LECTURE HANDOUT

REAL PROPERTY

REAL PROPERTY

PROFESSOR PAULA FRANZESE

Copyright © 2019 by BARBRI, Inc.

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NOTES
1 OVERVIEW OF REAL
PROPERTY
KEYS TO EFFECTIVE BAR EXAM PREPARATION

THE CORE TOPICS IN PROPERTY LAW

• Present estates and future interests
• Adverse possession
• Co-ownership, also known as concurrent estates
• Landlord-tenant law
• Servitudes: easements, profits, licenses, real cove-
nants, and equitable servitudes
• The purchase and sale of real estate
• The recording system
• Mortgages or land finance
• Zoning

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FREEHOLD ESTATES
SUMMARY
CHART FREEHOLD ESTATES

Estate Language to Duration Transferability Future Interest

Create

Fee Simple “To A and his Absolute Devisable, None

Absolute heirs” ownership, of descendible,
“To A.” potentially alienable.
infinite duration.

Defeasible Fees
Fee Simple “To A so long Potentially Alienable, Possibility of
Determinable as ...” infinite, so long devisable, Reverter (held by
“To A until...” as event does descendible, grantor).
“To A while...” not occur. subject to
(Language condition.
providing that
upon the
happening of a
stated event, the
land is to revert
to the grantor.)

“To A, but if X event Potentially Same. Right of

Fee Simple
happens, grantor infinite, so long Entry/Power of
Subject to
Condition reserves the right to as the condition Termination (held
Subsequent re-enter and retake.” is not breached by grantor).
Grantor must carve and, thereafter,
out right of reentry. until the holder of
the right of entry
timely exercises
the power of
termination.

Fee simple “To A, but if X Potentially Same Executory

Subject to event occurs, infinite, so long Interest (held by
Executory then to B.” as stated third party).
Limitation contingency does
not occur.

Life Estate “To A for life.” Measured by life of Alienable, Reversion (if
“To A for the life transferee or devisable and held by grantor);
of B.” by some other life descendible if Remainder (if
(pur autre vie). pur autre vie and held by third
measuring life is party).
still alive.

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2 PRESENT ESTATES
We are concerned here with three categories of free-
hold estates, so named because they grew out of the
English system of feudalism.
• The Fee Simple Absolute
• The Defeasible Fees (of which there are three
types); and
• The Life Estate
The examiners will expect you to know three things
with respect to each of these estates:
• What language will create the estate?
• Once identified, what are the estate’s distinguish-
ing characteristics? In other words, is the estate de-
visable, meaning, can it pass by will? Is the estate
descendible, meaning, will it pass by the statutes
of intestacy if its holder dies intestate (without a
will)? Is the estate alienable, meaning, is it transfer-
able inter vivos, or during the holder’s lifetime?
• Which future interests, if any, is the estate capable
of?

2.1 FEE SIMPLE ABSOLUTE

How Created
“To A” or “To A and his heirs.” Today, those common
law words “and his heirs” are not needed.
Thus, “to A” suffices to create the fee simple absolute.

Distinguishing Characteristics
A fee simple absolute is absolute ownership of poten-
tially infinite duration.

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NOTES
What does that mean?
Distinguished
Divisible (Can be divided)
Descendible (Will pass in case you
die intestate) Accompanying Future Interest
Alienable (Transfer)
HYPO 2A
Future Interest O conveys “to A” or “to A and his heirs.” A is alive
The Possibility of Reverter and well. What do A’s heirs have?

Why?

2.2 THE DEFEASIBLE FEES

Think of these as three types of fee simple (“to A”)
with a catch or condition attached that renders the
estate subject to the risk of forfeiture. To be defeasible
means to be capable of forfeiture.

The Fee Simple Determinable

How Created
“To A so long as . . .” “To A during . . .” “To A until . . .”
Look for clear durational language.
What happens if the stated condition is violated?

Distinguishing Characteristics
This estate, like all of the defeasible fees, is devisable,
descendible, and alienable, but always subject to the
condition.

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HYPO 2B
Paul conveys Blackacre “to Ringo so long as the
premises are used as a recording studio.”
What does Ringo have?

Suppose that Ringo in turn conveys to Mick, who

seeks to convert the recording studio into a bowl-a-
rama. May Mick do so?

Accompanying Future Interest

Only one future interest accompanies the fee simple
determinable. What is it called?

HYPO 2C
Frank Sinatra conveys Sinatra Palace “to Orville
Redenbacher, so long as popcorn is never made on
the premises.” Classify the interests.
What does Orville have?

What does Frank have?

To remember:
FSDPOR

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The Fee Simple Subject to Condition
Subsequent
How Created
“To A, but if X event occurs, grantor reserves the right
to re-enter and retake.”
Here, two ingredients are needed. What are they?

HYPO 2D
Britney conveys “To Selena, but if Selena ever
serves alcohol on site, Britney reserves the right to
re-enter and retake.”
What does Selena have?

What does Britney have?

Distinguishing Characteristics
This estate is NOT automatically terminated, but it can
be cut short at the grantor’s prerogative if the stated
condition occurs.
To remember:

Accompanying Future Interest

What is the grantor’s prerogative to terminate called?

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The Fee Simple Subject to Executory Limitation
How Created
“To A, but if X event occurs, then to B.”
What do you notice?

HYPO 2E
“To Bradley, but if he ceases to use the land for
agricultural purposes, then to Lady Gaga. Bradley is
a farmer and is using the land agriculturally.
What does Bradley have?

What does Lady Gaga have?

Distinguishing Characteristics
This estate is just like the fee simple determinable,
only now, if the condition is broken, the estate is auto-
matically forfeited in favor of an entity other than the
grantor.

Accompanying Future Interest

Which future interest accompanies the fee simple sub-
ject to executory limitation?

TWO IMPORTANT RULES OF CONSTRUCTION

FOR DEFEASIBLE FEES
• Words of mere desire, hope, or intention are in-
sufficient to create a defeasible fee.

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Why?

Remember: Courts will not find a defeasible fee

unless clear durational language is used.
Thus, in each of these instances, A is vested with a
fee simple absolute, and NOT a defeasible fee:
• “To A for the purpose of constructing a day
care center”;
• “To A with the hope that he becomes a lawyer”;
• “To A with the expectation that the premises
will be used as a hardware store.”
• Absolute restraints on alienation are void.
What is an absolute restraint on alienation?
An absolute restraint on alienation is an absolute
ban on the power to sell or transfer, that is not
linked to any reasonable time-limited purpose.

HYPO 2F
O conveys: “To A so long as she never attempts to
sell.”
What is the problem with the grant?

Thus, what does A have?

What does O have?

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HYPO 2G
O conveys: “To A so long as she does not attempt
to sell until the year 2022, when clouds on the title
will be resolved.”
What is different about this example?

What does A have?

What does O have?

REVIEW ACTIVITY
Take a look at these examples. See if you can identify
the various interests.
• O conveys “To Elle Woods, so long as she remains a
lawyer.” Elle is a lawyer. What does Elle have?

What does O have?

What result if Elle leaves the legal profession?

• O conveys “To Elle Woods, but if she leaves the legal

profession, grantor reserves the right to re-enter and
re-take.” Elle is a lawyer. What does Elle have?

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What does O have?

What result if Elle leaves the legal profession?

• O conveys “To Elle Woods, but if she leaves the legal

profession, then to Luke Wilson.” Elle is a lawyer. What
does Elle have?

What does Luke have?

What result if Elle leaves the legal profession?

2.3 THE LIFE ESTATE

How Created
This is an estate that must be measured in explicit
lifetime terms, and never in terms of years.
Think of the life estate as the romantic estate.
For example, O conveys: “To A for life.”
What does A have?

What is A known as?

What does O have?

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NOTES
Contrast with: “To A for 50 years, if she lives that long,”
or “To A for life, but in no event more than 10 years,”
both of which create the term of years (a leasehold
interest), and NOT the life estate.
The life estate pur autre vie:
A life estate measured by a life other than the grant-
ee’s. For example, “To A for the life of B.”

HYPO 2H
O conveys: “To Madonna, for the life of David
Letterman.”
What does Madonna have?

What does O have?

When does the estate revert back to O or O’s heirs?

Accompanying Future Interest

If held by O, it is called a reversion. If held by a third
party, it is called a remainder.

Distinguishing Characteristics
The life tenant’s entitlements are rooted in the import-
ant doctrine of waste. Note two general rules:
• The life tenant is entitled to all ordinary uses and
profits from the land.
• The life tenant must not commit waste.

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NOTES
There are three types of waste. What are they?

Voluntary (Affirmative) Waste

Voluntary waste (also known as affirmative waste) is
actual, overt conduct that causes what?

Voluntary Waste and Natural Resources

The general rule: The life tenant must not consume
or exploit natural resources on the property (such as
timber, oil, or minerals), unless what?

To remember the four exceptions, remember: P U R G E

• PU: Prior use, meaning that prior to the
grant, the land was used for exploitation.
When that is the case, what result?

Prior Use and the Open Mines Doctrine: If

mining was done on the land before the life
estate began, the life tenant may continue
to mine, but is limited to what?

Thus, the life tenant must not open any new

mines.
• R: Reasonable repairs. The life tenant may
consume natural resources for which pur-
poses?

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• G: Grant. The life tenant may exploit if ex-
pressly granted the right to do so.
• E: Exploitation, meaning the land is suitable
only for exploitation. When would the land
be suitable only for exploitation?

Permissive Waste (Neglect)

Permissive waste occurs when land is allowed to fall
into disrepair or the life tenant fails to reasonably pro-
tect the land. That’s why permissive waste is synony-
mous with what?

• Permissive waste and the obligation to

repair: The life tenant must simply maintain
the premises in reasonably good repair.
• Permissive waste and the obligation to
pay all ordinary taxes: The life tenant must
pay all ordinary taxes on the land, to the
extent of any income or profits that the life
tenant is reaping from the land. If there is no
income or profit, the life tenant is required
to pay all ordinary taxes only to the extent
of the premises’ fair rental value. What that
means is that when no income or profits are
coming in from the land, the life tenant’s tax
liability for the parcel will be computed not
on the basis of Blackacre’s fair market value
but instead on the basis of its mere fair rent-
al value (a considerably lesser sum).

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NOTES
Ameliorative Waste
The life tenant must not engage in acts that will en-
hance the property’s value, unless all future interest
holders are known and consent. Why?

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3 FUTURE INTERESTS
There are six categories of future interests, and we
classify them based on whether they are retained by
the grantor or instead, by a transferee.

3.1 FUTURE INTERESTS CAPABLE OF

CREATION IN THE GRANTOR
There are only three future interests capable of cre-
ation in the grantor:

The Possibility of Reverter: Which present estate

does the possibility of reverter accompany?

The Right of Entry (also known as Power of

Termination): Which present estate does the right of
entry or power of termination accompany?

The Reversion: A reversion is the future interest that

arises in a grantor who transfers an estate of lesser
duration than she started with, other than a fee simple
determinable (which gives O the possibility of reverter)
or a fee simple subject to condition subsequent (which
gives O the right of re-entry).

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HYPO 3A
(1) O, the holder of a fee simple absolute (which
can endure forever), conveys: “To A for life.” O has
conveyed less than what she started with. What
does O have?

(2) O, the holder of a fee simple absolute, conveys:

“To A for 99 years.” O has conveyed less than what
she started with. What does O have?

(3) O, the holder of a fee simple absolute, conveys:

“To A for life, then to B for 99 years.” O has still
conveyed less than that with which she started.
(Remember that the fee simple absolute can endure
forever.) What does O have?

3.2 FUTURE INTERESTS IN

TRANSFEREES
If our future interest is held by someone other than the
grantor, it has to be either:
• A contingent remainder, OR
• A vested remainder (of which there are three
types: (i) the indefeasibly vested remainder, (ii) the
vested remainder subject to complete defeasance
(also known as the vested remainder subject to
total divestment), and (iii) the vested remainder
subject to open), OR
• An executory interest (of which there are two
types: (i) the shifting executory interest, and (ii) the
springing executory interest).

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NOTES
What Is a Remainder?
A remainder is a future interest created in a grantee
that is capable of becoming possessory upon the expi-
ration of a prior possessory estate created in the same
conveyance in which the remainder is created.

Exam Tip
Think of the remainder as sociable. Here’s why:

Remainders never travel alone. In other words, remain-

ders always accompany a preceding estate of known
fixed duration (such as a life estate or term of years).

Think of remainders as patient and polite. Here’s why:

A remainder never cuts short or divests the prior taker.

Instead, it patiently waits its turn and won’t take until the
present life estate or term of years comes to its conclu-
sion.

Remainders Are Either Vested or Contingent

Contingent Remainders
A remainder is contingent if: (1) it is created in an una-
scertained or unknown person or (2) it is subject to an
unmet condition precedent, or both.

The Remainder That Is Contingent Because It Is

Created in an Unascertained or Unknown Person
For example:
• “To A for life, then to B’s first child.” A is alive. B,
as yet, has no children.
• “To A for life, then to B’s heirs.” A is alive. B is
alive. Because a living person has no heirs,
while B is alive his heirs are unknown.

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• “To A for life, then to those children of B who
survive A.” A is alive. We don’t yet know which,
if any, of B’s children will survive A.

The Remainder That Is Contingent Because It Is

Subject to an as Yet Unmet Condition Precedent
A condition is a condition precedent when it appears
before the language creating the remainder or is wo-
ven into the grant to the remainderman.

HYPO 3B
“To A for life, then, if B graduates from college, to
B.” A is alive. B is now in high school. Before B can
take, he must graduate from college. He has not yet
satisfied this condition precedent.
What does B have?

What does O have?

What if B graduates from college during A’s lifetime?

Vested Remainders
A remainder is vested when it is created in a known
taker who is not subject to a condition precedent.

The Three Types of Vested Remainders

There are three types of vested remainder. The first is
called the indefeasibly vested remainder. The second
is called the vested remainder subject to complete
defeasance (synonymous with the vested remainder
subject to total divestment). The third is called the
vested remainder subject to open.

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NOTES
How to distinguish the three types of vested remain-
der
The indefeasibly vested remainder: The holder of this
remainder is certain to acquire an estate in the future,
with no strings or conditions attached.

HYPO 3C
“To A for life, remainder to B.” A is alive. B is alive.
What does A have?

What does B have?

Why?

What if B predeceases A?

The vested remainder subject to complete defea-

sance (also known as the vested remainder subject
to total divestment): Here, the remainderman exists.
His taking is NOT subject to any condition precedent.
However, his right to possession could be cut short
because of a condition subsequent.
Here, it is important to know the difference between
a condition precedent, which creates a contingent
remainder, and a condition subsequent, which creates
a vested remainder subject to complete defeasance.
To tell the difference, apply the “Comma Rule”: When
conditional language in a transfer follows language
that, taken alone and set off by commas, would cre-
ate a vested remainder, the condition is a condition

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NOTES
subsequent, and you have a vested remainder subject
to complete defeasance.

HYPO 3D
O conveys: “To A for life, then to B, provided,
however, that if B dies under the age of 25, to C.” A
is alive. B is 20 years old.
What does A have?

What does B have?

What does C have?

Read the example again. “To A for life, then to B,

provided however that if B dies under the age of
25, to C.” A is alive and B is 20.
What result if B is under age 25 at the time of A’s
death?

Note, however, that B must live to 25 for his estate

to retain his interest. Otherwise, B’s heirs lose it all,
and C or C’s heirs take.

By contrast, if the conditional language appears

before the language creat­ing the remainder, the
condition is a condition precedent, and you have a
contingent remainder.

HYPO 3E
O conveys “To A for life, and if B has reached the
age of 25, to B.” A is alive. B is 20 years old.

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NOTES
What does A have?

What does B have?

In this example, what result if B is alive but under

age 25 at the time of A’s death?
B cannot take. The age requirement is drafted
as a prerequisite or condition precedent to B’s
entitlement to take. Thus, if B is still under 25 when
A dies, the estate reverts back to O or O’s heirs,
who hold it subject to B’s springing executory
interest. (If and when B reaches 25, B divests O.)

The vested remainder subject to open: Here, the re-

mainder is vested in a group of takers, at least one of
whom is qualified to take possession. But each class
member’s share could get smaller because additional
takers, not yet ascertained, can still join the class.

HYPO 3F
“To A for life, then to B’s children.” A is alive. B has
two children, C and D.
What do C and D have?

Why?

A CLASS IS EITHER OPEN OR CLOSED

When is a class open?

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When is a class closed?

How will you know when the given class has closed?

The rule: The class closes when any member can

demand possession.
Why is it called a rule of convenience?

HYPO 3G
“To A for life, then to B’s children.” A is alive. B has
two children, C and D.
The class closes at B’s death and also, because of
the rule of convenience, at A’s death—no matter
that B is still alive. Why?

Once A dies, a child of B born or conceived

thereafter will not share in the gift.
The one exception:

What if C or D predeceases A?

Executory Interests
An executory interest is a future interest created in
a transferee (a third party), which is not a remainder
because it takes effect by either cutting short some

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NOTES
interest in another person (“shifting”) or in the grantor
or his heirs (“springing”).

Shifting Executory Interest

A shifting executory interest always follows a defeasi-
ble fee and cuts short someone other than the grantor.

HYPO 3H
“To A, but if B returns from Canada, to B and his
heirs.”
What does B have?

Why doesn’t B have a remainder?

What does A have?

Does the conveyance violate the Rule Against

Perpetuities?

Springing Executory Interest

A springing executory interest cuts short the interest
of O, the grantor.

HYPO 3I
O conveys: “To A, if and when she becomes a
lawyer.” A is in high school.
What does A have?

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NOTES
Why?

What does O have?

Does the conveyance violate the Rule Against

Perpetuities?

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NOTES
4 THE RULE AGAINST RAP endeavor to impose reasonable
PERPETUITIES standard to accommodate both
opposing positions.
Certain kinds of future interests are void if there is
any possibility, however remote, that the given inter-
est could vest more than 21 years after the death of a **Those who want no restrictions
measuring life. on land use & those who want
restrictions into perpetuity.
**Mediator who compromises &
4.1 FOUR-STEP TECHNIQUE FOR will allow land to be tied up to with
ASSESSING POTENTIAL RAP PROBLEMS uncertainty only for so long RAP
First, determine which future interests have been cre- which does not allow land to be tied
ated by the conveyance. The RAP potentially applies up with uncertainty for over 21years
only to contingent remainders, executory interests, at the time of grants creation about
and certain vested remainders subject to open.
who ought to take in the future.
The RAP does NOT apply to any of the three future
interests capable of creation in O, the grantor, (the ---->This answer will not be able to
possibility of reverter, the right of re-entry, and the persist into perpetuity.
reversion). It does not apply to indefeasibly vested re-
mainders or to vested remainders subject to complete
---->There has to be an answer
defeasance.
within 21 years of the death of some
Second, determine what has to happen for the future relevant life in being at the time of
interest holder to take. the grants creation.
Third, look for the people alive at the date of the
conveyance whose lives and/or deaths are relevant ---->100 years on who gets to take
to what has to happen for the future interest holder to into the future
take. That person(s) is a measuring life.
----> On average thats the life span
Fourth, determine whether we will know for sure
within 21 years of the death of a measuring life if the of a person +21 years.
future interest holder(s) can take. If so, the conveyance
is good. By contrast, if we won’t know for sure within ---> About who gets to take in the
21 years of the death of a measuring life whether the future & wont know even if we wait
future interest holder can take, the future interest is 21 years. Than the future interest
void. subject to that condition is void.

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NOTES
Applying the Four Steps
HYPO 4A
“To A for life, then to A’s children.” A is alive. She
has no children.
Step one: What is the future interest?

Why?

Step two: What has to happen for the future interest

holder to take?

Step three: Find a measuring life. Whose life and/

or death is relevant to what has to happen for the
future interest holder to take?

Step four: Will we know within 21 years of the

death of that measuring life whether there will be
someone eligible to take?

4.2 REMEMBER THIS BRIGHT LINE RULE

OF COMMON LAW RAP
An executory interest with no limit on the time within
which it must vest violates the RAP.
HYPO 4B
“To A and his heirs so long as the land is used for
farm purposes, and if the land ceases to be so
used, to B and his heirs.”

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Step one: What is the future interest?

Why?

Step two: What has to happen for B to take?

Step three: Find a measuring life

Step four: Will we know for sure, within 21 years of

the death of our measuring life, if the future interest
holder can take?
No. A, the measuring life, might abide by the
condition during her lifetime. The condition may not
be breached, if ever, until hundreds of years have
passed.
Once the offensive future interest is stricken, we
are left with: “To A and his heirs so long as the
land is used for farm purposes.”
What does A have?

What does O have?

Is there a RAP problem?

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4.3 REFORM OF THE RAP
“Wait and See” or “Second Look” Doctrine
Under this majority reform effort, the validity of any
suspect future interest is determined on the basis of
the facts as they now exist, at the conclusion of our
measuring life.

The Uniform Statutory Rule Against Perpetuities

(USRAP)
Codifies the common law RAP and, in addition, pro-
vides for an alternative 90-year vesting period.

Cy Pres Recognized by Both Reforms

Both reform measures apply cy pres.

Cy Pres Doctrine (“As Near As Possible”)

If a given disposition violates the rule, a court may reform
it in a way that most closely matches the grantor’s intent,
while still complying with the rule against perpetuities.

REVIEW ACTIVITY
O conveys “To A for life, and if B becomes a veterinari-
an, to B.” A is alive. B is 9 years old.
Step one: What is the future interest?

Why?

Step two: What has to happen for the future interest

holder to take?

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NOTES
Step three: Find a measuring life. Whose life is rel-
evant to what has to happen for the future interest
holder to take?

Step four: Will we know within 21 years of the measur-

ing life’s death if he is qualified to take?

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5 ADVERSE POSSESSION
The basic concept: Possession for a statutorily pre-
scribed period of time can, if certain elements are met,
ripen into title.

5.1 THE ELEMENTS OF ADVERSE

POSSESSION
Remember C O A H:
For possession to ripen into title it must be:
• Continuous:

• Open and Notorious:

• Actual:

• Hostile:

Note: Possessor’s subjective state of mind is irrele-

vant. It does not matter, for example, that the posses-
sor actually thought that he was on his own land or
knew that he was encroaching on another’s land.

5.2 TACKING
One adverse possessor may tack on to his time with
the land his predecessor’s time, so long as there is
privity between the possessors.
How is privity satisfied?

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NOTES
By contrast, privity is absent when the possessor
acquires possession by ousting his predecessor in
possession.

HYPO 5A
O owned Blackacre in 1990 when A entered
adversely. A was on her way to satisfying the
elements of adverse possession when, in 1996, Mr.
X ousted her. Mr. X stays on the land through 2010.
Our jurisdiction has a 20-year statute of limitations.
In 2010, who owns Blackacre?

5.3 DISABILITIES
The statute of limitations will not run against a true
owner who is afflicted by a disability at the inception
of the adverse possession.

What are some common disabilities?

HYPO 5B
O owned Blackacre in 1990 when A entered
adversely. In 2000, O went into a coma. In 2010, O
recovered. Our jurisdiction has a 20-year statute of
limitations. In 2010, who owns Blackacre?

Why can’t O claim the benefit of the disability?

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NOTES
6 CONCURRENT ESTATES
There are three forms of concurrent ownership.
• The Joint Tenancy
Two or more own with the right of survivorship.
• The Tenancy by the Entirety
A protected marital interest between spouses with
the right of survivorship.
• The Tenancy in Common
Two or more own without the right of survivor-
ship.

6.1 THE JOINT TENANCY

Distinguishing Characteristics
• The right of survivorship: When one joint tenant
dies, what result?

• Alienability: A joint tenant’s interest is alienable

inter vivos. What does that mean?

• Not devisable or descendible: A joint tenant’s

interest is neither devisable nor descendible. Why
not?

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How to Create a Joint Tenancy
The Four Unities
Remember this “T-TIP”: Joint tenants must take their
interests:
T:

T:

What does that mean?

I:

P:

Clear Expression of Right of Survivorship

In addition to the four unities, to create a joint tenancy
the grantor must clearly express the right of survivor-
ship. How?

Why is it so difficult to create a joint tenancy?

Why are joint tenancies disfavored?

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NOTES
Use of a Straw
HYPO 6A
Dave holds Blackacre in fee simple absolute. He
wishes to hold it as a joint tenant with his best
friend Paul. How must Dave proceed?

Step 1:

Step 2:

Now, all four unities are present, including which

two?

Severance of a Joint Tenancy

Remember “SPAM”: Sale, Partition And Mortgage

Severance and Sale

• A joint tenant may sell or transfer her interest
during her lifetime.
May she do so secretly?

One joint tenant’s sale severs the joint tenancy

as to the seller’s interest. Why?

Thus, the buyer is:

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NOTES
If we started with more than two joint tenants in
the first place, the joint tenancy remains intact as
between the other, non-transferring joint tenants.

HYPO 6B
O conveys Blackacre “To Phoebe, Ross, and Monica
as joint tenants with the right of survivorship.”
Each owns what?

Phoebe then sells her interest to Chandler.

What is the result?

What is the state of Ross and Monica’s title?

What does Chandler have?

Later, Ross dies, leaving behind his heir, Rachel.

What happens to the share that was held by Ross?

What is the final result?

• In equity, a joint tenant’s mere act of entering

into a contract for the sale of her share will
sever the joint tenancy as to that contracting
party’s interest. This is because of the doctrine of
equitable conversion.

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NOTES
• It provides that “equity regards as done that
which ought to be done.”

HYPO 6C
O conveys Blackacre to “Ringo, Paul, and John as
joint tenants with the right of survivorship.”
This is which form of concurrent estate?

On January 1, Ringo enters into a contract for sale of

his interest in the joint tenancy to George, with the
closing to take place on April 1.
In equity, when does the severance as to Ringo’s
interest occur, and why?

Severance and Partition

Remember the three types of partition:
• By voluntary agreement: An allowable and
peaceful way to end the relationship.
• Partition in kind: A judicial action for a physical
division of the property, if in the best interests
of all parties. When would a partition in kind
work best?

• Forced sale: A judicial action when, in the best

interests of all parties, the land is sold and the
sale proceeds are divided up proportionately.
When would a forced sale work best?

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NOTES
Severance and Mortgage
The rule: One joint tenant’s execution of a mortgage
or a lien on his or her share will sever the joint tenancy
as to that now encumbered share only in the minority
of states that follow the title theory of mortgages.
What does that mean?

By contrast, the majority of states follow the lien the-

ory of mortgages, whereby a joint tenant’s execution
of a mortgage on his or her interest will not sever the
joint tenancy. Why is this the majority view?

HYPO 6D
Paul, John, and George are joint tenants. Suppose
now that Paul mortgages his interest in the joint
tenancy. Will this sever the joint tenancy as to Paul’s
interest?

6.2 THE TENANCY BY THE ENTIRETY

It can be created only between married partners, who
take as fictitious “one person” with the right of survi-
vorship.

How Created
In some states that recognize the tenancy by the
entirety, it arises presumptively in any conveyance to
married partners. In other states that recognize the
tenancy by the entirety, to create it the grantor must
clearly specify that the conveyance is to A and B, as
married partners, as tenants by the entirety.

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NOTES
Very Protected Form of Co-Ownership
Remember: “CAN’T TOUCH THIS”
Creditors: Creditors of only one spouse cannot touch
this tenancy for satisfaction of the debt.
Unilateral conveyance: One spouse, acting alone,
cannot defeat the right of survivorship by unilaterally
conveying to a third party.

HYPO 6E
Jack and Rebecca, married to each other, own
Blackacre as tenants by the entirety. Jack then
secretly transfers his interest to Miguel. What does
Miguel have?

6.3 THE TENANCY IN COMMON

Remember these three features:
• Each co-tenant owns an individual part, and each
has a right to possess the whole.
• Each interest is devisable, descendible, and alien-
able. Why?

• When in doubt, the presumption favors the tenancy

in common. Why?

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NOTES
6.4 RIGHTS AND DUTIES OF CO-
TENANTS
Suppose that siblings Kevin and Randall co-own a cab-
in. Kevin contributed 90% of the purchase price and
Randall 10%.
Which form of ownership is this?

Why?

Possession
Kevin takes a can of white paint and divides up the
premises. “Randall,” he says, “you can use and enjoy
that 10% on that side of the line, and only that.” Are
Kevin’s actions permissible?

If one co-tenant wrongfully excludes another co-tenant

from possession of the whole or any part, he has com-
mitted ouster. Ouster is an actionable wrong.

Rent from Co-Tenant in Exclusive Possession

Kevin leaves the cabin voluntarily, for a three-month
tour of Europe to promote his latest movie. On his
return, he demands rent from Randall for the three
months in which Randall enjoyed exclusive posses-
sion. Will Kevin prevail?

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NOTES
Rent from Third Parties
Randall leases the cabin’s basement to William, a
tenant. Is Kevin entitled to a portion of the rental in-
come?

A co-tenant who leases all or part of the premises to

a third party must account to his co-tenants, providing
them their fair share of the rental income. Here, what
are the parties’ respective fair shares of the rental
income?

Adverse Possession
Kevin loses interest in the cabin and decides instead
to relocate to Los Angeles, where he stays for the next
20 years. In his absence, can Randall acquire title to
the whole, to the exclusion of Kevin, through adverse
possession?

Unless he has ousted the other co-tenant, the co-

tenant in exclusive possession for the statutory ad-
verse possession period cannot acquire title to the
whole to the exclusion of the other co-tenant. Why
not?

Carrying Costs
What are Kevin’s and Randall’s respective responsibili-
ties with respect to the cabin’s carrying costs?

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NOTES
Repairs
A persistent squirrel breaks the cabin’s front window.
Randall has repaired the window. He seeks contri-
bution from Kevin for the cost of that repair. Will he
succeed?

Improvements
Randall unilaterally converts part of the cabin into a
science laboratory, to foster his passion for chemistry.
To do so, he had to eliminate the cabin’s game room.
He seeks contribution from Kevin, for Kevin’s fair share
of Randall’s “improvements.” Will Randall succeed?

What about at partition?

Waste
A co-tenant must not commit waste. During the life of
the co-tenancy, a co-tenant is permitted to bring an
action for waste against another co-tenant.
Recall the three types of waste:

Which forms of waste might reside on the basis of the

previous hypothetical where Randall unilaterally con-
verted part of the cabin into a chemistry lab, eliminat-
ing the premises’ game room in the process?

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NOTES
Partition
A joint tenant or tenant in common has a right to bring
an action for partition. Recall the three types of parti-
tion here:

REVIEW ACTIVITY
O conveys Blackacre, “To A and B as co-tenants.”
Which form of co-ownership is this?

Thereafter, A dies, devising her interest to her daugh-

ter, Jen. Then, B unilaterally chops down the walnut
grove on the premises to build a tennis court. Jen,
a conservationist, is outraged. Does she have any
rights?

What could Jen claim?

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NOTES

LANDLORD AND
TENANT LAW
7 THE FOUR LEASEHOLD OR
NONFREEHOLD ESTATES
There are four leasehold estates:
• The tenancy for years
• The periodic tenancy
• The tenancy at will
• The tenancy at sufferance

7.1 THE TENANCY FOR YEARS

This lease, also known as the estate for years or term
of years, is for a fixed, determined period of time.
That period could be, for example, as short as one
week or as long as 50 years.

Exam Tip
Watch for a termination date. Whenever you know the
termination date from the start, you have a tenancy for
years.

How much notice is needed to terminate a term of

years?

HYPO 7A
Taylor leases Blackacre to Selena “from January 1,
2018 to July 1, 2018.”

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NOTES
Why is this a tenancy for years?

How much notice is required to terminate?

A term of years greater than one year must be in

writing to be enforceable. Why?

7.2 THE PERIODIC TENANCY

This is a lease which continues for successive inter-
vals until L or T give proper notice of termination.
What is the hallmark of the periodic tenancy?

Creation
Express
The periodic tenancy can be created expressly. What
are some examples of an expressly created periodic
tenancy?

By Implication
The periodic tenancy can also arise by implication, in
any one of three ways:
• Land is leased with no mention of duration, but
provision is made for the payment of rent at set
intervals.

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NOTES
HYPO 7B
T rents an apartment from L, beginning June 1.
Nothing is said about duration. T pays rent each
month. What tenancy exists here?

• An oral term of years in violation of the Statute

of Frauds creates an implied periodic tenancy,
measured by the way rent is tendered.

HYPO 7C
L and T negotiate on the telephone for a
commercial lease. They orally agree on a five-year
lease with rent at $1,000 a month. Is this a tenancy
for years?

What if T sends L a check for $1,000 and L accepts

it?

• In a residential lease, if a landlord elects to

hold over a tenant who has wrongfully stayed
on past the conclusion of the original lease, an
implied periodic tenancy arises measured by
the way rent is now tendered.

HYPO 7D
T holds over after the expiration of her one-year
lease but sends another month’s rent check to L. L
cashes the check. What kind of tenancy now exists?

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NOTES
Termination
How is a periodic tenancy terminated?

How much notice is necessary?

Exam Tip
• In a month-to-month periodic tenancy, how much
notice is required?

• In a week-to-week periodic tenancy, how much

notice is required?

• In a tenancy that is year-to-year or greater, how

much notice is required?

Note: By private agreement, the parties may lengthen

or shorten these common-law prescribed notice provi-
sions.

7.3 THE TENANCY AT WILL

This is a tenancy of no fixed period of duration. For
example, “To T for as long as L or T desires.”

Creation
Unless the parties expressly agree to a tenancy at will,
the payment of regular rent will cause a court to treat
the tenancy as an implied periodic tenancy.

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NOTES
Termination
In theory, when can a tenancy at will be terminated?

Yet today:

7.4 THE TENANCY AT SUFFERANCE

Creation
It is created when T has wrongfully held over, past
the expiration of the lease. We give this wrongdoer a
leasehold estate (the tenancy at sufferance), to permit
L to recover rent.

Termination
The tenancy at sufferance is short-lived. Why?

REVIEW ACTIVITY
L orally conveys “to T, effective January 1, 2018 to Jan-
uary 31, 2018.”
Which leasehold has been created?

Why?

Was a writing required?

47
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NOTES
T vacates on January 31, 2018, without giving notice. Is
that permissible?

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NOTES
8 TENANT’S DUTIES
T HAS THREE PRIMARY DUTIES:
• T’s liability to third parties;
• T’s duty to repair;
• T’s duty to pay rent.

8.1 T’S LIABILITY TO THIRD PARTIES

(TORT LAW)
T is responsible for keeping the premises in reason-
ably good repair. In Tort, T is liable for injuries sus-
tained by third parties she invited, even where L has
expressly promised to make all repairs.

HYPO 8A
L leases a building to T, expressly promising to
maintain the premises in a state of good repair. T’s
invitee trips over a loose floorboard and sues T. If
invitee sues T, what result?
T loses and should seek indemnification from L.

8.2 T’S DUTY TO REPAIR

T’s Duty to Repair When Lease Is Silent
T need only maintain the premises. What does that
mean?

What is the difference between a routine repair (which

T is obliged to make) and a repair occasioned by ordi-
nary wear and tear (which T is not obliged to make)?

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NOTES
HYPO 8B
One morning, as she is cleaning her hairbrush, T
clogs the bathroom sink. What is her duty?

Later, in the shower, T notices that some of its tiles

have yellowed as a consequence of the passing of
time. Must T replace the worn tiles?

T Must Not Commit Waste

T’s duty to repair is linked to the doctrine of waste.
Recall the three types of waste:
• Voluntary waste:

• Permissive waste:

• Ameliorative Waste:

The Law of Fixtures

The law of fixtures is related to the doctrine of waste.
How so?

To make sense of that precept, it is important to know

the meaning of the term “fixture.” What is a fixture?

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NOTES
What are some common examples of fixtures?

FIXTURES PASS WITH OWNERSHIP OF THE LAND

This means that if what T installed amounts to a fix-
ture, T must not remove it.

HYPO 8C
Janet, a tenant, installs a beautiful heirloom
chandelier in the dining room. At the conclusion
of the leasehold, as she is about to remove it,
Landlord demands that the chandelier stay put.
If the chandelier qualifies as a fixture, may Janet
remove it?

How to Tell When a Tenant Installation Qualifies as a

Fixture
There are two ways to tell.
• First, express agreement controls. What
does that mean?

• What if there is no express agreement on

point?

Note: If removal will cause substantial damage to

the premises, then in objective judgment, T has
shown the intention to install a fixture. Thus, it must
stay put.
Remember: Fixtures pass with ownership of the
land.

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NOTES
T’s Duty to Repair When T Has Expressly
Covenanted in Lease to Maintain Property in
Good Condition for Duration of the Lease
• At common law, historically, T was responsible for
any loss to the property, including loss attributable
to force of nature, such as:

• Today, the majority view is:

8.3 T’S DUTY TO PAY RENT

T Breaches the Duty to Pay Rent and Is in
Possession of the Premises
The landlord’s only options are:

If the landlord moves to evict, is she nonetheless enti-

tled to rent?

By virtue of the eviction action, the defaulting tenant is

now deemed:

LANDLORD MUST NOT ENGAGE IN SELF-HELP, such

as:

Self-help is flatly outlawed and is punishable civilly and

criminally.

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NOTES
T Breaches the Duty to Pay Rent But Is Out of
Possession
For example, suppose that T wrongfully vacates with
time left on a term of years lease.
Remember S I R
• Surrender: L could choose to treat T’s abandon-
ment as an implicit offer of surrender, which L
accepts. What is surrender?

If the unexpired term is greater than one year,

surrender must be in writing to satisfy the Statute
of Frauds.
• Ignore the abandonment and hold T responsible
for the unpaid rent, just as if T were still there. This
option is available only in a minority of states.
• Re-let the premises on the wrongdoer-tenant’s be-
half, and hold the wrongdoer-tenant liable for any
deficiency.
Majority rule: L must at least try to re-let. Why?

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NOTES
9 LANDLORD’S DUTIES

9.1 DUTY TO DELIVER POSSESSION

The majority rule requires that L put T in actual physi-
cal possession of the premises. Thus, if at the start of
T’s lease, a prior holdover T is still in possession, what
result?

9.2 THE IMPLIED COVENANT OF QUIET

ENJOYMENT
This exceedingly important promise arises by implica-
tion in every residential and commercial lease. What
does it provide?

How might landlord breach this covenant?

Breach by Wrongful Eviction

When does this occur?

Breach by Constructive Eviction

How might this occur?
Suppose, for example, that every time it rains, Dido’s
apartment floods. She has a claim for constructive
eviction if three elements are met.
To recall the elements of constructive eviction, remem-
ber S I N G:

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NOTES
• Substantial Interference:

• Notice:

• Goodbye:

Acts of Other Tenants

Is the landlord liable to a tenant for the wrongful acts
of other tenants?
General Rule:

Two exceptions:

9.3 THE IMPLIED WARRANTY OF

HABITABILITY
This important implied promise applies only to resi-
dential leases and not to commercial leases. The im-
plied warranty of habitability is non-waivable. Why not?

The Standard
What does the implied warranty of habitability pro-
vide?

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NOTES
How is the appropriate standard for habitability dis-
cerned?

What sorts of problems trigger breach of the implied

warranty of habitability?

T’s Entitlements When Implied Warranty of

Habitability Is Breached
Remember MR3 Move, Repair, Reduce, Remain.
• M:

• R:

• R:

Typically, T must place withheld rent into an es-

crow account to show her good faith.
• R:

Exam Tip
On the exam, remember the difference between the
covenant of quiet enjoyment (where to plead constructive
eviction successfully T must vacate), and the implied
warrant of habitability, where T could vacate but is not
required to.

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 REAL PROPERTY

NOTES
9.4 RETALIATORY EVICTION
If T lawfully reports L for housing code viola­tions, L is
barred from penalizing T, by, for example, doing what?

The reason for the doctrine of retaliatory eviction?

REVIEW ACTIVITY
L and T entered into a written lease to endure from
June 1, 2017 to June 1, 2022. T operates her jewelry
business on site. Several months ago, the building’s
sprinkler system began going off in error, ruining some
of T’s inventory. She complained to L, who promised to
correct the problem. L never did. Last week, when the
sprinkler system malfunctioned yet again, T vacated.
Was T within her rights?

Does the implied warranty of habitability apply?

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NOTES
10 TRANSFERS OF
LEASEHOLDS/LANDLORD’S
TORT LIABILITY

10.1 TRANSFER OF LEASEHOLD—THE

ASSIGNMENT VERSUS THE SUBLEASE
In the absence of some prohibition in the lease, a T
may freely transfer his or her interest in whole (there-
by accomplishing an assignment) or in part (thereby
accomplishing a sublease). In the lease, L can prohibit
T from assigning or subletting without L’s prior written
approval. However, once L consents to one transfer
by T, L waives the right to object to future transfers by
that T, unless L expressly reserves the right.

The Assignment
HYPO 10A
T1 has 10 months remaining on a two-year term of
years lease. T1 transfers all 10 months to T2. Is this
an assignment or a sublease?

L and T2
As a result of the assignment, L and T2 are in privity
of estate. Why?

Because L and T2 are in privity of estate:

What are some examples?

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NOTES
Note: L and T2 are not in privity of contract. Why
not?

L and T1
As a result of an assignment, L and T1 are no longer
in privity of estate. Why not?

However, they remain in privity of contract. Why?

Because L and T1 remain in privity of contract:

What does that mean?

HYPO 10B
L leases Blackacre to T1. T1 assigns to T2. T2
assigns to T3. T3 then engages in flagrant abuse to
the premises.
Can L proceed against T3, the direct wrongdoer?

Can L proceed against T1, the original tenant?

Can L proceed against T2?

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NOTES
The Sublease
When does a sublease arise?

What is the result of a sublease?

Note: The relationship between L and T1 remains ful-

ly intact. Thus, for example, if T2 fails to pay rent, L
proceeds against T1 and T1 in turn proceeds against
T2. If the residential premises betray the implied
warranty of habitability, T2 proceeds against T1 and
T1 in turn proceeds against L.

10.2 LANDLORD’S TORT LIABILITY

Common Law of Caveat Lessee
The norm: Let the tenant beware. What does that
mean?

Five Most Important Exceptions

To remember: When tenant learns of these excep-
tions to the harsh common law of caveat lessee, she
CLAPS.
• Common Areas:

• Latent Defects Rule:

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NOTES
• Assumption of Repairs: While under no duty to
make repairs, once undertaken, L must complete
them with reasonable care. What does that mean?

• Public Use Rule: L who leases public space (e.g., a

convention hall or museum), and who should know,
because of the significant nature of the defect and
the short length of the lease that T will not repair, is
liable for any defects on the premises.
Why?

• Short-Term Lease of Furnished Dwelling: L is re-

sponsible for any defective condition which proxi-
mately injures T. Why?

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REAL PROPERTY

SERVITUDES

62
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NOTES
11 EASEMENTS
An easement is a grant of a nonpossessory property
interest that entitles its holder to some form of use or
enjoyment of another’s land. What are some common
examples of easements?

EASEMENTS ARE AFFIRMATIVE OR NEGATIVE

Affirmative
Most easements are affirmative. What is an affirmative
easement?

What are some examples?

Negative
The negative easement entitles its holder to prevent
the servient landowner from doing something that
would otherwise be permissible. Negative easements
are generally recognized in only four categories:
Remember L A S S :
• L:

• A:

• S:

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NOTES
• S:

A minority of states also allow a negative easement

for scenic view.

Creation of a Negative Easement

Negative easements can only be created expressly,
by writing signed by the grantor. There is no natural or
automatic right to a negative easement.

APPURTENANT OR IN GROSS
An easement is either appurtenant to land or it is held
in gross.

Appurtenant
The easement is appurtenant when it benefits its
holder in his physical use or enjoyment of his proper-
ty. How will you know when you’ve got an easement
appurtenant?

HYPO 11A
A grants B a right of way across A’s land, so that
B can more easily reach his land. B’s land is
benefited by the easement. In easement parlance,
it is the dominant tenement. A’s land is serving B’s
easement. It is the servient tenement. Notice that
two parcels are involved. What does B have?

In Gross
The easement is in gross if it confers upon its holder
only some personal or pecuniary advantage that is not
related to his use or enjoyment of his land. Here, ser-

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NOTES
vient land is burdened. However, there is no benefited
or dominant tenement.
What are some common examples of an easement in
gross?

What do those examples have in common?

TRANSFERABILITY
The Easement Appurtenant
The appurtenant easement passes automatically with
the dominant tenement, regardless of whether it is
even mentioned in the conveyance.

HYPO 11B
A has an easement entitling her to cut across B’s
lawn to get more easily to her land. What kind of
easement does A have?

Why?

Now A sells her parcel to Mr. X, with no mention of

the easement. Does Mr. X enjoy the easement?

The burden of the easement appurtenant also passes

automatically with the servient estate, unless:

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NOTES
The Easement In Gross
An easement in gross is not transferable unless it is for
commercial purposes.

HYPO 11C
A has an easement entitling her to swim in B’s lake.
What kind of easement does A have?

Why?

Is it transferable?

HYPO 11D
Starkist has an easement to use B’s lake to fish
for bait for Starkist’s tuna company. What kind of
easement does Starkist have?

Why?

Is it transferable?

CREATION OF AN AFFIRMATIVE EASEMENT

Remember P I N G
P:

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 REAL PROPERTY

NOTES
I:

N:

G:

By Grant
An easement to endure for more than one year must
be in a writing that complies with the formal elements
of a deed. Why?

What is the writing that evidences the easement

called?

By Implication
This is also known as the easement implied from exist-
ing use.

HYPO 11E
A owns two lots. Lot 1 is hooked up to a sewer drain
located on lot 2. A sells lot 1 to B, with no mention
of B’s right to continue to use the drain on A’s
remaining lot 2. For the court to imply an easement
on B’s behalf it would have to find what?

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NOTES
By Necesssity
An easement by necessity will be implied when grantor
conveys a portion of his land with no way out except
over some part of the grantor’s remaining acreage.

HYPO 11F
A owns 100 acres. She conveys two of those acres
to B, right in the middle of A’s remaining acreage.
As a result, B is landlocked. What will the court do?

Classify the easement:

By Prescription
An easement may be acquired by analogy to adverse
possession.
Remember C O A H:
C:

O:

A:

H:

Note: Permission defeats the acquisition of an ease-

ment by prescription. An easement by prescription
requires that the use be hostile.

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NOTES
SCOPE
How is the scope of an easement determined?

HYPO 11G
A grants B an easement to use A’s private road to
get to and from B’s parcel, Blackacre. What does B
have?

What is A’s parcel known as?

Subsequently, B purchases the adjacent Greenacre,

with its small marina. May B unilaterally expand the
use of the easement to benefit Greenacre?

TERMINATION
There are 8 ways to terminate an easement. Know
them all.
Remember END CRAMP: Estoppel, Necessity, De-
struction, Condemnation, Release, Abandonment,
Merger, Prescription

Estoppel
Here, the servient owner materially changes his or
her position in reasonable reliance on the easement
holder’s assurances that the easement will no longer
be enforced.

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NOTES
HYPO 11H
A tells B that A will no longer be using her right
of way across B’s parcel. In reasonable reliance,
B builds a swimming pool on B’s parcel, thereby
depriving A of the easement. May A later enforce
the easement?

Necessity
Easements created by necessity expire as soon as the
necessity ends, unless what?

HYPO 11I
O conveys a portion of his 10-acre tract to A, with
no means of access out except over a portion
of O’s remaining land. The parties reduce their
understanding to express writing. Thereafter, the
city builds a public roadway affording A access out.
Is A’s easement terminated?

Why?

Destruction
Destruction of the servient land, other than through
the willful conduct of the servient owner, will terminate
the easement.

Condemnation
Condemnation of the servient estate by governmental
eminent domain power will terminate the easement.

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NOTES
Release
A release given by the easement holder to the servi-
ent land owner will terminate the easement. Does the
release have to be in writing?

Abandonment
What must an easement holder show to terminate the
easement by abandonment?

Note: Abandonment requires physical action by the

easement holder.

EXAMPLE
A has a right of way across B’s parcel. A erects a structure
on A’s parcel that precludes her from ever again reaching
B’s parcel. That is the sort of action to signify abandon-
ment. By contrast, mere nonuse, or mere words,
are insufficient to terminate by abandonment.

Merger
The easement is extinguished when title to the ease-
ment and title to the servient land become vested in
the same person.

HYPO 11J
A has a right of way across B’s parcel, to enable A
to better reach her parcel.
What is A’s land called?

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What does A have?

What is B’s land called?

Later, A buys B’s parcel. What result?

Why?

If complete unity of title is achieved, the easement is

extinguished. Thereafter, if title is separated again, will
the easement return?

For example, assume now that A sells the parcel over

which she once enjoyed the easement of right of way.
The easement is not automatically reinstated. To cre-
ate it, A would have to start from scratch.

Prescription
The servient owner may extinguish the easement by
interfering with it in accordance with the elements of
adverse possession.
Remember C O A H:
C:

O:

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A:

H:

HYPO 11K
A has an easement of right of way across B’s parcel.
B erects a chain link fence on B’s parcel, thereby
precluding A from reaching it. With the sufficient
passage of time, how might B extinguish A’s
easement?

REVIEW ACTIVITY
(1) Saul grants Carrie the right to swim in Saul’s pond.
Classify the entitlement.

Why?

Carrie wants to transfer the right to her daughter Fran-

nie’s school. May she do so?

(2) Neighbor A grants neighbor B the right to use the

path on A’s parcel as a shortcut and roadway to and
from B’s parcel. Classify the entitlement.

Later, B builds a swimming pool on B’s parcel, preclud-

ing B’s access to the path. The result?

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12 LICENSES AND PROFITS
THE LICENSE
Creation
The license is a mere privilege to enter another’s land
for some delineated purpose. Is a writing needed to
create a license?

Why not?

Revocation
Licenses are freely revocable, at the will of the licen-
sor, unless estoppel applies to bar revocation.
Note the classic license cases:
• The ticket cases: What does a ticket create?

• Neighbors talking by the fence:

HYPO 12A
Neighbor A, talking by the fence with neighbor B,
says, “B, you can have that right of way across my
land.” Is this oral easement enforceable?

Why not?

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What has been created?

When will estoppel apply to bar revocation?

THE PROFIT
The profit entitles its holder to enter the servient land
and take from it:

What are the rules for creating and terminating profits?

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13 RESTRICTIVE COVENANTS
THE COVENANT
The covenant is a promise to do or not do something
related to land. It is unlike the easement because it is
not the grant of a property interest. Instead, it is a con-
tractual limitation or promise regarding land.

Negative and Affirmative

Covenants can be negative. These are known as re-
strictive covenants. What is a restrictive covenant?

What are some examples of restrictive covenants?

Covenants can be affirmative: The affirmative cov-

enant is a promise to do something related to land.
What are some examples?

Covenant vs. Equitable Servitude

On the exam, the same set of facts could seem to give
rise to either a covenant or an equitable servitude.
How will you know which analysis to apply?

What that means is that if the plaintiff wants money

damages, you must construe the promise as a cov-
enant. If the plaintiff wants an injunction, you must
construe the promise as an equitable servitude.

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Running with the Land
In covenant parlance, one tract is burdened by the
promise and another is benefited.
When will the covenant run with the land? In other
words, when is it capable of binding successors?
Suppose neighbor A promises neighbor B that A will
not build for commercial purposes on A’s property. A’s
parcel is burdened by the promise. B’s parcel is bene-
fited. Later, A sells her burdened parcel to A-1. B sells
his benefited parcel to B-1. Now, A-1 has commenced
manufacture of a steak sauce plant on the premises.
B-1 wishes to proceed against A-1 for money damag-
es. Will B-1 succeed?
It depends on whether the facts support the conclu-
sion that the burden and benefit run.

In answering, two separate contests must be resolved:

First, does the burden of A’s promise to B run from A to

A-1?

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For the Burden of a Covenant to Run Remember
W I T H N:
Writing:

Intent:

Note: Courts are generous in finding the requisite

intent.
Touch and concern the land:

Note: Covenants to pay money to be used in connec-

tion with the land (such as homeowners’ association
fees) and covenants not to compete do touch and
concern the land.
Horizontal and vertical privity: Both are required for
the burden to run.
• Horizontal privity refers to what?

It requires that they be in succession of

estate, meaning that they were in a grantor/
grantee or landlord/tenant or mortgagor/
mortgagee relationship when the covenant
was created.

• Vertical privity refers to what?

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It simply requires some nonhostile nexus,
such as: contract, devise, or descent.
When is the only time vertical privity will be
absent?

Notice:

Second, does the benefit of A’s promise to B run from B to

B-1?

For the Benefit of a Covenant to Run Remember

W I T V:
Writing:

Intent:

Touch and concern:

Vertical privity:

Note: Horizontal privity is not required for the benefit

to run.

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EQUITABLE SERVITUDES
The equitable servitude is a promise that equity will
enforce against successors.
The equitable servitude is accompanied by which form
of relief?

Creation
To create an equitable servitude that will bind succes-
sors:
Remember W I T N E S:
Writing:

Intent:

Touch and concern:

Notice:

ES: Equitable Servitude

NOTE: PRIVITY IS NOT REQUIRED TO BIND SUC-
CESSORS TO AN EQUITABLE SERVITUDE
The Implied Equitable Servitude—The General or
Common Scheme Doctrine

Suppose A subdivides her land into 50 lots. She sells

lots 1 through 45 through deeds that contain covenants

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NOTES
restricting use to residential purposes. A then sells one
of the remaining lots to a commercial entity, B, by deed
containing no such covenant. B now seeks to build a
convenience store on his lot. Can he be enjoined from
doing so?

Under the common scheme doctrine, the court will

imply a reciprocal negative servitude to hold the unre-
stricted lot holder to the promise. (Reciprocal negative
servitude means an implied equitable servitude).
The two elements of the general or common scheme
doctrine:

When the sales began, the subdivider (A):

The defendant lot-holder (B) had:

There are three forms of notice potentially imputed to

the defendant lot-holder:
Remember A I R:
Actual notice, meaning:

Inquiry notice, meaning:

Record notice, meaning the form of notice sometimes

imputed to buyers on the basis of:

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Note: With respect to record notice, the courts are
split. Some take the view that a subsequent buyer is
on record notice of the contents of prior deeds trans-
ferred to others by a common grantor. The better
view, taken by other courts, is that the subsequent
buyer does NOT have record notice of the contents
of those prior deeds transferred to others by the
common grantor.

Equitable Defenses to Enforcement of an Equitable

Servitude

Changed Conditions
The changed circumstances alleged by the party
seeking release from the terms of an equitable servi-
tude must be:

What is never good enough?

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CONVEYANCING
Every conveyance of real estate consists of a two-
step process.
Step I: The land contract, which conveys equitable
title. The land contract endures until step II.
Step II: The closing, where the deed passes legal title
and becomes our operative document.

14 THE LAND CONTRACT

STATUTE OF FRAUDS
The Standard
Under the Statute of Frauds, the contract must:
•
•
•
•

Size of Land Recited in Contract Is More Than Its

Actual Size
HYPO 14A
B enters into a contract to purchase a farm. The
con­tract recites that the farm is 100 acres. When B
has a survey done, B learns that the farm is actually
98 acres. What is B’s remedy?

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Exception to Statute of Frauds—The Doctrine of Part
Performance
If, on your facts, you have two of the following three,
the doctrine is satisfied and equity will decree specific
performance of an oral contract for the sale of land:
•
•
•

THE PROBLEM OF RISK OF LOSS

Apply the doctrine of equitable conversion:

In equity, who owns the land once the contract is

signed?

One important result flows from this: Destruction. If, in

the interim between contract and closing, Blackacre is
destroyed through no fault of either party, who bears
the risk of loss?

TWO IMPLIED PROMISES IN EVERY LAND

CONTRACT
The First Implied Promise: Seller Will Provide
Marketable Title
Seller promises to provide marketable title at the clos-
ing. What is marketable title?

There are three circumstances that will render title

unmarketable:

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• Adverse possession: If even a portion of the
title rests on adverse possession, it is unmarket-
able. In other words, for title to be marketable,
Seller must be able to provide what kind of title?

• Encumbrances: Marketable title means an un-

encumbered fee simple. What does this mean?

Note: Seller has the right to satisfy an outstand-

ing mortgage or lien at the closing, with the
proceeds of the sale. Thus, buyer cannot claim
title is unmarketable because it is subject to a
mortgage prior to closing, so long as the parties
understand that the closing will result in the
mortgage being satisfied or discharged.
• Zoning violations:

The Second Implied Promise: Seller Will Not Make

False Statements of Material Fact
Seller promises not to make any false statements of
material fact. The majority of states now also hold sell-
er liable for:

Can the seller avoid liability for fraud or failure to dis-

close by including in the contract a general disclaimer
of liability (for example, “property sold as is” or “with
all faults”)?

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NO IMPLIED WARRANTIES OF FITNESS OR
HABITABILITY
The land contract contains no implied warranties of
fitness or habitability. What is the common law norm?

Exception
One important exception: The implied warranty of fit-
ness and workmanlike construction applies to the sale
of a new home by a builder-vendor.

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15 THE CLOSING
The controlling document now is the deed.
What does the deed do?

Remember: to pass legal title from seller to buyer

the deed must be “LEAD”: Lawfully Executed And
Delivered.

LAWFUL EXECUTION OF A DEED

Must the deed be in writing?

Note: The deed need not recite consideration, nor

must consideration pass to make a deed valid.

Description of Land
Does the description of the land have to be perfect?

HYPOS 15A
The deed recites that O conveys “all of O’s land,”
or “all of O’s land in Essex County.” Would such
descriptions suffice?

HYPO 15B
O conveys “some of my land in Sussex County.”
Does such a description satisfy the standard?

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THE DELIVERY REQUIREMENT
• The delivery requirement could be satisfied when:

It is permissible here to use the mail or agent or

messenger.
• However, delivery does not necessarily require:

The standard for delivery is a legal standard, and is

a test solely of present intent. Ask:

• But what if the recipient expressly rejects the

deed?

HYPO 15C
As a surprise graduation gift, A’s Aunt Gertrude
executes a deed conveying Blackacre to A. A
responds, “I can’t accept such a lavish gift.” Who
does Blackacre belong to?

• If a deed, absolute on its face, is transferred to the

grantee with an oral condition, what result?

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HYPO 15D
O conveys a deed to Blackacre that is absolute on
its face, but says to grantee, “Blackacre is yours
only if you survive me.” What is the effect of the oral
condition?

• Is delivery by escrow permitted?

Grantor may deliver an executed deed to a third

party, known as an escrow agent, with instructions
that the deed be delivered to grantee once certain
conditions are met. What happens once the condi-
tions are met?

What happens if the grantor dies or becomes

incompetent or is otherwise unavailable before the
express conditions are met?

COVENANTS FOR TITLE AND THE THREE

TYPES OF DEED
The Quitclaim
Which covenants does a quitclaim deed contain?

Grantor isn’t even promising that he has title to con-

vey. This is the worst deed a buyer could hope for.

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NOTES
The General Warranty Deed
The best deed a buyer could hope for. What does it
warrant?

The general warranty deed typically contains all six

of the following covenants. The first three are present
covenants, meaning: a present covenant is breached,
if ever, at the time the deed is delivered.
When does the statute of limitations for breach of a
present covenant begin to run?

The three present covenants:

• The covenant of seisin:

• The covenant of the right to convey:

• The covenant against encumbrances:

The next three covenants are future covenants, mean-

ing: a future covenant is not breached, if ever, until
grantee is disturbed in possession.
When does the statute of limitations for breach of a
future covenant begin to run?

The three future covenants:

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• The covenant for quiet enjoyment:

• The covenant of warranty:

• The covenant for further assurances:

The Statutory Special Warranty Deed

Provided for by statute in many states, this deed con-
tains two promises that grantor makes only on behalf
of himself. (Note: Grantor makes no representations
on behalf of his predecessors in interest.)
The two promises:
(1)

and
(2)

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16 THE RECORDING SYSTEM
Our model: The case of the double dealer.
O conveys Blackacre to A. Later, O conveys Black-
acre, the same parcel, to B. O, our double dealer, has
skipped town. In the battle of A vs. B, who wins?
Remember two brightline rules:
• If B is a BONA FIDE PURCHASER, and we are in a
NOTICE jurisdiction, B wins, regardless of wheth-
er or not she records before A does.
• If B is a BONA FIDE PURCHASER and we are in a
RACE-NOTICE jurisdiction, B wins if she records
properly before A does.
Who do the recording acts protect?

BONA FIDE PURCHASER

A bona fide purchaser is one who:
•
•

Value
Two routine value questions:
• The bargain basement sale:

HYPO 16A
B paid $50,000 cash for Blackacre, when its fair
market value is estimated at $100,000. Is B a
purchaser for value?

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NOTES
• The case of the doomed donee: recording stat-
utes do not protect donees, heirs, or devisees
unless the shelter rule applies.

HYPO 16B
B is O’s heir, or devisee, or donee. In a recording
statute question, what happens to B?

Notice
The three forms of notice that a buyer may potentially
be charged with are:
A I R:
A:

I:

R:

Actual Notice
What does actual notice mean?

Inquiry Notice
Whether he examines Blackacre prior to closing or
not, B is on inquiry notice of what?

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NOTES
The buyer of real estate has a duty to inspect the
Buyer has a duty to check if anyone premises before transfer of title, to see, for example,
else in in possession, if so "B"is whether anyone else is in possession.
charged with inquiry notice because
if "A" If another is in possession, B is charged with what?
.

Thus, in our model of the double dealer, if A had tak-

en possession, B would be on inquiry notice of that
fact, thereby defeating B’s status as a bona fide pur-
chaser.
Further, if a recorded instrument makes reference
to an unrecorded transaction, grantee is on inquiry
notice of whatever a reasonable follow-up would have
revealed.

Record Notice
B is on record notice of A’s deed if at the time B takes,
A’s deed was properly recorded within the chain of
title.

In our model, what if A has not recorded, or has not

recorded properly at the time B takes? Assume that
B is a bona fide purchaser. Does B win?
.

What result in a state with a notice statute?

.

What result in a race-notice state?

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THE RECORDING STATUTES

The Notice Statute

“A conveyance of an interest in land shall not be
valid against any subsequent purchaser for value,
without notice thereof, unless the conveyance is
recorded.”
If, at the time B takes, he is a bona fide purchaser, he
wins. It won’t matter that A may ultimately record first,
before B does. It won’t matter, in the A vs. B contest,
that B never records.

The Race-Notice Statute

“A conveyance of an interest in land shall not be
valid against any subsequent purchaser for value,
without notice thereof, whose conveyance is first
recorded.”
What must B do to prevail?

HYPO 16C
On March 1, O conveys to A, a bona fide purchaser
who does not record. On April 1, O conveys the
same parcel to B, a bona fide purchaser, who does
not record. On May 1, A records.
Who takes Blackacre in a notice jurisdiction?

Who takes in a race-notice jurisdiction?

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CHAIN OF TITLE
Back to our original model, note that in either a no-
tice or race-notice jurisdiction, B’s status as a subse-
quent bona fide purchaser will be defeated if A had
promptly and properly recorded before B takes. In
other words, A’s proper recordation:
.

To give record notice to subsequent takers, the deed

must be recorded properly, within the chain of title.
.
What is the chain of title?

How is the chain of title established in most states?

.

Note three discrete chain of title problems:

The Shelter Rule

One who takes from a BFP will prevail against any
entity that the transferor-BFP would have prevailed
against. In other words, the transferee “takes shelter”
in the status of her transferor, and thereby “steps into
the shoes” of the BFP even though she otherwise fails
to meet the requirements of BFP status.

HYPO 16D
O conveys to A, who does not record. Later, O
conveys the same parcel to B, a BFP, who records.
B then conveys to C, who is a mere donee or who
has actual knowledge of the O-to-A transfer. In the
contest of A vs. C, who prevails?
.

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NOTES
What is the shelter rule trying to do?
.

The Problem of the Wild Deed

O sells Blackacre to A, who does not record. Then, A
sells to B. B records the A-to-B deed.
Is the A-to-B deed connected to the chain of title?
.

The A-to-B deed, therefore, is a wild deed.

The rule of the wild deed: If a deed, entered on the
records (A to B), has a grantor unconnected to the
chain of title (O to A), the deed is a wild deed. It is
incapable of giving record notice of its existence.
O, our initial grantor and dirty double dealer, then
sells Blackacre to C. Assume that C has no actual or
inquiry knowledge of the O-to-A or A-to-B convey-
ances. C records.
O has skipped town. In the contest of B vs. C, who
prevails?
.

Does it matter whether this is a notice or race-notice

jurisdiction?
.

Why does C win in a notice state?

.

Why does C win in a race-notice state?

.

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NOTES
Remember: B’s recording is a nullity.

Estoppel By Deed
In 1950, O owns Blackacre. He is thinking about sell-
ing it to X, but for now decides against it. In 1950, X,
who does not own Blackacre, sells it anyway, to A. A
records.
In 1960, O finally sells Blackacre to X. X records.
In 1970, X, a double dealer, sells Blackacre to B. B
records.
• As between X and A, who owned Blackacre
from 1960-1969?

The rule: One who conveys realty in which he

has no interest (here, X back in 1950), is es-
topped from denying the validity of that con-
veyance if he subsequently acquires the title
that he had previously purported to transfer
(here, the 1960 O to X sale).
• Who owns Blackacre in 1970?
.

.
Why does B win in a notice state?
.

Why does B win a race-notice state?

.

B’s title searcher would not find A’s deed. Why not?
Remember: A’s 1950 recording is a nullity. She record-
ed too early. (Her deed won’t be connected to the
chain of title.)

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NOTES
Because one is entitled to assume that no one sells
land until they first own it. Thus, B’s title searcher
would have no reason to discover X’s 1950 pre-owner-
ship transfer to A.

REVIEW ACTIVITY
In 2010, Jerry sold Blackacre to Tiffany. Tiffany did
not record but immediately assumed possession of
Blackacre, where she continues to live. In 2015, Jerry
sold Blackacre, the same parcel, to Chris by statutory
special warranty deed. Chris recorded the deed but
never assumed possession. Thereafter, Jerry fled the
jurisdiction. Blackacre is in a state whose recording
statute provides:
A conveyance of an interest in land is not valid
against any subsequent purchaser for value without
notice thereof, unless the conveyance is recorded.

This jurisdiction has a ten year statute of limitations for

claims of breach of warranty in a deed.
Identify this recording statute.

Chris has now endeavored to assume possession of

Blackacre, but to his surprise he finds Tiffany in pos-
session. In the lawsuit brought by Chris against Tiffany,
who prevails?

If Jerry returns to the jurisdiction, may Chris sue Jerry

for breach of the promises Jerry made when he deliv-
ered to Chris a statutory special warranty deed?

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NOTES
May Chris sue for breach of Jerry's implied promise, in
the land contract, to provide marketable title to Chris
at closing?

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NOTES
17 MORTGAGES
Our model: C, a creditor, is thinking of lending O
$100,000. O offers Blackacre as collateral.

CREATION
A mortgage is the conveyance of a security interest in
land, intended by the parties to be collateral for the re-
payment of a monetary obligation. In other words, the
owner of real estate gives the lender a lien in that real
estate to secure or backup the loan that the lender
makes.
A mortgage is the union of two elements:
(1)

(2)

Vocabulary
When speaking of a mortgage, what are the debtor
and creditor called?

Purchase-Money v. Non-Purchase-Money Mortgage

There are two primary ways to mortgage Blackacre:
the purchase-money mortgage and the non-pur-
chase-money mortgage. The purchase-money mort-
gage is an extension of value by a lender who takes
as collateral a security interest in the very real estate
that its loan enables the debtor to acquire.

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NOTES
HYPO 17A
Jack and Rebecca borrow $100,000 from Bank to
finance their purchase of a home, granting Bank a
security interest in that new home to collateralize
the loan. Which form of mortgage is this?
A Purchase Money Mortgage

-->Bank took a lien in the very realty that its loan enabled the debtors to acquire.
Why?
--->The lender extends the value (makes the loan) to enable the debtor to
purchase the very parcel that the loan enables the purchase.

The loan enables Jack & Rebecca to acquire their new

Classify the parties:
dream home. The very parcel in which the bank takes a
Jack and Rebecca are: security interest to secure the loan it made.

Jack and Rebecca are the Mortgagors

Bank is: The Bank is the Mortgagee

A Non-Purchase Money Mortgage HYPO 17B

is a mortgage made/lien in Now, later in life, Jack and Rebecca, having paid
Blackacre to secure a debt off that mortgage in full, seek to borrow $100,000
encumbered by the debtor, for from Valley Finance to help finance their children’s
purposes other than making the education, granting Valley a security interest in their
purchase of this very parcel. home. Which form of mortgage is this?
A Non-Purchase Money Mortgage

Valleys loan did not enable Jack & Rebecca to acquire the home.
Why?
Now they are borrowing on the house & using it as collateral to secure
100k loan V.F to be put to the purpose of thei childrens education

Classify the parties: Jack and Rebecca are the Mortgagors &
Valley Finance is the Mortgagee
Jack and Rebecca are:

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NOTES
Valley Finance is:
---> Terms that the bar examiners
use as to the written instrument that
is authenticating the fact of the
Writing mortgage.
The mortgage typically must be in writing to satisfy the
Statute of Frauds. This is the legal mortgage. Legal mortgage (written
instrument) could be called:
Collateralization that is evidenced by writing.
*The mortgage deed
THE EQUITABLE MORTGAGE *The note
Suppose O owns Blackacre. Creditor lends O a sum of *A security interest in land
money. The parties understand that Blackacre is the *A deed of trust
collateral for the debt. However, instead of executing *A sale leaseback
a note or mortgage deed, O hands Creditor a deed
to Blackacre that is absolute on its face. What is this
arrangement called? QUESTION ON THE EXAM:
An equitable mortgage

What if the creditor in bad faith

Is parol evidence admissible to show the parties’ true proceeds to sell Blackacre to a bona
intent?
fide purchaser “X”?
Between “O” & the creditor, the parol evidence is
freely admissible to show the parties intent.
--->“X” owns the land, “O” can sue
What if Creditor proceeds to sell Blackacre to bona the creditor for fraud & sale
fide purchaser X? proceeds.
“X” owns the land.
“O’s” only resource is to proceed against --->“X” is a BFP who now owns the
creditor for fraud & the sale proceeds. land.

RIGHTS OF THE PARTIES

Once a mortgage has been created, which party has
the right to possession?
Unless & until foreclosure, debtor
has title & the right to possession.
What does the creditor-mortgagee have?
A lien, a right to look at Blackacre if there is a default.

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NOTES
TRANSFER OF INTERESTS
All parties to a mortgage can transfer their interests.
The mortgage automatically follows a properly trans-
ferred note.

The creditor-mortgagee can transfer his interest by:

(1)

or
(2)

If the note is indorsed and delivered, the transferee

is eligible to become a holder in due course. What
effect does that have?

Personal defenses include the following:

The holder in due course may foreclose the mortgage

despite the presence of any such personal defense.
By contrast, the holder in due course is still subject to
“real” defenses that the debtor-mortgagor might raise.
MAD FIFI4, the Real Defenses:
MA:

D:

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 REAL PROPERTY

NOTES
FIF:

I:

I:

I:

I:

Requirements for Holder in Due Course Status

To be a holder in due course of the note, the following
criteria must be met:
• The note must be negotiable, made payable to
the named mortgagee;
• The original note must be indorsed, signed by
the named mortgagee;
• The original note must be delivered to the
transferee. A photocopy is unacceptable;
• The transferee must take the note in good
faith, without notice of any illegality; and
• The transferee must pay value for the note,
meaning some amount that is more than nomi-
nal.

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NOTES
If O, our debtor-mortgagor, sells Blackacre, which is
now mortgaged, what happens to the mortgage?

HYPO 17C
On January 10, Madge took out a $50,000
mortgage on Blackacre with First Bank. First Bank
promptly and properly recorded its interest on
January 10. Thereafter, on January 15, Madge sold
Blackacre to Buyer. Buyer had no actual knowledge
of the lien. Buyer promptly and properly recorded
its deed. Does Buyer hold subject to First Bank’s
mortgage?

All recording statutes apply to mortgages as well as

deeds. Thus, a subsequent buyer takes subject to a
properly recorded lien. Does it matter which recording
statute the jurisdiction in the above hypo has enacted?

In a notice state, Buyer takes subject to the lien be-

cause:

In a race-notice state, Buyer takes subject to the lien

because:

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NOTES
HYPO 17D
Assume now that on January 10, Madge took out
a $50,000 mortgage on Blackacre with First Bank.
On January 15, Madge sold Blackacre to Buyer.
Buyer had no knowledge of the lien. On January 20,
First Bank recorded its mortgage in Blackacre. On
January 30, Buyer recorded his deed to Blackacre.
Does Buyer hold subject to First Bank’s mortgage?

In a race-notice jurisdiction:

In a notice jurisdiction:

In a notice state, a subsequent BFP prevails over a

prior grantee or mortgagee who has not yet recorded
properly at the time the BFP takes.

Who is personally liable on the debt if O, our debtor-

mortgagor, sells Blackacre to B?
If B has “assumed the mortgage”

If B takes “subject to the mortgage”

FORECLOSURE
How to Proceed
Suppose that our debtor-mortgagor has defaulted on
the loan and our mortgagee-creditor must look to the
land for satisfaction. How must she proceed?

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The mortgagee must foreclose by proper judicial
proceeding. At foreclosure, the land is sold. The sale
proceeds go to satisfying the debt.
What if the proceeds from the sale of Blackacre are
less than the amount owed?

By contrast, what if there is a surplus?

HYPO 17E
Assume that Blackacre has a fair market value of
$50,000 and is subject to three mortgages executed
by its owner, Madge. First Bank, with first priority, is
owed $30,000. Second Bank, with second priority, is
owed $15,000, and Third Bank, with third priority, is
owed $10,000. Assume that First Bank’s mortgage is
foreclosed, and that Blackacre is sold for $50,000.
How will the funds be distributed?

The sale proceeds are then used to pay off the

mortgages in the order of their priority. Each
claimant is entitled to satisfaction in full before a
junior lienholder may take. Thus, First Bank takes
$30,000. Then, Second Bank takes $15,000. What
does Third Bank take?

HYPO 17F
Now assume the same facts as above, except that
Blackacre is sold at First Bank’s foreclosure sale for
$60,000. What result?

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Effect of Foreclosure on Various Interests

Junior Interests
Foreclosure will terminate interests junior to the
mortgage being foreclosed but will not affect senior
interests. (This means that junior lienholders will be
paid in descending order with the proceeds from the
sale, assuming funds are leftover after full satisfaction
of superior claims. Junior lienholders should be able to
proceed for a deficiency judgment. But once foreclo-
sure of a superior claim has occurred, with the pro-
ceeds distributed appropriately, junior lienholders can
no longer look to Blackacre for satisfaction.)
Who are the necessary parties to the foreclosure ac-
tion?

Is the debtor-mortgagor also a necessary party to the

foreclosure action?

Failure to include a necessary party results in the pres-

ervation of that party’s claim, despite the foreclosure
and sale. Thus, if a necessary party is not joined, his
mortgage will remain on the land.

Senior Interests
Foreclosure does not affect any interest senior to the
mortgage being foreclosed. The buyer at the sale
takes subject to such interest.
Is the buyer personally liable on the senior debt?

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HYPO 17G
Blackacre has a fair market value of $50,000 and
is subject to three mortgages executed by its
owner, Madge. First Bank, with first priority, is owed
$30,000. Second Bank, with second priority, is
owed $15,000, and Third Bank, with third priority,
is owed $10,000. Now, suppose that it is Second
Bank’s mortgage that is being foreclosed. (First
Bank’s mortgage exists, but it is either not in default
or its holder has not yet taken action to foreclose it.)
Will the foreclosure affect First Bank’s mortgage?

Foreclosure does not affect any interest senior to

the mortgage being foreclosed.
Is the foreclosure sale buyer personally liable to
First Bank?
No. Only the debtor Madge is personally liable
to First Bank. But, if she cannot repay the debt,
First Bank (whose lien was properly recorded)
is entitled to foreclose on Blackacre. What this
means is that because First Bank’s mortgage was
properly recorded, it sticks with the land. Thus, if
debtor Madge cannot pay back First Bank, First
Bank can foreclose on the land. With that in mind,
the foreclosure sale buyer, albeit buying at Second
Bank’s foreclosure sale, nonetheless has a strong
incentive to pay off First Bank’s lien. Otherwise,
Blackacre is subject to a later foreclosure action
brought by First Bank if and when debtor Madge is
unable to pay off First Bank’s lien.
That said, how should bidding proceed at the
foreclosure sale brought by Second Bank?

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Buyer should bid up to $20,000, which represents
Blackacre’s fair market value of $50,000 minus
the $30,000 buyer needs to discharge First Bank’s
mortgage.
How will the $20,000 proceeds from the sale be
distributed?
$15,000 goes to Second Bank (which is now
satisfied in full). $5,000 goes to Third Bank. Third
Bank has come up short and should proceed
against debtor Madge for the amount still owed to
it.
Buyer then applies the $30,000 that it had set aside
to pay off First Bank.

Priorities
As a creditor, you must record. Until you record, you
have no priority. Once recorded, priority is determined
by the norm of first-in-time, first-in-right. What does
that mean?

Purchase-Money Mortgage
The purchase-money mortgage: A mortgage given to
secure a loan that enables the debtor to acquire the
encumbered land.

HYPO 17H
C lends O $100,000 so that O can purchase
Blackacre. C takes as collateral a security interest
in Blackacre, the very parcel that C’s extension of
value enabled O to acquire. What is C?

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When the loan is under collateralized initially. Assuming that C has records properly,
What is C’s priority?
After acquired collateral clause is synonymous C has first priority in the parcel he fiananced
with a floating lien.
The purchase money mortgagee's "super priority"
After acquired collateral clauses & the floating
lien are common because This is
they are exceedingly helpful & efficient when
the deal on the front end is under collateralized. HYPO 17I called an:
Example: Needs 10 million, property after acquired
C1 lends $200,000 to O, taking a security interest in collateral
all of O’s real estate holdings, “whether now owned clause.
or hereafter acquired.” Is that permissible? It is
permissible.
Why would debtor O grant creditor C a floating lien?

C1 records the mortgage note. Six months later,

C2 lends O $50,000 to enable O to acquire a
parcel known as Blueacre, taking back a security
Purchase money mortgage is a interest in Blueacre and recording that interest.
secured loan to buy the property. Subsequently, O defaults on all outstanding
But for C2 there would not be a obligations. All that he has left is Blueacre. Who has
Blueacre first priority in Blueacre, C1 or C2?
------->C2
The Statutory Right of Redemption Purchase money mortgage has first Priority Blueacre, the parcel that is financed
after all
gives homeowners the right to
Subordination Agreements
redeem their mortgage for a period
of time after the foreclosure sale. By private agreement, a senior creditor may agree to
subordinate its priority to a junior creditor. These sub-
Typically by paying the foreclosure
ordination agreements are permissible.
sale price, plus interest & other fees
to the foreclosure sale purchase. Redemption

Redemption in Equity
Equitable redemption is universally recognized up to
the date of sale. What does that mean?

At any time prior to the foreclosure sale the debtor has the right
to redeem the land & free it of the mortgage.

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Once a valid foreclosure has taken place: the right to
equitable redemption is cut off. An Acceleration Clause:
--> Is contract provision that allows
a lender to require a burrower to
How is the right of equitable redemption exercised repay all of an outstanding loan if
when the note does not contain an acceleration certain requirements are not met or
clause? (An acceleration clause permits the mortgagee a breach, such as: many late or
to declare the full balance due in the event of default.) missed payments in the loan.
By payment of the missed payments (+) interest (+) costs
What if the mortgage or note contained an accelera-
tion clause?
Then the full balance (+) incurred interest (+) costs must be paid to redeem.

May a debtor/mortgagor waive the right to redeem

in the mortgage itself?
No, It is void as a matter of applicable public policy to extract on the debtor on the front end
of the deal. When she is signing the mortgage instrument it’s a self waiver of any rights that
would otherwise be assured upon her default mostly the right to redeem an equity.

Statutory Redemption
Recognized in one-half of the states, statutory re-
demption gives the debtor-mortgagor a statutory right
to redeem for some fixed period after the foreclosure
sale has occurred (typically six months to one year).
Where recognized, when does statutory redemption
apply? After foreclosure has occured

In a state that recognizes the right of statutory re-

demption, what amount must be paid by the debtor to
redeem?
The foreclosure sale price, rather than the
amount of the original debt

In most states to recognize the statutory right to re-

demption, who has the right to possession during the
statutory period? The mortgagor will have the right to possess
Blackacres during the Statutory period.

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What is the effect of the mortgagor’s redemption?

Consumer Protection Defenses to Foreclosure

Dodd-Frank Act (“Act”)

Requires residential mortgage lenders to determine a
mortgagor’s ability to repay before making the loan.
The terms of the loan must be understandable and
not unfair, deceptive or abusive. A lender’s violation
of the Act can be used by the mortgagor as a defense
in the lender’s foreclosure action.

Consumer Rights During Foreclosure Process

After the mortgagor has defaulted, the mortgagee
must in good faith consider a request made by the
mortgagor for a loan modification or other alternative
to foreclosure. The mortgagee cannot file a foreclo-
sure action in court while such a request is pending.
If the request is made after the foreclosure action is
filed, the mortgagee cannot proceed to foreclosure
sale until the request is resolved.

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OTHER TOPICS
18 OTHER RIGHTS IN REAL
PROPERTY
LATERAL SUPPORT
If land is improved by buildings and an adjacent land-
owner’s excavation causes that improved land to cave
in, the excavator will be liable only if negligent.
When does strict liability apply to the defendant-exca-
vator’s actions?
Strict liability attaches only if the plaintiff shows that,
because of the defendant-excavator’s actions, the
plaintiff’s improved land would have collapsed even in
its unadorned state.
In other words, for strict liability to apply, plaintiff must
show that the improvements on her land (for example,
the shrubs, the fountain, the structures) did not con-
tribute to her land’s collapse.

WATER RIGHTS
Watercourses
The two major systems for determining the allocation
of water in watercourses, such as streams, rivers, and
lakes:

The Riparian Doctrine

Under the riparian doctrine, who does the water be-
long to?

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What are these people called?

When will one riparian be liable to the other riparians?

The Prior Appropriation Doctrine

The water belongs initially to the state, but the right to
divert it and use it can be acquired by an individual, re-
gardless of whether or not he happens to be a riparian
owner.
How are rights determined?

What is the norm for allocation?

Thus, a person can acquire the right to divert and use

water from a watercourse merely by being the first to
do so. Any productive or beneficial use of the water,
including use for agriculture is sufficient to create the
appropriation right.

Groundwater
Also known as percolating water, groundwater is water
beneath the surface of the earth that is not confined to
a known channel.
What are the surface owner’s rights with respect to
groundwater?

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Surface Waters
Those waters which come from rain, springs or melting
snow, and which have not yet reached a natural water-
course or basin.
For surface water, apply the common enemy rule:

Many courts have modified the common enemy rule to

prohibit harm to neighbors’ land.

POSSESSOR’S RIGHTS
The possessor of land has the right to be free from
trespass and nuisance.

Trespass
What is a trespass?

How does a possessor remove a trespasser?

Private Nuisance
What is a private nuisance?

Note: Unlike trespass, nuisance does not require

physical invasion. Thus, odors and noise could give
rise to a nuisance but not a trespass.
Nuisance and the hypersensitive plaintiff:

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HYPO 18A
A operates a dog kennel located near a power
plant. A notices that her dogs are chronically
agitated, causing her to lose business. She learns
that the power plant emits a high frequency sound
heard by animals but not humans. A sues the plant
for nuisance. What result?

ZONING
Pursuant to its police powers, government may enact
statutes to control land use.

The Variance
The principal means to achieve flexibility in zoning.
The variance grants a landowner permission to depart
from a zoning stricture.
What must a proponent of a variance show?

The variance is granted or denied by administrative

action, typically in the form of a zoning board.

The Nonconforming Use

A once lawful, existing use is now deemed noncon-
forming by a new zoning ordinance. Can the once
lawful use be eliminated all at once?

Cumulative Zoning
There are two types of zoning ordinances: cumulative
and noncumulative.

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Cumulative Zoning Ordinance
A cumulative zoning ordinance creates a hierarchy of
uses of land, where a single-family home is the highest
use, followed for example by a two-family home (which
is a lesser use), and then an apartment building (an
even lesser use), and then a strip mall (even lesser),
and then a factory (even lesser).
Under a cumulative zoning ordinance, land that is
zoned for a particular use may be used for that partic-
ular use and for what other use?

HYPO 18B
The township of Utopia zones a strip of vacant land
for commercial use. A, who owns land in the strip,
wants to build a single-family home there. Under a
cumulative ordinance, can A build?

Why?

Noncumulative Zoning Ordinance

Under a noncumulative zoning ordinance, land may be
used only for the purpose for which it is zoned.

HYPO 18C
The township of Utopia zones a strip of vacant land
for commercial use. A, who owns land in the strip,
wants to build a single-family home there. Under a
noncumulative ordinance, can A build?

Why?

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Unconstitutional Exactions
Exactions are amenities government seeks in ex-
change for granting permission to build.

HYPO 18D
You are a developer seeking permission to build
a 200-unit residential development in the town of
Utopia. The town tells you that it will grant you the
requisite permit if you agree to provide several new
streetlights, a small park, and wider roads. What is
required for these exactions to pass constitutional
scrutiny?

CONDOMINIUMS AND HOMEOWNERS’

ASSOCIATIONS
Condominiums
Each owns the interior of her individual unit plus an
undivided interest in the exterior and common ele-
ments.
What are examples of common elements?

Homeowners’ Associations (HOA)

The owner of each condominium is a member of the
HOA. What does the HOA oversee?

The HOA passes rules (contained in what’s called a

declaration of covenants, conditions, and restric-
tions (or CC&R)), that prescribe what owners can and
cannot do with their property. For example, CC&Rs

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NOTES
might prohibit pets or the posting of “for sale” signs or
require that balconies be kept free of trash.
Who enforces the CC&Rs?

Each condominium owner must pay regular dues to

the HOA to maintain the common elements.
What if the monthly fees are insufficient to pay nec-
essary expenses (for example, a major roof repair is
needed)?

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