VIRGINIA REAL PROPERTY DISTINCTIONS MICHAEL DORAN UNIVERSITY OF VIRGINIA SCHOOL OF LAW

Transcription

1 VIRGINIA REAL PROPERTY DISTINCTIONS MICHAEL DORAN UNIVERSITY OF VIRGINIA SCHOOL OF LAW CHAPTER 1: OWNERSHIP Interests in Land: Exam Tip 1: This lecture will build off of the information on Real Property for the multi-state portion of the bar exam. o Present interests o Future interests o Simultaneous interests (concurrent interests) A. Present estates o Virginia law recognizes fee simple absolute, life estate, but recognize the fee tail ("and the heirs of his body") Virginia has abolished the fee tail by statute: any estate that previously was a fee tail is now converted to a fee simple, while attempt to create fee tail simply creates fee simple absolute. B. Concurrent estates: Tenancy in Common, Joint Tenancy, Tenancy by the Entirety o Joint Tenancy: Virginia law requires express language regarding right of survivorship in order to create a joint tenancy. Example 1: If husband and wife own land as tenants in common, there is no automatic right of survivorship. If they hold land as joint tenants, there is an automatic right of survivorship. If husband dies, wife becomes the sole owner of the land. Language: "as joint tenants, with the right of survivorship" is required. Simply saying "as joint tenants" not enough. Killing of one joint tenant by another tenant: if joint tenant kills other tenant through murder or voluntary manslaughter, the joint tenant who does the killing is treated as having the victim. The effect of this is: The joint tenant who does the killing does not get benefit of automatic survivorship (treated as dying first)

2 The joint tenant who is killed gets the benefit (treated as dying second) Devisee/heir of joint tenant who is killed ultimately gets the entire interest in the property. Example 2: Cain and Abel are joint tenants. Abel has named Eve as his heir. Cain murders Abel. Automatic right of Cain is forfeited, and Cain is treated as having predeceased Abel. Thus, Abel is treated as surviving joint tenant, and would receive sole ownership of land. Because Abel is actually dead, his full interest in the property passes entirely to Eve. Eve becomes sole owner of the land. Note: the same rule regarding murder or manslaughter applies to tenancy by the entirety. o Tenancy by the Entirety Key distinction: the grant require express language of survivorship to create a tenancy by the entirety (although it automatically includes right of survivorship). Two components of tenancy by the entirety, different from joint tenancy: Tenancy by the entirety can only be between persons. Tenancy by the entirety prevents any or transfer by one tenant without consent of other tenant. C. Future Interests: reversions, remainders, executory interests 1. Alienability Common Law: future interests are not always alienable (and still in some jurisdiction) In Virginia, all future interests are. 2. Statute of limitations to claim future interest Reversion interest: held by grantor, who does not give future interest to third party Automatically triggers/becomes possessory when preceding interest reaches Example 3: A dies. "O conveys to A, for life." O's interest becomes possessory when Possibility of reverter: future interest following fee simple determinable Right of reentry: grantor's future interest that follows fee simple subject to condition subsequent Both reverter and reentry become possessory only by cutting off preceding estate Themis Bar Review, LLC VA Real Property Distinctions

3 Example 4: "O conveys to A, unless A graduates from medical school." O has right of reentry, and this right will cut off A's fee simple subject to condition subsequent. Virginia Law: Holder of right of reverter or reentry has years to claim property. Period begins to run when triggering event occurs. Example 5: O to A unless A graduates from medical school. Once A graduates from medical school, O has 10 years to bring action to regain property. If O does not bring action within 10 years, O's right expires, and A has fee simple absolute. 3. Destructibility of Contingent Remainders Common law: A contingent remainder that did not vest at end of preceding estate is automatically destroyed. Virginia: has repealed/rejected that rule. Contingent remainder: holder of remainder must be unknown ("O to A for life, then A's heirs"); or dependent on some event that has no occurred ("O to A for life, then B, if B reaches 25") Common law would destroy remainder interest if it did not vest at end of preceding estate. Virginia creates an for contingent remainder holder, until contingency occurs. Example 6: O to A for life, then to B, if B reaches 25. Under common law, B's remainder would be destroyed if A dies before B reaches 25. In Virginia, if A dies before B reaches 25, property reverts to O, but it remains subject to an executory interest in B. So if B reaches 25, it passes from O to B. If B does not reach 25, O keeps property in fee simple absolute. 4. Rule in Shelley's Case abolished by Virginia Shelley's Case: prevents grantor from creating contingent remainder in heirs of grantee. Virginia has this rule. Example 7: "O to A for life, then to A's heirs." A has life estate, heirs have contingent remainder. Shelley's Case rule rewrote to say "O to A for life, remainder to A", giving A a fee simple absolute. Under Virginia's rule, conveyance works exactly as O intended. A gets life estate, and heirs have contingent remainder. VA Real Property Distinctions 2016 Themis Bar Review, LLC 3

4 5. Doctrine of Worthier Title abolished by Virginia Doctrine of Worthier Title: converted any remainder in grantor's heirs to a reversion in grantor. Virginia has this rule. Example 8: O to A for life, then to O's heirs. A has life estate, O's heirs have contingent remainder. Doctrine changed heirs' interest into reversion interest for O. Virginia has abolished this, giving effect to O's intent. 6. Rule Against Perpetuities Virginia has passed Uniform Statutory Rule Against Perpetuities Future interest is valid if it passes common law Rule Against Perpetuities, or if it actually vests within of creation. CHAPTER 2: LANDLORD-TENANT LAW 1. Remedies available to Landlord o Common law placed no duty on Landlord to mitigate damages o Virginia law: Landlord has duty to mitigate damages in case of lease. Example 9: Landlord leases house to Tenant for one year, at rent of $1,000 per month. Tenant leaves after 3 months, leaving $9,000 to be paid on lease. In Virginia, Landlord has duty to mitigate damages, and try to find new tenants for remainder of lease. For non-residential lease, landlord does not have duty to mitigate. Potential exception: if tenant never took possession, there may be a duty to mitigate under contract law theory. 2. Duty to give possession o Law can require landlord to give: Actual possession: has duty to clear out any adverse possessors Legal possession: has duty to clear anyone else off of land o Virginia: requires that landlord give actual possession for leases, and legal possession for leases. 3. Warranty of Habitability o Generally a non-waivable, implied warranty of habitability in residential leases. o Virginia: Delineates specific responsibilities: Themis Bar Review, LLC VA Real Property Distinctions

5 Comply with the requirements of applicable building and housing codes affecting health and safety; Make all repairs and do whatever is necessary to put and keep the premises in a fit and habitable condition; Maintain in working order and condition all electrical, plumbing, sanitary, heating, ventilating, air-conditioning, and other facilities and appliances, including elevators, supplied or required to be supplied by him; Supply running water and reasonable amounts of hot water at all times and reasonable air conditioning if provided and heat in season except when the dwelling unit is so constructed that heat, air conditioning or hot water is generated by an installation within the exclusive control of the tenant or supplied by a direct public utility connection; and Maintain the premises in such a condition as to prevent. o Landlord in violation is liable for damages proximately caused by breach. o Tenant, after giving reasonable notice to landlord, may place rents in with the court. CHAPTER 3: DISPUTES OVER LAND OWNERSHIP A. Adverse Possession Person who does not own land, but who possesses land, may become owner of land if certain conditions are met. General conditions-possession must be: (1) continuous; (2) actual; (3) open and notorious; (4) hostile; (5) exclusive. o Common law: sets possession period at 20 years. o Virginia law: adverse possession must be continuous and uninterrupted for. Exam Tip 2: Very popular topic on bar exam. Make sure to analyze each component of adverse possession, including 15-year requirement if property is in Virginia. Disability of owner: Common law rule is that statute of limitations does not run during time of owner's disability. o Virginia: Disability period cannot extend adverse possession period beyond. Example 10: Owner has been incarcerated for many years. Neighbor moves onto land. Owner's imprisonment is a disability, and stops clock on 15 year period. But, after 25 years, Neighbor will be able to claim adverse possession. VA Real Property Distinctions 2016 Themis Bar Review, LLC 5

6 Hostility requirement: You cannot gain adverse possession if you have permission. o Virginia: Where child is on parents' land, the child is to be there with the parents'. o To overcome presumption, child must give clear, definite or unequivocal notice of child's intention to assert exclusive ownership. Exam Tip 3: Has been tested on bar exam in past, so look for parent-child relationship in fact patterns. Example 11: A owns farm in Virginia. Son moves onto farm and tries to work it. After 15 years, Son is presumed to have had permission. o Co-tenants involve a similar rule to parent-child relationship. By living on land, co-tenant is not doing so adversely. Co-tenant must give actual or constructive notice of intent to oust co-tenant. Example 12: Boyfriend and Girlfriend own house together. They break up, Boyfriend moves out. Simply by staying in house, Girlfriend is not adversely possessing. But if Boyfriend shows up and Girlfriend won't let him in, moves stuff out to street, keeps him away, she has given notice of intent to oust him, and 15-year adverse possession clock begins to run. If one co-tenant gives right to third-party, and terms of transfer give third-party right to possess, third-party is in with regards to other co-tenant. Example 13: B and G own property as co-tenants. B moves out, G transfers property to Y and Y moves in. Y is adversely possessing with regards to B. Mineral rights: if surface rights and mineral rights been severed, adverse gets possession to both simply by possessing surface. o In Virginia, if they have been severed, adverse possessor may only get mineral rights by adversely possessing minerals. Land held in life estate o As long as life tenant is alive, adverse possessor can only gain title to life estate. To gain title from remainderman, adverse possessor must complete new 15 year period. Example 14: John owns land for life, remainder to Meagan. Ethan moves onto land, satisfies requirements over 15 years. In year 17, John dies, and land goes to Meagan. To establish title over Meagan, Ethan will have to establish a new 15 year period Themis Bar Review, LLC VA Real Property Distinctions

7 B. Contracts for Sale of Land 1. Part Performance o General exception to statute of frauds o Virginia requires showing that: Oral contract was certain and definite in its terms; Acts proved in part performance refer to,, or were made in pursuance of the agreement; Agreement was so far executed that a refusal of full execution would operate a upon the party seeking performance, and place him in a situation which does not lie in compensation. 2. Rescission or Modification o Virginia permit oral modification of a contract that is subject to the Statute of Frauds (and actually is in writing). 3. Implied Warranty of Fitness o Virginia rules: For residences other than condominiums, Virginia law implies warranty that the dwelling is: Free from, and would meet standards of construction trade Fit for Waiver of these warranties is permitted, but must be conspicuously and specifically set forth on face of. Seller's breach: Buyer has cause of action, but must first give written notice of defect, and Seller has reasonable time, up to, to fix defect. Buyer has to bring suit (period tolled during six month cure period) Warranty lasts for one year from earlier of date of transfer of title to Buyer, or Buyer taking possession o warranty with regards to foundation of dwelling o Condominiums: warranty lasts for, statute of limitations of 5 years; written notice, and opportunity to correct, is required. 4. Duty to Disclose o On sale of any home, newly constructed or not, many jurisdictions require that seller disclose physical defects. VA Real Property Distinctions 2016 Themis Bar Review, LLC 7

8 o Virginia: does not require that seller disclose physical defects, but rather that seller give of "caveat emptor" (let buyer beware). Statement must read: The owner makes no representations or warranties as to the condition of the real property or any improvements thereon, and purchasers are advised to exercise whatever due diligence a particular purchaser deems necessary including obtaining a certified home inspection. Va. Code Ann Risk of Loss During Executory Period o Executory period: Time between execution of land sale contract, and closing of land deal. o Doctrine of Equitable Conversion: Seller keeps title during this period, but buyer bears risk of loss. Virginia still follows classic equitable conversion doctrine, meaning risk of loss is on (other states put risk with seller) Example 15: Professor signs contract to buy house. Contract is signed on September 1, with closing date of October 15 (9/1-10/15 is executory period). If house burns down during executory period, loss is borne by Professor. Note: this is a default rule, and parties can contract to shift risk to seller/require seller to maintain insurance. Courts can use to relieve buyer when appropriate. 6. Security Interests in Land o Deed of trust: Similar to mortgage, owner of real property borrows money from lender, executes promissory note, and gives lender security over promissory note through deed of trust. Deed of trust gives trustee the right to sell land for lender's benefit if borrower defaults. Virginia: Recognizes deed of trust. If buyer pays off loan, trustee reconveys title to buyer. If buyer defaults, trustee sells property, applies proceeds to costs of executing trust, and uses remainder to pay debt to lender. o Mechanic's lien: Contractor who performs labor has a mechanic's lien on property to ensure payment. Note 1: In Virginia, a mechanic's lien must be filed within 90 days of the last day of the month in which labor was performed. o Judgment lien: Someone who obtains court judgment can file a judgment lien against judgment debtor's real property. Must be recorded with clerk in county or city where land is located Themis Bar Review, LLC VA Real Property Distinctions

9 7. Personal Liability of Mortgagor o Mortgagee: generally the bank o Mortgagor: the buyer of the property o In Virginia, the mortgagee can proceed against mortgagor, and does not first need to bring claim against the property itself. Mortgagor remains personally liable for of loan, even if that is more than fair market value of mortgaged property. Example 16: Professor buys land worth $500,000. Takes out mortgage for $400,000. Years pass, $350,000 is still owed, but property is only worth $300,000. Bank can still hold Professor personally liable for full $350, Transfer of Mortgage Debt o Virginia: Transfer of debt results also in transfer of. If bank transfers debt to another entity, only the transferee can bring claim on deed of trust or mortgage securing the debt. 9. Dual Agency o Virginia permits one person to serve as an agent for both the buyer and the seller. CHAPTER 4: DISPUTES OVER LAND OWNERSHIP AND LAND USE A. Disputes About Land Ownership, Cont'd 1. Transfer of Deed/Fraudulent Conveyances o Virginia: transfer if transferor had fraudulent intent (i.e., transferring property to avoid creditors) Exception: Purchaser for valuable consideration who did not have notice of fraudulent intent will be entitled to keep property. Example 17: Professor owns real property in Virginia, causes accident, judgment enters against Professor. Professor deeds real property to children, hoping to put real property outside reach of judgment creditor. Because of fraudulent intent, Virginia law voids transfer. 2. Recording the Deed o It is not necessary to record deed to make transfer valid, but recording provides protections, puts world on notice of grantee's interest in land. Virginia: In order for deed to be recorded, deed must be acknowledged by grantor, or proved by witnesses. VA Real Property Distinctions 2016 Themis Bar Review, LLC 9

10 o Race/Notice: Race Statute: First buyer to record deed gets the land, even if winner of the race knew of prior sale. Example 18: On Tuesday, O sells to A. A does not record deed. On Thursday, O sells to B, who knows about prior sale, but quickly gets deed recorded. A then records deed, but cannot get land over B, because B recorded first. Notice Statute: Later buyer can receive land if later buyer did not have of earlier sale, regardless of who first. Example 19: On Tuesday, O sells to A. A does not record deed. On Thursday, O sells to B. B does not know about sale to A. A then records deed, followed by B recording deed a few days later. B prevails, because B did not have notice of earlier sale. Race-Notice Statute: Later buyer will get land only if buyer (i) bought without notice, and (ii) recorded deed first. Example 20: Above example, A would prevail. Even though B bought without notice of prior sale to A, A was the first to record. Virginia: Virginia's statute reads as a notice statute, but has been interpreted as a racenotice statute by the Virginia Supreme Court. It can reasonably be argued that both interpretations/rules potentially apply. Exam Tip 4: If you get a question re: recording in Virginia, make sure to discuss both possible interpretations, and both possible rules. 3. Special Warranty Deeds o Virginia recognizes special warranty deeds, which contain warranty that grantees title will not be by the grantor or anyone claiming under the grantor. 4. Transfer of Real Property by Will/Intestacy o Virginia law does not provide for the exoneration of liens. When property is devised by will, it remains subject to any, lien or other encumbrance. o Virginia law provides for abatement of personal property over real property. If estate is not sufficient to handle all expenses and bequests, shortfall will come from before it is drawn from real property. B. Disputes Regarding Land Use In Virginia, a dispute about the ownership of land is resolved by a "quiet title action," where a dispute over use is resolved with an "ejectment action" Themis Bar Review, LLC VA Real Property Distinctions

11 1. Easements Editor's Note 1: Professor Doran misspoke. In Virginia, a dispute concerning who has title to land is typically decided by an ejectment action, while a dispute regarding possession is decided by an action for unlawful entry or detainer. o Easement by Prescription: Virginia has a period for acquiring easement by prescription. Works like adverse possession, but has a longer period. o Termination of Easement: Easement will be terminated in Virginia if purpose for which easement was created no longer exists. o License: Can become an easement if the licensee changes his position in on the license. License is revocable generally, unless licensee relies on license to his detriment. License becomes irrevocable easement. 2. Real Covenants Example 21: Professor gives X license to cross land. If X relies on license to detriment, spends time and money clearing out wood and shrubs and building road, and Professor tries to revoke license, X may have argument for equitable easement (easement by estoppel) o In Virginia, a covenant not to compete does not. o But, it can be enforced by injunction, if buyer has notice of covenant. Example 22: Seller owns two adjacent parcels, operating gas station on P1. Seller sells P2 to Buyer, gets Buyer to give covenant that Buyer will not operate a gas station on P2. When Buyer sells to third-party, covenant is only enforceable against third-party if third-party had notice of covenant, and may get an injunction (but not damages). 3. Water Rights and Support Rights o Surface Water: water from rain, melting snow, floods, etc. " ": Landowner has unqualified right to get rid of surface water, regardless of effect on neighbors. Virginia: Modifies common enemy doctrine. Each landowner can make whatever changes she wants to in order to manage surface water. But cannot or injure the property of another. o Support Rights: In Virginia, an action for undermining lateral or subjoining support requires a showing of damage (mere "weakening" is not enough) VA Real Property Distinctions 2016 Themis Bar Review, LLC 11

12 4. Government Regulation of the Land o Zoning: Virginia law defines "single family home" broadly, including foster home, family care home or group home with up to eight people along with staff. o Eminent Domain: Virginia Constitution was changed to prohibit eminent domain from being used for private gain, private benefit, private enterprise, increasing jobs, increasing tax revenue, or economic development. [END OF HANDOUT] Themis Bar Review, LLC VA Real Property Distinctions