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REAL PROPERTY

Present estates in Real property


Estates (interests) in land are either present possessory estates
or future estates and are categorize as either freehold estates
or non-freehold estates.
There are 3 types of freehold present estates: LEFTS
1) LE- LIFE ESTATE
2) FT- FEE TAIL
3) S- fee SIMPLE
Life estates
A life estate is measured by one or more lives. There is no longer
any limitation on the number of successive life estates that can
be used on a fee but the lives used cannot:
1) Violate the rule against perpetuities (lecture 14); or
2) Be so numerous as to make it unreasonably difficult for a
court to determine when the future estate vests and
becomes a present possessory interest.
A life estate is more then a simple right to occupy realty it is
equivalent of ownership of a land for life with all of its burdens
and benefits of ownership. The descriptive words indicating a life
estate are to transfer use and occupancy of a land for life
A life tenant who is given the use and occupancy for life is
permitted:
1) Transfer the life estate (by gift or by sale);
2) Lease it to a tenant;
3) Grant an easement over the land;
4) Lose it to a judgment creditor or to an adverse possessor;
or,
5) Mortgage it
Any interest created (1-5 above) during a life estate cannot
defeat diminish or affect the future interest following the life
estate. All of these interests (1-5 above) terminate by operation
of law upon death of the life tenant and the future takes the
realty free from these interests
In NY under exceptional circumstances (a life tenant has to go
into a nursing home) she can sell the realty with court permission
and collect the value of her life estate interest and pay the
balance of a sale through he future estate.
In NY if the measuring life of a life estate cannot be located and
has been continuously absent without explanation for 3 years
then the surrogate can assume that person is dead (at common
law it was 7 years).
Death can be established earlier then 3 or 7 years if the missing
life tenant was exposed to a known peril

A life tenant may use the natural resources of the property for
homestay and farming but not for commercial profit unless the
land previously was used commercially
Existing mines or oil wells can be continued but no knew wells
can be opened during a life estate. The same rule applies to the
commercial removal of sand or gravel. If this rule is violated the
remedy for the person possessing the future estate is to sue for
tort of waste seeking money damages for the past waste and an
injunction for the future waste
A life tenant is obligated to pay:
1) The current real property taxes but not any amount that
exceeded the lands yearly rental value
2) Interest only on an existing mortgage
a. If these current assessments on the realty (taxes and
mortgage interest) are not paid and the future
interest is compelled to pay them then the future
interest can recover a money judgment against the
life tenant and the sheriff could sell the life tenants
interest to satisfy the money judgment
b. When a life tenant dies her estate may remove
fixtures that were attached to the realty by the life
tenant. Her estate may also harvest annual crops
that were planted by the life tenant. This is referred
to as the law of emblamence

Doctrine or worthier title, which involves a life estate


At common law the king received a tax whenever the owner of
real property died to avoid this tax the owner would interviviovs
(lifetime) gift of a life estate to a third party and then create a
remainder class gift to the grantors heirs.
Under the doctrine of worthier title the remainder interest to the
grantors heirs were extinguished and upon the grantors death
the fee would revert back to the grantors estate and then be
taxed. In most jurisdictions (NY) this doctrine has been statutorily
abolished but it still remains a rule of construction today
whenever the creator of an intervivos trust seeks to revoke the
trust and whether permission to revoke is required from the
trusts remainder interest who are described as his heirs. July
2009 essay 5. NYEB 65 and See lecture 14
Distinguish a life estate from a fee simple interest
To A his heirs, and assigns but if A dies and is not survived by his
children then to X and his heirs. This language does not create a
life estate but rather a SAD vested fee simple interest subject to
a condition subsequent

The tort of waste


This tort arises where ownership of land is:
o 1) Divided into a present estate or future estate (a life
estate and a remainder interest)
o 2) Is shared simultaneously (the concurrent estates of a
tenant in common, joint tenants, or tenancy by the
entirety) (see lecture 15)
o 3) Is mortgaged allowing a mortgagee, the bank, to sue the
mortgagor, the borrower, for the tort of waste.
The tort of waste is any act or omission that diminishes the lands
value; only a person who is lawfully in possession of land can
commit this tort. If that person were not on the land lawfully then
the tort claim would be trespass and not waste.
A waste action is to protect the interest of another who has
privity of estate in the same land. The remedy for a waste action
is money damages for past waste and an injunction to prevent
future waste.
Money damages can be sought by a concurrent tenant against
another, a mortgagee against a mortgagor, or a vested
remainder or vested reversion interest in a fee simple but money
damages cannot be sought by someone with only:
o 1) A continent remainder;
o 2) A possibility of a reverter; or,
o 3) A right of entry.
Because it is simply too uncertain whether these future interest
will become present estates. These uncertain future interest can
seek an injunction but only if there is a reasonable likelihood that
the future interest will become a present possessory interest.
The common law doctrine of ameliorating waste prohibited a life
tenant or a tenant under a lease from substantially altering or
demolishing a structure without the future interest consent (or
the landlords consent) even though the existing structure would
be replaced with something more valuable. Today by statute
most jurisdictions allow a life tenant or a tenant with a long-term
lease to tear an old structure and replace it if it would increase
the value of the future interest.
NY allows the landlord or the future interest to demand a bond to
insure the new structure will be completed.
Fee tails
A fee tail kept the real estate in the grantees family it was a
conveyance to the grantee and to the heirs of his body this
restricted future transfers of the property only to the grantees
legal descendants.

It created a life estate in the grantee a contingent remainder in


his descendants and a reversion back to the grantor if the
grantees issue died out
40 states (NY) have abolished the fee tail and treat it as a fee
simple to the grantee.
The ten states that have not abolished it treat the first grantee
as having life estates but upon his death a fee simple absolute
passes to his heirs thereby defeating the fee tail and the
grantors reversionary interest.

Fee Simple
A fee simple is the most frequently conveyed realty interest.
At common law to create a fee simple the conveyance to the
grantee had to contain the phrase and his heirs or and his
heirs and assigns if these phrases were omitted only a life
estate was conveyed thus a transfer to X for forever or to X in
fee simple created only a life estate. Today this requirement has
been abolished by statute in 47 states.
There are 3 types of fee simple estates SAD:
o S- a fee SIMPLE subject to a condition subsequent (BOP)
A deed containing a fee simple subject to a condition
subsequent immediately conveys a fee interest but
restricts the future use of the land and also gives the
grantor (his heirs or assigns) a future interest called A
RIGHT OF ENTRY if the condition is violated
Upon a violation the grantor may terminated the grantees
fee interest and go in and BOP the current fee interest
with an ejectment claim
At common law the following 3 BOP words indicated the
existence of a fee simple subject to a condition
subsequent:
To X and his heirs
1) B- BUT if liquor is sold on black acre it reverts to G
or her heirs
2) O- ON condition that the land is used only for
religious purposes
3) P- PROVIDED the land is not used for commercial
purposes

OPE 1 question 3
T died and left a fee interest to his wife W but if W
remarried (a condition subsequent) then the land would
pass to D daughter. If W remarried Ws interest in the land
would end and W would have a right (a claim) for
ejectment to put W off the land
A BOP fee simple is distinguishable from a fee simple
subject to a condition precedent because the fee simple
subject to a condition precedent does not transfer a fee
simple interest to the grantee until the condition
precedent actually occurs
o Ex. O conveyed land to daughter D in a deed upon
the condition precedent the D passed the bar exam
otherwise to my son. D recorded the deed, who
owns black acre? O continues to own the land
subject to the condition precedent in the deed for Ds
ownership.
A-fee simple ABSOLUTE
o A transfer of a fee simple without any conditions imposed
on its future use. It creates no future interest (no
remainder interest, no reversionary interest, or no
executory interest) JGPs house.
D- fee simple DETERMINABLE (SUD)
This transfers a fee interest to the grantee but restricts the
future use of the land but violation of the restriction results
in automatic forfeiture and the fee reverts back to the
grantor. It creates a future interest called a possibility of
reverter. SUD language indicates such a fee interest.
Similar to fee simple subject to condition subsequent but
fee simple determinable is automatic forfeiture
A fee simple determinable requires the use of SUD language
so long as until or during the fee period the land is
used only for religious purposes
Any SUD or BOP language in a prior deed that has been
recorded in the propertys chain of title renders title to that
land unmarketable to any future grantee
Today language more specific than just BOP or SUD must be
used to create a forfeitable conditional fee because the law
does not favor forfeiture of title. Courts attempt to construe
the language as a covenant running with the land rather
than as a condition because breach of a covenant results
only in money damages or an injunction but not forfeiture of
title. NYAA 646
If the court finds a condition was created it will attempt to
construe that language as a condition subsequent (BOP)

because breach of a condition subsequent does not result in


automatic forfeiture.
Future interest
A future interest can be created in:
1) Real property
2) Personal property
3) By establishing a trust
A future interest can be assigned by its owner, attached by
creditors.
A future interest becomes a present possessory interest upon a
specific future death, upon a future certain date (death), or upon
a future uncertain event (having children or getting married), or
upon the occurrence or some BOP or SUD condition imposed on a
conditional fee
There a 6 general types of future estates in realty which are
categorized according to whether the property is to return to the
grantor who created the future interest (1-3 below) or whether
the future interest is to pass to a 3rd person.
1) A reversion is a future interest which will or may revert back
to the grantor upon the happening of some future event
2) A possibility of a reverter which is preceded by a fee simple
determinable having automatic forfeiture
3) A right of entry preceded by a fee simple subject to a
condition subsequent (BOP language)
1-3 above are not subject tot eh rule against perpetuities and
can last forever
4,5, and 6 do not return to the grantor but rather the future
estate passes to the third party
4) A vested remainder which usually follow a life estate to A for
life and then to B and his heirs
5) A condition remainder which usually follows a life estate to A
for life, then to Bs children but B has no children
6) A remainder interest following a fee simple determinable or a
fee simple subject to a condition subsequent (BOP) that do
not revert back to a creator but pass to a 3rd person. These
are called executor interest.
4 and 5 above are remainder interests that follow life estates but
6 is a remainder interest that follows a BOP or SUD conditional
fee
Future interest passing to someone other than the grantor (4,5
and 6 above) are limited by and may violate the rule against
perpetuities.
Problem: Ts will gave black acre to A for Z s life and upon Zs
death to X. What interest (estates) has T created? A has a

present life estate during Zs life and X has a vested remainder


future interest. X is remainder interested is vested and not
continent because:
a) A- X is ASCERTAINABLE within the RAP period (Zs life
ends, dies)
b) B- X is in BEING, alive or is conceived within the RAP
period
c) C- Xs future interest is CERTAIN to happen (Zs death)
To A for life, then to the children of A. A had 1 child B.
A has a present interest (life estate) and B has an ABC vested
remainder which is subject to open, that is Bs vested future
interest is subject to partial defeasance, if A has more
children during As life Bs remainder interest is vested
because it would become a present possessory interest upon
a future certain invent (As death) and it would pass to
someone (B) who was in being and ascertainable (AB in ABC).
However if A had no children then the future interest crated
would be a contingent remainder (no ABC)
To A for life, then to B and his heirs. But if B dies without
children (condition subsequent) then to X.
This is a vested remainder in B subject to a condition
subsequent
In her will G a widow conveyed black acre to A for life, remainder
to B if B survives A.
1) A has a present possessory life estate.
2) B has a future interest because it is not capable of present
enjoyment with is a contingent remainder because Bs
interest is subject to a condition precedent that is not
certain to happen (B must out life A)
3) G has impliedly created a reversion because if B dies before
A then the property will revert to Gs estate when A dies.

Trusts***
Trusts can be set up during the creators life, which is called an
intervivos trust, or it cant be established at the creators death, which
is called a testamentary trust
In NY trust are subject to the rule against perpetuities RAP, but in 24
states perpetual or dynasty trust can be created which allow trust to
be continued for 100 plus years.

A trust must be funded with property or money delivered to the


trustee. A trust instrument alone cannot establish an enforceable trust
until it actually possesses assets delivers to the trustee
A trustee cannot sell to or buy from the trust unless:
1) Expressly authorized by the trust; or
2) Approved by the surrogate
Absent 1 or 2 above such a transaction can be rescinded by an
unhappy trust beneficiary and under the No further inquiry rule
The surrogate will automatically vacate the transaction and will not
inquire into its fairness
A trustees investments must be prudent but generally no single
investment is prudent or imprudent, instead the surrogate evaluates
the overall investment strategy of the entire trust portfolio based on
TINDAD:
1) T- TRUST TERMS
2) I- INFLATION (stock market)
3) N-NEEDS of beneficiaries
4) D- DIVERSITY of investments
5) A- AMOUNT of the trust
6) D- the trust DURATION
All trusts in NY are presumed to be Spendthrift (protects beneficiaries
from their own stupidity from buying) trust, which shield trusts assets
form the beneficiarys creditors. A beneficiary cannot assign away trust
income before it is received and creditors cannot seize trust corpus or
income accept for 1010SENATE:
1) 10- 10% of distributed trust income can be seized by the
trust beneficiarys judgment
2) 10- trust income in excess of $10,000 can be assigned away
3) S- SELF-SETTLED trust
4) E- EXPRESLY made non spendthrift
5) N-NECESSARIES
6) A- ALIMONY
7) T- federal income TAXES (not exempt)
8) E-EXCESS income

Trust Litigation
Most frequently trust litigation arises when a beneficiary
attempts to TIP a NY trust:

1) T- when an income beneficiary or the settlor of an intervivos


trust seeks to TERMINATE the trust. Generally court approval
is required. Absent contrary language in a NY trust the settlor
is not entitled to freely revoke the trust but must first contain
the consent of all beneficiaries who have a present or future
interest in the trust.
a. If a beneficiary is an infant or is mentally incompetent
then because she lacks the legal capacity to consent
that trust cannot be terminated
b. Doctrine of worthier title. Where the remainder interest
for an intervivios trust was created for the settlors heirs,
distributes, or next of kin then under this doctrine the
settlors heirs are not sufficiently interested in the trust
and the settlor can revoke it without their consent
c. NY EPL abolishes the doctrine of worthier title and also
applies it as a rule or construction. Whenever the settlor
of an intervivos trust wishes to revoke it without the
consent of beneficiaries described in the trust document
as the settlors heirs or distributees by using worthier
title doctrine these heirs are not given a beneficial
interest in the trust and their consent is not required.
Their remainder interest reverts back to the settlor who
is then free to revoke it
d. In NY there is a strong public policy against terminating
trust, thus when the settlor has died (either an
intervivios trust or testamentary trust) All beneficiaries
must consent to its termination and the TRUST MUST
SERVE NO FURTHER PURPOSE. But NY courts try to find
a purpose to prevent termination. The spendthrift
purpose is the valid purpose for continuing the trust
e. The surrogate can now allow termination of a noneconomical trust
2) I- where the INCOME beneficiary prematurely seeks
distribution of a cumulative trust income. She must petition
the surrogate court for permission
a. Ex. T wills provided over 100,000 in trust and must
accumulate until a beneficiary reaches age 45, however
if he fails to reach age 45 then pay it X.
b. Where trust income is to be accumulated for the
beneficiary but that beneficiary is now without sufficient
means to support herself then the court may order the
withdrawal of a suitable sum from income already
accumulated or as an advancement of income which is
to be accumulated even though Xs contingent interest
may be defeated.

3) P- courts allow an income beneficiary to evade trust


PRINCIPAL. If a trust completely create a standard for such
invasion (I give my trustee discretion to invade the trust
corpus for Bs support, education, and welfare)
a. Where nothing is said in the trust about an invasion
then the court can allow it where the income beneficiary
is not being adequately provided for and the court does
not need the consent of the vested remainder men
Revocable lifetime trust
To avoid the expense and time of probating a will an adult can
execute a revocable lifetime trust during her life by transferring
her property to the trust, giving herself a life estate, naming
herself as the trustee, and giving her the right to amend or the
revoke the rust at anytime during her life or in her will by
specifically referring to the trust. When she dies her property
passes through the trust directly to trust beneficiaries without
having to probate any will.
The revocable life time trust document must be signed and
witnessed by 2 disinterested witnesses (like a will) or with no
witnesses but the creators signature must be acknowledged by
a notary like a deed
The property must be transferred to the trust and if registration
is required for that property (stocks, title to a car, a deed to
realty, or a bank account) then registration must be in the name
of the trust other wise it passes into the decedents probate or
interstate estate
Revocable lifetime trusts do not have spendthrift protection
because they are self-settled trust and are this subject to the
creditors claims against the settlor.
RLTs are testamentary substitutes and will be added back into
the settlors estate solely for the purpose of establishing the
surviving spouses right of election
Rule against perpetuities RAP
RAP is a social policy restricting the right of someone to
perpetually limit and control the future disposition of property
It generally deals with trusts or remainder interest that my vest
too far in the future and which RAP voids for attempting to do so
Under RAP a future remainder interest (4,5 and 6 from above) is
invalid unless it must vest if at all not later then 21 years after
any measuring lives in being when the RAP period began to run.
If there is any possibility that the remainder interest will remain
contingent after the RAP period expires then the future interest is
void form its creation.

If someones life is used to measure when a future interest is to


vest (ex. A life estate) then that measuring life has to be in
being or conceived when the RAP first started to run.
A future interest is validly vested if it is not subject to any
condition precedent after the deaths of the measuring lives in
being plus 21 years [ex. To A for life and then to B 21 years after
A dies, here RAP is not violated]
ABC vesting of the future interest does not have to exist at the
start of the RAP measuring period. Vesting must occur if at all
within the RAP period
o Ex. To a for life and then to her children
A has no children thus As children is not in being and A
is not certain to have any children (it is a contingent
remainder) but this ABC future interest must vest if it is
going to vest at all within the RAP period (within As
lifetime)
If no life estate is used to measure when a future interest is to
vest then by its language it must be certain to vest no later than
21 years from its creation, otherwise it violates RAP.
o Ex. This property shall pass to my friend the next Chinese
New Year of the rabbit; no RAP violation.
Or 30 years form y death- this violated since future
interest cannot vest within 21 years
When faced with an RAP problem determine:
1) When did the RAP period begin to run,
2) Who if any are the measuring lives and whether they were
in being at the start of the RAP period (measuring lives
usually are life estates). A measuring life is a life that
measures when a future interest becomes a possessory
interest
3) At what time will the ABC future interest vest or fail to vest
At common measuring lives had t be human lives and not a pet.
In NY and 38 other states can nor set up trust with the measuring
lives as pets
H set up a trust:
1) To my wife W for life
2) Then to my children for their lives
3) The remainder to my grandchildren none of whom are in
being
Does Hs trust violate RAP?
If this was a testamentary interest then all of the future
interest created (to Hs children and grandchildren) will not
violate the rule against perpetuities because all of the
measuring lives for determining the grandchildren future

interest will have to be in being when the RAP period


commenced (Hs death)
If this was an intervivos trust created during Hs life then the
future interest to the grandchildren would violate RAP because
H is presumed capable of having more children after the RAP
period started to run and those future children would be
measuring lives for the grandchildrens future interest and
thus the future interest is void for violating RAP
RAP does not apply to a future interest if it has the CCROUP:
1) C-COVENANTS see lecture 17
2) C- A remainder interest passing from one CHARITY to
another
3) R- REVERSIONARY interest
4) O- a tenants OPTION to renew a lease NYAA 609. Not
subject to RAP
5) U- A future interest benefiting the US government. Federal
government is not subject to state RAP laws because of
supremacy clause
6) P- PREEMPTIVE RIGHTS of first refusal. This is involving
commercial property not residential in NY.
RAP applies to CORE future interest
1) C- CONTINGENT remainders
2) O- OPTIONS to repurchase contained in a deed
3) R- REMAINDER interest
4) E- EXECUTORY interest
Statutory exceptions to RAP
Under the modern approach a future interest may be
saved from an RAP violation by NY and MBE statutory
exceptions
AFURS
o A- the estate ADMINISTRATION exception
Ex. T left black acre to his heirs living at the
time my estate is fully probated and a final
accounting is rendered. Here the measuring
period for vesting of the future interest has no
measuring lives but rather is measure by an
event (full estate administration) that is not
certain to happen within 21 years.
It is presumed that a estate administration would
be completed in 21 years by statute
o F- FERTILE octogenarian. There is a common law
assumption of fertility exclusive regardless of gender
age, or physical condition
Ts estate left to S for life then to Ss children and
then outright to Ss grandchildren. S is 86. Here

the measuring lives for the grandchildren for the


future interest are S and Ss children
The modern approach permits medical testimony
to establish S was incapable of having more
children. A NY female is presumed incapable after
age 55 but with males there is no age limit. But
courts are permitted to accept medical testimony
to show that male was medically incapable of
procreation
o U- UNBORN widow exception.
Ts will created a testamentary trust To A for life
then to As widow for life then to As issue
(children) who survive As widow who are the
measuring lives?
A and As widow are the measuring lives. As
descendants are contingent remainders in
whom the future interest will ultimately vest.
But Ts request violates RAP because As widow
cannot be determined until As death because
A might marry a much younger woman who is
not in being when T died. Thus the future
interest following her life is void by the RAP
violation.
Under the modern approach it is now
presumed A will marry someone who was in
being at Ts death.
o R- Age REDUCTION contingency.
Ts will left a trust for income for his wife F and
upon Ts death income was to accumulate until Fs
children reaches 21, then paid to children equally.
When T died F had 3 children. Does the trust
violate RAP? Yes, as to the remainder interest,
which was not certain, to vest within Fs
measuring life plus 21 years because Fs child
could be age 3 when F died and thus the future
interest will not vest within 21 years.
Under the modern approach F children will get
their share the moment Fs youngest child
reached age 21 thus avoiding RAP violation
o S-a RAP SAVINGS clause
A RAP violation may be avoided by inserting a
perpetuities savings clause in a will a trust
instrument or a deed. This permits the court to
reform the document and to prevent an RAP
violation. MLO page RP 166

The wait and see doctrine


30 states (not NY) have adopted the uniform probate code
and RST of propertys wait and see approach to any
possible RAP violation.
This allows the court to wait 90 years to see if the future
interest actually vest
In MBE AFURS converts to SAFURS by adding the wait and see
doctrine

LANDLORD TENANT
When realty is leased to a tenant it is treated as the equivalent
of a sale of the property for the term of the lease. At common
law the tenant was obligated to pay rent for the entire lease term
even if the premises were destroyed or the tenant died. Today
this harsh remedy is altered statutorily allowing a tenant to
cancel the lease. A NY residential tenant can always assert a
breach of the covenant of habitability if the residential building is
destroyed (in class question 25 do at home)
Statute of Frauds SMARTFLYS
A lease for a term of longer then 1 year must be in writing signed
by the party to be charged or by her agent whos authority to
sign must be in a signed writing (usually it is placed in a power of
attorney) (See agency lecture 40)
3 different types of tenancy leases:
o 1) Tenancy for years, at least the lease fixes the start
and end of the lease period. This lease starts on march
18, 2014 and expires March 17, 2018. No notice of
termination is necessary to terminate a tenancy for years
because the lease fixes the termination date. This differs

from a periodic tenancy in which the lease is automatically


renewed unless a notice of termination is given.
**At common law (No longer NY) a tenant holding
over even for 1 day in a tenancy for years gave the
landlord the option to renew the lease for another
term which was a very harsh remedy
o 2) A periodic tenancy. A lease or repeated time period of
1 year or less. Usually it is a month-to-month tenancy and
is automatically renewed unless one party gives notice of
termination. The minimum time for a termination notice is
the time period for which rent is paid (ex. 1 month) unless
rent is paid annually where 6 months notice is required.
o In NY notice of termination must be given at least 30
days prior to the expiration of the lease term in
which NY measures back from the end of the lease
period to ensure at least 30 days was given from that
date.
Ex. T paid rent on 1st of the month and on June
15, either the L or T served a termination
notice. Here the earliest termination is July 31st
and not June 30th since the notice was not
served at least 30 days before June 30th
o 3) A tenancy at will which has no fixed duration and can
be terminated by L or T or upon one partys death or by an
attempted assignment of the least. AT common law no
minimum termination notice was required. But NY requires
30 days notice
A tenancy at sufferance is really not a tenancy at all it refers to
that period of time after the lease has expired, where the
holdover tenant continues to wrongfully remain in possession.
The only difference between a trespasser and a tenant at
sufferance is that the tenants original entry was lawful.
If the landlord refuses to accept the holdover tenants rent
checks the tenant becomes liable for the fir market rental value
for the tenants time in possession after the lease expires which
amount may be far greater than the rent the tenant was paying
under the expired lease.
A holdover tenant is also liable for the landlords foreseeable
consequential damages for the lost rental income from a new
tenant that was forfeited because of the tenants holdover
A holdover may also be liable to a landlords new tenant for the
tort of tortious interference with a contract (See lecture 20)

Landlords tort liability

An out of possession landlord is not liable in tort for injuries on


the premises except for POLICE
1) P- where the lease is for a space that will be open to the
PUBLIC (a store or shopping center). Here the landlord
must inspect and repair any dangerous conditions before
surrendering possession to the tenant
2) O- for injuries arising OUTSIDE the premises as a result of
a dangerous defect on the leasehold which the landlord
knew or should have known existed when the leasehold was
surrendered to the tenant (a hanging gutter over the
sidewalk, or a sign that was no secure falling onto the street
after the tenant took possession
3) L- Injuries caused by LATENT defects of which the landlord
knew or should have known existed and the tenant did not
have a reasonable time to discover and repair it
4) I- where the tenants INTENDED use of the leasehold
creates and unreasonable risk of harm to others. And L was
aware of that intended dangerous use when that property
was turned over to the tenant. NYAA 784
5) C- where the landlord has multiple leases in the same
building then L is liable for injuries arising on the COMMON
passageways (lobbies, halls, stairways, or elevators.
6) E- Where the landlord EXPRESSLY contracted in the lease
to make repairs but did not after being notified by the
tenant and the disrepair proximately caused injury

Implied covenants in a lease


o Even though is silent on these issues, a landlord gives HEARS
implied covenants on a lease
o There are also implied covenants in a sale of goods contract
written in invisible ink CIDER
o There is a common law implied covenant that the tenant will
keep the premises in good repair to prevent waste from the
elements (Wind, water, or snow). This covenant did not impose a
duty on T to make every repair but only those repairs necessary
to prevent permissive waste or to prevent personal injury
o NY commercial tenants impliedly covenant to repair but this
implied covenant does not extend to structural repairs of a
permanent, substantial, or unusual character. Thus a NY
commercial tenant did not have to pay the cost of removing
contamination asbestos in a building or a leaking underground oil
tank. NYAA 659
o A NY residential lease (including co-ops but not condos) because
of the absence of a landlord tenant relationship in a
condominium there is a non-waive-able implied in law covenant

o
o

of habitability that the landlord will maintain the premises in a


manner fir for human habitability and will repair all conditions
that threaten the safety or health of tenants (rodents, bed bugs,
mold, insufficient heat, electricity, or water, excessive smells,
noise or second hand smoke from a neighboring apt. this
covenant does applies to inhabitability caused by nature
Breach of this implied is a defense to the L eviction proceeding to
the tenants nonpayment of rent. Expert testimony is not
required to establish breach of the lease and the court will
readjust the prior rent on the basis of its uninhabitable condition
In a jurisdiction that does not the implied covenant of habitability
for resident leases or NY commercial leases. If L expressly agrees
to make repairs in the lease but then neglects to do so the
tenants remedy is to sue for the cost of the repair after the
tenant repairs it. T cannot offset the cost of the repairs from the
monthly rent from the covenant to repair and the covenant to
pay rent are independent covenants
The exception is a breach of the implied covenant of
inhabitability and residential leases
Landlords have a limited duty to prevent FORESEEABLE third
party crimes by doing something as simple as installing a
peephole on the tenants door, locks to the door of the outside of
the building or by lighting a dark entryway
In order to be foreseeable prior similar crimes must have
occurred in that building. Ex. In a neighborhood where there is
high drug activity where the plaintiff was sexually assaulted in an
apartment elevator, this was not foreseeable and the landlord
was not liable. It was conceivable, but conceivability is not the
equivalent of foreseeability NYAA 785-787
Every landlord impliedly covenants quiet enjoyment. That is
neither the landlord nor someone with a superior title will
interrupt the tenants exclusive right to possession during the
leasehold. In order for this covenant to be breached the tenant
must be actually or constructively evicted from the leasehold.
Actual eviction occurs when a tenant is totally or partially
physically deprived of possession by the landlord. Ex. Changing
the locks on the door, partitioning off part of the least hold,
taking away the tenants parking space, taking away the use of a
freight elevator
Where there is a total or partial actual eviction the tenants
obligation to pay rent immediately ceases and the court will
not apportion the rent of a wrongdoer unless the landlords
taken was de minimus NYAA 656
If a NY tenant or cotenant (a tenant in common, a joint tenant, or
tenant by the entirety) is disposed or locked out by a landlord or

o
o

by the other cotenant who does not bother to go to court then


the NY damaged tenant can recover triple the damages
A NY commercial tenant can expressly give the landlord a selfhelp remedy to evict the tenant provided it is done without a
breach of the peace. NYAA 653
Under the English rule a landlord impliedly promises to give a
new tenant actual exclusive possession on the first day of the
lease under the American rule the landlord agrees to turnover
the right of possession which puts the burden on the new
tenant to evict a holdover tenant. NY follows the English rule,
and MBE follows the American rule.
Constructive eviction occurs when the landlord substantially
impairs the benefits of the lease and the leasehold is rendered
unbearable. Ex. No heat in the winter, no ac in summer in a
building with sealed windows, no running water, or no electricity,
or no elevator in a high-rise building.
o The elements for a constructive eviction are:
1) Give the landlord notice and a reasonable time to
correct it, and
2) The tenant must vacate the leasehold because a tenant in
possession cannot assert constructive eviction and remains liable
for the rent as long as the tenant stays in possession
NY residential tenants do not have to rely on constructive
eviction and can stay in the premises and refuse to pay rent
because of the uninhabitable condition and when L sues to evict
the tenant the tenants defense is breach of the implied warranty
of habitability
A landlord holds a tenants security deposit as a trustee and if L
does not deposit it into an escrow account but instead comingles
it with a landlords personal funds then L commits the tort of
conversion and the tenant can demand its immediate return
A NYs tenant security deposit is a personal indebtedness of the
original landlord except in residential buildings with 6 or more
apartments in which the duty to repay the security deposit runs
with the land and becomes the obligation of the new landlord if
the apt building is sold. NYAA 657

Assigning and Subletting a lease*** multistate always test on


this
o Absent contrary language in a lease, a lease is divisible by will,
descendible by intestacy and alienable by subletting or assigning
o A lease may expressly prohibit subleasing or assigning without
the landlords consent, which allows the landlord to arbitrarily
withhold consent.

o A prohibition against just 1 (but not both) does not impliedly


prohibit the other
o If a landlord consents to the tenants assignment without
expressly restricting any further future assignments of the lease
then under the rule of Dumpors case that a subsequent
reassignment may be made without the landlords consent.
Dumpors does not apply to the landlords consent for subleasing
o When a lease is assigned or sublet then the covenants in the
lease that run with the land are imposed on the new tenant in
possession:
1) To make repairs
2) To pay rent
3) To pay taxes to the landlord
o Likewise an option the renew or to buy property runs with that
land to the new tenant
o A lease assignment is where the tenant conveys the entire time
remaining in the least term retaining no reversionary interest of
any amount
o A sublease is where the tenant conveys only part of the
remaining lease term and the tenant retains some reversionary
interest even for only a month a week or a day
o If a new york landlord of a RESIDENTIAL BUILDING having 4 or
more apartments arbitrarily refuses to consent to an assignment
it relieves the tenant form any further liability and T may
terminate the lease
o If such a landlord unreasonably refuses to consent to a sublease
in a building then the tenant can go ahead and sublet without
the landlords consent and is not in breach of a lease.
o When l&t enter a lease there is direct privity of k and also privity
of estate (passing the keys to the premises)
o Where there is an assignment by the tenant then privity of estate
between L and the original tenant is extinguished. Why? Because
when the assignee finishes the lease term he takes the keys to
the landlord and not the original tenant. But the original tenant
remains liable for any breaches of the lease under privity of k
and acts as a surety by operation of law for any rent that is not
paid by the assignee. See assignment of ks
o The assignee is not liable to the original landlord under privity of
k because they never directly contracted, however, the assignee
is liable to the landlord for the breach of conveyance in the lease
that run with the land under privity of estate.
o But only for those breaches that occurred while the
assignee was in possession of the leasehold.

If the assignee reassigns the lease and moves out then


she will not be liable to the original landlord for any
subsequent breaches in that least because there no longer
exist privity of estate (passing of the keys)
o When the original tenant subleases then there is neither privity
of k nor privity of estate between the subtenant and the original
landlord.
o The original landlord cannot recover a money judgment
against a subtenant for unpaid rent, however here is privity
of estate between the tenant and the subtenant (they pass
the keys) and there is also privity of k under an express
contract (a written sublease or an implied in fact contract
that the subtenant would pay the rent for the period of the
sublease
o If an assignee or a subtenant expressly assumes the lease terms
then the original landlord can sue the assignee or subtenant for
any breaches of the lease during the lease period, because L is a
third party beneficiary of the assumption agreement.
o Apply these same rules when a buyer assumes a mortgage in a
sale of land transaction
o

Waiver
o A landlords acceptance of rent with knowledge of a tenants
violation of a lease term constitutes a waiver of the tenants
default. Ex. The landlords acceptance of a late payment of rent
or when a landlord did no consent to tenants assignment but
accepted rent payments from the assignee
Federal Fair Housing Act
o This act prohibits discrimination in the sale rental or zoning of
residential housing on the basis of race religion, color, sex,
handicap, family status (mother), or national origin, or people
with disabilities
o Some owned or occupied buildings with no more than 4
residential units are exempt, notices for sale or for rental
indicating this discrimination are unlawful
Express terms in a lease.
o If a lease gives the tenant an option to renew the lease by a
stated date then in multistate this condition must be strictly
construed and a day or week late is too late.
o However, NY allows an equitable renewal but only if the tenant is
in possession even though the tenant is late in exercising the
option provided the tenant has made substantial improvements

on the leasehold with the intent to renew the delay was brief and
the landlord was not prejudiced by the late renewal. NYAA 666
o A lease can expressly provide
1) To limit the tenants use of the premises to a stated purpose
only. It is a material breach for a tenant to use leasehold
other than the stated purpose.
2) To require the tenant to obtain insurance [ex. Fire, liability,
or insurance from terrorist attack]
3) Provide for rent acceleration (an acceleration clause) if
there is a material breach of the lease. Here the landlord
can demand 100% of the future lease payments remaining
in the lease. It is enforceable and it is not considered
unconscionable or punitive especially in commercial leases
where was represented by an Attorney.
a. However, by invoking the acceleration clause cannot
also terminate the lease demand that the tenant
surrender possession for the balance of a lease term.
4) Allowing the prevailing landlord to recover reasonable
attorneys fees if the tenant breaches the lease but the
landlord must substantially (totally). (90% was not
prevailing)
a. In a NY residential lease there is an implied in right
reciprocal law in attorneys fees if the tenant prevails
5) Allowing a tenant a specified time (10 or 20 days) from the
landlords service of the notice of breach for the tenant to
cure the breach.
a. Ex. A tenant performing alterations without the
landlords prior consent. Changing the use of the
leasehold or creating a nuisance such as smells from
a restaurant. If the cure period expires and the court
subsequently finds that the tenant was in material
breach of the lease then the court is powerless to
reinstate the lease of the tenant failed to cure the
violation during the cure period. The tenant by law
becomes a holdover tenant at the expiration of the
cure period.
b. The NY tenants remedy is to commence a declaratory
judgment action in the Supreme Court and move for a
TRO to stay the cure period. This stay preserves the
cure period allowing a tenant to litigate the landlords
claim without forfeiture of the lease provided the
application for the Yellowstone stay was made before
the cure period expired and the tenant can show it
has the ability to cure the breach.
c. However, the following have been found non-curable
breaches:

i. 1) Nonpayment of rent;
ii. 2) Failure to maintain insurance; or,
iii. 3) An assignment or sublet that violates the
lease
6) New York City resident leases the tenant does not have to
move for a stay because the law gives the tenant an
automatic 10-day notice to cure before giving an order of
eviction after the court finds a breach.
Surrender of the lease
If the tenant abandons a leasehold prior to its expiration
date L has 3 options:
1) In NY (minority view) do nothing and sue the tenant for
the unpaid rent under the lease because there is no duty
to mitigate a tenants damages.
a. In MBE a landlord has a duty to mitigate damages
especially for residential tenants. NYAA 658.
2) Accept the tenants surrender and then lease the premises
for the landlords benefit thereby releasing the tenant
from further rent liability.
a. The Landlord will do this where rents have increased
and a landlord can make more money on a new
lease.
3) Release the benefits of the tenants lease and sue for the
difference but only if the lease expressly gives the
landlord this authority
When a written lease has longer than 1 year remaining then
to validly surrender it there must exist a signed writing
signed by the party to be charged with breach of the
release agreement. NYAA 669
1) An exception to this rules is where there is a surrender by a
operation of law arising from the activates of the landlord which
are inconsistent with a continuation of the existing tenancy.
a. Ex. In a written lease L leased a store to T for 4000 a month
for 2 years T paid rent for 8 months then left. L immediately
leased it to X for 3000 a month. Can L sue T for the different
in the 2 rents? No, there existed a surrender by operation of
law when L leased it to X who took possession and control
this created a new L&T relationship inconsistent with a
continuation of Ts original lease
b. If the lease expressly allowed the landlord to re-let the apt
there is no surrender of law and T would have been liable for
the 2 rents.
c. .If T defaulted in paying the rent and refused to vacate. L
sued the tenant and obtained a warrant of eviction and T

was evicted. L then leases it to X as Ts agent. Is T liable for


the difference in the two rents? No, eviction by a landlord
discharges the tenant from all liability unless the lease
contained a survival clause that a tenant would remain liable
after an eviction.
d. What if T left after 3 months and the premises burned
downed next month through no fault of the tenant. What is
the tenants liability? Only 1 month because in most sates
(NY) by statute when a leasehold is substantially destroyed
through no fault of the tenant then the tenant has the option
of canceling the lease this tenants right can be waived in a
commercial lease but not in a residential lease
MORTGAGES****
There are 3 basic types of mortgages:
1) A vendor purchase money mortgage where the seller gives
the buyer a mortgage
2) Is a third party purchase money mortgage where the bank
finances the byers purchase price for the mortgage
3) Is a mortgage where existing land is used by the owner to
secure a debt or a loan
a. A mortgage is security for a loan and is most frequently
placed on the borrowers realty but the mortgage can
be placed on a 3rd persons realty to secure the loan of
another borrower. OPE 4 question 27
b. When a buyer of realty finances a purchase price or a
borrower finances a loan by using real estate as
collateral then 2 separate documents are executed by
the buyer:
i. A note promising repayment of the loans
ii. A mortgage to secure repayment of the loan.
The mortgage is then recorded in the borrowers property
chain of title
A mortgage on new construction frequently is given for future
advances (progress payments as the construction is completed)
where the bank does not immediately turnover the full amount of the
loan but spreads the payments out as the loan progresses.
o If they are mandatory then the mortgage has priority over any
subsequent interest recorded in the chain of title. However, if the
advances are optional with a lender then its priority on the realty
over subsequent interest is only to the extent the advances were
made before receiving actual notice that a subsequent lean or
subsequent mortgage has attached to the realty

Once a mortgage and note are executed then the mortgagee (the
lender) is free to assign (sell) both instruments together. The mortgage
always follows the note when it is assigned an assignment of just the
mortgage without an assignment of the note is a nullity such an
assignee lacks standing (CPLR 3211 a3) to commence a foreclosure
action. A mortgage is merely security for a debt and it cannot exist
independently of the note
A deed based on a forgery is void it is a nonevent in the eyes of the
law. No statute of limitations
A mortgage based on a forged deed is likewise invalid. Many properties
also put second and 3rd mortgages on the property but these
subsequent mortgages are .and if the 1st is foreclosed the 2nd and
third are extinguished
A subsequent alteration in the terms of the first mortgage must be in a
signed writing. If the alteration merely gives the borrower more time to
pay then the subsequent subordinate mortgages are subsequently filed
money judgment liens cannot complain since they are not prejudiced
by the change. However, if the modification increase the interest rate
or amount of the loan then the subsequent liens or mortgages will be
prejudice and will not be bound by such a change and will not have
priority over the earlier mortgages to the extent of the earlier
modifications
The majority position is that mortgages cannot be prepaid unless the
instrument expressly allows prepayment NYAA 681. NY statutorily
exempts residential mortgages and automatically allows prepayment
of residential mortgages
The execution of a mortgage conveys no title but merely creates a lien
on the realty to secure repayment of the mortgage debt. A minority of
jurisdictions recognizes a title mortgagee as compared to a lien
mortgage in which title to the property passes to the bank (mortgagee)
solely as security for the debt. Thus is one joint tenant with the right of
survivorship mortgaged his interest in a title mortgage jurisdiction it
would convert the joint tenancy into a tenancy in common
extinguishing the right of survivorship
If mortgage real estate is transferred by sale, gift, or decedents estate
then it passes title to that grantee subject to the existing mortgage
that grantee does not become personally liable for the payment of that
debt if the mortgage is foreclosed but the original mortgager who
signed the note always remains liable if the debt is not fully paid.

In a minority of jurisdictions if mortgaged land passes by will or by


intestacy then the grantee of the property has a right of equitable
exoneration to compel the decedents estate to pay off the mortgage.
In most jurisdictions (NY) unless the will clearly provides for equitable
exoneration then the party inheriting the realty takes it subject to
existing mortgages. A general provision in a NY will directing the
executor to pay all of the decedents debts does not impliedly give rise
to exoneration of the mortgage on the decedents realty.
A NY grantee of realty is not personally liable for an assumed mortgage
unless the sellers deed fully informs the buyer of TIPS
o T- TIME remaining on the mortgage
o I- INTEREST RATE
o P- the PRINCIPAL amount of the debt presumed
o S- must be SIGNED by the grantee
Mortgage real estate is freely transferrable, but if the mortgage
contains a do on sale clause it gives the lender the option accelerate
the debt if all or part of the property is sold without the lenders prior
written consent
Usually do on sale clauses are not activated by a transfer to:
o A spouse of children of the borrower
o A borrowers relative caused by a borrowers death
o A joint tenancy or a tenancy by the entirety where the borrower
dies and the land passes to the surviving concurrent tenant
o The borrowers revocable lifetime trust
5 rules on NY owner occupied Home foreclosures
1) As a condition precedent to commencing the foreclosure, a 90
day notice to cure the default must be mailed by both
registered and certified mail and also first class mail. It must
contain at least 5 counseling agencies in the borrowers
neighborhood on which the borrower can seek advice on the
foreclosure
2) Proof of service even in hand service must be filed with the
court within 20 days
3) A mandatory settlement conference within 60 days from when
the affidavit of service was filed requiring both parties to
negotiate in good faith in an attempt to reach a resolution (a
loan modification)
4) When process is served it must also contain on colored paper:
a. A warning about foreclosure rescue scams; and
b. A warning that any further payment of the monthly
mortgage will not stop the foreclosure action

5) The banks attorney must now filed an affirmation (affidavit)


that she has communicated with a named bank official who
has affirmed that the documents for foreclosure has been
personally reviewed and our accurate. The NY attorney must
then affirm to the best of her knowledge based on her
personal inspection of the banks documents that they are
complete and accurate. CPLR 3012-b
Mortgage default
o A mortgage default for non-payment can be cured simply by
tendering the unpaid arrears, plus interest at anytime before the
mortgage debt is formally accelerated under the notes
acceleration clause declaring the entire amount of the note due
o Even after the bank has accelerated the mortgage debt the
borrower always has the right under the doctrine of EQUITY OF
REDEMPTION to pay off the mortgage at anytime before the
property is sold at the foreclosure sale
o This payment by the borrower of the full amount of the mortgage
debt requires the bank to issue a satisfaction of mortgage to be
recorded in the propertys chain of title this saves the borrowers
equity in the realty
o In a minority of states this right to redeem is extinguished once a
valid foreclosure sale takes place
o 33 states (not NY) have enacted statutory rights of redemption
allowing the debtor to redeem the property after the foreclosure
sale anywhere from 10 days to 18 months by paying the amount
that was paid at the foreclosure sale
o Upon the debtors default in paying the note the creditor may
either:
1) Sue the borrower personally in a action for money damages
for the full amount of the debt; or
2) Sue in equity to foreclose on the mortgage where in those
states requiring judicial foreclosures (NY) the court will grant
foreclosure judgment, appoint a referee to sell the realty at a
foreclosure sale and to use the proceeds to pay off the note
of the sale
3) A mortgagee cannot simultaneously pursue both remedies
o A court will not set aside a foreclosure sale because the price
was inadequate, unless the price shocks the courts conscience.
Ex. $5,000 for an $80,000 farm shocked the courts conscience
o NY and 20 other states require a judicial foreclosure ($) but the
other 30 states allow a less expensive and quicker method nonjudicial foreclosure, which is known as a power of sale
foreclosure.

o A court is not involved in this foreclosure and notice is by mail. It


allows either the lender or a trustee designated under a deed of
trust, signed by the borrower, when the mortgage was first
executed to sell the property at public auction without any
judicial proceeding or supervision.
Deficiency judgments
o M foreclosed on a $90,000 mortgage, the property was sold at
foreclosure for 50k. Can M seek the deficient judgment for 40k in
a subsequent law action?
o In an action for a deficiency judgment the court disregards the
price paid at the foreclosure sale. M the bank can recover only
that amount of the mortgage debt which exceeded the fair
market value of the property (the property is underwater)
o The mortgagee has the burden of proving the fair market value
of the property when the bank sues for a deficiency the court
must reduce the mortgage debt by the greater of either its fair
market value or its price at the foreclosure sale in order to
determine if there is any deficiency
o In NY a deficiency judgment may be obtain only with the courts
permission by way of an OSC signed by the judge and served on
the debtor within 90 days from the new york foreclosure deed
was delivered to the purchaser. If the mortgagee does not timely
commence and serve then the proceeds from the mortgage sale
are deemed to fully satisfy the mortgaged debt
o If the property is sold at foreclosure for more than outstanding
mortgage debt the surplus is used to pay off any subordinate
mortgages liens or judgments that were recorded on the
property after the first mortgage was recorded. Any moneys
remaining go to the mortgagor.
o The purchaser at the foreclosure sale takes the same title that
existed back on the date that the mortgage was first recorded.
The foreclosure wipes out any subsequent interests that were
filed in the chain of title after the mortgage was filed. Ex. 2nd
mortgages, judgment liens, easements, or commercial leases
provided the holders of those subsequent interests were properly
named and served in the foreclosure proceeding. They are
necessary parties to the foreclosure action and the judgment will
not affect their interest, which will survive the foreclosure sale if
they are not properly noticed. Subsequent interest in the chain
title will survive a foreclosure if:
1) The interest was recorded prior to the mortgage being
recorded; or
2) No notice was given to the subsequent interest

o Under new federal and state laws bona fide residential tenants
whose rent is fair and not substantially below market value are
protected from eviction by the foreclosure purchaser as long as
the rent continues to be paid.
Equitable mortgages.
o An equitable mortgage is a transaction that has the intent but
not the form of a mortgage that equity nonetheless will treat as a
mortgage
o In an effort to circumvent the mortgagors right of the equity of
redemption as well as to avoid the time and expense of a judicial
foreclosure sale, lenders and sellers of real property who
ordinarily would take back a mortgage have created mortgage
substitutes in an attempt to clog or prevent the equity of
redemption in the event of a default.
o To prevent this clogging a deed or k of sale executed to secure a
loan will be treated as a mortgage, which must first be foreclosed
o D was desperate to borrow 50k, D went to N a wealthy neighbor
to borrow money, N proposed one of the following arrangements
to secure the loan:
1)
D would execute a 50k note and simultaneously give N an
option to buy Ds property for a substantially reduced price if
D defaulted. Equity would treat this arrangement as an
equitable mortgage requiring N to foreclose in order to wipe
out Ds equity of redemption.
2)
D gives N a deed to the property to immediately record, or
hold in escrow, if D defaults in payment of the loan. This is
referred to as an equitable mortgage security deed. It is
called a deed in trust when the deed is held in escrow by a 3rd
person.
a. Generally these deeds make no mention of the debt or
of the proposed retransfer back to D when the debt is
fully paid. Equity treats these deeds as mortgages
which must be foreclosed to extinguished Ds equity of
redemption
3)
A third type of equitable mortgage arises when B buyer
finances a purchase price S seller by entering into an
installment sales k permitting B to take possession of the
property while paying off the total purchase price. Execute
deed only when purchase price is paid in full. T
a. The installment sale k generally contain a forfeiture
clause in the event of Bs default which terminates the
contract and allows S to retain all prior payments as
rent or as liquidated damages.

Concurrent Estates
o A concurrent estate exist when 2 or more persons hold a
simultaneous present or future interest in the same piece of
property (not just real property)
o There are 3 types of this plural interest:
o 1) Tenancy in common,
o 2) Joint tenancy; and
o 3) Tenancy by the entirety
o Each cotenant has an indivisible right to possess the entire
parcel even though each owns only a fractional interest. No one
owns any particular portion of the property
o A joint tenant or tenant in common may sell, mortgage, or lease
his undivided right of possession but may not unilaterally sell,
mortgage, or lease the entire parcel or any specific portion of it
to the exclusion of the other cotenants
o Cotenants who obtain their interest from the same document are
fiduciaries of one another thus a cotenant who acquires superior
title to the property at a tax or mortgage foreclosure sale holds
titles for the benefit of the other cotenants provided they
consider their pro rata share of the purchase price
Tenancy in common
Arises where multiple parties concurrently own realty with no
right of survivorship. When one TC dies her interest in the
property passes through her estates and not to the surviving TCs
Joint tenancies
Like TC, JTS each hold an undivided possessory interest but they
also enjoy a right of survivorship. Upon the death of one JT the
decedents interest in the property passes to the surviving JTS
rather than through the decedents estate
Rule: at common law there was a presumption that when
property passed to 2 or more persons who were not married it
passed to joint tenants. Today in every state there is a statutory
presumption that absent specific survivorship language property
passing to 2 or more unmarried persons by sale gift, intestacy, or
will passes to tenants in common.
To create a JT (or TE) 4 unities must exist. PITT:
o P- unity of POSESSION. Each cotenant has an undivided
to possess the entire property
o I- Unity of INTEREST. Each cotenant must have the same
percentage of interest as to the quality and quantity of title
o T- Unity of TIME
o T- Unity of TITLE

During her lifetime a JT or a TC may convey her interest without


the consent or even the knowledge of the other JTs, the affect of
such a conveyance will change the new cotenants interest into a
TC with respect to the remaining joint tenants.
Neither a JT nor a tenancy by the entirety may devise by will her
interest in the realty because the interest automatically
extinguishes upon death and passes by operation of law to the
survivor

Tenancy by the entirety


A TE is similar to a JT, except:
o 1) A TE requires an existing valid marriage; and
o 2) Neither spouse may unilaterally destroy the TE without
the consent of the other; and
o 3) A JTs judgment creditor may bring a partition action
and have the JTs interest sold, where as one TE spouses
judgment creditors cannot.
A judgment lien foreclosed against one spouse is enforceable by
partition only if the TE is terminated and the debtor spouse
survives
No words of survivorship need be express to create a TE, all that
is required is that the deed name 2 spouses. The deed does not
have to contain the survivorship or husband or wife. In NY a
transfer of realty to spouses automatically creates a TE unless it
specifies a TC or a JT
The transfer of property to 3 people, 2 of whom are spouses
creates a interest in the spouses and a interest in X the
third person.
In MBE a TE may exist in personal or real property but in NY only
in real property or shares in a co-op.
An MBE spouse lacks the capacity to unilaterally transfer title or
mortgage an interest in a TE
NY allows a spouse to unilaterally mortgage convey or encumber
his or her own survivorship interest subject to the other spouses
right of survivorship, which can totally wipe out the transferred
interest. The buyer or mortgagee cannot partition and receives
only a contingent survivorship interest (contingent on the
mortgagor surviving the other spouse)
If it is later discovered that the parties were not in fact married or
that the marriage was void when the couple took the property
then No TE ever existed. To determine how the parties then hold
the property look to the intent expressed in the deed and apply
the general rules concerning TCs and JTs

On NY deeds executed on or after September 1st 1975 that


purport to convey to spouses who are not in fact married. NY
presumes that a joint tenancy was intended.
A TE is defeated by the 4Ds:
o D- Death of one spouse where by a 100% interest vest in
the survivor. Simultaneous of both spouses defeats the
survivorship element and the property is distributed as if it
was held by TCs (through the 2 estates)
o D- when one spouse becomes a DEBTOR in bankruptcy
o D- a DUAL transfer in which both H and W take part
o D- a MBE DIVORCE or annulment, or a NY DIVORCE,
annulment, dissolution, or separation judgment (not
agreement), which automatically converts a TE into a TC.
Estoppel by deed
If a JT or TE improperly conveys more than its fractional interest
then the grantor is estopped from denying the effectiveness of
the earlier deed if ultimately he is the sole survivor. Full title
immediately vest in the grantee under the doctrine of estoppel
by deed or the after acquired title theory

Concurrent tenants are jointly and severally liable to a person injured


on the property by a condition that they knew existed or by a
reasonable inspection should of known existed.
When a specific request or real property is made in a will or where a
decedent dies intestate prior to the property vest immediately by
operation of law in the specific legatees or intestate distributees. Any
tort claims arising out of the property should be asserted against the
individual beneficiaries who now own title and not against the estate
Ordinarily, cotenants are jointly and severally liable for injuries that
occur on the realty; but, where 1 cotenant has exclusive possession or
control the other cotenant is not personally liable to the plaintiff
A concurrent tenant voluntarily out of possession has no right to
demand rent from a tenant in possession, unless the tenant in
possession agreed to pay rent or wrongfully ousted or denied access to
the other cotenant
Where the cotenant in possession wrongfully oust or denies access she
must account to the other cotenants for their share of the market
rental value at the time of denial
In MBE a cotenant in possession may only recover for tax, mortgage,
and repair payments that exceed the fair market rental value of the

property. In NY the cotenant in possession is entitled to immediate


reimbursement regardless of the rental value
A cotenant is accountable to other cotenants for rents collected from a
third party in possession because each cotenant has an equal right to
share in income produced by the realty
A cotenant in possession that makes unnecessary improvements
(swimming pool) without the consent of the other cotenants is deemed
a mere volunteer. There is no immediate right to seek contribution
from the other cotenants for such improvements
However, when the property is ultimately partitioned or sold the
volunteer may be reimbursed for:
1) The extent that the improvements increase the selling price;
or
2) The cost of the improvements, whichever is less
Partition
Tenants in common and joint tenants are free to partition the
property at anytime by a COW:
o C- COURT DECREE. When cotenants cannot voluntarily
agree on a division the court will render a final accounting
after weighing the equities. Equity favors dividing the
property in-kind if it is capable of physical division if
partition in kind is not possible or practical the court will
order the property sold and equitably divide the proceeds
o O- ORAL agreement between all of the cotenants. Oral
partition agreements maybe enforced on a part
performance or estoppel theory.
o W-a signed WRITING voluntarily portioning the property
Real estate broker
In NY in order to sue for a real estate broker commission. The
broker must plead and prove that:
o 1) She was a duly licensed NY broker when the cause of
action arose, and the services were performed by a
licensed real estate broker or a licensed real estates sales
person;
o 2) The broker was the procuring cause of the sale, meaning
he must be the direct and proximate link. Simply
introducing the buyer and seller is not enough to earn a
broker commission (unless the broker has an exclusive
right to sell or exclusive agency)

Absent a statute a real estate broker contract does not have to


be in a signed writing because the agreement does not create or
affect an interest in real property. It merely appoints an agent to
find a buyer for the property. NY requires a writing but expressly
exempts licensed real estate brokers and sales persons as well
as attorneys form the obtaining a rider or from the writing
requirement
Where a brokers agreement makes no mention as to when the
broker earns a commission. Then it is earn when she produces a
RAW (ready to buy, finically able, and willing to agree to sellers
terms) buyer
The broker does not impliedly assume the risk of the partys full
performance and once she produces a raw buyer who has a
meeting of the minds with the seller she has earned her
commission. The commission is earned even if title never passes,
title is unmarketable, or the property is destroyed prior to the
closing
To protect the seller the brokers k could provide that the
commission is not earned unless or until title passes. Even with
this language a seller who willfully defaults after signing a k with
the buyer will owe a brokers commission
If a broker k does not have a fixed definite duration it is at will
and can be terminated at any time
There are 3 types of broker ks:
o 1) The exclusive right to sell, which requires that all sales
negotiation pass through the broker. Here the seller
becomes liable for a commission if the realty is sold even if
its the seller who found the buyer and brought about the
sale
o 2) Exclusive agency, which deters the seller form using the
services of another broker. If another broker brings about
the sale the broker with the exclusive agency may also
seek a commission. However, the seller may sell the
property herself and will not be liable for a commission
o 3) The non-exclusive agency, where the broker earns the
commission only if she herself procures a buyer RAW.
A broker representing a real property seller is entitled to the
agreed upon commission as a matter of law not withstanding
that the broker showed other properties to eventual buyer prior
to the sale

Real Property ks
o Caveat emptor or buyer beware requires a buyer to take care
and diligently inquire into the structural and environmental
condition of the property and neighborhood before entering the
real property k
o The caveat emptor doctrine precludes a claim for rescission by
the purchaser for structural or other defects that were:
1) Open and obvious,
2) Discoverable by reasonable inspection of either the
premises or public records and the purchaser has an
unimpeded opportunity to inspect and;
3) Not concealed or hidden by the silent seller
o A seller who makes misrepresentations or fraudulently conceals
defects may not rely on caveat emptor
o An as is clause expressly states that the buyer inspected the
quality fitness and value of the property before signing the k and
that B has not relied on any representations by S. An as is clause
will shield S from a claim of fraudulent misrepresentation but will
not protect S from a claim for fraudulent concealment.
Real Property K
To be enforceable any k defecting an interest in real property
must be in a writing signed by the party to be charged with its
breach or by an authorized agent of that party whose authority
must be expressed in a signed writing
A k may consist of several memoranda which may not all be
signed and which separately may not contain all the essential
terms but when taken together they comprise an enforceable k.
Explicating corporation by reference is not necessary,
Part performance in an oral real property k is an exception to the
statute of frauds to excuse a writing courts will consider 3 types
of PIP performance by the purchaser which much unequivocally
prefer to an agreement to the transfer of realty
o P- buyer PAID the purchase price, in whole, or part
o I- IMPROVEMENTS
o P- taking POSESSION
In NY it is almost impossible to achieve pip part performance
sufficient to take the real property contract out of the statute of
frauds.

The buyers performance alone must unequivocally refer to the


sale of real property without resort to oral testimony.
The conduct must be inconsistent with any explanation other
than the formation of a real property k. it must be beyond the
conduct engaged in by a mere tenant
Look for the valuable improvements
Estoppel is another equitable doctrine that may take an oral k
out of the sof. The same conduct buy a buyer that evokes the
detrimental reliance estoppel theory frequently also supports an
equitable part performance theory
The signed real property k must contain all of the material
elements; it must name buyer and seller, sufficiently describe
the real property and state the purchase price. A missing price
will nullify the k, even though it was signed by the party to be
charged.
A written real property k may include a contingency clause, it
may be conditioned on:
o 1) B obtaining 100k mortgage at 5% interest because
conditions are strictly construed, f B cannot get those exact
terms or better the condition fails and b is excused from
the k; however, B may waive the condition because it is in
place for Bs benefit
Meets and bounds is a way to measure property, also section, lot,
and block number which is how county keep tracks
A description may be incorporated by reference to another
document. Ex. The same property purchased by S from X in 2014

Real property disclosure act (NY never tested on it)


NY traditionally abides by caveat emptor; in NY and many states
the seller of an existing residential dwelling of one to four units
shall deliver a disclosure statement answering 48 questions on
the condition of the realty based on the sellers actual
knowledge. Failure to do so affords the NY buyer an automatic
500 credit at the closing
Marketable title
If a k makes no mention as to quality of title to be conveyed it is
implied in the k (but not in the deed that the seller will tender a
marketable title at the closing
Marketable title is one free from encumbrances and free from
reasonable doubt as to the interest of any 3rd person. It is a title
that the buyer will not have to defend by litigation
A buyer should not be forced to accept an unmarketable deed or
be required to purchase a lawsuit

Unmarketable title arises where a search of Ss chain of title


reveals ownership gaps, recorded judgments or mortgages. Or
where an inspection of the property reveals an easement,
encroachment, or adverse possessor
Even a k to take a quick claim deed impliedly requires S to
tender a marketable title.
Covenants easements and conditions restricting the use of the
land render title unmarketable unless the contract expressly
makes the sale, subject to existing covenants, conditions or
easements of record.
Property owned by an adverse possessor is not marketable until
a court determines title
A sellers use of the property that violates a building code does
not render title unmarketable unless the building department has
commenced litigation. Such defects relate to the condition of the
structure rather than the quality of the title
A buyer takes subject to existing rent control and zoning laws
which limit the use of the land rather than affect the title, a
change in these laws after k but before closing will not excuse B
from the k and B bears the risk of any change
If the MBE sellers current use of the property violates existing
zoning laws then a existing zoning violation renders an MBE title
unmarketable. In NY existing zoning violations do not render title
unmarketable unless litigation has begun or the k expressly so
provides
The implied covenant of marketable title imposes no obligation
on the seller until the date of closing (sometime NY calls closing
the law day; dont trigger an anticipatory breach based on
marketable title- because everyone has until the date of closing
to do whatever they need to do, such as satisfying a mortgage)
Courts have held that title is unmarketable where the threat of
litigation would lead a reasonable person to believe that the
buyer may be called upon to defend either his possession or title
The requirement that S tender a marketable title is for the
buyers benefit and B may waive it and accept an unmarketable
title
Under the merger doctrine the covenant of marketable title
merges into the deed when the seller delivers the deed to B at
the closing
Absent fraud or mutual mistake when B accepts a deed Ss title
obligations under the k are discharged. There after Bs rights are
based solely on the warranties if any contained in the deed. The
buyers acceptance of the deed is prima facie evidence of Ss
compliance with the k requirements as to title and a breach of k
claim cannot stand

The closing is where S executes and delivers the deed. And B


tenders payment, by certified or bank check. Failure to tender
marketable title or the type of payment called for in the k.
Constitutes a material breach
The partys to a real property k need not specify a closing date
because the court may infer a reasonable time. if the closing
date is fixed in the k it is only a tentative target date failure of
either party to close on that date is not a breach. Both parties
are afforded a reasonable time even beyond the ks closing date
to perform there respective obligations under the k unless the k
is expressly made time of the essence.
When time is of the essence, failure to tender performance at
closing results in a breach.
o Ex the term on or before 6/1 or in no event later than
6/1 is not sufficiently clear to make time of the essence
When one party requests an extension of the original closing
date the other party may select a new closing date and
unilaterally make it time of the essence. The notice must:
o 1) Provide a reasonable time to close; and
o 2) Be clear and unequivocal so as to warn the other party
that its failure to close will render it in default and liable to
damages
In order to hold a party in default, the party declaring a breach
must be able to demonstrate that it was RAW to comply with the
k terms

Equitable conversion
When a real property k is signed the equity will be specifically
enforced. Equity immediately treats the buyer as the title holder
and converts the sellers interest into personal party this effect
the partys interest in 3 ways
o 1) If the MBE buyer or seller dies, equitable conversion
affects a bequest of real property passing in a will.
Ex. all my realty to X and all my personal property
to Y- if the seller dies the proceeds of the sale pass
to Y under Ss will as personal property. And if the
buyer dies prior to closing then the buyers interest
passes to X under Bs will as realty
Equity treats as done what is meant to be done
In NY if a testator enters a k to sell real property the
k is not revoked in the prior Ts will. Such real
property passes under the will to the named
beneficiary subject tot eh execratory k.
o 2) If the MBE sellers judgment creditor files a judgment in
the county where the seller owns realty after the seller sold

a contract of sale, the lien does not attach tot eh sellers


interest which equity now considers personal property.
If the judgment is recorded against the buyer then
the lien attached to the buyers converted realty
interest even though the buyer has not officially
taken the deed.
In NY the judgment creditor simply steps into the
shoes of the debtor so the property would be sold
and the proceeds attached
o 3) If the MBE real property s damaged during the
execratory k period without the fault of either party then
absent a contrary statute or specific k language risk of lost
is on the MBE buyer
There are several exceptions to this MBE equitable conversion
risk of lost rule:
o 1) The damage was the sellers fault
o 2) The sellers title was defected and S could not have
tendered marketable title at the closing
o 3) The k was subject to a condition that was not satisfied
thereby excusing the buyer form the k.
o 4) In the 13 states that recognize the uniform vendor and
purchaser risk act (NY) even though equitable title passes
to B when the k is signed by statute risk of loss remains
with S who is in the best position to ensure against loss or
damage to the property. Under this act risk of loss does not
pass to B until: a) title basses at the closing; or b) Buyer
takes possession prior to closing
Under the act if prior to closing real property is materially
destroyed to no fault of either party or a material part is taken by
eminent domain the seller may not enforce the real property k
and the buyer may rescind it. The buyer however may enforce
the k with abatement in the purchase price.
If only an immaterial part of the premises is damaged or taken
then the k is specifically enforceable by either party in a k with
abatement in the purchase price.

Buyer and Seller Remedies


Page 41 and 42 in the handout
Ethics in Real estate
Where is the deposit held? It is held in the escrow account. The
most important thing you will control
All client funds held by an atty shall be held in a separate escrow
account in a NY bank. The atty must retain detailed escrow

records for 7 years. If deposit paid by the purchaser is embezzled


b the escrow agent (usually the sellers atty) then risk of lost of
the deposit is on the party who owned the money at the time it
was converted (usually the buyer)
Ny requires that if a buyers deposit will generate less than $150
in interest then it shall be deposited by the sellers atty into a NY
IOLA (interest on lawyers account) account, which every NY
lawyer who holds clients money must have. The interest earned
on such accounts is used to fund legal services for indigents,
where the interest earned will be substantial the funds should be
placed in an interest bearing account for the benefit of the owner
If a lawyers IOLA check bounces for insufficient funds the bank
must notify the appellate division grievance committee
Escrow checks made not be made to cash and only an attorney
admitted in NY may sign them
One lawyer may represent both the buyer and seller of realty but
only in very limited circumstances where there is little or no
actual adversity between the 2 parties. Both clients must
consent after full disclosure of the disadvantages and risk
involved. If a dispute arises between B and S the attorney must
withdraw from representing either client
A lawyer is subject to discipline for failing to decline legal
employment if the exercise of her independent professional
judgment on behalf of the client is likely to be adversely affected
by the lawyers conflict of interest
A lawyer may accept a referral fee from a mortgage broker or
title insurer, but only with Bs informed consent and only if the
fee is used to reduced the buyers legal fee.
A lawyer may not advertise that she can stop a foreclosure
without including a disclaimer that prior results do not guarantee
a similar outcome
A lawyer may conduct her law practice and real estate brokerage
business from the same office but she may not act as broker and
lawyer in the same transaction
A NY lawyer may send a paralegal to conduct a closing if the
paralegals work is only ministerial and the attorney remains
available by phone.
A lawyer may enter into a transaction for real or personal
property with a client but because the lawyer could profit and the
clients expense:
o A) The terms must be fair and reasonable
o B) The terms must be fully disclosed to the client in writing
in a manner than can be reasonably understood by the
client

o C) The must be advised to seek the advice of independent


counsel
o D) The client must consent in a signed writing to the fully
disclosed terms and toe lawyers inherent conflict of
interest in the transaction
An attorney engaging in ethical misconduct is not entitles to any
fee

Deeds
A deed is a written instrument signed and delivered by a grantor
to convey title to real property
The signature of the grantor of any real property interest must be
acknowledged by a notary in order to be recorded by a county
clerk. An acknowledgment is not necessary to transfer title and
its absence does not affect the grantees interest as to the
grantor but the inability or failure to record can affect the
grantees interest as to a third person
An instrument recorded without any acknowledgement or with a
defective acknowledgment is not sufficient to give constructive
notice of its contents to a subsequent bona fide purchaser
A forged deed is void and conveys no title. Unlike other fraud
based cases of action a claim against a forged deed is not
subject to a statute of limitations defense
There can be no bona fide purchaser of a forged deed and any
new interest subsequently created are void
Delivery
For valid delivery of a deed the grantor must intend to pass title
immediately by the deed and the grantor must give up dominion
and control of the deed. A deed not properly delivered is a nullity
even if it is recorded by the grantee
If the deed is a gift the AID gift elements must be established:
o ACCEPTANCE by done
o I- INTENT to make immediate gift
o D- Proper DELIVERY of a signed & acknowledged deed
When the grantor intends to surrender title immediately upon
delivery. The law will recognize an escrow delivery to an agent
delivery to the donee. If the escrow agent is the donors agent
then delivery is not complete until the deed is actually delivered
to the done. Thus, if the donor dies, becomes incapacitated or
changes her mind before delivery to the donee then agents
authority to deliver is revoked by agency law. However, if escrow
delivery is to an independent contractor, or the clerk of the

recording office, or the donees agent then the gift is effective


immediately upon delivery to that agent.
Escrow delivery to a third person for delivery upon the grantors
death (death escrow) is treated as vesting an immediate interest
in the grantee when the third person receives the deed provided
the grantor surrendered all rights to the deed upon delivery to
the escrow agent
There can be no gifts causa mortus (deathbed gifts)
Once a deed has been effectively delivered and accepted its
subsequent oral cancelation, deliberate destruction or even
redelivery back to the grantor will not re-vest legal title in the
grantor

A corrective deed
o The customary record is for the grantor to execute and deliver
to the grantee a new corrective deed in the form originally
intended. The sellers refusal to issue a corrective deed
breaches the covenant of further assurances if such a
covenant was granted in the first deed.
o If a grantee is omitted on a deed or the extent of his interest
is misstated, all grantees otherwise adversely affected by a
new corrective deed must join in its execution
Quick claim deed
o A quick claim deed is the simplest of all deeds. The grantor
covenants only to convey whatever interest he may have. He
simply states that he is quitting any claim to the land. These are
often by adverse possessors to tack there years together to
satisfy the statutory time requirement.
o If a contract makes no mention as to the type of deed to be
delivered at the closing. Then only a quick claim deed need be
tendered
o A k to give only a quick claim deed is supported by consideration
even though the seller in fact has no interest in the realty. If the
seller later requires an interest note that the doctrines of deed by
estoppel and after acquired title do not apply where the deed is
only a quick claim
Special warranty deed, which NY calls a bargain in sale deed
o This covenants only that the grantor has not encumbered the
marketability during his ownership period
General covenant and warranty deed
o In MBE it is usually a warranty deed or full warranty deed. On
MBE its going to be warranty or quick claim

o This is the most complete deed because it includes the following


covenants SECFEW:
o S- covenant of SEASON. This warrants that the grantor
possess the quality and the quantity of land purported to
be conveyed
o E- the covenant against ENCUMBRNCES. No third person
has any interest that would diminish the propertys value
except as expressly stated in the deed
o C- covenant of the right to convey that covenants that the
grantor has the right and the authority to convey title
o The SEC covenants are present covenants and are breach
if at all and the sol begins to run when the deed is
delivered. The SECs covenants are made only to the
grantors immediate grantee and are not intended to run
with the land to future grantees. The FEW covenants run
forever and run with the land
F- covenant of FURTHER assurances. The grantor
will execute any documents needed to clear up the
title for subsequent grantees
E- the covenant of quiet ENJOYMENT. Promises that
the grantees possession will not be disturbed. And if
it is the grantor will pay damages for the
disturbance. This covenant is breached only when
any future grantee is actually rejected by a third
person with superior title.
W- The covenant of WARRANTY. Covenants that the
grantor forever warrant and will the defend from
legal attack the title as it is described in the deed
o The FEW grantee may recover attorneys fees but only f
she loses title or pays to remove a title flaw. If she wins she
may not recover because the FEW covenants would not
have actually been breached as she was ejected
o Under the doctrine of horizontal privity these FEW real
covenants extend to all subsequent grantees, that is they
run with the land whenever it is re-conveyed. The FEW
statute of limitations begins to run only when a grantees
right is first interfered with
o Liability for breach of an SECFEW covenant is limited to
actual out of pocket restitution laws, which cannot exceed
the purchase price, received by the grantor of the warranty
deed. Subsequent improvements made on the realty, and
appreciation of the lands value is not recoverable against
the grantor
o Purchasers of real property typically purchase title
insurance to protect their interest from future claims

Recording Statutes
o Once an instrument affecting an interest in real property has
been signed, the signatures have been acknowledge by a notary,
and the document delivered the grantee should immediately
record in the count clerk recording office to put the world on
notice of that interest. This protects the grantee where the
grantor subsequently attempts to convey away the same
property
o Recording the instrument provides constructive notice and warns
the subsequent person of the grantees existing interest in the
realty. In the interest in the realty is recorded any subsequent
interest takes subject to that earlier recorded interest
o Recording the deed is not required for the deed to be affected
between the two parties but if the grantee fails to record the
interest the grantee may lose it to a subsequent bona fide
purchaser for value.
o In order to qualify as a bfp and to prevail over a prior recording
interest the subsequent purchaser must: 1) act in good faith in
awarding her interest; 2) pay some new consideration; and 3)
take without notice of the prior interest
o Only subsequent purchasers and mortgagees can rely upon the
recording act. Subsequent judgment creditor who record their
judgments as a lien on real property and pay no new
consideration on their interest. Are not protected and do not
prevail over purchases for value. A judgment creditor is not a
bona fide purchaser
o S conveyed black acre to B. but B neglected to record the deed.
Subsequently J recovered a judgment against S and filed a lien
against black acre even though J was the first to retort. J does not
prevail over Bs unrecorded interest because J is not a bona fide
purchaser who gave value.
o Once recorded a judgment will however, prevail over a
subsequently created interest in the realty because the new
grantee will be charged with constructive notice of the prior
recorded judgment and thus not qualify as a bona fide purchaser
o J records a judgment against P. 8 months later P purchases real
property by taking out a 90k mortgage from B bank. When title
closes on black acre that has priority? The answer is B the bank.
If a judgment is recorded in a county where the debtor owns no
real property and the debtor subsequently acquires titles in that
county then the recorded judgment automatically attaches to it.
If however, the debtor financed the purchase with a purchase
money mortgage then the purchase money mortgage prevails
over the prior recorded judgment even though the mortgagee

took the mortgage with constructive notice of the prior judgment


but only to the extent that the mortgage proceeds wire used to
purchase the property
o When a buyer finances the purchase price with both the sellers
purchase money mortgage and the banks purchase money
mortgage the sellers prevail of the bank.
o A subsequent conveyance received as a gift through intestacy or
under a will is not for value and thus even if recorded first will
not cut off a prior unrecorded interest
Notice
Constructive notice
o Refers to the notice provided by all prior recorded documents in
the propertys chain of title. Purchasers have a duty to search the
chain of title for any prior recorded interest and are deemed to
have constructive notice of them
Inquiry notice
o Arises where facts exist that would excite the suspicion of an
reasonable prudent person and cause that reasonable prudent
person to further investigate and inquire as to a third persons
possible interest in that inquiry. Failure t make reasonable inquiry
is negligence and will defeat bona fide purchaser status.
Ex. If there is a 3rd person in possession in a land or a
paved driveway. An inquiry is required to determine the
basis of her right to possess or use an easement.
o A subsequent bona fide purchaser with a superior interest over a
prior unrecorded interest can transfer that bona fide purchaser
status to future grantees that otherwise would not qualify as a
bona fide purchaser.
o Under the recording acts shelter doctrine, these future grantees
prevail over the prior unrecorded interest even if they took
without value or with notice of the prior unrecorded interest.
Actual notice
o If seller tells you about a situation on the property
There are 3 types of recording statutes:
1) The notice statute. 23 states give priority to subsequent bona
fide purchasers offer a prior unrecorded instrument provided
that at the time of taking the second instrument. The bona
fide purchaser had no CIA notice of the earlier interest. The
subsequent purchaser must be a bona fide purchaser but
does not have to record for protection as the bona fide

purchaser does in a race notice jurisdiction. In a notice statute


jurisdiction even if the first grantee is the first to record but
she does not record until after the bfp took her interest then
the subsequent bfp prevails. In class question 14 for notice
statute language.
2) A race notice statute (half the country including NY). Here
priority is given to a subsequent bfp who at the time she took
the instrument had no CIA notice of the prior unrecorded
instrument AND IS THE FIRST TO RECORD (in class question
13 for race notice language)
a. The race notice recording act protects bfps provided the
bfp is the first to record
3) For a race statute recording jurisdiction. Priority is given to the
interest that was the first to record. Neither good faith nor CIA
notice will defeat this priority thus a subsequent purchaser
who was the first to record prevails, even though she had
inquiry or actual notice of the unrecorded interest. Only north
Carolina and Louisiana however UCC article 9 adopts a pure
race statute for determining priority of a secured creditor
The term chain of title describes the history of all the recorded
documents on that piece of property.
o Ex. All deeds mortgages, contracts, lis pen dens, money
judgments, easements, covenants running with the land,
conditions (BOP or SUD) or liens can be found by searching back
in the history of that parcel in the county clerks office. These
recorded documents provide CIA constructive notice to any
subsequent purchaser.
A bfp is required to search the propertys chain of title. Under the
collateral document rule where a common owner formally held
contiguous properties a purchaser is charged with constructive notice
on instruments recorded in the adjacent propertys chain of title.
However in about half of the states (NY) there is no duty to search the
adjoining chain of title even though the lands formally owned by a
common owner. Ex. Restrictive covenants applying to both parcels but
recorded only in the contiguous propertys chain of title. NYAA 685
There are 2 basic methods of indexing these documents.
1) The grantor/grantee index, which uses the names of the
parties involved in the transaction as an indexing method
(similar to filing to a UCC article 9 financing statement in the
debtors name).

a. However, in real property there are actually 2 indexes a


grantor index and a grantee index for each type of
action.
b. Ex. An alphabetical index for both the grantee and
grantor for: a) deeds, b) mortgages, c) money
judgments, d) lis pen dens, e) leases, and f) other
documents.
c. If a deed or mortgage misspells the grantor or grantees
name then subsequent real property buyers or
mortgagees are not on constructive notice of that
earlier mis-recorded instrument
2) The tract or parcel index which is much more sufficient
because it uses the parcel as an indexing method by
assigning the parcel a unique number to that parcel it then
traces in sequence of time all the prior recorded instruments
in one index.
Covenants restricting the use of land
There are 2 general categories of restrictive covenants: (MLO 55-61,
Essay 1 February 2009 NYBE page 619)
1) a personal covenant between the 2 contracting parties which
is enforceable by either party based on privity of contract
2) Covenants that run with the land (CRLs) which are binding on
and enforceable by subsequent owners even though there were
not the contracting parties to the original covenant (no direct
privity of k).
o CRLs provide implied at law assignment of rights and
delegations of duty that pass along with a fee interest
whenever it is transferred. CRLs are annexed to the land
and cannot be separated from it whenever it is transferred
thereby binding, benefitting, or burdening all successors in
interest to that real estate
o The law favors free and unencumbered use of realty thus
CRLs are strictly (narrowly) construed and will be enforced
only if established by clear and convincing evidence (See
last paragraph in answer to in class question 15)
o The elements for a CRL are PINTS****:
P-PRIVITY of estate, which historically traces the
land of the plaintiff and defendant back to a common
owner who imposed the restriction. This is referred to
as vertical privity
I- INTENT by the original contracting parties that the
covenant runs to all future owners of the land. Ex.

Where the original covenant stated it applies to all


grantees there heirs and assigns
N- CIA NOTICE of the CRL. Thus a subsequent
purchaser of the land is bound by the CRL provided
there was CIA notice of its existence
T- the covenant much TOUCH AND CONCERN the
land. Both the burden and benefit of enforcing the
covenant must relate to the land. Most affirmative
covenants are not binding on subsequent grantees
because of this touch and concern factor. Also if an
affirmative covenant runs in perpetuity NY will not
enforce it
S- The STATUTE OF FRAUDS, which is easily
satisfied under the deed poll doctrine. Because if the
original covenant was in a document that was signed
by either grantor or grantee this satisfies the deed
poll sof requirement
o CRLs can be real covenants (PINTS) or equitable
servitudes, which do not require privity of estate tracing
the land back to a common owner. To enforce an equitable
servitude the plaintiff only has o satisfy TINS, which is
simply PINTS without privity of estate.
o in enforcing an equitable servitude the plaintiff can only
seek an injunction and not money damages
o If a covenant does not fall within one of 4 CANS then
generally it does not run with the land:
C- a COVENANT imposed by a common owner upon
part of the land conveyed away for the benefit and
protection of the land she retains (in class question
15 page 23). Subsequent owners of the land can
enforce this type of covenant if PINTS is satisfied
A- a covenant entered into between ADJOINING
landowners for the mutual benefit of both lands.
Since there is no true privity of estate tracing the
land back to a common owner and the restriction
was not created in connection with any transfer of an
interest in the land then these restrictions can be
enforced only by equitable servitudes by way of
injunction but money damages are not an available
remedy for an equitable servitude
N-A grantors restrictive covenant on all the land
conveyed away which is imposed for the benefit of
other NEIGHBORING lands, which they can enforce
as third party beneficiaries of the covenant despite
the absence of privity of estate by the neighbors.

S- A covenant imposed to carry out a common


SCHEME or plan for the future benefit of all the lot
owners in a housing development restricting the
lands use to a single family dwelling and not higher
than 2 structures (Levits CRL negro). This covenant is
recorded to the chain of title to all lots in the
development and is enforceable to all subsequent
grantees for the mutual benefit and protection.
February 2009 essay 1 NYBE 619

o PINTS can come in CANS:


o If there is any conflict with CRL and zoning law then the
stricter of the 2 will be enforced.
o The restrictive covenants in a housing development are also
enforceable by the earlier buyers in the development against the
developer and against subsequent buyers in the development on
the basis of an implied reciprocal servitude that is implied that
the developer who originally sold the first parcel with a
restriction imposed would impose similar restrictions on all other
parcels subsequently sold in that project
o If the developer set aside ten acres to build a school or a
playground but subsequently decided to sell it to a fast food
restaurant then the owners in the development could seek an
injunction on the basis of an implied reciprocal servitude.
Equity will not enforce a CRL where:
a) Enforcement would be worthless. Here the court uses the LIE
comparative hardship test of balances the equities and
whether granting the injunction would do more harm than
good. If it would cause great hardship to the defendant and
only a small benefit to the plaintiff the injunction will be
denied. See LIE in provisional remedies
b) The plaintiff unreasonably delayed in seeking to enforce the
servitude (laches); or
c) Enforcement would violate state public policy. Ex. Equity
would not enforce a CRL limiting the lands use to single
family homes. Where the government sought to establish a
community residence for intellectual challenged people
CRLs (PINTS) and conditions imposed on the use of land (BOP and SUD)
are not limited the rule against perpetuities (CROUP) and thus they can
run with the land indefinitely
Zoning

Zoning laws exist under the states police power. Zoning permits
municipalities to restrict development density, impose minimum
areas required to build a home, and restrict the use of land to a
particular use (residential, commercial, or industrial)
Zoning seeks to promote safety health and the general welfare
of the community
Rights in the land held by third parties such as easements, CRLs,
mortgages, or judgments render title to that property
unmarketable. An existing violation of a zoning law renders title
unmarketable MBE. However, existing zoning laws limiting the
use of the plans or a change in the zoning law after the k was
signed does not render title unmarketable.
Even though a landowner complies with existing zoning laws she
may never the less be enjoined in her use of the land by:
o 1) The tort of nuisance; or
o 2) Violation of an existing covenant running with the land;
or
o 3) A condition restriction the lands use (BOP or SUD).
If a landowner faces UNREASONABLE HARDSHIPS because of
existing zoning laws then a variance can be requested from the
zoning board of appeals to use the property in a manner that
conflicts with the zoning law. There are 2 types of variances:
o 1) Use variance (to build a gas station or fast food
restaurant on land zoned residential) requires a land owner
to show:
A) The zoning law imposes an undue financial
hardship on the owner so that the entire parcel as
zoned cannot yield a reasonable economic return by
complying with the zoning law.
B) The applicants problems are due to the unique
circumstances of the property and neighboring
properties do not share the same characteristics.
C) Granting the use variance will not substantially
alter the character of the neighborhood to the
detriment of the owners NYAA 696
The zoning board balances the detriment of the
landowner against the detriment to neighborhood
and whether that land as zoned can return a
reasonable economic return for the investment
o 2) An area variance does not seek to change the use of the
property but seeks to decrease the area required by the
zoning law or allowing a structure to be built closer to a
neighbors boundary or higher than the zoning law allows.
Here the court considers ACESS

A- ALTERNATIVES for accomplishing the goal


without a variance
C- would the variance adversely affect the
CHARACTER of the neighborhood
E- would it adversely affect the ENVIRONMENT
S- was it SELF CREATED. That is did the owner
create or did he buy the property with notice of the
problem. A buyer is presumed to know the zoning
law thus any resulting hardship is deemed selfcreating
Sbeneficial to the community then zoning boards must be flexible
in permitting its use. Although they are not exempt from zoning
laws, every effort to accommodate such uses must be made. The
board itself must suggest measures to accommodate the
purposed religious and educational use in an attempt to mitigate
any adverse affects on the surrounding community
Who has standing to challenging a variance or a change in the
zoning law?
When a variance application is denied the owner seeking the
variance ahs standing to challenge its denial.
When a variance is granted then an unhappy neighbor must
show a direct harm that is different from the rest of the public.
A property in close proximity (within 1/3 of a mile) and clearly
an adjacent parcel is presumed to suffer an injury and a
potential decline in property value.
Where the zoning board amends the zoning law to single out and
favorably rezone a single parcel giving it a lucrative advantage
over other properties but serving no public benefit and usually it
is not in conformity with the overall comprehensive zoning plan
then this spot zoning is arbitrary, capricious and illegal
A non-conforming use is the use of land, which lawfully existed
before the zoning law was enacted. It gives the owner the right
to continue that use even though it is contrary to existing zoning
law
A nonconforming use cannot be expanded without a variance
and if it is substantially destroyed it cannot be rebuilt without a
variance
A nonconforming use can be eliminated by zoning laws under an
amateurization plan giving the owner a reasonable time to
recoup the investment and then to conform to the zoning law
The us constitution and every states constitution has a takings
clause which allows a government agency to take real or
personal property for a PUBLIC PURPOSE without the owners

o
o
o

consent provided just compensation is paid to those having a


present or future interest in the condemned property.
o Fair value is determined at the most profitable use for which
the land can be used presently or in the near future. (Expert
testimony is required).
o The government is given brad discretion and the judiciary has a
very narrow scope of judicial review in defining what public use
is. It does not literally use by the public but is instead is a taking
for an overall public purpose. All of the land condemned does not
have to suffer from blight.
o Public purpose permits a taking to revitalize an economically
depressed neighborhood or for economic development for
private developers
Eminent domain
The federal government can even condemn state property and such
claims are litigated in the court of federal claims in DC. It violates the
takings clause from municipalities to compel (extort) landowner to
giver part of her property or to have it used for public used as a
condition to obtaining a building permit a zoning variance or a housing
project subdivision.
o Here the government must show an essential interest that is
roughly proportional to the developers impact on the
community, which the municipality intends to offset by the taken
A compensable taken is when it is:
1)
An actual, physical occupy of private property for public
purpose. Examples:
a. Building or expanding a road on to Os backyard;
b. A state law permitting cable tv companies to install its
cable on private land;
c. The governments permanent or seasonable flooding of
Os land by opening a dam every spring
2)
Regulatory taken, which is not a physical invasion of Os land is
a government regulation that deprives O of all beneficial use of
the property. [ex. When the regulation permanently or for a
prolonged period (10 years)] restricts all used of Os land
leaving all of it economically idled. [Ex a permanent wetlands
restriction to protect the public from hurricanes by preventing
any building within 400 feet of wetlands and all of Os land fell
within the 400 feet
Regulatory taking is distinguished from government regulation of land
such as zoning, rent control, or landmark preservation of realty which

the court has upheld just as long as O is able to obtain a reasonable


financial return from the property
For ecological purposes a zoning law prohibited O from building within
200 feet of the ocean on her 20 acre plot. This was not an
unconstitutional regulatory taken because it did not leave 100% of Os
property economically idle and she was still able to build on the back 8
acres given her an economical return on Os land
Fixtures
o A fixture is chattel, which by being annexed to realty becomes
part of the realty. If a chattel becomes a fixture it passes with
the realty whenever the realty is conveyed by deed, under a will,
by intestacy, by adverse possession, by mortgage foreclosure,
Os bankruptcy or the realty is taken by eminent domain. The
person who formally owned the chattel loses title and it passes
with the realtys transfer.
o Any personal property that is essential to the functional utility of
a fixture likewise cannot be removed [ex. Garage door openers,
hoses and attachments to a central vacuum system, light bulbs
and toilet seats]
o Whether a chattel becomes a fixture it is determined by TIP
T- is it the TYPE of chattel that generally becomes part of
the real estate [hot water heater, storm windows, shutters,
or awning}
I- the INTENT of the person installing the chattel. Was it
installed with the intent that it will subsequently be
removed? However, if the land and chattel had a common
owner, a presumption arises that it was intended as a
fixture
P- The PARTIES relationship (landlord and tenant, or life
tenant and remainder man) generally indicate that the
attached chattel was not intended as a permanent fixture
o Trade fixtures are any chattel installed by a commercial tenant
and even though annexed to the realty are presumed to be
removable by the tenant at the end of the lease term
o All fixtures, even trade fixtures must:
o 1) Be removed prior to termination of the leasehold
otherwise they revert to the landlord;
o 2) Any damage done in removing a fixture must be
repaired by the tenant;
o 3) It cannot be removed if it would cause substantial
damage to the realty

o UCC article 9 provides that a creditor having a perfected security


interest in fixtures may remove the fixtures on the debtors
default even if it would cause substantial damage to the realty
provided the secure creditor provides a bond to ensure the
damage will be repaired
o Under UCC article 9, lenders and creditors who sell goods on
credit may file a financing statement to perfect a security
interest in goods that become fixtures but a security interest
may not be created or perfected in ordinary building materials
(bricks or lumber) that are incorporated into a structure because
these materials will be to difficult to remove
o If a UCC security interest is properly perfected it protects the
secured creditor against a subsequent bfp of the realty that is
either a subsequent buyer or mortgagee of the realty
o Under article 9 the first interest to file either a mortgage a deed,
or a financing statement prevails over any subsequently filed
interest on the realty except for a subsequently perfected
purchase money security interest in fixtures which takes priority
over a prior recorded interest (prior deed or mortgage) provided
the purchase money security interest were perfected within 20
dys after the goods became fixtures
o A security interest in a TENANTS FIXTURES even if not properly
perfected has priority over a landlords interest if the land lord
consented in writing to the tenant executing a security interest
or where the lease gave the tenant the express right to remove
all fixtures from the property when the lease expired
Water rights
o A landowners use of a flowing waterway (a brook, river, or a
stream) must be reasonable. If water flows through or under
several parcels then the upstream owner can reasonably use the
water supply even if it decreases the supply of downstream
owners unless that water use was malicious or wasteful
o Most courts interpret reasonable use as giving each land on the
stream or river some benefit from the water. Requiring it to be
apportioned so that all owners have a right to some water. Under
this reasonable use theory majority vie , the court look at SPUD
to determine reasonableness:
1) S- SIZE of the waterway
2) P- PURPOSE from using the water and resulting harm from
using that use
3) U- how much water is being USED
4) D- the DURATION of that use. How long has the water been
used that way?

o Commercial use generally is not reasonable if it deprives


surrounding residential lands of that water. Thus where a new
manufacturer drilled a well cutting off the water supply to ten
nearby homes that use was not reasonable. However if that
commercial use had existed for decades and a drought caused
the water shortage then the manufactures use is not
unreasonable
o If water is removed from the land to the detriment of
downstream owners then the use is not reasonable
o If b constructs a dam causing the water to backup As property
then As remedy is a claim for the tort if trespass
o A landowner may impair the flow of water by constructing a dam
provide that it does not injured anothers land or unreasonably
interferes with the flow of water to downstream owners.
o If beavers built the dam then B had not duty toward that
condition because it is purely natural in origin
o Riparian rights give a landowner on the boarder of a define
waterway having tides (great lakes or oceans) then ownership
goes down to the high tide watermark and an easement arises
below the high water mark to gain access to and to reasonably
use the water. To launch a boat, to fish, to dreg, or other
reasonable uses regardless of who owns the land under the
water
o The conveyance of land located on inland streams, ponds, or
lakes impliedly conveys the underwater land not just to the
waters edge but out to the center of the pond of the stream.
There are 3 theories for waters:
1) The civil law theory involving diffuse surface waters from rain,
melting snow, or underground springs that surface that do not
form any part of a defined waterway
a. Under the civil law theory aka the natural flow theory
strict liability is imposed on a landowner who alters the
natural drainage flow causing damage to a neighbors
property. Under this theory every landowner is subject
to an easement of flowing surface waters. (only a few
states)
2) The common enemy doctrine is the opposite of civil law
concerning diffuse surface waters. It treats these waters as an
enemy and allows O to do anything to prevent the water from
entering the land. O is not liable to a neighbor whose land is
flooded by the alteration (15 states)
3) The reasonable use theory majority (NY). This allows O to
reasonably alter the flow of surface waters in good faith to

reasonably use Os land unless the alteration unreasonably


interferes with the neighbors property. Here the court looks at
the necessity for the change. Whether the alteration was done
with care. Whether a better method could have been used.
And how much harm was caused to a neighbors land
RST second of torts treats surface waters under the rules for the tort of
nuisance. That is interfering with the flow of surface waters is
permissible unless it unreasonably interferes with a neighbors use and
enjoyment of her land
Adverse possession (AP)
o AP permits a trespassers possession to ripen into ownership
through the passage of time the MBE AP state of mind when first
entering the land is irrelevant thus he does not have to have a
claim f right to that land. Each jurisdiction has its own statute
of limitations after which time title vest immediately in the
adverse possessor and Os cause of action for ejectment will be
barred
o Merely telling an AP to get off of the land will not interrupt the AP
period. To stop the AP period from advancing the owner must
commence an ejectment action within the statute of limitations
period or the AP must acknowledge Os right in the land (OPA)
o AP frequently benefits a possessor of land who either lacks title
or has a defective title because:
1) The deed was forged or it was never signed
2) The deed was not properly delivered with the intent to
transfer title
3) A mistaken encroachment onto a neighbors land
4) The delivered deed was lost and never recorded
o The title gained by an adverse possessor usually is the same
interest held by the former owner.
o Ex. A life estate or fee interest but some states hold that it
creates a brand new title and cuts off all prior interest
including a mortgage on the realty.
o However, in most states the AP takes the property subject to am
existing easements mortgages, future interest, CRLs, and
conditions (BOP or SUD) restricting the lands use
o Title acquired together by 2 adverse possessors even spouses is
held as tenants in common.
o Only a EUNUCH can adversely possesses realty: conjunctive.
Because the acquisition of title of AP is not favored by the law
the EUNUCH must be established by clear and convincing
evidence

a. E- EXCLUSIVE possession not shared by the owner. The


ap must care for the property as if she owned it and no
one else
b. U- the owner was UNDER no disability (infancy, mental
disability) when the original owner first could have sued
to eject the trespasser. Do question 17 in hand out
c. N- NOTORIOUS and open possession which would put
the owner and her neighbors on notice that a trespasser
was on the land
d. U-a few states require the AP to be in possession
UNDER a good faith claim of right, which is an
objective reasonable belief that she owned the land.
Seasonable use of vacation property may be sufficient
to satisfy EUNUCH but not all states agree
i. It is not necessary that the same person be in
possession for the entire AP period. The doctrine
of tacking allows one AP to tack on the time of a
previous AP provided that there was privity of
estate between the 2 involving a voluntary
transfer of title between them. Even an oral
transfer.
e. C-under the doctrine of CONSTUCTIVE possession an
adverse possessor who has a written coverable title
(forged deed, or an undelivered deed) to an entire
parcel (10 acres) but only occupied a part of it (2 acres)
is regarded as being in possession of the entire 10
acres. However if the APs claim is not based on a
written instrument invokes the footprint doctrine
allowing the adverse possessor to claim title only to the
portion of the land actually occupied (the footprint)
f. H- HOSTILE possession, which is hostility towards the
owners title and not necessarily to the true owner. The
hostile elements is presumed if the other EUNUCH
elements are satisfied unless the parties have a family
relationship or a relationship involving cooperative
neighbors which requires the AP to establish a hostile
possession. To establish AP. The adverse possessor does
not have to pay taxes on the realty but some states
require it
i. The hostility element is extinguished if the AP
openly occupies the land with OPA
1. O- the AP OFFERED to buy the land from O
2. P- the AP asked Os PERMISSION to use
the land. NYAA 630
3. A- ACKNOWLEDGING to anyone that O is
the owner

o Possession undertake with the owners permission will defeat an


ap claim. Possession by a tenant under a lease under a life
tenancy or as a concurrent tenant (JT, TC, or TE)
o A hostile possession does not begin to run until such permission
has been repudiated and the possessor assumes open hostility to
any right of the true owner. Once the adverse possession period
is satisfied by EUNCUH for the statutory period title vest
immediately in the adverse possessor by operation of law. It is no
longer dependent upon continued possession, continued
EUNCUH, and that tile cannot be lost by OPA
Easements
An easement is a right to use (not own or posses) anothers
property for a specific purpose
Most frequently to go across anothers land to access a public
road or a body of water. It is considered a unique real property
interest that may be protected by an injunction. It is
distinguishable from a license, which is a personal nonassignable use of anothers land revocable at the grantors will.
[a kiosk in a mall a stall in a flea market or an oral easement to
use anothers land
An easement consist of both a dominant estate which is the land
benefited by the easement and a serviant estate which is the
land burdened by the easement over which the easement runs
Affirmative easements may be created by PIGS
o P- easement by PERSCRIPTION which is similar to
adverse possession where a person only uses part of a
property for the statutory period without the owners
permission that use does not have to be exclusive as it
does for adverse possession
o I- easement by IMPLICATION which is implied form a prior
common owners apparent preexisting uses of the
dominant and serviant estates and where the common
owner previously made an open, apparent and permanent
reasonably necessary use of one part of the land for the
benefit of another (quasi easement)
By dividing the land into 2 parts and selling one the
seller impliedly created an easement over the
retained parcel for the benefit of the parcel conveyed
away NYAA 650
The elements for an implied easement are CRAB:
C-both the dominant and serviant estates were
formally owned by a COMMON owner who
subsequently divided that land

R-The implied easement is REASONABLY


necessary for the use of the estate
A-that use (easement) was APPARENT from a
reasonable inspection of the land (an exception
is for underground water pipes)
B-the former owner used the land and
subordinated one part of the land for the
BENEFIT of another part
o This CRAB easement arises from an
inference that the parties intended an
easement from the CRAB circumstances
o Courts are less inclined to find an implied
easement benefitting the grantors retain
land over the buyers land and in many
jurisdiction such an easement will be
implied only when it is strictly necessary
for the reasonable use of the grantors
retained parcel
G- easement by GRANT. An easement created in a
signed wiring (statute of frauds)
o A cotenant may not create an enforceable
easement by grant without the other cotenants
signature
o The fact that an easement by grant does not give a
precise location for the easement will not
invalidate it because the court will fix a location for
the easement
S- STRICT necessity. Arises when a common owner
subdivides the land leaving one parcel landlocked
without any motor vehicle access to a public way. The
purchaser is given an easement to reach a public road.
When a strict necessity ceases so will the easement by
strict necessity
o A profit is an easement that allows the easement holder to go on
anothers land and to sever and remove something form the
land.
Ex. To remove sand, oil or minerals, or to hunt or fish.
But the right to take water, which belongs to nobody, is
an easement and not a profit. If the parties k calls for the
seller to first sever minerals form the land then it is
considered a sale of goods k governed by UCC article 2
o Profits are subject to the statute of frauds.
o If an easement does not exist because it was not created by PIGS
then that use of anothers land is deemed a mere license
revocable at will

o An easement is distinguishable from a lease which gives to a


tenant both use and exclusive possession of the landlords realty
for a prescribed period of time
o The dominant estate has the duty of maintaining repairing or
rebuilding the easement if it is an easement in common then
that burden is imposed on all the users
o An easement that benefits (adds value to) the dominant estate is
called an apartment easement, which runs with the land whoever
the land is conveyed.
o An easement that does not benefit ones land but personally
benefits the easements holder is an easement in gross
o An impertinent easement may only be used to serve the
dominant estate it was intended to benefit it may not be used for
any purpose not connected with the enjoyment of the dominant
estate nor can the easement be assigned to the stranger to the
land. For example, the dominant owner for the use may not
expand it by other nearby lands
o If the dominant estate is subdivided the subdivision may not
unreasonably increase the burden on the serviant land beyond
that burden originally contemplated or beyond a reasonable use.
Misuse or overuse of an easement does not automatically
extinguish it. The serviant estates remedy is an injunction
o An easement profit or covenant running with the land may be
extinguished by AFRAME
1) A- ABANDONMENT clearly indicating an intent to
surrender the easement. Nonuse alone is not
abandonment
2) F- FORECLOSURE of a mortgage recorded before the
easement
3) R- a written RELEASE
4) A- ADVERSE POSESSION
5) M- MERGER by common ownership by 100% of the
dominant and servaint estates.
a. One cannot have an easement, covenant, or profit
on their own property. Re-subdivision of the
property does not revise the easement; however,
an easement may be independently established as
an easement by strict necessity or implication
6) E- EMINENT DOMAIN. Federal government or state
government takes the estate, which extinguishes the
easement. The government will owe the owner just
compensation