A) Interests in Land. 262 good questions, nicely answered!

Q: LEs: Forfeiture Restrictions on LEs

Valid restriction on alienation: 'H to E for life, then to G, but if E tries to sell her LE, that estate terminates and the property goes to G in FSA.' . . . Language that would terminate a LE if the holder tries to transfer DOES NOT violate the rule prohibiting restraints on alienation.

Q: Rights and Duties of Life Tenant: (1) Voluntary Waste - Depletion of Natural Resources

Open Mines Doctrine: Depletion of natural resources is waste UNLESS the normal use of the land was to deplete them. . . . Facts to trigger this concept will be mining coal, harvesting timber, extracting oil and gas, or any other type of minerals before the life estate is created. . . But note: the sale of crops grown on the land is not waste.

FSSEL: Magic Words?

No need to focus on magic words with this estate.

Present Freehold Estate #3: The Life Estate (The Estate that Will End): Characteristics of the Estate

The distinguishing characteristic of the life estate (LE) is that it is never measured by time, but only by life. It is transferable during life, but not at death.

Creation of Conventional Life Estate: 2 means

Can create by express language (J to E for life, then to G). . . While no specific words are required, the words "for life" are most commonly used to clearly create the LE.
Can create by implication (J to G after the death of E). . . Key is that it must have been what grantor meant.

LEs: Forfeiture Restrictions on LEs

Valid restriction on alienation: "H to E for life, then to G, but if E tries to sell her LE, that estate terminates and the property goes to G in FSA." . . . Language that would terminate a LE if the holder tries to transfer DOES NOT violate the rule prohibiting restraints on alienation.

LEs: Rights and Duties of Life Tenant: (1) Voluntary Waste - General Rule

Any affirmative act beyond the right of maintenance that causes harm to the premises. . . Life tenant can only continue the normal use; any change of use is voluntary waste, and life tenant is liable to the holder of the future interest.

Rights and Duties of Life Tenant: (1) Voluntary Waste - Depletion of Natural Resources

Open Mines Doctrine: Depletion of natural resources is waste UNLESS the normal use of the land was to deplete them. . . . Facts to trigger this concept will be mining coal, harvesting timber, extracting oil and gas, or any other type of minerals before the life estate is created. . . But note: the sale of crops grown on the land is not waste.

LEs: Rights and Duties of Life Tenant: Waste - (2) Permissive Waste - General Rule

Permissive waste occurs when the life tenant has failed to maintain the estate (involves inaction).

Rights and Duties of Life Tenant: (2) Permissive Waste: What must life tenant do to avoid permissive waste?

Life tenant must do 3 things to avoid permissive waste: (1) Repair, (2) Taxes, and (3) Interest on a Mortgage on the Entire Property

Life Tenants duties to avoid permissive waste: (1) Repair

Life tenant must keep the property in repair, but is only responsible for ordinary repairs, not improvements or replacements.

Life Tenants duties to avoid permissive waste: (2) Taxes

Life tenant must pay all taxes on the property. . . Watch Out: Holder of future interest must make sure taxes get paid, because a tax sale terminates the future interest. Purchaser at tax sale gets FSA.

Life Tenants duties to avoid permissive waste: (3) Interests on Mortgage on the Entire Property: Does the holder of the future interest pay anything?

The future interest holder pays the principal on a mortgage that encumbers the entire fee simple. However, if the life tenant were to use the LE as collateral for his own mortgage, the future interest holder would not be obligated to pay any principal, the life tenant would.

Life Tenants duties to avoid permissive waste: Limitation on Life Tenant's Liability

For the 3 obligations to avoid permissive waste, the life tenant's obligation is limited to the amount of income received from the land, or--if the life tenant is personally using the property--the reasonable rental value of the land.

LEs: Rights and Duties of Life Tenant: (3) Ameliorative Waste: Defined

Ameliorative waste is a special type of voluntary waste that occurs when the affirmative acts alters the property substantially but increases the value of it.

LEs: Rights and Duties of Life Tenant: (3) Ameliorative Waste: Rule

If changed conditions have made the property relatively useless in its current use, the life tenant can tear it down without liability to the holder of the future interest.

I.e., an old residential mansion is now surrounded by heavy industry. The life tenant wants to tear down the mansion, thus making the underlying land much for valuable for other uses. The holder of the future interest objects. Life tenant can still tear it down.

Estates in Land: (B) Future Interests - Gen Idea

This is a present interest in the land with a future right of possession. The interest exists now, but possession will not come until later, if at all.

Future Interests: Overview

For exam, we are concerned with 2 topics:

Classifying the interests
Applying the Rule Against Perpetuities.

Classification of future interests

Need to ask: "who holds the future interest?"

If the answer is the grantor, then the only possible choices are the (1) Reversion, (2) Possibility of Reverter, and (3) Right of Entry (AKA power of termination). . . NOTE: IF any chance that property might go back to grantor, then one of these is kept even if there are other future interests created.
If the answer is a grantee, then the only possible choices are the (1) Remainders and (2) Executory Interests.

Future Interests #1: The Reversion: Defined

The Reversion is the interest kept by the grantor when the grantor gives a grantee less than the durational estate the grantor had.

Tip: Is the age of a party in an estates question usually relevant?

No. The age of a party in an estates question is almost always irrelevant.

Future Interest #3: Right of Entry (RoE) - Defined

Whenever a grantor gives a FSSCS, grantor keeps a RoE. That present possessory estate and future interest always go together.

This interest is labelled as either the Right of Entry or the Power of Termination; both labels refer to the same future interest. . . .

RoE: Subject to Rap?

No. The Right of Entry is never subject to RaP.

RoE: General Rule on Transferability

The RoE is not freely transferrable in most states. The RoE may be devised and inherited, but it cannot be transferred inter vivos.

RoE: TX Rule on Transferability

There is no limitation on the transferability of this interest once the condition is broken. If the event has occurred, the future interest (RoE) is freely transferrable.

Identifying a RoE: Key

Remember to look for the conditional magic words creating the FSSCS (but if, provided, however, upon condition that) and that the future interest is retained by the grantor.

RoE: Look for language in the conveyance like "for the purpose of"

This has no effect on title b/c those are not magic words indicating a desire to forfeit title. If anything, that language may introduce a convenient. . . Because forfeiture of title is not favored under the law, ambiguous language is construed in a way that will not bring automatic forfeiture. This language will be construed to create a covenant rather than a condition.

Where language is ambiguous as to whether it creates as FSD v. FSSCS

If the language seems inconsistent, the FSSCS is preferred over the FSD (preference for more full interests)

Future Interest #4: Remainders: 4 types

Vested Remainder (VR)
Vested Remainder Subject to Open (VRSO)
Vested Remainder Subject to Divestment (VRSD)
Contingent Remainder

Vested Remainder (VR) - Define

Nothing stands in the way of its becoming possessory on the expiration of the estate that comes before it. We have an ascertainable person and there is no express condition present (no questions, no uncertainty).

I.E., "J to E for life, then to G and his heirs." . . . E has LE. G has VR. J has nothing.

Vested Remainder Subject to Open (VRSO) - Define

There is no condition to be satisfied before taking possession but this remainder is conveyed to a class of people. There is at least one member who will take but the size of his share remains unknown because the class remains open and future persons may qualify as members of the class (e.g., future children).

Continent Remainder (CR): Define

Something has to happen or be known before the remainder can become possessory. 3 situations for contingent remainders: (1) condition; (2) grantee not in existence; (3) identity of exact taker unknown.

CR - (2) Grantee not in existence

If, at the time of the grant, the grantee is not in existence then that interest must be a CR. The grantee's interest is continent on grantee being born.

J to E for life, then to E's children. E has no children.

CR - (3) Identity of Exact Taker unknown

If you cannot identify, by name, the person who holds the remainder, the remainder is contingent until you can identify the taker.

J to E for life, then to E's widower. E is married to Bob at the time of conveyance.

Vested Remainder Subject to Divestment (VRSD) - Define

The taker is identified but there is a condition subsequent. Look for a specific pattern of language. The condition subsequent will be in the clause that is AFTER the clause that creates the future interest in the grantee.

VRSD is also known as a Vested Remainder Subject to Total Divestment.

Future Interest #5: Executory Interests

The executory interest operates to divest (cut short) the estate that comes before it; it does not come into possession at the natural expiration of the earlier estate.

J to E for life, then to G; but if G marries S, then to K.

Executory Interests: 3 key points

If a future interest in a grantee is not a remainder, then it MUST be an executory interest.
IF a future interest in a grantee cuts short an earlier estate, it MUST be an executory interest.
The holder of an executory interest cannot sue a life tenant for waste.

Future Interests in the Grantee: The Rule Against Perpetuities (RAP). What does it cover?

The only interests that RAP applies to are:

Contingent remainders
Executory interests
Vested Remainders subject to open.

RAP: Determining the validity of the grant

the validity of a grant is determined at the time of conveyance. It dos not matter if the interest actually does vest within the time period of RAP. Beware of facts that indicate vesting would actually occur within the time period of the rule--ignore them! Do not wait and see what actually happens for the common law rule.

RAP: Time the transfer takes effect?

The time the transfer takes effect is also important in evaluating RAP. If the transfer is by will, look at the situation as of the time of the testator's death; if by deed, look at the situation at the time of the deed.

Charity-to-Charity Exception to RAP

RAP is never violated if the gift over is from one charity to another. Both grantees must be charities for the exception to apply.

Perpetuity Savings Clause Exception to Rap

A perpetuating savings clause saves a grant from being voided by RAP by making sure vesting must occur within the time period of the rule

Estates in Land: (3) Concurrent Ownership - General Idea

Instead of ownership being divided over time with present possessory estates and future interests, the focus now changes to having multiple owners at the same time. Concurrent ownership deals with the relationship between the owners.

Concurrent Ownership: 2 types

Joint Tenancies (JTs)
Tenancies-in-Common (TCs)

Joint Tenancies (JTs): Key Characteristic.

Right of survivorship. . . Each of the covenants own an undivided fractional share of the whole. The individual interest is transferable inter vivos; however, they are not able to be devised or inherited upon death due to the right of survivorship.

JT: Creation - (1) Time

All interests must have vested at the same time

JT: Creation - (2) Title

The grant to all Its must be by the same instrument of title.

JT: Creation - (3) Interest

All joint tenants must take the same type and same size interest.

JT: Creation - (4) Possession

All joint tenants must have identical rights of possession

Language needed to create a JT

The grant must clearly make the intention to create a joint tenancy known. If the intent of the grantor is unclear, the courts construe the interest to be a tenancy in common. The language must clearly indicate the desire for survivorship, such as "joint tenants with right of survivorship," or "in joint tenancy with right of survivorship."

JT: Destruction of a Joint Tenancy: General Idea

Although a joint tenancy with a right of survivorship can be created, there is no guarantee that the right of survivorship will remain in place. There are many different actions that can destroy the right of survivorship, which turns the JT into a TIC. Two are key: (1) partition; (2) severance.

JT: Destruction by Severance

A severance is an involuntary destruction. This occurs whenever any of the 4 unities is disturbed.

JT: Destruction by Severance: (1) A conveyance by one of the joint tenants.

One joint tenant's transfer of his interest creates a severance that destroys just the seller's joint tenancy, turning it into a TIC with the buyer, and the other joint tenants continue to hold their interests in JT.

JT: Destruction by Severance: (2) Mortgage in a title theory state.

Where a joint tenant mortgages his undivided fractional share of the whole.

In a title theory state, there is a severance of the joint tenancy.
In a lien theory state, there is NOT a severance of the joint tenancy.

JT: Destruction by Severance: (2) Mortgage - Lien Theory (Majority) State = No severance

The rationale is that when a mortgage is executed, a lien merely attaches to the title; title does not get transferred, so no unity is disturbed.

TEXAS FOLLOWS THE LIEN THEORY.
If there is no indication in the question as to which theory applies, assume lien theory.

JT: Destruction by Severance: (3) Contract of Sale

The severance occurs when one of the joint tenants enters into a contract of sale, not on the date of closing. Under the doctrine of equitable conversion, there is a split in the legal and equitable title to the land at that time, and that means a severance occurs when the contract of sale is signed.

JT: Destruction by Severance: (4) A Creditor's Sale of the Interest in the JT

No severance until the creditor's sale actually occurs.
A creditor's judgment lien is not enough to affect a severance much like the mortgage in a lien theory state. There has to be an actual judicial sale in order to transfer title and disturb the unities.

JT: Destruction by Severance by Lease?

IN the MBE, the execution of a lease does not sever the JT.

Tenancies-in-Common (TIC): Key difference from JT

There is no right of survivorship. . . Only one unity is required: Possession. All tenants must have equal rights of possession.

Rights and Duties Between or Among Co-Tenants (covers both JTs and TICs): 4 key

Possession
Accountability
Sharing Necessary Expenses
Right to partition

Rights + Duties Between/Among Co-Ts: (2) Accountability

Requirement that one co-tenant may have to ACCOUNT to another for a share of profits that the co-tenant received from renting to 3rd parties or from uses of the land that reduced its value such as removing minerals, timber, etc.

However, a co-t in possession has the right to retain profits from her use of the property. That co-t generally does not have to reimburse the other co-ts the share of profits from her own use of the land.

Rights + Duties Between/Among Co-Ts: (2) When is an accounting used?

An accounting is used when there is money coming in that the other co-tenant(s) believe should be shared.

Rights + Duties Between/Among Co-Ts: (2) Accountability: Ouster

IF there is an ouster of the other-contents by the co-tenant in possession, then there will be a requirement that he reimburse them for fair rental value.

Rights + Duties Between/Among Co-Ts: (2) Accountability: Agreement among Co-TEnants

If the parties have an agreement regarding the payment of rent, then the co-tenant in possession will be required to reimburse them according to the agreement.

Rights + Duties Between/Among Co-Ts: (3) Sharing Necessary Expenses

Key concept: CONTIBUTION, which is the right of one co-t to force the others to pay their share of some expenditure that another co-t made.

Rights + Duties Between/Among Co-Ts: (3) Contribution - Mortgages + Taxes

Contribution is available for any mortgage on the property signed by all co-tenants, or any governmentally imposed obligation such as taxes, assessments for streets/sewers, etc

Rights + Duties Between/Among Co-Ts: (3) Contribution - Improvements + Non-necessary repairs

Although there is no contribution for improvements or non-necessary repairs, money spent by the co-tenant may later be considered at partition or sale of property.

Rights + Duties Between/Among Co-Ts: (4) Right to Partition.

This right is held by every co-tenant regardless of TIC or JT. Any tenant-in-common or joint tenant can demand this regardless of the size of his share. Partition can be achieved voluntarily or by court order. There are two kinds of partition: (1) in kind; (2) by sale.

Rights + Duties Between/Among Co-Ts: (4) Partition in Kind

If property is capable of physical division, lines will be drawn. The parties are no longer co-tenants, they are neighbors.

Rights + Duties Between/Among Co-Ts: (4) Partition by Sale

If property is not capable of physical division, it will be sold and the proceeds will be divided among the fractional owners.

Estates in Land: (4) Leasehold [Non-Freehold] Estates (Landlord-Tenant): General Idea

This involves possessory interests in land. The tenant has the present right of possession and the landlord has the future right of possession.

Types of Leasehold Estates: 4

Tenancy for Years (TY)
Periodic Tenancy (PT)
Tenancy at Will (TW)
Tenancy at Sufferance (TS)

Leasehold Estate #1: Tenancy for Years--Key Phrase

Key phrase to remember: Specified time. Despite the name, it does not have to be for "years." It must be created with specific language.

Leasehold Estate #2: Periodic Tenancy--Key Word

Key word to remember: Repeating--an ongoing, continuing, repetitive estate, until one party gives valid notice (e.g., month-to-month, week-to-week, year-to-year).

Periodic Tenancy (PT): Creation

3 ways to create a PT: (1) by express agreement; (2) by implication; or (#) by operation of law)

Creation of Periodic Tenancy by (1) Express Agreement

The agreement must specifically state the period (month-to-month; year-to-year).

Creation of Periodic Tenancy by (2) Implication

Where lease is silent as to its duration but a periodic tenancy can be implied by the terms given. If the lease does not specify a fixed time or a defined period, then it is presumed to be a periodic tenancy measured by the rent payment (If rent is paid monthly, then the PT is month-to-month).

Creation of Period Tenancy by Operation of Law: (1) Oral Lease violating the Statute of Frauds

Acceptance of rent by the LL creates a periodic tenancy by operation of law, even though the oral lease itself violates the SoF. The period is not determined by the invalid oral agate but by the period covered by the rent check LL accepted.

Creation of Period Tenancy by Operation of Law: (2) Hold-Over Tenant

The tenant stays after expiration of the lease and the LL accepts rent. Note: If holdover tenant sends the LL a check for another period's rent, and the LL accepts it, there is a new periodic tenancy by operation of law.

TX ONLY: Termination of Periodic Tenancy

By statute, the required notice to end any periodic tenancy is 30 days and the notice does not have to be given so that it will end on a period ending date. The statute allows for proration of rent.

Leasehold Estate #3: Tenancy at Will (TW)

Either party can terminate at any time, without notice

5 ways that a TW terminates

Death of either party
Waste by the tenant
Assignment by the tenant
Transfer of title by LL
Lease by LL to someone else.

Leasehold Estate #4: Tenancy at Sufferance (TS)

Not a true tenancy! This is the bare possession of a holdover tenant. At LL's sole option, LL can either:

(A) Hold tenant as a wrongdoing trespasser and sue to throw tenant off the property and recover damages for the holdover; OR
(B) Impose a new periodic tenancy on the tenant.

If there is a tenancy at sufferance and LL exercises his right to impose a new periodic tenancy on the tenant, what is the period?

For residential property, the new period will always be month-to-month.
For commercial property: (A) If the old, expired tenancy was for a year or more, the new tenancy is year-to-year; (B) if the old, expired tenancy was for less than a year, the new tenancy is measured by the rent period of the old tenancy.

Tenancy at Sufferance: Limitation on LL's Rights

A LL cannot impose a new tenancy on a. holdover tenant if it is not REASONABLE. If there is a holdover tenant for just a few hours, or if T was holding over due to circumstances beyond T's control, then LL cannot impose a new tenancy.

Leasehold Estates: Tenant's Duties

If the lease is silent on T's duties, T must:

(1) Pay rent; AND
(2) Not commit waste. (Same concept of waste as in LEs. If waste occurs, the present possessory estate will come to an end and the future interest is entitled to protection).

Leasehold Estates: Tenant's Duties - (2) Waste

Unlike the other repair and habitability issues, if the T damages or makes substantial changes to the leased property, T is required to pay for the damage. However, if the premises are destroyed by not fault of the T, T can terminate the lease and will not be responsible for repairs.

Leasehold Estates: Tenant's Duties - (1) Rent

If T fails to pay rent, LL can sue for both damages and to evict the T.

Leasehold Estates: LL Remedy where T unjustifiably abandons

If T unjustifiably abandons the leasehold, LL has 2 choices:

Treat abandonment as an offer of surrender and accept by retaking the premises; thus ending T's liability as of that date.
Re-let the premises on T's account and hold T liable for deficiency (subject to LL's duty to mitigate damages).

Leasehold Estates: LL Duties + T's Remedies - 3 key

Possession
Condition of the Premises
Implied Covenant of Quiet Enjoyment

LL Duties: (2) Condition of the Premises

LL must deliver residential premises in habitable condition. There is an implied warranty of habitability in residential property (only residential): LL must provide property that is reasonably suited for residential use.

T Remedies: (2) Condition of the Premises

IF the LL breaches the IWH (by not providing property that is reasonably suited for residential use), then T has 2 options (common to all states):

T can vacate and terminate the lease.
T can stay and sue for damages.

TX Only: Condition of the Premises + IWH (residential property)

There is no common law IWH in Texas. There is a statutory warranty that requires LLs to repair conditions that materially affect the physical health/safety of an ordinary T. . . If the LL fails to comply and the T properly utilizes the statute, T can (1) move out, (2) sue the LL, OR (3) stay and repair and deduct the cost from next months' rent.

TX Only: Condition of the Premises + Implied Warranty of Suitability (commercial property)

In Texas, commercial leases have an Implied Warranty of Suitability covering latent defects in the essential facilities of leased property. This implied warranty may be waived by agreement of the parties.

LL Duties + T Remedies: (3) Implied Covenant of Quiet Enjoyment (ICQE)

In every lease, LL makes implied promise that he will not breach this covenant. This covenant may be waived. If it is not waived, there are 3 ways that LL can breach: (1) total eviction; (2) partial eviction; (3) constructive eviction.

Breach of ICQE by (1) Total Eviction

Landlord breaches the ICQE by a total eviction of T, which terminates the lease, ending T's obligation to pay rent. I.e., LL entered on the property and changed the locks refusing to allow T to re-enter the premises.

Breach of ICQE by (2) Partial Eviction

LL breaches ICQE by a partial eviction of T, which does not terminate the lease; T can stay and pay no rent to LL.

I.e., LL entered the property and locked T out of the basement only, but T continued to have access to the rest of the leased premises.

Breach of ICQE by (2) Partial Eviction by someone other than LL

If partial eviction is not by LL, but some 3rd person with better title, T's rent is apportioned to reflect the amount of the leasehold taken.

I.e., LL leased a 200-acre farm to T. A few months into the lease, it turned out that the north 40-acres were really owed by a neighbor, who took it back when T started to plow it.

Breach of ICQE by (3) Constructive Eviction

LL breaches the ICQE where LL's act or failure to provide some services that he has a legal duty to provide makes the premises uninhabitable. In oder to justify T's termination of the lease (constructive eviction), 3 requirements must be satisfied:

LL or LL's agents must cause the injury (not others);
Must be a substantial interference with the ICQE rendering the premises uninhabitable
T must vacate the premises within a reasonable time after the breach or lose the right to do so.

Leasehold Estates: "Sublease" Defined

When T transfers a portion of the lease period, holding some time back.

LL leased the farm to T1 for one year on January 1. On April 1, T1 transferred 3 months to T2.

Assignments - Situation 1: LL sues T; are successive Ts on a lease liable to LL?

A lease is both (1) a conveyance and (2) a contract, which are separate + independent grounds for liability. T is liable to LL if there is either PoE or PoC.

Liability on the (1) conveyance comes out of Privity of Estate (PoE). . . In an assignment, PoE exists only between the present LL and the Present T.
Liability on the (2) contract comes out of Privity of Contract (PoC). . . . In an assignment, PoC exists where there is (a) an agreement between the parties or (b) where the assignee expressly assumes the obligations under the lease.

What covenants beside rent run with the land?

In addition to rent, other covenants will run with the land if they touch and concern the land (T&C).

Assignments - Situation 2: T sues LL. If LL sells to a successor LL, can T sue the original LL and any successor LL on the lease?

LL1 continues to be liable to T because of PoC. . . . LL2 is also liable, provided that the lease covenant runs with the land and there is either PoC or PoE.

Subleases: Liability of T2

A sublesee is not liable to L because there is no PoC (same as with an assignment) and no PoE; the sublessor (T1) is deemed to have kept the estate. The original tenant (T1) is still connected to the LL on estate principles because the sublease happens during part of T1's leasehold and T1's present possessory estate is what is connected to the LL on the timeline.

Transferability of the Leasehold: Are non-assignment + non-sublease clauses [restraints on alienation] valid + enforceable?

Generally yes. Restraints on alienation permissible in context of leasehold estates. Courts do enforce these clauses, but do not like them and are quick to find waiver.
These clauses are construed narrowly: non-assignment clause does not prohibit subleases, and vice-versa.
Violation of non-assignment/non-sublease clause merely makes the attempted transfer voidable at LL's option. Nothing happens if LL does not exercise that option.

Transferability of the Leasehold (non-assignment + non-sublease clauses): What is the effect of LL's giving permission for an assignment/sublease?

Permission given once means the non-assigment/non-sublease clause is waived for all time, unless LL states otherwise at the time of giving permission.
Also, even if LL does not give expression permission, acceptance of rent by LL implied gives permission for a transfer.
Acceptance of rent from an assignee where the assignment was made in violation of the non-assignment clause means LL accepted the assignment and waived the clause permanently.

Leasehold Estates: Setting Security Deposits: MBE

In most states, security deposits cannot be more than 1 month's rent, LLs are required to pay rent on the deposits, and there are statutory damages available for improper refusal to return a deposit.

TX Note: Setting Security Deposits

In TX, there is no limit on the amount of a security deposit and LLs are not required to pay interest on the deposits that are held.

TX Note: Returning Security Deposits

In both commercial and residential leases, LLS cannot deduct charges for normal wear + tear from SD.
LL required to account for any money withheld form the deposit. (A) Commercial LL must account and/or refund the SD within 60 days if T provides a forwarding address in writing. (B) Residential LL must account and/or refund SD within 30 days of T surrounding the premises and providing a forwarding address in writing.
If LL does not comply with the STT, he is presumed to have acted in bad faith and statutory damages are available.

Leasehold Estates: Fixtures - 2 Common Issues

Owner installs an appliance on property (furnace), then contracts to sell property and does not mention appliance in K. Can owner remove and keep appliance before closing?
Tenant installs some kind of chattel on property. Can T remove and take chattel at end of lease?

Fixture Test - Factor (2) General Custom with this item

Is this the type of thing that sellers/tenants normally take with them when they leave

Fixture Test - Factor (3) Degree of Harm to Premises on Removal

Tenants are favored: If T can move the item without substantial damage to the premises, then courts allow an inference that there was no intent that the item be a fixture

Fixture Test - Factor (4) Trade Fixtures

Trade fixtures are chattels used in trade or business. They are not fixtures.

If a chattel is not a fixture, at what time can it be removed?

If the tenant can remove the chattel, it must be removed before the end of the lease
If the owner (seller) can remove the chattel, it must be removed before closing.

Leasehold Estates: Condemnations (Takings) is taken.

If the state takes property under a lease by its power of condemnation, there are 2 questions. To answer, look to see if (a) only part or (b) all of the leased property . . . is taken.

Is T excused from paying rent?
Will T share in the condemnation award?

Full Takings (of Leasehold Estate)

Extinguishes the lease and T is excused form paying rent. T shares in condemnation award only to the extent that the fair rental value of the lease exceeds the remaining rent due under the lease.

Homestead: Urban v Rural

The property's characterization as urban or rural will determine the amount of acreage subject to homestead protection among many other issues of importance to those who deal with homestead claimant and his property. Whether a homestead is rural or urban is a question of fact.

Urban homestead formula

A homestead is to be considered urban if it (1) is located with the limits of a municipality or its extraterritorial jurisdiction or a platted subdivision; (2) served by police protection and paid/unpaid fire protection; and (3) at least 3 of the following services are provided by a municipality or under a contract with a municipality: (a) electric; (b) natural gas; (c) sewer, (d) storm sewers, or (e) water. . . All homesteads not meeting this definition are considered to be rural.

General Warranty deed - (A) General Warranty Clause

A general warranty clause obligates the grantor to indemnify the grantee for loss caused by any claim against the title; whether a claim of an ownership interest or a lien or other encumbrance and regardless of when or under whom the claim arose .

General Warranty deed - Special Warranty Clause

A special warranty clause restricts the scope of the grantor's warranties by protecting the grantee against only claims of persons deriving their interest in the property through the grantor. Obviously, the general warranty of title is preferred, as it would allow grantee to recover against remote vendors, as well as against the grantor for failure of title.

Two implied warranties by use of the terms "grant" or "convey" in the granting clause of a deed, even without an express warranty clause

Warranty of title
Warranty of no encumbrances

TX Property Code: Mandatory Requirements for a Valid Deed

The deed must be (1) in writing, (2) signed by a grantor, (3) designate a grantee, (4) contain words of grant, (5) contain an adequate legal description, and (6) be delivered and accepted by the grantee

TX Recording Statute--affect

The purpose of recording is to give notice to 3Ps of the existence of an instrument affecting title to real property. Therefore, generally, the recording of an instrument is not necessary to its effectiveness between the parties.

TX Recording STT: Requirements for deed to be recorded

TX Property Code requires that the deed must be (a) acknowledge, (b) sworn to, or (c) proved in order to be recorded in the real property records of the county where the property is located

CF: Real Covenants v Equitable Servitudes - key difference

The only thing that distinguishes real covenants and equitable servitudes are they way they are enforced.

Equitable Servitude - ID

If plaintiff wants an injunction to enforce the restriction, the restriction is called an equitable servitude.

Real Covenants v. Equitable Servitude: Importance of the parties to the suit

It is also important to focus on the parties to the suit.

If the suit is between the original parties to the agreement, then contract law applies.
IF there are successors on either side of the agreement, the law of covenants applies, which requires an analysis of whether the benefit, burden, or both run with the land.

Real Covenants v Equitable Servitudes: Determining the Analysis

Both the parties involved and the relief sought must be established to know the proper analysis.

Real Covenants - Establishing the Burden of a Covenant Running with the land at law (5 elements)

For the burden of a real covenant to be enforceable against a successor promisor, there must be:

Intent that it run with land
Notice of the covenant (actual, record, or inquiry) at the time an interest in the burdened land is acquired.
Covenant must touch and concern the land---i.e., it must make the land more valuable/useful and not be a personal promise; It must affect the relationship of the parties as landowners.
Horizontal Privity between the original parties to the covenant
Vertical Privity between one party and the successor-in-interest

Establishing the Burden of a Real Covenants E4 - Horizontal Privity

Horizontal privity always refers to the original parties to the covenant. Requires that , at the time the promisor entered into the K with the promisee, the two shared some interest in land independent of the covenant. For horizontal privity, you must have a conveyance of the property between the original parties to the covenant.

Establishing the Burden of a Real Covenants E5 - Vertical Privity

Vertical privity refers to those who subsequently acquire property subject to the covenant (the sucessor-in-interest) and the original party from whom they got the property. There must be a transfer of the original covenanter's entire estate to the successor.

Establishing Benefits of a real covenant - E3: Vertical privity. What makes this element different from the version for establishing the burden?

For the benefit to run in favor of a successor-in-interest, you need only succeed to part of the prior estate. The owner of ANY succeeding possessory estate can enforce the benefit at law, it does not have to be the entire estate, which is required for vertical privity under the burden analysis.

FSD Magic Words - Durational

So long as, during, while, and until

FSEL v. FSD

Like the FSD, the FSEL will end automatically upon the happening of same stated event, but possession will then pass to another grantee. Grantor does not retain the future interest.

LE Pur Autre vie

When the measuring life is someone other than the life tenant. If the life tenant dies before the measuring life dies, the life estate passes to the life tenant's estate until the measuring life dies.

Creation of LE Pur Autre Vie

Can be created by the express words of the conveyance: "To A for the life of B."

Or by virtue of a later conveyance by the life tenant "O to A for life" . . . "A sells her life estate to B."

Rights and Duties of Life Tenant: Waste

All life tenant can do is maintain the estate, and that means continuing the normal use of the land in its present condition. If life tenant does more or less than merely maintain the estates, then life tenant is guilty of waste.

To create a FSCS + RoE, the conveyance must expressly reserve a

the right of entry in the grantor. Merely using the conditional words necessary to create a FSCS (provided that, etc) will not secure grantor a RoE.

Difference between remainders and executory interest

A remainder, whether vested or contingent, will become possessory, if at all, only upon the natural termination of the estates that come before them. . . On the other hand, the executory interest operates to divest/cut short the estate that comes before it; it does not come into possession at the natural expiration of the earlier estate.

Options of First Refusal + Rap

Options and rights of first refusal do violate RAP if they could be exercised outside the time period.

Class Gifts + Rap

Class gifts, even if they are VRSOs, are subject to RAP

Severance of JT: Conveyance

When one of the joint tenants transfers his interest, his interest is severed, he is no longer a JT but is a tenant in common with the buyer. The other JTS continue to hold their interests in a joint tenancy.

Joint Tenancies in TX?

A common law JT does not exist in TX. However, a right of survivorship can be created by agreement between the parties.

Assignments + Subleases: TX Distinction

While on the MBE tenants can assign or sublet unless the lease says otherwise, in TX by statute there is no right to assign or sublet unless the LL gives permission

When does privity of contract exist in an assignment

Where there is (A) an agreement between the parties (LO, T1, T2), or (B) where the assignee expressly assumes the obligations under the lease in the assignment (T1 + T2).

(A) Interests in Land: (2) Easements - (a) Creation of Easements - (1) Express Easements

An easement is an interest in land and therefore must comply with the SoF and the formalities of a deed. An express easement may created by (a) an express grant of an easement to someone else or (b) the express reservation of an easement when land is sold to another.

(A) Interests in Land: (2) Easements - (a) Creation of Easements - (1) Express Easements: SoF

Easements of a year or less do not have to be in writing, but most easements are perpetual in nature and will require a writing.

(A) Interests in Land: (2) Easements - (a) Creation of Easements - (2) Implied Easements: Three Types

Implied easement by prior existing use (IEPEU)
Implied easement by necessity (IEN)
Easement by perscription (EBP)

(A) Interests in Land: (2) Easements - (a) Creation of Easements - (2) Implied Easements: (1) Implied Easement by Prior Existing Use

This is an implied easement that is recognize because we assume that the parties intended the prior use to continue, but did not reduce that intention to writing. Exists where (1) commonly owned land is severed, (2) during the time of common ownership there was a use by the common owner (seller), andprevious use is (3) apparent and continuous (discoverable, not necessarily visible) and (4) reasonably necessary for the continued enjoyment of the now dominant estate.

Implied Easements by Prior Existing Use - TX Note

If an implied easement by prior existing use is impliedly RESERVED, the use must be STRICTLY NECESSARY for the continued enjoyment of the now dominant estate.

If an implied easement by prior use is impliedly GRANTED< then only REASONABLE NECECESSITY is required.

(A) Interests in Land: (2) Easements - (a) Creation of Easements - (2) Implied Easements: (2) Implied Easement by Necessity - Context

An implied easement by necessity exists when property is landlocked. The easement is recognized because it is presumed that individuals do not intend to own land that they cannot legally access

(A) Interests in Land: (2) Easements - (a) Creation of Easements - (2) Implied Easements: (2) Implied Easement by Necessity - Rule

For an implied easement by necessity to arise, there must have been (1) common ownership of land that was severed (now there is a dominant estate and a servient estate) and (2) at the time of the severance, the dominant estate became landlocked and there is strict necessity for access to a public road.

Implied Easements by Necessity v. Implied Easements by Prior Existing Use

Implied easement by necessity exists even if there is no prior use. This easement merely addresses a need for access when severance occurs.

TX Note - Landlocked Property and Implied Easements

As of the TX SCOTUS' decision in Hamrick v Ward, the implied easement by prior use is not available for landlocked property. Here, the implied easement by necessity is the means to obtain access to the landlocked parcel.

(A) Interests in Land: (2) Easements - (a) Creation of Easements - (2) Implied Easements: (2) Implied Easement by Necessity - Rights of Owner of Servient Estate

The owner of the servient estate can choose the location of the easement so long as the location is a reasonable one.

(2) Easements - (a) Creation of (2) Implied Easements: (3) Easement by Prescription (EBP): Elements

There must be actual use (not possession) of the land of another that is:

Visible and notorious (so that the LO could discover the use; can't be hidden or undiscoverable)
Adverse, or without permission of the owner (any grant of permission by the owner, even owner, will destroy adversity), and
Continous and uninterrupted (seasonal use ok if appropriate under the circumstances)
For the prescriptive period.

Perscriptive Periods for Easement by Prescription: MBE v TX

MBE: 20 years is default

TX: 10 years

(A) Interests in Land: (2) Easements - (c) Transfer of Easements: (1) Transferring the Benefit of an Easement Appurtenant

If the easement is appurtenant, the benefit goes automatically along with the dominant estate, whether it is mentioned or not in the conveyanced. It cannot be transferred separately from the dominant estate, however.

(A) Interests in Land: (2) Easements - (c) Transfer of Easements: (1) Transferring the Benefit of an Easement in Gross

If the easement is in gross, the benefits that are commercial can always be transferred, but benefits that are personal cannot be transferred.

TX Note: Transferring an Easement in Gross

No easement in gross can be transferred unless the language of the easement expressly provides for transfer. One exception: A conservation easement in gross can be transferred, as the statute creating conservation easements allows this.

(A) Interests in Land: (2) Easements - (c) Transfer of Easements: (2) Transferring the Burden of an Easement

Easements are always binding on subsequent holders of servient estates, even if the easement is not in their deeds, IF the subsequent holder had notice (actual, record, inquiry) of the easement.

(A) Interests in Land: (2) Easements - (d) Use of Easements: Where easement was implied or is silent on these matters, 2 presumptions

If an easement is silent on the matter or created without a writing, there are 2 presumptions

1) It is presumed that the easement is perpetual (lasts forever unless otherwise stated)
2) The use presumed is that of reasonable development of the dominant estate (the kind of use that would have been reasonably contemplated by the parties).

(A) Interests in Land: (2) Easements - (d) Use of Easements: Limit

An easement can be used to benefit only the dominant estate, not other property. Use to benefit of other property is considered excessive use. The servient estate owner's remedy is to enjoin that use (not terminate the easement).

(A) Interests in Land: (2) Easements - (E) Repair of Easements: Holder (dominant estate)'s obligations

The holder of the easement (dominant estate) is obligated to make necessary repairs. The holder of the easement must keep it in repair and can always go on the servient estate to repair the easement, even if the grant of the easement does not specifically provide the right to enter and repair. The holder must also make reasonable restoration of the servient estate after repairs.

(A) Interests in Land: (2) Easements - (F) Termination of Easements: General Idea

An easement can always terminate by its own terms in the agreement. However, there are 6 possible situations where an easement ends for reasons outside the terms of the agreement.

(A) Interests in Land: (2) Easements - (F) Termination of Easements: 6 ways to end apart from stated conditions in conveyance

Unity of Ownership (Merger)
Release
Abandonment
Estoppel
Prescription
End of Necessity

(A) Interests in Land: (2) Easements - (F) Termination of Easements: (1) Unity of Ownership (Merger)

When the servient estate and dominant estate both come together in the same owner, the easement is terminated.

(A) Interests in Land: (2) Easements - (F) Termination of Easements: (2) Release

An easement (including an easement in gross, which is otherwise alienable) can be terminated by a deed of release form the owner of the easement to the owner of the servient estate. Must comply with the SoF and all deed formalities.

(A) Interests in Land: (2) Easements - (F) Termination of Easements: (3) Abandonment

The intent to abandon must be manifested by taking some physical act on the property itself that would show intent to abandon (objective evidence of subjective intent). But note: Mere non-use, no matter how long it lasts, is not abandonment.

(A) Interests in Land: (2) Easements - (F) Termination of Easements: (4) Estoppel

Oral expressions of an intent to abandon do not terminate the easement unless committed to writing (release) or accompanied by action (abandonment). But if the owner of the servient estate changes his position in reasonable reliance on the representations made or conduct by the owner of the easement, the easement terminates thru estoppel.

(A) Interests in Land: (2) Easements - (F) Termination of Easements: (4) Termination of Estoppel - 2 elements

There must be (1) a representation of relinquishment by the holder of the dominant estate (easement holder); AND (2) a change of position in reliance thereon by the holder of the servient estate.

(A) Interests in Land: (2) Easements - (F) Termination of Easements: (5) Termination by Prescription

Owner of servient estate must stop the use of the easement and keep it stopped for the statutory period (MBE 20 years; TX 10 years)

(A) Interests in Land: (2) Easements - (G) Licenses + Easements by Estoppel: (1) Revocable License

A license is a limited privilege of use, and not a property interest. It is only a contract right, and it is revocable at the will of the licensor. But note: the licensor may have to pay contract damages for wrongful revocation.

(A) Interests in Land: (2) Easements - (G) Irrevocable License (Easement by Estoppel): 2 Rules

Any time an easement is attempted but fails due to SoF, there is a license.

If money is spent on the property in furtherance of that oral license, the license becomes irrevocable, is just as good as an easement, and can be enforced under principles of estoppel. In TX, the irrevocable license is called an easement by estoppel.

(A) Interests in Land: (2) Easements - (H) Profits

A profit gives the right to go onto land and take a natural resource away (e.g., timber, coal, etc). An implied easement to go onto the land, get the resource, and take it away goes along with a profit.

(A) Interests in Land: (3) Restrictive Covenants: (C) Equitable Servitudes in Subdivisions: Mutual Rights of Enforcement [AKA Reciprocal Negative Servitudes)

Mutual Rights of an enforcement are an exception to the general rule that promises must be in writing. There are two requirements to establish the mutual benefit and burden:

1) Intent to create a servitude on all the land in the subdivision; and
2) Notice

(A) Interests in Land: (3) Restrictive Covenants: (C) Equitable Servitudes in Subdivisions: E1: (1) Intent

The first requirement to establish mutual benefit and burden is intent to create a servitude on all land in the subdivision. . .
This is found in the common building plan (AKA common plan of development), which may be in (a) a subdivision map or (b) by deeds issued by a common grantor that each contain the restriction.
If intent is established, the benefits of the restriction attaches to all owners in the subdivision.

(A) Interests in Land: (3) Restrictive Covenants: (C) Equitable Servitudes in Subdivisions: E2: Notice

Notice of the common development plan can be one of 3 types:

1) Actual notice
2) Record notice (where the restriction is in the direct chain of title); or
3) Inquiry notice (you are held to know anything that a reasonable investigation might have revealed).

(A) Interests in Land: (3) Restrictive Covenants: (D) 4 Equitable Defenses to Enforcement [of equitable servitudes)

Unclean hands--P did same thing as D.
Acquiescence--P let neighbor on the other side do the same thing.
Latches--P sat by while D built the improvement and P only complains after D has finished it
Estoppel--P said earlier that he didn't mind if D put up an office building, and D relied.

(A) Interests in Land: (3) Restrictive Covenants: (E) Termination -- 3 ways

A covenant can be terminated by

1) Release
2) Unity of ownership
3) Changed circumstances (must affect all lots in the subdivision).

(B) Transfers and Protection of Interests: (4) Adverse Possession - 6 Elements: HELUVA

Hostile
Exclusive
Lasting
Uninterrupted
Visible
Actual

(4) Adverse Possession - Element (2) Exclusive

X excludes others from possessing the property

(4) Adverse Possession - Element (3) Lasting for the Statutory Period

The possession must last for the statutory period. Common law period is 20 years (MBE). TX has 4 statutes for AP periods.

4-5 TX Statutes governing AP Periods

"Title" or "Color of Title" STT
"Duly Registered Deed and Payment of Taxes" STT
"Bare Possession" STT
two other statutes, which the Barbri professor was too stupid to include.

Statutory AP Periods in TX: (1) "Title" or "Color of Title" STT: 3 years

IF possessor is on the land under a color of title and has only narrow specified defects in title, the adverse period is 3 years. NOTE: very hard test to satisfy, don't use on exam.

Statutory AP Periods in TX: (2) "Duly Registered Deed and Payment of Taxes" STT: 5 years

If possessor is there under a recorded, but otherwise defective, deed and pays all taxes, the adverse period is 5 years.

Statutory AP Periods in TX: (3) "Bare Possession" STT: 10 years

If the possessor is a naked trespasser (bare possession w/o color of title), the AP period is 10 years and possession is limited to 160 acres (unless a larger area is fenced in).

If the possessor has a deed that doesn't satisfy the more stringent 3 or 5 year requirements, the deed can help acquire title to whatever land is described in the deed, even if more than 160 acres and not fenced in.

Statutory AP Periods in TX: (4)-(5) 2 statutes

"Texas also has 2 statutes requiring a 25 period of AP. These only apply if the AP occurred while the true owner was under a disability.

(4) Adverse Possession - Element (4) Uninterrupted

Must be the kind of continuous use that an ordinary owner would make

(4) Adverse Possession - Element (5) Visible

The AP must be out in the open ("open and notorious").

(A) Interests in Land: (4) Adverse Possession - Element (6) Actual

Gen R: The AP'er must actually possess the land to get title.

Exceptions: Constructive AP; leasing of land not owned

TX Note: Adverse Possessor's mental state

The possessor must "intend to appropriate the land as one's own." If the possessor's state of mind was "I wasn't trying to get anything that isn't mind," then adverse possession fails. There must be a claim of right.

(A) Interests in Land: (4) Adverse Possession - (A) Special Rules for Adverse Possession: Seven Total

Doctrine of Constructive Adverse Possession
Leasing land to someone else qualifies as "possessing" it for AP purposes
Adverse possession against concurrent owners
Future Interest Situations
Tacking of Time for Owners + Possessors
Disability + Limitations Tolling
No adverse possession against government land

(A) Interests in Land: (4) Adverse Possession - (A) Special Rules for AP: (1) Constructive Adverse Possession (an exception to requirement of actual possession) - General Idea

If someone goes onto property under a color of title to a larger tract, but only actually possesses a part of the larger unit, constructive AP can give title to the rest of the property if 2 additional requirements are met:

1) The amount actually possessed bears a reasonable relation to the whole (not just some small part);
2) The property is unitary (a seamless whole).

(A) Interests in Land: (4) AP - (A) Special Rules: (2) If an adverse possessor leases the property to someone else, does the count as possession?

Yes. Leasing land to someone else qualifies as possessing it for AP purposes.

(A) Interests in Land: (4) AP - (A) Special Rules: (3) AP against concurrent owners

Adverse possession by one concurrent owner against another concurrent owner can occur only if the possessor excludes the other co-tenant(s) from possession and the statute runs.

(A) Interests in Land: (4) AP - (A) Special Rules: (4) Future Interest Situations - (b) Life estate plus future interest

If a life estate exists at the time AP begins, the clock does not run against the future interest holder until the life tenant dies--when his interest becomes possessor.

(A) Interests in Land: (4) AP - (A) Special Rules: (4) Future Interest Situations - (c) FSD + PoR

The clock against a grantor holding a possibility of reverter begins to run on the happening of the condition that automatically terminates the FSD (the present possessory estate).

(A) Interests in Land: (4) AP - (A) Special Rules: (4) Future Interest Situations - (d) FSCS + RoE

The AP clock does not begin to run against a grantor holding a possibility of reverted until he exercises his right of entry.

(A) Interests in Land: (4) AP - (A) Special Rules: (5) Tacking between Adverse Possessors

Can tack periods of AP, but the periods must pass directly from one AP'er to another. No gaps.

(A) Interests in Land: (4) AP - (A) Special Rules: (5) Tacking between Owners

Can tack periods of true owners, meaning that AP does not have to be against the present owner for the entire statutory period.

(A) Interests in Land: (4) AP - (A) Special Rules: (6) Disabilities + Statute of Limitations Tolling - MBE Rules

For the MBE, disabilities include being (a) a minor, (b) of unsound mind, and/or (c) in jail. These are legal disabilities that toll the statute of limitations. Note: The owner must be under the disability at the time AP begins. If he is, then the clock does not begin to run until he is free of that disability.

(A) Interests in Land: (4) AP - (A) Special Rules: (6) Disabilities + Statute of Limitations Tolling - TEXAS

3 disabilities are recognized in TX: (1) being a minor; (2) being of unsound mind, or (3) being in the US armed forces during a time of war. Not included: Incarceration.
The maximum tolling period for disabilities is 25 years. No matter what, AP'er can acquire title after 25 years.

(A) Interests in Land: (5) Conveyancing - Overview

Conveyancing is a two-step process: (1) contract of sale; (2) at closing, the deed.

(A) Interests in Land: (5) Conveyancing - (A) Contract of Sale - Overview

A real estate contract is governed by all regular contract rules, plus 5 additional considerations:

Statute of Frauds
Legal effect of a valid contract of sale--the executory period
Marketable Title
Time of Performance
Physical Condition of the Property + Seller's Liability

(A) Interests in Land: (5) Conveyancing - (A) Contract of Sale - (1) SoF: General Rule

A contract of sale of an interest in real property must be in writing and signed by the party against whom enforcement is sought.

The writing must contain the essential terms of the deal, including: (1) a description of the property; (2) the names of the parties; and (3) the price or a means of determining price (i.e., the "FMV as determined by appraisal").

(A) Interests in Land: (5) Conveyancing - (A) Contract of Sale - (1) SoF: Exception

The doctrine of part performance is an exception to SoF. It supports an action for specific performance.

MBE Elements - 2 of 3: (A) Possession of the land by the purchaser; (B) Paying all or part of the purchase price; (C) erecting improvements.
In Texas, all 3 elements must be present.

(A) Interests in Land: (5) Conveyancing - (A) Contract of Sale - (1) SoF: Exception - TX Doctrine of Part Performance

In order to qualify for protection under the doctrine of art performance, a purchaser must (1) be in possession of the land; (2) have paid all or part of the purchase prices; and (3) have erected improvements on the land in question.

It is very difficult to get around the SoF in TX when dealing with land contracts.

(A) Interests in Land: (5) Conveyancing - (A) Contract of Sale - (2) Legal Effect of a Valid Contract of Sale before delivery of deed (the Executory Period)

There are 3 points worth noting here:

Risk of loss
Death of a party before closing

(5) Conveyancing - (A) Contract of Sale - (2) Legal Effect of a Valid Contract of Sale: (a) Risk of Loss - MBE Rule

The buyer bears the risk of loss where property is damaged or destroyed before closing through no fault of the seller, even if the seller is still in possession and control of the property. Once the contract is executed, the doctrine of equitable conversion applies (title is in buyer for all practical purposes).

If seller is at fault for the damage, he is liable for the loss.

(5) Conveyancing - (A) Contract of Sale - (2) Legal Effect of a Valid Contract of Sale: (a) Risk of Loss - TX Rule

The risk of loss is on the person of possession at the time of the loss. TX UVPRA.

(5) Conveyancing - (A) Contract of Sale - (2) Legal Effect of a Valid Contract of Sale: (b) Death of a party before closing

Where a party (whether buyer or seller) dies before the closing, the doctrine of equitable conversion will preserve the rights as set forth in the contract, which are not affected by the party's death.

If the seller dies before closing, the buyer should close with the seller's estate. The seller's interest is considered personal property (sales price).
If the buyer dies before closing, the seller should close with the buyer's estate. The buyer's interest is considered real property (the land contracted for purchase).

(5) Conveyancing - (A) Contract of Sale - (3) Doctrine Marketable Title

Every land sale contract carries an implied warranty that, at closing, the seller will give buyer a marketable title.

Marketable title does not require a perfect title. Just a title that a reasonable person would accept.
3 types of defects make title unmarketable

(5) Conveyancing - (A) Contract of Sale - (3) Doctrine Marketable Title: When must a seller deliver marketable?

The seller must be able to deliver a valid legal title on the day of closing. Until that day, the buyer cannot rescind for lack of marketable title (can only do so at or after closing).

Where buyer finds out the day before closing that seller does not have legal title, the buyer cannot rescind because the seller does not need to provide valid legal title until the next day (closing date).

(5) Conveyancing - (A) Contract of Sale - (3) Doctrine Marketable Title: What "defects" make title unmarketable?

Defects in the Record Chain of Title:
The Presence of Encumbrances.
Title Acquired by Adverse Possession

(5) Conveyancing - (A) Contract of Sale - (3) Doctrine Marketable Title: (i) Defects in Record Chain of Title.

Variations in the property description, an improperly executed deed, evidence that a prior grantor lacked capacity to convey the property, etc.

(5) Conveyancing - (A) Contract of Sale - (3) Doctrine Marketable Title: (ii) The Presence of Encumbrances - General

If not mentioned in the K, none of the following: easements, restrictive covenants, mortgages, existence of a valid option to purchase, etc.

(5) Conveyancing - (A) Contract of Sale - (3) Doctrine Marketable Title: (ii) The Presence of Encumbrances - Exception for certain mortgages

A mortgage on the property is not an encumbrance if the seller palsy to pay the mortgage out of the proceeds of the sale.

(5) Conveyancing - (A) Contract of Sale - (3) Doctrine Marketable Title: (ii) The Presence of Encumbrances - Zoning Ordinance; Housing Code Violations

A ongoing violation of a zoning ordinance DOES make title unmarketable.

A violation of a housing or building code does NOT make title unmarketable (more of a physical defect than a legal defect in title).

(5) Conveyancing - (A) Contract of Sale - (3) Doctrine Marketable Title: (iii) Title was acquired by AP

Title acquired by AP is NOT marketable. But, the defect may be cured with either (a) a judgment of title for the seller or (b) a quit claim deed issued to seller from the party against whom he adversely possessed.

(5) Conveyancing - (A) Contract of Sale - (3) Doctrine Marketable Title: Buyer's Remedies, step-two: (2) 3 remedies

If the seller does not cure the defect after notice and reasonable time, the buyer has three options:

Rescission--buyer walks away
Sue for damages for the breach
Specific performance--buyer can take what seller has can give (what he has title to), but sue to recover the difference between the contract price and the title delivered.

(5) Conveyancing - (A) Contract of Sale - (3) Doctrine Marketable Title: Buyer's Remedies--Waiver

If the buyer goes to closing and accepts the deed without the defects having been cured, then the doctrine of merger applies: The buyer has no recourse against the seller under the land sale contract. Any action taken form that point must be based on what is in the deed the buyer receives.

(5) Conveyancing - (A) Contract of Sale - (4) Time of Performance: Remedies for breach of sales contract - 2

DAMAGES. Measured by the difference between (a) the contract price and (b) the value of the land on the day of the breach. Note, Liquidated Damages: The buyer's deposit can be forfeited as liquidated damages so long as it is not more than 10% of the sales price.
SPECIFIC PERFORMANCE of the land sales contract. Always available to both buyer and seller.

(5) Conveyancing - (A) Contract of Sale - (5) Physical Condition of the Property + Seller's Liability: Background

General Common Law Rule: A sale of land does not come with any warranties of quality or fitness related to the physical condition of the property. Originally, sellers were not obligated to disclose any defects.
However, some modifications have been made. There are distinct differences between new construction and resale transactions.

(5) Conveyancing - (A) Contract of Sale - (5) Physical Condition of the Property + Seller's Liability: (a) Liability of Seller of New Construction - (i) MBE Rule

A majority of states have adopted (1) an implied warranty of good workmanship (IWGW) and (2) an implied warranty of habitability (IWH) . . . in the sale of a new home.

IWGW: The builder promises that the quality of construction meets a certain level.
IWH: The builder promises that the residence is suitable for human habitation.

NOTE: these warranties only cover latent defects.

(5) Conveyancing - (A) Contract of Sale - (5) Physical Condition of the Property + Seller's Liability: (a) Liability of Seller of New Construction - (ii) TX Rule

The Texas Supreme Court has held that the IWGW and IWH are two distinct warranties making two different promisers. As such, issues with disclaimers and waivers are handled differently for each.

IWGW: A disclaimer is only valid if the builder replaces the IWGW with an express warranty for the quality of construction.
IWH: A waiver or disclaimer is generally invalid.

(5) Conveyancing - (A) Contract of Sale - (5) Physical Condition of the Property + Seller's Liability: (b) Liability of Seller of Existing Land & Building (Resale): General Idea

The seller of existing land and buildings does not make any implied warranties regarding the physical condition to the property. However, the seller may have liability based on 3 other duties:

(1) Seller must disclose known, serious defects that are not obvious to the buyer. See also, Texas Property Code §5.008.
(2) Seller cannot actively conceal defects (covering up termite damage with paint and wallpaper).
(3) Seller cannot make a [affirmative] false statement regarding a condition of the property.

(5) Conveyancing - (A) Contract of Sale - (5) Physical Condition of the Property + Seller's Liability: (b) Liability of Seller of Existing Land & Building (Resale): TX Real Property Code §5.008.

The general rule is that a seller must disclose known, serious defects that are not obvious to the buyer. TX §5.008 provides a statutory seller's disclosure form, which the seller must complete honestly and provide to the buyer before execution of a sales contract for residential property. There are some exceptions to the requirement of a statutory disclosure form, including (1) foreclosure sales, (2) property resold after foreclosure by bank, and (3) sales between co-owners.

Id. (5) Physical Condition of the Property + Seller's Liability: (c) Environmental Report

An owner of real property is generally required to pay to cure any environmental damage to the property, even if the damage occurred before he owner the property. As a result, buyers of commercial real estate often ask sellers to guarantee that the property complies with environmental laws.

(5) Conveyancing - (B) Deeds - General Idea

A "deed" is the document that transfers legal title to the property from seller to buyer. The document must comply with the SoF and be properly executed, delivered, and accepted. . .

Once the deed is executed, delivered, and accepted, the contract of sale merges into the deed and is destroyed. All contract provisions (e.g, implied warranty of merchantable title) are lost unless they are included in the deed (or the contract specifies that they survive).

(5) Conveyancing - (B) Deeds - general requirements

Comply with SoF
Proper execution
Proper delivery
Proper acceptance.

(5) Conveyancing - (B) Deeds: (1) Formalities Required

A valid deed must: (1) be in writing; (2) identify the grantee (buyer); (3) contain a description of the property, (4) include conveyancing language, and (5) be signed by the grantor (seller).*

Note: Consideration is not required for a valid deed.
*Special rules regarding grantor's signature under TX Homestead

(5) Conveyancing - (B) Deeds: (1) Formalities: Grantor's Signature + TX Homestead

If the property is seller's homestead, to validly convey the property the deed must include both (1) the seller's signature (as legal title holder of property) and (2) seller's spouse's signature.

(5) Conveyancing - (B) Deeds: (1) Formalities: Identifying a dead grantee?

A deed must identify the grantee (buyer). A dead person cannot be a grantee. So, a deed naming a dead person as grantee is invalid. The contract of sale may still be enforced by either the seller or the grantee's estate. Remedy: new deed identifying the buyer's estate as the grantee.

(5) Conveyancing - (B) Deeds: (1) Formalities: Property Description

For a property description to be sufficient, it must provide the means to identify the property. . . A minor discrepancy in the description is ok, so long as the proper can still be identified. However, fi the property cannot be located, the deed is void for vagueness and nothing is transferred from seller to buyer. . . A description by metes and bounds always controls over any other description (i.e., by acreage).

(5) Conveyancing - (B) Deeds: (2) Delivery - General Idea

Delivery does not require a physical transfer, only some evidence of the grantor's (seller) intent to pass title. . . The grantor's intent to deliver can be shown with any evidence (parole evidence, statements, conduct, anything).

If the grantor intends to pass title, the mere safeguarding of the paper by the grantor does not show a lack of delivery. . .

(5) Conveyancing - (B) Deeds: (2) Effect of Delivery

Once delivery occurs, title passes, and the grantee's later returning the deed to grantor or tearing up the deed has no effect on his title.

(5) Conveyancing - (B) Deeds: (2) Delivery - Presumption of Non-Delivery

If the grantor dies with the deed in his possession, there is a presumption of no delivery (can be rebutted by grantee).

(5) Conveyancing - (B) Deeds: (2) Delivery - Presumption of Delivery

If the grantor records the deed, this creates a presumption of delivery, even if the grantee never saw the deed and knew nothing about it.

(5) Conveyancing - (B) Deeds: (3) Conditional Delivery - Issue Spot

Grantor hands physically hands over the deed, but tried to condition its "delivery" on some event. This may be a valid conditional delivery, depending on three issues:

Is the condition expressly written into the deed?
Did the grantee state an oral condition during physical delivery to the grantee?
Did the grantor make delivery conditional on the grantee's paying the purchase price?

(5) Conveyancing - (B) Deeds: (3) Conditional Delivery: (i) Express condition written into deed

If the deed says it will not become effective until the grantor's death, there is a valid delivery of a future interest. The deed will be read to say "Grantor to grantor for life, then to grantee" to give effect to the grantor's intent. Here, the deed creates (1) a life estate in the grantor and (2) a vested remainder that cannot be convoked in the grantee.

Note: TX Transfer on Death Dead

(5) Conveyancing - (B) Deeds: (3) Conditional Delivery: (i) Express condition written into deed : TX Transfer on Death Deeds

Recently, a statute was adopted that allows an owner of real property to use a Transfer on Death Deed (TDD) to designate a transferee to receive title to property on the owner's death without the necessity of probate.

A TDD does not affect the owner's (transferor) rights and he retains the power to transfer or encumber the property, or to revoke the TDD.
For a valid TDD: delivery not required, but recording required.

(5) Conveyancing - (B) Deeds: (3) Conditional Delivery: (ii) Oral condition stated during delivery to grantee

An oral condition made at the time of delivery of the deed is invalid and should be disregarded.

(5) Conveyancing - (B) Deeds: (3) Conditional Delivery: (iii) Making delivery conditional on buyer (grantee) paying the purchase price

Making delivery conditional on payment of the purchase price is valid, provided that the seller (grantor) delivers the deed to a 3P in escrow w/ instructions to deliver to buyer (grantee) when the condition is satisfied (and oral instructions are ok).

Once the deed is given to the escrow agent, the grantor (seller) cannot get the deed back. If the grantee (buyer) satisfies the condition, he gets the property despite any subsequent changes of mind by grantor.

(5) Conveyancing - (B) Deeds: (4) Acceptance of Deed by Grantee (buyer)

Acceptance is presumed unless the facts show otherwise. The only way a grantee can avoid acceptance is by rejection.

(A) Interests in Land: (5) Conveyancing - (C) Covenants for Title + Estoppel by Deed - General Idea

Covenants of title are promises made by a grantor (seller) to the grantee (buyer) regarding the quality of title being conveyed by the deed. Covenants of title must be in writing.

(A) Interests in Land: (5) Conveyancing - (C) Covenants for Title: Types of Deed

There are 3 types of deeds used to convey property interests other than leaseholds: (1) the general warranty deed, (2) the special warranty deed, and (3) the quitclaim deed. . . The difference among these deeds is the scope of title assurance (i.e., covenants for title).

(5) Conveyancing - (c) Covenants for Title - TX rules of construction

Under the TX Property Code, if a deed uses the words "grants" or "conveys," two covenants are impliedly included: (1) the covenant against encumbrances; (2) the covenant of "no prior conveyances.

(C) Covenants for Title: The 6 Usual Covenants (General Warranty Deed): List

Covenant of Seisin
Covenant of Right to Convey
Covenant Against Encumbrances
Covenant for Quiet Enjoyment
Covenant of Warranty
Covenant for Further Assurances

(C) Covenants for Title: The 6 Usual Covenants (General Warranty Deed): Two brand categories

(1) Present Covenants and (2) Future Covenants.

(1) Present Covenants: Allow the grantee to sue immediately for breach. They are personal to the grantee and do not run with the land.
(2) Future Covenants: These do not allow the grantee to sue immediately for breach. They can only be breached later, when grantee is disturbed in possession (true owner shows up). A future covenant, which can only be breached in the future, runs with the land and can be enforced by all subsequent purchasers.

(C) Covenants for Title: (A) Present Covenants: (1) Covenant of Seisin + (2) Covenant of Right to Convey

These two covenants are used interchangeable on the exam. Essentially, they both present the seller's promise that (1) he has title and possession and (2) he can validly convey both.

(1) Covenant of Seisin. Grantor (seller) covenants that he has the estate that he purports to convey to the grantee (buyer) . HE must have both title and possession at the time of the grant (conveyance).
(2) Covenant of Right to Convey. Grantor (seller) covenants that he has authority to make the grant (conveyance). Title alone will satisfy this covenant.

(C) Covenants for Title: (A) Present Covenants: (3) Covenant Against Encumbrances

Grantor covenants against the existence of any (a) physical encumbrances (e.g., encroachments, easements) or (b) title encumbrances (e.g., mortgages).

- Basically, Grantor promises there are no easements, restrictive covenants, liens, etc.

(C) Covenants for Title: (B) Future Covenants: (1) Covenant for Quiet Enjoyment + (2) Covenant for Warranty.

Note: The covenant for quiet enjoyment and the covenant of warranty are generally considered to be similar covenants for title. Essentially, they both represent a promise from the seller that he will protect the buyer against anyone who shows up later and claims title.

(1) Covenant for Quiet Enjoyment: Grantor covenants that the grantee will not be disturbed in possession by a third party's lawful claim.
(2) Covenant of Warranty: Grantor agrees to defend against reasonable claims of title by a 3P and to compensate the grantee for any loss sustained by the claim of superior title.

(C) Covenants for Title: (B) Future Covenants: (3) Covenant for Further Assurances

The grantor promises to perform acts reasonably necessary to perfect the title conveyed.

Covenant for Further Assurances = the "mop up" covenant. If seller forgot to do something to pass valid title, seller promises to do whatever necessary to rectify (e.g., sign the deed).

(C) Covenants for Title: (C) Damages for Failure of Title ---AKA breach of (1-2) Seisin; Right to Convey, (2-3) General Warranty; Quiet Enjoyment; (4) Special Warranty

Damages for breach are limited to purchase price received by the warrantor, plus incidental damages.

(C) Covenants for Title: (C) Damages for Breach of Covenant Against Encumbrances

If the property is subject to an encumbrance that was not excepted from coverage in the conveyed,ce the damages are either (A) the cost of removing the encumbrance from the land; or (B) if encumbrance cannot be removed, the diminished FMB of the land.

(A) Interests in Land: (5) Conveyancing - (C) Estoppel by Deed

Doctrine of Estoppel by Deed (EBD) If grantor purports to convey an estate in property that he does not then own, his subsequent acquisition of the estate will automatically inure to the benefit of the grantee.

EBD applies only when: (A) the conveyance was a by warranty deed, or (B) where the deed purported to convey a. particular estate. NOT COVERED: Quitclaim deeds.

(A) Interests in Land: (5) Conveyancing - (C) Estoppel by Deed: Plain English

IF A deeds property to B that A does not then own, and later A acquires title to that property, THEN, B will get title because A (grantor) gave an implied covenant that title would be transferred to B (grantee). BUT, if A (grantor) gets title and then transfers to a BFP, the B (the original grantee) cannot reply on estoppel by deed.

(A) Interests in Land: (5) Conveyancing - (C) Estoppel by Deed: Texas Label

In Texas, estoppel by deed is called the Doctrine of After-Acquired Title.

TX Recording Act

TX recoding statute protects (1) BFPs (including mortgagees) and (2) Judgment creditors.

Recording a deed in TX

A deed can be properly recorded in Texas if (1) it is signed and (2) the signature is either (a) notarized [acknowledgment] or (b) signed by at least two witnesses

Bona Fide Purchaser for value: two common issues

Bargain basement sale. In the absence of an explicit claim of fraud, any amount other than a nominal amount is considered to be "for value." It does not matter if the amount paid does not come close to market value.

Inheritance + Devise: One who takes property as an heir, devisee, or donee cannot be a BFP. They have not "given value." They will never defeat the claim of a prior grantee/transferee/buyer.

BFP - Shelter Rule Exception

Anyone (even heirs, donees, and devisees; people who actually knew of an earlier sale) can shelter under the rights of a BFP. It protects anyone who takes from a BFP whether they are purchasers for value or not, and no matter what they know.

(3) Inquiry Notice - TX rule

In Texas, a quitclaim deed puts the grantee on notice of any defects that exist in the chain of title. The grantee under a quitclaim deed cannot be a BFP.

A) Interests in Land

262 important questions on A) Interests in Land