PROPERTY

I. Interests in Land
A. Estates
Key Word → “possession”; estates ALWAYS have this right!

Present Estates
(1) Fee Simple Absolute
Fee Simple Absolute … “O to A”
(a) Runs forever
(b) Fully alienable (no restraints on transfer of ownership)
o Attempt to restrain ability to transfer is VOID, ignore the restriction
o Right of first refusal → this is NOT an invalid restraint on alienation
(c) Conditions on exercise are ok (e.g., no alcohol use on land)

Presumption → courts will presume fee simple w/out clear intent to create something else

(2) Life Estate

Life Estate
 Measured by LIFETIME
o E.g., lifetime of recipient
o Life estate per autre vie → life estate measured by someone else’s lifetime (“to A for the
life of B”)
 Can also happen if person w/ life estate transfers it to someone else → can’t
transfer more than you have, so recipient will have estate for life of transferor
 If transferee dies before measuring life dies → goes to transferee’s estate until
measuring life dies
 Life estate by implication → “to A, and after A’s death, to B”
o Life estate must have been what was intended
 Restrictions on transfer are VOID!!!

Duty of a Life Tenant: TO MAINTAIN → life tenant can continue the NORMAL USE of the land in
its present condition
 More or less than this → liability for WASTE

(1) Voluntary Waste → any affirmative action beyond right of maintenance which causes
harm
 Open mines doctrine → depletion of natural resources is waste UNLESS it’s the
normal use of the land (e.g., it’s a coal mine))

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  Sale of crops is not waste

(2) Permissive Waste → tenant fails to do one of the following:

(i) Repair → responsible for ordinary repairs, but NOT replacements
(ii) Taxes → pay taxes on the property
 Note → future interest holder should pay attention; if life tenant fails to pay
taxes and property is sold at tax sale, BFP takes free & clear
 So future interest holder may have to pay in order to protect her future
interest!
(iii) Interest → pay interest on any mortgage
 But future interest holder must pay the principal

 Limitation → life tenant’s obligation for repair, taxes, and interest is LIMITED
to the amount of income received from the land OR reasonable rental value of
the land (depending on how LT is using it)
 Insurance → NO duty to insure the property

(3) Ameliorative Waste → affirmative act that increases value of the land
 If CHANGED CONDITIONS make the property RELATIVELY WORTHLESS
in its current use → LT can take affirmative act to raise value w/out liability to
future interest holder

(3) Estates Capable of Being Declared NULL & VOID

(A) Fee Simple Determinable → ends AUTOMATICALLY when a stated condition happens
 Grantor keeps a possibility of reverter

(B) Fee Simple Subject to Condition Subsequent → does not automatically terminate but may be CUT
SHORT by the grantor when a stated event happens
 Grantor keeps a right of entry

(C) Fee Simple Subject to an Executory Interest → upon a stated condition, is AUTOMATICALLY
divested by another grantee
 Other grantee has an executory interest

(D) Fee Simple Determinable Subject to an Executory Interest → basically, a fee simple determinable
that is also subject to an executory interest
 Other grantee has an executory interest

Class Gifts
Class Gift → gift to class of UNNAMED PERSONS (“to A’s children”)
3 Basic Rules:
(1) Class Members who Predecease Grantor → the gift lapses, dead class member gets nada
(2) Class stays open → to accommodate those who might later fall w/in the class (e.g., later-
born siblings)
(3) Class closes after distribution (“rule of convenience”) → e.g., grantor dies, or triggering

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 condition occurs
 This is a rule of construction → so grantor can specify if they don’t want it to
apply
 Note → class may close, but distribution does not necessarily occur immediately
 E.g., to X’s children who attain the age of 21 → class closes when decedent
dies (so no later-born children are included), but wait to distribute to see who
reaches 21 (those who have already reached 21 can collect their min share
now, get more later if others don’t survive)

Future Interests
Future interests are CURRENT interests → but possession doesn’t come until later
 2 categories → (i) future interests of GRANTOR, (ii) future interests of GRANTEE

Future Interests of GRANTOR (3) → not subject to RAP

(1) Reversion → CERTAIN to become possessory again
 Definition → interest kept by grantor when grantor gives away less than a full fee simple (e.g.,
life estate)
o If there is ANY chance that it will go back to the grantor (e.g., “to A for life” … O keeps
reversion, gets it when A dies)
 “Reversion for life” → if grantor is life tenant who gives estate to someone else for period of
time, life tenant keeps reversion for life
o E.g., if grantee dies before LT (age is irrelevant…LT can be 80 at time of gift)
o But once the LT dies, it goes back to the original grantor
 Freely transferable → reversions are freely transferable

(2) Possibility of Reverter → POSSIBLE that it may become possessory

 Definition → interest kept by grantor ONLY when grantor gives a fee simple determinable
o E.g., “to A for so long as [condition]” “while” “during” “until”
o FEE SIMPLE DETERMINABLE → ends AUTOMATICALLY when the condition is
violated
 Freely transferable → i.e., someone other than grantor can have this if grantee gives/devises it
to them!!!

(3) Right of Entry (Power of Termination)

 Definition → interest kept by grantor when grantor gives a fee simple subject to condition
subsequent
o E.g., “to A, provided, however, that if [condition x], grantor has right to reenter and
retake” “but if” “upon condition that”
o FEE SIMPLE SCS → does NOT end automatically; grantor must EXERCISE the right of
reentry
 Explicit reservation → grantor must explicitly reserve the right of reentry
 Non-transferable inter-vivos → can only be transferred by will or intestate succession, unless
otherwise specified by question

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“For the purpose of” → use of this phrase in an instrument has no effect; if grantor wants grantee to,
e.g., use the property for a playground, grantee’s failure to do so has no effect on title; but grantor might
be able sue for breach of K

Future Interests of GRANTEE (2)

 NOTE → restraints on alienation of future interests
o These are ok SO LONG AS the restraint ends when the interest becomes possessory
 E.g., “if A attempts to convey interest prior to the date that it becomes
possessory, it goes to B”

(1) Remainder
 Get this after a LIFE ESTATE
o Becomes possessory, if at all, upon the NATURAL EXPIRATION of the previous estate

4 KINDS:
(A) Vested remainder → NOT subject to RAP
o Nothing inhibiting it becoming fully possessory upon expiration of the estate that comes
before it
o We know WHO will take & there are NO conditions to taking
o Even if holder of vested remainder dies before getting possession, his estate will get it

(B) Vested remainder subject to open (aka vested remainder subject to partial divestment) → subject to RAP
o Remainder interest is to class whose members are not yet fully known
o Class remains open to allow for possible future qualifying members (e.g., future siblings)
o Vested remainder subject to open & subject to total divestment → when there is an open
class that might lose the interest if some condition happens (e.g., “to X for life, then to
X’s children, unless X becomes bankrupt, then to Y”)

(C) Vested remainder subject to divestment

o Condition subsequent could divest the interest
o E.g., so Jamie for so long as she remains single

(D) Contingent remainder → subject to RAP

o Something must HAPPEN before remainder can become possessory; 3 possibilities
(1) Condition
 Condition must be satisfied before grantee can be certain of possession
(something standing in the way of grantee’s being certain to get it)
 E.g., “to B if B is 21 upon grantor’s death”
(2) Grantee not in existence
 Grantee is not yet born at time of grant, so it’s contingent on grantee being
born
 E.g., “to A’s children” (when A has no children)
(3) ID of exact taker unknown
 Inability to ID by name the holder of the remainder
 Contingent upon IDing the taker
 E.g., “to A’s widow”—possibility that A could divorce and remarry

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(2) Executory Interest → subject to RAP
 Operates to CUT SHORT the estate that comes before it (punctuation matters!!!)
o Similar to “right of reentry” → only this is in a grantee, not the grantor
 DOES NOT come into possession at the natural expiration of the previous estate
 Waste → holder of executory interest CANNOT sue life tenant for waste
 2 kinds of executory interests:
(1) Shifting Executory Interest
 Takes title from one grantee and gives it to another grantee
(2) Springing Executory Interest
 Takes title from grantor and gives to grantee
 E.g., “to A for life, then ONE DAY after A’s death to B and his heirs” → title
goes back to grantor for that one day, so after that day, it goes from grantor to B
Remainder v. Executory Interest
“to A for life, then to B; but if B drinks, then to C”
 Remainder → B has a remainder (read only the clause BEFORE the semicolon!)
 Executory interest → C has an executory interest (“but if” following the semicolon)
Punctuation is IMPORTANT!!!
 Read the estates in order, and watch for punctuation to see if a contingency is part of the FIRST
estate given to a grantee, or part of the SECOND
 Set clauses apart and assign interests individually

PRESENT ESTATES FUTURE INTERESTS

In grantor In another grantee

(1) Fee Simple Absolute --- ---

(2) Life Estate → O says: to A Reversion Remainder

for life (then to B) -Vested
-Vested Subject to Open
-Contingent

(3) Fee Simple Determinable (3) Possibility of Reverter (3a) Executory Interest
(3a)…Subject to Executory
Interest
READ PUNCUATION CAREFULLY!!!

(4) Fee Simple Subject to (4) Right of Reentry (4a) Executory Interest
Condition Subsequent
(4a)…Subject to Executory
Interest
READ PUNCUATION CAREFULLY!!!

(5) Fee Simple Subject to --- Executory Interest

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Executory Interest

Rule Against Perpetuities (RAP)

RAP → no interest is good unless it must vest, if at all, NO later than 21 years after some life in being at
the creation of the interest

Rick Duffy’s Test:

(1) Last person mentioned by proper name and all prior parties take
(2) The next subsequent party not mentioned by proper name takes
(3) All additional parties lose and the property reverts back to grantor or grantor’s
heirs

Question → Could everyone alive at the time of the grant die, and 21 years pass, before the interest
might vest? If yes—void
 Applies to: (1) vested remainder subject to open, (2) contingent remainder, (3) executory interest
 Time of creation → this is when the validity of a grant is determined…can’t just wait and see if
it might work out
 Perpetuity saving clause → saves a grant from being voided by RAP by making sure that
vesting does occur w/in the time period
o E.g., “to A and his heirs so long as no alcohol consumed on premises; and if alcohol
consumed on the premises during the life time of A or B or w/in 21 years after the death
of the survivor of A or B, the title passes to B and his heirs”
o Grantor → possibility of reverter (if liquor consumed on premises after the 21 years)
o A → fee simple determinable subject to executory interest
o B → executory interest

Options & Rights of First Refusal → DO violate RAP if they could be exercised outside the time period
 Exception → options to purchase attached to LEASEHOLDS (i.e., lessee has option to purchase)
o RAP does not apply since the current lessee is the one who holds the option

Charity-to-Charity Exception → gifts over from one charity to another NEVER violate RAP
 E.g., “to Charity A for so long as it’s used as a gym; if it ever ceases to be so used, to Charity B
 Normally this would violate RAP → but not here because both grantees are charities
 Condition must operate to take it from one charity and give it to another

Class Gifts → if the gift over is to a class following an earlier estate

 LOOK OUT FOR → age contingency in a open class
o E.g., “to A for life, then to such of A’s children as reach 30 yrs”
o A could have more kids, who obviously won’t reach 30 in time to satisfy RAP
 “bad as to one, bad as to all” → if RAP voids the gift to any class member, all class members
lose their interest

Fertile octogenarian
 ANYONE, regardless of age, is capable of having kids for RAP purposes
 So if A, in problem above, is 90—doesn’t matter, she might still have another kid so RAP is
violated

Unborn Spouse

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  LOOK OUT FOR gift over following a “widow’s” estate where gift can’t vest until widow dies
 E.g., “O to A for life, then to A’s widow for life, then to A’s living children”
 Possibility that A could divorce current wife and, later on, marry someone who isn’t born yet
 BUT NOTE → if the gift above just said “then to A’s children” rather than “to A’s living
children” it would be ok!!
o “then to A’s children” → the interest vests as soon as A dies, because A can no longer
have children (and if any of the children are dead, it will go their estates)
o “then to A’s living children” → the interest can’t vest until the widow dies because we
won’t know until then which children will be living!
 Remember: “vesting” is when nothing stands in the way of getting possession
upon normal expiration of present interest

Transfer by WILL or DEED → look at the situation as if the gift was made at the time of testator’s
death
 Thus any gift “to widow” doesn’t create a problem → because we KNOW who the widow is now
because grantor is dead!
 Deed → look at situation at time of deed

Concurrent Ownership
Joint Tenancies
Joint Tenancy Characteristics:
(1) Right of Survivorship
o When one JT dies, the others take automatically (no “inheritance”)
(2) Right to Partition
o Any JT can ask that the property be partitioned → lines are drawn and the party takes out
his chunk to own solely
 Usually happens when JTs can’t agree on something (e.g., use of property)
o Partition → can be by agreement of the parties, or court can draw lines
o If lines can’t be drawn (e.g., single-fam home) → court can sell property and divide
proceeds

Creation of JT → 4 unities
(1) Time → all interests must vest at the same time
(2) Title → grant to all JT’s must be by the same instrument
(3) Interest → all JT’s take the same kind and amount of interest (e.g., each get undivided ¼ of fee
simple)
(4) Possession → all have identical rights of possession

~Language needed → to create JT, intention must be made known; otherwise courts presume
tenancy in common (e.g., “jointly” or “as joint owners” is NOT enough!—must say “as joint tenants
w/ right of survivorship” or “in joint tenancy w/ right of survivorship”)

Destruction of JT → 2 ways
(1) Partition → voluntary destruction
(2) Severance → involuntary destruction (one of 4 unities is disturbed)

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 4 ways to sever
(a) Conveyance → by one of the JTs
 Tranferee just gets a TiC, remaining JT’s STILL hold in JT

(b) Mortgage → in a TITLE theory state

 Title theory → title actually passes from mortgagor to mortgagee in a mortgage
 Note → if bank were to foreclose, could take possession even before
foreclosure, regardless of equity of redemption
 Lien theory → lien merely attaches to title in a mortgage (majority rule)
~assume lien theory state if question doesn’t specify
(c) Contract of Sale
 Due to doctrine of equitable conversion → severance occurs when K is signed
(d) Creditor’s Sale → of the interest in the JT
 Creditor’s judgment lien is not enough → must be actual judicial sale
o NOTE → a testamentary disposition is INOPERATIVE to destroy a JT because at the
instant of death, the decedent’s rights to the property evaporate and there is no longer any
property to convey

Note → JT or TiC may encumber OWN

Tenancy in Common interest but not other co-T’s interest

Tenancy in Common Characteristics: (assume TiC if exam question doesn’t specify)

(1) Right to Partition → any TiC can force it (see above)
(2) NO Right of Survivorship!!

Creation of TiC → only 1 unity required…POSSESSION

 All TiCs must have equal rights of possession
 Default tenancy → if JT isn’t properly created, it’s a TiC

Tenancy by Entirety
Tenancy by Entirety → held by married couple
(1) Right of Survivorship
(2) One spouse acting alone CANNOT convey or encumber the property
o E.g., BOTH, acting together, must join in a mortgage
o Judgment liens
 Judgment against one spouse—CANNOT attach to TbE
 BUT upon divorce, TbE becomes TiC and the lien will attach
 Judgment lien against both spouses together—CAN attach to TbE
 Upon divorce, stays attached to the TiC
(3) Termination → ONLY BY
o Death of a spouse
o Divorce
o Mutual agreement
o Execution by a joint creditor of both spouses
~becomes TiC

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Rights/Duties of Co-Tenants (“Incidents of Ownership”)

(1) Possession
o Each co-T has right to possess ALL property consistent w/ other co-T’s rights
o No co-T has exclusive right to possess

(2) Accountability
o Rule → one co-T does NOT have to account to another for share of profits from land
UNLESS:
(a) Ouster → if one co-T kept another off, or claimed an exclusive right of possession
 Ousted co-T has right to ½ (or 1/3 or whatever) the fair rental value of the
property during the ousted period
(b) Agreement to share
(c) Lease of property by co-T to 3d party
(d) Depletion of natural resources

(3) Contribution
o One co-T can force others to contribute to:
(a) Cost of NECESSARY REPAIRS ONLY
 NO contribution for improvements or non-necessary repairs (although money
spent on these could later be recouped by co-T at partition or sale)
(b) Mortgage on property signed by all co-Ts
(c) Govt.-imposed obligations (e.g., taxes)

Leasehold Estates (L/T Law)

(1) Tenancy for Years
Tenancy for Years → for a SPECIFIED TIME (does not have to be years)
 Any estate measured by a fixed period of time, no matter how short
 CAREFUL → just because a lease includes monthly payments, doesn’t necessarily mean it’s a
periodic tenancy…look at the length of the lease (e.g., lease for 5 years at 1K/yr is TFY!)
 Statute of Frauds → any TFY lasting more than a year must be in writing
o i.e., oral TFY for one year is ok; oral TFY for year and a day is not ok

(2) Periodic Tenancy

Periodic Tenancy → ongoing, continuing, REPETITIVE estate until one party gives valid notice
 Three ways to create:
(a) By express agreement
(b) By implication → if lease doesn’t specify duration, PT is presumed w/ period measured
by rent payment
(c) By operation of law

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  Oral lease that violates SOF → will create a PT when L accepts rent and the
period will be the period covered by the rent check accepted
 Hold-over T who stays after lease expires but L accepts rent → period will be
month to month (see Tenancy at Sufferance below)

Termination of PT → must give proper notice

(1) Time → must give notice one period ahead of time
o But if period length is a year → six months’ notice is ok
(2) Effective Day → day of termination must be the LAST DAY OF A PERIOD
o E.g., if lease started July 15 and was month to month, only valid termination day would
be the 14th

(3) Tenancy at Will

Tenancy at Will → either party can terminate at ANY time, WITHOUT NOTICE
 5 other ways to terminate automatically:
(1) Death of L or T
(2) Waste by T
(3) Assignment by T
(4) Transfer of title by L
(5) Lease by L to someone else

(4) Tenancy at Sufferance

Tenancy at Sufferance → when a T holds over, L has two options:
(1) Hold T as a wrongdoing trespasser and sue to throw T off and recover damages, OR
(2) Impose a new periodic tenancy on T (if REASONABLE → i.e., not reasonable of T only
heldover for a few hours, or if it was due to circs beyond T’s control)
Measure of period:
 Residential property → new period will always be month to month
 Commercial property
 If old tenancy was for 1+ years → period is year-to-year
 If old tenancy was for <1 year → new tenancy is measured by old rent period

Raising Rent → if L tries to raise T’s rent at the end of a lease, before the next one starts
 Before expiration of lease → if L tells T of higher rent before lease expires and T holds over, L
can impose new periodic tenancy at higher rent
 After expiration of lease → L can only impose old rent

Tenant’s Duties
T’s Duties → if lease is silent on T’s duties, T must
(1) Pay rent
(2) Not commit waste

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 “Repair and Maintain” → if lease specifies that T must “repair and maintain” then T is liable
for ALL damage to the property, including ordinary wear and tear (e.g., dingy paint) unless
specifically excluded
o Exception → if premises are destroyed w/out T’s fault, T can terminate the lease

Landlord’s Remedies:
 If T fails to pay rent → kick T out and sue for damages
 If T unjustifiably abandons the leasehold → L has two options
(1) Treat abandonment as offer of “surrender” → accept the offer, retake, and end T’s
liability as of that date
(2) Re-rent the premises on T’s account and hold T liable for any deficiency
 This is basically L’s attempt to mitigate T’s damages
 If rent that L can get on re-renting is less than T was paying → T is liable for the
difference

Landlord’s Duties
L’s Duties:
(1) Actual possession
o Give T actual possession of the premises when lease begins
o IF BREACH:
 T can only sue for damages → CANNOT TERMINATE LEASE

(2) Implied warranty of habitability—for residential property (not commercial!)

o L must deliver the residential premises in a HABITABLE condition, reasonably suited
for residential use (e.g., can’t refuse to fix toilet)
o IF BREACH
(i) T can move out and terminate lease, or
(ii) T can stay and sue for damage (offset future rent, abate rent, etc.)

(3) Implied covenant of quiet enjoyment

o 3 WAYS TO BREACH
(i) Total eviction → terminates lease and T’s rent obligation
(ii) Partial eviction (keep T out of part of lease property) → does not terminate lease,
T can stay and pays NO rent to L
 If the partial eviction is by a 3d party w/ better title (not L) → T’s rent is
apportioned to reflect the amt. taken away
(iii) Constructive eviction → L fails to provide required service, making premises
uninhabitable, 3 requirements:
1—L (not someone else) must be responsible
2—Must be substantial interference w/ covenant of quiet enjoyment (e.g., 10,000
roaches, not just 10)
3—T must abandon the premises w/in a reasonable time after L’s breach

Assignments & Subleases

Assignment → when T transfers everything, holding nothing back (e.g., for the These
rest of the lease)
two are SEPARATE—
L and T can sue eachother… violation of one by A does not
o FOR justify violation of the other by B

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 (1) Rent issues
(2) Covenants that TOUCH & CONCERN the land
 T&C → if performance of the covenant makes the land more valuable or
useful, then it runs w/ the land (e.g., covenant to fix the fence, not get mail)
o IF THERE IS EITHER
 Privity of estate → exists only between present L and present T
~OR~
 Privity of contract → exists where there is an agreement between parties, or
where assignee expressly assumes the lease obligations
 Thus, original T and L will always have privity of K with each other
 Later Ts and Ls might have it if they agreed to take on the lease obligations

Sublease → when T transfers a portion of the lease period, holding some time back (e.g., for the summer)
 Sublessee is NOT liable to L for ANY covenants → no privity of estate or contract

Non-assignment or Non-sublease Clause → e.g., “T may not assign or sublet w/out L’s permission
 These are VALID and ENFORCEABLE
o Construed narrowly → non-assignment clause doesn’t prohibit subleases, and vice versa
o Violation of clause merely makes transfer VOIDABLE at option of L → if L does
nothing, nothing happens (L can evict assignee/sublessor and/or collect damages from T
—depending on terms of lease or statute)
 If L gives permission
o Permission given ONCE means the clause is waived FOREVER, unless L states
otherwise when giving permission (e.g., “I reserve right to pass on any future transfers”)
o If T sublets/assigns w/out permission, but L accepts rent from new sub-T → this serves
as permission and waives the clause permanently

Condemnation & Eminent Domain

Condemnation → if state takes the leased property
 Partial taking
o T’s rent obligation → T must still pay FULL RENT
o Condemnation award → T gets lump sum of amount that T would have had to pay in rent
on that part of the property for the rest of the lease
 Full taking
o T’s rent obligation → lease is extinguished and T is excused from paying rent
o Condemnation award → T shares in award only to the extent that the fair rental value of
lease exceeds amount of rent they were actually paying
 I.e., T will now have to go rent on the open market and might have to pay more
for the same thing—so they get the difference

Landlord’s Tort Liability

General Rule → L has NO DUTY to T or T’s invitees for injuries on premises during lease
 Exceptions

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 (1) Latent defects
 “latent defect” → defect that T does not know of, and which a reasonable person
in T’s position would not discover
 L has duty to disclose latent defects of which L knows or has reason to know of
 L does NOT HAVE TO REPAIR → JUST DISCLOSE
(2) Short term lease of furnished dwelling
 “short term” → 3 months or less
 L is liable for defects that L knows of or has reason to know of
(3) Common areas under L’s control
 L is liable for failure to use reasonable care
(4) Negligent repairs
 L is liable for ANY injury resulting from L’s repair of a defect on the premises,
even if L used all due care (pretty much SL, but courts call it “negligence”)
 L is liable for creating a deceptive appearance of safety
(5) Public use exception → on premises leased for public use (e.g., bar)
 L is liable for injury for defects in the premises IF:
(i) L knew or should know of major defects, and
(ii) L knew or should have known that T will not fix the defect, and
(iii) L knew or should have known that the public will be using the premises

Tenant’s Tort Liability (see also Torts Outline)

Tenant’s Liability
 T is ALWAYS liable to third party invitees for negligent failure to correct dangerous conditions
on the premises…regardless of whether or not L may ALSO be liable

Fixtures
Fixture → is a part of the real property and cannot be removed

 When does an installed chattel become a FIXTURE? KEY → intent

o Agreement → if there is agreement regarding the matter, that controls
o No agreement → determine intent by looking to four things
(1) Degree of attachment
 Was it tacked up, or cemented in?
(2) General custom w/ this item
 Is this something that is usually taken along when leaving?
(3) Degree of damage caused by removal
 Ts are favored here → if T can remove w/out substantial damage, the courts
infer that there was no intent to be a fixture
(4) Trade fixtures
 Defined → chattels used in trade/business
 Misleading name → these are NOT fixtures, can ALWAYS be removed
o WASHERS/DRYERS → these are NEVER fixtures

 If you determine that it’s chattel, and NOT a fixture—when can you remove it?
o T—must remove BEFORE end of lease (otherwise, it stays)

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 o L—must remove BEFORE closing (otherwise, it stays)
 Specific agreements → to the extent that L and T specifically agree that something is NOT to be
deemed a fixture, the agreement controls
o BUT, regardless of agreement, things that have been incorporated into the structure of
the realty always become part of the realty (e.g., bricks built into windows)
B. Easements
Easement
Definition → non-possessory interest in land involving RIGHT OF USE
 Key Word → “use”
 Two types:
(1) Easement Appurtenant → when the easement directly benefits the use and enjoyment of
a specific piece of land
 Servient estate → burdened property (easement crosses it)
 Dominant estate → benefited property (easement serves it)
(2) Easement in Gross → there is NO dominant estate, only a servient estate (e.g., power
lines, RR tracks)

Creation of Easements
3 Ways to Create an Easement:

(1) Express Easement

 Express grant of easement to someone else OR reservation of easement when land is sold
 Statute of frauds → it’s a land interest, so must comply w/ SOF and all deed formalities
o Note—oral easements of <1year might be ok—if particular state’s SOF allows!!!
o If failure due to SOF → it’s just a license (see below)
 In writing → must be in writing, signed by holder of servient estate, executed like a deed (i.e.,
RECORDED)
o Note → improper recordation does NOT affect the rights of the original parties to the
transaction
 i.e., while it may mean that later purchasers won’t have constructive notice, it has
absolutely NO effect on the validity of the easement between the original parties

(2) Easement by implication → exists if

 Previous use by common owner → if someone who owned all the land sells off just a piece of it,
and the previous use of that land was:
o Continuous
o Apparent (open and obvious)
o Reasonably necessary (i.e., unable to get to property or use it in the same way)
 Depends on many factors—including prohibitive cost and difficulty
 Implied easement by necessity → implied easement exists if property is landlocked otherwise
o Location of easement → owner of servient estate can choose, must be reasonable
o No such thing as an implied easement for “light and air” → these can be created, but
they are never implied (e.g., if your sunlight is obstructed by neighbor, can’t claim
implied easement)

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(3) Easement by prescription → arises like adverse possession
 Four Requirements → use must be:
(a) Adverse to owner
(b) Continuous and uninterrupted for the statutory period (seasonal is ok if normal use)
 Time period → 20 years unless problem specifies otherwise
(c) Either visible and notorious OR with owner’s knowledge
(d) Without owner’s permission (ANY grant of permission, even oral, destroys EBP)

Transfer of Easements
Transferring the BENEFIT of the easement:
 Easement appurtenant → benefit goes automatically with the dominant estate
o Does NOT have to be mentioned in the conveyance (need never be mentioned in deed
again)
o CANNOT be transferred separately from the dominant estate
 Attempt to transfer does not extinguish the easement, just can’t do it
 Easement in gross
o Commercial → easement can ALWAYS be transferred to someone else
o Personal → easement cannot be transferred to someone else w/out permission from
owner of servient estate

Transferring the BURDEN of the easement:

 NOTICE requirement → easements are ALWAYS binding on subsequent holders of servient
estates, even if not in the deed, provided that subsequent holder receives NOTICE of the
easement
o If no notice → easement is not binding
o Notice:
 Actual
 Record → record notice exists if easement was properly recorded!
 Inquiry

Use of Easements
Use of Easementts:
 If use specified in easement → this controls
 If easement is silent → two presumptions
(1) Perpetual → easement is presumed to be perpetual (lasts forever)
(2) Reasonable development
 Use presumed is that of reasonable development of the dominant estate…i.e., the
kind of use that would have been reasonably contemplated by parties who
created the easement
 E.g., no highway when only tractor trail was contemplated
 No excessive use → easement can be used to benefit ONLY the dominant
estate…not OTHER property (this would be excessive use)
 REMEDY → injunction against the excessive use, not termination of easement

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Change in Use:
 A basic change in the nature of use (scope) of an easement is NOT ALLOWED (e.g., adding
power line to easement that only gives permission to traverse)

Repair of Easements
Responsibilities of HOLDER of easement:
(1) Repair → holder must keep easement in repair and can ALWAYS go onto servient estate to do
so (even if easement doesn’t specifically provide for right to enter and repair)
(2) Reasonable restoration → make reasonable restoration to servient estate after repairs (e.g., if
dig up land to reach pipes, fill hole back in)
(3) Necessary repairs → holder must make all necessary repairs; holder of servient estate has NO
such obligation (unless easement states otherwise)

Termination of Easements
Six Possible Ways to Terminate (other than agreement):
(1) Unity of Ownership (Merger)
o If dominant and servient estate come together in same owner
o Revival → once easement is terminated thru unity of ownership, it NEVER revives!
Have to make it again if you want it again.
(2) Valid Release
o Must comply w/ SOF and all deed formalities
(3) Abandonment
o Abandonment by action → intent to abandon must be manifested by taking some
PHYSICAL ACT on property itself (e.g., build wall)…simply oral statement of intent to
abandon is not enough
o Non-use, no matter how long, is NOT abandonment
(4) Termination by Estoppel
(i) Representation of relinquishment by holder of easement, and
(ii) Change of position in reliance by holder of servient estate (e.g., build pool)
(5) Termination by Prescription
o Owner of servient estate must STOP use of easement for statutory period
(6) End of Necessity
o Re: easement by necessity → once necessity ceases, easement ceases (e.g., land becomes
accessible by some other way)

Licenses → NOT a property interest, just a K right

License → limited privilege of USE
 It’s a K right → revocable at will of licensor (may have to pay K damages, but no property
rights)

Two Exam Situations:

(1) Tickets → these are ALWAYS licenses

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  Can give no in rem (i.e., property) rights, can only sue for breach of K
 Can ALWAYS be revoked → holder can’t force onto property, but can sue in K
(2) Irrevocable Licenses (aka “easement by estoppel) → license PLUS money spent on
property furthering the license
How to spot these…
(1) Anytime an easement is attempted but fails due to SOF, there is a license
(2) And then if party spends money in furtherance of the oral license (thinking it’s
an easement), it becomes irrevocable and is JUST AS GOOD AS AN
EASEMENT
 Can be enforced under principles of estoppel

Profits
Profit → gives the right to go onto land and take a natural resource away (e.g., timber, coal)
 Carries with it an implied easement to go onto the land to take it away
 If question on profit → use easement rules

C. Restrictive Covenants

Restrictive Covenants
Restrictive Covenants → give the right to RESTRICT someone else’s use of their land
 Two Kinds:
Only difference is the way they’re enforced → so
(1) Covenants at law → enforced at law must FIRST determine whether Π wants money
(2) Equitable servitudes → enforced in equity damages or an injunction to enforce

Covenants Running w/ the Land AT LAW (Π wants damages)

4 Requirements for Covenant to Run w/ Land at Law:

(1) Intent → that it run w/ the land

(2) Notice → to person against whom enforcement is sought

o NOTE → if successor is a DONEE (not a BFP who bought the property), no notice
necessary!!!
 Explanation → at common law—covenant enforceable even if no notice but this
was changed by recording statutes which require notice
o Recording statutes require notice re: BFPs, but if someone receives the
land who is NOT a BFP (e.g., heir, donee), notice is not necessary unless
specifically required by recording statute

(3) Touch & Concern → must make land more useful or valuable (e.g., covenant to pay taxes or
covenant to convey such as option to purchase)
o Note → covenants not to compete DO touch & concern the land

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 (4) Privity of Estate → TRANSFER of property interest from one person to another, 2 kinds

o HORIZONTAL PRIVITY → exists if the original parties who made the covenant
actually transferred land interest one to the other (as opposed to already owning their land
and then agreeing on a covenant)
 E.g., transfer of easement

o VERTICAL PRIVITY → refers to those who later get the property subject to the
covenant and the person they got it from
 Successor must take the FULL estate for vertical privity

If successor is suing → usually trying to get the benefit of the covenant to run to them
 For BENEFIT to run against successor → need only VERTICAL privity
If successor is BEING sued → usually trying to avoid having the burden run to them
 For BURDEN to run against successor → need both HORIZONTAL and
VERTICAL privity
 This includes situation where one successor is suing another successor → need
both horizontal and vertical

Equitable Servitudes (Π wants injunction)

3 Requirements for Equitable Servitude:
(1) Intent → that restriction be enforceable by successors
(2) Notice → to subsequent purchaser
(3) Touch & Concern

NO privity requirement!!!

Subdivisions (common fact pattern on exam!)

 Equitable servitudes in subdivisions (aka “reciprocal negative servitudes) → where each lot
owner in a subdivision (residential OR commercial) can enforce covenants against all other lot
owners—any neighbor can enforce
Two Requirements:
(1) Intent → to create a servitude on all land in the subdivision
 Found in the common building plan (note → applies to NEGATIVE
covenants)
(2) Notice → 3 ways to get this
 Actual
 Record → where restriction is in chain of title (cthouse records), record of
subdivision plan
 Inquiry → you are held to know anything that reasonably inquiry might have
revealed (is it obvious from looking around?)
 Parkland → if recorded subdivision plan has land marked as city parkland, and if it can be
construed as a dedication of the land to the city for a park, then the city can enforce it!
o Note → any dedication in a deed can be accepted by a city when it approves plans (e.g.,
road)

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Equitable Defenses Against Enforcement of Equitable Servitudes:
(1) Unclean Hands (e.g., Π did same thing as Δ)
(2) Acquiescence (e.g., Π let neighbor on the other side do same thing)
(3) Laches (e.g., Π waited until building was built before complaining)
(4) Estoppel (e.g., Π said earlier that it was ok for Δ to put up an office building)

Termination of Restrictive Covenants

Termination: Can happen by
(1) Release
(2) Unity of Ownership → both parcels of land owned by same person
(3) Changed conditions → that make the land unfit for intended use
o “All or Nothing” → can’t void a restriction because of changed conditions in an area
unless ALL LOTS in the subdivision are affected (to prevent domino effect)

II. How to get, keep, transfer interests in land

A. Adverse Possession
Adverse Possession
Adverse Possession → “HELUVA”…must have ALL 6

H—Hostile
 No right to be on the property
 Does NOT have to have hostile intent (APer can think it’s his!)

E—Exclusive
 APer is excluding others from possessing the property

L—Lasting
 For statutory period → common law period is 20 years (unless stated otherwise on exam)
 Future Interest Situations → when does the statutory period start??
o Life Estate + Future Interest → AP during life tenancy gets APer the life tenancy; AP
against future interest doesn’t start until life tenant dies
o Fee simple determinable → happening of the condition (title goes back to grantor
automatically)
o Fee simple subject to condition subsequent → when grantor exercises right of entry

U—Uninterrupted
 Continuous use that an ordinary owner would make (e.g., don’t have to farm during winter)

V—Visible
 Out in the open; “open and notorious”

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A—Actual
 Must actually possess the land to get title
 Leasing → if APer leases the land to someone else, this still counts as actual possession
 Doctrine of Constructive Adverse Possession
o Color of title → means bad title
o So when APer is not a trespasser, but has a claim of title that’s no good
o If APer has title for a larger tract of land, but really only possesses part of it → can get
title to the rest of the land if:
(1) Amount of land actually possessed bears a reasonable relation to the whole
 On exam → tiny part of the whole is not enough!!!
 Must possess enough of it to put the real owner on notice
 Possess ≠ use—possess = have color of title to
(2) Property must be unitary → a seamless whole (i.e., no public road dividing it)

NOT REQUIRED:
 True owner doesn’t have to KNOW APer is on the land
 APer doesn’t have to think he owns the property

Special AP Rules
AP against other concurrent owners (i.e., other joint tenants or tenants in common)
 Can only happen if APer EXCLUDES the other co-Ts from possession and the statute runs
 Statute starts running when APer starts excluding, not just when other co-T is gone

Tacking
 Can tack periods of AP together → periods must pass directly from one APer to another, no gaps
 Can tack periods of true ownership together → i.e., AP does not have to be against only one true
owner for the entire statutory period
o Lesson → if you buy property, check it out asap to make sure there’s no APer or you
might lose it!!!

Disability
 If true owner is under a disability (minor, insanity, in jail) at time that AP begins, AP clock
doesn’t begin until disability ends
 But if true owner didn’t have disability when AP started, and only acquired it after → disability is
ignored…AP goes on
 NO tacking of disabilities (e.g., if true owner is 17 at time AP begins, and then becomes insane
the day before 18th birthday…AP still begins on 18th birthday)
Ignore all disabilities except those present on the day AP began

Govt. Land → NO AP against govt. land

B. Conveyancing
TWO STEPS → (1) contract of sale (2) deed at closing

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 Contract of Sale
Contract of Sale
Statute of Frauds → Any K of sale of an interest in property must be IN WRITING and SIGNED by the
one who is sued
o Just need some kind of writing that has:
(i) A description of the property
(ii) The names of the parties
(iii) The price
o Exception → doctrine of part performance
(1) Oral K must be certain and clear (no ambiguities), AND
(2) PART performance, i.e., any TWO of the following:
(a) full or part payment
(b) possession, and/or
(c) improvements

Time Period → Time of Signing to Time of Closing

(1) Risk of Loss
o Equitable conversion → once K is signed, BUYER has land interest and SELLER has
only possession and control…land belongs to buyer
o So any damage to land after signing is buyer’s loss UNLESS seller is at fault

(2) Death of Party before Closing

o No change in rights
o Just close w/ decedent’s estate

Marketable Title → every land sale K has implied warranty that, at closing, seller will give marketable
title
 “marketable title” → not necessarily perfect, but one that a reasonable person would accept
o Minor defects are ok → as long as there is no significant threat of litigation (e.g., bldg
encroaches ½ inch over property line is ok; ½ foot is not ok)
 Significant threat of litigation → doesn’t matter if buyer is likely to win, can
back out if there is a chance of litigation at all!
o Adverse possession → if owner tries to sell parcel that includes portion that has been
APed, there MUST HAVE BEEN a judgment in action to quiet title (i.e., prove that that
APed portion is really owner’s now)—need more than oral evidence that owner APed

 Seller must give buyer 3 things:

(i) Proof of title

(ii) Title free of unmentioned encumbrances (options to purchase, easements, covenants

etc.)
 “Encumbrance”
 Valid option to purchase
 Violation of a ZONING restriction

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  Violation of requirements in original subdivision plan

 NOT an encumbrance:
 Existence of a general zoning restriction, no violation
 Violation of a HOUSING OR BUILDING CODE
 Mortgage on property—NOT an encumbrance so long as the mortgage is to
be satisfied out of the proceeds of the sale
 Beneficial easement that is visible or known

(iii) Valid legal title on the day of closing

 Doesn’t matter if seller doesn’t have title the day before closing, as long as he
gives it day of…buyer cannot rescind unless seller doesn’t have valid title the
day of closing

Remedies for Unmarketable Title

 Buyer must notify seller and give him a reasonable time to cure defect, even if closing is
postponed
o If problem not corrected → 3 options
(1) Rescission
(2) Damages
(3) Specific Performance → buyer takes whatever seller can give w/ lower price
 If problem not corrected but buyer goes to closing and accepts deed anyway → no recourse based
on contract

Time of Performance
 Time is NOT of the Essence → in land Ks, unless K says otherwise or facts make it clear
 So performance need only be tendered w/in reasonable time after set closing date
o i.e., no unreasonable delay (up to 2 months is ok)
 BUT if there’s a time of the essence clause → violating party is in breach, can’t enforce the K

Remedies for Breach of Sales Contract

(1) Damages → difference between K price and value of land on the day of the breach
 Liquidated damages clause → buyer’s deposit can be forfeited as liquidated damages so long as
deposit represented a reasonable estimate of damages in the event of a breach (i.e., no more
than 10% of sales price)

(2) Specific Performance → available to both buyer and seller

 Note → if seller can’t provide marketable title but buyer wants to proceed anyway, buyer can
usually get SP and abatement in purchase price as long as it’s not an excessive variance from
original price

Defects on the Property

General Rule → if land is not fit for ordinary purposes, buyer CANNOT recover!!! There is no implied
warranty of suitability or fitness

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  Two Exceptions:
(1) Seller must disclose serious defects that seller actually knows of and are not obvious
to buyer (latent) → seller can’t actively conceal defects
 Seller who does not disclose is liable for any resulting injuries
(2) Implied warranty of fitness/merchantability for NEW homes sold by seller who built
them (warranty is very narrow)

Deed
Deed

Deed → when deed is accepted, K of sale merges into the deed…all K provisions are destroyed, deed
controls
 TWO REQUIREMENTS → for title to pass from seller to buyer
(1) Execution (can’t just hand deed back)
 SOF must be satisfied → i.e., seller must sign deed
 Description of land → must ID the property, otherwise void (enough if it
furnishes a good lead as to ID of property… but if it can’t be located, void)
 Stream as boundary → where a stream is a boundary, abutting owners each
owe ½ of the stream bed
 Mistake/inconsistency re: description of the property
o Parol evidence can be introduced (e.g., to show seller only had one
condo)
o Physical description takes precedence over quantity description
o Metes & bounds → land descriptions by metes & bounds always controls
over any other description
(2) Delivery
 Intent to pass title → intent is necessary; physical transfer is not
 Parol evidence can be brought in to show intent (e.g., statements, conduct)
 If grantor dies and never handed deed over → presumption is that there was
NO delivery (rebuttable by grantee)
 Recording a deed → raises presumption (prima facie evidence) of delivery, even
if grantee never even sees the deed or knows anything about it
 Constructive delivery → grantor hands over deed but tries to condition delivery
on some event
(1) Where condition is in deed
o If deed says it won’t be effective until grantor dies → this is a valid
delivery of a FUTURE INTEREST (i.e., grantor to self, then to grantee)
(2) Oral condition
o Law here is a mess → just disregard the condition
(3) Delivery conditioned on grantee paying purchase price
o Grantor must make delivery to a 3d party in ESCROW w/ instructions to
NOTE—no
such thing as a deliver to grantee when conditions is satisfied (these oral instructions are
“constructive ok)
reconveyance” o Once deed goes to escrow agent, grantor can’t get deed back
o Generally, title does not pass to grantee until grantee performs specific

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 conditions (i.e., payment)
 Acceptance of deed by buyer → this is presumed unless facts show otherwise
(e.g., buyer rejects)—IF BUYER REJECTS, NO DELIVERY!!!

Note → Once delivery occurs, title passes → later return of deed or tearing it up has
no effect

NO CONSIDERATION → not needed for a deed to be valid (unlike K of sale)

Covenants for Title

Quit Claim Deed → when grantor makes NO promises re: title; grantee gets whatever grantor owns,
period
 BUT—still have the warranty of passing marketable title that was in K of sale!!!

Special Warranty Deed → covenants only that the grantor herself did not create any title defects

General Warranty Deed (question must SPECIFY that it’s a GW deed!!!) → when grantor makes
promises re: title, these are called covenants for title; a deed with the 6 traditional covenants for title are
called general warranty deeds

Present Covenants → DO NOT RUN W/ LAND!!!

(1) Covenant of Seisen MARKETABLE TITLE → promise of seller that
(2) Covenant of Right to Convey seller has title and possession and can validly convey
both (see above)
(3) Covenant against encumbrances → promise of no restrictive covenants, liens,
easements, other people encroaching on property, etc.

~Can sue immediately on these → they are personal to the grantee and do not run w/ the land
i.e., can only sue the person that you GOT it from! Can’t sue previous owners

Future Covenants → RUN W/ LAND!!!

(4) Covenant for Quiet Enjoyment Promise of seller that seller will protect buyer against
(5) Covenant of Warranty ANYONE who later shows up and tries to claim title

(6) Covenant of Further Assurance → “mop up” covenant; if seller forgot to do something
to pass valid title, Seller promises to do whatever is necessary to fix it (e.g., sign deed)

~These are not breached immediately; breached later when grantee is disturbed in possession;
these run with the land and all subsequent purchasers may enforce
i.e., you can make the person you GOT it from, AND all previous owners help you to enforce!!

NOTE → no covenants re: DEFECT IN PROPERTY (see above)

Breach of Covenant for Title

Damages for Breach of Warranty

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  LIMITED RECOVERY → limited to purchase price received by grantor plus any incidental
damages

Estoppel by Deed
 If A deeds property to B that A doesn’t own → if A later does get title, it goes to B
 Bona fide purchaser → but if A gets title and then sells it to a BFP, B can’t rely on estoppel by
deed (but can sue A for damages)

Deed to Dead Person

Deed to Dead Person → is INVALID
 Estate can still enforce the K of sale (remember, due to equitable conversion, estate has land
interest)
 New deed must be made to dead person’s estate

C. Recording of Interests
Recording
Recording → done to give NOTICE to the world, but not necessary to make title valid
 At recording office → clerk files copy of deed and indexes it in a grantor index and grantee
index

Common Law Rule → first in time wins

 i.e., “O to A” and later “O to B” → A was first to get it, so A wins

Recording Acts
Recording Acts
 Can protect subsequent purchasers or mortgages—NOT LIEN CREDITORS
 Does NOT protect judgment creditors (i.e., people who get judgment liens)
3 Types of Recording Acts:
(1) Notice Acts
 Protect subsequent buyers who are BFPs (give value, w/out notice)
 So if you’re a BFP, you win
 Recording is irrelevant → except that it gives later purchasers notice
(2) Race-Notice Acts
 Protect subsequent BFPs who are first to record
 If BFP does not record, then first in time takes
(3) Pure Race Acts
 Whoever records first, wins → notice is irrelevant
 Subsequent purchaser doesn’t even have to be BFP (can know all about prior sale
and still win)

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How to recognize which kind of act in exam question:
Pure Race Notice Race-Notice
--- “without notice” or “in good faith” “without notice” or “in good faith”
+
“first recorded” or “recorded first”

Bona Fide Purchaser (BFP)

Bona Fide Purchaser → purchaser for value, w/out notice

 “For Value”
o Absurdly Low Price → doesn’t matter if price is ridiculously low, just have to give
something; doesn’t matter if it’s not FMV
 One dollar → NOT enough, this is “sham consideration”
o Heirs, donees, devisees → cannot be BFPs, if you get it by will or gift you haven’t given
value
o Bank mortgagee → mortgagees are considered purchasers!!!
 So a bank who takes a mortgage for value (i.e., give a loan) is a BFP!!!

 “Without Notice”
o Actual notice → subsequent purchaser actually knew of prior conveyance
o Record notice → constructive notice if deed is recorded in chain of title
 Chain of title → only look for what grantor recorded after getting title and before
passing it on; legal blinders
 Wild deed → deed recorded too late (after passing title) OR too early (before
getting title), these are outside the chain of title and DON’T give notice
 E.g., A sells to B, then A sells to C → C records before B does, then C sells
to D
o Since B recorded outside the chain of title (after sale to C), NO NOTICE
o Inquiry notice
 Subsequent purchasers are on notice of anything mentioned in a deed in the chain
of title (e.g., reference to “the easement”—have to check it out)
 Subsequent purchasers must make inquiry of unexplained possessions or uses
(e.g., should go out and examine the land in case examination could show that
someone else is on it with a prior unrecorded right…such a horse poo)

Shelter Rule Exception → anyone can shelter under the rights of a BFP
 Once BFP has it, they have good title, and can transfer it any way they want (i.e., even by gift,
etc.)
 Buyer from BFP still gets good title, even if they knew of the prior conveyance that BFP didn’t
know about!!!
 Protects ANYONE who takes from a BFP → regardless of whether they give value or what they
know

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D. Security Interests
Security Interests
Security Interests → devices used to secure a loan on real property, 3 types:

(1) Mortgage → given by debtor to creditor

o If mortgage not paid → sheriff sells land at foreclosure sale
o Two situations TREATED as mortgages:
 Absolute Deed-with-separate-promise-of-reconveyance → e.g., “I’ll give you my
land outright, but you promise to give it back to me when I pay off the debt”…
treated as an “equitable mortgage”
 Sale/lease-back with option to repurchase → e.g., “I’ll sell you my land, but you
will immediately lease it back to me and give me the option to buy it back from
you at the end of the lease”…lease payments are basically the same amount as
mortgage payments would be

(2) Deed of Trust → given by debtor to 3d-party-trustee who holds it until loan is paid off
o If loan not paid → trustee may either:
 Get court to order sale
 Sell property on his own at public auction

(3) Installment Land Contract → debtor signs K promising to make payments, and seller keeps
title until last dollar is paid off on loan

Consequences of Mortgage or Deed of Trust

Six Consequences:

(1) Right of Redemption

o Equitable → right to redeem BEFORE date foreclosure sale, debtor can still redeem the
property if he pays arrears (missed payments + interest)
o Statutory → right to redeem AFTER the foreclosure sale
o Acceleration clause → if mortgage has acceleration clause, debtor must pay full debt
o Waiver
 Right of redemption cannot be waived in the deed
 May be waived later for separate consideration
 An attempt to waive the right of redemption in the security interest is prohibited

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 → known as clogging the equity of redemption

(2) Foreclosure must be by public auction sale

(3) If multiple mortgages → priority is “first in time” unless recording act says otherwise
o Same rules as with deeds
o Three Minor Points:
(i) Mortgage priorities may be changed by K
(ii) Purchase Money Mortgages (i.e., mortgage taken out to buy the property) have
priority over mortgages executed at about the same time, even if the other
mortgages get recorded first
 PMM given by seller → gets priority over PMM given by 3d party lender
(e.g., bank)
(iii) If owner does anything to increase a senior (earlier) mortgage (e.g., get more $$,
or increase interest rate) then that mortgage loses its priority over junior ones to
the extent of the change

(4) Foreclosure wipes out junior (later) interests but not senior (earlier) ones
o Junior interests → DO NOT go w/ the land → they’ll be paid off if there’s enough $$
coming from the foreclosure sale, but other wise…too bad
NOTE → not just junior mortgages, junior interests (i.e., junior
easements, leases, etc.)
Protection for junior interest holders”
 They can pay off the mortgage being foreclosed in order to keep their interest
from being wiped out (so mortgagee owes them more, but at least they still have
a hope of being paid eventually)
 “necessary parties” → so junior interest holders are necessary parties to any
foreclosure; if they’re not made a party, their interests are preserved
o Failure to include necessary party results in preservation of party’s
interest despite foreclosure and sale
o Senior interests (including liens) → DO run with the land; they WILL NOT be paid off
w/ proceeds from foreclosure sale
 Buyer at foreclosure sale takes subject to senior interests
 But, of course, the senior mortgage could itself be foreclosed

(5) Order of use of foreclosure proceeds

(i) Pay costs of foreclosure (including expenses and attorney fees)
(ii) Pay mortgage that was foreclosed (including interest)
(iii) Pay junior interests in order
(iv) Anything leftover goes to debtor

(6) If mortgage is foreclosed and doesn’t make enough $$ to pay off mortgage
o Lender can sue debtor for balance due

Consequences of Installment Land Contract

Forfeiture Clause → provides that if debtor misses a payment, seller can cancel the K, keep all money
paid so far, and keep the property

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  These are enforceable (but see Equity outline)

Transfers of Security Interests & Mortgages

Transfers → parties can freely transfer interest in property

 Personal liability → mortgagor can transfer title to property and the mortgage just tags along

o BUT original mortgagor continues to be PERSONALLY LIABLE

 So old owner (mortgagor) is still personally liable
 New owner is not personally liable, but might still lose property due to
foreclosure (i.e., takes only “subject to the mortgage”)

o UNLESS new owner specifically assumes the mortgage (i.e., “assumes payment of”)
 New owner would have PRIMARY LIABILITY
 Old owner would still be SECONDARILY LIABLE → so if new owner can’t
pay, old one still has to

o Modification to mortgage → if new owner assumes mortgage but then makes

modification to it…old owner is discharged from ALL liability

 Due-On-Sale Clause → if mortgagor transfers w/out mortgagee’s (bank’s) consent, FULL

amount of the loan is immediately due

Fixture Filing
Fixtures → if you attach a chattel to property and chattel-seller has a security interest (PMSI) in it
 File within 20 days → seller needs to file w/in 20 days after buyer attaches it to the property or
else any mortgage on the property will have priority over the security interest
o If seller files in time → seller can remove it regardless of any earlier mortgage or security
interest

NOTE: divided ownership → if chattel in which there is a PMSI is attached to leased premises (e.g.,
one that is subject to a mortgage taken out by lessor), bank has no rights to the chattel so long as it hasn’t
become a fixture (i.e., intent to be such, see above)

III. Extra Rights

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A. Rights of Support
Rights of Support
(1) Lateral Support
o Landowner has the right to land supported from the side by adjoining landowners
o Strict liability → adjacent landowner is strictly liable (even if used due care) for:
 Support of adjacent land
 Damage to improvements IF the land would have collapsed anyway, even w/out
the improvements (i.e., the improvements didn’t cause the collapse)

(2) Subjacent Support

o Support of surface from the bottom → comes up when mineral rights have been split
from surface rights
o Strict liability → holder of mineral rights is strictly liable (even if used due care) for:
 Failure to support land
 Improvements existing when the mineral rights were severed
 NO liability for buildings built after rights were severed

NOTE → even if no SL protection (e.g., because building was built after mineral rights were severed),
can still sue for negligence

B. Water Rights
Rivers and Lakes
Two Separate Legal Systems:

(1) Riparian Rights → majority system; refers to those whose property borders a lake/stream
(a) Natural (domestic) purposes (e.g., shower, limited grazing) → owner can use all water
as much as they want!
(b) Artificial (non-domestic) purposes (e.g., commercial/industrial, irrigation) → limited to
reasonable use (can’t impair quality or quantity)

ACCRETION → the slow and imperceptible change in course of a river serving as a

boundary (must be slow and imperceptible!!!)
 Accretion belongs to the riparian owner
 i.e., any resulting deposit of soil belongs to the owner of the abutting (riparian)
land
AVULSION → the sudden and perceptible loss or addition to land by the change in
course of a river
 Does NOT change property rights!!

(2) Prior Appropriation → only used where water is very scarce, minority view
o First in time takes → ANYONE who makes beneficial use of the water has a right to
continue to use it, protected from those who come later as long as the use continues

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Water Underground
Water Underground (e.g., well water)
(a) Reasonable use → landowner is entitled to reasonable use of ground water
(b) On the property → landowner must use it on property, not export it

Surface Water (“Flood Water” or “Runoff”)

Two Competing Approaches (exam will say which to use)

 Natural Flow Approach → a landowner cannot alter the rate or manner of natural flow of surface
waters where such actions would injury others above or below him
o Courts allow reasonable steps to deal w/ flood water
o Exam → drainage pipes or ditches to divert flood water are ok if reasonable

 Common Enemy Approach → can do ANYTHING w/ floodwater, whether reasonable or not

o Ok to dig a ditch so that water goes onto neighbor’s property!

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