MBE Property Mistake Books

Three years ago a landowner conveyed the tract to a grantee for $50,000 by a deed that provided: "By accepting this deed, the grantee covenants for herself, her heirs and assigns, that the premises herein conveyed shall be used solely for residential purposes and, if the premises are used for nonresidential purposes, the landowner, his heirs and assigns, shall have the right to repurchase the premises for the sum of one thousand dollars ($1,000)." In order to pay the $50,000 purchase price for the tract, the grantee obtained a $35,000 mortgage loan from a bank. The landowner had full knowledge of the mortgage transaction. The deed and mortgage were promptly and properly recorded in proper sequence. The mortgage, however, made no reference to the quoted language in the deed. Two years ago the grantee converted her use of the tract from residential to commercial without the knowledge or consent of the landowner or of the bank. The grantee's commercial venture failed, and the grantee defaulted on her mortgage payments to the bank. The tract now has a fair market value of $25,000. The bank began appropriate foreclosure proceedings against the grantee. The landowner properly intervened, tende

(A) is the best response, because an option to purchase "in gross" is subject to the Rule Against Perpetuities, and this option might be exercised beyond the perpetuities period. The option to purchase here, although it is contingent, would be held to create an interest in land. (That is, if the holder of the fee refused to convey after using the property for non-residential purposes, the optionee could get an order of specific performance. That's enough to give the optionee a contingent interest in the land.) The option here is "in gross" - that is, the option is not appurtenant to an interest already held by the optionee in the land. (A purchase option given to a tenant, by contrast, would not be in gross.) Options in gross are generally held to be subject to the Rule Against Perpetuities. 725 The Rule says that an interest is void if it might vest more than 21 years after some life in being at the time of creation of the interest. Here, the only lives that might qualify as measuring lives are the landowner's and the grantee's. Yet by its terms, the clause might be exercisable in the very distant future - by the landowner's great-great-grandchildren, for instance, as against the grantee's great-great-grandchildren. This exercise would be far after any measuring life mentioned in the document plus 21 years. Consequently, the option would be void if options in gross are subject to the Rule. (It's not absolutely certain that options in gross would be subject to the Rule in a particular jurisdiction. But if the court rules against the landowner, the only plausible explanation from those given is that the court has found that the Rule applies to options in gross, and that this option violates the Rule.)

A vacant lot is contiguous to a farm. Thirty years ago the then-record owner of the vacant lot executed and delivered to the owner of the farm an instrument in writing that was denominated "Deed of Conveyance" granting the farmer "and her heirs and assigns a right-of-way for egress and ingress" to the farm. If the quoted provision was sufficient to create an interest in land, the instrument met all other requirements for a valid grant. The farmer held record title in fee simple to the farm. Twelve years ago, an investor succeeded to the vacant lot owner's title in fee simple in the vacant lot and seven years ago the farmer's daughter succeeded to the farmer's title in fee simple in the farm by a deed that made no mention of a right-of-way or driveway. At the time the farmer's daughter took title, there existed, across the vacant lot, a driveway that showed evidence that it had been used regularly to travel between a highway and the farm. The farm did have frontage on another public road, but this means of access was seldom used because it was not as convenient to the dwelling situated on the farm as was the highway. The driveway originally was established by the farmer. The farmer's daug

(A) is the best response, because the easement was fixed and the investor did not have the right to move it. There are various ways of creating an easement. One of those ways is by express grant. That is what happened here. Although the investor might argue that the grant of a "right of way" was the grant of a revocable license rather than of an easement, this argument would fail. The reference in the document to the farmer "and her heirs" would convince a court that a permanent interest in land (i.e., an easement), not a revocable personal license, was intended. The easement by express grant did not, of course, fix the location in the document. However, when the original owner of the vacant lot acquiesced in the farmer's building of the driveway over a particular strip of his property, this acquiescence acted to fix the location of the easement as being the driveway. Once that location was definitively fixed, neither the owner of the vacant lot nor his successor had the right to compel the easement holder (whether the holder was the farmer or her daughter) to move the location, no matter how non-burdensome moving that location would have been for the easement holder.

A hotelier owned a hotel, subject to a mortgage securing a debt the hotelier owed to an investor. The hotelier later acquired a nearby parking garage, financing a part of the purchase price by a loan from a bank, secured by a mortgage on the parking garage. Two years thereafter, the hotelier defaulted on the loan owed to the investor, which caused the full amount of that loan to become immediately due and payable. The investor decided not to foreclose the mortgage on the owner's hotel at that time, but instead brought an action, appropriate under the laws of the jurisdiction and authorized by the mortgage loan documents, for the full amount of the defaulted loan. The investor obtained and properly filed a judgment for that amount. A statute of the jurisdiction provides: "Any judgment properly filed shall, for ten years from filing, be a lien on the real property then owned or subsequently acquired by any person against whom the judgment is rendered. There is no other applicable statute, except the statute providing for judicial foreclosure of mortgages, which places no restriction on deficiency judgments. The investor later 652 brought an appropriate action for judicial foreclosure of it

(A) is the best response, because the investor's judgment lien on the garage came ahead of the hotelier's equity. When the investor filed his judgment for the amount owed on the hotel, that lender got a lien against the garage (as well as against the hotel) for the full amount owed on the garage. So at that moment, the investor was in the position of a second mortgagee on the garage, behind the bank. Then, when the investor purchased the hotel for $100,000 less than the mortgage balance, the investor obtained a deficiency judgment for that $100,000 amount. This became the amount covered by the earlier-filed judgment lien, and was secured by a second position on the garage. (It's irrelevant that the hotel was bought by the investor: The same result, a $100,000 second-position lien for the investor on the garage, would have come into existence regardless of who bought the hotel at foreclosure, if the price paid was $100,000 less than the balance due.) When the investor paid $200,000 more than the outstanding mortgage balance for the garage, this $200,000 amount was "excess" and was required to be handled the same way as if the bank had had no mortgage and the total purchase price was $200,000. That is, the investor's lien now moved to first position, and was entitled to be paid in full before anything went to the equity owner (the hotelier). So the investor got the first $100,000 of the excess. The balance, $100.000, went to the equity owner (the hotelier).

A man conveyed his house to his wife for life, remainder to his only child, a son by a previous marriage. Thereafter, the man died, devising his entire estate to his son. The wife later removed a light fixture in the dining room of the house and replaced it with a chandelier that was one of her family heirlooms. She then informed her nephew and her late husband's son that after her death, the chandelier should be removed from the dining room and replaced with the former light fixture, which she had stored in the basement. The wife died and under her will bequeathed her entire estate to her nephew. She also named the nephew as the personal representative of her estate. After the nephew, in his capacity as personal representative, removed the chandelier and replaced it with the original light fixture shortly after the wife's death, the son sued to have the chandelier reinstalled. Who will likely prevail? (A) The nephew, because he had the right to remove the chandelier within a reasonable time after the wife's death. (B) The nephew, because of the doctrine of accession. (C) The son, because the chandelier could not be legally removed after the death of the wife (D) The son, because a perso

(A) is the best response, because the wife did not intend to make the chandelier a permanent annexation, and the chandelier was removable without seriously damaging the real estate or the chandelier. When the holder of a life estate (or a tenant for years) annexes a chattel (commonly called a "fixture") to the real estate, and does not intend to make a permanent annexation, the holder or her representative is permitted to remove the fixture before or soon after the end of the estate, if removal can be done without causing substantial injury to the real estate or substantial destruction of the fixture itself. S&W, § 4.9, p. 168. These conditions apply here: (1) we know that the wife did not intend to make the chandelier a permanent annexation, since she told her nephew and her stepson that after her death, the chandelier should be removed; and (2) there is no evidence that the removal damaged either the ceiling or the fixture itself. Therefore, the nephew, as the wife's personal representative, had the right to remove the chandelier within a reasonable time after the wife's death.

A seller contracted to sell land to a buyer for $300,000. The contract provided that the closing would be 60 days after the contract was signed and that the seller would convey to the buyer a "marketable title" by a quitclaim deed at closing. The contract contained no other provisions regarding the title to be delivered to the buyer. A title search revealed that the land was subject to an unsatisfied $50,000 mortgage and a right-of- way easement over a portion of the land. The buyer now claims that the title is unmarketable and has refused to close. Is the buyer correct? (A) No, because nothing under these facts renders title unmarketable. (B) No, because the buyer agreed to accept a quitclaim deed. (C) Yes, because the right-of-way easement makes the title unmarketable. (D) Yes, because the unsatisfied mortgage makes the title unmarketable.

(A) is the best response, because: (1) the right-of-way easement would have been visible at the time of the contract: and (2) the unsatisfied mortgage can be paid off by the seller at the closing out of the sale proceeds. When the question asks you to decide whether title is marketable, you should presume that it's marketable unless you can see some specific reason that would render it unmarketable. And in a multiple-choice format like the MBE, the examiners will almost certainly have to mention a defect in a choice in order for that choice to represent a correct reason why the title is unmarketable. This means that here, where there are only two "yes" choices (i.e., two choices where the buyer wins), you don't have to worry about any defect that's not mentioned in either of the two. In other words, you only have to worry about the potential defects mentioned in Choices (C) and (D), the right-of-way- easement issue and the unsatisfied-mortgage issue. As to the right-of-way easement, there are some types of easements whose existence so materially reduces the value of the fee simple that the easement does make the title unmarketable. But most "right of way" easements merely give an adjacent landowner the ability to get to the public road, and in this situation the easement's existence will generally be visible to anyone who inspects the property when the contract is signed (since there will almost always be some visible indication- like a pathway, and/or the otherwise land-locked nature of the dominant parcel - of the easement's existence). Virtually all courts hold that in this situation of a visible pathway to the public road, the buyer will be treated as having agreed in the contract to accept the property subject to that easement. S&W Hornbook (3d Ed.), § 10.12, pp. 781-82; 3 A. L. P. & 11.49, p. 137.

A farmer owned a farm in fee simple, as the land records showed, when he contracted to sell the farm to a buyer. Two weeks later, the buyer paid the agreed price and received a warranty deed. A week thereafter, when neither the contract nor the deed had been recorded and while the farmer remained in possession of the farm, a creditor properly filed her money judgment against the farmer. She knew nothing of the buyer's interest. A statute in the jurisdiction provides: "Any judgment properly filed shall, for ten years from filing, be a lien on the real property then owned or subsequently acquired by any person against whom the judgment is rendered." The recording act of the jurisdiction provides: "No conveyance or mortgage of real property shall be good against subsequent purchasers for value and without notice unless the same be recorded according to law." The creditor brought an appropriate action to enforce her lien against the farm in the buyer's hands. If the court decides for the buyer, it will most probably be because (A) the doctrine of equitable conversion applies. (B) the jurisdiction's recording act does not protect creditors. (C) the farmer's possession gave the creditor constr

(B) is the best response, because creditors are probably not "purchasers for value" as required for protection under the recording act. Some recording acts have language that specifically protects judgment creditors who file their judgment after the debtor has made an unrecorded conveyance. But where the language of the recording act is ambiguous about whether judgment creditors are covered (e.g., where, as here, "purchasers for value" 499 are what are covered), most courts have interpreted the statute so as not to cover the judgment creditor. There is no guarantee that a court would interpret the statute in this anti-creditor way, but that's at least a possibility, and of the four choices this is the most likely explanation for an anti- creditor result. (Remember, you're not asked to say how the case will come out - you're merely asked to say what the most likely rationale will be if the case is decided for the buyer.) A second rationale for the creditor's loss, by the way, is that the judgment lien statute here gives a lien on "property then owned or subsequently acquired" by the debtor. A court could very plausibly conclude that this language is limited to "property then actually owned, not "property then owned as of record" by the debtor.

Under the terms of his duly probated will, a testator devised his house to his "grandchildren in fee simple" and the residue of his estate to his brother. The testator had had two children, a son and a daughter, but only the daughter survived the testator. At the time of the testator's death, the daughter was 30 years old and had two minor children (grandchildren of the testator) who also survived the testator. A third grandchild of the testator, who was the child of the testator's predeceased son, had been alive when the testator executed the will, but had predeceased the testator. Under the applicable intestate succession laws, the deceased grandchild's sole heir was his mother. A statute of the jurisdiction provides as follows: "If a devisee, including a devisee of a class gift, who is a grandparent or a lineal descendant of a grandparent of the testator is dead at the time of execution of the will or fails to survive the testator, the issue of such deceased devisee shall take the deceased's share under the will, unless the will expressly provides that this statute shall not apply. For this purpose, words of survivorship, such as 'if he survives me, are a sufficient expression that th

(B) is the best response, because the two surviving grandchildren were covered by the class gift, and the deceased grandchild was not survived by any issue. The testator made a "class gift" of his house, with the class defined as his "grandchildren." Any grandchild who was alive when the gift took effect (i.e., when the testator died) is obviously covered by the class gift. So the two surviving grandchildren are certainly members of the class. What is the effect of the statute that is quoted? This is an "anti-lapse" statute. The deceased grandchild qualified for protection under the statute, since the grandchild was "a lineal descendant of a grandparent of the testator." So if that grandchild had had "issue" at the time of the testator's death, under the anti- lapse statute the issue would have taken the grandchild's share. But "issue" means "direct descendants, such as children or grandchildren. The deceased grandchild's mother, though she is his "heir" under the intestacy statute, does not qualify as his "issue" because she is not his direct descendant. Therefore, she does not take any share in the house. What about children who might be born to the testator's daughter after the testator's death? These would be grandchildren of the testator, so it might be argued that once they are born, the class of "grandchildren" should open up to include them. But that is not the way such class gifts are interpreted - the class is deemed to close at the moment the gift takes effect. See, e.g., Amer. Law of Prop., § 22.42: "If a gift of either real or personal property is made by deed or will 'to the children of A; and A is alive when the instrument takes effect, all children of A born thereafter are excluded." Thus, the two surviving grandchildren are the only takers.

A landlord and a tenant orally agreed to a commercial tenancy for a term of six months beginning on July 1. Rent was to be paid by the first day of each month, and the tenant paid the first month's rent at the time of the agreement. When the tenant arrived at the leased premises on July 1, the tenant learned that the previous tenant had not vacated the premises at the end of her lease term on May 31 and did not intend to vacate. The tenant then successfully sued the previous tenant for possession. The tenant did not inform the landlord of the eviction action until after the tenant received possession. The tenant then sued the landlord, claiming damages for that portion of the lease period during which the tenant was not in possession. If the court finds for the landlord, what will be the most likely explanation? (A) By suing the previous tenant for possession, the tenant elected that remedy in lieu of a suit against the landlord. (B) The landlord had delivered the legal right of possession to the tenant. (C) The tenant failed to timely vacate as required to sue for constructive eviction. (D) The tenant had not notified the landlord before bringing the eviction action.

(B) is the best response, because we can infer from the landlord's victory that we are in a jurisdiction that does not require the landlord to put the tenant into actual possession. It's clear that the landlord has given the new tenant the legal right to possess the premises, and that the landlord hasn't given a conflicting legal right to anyone else. (The holdover tenant's term is over, so that tenant cannot be asserting that he has a legal right to possession deriving from the landlord. Furthermore, there's no indication in the facts that the landlord or any third person claiming under him has asserted a legal claim to possession of the premises.) So the new tenant cannot win in his damages suit against the landlord by merely showing that he had a legal right to the premises - the landlord has delivered that to him, free of competing claims. The tenant can win if, and only if, the landlord is found to have had an implied duty to deliver actual possession (as opposed to just the legal right to possession) to the tenant. American courts are split on the issue of whether the landlord owes the tenant an implied duty to put him into actual possession. Most American courts follow the so-called "English rule" under which the landlord has an implied duty to deliver actual possession to the tenant. But a minority follow the so-called "American rule," under which the landlord is merely required to give the tenant legal possession. We're told to assume that the court has found for the landlord. We can infer from this fact that the jurisdiction follows the American rule. That would explain how and why the landlord would win. By contrast, none of the other three explanations would produce a victory for the landlord.

Ten years ago, a seller sold land to a buyer, who financed the purchase price with a loan from a bank that was secured by a mortgage on the land. The buyer purchased a title insurance policy running to both the buyer and the bank, showing no liens on the property other than the buyer's mortgage to the bank. Eight years ago, the buyer paid the mortgage in full. Seven years ago, the buyer sold the land to an investor by a full covenant and warranty deed without exceptions. Six years ago, the investor gave the land to a donee by a quitclaim deed. Last year, the donee discovered an outstanding mortgage on the land that predated all of these conveyances. As a result of a title examiner's negligence, this mortgage was not disclosed in the title insurance policy issued to the buyer and the bank. 646 Following this discovery, the donee successfully sued the buyer to recover the amount of the outstanding mortgage. If the buver sues the title insurance company to recover the amount he paid to the donee, is he likely to prevail? (A) No, because the buyer conveyed the land to an investor. (B) No, because the title insurance policy lapsed when the buyer paid off the bank's mortgage. (C) Yes, because

(C) is the best response, because title insurance covers the insured's liability under any warranties of title made when he sold the property. 694 This question is asking you to anticipate a detail of how title insurance handles the problem of the insured's liability for warranties of title made in the deed by which the insured sells the property. You cannot know for certain how the particular title policy in question handles that issue. But nearly all owner's title policies issued in the United States follow the basic provisions of the standard form of owner policy published by the American Land Title Association (ALTA), the title industry's trade association. That standard policy says that the coverage shall continue in force until the later of various events, one of which is "so long as the insured shall have liability by reason of warranties in any transfer or convevance of the Title." 2006 ATLA Owner's Policy, Conditions, Par. 2. So no matter how many years elapse between the time when the insured owner makes a warranty of title in connection with his sale of the property, and the time when the owner is successfully sued for damages for breach of the warranty, the standard U.S. title policy covers the owner's liability.

An elderly woman owned the house in which she and her daughter both lived. The daughter always referred to the house as "my property." Two years ago, the daughter, for a valuable consideration, executed and delivered to a buyer an instrument in the proper form of a warranty deed purporting to convey the house to the buyer in fee simple, reserving to herself an estate for two years in the house. The buyer promptly and properly recorded his deed. One year ago, the woman died and by will, duly admitted to probate, left her entire estate to her daughter. One month ago, the daughter, for a valuable consideration, executed and delivered to her friend an instrument in the proper form of a warranty deed purporting to convey the house to the friend, who promptly and properly recorded the deed. The daughter was then in possession of the house and her friend had no actual knowledge of the deed to the earlier buyer. Immediately thereafter, the daughter gave possession to the friend. The recording act of the jurisdiction provides: "No conveyance or mortgage of real property shall be good against subsequent purchasers for value and without notice unless the same be recorded according to law." Last wee

(D) is the best response, because the deed was indeed not in the friend's chain of title (since it was recorded before the daughter took title), making the friend a BFP who gets the protection of the recording act. As between the daughter and the buyer, the buyer could rely on the doctrine of "estoppel by deed" (sometimes called "after-acquired title") to establish that he owns the property. Under this doctrine, one who makes a conveyance of property she doesn't own, and who then acquires that property, is estopped from denying the grantee's superior claim to the property. So if the daughter had never 704 made any conveyance of the house to anyone but the buyer, and the buyer sued the daughter to establish that he now owns the property rather than she, the buyer would win. But most courts hold that the doctrine of estoppel by deed does not apply as against a subsequent BFP from the original grantor. That is, most courts would say that as between the friend (the subsequent BFP from the daughter) and the buyer, the buyer cannot rely on the estoppel-by-deed doctrine, even though he recorded his title promptly. The reason is that a contrary rule would mean that the friend would have an immense burden when checking the daughter's title - he would have had to check for conveyances by the daughter dating from before the time when, according to the records, the daughter herself got title. For this reason, an "early recorded document" (one recorded as a grant by the grantor before the date when the grantor got record title) is in most courts deemed to be outside the grantor's chain of title. There's no guarantee that a court would follow this majority view, but (1) the court would probably do so; and (2) if the court did so, the friend would win.

A landowner owned several vacant lots in a subdivision. She obtained a $50,000 loan from a bank, and executed and delivered to the bank a promissory note and mortgage describing Lots 1, 2, 3, 4, and 5. The mortgage was promptly and properly recorded. Upon payment of $10,000, the landowner obtained a release of Lot 2 duly executed by the bank. She altered the instrument of release to include Lot 5 as well as Lot 2 and recorded it. The landowner thereafter sold Lot 5 to a developer, an innocent purchaser, for value. The bank discovered that the instrument of release had been altered and brought an appropriate action against the landowner and the developer to set aside the release as it applied to Lot 5. The landowner did not defend against the action, but the developer did. The recording act of the jurisdiction provides: "No unrecorded conveyance or mortgage of real property shall be good against subsequent purchasers for value without notice, who shall first record." The court should rule for (A) the developer, because the bank was negligent in failing to check the recordation of the release. (B) the developer, because she was entitled to rely on the recorded release. (C) the bank, becaus

(D) is the best response, because the forged release was not effective, and recording this forged document had no effect. A person who procures record title by forging (and then recording) a deed has nothing to convey. The grantee then gets nothing, despite the apparently perfect record title. (This problem points up a major problem of recording acts: If a person procures title by a forged document that she then 705 records, a prospective grantee from that person has no way to determine from inspection of the records that she is taking nothing. That's one of the risks that title insurance guards against.) Therefore, the landowner's forged document saying that she had unencumbered title to Lot 5 was of no effect, even when recorded. The developer loses despite the absolutely perfect appearance of the landowner's record title.

A landowner owned in fee simple two lots in an urban subdivision. The lots were vacant and unproductive. They were held as a speculation that their value would increase. The landowner died and, by his duly probated will, devised the residue of his estate (of which the lots were part) to his wife for life with remainder in fee simple to his daughter. The landowner's executor distributed the estate under appropriate court order, and notified the landowner's wife that future real estate taxes on the lots were her responsibility to pay. Except for the statutes relating to probate and those relating to real estate taxes, there is no applicable statute. The wife failed to pay the real estate taxes due for the two lots. To prevent a tax sale of the fee simple, the daughter paid the taxes and demanded that the wife reimburse her for same. When she refused, the daughter brought an appropriate action against the wife to recover the amount paid. In such action the daughter should recover (A) the amount paid, because a life tenant has the duty to pay current charges. (B) the present value of the interest that the amount paid would earn during the wife's lifetime. (C) nothing, because the wife's sole

(D) is the best response, because the wife's obligation to pay property tax is limited to the rent she received. Since a life tenancy is by definition to be followed by another interest, a life tenant has a number of duties vis-a-vis the future interest. One of those duties is to pay all property taxes that come due while the life tenant holds possession of the property. However, a life tenant is liable to the holder of the future interest for property taxes only to the extent of the rents received, or the fair rental value if the life tenant occupies it. Since the property was vacant, there were no rents, and the wife consequently had no liability to the daughter for failing to pay them. And that's true even though the daughter went into her pocket to pay these taxes.

A woman duly executed a will under which she devised her farm to her nephew and bequeathed the residue of her estate to her niece. For 12 years after executing her will, the woman lived on her farm. Then she sold it and used the sales proceeds to purchase a home in the city, in which she lived until she died, never having changed her will. Following the admission of the will to probate, both the nephew and the niece claimed ownership of the home. There is no applicable statute. Who is the owner of the home? (A) The nephew because of the doctrine of ademption. 639 (B) The nephew because of the doctrine of equitable estoppel. (C) The niece, because of the doctrine of lapse. (D) The niece, because she is the residuary legatee.

(D) is the best response, because under the doctrine of ademption, the gift to the nephew was extinguished when the woman sold the farm, even though she used the proceeds to buy a different home. The only real issue in this question is whether the doctrine of "ademption" applies. "Ademption" refers to the failure (or extinction) of a specific bequest by reason of the fact that the specific property bequeathed is no longer in the testator's estate at the time of death. The modern trend (and that of the Third Restatement) is to apply the "intent" theory of ademption, under which a specific devise will fail if the specifically-devised property is not in the testator's estate at death, "unless the evidence establishes that failure would be inconsistent with the testator's intent[]" Rest. 3d (Wills), § 5.2, Comment b. (The text of § 5.2 itself is shown in the following paragraph below.) Let's apply the intent theory of ademption here. Because the specifically-devised property (the farm) was no longer in the woman's estate when she died, the devisee (the nephew) takes nothing, unless there's affirmative evidence that the woman intended otherwise. And there is no indication in the facts that when the woman wrote the will, she intended that in the event she were to sell the farm and buy some other property to live in, the bequest of the farmhouse should be interpreted to give the nephew that new property instead.

A farmer owned a farm in joint tenancy with her brother. The farmer lived on the farm, while her brother lived upstate in a major metropolitan area. The farmer and her brother had taken ownership of the farm pursuant to their father's will upon his death. Several years later, the farmer took out a loan from a local lending institution in order to build a new barn on the farm. The farmer executed a promissory note in favor of the lender and granted the lender a mortgage on her interest in the farm. After the barn was constructed, the farmer defaulted on the loan and died shortly thereafter. The jurisdiction adheres to the title theory of mortgages. Can the lender enforce its mortgage by foreclosing on the farm?

A joint tenant may grant a mortgage on his/her joint-tenancy interest without the other joint tenant's consent. In a lien-theory jurisdiction (majority rule), the mortgage does not sever the joint tenancy—but it does in a title-theory jurisdiction.

A landowner died and left a piece of land to his three sons as joint tenants with the right of survivorship. The youngest son sold his interest in the property to the oldest son. The oldest son then died and left all of his real property interests to his daughter. The youngest son later died. Following the youngest son's death, the middle son gave his interest in the property to a nephew. The applicable jurisdiction continues to follow the common law with regard to joint tenancy. Who owns the property?

A lifetime conveyance of a joint-tenancy interest destroys unity of title and severs the joint tenancy with respect to that interest. If there are more than two joint tenants, then severing one tenant's interest does not affect the joint tenancy between the remaining tenants. And unlike a tenancy in common, a joint tenancy is not devisable.

A mother subdivided a vacant land that she owned into three lots. She kept one lot for herself, conveyed another to her daughter, and conveyed the remaining lot to her son. Each conveyance was by a deed of gift containing a covenant specifying that only one single-story home could be constructed on the conveyed lot in order to preserve views of a nearby lake from the mother's lot. The deeds were promptly recorded. The mother then constructed a large three-story house on her lot. Several years later, the son conveyed his vacant lot to a purchaser using a warranty deed that made no mention of the covenant in the previous deed from the mother. The purchaser promptly recorded her deed. When the purchaser later began constructing a three-story house similar to the mother's, the mother sued to enjoin the construction. Should the court arant the iniunction?

A. No, because the mother is stopped from enforcing the ( covenant, since she herself constructed a three-story house. B. No, because there was no consideration given for the covenants in the deeds of gift. C. Yes, because the burden of the covenant runs with the land even if the purchaser had no actual notice of the covenant. D. Yes, because the mother is in privity of contract with the purchaser. Here, the son conveyed his lot to a purchaser by a warranty deed that made no mention of the covenant. But even though the purchaser may have lacked actual knowledge of the covenant, she had record notice because the mother's deed to the son was previously recorded. And since the other above-listed elements are satisfied, the court should grant the injunction to enforce the covenant against the purchaser.

A woman executed and delivered to her unmarried nephew a warranty deed conveying her home to him "on the date of his marriage." The nephew promptly recorded the deed. Several years later, when the nephew was still unmarried, the woman died testate, leaving her entire estate to her sister. The executor of the woman's estate has asserted that the nephew has no interest in the home. Is the executor correct?

A. No, because the nephew recorded the deed before the woman's death. B. No, because the woman's death did not affect the (E nephew's future interest in the home. C. Yes, because a deed that does not transfer immediate possession to a grantee is rendered void by the grantor's death. D. Yes, because the nephew did not marry before the ( woman's death. (D) is not the best response, because the warranty deed in the nephew's possession did not require the nephew to marry prior to the woman's death. As discussed in Choice (B), the nephew retained a "springing" executory interest in the property, which would vest when and if the nephew satisfies the condition of marrying. An executory interest (which can be either a "springing" interest or a "shifting" interest), does not become invalid merely because the condition for the interest to vest is not satisfied prior to the natural termination of the prior estate. Therefore, even though the nephew did not marry prior to the woman's death, he retains his executory interest as long as he remains alive.

The owner of a used-car lot put the property up for sale. A car dealer was looking for another car lot upon which to sell his cars, and he made a generous offer to the owner. The owner and the dealer promptly executed a valid land-sales contract for the used-car lot. The contract contained all of the essential terms. Prior to the closing date, the owner's estranged son discovered that his father had contracted with the dealer to sell the car lot. The son immediately contacted the dealer and truthfully informed him that the owner only had a life-estate interest in the car lot and that he, the son, had a future interest in the property in fee simple. The son also said that he would not agree to the sale unless his father paid him $25,000. The owner promised the dealer that his son would agree to the sale because the owner would pay the son $25,000 in the future. On the closing date, the dealer refused to close. The owner has filed an appropriate action against the dealer for specific performance. Will the owner be likely to prevail?

All land-sales contracts have an implied warranty that requires the seller to convey marketable title (i.e., defect-free title) upon closing. Title can be rendered unmarketable by a future interest if the holder of that interest does not agree to the transfer.

The owner of a building leased a portion of the ground floor for two years at a fixed monthly rent to a chef who opened a restaurant. Eight months later the chef, due to a souring of the local economy, informed the owner that she was closing the restaurant. She vacated the premises and stopped paying rent, which prior to that time she had timely paid. The owner unsuccessfully sought to rent the unoccupied space on behalf of the chef for the following four months before bringing suit against the chef for breach of the lease. What is the maximum amount of rent to which the owner is entitled in a majority of jurisdictions?

Answer Choices: Sixteen months' rent.Twelve months' rent.Four months' rent.Nothing. The doctrine of anticipatory repudiation does not apply to leases in a majority of jurisdictions. Therefore, when a tenant breaches the duty to pay rent, a landlord is only entitled to rental payments as they become due—not all future rents that would have been due under the lease. Can sue for rent as it comes due, several accrued rents, or entire amount at end of lease term Majority rule - cannot recover future rents unless lease contains acceleration clause Minority rule - can recover future rents minus (1) reasonable rental value of premises for remainder of lease or (2) actual rent collected on re-rental Terminate & evict Majority rule - must give tenant notice & opportunity to cure before terminating lease or evicting tenant Minority (common law) rule - cannot evict tenant for failure to pay rent

A homeowner mortgaged her home with a bank ten years ago and turned it into an inn. The bank recorded the mortgage at that time. She subsequently incurred obligations with a contractor for work on the inn to create two large, high-end suites for guests. This involved tearing down walls and thereby reducing the number of bedrooms at the inn. A year later, she was forced to undergo a foreclosure action after failing to make six months of mortgage payments. She then realized that if she reinstated the walls and increased the number of bedrooms in the inn, she could turn a higher profit. She further hoped that making these improvements might negate the need to follow through with the foreclosure action. She therefore refinanced the mortgage with the bank to make these improvements after a family member helped her to get current with her mortgage obligations. The bank accordingly adjusted the existing mortgage so that its payments were decreased for three years but ballooned to a much higher interest rate if the homeowner missed more than three payments in a row. Two years later, the inn had seen no profit, and the homeowner again defaulted on her mortgage for four months. After giving the homeowner an additional four months to catch up on her obligations, the bank again initiated a foreclosure action, which resulted in a sale of the home. At the time of the sale, the existing secured creditors included not only those associated with the foreclosure action but, by virtue of a lien that took effect prior to the refinancing, also the contractor who had performed the work on the two suites at the inn. How did the refinance impact the bank's rights as a mortgagee?

Answer Choices:The bank is not impacted by the action.The bank subordinated its interest as to only the increased rate.The bank subordinated its interest.The bank will be treated as the most senior mortgagee at the increased rate. Learner Selected Answer: The bank subordinated its interest as to only the increased rate. A modification of a senior mortgage that materially prejudices a junior interest will subordinate the senior mortgagee's interest only as to the modification—but the senior mortgagee's original interest will remain superior. Here, the bank is the senior mortgagee because it was first in time and there is no recording act. After the contractor acquired a lien on the inn, the bank modified its mortgage so that its payments were decreased for three years but ballooned to a much higher interest rate if the homeowner missed more than three payments in a row. The increased interest rate was materially prejudicial to the contractor's junior interest, so the bank subordinated its interest only as to that increased rate

The owner of a tract of vacant land granted a power-line easement over the land to the electric company. The easement, which was granted in a properly executed written agreement, was never recorded. Several years later, the owner sold the tract of land. The buyer, who planned to sell hot air balloon rides on the property, bought the property sight unseen. After the buyer purchased the property, he discovered the power lines, which would make hot air balloon rides on the property prohibitively dangerous. The applicable jurisdiction has the following recording statute: "No conveyance or mortgage of real property shall be good against subsequent purchasers for value and without notice unless the same be recorded according to law." Can the buyer successfully challenge the easement?

Answer Choices:Yes, because the buyer had no actual notice of the easement.Yes, because the easement was not recorded.No, because the buyer had inquiry notice of the easement.No, because with the easements, the land is not suited for the buyer's purpose. Under a notice statute, a purchaser for value without notice (actual, constructive, or inquiry) of a prior real property interest (e.g., easement) will prevail.

A landowner sold the right to access and remove oil from below the surface of her property to a company. As a consequence of the removal of the oil, the ground subsided, although the company exercised reasonable care and complied with all laws and regulations. The landowner's residence, which had been on the property long before she purchased the land, was damaged due to the subsidence. The company's removal of the oil would have caused the ground to subside regardless of the presence of the residence on the property. Can the landowner recover from the company for the damage to her residence?

Answers: No, because the company complied with all laws and regulations. No, because the company exercised reasonable care in removing the oil and the land was not in its natural state. Yes, because the property damaged was a personal residence and it predated the company's oil rights. You Selected: Yes, because the residence predated the company's oil rights and did not contribute to the subsidence. A third-party owner of subsurface rights is strictly liable for any failure to support the land and buildings that predate the conveyance of those rights, provided that the damage would have occurred in the land's natural state.

A widower owned a parcel of land. At his death, ownership of the parcel of land was transferred by his will to his three adult children as joint tenants with the right of survivorship. Several years later, the youngest child sold his interest in the parcel to an investor. Recently, the oldest child died, devising all of her real property to her daughter. Who currently owns the parcel of land?

Answers: The investor and the middle child of the widower each own a one-half interest in the land as joint tenants with the right of survivorship. The investor and the middle child of the widower each own a one-half interest in the land as tenants in common. You Selected: The investor owns a one-third interest and the middle child of the widower owns a two-thirds interest in the land as tenants in common. The investor, the daughter of the oldest child, and the middle child of the widower each own a one-third interest in the land as tenants in common. A lifetime transfer of a joint tenant's interest severs that interest from the joint tenancy. The transferee holds that interest as a tenant in common with the remaining joint tenant(s). If two or more joint tenants remain after the transfer, then they retain a joint tenancy with respect to each other.

An accountant owned a small farmhouse and land that he planned to pass on to his two children, a son and a daughter. The accountant was contacted by a longtime family friendwho said that she had retired and was looking for a place to live. In order to help the friend, the accountant made an inter vivos conveyance of the farmhouse and land "to the friend for her life, and then to my heirs; but if none of my heirs survive the friend, then to my lawyer." Two years later, the accountant died, leaving the son and the daughter as his only heirs. Recently, the daughter died, but the friend is still living. The jurisdiction does not apply the Rule in Shelley's Case or the doctrine of worthier title. Which of the following best describes the son's current property interest in the land?

Answers: You Selected: A contingent remainder. Correct Answer: A vested remainder subject to complete divestment. A vested remainder subject to open. No interest in the land. A vested remainder is subject to complete divestment if the occurrence of a condition will eliminate the remainder interest.

A landowner gave her property's mineral rights to her son. After the transfer but before the son began to mine the minerals, the landowner sold the property to a corporation that built a commercial warehouse on the property. As a consequence of the son's subsequent mining activities, which were conducted with reasonable care and in compliance with all laws and regulations, the land subsided and the warehouse was damaged. Can the corporation likely recover from the son for the damage to its warehouse?

Correct Answer: No, because the son exercised reasonable care in conducting the mining activities. No, because the warehouse was used for commercial rather than residential purposes. Yes, because the corporation acquired the property by purchase rather than gift. You Selected: Yes, because the corporation built the structure before the son began to mine the minerals. The owner of mineral rights is strictly liable for any failure to support the land and any buildings that predate the conveyance of those rights, provided that the damage would have occurred in the land's natural state. But the owner is liable only for negligence for damage to improvements built after the mineral rights were conveyed.

A partnership purchased land intending to develop it commercially and financed the purchase with a loan from a bank. As security for the loan, the bank took a mortgage in the land, which the bank recorded. The partnership subsequently defaulted on the bank loan, and the bank initiated foreclosure proceedings on its mortgage. At the foreclosure sale, as permitted by state law, the bank purchased the land. Several months later, the bank sold the land to a developer for less than the bank had paid for it at the foreclosure sale. To what extent does the bank have an interest in the land?

Correct Answer: The bank has no interest in the land, because the bank's mortgage on the land was extinguished by the foreclosure sale. You Selected: The bank's mortgage remains to the extent that the bank suffered a loss on the resale of the land to the developer. The bank's mortgage remains in full, because the bank, as mortgagee, purchased the property at the foreclosure sale. The bank's mortgage remains in full, because the developer, as a subsequent purchaser, had record notice of the bank's mortgage. A foreclosure sale eliminates the mortgagor's property interest, the mortgage interest being foreclosed upon, and any junior interests attached to the property

A man purchased undeveloped land with a bank loan secured by a mortgage on the property. The man recorded the deed, and the bank promptly recorded the mortgage. A year later, the man decided to sell the property to a wealthy widower. The widower purchased the property, recorded his interest, and assumed the mortgage. Several years later, the widower gave the property to his daughter. The widower did not tell his daughter about the mortgage but instead continued to make the mortgage payments. The deed, which contained no mention of the mortgage, was promptly recorded by the daughter. When the widower died, he devised all of his real property to his daughter. He left the remainder of his estate to his son. Following the widower's death, no one made payments on the bank loan, causing it to fall into default. May the bank foreclose on the property?

No, because of the exoneration-of-liens doctrine. No, because the daughter's deed made no mention of the mortgage. You Selected: Yes, because the bank recorded its mortgage. Yes, because the daughter received the property as a gift. Recording acts protect purchasers—not donees. The Shelter Rule gives donees who acquire property from a grantor protected by a recording act the same protection as the grantor under the recording act. Otherwise, the "first in time, first in right" rule applies.

A tenant leased a warehouse from a landlord for a term of 10 years, with equal payments to be made at the beginning of each year. The commercial lease made no mention of a covenant of quiet enjoyment. The tenant paid the rent for the first year of the lease and moved goods into the warehouse. Later that year, the landlord sought a loan from a bank and offered a mortgage on the warehouse to secure the loan. In researching the property records, the bank learned that a now-defunct company had acquired the warehouse from its original owner and recorded its deed before the original owner had sold the warehouse to the landlord. While winding up its affairs, the company had overlooked its interest in the warehouse. The bank shared this information with the landlord and the tenant.When the second year's rent was due, the tenant told the landlord that it would not make that payment. The landlord sued the tenant for the rent due. The tenant counterclaimed for a return of the rent it had paid and a cancellation of the lease.For whom should the court render judgment?

Correct Answer: The landlord, because no one has taken action to eject the tenant. The landlord, because the lease did not contain a covenant of quiet enjoyment. The tenant, because a landlord has an obligation to provide a tenant with legal possession of the leased premises. You Selected: The tenant, because the landlord does not own the warehouse. hile a covenant of quiet enjoyment is implied in every lease, including a commercial lease, this covenant has not been breached by the landlord. Although the landlord has learned that the successors-in-interest to the defunct company, whoever they might be, may enjoy an ownership interest in the warehouse that is superior to the landlord's interest, the tenant's possession of the warehouse has not been disturbed. Consequently, since the covenant of quiet enjoyment has not been breached, the landlord is entitled to the rental payment due pursuant to the terms of the lease.

The owner of a building leased it to a manufacturer for 10 years. Among the terms of the lease was a provision that prohibited anyone from assigning any rights under the lease without the express written consent of the owner. Three years later, the manufacturer, facing a contraction of its business, entered into an agreement with a retailer to assume the manufacturer's obligations under the lease for the remaining seven years. The manufacturer did not seek the approval of the owner to this agreement, but the owner was aware of it and accepted the retailer's payment of the rent. With five years remaining on the lease, the retailer entered into an agreement with a distributor for the distributor to lease the building for two years. The retailer sought the owner's permission for this transfer. The owner, because of personal animus towards the distributor, has refused to grant his permission. Which of the following is an argument that is most likely to compel the owner to accept the distributor as the tenant of the building?

Correct Answer: The lease provision does not require the owner's approval of the agreement between the retailer and the distributor. The owner waived his rights to object under the lease by accepting the retailer as a tenant. A non-assignment provision constitutes an unreasonable restraint on alienation. You Selected: The owner does not have a commercially reasonable objection to the distributor as a tenant in the building. An assignment is a complete transfer of the tenant's remaining lease term. Any transfer for less than the entire duration of the lease is a sublease. Here, the agreement between the retailer and the distributor is a sublease, not an assignment, because it extends for only two years of the remaining five years of the lease. As such, it is not covered by the lease provision that requires the owner's permission before rights under the lease can be assigned. hen a lease prevents assignment or subletting without the permission of the landlord, and the lease is silent as to a standard for exercising that permission, the majority of jurisdictions impose a requirement that the landlord may withhold permission only on a reasonable ground in relationship to the property being leased (e.g., a commercially reasonable objection when a commercial building is at issue). The traditional rule is that the landlord may withhold permission at his discretion. However, the lease provision here only prohibited assignments without the permission of the owner, not subleases.

Three brothers inherited, as joint tenants with the right of survivorship, a building in which their parents had operated a hardware store. Only the oldest brother continued to operate the hardware store on the premises, but he did not restrict his brothers' access to the building. The middle brother sold his interest in the building to the oldest brother. The youngest brother died, leaving everything to his daughter in his will. Who owns the building?

Correct Answer: The oldest brother in fee simple. The oldest brother and the youngest brother's daughter as joint tenants. The oldest brother and the youngest brother's daughter as equal tenants in common. You Selected: The oldest brother and the youngest brother's daughter as tenants in common, with the oldest brother owning a 2/3 interest and the youngest brother's daughter owning a 1/3 interest. Each brother inherited a 1/3 interest in the building. The middle brother's sale of his interest to the oldest brother severed the joint tenancy with respect to that interest. As a consequence, the oldest brother held a 1/3 interest as a tenant in common with the youngest brother. The oldest and youngest brothers held the remaining 2/3 interest as joint tenants. Upon the youngest brother's death, his interest passed automatically to the oldest brother by virtue of the right of survivorship. This interest, combined with the remaining 1/3 interest that oldest brother possessed, gave the older brother complete ownership of the building.

In February, a bank made a loan to a corn farmer to facilitate the purchase of seeds, supplies, and equipment. The loan was to be repaid when the corn was harvested in July. As security for the loan, the farmer mortgaged the farm, which he owned in fee simple. In late April, the farmer planted the corn. In mid-May, the farmer disappeared. Upon learning of the farmer's disappearance a week later, the bank took control of the farm and hired a caretaker to manage the farm in the farmer's absence. In early June, a business invitee was injured on the property in a manner in which the owner of the property was liable to the business invitee. In late June, the invitee sued the bank to recover damages for her injuries.With regard to the treatment of a mortgagee's interest in the mortgaged property, the jurisdiction follows the lien theory of ownership.The bank has not taken any action to foreclose on its mortgage. Is the bank liable to the business invitee?

Correct Answer: Yes, because the bank was a mortgagee in possession. Yes, because the bank was wrongfully in possession of the farm. No, because the jurisdiction is a lien jurisdiction. You Selected: No, because the bank has not taken any action to foreclose on its mortgage. A mortgagee in possession assumes a duty to take reasonable care of the property, and she incurs liability as if she were the owner. Consequently, the bank is liable to the business invitee for injuries the invitee suffered on the farm.

A brother and sister owned real property as tenants-in-common. The brother, just before departing on an extended trip into a wilderness area where he planned to be out of communication with the outside world, was approached by a potential buyer of the property. The brother flippantly told the potential buyer that, if the potential buyer could convince the sister to sell the property, she had the brother's permission to sell his interest in the property as well as her own. In fact, the brother recalled that he and his sister had discussed selling the property only once before, and both had been opposed to doing so. There had been no discussion at that time of one acting as an agent for the other. When the potential buyer contacted the sister about selling the property, she readily agreed.When told of her brother's statement, she executed a deed conveying the real property to the buyer. She signed both her own name and her brother's name to the deed, appending a note that she was acting as her brother's agent. Upon returning from his trip, the brother learned of the deed. He initiated an action to set aside the transfer of his interest in the real property. How should the court rule on t

For the buyer, because the sister had apparent authority to act on behalf of her brother based on his statement to the buyer. For the buyer, because a tenant-in-common can transfer the interest of another tenant-in-common in the same property. For the brother, because authority to act cannot be created orally. You Selected: For the brother, because of the equal dignities rule. Under the "equal dignities" rule, when the act performed by an agent on behalf of the principal is required by law to be in writing, the agent's authority must also be established in writing. Consequently, when an agent signs a deed, the agent's authority must also generally be in writing. Since the sister did not possess written authority to transfer her brother's interest in the real property, the brother can set aside the transfer of his interest in the real property.

The owner of two lots sold one of the lots. Because the owner resided in a house on the retained lot, the deed supplied by the owner to the buyer of the second lot contained a promise that the buyer, as well as "his heir and assignees," would use the lot only for residential purposes. Although the buyer was aware of the promise when he accepted the deed, the buyer neither signed nor recorded the deed. The buyer subsequently built a house on his lot. After the buyer's death, ownership of his lot and house passed by will to his daughter. The daughter, who was not aware of the restriction contained in the deed, began operating her accounting business from a room in the house. The applicable recording act is a notice-type act. The original owner of the lot has sued the daughter for damages. In defense, the daughter asserts that she did not have notice of the residential restriction. How should the court rule with regard to her defense?

For the daughter, because her father, the buyer, did not record the deed. For the daughter, because her father, the buyer, did not sign the deed. For the owner, because notice of a negative covenant is not required. You Selected: For the owner, because the restriction is enforceable despite the daughter's lack of notice of it. The promise contained in the deed created a real covenant that runs with the land because it specifically bound the buyer's "heirs and assignees." As such, it applies to the buyer's daughter as well. A subsequent purchaser of property who does not have notice of a burdening covenant is not bound by it if protected by the recording act. However, the daughter gained ownership of the lot through her father's will, not by purchase. Consequently, the notice-type recording act that would have protected her had she been a bona fide purchaser will not protect her as a gratuitous donee.

The owner of commercially zoned property in a major city entered into a 75-year lease with a developer. The developer demolished the existing structure on the property and constructed a multi-story office building. Under the terms of the lease, the developer retained the right to purchase the property at the end of the lease term for a nominal sum. Ten years later, the owner sold all of its rights in the property to a buyer. The buyer then filed an action seeking a declaratory judgment that the developer's right to purchase the property was void. The jurisdiction continues to adhere to the common law Rule Against Perpetuities.How should the court rule?

For the developer, because the option was created as part of a commercial transaction. You Selected: For the developer, because the developer is the current lessee. For the buyer, because an option to purchase is a future property interest. For the buyer, because the lease term was for more than 21 years.

A developer purchased a parcel of oceanfront property to build a resort on it. After the developer purchased the land and began contacting contractors about building the resort, the county enacted a local ordinance requiring that the owners of all oceanfront property take affirmative steps to prevent shore erosion. The ordinance requires that, "to preserve the unique ecosystem and ecological flood-protection benefits of the sand dunes, all owners of oceanfront property must promote the formation and maintenance of natural sand dunes by planting beach grass at a designated distance from the water and byerecting sand fencing to prevent damaging foot traffic." The regulation, if enforced, would force the developer to build a far smaller, albeit still profitable, resort much farther from the ocean than he had planned. The developer sued the county, claiming that the ordinance constitutes a taking of the developer's oceanfront property and that the county therefore owes the developer just compensation.Is the court likely to rule in favor of the developer?

No, because a taking can occur only when the government takes title to private property. You Selected: No, because a governmental regulation that adversely affects a person's property interest is generally not a taking. Yes, because the conservation objective of the county ordinance is not sufficiently compelling to justify the substantial diminution in the property value. Yes, because the county's ordinance will constitute a taking to the extent that the developer's resort will be less profitable. In the context of a regulation, a state or local government can act under its police power for the purposes of health, safety, welfare, aesthetic, and environmental concerns. A taking occurs when the government takes title to land, physically invades land, or severely restricts the use of land. Generally, a governmental regulation that adversely affects a person's property interest is not a taking. Here, the developer can still build a smaller resort and make a profit. Consequently, it is unlikely that the court will find that a taking has occurred.

A limited partnership purchased land with a loan from a bank. Neither the individual partners nor the limited partnership was personally obligated to repay the loan. As security for the loan, the limited partnership granted the bank a mortgage on the land. Subsequently, the limited partnership sold the land to a buyer. The buyer did not enter into an agreement with respect to the limited partnership's loan. After the sale, the limited partnership defaulted on the loan. The applicable jurisdiction follows the lien theory of mortgages. Can the bank foreclose on the land owned by the buyer?

No, because no one was personally obligated to repay the loan. No, because the buyer did not agree to assume the limited partnership's loan. Yes, because the applicable jurisdiction follows the lien theory of mortgages. You Selected: Yes, because the buyer took the land subject to the mortgage. the lender can foreclose on the mortgage if the debtor defaults on the loan

A landlord, the owner of the only shopping center in a small town, and a tenant, a new small-business owner, entered into a lease for a commercial shopping space in the shopping center. The tenant was unsure that the community would support her new business, so she wanted to limit the term of the lease to a maximum of two years. The landlord, however, insisted on an at-will tenancy for a minimum of 10 years, and he included the following clause in the lease: "Pursuant to this Lease, Landlord is given the express right to terminate the leasehold with Tenant by giving 30 days' notice." The lease omitted language giving the tenant a similar termination right. Due to the lack of commercial space available to rent in the area, the tenant agreed. Six months into the lease, the tenant terminated the lease in writing with 30 days' notice, explaining that, although sales at the shopping space technically covered all of the tenant's expenses, she had found lower rent in a nearby town, which she believed would be a more successful market. The landlord has sued the tenant for breach of the lease. Will the landlord likely prevail in the breach-of-lease action?

No, because termination rights in at-will tenancies cannot be limited. You Selected: No, because the lease's unconscionability gave the tenant the right to terminate the lease. Yes, because the lease contract reserved the right of termination only for the landlord. Yes, because the tenant's reasons for terminating the lease were in bad faith. A tenancy at will is a leasehold estate that has no specific term and continues so long as the landlord and the tenant desire. If only one party is expressly given the right to terminate the leasehold, the lease may be deemed unconscionable and both parties will have the ability to terminate it.

A woman received a loan from a bank to purchase a new home. She secured the loan by a mortgage on the home. The woman made regular payments on the mortgage for eight years. However, the woman fell into debt and eventually defaulted on the loan. The bank gave the woman proper notice of foreclosure proceedings. Before the foreclosure sale took place, the woman received an inheritance from a distant relative. The woman contacted the bank and offered to pay the remaining balance of the loan and any accrued interest in exchange for clear title to the property. Is the bank required to accept the woman's offer?

No, because the bank has already initiated foreclosure proceedings. No, because the bank can sell the property at a judicially supervised public sale. Correct Answer: Yes, because the woman exercised her right under the equity of redemption. You Selected: Yes, because the woman exercised her statutory right of redemption. The equitable right of redemption allows a debtor to avoid foreclosure and regain clear title to the mortgaged property by paying the amount currently owed on the loan plus any accrued interest before the foreclosure sale.

The owner of a retail store sold the store to two of her employees. The two employees, the manager and the bookkeeper, took ownership of the store as tenants in common with equal ownership interests. At the time of the sale, there was an existing mortgage on the store that the former owner had granted to a bank in exchange for a loan. The manager and the bookkeeper did not assume the obligation to repay the loan. Six months later, the former owner became insolvent and the loan went into default. Responding to the bank's threat to foreclose on the mortgage, the manager paid off the loan. Can the manager enforce the mortgage against the bookkeeper's interest in the store?

No, because the bookkeeper did not assume the obligation to repay the mortgage loan. No, because the mortgage was extinguished by the manager's payment of the loan for which the mortgage served as security. Yes, because the manager could not recover from the former owner due to her insolvency. You Selected: Yes, but only to the extent of one-half of the payment made by the manager. Under the doctrine of subrogation, a third party (subrogee) who pays another's mortgage loan in full becomes the owner of the loan and the mortgage. The subrogee may therefore seek reimbursement from the debtor or enforce the mortgage. Under the doctrine of subrogation, a third party (subrogee) who pays another's mortgage loan in full becomes the owner of the loan and the mortgage securing that loan to the extent necessary to prevent unjust enrichment. This means that the subrogee may seek reimbursement from the debtor (the former owner) or enforce the mortgage. Therefore, the manager can enforce the mortgage against the bookkeeper's one-half interest in the store to recover the bookkeeper's share of necessary expenses.

A buyer entered into a contract to purchase a house from its owner. The contract called for the buyer to make equal monthly installment payments over 10 years. During that time, the owner was to retain title to the house and the buyer was granted the right to occupy the premises. Once the buyer made all of the required payments, the owner was to transfer ownership of the house to the buyer. The contract contained an acceleration clause under which all future installment payments were to become due in the event the buyer failed to timely make a required installment payment. Additionally, the contract included a forfeiture clause, which stated that time was of the essence and permitted the owner to terminate upon the buyer's failure to timely make a required installment payment, regain possession of the house, and retain any payments already made by the buyer. After making timely payments for seven years, the buyer failed to make three monthly payments. In accordance with his rights under the contract, the owner filed a summary ejectment action to evict the buyer from the house. The buyer appeared at the summary ejectment proceeding, and she tendered the missed payments. The applicable jurisdiction treats an installment land contract as a mortgage, follows the lien theory of mortgages, and does not recognize a mortgagee's right of strict foreclosure. Should the court award possession of the house to the owner?

No, because the buyer tendered the missed payments. You Selected: No, because there has not been a foreclosure sale. Yes, because the buyer failed to timely make required installment payments. Yes, because the owner did not utilize self-help but acted through the judicial system. In a jurisdiction that treats an installment land contract like a mortgage, a buyer in default may redeem the property by tendering to the owner the full balance due under the contract prior to foreclosure. Today, states handle a buyer's failure to pay in one of three ways: Allow the seller to retain ownership of the property but require some form of restitution to the buyer Offer the buyer an equitable right of redemption—i.e., the buyer can keep the property by paying the full balance of the installment contract at any time prior to the foreclosure sale Treat the installment land contract as a mortgage, so the seller must foreclose to gain title to the property and the buyer has an equitable right of redemption and other protections

A corporate officer purchased land with the aid of a loan at a favorable interest rate from the corporation. The officer granted the corporation a mortgage as security for the loan, and the corporation promptly recorded the mortgage instrument. The officer also signed a note promising to repay the loan over a period of 10 years. The note contained a due-on-sale clause that required, at the corporation's option, payment of the full outstanding amount of the loan if the officer sold the land without first obtaining the corporation's written consent. After making timely payments on the loan for three years, the officer sold the land to a buyer who was unrelated to the officer without obtaining the corporation's consent. The deed given by the officer acknowledged that the land was being transferred subject to the mortgage. After payment of the purchase price to the officer, the buyer promptly recorded his deed. Subsequently, neither the officer nor the buyer made any payments on the loan to the corporation. The corporation, in order to avoid lengthy foreclosure procedures, has sued the buyer for the full outstanding amount of the loan obligation. Is the buyer liable for the full outstanding amount of the loan?

No, because the corporation has not foreclosed on its mortgage. You Selected: No, because the buyer purchased the land subject to the mortgage. Yes, because the corporation promptly recorded its mortgage. Yes, because of the due-on-sale clause in the note. A grantee who takes real property subject to a mortgage does not agree to pay and is not personally liable for the debt. As a result, only the debtor is liable for any failure to make payments on the mortgage loan.

A man owned a tract of land that he divided into two parcels, each of which was adjacent to a stone retaining wall. The man sold both parcels. In the deeds that conveyed the parcels, the purchasers each agreed that "the owners, their heirs, and their assigns will maintain a retaining wall made of stone between the properties." They further agreed that they "will share equally any expenses associated with the retaining wall." The deeds were properly recorded. Subsequently, each of the parcels was sold several times, and none of the owners properly maintained the retaining wall. Fifteen years ago, the owners of the two parcels made the joint decision to dismantle the wall. Two years ago, one of the parcels was sold, and the new owner decided to rebuild the retaining wall. The new owner asked the other owner to pay half of the expenses to rebuild the wall, and the other owner refused. The new owner paid to erect the retaining wall and then brought suit against the other owner to collect half the expenses. Can the new owner successfully bring suit against the other owner for half of the expenses?

No, because the covenant was effectively terminated by a change in circumstances. You Selected: No, because the previous owners decided to dismantle the retaining wall. Yes, because the covenant ran with the land. Yes, because the deed created an equitable servitude. A covenant is terminated by abandonment when an affirmative act—something more than neglect or nonuse—shows a clear intent to relinquish the covenant.

A widow executed a will in which she left her house to her son and the remainder of her estate to her daughter. The house was subject to a purchase-money mortgage at the time of the widow's death, the unpaid portion of which was nearly equal to the value of the residuary estate. The son now demands that the personal representative of the estate use the residuary estate to pay off the mortgage. The will contains a general provision for the payment of all the testator's debts, but not a specific provision authorizing the payment of the outstanding balance of the mortgage. The jurisdiction follows the common law. Should the personal representative accede to the son's demand?

No, because the doctrine of satisfaction does not apply to a specific devise. No, because the mortgage is a purchase-money mortgage. You Selected: Yes, because the son has a right to the exoneration of the mortgage. Yes, because the will contains a general provision for the payment of the testator's debts. Under the common-law exoneration-of-liens doctrine, the recipient of a specific devise of real property can use the remaining assets in the testator's estate to pay off any encumbrances on that property.

The owner of a small parcel of undeveloped land conveyed the right to construct and use a road across the parcel to a corporation that owned a sizable tract of undeveloped adjacent land. The landowner was aware that the corporation intended to construct a factory on that tract of land and understood that the corporation intended to use the road to provide access to the factory. Before beginning construction of the factory, the corporation changed its plans and acquired additional contiguous property from a third party. As a consequence, the corporation planned to build a factory that was slightly larger than the one originally planned on both this newly acquired property and the property the corporation originally owned. There would be a modest increase in the traffic using the road associated with this modification. Upon learning of the corporation's change in plans, the individual sued to enjoin the corporation from building and using the road to provide access to the factory. Should the court grant the injunction?

No, because the individual was aware of the purpose of the road. No, because the increase in usage of the road was modest. Yes, because there was no preexisting road on the parcel. Yes, because the easement would benefit property acquired after the easement was granted. Unless otherwise stated, an easement appurtenant cannot be used for the benefit of property other than the dominant estate. If this occurs, a court may award damages instead of an injunction when there is no increased burden on the servient estate. A future increase in the use of an easement (e.g., increased traffic) may be permitted if the increase is modest or reasonable. But an increase in the scope of an easement for the benefit of property other than the dominant estate (as seen here) is not permitted.

A tenant leased a set of 10 commercial storefronts spanning two city blocks. The lease was for a term of five years and complied with all relevant statutes. The lease was silent as to the effect of condemnation by the city. Three years into the lease, the city properly took one of the city blocks for public use pursuant to eminent domain and compensated the landlord accordingly. The city demolished five storefronts and began developing a public park. Upon this condemnation, the tenant stopped paying rent for all 10 storefronts. In an appropriate action, the landlord sued the tenant for the unpaid rent on all 10 storefronts. Is the landlord likely to succeed?

No, because the landlord breached the implied covenant of quiet enjoyment. No, because the lease terminated upon condemnation of some of the leased property. You Selected: Yes, but only for half the amount, because the tenant is entitled to compensation. Yes, for the full amount, because the obligation under the lease is still in effect.

A private investor purchased a 50-unit apartment building and took up residence in one of the apartments. The purchase was enabled by a nonrecourse loan obtained by the investor from a bank. As security for the loan, the bank took a mortgage in the apartment building. The mortgage contained an acceleration clause that provided that, in the event that the apartment building was transferred, the full amount of the outstanding obligation would be, at the election of the bank, due and payable unless prior permission of the bank was obtained. Several years later, the investor, having timely made all required loan payments, sold the apartment building to a real estate investment firm. The firm assumed personal liability for the loan. The bank, upon learning of the transfer, demanded that the firm pay the full amount of the outstanding loan obligation. When the firm refused, the bank brought a foreclosure action to collect the full amount of the outstanding loan obligation. Is the bank likely to succeed?

No, because the loan obtained by the private investor was without recourse. No, because the mortgaged property was residential. You Selected: Yes, because the "due on sale" clause is enforceable. Yes, because the real estate investment firm assumed personal liability for the loan. A due-on-sale clause allows a lender to demand full payment of the remaining mortgage debt if the debtor transfers the mortgaged property without the lender's permission.

The owner of a commercial building leased the premises at fair rental value to a civic organization for a 25-year term. The lease contained a reasonable right-of-first-refusal provision granting the organization a right to purchase the building if the owner found a buyer who was ready, willing, and able to purchase the building at a price agreed to by the owner and the buyer. Fifteen years into the lease, the owner was approached by a friend who was ready, willing, and able to purchase the building. Because of the friendship, the owner agreed to a purchase price that was below the market price. The owner notified the civic organization of the proposed sale, and the organization invoked its right of first refusal. However, the owner refused to sell the building to the organization for less than its fair market value. The applicable jurisdiction has retained the common law with respect to the Rule Against Perpetuities. May the civic organization compel the owner to sell the building to the organization at the price agreed upon by the owner and the friend?

No, because the organization's right of first refusal violates the Rule Against Perpetuities. No, because the organization's right of first refusal constitutes an encumbrance on marketable title. You Selected: Yes, because the right of first refusal was reasonable. Yes, because the right of first refusal was a valid covenant running with the land. A right of first refusal is a partial, promissory restraint on alienation that gives its holder a preemptive right to acquire property prior to its transfer to another party. This right is generally reasonable if the holder of the right can purchase the property under the same terms offered to another. If so, the right of first refusal is valid and enforceable by an injunction.

An aging landowner, wanting to settle his affairs, discussed the disposition of his profitable apartment complex with his two adult children, a son and a daughter. The daughterindicated that she would like the property, but had no interest in managing the property herself; so, the landowner called his attorney and instructed her to prepare a deed that immediately transferred the apartment complex to his son. Later that week in the attorney's office, the landowner executed a valid deed in the presence of his attorney. The landowner also directed the attorney to record the deed, which she did the following day. While at the attorney's office, the landowner indicated that he wanted to make a will. He indicated that he was uncertain, but that he thought that he had made a will when he was much younger. They made an appointment for the following week to review that will, if the landowner found it, and, if necessary, to draft a codicil or a will. Before the appointment, the landowner died in his sleep. In the landowner's desk was found a will of which only the landowner was aware. The will, which had been drafted more than 20 years ago by another attorney now deceased, had been validly execute

No, because the will was executed before the deed. No, because since the deed was never delivered until after the landowner's death, the apartment complex passes to the daughter under the terms of the will. Correct Answer: Yes, because the deed rather than the will governs ownership of the apartment complex. You Selected: Yes, because, since the deed was executed after the will, the deed superseded the will. Recording a deed raises the rebuttable presumption of delivery. Here, because the deed was validly executed and recorded and thus operated to transfer the apartment complex to the son. No facts indicate a change in the grantor's intent. Therefore, because there are no facts to rebut the presumption of delivery, even though there was no physical delivery of the deed to the son, the landowner removed his power to revoke it

A man owned a 25-acre tract of land. He conveyed 20 of the 25 acres to a developer bywarranty deed and continues to live on the 5-acre portion he retained. The deed to the 20-acre tract was promptly recorded and contained the following provision: "It is a condition of this deed that all owners, and their heirs and assigns, of any portion of the 20-acre tract shall use the land for single-family residences only." The applicable zoning ordinance allows for single and multi-family homes in this area. The developer fully developed the tract into a residential subdivision consisting of 20 lots with a single-family home on each lot. The lots were subsequently sold and the deed to each lot referenced the quoted provision. A woman who owned one of the lots on the perimeter of the subdivision has decided to build an addition to her house, which would contain an apartment she intends to rent to students of a nearby college. An individual who lives in an adjacent residential neighborhood opposes the woman's addition because he does not want rowdy college students nearby. Can the individual prevent the woman from building the apartment?

No, because the zoning ordinance allows for multi-family homes as well as single-family homes. You Selected: No, because the individual does not have the right to enforce the restriction. Yes, because the original parties intended for the rights and duties to run with the land. Yes, because the restriction is valid under the common-law Rule Against Perpetuities. The benefit of enforcing an equitable servitude is held only by the original parties and their successors in interest. the individual's property is adjacent to the subdivision—not part of the 20-acre tract—he is not a successor in interest.

A buyer entered into an installment land contract with a seller, agreeing to purchase a vacant lot owned by the seller. The parties agreed that after the buyer made the last of 120 installment payments, the seller would deliver a warranty deed conveying the lot in fee simple. The contract did not mention any encumbrances on the vacant lot. The buyer took possession of the lot and constructed an office building. The buyer made 119 timely installment payments. Upon making the last payment, the buyer demanded that the seller convey title to the lot in fee simple pursuant to the land sales contract. The seller delivered the deed to the lot at which time the buyer discovered an outstanding, enforceable mortgage on the lot. There was no evidence that the seller ever defaulted on the mortgage. However, the balance of the mortgage obligation remained at half the value of the lot.Upon learning of the outstanding mortgage, the buyer refused to accept the deed and demanded that the seller either pay the mortgage obligation or return half of the installment payments to compensate for the encumbrance. The seller has refused to comply with either demand. Is the buyer likely to succeed in a suit against the seller?

No, because there is no covenant of marketable title in an installment land contract. No, because the buyer can no longer sue under the installment land contract. Yes, because the installment land contract specifically called for delivery of a warranty deed. You Selected: Yes, because the buyer can obtain specific performance with an abatement of the purchase price. Absent contrary language, every land sales contract contains an implied covenant of marketable title. Unless otherwise agreed, the seller is not required to deliver marketable title until the closing. In an installment land contract, marketable title is not required to be given until delivery occurs after all installment payments have been made. An undisclosed private encumbrance (such as a mortgage) renders title unmarketable. If a seller delivers an unmarketable title, a buyer may rescind the contract and recover payments, sue for breach of contract, or bring an action for specific performance with an abatement of the purchase price (e.g., price adjustment to compensate the buyer for the defect).

A childless widow died. By the terms of her will, she left her residence to her favorite niecefor life and then to such of her niece's children who reach the age of 21. At the time of the widow's death, the niece had two children, a son who was 25 and a daughter who was 13. Before her death, the niece had a second daughter. At the time of the niece's death, her son was 40, her older daughter was 28, and her younger daughter was 15. The applicable jurisdiction continues to follow the common-law Rule Against Perpetuities. Immediately before the niece's death, who held a vested remainder in the residence?

None of the children, due to the "bad as to one, bad as to all" rule. Only the son. You Selected: The son and the older daughter. All three children. If at the time of the conveyance of a class gift at least one but not all members receive a vested remainder, then that vested remainder is subject to open. But absent a closing date, the rule of convenience closes the class once any member becomes entitled to immediate possession of the property.

To pay for a home in the mountains, a retiree executed a mortgage with the seller of the home. Due to a clerical error, the seller's mortgage was never recorded. Years later, the retiree executed a second mortgage on the home with a bank to make improvements, and that mortgage was immediately recorded. As part of the mortgage-approval process, the retiree had to disclose his first mortgage on the property. Shortly thereafter, the seller discovered that his mortgage had not been recorded and recorded it. A year later, the retiree executed a third mortgage on the home after he realized the full effect his retirement was having on his finances. The retiree then went nearly a year without making mortgage payments, so a foreclosure action was initiated. In a race-notice jurisdiction, which of the following is a correct statement about the first mortgage?

The "first in time, first in right" rule is generally used to determine the priority of interests in real property. However, a purchase-money mortgage (PMM) will be given priority over liens that arose prior to the PMM—even if it was not recorded. And if the jurisdiction has a recording act, then the recording act will control.

Fifteen years ago, a farmer purchased a large undeveloped tract of land. The land was located next to an automobile salvage yard that had already been there for over a decade. Neither the salvage yard nor the farmer ever surveyed their properties to clearly identify or mark the boundary between their tracts. Over the last 15 years, the salvage yard has started to spread onto the adjacent edge of the farmer's land, regularly occupying a 10-yard-wide strip of the property with scrap heaps. Neither the farmer nor the salvage yard ever knew that the scrap heaps were regularly encroaching on the farmer's property. The farmer died last year having never used the 10-yard-wide strip of the property. His son inherited the farmer's land and planned to develop the property as a farm. When the son surveyed the property, the salvage yard's trespass was discovered. The son demanded that the salvage yard cease placing scrap heaps on his land. When the salvage yard refused the son's demand, he brought an action to enjoin any such use in the future. The period of time for acquiring title by adverse possession in the jurisdiction is 10 years. Of the following, what is the salvage yard's best argument to defeat this action?

The balance of the equities weighs in favor of the salvage yard. The farmer impliedly consented to the salvage yard's use of the land by failing to object to the scrap heaps on his property. The salvage yard has acquired an easement by implication due to its prior use of the 10-yard-wide strip of property. You Selected: The salvage yard has acquired title to the 10-yard-wide strip of the son's property through adverse possession. The nonpermissive requirement for adverse possession is met if (1) the land is possessed without the owner's permission and (2) the possessor objectively demonstrates an intent to claim the land as his/her own.

A homeowner purchased a residence from its original owner, who agreed to finance the sale in exchange for a mortgage on the residence. The homeowner later obtained a loan from a bank to add a family room to his residence. In addition to the homeowner's note promising to repay the loan, the bank demanded and the homeowner granted a mortgage on the property. Subsequently, the homeowner obtained a home equity loan from a credit union to remodel the kitchen. The loan was secured by a mortgage on the residence. All mortgages were promptly and properly recorded. The homeowner, while continuing to make timely payments with respect to the loans from the bank and the credit union, failed to make the required payments to the original owner of the residence. The original owner filed a foreclosure action with respect to her mortgage. The credit union was made a defendant to this action, but due to an oversight, the bank was not made a defendant. At the judicial foreclosure sale, the property was sold for its fair market value. Proceeds from the judicial sale equaled the homeowner's obligation to the original owner. The jurisdiction permits a mortgagee to obtain a deficiency judgment. What is the bank's right with respect to its mortgage on the residence?

The bank's mortgage continues, because the bank is entitled to seek a deficiency judgment. You Selected: The bank's mortgage continues, because the bank was not made a party to the foreclosure action. The bank's mortgage was extinguished, because the property was sold for its fair market value. The bank's mortgage was extinguished, because the property was sold in a foreclosure sale.

A homeowner financed the purchase of his residence with a $200,000 loan from a bank. The loan, which was to be repaid over twenty years, was secured by a mortgage on the residence. The bank promptly recorded the mortgage. The following year, the homeowner borrowed $50,000 from a credit union to start a business. The credit union loan, which had a two-year term, was secured by a mortgage on the residence, which the credit union immediately recorded. The next year, the homeowner obtained a two-year loan from the bank for $25,000 to pay for his daughter's wedding. The homeowner agreed to increase the mortgage on the residence as security for this loan. The bank recorded the modified mortgage. The homeowner defaulted on all three loans. The bank initiated foreclosure proceedings, to which the credit union was named as a party. The proceeds from the foreclosure sale were sufficient to repay the bank in full for its residential purchase loan and either the credit union's business loan or the bank's wedding loan, but not both. Who should be paid in full?

The bank, because the bank's mortgage was recorded before the credit union's mortgage. The bank, because the bank initiated the foreclosure proceedings. The credit union, because the credit union's mortgage was recorded before the bank modified its mortgage. The credit union, because the bank's modification of its mortgage prejudiced the credit union. Educational objective:Modification of a senior mortgage generally does not forfeit that mortgage's priority over a junior mortgage. But if the modification materially prejudices the junior mortgage, then the senior mortgagee subordinates its interest as to the modification—but the original mortgage remains superior.

A buyer purchased land from a seller for $50,000. A savings bank held an existing mortgage on the property to secure a prior loan made by the bank to the seller. At the time of the purchase, the buyer assumed this mortgage, which had an outstanding balance of $30,000. The buyer also executed another mortgage on the property in favor of the seller as security for the $20,000 note given by the buyer to the seller for the remainder of the purchase price. Subsequently, the buyer failed to make payments on the bank's mortgage. The bank initiated foreclosure proceedings against the property, but the buyer redeemed the bank's mortgage prior to the foreclosure sale. The buyer then defaulted on his obligation to the seller, and the seller initiated a foreclosure action on her mortgage. The buyer has challenged the validity of this action. For whom should the court rule?

The buyer, because the buyer's prior redemption terminated the seller's junior mortgage. The buyer, because the seller had not first sought a judgment against the buyer personally. The seller, because her mortgage was not eliminated by the buyer's redemption of the bank's junior mortgage. You Selected: The seller, because the loan secured by her mortgage was in default.

Eighty years ago, a woman conveyed land to her son for life, then to her son's widow for her life, then to her son's children. At the time of the conveyance, her son was only five years old. The woman died a few weeks later, devising her entire estate to a charity. Thirty years later, the son married. The son and his wife had a child the following year, but his wife died shortly thereafter. The child died at the age of 25, leaving her entire estate by will to a church. A year after his child died, the son married a woman who was 50 years old. The couple had no children. The son died the same year that they married. He was survived by his widow, to whom he willed his entire estate. In a jurisdiction applying the common-law Rule Against Perpetuities, who has a properly vested interest in the land?

The charity named in the woman's will in fee simple, because the son's widow was not a life in being at the time of conveyance. The church named in the will of the son's child in fee simple, because the child had a vested remainder interest that passed by the child's will to the church. You Selected: The widow for life, with the remainder to the church named in the will of the son's child. The widow in fee simple, because she had a life estate in the land and was devised her husband's entire estate. Here, the woman conveyed land to her son for life, then to his widow for her life, and the remainder to his children. The son was only five years old at the time of the conveyance, so his widow and children were unknown or unborn persons. As a result, the widow and children held contingent future interests that are subject to RAP. However, the identity of the son's widow and children would be immediately identifiable upon the death of the son—the relevant life in being when the interests were created—so their interests do not violate RAP. Accordingly, the widow's life estate in the land became a present possessory interest upon the son's death. And the remainder interest in the children became a vested interest in the son's only child upon the son's death. Because that child devised her interest in the land to a church, the church now owns that remainder interest. Therefore, the widow has a properly vested interest in the land for life, with the remainder to the church named in the will of the son's child

The owner of land donated it to a charity by quitclaim deed. The charity did not record the deed. The following month, the owner sold the same land by warranty deed to a woman who paid valuable consideration and did not know about the prior gift of the land to the charity. The woman promptly and properly recorded her warranty deed. A month later, the charity recorded its quitclaim deed. The following year, the woman gave the property to her son by quitclaim deed. Although the land had remained undeveloped at all relevant times, the son discovered the possible conflict with the charity's claim after the conveyance. The son then recorded his deed. The recording act of the jurisdiction provides: "No unrecorded conveyance or mortgage of real property shall be good against subsequent purchasers for value without notice who shall first record." Who owns the land?

The charity, because the charity recorded its deed before the son recorded his deed. The charity, because the son was not a purchaser for value. The son, because the charity was not a purchaser for value. You Selected: The son, because the woman's purchase and recording of her deed gave the son superior rights to the land. In a race-notice jurisdiction, a purchaser who lacks notice of an earlier property interest (BFP) and records first will prevail. And under the Shelter Rule, a person who receives a property interest from a BFP is entitled to the same protection under the recording act as the BFP.

A manufacturer entered into a 30-year lease with the owner of a building zoned for commercial use. The lease contained a term that gave the manufacturer the right of first refusal if the owner ever decided to sell the building. Ten years later, the owner entered into a contract to sell the building to a third party. The owner has refused to honor the manufacturer's right of first refusal, contending that it violates the Rule Against Perpetuities. The jurisdiction recognizes the common-law Rule Against Perpetuities and its application to rights of first refusal. Which of the following is the manufacturer's best argument that the Rule Against Perpetuities does not apply to the manufacturer's right of first refusal?

The right of first refusal was granted in conjunction with a lease. The right of first refusal was granted as part of a commercial transaction. There is no life in being against which the right of first refusal is measured. The manufacturer exercised the right of first refusal before the expiration of the 21-year period. A right of first refusal is subject to RAP unless the right is granted in a lease to a current leasehold tenant. In the majority of jurisdictions that have adopted the Uniform Statutory Rule Against Perpetuities, RAP does not apply to a right of first refusal when the property right is created in a commercial transaction. But there is no such exception in this jurisdiction, which recognizes common-law RAP.

The owner of a restaurant decided to pursue a different line of work, so he conveyed the restaurant to an up-and-coming chef. The owner executed a valid, written deed to the chef, who did not record the deed. The chef was talented, but he did not understand how to run a business, so his restaurant failed within a few months. A culinary school, in search of a new location to hold its cooking classes, purchased the restaurant from the chef. The chef executed a valid, written deed to the culinary school, and the culinary school promptly recorded the deed. After the sale, but before the culinary school had a chance to occupy the restaurant space, the original owner noticed that the restaurant was vacant. The owner then sold the space to a fast-food chain, and the fast-food chain promptly recorded the deed. The owner did not tell the fast-food chain of his earlier conveyance of the restaurant to the chef, and the fast-food chain otherwise lacked actual knowledge of this conveyance. Subsequently, the chef recorded the deed from the owner conveying the restaurant to him. When the fast-food chain attempted to take possession of the restaurant, it discovered that the culinary school had moved into the restaurant. The fast-food chain has filed an appropriate action to quiet title against the owner, the chef, and the culinary school. The jurisdiction in which the restaurant is located applies a race-notice recording statute. Who will likely prevail?

The chef. The culinary school. You Selected: The fast-food chain. The owner. A recorded deed that falls outside the chain of title is a "wild deed" that fails to give constructive notice to subsequent purchasers.

By statute, a jurisdiction provides: "Any judgment properly filed shall, for 10 years from filing, be a lien on the real property then owned or subsequently acquired by any person against whom the judgment is rendered." In addition, the recording act of the jurisdiction reads, in its entirety, as follows: "No conveyance or mortgage of real property shall be good against subsequent purchasers for value and without notice unless the same be recorded according to law." This act has been interpreted as not providing any grace period for recording a conveyance or mortgage. An owner conveyed land by a warranty deed to his adult child. The child recorded the deed a week later. Three days after the conveyance to the child and without knowledge of it, a creditor of the owner properly filed a judgment against the owner. The creditor then filed suit against the owner and his child to foreclose on the judgment lien against the land. If the court rules against the creditor, which of the following is the most likely reason?

The child's weeklong delay in recording the deed was not unreasonable. Correct Answer: The creditor is not a purchaser for value. You Selected: The owner's warranty of title to his child protects the land from the creditor's claim. The warranty deed has priority over any valid judgment lien on the land. Judgment creditors are not purchasers for value since the attachment of a judgment lien to a debtor's property is merely security for a preexisting debt—not payment of value.

A fitness company entered into a 10-year lease with the landlord of a gym facility. The lease required the fitness company to maintain the gym equipment in proper, working condition and to upgrade or replace any of the equipment as required by the safety guidelines for gymnasiums issued by a national organization of gymnasiums. In addition, the lease specified that all of the fitness company's clients must sign a valid waiver releasing the current landlord from liability for any injury arising from their improper use of the gym equipment. One year into the lease, the landlord transferred the remaining term of the fitness company's lease to a large fitness conglomerate. The transfer occurred without the fitness company's consent. The fitness company paid rent to the conglomerate, but the company stopped making its clients sign the liability waiver because the conglomerate did not require any of its gym members to sign one. The conglomerate has brought an action against the fitness company to enforce this covenant in the lease. Who will likely prevail?

The conglomerate, because the fitness company had required its clients to sign the waiver in the past. You Selected: The conglomerate, because the liability-waiver requirement touches and concerns the land. The fitness company, because the conglomerate does not require liability waivers from its gym members. The fitness company, because it did not consent to the assignment of the lease to the conglomerate. A lease covenant can be enforced by an assignee-landlord if the covenant runs with the land—i.e., the original parties intended to bind their successors, the covenant touches and concerns the land, and there is privity of estate. *When a lease covenant does not run with the land, the original landlord retains the right to enforce it.

The owner of a house in a suburban neighborhood converted a driveway from rock to asphalt. The owner's neighbor did not have a driveway but instead parked on the street that ran in front of both of their homes. When asked by the neighbor, the owner told the neighbor that she could also use the driveway to access her house. For 11 years, the neighbor used the driveway on occasion when engaged in tasks such as bringing furniture and appliances into her house, or on days when it was raining heavily. Throughout these years, only the owner maintained the driveway. Recently, the owner sold his house to a couple. The owner informed the couple about the neighbor's use of the driveway when they first looked at the house, but neither the contract of sale nor the deed made reference to it. When the neighbor used the driveway on the first rainy day after the couple moved in, the couple told her that she could no longer use the driveway. The neighbor sued the couple, seeking a judgment that she has a right to use the driveway. In the applicable jurisdiction, the term for the creation of a prescriptive easement is 10 years. Who is likely to succeed?

The couple, because a license, as a property interest, must be in writing. Correct Answer: The couple, because the neighbor's license to use the driveway has been revoked. The neighbor, because her use of the driveway created a prescriptive easement. You Selected: The neighbor, because the couple had notice of her driveway use before buying the house. Definition Revocable privilege to enter & use another's land for specific purpose Creation Orally, in writing, or by another act demonstrating licensor's intent to create license Termination At any time upon revocation by licensor Automatically upon (1) death of licensor or licensee or (2) conveyance of licensed property A license is a nonpossessory right to enter and use someone else's land for a specific purpose. A license is freely revocable unless the licensee detrimentally relied on the license (e.g., paid money to use or maintain the license) OR the license was coupled with an interest in the property (e.g., a remainderman's license to enter and inspect property). A license can be revoked by the licensor at any time, but it terminates automatically upon (1) the death of the licensor or licensee or (2) the conveyance of the licensed property.

A rancher subdivided a portion of his ranch that had recently been annexed by the city into 30 two-acre lots. At the time the ranch was annexed, the city's building code prohibited a single-family residence of more than two stories. The rancher filed a subdivision plan that restricted the use of each lot to one single-family residence but placed no other restrictions on the lots. The rancher then sold one lot to a speculator. The speculator's deed restricted the lot to residential use only, but it did not restrict the residence to two stories. Immediately thereafter, the housing market in the area plummeted, and the rancher was unable to sell any of the remaining lots for almost three years. The city, acting in response to consumer demand, modified its building code to permit three-story single-family residences. During the next two-year period, the rancher sold 28 of the remaining 29 lots. Since the rancher did not want any of the residences built on the lots to be as high as his own three-story residence located on the ranch, he included a two-story height restriction in all 28 deeds. None of the owners of those 28 lots violated the two-story height restriction. The rancher notified the speculator of the two-story height restriction by letter, but the speculator did not respond. Subsequently, the speculator sold his lot to a couple. The couple's deed contained the single-family residence restriction but made no mention of the two-story height limitation. The rancher, upon learning of the couple's plans to construct a three-story family residence, has filed suit on his own behalf and on behalf of the owners of the 28 lots seeking an injunction to prevent the couple from building a three-story family residence. For whom is the court likely to rule?

The couple, because the city building code has priority over a private restrictive covenant. You Selected: The couple, because the two-story height restriction was not contained in their deed, the speculator's deed, or the subdivision plan. The rancher, because he made the speculator aware of the height restriction before the speculator sold his lot to the couple. The rancher, because the common scheme of the two-story height restriction was readily apparent to the couple. An equitable servitude can be implied from a common scheme if (1) the owner intended to create a common scheme, (2) the intended servitude was restrictive, and (3) persons to be bound had notice of the servitude. But it cannot be enforced against lots sold before the common scheme arose.

On April 1, a buyer and a seller executed a valid land-sales contract for a warehouse, with closing set for May 1. The buyer paid a deposit equal to 20% of the sales price at the signing. On April 15, the buyer discovered that the seller did not own the warehouse. The seller assured the buyer that it had a contract to purchase the warehouse from a third party and would possess title to the warehouse by the May 1 closing date. The seller had scheduled a closing with the third party to take title to the warehouse on April 30, but the third party did not appear at the closing. The seller notified the buyer that it could not timely secure title to the warehouse and would need to reschedule the May 1 closing date, offering an alternative closing date of May 3. The buyer refused to accept the rescheduled date. On May 1, after the seller failed to appear for the closing, the buyer filed suit against the seller for rescission of the land-sales contract. On May 2, the seller acquired title to the warehouse and filed a counterclaim against the buyer for specific performance of the land-sales contract. How should the court rule?

The court should order specific performance, because the seller had equitable title to the property on May 1 under the theory of equitable conversion. You Selected: The court should order specific performance, because time was not of the essence. The court should rescind the contract, because the seller did not have marketable title on May 1, the date scheduled for closing. The court should rescind the contract, because the seller did not possess title to the warehouse when it entered into the contract. When time is not of the essence in a land-sales contract, a party need not perform until closing or a reasonable time thereafter. And so long as the party can perform within a reasonable time, the other party cannot rescind the contract and must perform.

The sole, unmarried owner of a residence died. She had validly devised the residence to her long-term companion with whom she had lived for over 20 years. The residence was devised to the companion "for life or until she vacates the premises, and then to my nephew." Several years after the owner's death, the nephew transferred by quitclaim deed "any interest I have" in the residence to a creditor in satisfaction of a debt that the nephew had incurred. The deceased owner's companion continues to live in the residence. Which of the following most accurately describes the creditor's interest in the residence?

The creditor has a vested remainder in the residence. The creditor has an executory interest in the residence. You Selected: The creditor has both a vested remainder and an executory interest in the residence. The creditor has a mere expectancy with regard to the residence until the companion dies or vacates the premises. A defeasible life estate is a present possessory interest that terminates upon the end of the measuring life or the happening of a stated event. If title passes to someone other than the grantor when the present interest terminates, then the estate is followed by a remainder and an executory interest. *Neither the fact that the transfer was made by a quitclaim deed nor the fact that the transfer was made in satisfaction of a prior debt affects the creditor's interests in the residence.

A tenant rented a two-story building; she operated a store on the first floor of the building and lived on the second floor. During a winter weekend when the tenant was out of town and the store was closed, a thief broke into the building. The thief left the building exposed to the elements. As a consequence, water in the pipes froze and burst the pipes, resulting in structural damage to the building. When the tenant returned and discovered the problem, she promptly notified the landlord. The lease contains a provision obligating thetenant to maintain and repair the premises during the tenancy.Which of the following would be the tenant's best argument that she is not obligated to repair the damage to the building?

The criminal act of a third party caused the damage. You Selected: The lease was residential. The structure of the building was damaged. The damage was due to natural causes. A residential lease generally cannot place the duty to make repairs on the tenant, and a provision to that effect is void. This would certainly be true if the need for the repairs did not arise from the tenant's acts and the tenant promptly notified the landlord of the need for such repairs, as is the case here

Pursuant to a written lease, the owner of a warehouse leased the premises to a manufacturer for a term of one year at a total rent of $60,000. The lease called for the rent to be paid in monthly installments of $5,000 at the beginning of each month. The lease contained no provisions regarding termination or extension. The manufacturer promptly made the required rental payment each month. At the end of the lease term, the owner did not provide notice to the manufacturer of the termination of the lease. The manufacturer tendered a rental payment of $5,000 for the following month to the owner, which the owner refused to accept. In the absence of an applicable statute, how much advance notice must the owner give the manufacturer before seeking to evict the manufacturer?

You Selected: None, because the manufacturer is a tenant at sufferance. A reasonable time, because the manufacturer is a tenant at will. A month, because the manufacturer, by tendering a rental payment, has created a periodic tenancy. Six months, because the manufacturer, by tendering a rental payment, has created a tenancy for years. Unless required by statute, a landlord is not required to give a tenant at sufferance notice to vacate the premises before taking steps to recover possession of the property.

A farmer had two children, a daughter and a son. The farmer was diagnosed with a terminal illness by his doctor. Upon arriving home immediately after receiving the news, the farmer wrote the following: "I, [farmer], now transfer my farm at [address] to [the son]." The farmer, who owned the farm in fee simple absolute, then signed and dated the document. The farmer took the document to his neighbor, told her that the document belonged to his son, and asked her to give it to his son when the farmer died. The neighbor complied with the farmer's directions. Shortly after the farmer's death, a will was found among his personal papers. The farmer had executed the will in compliance with all of the required formalities after his wife's death 11 years prior to his own. This will devised the farm to the farmer's daughter. The son and the daughter, who were the farmer's only heirs, learned of the document and the will, and each claimed ownership of the farm outright. The farmer's personal representative admitted the will to probate then filed an appropriate action to determine ownership of the farm. Who is entitled to ownership of the farm?

The daughter, because the document was neither delivered to nor accepted by the son prior to the owner's death. The daughter, because the will was executed before the document. You Selected: The son, because the document took effect before the will. The son, because the document was executed after the will. A grantor can deliver a deed to the grantee through an independent third party. If the third party's transfer of the deed to the grantee is conditioned on the grantor's death, then the grantor's delivery of the deed must evidence the intent to make a present gift to be effective.

The owner of a daycare business operated the daycare out of a rented building located next to a fenced-in playground. Under the daycare owner's direction, the children at the daycare facility used the playground five days a week. The daycare owner did not own the parcel upon which the playground was located, nor did she know who did. Had she asked, the parcel owner would have given permission for the children to use the playground. The daycare owner padlocked the playground when not used by the daycare children in order to keep vagrants and other people out. After renting the building and using the playground for eight years, the daycare owner suddenly fell into a coma. The owner of the building that housed the daycare operation then rented the building to a childcare center,and the manager of the childcare center continued to use the playground just as the daycare owner had for the next four years. Recently, the daycare owner died. Shortly thereafter, the owner of the playground parcel returned, introduced himself to the manager of the childcare center, and revealed his plans to build a high-rise condominium on the playground parcel. The manager has filed a suit seeking a declaration that she is the owner of the parcel. The statutory period to obtain title by adverse possession in the jurisdiction is 10 years. Which of the following is the best defense that the owner of the playground parcel can make against the lawsuit?

The daycare owner and the childcare center's manager merely rented the property on which their businesses operated. You Selected: The childcare center's manager has not possessed the playground for the statutory period. The parcel owner would have granted the daycare and childcare facilities permission to use the playground had it been sought. The playground lot was used for only five days each week.

A grandmother had lived in her family's mansion for her entire life, but she decided to sell the property and move into a smaller home. Desiring to keep the mansion in her family,the grandmother sold the mansion to her grandson at a below-market price. The grandmother included a right-of-first-refusal clause in the valid, written deed to her grandson, which the grandson signed. The clause stated that, in the event the grandson, his heirs, devisees, or assigns attempted to sell the property to a non-family member, the grandmother, her heirs, devisees, or assigns would have the opportunity to purchase the property before the transfer. One year after the grandson purchased the property, he was approached by a buyer who offered him twice the price he had paid his grandmother. The grandson readily accepted and immediately sold the mansion to the buyer. The grandmother subsequently read about the sale in the local newspaper and brought an action against the buyer to enforce her right of first refusal. The jurisdiction adheres to the common-law Rule Against Perpetuities. Which of the following doctrines will help determine whether the grandmother will be able to enforce the right-of-first-refusal clause?

The doctrine of worthier title. The parol evidence rule. You Selected: The Rule Against Perpetuities. The statute of frauds. Rights of first refusal are generally subject to the Rule Against Perpetuities, so this contingent future interest is void if it there is any possibility that it could vest more than 21 years after some relevant life in being at the creation of the interest.

A widower owned a house in fee simple absolute. His daughter is his only child. The daughter also has one child, the widower's grandson. The grandson and his wife had just had their first child when the widower executed a will in which the house was devised to his daughter for her life and the remainder to his grandson's children. The widower left the rest of his estate to a charity. After the widower's death, his grandson had a second child and the widower's daughter died shortly thereafter. A year later, the grandson had a third child. The widower'sgrandson recently died, survived by all three of his children. The jurisdiction follows the common-law Rule Against Perpetuities as well as the Rule of Convenience. Who now owns the house?

The first child. Correct Answer: The first child and the second child. You Selected: The first child, the second child, and the third child. The charity named in the will.

A man owned a building. He executed a deed conveying the building to a local church "for the purpose of using the building to further religious education." Six years later, the man died, leaving his niece as his sole heir. The man's duly probated will left his entire estate to a friend. Eighteen months later, the local church, having never made use of the building, conveyed all of its interest in the building to an investor for valuable consideration. The investor has filed an action to quiet title against the friend and the niece. The investor has also joined a state official who argues that a valid charitable trust was created and that the attorney general of the state should be permitted to enforce the charitable trust. In whom should the court find proper title is vested?

The friend. You Selected: The investor. The niece. The state official. Defeasible fees are limited by specific durational or conditional language (e.g., "so long as," "but if"). Language that limits only the purpose of the transfer creates a fee simple absolute.

Twenty-five years ago, a hunter found a cabin in a remote wooded area while on an extended hunting trip with his friend. The hunter and his friend stayed in the cabin for the season and left when the weather became too severe for the cabin to be habitable. Upon returning to town, the hunter asked around to find out who owned the cabin. A bartender, believing in good faith that the hunter was describing a different cabin, stated that he owned the cabin. The hunter paid the bartender and received a quitclaim deed to the bartender's cabin, erroneously believing that the deed was to the cabin that the hunter had found. The hunter and his friend used the cabin every hunting season. Last year, the hunter's friend died. Shortly after the friend's death, the true owner of the cabin, who had been incarcerated for 30 years, was released from prison. The true owner brought a suit against the hunter to quiet title to the cabin. The statutory period for adverse possession in the jurisdiction is 25 years. If the true owner wins his suit against the hunter to quiet title to the cabin, what is the most likely reason?

The hunter shared the property with his friend, so his use of the property was not exclusive for the statutorily required time. The hunter's quitclaim deed made his use of the cabin permissive, negating the hostility requirement of adverse possession. The hunter's seasonal use of the cabin was neither notorious nor significantly continuous to meet the statutory requirements of adverse possession. You Selected: The statute of limitations did not run against the true owner because he was imprisoned at the inception of the adverse possession. The statute of limitations for adverse possession will not run against a true owner afflicted with a disability (e.g., insanity, infancy, imprisonment) at the inception of the adverse possession until the disability is removed.

A buyer entered into a written contract to purchase real property from its owner. The buyer asked that the owner convey the property to the buyer and her brother as tenants in common. The owner noted that the buyer's brother would need to attend the closing to sign the necessary paperwork. Because the brother lived in another state and could not attend the closing, the buyer brought her roommate to the closing instead. The roommate pretended to be the buyer's brother and signed all the necessary paperwork with the brother's name. The buyer paid the full purchase price, and the deed granting the buyer and her brother half interests as cotenants was recorded on the same day. Unbeknownst to any of the parties, the evening before the closing, the buyer's brother had died in a car accident. The brother's valid probated will devised all of his property to his wife. The brother's wife has brought an action against the buyer, who has taken sole possession of the property, and the original owner to quiet legal title to an undivided one-half interest in the property. Who should the court find has legal title to the real property, and in what proportions?

The original owner. The buyer. You Selected: One-half in the buyer and one-half in the original owner. One-half in the buyer and one-half in the brother's wife. A deed purporting to transfer real property to a nonexistent cotenant is void as to the nonexistent cotenant and creates a tenancy in common between the grantor and the other cotenant(s) named in the deed.

In anticipation of the Fourth of July holiday, a fireworks dealer borrowed money from a lender to finance the purchase of fireworks to sell at a roadside stand. Later the same day, the dealer transferred ownership of real estate to the lender. The deed, which contained no mention of the loan, was promptly recorded by the lender. When the dealer paid off the loan, he demanded that the lender return the property, contending that the parties had an oral agreement that the lender would return the property when the loan was paid off. The lender instead sold the property to an unrelated third party who had no knowledge of the loan. The dealer files an action against the lender seeking the return of the property. Which of the following is the most likely reason for the dealer's action to fail?

The parol evidence rule prohibits the introduction of evidence regarding the agreement. The statute of frauds prohibits the oral transfer of property rights. You Selected: The property has been sold to a good faith purchaser. The lender recorded the deed. An absolute deed transferring unrestricted title to property with the intent to secure a debt is usually enforceable as an equitable mortgage unless competing equities (e.g., good-faith purchaser) take precedence. absolute deed—one that transfers title free of all liens and encumbrances—given with the intent to secure a debt is generally enforceable as an equitable mortgage. But competing equities (e.g., good-faith purchaser) take precedence over an equitable mortgage. Although the intent to secure the debt was not explicitly stated in the deed, the dealer contended that the parties had an oral agreement for the lender to return the property when the loan was paid off. These circumstances would have been sufficient for the court to find that an equitable mortgage existed. However, the court likely will not do so because the property was sold to a third party who had no knowledge of the loan (good-faith purchaser).

The owner of a warehouse entered into a very basic contract to transfer title and possession of the warehouse to a buyer. The contract did not mandate the type of deed that the owner was required to convey to the buyer at closing and did not require the owner to transfer his title to the warehouse free of all defects. Additionally, the contract did not require either party to insure the building against casualty losses. After the contract was executed, the owner allowed his casualty insurance on the warehouse to lapse even though he retained possession of the warehouse during the executory period. Several days prior to closing, the warehouse was destroyed by a tornado. As a consequence, the buyer refused to pay the purchase price specified in the contract to the owner. The owner then filed suit against the buyer to compel the buyer to honor her contractual obligation to pay the purchase price to the owner. Which of the following is likely to be the most important issue in awarding judgment to a party?

The presumption under the applicable law as to the type of deed the owner is required to convey. Correct Answer: Whether the applicable jurisdiction has adopted the Uniform Vendor and Purchaser Risk Act. Whether the applicable jurisdiction implies a covenant by the owner to convey marketable title. You Selected: Whether the buyer, as holder of the equitable interest in the warehouse, had an insurable interest in the warehouse.

The owner of a wooded parcel of land conveyed the land "to [her accountant] and his heirs, provided that, if this parcel is developed, [the owner] and her heirs may reenter and retake the property." Subsequently, the owner transferred "all my interests in real property" to her friend. When the owner died, her will devised all her interests in real property to her coworker, with whom the owner had developed a longtime friendship. At the time of her death, the owner's only heir was her niece. One year after the owner's death, the accountant began construction of a house on the wooded parcel of land. Property taxes assessed against this parcel of land may be challenged only by the owner of the property who holds a current possessory interest in the land. Who has the right to challenge the property taxes assessed on the parcel of land?

You Selected: The accountant. The coworker. The friend. The niece. The grantor of a fee simple subject to a condition subsequent can explicitly retain a right of entry. If the stated condition occurs, the grantor (or his/her successor in interest) can enter and terminate the estate by affirmatively demonstrating an intent to terminate.

A landlord and tenant entered into a one-year lease to rent a one-bedroom apartment in amulti-family dwelling. The tenant was a sculptor, and spent much of her time working on art projects that could cause a significant amount of noise. The windows and doors in the apartment were lacking proper sealing and soundproofing for sculpting, but the landlord and sculptor agreed to leave the property as-is and that the sculptor could create art pieces in the apartment. After one month, numerous neighbors complained to the sculptor that her sculpting activities were loud and disruptive. The sculptor decided to soundproof the windows and doors in her apartment, and deduct the expenses from her monthly rental payment. The landlord is now filing an action against the sculptor for the full rental amount. Who will succeed?

The sculptor, because she made necessary improvements to the property. The sculptor, because the landlord did not provide adequate soundproofing. You Selected: The landlord, because the sculptor committed waste by improving the property. The landlord, because the sculptor cannot withhold a portion of the rent for repairs. A tenant is entitled to make changes to the physical condition of the leased property that are reasonably necessary for the tenant to use the property in a reasonable manner, unless the landlord and tenant agree otherwise. Here, the sculptor and the landlord agreed that the property would remain as-is, thus the sculptor committed ameliorative waste. Ameliorative waste occurs when a change in use of the property increases the value of the property.

speculator and the original owner of a condominium unit entered into a contract for the sale of the unit. The contract, which contained no reference to the marketability of the title, called for the owner to transfer the unit to the speculator by quitclaim deed, which the owner did on the date called for in the contract. A year later, the speculator entered into a contract to sell the unit to a third party at a price significantly higher than the price paid by the speculator for the unit. The contract specifically required the speculator to provide the third party with title to the unit free from all defects. Upon investigation, the third party discovered that the unit was subject to a restrictive covenant that rendered the title to the unit unmarketable and that the restrictive covenant had existed at the time that the speculator had purchased the unit. The third party refused to complete the transaction. The speculator subsequently sued the original owner of the condominium unit for breach of contract. For whom is the court likely to rule?

The speculator, because a covenant of marketable title was implied in the contract. The speculator, because of the warranty against encumbrances. You Selected: The original owner, because the condominium unit was transferred by a quitclaim deed. Correct Answer: The original owner, because of the merger doctrine. Under the doctrine of merger, the seller's duties in a contract for the sale of real property—including the duty to deliver marketable title—merge into the deed at closing. As a result, these duties are enforceable thereafter only if they are contained in the deed. Unless otherwise stated, an implied covenant of marketable title is part of a land-sale contract, regardless of the type of deed created. Under this covenant, the seller promises to deliver title that is reasonably free from doubt and under no threat of litigation, such that a reasonable person would accept and pay for it. However, under the merger doctrine, any obligations contained in the land-sale contract merge into the deed and are extinguished at closing.* As a result, these obligations are enforceable only if they are contained in the deed.

A small island was divided into two parcels of land. A writer owned the northern parcel, and a businessman owned the southern parcel. Both parcels, which had never been under common ownership, were undeveloped. The businessman leased the southern parcel to ayouth group, allowing them to use the parcel freely for camping. The writer built a home on the northern parcel. Because the shoreline of the northern parcel consisted of a steep, inhospitable cliff, the writer repaired a decaying dock on the shoreline of the southern parcel. For 13 years, the writer and campers used the dock year-round. Last month, the businessman visited his land and discovered the writer's unauthorized repair and use of the dock. He immediately denied the writer access to the dock and made plans to demolish it.The period of time necessary to acquire rights by prescription in the jurisdiction is 10 years. The period of time necessary to acquire title by adverse possession in the jurisdiction is 10 years.Of the following, which best describes the writer's rights in the dock?

The writer has no right to use the dock. The writer has an easement by necessity to use the dock. You Selected: The writer has an easement by prescription to use the dock. The writer has title to the dock by adverse possession.

On January 1, a contractor entered into an agreement with a bank to obtain financing for a construction project. The bank agreed to loan the contractor $6 million, with $1 million to be paid immediately and the remainder to be paid in $1 million increments at two-month intervals. The contractor granted the bank a mortgage on land owned by the contractor in a different part of the state to serve as security for repayment of the amount loaned by the bank. The bank promptly recorded this mortgage. In May, after the bank had loaned the contractor a total of $3 million, the contractor obtained a $500,000 loan from a private equity firm. This loan was secured by a mortgage on the land owned by the contractor that was also subject to the bank's mortgage. The private equity firm promptly recorded its mortgage. In August, after the contractor had received an additional $1 million from the bank, the bank acquired actual knowledge of the private equity firm's mortgage on the land. In October, after the bank had loaned the contractor another $1 million, the contractor defaulted on both loans. As a consequence of the default, the bank, pursuant to the terms of the loan, did not advance the final $1 million installment. At a sale of the land initiated by the bank's foreclosure of its mortgage, to what portion of the sale proceeds does the bank have priority over the private equity firm?

Up to $6 million, the amount the bank initially promised to loan the contractor. You Selected: Up to $5 million, the amount the bank actually loaned the contractor. Up to $4 million, the amount the bank loaned the contractor before having actual knowledge of the private equity firm's mortgage. Up to $3 million, the amount the bank loaned the contractor before having constructive knowledge of the private equity firm's mortgage. If a future-advances mortgage is optional, then the future-advances mortgagee has priority with respect to amounts loaned before receiving notice of a subsequent mortgage. But if the advance is obligatory, then the future-advances mortgagee has priority with respect to amounts loaned before and after receiving notice.

A homebuyer financed the purchase of her home with a loan from a bank, granting the bank a mortgage on the home to secure her loan obligation. The bank promptly recorded its mortgage interest. A few years later, the homebuyer borrowed money from a finance company to pay for a child's tuition expenses. The finance company took a mortgage on the home, which it promptly recorded. The homebuyer maintained payments to the finance company, but she defaulted on her bank loan. The bank initiated foreclosure proceedings against the homebuyer. The finance company did not receive notice of these proceedings. The home was sold at a judicial foreclosure sale to an investor who intended to rent out the home. Has the finance company's mortgage on the home been eliminated?

You Selected: No, because the finance company did not receive notice of the foreclosure sale. No, because the finance company's loan was not in default at the time of the foreclosure sale. Yes, because the finance company's mortgage was a junior mortgage. Yes, because the home has been sold at a judicial foreclosure sale. For a judicially supervised foreclosure sale, the foreclosing mortgagee must give notice to the holders of any junior interests in the property to eliminate those interests. Any others who have an interest in the property or are liable on the debt may be joined as proper but unnecessary parties.

A landowner sold his land to a buyer in fee simple absolute for $150,000. The buyer promptly and properly recorded the general warranty deed. Shortly thereafter, the buyer was sued by a third party who claimed ownership of the land based on a transaction with a prior owner of the land. The buyer notified the landowner of the suit, and demanded that the landowner defend against the suit based on the covenant of warranty in the general warranty deed, but the landowner refused. The buyer spent $25,000 in legal fees and expenses in successfully defending against the third party's lawsuit. Can the buyer recover the legal fees and expenses from the landowner?

Yes, because the amount of the legal fees and expenses did not exceed the cost of the land. Yes, because the buyer notified the landowner of the suit and demanded that the landowner defend against the suit. No, because the deed was not a special warranty deed. You Selected: No, because the buyer was successful in defending against the lawsuit. The covenant of warranty is a future covenant that guarantees that the grantor will defend against a third party's lawful (i.e., valid) claim for title. This covenant, however, does not require the grantor to defend against a third party's wrongful claim. In essence, this covenant does not require the grantor to defend against all title claims brought by a third party against the grantee, but to be responsible for the litigation costs if the third party's claim is successful. Here, because the buyer was successful in defending against the third party's claim, the grantor was not required to defend the buyer against this action.

Two brothers owned real property as joint tenants with the right of survivorship. The older brother obtained a loan from a credit union to start a business. He signed a note for the amount of the loan plus interest and received the loan proceeds. Both brothers executed a mortgage on the jointly owned property as security for the loan. The older brother operated the business without his younger brother's aid and retained all of the proceeds from the business. Approximately a year later, the older brother defaulted on the loan. The bank initiated foreclosure proceedings against the property. The applicable jurisdiction recognizes the lien theory with respect to the effect of a mortgage on a joint tenancy. Can the bank enforce the mortgage against the younger brother's interest in the real property?

Yes, because the applicable jurisdiction follows the lien theory. Yes, because the younger brother also executed the mortgage. No, because the real property was held in joint tenancy with the right of survivorship. No, because the younger brother did not receive an economic benefit from the loan. When all of the joint tenants execute a mortgage, the mortgagee may enforce the mortgage against all joint interests upon default.

A developer who owned a large tract of land paid the owner of 10 acres of meadow land that adjoined the tract for the right to construct and use a road across the meadow land to reach the developer's tract. Although the developer planned to build 50 homes on his land, due to a downturn in the economy, the developer never began work on the project. The developer did not record the deed from the owner of the meadow land that granted the easement across the owner's land. The following year, the owner died. He devised themeadow land to his son. Unaware of his father's deed to the developer, the son built a residence on the meadow land and lived there for six years before recently selling it to a buyer. The developer, having obtained the necessary funds, has resurrected the planned development project. The developer properly recorded the deed from the owner the day before the buyer recorded a special warranty deed that she received from the son. The buyer, learning of the developer's plan to construct and use a road across the buyer's newly acquired property, has sued the son for breach of warranty.The applicable jurisdiction has the following recording statute:No conveyance or mortgage of real property shall be good against subsequent purchasers for value and without notice who shall first record.Will the buyer be successful in her lawsuit against the son?

Yes, because the developer has an easement to construct a road across the 10 acres. Yes, because the son has breached the covenant against encumbrances. No, because the buyer's land is not subject to the developer's easement. You Selected: No, because the easement did not arise during the time that the son owned the 10 acres.

A farmer owned a 10-acre farm. Six months before his death, the farmer ceased farming the land, but continued to live in his residence on the land with his friend and maintain thetwo acres of his property that surrounded the residence. After the farmer died, the farmer's friend continued to live in the residence and maintain the two acres. The friend believed that she was the owner of the farm pursuant to the terms of the farmer's will, prepared shortly before his death, which specifically devised the farm to her. Unbeknownst to the farmer's friend, the farmer, several years before his death, had deeded ownership of the farm to his son, which the son did not record. The son became estranged from his father shortly thereafter and did not learn of his father's death for 11 years. Recently, the son brought an ejectment action against the farmer's friend.The statute of limitations for adverse possession in the applicable jurisdiction is 10 years. In addition, the applicable jurisdiction has adopted a notice-type recording act.Is the farmer's friend likely to be awarded the entire 10-acre farm?

Yes, because the farmer's son failed to record the deed from his father. You Selected: Yes, because the farmer's friend took possession of the farm under color of title. No, because the farmer's friend has possessed only the residence and the two acres surrounding it. No, because the farmer had transferred ownership of the farm to his son during the farmer's lifetime. If a person enters property under color of title (a facially valid will or deed) and actually possesses only a portion of the property, then constructive adverse possession can give title to the whole.

A shopkeeper purchased the building that houses her shop, incurring an obligation to the owner of the building equal to the fair market value of the building plus interest. The obligation is evidenced by a promissory note and secured by a mortgage on the building. Several years later, the shopkeeper sold her business and the building to a third party, who assumed liability for the obligation. At the request of the third party and without the knowledge of the shopkeeper, the original owner of the building agreed to release the mortgage. Subsequently, the third party defaulted on the obligation. The current fair market value of the building exceeds the amount of the unpaid obligation. The original owner of the building sued the shopkeeper for the amount of the unpaid obligation. Can the original owner recover this amount from the shopkeeper?

You Selected: No, because the release of the mortgage discharged the shopkeeper's personal liability. No, because the third party assumed liability for the obligation. Yes, because the obligation was incurred in conjunction with a purchase-money mortgage. Yes, because the shopkeeper remains personally liable for the unpaid obligation. A borrower (mortgagor) remains personally liable for a mortgage loan after transferring the mortgaged property to another. However, the borrower's liability will be discharged if the mortgage is released.

The owner of a small commercial building contracted to sell the building and the lot on which it was located to a buyer for five million dollars. The owner constructed the building after purchasing the lot from a widow. The widow had taken title to the lot under the terms of her husband's will that devised the lot to her in fee simple absolute. Prior to selling the lot, the widow had executed a will in which the lot was devised to her nephews. Neither of the nephews were parties to the contract to sell the lot to the owner, nor did they execute a deed to the owner. The contract between the buyer and the owner does not contain a warranty of marketable title. The building is subject to a mortgage with an outstanding balance of three million dollars. The buyer will not be assuming or taking the property subject to that mortgage.If the buyer no longer wishes to purchase the property, can the buyer rescind the contract?

Yes, because the property is subject to a mortgage. Yes, because the widow's nephews did not join in the contract to sell the property to the owner. No, because a marketable title clause is only implied in a residential land sales contract. You Selected: No, because title to the property is marketable. while an outstanding mortgage does constitute an encumbrance, if the amount of the mortgage is less than the selling price, at closing the seller can apply the proceeds from the sale of the property to pay off the balance of the mortgage and remove the encumbrance.

An owner conveyed one of his properties to "my son for life, remainder to my daughter." The son lived on the property without paying any rent, although the property could have been rented for $4,000 a month. The property was assessed annual property taxes of $10,000. The son did not pay the taxes on the property. Not wanting to have a lien on the property or otherwise have it foreclosed upon, the daughter paid the annual property taxes. The fair market value of the life estate was 10 percent of the fair market value of the property held in fee simple absolute. How much can the daughter recover from the son for the tax payments?

You Selected: $10,000, because life tenants are responsible for paying annual taxes assessed on the property in their entirety. Correct Answer: $10,000, because the taxes did not exceed the reasonable rental value of the property. $1,000, the amount of taxes owed based on the proportion of the fair market value of the life estate to the fair market value of the property held in fee simple absolute. Nothing, because the property taxes are the responsibility of the holder of the remainder interest. The grantee, as a life tenant, assumes certain dutieswith respect to the estate. These duties include paying ordinary taxes on the real property, but only to the extent that the life tenant receives a financial benefit from the property The financial benefit is determined differently depending on whether the life tenant: occupies the property - in which case the financial benefit is measured by the fair market rental value of the property (e.g., reasonable rental value) or does not occupy the property - in which case the financial benefit is measured by the income derived from the land (e.g., third-party rental income, crops grown on the land)

A man owned a tract of land, and a woman owned an adjoining tract. A dirt road ran through the man's tract from the adjoining public highway, but the man never used it because he had direct access to the highway. Without the man's permission and with no initial right, the woman traveled over the dirt road from her property to the public highway for more than 10 years even though her property abutted another public road. Occasionally, the woman made repairs to the dirt road. The man later conveyed a portion of his tract to a friend. The deed specifically granted the friend the right to use the dirt road. The friend built a house fronting the dirt road. Shortly thereafter, the dirt road was severely damaged by a minor mudslide. The friend, acting on his own initiative, made substantial and necessary repairs to the road. He then asked the man and the woman to each contribute one-third of the cost of repairing the damage. When each refused, the friend brought an appropriate action to recover the one-third costs from the man and the woman. The period of time to acquire rights by prescription in the jurisdiction is seven years. Will the friend likely succeed in his action?

You Selected: No, as to both defendants. Yes as to the man, but no as to the woman. Correct Answer: Yes as to the woman, but no as to the man. Yes, as to both defendants. When an easement is shared, the owner who maintains or repairs the easement may seek contribution from (1) the other owners and (2) the servient-estate owner if he/she uses the easement.

A widow held a life estate in a house and several acres of land in a semirural area. She lived in the house and harvested berries from the numerous wild berry bushes on her property each June. The widow personally consumed the berries or gave them away to family and friends, but she did not sell them to third parties. One day at the end of May, just as the berries were ripening enough to be harvested, the widow died. In her will, the widow left her personal property to her children, but the land reverted to a distant relative who was the remainderman. The widow's children sought to enter the land to harvest the berries, but the remainderman objected, claiming that he had sole right to the berries. Do the widow's children have the right to return and harvest the berries?

You Selected: No, because the berries grew wild. No, because the widow did not sell the berries to third parties. Yes, because the berries were the widow's personal property. Yes, because the widow would have been able to harvest them had she survived. Wild, uncultivated crops (i.e., fructus naturales) are considered part of the real property on which they grow, and they pass automatically with the land. The prior owner has no right to reenter the land to remove the crops.

A man and a woman were neighbors whose small yards were separated only by a hedgerow consisting of small shrubs. After a discussion about building a one-foot-thick stone wall to separate the two properties, the neighbors agreed that the man would pay for the materials and construction of the wall, as the woman did not have the funds to do so. In return, they agreed that the wall would be built on the woman's property so as not to reduce the square footage of the man's yard. Years later, the woman sold her property in a valid transaction with a buyer. At the time of the sale, the woman told the buyer that the man had paid for and built the wall and that she had agreed to keep it there. However, there was no mention of the wall in the sales contract or the deed. After the buyer moved in, she spoke to the man about her desire to tear down the wall to open up the space and stated that she would pay for the destruction of the wall. The man objected to tearing down the wall. May the man prevent the buyer from tearing down the wall?

You Selected: No, because the buyer validly purchased the land from the woman. No, because the wall constituted an easement in gross. Yes, because he has a separate security interest in the materials used to build the wall. Yes, because the wall constituted an easement by implication. A fixture is a chattel that is (1) attached to real property in such a manner that it is treated as part of the realty and (2) used for some larger component or function of the land (e.g., a wall separating adjoining properties).

A mother owned a vacation cabin, but as she no longer visited it, she decided to convey the cabin to her daughter. The mother executed a valid, written deed, and she promptly and properly recorded it. The mother did not tell her daughter that she intended to give the cabin to the daughter because the mother wanted to surprise the daughter with this gift at an upcoming family reunion. Prior to the reunion, the daughter died suddenly. In her will, the daughter left her entire estate to her best friend. The mother, not wanting the cabin to go to someone who was not a family member, brought an action to set aside the conveyance to the best friend. Who will be likely to prevail in this action?

You Selected: The best friend, because the mother recorded the deed conveying the cabin to her daughter. The best friend, because the mother's intent was evidenced by a valid deed in writing. The mother, because she did not deliver the deed to her daughter. The mother, because the daughter did not accept the mother's gift. A transfer by deed is effective when the deed is delivered by the grantor and accepted by the grantee. Delivery is presumed when the deed has been recorded, and acceptance is presumed if the transfer benefits the grantee.