Property Missed Qs

In 1959, 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 created the parcels, the purchasers mutually agreed that: "the owners, their heirs, and assigns agree to maintain a retaining wall made of stone between the properties. They further agree that they will share equally any expenses associated with the retaining wall." The deed was properly recorded. Subsequently, each of the parcels was sold several times, and none of the owners properly maintained the retaining wall. In 2009, the owners of the parcels made the joint decision to dismantle the wall. In 2012, 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. No, because the previous owners decided to dismantle the retaining wall. Yes, because the deed created an equitable servitude. Yes, because the covenant ran with the land.

Answer choice B is correct. In order for a covenant to be enforceable it must be in writing, with the intent that the duties and rights run with the land, must touch and concern the land, subsequent purchasers must have notice of the covenant (either actual, constructive, or inquiry notice), and the parties must have horizontal privity (the estate and the covenant are contained in the same instrument) and vertical privity (an unbroken chain of ownership from the original parties). A covenant may be terminated in the same ways as an easement, including by abandonment. A covenant can be terminated by abandonment if the parties to the covenant act in an affirmative way that shows a clear intent to relinquish the covenant right; mere nonuse, however, or statements of intent without affirmative conduct, will not constitute abandonment. Here, the parties satisfied the criteria for creating a covenant appurtenant in 1959. The covenant was then abandoned by subsequent owners who dismantled the retaining wall that the covenant was created to maintain. Answer choice A is incorrect because there was not a drastic change in circumstances that would justify not enforcing the covenant. If a restriction (i.e., real covenant or equitable servitude) on a property no longer makes sense to enforce due to drastic changes in the surrounding area since the restriction was first contemplated, it will not be enforced. The facts in this case do not indicate that there was any such drastic change. Answer choice C is incorrect because only equitable remedies such as injunctions are available to the holder of an equitable servitude. In this case, the new owner is seeking money damages, which are available only for breach of a covenant appurtenant. Answer choice D is incorrect because, although the covenant ran with the land, it was subsequently terminated by abandonment.

A woman died, devising land that she owned in another state to her daughter, who was then 17 years old. A neighbor who owned the property immediately adjacent to the land wrongfully began to possess the land at that time. For 24 of the next 25 years, the neighbor planted and harvested crops on the land, hunted on it, and parked cars on it. However, in the sixth year after he first took possession of the land, the neighbor neither planted crops nor hunted nor parked cars on the land because he spent that entire year living in Europe. The neighbor built a small gardening shed on the land, but he never built a residence on it. When the daughter was 28, she was declared mentally incompetent and had a conservator appointed to oversee her affairs. Since then, she has continuously resided in a care facility. The applicable statute of limitations provides as follows: "An ejectment action shall be brought within 21 years after the cause of action accrues, but if the person entitled to bring the cause of action is under age 18 or mentally incompetent at the time the cause of action accrues, it may be brought by such person within 10 years after attaining age 18 or after the person becomes competent." If the daughter's conservator wins an ejectment action against the neighbor, what will be the most likely explanation?

A woman died, devising land that she owned in another state to her daughter, who was then 17 years old. A neighbor who owned the property immediately adjacent to the land wrongfully began to possess the land at that time. For 24 of the next 25 years, the neighbor planted and harvested crops on the land, hunted on it, and parked cars on it. However, in the sixth year after he first took possession of the land, the neighbor neither planted crops nor hunted nor parked cars on the land because he spent that entire year living in Europe. The neighbor built a small gardening shed on the land, but he never built a residence on it. When the daughter was 28, she was declared mentally incompetent and had a conservator appointed to oversee her affairs. Since then, she has continuously resided in a care facility. The applicable statute of limitations provides as follows: "An ejectment action shall be brought within 21 years after the cause of action accrues, but if the person entitled to bring the cause of action is under age 18 or mentally incompetent at the time the cause of action accrues, it may be brought by such person within 10 years after attaining age 18 or after the person becomes competent." If the daughter's conservator wins an ejectment action against the neighbor, what will be the most likely explanation? The daughter was age 17 when the neighbor first took possession of the land. Because the daughter is mentally incompetent, the statute of limitations has been tolled. The neighbor never built a residence on the land. The neighbor was not in continuous possession of the land for 21 years.

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 year, 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? 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.

Answer choice A is correct. A tenancy for years is an estate measured by a fixed and ascertainable amount of time. Termination occurs automatically upon the expiration of the term; no notice is required. Any right to renew the agreement must be explicitly set out in the lease. In this case, the owner and the manufacturer had a tenancy for years. This tenancy expired at the end of its term, which was one year. The owner was not required to give notice of its termination. Consequently, by remaining on the premises after the termination of the tenancy for years, the manufacturer became a holdover tenant (i.e., a tenant at sufferance). Because the owner refused to accept the manufacturer's tender of a rental payment, a new tenancy was not created. Therefore, the owner may file a legal action to evict the manufacturer without further notice because the manufacturer, by remaining in the warehouse past the expiration of the one-year term of the lease, is wrongfully in possession of the premises.

The owner of undeveloped land had his attorney prepare a deed transferring the land to his niece as a surprise. The uncle signed the deed and had his attorney record it. However, before the uncle delivered the deed to his niece, the two had a falling out. After the man's death, the niece learned about the deed when it was found among her uncle's papers. She transferred her interest in the land by quitclaim deed to a good faith buyer for valuable consideration. The buyer promptly recorded this deed. By will, the owner left his real property to a nephew. The recording statute in the applicable jurisdiction states: "Any conveyance of an interest in land shall not be valid against any subsequent purchaser for value, without notice thereof, whose conveyance is recorded." Who owns the land? The nephew, because he was the devisee of the owner's real property. The nephew, because the buyer's interest in the land was obtained through a quitclaim deed. The buyer, because the uncle's deed to his niece was recorded. The buyer, because the buyer gave valuable consideration for the niece's interest.

Answer choice A is correct. Although recording the deed raises the presumption of delivery, that presumption is rebuttable by facts indicating the grantor's contrary intent. Here, the facts indicate the uncle and niece had a falling out before the uncle delivered the deed, and the deed was never delivered; this may be an indication that the uncle to change his mind, and the presumption is thereby rebutted. Because the uncle retained ownership of the land at his death, the land passed by will to his nephew. Answer choice B is incorrect because the property could have been transferred by quitclaim deed if the niece had owned it. The transfer of a real property interest through a quitclaim deed does not by itself place the transferee on notice as to a problem with the transferor's ownership of the transferred property. Instead, a quitclaim deed merely limits the liability of the transferor. Answer choice C is incorrect because, although the recording of a deed generally protects a person who buys the property from the record owner, the recording of a deed does not validate an otherwise invalid transfer. Here, since the uncle did not complete the gift to his niece by delivering the deed to her, and the presumption that a deed recorded is a deed delivered has been rebutted, she did not obtain ownership of the land and therefore could not sell it to a third party. Answer choice D is incorrect because, although a good faith purchaser of real property from the record owner is generally protected from other claimants to the property, in this case the record owner never obtained ownership of the land.

The owner of a residence orally agreed to lease the residence to a tenant for a year. The owner consented to the tenant's right to install appliances of her choosing and to remove those appliances at the end of the tenancy. Their agreement was not in writing. Upon moving in, the tenant disconnected the electric range in the kitchen, moved it to the basement, and installed a gas range in the same space. The necessary gas connection was readily available. Two months before the end of the tenancy, the owner entered into a contract to sell the residence to a buyer. The contract specified that all appliances were included in the sale, and the buyer was unaware of the tenant's installation of the gas range or the agreement between the owner and tenant regarding it. When the buyer learned of the tenant's plan to remove the gas range, the buyer brought an action to enjoin the tenant from removing it from the residence. How should the court rule on this action? For the tenant, because of the agreement between the owner and the tenant. For the tenant, because the residence could be restored to its former condition by replacement of the gas range with the electric one in the basement. For the buyer, because of the Statute of Frauds. For the buyer, because the buyer was unaware of the agreement between the owner and the tenant.

Answer choice A is correct. Generally, an item that becomes a fixture is transferred as part of the real property interest to which it relates. However, when there is an agreement between the landlord and tenant regarding an item that may be a fixture, that agreement will control. Here, because the owner of the residence agreed to the tenant's right to install and remove appliances, the tenant clearly has the right to remove the gas range upon termination of the tenancy. Answer choice B is incorrect. The ability of the tenant to restore the leased property to its former condition after removal of the gas range by moving the electric range from the basement to the kitchen and reconnecting it within a reasonable time would permit the tenant to remove the gas range despite it being a fixture, in the absence of an agreement with the owner. However, because there is an agreement here, that agreement controls the tenant's rights with regard to the gas range. Answer choice C is incorrect. The Statute of Frauds generally does not apply to a lease of one year or less. Consequently, the lack of a writing does not preclude the tenant from proving the oral agreement between herself and the owner regarding appliances in general and the gas range in particular. Answer choice D is incorrect because, although the buyer's lack of awareness of the agreement between the owner and the tenant may give the buyer a cause of action against the owner based on the terms of the contract to sell the residence, it does not give the buyer rights in the gas range superior to those of the tenant, even if the gas range constitutes a fixture.

A small business owner entered into an agreement with a credit union to obtain financing for her business. The credit union agreed to loan the business owner $10,000 immediately. As security for this loan, the business owner gave the credit union a mortgage on her personal residence to secure repayment of the loan. The terms of the mortgage provided that it would serve as security for further discretionary loans made by the credit union to the business owner to the extent that the outstanding balance owed to the credit union did not exceed $50,000. The credit union promptly recorded its mortgage. After the credit union had loaned the business owner a total of $30,000, the business owner obtained a $15,000 loan from a friend. The friend recorded his mortgage. This loan was also secured by a mortgage on the business owner's personal residence. The business owner notified the bank in writing about the mortgage with the friend. The credit union subsequently loaned the business owner an additional $20,000. In a legal dispute over priority between the friend and the credit union over which lender has priority with respect to the additional loan of $20,000 by the credit union, which party should prevail? The friend, because the credit union had notice of the friend's mortgage prior to loaning the $20,000 and was not obligated to make that loan to the business owner. The friend, because a mortgage that purports to cover future advances is never enforceable with respect to such advances. The credit union, because the friend was on notice of the credit union's future-advances mortgage. The credit union, because a mortgage that provides that it will cover future advances is always enforceable with respect to such advances as against a subsequent mortgagee.

Answer choice A is correct. If an original mortgagee loans an additional amount to a mortgagor that is optional rather than obligatory such amount may not enjoy priority over a second mortgage if the original mortgagee has notice of the second mortgage. This is true even though the mortgage by its terms serves as security for future advances. Answer choice B is incorrect because a mortgage can serve as security for future advances as well as for loans made contemporaneously with the creation of the mortgage under certain circumstances. Thus, saying that such a mortgage is never enforceable is not accurate. Answer choice C is incorrect because, even though the friend was on notice of the credit union's future advances mortgage, if the payments under a future-advances mortgage are optional, the subsequent mortgagee has priority over payments made after the future-advance mortgagee has notice of the subsequent mortgage. Answer choice D is incorrect because a mortgage that provides that will cover future advances is not always enforceable with respect to such advances as against a subsequent mortgagee. If the payments under a future-advance mortgage are optional, the subsequent mortgagee has priority over payments made after the future-advance mortgagee has notice of the subsequent mortgage.

A widow executes a will in which she leaves her house to her son and the remainder of her estate to her daughter. The house is subject to a purchase money mortgage, the unpaid portion of which is nearly equal to the value of the residuary estate. The son 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? 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. No, because the doctrine of satisfaction does not apply to a specific devise. No, because the mortgage is a purchase-money mortgage.

Answer choice A is correct. The devisee of real property is entitled under the common-law doctrine of exoneration of liens to have any outstanding balance of a mortgage or other encumbrance on the property to be paid from the remaining assets of the testator's estate. Note that today, most jurisdictions have abolished this doctrine and property passes subject to any encumbrance. Answer choice B is incorrect because a general provision that requires the payment of a testator's debts does not require the personal representative of the estate to pay off any mortgages or other encumbrances on real property of the testator. Answer choice C is incorrect because the doctrine of satisfaction refers to the receipt of a gift from the testator prior to death that satisfies a devise made by the testator in the testator's will. Answer choice D is incorrect because the doctrine of exoneration of liens applies to all encumbrances, not just purchase-money mortgages.

The owner of a commercial building obtained a nonrecourse, five-year loan from a lender and used the proceeds to fund another business project. The lender secured the loan with a mortgage on the building. Under the terms of the loan, monthly loan payments constituted only interest on the loan. The loan required a single payment of the principal amount (i.e., a "balloon" payment) at the end of the five-year period. Three years after the loan was made, the building was damaged by an unexpected hurricane. The owner did not repair the damage done by the hurricane and did not take action to protect the building from further damage. The contract was silent with regard to any obligation to repair the building. At the end of the five-year period, despite an overall rise in property values for commercial buildings in the area, the value of the building was less than the amount of the balloon payment due to its state of disrepair. The owner did not make the balloon payment. The lender sued to foreclose its mortgage. After the foreclosure sale, the lender filed an action against the owner personally. If the court finds for the lender, which of the following is the most likely reason? The loan was in default. The owner committed waste. The applicable jurisdiction permits a mortgagee to seek a deficiency judgment. The applicable jurisdiction follows the title theory of mortgages.

Answer choice B is correct. A mortgagor has a duty not to commit waste at least to the extent that the waste impairs the mortgage's security. While the damage done to the building by the hurricane does not constitute waste because it was due to natural forces, the damage done by the owner's failure to take action to prevent further damage to the building could constitute waste. Because the overall value of commercial buildings in the area had risen during the five-year period and the decline in the value of the building was due to its state of disrepair, it is likely that the owner's failure was in part responsible for the impairment of the lender's security. Answer choice A is incorrect because, even though the loan was in default, the loan was a nonrecourse loan. A nonrecourse loan, as the name implies, is a loan secured by collateral, but for which the borrower is not personally liable; in the event of default, the lender can seize the collateral, but nothing else. Consequently, the lender was not personally responsible for payment of the loan. Answer choice C is incorrect because, even though the applicable jurisdiction permits a mortgagee to seek a deficiency judgment, because the loan was a nonrecourse loan, the owner is not personally liable for the deficiency

A nephew rented a luxury condominium unit from his uncle for a number of years. Because of their familial relationship, the two never entered into formal written lease. Instead, the nephew made a single rental payment to his uncle at the end of each year. Several years ago the nephew, without his uncle's knowledge or approval, installed a home movie theater in the condominium unit at his own expense. Recently, the uncle died and ownership of the condominium unit passed to his daughter. The uncle's daughter informed the nephew that he must vacate the unit by the end of the year, and must leave the theater and its sound system on the premises. Some of the items, such as the video player and receiver, are simply sitting on a table. Other components, such as the recliners, surround-sound speakers, and high-definition screen, are bolted to the floor or built into the walls. The nephew is physically able to remove the components of the theater and sound system by the end of the year and restore the premises to its original condition, but doing so will be costly. May the nephew legally remove the components of the home movie theater and sound system? Yes, but only the components that are not affixed to the structure of the condominium unit. Yes, because the nephew can remove the components by the end of his lease and restore the premises to its original condition. No, because the nephew installed the components without the knowledge or approval of the owner of the condominium unit. No, because a holdover tenant may not remove fixtures attached to a property.

Answer choice B is correct. Absent an agreement to the contrary, a non-freehold tenant can remove a fixture that the tenant has attached to the leased property if (i) the leased property can be and is restored to its former condition after the removal, and (ii) the removal and restoration is made within a reasonable time. Here, the tenant has a periodic year-to-year tenancy. Since he can remove all of the components of the home movie theater and restore the premises to its original condition prior to the termination of the lease period, he is legally permitted to do so. Answer choice A is incorrect because the nephew can also remove items affixed to the condominium so long as he can restore the premises to its original condition prior to the termination of the lease period. Answer choice C is incorrect. Even if the nephew's installation of the home movie theater and its sound system constituted ameliorative waste for which he should have sought the consent of his uncle, this would not forbid the nephew from returning the condominium unit to its original condition before the end of the lease. Answer choice D is incorrect. Under common law, a trespasser, such as a holdover tenant, is prohibited from removing a fixture attached to the land. However, the nephew's tenancy by implication does not terminate until the end of the year. Therefore, he is not a holdover tenant and is still permitted to remove the fixtures if he can restore the condominium to its former condition by the end of the lease.

A widower owned a residence in fee simple absolute. His only child, a daughter, also had only one child, a son, who had a child, Ann. The widower executed a will in which the residence was devised to his daughter for her life, and then 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, Bill. Subsequently, the widower's daughter died. A year later, the grandson had a third child, Claire. Recently, the widower's grandson died. All three of the grandson's children have survived him. The applicable jurisdiction continues to follow the common-law Rule Against Perpetuities as well as the Rule of Convenience. Who now owns the residence? Ann Ann and Bill Ann, Bill, and Claire The charity named in the will.

Answer choice B is correct. At the time of the widower's (W's) death, his daughter (D) had a life estate interest in the residence, Ann (A) had a vested remainder subject to open, and the grandson's (G's) unborn children (Bill and Claire, B and C) had contingent remainders in the residence. Just prior to the death of the widower's daughter, G's living children, A and B, each had a vested remainder subject to open. Because the class of the G's children had members at the time that it became possessory (upon the death of D), the class closed at that time. Consequently, A and B are part of the class, but C, being born after the class closed, is not entitled to share ownership of the residence with her siblings. Answer choice A is incorrect because, although Ann's remainder interest vested upon the widower's death, her interest was subject to being shared with subsequent siblings. Even though B was born after the W's death, the class did not close until D's death. Thus, B also owns the residence. Answer choice C is incorrect because C was born after the class closed. Answer choice D is incorrect because it assumes the devise violated the Rule Against Perpetuities (RAP), without being saved. As a remainder interest, the devise to the G's children was subject to the RAP, and the residence would have passed to the charity, as the owner of the rest of the widower's estate, if the RAP voided the devise. The RAP was violated because the widower's grandson could have had another child more than 21 years after the death of D (i.e., the measuring life), thus neither certainly failing or vesting within the RAP period. However, the class gift to the grandson's children was rescued by the Rule of Convenience, which provides that the class is deemed to close when at least one member of the class can demand a distribution (i.e., when an interest becomes a present interest). In this case, such members of the class (A and B) were alive upon D's death, and thus a violation of the RAP is avoided.

A homeowner bought a home with the proceeds of a loan from a thrift institution. The loan was secured by a mortgage on the home. Under the terms of the loan, the full amount of the outstanding loan obligation was to become due and payable if the home was sold or otherwise transferred without the prior permission of the thrift institution. The thrift institution recorded its mortgage. Subsequently, the homeowner established a living trust and transferred ownership of her home to the living trust. The homeowner recorded this ownership transfer. Upon learning of the transfer, the thrift institution demanded that the homeowner pay the outstanding amount due on the loan immediately. When the homeowner refused, the thrift institution brought a foreclosure action to collect the full amount of the outstanding loan obligation. Is the thrift institution likely to succeed? No, because the transfer of ownership of the home to the living trust was recorded. No, because ownership of the home was transferred to the homeowner's living trust. Yes, because the thrift institution recorded its mortgage. Yes, because the thrift institution's mortgage is a purchase-money mortgage.

Answer choice B is correct. Generally, an acceleration clause (due-on-sale clause) in a mortgage loan document is enforceable. However, federal law provides a residential real property exemption, exempting certain transfers of residential real property from the requirement that states give effect to an acceleration clause. Among the exempt transfers is a transfer by the mortgagor-borrower to her living trust. Consequently, it is unlikely that the court will give effect to the acceleration clause in this situation and find the loan in default due to the transfer of ownership from the homeowner to her living trust.

A restaurant owner purchased kitchen equipment from a supplier and gave the supplier an unsecured, nonnegotiable promissory note. Prior to the date on which payment of the note was required, the owner asked the supplier for an extension of time to pay the note. The supplier demanded in exchange that the restaurant owner execute a deed of trust with respect to the restaurant itself to serve as security for payment of the note. When the restaurant owner refused this demand, the supplier threatened to falsely report health code violations by the restaurant owner to the local health department. Acting under duress, the restaurant owner executed the deed of trust, which the supplier promptly recorded. Shortly afterwards, the owner sold the restaurant to the restaurant's chef. The chef assumed the obligation to pay the promissory note. The cash amount paid by the chef to the owner was less than the fair market value of the restaurant because the cash payment reflected the assumed obligation. The note is now in default and the trustee has instituted foreclosure proceedings on the deed of trust. Can the chef assert the owner's defense of duress against the trustee? No, because the supplier recorded the deed of trust prior to the sale of the restaurant to the chef. No, because the cash amount paid by the chef reflected the assumption of the owner's obligation on the note. Yes, because, by assuming the owner's obligation, the chef is entitled to assert the owner's defenses. Yes, because duress is a defense to the enforcement of a mortgage.

Answer choice B is correct. If the purchase price reflects the assumption of the mortgage, the purchaser of a mortgaged property who assumes the mortgage cannot assert the defenses of the mortgagor-seller against the enforcement of the mortgage. Otherwise, the purchaser would, by being permitted to avoid the assumed obligation, be unjustly enriched. (Note: A deed of trust functions as a mortgage in many states.) Answer choice A is incorrect because the question asks about the chef's ability to assert the owner's duress defense. The supplier's recording of the deed of trust serves only to protect the supplier from any claim by the chef, that the purchaser's rights have priority over the supplier's deed of trust. Under these facts, the supplier's recording of its deed of trust is not relevant. Answer choice C is incorrect because permitting the chef to assert the owner's defenses would result in a windfall to the chef, because the chef's promise to assume payment of the note was part of the price that the chef paid for the restaurant. Answer choice D is incorrect because, although duress is a valid defense to the enforcement of a deed of trust or a mortgage, the chef, as transferee, cannot in this case assert a defense that belongs to the transferor because it would unjustly enrich him.

A small company specializing in providing meditation retreats purchased a tract of land fronting a river in a rural residential area. As the residential area grew around the company's tract of land, the tract became essentially cut off from the only public road. Hoping to avoid the expense of building a bridge across the river, the company approached an owner of one residential plot separating the company's tract from the road to request an easement. The owner, without requiring consideration, granted the company an easement by deed to a strip of land 30 feet wide across his property. The deed did not place any express limitations on the easement's use. The company built a narrow dirt road across the easement to accommodate the limited number of vehicles attending its occasional meditation retreats. A year later, the company began to offer outdoor yoga classes each night. This new service was wildly popular, resulting in increased daily traffic across the easement. On busy evenings, visitors also parked on the dirt road for the duration of their class. After a month of enduring the additional traffic, the owner erected a concrete barrier to prevent any use of the easement to access the company's tract. The company objected, and the owner brought an action to terminate the easement across her property. Should the court allow the owner to terminate the easement on these facts? Yes, because the company's current use of the dirt road greatly exceeded its initial use of the road. Yes, because the granting of the easement was not supported by consideration and is thus freely revocable. No, because the easement is not terminated by the company's expanded use of the dirt road. No, because the owner, by blocking the dirt road, can no longer seek equitable relief.

Answer choice C is correct. An express easement arises when it is affirmatively created by the parties in a writing that is in compliance with the Statute of Frauds. In addition to any express terms in the written instrument that allow for termination of the easement, an express easement may be terminated by an express written release, merger, severance, abandonment, prescription, or estoppel. Here, although the owner of the servient estate may be able to thwart a change in the scope of an express easement, this change does not constitute grounds for terminating the easement. Answer choice A is incorrect. Although the expanded use of an easement may be enjoined by the owner of the servient estate if such use is not in conformity with the express terms of the easement or is otherwise unreasonable, expanded use is not an independent ground for termination of an easement. Answer choice B is incorrect because an express easement need not be supported by consideration. Once created, the easement cannot unilaterally be revoked by the owner of the servient estate. Answer choice D is incorrect. Although the owner could be sued for interfering with the company's express easement, the proper remedies for this conduct do not include barring the owner from challenging the easement and seeking equitable relief in court.

A man decided to sell his house after receiving a new job in a neighboring state. Before putting the house on the market, the man told his friend, who had always said how much she enjoyed the house, that he was selling the house and she could buy it at a lower price than he would seek from other potential buyers. Excited at the prospect of home ownership and the lower price, the friend immediately agreed to purchase the house and entered into a contract with the man for the sale of the house, without inquiring as to any issues with the house the man had experienced or knew about. Although he did not say anything to the friend, the man was not aware of any issues. Pursuant to the contract, the man delivered a general warranty deed to the friend at the closing. The friend then moved into the house and decided she would hire a contractor to perform some slight renovations to the upstairs bathroom. As soon as the contractor broke through the wall, he discovered black mold all throughout the interior of the bathroom and along the pipes. Upon further inspection black mold was found behind the walls, throughout the upstairs. The friend brought suit against the man for damages. Pursuant to statute, a seller has a duty of disclosure in all home-sale transactions in the jurisdiction. For whom is the court likely to rule? The man, because the friend did not ask about the condition of the house. The man, because he was not aware of the black mold. The friend, because the covenants contained in the general warranty deed were breached. The friend, because the black mold constituted a material physical defect in the house.

Answer choice B is correct. In a majority of jurisdictions, including the jurisdiction here, a seller of a residence has a duty to disclose. The seller must disclose all known material physical defects to the buyer. The defect must not be readily observable or known to the buyer. In this case, the man was not aware of the presence of black mold in his house. Therefore, he did not violate the duty of disclosure imposed on him by statute. Answer choice A is incorrect. The man had a duty to disclose all known material physical defects to the friend, even if the friend did not first ask about the condition of the house. However, the man was not aware of the black mold, and accordingly, he cannot be held liable for failure to disclose. Answer choice C is incorrect. The six covenants of title that are contained in every general warranty deed only protect the buyer from defects in title, not defects in the condition of the home. Answer choice D is incorrect. To be material, a defect must substantially affect the value of the residence, impact the health or safety of a resident, or affect the desirability of the residence to the buyer. Although the presence of black mold falls within the definition of a material physical defect, the man will not be held liable here because that defect was not known.

An owner conveyed one of his properties to his son for the son's life, remainder to his 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 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? $10,000, because life tenants are responsible for paying the full amount of taxes assessed on the property. $10,000, based on the reasonable rental value of the property.

Answer choice B is correct. Life tenants have the obligation to pay all ordinary taxes on the land and interest on the mortgage to the extent that the property can produce income. If the property is not producing an income, the life tenant is responsible for the taxes and mortgage interest to the extent of the reasonable rental value of the land. Because the property in question is not producing income but has a reasonable rental value of $48,000 per year ($4,000 per month), the life tenant is liable to the holder of the remainder interest for the full amount of the taxes paid by the holder of the remainder interest, $10,000, as that amount does not exceed the reasonable rental value. Answer choice A is incorrect. Life tenants are not necessarily responsible for paying the full amount of taxes assessed on the property. Life tenants have the obligation to pay all ordinary taxes on the land to the extent the property is producing income. If the property is not producing an income, as in this case, the life tenant is responsible for taxes and mortgage interest to the extent of the reasonable rental value of the land

An individual received a contingent remainder interest in land by will. Subsequently, the individual sought to transfer this interest to his niece via a document. The unsigned document identified the individual as the grantor, the niece as the grantee of the interest, contained an adequate description of the property interest to be conveyed, and expressed an intent to transfer the interest. Does this document operate to transfer the contingent remainder interest to the niece? No, because the document did not indicate that the transfer was made for good and valuable consideration. No, because the individual did not sign the document. Yes, because a contingent remainder may be transferred during the owner's lifetime. Yes, because the document constitutes a valid deed.

Answer choice B is correct. The grantor's signature is generally required for a document to be a valid deed. Because the individual who held the contingent remainder did not sign the document, it is not a valid deed and will not operate to transfer his contingent remainder interest to his niece. Answer choice A is incorrect because a deed does not require a recitation of consideration. Many deeds effect a gratuitous transfer of property, as is presumably the case in this transfer. Answer choice C is incorrect because, while in most states a contingent remainder may be transferred during the remainderman's lifetime, the document in question is not a valid deed. Answer choice D is incorrect because, as noted with respect to answer choice A, the document is not a valid deed because the grantor did not sign the document.

A widower who owned a vacation cabin in the mountains executed a will under which the cabin was devised to his niece. The will contained a residuary clause that devised the testator's remaining estate to his son. Subsequent to the execution of the will, the widower sold the cabin and invested the proceeds in an oceanside condominium. After the death of the widower, the personal representative of his estate determined that the niece was entitled to the condominium. The son has challenged this determination in court. Which of the following legal concepts provides the strongest support for the son's position that the condominium should pass under the terms of the will to him? Intestate succession Ademption Exoneration Lapse

Answer choice B is correct. Under the doctrine of ademption, the transfer of property by a testator subsequent to the execution of a will removes the property from his estate and the devise of the property is adeemed. Here, the son could contend that the devise of the cabin to the widower's niece was adeemed when the widower sold the property during his lifetime. Answer choice A is incorrect because rules regarding intestate succession only apply to the extent that a decedent has not devised his property by a will. Here, the will contains a residuary clause that passes the remainder of the widower's estate that is not otherwise devised to the son. Consequently, the widower's will, and not the rules regarding interstate succession, govern the transfer of the widower's property upon his death. Answer choice C is incorrect because the doctrine of exoneration applies to the payment by the decedent's estate of an encumbrance on real property that is devised to a beneficiary. Here, there is no indication that either property was subject to a mortgage or lien. Answer choice D is incorrect because the doctrine of lapse applies when a designated beneficiary in a will dies before the testator. The doctrine prevents the devise from passing to the beneficiary's descendants. Here, the niece has survived the widower.

A woman obtained ownership of a cottage after her grandmother died. The owner, who lived out of state, decided to sell the cottage to a buyer. The parties agreed that closing would occur the following week. The owner had casualty insurance on the cottage, while the buyer did not obtain such insurance. On the evening before the closing was to take place, a fire caused by lightning destroyed the cottage. The jurisdiction has not adopted the Uniform Vendor and Purchaser Risk Act. If the seller seeks specific performance, may the buyer rescind the contract for the sale of the cottage? No, because the buyer bears the risk of loss. No, but the owner must give the buyer credit against the purchase price in the amount of the insurance proceeds. Yes, because the owner has casualty insurance and can more easily bear the loss. Yes, but the buyer must reimburse the owner for the cost of the casualty insurance.

Answer choice B is correct. Under the doctrine of equitable conversion, equitable title to real property passes to the buyer upon entering the contract, even though the seller retains legal title. Most jurisdictions place the risk of loss between the contract and the closing on the buyer. However, if the seller has casualty insurance on the property, the seller must give the buyer credit in the amount of insurance proceeds against the purchase price.

A married couple bought a house to use as a residence. Their bank loan was secured by a mortgage on the house. The following year, the couple granted a second mortgage to a savings and loan association in exchange for a loan. The proceeds from this loan were used in the couple's business. Several years later, the couple defaulted on both loans. The couple offered their interest in the house to the bank by deed in lieu of foreclosure and the bank accepted. What effect does this transaction have on the savings and loan association's mortgage? As an interest with priority over the bank's mortgage, the savings and loan association's mortgage is unaffected. As a junior interest to the bank's mortgage, the savings and loan association's mortgage is completely eliminated. The savings and loan association cannot foreclose on its mortgage, but must look to the personal liability of the couple, now that the bank owns the house. The house remains subject to the savings and loan association's mortgage.

Answer choice D is correct. While the bank's acceptance of the couple's deed in lieu of foreclosure extinguished the bank's mortgage on the house, this transaction did not affect the savings and loan association's mortgage on the house. The bank took title to the house subject to the savings and loan association's mortgage.

A buyer and seller entered into a contract for the sale of a business including the building in which the business was conducted and the land on which the building was situated. In the contract, the seller agreed to convey marketable title subject to any restrictions of record, such as easement and covenants, and all applicable zoning laws and ordinances. Before closing, the buyer learned that the operation of the business violated the zoning laws, but nevertheless was confident that it could obtain a variance for the operation of the business at that location. If the seller refused to transfer title to the building and land, can the buyer seek specific performance of the contract? No, because the covenant of marketable title has been violated. No, because the contract specifically provides that property is being sold subject to the zoning ordinances. Yes, because the seller breached the covenant of marketable title. Yes, because the buyer is confident that it can obtain a variance for the operation of the business at that location.

Answer choice C is correct. A buyer is entitled to specific performance when a seller breaches a contract to sell a real property interest because the buyer's remedy at law (i.e., damages) is considered inadequate due to the unique nature of land. In addition, when the buyer seeks specific performance with respect to property for which there is a title defect (e.g., an encumbrance), the buyer may also obtain an abatement in the purchase price to compensate the buyer for the defect. Here, because the seller breached the contract, the buyer is entitled to specific performance, if it wants the property despite the defect

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 co-tenants was recorded on the same day. Unknown 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. 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.

Answer choice C is correct. A deed to a nonexistent grantee is void as to the nonexistent grantee. Therefore, the purported conveyance of a one-half interest in the real property to the buyer's brother failed, and the original owner retains this one-half interest. The conveyance of a one-half interest in the property to the buyer is unaffected. (Note: The buyer should be successful in an unjust enrichment action to recoup one-half of the purchase price from the original owner.)

A manufacturer, on its own land, built a factory to produce a product. The factory contained the heavy machinery needed to produce the product. Several years later, the owner of adjoining land excavated a site on its own land in order to place an underground storage tank. The excavation at this location, although done without negligence, caused the part of the manufacturer's factory that housed the heavy machinery to subside. Both the manufacturer with regard to the factory and the adjacent landowner with regard to the excavation complied with all governmental regulations. The manufacturer has sued the adjacent landowner for damages to its factory attributable to the landowner's excavation. For whom is the court likely to rule? The manufacturer, because its factory had been constructed before the adjacent landowner's excavation. The manufacturer, because the adjacent landowner is strictly liable for damages attributable to the lack of lateral support.

Answer choice C is correct. A landowner has a right to lateral support from adjoining land. When adjoining land is in its natural state (i.e., undeveloped), a landowner who excavates on his own land is strictly liable for any damage to the adjoining land caused by the excavation. If the adjoining land has been improved (i.e., is not in its natural state), the excavating landowner is strictly liable for any damage caused by the excavation only if the land would have collapsed in its natural state (regardless of the improvement). If the improvement contributed to the collapse, then the adjoining landowner may recover only if the excavating landowner was negligent. Here, the manufacturer's land was not in its natural state; the manufacturer had constructed a factory on the land. Moreover, the only part of the factory that suffered damages was the part that had housed the heavy machinery, which indicates that the land would likely not have subsided in its natural state. Consequently, because the subsidence occurred without negligence on the part of the adjacent landowner, the court is likely to rule in favor of the adjacent landowner.

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. Yes, because the right of first refusal was reasonable. Yes, because the right of first refusal was a valid covenant running with the land.

Answer choice C is correct. A promissory restraint on alienation, such as a right of first refusal, may be enforceable by an injunction if it is reasonable. The organization's right of first refusal was a reasonable provision in a commercial lease and consequently is enforceable through an injunction compelling the owner to sell the building to the organization. Answer choice A is incorrect because the Rule Against Perpetuities does not apply to a right of first refusal that is granted to a lessee in conjunction with a lease.

Many years ago, the owner of an estate gave a railroad company an easement to build, operate, and maintain railroad tracks on the estate. The written easement detailed the projected dimensions of the railroad, but it was not recorded and the tracks were never laid. Ten years ago, the owner sold the underlying property to a farmer. The deed of sale mentioned the easement. Recently, the railroad company contacted the farmer to let him know that it planned to install tracks on its easement. The tracks would be six inches wider than originally projected, as the minimum size of train cars had increased since the easement was granted. The railroad company, which had since purchased a communications company, also wanted to install a fiber-optic system on the same land covered by the easement. The farmer has refused to allow the railroad company to install the tracks and the fiber optic system. Can the railroad company install the wider railroad tracks and the fiber-optic system? No as to both the wider railroad tracks and the fiber-optic cables. No as to the wider railroad tracks, but yes as to the fiber-optic cables. Yes as to the wider railroad tracks, but no as to the fiber-optic cables. Yes as to both the wider railroad tracks and the fiber-optic cables.

Answer choice C is correct. Although a sale of the servient estate to a bona fide purchaser (i.e., a purchaser without notice) of the easement can make the easement unenforceable, here, the farmer did have notice of the easement. Although the easement was not recorded, it was in the deed of sale. Accordingly, the farmer will be charged with having notice of the easement, and it will be enforceable against him. As to the railroad tracks, even though the railroad company's planned use and the written easement are not exactly the same thing, the scope of the easement is the same. Changes in use are examined for reasonableness, as there is the assumption that the original parties contemplated the easement's present and future use. Here, the railroad company wants to increase the width of the easement by a mere six inches; a court would most likely find this within the scope of the easement. As to the fiber-optic cables, however, that is likely too far outside the scope of the easement to be enforceable against either of the owners. Installing fiber-optic cables has nothing to do with operating and maintaining railroad tracks. Answer choices A and B are incorrect because they would not allow enforcement of the wider railroad tracks. Answer choice B is further incorrect because it would allow the enforcement of the easement as to the fiber-optic cables. Answer choice D is incorrect because it would allow the enforcement of the easement as to the fiber-optic cables.

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? The nephew owns the property outright. The daughter and the nephew each own a one-half interest in the property as tenants-in-common. The daughter and the nephew hold the property as tenants-in-common, with the daughter owning a one-third interest and the nephew a two-thirds interest. The daughter and the nephew hold the property as tenants-in-common, with the daughter owning a two-thirds interest and the nephew a one-third interest.

Answer choice C is correct. At the landowner's death, each of the three sons held a one-third interest in the property as joint tenants with the right of survivorship. The sale of the property from the younger son to the older son severed the unity of title; therefore, upon the youngest son's sale of his interest to the oldest son, the oldest son held a one-third interest as a tenant-in-common, and a one-third interest as joint tenant with the middle son. (Note: The youngest son's subsequent death had no effect on ownership rights in the property, because he had already transferred his interest.) Upon the oldest son's death, the daughter was entitled by the terms of her father's will to the one-third interest he held as a tenant-in-common. His remaining one-third interest became the property of the middle son pursuant to the right of survivorship, giving the middle son a two-thirds interest as a tenant-in-common with the daughter. The middle son then gave this interest to his nephew. Thus, the nephew owned a two-thirds interest in the property as a tenant-in-common with the daughter.

A widow held a life estate in a house and several acres of land in a semi-rural area. She lived in the house and harvested berries from the numerous wild berry bushes on the property each June. The widow personally consumed the berries or gave them away to family and friends, but did not sell them to third parties. One May, just before the berries were to be harvested, the widow died. The widow's children, her heirs, sought to enter the land to harvest the berries, but the remainderman, the new owner, objected, claiming that he had sole right to the berries Do the heirs have the right to return and harvest the berries? Yes, because the berries were the widow's personal property. Yes, because the widow would have been able to harvest them had she survived. No, because the berries grew wild. No, because the widow did not sell the berries to third parties.

Answer choice C is correct. Fructus naturales are wild crops that are not cultivated; such crops are considered real property and pass automatically with the land. Here, title to the land, including the unharvested berries, reverted to the remainderman at the time of the widow's death. Accordingly, the remainderman has the sole right to the berries. Had the berries been fructus industriales, that is, had the widow purposely planted and cultivated the berries, then they would have been considered personalty. Answer choice A is incorrect because the berries were not yet the widow's personal property; they would have become her personal property if she had already harvested them, and they would have been considered personalty had she cultivated them. However, because they grew wild, they pass with the land. Answer choice B is incorrect because, while it is true that she would have been able to harvest them had she survived, the land, including the berries, passed to the remainderman at the time of her death. Answer choice D is incorrect because what the widow did with the berries is irrelevant to the question of whether her heirs are entitled to enter the land and harvest them.

After inheriting a substantial amount of money, a man purchased a large estate in the mountains adjacent to a ski resort intending to operate the estate as a seasonal rental property used exclusively to generate rental income. The man made the purchase with cash. Unable to properly manage his wealth, he was impoverished a few months later. He therefore procured a mortgage on the estate from a credit union, and the mortgage was properly executed and recorded. In light of a struggling economy, credit union executives were confident the man would default on the loan and wanted to ensure the estate was properly maintained in anticipation of a subsequent sale. The credit union therefore sought to obtain a court order confirming its right to possession of the estate in order to make repairs and prevent further deterioration of the property. Could the credit union take possession of the estate? No, in an intermediate theory state, after default by the mortgagor. No, in a title theory state, absent default by the mortgagor. Yes, in a title theory state, until the mortgage has been fully satisfied. Yes, in a lien theory state, because the mortgagee is considered the owner of the land during the term of the mortgage.

Answer choice C is correct. In a title theory state, legal title is in the mortgagee (here, the credit union) until the mortgage has been fully satisfied. Thus, the mortgagee is theoretically entitled to take possession at any time, although the mortgagee is typically prohibited by the terms of the mortgage from taking possession of the property before default occurs. As such, the credit union can make repairs, take rent, prevent waste, and lease out vacant space. Answer choice B is incorrect because in a title theory state, the mortgagee has the right to possession even if the mortgagor has not yet defaulted. Answer choice A is incorrect because an intermediate theory state would allow the mortgagor to retain legal title until default, at which time legal title would vest in the mortgagee. Answer choice D is incorrect because in a lien theory state, the mortgagee cannot take possession prior to foreclosure because the mortgagor is considered to be the owner of the land until foreclosure.

A homeowner who sought to sell his home entered into an agreement with a real estate agent with regard to the marketing of the home. The agreement specified that the agent was entitled to a commission if the agent procured a buyer who was "ready, willing, and able" to purchase the home in accord with the contract terms. The agent found a buyer who agreed to pay the seller's asking price for the home and who pre-qualified for a loan to enable to the buyer to finance the purchase. However, the buyer, who was selling her own home, asked for the inclusion of provision that would give the buyer the right to cancel the contract if her home had not sold within 60 days. The seller refused to agree to the inclusion of this provision. As a consequence, the parties did not enter into a contract. Is the agent entitled to a commission to be paid by the homeowner? Yes, because the buyer agreed to seller's purchase price. Yes, because the buyer's right to cancel was restricted to a 60 day period. No, because the buyer was not ready and willing to purchase the home. No, because there was no closing.

Answer choice C is correct. The buyer was not ready and willing to meet the seller's terms, which did not include a contingency based on the ability of the buyer to sell her own home. Answer choice A is incorrect because, although the buyer did agree to the seller's purchase price, the buyer sought to impose an additional condition on the sale of the home, which the seller rejected. Answer choice B is incorrect because, although the inclusion of the cancelation provision would not have made the contract illusory, the provision was not acceptable to the seller. Answer choice D is incorrect because, under the majority rule, a seller may be liable to pay a commission to a broker where the parties have entered into an enforceable contract, even though there has not been a closing.

A rancher subdivided a portion of his ranch that had recently been annexed by the city into 30 two-acre lots. 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 a lot to a speculator. The deed contained the single-family residential restriction, but no other restrictions. 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. During the next two-year period, the rancher sold 28 of the remaining 29 lots. At the time that the portion of the ranch was annexed by the city, the city's building code prohibited a single-family residence of more than two stories. After the rancher sold the first lot to the speculator, but before he sold any of the remaining lots, the city, acting in response to complaints by developers, modified its building code to permit three-story single-family residences. However, 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. Thus, he included in the deeds to each of the 28 lots that he sold after the market rebounded a two-story height restriction for each single-family residence. The rancher made the speculator aware of this height restriction by letter, but the speculator did not respond. Subsequently, the speculator sold his lot to a couple. The deed to the couple 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, as well as the owners of the other 28 lots, seeking an injunction to prevent the couple from building a three-story family residence. All of the 28 owners of the other lots who have built residences on their lots have not violated the two-story height restriction. For whom is the court likely to rule? The rancher, because the common scheme of the two-story height restriction was readily apparent to the couple. The rancher, because he made the speculator aware of the height restriction before the speculator sold his lot to the couple. The couple, because the two-story height restriction was not contained in their deed, the speculator's deed, or the subdivision plan. The couple, because the city building code takes priority over a private restrictive covenant.

Answer choice C is correct. The two-story height restriction was not contained in the couple's deed, the speculator's deed, or the recorded subdivision plan. Therefore, this restriction cannot be imposed on the couple's use of the lot as either a real covenant or an express equitable servitude. Answer choice A is incorrect because the common scheme did not exist at the time that the rancher transferred the first lot to the speculator, but was developed by the rancher in response to the change in the city building code. Even if the couple was aware of the common scheme from the fact that there were no three-story residences on any of the other developed lots, this awareness does not bind them as owners of their lot to that common scheme because the rancher failed to manifest an intent to bind their lot to that scheme at the time that he sold it to the speculator. Had the rancher evidenced his intent to impose this restriction on all thirty lots prior to the sale of the lot to the speculator, such as by including a provision in the subdivision plan, then the speculator and the couple might have been subject to the restriction as an implied reciprocal servitude. Answer choice B is incorrect because, as with the couple's awareness of the common scheme, the speculator's knowledge of the two-story height restriction did not arise until after he had become the owner of the lot. Moreover, the height restriction was not included in either deed or the subdivision plan. Answer choice D is incorrect. Although the couple is subject to the city's building codes, if they were also subject to the two-story height restriction found in the deeds of the 28 lots (which they are not), then the private restriction could still be enforced. The owners of private property may subject their property to greater restrictions on the use of their property than are imposed by a governmental entity.

A buyer entered into a contract to purchase a 20-year-old residence from its current owner and occupant. Among the terms of the contract was a warranty that the residence was free from termite infestation and damage and a requirement that the seller obtain a termite inspection and provide the buyer with a report of the inspection. The seller timely complied with this requirement. In the report, the inspector indicated that no evidence of termites was found, but noted that there were certain areas of the house that the inspector was unable to access due to existing structures, such as interior walls and ceilings. At closing, the seller provided the buyer with a deed that the buyer promptly and properly recorded. A few weeks later, the buyer, in the process of remodeling the residence, uncovered live termites and extensive damage in the wooden beams that supported the walls and floor of the house. The seller had not been aware of the presence of the termites in the house or the damage that they had done to its structure. The buyer sued the seller for breach of the warranty relating to termites. Who will prevail? The buyer, because the seller breached the warranty of fitness or suitability. The buyer, because the buyer could not have learned about the existence of the termites or their damage to the residence through a reasonable pre-sale inspection. ' The seller, because promises in the contract merged into the deed. The seller, because the seller complied with the terms of the contractual warranty.

Answer choice C is correct. Under the doctrine of merger, a buyer of property generally cannot sue on promises contained in the contract, such as a termite warranty, once closing has taken place. Answer choice A is incorrect because, while the warranty of fitness or suitability does apply to the sale of a residence, it only applies to a newly constructed residence and is imposed only on a commercial seller, typically the builder or developer of the residence.

A grantor owned two tracts of land, one 10 acres and the other 20 acres. Fifteen years ago, the grantor conveyed the larger tract to a friend and retained the smaller tract for himself. The deed to the friend contained, in addition to all requirements for a valid deed, the following provision: "I, the grantor, bind myself that in the event I offer to sell the smaller tract that I now retain, I will notify the grantee in writing, and the grantee shall have the right to purchase the smaller tract for its fair market value as determined by a board of three qualified expert appraisers." The deed also contained a reciprocal provision conveying a similar right to the grantor for the right to purchase the larger tract from the friend. Five years ago, the grantor decided to sell the smaller tract of land. He informed the friend in writing of his intention to sell the property. The friend had no interest in buying the smaller tract and released his right to purchase the tract. The grantor sold the property to a buyer. Several months ago, the friend decided to sell the larger tract of land. However, the friend failed to inform the grantor in writing of his intention to sell the property. The grantor learned of the offer to sell the property through a local newspaper. The grantor approached the friend with an offer to purchase the property at fair market value. The friend refused because he believed he could sell the property for a higher value. The common law Rule Against Perpetuities is unmodified in this jurisdiction and there are no applicable statutes. The grantor has brought an action for specific performance of the right of first refusal. Is he likely to succeed? No, because the friend's release operates as a waiver of any right to purchase. No, because the provision providing the right to purchase violates the Rule Against Perpetuities. Yes, because the Rule Against Perpetuities does not apply to the right to purchase provision. Yes, because the terms of the right to purchase are reasonable.

Answer choice D is correct. A right of first refusal is a preemptive right that gives its holder the opportunity to acquire property before it is transferred to another. Such a provision is valid if it complies with the Statute of Frauds and the terms are reasonable. Under the reasonableness standard, the utility of the purpose served by the restraint is balanced against the likely harm that would result from its enforcement. In this case, the original deed from the grantor to friend created the right of first refusal in both the grantor and the friend. This provision complied with the Statute of Frauds. Because the fair market value is to be determined by a panel of experts, the pricing of the property is likely fair and reasonable. Answer choice A in incorrect because both the friend and the grantor have the right of first refusal. The grantor's ability to exercise his right of first refusal is not impacted by the friend's waiver of his right as to the smaller tract of land. Answer choice B is incorrect because the provision does not violate the common law Rule Against Perpetuities. This provision is specific to the grantor and the friend without reference to heirs or successors in interest. It is not possible for the right to be exercised more than 21 years after a life in being because each person's right will end upon his death. Answer choice C is incorrect because the Rule Against Perpetuities applies to rights of first refusal. The Rule does not apply when the right is granted to a current leasehold tenant. However, that is not the case here.

A 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. The original owner, because the condominium unit was transferred by a quitclaim deed. The original owner, because of the merger doctrine.

Answer choice D is correct. Absent contrary language, an implied covenant of marketable title (i.e., a title free from defects) is part of a contract to sell real property. However, under the doctrine of merger, obligations contained in the contract of sale, including the seller's duty to deliver marketable title, are merged into the deed and cannot thereafter be enforced through a breach of contract action. Consequently, the speculator cannot sue the original owner for a breach of the covenant to deliver marketable title.

A homeowner whose house sat on an irregularly shaped lot constructed a storage shed that by mistake rested entirely on his neighbor's property. The storage shed stood for 16 years before the neighbor discovered the mistake when selling her property. The homeowner apologized and dismantled the shed. The neighbor then transferred title to her property to a buyer who promptly recorded the deed. Six months later, the homeowner died, devising all of his real property interests to his son. When the son sought to construct a storage shed in the same location as the prior shed, the buyer objected and initiated a lawsuit against the son. In the applicable jurisdiction, the statute of limitations for adverse possession is 15 years and the recording act is a race type recording act. Which of the following is the buyer's best argument that the land on which the original storage shed was located belongs to the buyer? The buyer is entitled to this land under the recording act. The buyer is the owner of the land pursuant to the doctrine of estoppel by deed. The homeowner's removal of the shed returned not only possession but also ownership of this land to the neighbor. The homeower's possession of this land was not hostile.

Answer choice D is correct. Among the requirements for adverse possession is that the adverse possession must be hostile. In a majority of jurisdictions, "hostile" merely means without the owner's permission; it does not require that the possessor purposefully seeks to defeat the owner's title because the intent of the possessor is irrelevant. In jurisdictions that consider intent, some will grant title to a possessor who, in good faith, thought he had the legal right to possess (i.e., believed that the property was not owned or thought that he owned the property). Others require the intent to be based on bad faith (i.e., aggressive trespass). Here, because the homeowner did not act in bad faith, and the other answer choices do not defeat the homeowner's adverse possession of the land, this is the buyer's best argument. Answer choice A is incorrect. Under a race recording act, a purchaser of property who records his property interest before the competing claimant has priority over that claimant, regardless of whether the purchaser has notice of the other claim at the time of purchase. Although a buyer is generally protected under this type of recording act from any person whose property rights arose prior to the buyer's acquisition of the property, no type of recording act protects a subsequent taker for value from a property interest acquired by operation of law, such as property acquired by adverse possession. Since generally such ownership arises automatically upon the expiration of the statutory period, there is no documentation to be recorded. Answer choice B is incorrect. The doctrine of estoppel by deed prevents a grantor who does not own property at the time that the grantor purports to transfer ownership of it to the grantee from asserting ownership of that property when the grantor subsequently acquires ownership of the property. Here, this doctrine does not apply because the homeowner did not deed the property in question to the buyer. Answer choice C is incorrect because, once the homeowner's right to this property arose because of adverse possession, the homeowner cannot return ownership of this property orally or by simply removing the trespassing structure. The homeowner must transfer ownership of the adversely possessed property by deed.

A man owned a 25-acre tract of land. He conveyed 20 of the 25 acres to a developer by warranty deed and continues to live on the five-acre portion he retained. The deed to the 20-acre tract was promptly recorded and contained the following: "It is a condition of this deed that all owners, 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 purchased one of the lots and decided to build an addition to the house. The woman plans to build an entirely separate apartment and rent it to college students. A nosy neighbor in an adjoining subdivision opposes this development because she does not want rowdy college students driving through the neighborhood. Can the neighbor prevent the woman from building the apartment? 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. No, because the zoning ordinance allows for multi-family homes as well as single-family homes. No, because the neighbor does not have the right to enforce the restriction.

Answer choice D is correct. Equitable servitudes are covenants about land use that are enforced at equity by injunction. For a servitude to be enforced at equity, it must be in writing and meet the following requirements: (i) there must be intent for the restriction to be enforceable by and against successors in interest, (ii) the servitude must touch and concern the land, and (iii) if the person against whom the servitude is to be enforced is a purchaser, he must have notice (whether actual, record, or inquiry notice) of the servitude. In this case, there is a valid equitable servitude on the 20-acre subdivision. The restriction is contained in the deed between the original parties. The phrase "all owners, their heirs and assigns" shows the parties' intent that the benefits and burdens run with the land. The restriction touches and concerns the land because it affects the owners as property owners, not merely individuals. Finally, subsequent purchasers had notice of the restriction in their deeds. However, the neighbor cannot enforce the equitable servitude because she does not own property in that subdivision. The benefit of enforcing an equitable servitude is held only by successors in interest to the original deed.

A bank made a loan to a homeowner to enable the homeowner to buy his primary residence. The homeowner executed a promissory note to the bank. As security for payment of the note, the homeowner granted the bank a mortgage in the residence. The mortgage loan document contained the following acceleration clause: Upon a transfer of the property without the permission of the lender, the full amount of the outstanding loan obligation becomes due and payable. One year later, the homeowner married. Shortly thereafter, the homeowner retitled ownership of the residence in his and his wife's names as tenants by the entirety. Five years later, the homeowner and his wife divorced. The divorce decree mandated that the homeowner transfer his ownership interest in the residence to his ex-spouse. The homeowner complied with the court's decree. In neither case did the homeowner notify the bank of the transfer. Do these changes in ownership likely give the bank valid grounds to enforce the acceleration clause? Yes, because both ownership changes violate the acceleration clause. Only the retitling of the residence in the names of both spouses allows the bank to enforce the acceleration clause. Only the transfer of the homeowner's ownership interest pursuant to the divorce decree allows the bank to enforce the acceleration clause. No, neither ownership change allows the bank to enforce the acceleration clause.

Answer choice D is correct. Generally, an acceleration clause (due-on-sale clause) in a mortgage loan document is enforceable. However, federal law provides a residential real property exemption exempting certain transfers of residential real property from the requirement that states give effect to an acceleration clause. Among the exempt transfers are a transfer of property to a spouse or child and a transfer of property to an ex-spouse due to a divorce. Consequently, it is unlikely that a court would find that either of the ownership changes effected by the homeowner will allow enforcement of the acceleration clause. Consequently, answer choices A, B, and C are incorrect.

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 which time the owner was to retain title to the house and the buyer was granted the right to occupy the premises. Under the contract, 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 of any failure to timely make a required installment payment, and 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 accord with his rights under the contract, the owner filed a summary ejectment action to evict the buyer from the house. 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. The buyer appeared at the summary ejectment proceeding and tendered the missed payments. Should the court award possession of the house to the owner? 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. No, because the buyer tendered the missed payments. No, because there has not been a foreclosure sale.

Answer choice D is correct. This agreement is an installment land contract. Because 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, the owner cannot regain possession of the residence until a foreclosure sale has been held. Answer choice A is incorrect because, although the buyer's failure to timely make the required installment payments does constitute a default, this failure does not give the owner the right to retake possession of the residence. As noted with regard to answer choice D, the owner has this right only after a foreclosure sale is held. Answer choice B is incorrect. Although the owner did not attempt to regain possession of the resident through self-help, but instead chose judicial means, because the applicable jurisdiction treats an installment land contract as a mortgage and follows the lien theory of mortgages, the owner is entitled to possession only after a foreclosure sale is held. Answer choice C is incorrect. Because the applicable jurisdiction treats an installment land contract as a mortgage, the buyer possesses the equity of redemption, under which the buyer can redeem the property until there has been a foreclosure sale. However, the buyer's tender of the three missed payments does not satisfy the buyer's contractual obligations. Due to the presence of an acceleration clause in the contract, the buyer, as a result of the default, is required to tender the total amount of the remaining installment payments.

A couple entered into a contract to purchase a house from the owner. The couple did not record the contract of sale. Prior to the execution of the contract, the owner incurred a debt to a creditor. Subsequent to the execution of the contract, the creditor obtained a judgment against the owner. Unaware of the contract of sale, the creditor recorded her judgment in the land records for the county in which the house was located, thereby giving the creditor a lien against property owned by the owner in the county. After the owner deeded the house to the couple and they recorded the deed, the creditor sought to execute the lien and levy on the house. The couple filed an action to enjoin the creditor from executing the lien. The applicable recording act reads: 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. Who will prevail? The creditor, because she recorded her judgment prior the couple's recording of their deed and without notice of their purchase of the house. The creditor, because she had reduced her claim to judgment. The couple, because they were protected by the recording act as purchasers for value of the house. The couple, because the doctrine of equitable conversion protected their interest in the house from the judgment creditor.

Answer choice D is correct. Upon execution of the land sales contract, the couple became the equitable owners of the house; the owner merely held legal title which he was required to convey at closing to the couple. Consequently, the creditor's judgment lien, which was obtained after the contract was executed, was not enforceable against the house because the house no longer belonged to the owner

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? The nephew owns the property outright. The daughter and the nephew each own a one-half interest in the property as tenants-in-common. The daughter and the nephew hold the property as tenants-in-common, with the daughter owning a one-third interest and the nephew a two-thirds interest. The daughter and the nephew hold the property as tenants-in-common, with the daughter owning a two-thirds interest and the nephew a one-third interest.

nswer choice C is correct. At the landowner's death, each of the three sons held a one-third interest in the property as joint tenants with the right of survivorship. The sale of the property from the younger son to the older son severed the unity of title; therefore, upon the youngest son's sale of his interest to the oldest son, the oldest son held a one-third interest as a tenant-in-common, and a one-third interest as joint tenant with the middle son. (Note: The youngest son's subsequent death had no effect on ownership rights in the property, because he had already transferred his interest.) Upon the oldest son's death, the daughter was entitled by the terms of her father's will to the one-third interest he held as a tenant-in-common. His remaining one-third interest became the property of the middle son pursuant to the right of survivorship, giving the middle son a two-thirds interest as a tenant-in-common with the daughter. The middle son then gave this interest to his nephew. Thus, the nephew owned a two-thirds interest in the property as a tenant-in-common with the daughter. Answer choice A is incorrect because the oldest son purchased the youngest son's one-third interest, which was held as a tenant-in-common, and which he passed to his daughter through his will. Thus, the nephew held only a two-thirds interest. Answer choice B is incorrect because the daughter is entitled to the portion of the property owned by the oldest son that could be devised. The oldest son held a two-thirds interest in the property, but only the one-third interest held as a tenant-in-common passed to the daughter upon the oldest son's death. The other one-third interest became the middle son's by right of survivorship, and the middle son gave this to his nephew, along with his own one-third interest. Answer choice D is incorrect because the nephew is entitled to the portion of the property owned by the middle son. Upon the death of the oldest son, the middle son had a two-thirds interest in the property as a tenant-in-common with the oldest son's daughter, who owned the remaining one-third interest.

A bank provided a loan to the purchaser of a parcel of undeveloped land. As security for the loan, the purchaser granted the bank a mortgage with respect to the parcel of land. Subsequently, the purchaser subdivided the land into three lots. The purchaser sold two of the three lots, each to a different buyer at a different time. Each buyer obtained a loan to finance the purchase from a different bank, neither of which was the bank that provided the original loan to the purchaser. Each buyer gave his lender a mortgage on his lot. The purchaser later defaulted on his bank loan. The bank filed an action to foreclose on all three parcels of land. The buyers of the two lots each filed an appropriate motion to protect their interests to the maximum extent possible. Which of the following best describes the likely outcome of the bank's attempt to proceed against the three lots? The bank may proceed against any of the three lots in any order that it chooses. The bank must proceed first against the lot retained by the purchaser and then against the lots in the order in which the mortgages on them were created. The bank must proceed first against the lot retained by the purchaser and then against the lots in the inverse order in which the mortgages on them were created. The bank must proceed against all of the lots in a manner that recovers an equal amount from each.

nswer choice C is correct. Generally, upon default of an obligation, a mortgagee may foreclose on any and all parcels of real property of the mortgagor that serve as security for the obligation. If there are junior security interests with respect to some of those parcels of real property, however, those junior interests may petition the court for protection of their interests under the doctrine of marshaling of assets. Under this doctrine, the holder of a senior security interest must first proceed against the property on which there are not any junior security interests, and then against the property on which the junior interest was more recently created, before proceeding against property on which the junior interest was more remotely created. Answer choice A is incorrect because, although a mortgagee may generally proceed with a foreclosure against any real property of the mortgagor that serves as security for the obligation, in this case the doctrine of marshalling of assets applies to prevent the mortgagee from exercising that discretion. Answer choice B is incorrect because the doctrine of marshalling of assets requires that the holder of the senior security interest proceed first against the property on which the junior interest was more recently created. Answer choice D is incorrect because the holder of the senior security interest must proceed first against property on which there are not any junior security interests, and then against the property on which the junior interest was more recently created, before proceeding against property on which the junior interest was more remotely created.