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REAL PROPERTY PROFESSOR ZACHARY A. KRAMER (City of Oakland)

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REAL PROPERTY
PROFESSOR ZACHARY A. KRAMER
ARIZONA STATE UNIVERSITY – SANDRA DAY O’CONNOR COLLEGE OF LAW
Editorial Note 1: The Professor refers to specific Example numbers throughout
this lecture. The content does not always match these references due to
formatting changes.
CHAPTER 1: OWNERSHIP
A. Basics
Different ways property can be transferred (i.e., alienated):
1. ______________________________:
Example 1: Oliver sells his home to Anna for $325,000.
2. Gift:
Example 2: Oliver gives his lucky pen to Anna, “in the hope that it will bring
her as much luck as it has brought him.”
3. ______________________________:
Example 3: Oliver dies in a tragic fishing accident. In his will, he gives his
stamp collection to his wife Anna. When is this gift effective? At Oliver’s
______________________________.
Note 1: Gifts in a will are effective when the decedent dies.
4. ______________________________ succession:
Example 4: Oliver dies without a will. He is survived solely by his wife, Anna,
who is his ______________________________ at law (i.e., a person who
survives the decedent and takes by intestate succession).
B. Estates in Land
Ownership interests: Divided in time between ______________________________ interests and future
interests
• Key distinction is timing of ______________________________.
Example 5: Oliver transfers Blackacre “to Anna for life, then to Ben.”
Who has the right to possession presently?
______________________________.
Who has the right to possession in the future?
______________________________.
2 | © 2019 Themis Bar Review, LLC | MBE Real Property
Example 6: Oliver transfers Blackacre “to Anna once she passes the bar
exam.”
Who has the right to possession presently?
______________________________.
Who has the right to possession in the future?
______________________________.
• Someone must be in possession of the property at all times.
C. Fee Simple
• Fee simple is the ______________________________ possessory estate.
• Why is it the largest? It is capable of ______________________________.
o Inheritable: Upon the owner’s death, the owner can pass it by will or by intestate
succession; can also be transferred by gift or sale during owner’s life.
Example 7: O transfers land to A. A has a fee simple absolute. A dies without
a will. B is A’s only heir. B then has a fee simple absolute. B dies without a will,
leaving C as an heir. C has a fee simple absolute.
• To create a fee simple:
o Look for magic words: “and his/her ______________________________”
But these words are not required: “O to A” and “O to A and her heirs” are the same
thing.
o Watch out for ambiguous grants. If ambiguous, it creates a
______________________________.
Example 8: Oliver conveys Blackacre “to Anna forever.” What does Anna
have? A ______________________________.
• Fee simple absolute is the default estate; there is a presumption that the grantor conveys the
most that she has.
• Don’t be fooled by words of ______________________________ or
______________________________.
Example 9: Oliver conveys Blackacre “to Anna, my hope and wish being that
on her death, Anna will give the property to her son, Ben.”
What interest does Anna have? ______________________________.
What interest does Ben have? ______________________________.
Note 2: Precatory words such as “my hope and wish” are not enough to show
actual intent.
MBE Real Property | © 2019 Themis Bar Review, LLC | 3
• No future interest associated with a fee simple.
o Capable of lasting ______________________________.
CHAPTER 2: DEFEASIBLE FEES
A. Defeasible Fees
• May be ______________________________ by the occurrence of an event;
• Capable of lasting forever but also of being terminated early;
• Condition will ______________________________ the fee simple.
B. Fee Simple Determinable
• Limited by specific ______________________________ language
Example 10: Oliver conveys Blackacre “to Anna
______________________________ the land is used as a farm.”
• Examples of durational language include:
o “______________________________ the land is used as a farm;”
o “______________________________ its use as a farm;”
o “Until it is no longer used as a farm.”
Note 3: The fee simple lasts while the period is in play (e.g., while used as a
farm), but as soon as the period ends (e.g., when the land is no longer used as a
farm), the fee simple ends.
C. Fee Simple Subject to Condition Subsequent
• Limited by specific ______________________________ language
Example 11: Oliver conveys Blackacre “to Anna,
______________________________ the land is not farmed, Oliver may re-enter
and re-take the property.”
• Examples of conditional language include:
o “Provided that the land is not farmed;”
o “On the condition that the land is not farmed.”
• Focus on the language to the grantor: Suggests that the grantor must exercise a right in order to
take possession.
Example 12: Oliver conveys Blackacre “to Anna, but if the land is not farmed,
Oliver may re-enter and re-take the property.” When, if ever, is Oliver entitled to
possession? When the condition is met and Oliver reclaims it.
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D. Future Interests Associated with Defeasible Fees
1. Possibility of Reverter
o Future interest held by a ______________________________ following a
______________________________.
o Interest vests ______________________________ after the durational period ends.
Example 13: Oliver conveys Blackacre “to Anna and her heirs, so long as the
land is used as a public park.” What future interest does Oliver have? Oliver
has a ______________________________. If the land isn’t used as a park, the
interest vests in Oliver as a fee simple because it reverts back to the grantor.
2. Right of Entry
o Future interest held by the ______________________________ following a
______________________________.
o Does not vest automatically; it must be ______________________________.
Example 14: Oliver conveys Blackacre “to Anna and her heirs, but if the land is
not used as a public park, Oliver can re-enter and re-take.” Oliver has a
______________________________. In order for Oliver’s interest to become
possessory, Oliver must exercise the right of entry and reclaim the interest.
Note 4: The right of entry is also known as the power of termination.
E. Fee Simple Subject to Executory Interest
• Will end upon the happening of an event and the future interest will vest in a
______________________________ (i.e., someone other than the grantor)
• Held by another ______________________________ and not the grantor.
Example 15: Oliver conveys Blackacre “to Anna and her heirs, but if liquor is
served on the premises, then to Ben and his heirs.”
Anna has a fee simple subject to executory interest.
Ben has an ______________________________. If liquor is ever served, Ben
will divest Anna of her interest and hold a fee simple.
Note 5: Look to who holds the future interest to distinguish a fee simple
subject to executory interest (third party holds) from a fee simple subject to a
condition subsequent (grantor holds).
F. Executory Interest
• Future interest that will ______________________________, or terminate, an earlier interest.
• The word for terminating a prior interest is to “______________________________.”
Example 16: Oliver conveys Blackacre “to Anna and her heirs, but if liquor is
served on the premises, then to Ben and his heirs.”
MBE Real Property | © 2019 Themis Bar Review, LLC | 5
Ben has an executory interest. Why? Because Ben will
______________________________ Anna’s interest if liquor is ever served.
Whose interest is being divested? ______________________________.
Problem 1: Oliver conveys Blackacre “to Anna.”
Anna has a ______________________________.
Oliver has ______________________________.
Note 6: Always presume a party conveys the most that it has to convey.
Problem 2: Oliver conveys Blackacre “to Anna while the land is used for school
purposes.”
Anna has a ______________________________.
Oliver has a ______________________________.
Problem 3: Oliver conveys Blackacre “to Anna while the land is used for school
purposes, then to Ben.”
Anna has a ______________________________.
Ben has an ______________________________.
Oliver has ______________________________.
Problem 4: Oliver conveys Blackacre “to Anna, but if Anna gets a pet, Oliver
may re-enter and re-take.”
Anna has a ______________________________.
Oliver has a ______________________________.
CHAPTER 3: THE LIFE ESTATE
A. Definition
• Present estate that is ______________________________ by a
______________________________.
• Whose life?
Example 17: Oliver conveys Blackacre “to Anna for life.” This life estate is
measured against ______________________________ life.
Example 18: Oliver conveys Blackacre “to Anna for Ben’s life.” Anna’s life
estate is measured against ______________________________ life. This is
known as a life estate “pur autre vie” (meaning measured against the life of
someone else).
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B. Creation
• Magic words to create a life estate are “______________________________.”
• If ambiguous, look for the grantor’s intent to create an estate that will end upon the
______________________________ of the measuring life.
Example 19: “To A to live in your house.” Some argue that this language
creates a fee simple for A. Others argue that this language creates a life estate.
Both arguments have merit. Resolve based on whether it should be inheritable
or limited just for the person while they are alive.
C. Termination
• Ends naturally when the measuring life ______________________________.
o Transferable
Example 20: Oliver conveys Blackacre “to Anna for life.” Anna later transfers
her interest to Ben. When will Ben’s interest terminate?
______________________________.
• Can a life tenant (of a life estate measured by the life tenant’s life) pass the property by will?
o ______________________________, the life estate ends at the life tenant’s death.
• Can a life tenant (of a life estate measured by the life tenant’s life) pass the property by
intestate succession?
o ______________________________, the life estate ends at the life tenant’s death.
Example 21: Oliver conveys Blackacre “to Anna for life.” Anna dies, leaving her
son Ben as her sole heir. Does Ben inherit Anna’s life estate?
______________________________, Anna’s interest ended on her death.
D. Future Interests Following a Life Estate
• If possession of the land goes back to the grantor after the life estate ends, then the grantor
retains a ______________________________.
Example 22: Oliver conveys Blackacre “to Anna for life.”
Oliver retains a ______________________________. Upon Anna’s death,
Oliver takes the property in ______________________________.
• If possession of the land goes to a third party (transferee) after the life estate ends, then the
third party takes a ______________________________.
Example 23: Oliver conveys Blackacre “to Anna for life, then to Ben.”
During Anna’s life, Ben has a ______________________________. What
happens when Anna dies? Ben takes possession in
______________________________. Oliver has
MBE Real Property | © 2019 Themis Bar Review, LLC | 7
______________________________ because Anna has the present interest (life
estate) and Ben has the future interest.
E. Waste
• Comes into play when more than one party has an interest in the same piece of real property
Example 24: Oliver conveys Blackacre “to Anna for life.” Anna has been
dumping hazardous materials onto the property, which have caused serious
damage to Blackacre. The doctrine of waste gives Oliver a claim to stop Anna
from injuring the land. Why? Because Oliver has a
______________________________.
• Three kinds of waste:
o ______________________________ waste: Waste caused by
______________________________ conduct, which causes a
______________________________ in value.
Example 25: Dumping hazardous materials on the property
o ______________________________ waste: Waste caused by
______________________________ toward the property, which causes a decrease in value.
Example 26: Harm caused to property through tenant’s failure to take action
after a storm
o ______________________________ waste: Special situation where a life tenant or other
person in possession changes the use of the property and actually
______________________________ the value of the property.
Example 27: Renovation of a house, construction of a dam, fixing a fence
• Not unique to estates and future interests
• Situations where the doctrine of waste applies include:
o Landlord v. tenant;
o Co-tenant out of possession v. tenant in possession (concurrent estates);
o Mortgagee (bank/lender) v. mortgagor (borrower).
Exam Tip 1: How to Spot a Waste Problem:
1. Do multiple parties have simultaneous interests, (e.g., life tenant, remainder,
future interests, landlord v. tenant)?
2. Is there a change in the value of the property due to the actions/inactions of
the party in possession?
3. Will the waste substantially change the interest taken by the party out of
possession?
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CHAPTER 4: FUTURE INTERESTS
A. Remainders
• A remainder is a future interest that follows what present possessory estate?
______________________________.
o A remainder ______________________________ follow a vested fee simple. Why? A
future interest following a vested fee simple would have to divest the prior interest (the fee
simple) but a remainder does not function that way because it instead waits for the prior
interest to end.
• Can be ______________________________ or ______________________________.
• RAP generally applies only to ______________________________ remainders.
o Vested Remainder—an interest that is:
1) Given to an ______________________________ grantee (i.e., someone who can be
identified); and
2) Not subject to a ______________________________ (i.e., there is no condition that
must be satisfied in order for the interest to vest).
If the remainder fails either 1 or 2, it is a contingent remainder.
Example 28: Oliver conveys Blackacre “to Anna for life, then to Ben.”
What does Anna have? A ______________________________.
Is Ben an ascertainable grantee? ______________________________.
Is there a condition precedent? ______________________________.
Ben has a ______________________________ remainder.
Note 7: If the holder of a vested remainder dies, the interest passes to the
holder’s heirs.
Example 29: Oliver conveys Blackacre “to A for life, then to A’s firstborn
grandchild.” At the time of the conveyance, A does not have any grandchildren.
What interest does the firstborn grandchild have? A
______________________________.
Is the firstborn grandchild an ascertainable grantee?
______________________________.
The firstborn grandchild has a ______________________________ remainder.
Note 8: If a contingent remainder does not vest before it becomes possessory
(e.g., A does not have any grandchildren before A dies), the grantor has a
reversion.
MBE Real Property | © 2019 Themis Bar Review, LLC | 9
Example 30: Oliver conveys Blackacre “to Anna for life, then to Ben if Ben
survives Anna.” What kind of remainder does Ben have?
Is Ben an ascertainable grantee? ______________________________.
Is there a condition precedent? Yes, Ben must survive Anna.
Ben has a ______________________________ remainder.
Oliver has a ______________________________.
B. Class Gifts—Vested Subject to Open
1. Vested Subject to Open
o Vested remainder in a ______________________________; and
o Full class membership is ______________________________.
At least one person in the class must be vested for it to be vested subject to open; if no
one in the class has vested, the remainder is contingent.
When all members of a class are identified, the class is
______________________________.
Example 31: Oliver conveys Blackacre “to Anna for life, then to Anna’s children
who reach 21.” Anna has three kids—Ben is 25, Carmen is 18, and David is 15.
What is Ben’s interest? ______________________________.
Why is it subject to open? Because ______________________________ might
make it to 21.
When will we know when the class closes and who the class members are?
______________________________.
If more of Anna’s children reach 21, what happens? They will
______________________________ divest Ben.
Note 9: In property law, it is presumed a party can have a child at any time
before the party’s death, regardless of age.
Watch out! At least one member of the class must be vested. If no one in the class is
vested, then the remainder is ______________________________. In the above
example, if Ben were 20 instead of 25, his remainder would be contingent.
2. RAP Applies to a Vested Remainder Subject to Open.
o Rule of Convenience: A class-closing mechanism to avoid application of
______________________________ to a class gift.
o If the grant does not have an express closing date, the Rule of Convenience closes the class
when any member of the class becomes entitled to ______________________________.
10 | © 2019 Themis Bar Review, LLC | MBE Real Property
Example 32: Oliver conveys “to Anna for life, then to Ben’s children.” Ben has
one child. When will this class close under the Rule of Convenience? On
______________________________death.
C. Special Cases
1. Doctrine of Worthier Title
o Prevents against remainders in a ______________________________ heirs
o Creates a presumption of a reversion to the grantor
Example 33: Oliver conveys “to Anna for life, then to my heirs.” What future
interest does Oliver retain under the Doctrine of Worthier Title?
______________________________.
2. Rule in Shelley’s Case
o Prevents against remainders in a ______________________________ heirs
o Uses the doctrine of merger to create a fee simple
Example 34: Oliver conveys “to Anna for life, then to Anna’s heirs.” What
estate does Anna have under the Rule in Shelley’s case?
______________________________.
D. Executory Interests
• Subject to the Rule Against Perpetuities (“RAP”)
• Definition: Future interest that ______________________________ (i.e., divests) a prior
______________________________ interest
o Two kinds of executory interests:
Springing executory interest: Divests the ______________________________;
Shifting executory interest: Divests a prior ______________________________.
Example 35: Oliver conveys Blackacre “to Anna for life, then to Ben one year
after Anna’s death.”
What interest does Anna have? A ______________________________.
What happens immediately after Anna’s death?
______________________________.
Whose interest does Ben divest? ______________________________.
What interest does Ben have? A ______________________________
executory interest.
Example 36: Oliver conveys Blackacre “to Anna, but if the land is used for
commercial purposes, to Ben.”
MBE Real Property | © 2019 Themis Bar Review, LLC | 11
What interest does Anna have? A ______________________________.
Under what condition will Ben take the property? If the land
______________________________.
Whose interest does Ben divest? ______________________________, who is a
prior grantee.
What interest does Ben have? A shifting executory interest.
Example 37: Oliver conveys Blackacre “to Anna after she is admitted to the
bar.”
What interest does Anna have? A ______________________________
executory interest.
Whose interest does Anna divest? ______________________________, the
grantor.
What interest does Oliver have? A ______________________________.
Exam Tip 2: Count the parties:
If there are two parties (Grantor + Grantee), it is most likely a springing
executory interest because the grantee will divest the grantor.
If there are three parties (Grantor + Grantee + Grantee), it is most likely a
shifting executory interest because a grantee will divest another grantee (the
executory interest will shift from one grantee to another).
CHAPTER 5: THE RULE AGAINST PERPETUITIES (RAP)
A. What is going on here?
Three questions to set the RAP context:
1. Why do we have such a silly rule?
o Practical tension: Parents want to keep property in the family but do not trust their children
v. courts’ unease about uncertainty
o Thus: RAP prevents ______________________________ vesting.
2. What’s the goal of the rule?
o Testing for ______________________________;
o Operates like a statute of limitations for contingent future interests.
3. Why 21 years?
o Approximately two generations—a life plus 21 years;
o Beyond that, we can’t say what will happen.
12 | © 2019 Themis Bar Review, LLC | MBE Real Property
B. Method—When, What, Who?
1. When: Identifying when the interests are created
o Inter vivos transfers: Interests created at time of the grant
o Devise (will): Interests created at testator’s ______________________________, not when
the will is drafted
2. What: Determine if interests created are subject to RAP
o RAP applies to:
______________________________ remainders;
______________________________;
______________________________ gifts (subject to open), if not closed by rule of
convenience.
o Does not apply to vested remainders unless subject to open
3. Who: Identify the relevant and, if applicable, validating lives
o Relevant life: Person who affects vesting, usually mentioned or implied by the grant (e.g.,
prior life tenant, the parent where a conveyance is made to a child)
o Validating life: Person who tells us whether or not the interest vests within the perpetuities
period (lifetime plus 21 years)
Must have been ______________________________ when the interests were created;
Can validate her own interest;
If no validating life, then the interest is ______________________________ and we
strike it from the grant; if there is a validating life, the interest is good.
4. “When, What, Who?” Application
Example 38: Oliver conveys Blackacre “to Anna, but if the land is ever used as
a business during Anna’s lifetime, to Ben.”
When: Interests created ______________________________; inter vivos.
What: Interest subject to RAP is ______________________________.
Who: Lives in being at the creation of the interest are
______________________________, ______________________________, and
______________________________.
Validating life? Will we know 21 years after their lives whether this interest will
vest or not? Yes, at ______________________________ death we will know
whether she used the land for business purposes. So
______________________________ is the validating life.
Result: RAP is not violated. Ben’s executory interest is valid.
MBE Real Property | © 2019 Themis Bar Review, LLC | 13
Example 39: Professor Kramer conveys “$1000 to my Themis students who are
admitted to the bar.” (Not a binding contract!)
When: Interests created ______________________________.
What: Interest subject to RAP is students’ ______________________________.
Who: Lives in being at the creation of the interest are
______________________________ and ______________________________.
Validating life? Will we know 21 years after someone’s death whether this
interest vests or not? ______________________________, we will know
whether it vested or failed.
Editorial Note 2: Note that this is an exception to the “bad as to one, bad as to
all” rule for class transfers because transfers of a specific dollar amount to
each class member are tested separately, even though the RAP may fail as
to some members of the class of Professor Kramer’s “Themis students.”
Result: No violation. Students’ executory interests are valid.
Note 10: RAP is not about whether an interest vests or fails. It is about whether
we will know if it vests or fails. Cannot have uncertainty.
CHAPTER 6: RAP VIOLATIONS
We strike out the violating interest, as if the interest was never created in the first place.
Example 40: Oliver conveys “to Anna for life, then to Anna’s first child who
reaches the age of 22.” This conveyance violates RAP. It is a contingent
remainder, and possible for the contingent remainder in Anna’s first child to vest
more than 21 years after Anna’s life. Anna’s first child, even if alive, is not a
validating life because the child could die.
Result—strike the offending interest: Oliver conveys to Anna for life, then to
Anna’s first child who reaches the age of 22.
Anna’s interest: A ______________________________.
Anna’s first child’s interest: ______________________________.
Oliver interest: A ______________________________.
Example 41: Oliver conveys, “to Anna so long as the property is used as a farm,
then to Ben.” Anna has a fee simple subject to an executory interest and Ben
has an executory interest. This conveyance violates RAP. It is possible that Ben’s
executory interest will vest more than 21 years after Anna’s or Ben’s death.
Result—strike the offending interest: Oliver conveys to Anna so long as the
property is used as a farm, then to Ben.
14 | © 2019 Themis Bar Review, LLC | MBE Real Property
Anna’s interest: A ______________________________.
Ben’s interest: ______________________________.
Oliver’s interest: A ______________________________.
Example 42: Oliver conveys “to my grandchildren who reach 21.” Oliver has
two children, Anna and Ben, and three grandchildren under the age of 21. This
conveyance violates RAP. It is possible that Oliver could have another child—call
her C—who gives birth to a grandchild after Oliver, Anna, and Ben have died.
This grandchild will not reach age 21 until more than 21 years after the deaths
of the measuring lives (C is not a validating life because she was not in existence
when the interest was created).
Result—strike the offending interest: Oliver conveys to my grandchildren who
reach 21.
Grandchildren who reach 21: ______________________________.
Oliver’s interest: A ______________________________.
What’s the key fact? Oliver is ______________________________.
CHAPTER 7: RAP—SPECIAL CASES
A. RAP and Class Gifts
• Special Rule: If the gift to any member of the class is void under RAP, then the gift is void as to
all members of the class. The gift is “bad as to one, bad as to all.” (The “all or nothing” rule.)
Example 43: Oliver conveys “to Anna for life, then to her children who reach
25.” At the time of the conveyance, Anna’s son Ben is 26 and her daughter
Carmen is 18.
Who are members of the class? ______________________________.
Editorial Note 3: The members of the class are Anna’s children. Before they
can be entitled to take the property they must satisfy the condition of
reaching 25.
Has any class member vested? ______________________________, Ben’s
remainder has vested.
Is the class closed? ______________________________, Anna is still alive and
may have more children.
• Remember: Living people have the nasty habit of breeding. Property law assumes that anyone
who is alive can still have children.
MBE Real Property | © 2019 Themis Bar Review, LLC | 15
Does the gift survive RAP? ______________________________. Anna could
have another kid (call her Dana) after the conveyance. Dana can’t be a
validating life. Dana could vest more than 21 years after Anna, Ben, and
Carmen’s death.
What happens to Ben’s interest? ______________________________.
Result—strike the offending interest: Oliver conveys to Anna for life, then to her
children who reach 25.
Anna’s interest: A ______________________________.
Oliver interest: A ______________________________.
Children, including Ben who is vested, have
______________________________.
B. Rule of Convenience
• An interpretative rule
• Can save a class gift from being ______________________________ under RAP
• For purposes of avoiding RAP, the class closes as soon as a member of the class is entitled to
______________________________ possession.
Example 44: Oliver conveys “to Anna for life, then to Anna’s grandchildren.”
Anna has one grandchild, Ben. It is possible that other grandchildren will be
born more than 21 years after Anna or Ben’s death. Without the Rule of
Convenience, the gift to Ben is ______________________________ under RAP.
With the Rule of Convenience, Ben will take at
______________________________. When Anna dies, the class treated as
______________________________.
C. Exceptions to the Class Gift Rule (when the “all or nothing” rule does not apply)
Two exceptions:
• Transfers of a specific ______________________________ to each class member, and
• Transfers to a ______________________________ that vests at a
______________________________ time, e.g., “to the children of B, and upon the death of
each, to that child’s issue”
D. Exceptions to RAP
1. Charities
o RAP does not apply to a gift from one ______________________________ to another
charity.
o The gift to the alternate charity is not subject to RAP
16 | © 2019 Themis Bar Review, LLC | MBE Real Property
Example 45: Oliver conveys Blackacre “to the Donald McRonald House so long
as the property is used to support cancer patients and their families, then to the
Glaser Elizabeth Pediatric AIDS Fund.”
The AIDS Fund’s executory interest, which normally would violate RAP, is valid
because RAP does not apply to charity-to-charity gifts.
2. Options
o RAP does not apply to an ______________________________ held by a current tenant to
purchase a fee interest in the leasehold property.
o Nor does it apply to an option (or right of first refusal) in a
______________________________ transaction.
E. “Wait and See” Approach
• The traditional RAP has been softened by reform (e.g., Uniform Statutory Rule Against
Perpetuities).
• The most common modern approach is to “wait and see” if an interest subject to RAP vests
within the perpetuities period.
• Some of these states changed the vesting period to ______________________________ years.
Exam Tip 3: The bar exam still tests the traditional RAP though you should be
aware of the modern “wait and see” approach.
F. Cy Pres
• An equitable doctrine (borrowed from the law of trusts) that allows a court to reform a transfer
to avoid RAP.
CHAPTER 8: CONCURRENT ESTATES
A. Basics
1. Definition
o Ownership or possession of real property by two or more persons simultaneously
Example 46: Oliver conveys Blackacre “to Anna and Ben and their heirs.” Anna
and Ben are ______________________________ owners of Blackacre.
2. Basic Rule
o Concurrent owners each have right to use or possess the
______________________________ property.
o Exception: Concurrent owners can contract out of the basic rule.
3. Three Kinds of Concurrent Ownership/Concurrent Estates
o Tenancy in ______________________________;
MBE Real Property | © 2019 Themis Bar Review, LLC | 17
o ______________________________ tenancy;
o Tenancy by the ______________________________.
B. Tenancy in Common
• Default concurrent interest
o Any conveyance to more than one person is presumed to be a tenancy in common.
• Concurrent owners have ______________________________ but
______________________________ interests in the property.
Example 47: Oliver conveys Blackacre “in equal shares to Anna and Ben.” Their
interests are separate because they have ______________________________
shares in Blackacre. Their interests are undivided because Blackacre is not
physically divided; Anna and Ben each have a right to possess the
______________________________ of Blackacre.
• No right of survivorship
o Each co-tenant can transfer the property freely at death as well as during life.
Example 48: Oliver conveys Blackacre “in equal shares to Anna, Ben, and
Carmen.” Anna conveys her interest to Amy. Ben dies and his will gives his
entire estate to his son Brad. Who owns Blackacre? Amy has a
______________________________ interest in Blackacre. Brad has a
______________________________ interest in Blackacre. Carmen has a
______________________________ interest in Blackacre.
C. Joint Tenancy
• The defining characteristic is the right of ______________________________, whereby the
surviving joint tenant(s) automatically take the deceased tenant’s interest.
Example 49: Oliver conveys Blackacre “to Anna and Ben as joint tenants with a
right of survivorship.” Anna dies in a tragic hunting accident. Anna’s will leaves
everything to her daughter Amy. Who owns Blackacre and why?
______________________________, who takes under the right of survivorship.
• How do you create a joint tenancy?
o Grantor must make a clear expression of intent; PLUS
o Must be survivorship language, e.g., “as joint tenants with a right of survivorship.”
D. Four Unities [PITT]
To create a joint tenancy, you need four unities:
• Possession: Every joint tenant has an equal right to possess the whole of the property.
Note 11: Tenancy in common and tenancy by the entirety also require the unity
of possession. The remaining three unities set the joint tenancy apart.
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• Interest: Joint tenants must have an ______________________________ share of the same
type of interest.
Example 50: Anna and Ben own Blackacre as joint tenants. Each has a 50%
share and each owns the property in fee simple—equal shares, equal interests.
• Time: Joint tenants must receive their interests at the same
______________________________.
• Title: Joint tenants must receive their interests in the same ______________________________
of title.
Example 51: Oliver’s will leaves Blackacre “to Anna and Ben as joint tenants
with a right of survivorship.” The will further provides that Anna takes a 1/3
interest and Ben takes a 2/3 interest. Are the four unities present?
Possession: ______________________________, Anna and Ben have
possession.
Interest: ______________________________, they did not receive the same
interest (Anna received 1/3; Ben 2/3).
Time: ______________________________, they received their interests at the
same time.
Title: ______________________________, received it by the same instrument
(i.e., Oliver’s will).
This conveyance would create a ______________________________.
Note 12: The four unities are needed to create a joint tenancy and also to
maintain a joint tenancy. If one unity is lost, the joint tenancy is severed.
E. Severance
• If any of the unities are severed (i.e., ______________________________), then the joint
tenancy is terminated and turns into a ______________________________.
• Common situations:
o Inter vivos transfer: Transfer during life will destroy/sever the right of survivorship and
convert the estate into a tenancy in common.
Note 13: Conveyance by only one of more than two joint tenants does not
destroy the joint tenancy of the remaining joint tenants.
Example 52: Anna, Ben, and Carmen own Blackacre as joint tenants. Anna
transfers her share to Amy. What effect on the joint tenancy?
Amy’s interest: A ______________________________.
Ben and Carmen’s interests: ______________________________.
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Note 14: Any lien against a joint tenant’s interest _________________________
upon that tenant’s death, so the surviving tenants’ interests are not
______________________________.
o Mortgages: A joint tenant grants a mortgage interest in the joint tenancy to a creditor.
Does the mortgage sever the joint tenancy?
Majority: Most jurisdictions follow a ______________________________ theory. The
mortgage is treated as a lien and does not destroy the joint tenancy.
Minority: A minority of jurisdictions follows a ______________________________
theory. The mortgage severs title and the tenancy between the joint tenants and the
creditor is converted into a tenancy in common.
o Leases: A joint tenant leases her share in the property to a tenant. Does the lease sever the
joint tenancy? Jurisdictions are split.
Some jurisdictions hold that the lease ______________________________ the joint
tenancy.
Other jurisdictions treat the lease as a ______________________________ suspension
of the joint tenancy.
F. Tenancy by the Entirety
• Joint tenancy between ______________________________.
o Marriage is the fifth unity (sometimes called the unity of person).
• Has a right of ______________________________.
• Tenants by the entirety cannot alienate or encumber their shares without the
______________________________ of their spouse.
• Magic words: Property conveyed “as tenants by the entirety, with a right of survivorship”
• If the grant is ambiguous, courts presume property is held as joint tenants or as tenants in
common.
CHAPTER 9: RIGHTS AND OBLIGATIONS OF CONCURRENT OWNERS
A. Possession and Use
• General Rule: Each co-tenant has right to possess ______________________________ of the
property, regardless of that co-tenant’s share and regardless of the type of co-tenancy.
• Exception: Co-tenants have entered into an agreement to the contrary
Example 53: Anna and Ben are tenants in common in Blackacre. Anna owns a
2/3 share and Ben owns a 1/3 share. Ben is in sole possession of Blackacre.
They have no agreement as to possession.
Question 1: Ben owns a 1/3 share. Can he still occupy the whole of the
property? ______________________________.
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Question 2: Is Ben an adverse possessor? ______________________________,
Ben’s use is not adverse to Anna’s interest.
Question 3: Does one co-tenant owe the other a duty to pay rent?
______________________________, a co-tenant in possession is not required
to pay rent to co-tenants out of ______________________________.
• Ouster: Co-tenant in possession denies another co-tenant ______________________________
to the property (e.g., one tenant changes the locks, or throws out the co-tenant’s stuff)
o Remedies for the ousted tenant:
Get an ______________________________ granting access to the property; and/or
Recover ______________________________ for the value of the use while the co-
tenant was unable to access the property.
B. Third Party Rents and Operating Expenses
1. Rent
o Rent received from a third party’s possession of the property, minus operating expenses,
are divided based on ______________________________ interests of each co-tenant
Example 54: Anna and Ben own Blackacre as tenants in common. Anna has a
10% interest and Ben has a 90% interest in Blackacre. Carmen is renting
Blackacre for $1000 a month. Each month, Anna is entitled to
$______________________________ of Carmen’s rent, while Ben is entitled to
$______________________________ of Carmen’s rent. The outcome would
differ if Carmen was renting from one co-tenant and the other co-tenant was
also in possession.
2. Operating Expenses
o Necessary charges, such as taxes or mortgage interest payments
Divided based on ______________________________ interests of each co-tenant
A co-tenant can collect ______________________________ from the other co-tenants
for payments in excess of her share of the operating expenses.
3. Repairs
o There is no right to reimbursement from co-tenants for ______________________________
repairs.
o However, the co-tenant who makes the repairs can get credit in a partition action.
4. Improvements
o There is no right to ______________________________ for improvements.
o However, the co-tenant who makes the improvements can get credit in a partition action.
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C. Partition
1. Equitable Remedy
o Available to all holders of a tenancy in common or a ______________________________
tenancy
o A ______________________________ right
o Tenants by the entirety do not have the unilateral right to partition.
2. Effect
• The court will divide the property into ______________________________ portions.
• Courts have a preference for a ______________________________ division (i.e., a partition in
kind).
o Court will order a partition by sale if the physical partition is:
Not ______________________________ (e.g., land has complicated terrain); or
Not ______________________________ to all parties.
3. Proceeds
o Proceeds from a partition by sale are divided among the co-tenants based on their
ownership interests.
Example 55: Anna and Ben own a condo unit as tenants in common, each with
a 50% share in the property. Anna sues for partition. What kind of partition will
the court order? A partition ______________________________ because a
physical partition is not feasible.
4. Agreement
o Co-tenants can agree not to partition. Such an agreement is enforceable, provided:
The agreement is ______________________________; and
The time limitation is ______________________________.
CHAPTER 10: SPECIAL ISSUES—DISCRIMINATION & CHOICE OF LAW (CONFLICT OF LAWS)
A. Discrimination
The Fair Housing Act (FHA) prohibits discrimination in the sale, ______________________________, and
financing of dwellings (homes, apartments, etc.). It also prohibits ______________________________
that states a discriminatory preference.
• Who’s covered? Primary focus is on ______________________________ residential housing
• Who’s not covered? There are three exemptions from the FHA:
o Single-family housing that is sold or rented without a ______________________________;
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o Owner-occupied buildings with ______________________________ or fewer living units
(“Ms. Murphy’s Boarding House”);
o Religious organizations and private clubs.
• Who’s protected?
Protected traits: ______________________________, color, religion, national origin, sex,
______________________________, and familial status
o Sex refers to gender discrimination, but does not include sexual
______________________________.
o Familial status means families that have children under ______________________________
or someone who is ______________________________.
Special exemptions for senior living (e.g., seniors-only communities)
o Disability provision mandates ______________________________ accommodations for the
disabled (e.g., ramp, elevator, etc.)
• What’s prohibited?
o Refusing to rent, sell, or ______________________________ a dwelling;
o Requiring different rents;
o Falsely ______________________________ that a unit is available;
o Providing different services to facilities;
Exception: When making a reasonable accommodation for a disabled tenant
o Stating a discriminatory preference in an advertisement.
Note 15: The first two exemptions (single-family without broker and Ms.
Murphy boarding house) do not apply to discriminatory advertisements. But
religious organizations and private clubs can list their restrictions in their
advertisements.
• Intent: FHA allows for both intent (disparate ______________________________) and effect
(disparate ______________________________) cases
• Causation: Prohibited behavior must be linked to the protected basis
Example 56: Larry advertises an available one-bedroom unit in one of his
apartment buildings. Two applicants apply for the unit—Sally, a black woman
who works as a nurse, and Tim, a white male student at Acme University. Both
filled out an application and, after running credit and background checks, Larry
rented the unit to Tim. Did Larry violate the Fair Housing Act?
______________________________, there is no evidence of causation.
Example 57: Jenny puts the following advertisement in the local paper: “One-
bedroom unit apartment available. Perfect bachelor pad. Hot tub and other
amenities. Close to bus line, bars, and grocery. Utilities not included. Call
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Jenny, 867-5309. No creepers.” Does the advertisement violate the Fair
Housing Act? ______________________________, the statement “perfect
bachelor pad” states a discriminatory preference based on sex and familial
status.
Note 16: The unlawful act is the advertisement itself. Jenny has violated the Act
even if she does not otherwise engage in discriminatory behavior.
B. Conflict of Laws
1. Basic Rule: In cases about property, the controlling law is based upon where the property is
______________________________, (i.e., law of the situs).
2. Why do you care about this? Law of the situs is the baseline choice of law rule in a property
dispute that involves more than one state (e.g., the parties to the suit are in different states).
3. When do you care about this? In many testable issues involving property:
o ______________________________;
o Land contract dispute;
o Equitable interests (e.g., trust property);
o ______________________________ succession;
o Interpreting conveyances.
4. When do you ignore the basic rule?
o If the instrument in question ______________________________ an applicable jurisdiction;
o In cases involving ______________________________, specifically with respect to
classifying property as marital or separate, the domicile of the party may override the law of
the situs;
o In mortgage cases, where the mortgage documents require repayment to be made in
another state.
CHAPTER 11: LANDLORD AND TENANT—THE TENANCIES
A. Lease
• Creates both a ______________________________ interest and a
______________________________ interest
• Landlord-tenant law is a mix of contract law and property law.
B. Tenancies
• Four types of estates that can govern the landlord-tenant relationship (i.e., tenancies):
o Tenancy for ______________________________;
o ______________________________ tenancy;
o Tenancy at ______________________________;
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o Tenancy at ______________________________.
• You want to know two things:
o How is each created?
o How is each terminated?
C. Tenancy for Years
1. Definition: Measured by a ______________________________ and ascertainable amount of
time
Example 58: Larry leases Blackacre to Tara for two years.
Note 17: It need not be measured in years. It can be for any length of time.
Example 59: Larry leases Blackacre to Tara for two weeks. This is a tenancy for
years.
2. Creation: What is required to create a tenancy for years?
o An agreement by the landlord and the ______________________________;
Purpose is to demonstrate the intent to create a leasehold
o If the term is longer than one year, then the agreement must be signed and in
______________________________ because of the Statute of Frauds.
3. Termination: How is a tenancy for years terminated?
o At the end of the term:
Termination occurs ______________________________ upon the expiration of the
term.
Is notice required to terminate? ______________________________, unless the lease
requires it.
o Before the term is over:
Tenant ______________________________ the lease, or
The tenant or the landlord commits a ______________________________ breach of
the lease (e.g., the tenant fails to pay rent).
D. Periodic Tenancy
1. Definition: Estate that is ______________________________ and ongoing for a set period of
time (e.g., month-to-month, year-to-year)
o Renews ______________________________ at the end of each period until one party gives
proper notice of termination
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2. Creation: Parties must intend to create a periodic tenancy
o Intent can be ______________________________ (e.g., a signed lease) or
______________________________ (e.g., payment of rent)
Example 60: Larry and Tara did not execute a formal lease agreement. Every
month, however, Tara pays rent and Larry accepts the payment. This will create
a periodic tenancy by implication.
3. Termination: Renews automatically until proper notice is given
o Old approach: In a year-to-year lease, you must give notice at least
______________________________ months in advance.
o New approach: Shorter notice requirements; many states have lowered to a month’s notice.
o Proper notice means the terminating party gives notice before the
______________________________ of what will be the
______________________________ term.
o Most jurisdictions require written notice of termination.
o Notice is effective on the ______________________________ day of the period.
Example 61: Larry leased Blackacre to Tara on a month-to-month basis. Tara
gives notice of termination on February 15. When is the termination effective?
______________________________.
E. Tenancy at Will
1. Definition: May be ______________________________ by either landlord or tenant at any
time, for any reason
2. Creation: Can be created by express agreement or by implication
3. Termination: Can be terminated by either party ______________________________ notice
o If the agreement gives only the landlord the right to terminate at will, the tenant also gets
the right to terminate by ______________________________.
o If agreement gives only the tenant the right to terminate at will, the landlord is
______________________________ given the right to terminate at will.
o If the landlord or tenant dies, does that terminate the tenancy at will?
______________________________, but this is not true for the tenancy for years or the
periodic tenancy.
F. Tenancy at Sufferance
1. Definition: Created when a tenant ______________________________ after the lease has
ended
o Temporary tenancy that exists before the landlord either
______________________________ the prior tenant or
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______________________________ the property to the tenant (creates a new tenancy with
the holdover tenant)
o Tenant owes landlord reasonable ______________________________ of her daily use (i.e.,
look to rent from prior lease), as well as reasonably ______________________________
special damages.
2. Creation: Distinguish between a tenancy at will and a tenancy at sufferance:
o Tenancy at will: Created by ______________________________ of the landlord and tenant
o Tenancy at sufferance: Created by ______________________________ of the tenant alone
3. Termination: Consider three ways to terminate:
o The tenant voluntarily ______________________________;
o The landlord ______________________________ the tenant;
o The landlord ______________________________ to the tenant.
CHAPTER 12: LANDLORD AND TENANT—TENANT’S DUTIES
A. The Gist
The tenant has two basic duties:
• Pay ______________________________;
• Avoid ______________________________.
B. Duty to Pay Rent
• Duty arises because of the contractual relationship between the landlord and tenant (i.e., the
lease requires it)
• Three situations when duty to pay rent is suspended:
o Premises are ______________________________, so long as the tenant didn’t cause the
damage;
o The landlord completely or partially ______________________________ the tenant;
Complete eviction: Removal of tenant from the entire property
Partial eviction: Removal of tenant from a ______________________________ of the
property
o The landlord materially ______________________________ the lease.
• Particularly concerned with breaches of the implied covenant of quiet enjoyment and the
implied warranty of habitability
o Implied Covenant of Quiet Enjoyment: The tenant can withhold rent when the landlord
takes actions that make the premises wholly or substantially
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______________________________ for their intended purposes, and the tenant is
______________________________ evicted.
Constructive Eviction—four elements:
• Premises were ______________________________ for their intended purposes
(i.e., breach of the covenant of quiet enjoyment);
• The tenant ______________________________ the landlord of the problem;
• The landlord does not correct the problem; and
• The tenant ______________________________ the premises after a
______________________________ amount of time has passed.
Example 62: The Scott Michael Paper Company rents office space from
Landlord. Due to poor construction, the office floods whenever it rains. The
first time the office floods, the Company notifies Landlord and explains that it
will no longer pay rent. The next day, the Company rents a new space and
moves its belongings. Is the Company liable to Landlord for rent?
______________________________. Why? Because the Company vacated
______________________________; it did not give Landlord the opportunity to
fix the problem. Note that Landlord had breached the covenant of quiet
enjoyment and the Company did give Landlord notice of the problem.
o Implied Warranty of Habitability (“IWH”): The landlord has an obligation to maintain the
property such that it is suitable for residential use. We are concerned with conditions that
threaten the tenant’s ______________________________ and
______________________________.
Background points:
• The tenant cannot ______________________________ habitability protection;
• The landlord’s failure to comply with applicable
______________________________ codes constitutes a breach;
• Applies to ______________________________ properties, usually multi-family
buildings; not to commercial leases;
• IWH and rent: If the premises are not habitable, the tenant may:
o ______________________________ to pay rent;
o ______________________________ the defect and offset costs against the
rent; or
o ______________________________ against eviction.
Note 18: If the tenant chooses to withhold rent, the tenant must: (i)
______________________________ the landlord of the problem; and (ii) give
the landlord a reasonable opportunity to correct the problem.
Note 19: Unlike quiet enjoyment and constructive eviction, IWH does not
require the tenant to ______________________________ the premises.
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Example 63: Tara rents an apartment from Larry. The apartment is in a bad
state—there is no hot water, ants and roaches are getting in, there is mold
growing in the bathroom, and the security light over Tara’s door is inoperable.
Tara has repeatedly notified Larry of the problems to no avail. Can Tara
withhold rent? ______________________________, because Larry has
breached IWH and failed to correct the problems.
C. Duty to Avoid Waste
• The duty to avoid waste is a background rule; it does not have to be
______________________________ in a lease in order to apply.
• The tenant has a duty not to commit ______________________________ (voluntary) waste or
______________________________ (neglectful) waste.
• A tenant may make changes to the property that ______________________________ the
property’s value (“ameliorative waste”). Landlords usually require permission before a tenant
can make the change.
Note 20: A landlord can put a provision in the lease prohibiting the tenant from
making improvements to the property.
• Duty to repair: In a residential lease, the ______________________________ is presumed to be
responsible for repairs. The tenant must ______________________________ the landlord of
any needed repairs.
Note 21: The landlord is not responsible to make repairs caused by the tenant’s
actions.
Note 22: In a commercial lease, the landlord can place the duty to repair on the
tenant.
CHAPTER 13: LANDLORD AND TENANT—LANDLORD’S DUTIES
A. Duty to Mitigate Damages
If the tenant abandons the property early or is evicted by landlord, does the landlord have an obligation
to mitigate damages by re-renting the property?
1. Majority rule: The landlord must make ______________________________ efforts to re-rent
the property.
o The landlord must treat leasehold as if it was ______________________________ stock,
that is, like any other property she would try to rent (e.g., advertise, allow for viewings).
o If the landlord does not make diligent efforts to mitigate, the tenant is
______________________________ from the obligation to continue paying rent.
o If the landlord does seek to mitigate, the landlord is entitled to the difference between the
original rent and the rent received from the ______________________________ tenant.
o The landlord does not have to accept an unacceptable replacement tenant.
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2. Minority rule: The landlord does not have to mitigate damages. The minority rule is more
common in cases involving ______________________________ leases.
Example 64: Larry rents a studio apartment to Tara at $2000 per month for a
one-year term. Tara abandons the apartment after a month in search of a
cheaper apartment. Larry does nothing until the one-year term is up. In a
majority jurisdiction, can Larry recover damages from Tara?
______________________________, Larry failed to make a reasonable effort
to re-rent.
Example 65: Instead, assume Larry advertised as normal but was only able to
find a tenant who was willing to pay $1000 for the studio apartment. In a
majority jurisdiction, can Larry collect the remaining half from Tara?
______________________________, Larry met his obligation to mitigate.
B. Holdover Tenant
How can the landlord deal with the holdover?
• Can ______________________________ the holdover tenant; or
• Can continue the relationship with the tenant by treating the holdover tenant as a
______________________________ tenant.
o The landlord will continue the relationship by accepting rent.
o Amount of rent: Rent amount under the old lease is the amount due
o Exception: The landlord can impose a higher rent if the landlord had informed the tenant of
the increase ______________________________ the expiration of the old lease.
C. Duty to Deliver Possession
• Majority rule: The landlord must deliver ______________________________ possession of the
leasehold premises. This means ______________________________ possession of the
property.
• Minority rule: The landlord only required to deliver ______________________________
possession.
Note 23: The difference between actual and legal possession is of particular
importance with holdover tenant issues and the obligation to the new tenant.
D. Conditions of Leased Premises
• The landlord cannot deny the tenant quiet enjoyment. In practice, quiet enjoyment is violated
when the landlord, or someone connected to the landlord, renders the premises unsuitable for
the intended purpose.
o The landlord must control:
______________________________ areas, such as a lobby, hallway, or laundry room;
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______________________________-like behavior of other tenants (Remember: Don’t
touch the stinky wall!).
o The landlord does not have to control:
Off-premises actions of ______________________________ that are beyond the
landlord’s control (e.g., the noisy bar across the street);
In a residential lease, the landlord must provide ______________________________
premises.
Example 66: Larry is the landlord for an apartment building. The lock on the
front door of the building is broken and, although tenants have complained,
Larry has not fixed it. Young hooligans have been vandalizing the lobby hallway
of the building. Tara, a tenant in the building, is injured by a piece of debris left
in the hallway by one of the hooligans. Has Larry breached his obligation to
Tara? ______________________________, because the damage took place in
a ______________________________ area, which is under Larry’s control.
• If a tenant complains about conditions, the landlord cannot retaliate by evicting the tenant.
CHAPTER 14: LANDLORD AND TENANT—TORT LIABILITY & TRANSFERS
A. Tort Liability
• The tenant owes a duty of ______________________________. This extends to invitees,
licensees, and foreseeable trespassers.
• The landlord’s liability to invitees, licensees, and foreseeable trespassers is as follows:
o Common law
Responsible in negligence for ______________________________ (hidden) defects
about which the tenant has not been warned;
Responsible for ______________________________ completed by the landlord (or the
landlord’s agent) negligently;
Responsible for negligence that causes injuries in ______________________________
areas of the property.
o Modern trend: Landlords have a general duty of reasonable care.
Example 67: Larry rents a studio apartment in a large building to Tara. When
Tara moved in, Larry warned her that there was a loose beam in the floor of the
hallway in her apartment. Shortly after moving in, Tara tripped on the loose
beam and fractured her ankle. Is Larry liable for her injuries?
______________________________, she was warned; it’s not a latent defect.
Example 68: Tara noticed that the building’s back door had a broken hinge,
causing it to slam shut quicker than most would expect it to. Tara informed
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Larry about the door. Larry sent a handyman to fix the door, but the handyman
ended up making the door worse. Tara smashed her fingers in the door. Is Larry
liable for her injuries? ______________________________, under common
law, because the landlord’s agent undertook to repair the door, but the repair
was faulty. Under modern rule, as it violates duty of care.
B. The Basics of Transfers—Subleases and Assignments
• Who’s who? Three parties:
o Landlord: ______________________________;
o Tenant: Transferee/transferor;
o Subsequent tenant: ______________________________.
• Assignment is a ______________________________ transfer of the tenant’s remaining term.
• Sublease is a transfer for ______________________________ the entire duration of the lease.
Example 69: Larry rents a studio apartment to Tara and the lease is set to end
on August 14. Tara decides to move to Belgium for the summer so she transfers
her lease to Sally Theresa. Tara will re-take possession from Sally Theresa on
August 1. Is the transfer to Sally Theresa an assignment or a sublease? It is a
______________________________; it is less than the entire duration.
Exam Tip 4: If the tenant retains a reversionary interest in the leasehold, then
the transfer is a sublease.
C. Responsibility for Rent
• In an assignment, the landlord can collect rent from:
o The ______________________________ (because of privity of contract); or
o The ______________________________ tenant (because of privity of estate).
• In a sublease, the landlord can collect rent from:
o The ______________________________ (because of privity of contract and estate)
The subsequent tenant only has rent obligations to the original tenant.
Example 70: Larry rents a studio apartment to Tara and the lease is set to end
on August 14. Tara decides to move to Belgium for the summer so she transfers
her lease to Sally Theresa. Tara will re-take possession from Sally Theresa on
August 1. Larry doesn’t receive rent during the summer months. Can he try to
get rent from Sally Theresa? ______________________________, because
they are not in privity. He can only collect rent from
______________________________.
D. Permission
• Silent lease: If the lease is silent on the issue, a tenant may assign or sublet freely.
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• Permission: If the lease requires the landlord’s permission to transfer, but is silent as to the
applicable standard, then:
o Majority rule: A landlord may deny permission to a transfer only for a
______________________________ reasonable reason.
o Minority rule: A landlord may deny permission at her ______________________________,
which means for any reason or no reason at all.
• Transferring a landlord’s interest: A landlord does not need the tenant’s permission before
transferring her interest. The new landlord is bound by terms of the existing lease.
Example 71: Larry rented a one-bedroom house to Tara at $1000 per month
for a one-year term. The lease included a covenant that Larry would shovel the
snow and take care of the lawn maintenance. A few months into Tara’s tenancy,
Larry decided to move to Tahiti, so he transferred his interest in the property to
Lucy. Lucy contacted Tara to inform her that her rent would go up to $1200 per
month and that Tara was now responsible for snow removal and lawn care.
Question 1: Did Larry need Tara’s permission before transferring to Lucy?
______________________________, the landlord is free to transfer.
Question 2: Can Lucy change the terms of Tara’s lease?
______________________________, she needs Tara’s approval.
CHAPTER 15: LAND SALE CONTRACTS
Exam Tip 5: Expect questions on the MBE in this area. The land sale contract is
one of the most heavily tested subjects in real property.
A. Who’s Who?
• Seller: Owner looking to unload property
• Buyer: Sucker looking to get stuck with a money pit
• Broker (or real estate agent): An intermediary between buyer and seller
o Listing agent: The agent who assists the seller in promoting and selling the property
o Seller’s agent: A sub-agent for the listing agent who helps find buyers
Note 24: In most cases, the listing and seller’s agent share the commission. The
agent who shows you property is, in effect, working for the seller.
o Buyer’s agent: The broker who serves as the representative of the buyer; will receive
commission similar to seller’s agent fee
o Dual agent: Represents both buyer and seller (many states forbid dual agency as a conflict
of interest)
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B. Framework
1. Two Stages
o First: ______________________________ (where parties negotiate terms)
o Then: ______________________________ (where parties transfer property)
2. Liability: Determined by the stage where breach occurs
o Contract stage: Any liability must be based on a ______________________________
provision
o Deed stage: Any liability must be based on a ______________________________ warranty
3. Doctrine of Merger
o Covenants under the contract are ______________________________ into the deed and
any remedy will flow from the deed.
C. Statute of Frauds
Exam Tip 6: Expect a Statute of Frauds question on the MBE. The bar
examiners test the Statute of Frauds and its exceptions rather frequently.
• Land sale contracts are subject to the Statute of Frauds.
• Three requirements:
o Must be in ______________________________;
o Must be signed by the party to be ______________________________; and
o Must include ______________________________ terms:
The ______________________________ (i.e., the seller and the buyer);
______________________________ of the property;
Price and payment info (e.g., money, financing).
D. Exceptions to the Statute of Frauds
Two main exceptions:
• Part performance;
• Detrimental reliance (also called estoppel).
1. Part Performance
o Partial performance by either the seller or the buyer is treated as evidence that the contract
existed.
o Look for acts of performance, such as:
______________________________ of all or part of the purchase price;
______________________________ by the purchaser; or
______________________________ by the purchaser.
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Exam Tip 7: Many states require at least two acts of performance for the
doctrine of partial performance to apply. On the MBE, look for at least two
acts.
2. Detrimental Reliance
o An estoppel doctrine that applies where a party has reasonably
______________________________ on the contract and would suffer hardship if the
contract were not enforced.
Note 25: The two doctrines—part performance and detrimental reliance—often
go hand in hand.
Example 72: Paul orally agrees to purchase Sandy’s home for $75,000. Paul
sends Sandy a check for the home, then proceeds to move into the new house,
sell his old house, buys new furniture, and hires a contractor to make repairs.
Weeks later, Sandy returns the check and demands that Paul leave the house.
Can Paul enforce the contract? ______________________________, despite
the absence of a written contract, under both the part performance and the
detrimental reliance exceptions to the Statute of Frauds.
E. Marketable Title
• Every land sale contract includes an implied covenant of marketable title.
o What is marketable title? Title that is free from an ______________________________ risk
of litigation
o Examples of defects in title that would render title unmarketable:
Title acquired by adverse possession that hasn’t been
______________________________;
Private encumbrances (e.g., mortgage, ______________________________, easement);
Violation of a ______________________________ ordinance.
Note 26: A defect in title must be cured or fixed
______________________________, at which point the contract and deed
merge and the deed controls.
• In judging whether title is unmarketable, the standard is that of a
______________________________ buyer.
• If the seller cannot deliver marketable title, the buyer’s remedy is
______________________________ of the contract.
Example 73: Sadie contracts to sell a condo to Benson in the Hilly Flats
community. A title search on Hilly Flats reveals two covenants. The first says
that condos in Hilly Flats “cannot be transferred to Non-Caucasians.” The
second says, “No pets can reside anywhere in Hilly Flats condos.”
Can Benson rescind the contract because of the racially restrictive covenant?
______________________________. This covenant is not enforceable under
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the Fair Housing Act or the 14th Amendment of the U.S. Constitution. Thus,
there is no risk of litigation.
What about the “no pets” covenant? ______________________________.
The covenant is an encumbrance that would prevent Benson from having a pet
(potential enforcer of the covenant: Neighbors or HOA) or from eventually
selling to anyone with a pet.
F. Delays
• Basic rule: Unless the contract or parties notify, time is NOT of the essence.
• Why does this matter? If time is not of the essence, the failure to close on the date set for close
may be a ______________________________ of the contract, but is not grounds for rescission
of the contract.
• Specific performance is still available.
G. Implied Warranty of Fitness or Suitability
Applies to defects in new construction
• In most jurisdictions, both the initial homeowner-purchaser and subsequent purchasers may
recover damages.
• In a minority of jurisdictions, only the original buyer can enforce this warranty.
• Generally, suit for breach of this warranty must be brought within a reasonable time after
______________________________ of the defect (but some jurisdictions have a statutory time
period).
H. Duty to Disclose Defects
Most jurisdictions impose a duty on the seller to disclose to the buyer all known, physical and
______________________________ defects.
• Concerned with ______________________________ or hidden defects;
• Material defect must ______________________________ affect the value of the home, health
and safety of its occupants, or the desirability of the home;
• General disclaimers (e.g., “as is”) will not satisfy the seller’s duty to disclose.
I. Merger
• After closing, obligations contained in the contract are merged into the deed.
• If there was something important in the contract that is not in the deed, the cause of action is
lost because the deed controls after closing.
J. Seller’s Remedies on Buyer’s Breach
Remedies available to the seller?
• ______________________________: Measure is the difference between the contract price and
market price
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• ______________________________: Seller can sell the property to someone else
• Specific Performance
K. Buyer’s Remedies on Seller’s Breach
Remedies available to the buyer?
• Damages: Measure is the difference between contract price and
______________________________ on the date of breach
o What if the seller breaches but acted in good faith? The buyer can only recover out-of-
pocket expenses.
• Rescission: Returns payments to the buyer and ______________________________ the
contract
• Specific performance
Note 27: Buyers and sellers must choose between damages and specific
performance—cannot have both remedies.
L. Equitable Conversion and Risk of Loss
1. Issue
Who bears the risk of loss if there is damage to or destruction of the property?
2. Majority rule
The ______________________________ holds equitable title during the period between the
execution of the contract and the closing and delivery of the deed.
o Buyer is responsible for any damage to the property that happens during that period.
o As holder of legal title, the ______________________________ has a right to possess the
property.
3. Minority rule
Places the risk of loss on the ______________________________ until the closing and delivery
of deed.
Example 74: Sadie and Benson agree that Sadie will sell Benson Banana Acre.
Two days before Sadie and Benson are set to close on Banana Acre, an epic
storm blows through town and crushes Banana Acre, reducing it to rubble. Who
is responsible for the damage to Banana Acre?
In a majority jurisdiction: ______________________________. As the holder of
equitable title, he bears the risk of loss.
In a minority jurisdiction: ______________________________. As the seller,
she bears the risk of loss.
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CHAPTER 16: ADVERSE POSSESSION
A. The Gist
• The doctrine of adverse possession allows a person in ______________________________
possession to acquire good title to a piece of property. Until the person acquires good title, the
person is a ______________________________.
• When a person acquires title by adverse possession, the new title relates back to the date of the
person’s entry onto the property. There is no transfer of title from the former owner.
• Property owned by the ______________________________ cannot be adversely possessed.
• Two basic rationales for the doctrine of adverse possession:
o ______________________________ the true owner for sleeping on her rights; and
o Rewarding the adverse possessor for ______________________________ good title.
B. The Elements
Four elements:
• ______________________________ for the statutory period;
• Open and notorious;
• ______________________________; and
• ______________________________.
1. Continuous
a. Three phases:
Entry phase: When the adverse possessor ______________________________ the
land; required to trigger the applicable statute of limitations;
End phase: When the statute of limitations runs out of time; now, the adverse
possessor is the legal owner of the property by operation of law;
Middle phase: When the adverse possessor makes ______________________________
of the property, between the entry and end phases.
b. The “continuous” requirement is not literal.
Seasonal or infrequent use may suffice if the use is ______________________________
with the type of property being possessed (e.g., a vacation home, farmland).
c. Tacking
If the adverse possessor cannot satisfy the continuity requirement on her own, she can
tack on her predecessor’s time on the property to satisfy the statute of limitations.
Example 75: Anderson takes possession of Tony’s property and lives there for
five years. Anderson later “sells” his interest in the property to Annie, who takes
possession and lives there for three years. The statute of limitations is seven
years. Can Annie satisfy the continuous requirement?
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______________________________, by tacking on Anderson’s time of
possession.
To tack the time of adverse possession of a prior adverse possessor, the current adverse
possessor must be in ______________________________ with the prior adverse
possessor. Privity is an exchange of some sort between the adverse possessors.
d. Disabilities
The statute of limitations will not run against a true owner who has a disability at the
time the adverse possession begins (e.g., infancy, ______________________________,
or imprisonment).
The disability must exist when the trespasser enters the property.
e. Interruptions
A true owner can interrupt the adverse possession period by
______________________________ the adverse possessor. This will stop the adverse
possession clock.
2. Open and Notorious
o An adverse possessor’s use must be open and notorious.
o Use must be such that it would put a ______________________________ true owner on
notice of the adverse use.
o The use cannot be hidden; the trespasser must use the property as if she was the true
owner.
Example 76: Tony owns Blackacre but has never visited it. Annie trespasses on
Blackacre and begins living there. To conceal her trespass, Annie only goes out
at night and never uses lights. Would Annie’s use be open and notorious?
______________________________, because it is designed to avoid detection.
3. Hostile
“Hostile” does not mean unpleasant. Possession must be ______________________________
to the owner’s interest. It is a claim of competing title.
Example 77: I invite my friend to stay at my house while I’m out of town. Is my
friend’s use hostile? ______________________________, the use is permissive.
o Majority rule: Ignores the adverse possessor’s state of mind
o Minority rule: Inquires into the adverse possessor’s state of mind
Good faith: The adverse possessor’s claim is hostile if she thinks the land is unowned or
that she is the rightful owner. This is adverse possession based on a
______________________________.
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Bad faith: The adverse possessor knows that land is not hers and she tries to acquire
title to the property by adverse possession. This is adverse possession based on an
aggressive trespass.
Example 78: Trevor buys Blackacre from Charlie for $200,000 cash. Trevor
didn’t know that the deed was fraudulent and Charlie didn’t own the rights to
Blackacre. Trevor takes possession of Blackacre and begins farming it. Was
Trevor’s use hostile?
In a majority jurisdiction: ______________________________, state of mind is
irrelevant and Trevor’s use is adverse to the true owner’s interest.
In a good-faith jurisdiction: ______________________________, Trevor
mistakenly believed he had acquired good title from Charlie.
In a bad-faith jurisdiction: ______________________________, because it was
based on mistake, Trevor’s possession was not an aggressive trespass.
4. Exclusive
• An adverse possessor cannot share ______________________________ with the true owner.
• If two people possess the property together, can they both acquire title by adverse possession?
______________________________, they acquire title as tenants in common.
C. Scope of Possession
• Adverse possession generally traces the legal boundaries of the property
• Exception—constructive adverse possession: Adverse possessor enters under color of title from
an invalid instrument (e.g., fraudulent deed) and occupies a portion of the property described in
the instrument. The adverse possessor is in actual possession of the occupied land and
constructive possession of the remaining land described in the deed.
Example 79: A fraudulent deed states that a buyer purchases all 10 acres of a
piece of property. When the tenant moves onto the property, she only occupies
one acre. Here, the tenant entered under color of title and occupied one acre
(i.e., was in actual possession of one acre). But because 10 acres are described
in the deed, the tenant is in constructive possession of the remaining nine acres.
• Includes ______________________________ rights, unless those rights already belong to a
third party
• Easements can also be acquired by adverse possession (or prescription).
Example 80: Annie regularly crosses Tony’s land to reach the main road, which
she has done consistently for over 10 years. The jurisdiction has a 10-year
statute of limitations. Annie can acquire an easement by adverse possession
(prescription). Has Annie acquired title to Tony’s land?
______________________________, she has only acquired the right to
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______________________________ his land (use rights), not to possess it
(ownership).
CHAPTER 17: DEEEDS (AND A TASTE OF RECORDING)
A. What’s What?
• Basics: A deed is a legal instrument that transfers ownership of real property.
• For a deed to be valid, it must be ______________________________ and
______________________________. The delivery requirement houses the issue of intent.
1. Delivery
The controlling question is whether the grantor had the ______________________________
intent to transfer the property.
Note 28: Physical transfer of a deed is not required.
Example 81: Garrett executes a deed conveying Blackacre to Barbara. Garrett
learns that Barbara is out of the country when he tries to deliver the deed to
her. So he calls her and says, “Great news! I conveyed you Blackacre. You’re
the new owner.” Has the deed been delivered?
______________________________, because the phone call manifests the
necessary intent to make an immediate transfer of Blackacre.
Note 29: Be on the lookout for situations where delivery is incomplete or
seemingly revocable.
Example 82: Garrett asks his attorney to transfer a deed for Blackacre to
Barbara “in two months’ time, unless I change my mind before then.” Has the
deed been delivered? ______________________________, because Garrett
can change his mind before the date of delivery.
Note 30: Remember that the grantor can make proper delivery to an agent.
Example 83: Garrett gives a deed to an escrow agent with clear instructions to
deliver it to Barbara. Has proper delivery been made?
______________________________.
2. Acceptance
Acceptance is generally presumed, provided the transfer is for value.
Example 84: Garrett conveys a deed to Blackacre to Barbara. A day later,
Barbara changes her mind about Blackacre and says she doesn’t want it. Has
Barbara accepted the deed? ______________________________. What must
Barbara do if she doesn’t want the property anymore?
______________________________.
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B. Who’s Who?
Brokers can be involved in land sale contracts so long as they do not practice
______________________________.
• Permissible: Most states permit real estate agents and brokers to prepare a contract of sale.
• Impermissible: Real estate agents cannot usually draft a legal document like a deed or
mortgage.
• Keep in mind: We are looking for the exercise of legal ______________________________ and
whether the broker or non-lawyer is giving legal ______________________________.
C. Contents of a Deed
• A valid deed must identify the ______________________________ (i.e., grantor and grantee)
and it must be signed by the ______________________________, per the Statute of Frauds.
• A valid deed must include words of ______________________________.
o A granting clause can include any words that evidence a
______________________________ intent to transfer.
• A valid deed must include a sufficient ______________________________ of the property.
o Does the description have to be a legal description? ______________________________.
o Can it be based on monuments or physical attributes of the property?
______________________________.
o Can extrinsic evidence be admitted to clarify an ambiguous description?
______________________________.
D. Execution
1. Signature
As a general matter, the grantor’s signature is required for execution to be effective.
o Is the grantee required to sign too? ______________________________.
o Must the deed be witnessed or notarized? ______________________________.
o What if the signature is forged? The deed is ______________________________, even if
the purchaser is a BFP.
2. Agents
o A principal can appoint an agent to execute a deed.
o Equal Dignities Rule: If the agent is required to sign (e.g., execute a deed), then the agency
relationship must be created in ______________________________.
E. Recording—The Basics
• What does it mean to record? Publicly ______________________________ your deed.
• What is the purpose of recording? ______________________________. Tell the world you
own the property.
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• Does recording affect the validity of a deed? ______________________________, a deed is
valid at delivery.
• If they do not affect validity, what’s the big deal with recording statutes? We’re concerned
about ______________________________.
Example 85: Garrett conveys Blackacre to Barbara. Later, Garrett conveys
Blackacre to Sandy without informing her about the prior deed to Barbara.
Who is the subsequent purchaser? ______________________________. The
purpose of a recording statute is to mediate conflicts between first and
subsequent purchasers, in this example, Barbara and Sandy.
F. Common-Law Recording Rule
• A deed does not have to be recorded to be valid!
• The baseline for recording problems is the common-law rule. It follows the “first in
______________________________, first in ______________________________” principle
(i.e., under the common-law rule, the first grantee to receive a deed wins).
Note 31: Every state has a recording statute that modifies the common-law rule
to give priority to certain deeds when there are competing claims to title.
Note 32: In the absence of a recording statute, the common-law rule controls.
Example 86: Garrett sells his property to three people. First to Barbara, then
to Candace, and finally to Darla. All three are claiming title. Who has title at
common law? ______________________________. Why? Because she was
______________________________.
CHAPTER 18: RECORDING ACTS
A. Scope of Recording Acts
1. What’s What? What types of interests are covered?
o Deeds;
o ______________________________;
o Leases;
o ______________________________;
o Judgments affecting title;
o Other instruments creating an interest in land, such as ______________________________
or ______________________________.
Note 33: Title by adverse possession is NOT covered. Recording statutes do not
cover interests created by operation of law.
2. Who’s Protected? Who is covered by recording acts?
o ______________________________ purchasers
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Note 34: The term “purchaser” means someone who has acquired an interest in
land.
3. Unprotected Persons: Who is not covered by recording acts?
o Grantees who acquire title by ______________________________, intestacy, or devise are
not protected by recording acts.
o The policy behind recording acts is that we want to protect those who make economic
investments by ______________________________ property.
B. Notice
• The concept of ______________________________ is crucial in applying two of the three
recording acts.
• Three kinds of notice:
o Actual—when the subsequent grantee has real, ______________________________
knowledge of a prior interest;
o Constructive (i.e., record notice)—when a prior interest is
______________________________;
o Inquiry—when a reasonable ______________________________ would have disclosed the
existence of prior claims.
• Helpful hint about inquiry notice: There are two common situations where a subsequent
grantee will be put on inquiry notice:
o Dude on the land: When there is someone else living on or
______________________________ the land; had the subsequent grantee investigated the
land, he would have discovered the person in possession;
o Mentioned interest: When there is an interest mentioned in the deed to some other
transaction; had the subsequent grantee ______________________________, he would
have discovered the interest.
Example 87: Garrett’s deed to Barbara references an easement from Garrett
to Jones. This is ______________________________ notice. Any subsequent
purchaser in Garrett’s chain of title will be charged with knowledge of the
easement.
Exam Tip 8: Of the three types of recording acts, notice statutes and race-
notice statutes are most heavily tested on the MBE.
C. Race Statutes
1. Rule: First to ______________________________ wins, even if the subsequent purchaser had
notice of a prior, unrecorded conveyance.
2. Key language: “First recorded” or “First to record”
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D. Notice Statutes
1. Rule: A subsequent purchaser wins if she acquires without notice of a prior,
______________________________ conveyance.
2. Key language: “In good faith” or “Without notice”
E. Race-Notice Statutes
1. Rule: A subsequent purchaser wins if two requirements are met:
o Acquired ______________________________ notice of a prior unrecorded conveyance; and
o Records ______________________________.
2. Key language: “In good faith” or “Without notice” plus “First duly recorded” or “First recorded”
F. Name that Statute
Example 88: “No conveyance or mortgage of real property shall be good
against subsequent purchasers for value and without notice unless the same be
first recorded according to law.” This is a ______________________________
statute.
Example 89: “No conveyance or mortgage of real property shall be good
against subsequent purchasers for value unless the same be first recorded
according to law.” This is a ______________________________ statute.
Example 90: “No conveyance or mortgage of real property shall be good
against subsequent purchasers for value and without notice unless the same be
recorded according to law.” This is a ______________________________
statute.
G. Application
Example 91: Oliver owns Blackacre. Oliver conveys Blackacre to Anna, who
does not record. Oliver later conveys Blackacre to Benny for $200,000. Benny
does not know about the deed to Anna. Benny records. Then Anna records.
Who wins in a “race” state? ______________________________. He recorded
first.
Who wins in a “notice” state? ______________________________. He bought
without knowledge of Anna’s prior interest.
Who wins in a “race-notice” state? ______________________________. He
recorded first and didn’t have knowledge.
Example 92: Blackacre is located in a state that has the following statute: “No
conveyance or mortgage of real property shall be good against subsequent
purchasers for value unless first duly recorded in good faith.” Oliver sold
Blackacre to Anna, who did not record. Later, Oliver conveyed Blackacre to
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Benny for valuable consideration. Benny did not know of the prior conveyance.
Anna recorded. Then Benny recorded.
What kind of recording act is it? ______________________________.
Who owns Blackacre? ______________________________. Why?
______________________________. Benny lost the race.
Example 93: Oliver owns Blackacre, which he conveys to Anna for $100,000.
Anna does not record. Weeks later, Oliver offers Benny Blackacre for $15,000.
Before buying it, Benny inspects Blackacre and sees Anna working in the garden
on the property. Benny goes ahead with the purchase and records his deed.
Who wins in a “race” state? ______________________________. He recorded
first.
Who wins in a “notice” state? ______________________________. Benny had
inquiry notice of Anna’s interest.
Who wins in a “race-notice” state? ______________________________.
Again, Benny had inquiry notice; he is not protected by the recording statute.
Example 94: Oliver owns Blackacre. Oliver conveys Blackacre to Anna for
$100,000. Anna does not record. Weeks later, Oliver makes a gift of Blackacre
to his nephew Benny. Benny does not know about the prior conveyance to
Anna. Benny does not record. Anna records.
Is Benny covered by the recording act? ______________________________.
Gift recipients are not covered by a recording statute.
What rule controls? The ______________________________ rule controls—
first in time.
Who wins? ______________________________. She was first in time.
H. Special Rules
1. Shelter Rule
A person who takes from a bona fide purchaser protected by the recording act has the same
rights as her grantor.
Example 95: Oliver sells Blackacre to Anna, who does not record. Later, Oliver
sells Blackacre to Benny. Benny has no knowledge of the prior conveyance.
Carter is interested in buying Blackacre from Benny, though Carter is aware of
the prior transfer to Anna. Benny sells to Carter. The state is a “notice” state.
Does Carter have good title? ______________________________. Even
though Carter had notice of the prior conveyance, Carter stands in Benny’s
place, and Benny did not have notice of the conveyance to Anna.
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2. Estoppel by Deed
o Arises when a grantor conveys land the grantor does not own
o If a grantor subsequently acquires title to the land, the grantor is
______________________________ from trying to repossess on grounds that he didn’t
have title when he made the original conveyance.
CHAPTER 19: DEEDS; WILLS & TRUSTS; RESTRAINTS ON ALIENATION
A. Deed
• Reminder: After closing, the land sale contract is merged into the deed. Any liability must arise
out of the ______________________________, not the contract.
• Three kinds of deeds:
o ______________________________ warranty deed;
o ______________________________ warranty deed;
o ______________________________ deed.
Note 35: The list is a hierarchy from best to worst based upon the type of
protection that is provided (i.e., how many warranties are built into the deed).
B. Particulars
1. General Warranty Deed
o Provides the ______________________________ amount of title protection; the grantor
warrants title against ______________________________ defects, even if the grantor did
not cause the defects.
a. Six implied covenants in the general warranty deed
1) Present covenants
• Covenant of seisin: Warrants that the deed ______________________________
the land in question;
• Covenant of the right to convey: Warrants that the grantor (i.e., the seller) has the
______________________________ to convey the property;
• Covenant against encumbrances: Warrants that there are no
______________________________ encumbrances on the property that could limit
its value.
2) Future covenants
• Covenant of quiet enjoyment: Grantor promises that the grantee’s possession will
not be ______________________________ by a third-party claim;
• Covenant of warranty: Grantor promises to defend against future claims of
______________________________ by a third party;
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• Covenant of further assurances: Grantor promises to fix future title problems.
2. Special Warranty Deed
o The grantor warrants against defects only caused by the
______________________________.
o This type of deed provides a lesser amount of title protection than a general warranty deed.
o It includes the same six covenants as a general warranty deed, but they only apply to the
acts (or omissions) of the ______________________________.
3. Quitclaim Deed
o The grantor makes ______________________________ as to the health of the title.
o This type of deed provides the least amount of title protection.
o Often used in tax sales and intra-family disputes (e.g., divorces)
Example 96: Sadie transfers a quitclaim deed for Banana Acre to Benson for
$25,000. After taking possession, Benson discovers a bunch of his neighbors
using paths on his property. He learns from them that Sadie had granted a
right-of-way easement across Banana Acre, which she did not disclose to
Benson. Does Benson have a claim against Sadie for failing to disclose the
easements? ______________________________. Because she used a
quitclaim deed, Sadie made no warranties as to the state of the title.
Example 97: Instead, assume that Sadie had transferred a special warranty
deed. Would Benson have a claim against Sadie for failing to disclose the
easements? ______________________________. Sadie breached the
covenant against ______________________________.
Example 98: Instead, assume that Benson discovered that a prior owner,
rather than Sadie, had granted the easements across Banana Acre. Sadie still
conveyed a special warranty deed. Would Benson have a claim against Sadie
for failing to disclose the easements? ______________________________.
Sadie only warranted against defects that she herself created.
C. Breach and Remedies
• Breach of the present covenants occurs at the ______________________________.
• Breach of the future covenants occurs ______________________________ the conveyance,
once there is interference with possession.
• Remedies: Damages
D. Wills
• Real property can be transferred by ______________________________.
• The guiding principle in the interpretation of wills is the testator’s
______________________________.
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• If a person dies without a will, her estate is distributed by ______________________________
succession. This is a default estate plan created by the legislature.
1. Who’s Who?
o Heirs: People who take a decedent’s ______________________________ estate. In order
to be an heir you have to survive the dead person who dies without a will;
o Devisee: A person who takes a devise by will (alternative term: Legatee);
o Decedent: Dead guy;
o Testator: Dead guy who made a ______________________________.
2. What’s What?
o Escheat: If a decedent dies without a will and without heirs, the decedent’s property goes to
the state.
o Ademption: A devise of property that fails (or “adeems”) because it is not in the testator’s
estate at ______________________________:
Basic rule: The gift ______________________________ and the intended recipient gets
nothing;
Satisfaction: If the testator gives the intended beneficiary the promised gift during
______________________________, then the beneficiary keeps the gift (“ademption by
satisfaction”).
o Lapse & Anti-Lapse
Lapse: The intended beneficiary predeceases (i.e., dies before) the testator.
Traditionally, the gift fails (i.e., lapses) and would fall to the residuary gift.
Anti-Lapse: Every state has an anti-lapse statute to prevent a gift from failing because
an intended recipient predeceased the testator.
• In most states, to qualify under an anti-lapse statute, the predeceasing beneficiary
must be a ______________________________ of the testator who dies leaving
issue.
• The statute replaces the intended beneficiary with a family member (e.g., the
children of the beneficiary) who stands in the shoes of their parent and takes the
gift on their behalf.
• Why? More consistent with the testator’s ______________________________.
Rather go to family than the residuary.
E. Trusts
1. Definition
A device for managing property with bifurcated ownership. One person (the
______________________________) owns property (legal title) for the benefit of another
person (the ______________________________) who holds equitable title.
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o Charitable Trust: Trust designed to benefit the public and is charitable in nature
o Private Trust: Trust designed to satisfy some legal purpose by giving property to a person or
group for the benefit of another person or group.
2. Who’s Who?
o Settlor: Person who ______________________________ the trust
o Beneficiary: Person who ______________________________ from the trust
Holds equitable title (no obligations and all of the benefit);
Has standing to enforce the trust.
o Trustee: Person (can be an entity) who ______________________________ the trust
property and holds legal title
3. What’s What?
o Res: Property that is subject to the trust. Generally, a trust must contain property.
o Bifurcated transfer: Ownership is divided:
Giving someone ______________________________ title to act as the owner (trustee)
Giving someone ______________________________ title to benefit from that
ownership (beneficiary)
Example 99: Sam wants to save money to pay for his son Ben’s education.
Sam executes the following deed: “I convey $100,000 to my friend Todd for the
benefit of Ben’s education.” The deed creates a trust.
Who is the settlor? ______________________________.
Who is the trustee? ______________________________.
Who is the beneficiary? ______________________________.
Who has legal title? ______________________________, as trustee.
Who has equitable title? ______________________________, as beneficiary.
F. Restraints on Alienation
A restriction on ______________________________ property
1. Where do we see these restrictions?
o Inter vivos grant of an estate smaller than a fee simple;
o Devise of an estate smaller than a fee simple;
o Co-tenant agreement;
o Covenants that ______________________________ with the land;
o Easements.
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2. Rules about restraints
o An absolute restraint on alienation is ______________________________;
o A partial restraint is valid if it is for a limited time and a ______________________________
purpose;
o A restriction on the use of property is generally permissible (e.g., covenants).
3. What’s the effect of the restraint on alienation?
o If the restraint is valid: Any attempt to alienate the property will be null and void.
o If the restraint is invalid: The restraint is rejected and the property can be
______________________________ in violation of the restraint.
CHAPTER 20: MORTGAGES
A. Basics
What is a mortgage? A ______________________________ device used to secure payment of a
______________________________.
1. Two Component Parts
o The note: Borrower’s promise to repay the loan/debt;
o The ______________________________: Instrument that provides security for the note.
Put it together: If the borrower defaults on the loan, then the lender can force a
______________________________ sale to satisfy the outstanding debt.
2. Big Picture
o Lender lends money (with interest) to someone who wants to purchase a home;
o Lender takes an interest in the home as ______________________________;
o When the loan is paid, everybody benefits;
o If payments are not made, the lender will foreclose on its interest and force a sale of the
home to satisfy the debt.
3. Who’s Who?
o Mortgagor: The borrower
o Mortgagee: The lender
4. Two Kinds of Mortgages
o Purchase money mortgage: A person takes out a loan for the purpose of
______________________________ property
o Future advance mortgage: A line of credit used for home
______________________________, construction, business, and commercial loans (often
referred to as a “second mortgage”)
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Example 100: Bonnie takes out a $100,000 mortgage from America’s Bank to
buy a home. Years later, she takes out a $25,000 second mortgage from Village
Bank to renovate her kitchen. Now both America’s Bank and Village Bank have
an interest in Bonnie’s home. She now has two separate mortgages to pay.
Two different lenders have an interest in her property that could be foreclosed
upon.
B. Lien States v. Title States
• Majority (“lien state”): Treats a mortgage as a lien that does not
______________________________ a joint tenancy
• Minority (“title state”): A mortgage does sever a joint tenancy and converts it into a tenancy in
common
Exam Tip 9: This is an ideal exam question. Encompasses two areas of study:
Concurrent ownership and security devices (mortgages).
C. Alternatives to Mortgages—Equitable Mortgages
1. Deed of Trust
o Operates like a mortgage but uses a ______________________________ to hold title for
the benefit of the lender (i.e., the beneficiary of the trust receiving the payments)
2. Installment Land Contract
o The seller finances the purchase; the seller retains ______________________________ until
the buyer makes the final payment on an installment plan.
o Traditional rule: If the buyer breaches (i.e., misses a payment), the seller keeps the
installment payments made and the property.
o Modern approaches: States are trying to assist defaulting buyers:
Some treat installment contracts as a ______________________________, requiring
the seller to foreclose;
Some give the buyer the equitable right of ______________________________ to stop
a foreclosure sale;
Some allow the seller to retain ownership, but require some
______________________________ for what’s been paid.
3. Absolute Deed
The mortgagor (borrower) transfers the ______________________________ to the property
instead of conveying a security interest in exchange for the loan.
o If this is a mortgage disguised as a sale, the borrower must prove a mortgage-like agreement
by ______________________________ evidence (i.e., that there was an obligation created
prior to or contemporaneously with the transfer);
o Parol evidence is admissible to make this showing;
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o Statute of Frauds does not bar ______________________________ evidence about the
agreement.
4. Conditional Sale and Repurchase
o The owner sells property to the lender who leases the property back to the owner in
exchange for a loan.
o The lender gives the owner the option to repurchase after the loan is paid off.
D. Transfers
1. By Mortgagor/Borrower
a. Liability of mortgagor/borrower
Mortgagor may transfer the property by deed (sale), by will, or by intestate succession.
Mortgagor remains ______________________________ liable after the transfer unless:
• Lender/mortgagee ______________________________ mortgagor; or
• Lender ______________________________ the transferee’s (buyer/new owner)
obligation.
Due-on-sale clause: Lender has the option to demand immediate full payment upon
transfer. Think of this as an ______________________________ clause that allows the
lender to speed up the payment when the property is
______________________________.
Due-on-encumbrance clause: An acceleration clause when the mortgagor obtains a
______________________________ mortgage or otherwise encumbers the property.
b. Liability of subsequent transferee
1) “Assumes” the mortgage
• Upon default, if the buyer/transferee assumes the mortgage, the transferee is
______________________________ liable for the mortgage.
• Note: Both the original mortgagor and the transferee are liable upon default.
• In most jurisdictions, the assumption agreement does not need to be in writing.
2) Takes “subject to” the mortgage
• Transferee is not personally liable upon default.
• If the deed is silent or ambiguous as to liability, the transferee/buyer is considered
to have taken title ______________________________ to the mortgage.
2. By Mortgagee/Lender
Example 101: Bonnie takes out a $250,000 loan from Local Bank to buy a home.
Local Bank assigns the note and mortgage to America’s Bank. Despite this
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transfer, Bonnie still must make her mortgage payments. The payments will go
to America’s Bank.
Special Situation #1: Local Bank transfers the note but not the mortgage. The
rule is that the mortgage ______________________________ the note.
Special Situation #2: Local Bank transfers the mortgage but not the note. The
transfer is either (i) ______________________________ because the note is
the evidence of the debt, or (ii) the note and mortgage are considered a single
entity, thus the note follows the mortgage.
CHAPTER 21: FORECLOSURE
A. Pre-Foreclosure Rights and Duties
1. When Can the Mortgagee/Lender Take Possession?
a. Lien theory state
The mortgagee/lender cannot take possession prior to foreclosure because lender has a
______________________________ until foreclosure is complete.
The mortgagor is the owner up until foreclosure.
b. Title theory state
The lender technically has the right, as the holder of title, to
______________________________ the property at any time.
c. Intermediate title theory state
A minority of jurisdictions modify the title theory.
The mortgagor retains title until ______________________________, at which point
the lender can take possession.
2. Waste
o A homeowner cannot commit waste that will impair the lender’s security interest.
o Affirmative waste, ______________________________ waste, and permissive waste are
more of a concern than ameliorative waste (improvements).
3. Equity of Redemption
o A common law right held by the mortgagor to reclaim ______________________________
and prevent foreclosure upon the full payment of the debt.
o The mortgagor must exercise this right ______________________________ the foreclosure
sale.
Example 102: Bonnie takes out a $350,000 mortgage to buy a condo. She
misses a considerable number of payments and the bank initiates a foreclosure
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sale on account of Bonnie’s default. Bonnie can
______________________________ the foreclosure under the equity of
redemption if she can repay the debt in full
______________________________ the foreclosure sale.
o Deed in lieu of foreclosure: Rather than face foreclosure, the mortgagor can convey the
property to the lender in exchange for releasing her from any outstanding debt.
o “Clogging” the equity of redemption
To “clog” is to create terms that make it ______________________________ for a
borrower to exercise her equity of redemption.
Courts will intervene to prevent clogging.
For instance, a borrower may waive the right to redeem in exchange for consideration.
A court is going to be very skeptical of this provision, as it will prevent the borrower
from recovering before foreclosure.
B. Foreclosure Methods
1. What’s What?
A foreclosure is a ______________________________ sale of an asset to pay off a debt.
2. Notice
The mortgagee must give notice ______________________________ foreclosing.
3. Two Methods
Judicial sale: Sale under the ______________________________ of a court
Power of sale (private sale): Sale held by the mortgagee/lender
o Either way, the proceeds of the sale are used to pay off the debt.
o Excess proceeds will be used to satisfy other ______________________________.
4. Deficiency
Is the mortgagor responsible if the sale produces less than the mortgagor owes?
______________________________. In that situation, the court can issue a deficiency
judgment for the remaining balance.
Example 103: Bonnie takes out a $200,000 mortgage from America’s Bank to
buy a home. She defaults on the loan and the home is foreclosed upon and sold
for $100,000. The remaining debt, including principal and interest, is $175,000.
What happens to the proceeds of the sale? The bank will take the $100,000 and
get a deficiency judgment against Bonnie for the remaining
$______________________________.
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C. Priorities
Now imagine more than one interest in the property is being foreclosed. How do we reconcile the
competing interests? Which survive, which melt away?
1. General Rule
o Senior interests: Interests acquired ______________________________ the interest that is
being foreclosed. They ______________________________ the foreclosure.
o Junior interests: Interests acquired ______________________________ the interest that is
being foreclosed. They are ______________________________ by the foreclosure.
o First in time rule: Surviving debts are satisfied ______________________________.
Classify the interest as either senior or junior and then apply the rule to determine whether the
interest survives foreclosure.
2. Exceptions to the Chronological “First in Time” Rule
a. Purchase-money mortgage exception
Mortgage given to a lender in exchange for a loan to buy real property
The purchase money mortgage has priority over mortgages and liens created by or
against the purchaser/mortgagor ______________________________ the
purchaser/mortgagor’s acquisition of the property.
Example 104: Bernard took out a $200,000 mortgage from America’s Bank to
purchase a home. After failing to make payments, he is in default. He is
likewise in default on an earlier judgment lien from a traffic accident. America’s
Bank forecloses. Although it is junior to the judgment lien, the America’s Bank
mortgage would take priority.
b. Recording act exception
A senior mortgage may sometimes not get recorded.
A junior mortgage that satisfies the requirements of the state recording act may take
______________________________ over the unrecorded senior mortgage.
Example 105: America’s Bank is foreclosing on its mortgage on Blueberry Acre.
America’s Bank never recorded its mortgage interest. Village Bank has a later
(junior) mortgage on Blueberry Acre. At the time of the execution, Village Bank
was not aware of the earlier interest. The jurisdiction follows a notice rule for
recording. Because it took its interest without knowledge (notice) of the senior
interest, Village Bank’s junior interest will take priority.
c. Subordination agreement between mortgagees
A senior mortgagee can ______________________________ to subordinate its interest to a
junior interest.
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d. Mortgage modifications
A senior mortgagee who enters into an agreement with the mortgagor/landowner to
modify the mortgage by making it ______________________________ burdensome
subordinates its interest, but only as to the modification. The original mortgage will
otherwise remain superior.
Likewise, if a senior mortgagee releases a mortgage and, at the same time, replaces it
with a new mortgage, the new mortgage retains the same priority as the former
mortgage, except to the extent a change is materially
______________________________ to a junior mortgage holder.
e. Future-advances mortgages
A line of credit; see MBE Real Property outline at V.E.2.D.
f. After-acquired property
A mortgagor/borrower may grant a mortgagee/lender rights to property that the
mortgagor/borrower acquires in the future.
The mortgage must ______________________________ state that it applies to after-
acquired property.
Upon foreclosure, an interest in after-acquired property is
______________________________ to a purchase-money mortgage.
D. Effects of Foreclosure
1. Mortgagor
o Foreclosure ______________________________ the mortgagor’s interest in the property.
o Exception: Statutory redemption:
Some states allow the mortgagor to redeem the property even
______________________________ the foreclosure sale.
A statute enables the homeowner to ______________________________ the
foreclosure.
It ends the purchaser’s title and restores title to the homeowner.
Example 106: Bonnie purchased a home for $350,000. Bonnie can’t afford to
make payments and defaults. Polly purchases the home at a foreclosure sale.
Normally, at that point, Polly would become the rightful owner of the house and
Bonnie’s interest would be extinguished. In a state with statutory redemption,
however, Bonnie can ______________________________ the subsequent sale
to Polly, provided she satisfies the statute.
Note 36: Absent statutory redemption, the purchaser of property at a
foreclosure sale takes the property free and clear of any junior mortgage and
subject to any senior mortgage.
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2. Purchaser
o The purchaser of property at a foreclosure sale takes the property
______________________________ and ______________________________ of any junior
mortgage and subject to any senior mortgage; BUT
o The purchase may be subject to the mortgagor’s statutory right of
______________________________, if one exists.
3. Senior interests
The rights of senior interests are generally not affected by the foreclosure sale.
4. Junior interests
The rights of junior interests are generally ______________________________.
CHAPTER 22: EASEMENTS, PART I
A. Basics
1. Definition: Right held by one person to make ______________________________ of another
person’s land
2. Servient Estate: Land ______________________________ by the easement
3. Dominant Estate: Land ______________________________ by the easement
Example 107: Sissy has an easement to cross Dominic’s property to reach the
highway. Who has the dominant estate? ______________________________.
Who has the servient estate? ______________________________.
4. Affirmative Easement: The holder has the right to ______________________________ on
someone else’s property.
Example 108: Eddie has an easement to cross Sue’s land to reach the highway.
5. Negative Easement: The holder has the right to ______________________________ someone
from doing something on her land.
Example 109: Eddie has an easement that entitles him to prevent Sue from
growing her bamboo to a height that blocks Eddie’s view of the mountains.
6. Easement Appurtenant: The easement is tied to the ______________________________ of the
land.
Example 110: Eddie and Sue are neighbors. Eddie has the right to cross Sue’s
land to reach the highway. Who has the dominant estate?
______________________________. Who has the servient estate?
______________________________.
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Note 37: An easement appurtenant is fully transferable; it goes with the land.
7. Easement in Gross: The easement benefits the holder ______________________________.
Example 111: Sue has a lovely pool. Eddie is an avid swimmer but doesn’t have
a pool. Sue gives Eddie an easement so he can use her pool. It does not matter
where Eddie lives. It benefits him personally.
Note 38: In an easement in gross, there is no dominant estate, only a servient
estate.
Note 39: Traditionally, easements in gross were not transferable, but now courts
allow the easement to be transferred if there is intent for it to be transferable.
B. Creating an Easement
Two methods:
• ______________________________ easement
• ______________________________ easement
C. Express Easements
• An express easement is subject to the Statute of Frauds. Thus, it must be in
______________________________.
• It can be created by a ______________________________.
• It can also be created by ______________________________. An easement by reservation is
created when a grantor conveys land but reserves an easement right in the land for the
grantor’s use and benefit.
Example 112: Eddie conveys Yellowacre to Sue. In the deed, Eddie “reserves the
right to cross Yellowacre to reach the lake.”
• Remember:
o Express easements are subject to ______________________________ statutes.
o A ______________________________ easement must be express; it cannot be created by
implication. Why? Implied easements arise out of circumstances and a negative right will
rarely be created by circumstances.
D. Implied Easements (Easements by Operation of Law; Non-Express Easements)
Exam Tip 10: Expect a question on the MBE on implied easements.
• Implied easements are informal; they arise out of factual circumstances.
• They are ______________________________.
• They are not subject to the Statute of Frauds.
• They are not subject to recording statutes, unless the subsequent purchaser had
______________________________ of the easement.
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• Four kinds:
o Easement by ______________________________;
o Easement by ______________________________ (easement by prior use);
o Easement by ______________________________;
o Easement by ______________________________.
E. Implied Easement by Necessity
• An easement by necessity is created only when property is virtually
______________________________ (e.g., when the property is landlocked; there is no road or
access without crossing another’s land).
• Conditions that must be met:
o Common ownership: Dominant and servient estates were owned in
______________________________ by one person; and
o Necessity at severance: When the estates were severed into two separate estates
(severance), one of the properties became virtually useless without an easement.
• “Necessity” in a strict sense
• Ends when it is no longer necessary
Example 113: Donna owns Brownacre. She divides the property, selling the
west portion to Wayne, and keeping the east portion for herself. When he
purchased the property, Wayne asked Donna if he could cross her land because
it was more convenient than using the road that abuts the north side of his
property. Does Wayne have an easement by necessity?
______________________________, because inconvenience is not enough.
CHAPTER 23: EASEMENTS, PART II
A. Implied Easement by Implication
1. What Is It?
An easement by implication is created by an existing use on a property.
2. Conditions that Must be Met
o Common ownership: A large estate owned by one owner
o Before severance: The owner of the large tract uses the land as if there’s an easement on it.
We call this a quasi-easement. It’s “quasi” because an owner can’t have an easement over
her own land.
Example 114: Olivia owns Cherryacre. Her house is on the west side of the tract
and she crosses the east side of the tract to reach the highway.
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o After severance: Use must be ______________________________ and apparent at the
time of severance.
o Necessity: Use must be reasonably ______________________________ to the dominant
estate’s use and enjoyment.
Note 40: “Reasonably” necessary is a lesser standard than “strictly” necessary.
Example 115: Olivia owns Purple Acre. She lived on the west side of the
property and regularly crossed to the east side to reach the well. She did not
have indoor plumbing in her home. She sold the east half (with the well) to
Sam, but the deed did not reserve an express easement over Sam’s property for
Olivia to access the well. Olivia kept crossing Sam’s property to fetch water until
Sam demanded that she stop. Has Olivia acquired an easement by implication?
______________________________.
B. Implied Easement by Prescription
1. What Is It?
It’s like acquiring an easement by ______________________________ possession.
2. Important Differences
o Adverse possession is about possession, whereas an easement by prescription concerns
______________________________.
o Elements are the same as adverse possession, except exclusivity. Do you see why?
C. Implied Easement by Estoppel
1. Creation
o Permission: Starts with a ______________________________ use (e.g., the first neighbor
permits the second neighbor to use her land). This is a license.
o Reliance: Continues when the second neighbor ______________________________ on the
first neighbor’s promise
Reliance must be reasonable and in good faith;
Look for facts where the second neighbor invested money in reliance on the first
neighbor’s promise (e.g., made improvements to the easement).
o Permission withdrawn: Finally, the first neighbor withdraws permission.
2. Result
If reliance was ______________________________ to the second neighbor, the first neighbor is
estopped from withdrawing permission, in effect creating an easement.
Example 116: Olivia and Sam are neighbors. Olivia gives Sam permission to use
the roadway across her property to reach Sam’s property. Based on this
promise, Sam uses the roadway to construct a cabin on his property. After
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building the cabin and paving the roadway, Olivia blocks the roadway and tells
Sam he is trespassing. Can Olivia prevent Sam from using the road?
______________________________, because he has acquired an easement by
estoppel.
D. Scope
Depends on the type of easement
1. Express Easements
Determined by the terms of the easement when it was created
o Ambiguous terms: If the terms are ambiguous, the court considers the
______________________________ of the original parties as to the purpose of the
easement.
o Changes in use: Changes in use of an easement are tested under a
______________________________ standard. Presume the parties contemplated both its
current use and its future use, which means the future use of an easement must be
reasonably foreseeable.
o Trespass: If the use exceeds the scope, the dominant tenant is
______________________________ on the servient estate.
Example 117: Oliver gave Mary an easement to take walks along the forest on
his property. After years of strolling on the property, Mary has begun riding her
motorcycle on the path across Oliver’s property. Can Oliver eject her from the
path? ______________________________, because Mary’s current use was
not reasonably foreseeable when they created the easement. Her current use
burdens the scope.
o Watch out! Be on the lookout for fact patterns where a person has an easement to cross
another’s land and the holder of the easement seeks to redevelop or
______________________________ the property to add many new holders.
Considerations:
• Can the easement be transferred to the new holders of the estate?
• Was the new use an ordinary foreseeable development?
o Also note: The holder of the dominant estate is not entitled to use the easement to access
property acquired after the easement is created.
2. Implied Easements
Determined by the ______________________________ of the prior use or necessity
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E. Duty to Maintain
• Who has the duty to maintain the property subject to an easement? The
______________________________ of the easement.
• Exception: Parties can otherwise contract.
F. Termination
1. Release
o The holder of the easement ______________________________ releases it.
o The release must be in ______________________________, because it is subject to the
Statute of Frauds.
2. Merger
o An easement is terminated if the owner of the easement acquires fee title to the underlying
estate.
o The easement ______________________________ into the title.
Example 118: Jose has an easement that gives him a right to cross Jenny’s land
to reach the river. Later Jose purchases Jenny’s land. Is Jose’s easement
terminated? ______________________________, the dominant and servient
estates have merged. Jose cannot have an easement on his own property.
3. Abandonment
The owner acts in an affirmative way that shows a clear intent to relinquish the right.
o Requires more than non-use or statements;
o Usually need ______________________________ plus an act demonstrating an
______________________________ to abandon.
Example 119: Rancher gives Shepherd an easement to use a path on his
property so that Shepherd’s sheep can get to the river to drink. Fed up with
country living, Shepherd sells his flock and moves to New York City with plans
never to return. Has Shepherd abandoned his easement?
______________________________, because Shepherd no longer uses the
path and has taken acts (i.e., selling his sheep, moving to New York City) that
demonstrate his intent to abandon the easement.
4. Prescription
The holder fails to protect against a ______________________________ for the statutory
period.
Example 120: Millhouse has an easement to use the path along Lulu’s property.
Lulu hates Millhouse and no longer wants him on her property. She puts up a
fence to block Millhouse’s access to the path. If the path is blocked for the
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statutory period, will Millhouse’s easement be terminated?
______________________________, Lulu’s action prevented Millhouse from
exercising his easement rights.
5. Sale to a Bona Fide Purchaser
6. Estoppel
The servient owner changes position to his ______________________________ in reliance on
statements or conduct of the easement holder that the easement is abandoned.
Example 121: Horace has an easement to use the road on Grace’s property.
Horace tells Grace that he is not going to use the road anymore. Grace hires a
landscape designer who begins work to turn the path into a giant topiary
garden. After the garden is half built, Horace demands that Grace reinstate the
path for his use. Was the easement terminated?
______________________________, Grace reasonably relied on Horace’s
statement.
7. End of Necessity
An easement by necessity lasts as long as the easement is ______________________________.
If it is no longer necessary, the easement ends.
G. Not Easements
Distinguish an easement from two other interests:
1. Profit
o Right to enter another’s land and remove a specific natural
______________________________ (e.g., oil, gas, timber)
o Note: Operates similarly to an easement, but profits cannot be created by
______________________________.
2. License
o A revocable ______________________________ to use another’s land (e.g., a ticket to a
sporting event; the permission you give to a plumber to come into your house)
• Remember: Easements are not revocable but licenses are revocable.
• Remember: An easement binds ______________________________, whereas a license only
binds the ______________________________.
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CHAPTER 24: REAL COVENANTS
Exam Tip 11: Nearly every MBE has tested real covenants.
A. The Gist
• What is it? A promise concerning the use of the land that runs to successors to the promise
Example 122: Oliver conveys a neighboring property to Caleb. In the deed,
Oliver and Caleb agree to paint their houses white. This agreement is governed
by contract law.
Example 123: Compare: Caleb later conveys his property to Gertrude, who
intends to paint her house yellow. Contract law cannot resolve the issue of
whether Oliver can enforce the agreement against Gertrude, but property law
does.
• When an agreement binds a successor, it “runs with the land.”
o The benefit of the covenant is the ability to ______________________________ the
covenant.
o The burden of the covenant is being ______________________________ to it (i.e., bound
by it).
Example 124: Oliver conveyed property to Caleb and they both agreed to paint
their houses white. When Caleb conveys to Gertrude, who intends to paint her
house yellow, Oliver wants to stop Gertrude from breaching the covenant. Are
we running the benefit or the burden to Gertrude? The
______________________________. The burden running from Caleb to
Gertrude will prevent her from breaching the covenant.
B. Requirements to Run
Five elements:
• ______________________________;
• ______________________________;
• Touch and concern;
• ______________________________;
• ______________________________.
C. Writing
A real covenant is subject to the Statute of Frauds, so it must be in writing.
Note 41: Real covenants can be recorded. Are they subject to recording acts?
______________________________.
D. Intent
To bind a successor, the original parties must intend for the covenant to run with the land.
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Exam Tip 12: Look for express language such as “and his heirs and assigns” to
prove the requisite intent.
E. Touch and Concern
• A real covenant must touch and concern the land in order to run.
• The benefit or burden of the covenant must affect ______________________________ parties
as owners of the land.
o Negative covenant: A restriction on use will usually touch and concern because they restrict
what you can do with your land. Watch out for promises that are unenforceable such as
______________________________ covenants, as these do not touch and concern.
o Affirmative covenant: A covenant to pay money (e.g., homeowners’ association fees).
Traditionally, such fees did not touch and concern, but the modern trend is to say that these
fees do touch and concern.
F. Notice
• What kind of notice is required to run a real covenant? Either
______________________________ notice or ______________________________ (i.e., record)
notice;
• ______________________________ notice may also suffice for an equitable servitude.
G. Horizontal Privity
• To run the burden to a successor, the ______________________________ parties to the
promise must have been in horizontal privity.
• Horizontal privity refers to privity of ______________________________, where the estate and
covenant are contained in the same instrument (e.g., the deed).
o Helpful Hint: Look for a transfer of property between the original parties that contains a
covenant in it. (Key for horizontal privity: Look for the original parties to the agreement.)
Example 125: Oliver owns Blackacre and Whiteacre. He conveys Whiteacre to
Caleb. The deed says “Oliver and Caleb promise to use their property for
residential purposes only.” Are Caleb and Oliver in horizontal privity?
______________________________. Why? There was a transfer and the
covenant was included in the transfer.
Note 42: You do not need horizontal privity to run a benefit.
H. Vertical Privity
• Vertical privity refers to the relationship between the original party to the agreement and
his/her ______________________________ to the property.
• To run the burden of the covenant to the successor, the successor must take the original party’s
______________________________ interest. This is called strict vertical privity.
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• To run the benefit of the covenant to the successor, the successor need only take an interest
that is ______________________________ of the original party’s estate. This is called relaxed
vertical privity.
Example 126: Oliver and Caleb have in their deeds to Blackacre and Whiteacre a
promise not to build a shed on their properties. Oliver conveys his fee simple
interest to Marsha, who plans to build a shed on the property. Can Caleb
recover against Marsha? Ask first if you’re running the benefit or the burden
and then what kind of vertical privity is needed. Here we’re running the
______________________________. To run the burden, you need
______________________________ vertical privity. So here, because Marsha
took Oliver’s fee simple interest (strict vertical privity), we have enough to run
the burden, provided there is horizontal privity.
Example 127: Would there still have been vertical privity if Oliver had conveyed
a life estate to Marsha? ______________________________, because she took
an interest carved out of the fee simple interest rather than the whole fee
simple interest.
Exam Tip 13: Ask yourself a series of questions:
(i) Identify whether you are running the benefit or the burden;
(ii) If it is the benefit, you need relaxed vertical privity and you don’t care about
horizontal privity;
(iii) If it is the burden, you need horizontal privity and strict vertical privity.
I. Remedy
The remedy for a breach of a real covenant is ______________________________.
CHAPTER 25: EQUITABLE SERVITUDES
• Two ways to bind a successor to an original party’s promise: (i) real covenant; (ii) equitable
servitude;
• An equitable servitude has an easier standard to meet and the remedy differs.
A. The Gist
• Operates like a real covenant but with easier requirements;
• To bind a successor:
o It must be in ______________________________;
o Must have been ______________________________ to run with the land (same standard
as a real covenant);
o Must ______________________________ the land (same standard as a real covenant);
o Successor must have ______________________________ (actual, record, or inquiry).
MBE Real Property | © 2019 Themis Bar Review, LLC | 67
• No privity requirement.
• The remedy for a breach is ______________________________ relief.
B. Implied Reciprocal Servitude
• It is a kind of equitable servitude that is implied and need NOT be in writing.
• Usually comes up in ______________________________ communities (e.g., condo,
subdivision);
• How are they created?
o Developer must ______________________________ to create a covenant (i.e., promise) on
all plots in the subdivision;
o Promises must be ______________________________ (i.e., benefits and burdens each and
every parcel equally);
o Must be ______________________________ rather than positive (i.e., it must be a
restriction on the owner’s use);
o A successor must be on ______________________________ of the restriction (at least
inquiry notice); and
o Must be a ______________________________ plan or scheme.
Example 128: Developer Joe Schmo has an idea for a community. He buys the
land and writes up a master plan for the community. He begins conveying the
property, including a restriction that your house must be painted white.
However, some of the later transfers do not include a “white house” covenant.
One of the new owners does not have the “white house” covenant expressed in
her deed and this owner wants to paint her house turquoise. This owner will
not find a “white house” covenant in her chain of title.
Should the owner be bound by a restriction that wasn’t in her deed? Though
the owner had neither record nor actual notice, the owner may be on
______________________________ notice. Why? Looking around, every
house is painted white. Even though the restriction is not in the deed, it may be
implied—an exception to the requirement that the promise needs to be in
writing. It is an implied reciprocal servitude.
To prove there is a common plan, look for:
• A (recorded) map of the community showing the common scheme;
• Marketing or ______________________________ of the community;
• Oral or written mention that the lots are burdened by common restriction.
C. Termination
Terminates as an easement does (i.e., merger, release, etc.)
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D. Changed Circumstances Doctrine
• Look for situations where the restriction no longer makes ______________________________
due to ______________________________ changes in the surrounding area since the
restriction was put in place.
• Critical question: Does the property subject to the restriction still retain some benefit from the
restriction?
Example 129: The houses in the Hilly Flats subdivision all have restrictions
against commercial use. When Hilly Flats was developed, the surrounding
neighborhoods were exclusively residential. In the following years, commercial
properties developed adjacent to Hilly Flats, though there are no commercial
properties within the subdivision itself. Henry wants to open a business on his
property within Hilly Flats. His neighbor opposes it, seeking to have the
servitude enforced.
Will the court continue to enforce it? ______________________________.
Although there is change outside the community, there have not been changed
circumstances inside the community, so residents still benefit from the
restriction (e.g., noise, traffic). Change outside the community is not sufficient
to terminate.
E. Equitable Defenses
Equitable defenses are available, including unclean hands (the plaintiff not acting in good faith) and
laches (unreasonable ______________________________).
F. Common Interest Communities
• What are we talking about?
o Real estate development in which individual units/lots are burdened by a covenant to pay
dues to an association;
o The association:
Services: Maintains grounds, provides facilities, etc.
Enforces the covenants: The association is the “heavy” when your neighbor breaks the
rules.
• Three types
o Owners’ Associations: Where property owners belong and pay
______________________________ to an association or board;
o Condominiums: Where individual units are owned outright, but common areas are owned
______________________________ as tenants in common;
o Cooperatives: Property is owned by a corporation (made up of residents/shareholders) that
leases individual units to shareholders (residents).
MBE Real Property | © 2019 Themis Bar Review, LLC | 69
• Governance
o Declaration: The governing documents that outline the controlling covenants and
restrictions, as well as the particulars about the association or board.
Note 43: Rules laid out in a declaration are valid so long as they are not illegal,
against public policy, or ______________________________.
o Powers: The board has general powers to manage the common property and administer the
residents. For example:
Assessments/fees;
Manage and maintain the common property (e.g., clubhouse, gym);
Enforce rules;
Create new rules.
• Basic test: A new rule must be reasonably related to further a
______________________________ purpose of the association (think: rational
basis test).
• Duties
To the community: The association must deal ______________________________ with
members of the community.
o Good faith;
o ______________________________;
o Ordinary care;
o Business Judgment Rule controls (the board is shielded from honest but mistaken business
decisions).
G. Fixtures
1. What Is It?
Tangible personal property that is ______________________________ to real property in a
manner that is treated as part of the real property (e.g., a wall or a bridge; the materials used to
make a wall or a bridge)
2. Making Improvements
o A fee simple owner of property is free to make improvements to the property, including
fixtures, subject to governmental land use regulations.
o Holders of a life estate or tenants, by contrast, are limited by the doctrine of
______________________________.
Example 130: Anita is the fee simple owner of Apple Acre. Sick of buying eggs
every week, Anita decides to build a large chicken coop in her backyard. The
municipality has no restrictions against landowners keeping farm animals on
70 | © 2019 Themis Bar Review, LLC | MBE Real Property
their property. Can Anita make the improvement?
______________________________, she is a fee simple owner and there are
no governmental restrictions against her doing so.
Example 131: Ray is the life tenant on Iowa Acre, a corn farm. After hearing a
mysterious voice, Ray plows under his cornfield and builds a baseball field.
Should Ray be worried about a claim by the future interest holder?
______________________________, Ray’s action could be considered waste.
3. Removal
o The ______________________________ of real property is generally entitled to the chattel,
unless the seller reserves in the ______________________________ the right to keep the
chattel.
o Life tenants and tenants: Presumption is that they can remove fixtures unless doing so
would ______________________________ damage the property
4. Trespassers
o Old rule: Trespassers could never remove any fixtures or improvements that they installed.
o New rule: Trespassers can remove an improvement, or at least recover the value added to
the property, so long as they acted in ______________________________.
Example 132: Terry rents an apartment from Leo. Terry installs special lights
that she uses to grow orchids. The lights, which hang on a stand and are not
permanently affixed to the property, can be removed with ease. The lease does
not contain a provision about improvements or fixtures. Leo is eager to keep
the lights on the property, hoping to repurpose them to as fancy patio lights.
Can Terry remove the lights at the end of the lease?
______________________________. Removing the lights will not cause
permanent damage to the property.
Example 133: Archibald takes possession of Cotton Acre, thinking he is the
rightful owner. During his three-year stay on Cotton Acre, Archibald repaired
the barn and built a shed for farm equipment. Butch, the rightful owner of
Cotton Acre, discovers Archibald and demands that he leave Cotton Acre at
once. Archibald agrees, but insists that Butch pay him the value of the shed
Archibald built. Will Archibald recover the value of the shed?
______________________________, (in a modern jurisdiction) because
Archibald improved Cotton Acre in good faith.
MBE Real Property | © 2019 Themis Bar Review, LLC | 71
CHAPTER 26: LAND USE
A. Zoning Basics
1. What are We Talking About?
o State and local governments may regulate the use of land through zoning laws.
o Zoning laws are enacted for the ______________________________ and
______________________________ of the community.
States have authority to zone through police powers.
Local governments get power to zone through specific enabling acts.
2. Objective
o Segregate ______________________________ uses from being developed in the same area
(e.g., residential v. commercial and industrial)
o Cumulative zoning: The traditional approach in which residential use is permitted
everywhere, commercial use is restricted to some areas, and industrial use is allowed in the
fewest areas.
o Mutually exclusive zoning: Some jurisdictions have developed an approach where only one
type of use is permitted by zone.
B. Nonconforming Uses
Two situations:
1. Existing Nonconforming Properties
When zoning is changed and a structure does not satisfy the zone’s requirements, it is called a
“nonconforming use.”
o The goal of the property owner is to get the nonconforming use
______________________________ in.
o Vested rights: If the project is in process when the change happens, the developer must
have the proper building permits by the time the ordinance takes effect. The developer
must also demonstrate the project was in ______________________________.
o What if…?
Owner wants to expand the nonconforming use? This is generally
______________________________.
The nonconforming owner switches to another nonconforming use?
______________________________.
The nonconforming owner transfers the property to a new owner?
______________________________.
2. Post-Ordinance Nonconforming Properties
When the property owner requests a change after the zoning ordinance is in place.
72 | © 2019 Themis Bar Review, LLC | MBE Real Property
a. Variance
Owner applies for a variance, essentially permission to violate the zoning rules.
1) Use variance: Obtain the right to use property in a manner not permitted by zoning
Example 134: Otis wants to open a café in a residential neighborhood. To
support his case, he argues that there is already a smattering of small
businesses in the neighborhood, that his cafe won’t increase the burden on the
neighborhood traffic patterns, and that his café will make the neighborhood
more desirable. The argument is about the use and trying to make it consistent
with the existing neighborhood.
2) Area variance: Focuses on restrictions concerning property development.
Example 135: Amanda wants to build a fence around her property. Her plan is
to follow the natural tree line surrounding her property. One spot of the
proposed fence, on the west side of her property, will slightly encroach on the
City’s utility right of way. Amanda argues that the encroachment is slight and
that diverting from the tree line will be unsightly.
b. Standard
The person applying for a variance must show ALL of the following:
Compliance would create unnecessary ______________________________;
The hardship arises from circumstances ______________________________ to the
property;
The owner did not create the hardship;
The variance is in keeping with the overall ______________________________ of the
ordinance; and
The variance will not cause substantial ______________________________ to the
general welfare.
C. Nuisance
1. Private nuisance
o A ______________________________ and ______________________________
interference with another individual’s use or enjoyment of his property.
o Substantial: One that would be offensive, inconvenient, or
______________________________ to an average person in the community.
o Unreasonable: The injury outweighs the ______________________________ of the
defendant’s actions.
2. Public nuisance
o Unreasonable interference with the health, ______________________________, or
property rights of the community.
MBE Real Property | © 2019 Themis Bar Review, LLC | 73
o Private party: Must show that she suffered a ______________________________ kind of
harm than the rest of the community.
3. Remedies
o Usual remedy is damages;
o If money damages are inadequate or unavailable, the court can impose
______________________________ relief.
D. Water Rights
Two basic approaches:
1. Riparian Rights
o Doctrine of riparian rights holds that landowners who ______________________________
a waterway own the rights to the waterway. The right depends upon whether the
landowner is located near the water.
o Riparians share the right to ______________________________ use of the water, such that
one riparian is liable to another for interference with the other’s use.
2. Prior Appropriation
o First in time, first in right: The ______________________________ person to use the
water, regardless of where their land is located, has the rights to the water.
o Beneficial use: In a prior appropriation jurisdiction, the user must put the water to a
______________________________ use. Any productive use satisfies this standard.
E. Support Rights
1. Lateral Support Rights
o A neighboring landowner cannot ______________________________ so as to cause a cave
in (i.e., subsidence) on an adjacent owner’s land.
o Applicable standards:
Did the neighbor’s buildings (structures) contribute to the cave in? If so, the standard to
apply to the one excavating is ______________________________.
What if the neighbor’s buildings did not contribute to cave in? The standard to apply is
______________________________.
2. Subjacent Support
o Think ______________________________ rights.
o The surface landowners have the right not to have their land subside from the activities of
the owners of ______________________________ rights.
STUDY HARD, GOOD LUCK ON THE EXAM, AND THANKS FOR YOUR TIME.
[END OF HANDOUT]
74 | © 2019 Themis Bar Review, LLC | MBE Real Property
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REAL PROPERTY PROFESSOR ZACHARY A. KRAMER (City of Oakland)

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