PROPERTY BIG PICTURE OUTLINE

Transcription

1 PROPERTY BIG PICTURE OUTLINE The best approach to property is to first identify the interests of the parties involved in the property at issue. Once those interests are identified, then all the rights in connection to those interests can be determined. When looking at the ownership of a particular parcel, consider whether any extrinsic interests in the property can disrupt the ownership. 1. What are the OWNERSHIP INTERESTS of the parties in the property? a. Reading comprehension is essential. The type of estate can turn on a phrase and sometimes is not always clear. Identify the interest and what it means in relation to the ownership rights. b. Estates in Land Who currently possesses the land? i. Fee Simple Absolute Is the owner completely free to dispose with the property as they see fit? ii. Defeasible Fees Are there any conditions to ownership and at what point can those conditions affect the ownership rights? What happens to the interest if the condition is broken? 1. Fee simple determinable 2. Fee simple subject to condition subsequent 3. Fee simple subject to executory limitation a. Shifting v. Springing iii. Life Estate A life tenant has the right to use the property during his/her lifetime. 1. Per Autre Vie for the life of the original life tenant. 2. Doctrine of Waste Life tenant must not do anything to hurt the future interest holders. Can be voluntary, permissive, or ameliorative. 3. Dower At common law, a widow is entitled to a life estate in a third of the lands of which her husband was seized in fee simple at any time during the marriage. c. Future Interests Will the land pass to another party once the current estate is extinguished? i. Reversion Can be in the grantor or their estate. ii. Possibility of Reverter Only follows a fee simple determinable. iii. Right of Reentry Only follows a fee simple subject to condition subsequent. Reentry language must be present. iv. Remainder Never follows a defeasible fee. 1. Vested v. Contingent v. Rule Against Perpetuities Always applies to contingent remainders and executory interests and certain vested remainders subject to open, options to purchase, rights of first refusal, powers of appointment and class gifts.

2 d. Concurrent Estates Who shares in the property interest? i. Tenancy in Common What are the rights of the tenants? ii. Joint Tenancy Have all four conditions been met? Did severance occur at any time during the life of the tenancy? iii. Tenancy by the Entirety Did one or both spouses encumber tenancy? e. Leaseholds i. Different types of tenancies 1. Tenancy for Years 2. Periodic Tenancy 3. Tenancy at Will 4. Tenancy at Sufferance 5. Hold-Over ii. What are the duties of the tenant? iii. What are the duties of the landlord? iv. Know the difference between an assignment and a sublease. v. Fixtures 2. Non-Possessory Interests These are rights in the land of another. a. Easements The only rights that are still property interests. Always ask how the easement been created and whether it can it be terminated. With the exception of an in gross easement, a dominant and servient tenant must be present. i. Affirmative 1. Appurtenant 2. Prescriptive 3. Implied 4. By Necessity 5. In gross ii. Negative b. Licenses Revocable permission to enter the land of another c. Profit Right of one person to enter the land of another and extract or remove resources. d. Covenants Does the burden of the promise to do or not do something relate to the land run from owner to owner? e. Equitable Servitudes A restriction of the use of land enforceable in a court of equity. i. Implied equitable servitude owner must have notice of common scheme in residential development. f. Public Use Grantor dedicates easement for public use. 3. Can there be any claims for ADVERSE POSSESSION? a. Open and Notorious: This means that the adverse possessor is using the property as a true owner would, or rather, that if the true owner inspected the property they would notice that someone else was possessing it

3 b. Actual: they are possessing it in a way that is actual, not constructive c. Exclusive: the adverse possessor is using it in such a way that excludes all others d. Hostile: this only means without owner s permission e. Continuous for a statutory period f. Title can acquire marketable title by adverse possession only by getting a court to order quiet title 4. Are there any INCIDENTAL RIGHTS to ownership of land? a. Support Land must be in natural condition otherwise owner must prove neighbor was negligent. i. Lateral v. Subjacent b. Water Rights What are the rights of each owner with regards to water use? i. Riparian ii. Groundwater iii. Surface Water c. Right to Exclude The possessor of land has the right to be free from trespass and nuisance. 5. Does the issue involve a CONVEYANCE of land? a. By what instrument was the land conveyed? b. Land Sales Contract Was the contract executed properly? Doctrine of Equitable Conversion applies between execution of contract and closing. c. The Closing Marketable title must be provided by the seller at this point. d. The Deed Was the deed delivered and accepted? i. General Warranty 6 covenants ii. Special Warranty 2 covenants iii. Quitclaim or Release Deed no covenants e. Recording Know the three types of acts. Is the subsequent purchaser a BFP? Who is protected under the Shelter Rule? f. What Remedies are available for mistakes regarding the land? i. Rescission Available when there has been a mutual mistake. ii. Reformation Can add acreage when there was a mistake about the quantity of land owned by the vendor. iii. Abatement Allows for a price adjustment when vendor owns less land than promised. 6. Were any SECURITY INTERESTS created during ownership? a. Mortgage Who has priority when there is more than one mortgage? i. Transfer by Mortgagee v. Transfer by Mortgagor What are the responsibilities of the new parties? b. Foreclosure What is the effect of foreclosure on various interests? Must know the inverse order of alienation rule.

4 c. Redemption Universally recognized up to the date of sale. i. Redemption in Equity v. Statutory Redemption d. Installment Land Contract Usually arises when buyer cannot get a mortgage. 7. Are there any external LIMITATIONS ON OWNERSHIP? a. Eminent Domain The Government s right to take private property for public use in exchange for just compensation. i. Explicit v. Implicit Taking b. Zoning The state s power to enact statutes to reasonably control land use i. Variance v. Non-conforming Use

5 Mini Essays Questions 1 Fuchs and Shah owned large adjoining tracts of land. The boundary line between the two properties was never properly determined or clearly known. In 1966, Fuchs installed a gas-powered generator on land he thought he owned, but which was in fact owned by Shah. The generator was housed in a small shed and surrounded by a fence. During the summer months, Fuchs ran electrical wires from the generator to a guesthouse across land he knew belonged to Shah. Shah orally consented to the wiring s crossing her land. In 1979, Shah was found to be mentally incompetent. She died in 1990, and her executor filed suit to eject Fuchs and quiet title. The statute of limitations in ejectment is 20 years. What is the likely outcome of this suit with respect to the land over which the electrical wires were laid? Questions 2 Manuel and Paulo owned adjacent ranches in Scorpion Desert. Manuel Ranch was to the north of Paulo Ranch, and deeper into the canyon; the only public road in the area ran along the southern border of Paulo Ranch. For years, Manuel and Paulo had had an understanding that Manuel could use a ten-foot wide dirt road running along the western edge of Paulo s ranch for ingress and egress to Manuel Ranch from the public road. In 1965, Jose bought both ranches but continued to operate them as separate entities; the foreman and hands of Manuel Ranch continued to use the dirt road across Paulo Ranch to get from Manuel Ranch to the public road. In 1975, Jose sold Manuel Ranch to Alejandro; included in the deed was the following: Alejandro, his heirs and assigns, shall have the use of the dirt road running along the western border of Paulo Ranch for ingress and egress to Manuel Ranch. In 1987, Pedro purchased Paulo Ranch from Jose. Pedro subsequently obtained official approval for and filed a subdivision map creating a planned residential community thereon. The area occupied by the dirt road was designated a public park, with fountains, children s play equipment and a baseball diamond. When Alejandro learned of Pedro s plans, he instituted an appropriate action to enjoin obstruction or obliteration of the dirt road. Who will prevail?

6 PROPERTY MBE QUESTIONS Question 1 Owner conveyed Natureacre to Buyer, so long as it is used exclusively and in its entirety as a site for hunting and nature preservation. Owner then died intestate, survived only by his heir son. Three years later, Buyer discovered that Natureacre occupied a significant portion of the surface of a large underground oilfield. Buyer immediately leased the rights to extract oil from under Natureacre to a large, multinational oil company, which shut down all hunting, camping and other nature activities. Upon learning of Buyer s acts, son brought an action against Buyer and the oil company to quiet title in himself to Natureacre. What will be the outcome of this litigation? Buyer will win, because the purported limitation of his interest in Natureacre is invalid under the Rule Against Perpetuities. Buyer will win because the oil company, as a bona fide lessee, cuts off any rights son has in Natureacre. Son will win, because Natureacre automatically became his property when Buyer executed the lease with the oil company. Son will win, because the lease executed by Buyer with the oil company gave son the right to seek a judicial declaration of his ownership of Natureacre. Question 2 Owner owned Freedomacre, a two-acre, star-shaped, grass-covered parcel in downtown Capital about a mile from the civic center where all federal, state, and local government buildings were located. Owner conveyed Freedomacre, To Abe, his heirs and assigns, so long as it is used by the people to gather for purposes of public assembly and debate, then to Benjamin and his heirs. Which of the following best describes Benjamin interest in Freedomacre? A right of entry. A possibility of reverter. A valid executory interest. He has no interest in Bowlacre. Questions 3-4 are based on the following fact situation. Doctor had never forgiven his son, Son, for refusing to go to medical school. When Doctor became too ill to enjoy riding the horses he kept on his ranch, Medicalacre, he conveyed it to his lifelong friend, Surgeon, for life, remainder to the children of my son, Son. At the time of this conveyance, Son was married but had no children.

7 3. After the conveyance of Medicalacre, which of the following best describes the interest in Medicalacre of the children of Son? A contingent remainder. A shifting use. A springing use. They have no interest in Medicalacre. 4. Assume for the purposes of this question only that six months after the conveyance of Medicalacre, Surgeon died, survived only by his nephew, Nurse. Doctor and Son are still alive, and Son still has no children. The jurisdiction has abolished the Rule in Shelley s Case, the Destructibility of Contingent Remainders, and the Doctrine of Worthier Title. Which of the following best describes the state of title to Medicalacre? Nurse. Doctor. Son, in fee simple subject to divestment by the birth of a child to him. Son, in fee simple absolute. Question 5 Brother and Sister owned Familyacre as joint tenants with right of survivorship. Sister executed a mortgage on Familyacre to secure a debt to Bank. Before the debt to Bank had been satisfied, Sister died intestate, leaving as her sole heir, cousin. In a jurisdiction which follows the lien theory of mortgages, if an appropriate action is brought to determine ownership of Familyacre, which of the following is most likely to reflect the court s judgment? Cousin and Brother own Familyacre in undivided half interests as tenants in common, with cousin s interest subject to Bank s mortgage. Cousin and Brother own Familyacre in undivided half interests as tenants in common, with the entire interest subject to Bank s mortgage. Brother owns Familyacre in fee simple, subject to Bank s mortgage. Brother owns Familyacre in fee simple. Question 6 Two cousins purchased land under a deed which conveyed the land to them as joint tenants, with right of survivorship. The purchase price was $50,000 of which cousin 1 paid $10,000 and cousin 2 paid $40,000. Cousin 1 later mortgaged her interest in the land, needing money for law school. Unfortunately, cousin 2 then passed away shortly after, leaving everything to her sister. Cousin 1 paid off her debt, and the mortgage was released.

8 At present time, who owns the land? The answer depends on whether the jurisdiction follows the lien theory or the title theory of mortgages Title is in the sister and cousin as equal tenants in common Title is in the sister and cousin as tenants in common with cousin having 20% interest and cousin having 80% interest. Title is entirely in cousin as the surviving joint tenant. Questions 7-8 are based on the following fact situation. Rancher and Neighbor owned adjacent ranches. Rancher s Ranch was to the north of Neighbor s Ranch and the only public road in the area ran along the southern border of Neighbor s Ranch. For years, Rancher and Neighbor had had an understanding that Rancher could use a ten-foot wide dirt road running along the western edge of Neighbor ranch for ingress and egress to Rancher s Ranch from the public road. In 1995, Buyer bought both ranches and continued to operate then as separate entities; the foreman and hands of Rancher s Ranch continued to use the dirt road across Neighbor s Ranch to get from Rancher s Ranch to the public road. In 2005, Buyer sold Rancher s Ranch to Man; included in the deed was the following: Man, his heirs and assigns, shall have the use of the dirt road running along the western border of Neighbor s Ranch for ingress and egress to Rancher s Ranch. 7. In 2007, Developer purchased Neighbor Ranch from Buyer. Developer subsequently obtained official approval for and filed a subdivision map creating a planned residential community thereon. The area occupied by the dirt road was designated a public park, with fountains, children s play equipment and a baseball diamond. When Buyer learned of Developer s plans, he instituted an appropriate action to enjoin obstruction or obliteration of the dirt road. Buyer will: Prevail, because the owner of the servient tenement is not permitted to obstruct an express easement. Prevail, because Buyer has obtained an easement by necessity over the dirt road. Not prevail, because Buyer will be held to his remedy at law, damages. Not prevail, because circumstances have changed substantially since the easement over the dirt road was created. 8. Assume for the purposes of this question only that Buyer did not sell Neighbor Ranch to Developer. Instead, in 2007 Buyer sold Neighbor Ranch to Farmer, who continued to operate it as a ranch. In 2009, Developer purchased Rancher s Ranch from Buyer, and obtained government approval for the same type of planned residential community as described in the previous question.

9 In order to accommodate the expected vehicular traffic in and out of the subdivision, Developer asked permission from Farmer to pave a 30 foot-wide asphalt road along the same area where the dirt road runs. Farmer denied Developer permission, and Developer instituted an appropriate action to obtain judicial approval for the road improvement. If Farmer succeeds in resisting Developer s action, it will be because: Developer s failure to continue ranch operations on Rancher s Ranch constitutes an abandonment of the dirt road easement. Developer s proposed use of the easement for ingress and egress to a large residential subdivision exceeds the scope of the easement originally granted to Buyer. Developer s proposed use of the easement for ingress and egress to a large residential subdivision exceeds the scope of an easement by necessity. Only Farmer, as owner of the servient tenement, is entitled to alter the physical state of the right-of-way easement. Question 9 Man and Woman owned adjacent residences, each on its own lot, in Town. Both lots bordered side and back on other lots, and on the front, to the north, by Avenue. Man received a new job out of state, so rented his house to a young family and moved away. Woman continued to live in her home, however, after about six months, Woman decided to leave her job and convert her garage into an art studio. She built a carport at the rear of Man s house and laid an asphalt driveway down the side of the house to the carport. The driveway encroached five feet onto Man s lot all along its length. The renters didn t appear to notice anything, and since the renters always paid on time, Man never visited his old home, since he was far too busy at work. Seven years later, Man was in town for a company reunion and drove by his house. He noticed the asphalt driveway and was sure it encroached on his property. A survey documents the encroachment, and Man brought an appropriate action to cause Woman to remove the encroaching portion of the driveway. In a jurisdiction whose statutory period for adverse possession is five years, Man will: Win, because Woman has not exercised any act of dominion over the disputed property sufficient to establish his ownership. Win, because he had no notice of the encroachment by Woman. Lose, because his long absence coupled with lack of any inquiry as to the state of his property constitutes an abandonment of the disputed strip. Lose, because Woman has obtained an easement by adverse possession.

10 Question 10 A man owned two adjoining lots, Lot 1 and Lot 2. Two years ago, the man borrowed $20,000 from a brother and gave the brother a $20,000 note, due in two years with interestonly payments in the interim, secured by a mortgage on both lots. The mortgage was promptly recorded. One year ago, the man conveyed Lot 2 to a buyer for a valuable consideration. Neither the man nor the deed to the buyer made any mention of the brother s mortgage. The buyer promptly recorded the deed. Six months ago, the man asked his brother to release Lot 1 from the lien of the mortgage, since each lot had increased in value to over $50,000. The brother, who did not know that the buyer had purchased Lot 2, released Lot 1 to his sister for $50,000. Until the sale to his sister, the man had made regular monthly payments of interest to his brother, but after the sale to his sister, the man disappeared and made no further payments. The $20,000 principal is now due. What are the brother s rights with respect to the buyer and Lot 2? The buyer is personally liable on the note, and the brother has a $20,000 lien on Lot 2. The buyer is not personally liable on the note, but the brother has a $20,000 lien on Lot 2. The buyer is not personally liable on the note, nor is there a lien on Lot 2, because the buyer signed neither the note nor the mortgage. The buyer is not personally liable on the note, because the brother failed to insist on payment before releasing the lien on Lot 1. Question 11 Husband was 45 years old when he married Wife, and he insisted upon executing a prenuptial agreement with her specifying that his accounting business was and would remain his separate property. Thereafter, Husband operated his business while Wife stayed at home caring for their twin daughters, Abigail and Mary. By the time Abigail and Mary went away to college, Husband had used accumulated profits from his business to purchase three small apartment complexes. Husband died a week after his 63 rd birthday, leaving no will. Wife, Abigail and Mary assumed that Husband s properties passed to the three of them as his heirs, but in fact, the apartment complexes were community property and passed in their entirety to Wife as surviving spouse. Wife assumed management of the factory and the apartments. Three years later, Wife began suffering from cancer. Unknown to Wife, Abigail and Mary decided that one of them would have to give up her studies and return to manage the various properties. Abigail had just been accepted to law school, so she and Mary orally agreed that if Mary would manage the family properties until Abigail had completed her studies, the three apartment complexes would become the sole property of Mary. For the next eight years Mary managed the properties. She paid all applicable property taxes and insurance charges. She placed Wife in a care facility and visited her regularly, but Wife was rarely well enough to recognize her.

11 Eight years later, Wife died. Her will, validly executed before her stroke, left all her property to Abigail and Mary as tenants in common. Abigail returned after completing her degree and passing the bar and asked Mary to sell the apartment complexes so that she (Abigail) could use her half of the proceeds to finance the opening of a law firm. When Mary refused, Abigail brought an appropriate action to partition the apartment properties. The statutory period for adverse possession in the jurisdiction is five years. What are the ownership interests in the apartment complexes? Mary is sole owner of the apartments, because she fully performed her agreement with Abigail. Mary is sole owner of the apartments, because she has acquired title by adverse possession. Abigail and Mary own the apartments as cotenants, because one cotenant cannot obtain title from another by adverse possession. Abigail and Mary own the apartments as cotenants, because Mary s possession of the apartments was never hostile as to Abigail. Question 12 Seller owned Blackacre, a vacant tract of land. Buyer approached Seller and offered to pay Seller $250,000 for Blackacre. Seller was reluctant to sell Blackacre because the property had been owned for many generations by Seller s father and other family members. When Buyer offered to pay a non-refundable $125,000 down payment, Seller agreed and the parties signed a land sale contract. In the contract, Buyer expressly agreed to pay Seller $250,000 total, with $125,000 down and the balance of $125,000 to be paid within one year of the sale. The contract also provided that the $125,000 down payment was payable upon execution of the contract but was non-refundable and would be forfeited by Buyer in the event of a breach of contract by Buyer. One week prior to the date set for delivery of the deed, Buyer was killed in a fire. The executor of Buyer s estate wrote a letter to Seller and asked for a return of the $125,000 down payment. Seller responded to claiming that the executor s letter constituted a breach by anticipatory repudiation and declared that Seller was entitled to keep the $125,000 as a consequence of the breach of contract. Seller brought an action against Buyer s estate seeking a court order upholding the validity of the nonrefundable down payment provision. Buyer s estate answered and sought a court order to declare the non-refundable down payment provision as invalid. In this action, the court should rule in favor of: Seller, because the contract should be enforced as written. Seller, because equitable title passed to Buyer at the time the contract was executed. Buyer s estate, because death of a party terminated a contract. Buyer s estate, because the non-refundable down payment provision is invalid and unenforceable.

12 Question 13 Buyer purchased fifteen acres of desert land from Company, dealing entirely by correspondence. Buyer entered into possession of what he believed to be his fifteen acres of land, but he inadvertently misread the property description on the deed, and actually occupied a fifteen acre parcel one mile to the west of the parcel that had been conveyed to him. Because he had no neighbors at the time, nothing alerted Buyer to his mistake. He built a large residence, paid all appropriate taxes and insurance, and otherwise conducted himself so to satisfy all requirements for obtaining title to the property by adverse possession. By this time, others had purchased parcels in the same area, and it came to Buyer s attention that he had located himself on the wrong land. In an appropriate action against Company, Buyer obtained a judicial declaration that he was the owner and holder of legal title to the property he occupied. Buyer subsequently entered into a written contract to sell his property to Purchaser. After formation, but prior to the date set for closing, Purchaser discovered that Buyer had obtained title to his property via adverse possession, and that the concrete footings for Buyer s swimming pool extended onto the neighboring parcel along a 50 foot long strip, varying in width from several inches to one foot. No one had ever realized that Buyer s swimming pool encroached onto the neighboring property until Purchaser s investigation revealed it. Purchaser refused to tender the purchase price agreed upon in the contract. Buyer brought an action for specific performance to compel purchaser to complete the land sale transaction. The court should find in favor of: Buyer, because he obtained a judicial declaration that he is the holder of legal title through adverse possession. Buyer, because the encroachment is onto the neighboring parcel, not from the neighboring parcel onto his property. Purchaser, because title to Buyer s property is unmarketable due to his obtaining it via adverse possession. Purchaser, because title to Buyer s property is unmarketable due to the encroachment upon the neighboring parcel. Question 14 On December 15, Owner purchased LawAcre, a vacant tract of land, from Seller for $500,000. Owner paid $50,000 cash as a down payment and financed the balance of the purchase price by giving Seller a promissory note for the balance secured by a mortgage on LawAcre. The mortgage contained a due-on-sale clause providing that Seller was entitled to payment of the entire balance of the loan upon the sale of LawAcre. On March 1 of the following year, Owner sold LawAcre to Buyer, who purchased the property subject to the mortgage. After tendering monthly mortgage payments to Seller for two months (which were accepted by Seller), Buyer received a notice from Seller stating that Seller intended to enforce the dueon-sale clause and demanding payment of the balance of the loan.

13 If Seller brings an action seeking a court order enforcing the due-on-sale clause against Buyer and the court rules in favor of Buyer it will most likely be because: Buyer purchased LawAcre subject to the mortgage. Seller failed to show it was prejudiced by the sale. Seller failed to record the mortgage. Seller accepted payment from Buyer and thus waived its right to enforce the due-on-sale clause. Question 15 Buyer was in the market for a new home and asked Agent to look for a three bedroom single family home under $350,000. Agent found a two-story house listed at $248,000 and brought Buyer to look at the property. Buyer decided to purchase the house and made a full-price offer that was accepted by the seller. To finance the purchase, Buyer made a $48,000 down payment and obtained a mortgage from Bank in the amount of $200,000 to finance the balance. Three years later, Buyer was involved in a skiing accident and could no longer get up and down the stairs in his home. He decided to sell his house and move to a single-story house in a nearby neighborhood. Buyer arranged to sell the twostory house to Jeff for $260,000. The terms of the sale provided that Jeff would pay Buyer $85,000 and would assume the existing loan and mortgage held by bank which now showed a balance due of $175,000. One year after the sale, Jeff stopped working to pursue music, and stopped making payments on the mortgage. After six months, Bank personally served Jeff with notice of intent to foreclose and instituted foreclosure proceedings in an appropriate court. Buyer was not served with notice of the foreclosure. One week prior to the scheduled foreclosure sale, Jeff quitclaimed the house and lot back to Bank in lieu of foreclosure. At the time of the quitclaim, the property was worth substantially less than the mortgage debt. Assume that the jurisdiction has no statute preventing deficiency judgments; in this action the court should rule that Buyer is: Liable for the mortgage debt, because Buyer stands as a surety for the unpaid balance of the mortgage. Liable for the mortgage debt, because Buyer was not made a party to the quitclaim in lieu of foreclosure conveyance. Not liable, because Buyer was not served or otherwise notified of the foreclosure action. Not liable, because by accepting the property in lieu of foreclosure, Bank effectively discharged the obligations of both Buyer and Jeff.

14 Question 16 Several like-minded persons, including Owner, purchased land surrounding Lake Michigan. The former owner of all the parcels wished to preserve Lake Michigan in its natural setting for camping and fishing, and so inserted into the deeds by which each purchaser took title language sufficient to create an equitable restriction prohibiting the construction of any permanent structure thereon or the use for any purpose other than camping, fishing or related recreation. After all, Michigan is a sportsman s paradise. Jerry took possession of the parcel owned by Owner, established various hiking trails thereon, hand-graded a campsite, and occupied and used the property in a manner and for a period sufficient to acquire title to it by adverse possession. Owner, unaware of the circumstances and effect of Jerry s occupation of his former property, purported to sell that property to Hank for a valuable consideration and executed a warranty deed purporting to convey the parcel to Hank. Hank immediately recorded the deed. The recording act in the jurisdiction provides, Every conveyance of real property (other than a lease for a term not to exceed one year) is void as against any subsequent purchaser or mortgagee of the same property (or any part thereof) in good faith and for a reasonable value consideration, whose conveyance is first duly recorded. If Hank brings an appropriate action to eject Jerry and quiet title to the disputed parcel, she will: Lose, because Jerry s possession of the parcel put Hank on inquiry notice of his interest therein. Lose, because the recording act does not operate to void Jerry s acquisition of title to the parcel. Win, because Jerry failed to document his acquisition of title in a manner equivalent to recording a deed to the parcel. Win, because intermittent use of land is not sufficient to put a bona fide purchaser on inquiry notice. Question 17 Owner conveyed Homestead to Allen via a warranty deed that Allen failed to record. Owner subsequently purported to convey Homestead to Betty in exchange for value; Betty promptly recorded her deed. Unaware of the Owner-Betty transaction, Allen then recorded his deed. Betty subsequently sold and conveyed Homestead via warranty deed to Carol. Although he had never communicated with any of the participants, Dan had known of all the transactions regarding Homestead from before the Owner-Allen conveyance. Carol died, devising Homestead to Dan. The jurisdiction s recording act provides, A conveyance of an estate in land (other than a lease for less than one year) shall not be valid as against any subsequent purchaser for value, except such persons having actual notice of it, unless the conveyance is properly recorded.

15 Who owns Homestead? Allen, because he recorded his deed before Betty conveyed to Carol. Allen, because Dan knew of Allen s interest in Homestead when he (Dan) took title thereto. Dan, so long as Betty had no actual notice of the Owner-Allen transaction. Dan, because the first person to record always has paramount interest. Questions are based on the following fact situation. Buyer was a good friend of Friend and was frequently invited to spend holidays and vacations at the remote country property owned by Friend s cousin, Owner. One day, when Owner complained of not being young enough to properly care for and utilize the property, Buyer offered to buy it. Owner agreed and, in exchange for its reasonable market price, subsequently delivered to Buyer a warranty deed conveying the property to her. Buyer failed to record her deed. Two months later, Owner purported to convey the mountain property via warranty deed to Friend, as a wedding present. Friend immediately recorded her deed. The applicable recording act provides, A conveyance of an estate in land (other than a lease for less than one year) shall not be valid as against any subsequent purchaser for value, except such person who have actual notice of it, unless the conveyance is properly recorded. 18. When Buyer subsequently learned of the Owner-Friend deed, she recorded her deed and then brought an action to quiet title to the mountain property. Buyer will prevail in this action because: She recorded her deed before commencing the quiet title action. As a donee, Friend is considered to have actual knowledge of Buyer s interest via imputation from the donor, Owner. Owner had no interest in the mountain property to pass to Friend. She paid valuable consideration for the mountain property. 19. Assume for the purposes of this question only that, instead of selling the mountain property to Buyer, Owner gave it to her out of their longstanding friendship. Further assume that, instead of subsequently delivering a deed to the mountain property to Friend, that Owner died, leaving Friend the mountain property in his will. Upon learning of the purported testamentary gift of the property to Friend, Buyer recorded her deed and then brought an action to quiet title to the mountain property.

16 Buyer will: Prevail, because as a donee, Friend is considered to have actual knowledge of Buyer s interest via imputation from the donor, Owner. Prevail, because Owner had no interest in the mountain property to pass to Friend. Lose, because she was herself a donee grantee of the mountain property. Lose, because she did not record her deed until after Owner s death. Question 20 Six years ago the owner of a shopping center leased a store in the center for a 10 year term to a makeup artist for use as a makeup store. The makeup artist established and operated a store at the leased premises. The lease included provisions that described the shopping center by metes and bounds; identified the entrances, parking areas, signs, and other common facilities of the shopping center; and set out a covenant that the owner would not lease any part of the shopping center to any other store selling makeup. Last year the owner purchased a parcel of land immediately adjacent to the shopping center. That parcel was improved with a building that, at the time of the owner s purchase and for ten years earlier, was occupied in part by a food supermarket, which included a vast selection of discount makeup, under leases which the prior owner assigned to the owner. The owner reconstructed the common facilities of both shopping centers to integrate them and combine them so that, to the public, the two centers appeared as a larger single development. The makeup artist learned that the lease of the supermarket was about to expire and that the owner planned to enter into a new lease of the same space with the supermarket. The makeup artist protested the proposed new lease, but the owner declared his intention to go forward with it. The makeup artist brought an appropriate action to enjoy in the new lease to the supermarket as a violation of the covenant in the makeup artist s lease. If the court finds for the owner, what will be the likely reason? The covenant in the makeup artist s lease can be fairly construed as to apply only to the original shopping center premises. A covenant cannot restrict the use of land not owned by a covenantor when the covenant was created. A covenant that attempts to restrict competition is invalid as against public policy even if it runs with the land, The supermarket s use on the adjacent parcel was in existence when the owner and the makeup artist first entered into the lease.

17 Subject Matter for Property MBE Questions 1. Estates and Future Interests 2. Estates and Future Interests 3. Estates and Future Interests 4. Estates and Future Interests 5. Joint Tenancy/Severance 6. Joint Tenancy/Severance 7. Easement 8. Easement 9. Easement by Prescription 10. Mortgages 11. Statute of Frauds 12. Conveyancing 13. Marketable Title/Encroachment 14. Mortgages 15. Mortgages 16. Recording Act 17. Recording Act 18. Recording Act 19. Recording Act 20. Covenants

18 Property MBE Questions Answer Sheet 1. C 2. D 3. A 4. B 5. D 6. A 7. A 8. B 9. D 10. B 11. B 12. A 13. D 14. D 15. D 16. C 17. B 18. C 19. C 20. A