one month, the man went to the city health and licensing department and complained about various sanitary code violations that the landlord failed to correct. The agency made an inspection and found 40 sanitary code violations. It cited the landlord, and ordered him to clear up all of the violations. After the inspection, the landlord brought an eviction action against the man and obtained a judgment against him for eviction. Will the eviction order hold up under the stated facts?

Answer: No, because the landlord’s action is a retaliatory eviction, which cannot be used against a tenant who reports code violations and is a defense that the tenant may raise.

Most jurisdictions prohibit retaliatory eviction, meaning a landlord cannot evict a tenant in response to the tenant's good-faith complaints about housing code violations. This protection is designed to encourage tenants to report unsafe or unhealthy living conditions without fear of losing their home. The tenant's report to the health department, followed by the eviction action, strongly suggests a retaliatory motive, which serves as a valid defense against the eviction.

A woman conveyed by deed her farm to her nephew, for the nephew’s life. The nephew died prior to his aunt. The deed was silent on what happens on the nephew’s death. The nephew’s heirs tried to assert control and ownership of the property. The aunt sued them to assert her claimed superior interest in the property. Will the court return the property to the aunt?

Answer: Yes, because the life estate terminated on the nephew’s death and title reverted back to the aunt.

A life estate is an interest in real property that lasts only for the duration of a specific person's life, in this case, the nephew's life. Upon the death of the measuring life (the nephew), the life estate automatically terminates. Since the deed was silent on a remainder interest, the property reverts back to the grantor (the aunt) or her heirs, as she retained a reversionary interest.

Plaintiffs agreed in writing to sell to defendants a single-family home for the sum of $40,000. The contract provided that this sum would be paid over a 15-year period with interest, in monthly installments. The sellers agreed to convey legal title upon payment in full as agreed. The purchasers were entitled to possession of the property, and all taxes, assessments and water rates, and insurance became their obligation. The contract provided that if the purchasers defaulted and failed to cure the default within 30 days, the sellers could elect to call the remaining balance immediately due, or elect to declare the contract terminated and repossess the premises, keeping all monies paid as liquidated contract damages. Defendants made improvements to the property, and made the payments for 10 years until one of them became disabled. At the time of default they had paid about $30,000 total of which 20,000 was applied to principal. The plaintiffs sued the defendants for breach of the contract, got a judgment against them, and evicted the defendants. Defendants appealed, claiming that they had equitable title, and a foreclosure action had to be first instituted. What result?

Answer: The defendants had equitable title and the sellers had legal title; this was similar to a real estate loan transaction, and the rights of the defendants had to be tested and taken in a foreclosure action with all due process, rights of redemption, etc.

In many jurisdictions, an installment land contract (or contract for deed) is treated as a financing device similar to a mortgage. Upon entering such an agreement, the buyer acquires equitable title to the property, while the seller retains legal title as security. Consequently, if the buyer defaults after making substantial payments or improvements, the seller typically cannot simply declare a forfeiture and repossess; instead, they must initiate a judicial foreclosure proceeding, affording the buyer protections like the right of redemption.

A married couple own a residential premises. They received a foreclosure action from the first mortgage lender in a state that has judicial foreclosure procedures. The state also statutorily extends the right of redemption both prior to the sale, and for a period of one year after the sale. The sale took place; the property was sold to the lender. The lender then filed a deficiency judgment action. The couple received a loan from family members about six months after the sale. It was sufficient to pay the balance on the mortgage plus interest and costs. The couple notified the lender and the court of their intent to exercise their right of redemption. What is the likely outcome?

Answer: The couple will exercise their right of redemption to retain ownership of their property.

A statutory right of redemption allows a mortgagor to reclaim their property after a foreclosure sale by paying the sale price, plus interest and costs, within a specified statutory period. Since the state provides a one-year post-sale redemption period and the couple secured funds and notified their intent within six months, they are within the statutory timeframe and can successfully exercise their right to redeem the property.

A seller of residential property told the buyer that he could use his gravel road to the main highway if he purchased the property, which adjoined the seller’s property. Although the property was not otherwise landlocked, the buyer relied on the seller’s promise in making an offer. The buyer had specific uses in mind for improvements that needed the gravel road. The purchase took place but the seller did not include the easement in the deed or the other papers. The buyer built a garage that accessed the gravel road leading to the highway. The seller later decided to fence off the driveway and divert it from buyer’s use. Will a court compel the seller to open up the road and provide an easement to the buyer?

Answer: Yes, because this was an easement by estoppel, created by the seller’s promises and relied upon by the buyer.

An easement by estoppel can arise when a landowner makes a representation concerning the use of their land, another party reasonably and detrimentally relies on that representation, and injustice can only be avoided by enforcing the promise. Here, the seller's promise of road access, coupled with the buyer's reliance in purchasing the property and building a garage, creates an equitable easement that prevents the seller from later denying access.

A father made out a deed to a parcel of farmland to his three daughters, as joint tenants. State law recognizes the right of survivorship among joint tenants. The youngest sister sold her interest to an unrelated purchaser for value. The eldest sister then died. After that sister’s death, the remaining sister sold her interest to one of her cousins. What is the resulting status of the ownership interests in the land?

Answer: The purchaser for value owns a one-third interest as a tenant in common with the cousin, who owns a two-thirds interest.

When one joint tenant conveys their interest to a third party, it severs the joint tenancy as to that interest, converting it into a tenancy in common. Thus, the purchaser owns 1/3 as a tenant in common. The remaining two sisters still held their 2/3 interest as joint tenants with each other; when the eldest died, her 1/3 passed to the remaining sister by right of survivorship, making that sister own 2/3. When the remaining sister then sold her 2/3 interest to the cousin, the cousin became a tenant in common with the purchaser.

A developer signed a contract to purchase 100 acres of land for construction of single-family dwellings. The land price was $100,000. The contract was contingent on approval of a subdivision plan being accepted by the township for 70 one-acre homes and 30 acres of open space. The subdivision plan was filed with the township but shortly thereafter, the township passed a zoning ordinance that increased the minimum size of building lots in rural areas to five acres per home, in order to preserve the rural nature of the countryside and prevent too much population growth. There was known to be little or no market for five-acre homes. The developer sued the township on the basis that the ordinance was not a reasonable use of the police powers and the property should revert to the original one-acre limitation. The county court denied the developer’s request for injunctive relief against the zoning board. Will the appellate court reverse the county court and issue an order declaring the new 5 acre rule to be an unreasonable and arbitrary use of the police power?

Answer: Yes, because the new rule imposes too much of an arbitrary, unreasonable, and exclusionary burden on the use of the land, and is therefore an abuse of the reasonable use of the police power.

While municipalities have broad police powers to enact zoning ordinances for public welfare, these ordinances must be reasonable and not arbitrary or unduly burdensome. A five-acre minimum lot size, especially when there's little market for such homes and it effectively prevents reasonable development, can be challenged as exclusionary zoning or an unreasonable exercise of police power. Courts may find such an ordinance to be an abuse of discretion if it serves primarily to exclude certain populations or is not rationally related to a legitimate public purpose.

A parcel of land was owned by owner one and owner two, as tenants in common. The owners signed an agreement with a real estate investor giving her the right of first refusal. If the owners offered the property for sale and if they got a bona fide offer to purchase, the investor would be given the exclusive right to purchase at the amount offered. At some time after that agreement was executed, owner one died and his property passed automatically by intestate succession to his two sons. The sons signed a deed of their interest over to owner two for $10,000. Owner two became the owner in fee. Shortly after that conveyance was recorded, the investor sued owner two and the sons on the basis that owner two should have first offered owner one’s 50% interest to the investor per the agreement. Will the court enforce the investor’s right of first refusal with respect to the transfer to owner two?

Answer: No, because they did not offer the property for sale and there was no bona fide offer to purchase; instead, the property passed by operation of law and then there was a private transaction to put total ownership in owner two.

A right of first refusal is typically triggered when the owner receives a bona fide offer from a third party and decides to sell the property. Here, the initial transfer of Owner One's interest to his sons occurred by operation of law (intestate succession), not by an 'offer for sale.' The subsequent private transaction between the sons and Owner Two, while involving consideration, was not an 'offer for sale' to a third party that would typically trigger a right of first refusal, especially since Owner Two was already a co-owner.

An owner and a buyer signed an agreement of sale for the owner’s residential premises. Time was of the essence. The closing date was set for 90 days from the date of the agreement. The buyer turned over a significant down payment, which was held in escrow by the real estate broker. The settlement was contingent on the buyer obtaining a conventional mortgage at prevailing rates within 45 days of the date of the agreement. The buyer promised to make a good faith effort to apply for a mortgage. The only mortgage that the buyer was able to obtain was a variable rate mortgage that was then set at 5 points above the prime rate. It contained a balloon payment in 5 years with a large balance that the buyer could ill-afford if he was unable to obtain new financing. The buyer advised the seller that he could not get a mortgage and demanded his down payment back. The seller disputed that the buyer could not get a mortgage and refused the refund. Will the court enforce the refund?

Answer: Yes, because this was not a conventional mortgage at prevailing rates.

A mortgage contingency clause requires the buyer to obtain a specific type of financing, and if they cannot, they are typically entitled to a refund of their down payment. A variable rate mortgage at 5 points above prime with a balloon payment is generally not considered a 'conventional mortgage at prevailing rates' as contemplated by such a clause. Since the buyer made a good faith effort and the available loan did not meet the specified terms, the contingency was not satisfied, entitling the buyer to a refund.

A buyer and seller agreed on terms to transfer a property to buyer. They wrote up a contract themselves that said: Seller is selling the Old Wilson property to the Buyer, for a value they have agreed on, and the sale should be finished and done in thirty days by cash payment by buyer, or in installments if buyer cannot get a mortgage. The seller changed his mind and filed suit, asking for rescission of the document, on the basis that it was not a contract due to ambiguity and leaving out basic required information. Will the court likely order rescission?

Answer: Yes, the document is not a contract for the sale of real estate because it does not contain all of the information required.

For a contract for the sale of real estate to be enforceable, it must satisfy the Statute of Frauds, requiring a writing signed by the party to be charged, and must contain essential terms with reasonable certainty. Key missing elements here include a precise description of the property, a definite purchase price (not just 'a value they have agreed on'), and clear payment terms beyond vague options. The lack of these essential, definite terms renders the agreement too ambiguous and likely unenforceable, justifying rescission.

A tenant moved into a single-family residence. She and the landlord signed a lease-purchase agreement, which applied $200 of each month’s rent to the purchase price of $50,000. The tenant agreed to get a mortgage within 33 months and to pay the full balance due, less the payments credited, on the final settlement date, which was set for 90 days after the 33rd month. A default by the tenant caused a forfeiture of all credits and voided the agreement. The tenant made 31 consecutive payments, but stopped on month 32, when part of the roof caved in causing an uninhabitable situation in the dead of winter. She put the rental payments in an escrow account. The landlord sued for eviction and termination of the lease-purchase agreement. The tenant answered that the landlord had breached the warranty of habitability. She also counterclaimed to compel specific performance of the agreement because she was ready to tender the balance due and take full title to the property. Under the circumstances, what is the most likely ruling of the court?

Answer: The landlord breached the warranty of habitability, which released the tenant at least temporarily from further rent payments, but the purchase agreement was still valid and it would be enforced.

The warranty of habitability is implied in residential leases, requiring landlords to maintain premises fit for human habitation. The caved-in roof in winter clearly breaches this warranty, excusing the tenant from rent payments during that period. However, the lease-purchase agreement has two distinct components: the lease and the option to purchase. While the landlord's breach affects the lease, it does not automatically void the purchase agreement, especially since the tenant is ready to tender the balance, thus the purchase agreement would be enforced.

An owner conveyed residential real estate to a friend for life. The friend conveyed his interest in the same real estate to his brother. When the owner discovered the conveyance to the brother, he brought an eviction action against the brother. The brother refused to vacate the premises and appealed. What is the likely decision of the court regarding the requested eviction of the brother?

Answer: The court will rule that the brother has a right to live on the premises until the death of his brother who conveyed the property to him.

A life estate, while limited in duration, is generally alienable (transferable). When the friend conveyed his life estate to his brother, the brother received an estate *pur autre vie* (for the life of another), meaning his interest is measured by the original grantee's (the friend's) life. The brother's right to possess the property will therefore terminate upon the death of the friend, not the original owner or the brother himself.

A man signed an agreement to purchase real estate from a woman for $10,000. He put $250 down at the time of signing the contract but was bound to put up another $750 within 10 days, so as to equal a total of 10% down, as per the written contract terms. The ten days passed without the balance being deposited. The purchaser’s broker told him that the title search revealed an ancient easement over the rear of the property allowing a farmer to take his sheep across the land. Nothing more was said about it. About 30 days after the date of the agreement, the seller gave written notice that she did not intend to perform the agreement and enclosed the check for $250 to the purchaser. The purchaser did not cash that check and put the remaining $750 in the escrow. He then sued for specific performance. Will the court enforce the agreement and compel the seller to sell under the contract?

Answer: No, because the purchaser breached the agreement by not putting up the balance of the down payment in time, and he had no right to delay just because of rumors about the title search.

A suit for specific performance cannot be enforced in favor of one who has not fully and fairly performed all conditions precedent on his part. Failure to pay the money within the specified time deprives the purchaser of his right of action to enforce performance. If he had a problem with the title search he had a duty to complain and demand a refund, but he did not do that.

Several landowners had residential premises in a development called “The Lakes.” One owner’s property contained a small improved beach area that could be used for swimming. That owner gave oral permission to several neighbors to use the beachfront for swimming, as a friendly neighborly gesture. That owner sold her property to a new owner. The new owner erected fences and signs saying, “keep out.” The neighbors sued, claiming that they had an easement by implication through prior usage to use the beachfront. Will the court restore the use of the beachfront to the neighbors?

Answer: No, because the use granted was merely a license to go on a neighbor’s land to go swimming, and the users of the free license did not expect that they were obtaining an interest in the land.

A license is the permission to do an act or series of acts on another’s land without possession of any estate in the land. An oral license without any consideration being paid for the use of the license is revocable at the will of the person granting the license. A license is thus mere permission to perform a certain act. A license in writing for which consideration is paid can be irrevocable, depending on the circumstances. The above example has no indication of being compensated or having any other characteristics of becoming irrevocable.