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Complete subject outline

Real Property outline for the bar exam

This outline covers Real Property from ownership through transfer and financing: present and future estates, co-ownership, landlord and tenant law, the contract of sale, deeds, mortgages, recording, and easements, covenants and zoning. Each module lists the propositions to memorize, an attack sequence, the traps and exceptions, and a short worked application. The MBE asks 25 scored questions on the subject and the MEE uses it often, and because so many answers depend on exact terms of art, the outline is meant to be reread rather than read once. Use it as the continuous reference after your first pass through the rule bank by unit. Draw each estate and interest as a timeline while you reread, which makes future interests far easier to classify, and keep the vocabulary pairs straight since a single wrong term flips the answer.

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Real Property outline coverage by unit
UnitModulesPropositions
Estates15
Future interests212
Concurrent ownership15
Landlord-tenant15
Tenant protection15
Land sale15
Deeds15
Recording15
Mortgages15
Easements15
Land promises15
Possession and use16
Public controls15
Special problems214
Landlord-tenant law218
Easements and licenses18
Restrictive covenants17
Real estate contracts321
Mortgages and security devices217
Titles214
Title assurance19
Rights in real property110
Mortgages and foreclosure110
Ownership of real property110
01 · Estates

Present estates and defeasible fees

Conveyance language determines the present estate, its duration, the future interest, and whether termination is automatic or elective.

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Black-letter propositions

  1. Fee simple absolute is potentially infinite and freely transferable.
  2. Fee simple determinable ends automatically upon a stated event and leaves the grantor a possibility of reverter.
  3. Fee simple subject to condition subsequent gives the grantor a power of termination requiring action.
  4. Fee simple subject to executory interest shifts automatically to a third person.
  5. A life estate ends at the measuring life and carries duties against affirmative and permissive waste.

Attack sequence

1Quote operative language.

2Name present estate.

3Name each future interest and holder.

4State automatic or elective termination.

5Analyze transfer and waste.

Traps and exceptions

!Purpose language may create a covenant rather than a defeasible estate.

!Modern deeds generally presume fee simple without words of inheritance.

!A life tenant cannot exploit resources merely because use would be profitable.

WORKED APPLICATION

O conveys 'to A while used as a school, then to B.'

A holds a fee simple subject to B's shifting executory interest because title shifts automatically to a third party when school use ends.

Essay-ready formulationConditional language creates a determinable fee, condition-subsequent fee, or executory limitation depending on who takes and whether termination is automatic.
02 · Future interests

Remainders, executory interests, reversions, and RAP

Future interests are classified by holder, timing, conditions, and vesting; common-law RAP invalidates certain interests capable of vesting too remotely.

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Black-letter propositions

  1. A remainder follows natural termination and can be indefeasibly vested, vested subject to open, vested subject to divestment, or contingent.
  2. An executory interest cuts short another estate or follows a gap; grantor interests are reversion, possibility of reverter, and power of termination.
  3. A contingent remainder has an unascertained taker or condition precedent.
  4. Common-law RAP invalidates a contingent remainder, executory interest, or certain class gift unless it must vest or fail within a life in being plus 21 years.
  5. Vested interests, grantor interests, and many charity-to-charity shifts are outside common-law RAP.

Attack sequence

1Write the full timeline.

2Classify every interest.

3Separate precedent conditions from later divestment.

4For RAP, identify covered interest and validating life.

5Check statutory reform if supplied.

Traps and exceptions

!Probability is irrelevant under common-law RAP.

!The unborn widow is not a measuring life at creation.

!One remote class member can invalidate a class gift under all-or-nothing treatment.

WORKED APPLICATION

O conveys 'to A for life, then to A's first grandchild to reach 30,' when A has no grandchildren.

A child could be born later and have a child who reaches 30 too remotely; common-law RAP invalidates the contingent remainder.

Essay-ready formulationFuture-interest analysis requires exact classification before asking whether a covered interest must vest or fail within the perpetuities period.
03 · Concurrent ownership

Cotenancies, severance, accounting, and partition

Concurrent owners share possession but differ in survivorship, creation, severance, expenses, rents, and creditor treatment.

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Black-letter propositions

  1. Tenants in common have fractional shares without survivorship.
  2. Joint tenants have survivorship and traditionally require time, title, interest, and possession plus clear language.
  3. An inter vivos transfer severs the transferring joint tenant's share; mortgage effect depends on title- or lien-theory law.
  4. A cotenant may possess all absent ouster, must account for third-party rent, and may obtain contribution for necessary carrying costs.
  5. Partition in kind is preferred where practical; sale is used when division is prejudicial and sale better serves owners.

Attack sequence

1Identify creation language and unities.

2Track every transfer and lien.

3Analyze possession, ouster, rent, costs, and improvements.

4Select partition remedy and accounting.

Traps and exceptions

!A cotenant in possession generally owes no rent without ouster or agreement.

!One cotenant cannot lease another's share.

!Severance can unintentionally destroy survivorship.

WORKED APPLICATION

A and B own as joint tenants. A conveys to C, then dies.

The conveyance severed A's share. B and C are tenants in common; survivorship does not give B C's interest.

Essay-ready formulationCotenancy analysis tracks creation, survivorship, severance, possession, accounting, creditors, and partition.
04 · Landlord-tenant

Tenancies, possession, rent, assignment, and sublease

Lease law classifies the tenancy and allocates possession, rent, transfer, and continuing contractual duties.

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Black-letter propositions

  1. A term of years has fixed dates; a periodic tenancy renews until notice; tenancies at will and sufferance use special termination rules.
  2. The majority English rule requires the landlord to deliver actual possession; the minority American rule requires legal possession only.
  3. An assignment transfers the entire remaining term and creates privity of estate; a sublease retains a reversion.
  4. The original tenant remains in privity of contract unless released; an assignee is liable on running lease covenants while in possession.
  5. Modern landlords generally must mitigate after tenant abandonment.

Attack sequence

1Classify tenancy and writing requirement.

2Determine possession and rent breach.

3Compare transferred time with remaining term.

4Identify contract and estate privity.

5Address consent, surrender, and mitigation.

Traps and exceptions

!Labels do not control assignment versus sublease.

!Reassignment can end future estate liability but not separate contract liability.

!A holdover landlord must choose lawful eviction or tenancy treatment.

WORKED APPLICATION

A tenant transfers all eight remaining months but calls the transfer a sublease.

Because no reversion was retained, it is an assignment. The transferee enters privity of estate with the landlord.

Essay-ready formulationLease transfers are classified by whether the entire remaining term passed, which determines privity and liability regardless of labels.
05 · Tenant protection

Habitability, quiet enjoyment, tort duties, and waste

Condition and use problems require choosing the doctrine whose elements and remedies fit the facts.

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Black-letter propositions

  1. Residential habitability protects basic living conditions and can support damages, rent reduction, repair remedies, or termination after required notice.
  2. Constructive eviction requires landlord-caused substantial interference and tenant departure within a reasonable time.
  3. Landlord tort duties commonly cover known latent defects, common areas, negligent repairs, public use, and short furnished leases.
  4. Tenants must avoid affirmative, permissive, and ameliorative waste.
  5. Retaliation and housing-discrimination statutes limit eviction and selection.

Attack sequence

1Identify residential or commercial setting.

2Name duty and notice requirement.

3Match breach to remedy and vacation requirement.

4For injury, choose landlord-duty exception.

5Check tenant fault and waiver limits.

Traps and exceptions

!Constructive eviction usually requires leaving; habitability does not.

!A landlord is not strictly liable for every interior condition.

!Residential habitability often cannot be waived.

WORKED APPLICATION

A landlord ignores loss of heat during winter, and a residential tenant remains while using a valid rent-withholding remedy.

The serious condition can breach habitability despite continued possession. Constructive eviction would require departure.

Essay-ready formulationCondition disputes require separate habitability, quiet-enjoyment, tort-duty, and waste analyses with their own notice and remedies.
06 · Land sale

Marketable title, equitable conversion, casualty, and disclosure

An enforceable land-sale contract carries title and disclosure obligations and can shift equitable ownership and risk before closing.

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Black-letter propositions

  1. Marketable title is reasonably free from litigation risk and is ordinarily due at closing.
  2. Adverse-possession gaps, undisclosed encumbrances, and existing zoning violations can create defects; many liens can be cured from proceeds.
  3. Equitable conversion can shift beneficial ownership and traditional casualty risk, but statutes often keep risk with the seller until title or possession transfers.
  4. Modern sellers may need to disclose known latent material defects not readily observable.
  5. Breach can support specific performance, expectation, reliance, restitution, or agreed-deposit treatment.

Attack sequence

1Identify closing date and time clause.

2List title defects and cure options.

3Choose casualty-risk rule.

4Analyze disclosure and merger.

5State both parties' remedies.

Traps and exceptions

!Marketable title is usually required at closing, not contract signing.

!Equitable conversion does not override a controlling statute or agreement.

!Merger at deed delivery has exceptions for collateral promises and fraud.

WORKED APPLICATION

A house burns before closing while the seller remains in possession in a Uniform Vendor and Purchaser Risk Act state.

Risk stays with the seller because the buyer has neither title nor possession. The buyer may avoid or adjust the contract under the statute.

Essay-ready formulationLand-sale analysis covers marketable title at closing, cure, casualty allocation, disclosure, equitable conversion, and transaction remedies.
07 · Deeds

Execution, delivery, acceptance, and covenants

A deed transfers legal title when properly executed and delivered with present intent, subject to acceptance and the promises of the chosen deed form.

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Black-letter propositions

  1. The deed identifies parties and land and is signed by grantor; consideration is generally not essential to validity.
  2. Delivery turns on present transfer intent shown by words, conduct, escrow, recording, or possession; physical handoff is not conclusive.
  3. An oral condition attached to unconditional manual delivery to the grantee is generally ineffective.
  4. A general warranty deed includes present covenants of seisin, right to convey, and against encumbrances plus future warranty-related covenants.
  5. A quitclaim deed conveys existing title without covenants but can still receive recording-act protection.

Attack sequence

1Test execution and description.

2Find present delivery intent and escrow conditions.

3Identify acceptance.

4Classify deed and covenant.

5State present or future breach timing.

Traps and exceptions

!Recording is evidence of delivery, not an absolute element between parties.

!A deed intended to operate only at death may violate will formalities.

!Quitclaim form does not always defeat bona fide purchaser status.

WORKED APPLICATION

O hands A a deed saying, 'This is yours now, but do not record until I die.'

The words can show present delivery despite postponed recording. Retained control or a contrary intent could change the result.

Essay-ready formulationA deed transfers through proper execution and present-intent delivery, while its form determines title covenants and breach timing.
08 · Recording

Notice, race, race-notice, and chain of title

Recording acts protect qualifying later purchasers under the exact statutory priority formula.

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Black-letter propositions

  1. A bona fide purchaser gives value and lacks actual, record, and inquiry notice at conveyance.
  2. Notice statutes protect the later BFP; race-notice also requires first recording; pure race rewards first recording.
  3. An instrument outside the chain of title may not give record notice.
  4. Visible possession and suspicious references can create inquiry notice.
  5. Shelter allows transferees from a protected purchaser to receive protection, subject to limited reconveyance issues.

Attack sequence

1Translate statutory words.

2Chronologically list conveyances and recordings.

3For each later taker, test value and three notice forms.

4Apply first-record requirement.

5Check wild deeds and shelter.

Traps and exceptions

!A donee does not give value.

!Recording first cannot cure notice under race-notice.

!A record search is insufficient when possession demands inquiry.

WORKED APPLICATION

O deeds to A, who possesses but does not record. O later deeds to B, who sees A but makes no inquiry and records first under race-notice law.

A's possession gives B inquiry notice, so B is not a BFP and loses despite first recording.

Essay-ready formulationRecording priority follows the statute word for word through value, actual, record, and inquiry notice, timing, and recordation.
09 · Mortgages

Debt, transfer, priority, foreclosure, and redemption

A mortgage secures an obligation; personal liability, lien priority, and foreclosure consequences must be analyzed separately.

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Black-letter propositions

  1. The mortgagor retains equity of redemption until valid foreclosure; a contemporaneous clog on redemption is disfavored.
  2. A buyer taking subject to a mortgage lacks personal liability, while one assuming it becomes primarily liable and the original borrower often becomes surety.
  3. Priority generally follows first in time as modified by recording acts, purchase-money priority, subordination, advances, and modifications.
  4. Foreclosure terminates properly joined junior interests but leaves senior interests; omitted interests retain rights.
  5. Proceeds pay costs, foreclosing debt, junior liens by priority, then mortgagor, with deficiency and statutory redemption rules varying.

Attack sequence

1Identify note, mortgage, recording, and transfers.

2Classify subject-to or assumption.

3Rank every lien.

4Check foreclosure parties and notice.

5Distribute proceeds and address deficiency and redemption.

Traps and exceptions

!Junior foreclosure does not eliminate senior mortgages.

!The note ordinarily carries the mortgage.

!A material modification can lose priority against prejudiced junior interests.

WORKED APPLICATION

A buyer assumes a mortgage, defaults, and the lender sues buyer and original borrower.

The buyer is primarily liable; the original borrower remains liable absent release but has surety rights.

Essay-ready formulationMortgage problems require separate treatment of the debt, land security, transfer liability, priority, foreclosure, proceeds, and redemption.
10 · Easements

Creation, scope, transfer, and termination

An easement is a nonpossessory use right created expressly or by implication, necessity, prescription, or estoppel and limited by its purpose.

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Black-letter propositions

  1. An express easement generally satisfies the Statute of Frauds.
  2. Prior-use implication requires severance, apparent continuous use, and reasonable necessity; necessity requires prior common ownership and necessity at severance.
  3. Prescription resembles adverse possession through open, notorious, adverse, continuous use for the statutory period.
  4. Appurtenant easements benefit a dominant parcel and ordinarily transfer with it.
  5. Termination can occur by release, merger, abandonment plus conduct, estoppel, prescription, expiration, or end of necessity.

Attack sequence

1Identify dominant and servient parcels.

2Choose creation theory and timing.

3Define permitted scope and overburden.

4Trace transfer.

5Test termination.

Traps and exceptions

!Mere nonuse is not abandonment without intent plus conduct.

!Later-created necessity does not support easement by necessity.

!An easement holder can make reasonable repairs but not unreasonably increase burden.

WORKED APPLICATION

O conveys a landlocked parcel from a larger tract with no road access.

If necessity existed at severance and satisfies the jurisdictional degree, an easement by necessity may arise over retained land.

Essay-ready formulationEasement analysis requires valid creation, defined scope, successor transfer, and a recognized termination event.
11 · Land promises

Real covenants, equitable servitudes, and common plans

Land-use promises bind successors only through the elements matching the interest, burden, benefit, and requested remedy.

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Black-letter propositions

  1. A real covenant traditionally requires writing, intent, notice for the burden, horizontal and vertical privity as applicable, and touch and concern; damages are the remedy.
  2. An equitable servitude requires writing or implied common scheme, intent, notice for the burden, and land relation; injunction is the remedy.
  3. Reciprocal restrictions can arise from a developer's common plan plus purchaser notice.
  4. Benefits and burdens must be analyzed separately for each successor.
  5. Defenses include changed conditions, abandonment, laches, estoppel, and unclean hands.

Attack sequence

1Quote promise and identify remedy.

2Analyze benefit and burden separately.

3Apply writing, intent, notice, privity, and land relation.

4For subdivision, prove plan and notice.

5Apply equitable defenses.

Traps and exceptions

!Recording proves notice, not every element.

!Changed conditions must substantially defeat the restriction's purpose.

!Zoning permission does not override private covenant.

WORKED APPLICATION

A recorded subdivision declaration limits every lot to residential use; a buyer with record notice opens a factory.

The restriction can be enforced as an equitable servitude if intent and land relation are shown, regardless of permissive zoning.

Essay-ready formulationSuccessor liability for land promises depends on the legal or equitable covenant elements and the exact remedy sought.
12 · Possession and use

Adverse possession, nuisance, support, water, and fixtures

Possession and use disputes require matching facts to the property doctrine that governs title, interference, resources, or annexed items.

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Black-letter propositions

  1. Adverse possession requires actual, open, notorious, hostile, exclusive, continuous possession for the statutory period; tacking needs privity.
  2. A disability generally matters only if present when adverse possession begins.
  3. Private nuisance is substantial and unreasonable interference with use and enjoyment; public nuisance concerns a public right and private standing needs special injury.
  4. Lateral support protects land in natural condition; building damage may require negligence unless the land alone would have collapsed.
  5. Water uses riparian reasonable-use or prior-appropriation systems.
  6. Fixture status considers attachment, adaptation, and objective intent, with special tenant trade-fixture rules.

Attack sequence

1Choose doctrine matching the dispute.

2For adverse possession, mark start, continuity, privity, and disability.

3For nuisance, assess severity, locality, utility, sensitivity, and remedy.

4For support or water, identify regime.

5For fixtures, identify relationship and removal timing.

Traps and exceptions

!Hostility usually means without permission, not hostility of feeling.

!Trespass protects possession; nuisance protects use and enjoyment.

!A life tenant's adverse possession against remainderman generally cannot run before possessory rights arise.

WORKED APPLICATION

A neighbor openly fences and exclusively gardens a boundary strip for the full period under a mistaken belief of ownership.

Most jurisdictions use objective hostility, so mistake does not defeat the claim if all other elements are satisfied.

Essay-ready formulationProperty-use disputes require precise classification: adverse possession for title, nuisance for interference, support and water for resource rights, and fixtures for annexed property.
13 · Public controls

Zoning, variances, nonconforming uses, and takings

Government land-use controls operate through police power but remain limited by procedural requirements, vested uses, and compensation doctrines.

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Black-letter propositions

  1. Zoning ordinarily needs a rational relation to public welfare unless it burdens a protected right or takes property.
  2. A variance usually requires unique, non-self-created hardship, with stricter treatment for use than area variances.
  3. A lawful preexisting nonconforming use can continue subject to abandonment, destruction, amortization, and expansion rules.
  4. Eminent domain requires public use and just compensation measured by fair market value.
  5. Regulatory takings include permanent physical occupation, total use elimination, ad hoc economic-impact analysis, and permit exactions requiring nexus and rough proportionality.

Attack sequence

1Identify regulation, parcel, and relief.

2Apply zoning authority and variance or nonconforming-use rule.

3Choose precise takings category.

4Determine public use and compensation.

5Separate due process and equal protection.

Traps and exceptions

!A large value decline is not automatically a taking.

!Self-created hardship often defeats a variance.

!An unrelated permit demand can be an exaction even if government could deny the permit.

WORKED APPLICATION

A city conditions a modest home permit on dedication of an unrelated public beach easement.

The condition likely lacks essential nexus to project impacts and is an unconstitutional exaction absent a demonstrated proportional connection.

Essay-ready formulationLand-use regulation is generally valid but subject to variance, vested-use, public-use, compensation, and regulatory-takings limits.
14 · Future interests

Survivorship, class gifts, and common-law rules that affect future interests

Whether a future interest ever takes effect can turn on survival, on what happens when a beneficiary dies first, and on old rules such as the fee tail, worthier title and Shelley's case, most of which statutes have changed.

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Black-letter propositions

  1. A transferee who fails to survive until a future time required by the instrument does not take, and if survival cannot be shown by clear and convincing evidence it is deemed not to have occurred (California Probate Code section 21109).
  2. Under an anti-lapse statute like California Probate Code section 21110, when a kindred transferee dies before the transferor or fails to survive a required time, the transferee's issue take in that place unless the instrument shows a contrary intention, and a survival requirement is itself a contrary intention.
  3. If a transfer fails and the instrument gives no alternative disposition, the property falls into the residue, or into the estate if there is no residue; and if a share of a residuary gift or a future interest given to two or more persons fails, it passes to the other transferees in proportion to their interests.
  4. A fee tail, created by words like 'to John and the heirs of his body,' has been abolished in most states, so those words now create a fee simple; some states also disentail existing fee tails by statute.
  5. The doctrine of worthier title presumes that a grantor who conveys a future interest to his own heirs meant to keep it, and the rule in Shelley's case treats a future interest given to the heirs of the grantee who holds the possessory estate as the grantee's own; most states have abolished both.
  6. An executory interest is a future interest in a transferee that divests a prior estate, as a shifting interest, or springs out of the grantor, as a springing interest, and it is subject to the rule against perpetuities.
  7. Reformation of a disposition that violates the perpetuities rule, as under California Probate Code section 21220, applies the cy pres idea by adjusting the gift to most closely approximate the transferor's plan.

Attack sequence

1Read the instrument for any survival condition and note the moment at which survival is measured.

2If a named beneficiary died first, check the anti-lapse statute, who qualifies as a transferee, and whether the instrument shows a contrary intention.

3If a gift fails, follow the order of the statute: alternative disposition, residue, other class or future-interest members, then intestacy.

4For archaic language, ask whether the jurisdiction abolished the fee tail, worthier title or Shelley's case.

Traps and exceptions

!A requirement that the beneficiary survive the transferor usually blocks the anti-lapse substitute, because it shows a contrary intention.

!An executory interest is not a remainder and is not protected from the rule against perpetuities.

!Old-law doctrines apply only in states that have not abolished them, and the question usually says which rule governs.

WORKED APPLICATION

A will leaves land 'to my brother Ben.' Ben dies before the testator and leaves a daughter. The will has no residuary clause and no contrary language.

Under an anti-lapse statute like California's, Ben's daughter takes in his place, because Ben was kindred of the transferor and the will shows no contrary intention. If the will had said 'to Ben if he survives me,' the survival condition would defeat the substitution, and the gift would fall into the residue or the estate.

Essay-ready formulationIdentify whether survival is required, apply the anti-lapse or failure-of-transfer rule in order, and note any old-law doctrine the question abolishes or preserves.
15 · Special problems

The Rule Against Perpetuities: common-law rule, exclusions, and statutory reform

The rule invalidates a nonvested interest that might vest too remotely, and most states now soften it with wait-and-see periods, reformation, and exclusions for commercial and charitable interests.

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Black-letter propositions

  1. At common law, a nonvested interest is void unless it must vest, if at all, within 21 years after a life in being when the interest was created; even a remote possibility that it will vest later voids it, and the validating life may be a class only if the class is closed.
  2. Vesting means the right has reached a known, verified individual, and the rule tests the interest at its creation, not by what later happens.
  3. The Uniform Statutory Rule Against Perpetuities, as enacted in California Probate Code section 21205, keeps the common-law period as a first test and adds a wait-and-see test: a nonvested interest is valid if it is certain at creation to vest or terminate within 21 years after the death of an individual then alive, or if it actually vests or terminates within 90 years after creation.
  4. Under the California statute, the possibility that a child will be born to an individual after that individual's death is disregarded, and an individual described as the spouse of a person alive at the start of the period is treated as alive when the interest is created, which removes the unborn widow problem.
  5. A court must reform a disposition that would otherwise fail, on petition, to approximate the transferor's plan within 90 years, when an interest becomes invalid under the statute, when a class gift might become invalid and a member's share is about to take effect, or when an interest cannot vest within 90 years.
  6. The statutory rule does not apply to nondonative transfers such as commercial arrangements, to fiduciary administrative powers, to an interest held by one charity or governmental body that follows an interest held by another, to qualified benefit plans, or to arrangements not subject to the common-law rule.
  7. New York's rule, in EPTL 9-1.1, requires that an estate vest, if at all, not later than 21 years after one or more lives in being and any period of gestation involved, and it counts a child conceived before the creation of the estate but born after it as a life in being.

Attack sequence

1Decide first whether the interest is nonvested and whether the rule applies to it, given the exclusions for commercial and charitable interests.

2Under a common-law question, list the lives in being at creation and look for any possible chain of events that could vest the interest too late.

3Under a statutory question, test the 21-years-after-a-life alternative and the 90-year wait-and-see alternative.

4If the interest would fail, ask whether the jurisdiction provides for reformation and how it would rewrite the gift.

Traps and exceptions

!The common-law test looks at what could happen, not what does happen, but wait-and-see looks at what actually happens within 90 years.

!Only interests that are not vested at creation are tested, and a vested remainder or a reversion is not.

!Charity-to-charity and commercial interests are often outside the statutory rule, so check the exclusions before analyzing vesting.

WORKED APPLICATION

A trust gives land 'to my niece's first child to reach age 30,' and the niece has no children when the trust is created.

At common law the gift is void, because the niece might have a child just before her death who reaches 30 more than 21 years later. Under a wait-and-see statute like California's, the gift is valid if the first child reaches 30 within 90 years of creation, and if it could not, a court would reform it to fit the plan within the period.

Essay-ready formulationState whether the rule applies, identify the measuring lives, run the common-law test, then apply the statutory wait-and-see and reformation provisions and any exclusion.
16 · Landlord-tenant law

Ending a tenancy: notice, abandonment, mitigation, deposits, and retaliation

How a lease ends, what a landlord may recover when a tenant leaves early, what happens to the deposit, and which self-help and retaliatory acts are barred all vary by statute, and the bar exam asks for the majority or statutory rule.

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Black-letter propositions

  1. A month-to-month tenancy ends on written notice, and statutes such as California Civil Code section 1946 require 30 days' written notice from either party, with rent due through the date of termination.
  2. When a tenant abandons before the end of the term, a landlord in California may recover rent earned to termination, plus rent that would have accrued afterward minus the amount the tenant proves could have been reasonably avoided, so the landlord's failure to mitigate reduces damages (Civil Code section 1951.2).
  3. Recovery for rent for the balance of the term after the award requires a lease provision allowing it or a reasonable, good-faith reletting by the landlord, and the tenant bears the burden of proving what could have been avoided.
  4. A residential security deposit may not exceed one month's rent under California's statute, and the landlord must give an itemized statement and return the remainder within 21 calendar days after the tenant vacates, and loses the right to claim any of the deposit if it fails to comply in bad faith (Civil Code section 1950.5).
  5. A residential tenant who gives notice of dilapidations that make the premises untenantable may, if the landlord does not repair within a reasonable time, repair and deduct up to one month's rent, or vacate and be discharged from further rent, but not more than twice in 12 months; acting after 30 days is presumed reasonable (Civil Code section 1942).
  6. A landlord may not retaliate against a tenant who is not in default in rent for a good-faith complaint about tenantability: for 180 days the landlord may not recover possession, raise rent, or reduce services (Civil Code section 1942.5), and may not use lockouts or utility shutoffs to force a tenant out (section 789.3).
  7. A landlord may enter a dwelling only in listed cases, such as emergency, repairs, showing to buyers or tenants, abandonment, or court order, and generally must give reasonable written notice and may not use entry to harass (Civil Code section 1954).
  8. A tenant who holds over after a nondefault expiration, or who fails to pay rent after a three-day notice, is subject to an unlawful detainer action in California, the statutory process by which a landlord recovers possession (Code of Civil Procedure section 1161).

Attack sequence

1Identify the type of tenancy and the notice the statute or lease requires to end it.

2If the tenant left early, ask whether the landlord reasonably tried to relet and what the tenant can prove was avoidable.

3For a deposit, check the cap, the time to return, the itemized statement, and any bad-faith consequence.

4For a tenant's self-help remedy or a landlord's eviction, check whether the statute allows it and whether retaliation or self-help bars it.

Traps and exceptions

!A landlord who ignores the duty to mitigate does not lose all rent but may lose the rent the tenant proves could have been avoided.

!A tenant who is in default in rent is not protected by the retaliation statute in the same way as a tenant who is current.

!Repair-and-deduct is limited by amount and frequency, and it does not replace the remedy of vacating.

WORKED APPLICATION

A tenant with a twelve-month lease abandons the apartment after four months and stops paying. The landlord does nothing to find a new tenant and sues for the remaining eight months of rent.

Under a mitigation rule like California's, the landlord may recover the rent that has accrued and the rent that would be earned afterward, less the amount the tenant proves could have been reasonably avoided by reletting. The tenant will try to prove that a comparable unit would have been rented quickly, and the landlord's inaction weakens its claim.

Essay-ready formulationState how the tenancy ended, apply the statute's notice and remedy rules, address mitigation and deposit duties, and check for retaliation, self-help, or entry violations.
17 · Special problems

Fair housing, discrimination, and conflicts of law in land disputes

Federal law bars discrimination in selling and renting housing, with defined exemptions and a separate post-Civil War statute on race, and the law of the state where land sits governs its title.

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Black-letter propositions

  1. The Fair Housing Act makes it unlawful to refuse to sell or rent, or to discriminate in terms, conditions or services, because of race, color, religion, sex, familial status or national origin, and separately bars discrimination because of handicap; it also bars discriminatory notices and advertisements, false statements that a dwelling is unavailable, and blockbusting representations about entry of a protected group into a neighborhood.
  2. Discrimination because of handicap includes refusing reasonable accommodations in rules or policies that a handicapped person needs to use and enjoy a dwelling, and refusing to allow reasonable modifications at the person's expense, though a landlord may condition permission on restoring the interior at the end of a rental.
  3. The Act exempts a single-family house sold or rented by an owner of no more than three such houses without a broker and without a discriminatory advertisement, and rooms or units in an owner-occupied building of no more than four units; the exemptions do not reach the prohibition on discriminatory notices and advertisements.
  4. Religious organizations and nonprofits they control may limit noncommercial dwellings to members of their religion unless membership is restricted by race, color or national origin, and private clubs not open to the public may limit lodging to members.
  5. Section 1982 of Title 42, which gives all citizens the same right to purchase, lease, sell, hold and convey property as white citizens, bars all racial discrimination, private as well as public, in the sale or rental of property (Jones v. Alfred H. Mayer Co.), so a Fair Housing Act exemption does not shield racial discrimination.
  6. Shelley v. Kraemer held that judicial enforcement of a racially restrictive covenant by state courts is state action that denies equal protection, though a private covenant itself is not unconstitutional.
  7. Under Fall v. Eastin, the disposition of land is governed by the law of the state where the land sits, and a court of another state, acting on the person, may order a party to convey land but its decree cannot itself transfer title outside its jurisdiction.

Attack sequence

1Identify the protected class and the act complained of: refusal, terms, advertisement, false unavailability, or blockbusting.

2Check the statutory exemptions and note that they do not cover advertising and do not affect Section 1982 as to race.

3For handicap, ask whether the request is a reasonable accommodation or modification and who pays.

4For land in another state, choose the law of the situs for title and note what an out-of-state decree can and cannot do.

Traps and exceptions

!The owner-occupied and single-family exemptions do not permit a discriminatory advertisement.

!A landlord exempt from the Fair Housing Act may still violate Section 1982 by refusing to rent because of race.

!A court order from another state is enforced against the person; it does not by itself convey title to land located elsewhere.

WORKED APPLICATION

An owner who lives in a four-unit building she owns refuses to rent a vacant unit to a family because of the family's religion, without using a broker or advertising.

The Fair Housing Act exempts rooms or units in an owner-occupied building of no more than four units, so the refusal is outside sections 3604(a) and (b). Section 1982 addresses only race, so it would not reach a refusal based on religion, and the exemption would apply unless state or local law says otherwise.

Essay-ready formulationIdentify the statute that applies, note the exemption and its limits, then apply the accommodation or advertising rule, and separate Section 1982 and constitutional theories.
18 · Easements and licenses

Licenses, profits, and how easements arise, are limited, and end

An easement is a nonpossessory interest that generally needs a writing, a license is mere revocable permission, and easements can also arise by implication, necessity, prescription or estoppel and end by merger, abandonment or other statutory events.

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Black-letter propositions

  1. An easement is the grant of a nonpossessory property interest that lets the holder use another's land; an appurtenant easement benefits a dominant tenement and burdens a servient tenement, and easements are transferable with the dominant tenement.
  2. Easements can be created by express grant, by implication, by necessity, by prescription, and in some states by estoppel, and California provides that a servitude can be created only by one with a vested estate in the servient tenement.
  3. A statute of frauds, such as New York General Obligations Law section 5-703, requires an interest in real property other than a short lease to be created by a written deed or conveyance, so an oral grant of a right of way fails as an easement.
  4. A license is permission to enter or use land that would otherwise be a trespass; it is revocable, but where the licensee, with the owner's knowledge, makes improvements or substantial expenditures in reliance on the license, it may become irrevocable as a grant through estoppel.
  5. A profit is a right to take something from another's land, such as minerals, timber, water or fish, and California's code lists profit-type rights that may be held apart from land, including the right of way, the right to take water, wood and minerals, and the right of pasture.
  6. A prescriptive easement arises from use for the period that bars an action to recover the land, five years in California, and no possession, however long, ripens into a right against land dedicated to public utility use or owned by a public entity.
  7. The extent of a servitude is determined by the terms of the grant or, for one acquired by use, by the nature of the enjoyment by which it was acquired, and use beyond that scope is an overburden.
  8. A servitude is extinguished by merger of the dominant and servient estates in one owner, by destruction of the servient tenement, by an act by the owner of the servitude that is incompatible with its nature, or, when acquired by use, by disuse for the prescriptive period; an easement by necessity also ends when the necessity ceases.

Attack sequence

1Classify the right: an easement, a profit, or a license, and note whether it is appurtenant or in gross.

2Ask how it was created and whether a required writing exists or an exception such as estoppel or prescription applies.

3Measure the scope by the grant or the historic use and test whether the current use overburdens the servient land.

4Check for termination by merger, abandonment, incompatible acts, disuse, or the end of necessity.

Traps and exceptions

!Permission defeats prescription, because a prescriptive right requires use that is adverse to the owner.

!A license is not an interest in land, though estoppel may make a relied-on license irrevocable.

!Nonuse alone does not end an easement acquired by grant, but disuse for the prescriptive period ends one acquired by use.

WORKED APPLICATION

A landowner orally tells a neighbor he may use a gravel road across her land. The neighbor spends $8,000 paving the road, and the owner knew and said nothing. Two years later, the owner locks a gate across the road.

The oral permission does not create an easement because of the writing requirement, and it is a license. Because the neighbor made substantial expenditures with the owner's knowledge in reliance on it, many courts treat the license as irrevocable, a grant through estoppel, and would enjoin the owner from blocking the road.

Essay-ready formulationIdentify the interest, say how it was created and what writing or exception applies, state the scope of use, and address termination.
19 · Restrictive covenants

Property owners' associations and common interest communities

A common interest community is governed by a recorded declaration whose restrictions run as equitable servitudes, and courts presume them valid, so an owner challenging one must show it is unreasonable, arbitrary, or against public policy.

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Black-letter propositions

  1. A common interest development is created when a separate interest coupled with an interest in the common area or membership in the association is conveyed and the declaration, any condominium plan, and any required map are recorded.
  2. The covenants and restrictions in the recorded declaration are enforceable equitable servitudes unless unreasonable, and they bind all owners of separate interests; unless the declaration says otherwise, they may be enforced by any owner or by the association, and the prevailing party in an enforcement action recovers reasonable attorney's fees.
  3. Nahrstedt v. Lakeside Village Condominium Association gives recorded use restrictions a presumption of validity, requires the challenger to show unreasonableness under the deferential standard for equitable servitudes, and holds that a restriction must be uniformly enforced unless its burdens on affected properties so substantially outweigh its benefits that it should not be enforced against any owner.
  4. A court will not enforce a restriction that violates a fundamental public policy, such as one that discriminates by race, or one that is arbitrary because it bears no rational relationship to the protection, preservation, operation or purpose of the land.
  5. Regular and special assessments are a debt of the owner at the time they are levied, and if delinquent the association may recover collection costs, attorney's fees, a capped late charge and capped interest.
  6. Unless the declaration provides otherwise, the association is responsible for repairing, replacing and maintaining the common area, and each owner maintains the owner's own separate interest.
  7. The association has standing in its own name, without joining members, to enforce the governing documents and to sue for damage to the common area.

Attack sequence

1Confirm that the community exists by a recorded declaration and that the restriction is in it, not in a later rule alone.

2Apply the presumption of validity and ask whether the restriction is arbitrary, discriminatory, or so burdensome as to be unreasonable for every owner.

3For enforcement, identify who may sue, what relief is sought, and whether fees shift to the prevailing party.

4For money disputes, find the assessment's due date, the late charge and interest limits, and who bears repair duties.

Traps and exceptions

!Reasonableness is judged for the restriction as a whole and for the community, not for one owner's circumstances.

!The presumption in Nahrstedt concerns restrictions in the recorded declaration, and a later board rule is enforceable under the statute as a governing document but is analyzed on its own terms.

!A restriction that discriminates on a protected ground is unenforceable whatever the declaration says.

WORKED APPLICATION

A recorded declaration for a large condominium bans keeping dogs and cats. An owner who keeps indoor cats that make no noise sues to stop enforcement, saying the ban is unreasonable as applied to her.

Under Nahrstedt, the pet ban is presumptively valid and must be uniformly enforced unless its burdens on all affected properties so substantially outweigh its benefits that it should not be enforced against any owner. The owner's own quiet cats do not decide the question, so the ban is likely enforceable.

Essay-ready formulationIdentify the common interest community and the source of the restriction, apply the presumption of validity and the reasonableness limits, and address enforcement, assessments and fees.
20 · Real estate contracts

Real estate brokerage: licensing, listing agreements, commissions, and broker duties

A broker must be licensed to earn or sue for a commission, a listing agreement usually must be in writing, the commission is earned when the agreed event occurs, and a seller's broker owes buyers a duty to inspect and disclose.

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Black-letter propositions

  1. A person who, for compensation or in expectation of it, sells, offers to sell, solicits listings or prospective buyers or tenants, negotiates the purchase, sale or lease of real property, or collects rents is a real estate broker, and acting as one without a license is unlawful; California also bars an unlicensed person from suing to collect a commission.
  2. A broker's payment of compensation to an unlicensed person for acts requiring a license is unlawful, and a salesperson may accept compensation for such acts only from the broker under whom he or she is licensed.
  3. A statute of frauds such as California Civil Code section 1624(a)(4) makes invalid an agreement authorizing or employing an agent or broker to sell or purchase real estate, or to find a buyer or seller, for compensation, unless it is in writing and signed by the party to be charged.
  4. Under the traditional rule, a broker engaged to find a buyer earns the commission on producing a buyer ready, willing and able to buy on the terms fixed by the owner, and the owner's signing a contract with that buyer completes the broker's task.
  5. Under the stricter rule of Ellsworth Dobbs, Inc. v. Johnson, the broker earns the commission only when the buyer is ready, willing and able, enters a binding contract, and closes; if the deal fails for the buyer's default there is no commission, but if it fails through the seller's wrongful act or interference the broker is paid.
  6. A broker representing a seller of residential property has an affirmative duty to conduct a reasonably competent and diligent inspection of the property and to disclose to prospective purchasers all facts materially affecting its value or desirability that such an investigation would reveal (Easton v. Strassburger; California Civil Code section 2079).
  7. A broker's contractual right to a commission, the license requirement, and the duties owed to buyers are separate questions, and the exam will usually signal which one is tested.

Attack sequence

1Decide whether the person acted as a broker and, if so, whether the person was licensed when the claim arose.

2Check whether the listing or commission agreement is in a signed writing that satisfies the statute of frauds.

3Determine when the commission was earned under the jurisdiction's rule, and whether the seller wrongfully caused any failure to close.

4For a buyer's claim, ask whether the broker inspected and disclosed what a diligent visual inspection would have revealed.

Traps and exceptions

!An unlicensed person who negotiates a sale for pay cannot recover the commission in court, whatever the merits.

!Under the stricter closing rule, a buyer's default defeats the commission, but a seller's wrongful refusal to close does not.

!The broker's duty to inspect is limited to what a reasonably competent and diligent visual inspection would reveal, and it does not extend to hidden conditions.

WORKED APPLICATION

A person with no real estate license introduces a buyer to a seller for a promised fee of $10,000, and the seller and buyer sign a contract and close. The seller refuses to pay the fee.

Because the person acted as a broker for compensation without a license, the person cannot bring an action to collect the commission under a statute like California's. The result does not depend on the merits of the claim or on the seller's having benefited.

Essay-ready formulationSay whether the person needed a license and had one, whether a writing supports the commission, when the commission was earned, and what duties the broker owed the buyer.
21 · Real estate contracts

Contracts for the sale of land: writing, part performance, time, and remedies

A contract for the sale of land must satisfy the statute of frauds unless an exception applies, must be performed within the stated or a reasonable time, and is remedied by specific performance or statutory damages, with limits on liquidated damages.

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Black-letter propositions

  1. A contract for the sale of real property is void unless the contract or a note or memorandum of it, expressing the consideration, is in a writing subscribed by the party to be charged or his lawfully authorized agent, as in New York General Obligations Law section 5-703(2); California's section 1624(a)(3) likewise requires the agent's authority to be in a signed writing.
  2. The writing must be signed by the party against whom enforcement is sought, so a contract signed only by the buyer can be enforced against the buyer but not against the seller.
  3. The statute of frauds does not abridge the power of courts of equity to compel specific performance in cases of part performance, as when the buyer takes possession and makes valuable improvements in reliance on an oral contract.
  4. If a contract does not specify a time for performance, a reasonable time is allowed, and an act like payment of money that can be done instantly must be performed immediately once the thing to be done is exactly ascertained.
  5. Specific performance of a contract to convey real property is favored because damages are presumed inadequate; California makes the presumption conclusive for a single-family dwelling the party seeking performance intends to occupy, and a presumption affecting the burden of proof in other cases.
  6. For a seller's breach, California measures the buyer's detriment as the price paid, expenses of examining title and preparing papers, the difference between the contract price and the value at breach, expenses of preparing to enter the land, consequential damages, and interest; for a buyer's breach, the seller recovers the excess of the contract price over the value of the property to the seller, plus consequential damages and interest.
  7. A liquidated damages clause in a contract to sell owner-occupied residential property of not more than four units is valid to the extent of cash actually paid if the amount does not exceed 3 percent of the price unless the buyer shows it is unreasonable; over 3 percent, it is invalid unless the party relying on it shows that the amount is reasonable.

Attack sequence

1Test the writing for signature by the party to be charged, the property, the parties, and the consideration, and check any agent's written authority.

2If the writing fails, ask whether part performance, estoppel, or another exception lets a court enforce the contract in equity.

3Identify the time for performance, whether a date was fixed, and whether delay was reasonable.

4Choose the remedy: specific performance, damages under the statutory formula, or retention of a deposit as liquidated damages.

Traps and exceptions

!The signature required is that of the party against whom enforcement is sought, not of both parties.

!Part performance is a ground for specific performance in equity, and it does not convert an oral contract into a valid written one.

!A deposit above the statutory percentage is not void; it is valid only if the seller proves it was reasonable.

WORKED APPLICATION

A buyer signs a written contract to buy a house for $300,000. The seller never signs, and later refuses to close.

The statute of frauds requires the signature of the party to be charged. Because the seller did not sign, the buyer cannot enforce the contract against the seller unless an exception such as part performance applies, although the seller could enforce it against the buyer, who is the party that signed.

Essay-ready formulationState the writing requirement and who must sign, apply any exception, set the time for performance, and finish with the remedy formula and any liquidated damages limits.
22 · Real estate contracts

Options, rights of first refusal, merger by deed, and implied warranties in new homes

An option can compel a sale, a right of first refusal only gives a first chance, delivery of a deed can extinguish contract terms about title but not collateral promises, and builders of new homes may be held to an implied warranty of quality.

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Black-letter propositions

  1. An option contract is a promise to keep an offer open for a period, so the offeror cannot revoke it; it usually needs consideration, though a court may enforce it under promissory estoppel where the offeree relied.
  2. An option gives the optionee the power to compel the owner to sell at the stated price whether or not the owner is willing, while a right of first refusal, or preemptive right, only requires the owner, when and if the owner decides to sell, to offer the property first to the holder at the stipulated price, and if the holder declines the owner may sell to anyone.
  3. A majority of courts apply the rule against perpetuities to rights of first refusal, but the Washington Supreme Court in Robroy Land Co. v. Prather declined to and instead read an unlimited right to last for a reasonable time.
  4. Statutes may limit how long a recorded option clouds title: under California Civil Code section 884.010, a recorded option to purchase expires of record six months after its expiration date, or six months after the instrument's recording if no date is ascertainable, unless an instrument giving notice of exercise or extension is recorded.
  5. Under the doctrine of merger, the contract of sale is generally merged into the deed on delivery and acceptance, but the doctrine is not absolute: it applies the parol evidence and integration principles, and terms that are collateral to the conveyance or that the parties meant to survive are not merged.
  6. Traditionally the buyer of land took the risk of its quality absent an express warranty, fraud or misrepresentation, but builders and sellers of new construction may be held to an implied warranty that the structure was designed and built in a reasonably workmanlike manner, with the buyer giving notice of breach within a reasonable time.
  7. Statutory schemes for residential builders can replace the common-law warranty with defined construction standards, as California's Civil Code section 896 does for original construction intended to be sold as a dwelling unit, and California requires transferors of single-family homes to make statutory disclosures that cannot be waived.

Attack sequence

1Classify the right as an option or a right of first refusal by asking whether the holder can force a sale or only receive the first offer.

2Test the right against the rule against perpetuities where the jurisdiction applies it, and against any statute limiting recorded options.

3For claims after closing, ask whether the promise merged into the deed or is collateral and intended to survive.

4For a new home, consider an implied warranty of quality, notice of breach, and any statutory construction standards.

Traps and exceptions

!A right of first refusal does not give the holder power to force a sale, so it is not triggered until the owner decides to sell.

!Delivery of a deed extinguishes contract terms about title but does not automatically extinguish promises collateral to the conveyance.

!An implied warranty of quality attaches to builders and sellers of new construction, not to the ordinary owner who resells a used home.

WORKED APPLICATION

A grantor gives a neighbor 'the first right of refusal to purchase' a parcel, with no time limit. Decades later, the grantor's heirs contract to sell the parcel to a third party without offering it to the neighbor's successor.

The right of first refusal was triggered when the heirs decided to sell, so they had to offer the parcel to the holder on the third party's terms. In a jurisdiction that applies the rule against perpetuities to such rights, the holder's right might be void, and in one that follows Robroy it lasts for a reasonable time, so the holder may be able to upset the sale.

Essay-ready formulationSay whether the right is an option or a right of first refusal, identify when it can be exercised, test it against perpetuities and recording statutes, and address merger or an implied warranty when the facts involve a closing or a new home.
23 · Mortgages and security devices

Security devices: mortgages, deeds of trust, installment contracts, and deeds absolute

Real estate lenders take security through mortgages, deeds of trust, or installment sale contracts, courts look through a deed absolute in form to its purpose as security, and anti-deficiency rules protect purchase-money borrowers.

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Black-letter propositions

  1. A mortgage transfers an interest in land as security for a loan; the borrower is the mortgagor and the lender the mortgagee, and California defines it as a contract by which specific property is hypothecated for the performance of an act without a change of possession.
  2. Three theories describe who holds title: under title theory the mortgagee holds title, under lien theory, which most states follow, legal title stays with the mortgagor until foreclosure, and under the intermediate theory the lien theory applies until default and the title theory afterward.
  3. A deed of trust involves a lender, a borrower who conveys an interest to a trustee as security for a promissory note, and the trustee, usually a title company; it almost always contains a power of sale allowing nonjudicial foreclosure without a court order.
  4. An installment land contract, which California calls a real property sales contract, is an agreement to convey title on satisfaction of specified conditions, usually payment over time, where conveyance is not required within one year; where it contains a power of sale, California treats it as a mortgage for its foreclosure statutes.
  5. A deed that is absolute in form but was given as security for a debt is treated in equity as a mortgage, parol evidence is admissible to show that intent, and the proof must be clear and convincing; a grantor's affidavit that the deed was absolute is not conclusive.
  6. A borrower cannot waive, in the loan documents, the protections the foreclosure statutes give, and such an agreement is void in California; this reflects the rule against clogging the equity of redemption, which lets a mortgagor recover the property by paying the debt.
  7. Purchase-money protections: in California no deficiency is owed after a sale for the purchaser's failure to complete a contract of sale, under a deed of trust or mortgage given to the vendor for the balance of the price, or on a loan for a dwelling of not more than four families that the purchaser occupies and that was used to buy it, and refinancing generally keeps the protection except as to new advances.
  8. A defaulting mortgagor's equity of redemption lets the mortgagor redeem before foreclosure by paying the debt, and in many jurisdictions a statutory right of redemption follows the sale, with any surplus going to the mortgagor.

Attack sequence

1Identify the device and its parties: mortgage, deed of trust with trustee, or installment contract with vendor and vendee.

2Determine which title theory the jurisdiction follows if title matters to the question.

3If a deed absolute in form was given for a loan, look for evidence of intent to secure a debt and apply the clear-and-convincing standard.

4Check whether an anti-deficiency rule protects the borrower because the loan was purchase money or the sale was nonjudicial.

Traps and exceptions

!Most states follow lien theory, so the mortgagor holds legal title until foreclosure and can convey and lease it.

!A deed absolute in form is not a sale if the parties meant it as security, but the borrower must prove that intent by clear and convincing evidence.

!An anti-deficiency rule protects the borrower from a personal judgment for a shortfall, and a guarantor may still be liable.

WORKED APPLICATION

A borrower deeds his land to a lender by a deed that says it conveys the land absolutely, in exchange for a $200,000 loan, with a side letter promising to reconvey when the loan is repaid. The lender sells the land to a third party after the borrower defaults.

The deed absolute in form may be shown to be a mortgage because it was made to secure the loan, though the borrower must prove that by clear and convincing evidence. If it is a mortgage, the lender must foreclose, and its sale to the third party may not have cut off the borrower's equity of redemption.

Essay-ready formulationName the security device, state the title theory, test for recharacterization of an absolute deed, and address anti-deficiency and redemption protections.
24 · Mortgages and security devices

Mortgage transfers, discharge, foreclosure procedure, deficiencies, and redemption

A transfer of mortgaged land may trigger a due-on-sale clause, the buyer is personally liable only on assuming the debt, a paid-off mortgage must be discharged of record, and foreclosure follows statutory steps that determine deficiency and redemption rights.

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Black-letter propositions

  1. A due-on-sale clause authorizes the lender to declare the loan due if the property or an interest in it is sold or transferred without the lender's consent, and federal law lets a lender enforce it despite contrary state law, subject to exceptions for residential loans on fewer than five units such as a transfer by devise or on the death of a joint tenant, to a relative after the borrower's death, to a spouse or children, in a divorce, or into a trust of which the borrower remains a beneficiary.
  2. A grantee who takes subject to a mortgage is not personally liable on the debt; under New York General Obligations Law section 5-705, a grantee is not liable on the mortgage debt or any deficiency unless the grantee signs and acknowledges a written statement assuming and agreeing to pay it, which may be part of the deed.
  3. After the mortgage is satisfied the mortgagee must record a certificate of discharge, and in California the beneficiary of a deed of trust must deliver reconveyance documents to the trustee within 30 days and the trustee must record the reconveyance within 21 days of receiving them.
  4. Under California's nonjudicial foreclosure statute, a trustee under a power of sale must first record a notice of default, wait at least three months, and then give notice of sale, and a borrower or junior lienholder may cure a default and reinstate the loan by paying what is due within the statutory period.
  5. California allows a lender only one form of action to enforce a mortgage, a judicial foreclosure in which the court may order a sale and, unless a deficiency is waived or barred, determine personal liability for a shortfall, while a sale under a power of sale bars any deficiency judgment against the borrower, though a guarantor's liability is unaffected.
  6. The most common foreclosure processes are a court proceeding, called judicial foreclosure, and a sale under a power of sale in the mortgage or deed of trust; the law of the place where the property lies governs, and an acceleration clause lets the lender declare the whole debt due on default.
  7. A defaulting mortgagor's equity of redemption lets the mortgagor pay the debt to keep the property before the sale, and in many jurisdictions a statutory right of redemption exists after the sale, such as Minnesota's six months to redeem by paying the price with interest; any surplus after debts and liens goes to the mortgagor.
  8. Under BFP v. Resolution Trust Corp., the price received at a foreclosure sale that complies with the state foreclosure law is a reasonably equivalent value for purposes of the bankruptcy fraudulent transfer provision, whether or not it equals fair market value.
  9. Subrogation is the process by which one party assumes the legal rights of another, typically by substituting for a creditor, so that a party who pays off a debt may step into the creditor's position.

Attack sequence

1Identify the transfer or default and ask whether the lender may invoke a due-on-sale clause or an exception applies.

2Decide whether the transferee assumed the debt in the required writing or took only subject to the mortgage.

3Trace the foreclosure steps the statute requires, and check that junior lienholders were joined to be cut off.

4Compute any deficiency or surplus, note anti-deficiency limits, and address redemption before and after sale.

Traps and exceptions

!A buyer who takes subject to the mortgage risks the property but is not personally liable, while a buyer who assumes is personally liable to the lender.

!Federal law preempts state limits on due-on-sale clauses, but not for the listed protected transfers of small residential loans.

!A foreclosure sale cuts off only interests that were joined in the foreclosure, so an unjoined junior lienholder keeps its lien.

WORKED APPLICATION

A homeowner dies, leaving her house, which is subject to a mortgage with a due-on-sale clause, to her son by will. The lender declares the loan due on the transfer.

Under the federal statute, a lender may not exercise a due-on-sale clause on a residential loan on a property with fewer than five units on a transfer to a relative resulting from the borrower's death. The son may take the house subject to the mortgage, and the lender may not accelerate solely because of the transfer.

Essay-ready formulationSay what transfer occurred and whether the due-on-sale clause is enforceable, whether the transferee assumed, how foreclosure proceeded, and what deficiency, surplus or redemption rights follow.
25 · Titles

Transfers at death and by operation of law: wills, intestacy, ademption, exoneration, and lapse

Land passes at death by will or by intestacy, and the rules on ademption, exoneration and lapse decide what a devisee actually receives when the property changed, carries a lien, or the devisee died first.

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Black-letter propositions

  1. A will must be in writing, signed by the testator or in the testator's name at the testator's direction, and signed by at least two witnesses present at the same time who understand that it is the testator's will, though California treats a defectively executed will as valid if the proponent proves by clear and convincing evidence that the testator intended it to be the will.
  2. If there is no will, or the will fails, land passes by intestacy to the statutory heirs, in California first to the surviving spouse's share and then to the issue, then parents, then issue of parents, then grandparents and their issue, and if there is no taker the estate escheats.
  3. Ademption by extinction defeats a specific gift when the property no longer belongs to the testator at death because it was sold, destroyed, given away, or otherwise ceased to exist; a phrase like 'if owned by me at my death' is sometimes used to avoid confusion.
  4. Ademption by satisfaction is different: it occurs when the testator gives the beneficiary property during life in lieu of the testamentary gift.
  5. Modern statutes soften ademption: California gives the specific devisee the unpaid balance of the purchase price if the property was sold, an unpaid eminent domain award, unpaid fire or casualty insurance proceeds, and property acquired through foreclosure of a security interest on a specifically given obligation.
  6. Exoneration is the right to have a lien on specifically devised property paid from the estate; in California a specific gift passes subject to any mortgage or lien existing at death, without a right of exoneration, regardless of a general directive to pay debts.
  7. A devise lapses when the devisee dies before the testator, and the gift then falls into the rest of the estate unless an anti-lapse statute lets the devisee's relatives take; anti-lapse statutes in every state apply to some relatives, differ on which relatives, do not apply to non-relatives, and can be excluded by language in the will.

Attack sequence

1Verify that the instrument is a valid will, or fall back to intestacy if it is not.

2For a specific gift, ask whether the property was still owned at death and whether a statute preserves the proceeds.

3For a gift of encumbered property, ask whether the will or a statute lets the devisee claim payoff of the lien from the estate.

4If the devisee died first, apply the anti-lapse statute in the jurisdiction and check whether the will's language excludes it.

Traps and exceptions

!A general instruction to pay debts does not, under California's statute, entitle a specific devisee to have the mortgage on the gifted house paid.

!Ademption by extinction concerns the property's absence at death, and ademption by satisfaction concerns lifetime gifts in lieu of the bequest.

!An anti-lapse statute rescues a gift only for the relatives the statute covers, so a bequest to a friend who dies first lapses.

WORKED APPLICATION

A testator's will leaves 'my farm to my niece.' Before her death, the testator sells the farm and takes a note for $200,000 from the buyer, which is still unpaid when she dies.

The farm is not owned at death, so the specific gift would be adeemed by extinction at common law. A statute like California's gives the niece the unpaid balance of the purchase price, so the niece is likely entitled to the note's remaining balance.

Essay-ready formulationEstablish the valid instrument, identify the type of gift, apply ademption, exoneration or lapse in turn, and check whether a statute changes the common-law result.
26 · Title assurance

Title assurance: recording statutes, constructive notice, liens, title insurance, and estoppel by deed

Recording statutes come in three forms, recorded instruments give constructive notice, liens attach by recording or filing, and title insurance and estoppel by deed address defects that a search may miss.

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Black-letter propositions

  1. A pure race statute protects the purchaser who records first, whatever the purchaser knew; North Carolina's statute makes a conveyance ineffective against lien creditors and purchasers for value except from the time of its registration and does not mention notice.
  2. A notice statute protects a subsequent purchaser for value without notice even before recording, and Virginia's statute makes an unrecorded deed void as to purchasers for valuable consideration without notice and lien creditors until it is recorded.
  3. A race-notice statute protects a subsequent purchaser in good faith for value whose conveyance is first duly recorded, as California Civil Code section 1214 provides, so the purchaser needs both lack of notice and priority in recording.
  4. Recording a properly acknowledged conveyance gives constructive notice of its contents to subsequent purchasers and mortgagees, and a bona fide purchaser is someone who pays value without actual or constructive notice of defects in the seller's title.
  5. A judgment lien on real property arises in California by recording an abstract of a money judgment, attaches to the debtor's interests in the county, including those acquired later, and lasts ten years from entry unless renewed.
  6. A federal tax lien is not valid against a purchaser, holder of a security interest, mechanic's lienor, or judgment lien creditor until notice of the lien is filed as the statute requires.
  7. A lis pendens notice recorded in the chain of title warns that interests acquired during the suit are subject to its outcome.
  8. Title insurance protects a buyer, and a lender if the loan requires it, against title issues that the search missed, such as forgery, subject to the terms of the policy; coverage disputes are common.
  9. Under estoppel by deed, a grantor who purported to convey property he did not own cannot later deny the grantee's title, so if the grantor later acquires the property, he is estopped from asserting it against the grantee.

Attack sequence

1Identify which recording statute governs, and test each purchaser for value, notice, and order of recording.

2Search the chain of title for constructive notice from recorded instruments, including a recorded lis pendens.

3For liens, find the recording or filing that created the lien and whether it preceded the purchase.

4Ask whether title insurance, estoppel by deed, or another doctrine cures a defect that the search did not.

Traps and exceptions

!Under a pure race statute, actual notice of an earlier unrecorded deed does not defeat the first to record.

!Under a notice statute, a purchaser without notice prevails over an earlier unrecorded deed even if she has not yet recorded her own.

!A federal tax lien is not valid against a purchaser until notice of it is filed as the statute requires, so a purchase before filing takes free of it.

WORKED APPLICATION

Seller conveys a lot to Buyer One, who does not record, and then conveys the same lot to Buyer Two, who pays value, has no notice of the first deed, and records at once. Buyer One then records.

Buyer Two wins under all three kinds of statute: under a notice statute for lack of notice, under a race-notice statute for lack of notice and prior recording, and under a pure race statute for recording first. The three statutes diverge when Buyer Two has notice or does not record first.

Essay-ready formulationName the recording statute, apply its elements to each purchaser, add constructive notice from the record and liens, and then consider title insurance or estoppel by deed.
27 · Titles

Adverse possession in depth: elements, mistaken boundaries, tacking, color of title, and taxes

A trespasser who possesses land openly, continuously and adversely for the statutory period can acquire title, and the questions turn on hostility despite a mistake, notice for small encroachments, tacking between owners, and special statutory conditions.

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Black-letter propositions

  1. Typically the possession must be actual, exclusive, open and notorious, hostile, and continuous for the statutory period, and the period varies: California requires five years, New York ten, and some states use shorter periods with color of title and longer without.
  2. Hostile does not mean unfriendly; it means the possession infringes the true owner's rights, so possession with the owner's permission or license is not hostile, and a tenant cannot adversely possess the rented property.
  3. Courts divide on a possessor who enters under a mistaken belief that the land is hers: the Maine doctrine treats the mistake as defeating the required intent, while the Connecticut doctrine, adopted in Mannillo v. Gorski, treats the mistake as immaterial to hostility.
  4. Under Mannillo, no presumption of knowledge arises from a minor encroachment along a common boundary, and only if the true owner has actual knowledge is the possession open and notorious; equity may compel the true owner to convey the strip for fair value where the possessor acted in good faith and no serious damage would result.
  5. Successive possessors may tack their periods if they are in privity, such as buyer and seller, and Howard v. Kunto allowed tacking even though the deeds described adjacent land and not the land occupied; continuity is a matter of substance, so seasonal use during the time the land can be used suffices.
  6. In California, possession without a written instrument counts only if the land was protected by a substantial enclosure or usually cultivated or improved, and in every case the possessor must have paid all taxes levied on the land for the five years; a possessor under a written conveyance who occupies part of the described property for five years is deemed to hold the part described, except that possession of one lot of a divided tract is not possession of another.
  7. Possession of land owned by the state or a public entity, or dedicated to public use by a public utility, never ripens into title.

Attack sequence

1List each element and match it to the facts, including the statutory period and any extra state requirements such as taxes.

2If the possessor made a mistake about the boundary, identify whether the jurisdiction follows the Maine or Connecticut view.

3For a small encroachment, ask whether the owner had actual knowledge and consider equitable relief.

4If more than one possessor is involved, test privity for tacking and the continuity of use.

Traps and exceptions

!A tenant's possession, or use with the owner's permission, is not adverse, however long it lasts.

!In a Connecticut-doctrine state, a good-faith mistake about the boundary does not defeat hostility, while in a Maine-doctrine state it does.

!California requires payment of taxes for the period, so a possessor who did not pay them fails even after five years of open use.

WORKED APPLICATION

A homeowner builds a garage that extends fifteen inches onto a neighbor's land, believing the line is farther over. Neither knows of the encroachment for fifteen years. The statutory period is ten years.

In a Connecticut-doctrine state the homeowner's mistake does not defeat hostility, but under Mannillo a minor encroachment does not put the neighbor on notice unless the neighbor actually knew, so the possession is not open and notorious. Equity might still compel the neighbor to convey the strip for fair value.

Essay-ready formulationApply each element and the statutory period, address hostility and the mistake, discuss notice for small encroachments and tacking, and finish with statutory conditions such as taxes and public land.
28 · Landlord-tenant law

Leases: consent to assignment, the warranty of habitability, constructive eviction, and self-help

A lease clause requiring the landlord's consent to an assignment is read in some states to require a commercially reasonable objection, residential landlords must keep premises fit and habitable, a tenant who is substantially deprived of the premises by the landlord's act or omission may vacate within a reasonable time as constructively evicted, and a landlord who removes a residential tenant without following the statute is liable.

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Black-letter propositions

  1. In the minority view adopted in California, when a lease requires the landlord's consent to an assignment, consent may be withheld only where the landlord has a commercially reasonable objection to the assignment, even if the lease does not say that consent will not be unreasonably withheld.
  2. A landlord's denial of consent solely on personal taste, convenience, or sensibility, or to charge a higher rent than originally agreed, has been held arbitrary and not commercially reasonable.
  3. Under the majority common-law view, a landlord could arbitrarily refuse consent to an assignment where the lease required consent and did not say that consent would not be unreasonably withheld, so the answer depends on the jurisdiction.
  4. A warranty of habitability, measured by the housing regulations, is implied by operation of law into leases of urban dwelling units, and its breach gives rise to the usual remedies for breach of contract, including the tenant's use of the breach as a defense to a suit for possession for nonpayment of rent.
  5. Under North Carolina law a residential landlord must comply with applicable building and housing codes, make all repairs and do whatever is necessary to keep the premises in a fit and habitable condition, keep common areas safe, and maintain electrical, plumbing, heating, and other supplied facilities after written notice of needed repairs except in emergencies.
  6. Any act or omission of the landlord, or of someone acting under the landlord's authority or having superior title, that renders the premises substantially unsuitable for their leased purpose or seriously interferes with the beneficial enjoyment of the premises breaches the covenant of quiet enjoyment and is a constructive eviction.
  7. A tenant's right to claim constructive eviction is lost if the tenant does not vacate within a reasonable time after the right arises, what is reasonable depends on the circumstances, and a tenant who vacates does so at his peril because a court may later find the landlord's conduct did not amount to constructive eviction.
  8. If a landlord removes or attempts to remove a residential tenant in any manner contrary to the North Carolina statute, the tenant may recover possession or terminate the lease, and the landlord is liable for actual damages caused by the removal or attempted removal, but not punitive or treble damages.
  9. A North Carolina landlord who seizes a tenant's personal property or interferes with access to it other than as the statute allows is liable to the tenant for its value or for its return.
  10. A North Carolina tenant who holds over after the term expires and after demand for surrender may be removed in the manner the statute prescribes, and a lease with a fixed rent date implies a forfeiture if rent is not paid within 10 days after demand.

Attack sequence

1Identify the lease type and jurisdiction, since the assignment consent rule is a split of authority.

2For a habitability claim, identify the housing code or statute and the landlord's notice and repair duties.

3For constructive eviction, look for a substantial landlord-caused deprivation and a timely move-out.

4For a landlord's removal of a tenant, ask whether the landlord followed judicial procedure or used self-help.

5State the remedies: possession, termination, damages, and any defense to rent.

Traps and exceptions

!A tenant who stays too long after the deprivation may lose the constructive eviction claim.

!A landlord's refusal of consent for a reason unrelated to the assignee may be unreasonable in states following the minority rule.

!Self-help removal, such as changing the locks, exposes a residential landlord to liability under the North Carolina statute.

!A repair duty for facilities such as heating depends on written notice from the tenant, except in emergencies.

WORKED APPLICATION

A commercial tenant's lease requires the landlord's written consent to assignment and says nothing else. The tenant finds a solvent assignee, and the landlord refuses only because it wants to raise the rent for a new lease. The jurisdiction follows the minority view.

Under the minority rule the landlord may withhold consent only for a commercially reasonable objection, and a desire for a higher rent is not one, so the refusal is likely unreasonable and the tenant may assign.

Essay-ready formulationIdentify the doctrine, state the split of authority or statute, and apply it to the landlord's and tenant's conduct, including timing and remedies.
29 · Rights in real property

Easements implied from prior use, easements by necessity, and easements by estoppel

An easement can arise without a written grant when a prior obvious use continues after severance, when necessity existed at the time a common owner divided the land, or when a landowner permits a use and the user spends substantial sums in reliance so that the license becomes irrevocable, while permissive use does not ripen into a prescriptive easement.

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Black-letter propositions

  1. An easement can be created by express written grant, by implication, by prescription, or by estoppel.
  2. North Carolina requires three essentials for an easement implied by law on severance of title: a separation of title, a use before the separation that was so long continued and obvious or manifest as to show it was meant to be permanent, and that the easement be necessary to the beneficial enjoyment of the land granted or retained.
  3. Separation of title implies unity of ownership of both tracts at some former time, so no easement by implication arises if neither the claimant nor the owner of the burdened land nor anyone under whom either claims was ever the owner of both tracts.
  4. Where, during unity of title, an apparently permanent and obvious servitude is imposed on one part of an estate in favor of another and is in use and reasonably necessary to the fair enjoyment of the other part at the time of severance, a grant of the right to continue the use arises by implication of law on severance.
  5. An easement implied from prior use does not require strict necessity, and it is enough to show physical conditions and use that would reasonably lead one to believe the grantor meant the grantee to continue the use, because it is reasonably necessary to the fair enjoyment of the property.
  6. An easement by necessity by implied reservation requires unity of ownership of the alleged dominant and servient estates, that the roadway is a necessity and not a mere convenience, and that the necessity existed at the time of severance of the two estates.
  7. A claim to an easement by necessity fails if the necessity did not exist at the time the common owner divided the land, and a later need for access does not create one.
  8. An easement by prescription arises when the claimant, or those under whom he claims, has used a way openly, peaceably, continuously, and under a claim of right adverse to the owner and with the owner's knowledge and acquiescence for the statutory period, which was 15 years in Kentucky, and use by permission is not adverse.
  9. A license that gives only a bare right of entry is revocable, but where the licensee, on the strength of the license, erects improvements or makes substantial expenditures, the license becomes irrevocable and continues as long as its nature calls for, in effect a grant through estoppel.
  10. A right to use a roadway over another's land may be established by estoppel, and the licensor may not revoke it after the licensee has exercised the privilege and made improvements at considerable expense.

Attack sequence

1Ask whether a common owner once held both parcels and then severed them.

2For prior use, look for an obvious, long-continued, permanent use that is reasonably necessary to fair enjoyment.

3For necessity, ask whether access was necessary and not merely convenient at the time of severance.

4For prescription, check for adverse, open, continuous use for the full period without permission.

5For estoppel, look for the owner's permission and the user's substantial reliance.

Traps and exceptions

!An easement by necessity is judged at the time of severance, not by later needs.

!Permission defeats the adverse element of a prescriptive easement.

!Prior use easements need only reasonable necessity, and strict necessity is not required.

!A license usually revocable at will can become irrevocable after substantial improvements in reliance.

WORKED APPLICATION

A landowner permits a neighbor to cut a road across his land to reach the neighbor's new house. The neighbor spends thousands of dollars building and improving the road and uses it regularly. Years later the landowner tries to close the road.

The license was more than a bare right of entry, and the neighbor made substantial expenditures in reliance on it, so it became irrevocable and the landowner is estopped to close the road.

Essay-ready formulationIdentify the type of easement claimed, state its elements, and apply them to the facts, noting the time at which necessity is judged and whether the use was permissive.
30 · Mortgages and foreclosure

Power-of-sale foreclosure, deficiency defenses, surplus, registration of conveyances, and seller disclosure (North Carolina statutes)

A North Carolina power-of-sale foreclosure requires notice and a hearing at which the clerk must find a valid debt, default, a right to foreclose, and notice, sale proceeds are applied in a statutory order with any surplus paid to those entitled or the clerk, a purchase-money mortgagee gets no deficiency, and a conveyance must be registered to bind lien creditors and purchasers for value.

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Black-letter propositions

  1. A mortgagee or trustee who seeks to exercise a power of sale must file a notice of hearing with the clerk of court, serve it on each party entitled to notice not less than 10 days before the hearing, and by statute may serve by posting on the property not less than 20 days before the hearing where service cannot otherwise be made.
  2. The notice must describe the security interest being foreclosed, name the holder, state the nature of the default and any acceleration, state any right to pay or cure, and include a statement that to authorize the foreclosure the clerk must find a valid debt of which the party seeking to foreclose is the holder, default, a right to foreclose under the instrument, and notice to those entitled to notice.
  3. The proceeds of a foreclosure sale are applied in order to the costs and expenses of the sale, unpaid taxes, unpaid special assessments, and the obligation secured by the mortgage or deed of trust.
  4. Any surplus after applying the proceeds must be paid to the persons entitled to it if the seller knows who they are, and otherwise to the clerk of superior court when the owner is dead with no personal representative, the persons cannot be located, the seller is in doubt, or adverse claims are asserted.
  5. When a mortgagee, payee, or holder buys at a foreclosure sale and then sues for a deficiency, the mortgagor may show as a defense and offset, but not as a counterclaim, that the property was fairly worth the amount of the debt at the time and place of sale or that the amount bid was substantially less than its true value.
  6. That deficiency defense does not apply to foreclosure sales made under a court order or decree, and it does not affect the rights of other purchasers or innocent third parties.
  7. A mortgagee or trustee under a mortgage or deed of trust that secures the balance of the purchase price of real property, and that shows on its face that it is for purchase money, is not entitled to a deficiency judgment.
  8. A register of deeds may not accept for registration an instrument that requires acknowledgment or proof unless its execution appears to have been proved or acknowledged before an officer with apparent authority, so an unacknowledged instrument is not properly registered.
  9. No conveyance of land, contract to convey, option, lease for more than three years, right of first refusal, or right of first offer is valid to pass a property interest as against lien creditors or purchasers for valuable consideration except from the time of its registration, and instruments have priority by order of registration.
  10. Where a seller of a home knows of facts materially affecting its value that are not readily observable and not known to the buyer, the seller has a duty to disclose them, and concealment of a roof leak entitled the buyers to rescission and return of their deposit.

Attack sequence

1For a power-of-sale foreclosure, confirm the notice, the 10-day service period, and the four findings the clerk must make.

2Apply the proceeds in the statutory order and identify who receives any surplus.

3For a deficiency claim, ask whether the lender bought at the sale and whether the mortgage secured purchase money.

4For priority, check whether and when each instrument was registered and whether it was properly acknowledged.

5For seller disclosure, ask whether the seller knew of a material, hidden defect.

Traps and exceptions

!A purchase-money mortgagee gets no deficiency judgment even after a foreclosure sale.

!The deficiency defense is raised as a defense and offset and not as a counterclaim.

!An unregistered conveyance does not bind lien creditors or purchasers for value, whatever they knew, under the North Carolina registration statute.

!A seller's silence about a known hidden defect can support rescission.

WORKED APPLICATION

A lender holding a deed of trust forecloses, buys the property at the sale for far less than its value, and sues the borrower for the balance. The deed of trust secured a loan for the borrower's refinancing and not for the purchase price.

The purchase-money bar does not apply, but the borrower may show as a defense and offset that the property was fairly worth the debt or that the bid was substantially below true value, which may defeat or reduce the deficiency.

Essay-ready formulationTrace the foreclosure steps, apply the proceeds and surplus rules, address deficiency defenses and the purchase-money bar, and finish with registration and priority questions.
31 · Ownership of real property

Cotenancy: mortgages and leases by one joint tenant, rent and ouster, contribution, and partition

A mortgage or lease granted by one joint tenant does not sever the tenancy and does not survive that tenant's death, a cotenant in possession owes rent only after an agreement or an ouster, cotenants may recover carrying costs through contribution, and North Carolina partition law prefers division in kind and allows a sale only on proof of substantial injury.

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Black-letter propositions

  1. The unities of interest, title, time, and possession are fundamental to a joint tenancy, and destruction of any of them by one of the joint tenants, voluntarily or involuntarily, severs the tenancy.
  2. A mortgage given by one joint tenant of his interest does not sever the joint tenancy, so the surviving joint tenant's right of survivorship operates on the death of the mortgagor.
  3. A surviving joint tenant takes by virtue of the conveyance that created the joint tenancy and not as the successor of the deceased, so a mortgage given by the deceased joint tenant does not survive as a lien on the survivor's property.
  4. A lease of the joint property by one joint tenant for a term of years does not sever the joint tenancy, and it expires on the death of the lessor joint tenant, because a joint tenant's interest and any encumbrance he placed on it die with him.
  5. In the absence of an agreement to pay rent or an ouster, a cotenant in possession is not liable to the other cotenants for the value of his use and occupation of the property.
  6. Ouster for purposes of rent liability arises when the occupying cotenant refuses a demand of the other cotenants to be allowed into use and enjoyment of the land, and merely asking the occupying cotenant to vacate is not enough because he may rightfully occupy the whole.
  7. Ouster for adverse possession purposes requires a showing that the possessing cotenant asserted complete ownership, which is a different showing from ouster for rent purposes.
  8. In North Carolina a cotenant has a right to contribution from the other cotenants for the payment of the property's carrying costs, such as property taxes, insurance, repairs, and loan payments, and for the lesser of the value added by improvements or their actual cost.
  9. A partition proceeding is by special proceeding in superior court, may be brought by any person claiming as a tenant in common or joint tenant, and must join all cotenants.
  10. The court in a partition proceeding shall order actual partition unless the party seeking a sale proves by a preponderance of the evidence that actual partition cannot be made without substantial injury to any party, and it may not order a cotenant to continue to hold in cotenancy over the cotenant's objection.

Attack sequence

1Identify the type of co-ownership and whether any of the four unities was destroyed.

2For a mortgage or lease by one joint tenant, ask whether the grantor died first and what the survivor takes.

3For a rent claim, look for an agreement to pay rent or a refusal of the other cotenants' demand to share possession.

4For costs, apply the contribution statute for carrying costs and improvements.

5For partition, ask whether division in kind is possible without substantial injury.

Traps and exceptions

!A mortgage by one joint tenant does not sever the tenancy, but the lender's lien is lost if the mortgagor dies first.

!A lease by one joint tenant ends at his death, and the survivor is not bound by it.

!A cotenant in possession does not owe rent to the others merely because he is in possession.

!A partition sale requires a showing of substantial injury from a division in kind.

WORKED APPLICATION

Two brothers own a house as joint tenants. One brother mortgages his interest to secure a loan for a friend without telling the other, and then dies. The lender sues to enforce the mortgage against the surviving brother's house.

The mortgage did not sever the joint tenancy, so the surviving brother takes the whole property by survivorship and the lender's lien on the deceased brother's interest ended at death, and the surviving brother owns the house free of the mortgage.

Essay-ready formulationClassify the co-ownership, decide whether any act severed it, apply the survivorship, rent, contribution, and partition rules, and state the result.
QUICK ANSWERS

What NCBE lists for Real Property

What present estates does the outline list?+

Fees simple, defeasible fees and life estates. NCBE lists these as present estates under ownership of real property, the first category of five.

What future interests does NCBE list?+

Reversions, vested and contingent remainders, executory interests, possibilities of reverter and powers of termination, plus rules affecting these interests such as survivorship, class gifts, waste and cy pres.

What special problems appear under ownership?+

The rule against perpetuities and statutory reforms, alienability, descendibility and devisability, fair housing and discrimination, and conflicts of law involving real property.

What rights in real property topics are listed?+

Restrictive covenants, easements, profits and licenses, fixtures, and zoning fundamentals, listed by NCBE as category II, rights in real property.

Which real estate contract topics does NCBE list?+

Real estate brokerage, creation and construction including the statute of frauds, marketability of title, equitable conversion, options and rights of first refusal, fitness and suitability, and merger.

What does the mortgages and security devices category include?+

Types of security devices, security relationships, transfers by mortgagor and mortgagee, discharge, and foreclosure, listed by NCBE as category IV of five.

What does the titles category include?+

Adverse possession, transfer by deed, transfer by operation of law and by will, title assurance systems and special problems.

Which landlord-tenant topics are listed?+

Types of tenancies, possession and rent, transfers by landlord or tenant, termination, and habitability and suitability.

SOURCE DESK

Official NCBE sources

NCBE: MBE subject matter outline↗NCBE: preparing for the MBE↗

Governing text

Landlord-tenant, conveyancing and title rules vary by state, and the Uniform Law Commission's catalog lists the model acts that many states adopted. Uniform property acts (Uniform Law Commission) ↗