PMBR Flash Cards - Real Property - 2007

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Property Evil
Contracts . Constitu
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247 Licenses
Describe a license.
MULTISTATE SPECIALIST
2 47
ANSWER
A license permits one person to enter onto the land
in the possession of another without being a tres-
passer. Unlike an affirmative easement, a license is
not an interest in land. It is merely a privilege, revo-
cable at the will of the licensor (unless it is coupled
with an interest, i.e., the licensee has paid for the
particular right or has relied upon it in a significant
manner).
EXAMPLES
X orally advises Y that the latter may enter Blackacre for
recreational purposes. As a consequence, Y purchases expen-
sive hunting and fishing gear. If X desires to repudiate his
promise, he would contend that Y was granted an express
easement. Therefore, since the Statute of Frauds is not satis-
fied, the easement is unenforceable by Y. Y, however, would
argue that X gave him a license, which is now coupled with
an interest (i.e., Y relied to his detriment upon X's promise).
Thus, it cannot be revoked. A license is a personal property
interest, and therefore is not subject to the Statute of Frauds.
X advises Y that she (Y) can cross Blackacre until advised to
the contrary. Since Y's right to use X's land is explicitly sub-
ject to X's ability to revoke, Y has a license. However, the fact
that a right to use another's land is explicitly limited to a spe-
cific duration (i.e., X gives Y the right to cross Blackacre for
five years) would not preclude the grant from being character-
ized as an easement.
• EXAMINATION TIP: Licenses are, in the absence of

an express understanding to the contrary, non-
assignable.
• EXAMINATION TIP: On the MBE, the bar examiners
typically test several kinds of licenses: tickets to sport-
ing events, reservation and occupancy of a hotel
room, and social guests who enter onto the property.
MULTISTATE SPECIALIST flash cards

248 Profits
Describe a profit.
MULTISTATE
248
ANSWER
A profit is the right of one person to go onto
the land in possession of another and take
therefrom either some part of the land itself or
some product of the land.
EXAMPLE
A gives B the right to enter his land "to extract oil and
gas from it."
• EXAMINATION TIP: Profits (like affirmative
easements) are real property interests, and
therefore subject to the Statute of Frauds. If in
the Example, A's grant was made orally, he
could later revoke it (unless estopped to do so by
equitable principles).
• EXAMINATION TIP: Easements of access and
egress will usually be implied into the grant of a
profit. X, in writing, gives Y the right to extract
timber from a particular area located inside the
boundary of X's land. An easement to and from
the area where the timber is located will be
implied into X's grant.
• EXAMINATION TIP: Unless there is an explicit
understanding to the contrary (i.e., the profit is
"exclusive'), the recipient of a profit may assign
it to another. However, the assignee may not
overuse the original grant (i.e., make extrac-
tions in excess of that which the grantor would
have reasonably anticipated). If such overuse
occurs, the profit is extinguished.
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249 Easements
Describe an easement.
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ANSWER
An affirmative easement is the right of one
person to go onto the land in possession of
another and make a limited use thereof.
A negative easement is an agreement by a
landowner to restrict the use of his land.
EXAMPLE
X signs a deed permitting Y (X's neighbor) to cross his
(X's) land to obtain access to a public highway. X has
granted an affirmative easement to Y.
• EXAMINATION TIP: An easement appurtenant

is one which benefits another primarily by reason
of the latter's ownership of a particular parcel of
land. An easement in gross is one which benefits
another in a personal manner. X signs a deed
giving Y (X's neighbor) the right to use his (X's)
jacuzzi. Since X probably intended this right to
be personal to Y, she has an easement in gross.
• EXAMINATION TIP: Easements appurtenant
ordinarily run with the land. Easements in gross
ordinarily do not. If in the situation described
above, Y sold her land to Z, the latter is probably
not entitled to use X's jacuzzi.
• EXAMINATION TIP: The owner of the servient
tenement is ordinarily not precluded from
using land over which another party has an
easement. If X has the right to use a road which
runs across Y's land, Y may also use it. Y may
not, however, unreasonably interfere with X's
easement (i.e., block the road).
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250 Express Easements
Describe an express
easement.
M ULTISTATE SPECIALIST
MULTISTATE
2 50
ANSWER
An express easement is one which is expressly
granted to the dominant tenant.
• EXAMINATION TIP: Express easements are

subject to the Statute of Frauds. However,
where the grantee accepts a deed under
which the grantor reserves an easement
against the property being conveyed, the
Statute of Frauds is deemed to be satisfied
(despite the absence of the grantee's
signature).
• EXAMINATION TIP: Questions sometimes

arise as to whether an express grant consti-
tutes a fee, easement or license. Unlike the
various implied easements, an express ease-
ment is not enforceable against a bona fide
purchaser of the servient tenement.
• EXAMINATION TIP: An express easement is

often limited by its terms. X signs a deed
which 'grants Y the right to construct a sewer
line under his (X's) land." If Y sells his land
to Z, the latter arguably cannot enforce the
easement since (1) the grant was made
specifically to Y, and (2) there was no
"successors and assigns" language.
W MULTISTATE SPECIALIST flash cards

251 Easement by Implication
Describe the manner in

which an affirmative
easement arises from
implication.
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ANSWER
An easement by implication generally arises
when the owner of two or more adjacent
parcels sells one or more of them and it is
clear (although no easement was mentioned in
the instrument of conveyance) that one was
intended. In order to establish an easement by
implication, the following requirements must
be met: (a) that at the time of the conveyance
one part of the land is being used for the ben-
efit of the other part (a quasi-easement); and
(b) that the use is apparent; and (c) that the
use is continuous; and (d) that the use is
either reasonably or strictly necessary to
the enjoyment of the quasi-dominant tract.
EXAMPLE
X has a lot whose western boundary abuts a public
street. She builds a house on the rear part of the land
and paves a walkway (running along the northern por-
tion of the property) from the structure to the street. If X
conveys the back portion of the lot to Y, but makes no
reference in the deed to Y's right to use the walkway, Y
can claim an easement by implication over the land
retained by X (assuming it would be difficult for Y to
enter or egress from his land without utilizing the
walkway).
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252 Prescriptive Easement
Describe an easement by
prescription.
25 2
ANSWER
A prescriptive easement arises by operation of
law where the party claiming the easement has
continuously used the servient tenement in an
open, notorious, adverse manner, continuously
throughout the applicable statute of limitations
period.
EXAMPLES
X, without obtaining Y's permission, uses a road which
runs across Y's land for purpose of ingress and egress to
and from his (X's) home. X's use of the road is visible
and occurs on a regular, frequent basis. At the expiration
of the applicable statute of limitations period, X has
acquired a prescriptive easement across Y's land.
A expressly grants B an easement in writing to use a spe-
cific road which runs across A's land. B, without obtain-
ing A's permission, widens the road (almost doubling its
width). This work is done in a visible manner. The
enhanced road is subsequently used on a regular basis
by B. B has an express easement to the original road and
an easement by prescription to the widened portion of it.
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MULTISTAT1 SPICIALIS T flash cards
253 Easements Arising from Necessity
Describe an easement by
necessity.
253
ANSWER
An easement by necessity arises by operation
of law where the following conditions are
satisfied:
(1) At some point in time, the dominant and
servient tenements were under common
ownership,
(2) The necessity for an easement existed
when the dominant and servient tenements
were originally severed, and
(3) The degree of necessity is relatively high
(the party asserting the easement would incur
substantial expense and/or inconvenience if an
easement was not implied).
EXAMPLES
X subdivides her land, granting one parcel to Y and the
other to Z. The only way to the public street from Z's
parcel is over Y's parcel. Z immediately conveys her
property to Art. If Art cannot gain access to a public
street, except by expending a prohibitive sum of money,
he can probably claim an easement by necessity over Y's
land. However, Y can "locate" the easement (i.e., stipu-
late exactly where Art can cross his land).
A owns Blackacre, which is bordered on the south and
the west by public roads. A sells the northern half of
Blackacre to B. Later, the road on the west side of B's
property is closed by the county. No easement arises.
The necessity did not exist at the time the land was
severed.
piMULTISTATE SPECIALIST flash cards

254 Extinguishments of Easements
Describe how an easement

is extinguished.
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254
ANSWER
An easement may be extinguished in any one
of the following ways:
(1) The dominant and servient tenement are
merged (i.e., the parcels come under common
ownership),
(2) A written release is given by the dominant
tenement holder,
(3) The easement lapses (i) pursuant to the
terms of an express grant, or (ii) the necessity
which caused the easement to arise by opera-
tion law ceases to exist,
(4) The easement is abandoned by the domi-
nant tenant (i.e., non-use, together with a spe-
cific intention to abandon it),
(5) The dominant tenant is estopped from
asserting the easement (i.e., the servient tenant
detrimentally relies upon the dominant tenant's
assurances that the easement will not be
asserted),
(6) The servient tenement (usually a building)
is destroyed through no fault of the servient
tenant,
(7) The servient tenement is condemned, or
(8) A prescriptive re-taking by the servient ten-
ant occurs (i.e., the servient tenant interrupts
the dominant tenant's use of the easement for
the requisite period of time).
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255 Adverse Possession
Describe how land is

acquired by adverse
possession.
MULTISTATE
255
ANSWER
Title to non-public land is acquired by adverse
possession where the claimant occupies the
real property in an open, notorious, exclusive,
hostile manner, continuously throughout the
applicable statute of limitations period (typi-
cally, 5-21 years).
• EXAMINATION TIP: Adverse possession must
be distinguished from acquisition of a pre-
scriptive easement. In the latter instance, the
land is merely used (rather than occupied)
in a manner adverse (rather than hostile) to
the rightful owner.
• EXAMINATION TIP: Where the rightful owner
or occupier (i.e., a lessee) successfully ejects
an adverse claimant, the former may also
recover mesne profits (i.e., the reasonable
rental value of the land for the period of
possession) from the latter.
• EXAMINATION TIP: The acquisition of title by
adverse possession does not impair any non-
possessory interests held by third parties (i.e.,
an easement holder or covenantee).
• EXAMINATION TIP: Title to land acquired by
adverse possession is valid against a subse-
quent bona fide purchaser of the record
owner.
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256 "Hostile" Elements of
Adverse Possession
Describe the "hostile"

element of adverse
possession.
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256
ANSWER
Possession of land is "hostile" where the cir-
cumstances are such that the rightful owner
should recognize that an ejectment action is
necessary to preserve her ownership of the
property.
EXAMPLES
X asks Y if he (X) can stay on the latter's (Y's) land. Y
agrees. X cannot acquire title by adverse possession,
unless he subsequently advises Y that he (X) is claiming
title to the land.
Y orally advises X that he (Y) is giving Blackacre to her
(X). X's possession is hostile (i.e., Y should realize that
X, believing she is the owner, would have to be ejected).
X goes into possession of Blackacre based upon a fraud-
ulent deed. His occupation of the land is hostile.
X and Y jointly own Blackacre. X's exclusive possession
of the land is not "hostile," unless he advises Y that he
(X) is claiming sole title to Blackacre. Since each joint
tenant is entitled to occupy co-owned land, Y would not
otherwise realize the necessity to assert his ownership
rights in the land. Similarly, a landlord ordinarily assumes
that a holdover tenant was willing to pay rent for the
holdover period. Thus, a lessee is obliged to make the
lessor aware that her possession is "hostile".
• EXAMINATION TIP: Hostile possession is not

permissive.
• EXAMINATION TIP: Possession may occur
intentionally or by mistake.
potable
257
Describe when a claimant's

adverse possession is
"open and notorious."
MULTISTATE
257
ANSWER
Possession is "open and notorious" when the
adverse claimant does acts with respect to the
land which would be expected of the rightful
owner. An open and notorious claimant acts
for the whole world to see, not secretly or
clandestinely.
EXAMPLES
X's land is in a rustic area. As a consequence, it is easily
habitable only during the summer months. Assuming the
other requisites of adverse possession are satisfied, Y's
construction of a cabin and occupation of X's land dur-
ing the summer would satisfy the "open and notorious"
element.
X moves onto Blackacre, builds an apartment house,
and charges its occupants rent. Although X is not physi-
cally present at the land, his activities are "open and
notorious".
•EXAIVIINATION TIP: Where occupation of

land by an adverse claimant commences
after a future interest has been granted, the
statute of limitations does not commence
against the latter until his right to possession
has vested. X makes an inter vivos grant of a
future interest in Blackacre to y but reserves
a life estate in herself. Subsequently, Z
moves onto the land under circumstances
which satisfy the adverse possession doctrine.
Z's possession is not effective against Y until
X dies.
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258 Tacking
Describe the "tacking"

doctrine for purposes of
adverse possession.
25 8
ANSWER
An adverse claimant may aggregate any periods of
time during which prior possessors occupied the
land, provided such parties were in privity of estate
with the adverse claimant (i.e., they had sold, con-
veyed or devised the land).
EXAMPLES
X moves onto Blackacre under circumstances which satisfy
the adverse possession doctrine. When he dies, he devises the
land to Jane. Jane can "tack" X's time of possession to her
own. The result is the same if Jane inherited Blackacre under
the applicable intestate succession rules.
the adverse possession doctrine. She subsequently sells the
land to Y. Y can "tack" X's period of possession onto his own.
the adverse possession doctrine. She subsequently rents the
land to Z. Z's possession of the land is tacked onto X's statute
of limitations period (so long as Z recognizes X as his land-
lord).
• EXAMINATION TIP: Tacking is not allowed
unless the claimant satisfies all common law
elements of adverse possession.
• EXAMINATION TIP: Tacking is not permitted
where one adverse claimant ousts a preceding
adverse claimant.
EXAMPLE
X moves onto Blackacre under circumstances which
satisfy the adverse possession doctrine. He is subse-
quently ousted by Y, whose occupation of the land also
meets the requirements of adverse possession. Y cannot
tack X's period of occupation to her own. Y is not in
privity of estate with X.
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MULTISTAT1 SPICIALIST flash cards
259 Interruption of Adverse Possession
Describe when a claimant's

adverse possession is
interrupted.
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259
ANSWER
The statute of limitations period may be inter-
rupted by (1) dispossession of the claimant by
(i) the rightful owner or occupier, or (ii) a sub-
sequent adverse possessor, (2) commencement
of an ejectment action by the rightful owner or
occupier (assuming the suit is pursued to a
successful conclusion), or (3) abandonment by
the adverse claimant.
EXAMPLES
X moves onto Blackacre under circumstances which
satisfy the adverse possession doctrine. Prior to the run-
ning of the applicable statute of limitations period, X
decides to live at another location and moves away. Two
months later, she changes her mind and returns to Black-
acre. Since X abandoned the land (i.e., departed with no
intent to return), the statute of limitations period was
interrupted.
X moves onto Blackacre under circumstances which sat-
isfy the adverse possession doctrine. No interruption
occurs if Y (the rightful owner) subsequently becomes
mentally incompetent.
•EXAMINATION TIP: If any interruption

occurs, the claimant may only count years of
possession after the interruption towards sat-
isfaction of the prescriptive period.
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260
Describe the significance

of taking adverse
possession under color of
title.
260
ANSWER
An adverse claimant takes possession of land
under color of title when she goes onto the
property pursuant to a defective document. In
such event, the claimant acquires title to all of
the land described in the instrument (rather
than just the portion which she actually
occupied).
EXAMPLES
X owns two parcels of land, Blackacre and Redacre. He
sells Blackacre to Y (a farmer who wishes to plant crops
on the land). However, the deed mistakenly describes
Redacre. Redacre comprises 50 square acres, but Y culti-
vates only one-half of the land. Nevertheless, if Y's pres-
ence on Redacre continues for the applicable statutory
period, he becomes the owner of the entire parcel.
X orally grants Blackacre to Y. Since the Statute of Frauds
is not satisfied, the conveyance is unenforceable. If Y
goes into possession of a part of Blackacre for the appli-
cable statute of limitations period, he would become the
owner of that portion of the real property. He would
not, however, acquire title to any other part of the land.
In this case, Y did not go into possession pursuant to a
document.
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,■ MULTISTATE SPECIALIST flash cards
261 Constructive Eviction
Describe the constructive

eviction doctrine.
261
ANSWER
Constructive eviction occurs where there is a
material breach by the landlord which violates the
tenant's implied covenant of quiet enjoyment, if
the breach renders the premises uninhabitable
and the tenant quits the premises in a timely
fashion. In a constructive eviction, the tenant is
relieved of his duties to pay rent and may even
recover damages resulting from the landlord's
actions.
EXAMPLES
X rents an apartment to Y. Z, another tenant, practices on his
clarinet until 11:30 p.m. each evening. Since a landlord is
ordinarily not responsible for the acts of others, no construc-
tive eviction has occurred. In some states, however, where the
landlord has the contractual right to evict tenants for causing a
disturbance and refrains from enforcing it, the former's non-
action is deemed "responsible" for a tenant's behavior.
Leased premises are severely damaged due to a hailstorm.
Since the landlord is not responsible for this occurrence, no
constructive eviction has occurred.
Landlord, owner of dwelling, leased it to Tenant. Shortly after
Tenant took possession, Landlord changed the heating system
in the home from one operated by coal to oil. For two
months following the changeover, soot, smoke and oil fumes
came through the floor and baseboards in the dwelling to
such an extent that Tenant's physician advised her to vacate
the premises to preserve her health. Landlord, who was noti-
fied of the condition, failed to correct the problem, and Ten-
ant vacated the premises. Landlord has constructively evicted
tenant by violating the implied covenant of quiet enjoyment.
•EXAMINATION TIP: Where the landlord has

covenanted to perform specific acts (i.e., supply heat,
have a doorman, etc.), and fails to do so, a construc-
tive eviction occurs only if a substantial interference
with the tenant's enjoyment of the premises results.
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MULTISTATS SPECIALIST flash cards
262 Implied Warranty of Habitability
Describe the implied

warranty of habitability.
potable
262
ANSWER
Where, due to the landlord's failure to main-
tain residential premises, those premises cease
to be habitable, the tenant may (1) vacate the
dwelling and recover damages resulting from
the landlord's breach of this warranty (i.e., a
constructive eviction occurs), or (2) remain in
possession and reduce her rent in an amount
equal to the diminished value of the premises.
• EXAMINATION TIP: In most jurisdictions, the
premises must fail to comply, in a significant
manner, with a pertinent housing or build-
ing code for this doctrine to be applicable.
• EXAMINATION TIP: Under the common law,
a landlord ordinarily has no responsibility
for repairing leased premises (unless the
defect was located in a common area under
the landlord's control, such as a hallway,
elevator, etc.). Thus, no constructive eviction
occurs by reason of a landlord's failure to
make repairs necessitated by (1) a structure's
natural deterioration (unless the landlord
had covenanted to repair the same), or
(2) conditions over which the landlord has
no control. Under the implied warranty of
habitability, a landlord may be responsible
for making repairs which were not required
at common law.
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263 Delivery of Leased Premises
Describe the landlord's

duty to deliver possession
of leased premises at the
commencement of the
term.
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ANSWER
In most jurisdictions, a landlord has an implied obli-
gation to deliver physical possession of premises at
the commencement of the lease term ("English
rule"). A substantial minority of states, however,
impose no obligation upon the landlord to do so
("American rule"). Also, under common law, a land-
lord did not have an obligation to actually deliver
possession to the tenant. Consequently, a lessee did
not acquire a legal interest in the leased premises
until she actually took possession. In the event that
there was a trespasser or holdover tenant on the
property, tenant's exclusive remedy was against the
wrongdoer (and tenant had no action against the
landlord).
EXAMPLE
X rents an apartment to Y. When Y arrives on the initial date
of the lease term, she finds that Z (the previous lessee) is still
in the apartment. In most states, Y can treat the landlord as
being in breach of the implied obligation to deliver posses-
sion of the premises and recover the (1) costs of moving to a
new location, and (2) difference between the new rental rate
and that which would have been due under the original lease
for the duration of the initial term. In jurisdictions which fol-
low the minority ("American rule") view, however, the lessee
would (1) be liable for the rent under the lease, and (2) have
responsibility for evicting the holdover tenant.
•EXAMINATION TIP: If in jurisdictions which

follow the majority ("English rule"), the new ten-
ant elects to go into possession after the holdover
lessee has been evicted, she is entitled to recover
any damages resulting from the delay in her
ability to occupy the premises (i.e., those losses
are not waived).
p MULTISTATE SPECIALIST flash cards

264 Retaliatory Eviction
Describe the retaliatory

eviction doctrine.
MULTISTATE
264
ANSWER
A landlord may not retaliate against a tenant
solely because the latter has (1) exercised his
applicable state federal or constitutional rights,
or (2) reported housing code violations to the
appropriate authorities.
EXAMPLE
X, a month-to-month tenant at an apartment complex
owned by Y, complains to the authorities about numer-
ous violations of the housing code at his premises. When
Y learns of this, he notifies X that he (X) must vacate
the premises when the lease would otherwise renew.
Assuming Y's actions are otherwise legal, if X proves that
Y acted out of retaliatory motives, X's eviction could be
enjoined.
• EXAMINATION TIP: Retaliatory conduct of

any type (i.e., increasing rent, decreasing
services, etc.) is precluded under this
doctrine.
• EXAMINATION TIP: This doctrine has been

applied to situations where a landlord sought
to evict a tenant for (1) opposing the lessor's
application to rezone the premises, (2) join-
ing a tenants' union, and (3) pursuing legal
remedies against a landlord while remain-
ing at the premises.

265 Fixtures
Describe a fixture.
2 65
ANSWER
A fixture is a chattel (i.e., something movable)
which is attached to the land with the inten-
tion that it become part of the realty. If an item
is a fixture other than a trade fixture (one used
in a trade or business), it may not be removed
by the land occupier when she vacates the
land.
EXAMPLE
X leases an apartment that is owned by Y. Disgusted by
the lack of light in the dining room, X attaches a chande-
lier to the ceiling. To do so, he must tear a hole in the
plaster and have an electrician add wiring. The chande-
lier will probably become a fixture.
• EXAMINATION TIP: In determining if the

person (frequently a tenant) who affixes an
item to land intended it to become part of the
realty, courts consider- the (1) permanence
of the attachment, (2) damage to the land
which the chattel's removal would cause,
(3) the degree to which the land's value
would depreciate if the item is removed, and
(4) the intent of the annexer.
• EXAMINATION TIP: If in removing a fixture,
the realty is damaged, the person detaching
the item is liable for the cost of restoring the
premises to the original condition.
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266
Describe a trade fixture.
266
ANSWER
Trade fixtures are chattels annexed to the land
by a tenant for pecuniary gain during her ten-
ancy. They are removable by the tenant,
whether she be a tenant for life, tenant for
years or tenant at will.
EXAMPLE
X opens a restaurant in an empty storefront owned by Y.
X installs booths, stools, lighting, and a bar. When he
vacates the space at the end of his lease, he may take all
of these items with him because he has used them in his
trade.
•EXAMINATION TIP: The common law rule

states that, if the tenancy is for a definite
time and ends on a certain day, the trade
fixtures must be removed before the end of
the term. Under the modern view, however,
and under the laws of most states, to encour-
age trade and industry a tenant is permit-
ted to remove trade fixtures within a
reasonable time after the expiration of a
lease.
flash cards
267 Waste
Describe what constitutes

waste.
267
ANSWER
Waste occurs where one rightfully in posses-
sion of land, but who holds less than a fee
simple absolute, unreasonably (1) undertakes,
or fails to undertake, conduct which results in
a permanent reduction in the property's value,
or (2) deliberately alters the principal use
made of the land.
•EXAMINATION TIP: Waste may either be

affirmative (doing something to the land,
such as tearing down a building or remov-
ing minerals) or permissive (allowing the
property to depreciate, such as by failing to
repair a leak in the roof or neglecting to pay
taxes).
•EXAMINATION TIP: Whether conduct is

"unreasonable" depends upon the use to
which the land has been, or would be
expected to be, put. While the removal of tim-
ber or minerals from land usually constitutes
waste, i f (1) those things were previously
extracted from the land, or (2) the grantor
consented to, or should have anticipated, the
use in question, the occupier's conduct is
probably not waste.
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268 Real Covenant/Equitable Servitude
Distinction
Describe the distinction

between a real covenant
and an equitable servitude.
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268
ANSWER
Where a promise which runs with the land is
enforced at law (i.e., the covenantee is seeking
monetary damages), it is analyzed as a real
covenant. Where the same promise is enforced
in equity (i.e., by an injunction), it is viewed as
an equitable servitude.
EXAMPLE
X covenants to refrain from building within three feet of
the boundary lines of her land. Nevertheless, she subse-
quently commences a structure which extends to one-
foot of the common property line with Y (a covenantee).
If Y seeks to enjoin X from building within the restricted
area, X's promise must be analyzed as an equitable servi-
tude. If Y seeks monetary damages (i.e., a sum equal to
the diminished value of Y's land as a consequence of the
construction), X's promise would be analyzed as a real
covenant. A party seeking to enforce a covenant will
usually (1) seek specific performance, and (2) alterna-
tively, demand monetary damages (in the event that
injunctive relief is refused).
*EXAMINATION TIP: It is often difficult to dis-

tinguish between a negative covenant and a
negative easement. In both instances, the
landowner has promised to restrict the use of
his land. A negative easement must only be
recorded to be enforceable against BFP's of
the burdened parcel. An equitable servitude,
however, must satisfy the requisites of run-
ning with the land to be enforceable against
such BFP's.
pssaine
269 Benefit of Real Covenant Running
with the Land
Describe the conditions

which must be satisfied for
the benefit of a promise
which is being enforced as
a real covenant to run with
the land.
pose hr
2 69
ANSWER
For the benefit of a promise which is being
enforced as a real covenant to run with the
land, the following conditions must be satis-
fied: the (1) original parties intended it to run
with the land, (2) promise is memorialized in a
writing which satisfies the Statute of Frauds,
(3) benefit of the covenant touches and con-
cerns the covenantee's land, and (4) party
seeking to enforce the covenant stands in ver-
tical privity with the original covenantee.
EXAMPLE
X promises Y, in a writing which satisfies the Statute of
Frauds, that she (X) will refrain from (1) using her land
for commercial purposes, and (2) smoking. Y subse-
quently conveys his land to Z. The latter promise would
not run to Z (i.e., it does not "touch or concern" Z's
land). The former promise would run to Z if (i) Y's use
or enjoyment of his land is affected by X's promise, and
(ii) so intended by the original parties.
I EXAMINATION TIP: To be enforceable, a real

covenant (like any other contractual provi-
sion) must (1) not be too ambiguous, and
(2) be constitutionally valid. A covenant
whereby the grantee promises to use land for
"recreational purposes only" might be too
vague to be enforceable.
pitsiti9V
270 Burden of Real Covenant Running
with the Land

which must be satisfied for
the burden of a promise
a real covenant to run with
the land.
ro
O
ro
Z
0.4
270
ANSWER
For the burden of a promise which is being
enforced as a real covenant to run with the
land, the following conditions must be satis-
fied: (1) the original parties intended it to run
with the land, (2) the promise is memorialized
in a writing which satisfies the Statute of
Frauds, (3) there was horizontal privity
between the original covenantor and cove-
nantee (i.e., typically, the parties stood in a
buyer-seller, or landlord-tenant relationship),
(4) there is vertical privity between the original
covenantor and the party against whom the
covenant is being enforced, (5) the burden
of the covenant touches and concerns the
covenantor's and covenantee's land (i.e.,
affects their use or enjoyment of it), and (6) if
the party against whom the covenant is to be
enforced gave value to the grantor, she must
have had actual, constructive or inquiry notice
of the covenant when the land was acquired.
•EXAMINATION TIP: The intention of the orig-
inal parties that a covenant run with the
land may be found from the words of the
original grant ( X, his successors, heirs and
"
assigns hereby promise... '9. Where no spe-

cific language exists, courts often infer this
intent from the fact that a covenant touches
and concerns the burdened land.
p MULTISTATE SPECIALIST flash cards

271 r ed Reciprocal Covenants
Describe when a reciprocal

covenant by the grantor
will be implied into a deed
given to a grantee within a
subdivision.
271
ANSWER
An implied reciprocal covenant may be read
into a grantor's deed when: (1) the plaintiff rea-
sonably believed that parcels subsequently con-
veyed within the subdivision would be subject
to a similar covenant, (2) there was a common
scheme which included the covenant in ques-
tion at the time the plaintiff acquired his land,
(3) the party against whom the implied
covenant is asserted had reason to expect that
his land would be subject to the restrictions in
question, and (4) the party against whom the
implied covenant is asserted had actual or con-
structive notice of the restrictions.
EXAMPLE
0 conveys Lot #1 to X. In the deed, X promises to
restrict her land to residential uses. At that time, 0 tells X
that the 19 remaining subdivision lots will be subject to a
similar restriction. X records her deed. However, when
Lot #19 is sold to Y, the deed fails to contain any restric-
tions. Y desires to build a shopping center. If (1) there
was indicia of a common scheme when X acquired the
land (i.e., a plot map showing only residential homes,
brochures indicating a purely residential subdivision,
etc.), and (2) Y should have realized that a reciprocal
covenant by 0 (i.e., 0 promises to restrict the subdivi-
sion to residential purposes) would be implied into the
deed given to X, X could enforce this implied reciprocal
covenant against Y (0's successor to Lot #19). If parcels
#1-18 were being used in a residential manner when Y
acquired Lot #19, Y arguably had reason to expect that
his land would be similarly burdened.
, M ULTISTATE SPECIALIST
MULTISTATE flash cards

272 Equitable Servitudes

which must be satisfied
for the (1) burden, and
(2) benefit of a promise
an equitable servitude to
run with the land.
MULTISTATE
272
ANSWER
For the burden of a promise which is being
enforced as an equitable servitude to run with
the land, the following conditions must be
satisfied: (1) the original parties intended the
burden to run with the land, (2) the promise
is memorialized in a writing which satisfies
the Statute of Frauds, (3) the burden of the
covenant touches and concerns the covenan-
tee's land, and (4) if the party against whom
the covenant is sought to be enforced gave
value, he must have had actual, inquiry or
constructive notice of the promise.
For the benefit of a promise which is being
enforced as an equitable servitude to run with
the land, the following requisites must be
satisfied: the (1) original parties intended the
benefit to run with the land, (2) promise is
memorialized in a writing which satisfies the
Statute of Frauds, and (3) promise touches and
concerns the covenantee's land.
Iffiff
MULTISTATE
, SPECIALIST flash cards
273 Enforcement of Equitable Servitude
Describe when an
equitable servitude will not
be enforced, despite the
fact that it runs with the
land or is being asserted by
the original covenantee.
O
ro
tTi
°4
04
MULTISTATE
273
ANSWER
A covenant which is being asserted as an
equitable servitude will not be enforced where
the equities weigh in favor of the covenantor.
EXAMPLES
Although X agreed with Y to refrain from building a
second story onto his (X's) home, he subsequently com-
mences to do so. When the work is almost finished, Y
initiates an action to compel X to dismantle it. A court
could find that Y had waited too long to seek relief (i.e.,
laches). If so, Y would be limited to monetary damages
(i.e., the diminishment in value of his land as a result of
the construction).
If, in the above Example, Y commenced the suit in a
timely manner, but was, himself, in breach of a different
covenant, the "unclean hands" doctrine might prevent Y
from enforcing X's covenant.
•EXAMINATION TIP: Equitable relief is

always discretionary in nature. Any equi-
table consideration (i.e., relative hardship of
the parties, changes in the surrounding
neighborhood, etc.) is pertinent in determin-
ing whether or not an injunction should be
issued.
posibirds
274 Statute of Frauds/
Real Property Transfers
Describe the Statute of

Frauds rule pertaining to
transfers of an interest in
land.
plods,*
/ MULTISTATE SPECIALIST
27 4
ANSWER
Promises or agreements pertaining to the
transfer of an interest in land must be embod-
ied in a writing which satisfies the Statute of
Frauds to be enforceable.
EXAMPLES
A, in writing, offers to transfer Blackacre to B in
exchange for Redacre. B orally accepts. A would not be
able to enforce the agreement against B, since the agree-
ment involves the transfer of land.
A orally agrees with B to build a home on B's land for
$50,000. A could enforce the contract against B (B has
merely retained A to erect a structure upon B's real
property).
A and B orally agree that (1) A will purchase certain land
with funds provided by B, (2) A will construct and oper-
ate a hotel on the land, and (3) A and B will split the
income from the hotel. Since the transaction does not
involve the transfer of an interest in land by one of the
parties to the other, it is not within the Statute of Frauds.
•EXAMINATION TIP: Express easements (and

their release), profits (and their release),
covenants, equitable servitudes, leases, con-
veyances through deeds, and the sale of fruc-
tus naturales all require compliance with the
Statute of Frauds. However, boundary line
agreements generally do not, and licenses
never do.

275 Oral Agreements for the
Transfer of Real Property
Describe when oral

agreements for the
transfer of land are
enforceable.
O
ro
1.4 z
MULTISTATE
275
ANSWER
In a majority of states, an oral real estate sales
agreement may be enforced in equity (even though
the Statute of Frauds requires a writing). Although
there is considerable flexibility among the states as
to the kind and amount of part performance that is
necessary in order to permit enforcement, the fol-
lowing acts are generally necessary:
a.Payment of all or part of the purchase price,
and either
b. Delivery of possession of the land or prem-
ises to the vendee, or
c. Construction of permanent and valuable
improvements by the vendee.
EXAMPLES
X orally agrees to sell Blackacre to Y for $10,000. X delivers a
valid deed pertaining to the land to Y. Before paying the pur-
chase price, Y repudiates the transaction. Although the deed
was not signed by Y, acceptance of the instrument ordinarily
precludes him from successfully asserting the Statute of
Frauds. Additionally, Y is bound by any promises attributed to
him in the deed.
X promises her niece Ann that, if the latter comes to Black-
acre and takes care of her (X), she will devise Blackacre to
Ann. Ann accepts. However, if Ann makes neither (1) valu-
able improvements to the land, nor (2) pays the real property
taxes, she would probably not be able to obtain specific per-
formance if X fails to devise Blackacre to her. She might,
however, be able to recover monetary damages under a
quasi-contract theory.
•EXAMINATION TIP: A few courts permit specific

performance whenever a vendee "so changes his
position that injustice can be avoided only by
specific enforcement"; Rest. 2d, Section 197.
posibite
276 Marketable Title
Describe the marketable

title doctrine.
276
ANSWER
Unless there is an explicit provision to the contrary,
it is implied into a contract for the sale of land that
the grantee will have marketable title (i.e., there is
no reasonable possibility that the grantee will be
subjected to a lawsuit as a consequence of acquir-
ing the land) when the deed is delivered to her.
EXAMPLES
Common defects that may render land title unmarketable
include:
(1) Outstanding mortgages or liens,
(2) The existence of restrictive covenants,
(3) Outstanding future interests of others in the property,
(4) An encumbrance which the vendor cannot or will not
remove and which the vendee cannot remove by applica-
tion of the purchase money,
(5) An easement upon any appreciable part of the
property,
(6) Variations in the names of grantors and grantees in
the chain of title,
(7) Variations in the land description in the chain of title,
(8) Outstanding dower interests,
(9) Land subject to claims of adverse possessors,
(10) Encroachments, and
(11) Existing violations of equitable servitudes or
covenants.
• EXAMINATION TIP: The following defects do not

render title unmarketable: (1) zoning restric-
tions; and (2) land use restrictions.
• EXAMINATION TIP: Marketable title is even
implied into a land sale contract which requires
only the tender of quitclaim deed.
plash's*
277 Estoppel by Deed
Describe the "estoppel by

deed" doctrine.
277
ANSWER
Where a person purports to convey land to
another before she actually owns it, ownership
automatically passes to the grantee when the
grantor acquires title to the real property. The
modern doctrine of estoppel by deed is an out-
growth from the common law rules relating to
warranty of title. The doctrine is based on the
concept that a grantor, and persons claiming own-
ership through him are bound by representations
made concerning the title to be transferred. Some
jurisdictions hold that after-acquired title by the
grantor passes to the grantee by operation of
law. Other jurisdictions apply the rules relating to
true estoppel. The doctrine of estoppel by deed
applies when there is a representation respecting
title expressed in the form of a warranty. It is not
determined by the type of deed involved.
EXAMPLE
X owns Blackacre. He tells his son, Y, that the land has
been willed to him (Y). Prior to X's death, Y purports to
convey the land to Z. At that time, Y had no interest in
Blackacre to convey. However, if X subsequently dies and
devises Blackacre to Y, Z automatically becomes the
owner of it. As a consequence of the estoppel by deed
doctrine, a conveyance by Y subsequent to X's death is
unnecessary to pass title to Z.
•EXAMINATION TIP: The estoppel by deed doctrine

will not overcome the rights of an intervening
bona fide purchaser. Assume that, in the above
Example, Y conveys Blackacre to A soon after
X's death. If A (1) gave value, and (2) had no
knowledge of Z's interest, A has priority over Z.
possiov
278
Describe the equitable

conversion doctrine.
ro
posaboo
278
ANSWER
Equitable conversion applies when there is an enforce-
able obligation to sell land (usually in the case of an
executory real estate sales contract). Under this doc-
trine, the purchaser is regarded as the equitable
owner of the land, and the vendor, although she
still owns the legal title, is regarded as the benefi-
cial (or equitable) owner of personal property,
primarily the right to the purchase price. This means
that where real property under contract is destroyed
during the executory period and before the closing,
and neither party is at fault, the risk of loss is on the
buyer. In other words, even if the property is com-
pletely destroyed, under the doctrine of equitable con-
version, the buyer must pay the contract price.
• EXAMINATION TIP: Where the land is impaired
because of some condition for which the vendor is
not responsible (i.e., floods, fire caused by a third
party, etc.), the buyer cannot avoid the transaction.
• EXAMINATION TIP: At common law, where the seller
had casualty insurance that covered any material
physical damage during the executory period, even
where the seller collected insurance proceeds, the
buyer still had to pay the full purchase price. Mod-
ernly, where the seller has casualty insurance that
covers any material, physical damage during the
executory period, most jurisdictions require the seller
to deduct the amount of insurance proceeds from the
amount the buyer is obligated to pay.
• EXAMINATION TIP: If the vendor dies prior to delivery
of the deed to the buyer, the proceeds to be derived
from the sale are usually viewed as personal prop-
erty. Thus, a devisee of the land under the vendor's
will receives nothing if the transaction is consum-
mated (the proceeds instead going to devisees of the
seller's personal property).
potable
279 Conveyancing
Describe when an inter

vivos conveyance of real
property occurs.
pa,*
im
279
ANSWER
A conveyance of land occurs when: (1) the
grantor has completed a valid deed, (2) there
has been "delivery" of the deed, and (3) the
grantee "accepts" the deed (i.e., indicates a
willingness to become the owner of the land).
EXAMPLES
X orally states, in the presence of five persons, "I hereby
give Blackacre to Y." No conveyance has occurred,
unless a valid deed also exists.
X transfers land to Y, delivering a valid deed to the latter.
A few days later, before the deed is recorded, X changes
her mind and demands that Y return the deed to her.
Y complies. The land is still owned by Y. No conveyance
from Y back to X occurred, since the Statute of Frauds
was not satisfied (i.e., there was no valid deed signed by
Y in favor of X). The fact that Y failed to record the deed
received from X did not preclude a conveyance from
occurring.
•EXAMINATION TIP: When one gratuitously

transfers land to another (i.e., by inter vivos
gift or will), the latter's acceptance of the
deed is presumed (unless it is rejected
promptly upon learning of the grant).
iPtisbit°
280 Requisites of a Valid Deed
Describe the requisites of

a valid deed.
ro
MULTISTATE
280
ANSWER
The Statute of Frauds requires a written instru-
ment signed by the grantor or the grantor's agent
to accomplish the conveyance of a freehold
estate, the execution of a contract for the sale of
land or a memorandum of sale. An oral contract
for the sale of land may be specifically enforce-
able in equity under the part performance doc-
trine. The following elements are required for a
valid deed: (1) Signature of Grantor. The signa-
ture of the grantor is usually required by statute
for the proper execution of a deed. The grantee's
signature is not required. The grantee's accep-
tance of the instrument makes him a party to the
deed. (2) Consideration. Consideration is neces-
sary to raise a use (under the Statute of Uses) by
bargain and sale. The recital of a consideration in
the instrument will suffice. A conveyance will be
sustained if consideration was paid but no recital
was included in the deed. (3) Identification of
the parties. In order for a deed to be valid, both
the buyer and the seller must be identified in the
deed. (4) Description of the property. A deed
must adequately describe the property being
conveyed.
• EXAMINATION TIP: Notarization and/or
witnessing is not necessary for a deed to be
valid. These formalities are, however, ordinarily
required for the deed to be recorded.
• EXAMINATION TIP: Where a grantor gives a
deed to another with the expectation that the
recipient will complete the item by filling in the
grantee's name, the instrument is usually valid
when the latter's name is actually inserted.
pinks*
281 Delivery
Describe when, for

purpose of conveyancing,
a delivery occurs.
281
ANSWER
An effective delivery of a deed requires that
the grantor intend to deliver the deed. The
intent should be that the transfer of ownership
is immediately operative. A physical transfer of
the deed is not necessary. Once a deed has
been delivered, a cancellation of the instrument
will not revest ownership of the property in the
grantor.
EXAMPLES
X hands a valid deed to Y and says, "This land is yours
when you graduate from law school." No delivery has
occurred (i.e., X's words indicate that the conveyance is
not immediately operative).
X hands a deed (completed in favor of Z) to Y (Z's
friend) and says, "I'm hereby giving Blackacre to Z, but
please don't give her this deed until I die." Delivery has
probably occurred. The fact that Z's right to possession
does not vest until a subsequent point in time does not
prevent this conclusion. This is always the case with
future interests.
• EXAMINATION TIP: Extrinsic evidence is

always admissible to prove whether the
grantor intended a deed to be "immediately
operative" or not.
• EXAMINATION TIP: There is a rebuttable
presumption that a deed which has manu-
ally been given to the grantee has been deliv-
ered. Conversely, there is a rebuttable
presumption that a deed which the grantor
has retained in his physical possession has
not been delivered.

282 Merger of Warranties
Describe the merger of

warranty doctrine.
mpiebs•
282
ANSWER
Once a buyer accepts a deed, she can sue only
on those covenants expressly contained in that
instrument. Any covenants contained in a con-
tract for the sale of land are merged into the
deed.
EXAMPLE
X and Y enter into an agreement pursuant to which the
X (the vendor) promises to deliver "marketable title" to
Y (the buyer). However, unknown to X, the area has
been rezoned (causing the land to be in violation of the
applicable ordinance, and therefore be "unmarketable").
If Y accepts a quitclaim deed, he would not be able to
successfully sue X for the defect in the zoning law.
•EXAMINATION TIP: An exception to thê

merger rule is recognized with respect to col-
lateral agreements. X and Y enter into a con-
tract, whereby X will convey Blackacre to Y
for valuable consideration. The agreement
also requires X to paint the house situated on
Blackacre. If Y accepts a deed which makes
no reference to this obligation and X fails
to paint the structure, Y might be able to
enforce X's promise (i.e., X's promise was
collateral to transferring title to Blackacre).
petabse
283 g3 0g?ii
, ur
Describe a bona fide

purchaser ("BFP") for
purposes of the recording
statutes.
pinata
2 83
ANSWER
A bona fide purchaser ("BFP") is one who, in
good faith and for value, obtains an interest in
land, without actual, inquiry or constructive
notice of the prior competing interest in
question.
• EXAMINATION TIP: Value for purposes of

becoming a BFP ordinarily requires the
party claiming that status to part with some-
thing of tangible worth at the time his
interest was acquired. A creditor who
receives a mortgage on land to temporarily
forebear from asserting a past debt has not
given value. However, a creditor who receives
a conveyance in satisfaction of a past due
obligation has given present value (i.e., the
owner's debt to him is extinguished).
PM PO
284 Constructive Notice
Describe "constructive
notice" for purposes of
determining if a party is a
BFP.
2:1
O
ro
MULTISTATE
284
ANSWER
A party acquiring an interest in land is deemed
to have constructive notice of any documents
which would be disclosed by a search of the
grantor-grantee index.
EXAMPLE
X conveys Blackacre to A, who (without recording his
deed) re-conveys the land to B. B records the A-B deed
immediately. X subsequently conveys the land to C. C
would not have constructive notice of B's interest. The
grantor-grantee index would not disclose a chain of title
running from X to B.
• EXAMINATION TIP: Where (1) a deed is

required to be notarized and/or witnessed
prior to filing, and (2) it is recorded without
such formalities, it is usually a nullity (i.e.,
it is viewed as not appearing in the public
records). Many jurisdictions, however, have
curative statutes. Under these laws, where no
dispute as to ownership of the land arises
within (for example) ten years after recorda-
tion, the defect in the deed is retroactively
deemed to be cured.
• EXAMINATION TIP: Where a document in the
chain of title specifically refers to another,
unrecorded instrument, a grantee is ordi-
narily charged with notice of the contents of
the latter writing.
potabos
285 Race Notice
Describe the priority

to land in a "race"
jurisdiction.
2 85
ANSWER
No conveyance or other instrument is valid as
against purchasers (including lien creditors or
other parties) for a valuable consideration, but
from the time of recordation. Under this type
of statute, the first to record wins. A subse-
quent purchaser need not be bona fide and
without notice since he or she will prevail if
he or she records first. Priority is determined
by who wins the race to the recording office.
EXAMPLES
For value, X conveys Blackacre to B. However, before B
records the deed which she received from X, X gratu-
itously conveys the land to Y. Y, having actual knowl-
edge of B's interest in Blackacre, records the deed which
he received from X. Assuming Y's filing preceded B's
recordation, Y has priority. The fact that Y was aware of
B's prior interest in Blackacre would not be significant.
X conveys Blackacre to Y. Y neglects to record the deed
which he receives from X. For value, Y then reconveys
Blackacre to Z. Z immediately records the deed which
she received from Y. Subsequently, X gratuitously con-
veys Blackacre to Art ("A"). Although A knows of Z's
interest in Blackacre, he records the deed received from
X. A has priority. Although Z recorded her deed prior to
A's filing, Z's deed is out of the chain of title (i.e., some-
one searching the grantor-grantee index from X would
not find the Y-Z deed). Thus A was the initial person to
record an unbroken chain of title. Z could have pro-
tected herself by insisting upon recordation of the X-Y
deed before she filed her (the Y-Z) deed.
potab
286
Describe the priority to

land in a "notice"
jurisdiction.
ipmbio
286
ANSWER
An unrecorded conveyance or other instrument
is invalid as against a subsequent bona
fide purchaser ("BFP") for value and with-
out notice. Under this type of statute, the sub-
sequent bona fide purchaser prevails over the
prior interest whether the subsequent BFP
records or not. As far as the subsequent BFP is
concerned, there is no premium on a race to
the recorder's office. Priority is determined
upon the status of the purchaser at the time the
deed or mortgage is acquired.
EXAMPLES
For value, X conveys Blackacre to Y. Before Y records, X
conveys Blackacre to Z for value. However, before Z
files his deed, Y records her deed. Assuming Z did not
have notice of Y's interest, Z would have priority. The
fact that Y recorded first would not be significant, since
Z (1) gave value, and (2) had no notice of the earlier
conveyance when the land was sold to him.
For value, X conveys Blackacre to Y. Subsequently, X
also conveys Blackacre to Z. Y files the deed received
from X prior to Z's recordation, but after the conveyance
to Z. Whether Z has priority to the land depends upon
whether (1) he had notice of Y's interest (if he did, Y has
priority), and (2) he had given value for X's conveyance
of Blackacre to him (if he had not, Y has priority).
petthiP
/ MULTISTATE SPECIALIST flash cards
287 Race/Notice Jurisdiction
Describe the priority to

land in a "race/notice"
jurisdiction.
287
ANSWER
An unrecorded conveyance or other instru-
ment is invalid as against a subsequent
bona fide purchaser for value without
notice and who records first. This statute
combines the essential features of both the
notice and race type recording statutes. In
order for a subsequent party to prevail in a
race-notice jurisdiction, he or she must be both
a bona fide purchaser for value without notice
of the prior interest and record first.
EXAMPLES
X gratuitously conveys Blackacre to Y. X then conveys
the land, for value, to Z. Prior to filing her deed, Z learns
of the earlier conveyance to Y. Nevertheless, Z files her
deed before Y records. Z has priority (assuming she
lacked notice of Y's interest when Blackacre was con-
veyed to her). The fact that Z obtained knowledge of Y's
interest before she (Z) recorded is not significant.
X gratuitously conveys Blackacre to A. A immediately
records his deed. For value, A then conveys the land to
C (who fails to record the deed which she receives from
A). X then conveys the land to B, who lacks knowledge
of C's interest. B immediately records his deed. Since B
had constructive knowledge of X's conveyance to A, B's
interest is subordinate to C (since C acquired his interest
through A).
pi/Mb,*
288
Describe the covenants

contained in a general
warranty deed.
288
ANSWER
A general warranty deed contains six
covenants:
(1) The grantor is the exclusive owner of the
land, and there are no outstanding, future
interests which will vest at a subsequent time
(covenant of seisin),
(2) The grantor is legally capable of conveying
the land (i.e., he is not incapacitated or a
minor),
(3) There are no interests against the land (i.e.,
easements, covenants, liens) which have not
been disclosed to the grantee (covenant
against encumbrances),
(4) The grantee will not subsequently be
evicted or disturbed by someone validly claim-
ing a superior title to the land (covenant of
quiet enjoyment),
(5) The grantor will reimburse the grantee if
the latter, after giving the former notice, unsuc-
cessfully defends against the claims of another
who asserts a paramount interest in the land
(covenant of warranty), and
(6) The grantor will do any acts reasonably
necessary to perfect the grantee's interest in
the land (i.e., covenant of further assurances).
pmable
MULTISTATE SPECIALIST iWish cards
289 Land Sale Remedies
Describe the remedies

available to an aggrieved
buyer or seller of real
property.
b
MULTISTATE
2 89
ANSWER
Where the seller refuses to consummate the
transaction, a buyer can ordinarily: (1) obtain
specific performance, or (2) obtain (i) damages
(i.e., the difference between the market price
and the contract price), and (ii) reimbursement
for monies advanced to the seller or expended
with respect to the transaction.
Where the buyer refuses to perform, a seller
may ordinarily: (1) obtain specific performance
(i.e., a judgment against the buyer for the full
amount of the purchase price), (2) obtain dam-
ages (i.e., the difference between the contract
price and the market price), or (3) retain the
deposit (provided there is a valid liquidated
damages clause).
•EXAMINATION TIP: Where the (1) vendor

cannot convey marketable title, and (2)
buyer desires to complete the transaction, the
latter can usually obtain an abatement of
the purchase price. X enters into a contract
to sell land to Y. However, X and Y subse-
quently discover that a 3-foot strip along the
western boundary of X's property is owned
by Z (X's neighbor). Y can probably obtain
specific performance and pay X an abated
purchase price (equal to the decrease in land
being acquired).
MUMULTISTATE
LTISTATE SPECIALIST flash cards
290 joint Tenancy
Describe a joint tenancy.
290
ANSWER
A joint tenancy is a form of co-ownership
where each tenant owns an undivided
interest in the whole estate. Its distinguish-
ing feature is the right of survivorship,
which means that upon the death of one joint
tenant, the surviving tenant or tenants own the
whole of the property and nothing passes to
the heirs of the decedent.
EXAMPLE
X, Y and Z are joint tenants. If X dies, Y and Z become
the sole owners of the land (even though X devises her
interest in the property to Art). Y and Z would also take
free of any dower or courtesy rights otherwise held by
X's spouse.
•EXAMINATION TIP: For a joint tenancy to be

created, four unities must occur concur-
rently: (1) time (i.e., the joint tenancy inter-
ests must be created at the same time),
(2) title (i.e., the joint tenancy must be cre-
ated within a single document, (3) interest
(i.e., each of the joint tenants must hold
interests of equal size and duration), and
(4) possession (i.e., the right of each joint
tenant to possess the land must be identical).
X devises Blackacre "...3/4 to Y and 1/4 to Z,
as joint tenants, with right of survivorship".
Since the interests of Y and Z are not of
equal size, a tenancy in common (rather
than a joint tenancy) is created.
pintsboo
291 Tenancy in Common
Describe a tenancy in
common.
MULTISTATE
29 1
ANSWER
A tenancy in common is a concurrent estate in
which co-tenants each own an undivided, sep-
arate and distinct share of the property. It
is important to note that a tenant in common
does not own the whole property as in a joint
tenancy. Each tenant can dispose of her undi-
vided fractional part or any portion thereof,
either by deed or will. The only "unity" is that
of possession inasmuch as each tenant is
entitled to possession of the whole estate.
Also, there is no right of survivorship.
Upon the death intestate of a tenant in com-
mon, her interest descends to her heirs.
EXAMPLES
X and Y are tenants in common of Blackacre. X dies,
and leaves his share of Blackacre to Z in his will. Z will
take X's share, and Y will now be a tenant in common
with Z.
A and B are tenants in common of Blueacre. A makes an
inter vivos conveyance of his interest in Blueacre to C.
C and B are now tenants in common.
•EXAMINATION TIP: Modernly, tenancies in

common are preferred.
pinata

292 Tenancy by the Entirety
Describe a tenancy by the

entirety.
29 2
ANSWER
A tenancy by the entirety is a form of co-
ownership similar to a joint tenancy based
upon the common law concept of unity of
husband and wife. Tenancy by the entirety is
a species of joint tenancy, and, like in joint
tenancy, each spouse owns the whole estate
and not a fractional part thereof. Just as in a
joint tenancy, the doctrine of survivorship
operates in a tenancy by the entirety so that
the survivor spouse takes the whole estate and
the heirs receive nothing.
• EXAMINATION TIP: Five unities are essential

in a tenancy by the entirety: (1) Time,
(2) Title, (3) Interest, (4) Possession, (5) Per-
son (i.e., unity of husband and wife).
• EXAMINATION TIP: Remember that, in a

tenancy by the entirety, all decisions and
actions are made by the couple, not by the
individuals spouses. One spouse cannot act
independently of the other.
possikute

2 93 Ouster
What is an ouster?
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MULTISTATE
293
ANSWER
An ouster occurs where one co-tenant
manages to wrongfully exclude his or her
co-tenants from possession of the property.
When one co-tenant ousts from possession her
co-tenant, the ousted tenant has a cause of
action against the possessor, not to put her
out, but to regain possession for herself with
the possessor.
EXAMPLE
X and Y are co-tenants of Blackacre. X builds a 10 foot
high electric fence and locks the gate, keeping the only
key, effectively excluding Y from the property. This
wrongful exclusion would probably constitute an ouster.
•EXAMINATION TIP: Where one co-tenant

stakes a claim for exclusive possession of any
part of the property, the claim alone may
amount to an ouster.
pititiNO

294 Severance of Joint Tenancy
Describe how a joint

tenancy is severed.
O
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294
ANSWER
There are four primary ways to sever a joint
tenancy: (1) the death of one joint tenant
(because the other(s) will take through right
of survivorship; (2) a conveyance inter vivos
by one joint tenant (with the grantee becom-
ing a tenant in common with the remaining
tenant(s); (3) a final partition decree from
an equity court; (4) in a title theory jurisdic-
tion, a mortgage taken out by one joint ten-
ant will sever.
EXAMPLE
A, B and C are joint tenants. A makes an inter vivos con-
veyance to D. D will now be a joint tenant with the
group of B and C. B and C remain joint tenants with a
right of survivorship. However, upon D's death, his inter-
est will pass to his heirs.
•EXAMINATION TIP: When there are more

than two joint tenants and a severance
occurs, the severance is only effective to the
extent of the interest cut off
potable
295 Rights of Obligations of Co-Tenants
Describe the rights and

obligations of co-tenants.
PI 1111 thiP
295
ANSWER
Co-tenants (i.e., tenants in common, joint tenants, tenants by
the entirety) have the following rights and obligations:
(1) In all forms of concurrent ownership, each tenant has the
right to possess and enjoy the whole estate.
(2) In a majority of states, a tenant in possession has the
right to retain profits gained by her use of the property. By
the same token, a tenant in possession need not share such
profits with a co-tenant out of possession, nor reimburse him
for the rental value of her use of the land, unless there has
been an ouster. However, a co-tenant out of possession has
a right to share in rents and profits received from third
parties.
(3) A tenant who has paid the entire taxes on the property
may either compel contribution by her co-tenants or enforce a
lien against the property for such. Contribution may also be
compelled for mortgage payments made by one co-tenant, as
long as the co-tenant making the payments is not in sole pos-
session of the property. Where she is in sole possession of the
property, the court will only reimburse her if the payments
she has made are in excess of the amount the property would
net if rented.
(4) The majority rule states that a co-tenant who spends his
or her own money to make necessary repairs to the property
can require that the other co-tenants contribute to the cost of
such repairs. The general rule is that the co-tenant making
the repairs and laying out the money must notify the other
co-tenants in advance of the necessity of such repairs and of
the co-tenants expected contribution. However, according
to the minority rule, a tenant has no right of contribution
against the other co-tenant(s) for repairs he has made, but if
partition is had the court in making an equitable division of
the proceeds will take into consideration the expenditures
made by one tenant for repairs and improvements.
(5) A co-tenant who makes improvements to the property is
not entitled to contribution from other co-tenants. If a parti-
tion occurs, then the court may "even up" the expenses paid
by reimbursing the co-tenant who made the improvements.
(6) If a tenant extracts minerals or standing timber from the
land, she must pay the other co-tenants an amount equal to
their proportionate share of profits.
pirsabse
296 Private Nuisance
Describe a private
nuisance.
MULTISTATE
296
ANSWER
A nuisance occurs where the defendant has
caused, or is responsible for, a nontrespassoty,
substantial, unreasonable interference with the
plaintiffs use and enjoyment of her land; Rest.
2d (Torts), Section 821(D).
EXAMPLES
A dog belonging to X (Y's neighbor) constantly barks
until 2.00 a.m. in the morning. X (who is responsible for
his pet) may be liable to Y for nuisance. No trespass has
occurred. There was no encroachment on Y's land.
Aircraft constantly fly, at an altitude of approximately
5,000 feet, over X's land. These loud flights severely
rattle the furnishings in X's home. Assuming this inter-
ference is "substantial," X could assert an action for
nuisance, but not trespass (i.e., a height of 5,000 feet
would not be within the immediate reaches of X's land).
X throws a beehive onto Y's land, causing Y to remain
inside his home for 6 hours. While X has committed a
trespass (and possibly false imprisonment, if Y's inability
to leave his house was substantially certain to occur),
there is probably no liability for nuisance. A physical
encroachment occurred in this instance.
pmellos•

297 Duties of Lateral Support
Describe the duty

pertaining to lateral
support.
MU LTISTATE SPECIALIST
297
ANSWER
A landowner or occupier is strictly liable for the
removal or alteration of her property in a manner
which causes her neighbor's land to subside; pro-
vided the subsidence (1) occurred while the land
was in its natural state, or (2) would have occurred
even if the land was in its natural state. If there are
artificial structures on the land and the land in its
natural condition would be injured by the taking
away of lateral support, then there are two distinct
views as to the damages recoverable. In most states,
the recovery is limited to damage to the land in
its natural condition and does not include any
damage to the artificial structures on the land. In a
minority of jurisdictions, the recovery will include
both the damage to the land and the damage to the
artificial structures thereon as well. Under both
views, however, however, if there is negligence on
the part of wrongdoer who removes lateral or sub-
jacent support, then the wrongdoer is liable for all
damages which naturally and proximately flow from
his negligence, including damages to both land and
artificial structures.
• EXAMINATION TIP; If a landowner is not respon-
sible for the damage caused to another's property
under the duty of lateral support, he might still be
liable under a tort theory (i.e., negligence or
engaging in an abnormally dangerous activity).
• EXAMINATION TIP: A party may contractually
release his right to lateral support, but such
agreements (1) are strictly construed against the
party asserting the waiver; and (2) must ordinar-
ily satisfy the Statute of Frauds.
potable
Describe a fee simple
absolute.
polish,*
29 8
ANSWER
A fee simple absolute is an estate in land (1) of
potentially indefinite duration (it ceases only if
the owner dies intestate and without heirs), (2)
which is alienable, devisable and inheritable
through intestacy statutes.
EXAMPLES
A conveys Blackacre to "B and his heirs." B owns a fee sim-
ple absolute. He may make an inter vivos conveyance of the
land or devise it by will. If B fails to do either, Blackacre
will be inherited by B's heirs at his death.
A conveys Blackacre "to B." Although at common law this
conveyance created only a life estate in B, most jurisdictions
today view the grant as a fee simple absolute.
• EXAMINATION TIP: A fee tail (i.e., "A to B and

the heirs of B's body") is not alienable (other
than for the current owner's lifetime) or devisa-
ble. It is inheritable, but only by lineal descen-
dants (i.e., issue) of the grantee. Today, a fee
tail is usually treated as (1) a fee simple
absolute in the original grantee, or (2) creating
a life estate in the initial grantee, with a vested
remainder in the original grantee's issue.
• EXAMINATION TIP: Where it is unclear as to
whether a fee simple absolute or some lesser
estate has been conveyed, there is a judicial
preference in favor of the former.
• EXAMINATION TIP: On the MBE, you must see
the words "and his heirs" for a fee simple
absolute.
postibiP
299 Defeasible Estates
Describe the three types of

defeasible estates.
MULTISTATE
299
ANSWER
A determinable estate is subject to automatic
termination in favor of the grantor upon the
occurrence of a specific event. It is usually
characterized by words such as "so long as,
during, until, while, etc.". X grants land to
"Y and her heirs, so long as it continues to
be used as a hospital." Y has a fee simple
determinable.
An estate subject to a condition subsequent is
capable of being terminated upon (1) the
occurrence of a specific event, and (2) appro-
priate, affirmative action by the grantor. It is
usually characterized by words such as, "but if,
upon the condition that, provided that, etc."
X conveys land to "Y and her heirs, provided
liquor is never sold on the premises, and if it
is, I and my heirs may re-enter and recover it
back." Y has a fee simple subject to a condi-
tion subsequent.
An estate subject to an executory limitation
(1) terminates upon the occurrence of a spe-
cific event, and (2) passes to a third party (i,e.,
someone other than the grantor or the imme-
diately preceding grantee). It is characterized
by the same language which is used to create
a determinable estate or an estate which is
subject to a condition subsequent.
,Fasseby
300 Possibility of Reverter
Describe a possibility of
reverter.
'MULTISTATE SPECIALIST
300
ANSWER
A possibility of reverter is a future interest in
land in favor of the grantor which follows a
determinable estate.
EXAMPLE
X grants Blackacre to "Y and her heirs, as long as the
land is used only for residential purposes." Even though
X's grant does not specifically state that ownership of the
land automatically reverts back to him if it is used for
other than residential purposes, this consequence will be
implied.
• EXAMINATION TIP: A possibility of reverter is

not subject to the Rule Against Perpetuities.
• EXAMINATION TIP: Since ownership to land
automatically reverts back to the grantor
when the terminating event occurs, contin-
ued possession by the occupier is "hostile" for
purposes of adverse possession. Thus, if pos-
session of land continues for the applicable
period of time after the terminating event has
occurred, the occupier acquires legal title by
adverse possession.
possbire

301 Right of Re-Entry
Describe a right of re-entry

(sometimes called a
"power of termination").
O
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, MULTISTATE
301
ANSWER
A right of re-entry is a future interest in land in
favor of the grantor which follows an estate
which is subject to a condition subsequent.
EXAMPLES
X conveys land to "Y and her heirs, provided that if the
land is ever used for commercial purposes, I and my
heirs may re-enter and reclaim the land." Since, in addi-
tion to the condition subsequent, the grantor must take
affirmative steps to recover the land, X has a right of
re-entry.
X grants land to "Z and his heirs, provided it shall be
used for residential purposes only." Since there is no
specific right of re-entry language, the grant will proba-
bly be construed as a covenant or mere statement of
purpose. Thus, X has no right to reclaim the land if it is
used for non-residential purposes.
• EXAMINATION TIP: A right of re-entry is not

subject to the Rule Against Perpetuities.
• EXAMINATION TIP: Where a condition subse-
quent occurs, the occupier's possession of the
land is not "hostile" for purposes of adverse
possession until the grantor commences the
appropriate action to reclaim the land. How-
ever, if not asserted in a relatively timely man-
ner, a condition subsequent may be waived.
pirsibr
302 Executory Interest
Describe an executory
interest.
302
ANSWER
A future interest in land which (1) cuts short a
preceding possessory estate (held by someone
other than the grantor) upon the occurrence of
a contingent event, and shifts title to a third
party (a "shifting interest"), or (2) divests the
grantor's estate (a "springing interest"). An
executory interest is subject to the Rule Against
Perpetuities.
EXAMPLES
X conveys Blackacre to "Y and her heirs, if Y reaches the
age of 21." Y has an executory interest. It divests the
grantor's estate. Y's interest is not a contingent remainder
because it does not take effect upon the natural expira-
tion of X's estate.
X conveys Blackacre to "Y and her heirs, so long as the
land is used for commercial purposes, but if it is not, to
Z and her heirs." Z has an executory interest. If the land
is used for commercial purposes, title automatically shifts
to Z. (However, Z's interest is void under the Rule
Against Perpetuities.)
X conveys Blackacre to "Y and his heirs, but if Z survives
Y, to Z and her heirs." Z has an executory interest. If she
survives Y, she will divest Y of his interest. Z's interest is
not a contingent remainder subject to a condition prece-
dent (i.e., surviving Y). A contingent remainder cannot
follow a fee simple.
X conveys Blackacre to "Y for life, and then, one year
later, to Z and her heirs." Z has an executory interest.
It divests the grantor's estate.

303
Describe the difference

between a vested and
contingent remainder.
PAM IP
303
ANSWER
A vested remainder is a future interest, not
subject to the occurrence of any condition, in
favor of an ascertainable person (other than
the grantor) which automatically takes effect
upon the natural expiration of the preceding
possessory estate. A contingent remainder is a
future interest which is (1) in favor of an
unascertainable person, or (2) subject to a
condition precedent, which takes effect auto-
matically upon the natural expiration of the
preceding possessory estate.
EXAMPLES
X conveys Blackacre to "Y for life, then to C and her
heirs." C has a vested remainder. Her interest vests auto-
matically upon Y's death.
X conveys Blackacre to "Y for life, then to Z's children."
If Z has no children when the grant is made (i.e., the
grantees are unascertainable), Z's children have a contin-
gent remainder.
X conveys Blackacre to "Y for life, then to Z's heirs". Z's
heirs have a contingent remainder (i.e., they cannot be
ascertained until Z's death).
•EXAMINATION TIP: A remainder can only

follow an estate which is less than a fee sim-
ple (i.e., a life estate, estate for years). X con-
veys Blackacre to 'X and his heirs, then to Y
and her heirs." X has a fee simple absolute.
Y has no interest in Blackacre.
plissbite
304 Rule Against Perpetuities
Describe the Rule Against

Perpetuities.
ro
Oro
304
ANSWER
The Rule Against Perpetuities states, "No inter-
est is valid unless it vests, if at all, within 21
years of a life in being from the time of its cre-
ation." The vesting period is measured in two
ways: (1) in the case of an inter vivos grant,
from the time that the future interest is created;
(2) in the case of a will, at the grantor's death.
EXAMPLES
X makes an inter vivos grant of land "to Y for life, then
to Y's children, and then to Y's grandchildren." The
interest of Y's children will vest within 21 years of a life
in being (i.e., their interests will vest immediately upon
Y's death). However, the interest of the grandchildren is
void. Y (regardless of his age) could theoretically have
additional children after X's death, and so the interests of
their children (i.e., Y's grandchildren) could vest more
than 21 years after Y's death). (Since X made an inter
vivos conveyance, Y is the measuring life.)
In his will, X grants land "to Y for life, then to Y's chil-
dren for their lives, then to Z and his heirs, but if Z is not
alive when the survivor of Y's children dies." The inter-
ests of Z and A are void. Their interests are not certain to
vest within 21 years of the measuring life (Y's). Again, Y
could have additional children after X's death. On the
other hand, if Y predeceases X, the bequests to A and Z
are valid. Y's children would be the measuring lives. The
interests of Z and A will vest (if at all) at the death of the
survivor of Y's children.
pmbv

305 Mortgage
Describe a mortgage.
'MULTISTATE SPECIALIST
305
ANSWER
A mortgage is an interest in land created by a
written instrument providing security for the
performance of a duty or the payment of a
debt. If the mortgagor does not pay the mort-
gage debt on time, the mortgagee (or the party
to whom the debt is owned) has two choices.
It can either assume title to the piece of real
property or call the property to be sold and
keep the proceeds toward satisfaction of the
mortgage debt.
•EXAMINATION TIP: A mortgage is always

accompanied by a note. They go hand in
hand. The mortgage is security for the debt
(the money borrowed), and the note is evi-
dence of the debt.
postai.*

306 a Mortgage
Describe the parties to a

mortgage.
1"00"1 PS
306
ANSWER
The mortgagor creates the mortgage. He is
the "landowner" and debtor. The mortgagee
is the creditor (e.g., bank) and the holder of
the mortgage.
EXAMPLES
X wishes to buy a new home. He plans to put 20% down
and finance the rest. Y Bank agrees to give him a loan.
As the land purchaser, X will be the mortgagor. Y Bank
is the mortgagee.
X already owns a home but wishes to raise some cash
to pay for his daughter's college tuition. He may give
Y a security interest (i.e., a mortgage) in his home in
exchange for cash. X will be the mortgagor, and Y will
be the mortgagee.
•EXAMINATION TIP: Even though it may

sound counterintuitive, remember that the
mortgagor is the person borrowing the
money, not the entity lending it!
posebse
307 M ain Mortgage Theories
Describe the three main

types of mortgage theories.
posabso
307
ANSWER
There are three main types of mortgage theo-
ries: lien theory, title theory, and intermedi-
ate theory. (1) In the majority of states, the
mortgage creates only a lien on the land regard-
less of the operative words of the mortgage
instrument. Under lien theory, the mortgagor
remains the owner of the land, and the mort-
gagee holds only a security interest in the land.
Therefore, the mortgagor retains possession
unless a foreclosure takes place, in which case
the mortgagee may take over possession of the
land. (2) However, at common law, and still in
about 20 states, the mortgage operates as a
conveyance of the legal title to the mort-
gagee. Note, however, that such title is subject
to defeasance on payment of the mortgage
debt. However, under a title theory, the mort-
gagee is actually entitled to possession of the
land at any time. Practically, this means that the
mortgagee may take possession immediately
upon default and need not wait for foreclosure.
(3) Finally, very few states follow the intermedi-
ate theory which states that, while title is in the
mortgagor until default, upon default, legal title
switches to the mortgagee. Therefore, as in title
theory jurisdiction, the mortgagee may take
over possession of the property immediately
upon default.
•EXAMINATION TIP: Note that the difference

between intermediate theory and title theory
is mostly semantic.
postai&
-'--
308 As sume/Subject To
Distinguish between
mortgages that are
assumed and property that
is taken subject to the
mortgage.
MULTISTATE
308
ANSWER
Where a mortgage exists on property at the time that
the mortgagor conveys the property to a third party,
the language in the deed controls whether the third
party assumes liability for the mortgage debt. At
common law, the mortgagee could not object to the
mortgagor's transfer of the property.
"Subject to" Mortgage. In a conveyance of land
where the deed states that the buyer or grantee
takes "subject to" a mortgage, the grantee is not
personally liable (i.e., in personam) for the mort-
gage debt. However, if she does not pay the debt,
the mortgage may be foreclosed and she (the
grantee) will lose the land.
NOTE: Where the deed language is silent, the
grantee is considered to take "subject to" the mort-
gage.
"Assumption" of Mortgage. In a sale of land in
which the deed states that the purchaser "assumes"
the mortgage, the purchaser or grantee is person-
ally liable for the mortgage debt and is subject to a
deficiency judgment in the event that a foreclosure
sale does not satisfy the debt.
NOTE: Where the grantee assumes the mortgage but
does not pay, she is primarily liable to the mort-
gagee, but the original mortgagor remains secondar-
ily liable and may be called to pay if the mortgagee
does not exceed as against the grantee. Note also
that the mortgagee and grantee can contract so that
the original mortgagor retains no liability.
• EXAMINATION TIP: Remember that, where the

deed is silent, the default is that the new pur-
chaser takes subject to the existing mortgage on
the property. This is a frequently tested issue!
pi/stbiP
309 "Due-on-Sale" Clause
What is a "due-on-sale"
clause?
O
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tri
MULTISTATE
309
ANSWER
Modernly, "subject to" and "assume" do not
have much relevance in deeds because a mort-
gagee will call in the loan and require its full
payment when the mortgagor wishes to trans-
fer ownership of the property without the
mortgagee's consent. Such "due-on-sale"
clauses have been deemed to be enforceable
and operate almost universally in all states
today.
•EXAMINATION TIP: Remember that, unless

you are instructed otherwise, the bar exam-
iners are testing you on the common law in
Property. Therefore, even though you may
know that due-on-sale clauses are ubiquitous
modernly, you should presume that a mort-
gagor may sell a piece of property, even
where it has an outstanding mortgage on it.

sh cards
310 Assignability of Mortgages
Are mortgages assignable?
31 0
ANSWER
Mortgages are assignable. Both the mortgage
(i.e., the security), and the note (i.e., the debt),
are transferable.
CAVEAT: When there is a purported transfer of
the note or debt to one party, and an assign-
ment of the mortgage to another, the general
rule is that the mortgage follows the note or
debt. Be aware that the debt or note is the
principal relationship, and the mortgage is
only ancillary thereto for purposes of security.
EXAMPLE
X takes out a mortgage with Y Bank. One day, he
receives a letter in the mail telling him that Y Bank has
assigned the mortgage to ABC Bank. Such an assignment
is permissible.
•EXAMINATION TIP: You will often see issues

related to the assignment of mortgages when
you see recording statutes questions. For
these questions, treat the assignment of a
mortgage as you would a conveyance to a
BFP.
pititibtiv

311 Equity of Redemption
Describe the equity of

redemption.
31 1
ANSWER
The term equity of redemption refers to the
interest of the mortgagor in a title jurisdiction
after default. It was in this situation that the
mortgagor needed the aid of equity to provide
relief from the conveyance, which at law had
become absolute in the mortgagee.
EXAMPLE
X misses several payments on his mortgage. As a result,
Y Bank lets him know that it intends to foreclose on his
home. Up until the foreclosure is complete, X may still
redeem: in other words, pay off the mortgage debt and
recover title to his property.
•EXAMINATION TIP: Always look to see

whether the mortgagee has completed the
foreclosure. A completed foreclosure cuts
off the mortgagor's right to an equitable
redemption.
,I
D flash cards
LTISTATE SPECIALIST
312 Equity
What does the term

"equity" mean?
312
ANSWER
The term "equity" is commonly used to refer
to the value of the mortgagor's interest over
and above the amount of the debt owing to
the mortgagee.
EXAMPLES
X purchases a home for $300,000. He puts 20% ($60,000)
down and takes out a mortgage for the rest of the pur-
chase price. At the time of the initial purchase, he has
$60,000 in equity.
Three years later, the housing market has boomed. X's
home is now worth $500,000. X now has $260,000 worth
of equity in his home (in addition to whatever small
amount of the mortgage principal he has paid).
,fi b '
, flash cards

313 Foreclosure Process
Describe the foreclosure

process.
MULTISTATE
313
ANSWER
In most jurisdictions today, foreclosure is the
method by which the security (i.e., the mort-
gaged property), or proceeds from the sale
thereof, is applied to the satisfaction of the debt
or obligation. It is also the means by which the
mortgagee succeeds in ending the mortgagor's
ownership interest in the real estate. Before a
foreclosure may take place, the mortgagor must
default on the loan.
In early times, foreclosure meant literally fore-
closing or barring the equity of redemption. It
was a remedy afforded the mortgagee to pre-
vent the mortgagor from redeeming his land
after default. In other words, the mortgagee
sought and obtained a decree to the effect that
if the mortgagor did not satisfy the mortgage
debt by a specified date, then he would be
foreclosed (or barred) from ever redeeming, or
getting his land back mortgage-free. This is the
so-called "strict foreclosure" view and is still
applicable in a minority of states.
In some states, other methods of foreclosure
(such as foreclosure under power of sale and
foreclosure by entry) are available. NOTE: Fore-
closure by sale under judicial supervision facili-
tates the determination of the value of the
mortgaged property and thus aids in the deter-
mination of the amount of any deficiency
decree that might be awarded where the pro-
ceeds realized from the sale are insufficient to
satisfy the mortgage debt.
pitiable
MUISTATE
LT SPECIALIST flash cards
314
What is the right of

redemption?
bir
MULTISTATE
314
ANSWER
The right of redemption allows a mortgagor in
default to pay off the amount owed to the
mortgagee and any interest prior to foreclo-
sure. If the mortgagor actually pays off the
debt prior to the foreclosure, he redeems the
mortgage and takes the land free of the mort-
gage even though he had previously defaulted.
•EXAMINATION TIP: A mortgage may not con-

tain a provision that the mortgagor waives
the right to redeem. This type of clause is
called "clogging" and is invalid. If the mort-
gagor would like to, however, he may waive
the right to redeem after the mortgage has
been executed in exchange for good and
valuable consideration.
psta bie
S flash cards
315 Two Types of Redemption Rights
Describe the two types of

redemption rights.
vmsi
pstm
315
ANSWER
There are two ways that a mortgagor can
redeem.
Equitable Redemption. Under equitable
redemption, the mortgagor must redeem
before the foreclosure sale. Once the fore-
closure sale has occurred, the mortgagor's
rights to redeem are terminated.
Statutory Redemption. Under a statutory
redemption theory, a mortgagor may redeem
even after the foreclosure sale has occurred.
This period is usually six months to a year.
EXAMPLE
X misses several payments on the mortgage on his
home. Y bank notifies him of its intention to foreclose.
X scrambles to get the money to pay off the mortgage,
but he can't come up with it, and Y sells his home at a
foreclosure sale. His equitable right of redemption is
now terminated. However, if he lives in a state that
grants a statutory right of redemption, he may still
redeem.
•EXAMINATION TIP: About fifty percent of the

states grant the mortgagor a right of statutory
redemption.

flash cards
316
Describe a purchase
money mortgage.
ro
o
MULTISTATE
316
ANSWER
Where a mortgagor takes out a loan in order
to buy property, this type of mortgage, called
a "purchase money mortgage", takes priority
over other types of mortgages, even if those
other types of mortgages were recorded earlier
in time.
•EXAMINATION TIP: Purchase money mort-

gages are heavily tested on the MBE.
pis! br,
MULTIST-TE SPEC IA LIST flash cards
317 Deficiency Judgment
Describe a deficiency
judgment.
317
ANSWER
A deficiency judgment only comes into play
when the mortgagor has defaulted in the mort-
gage debt and the mortgagee has sold the real
property at a foreclosure sale. If, at the fore-
closure sale, the mortgagee receives enough
money for the property to pay off the mort-
gage debt, the mortgagor has no further obli-
gation. However, where the proceeds from the
foreclosure sale do not completely cover the
mortgage debt, a deficiency is said to exist. In
most states, a mortgagee may proceed directly
against the mortgagor for the balance of the
loan. This money needed to satisfy the mort-
gage loan is called a deficiency judgment.
•EXAMINATION TIP: Many states have limita-

tions on the amount a mortgagee may
recover for a deficiency judgment. For exam-
ple, some states limit the amount to the dif-
ference between the amount owed and the
fair market value of the real estate when the
fair market value exceeds the amount
brought at the foreclosure sale. Some states
even completely forbid deficiency judgment
on purchase money mortgages.
passim*
318 Mortgagees' Order of Priority
Where there is more than

one mortgage on a piece
of property, what is the
mortgagees' order of
priority?
potable
/MULTISTATE SPECIALIST
31 8
ANSWER
Typically, chronology determines the order of
priority that various mortgagees hold in the
property. The first mortgagee to grant a mort-
gage to the mortgagor has highest priority, fol-
lowed by the second "junior" mortgagee,
followed by the third, and so on.
•EXAMINATION TIP: This order of priority

may be modified in several instances:
(1) where a senior mortgagee does not
record his mortgage interest; (2) where the
senior mortgagee contracts away his priority
to a junior mortgagee; (3) where a purchase
money mortgage is in effect; or (4) where the
senior mortgagee changes some condition on
the mortgage to make it more difficult for the
mortgagor to pay.
pmapAr
' MULTISTATE SPECIALIST flash cards
319 Foreclosure Right of
a Senior Mortgagee
What is the right of a

senior mortgagee in a
foreclosure?
IP
MULTISTATE
31 9
ANSWER
The party who extended the original mortgage
loan is called a "senior mortgagee" and any
subsequent mortgagees are called "junior mort-
gagees". A senior mortgagee cannot be made a
party against his will to a foreclosure action by
a junior mortgagee or encumbrancer. How-
ever, a senior mortgagee may join a junior
mortgagee into a foreclosure action.
EXAMPLE
When he purchases his home, X takes out a $200,000
mortgage with Y Bank. Ten years later, before he has
paid off the mortgage with Y Bank, X takes out a second
mortgage with ABC Bank. Two years later, he defaults
on both mortgages. While ABC Bank cannot join Y Bank
into a foreclosure action, Y Bank can join in ABC Bank.
issteb/P
320 Foreclosure Right of
a Junior Mortgagee
What is the right of a

junior mortgagee in a
foreclosure?
ro
possime
32 0
ANSWER
A junior mortgagee or encumbrancer is one
who has granted a mortgage to the mortgagor
when there was already some outstanding
mortgage in place. A junior encumbrancer can
be made an involuntary party to a foreclosure
action by a senior encumbrancer. In fact, jun-
ior encumbrancers must be made parties in
order to have their claims eliminated. Where a
senior mortgagee does join a junior mortgagee
as a party, the junior mortgagee's right to fore-
close is completely wiped out.
EXAMPLE
When he purchases his home, X takes out a $200,000
mortgage with Y Bank. Ten years later, before he has
paid off the mortgage with Y Bank, X takes out a second
mortgage with ABC Bank. Two years later, he defaults
on both mortgages. Y Bank brings a foreclosure action
against X and joins ABC Bank into the action. ABC's
right to foreclose is now wiped out.
pin/MP

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• EXAMINATION TIP: Licenses are, in the absence of

MULTISTATE SPECIALIST flash cards

• EXAMINATION TIP: An easement appurtenant

• EXAMINATION TIP: Express easements are

• EXAMINATION TIP: Questions sometimes

• EXAMINATION TIP: An express easement is

W MULTISTATE SPECIALIST flash cards

Describe the manner in

piMULTISTATE SPECIALIST flash cards

Describe how an easement

Describe how land is

Describe the "hostile"

• EXAMINATION TIP: Hostile possession is not

Describe when a claimant's

•EXAIVIINATION TIP: Where occupation of

Describe the "tacking"

Describe when a claimant's

•EXAMINATION TIP: If any interruption

Describe the significance

Describe the constructive

•EXAMINATION TIP: Where the landlord has

Describe the implied

Describe the landlord's

•EXAMINATION TIP: If in jurisdictions which

p MULTISTATE SPECIALIST flash cards

Describe the retaliatory

• EXAMINATION TIP: Retaliatory conduct of

• EXAMINATION TIP: This doctrine has been

MULTISTATE SPECIALIST flash cards

• EXAMINATION TIP: In determining if the

Describe a trade fixture.

•EXAMINATION TIP: The common law rule

Describe what constitutes

•EXAMINATION TIP: Waste may either be

•EXAMINATION TIP: Whether conduct is

Describe the distinction

*EXAMINATION TIP: It is often difficult to dis-

Describe the conditions

I EXAMINATION TIP: To be enforceable, a real

Describe the conditions

assigns hereby promise... '9. Where no spe-

p MULTISTATE SPECIALIST flash cards

Describe when a reciprocal

Describe the conditions

•EXAMINATION TIP: Equitable relief is

Describe the Statute of

•EXAMINATION TIP: Express easements (and

MULTISTATE SPECIALIST flash cards

Describe when oral

•EXAMINATION TIP: A few courts permit specific

Describe the marketable

• EXAMINATION TIP: The following defects do not

Describe the "estoppel by

•EXAMINATION TIP: The estoppel by deed doctrine

Describe the equitable

Describe when an inter

•EXAMINATION TIP: When one gratuitously

Describe the requisites of

Describe when, for

• EXAMINATION TIP: Extrinsic evidence is

MULTISTATE SPECIALIST flash cards

Describe the merger of