REAL PROPERTY REAL PROPERTY i. REAL PROPERTY TABLE OF CONTENTS I. ESTATES IN LAND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 A. IN GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 B. PRESENT POSSESSORY ESTATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1. Fee Simple Absolute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2. Defeasible Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1. Fee Simple Determinable (and Possibility of Reverter) . . . . . . . . . . . . . . . . 1 1. 1) Correlative Future Interest in GrantorPossibility of Reverter . . . . 2 a) Possibility of Reverter Need Not Be Expressly Retained . . . . . . . 2 b) Transferability of Possibility of Reverter . . . . . . . . . . . . . . . . . . . . 2 2. 2) Correlative Future Interest in Third PartyExecutory Interest . . . . 2 2. Fee Simple Subject to Condition Subsequent (and Right of Entry) . . . . . . . 2 1. 1) Correlative Future Interest in GrantorRight of Entry . . . . . . . . . . . 3 a) Failure to Reserve Right of Entry . . . . . . . . . . . . . . . . . . . . . . . . . 3 b) Waiver of Right of Entry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 (1) Inaction by Itself Not a Waiver . . . . . . . . . . . . . . . . . . . . . . . . 3 c) Transferability of Right of Entry . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2. 2) Correlative Future Interest in Third PartyExecutory Interest . . . . 3 3. 3) CompareFee Simple Determinable . . . . . . . . . . . . . . . . . . . . . . . . . . 3 a) Construction of Ambiguous Language . . . . . . . . . . . . . . . . . . . . . 4 3. Fee Simple Subject to an Executory Interest . . . . . . . . . . . . . . . . . . . . . . . . . 4 4. Limitations on Possibilities of Reverter and Rights of Entry . . . . . . . . . . . . 5 5. Conditions and Limitations Violating Public Policy . . . . . . . . . . . . . . . . . . . 5 1) Restraints on Marriage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2) Provisions Involving Separation or Divorce . . . . . . . . . . . . . . . . . . . . . 5 3. Fee Tail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 4. Life Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 a. Life Estates by Marital Right (Legal Life Estates) . . . . . . . . . . . . . . . . . . . . 5 b. Conventional Life Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 1) For Life of Grantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 2) Life Estate Pur Autre Vie (Life of Another) . . . . . . . . . . . . . . . . . . . . . 6 a) Inheritability .......................................... 7 c. Rights and Duties of Life TenantDoctrine of Waste . . . . . . . . . . . . . . . . . 7 1) Affirmative (Voluntary) WasteNatural Resources . . . . . . . . . . . . . . 7 a) Open Mines Doctrine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 2. 2) Permissive Waste . . . . . . . . . . . . . . . . . . . . . . . . . . . . a) Obligation to Repair . . . . . . . . . . . . . . . . . . . . . b) Obligation to Pay Interest on Encumbrances . c) Obligation to Pay Taxes . . . . . . . . . . . . . . . . . . . d) Special Assessments for Public Improvements (1) Apportionment of Costs . . . . . . . . . . . . . . e) No Obligation to Insure Premises . . . . . . . . . . f) No Liability for Third Partys Torts. . . . . . . . . 3. 3) Ameliorative Waste . . . . . . . . . . . . . . . . . . . . . . . . . . ............... 7 ............... 8 ............... 8 ............... 8 ............... 8 ............... 8 ............... 8 ............... 8 ............... 8

ii. REAL PROPERTY 1. a) CompareLeasehold Tenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. b) CompareWorthless Property . . . . . . . . . . . . . . . . . . . . . . . . . . d. Renunciation of Life Estates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5. Estates for Years, Periodic Estates, Estates at Will, Tenancies at Sufferance . C. FUTURE INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Reversionary InterestsFuture Interests in Transferor . . . . . . . . . . . . . . . . . . a. Possibilities of Reverter and Rights of Entry . . . . . . . . . . . . . . . . . . . . . . . b. Reversions.................................................... c. All Reversionary Interests Are Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Remainders....................................................... a. Indefeasibly Vested Remainder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . b. Vested Remainder Subject to Open . . . . . . . . . . . .................... 1) Divesting Interests Are Executory Interests .................... 2) Effect on Marketability of Title . . . . . . . . . . .................... c. Vested Remainder Subject to Total Divestment . .................... d. Contingent Remainder . . . . . . . . . . . . . . . . . . . . . .................... 1) Subject to Condition Precedent . . . . . . . . . . .................... 2) Unborn or Unascertained Persons . . . . . . . . .................... 3) Destructibility of Contingent Remainders . . .................... a) Rule Abolished . . . . . . . . . . . . . . . . . . . . .................... b) Related Doctrine of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1) CompareInterests Created Simultaneously . . . . . . . . . . . e. Rule in Shelleys Case (Rule Against Remainders in Grantees Heirs) . . . f. Doctrine of Worthier Title (Rule Against Remainders in Grantors Heirs) ....................................................... 3. Executory Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . a. Shifting Executory InterestDivests a Transferee . . . . . . . . . . . . . . . . . . b. SpringingExecutoryInterestFollowsaGaporDivestsaTransferor. c. Executory Interest Follows a Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . d. Differences Between Executory Interests and Remainders . . . . . . . . . . . . 4. Importance of Classifying Interests In Order . . . . . . . . . . . . . . . . . . . . . . . . . 5. Transferability of Remainders and Executory Interests . . . . . . . . . . . . . . . . . . a. Vested Remainders Are Transferable, Devisable, and Descendible . . . . . b. Contingent Remainders and Executory Interests Are TransferableInter Vivos . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . c. Contingent Remainders and Executory Interests Are Usually Devisable and Descendible . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . d. Any Transferable Future Interest Is Reachable by Creditors . . . . . . . . . . e. Practical Ability to Transfer Marketable Title . . . . . . . . . . . . . . . . . . . . . . 6. Class Gifts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................... . 1. Definitional Problems . . . . . . . . . . . . . . . . . . . . ..................... . 1) Dispositions to Children . . . . . . . . . . . . ..................... . 2) Dispositions to Heirs . . . . . . . . . . . . . . . ..................... . 3) Dispositions to Issue or Descendants ..................... . 4) Class Members in Gestation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. When the Class ClosesThe Rule of Convenience. . . . . . . . . . . . . . . . . . . 1) Outright GiftClass Closes at Time Gift Is Made . . . . . . . . . . . . . . a) No Class Members Alive at Testators DeathClass Stays Open . . 9 . 9 . 9 . 9 . 9 10 10 10 11 11 11 12 13 13 13 14 14 15 15 16 16 16 16 17 18 18 18 19 19 19 20 20 21 21 21 21 21 21 21 21 22 22 22 22 22

REAL PROPERTY iii. 2. 2) Postponed GiftClass Closes at Time Fixed for Distribution . . . . . 23 3. 3) Dispositions Subject to Condition of Reaching Given Age . . . . . . . . . 23 4. 4) Rule of Convenience Is a Rule of Construction Only . . . . . . . . . . . . . 24 7. Survival.......................................................... 24 a. Express Words of Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 b. Implied Contingency of SurvivalGifts to Issue, Descendants, or Heirs ...................................................... 25 4. TRUSTS ............................................................. 25 1. Private Trust Concepts and Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 a. Settlor ....................................................... 25 b. Trustee ...................................................... 25 c. Beneficiaries.................................................. 25 d. Res.......................................................... 25 e. Application of Rule Against Perpetuities . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 2. Creation of Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 a. Inter Vivos Conveyance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 b. Inter Vivos Declaration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 c. Testamentary Conveyance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 d. Pour-Over into Existing Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 3. Charitable Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 a. Beneficiaries.................................................. 26 b. Application of Rule Against Perpetuities . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 c. Cy Pres Doctrine . . . . . . . . . . . . . . . . . . . . . . . ....................... 27 d. Enforcement of Charitable Trusts . . . . . . . . . ....................... 27 5. THE RULE AGAINST PERPETUITIES . . . . . . . . . . . ....................... 27 1. Analysis of the Rule . . . . . . . . . . . . . . . . . . . . . . . . . ....................... 27 a. When the Perpetuities Period Begins to Run ....................... 27 1) WillsDate of Testators Death . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 2) Revocable TrustsDate Trust Becomes Irrevocable . . . . . . . . . . . . . 27 3) Irrevocable TrustsDate Trust Is Created . . . . . . . . . . . . . . . . . . . . 27 4) DeedsDate Deed Is Delivered with Intent to Pass 2. Must Vest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1) Wait and See Rule . . . . . . . . . . . . . . . . . . . . . . . . . 3. If at All . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. Lives in Being . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1) Who Can Be Used as Measuring Lives . . . . . . . . . . 2) Reasonable Number of Human Lives Can Be Used 5. Interests Exempt from Rule . . . . . . . . . . . . . . . . . . . . . . . 1) Gift Over to Second Charity . . . . . . . . . . . . . . . . . . . 2) Vested Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . a) CompareClass Gifts Are Subject to Rule . . 3) Reversionary Interests . . . . . . . . . . . . . . . . . . . . . . . . Title . . . . . . . . . 28 .............. 28 .............. 29 .............. 29 .............. 29 .............. 30 .............. 30 .............. 31 .............. 31 .............. 32 .............. 32 .............. 32 a) CompareExecutory Interests Are Subject to Rule . . . . . . . . . 32 f. Consequence of Violating the RuleInterest Is Stricken . . . . . . . . . . . . . 32 1) ExceptionInfectious Invalidity . . . . . . . . . . . . . .............. 32 2. The Rule in OperationCommon Pitfall Cases. . . . . . . . . . . .............. 33 a. Executory Interest Following Defeasible Fee Violates the Rule . . . . . . . . . 33 b. Age Contingency Beyond Age Twenty-One in Open Class . . . . . . . . . . . . . 34

iv. REAL PROPERTY c. The Fertile Octogenarian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 4. The Unborn Widow or Widower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 5. The Administrative Contingency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 6. Options and Rights of First Refusal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 1) Options .................................................. 35 a) Reasonable Time Limit May Be Inferred . . . . . . . . . . . . . . . . . . 36 b) Options Connected to Leaseholds 2) Rights of First Refusal. . . . . . . . . . . . . 3. Application of the Rule to Class Gifts . . . . . . . . a. Bad-as-to-One, Bad-as-to-All Rule . . . . b. Class Closing Rules May Save Disposition c. Gift to Subclass Exception . . . . . . . . . . . . d. Per Capita Gift Exception . . . . . . . . . . . . . . . . . . . . ........................ 36 4. Perpetuities Reform Legislation . . . . . . . . . . . . . . 5. Technique for Analysis of Perpetuities Problems a. Determine What Interests Are Created . . . . b. Apply the Rule . . . . . . . . . . . . . . . . . . . . . . . . ..... ..... ..... ..... ..... ..... ..... ..... ..... ..... ................... 36 ................... 36 ................... 36 ................... 37 ................... 38 ................... 38 ................... 38 ................... 39 ................... 39 ................... 39 ................... 39 ................... 39 ................... 39 ................... 40 ................... 40 ................... 40 ................... 40 ................... 40 ................... 40 ................... 40 ................... 41 ................... 41 ................... 41 ................... 41 ................... 41 ................... 41 ................... 41 c. Apply Reform Statute . . . . . . . . . . . . . . . . . . . . . . . F. THE RULE AGAINST RESTRAINTS ON ALIENATION 1. Types of Restraints on Alienation . . . . . . . . . . . . . . . . . . 2. Restraints on a Fee Simple . . . . . . . . . . . . a. Total Restraints . . . . . . . . . . . . . . . . . b. Partial Restraints . . . . . . . . . . . . . . . . 1) Reasonable Restraints Doctrine 2) Discriminatory Restraints . . . . . a) Fourteenth Amendment .. b) Fair Housing Act . . . . . . .. 3. Restraints on a Life Estate . . . . . . . . . . .. a. Legal Life Estate . . . . . . . . . . . . . . .. b. Equitable Life Estate . . . . . . . . . . . .. 4. Restraints on Future Interests . . . . . . . .. a. Vested Remainders in Fee Simple . .. b. Vested Remainders for Life . . . . . . .. c. Contingent Remainders . . . . . . . . . .. ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... 5. Other Valid Restraints on Alienation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 a. Reasonable Restrictions in Commercial Transactions . . . . . . . . . . . . . . . . 41 b. Options and Rights of First Refusal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 c. Restrictions on Transferability of Leaseholds . . . . . . . . . . . . . . . . . . . . . . . 42 G. CONCURRENT ESTATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 1. Joint Tenancy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 1. Creation ..................................................... 42 1) Four Unities Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 2) Modern Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 3) Express Language Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 2. Severance .................................................... 43 1) Inter Vivos Conveyance by One Joint Tenant . . . . . . . . . . . . . . . . . . . 43 a) When More than Two Joint Tenants . . . . . . . . . . . . . . . . . . . . . . 43 b) Transactions that May Not Result in Severance . . . . . . . . . . . . . 43

REAL PROPERTY v. (1) Judgment Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 (2) Mortgages........................................ 44 (3) Leases ........................................... 44 (a) Death of Lessor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 2) Contract to Convey by One Joint Tenant . . . . . . . . . . . . . . . . . . . . . . . 44 a) CompareExecutory Contract by All Joint Tenants . . . . . . . . 44 (1) Common Law ViewJoint Tenancy Continues . . . . . . . . . 45 (2) Other CourtsTenancy in Common . . . . . . . . . . . . . . . . . . 45 3. 3) Testamentary Disposition by One Joint Tenant Has No Effect . . . . . 45 a) CompareSecret Deeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 4. 4) Effect of One Joint Tenants Murdering Another . . . . . . . . . . . . . . . . 45 2. Tenancy by the Entirety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 a. Right of Survivorship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 b. Severance Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 c. Individual Spouse Cannot Convey or Encumber . . . . . . . . . . . . . . . . . . . . 46 3. Tenancy in Common . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 4. Incidents of Co-Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 a. Possession.................................................... 46 b. Rents and Profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 c. Effect of One Concurrent Owners Encumbering the Property . . . . . . . . 46 d. Ouster....................................................... 47 e. Remedy of Partition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 1) Restraint on Partition by Co-Tenants . . . . . . . . . . . . . . . . . . . . . . . . . 47 f. Expenses for Preservation of PropertyContribution . . . . . . . . . . . . . . . 48 1) RepairsContribution May Be Compelled for Necessary Repairs . 48 2) ImprovementsNo Contribution or Setoff . . . . . . . . . . . . . . . . . . . . . 48 3) Taxes and MortgagesContribution Can Be Compelled . . . . . . . . . 48 g. Duty of Fair Dealing Among Co-Tenants . . . . . . . . . . . . . . . . . . . . . . . . . . 48 II. LANDLORD AND TENANT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 A. NATURE OF LEASEHOLD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 1. Tenancies for Years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 a. Fixed Period of Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 b. Creation ..................................................... 49 c. Termination .................................................. 49 1. 1) Breach of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 a) Failure to Pay Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 2. 2) Surrender ................................................ 49 2. Periodic Tenancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 1. Creation ..................................................... 50 1) By Express Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 2) By Implication . . . . . . . . . . .................................. 50 3) By Operation of Law . . . . . .................................. 50 a) Tenant Holds Over . . . .................................. 50 b) Lease Invalid . . . . . . . .................................. 50 2. TerminationNotice Required .................................. 50 3. Tenancies at Will . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 a. Creation ..................................................... 51

vi. REAL PROPERTY b. Termination .................................................. 51 4. Tenancies at Sufferance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 5. The Hold-Over Doctrine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 a. Eviction...................................................... 52 b. Creation of Periodic Tenancy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 1) Terms ................................................... 52 2) Altered Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 c. What Does Not Constitute Holding Over . . . . . . . . . . . . . . . . . . . . . . . . . . 52 d. Double Rent Jeopardy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 e. Forcible Entry Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 B. LEASES............................................................. 53 1. Common LawLease Covenants Independent . . . . . . . . . . . . . . . . . . . . . . . . . 53 2. Modern TrendLease Covenants Dependent . . C. TENANT DUTIES AND LANDLORD REMEDIES 1. Tenants Duty to Repair (Doctrine of Waste) . . . a. Types of Waste . . . . . . . . . . . . . . . . . . . . . . . . 1) Voluntary (Affirmative) Waste . . . . . . . 2) Permissive Waste . . . . . . . . . . . . . . . . . . 3) Ameliorative Waste . . . . . . . . . . . . . . . . ........................ 53 ........................ 54 ........................ 54 ........................ 54 ........................ 54 ........................ 54 ........................ 54 a) LiabilityCost of Restoration . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 b) Modern ExceptionValue of Premises Decreasing . . . . . . . . . . 54 2. Destruction of the Premises Without Fault . . . . . . . . . . . . . . . . . . . . . . . . . 55 1) Majority ViewTenant Can Terminate Lease . . . . . . . . . . . . . . . . . . 55 3. Tenants Liability for Covenants to Repair . . . . . . . . . . . . . . . . . . . . . . . . . 55 1) Rebuilding After Structural Damage or Casualty Destruction . . . . . 55 2) Repairing Ordinary Wear and Tear . . . . . . . . . . . . . . . . . . . . . . . . . . 55 2. Duty to Not Use Premises for Illegal Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 a. Occasional Unlawful Conduct Does Not Breach Duty . . . . . . . . . . . . . . . . 56 b. Landlord RemediesTerminate Lease, Recover Damages . . . . . . . . . . . . 56 3. Duty to Pay Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 a. When Rent Accrues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 b. Rent Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 c. Termination of Rent LiabilitySurrender . . . . . . . . . . . . . . . . . . . . . . . . . 56 4. Landlord Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 1. Tenant on Premises But Fails to Pay RentEvict or Sue for Rent . . . . . . 56 1) DistressLandlords Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 2. Tenant AbandonsDo Nothing or Repossess . . . . . . . . . . . . . . . . . . . . . . . 57 1) Landlord Does NothingTenant Remains Liable . . . . . . . . . . . . . . . 57 2) Landlord RepossessesTenants Liability Depends on Surrender . . 57 a) Acts that Constitute Acceptance of Surrender . . . . . . . . . . . . . . 57 b) Acts that Do Not Constitute Acceptance of Surrender . . . . . . . . 57 D. LANDLORD DUTIES AND TENANT REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . 57 1. Duty to Deliver Possession of Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 a. Landlord DutyMust Deliver Actual Possession . . . . . . . . . . . . . . . . . . . . 58 b. Tenant RemedyDamages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 2. Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 a. Actual Eviction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 b. Partial Actual Eviction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

REAL PROPERTY vii. 1. 1) Partial Eviction by LandlordEntire Rent Obligation Relieved . . . 58 2. 2) Partial Eviction by Third PersonRent Apportioned . . . . . . . . . . . . 58 c. Constructive Eviction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 3. Implied Warranty of Habitability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 a. StandardReasonably Suitable for Human Residence . . . . . . . . . . . . . . . 59 b. Remedies..................................................... 59 4. Retaliatory Eviction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 5. Discrimination .................................................... 60 5. ASSIGNMENTS AND SUBLEASES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 1. Consequences of Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 a. Covenants that Run with the Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 b. Rent Covenant Runs with the Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 1. 1) Reassignment by AssigneePrivity of Estate with Landlord Ends . 61 a) Effect of Assignee Assuming Rent Obligation . . . . . . . . . . . . . . . 61 2. 2) Original Tenant Remains Liable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 2. Consequences of Sublease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 1. Liability of Sublessee for Rent and Other Covenants . . . . . . . . . . . . . . . . . 61 1) Termination for Breach of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . 62 2. Assumption by Sublessee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 3. Rights of Sublessee. . . . . . . . . . . . . . . . . ............................ 62 3. Covenants Against Assignment or Sublease ............................ 62 a. Strictly Construed Against Landlord . . ............................ 62 b. Waiver of Covenant . . . . . . . . . . . . . . . . . ........................... 62 c. Continuing Waiver . . . . . . . . . . . . . . . . . ............................ 62 d. Transfer in Violation of Lease Not Void ........................... 62 e. Reasonableness................................................ 62 4. Assignments by Landlords . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 a. Right to Assign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 b. Rights of Assignee Against Tenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 c. Liabilities of Assignee to Tenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 6. CONDEMNATION OF LEASEHOLDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 1. Entire Leasehold Taken by Eminent DomainRent Liability Extinguished . 63 2. Temporary or Partial TakingTenant Entitled to Compensation Only . . . . . 63 7. TORT LIABILITY OF LANDLORD AND TENANT . . . . . . . . . . . . . . . . . . . . . . . 63 1. Landlords Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . a. Concealed Dangerous Condition (Latent Defect) b. Common Areas . . . . . . . . . . . . . . . . . . . . . . . . . . . .................... 63 .................... 64 .................... 64 .................... 64 .................... 64 .................... 64 .................... 64 .................... 64 .................... 65 c. Public Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . d. Furnished Short-Term Residence . . . . . . . . . . . . e. Negligent Repairs by Landlord . . . . . . . . . . . . . . f. Landlord Contracts to Repair . . . . . . . . . . . . . . . . . . . . 2. Modern TrendGeneral Duty of Reasonable Care .a. Defects Arising After Tenant Takes Possessionb. Legal Duty to Repair . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 c. Security...................................................... 65 3. Tenants Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 III. FIXTURES .............................................................. 65

viii. REAL PROPERTY 1. IN GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 2. CHATTELS INCORPORATED INTO STRUCTURE ALWAYS BECOME FIXTURES .......................................................... 66 3. COMMON OWNERSHIP CASES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 1. Annexors Intent Controls in Common Ownership Cases . . . . . . . . . . . . . . . . . 66 a. Constructive Annexation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 b. Vendor-Purchaser Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 c. Mortgagor-Mortgagee Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 2. Effect of Fixture Classification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 a. Conveyance................................................... 67 b. Mortgage..................................................... 67 c. Agreement to Contrary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 4. DIVIDED OWNERSHIP CASES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 1. Landlord-Tenant .................................................. 67 a. Agreement ................................................... 67 b. No Intent If Removal Does Not Cause Damage. . . . . . . . . . . . . . . . . . . . . . 68 c. Removal Must Occur Before End of Lease Term . . . . . . . . . . . . . . . . . . . . 68 d. Tenant Has Duty to Repair Damages Resulting from Removal . . . . . . . . 68 2. Life Tenant and Remainderman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 3. Licensee and Landowner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 4. Trespasser and Landowner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 a. Trespassers Recovery Limited to Value Added to Land . . . . . . . . . . . . . . 68 5. THIRD-PARTY CASES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 1. Third Person Claims Lien on Chattel Affixed to Land . . . . . . . . . . . . . . . . . . . 68 a. U.C.C. Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 b. Liability for Damages Caused by Removal . . . . . . . . . . . . . . . . . . . . . . . . . 69 IV. RIGHTS IN THE LAND OF ANOTHEREASEMENTS, PROFITS, COVENANTS, AND SERVITUDES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 A. IN GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 B. EASEMENTS ........................................................ 69 1. Introduction ...................................................... 69 a. Types of Easements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 1) Affirmative Easements . . . . . . . . . . . . . . . . . 2) Negative Easements . . . . . . . . . . . . . . . . . . . . 2. Easement Appurtenant . . . . . . . . . . . . . . . . . . . . . 1) Use and Enjoyment . . . . . . . . . . . . . . . . . . . . 2) Benefit Attached to Possession . . . . . . . . . . . 3) Transfer of Dominant and Servient Estates 3. Easement in Gross . . . . . . . . . . . . . . . . . . . . . . . . . 4. Judicial Preference for Easements Appurtenant . .................... 69 .................... 70 .................... 70 .................... 70 .................... 70 .................... 71 .................... 71 .................... 71 .................... 72 .................... 72 2. Creation of Easements . . . . . . . . . . . . . . . . . . . . . . . . . .a. Express Grant . . . . . . . . . . . . . . . . . . . . . . . . . . . .b. Express Reservation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 c. Implication................................................... 72 1) Easement Implied from Existing Use (Quasi-Easement) . . . . . . . . 72 a) Existing Use at Time Tract Divided . . . . . . . . . . . . . . . . . . . . . . . 72 b) Reasonable Necessity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

REAL PROPERTY ix. c) Grant or Reservation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 2. 2) Easements Implied Without Any Existing Use . . . . . . . . . . . . . . . . . . 73 a) Subdivision Plat . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 b) Profit a Prendre . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 3. 3) Easement by Necessity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 d. Prescription .................................................. 73 1) Open and Notorious . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 2) Adverse.................................................. 74 3) Continuous Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 4) When Prescriptive Easements Cannot Be Acquired . . . . . . . . . . . . . . 74 3. Scope............................................................ 74 a. General Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 b. Absence of Location . . . . . . . . . . . . . . . . ............................ 75 c. Changes in Use . . . . . . . . . . . . . . . . . . . . ............................ 75 d. Easements by Necessity or Implication ............................ 75 e. Use of Servient Estate . . . . . . . . . . . . . . ............................ 75 1) Duty to Repair . . . . . . . . . . . . . . . . ............................ 75 f. Intended BeneficiariesSubdivision of Dominant Parcel . . . . . . . . . . . . . 76 g. Effect of Use Outside Scope of Easement . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 4. Termination of Easements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 a. Stated Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 b. Unity of Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 1) Complete Unity Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 2) No Revival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 c. Release ...................................................... 77 1) Easement Appurtenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 2) Easement in Gross . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 3) Statute of Frauds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 d. Abandonment................................................. 78 1) Physical Act Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 2) Mere Words Insufficient . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 3) Mere Nonuse Insufficient . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 e. Estoppel ..................................................... 79 f. Prescription .................................................. 79 g. Necessity..................................................... 79 h. Condemnation ................................................ 79 i. Destruction of Servient Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 5. CompareLicenses................................................ 80 a. Assignability.................................................. 80 b. Revocation and Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 1) Public Amusement Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 2) Breach of Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 c. Failure to Create an Easement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 d. Irrevocable Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 1) Estoppel Theory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 2) License Coupled with an Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 a) Vendee of a Chattel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 b) Termination of Tenancy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81

x. REAL PROPERTY c) Inspection for Waste . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 C. PROFITS ............................................................ 81 1. Creation ......................................................... 82 2. Alienability....................................................... 82 3. Exclusive and Nonexclusive Profits Distinguished . . . . . . . . . . . . . . . . . . . . . . . 82 4. Scope............................................................ 82 a. Apportionment of Profits Appurtenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 b. Apportionment of Profits in Gross . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 5. Termination ...................................................... 83 4. COVENANTS RUNNING WITH THE LAND AT LAW (REAL COVENANTS) . 83 1. Requirements for Burden to Run . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 a. Intent........................................................ 83 b. Notice ....................................................... 83 c. Horizontal Privity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 d. Vertical Privity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 e. Touch and Concern . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 1) Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 2) Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 2. Requirements for Benefit to Run . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 a. Intent........................................................ 85 b. Vertical Privity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 c. Touch and Concern . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 3. Modern Status of Running of Burden and Benefit . . . . . . . . . . . . . . . . . . . . . . . 86 a. Horizontal and Vertical Privity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 b. Touch and Concern . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 4. Specific Situations Involving Real Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 a. Promises to Pay Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 b. Covenants Not to Compete . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 c. Racially Restrictive Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 5. RemediesDamages............................................... 87 6. Termination ...................................................... 87 5. EQUITABLE SERVITUDES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 1. Creation ......................................................... 87 a. Servitudes Implied from Common Scheme . . . . . . . . . . . . . . . . . . . . . . . . . 88 1) Common Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 2) Notice ................................................... 88 2. Enforcement...................................................... 88 1. Requirements for Burden to Run . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 1) Intent.................................................... 89 2) Notice ................................................... 89 3) Touch and Concern . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 2. Requirements for Benefit to Run . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 3. Privity Not Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 4. Implied Beneficiaries of CovenantsGeneral Scheme . . . . . . . . . . . . . . . 89 3. Equitable Defenses to Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 a. Unclean Hands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 b. Acquiescence.................................................. 90 c. Estoppel ..................................................... 90

REAL PROPERTY xi. d. Changed Neighborhood Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 1) Zoning................................................... 91 2) Concept of the Entering Wedge . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 4. Termination ...................................................... 91 6. RELATIONSHIP OF COVENANTS TO ZONING ORDINANCES . . . . . . . . . . . 91 7. PARTY WALLS AND COMMON DRIVEWAYS . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 1. Creation ......................................................... 92 2. Running of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 V. ADVERSE POSSESSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 A. IN GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 B. REQUIREMENTS .................................................... 92 1. Running of Statute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 2. Actual and Exclusive Possession . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 1. Actual Possession Gives Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 1) Constructive Possession of Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 2. Exclusive PossessionNo Sharing with Owner . . . . . . . . . . . . . . . . . . . . . 93 3. Open and Notorious Possession . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 4. Hostile........................................................... 93 a. If Possession Starts PermissivelyMust Communicate Hostility . . . . . . . 93 b. Co-TenantsOuster Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 c. If Grantor Stays in PossessionPermission Presumed . . . . . . . . . . . . . . . 94 d. CompareBoundary Line Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 1) Establishment Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 5. Continuous Possession . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 a. Intermittent Periods of Occupancy Not Sufficient . . . . . . . . . . . . . . . . . . . 94 b. Tacking Permitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 1) Privity................................................. 95 2) Formalities on Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 6. Payment of Property Taxes Generally Not Required . . . . . . . . . . . . . . . . . . . . . 95 C. DISABILITY ......................................................... 95 1. Effect of DisabilitiesStatute Does Not Begin to Run . . . . . . . . . . . . . . . . . . . . 95 2. No Tacking of Disabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 3. Maximum Tolling Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 D. ADVERSE POSSESSION AND FUTURE INTERESTS . . . . . . . . . . . . . . . . . . . . . 96 1. Possibility of ReverterStatute of Limitations Runs on Happening of Event . 96 2. Right of EntryHappening of Event Does Not Trigger Statute of Limitations....................................................... 96 a. Grantor Must Act Within Reasonable Time to Avoid Laches . . . . . . . . . . 96 E. EFFECT OF COVENANTS IN TRUE OWNERS DEED . . . . . . . . . . . . . . . . . . . . 97 F. LAND THAT CANNOT BE ADVERSELY POSSESSED . . . . . . . . . . . . . . . . . . . . 97 VI. CONVEYANCING ........................................................ 97 A. LAND SALE CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 1. Statute of Frauds Applicable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 a. Doctrine of Part Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 1) Theories to Support the Doctrine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 a) Evidentiary Theory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97

xii. REAL PROPERTY b) Hardship or Estoppel Theory . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. 2) Acts of Part Performance .................................. 3. 3) Can Seller Obtain Specific Performance Based on Buyers Acts? . . a) Evidentiary Theory . .................................. b) Hardship or Estoppel Theory . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 . 98 . 98 . 98 . 98 . 98 . 98 . 98 . 99 . 99 . 99 . 99 . 99 . 99 100 100 100 100 101 101 101 101 101 101 101 101 102 102 102 102 102 102 102 102 103 103 103 103 103 103 103 103 103 104 104 104 104 104 2. Doctrine of Equitable Conversion . 1. Risk of Loss . . . . . . . . . . . . . . . 1) Casualty Insurance . . . . . 2. Passage of Title on Death . . . . 1) Death of Seller . . . . . . . . . 2) Death of Buyer . . . . . . . . . .................................. .................................. .................................. .................................. .................................. .................................. 3. Marketable Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Marketability DefinedTitle Reasonably Free from Doubt . . . . . . . . 1. 1) Defects in Record Chain of Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . a) Adverse Possession . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . b) Future Interest Held by Unborn or Unascertained Parties . . . 2. 2) Encumbrances ........................................... a) Mortgages and Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . b) Easements........................................... c) Covenants........................................... d) Encroachments....................................... 3. 3) Zoning Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4) Waiver.................................................. 2. Quitclaim DeedNo Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. Time of Marketability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1) Installment Land Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. Remedy If Title Not Marketable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1) Rescission, Damages, Specific Performance . . . . . . . . . . . . . . . . . . . 2) Merger ................................................. 4. Time of Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . a. PresumptionTime Not of the Essence. . . . . . . . . . . . . . . . . . . . . . . . . . . b. When Presumption Overcome . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . c. Effect of Time of the Essence Construction . . . . . . . . . . . . . . . . . . . . . . . . d. Liability When Time Not of the Essence . . . . . . . . . . . . . . . . . . . . . . . . . . 5. Tender of Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . a. When Partys Tender Excused . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . b. Neither Party Tenders Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . c. Buyer Finds Sellers Title Unmarketable . . . . . . . . . . . . . . . . . . . . . . . . . . 6. Remedies for Breach of the Sales Contract 1. Damages . . . . . . . . . . . . . . . . . . . . . . . . 1) Liquidated Damages . . . . . . . . . . 2. Specific Performance . . . . . . . . . . . . . . 1) Buyers Remedy . . . . . . . . . . . . . . 2) Sellers Remedy . . . . . . . . . . . . . . 3. Special Rules for Unmarketable Title 7. Sellers Liability for Defects on Property . . a. Warranty of Fitness or QualityNew b. Negligence of Builder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ........................... ............................ ............................ ............................ ............................ ............................ ............................ Construction Only . . . . . . . . . . . ............................

REAL PROPERTY xiii. c. Liability for Sale of Existing Land and Buildings . . 1) Misrepresentation (Fraud) . . . . . . . . . . . . . . . . 2) Active Concealment . . . . . . . . . . . . . . . . . . . . . . 3) Failure to Disclose . . . . . . . . . . . . . . . . . . . . . . . d. Disclaimers of Liability . . . . . . . . . . . . . . . . . . . . . . . 1) As Is Clauses . . . . . . . . . . . . . . . . . . . . . . . . . . 2) Specific Disclaimers . . . . . . . . . . . . . . . . . . . . . . 8. Real Estate Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ................. 104 ................. 104 ................. 104 ................. 105 ................. 105 ................. 105 ................. 105 ................. 105 ................. 105 9. Title Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .B. DEEDSFORM AND CONTENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105 1. Formalities ...................................................... 106 a. Statute of Frauds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106 b. Description of Land and Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106 c. Words of Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106 d. Consideration Not Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106 e. Seal Is Unnecessary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106 f. Attestation and Acknowledgment Generally Unnecessary . . . . . . . . . . . . 106 g. Signature.................................................... 106 2. Defective Deeds and Fraudulent Conveyances . . . . . . . . . . . . . . . . . . . . . . . . . 107 1. Void and Voidable Deeds . . . . . . . . . . . . . . . . . . . . . . . 1) Void Deeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2) Voidable Deeds . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Fraudulent Conveyances . . . . . . . . . . . . . . . . . . . . . . . 3. Description of Land Conveyed . . . . . . . . . . . . . . . . . . . . . . a. Sufficient Description Provides a Good Lead . . . . . . b. Insufficient DescriptionTitle Remains in Grantor c. Parol Evidence Admissible to Clear Up Ambiguity . 1) CompareInadequate Description . . . . . . . . . . d. Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... .......... 107 .......... 107 .......... 107 .......... 107 .......... 107 .......... 107 .......... 107 .......... 108 .......... 108 .......... 108 .......... 108 .......... 108 .......... 109 .......... 109 .......... 109 .......... 109 e. Land Bounded by Right-of-Way . . . . . . . . . . . . . . . . . . . . . . . 1. 1) Title Presumed to Extend to Center of Right-of-Way . . a) Evidence to Rebut Presumption . . . . . . . . . . . . . . . b) Measuring from Monument . . . . . . . . . . . . . . . . . . 2. 2) Variable Boundary Line Cases . . . . . . . . . . . . . . . . . . . . a) Slow Change in Course Changes Property Rightsb) Avulsion Does Not Change Property Rights . . . . . . . . . . . . . . . 109 c) Encroachment of Water Does Not Change Fixed Boundary Lines ............................................... 109 f. Reformation of Deeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110 C. DELIVERY AND ACCEPTANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110 1. DeliveryIn General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110 a. Manual Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110 b. Presumptions Relating to Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110 c. Delivery Cannot Be Canceled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111 d. Parol Evidence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111 1) Admissible to Prove Grantors Intent . . . . . . . . . . . . . . . . . . . . . . . . 111 2) Not Admissible to Show Delivery to Grantee Was Conditional . . . . 111 3) Admissible to Show No Delivery Intended . . . . . . . . . . . . . . . . . . . . . 111

xiv. REAL PROPERTY 1. a) Deed Intended as Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111 2. b) Transfer of Deed to Bona Fide Purchaser . . . . . . . . . . . . . . . . . 111 (1) Estoppel in Favor of Innocent Purchaser . . . . . . . . . . . . . 112 4) Comment ............................................... 112 2. Retention of Interest by Grantor or Conditional Delivery . . . . . . . . . . . . . . . . 112 a. No DeliveryTitle Does Not Pass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 b. No RecordingTitle Passes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 c. Express Condition of Death of Grantor Creates Future Interest . . . . . . 112 d. Conditions Not Contained in Deed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 e. TestRelinquishment of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 3. Where Grantor Gives Deed to Third Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 a. Transfer to Third Party with No Conditions . . . . . . . . . . . . . . . . . . . . . . 113 b. Transfer to Third Party with Conditions (Commercial Transaction) . . 113 1) Parol Evidence Admissible to Show Conditions . . . . . . . . . . . . . . . . 113 2) Grantors Right to Recover Deed . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 a) Majority ViewCan Recover Only If No Written Contract . . 114 b) Minority ViewNo Right to Recover . . . . . . . . . . . . . . . . . . . . 114 3) Breach of Escrow ConditionsTitle Does Not Pass . . . . . . . . . . . . . 114 a) Estoppel Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 4) Relation-Back Doctrine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 a) Not Applied If Intervening Party Is BFP or Mortgagee . . . . . . 115 b) Not Applied in Favor of Escrow Grantee with Knowledge . . . . 115 c. Transfer to Third Party with Conditions (Donative Transactions) . . . . 115 1) Condition Unrelated to Grantors Death . . . . . . . . . . . . . . . . . . . . . . 115 2) Where Condition Is Grantors Death . . . . . . . . . . . . . . . . . . . . . . . . . 115 a) LimitationNo Delivery If Conditioned on Survival . . . . . . . . 115 4. Acceptance ...................................................... 115 a. Usually Presumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 b. Usually Relates Back . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116 5. Dedication....................................................... 116 D. COVENANTS FOR TITLE AND ESTOPPEL BY DEED . . . . . . . . . . . . . . . . . . . 116 1. Covenants for Title in a General Warranty Deed . . . . . . . . . . . . . . . . . . . . . . . 116 a. Usual Covenants . . . . . . . . . . . . . . . . . . . . . . . . . 1) Covenant of Seisin . . . . . . . . . . . . . . . . ... 2) Covenant of Right to Convey . . . . . . . ... 3) Covenant Against Encumbrances . . . . ... 4) Covenant for Quiet Enjoyment . . . . . . ... 5) Covenant of Warranty . . . . . . . . . . . . . ... 6) Covenant for Further Assurances . . . ... 7) No Implied Warranties or Covenants ... ..................... 116 ..................... 116 ..................... 116 ..................... 117 ..................... 117 ..................... 117 ..................... 117 ..................... 117 ..................... 117 ..................... 117 b. Breach of Covenants . . . . . . . . . . . . . . . . . . . . .1) Covenants of Seisin and Right to Convey2) Covenant Against Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118 3) Covenants for Quiet Enjoyment, Warranty, and Further Assurances .............................................. 118 a) Covenant Runs to Successive Grantees . . . . . . . . . . . . . . . . . . . 118 b) Requirement of Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118 c) Any Disturbance of Possession . . . . . . . . . . . . . . . . . . . . . . . . . . 118

REAL PROPERTY xv. c. Damages and Remote Grantees . . . . . . . . . . . . . 2. Statutory Special Warranty Deed . . . . . . . . . . . . . . . 3. Quitclaim Deeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. Estoppel by Deed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . a. Applies to Warranty Deeds . . . . . . . . . . . . . . . . . b. Rights of Subsequent Purchasers . . . . . . . . . . . . 1) Effect of Recordation by Original Grantee .................... 118 .................... 119 .................... 119 . . . . . . . . . . .. . . . . . . . . 119 .................... 119 .................... 119 .................... 120 c. Remedies of Grantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120 E. RECORDING ....................................................... 120 1. Recording ActsIn General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120 a. Purpose of RecordationNotice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120 b. Requirements for Recordation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120 1. 1) What Can Be RecordedInstrument Affecting an Interest inLand ................................................... 120 2. 2) Grantor Must Acknowledge Deed . . . . . . . . . . . . . . . . . . . . . . . . . . . 120 c. Mechanics of Recording . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121 1) Filing Copy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121 2) Indexing ................................................ 121 2. Types of Recording Acts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121 a. Notice Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121 b. Race-Notice Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122 c. Race Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122 3. Who Is Protected by Recording Acts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122 1. Purchasers .................................................. 123 1) Donees, Heirs, and Devisees Not Protected . . . . . . . . . . . . . . . . . . . . 123 2) Purchaser from Donee, Heir, or Devisee . . . . . . . . . . . . . . . . . . . . . . 123 3) Mortgagees.............................................. 123 4) Judgment Creditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 5) Transferees from Bona Fide PurchaserShelter Rule . . . . . . . . . . 124 a) Rationale............................................ 124 b) ExceptionNo Shipping Through . . . . . . . . . . . . . . . . . . . . . 124 6) Purchaser Under Installment Land Contract . . . . . . . . . . . . . . . . . . 124 a) ExceptionShelter Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125 2. Without Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125 1) Actual Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125 2) Record NoticeChain of Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125 a) Wild Deeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125 b) Deeds Recorded Late . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126 (1) ExceptionShelter Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . 126 (2) Lis Pendens Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126 c) Deeds Recorded Before Grantor Obtained Title. . . . . . . . . . . . 126 d) Deed in Chain Referring to Instrument Outside Chain . . . . . . 127 e) Restrictive CovenantsDeeds from Common Grantor . . . . . . 127 (1) Subdivision Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . 127 (2) Adjacent Lots . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128 f) Marketable Title Acts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128 3) Inquiry Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128 a) Generally No Inquiry from Quitclaim Deed . . . . . . . . . . . . . . . 128

xvi. REAL PROPERTY VII. 2. b) Inquiry from References in Recorded Instruments . . . . . . . . . 128 3. c) Inquiry from Unrecorded Instruments in Chain of Title . . . . . 128 4. d) Inquiry from Possession . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129 c. Valuable Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129 1) TestSubstantial Pecuniary Value . . . . . . . . . . . . . . . . . . . . . . . . . . 129 2) Property Received as Security for Antecedent Debts Is Insufficient .............................................. 129 4. Title Search . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129 a. Tract Index Search . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129 b. Grantor and Grantee Index Search . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130 c. Other Instruments and Events Affecting Title . . . . . . . . . . . . . . . . . . . . . 131 5. Effect of Recordation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131 a. Does Not Validate Invalid Deed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131 b. Does Not Protect Against Interests Arising by Operation of Law . . . . . . 131 1) Exception ............................................... 131 c. Recorders Mistakes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132 d. Effect of Recording Unacknowledged Instrument . . . . . . . . . . . . . . . . . . 132 1) No AcknowledgmentNo Constructive Notice . . . . . . . . . . . . . . . . . 132 2) CompareDefective Acknowledgment . . . . . . . . . . . . . . . . . . . . . . . 132 6. CONVEYANCE BY WILL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132 1. Ademption ...................................................... 132 a. Not Applicable to General Devises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133 b. Not Applicable to Land Under Executory Contract . . . . . . . . . . . . . . . . . 133 1) No Ademption If Decedent Incompetent When Contract Formed . 133 c. Other Proceeds Not Subject to Ademption . . . . . . . . . . . . . . . . . . . . . . . . 133 d. Partial Ademption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133 2. Exoneration ..................................................... 133 3. Lapse and Anti-Lapse Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134 1. Degree of Relationship to Testator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134 1) Descendants Are Substituted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134 2. Inapplicable If Beneficiary Dead When Will Executed . . . . . . . . . . . . . . 134 3. Application to Class Gifts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134 4. Anti-Lapse Statute Does Not Apply If Contrary Will Provision . . . . . . . 134 4. Abatement....................................................... 134 7. CROPS (EMBLEMENTS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135 1. Conveyance of Land Includes Crops . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135 2. ExceptionHarvested Crops . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135 a. Ripened But Unharvested Crops . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135 3. ExceptionCrops Planted by Tenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135 a. CompareTrespasser......................................... 135 SECURITY INTERESTS IN REAL ESTATE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135 A. TYPES OF SECURITY INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135 1. Mortgage........................................................ 136 2. Deed of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136 3. Installment Land Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136 4. Absolute DeedEquitable Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136 5. Sale-Leaseback................................................... 136

REAL PROPERTY xvii. B. TRANSFERS BY MORTGAGEE AND MORTGAGOR ................... 1. Transfer by Mortgagee . . . . . . . . . . . . . . . . . . . . . . . . ................... a. Transfer of Mortgage Without Note. . . . . . . . . . ................... b. Transfer of Note Without Mortgage. . . . . . . . . . ................... 1. 1) Methods of Transferring the Note . . . . . . . ................... a) Holder in Due Course Status . . . . . . . . . . . . . . . . . . . . . . . . . . b) Benefits of Holder in Due Course Status . . . . . . . . . . . . . . . . . 2. 2) Effect of Payment to Original Mortgagee After Transfer of Note . . 136 . 137 . 137 . 137 . 137 . 137 . 137 . 138 2. Transfer by MortgagorGrantee Takes Subject to Mortgage . . . . . . . . . . . . 138 a. Assumption.................................................. 138 b. Nonassuming Grantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138 c. Due-on-Sale Clauses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138 C. DEFENSES AND DISCHARGE OF THE MORTGAGE . . . . . . . . . . . . . . . . . . . . 139 1. Defenses to Underlying Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139 2. Discharge of the Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139 a. Payment .................................................... 139 b. Merger ..................................................... 139 c. Deed in Lieu of Foreclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139 D. POSSESSION BEFORE FORECLOSURE 1. Theories of Title . . . . . . . . . . . . . . . . . . . a. The Lien Theory . . . . . . . . . . . . . . b. The Title Theory . . . . . . . . . . . . . . c. The Intermediate Theory . . . . . . . 2. Mortgagor Consent and Abandonment ............................... 139 ............................... 139 ............................... 140 ............................... 140 ............................... 140 ............................... 140 3. Risks of Mortgagee in Possession . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140 4. Receiverships .................................................... 140 E. FORECLOSURE..................................................... 140 1. Redemption...................................................... 140 a. Redemption in Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141 b. Statutory Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141 2. Priorities........................................................ 141 a. Effect of Foreclosure on Various Interests . . . . . . . . . . . . . . . . . . . . . . . . . 141 1) Junior Interests Destroyed by Foreclosure 2) Senior Interests Not Affected . . . . . . . . . . . b. Modification of Priority . . . . . . . . . . . . . . . . . . . . 1) Failure to Record . . . . . . . . . . . . . . . . . . . . . 2) Subordination Agreement . . . . . . . . . . . . . . 3) Purchase Money Mortgages . . . . . . . . . . . . .................... 141 .................... 141 .................... 141 .................... 141 .................... 142 .................... 142 a) Vendor PMM vs. Third-Party PMM . . . . . . . . . . . . . . . . . . . . . 142 b) Third-Party PMM vs. Third-Party PMM . . . . . . . . . . . . . . . . . 142 4) Modification of Senior Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143 5) Optional Future Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143 3. Proceeds of Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143 4. Deficiency Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143 F. INSTALLMENT LAND CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145 1. Equity of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145 2. Restitution ...................................................... 145 3. Treat as a Mortgage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145

xviii. REAL PROPERTY 4. Waiver.......................................................... 145 5. Election of Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145 VIII. RIGHTS INCIDENTAL TO OWNERSHIP OF LAND (NATURAL RIGHTS) . . . . . 145 A. IN GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145 B. RIGHT TO LATERAL AND SUBJACENT SUPPORT OF LAND 1. Right to Lateral Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . a. Support of Land in Natural State . . . . . . . . . . . . . . . . . . . . . b. Support of Buildings on Land. . . . . . . . . . . . . . . . . . . . . . . . 2. Right to Subjacent Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . a. Support of Land and Buildings . . . . . . . . . . . . . . . . . . . . . . b. Interference with Underground Waters . . . . . . . . . . . . . . . . ........... 145 ........... 146 ........... 146 ........... 146 ........... 146 ........... 146 ........... 146 C. WATER RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146 1. Watercourses .................................................... 146 a. Riparian Doctrine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147 1) What Land Is Riparian . . . . . ............................... 147 a) Riparian Owner . . . . . . . ............................... 147 b) Doctrine Applies Only to Riparian Parcel . . . . . . . . . . . . . . . . . 147 2) Nature of Riparian Right . . . a) Natural Flow Theory . . . b) Reasonable Use Theory . (1) Factors to Consider c) Natural vs. Artificial Use b. Prior Appropriation Doctrine . . . . 1) Factors to Note for Bar Exam ............................... 147 ............................... 147 ............................... 147 ............................... 147 ............................... 148 ............................... 148 ............................... 148 c. Accretion and Avulsion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148 2. Groundwater .................................................... 148 a. Absolute Ownership Doctrine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149 b. Reasonable Use Doctrine . . . . . c. Correlative Rights Doctrine . . d. Appropriative Rights Doctrine e. Restatement Approach . . . . . . 3. Surface Waters . . . . . . . . . . . . . . . . .a. Natural Flow Theory . . . . . . . .b. Common Enemy Theory . . . . .c. Reasonable Use Theory . . . . . .d. CompareCapture of Surface Water ............................ 149 ............................ 149 ............................ 149 ............................ 149 ............................ 149 ............................ 149 ............................ 150 ............................ 150 ............................ 150 D. RIGHTS IN AIRSPACE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150 E. RIGHT TO EXCLUDEREMEDIES OF POSSESSOR . . . . . . . . . . . . . . . . . . . 150 1. Trespass ........................................................ 150 2. Private Nuisance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150 a. ComparePublic Nuisance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150 3. Continuing Trespass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150 4. Law or Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150 a. Ejectment ................................................... 150 b. Unlawful Detainer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151 IX. COOPERATIVES, CONDOMINIUMS, AND ZONING . . . . . . . . . . . . . . . . . . . . . . . . 151 ...... ...... ...... ...... ...... ...... ...... ......

REAL PROPERTY xix. 1. COOPERATIVES.................................................... 151 1. Restriction on Transfer of Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151 2. Mortgages....................................................... 151 3. Maintenance Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151 2. CONDOMINIUMS................................................... 151 1. Restriction on Transfer of Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151 2. Mortgages....................................................... 151 3. Maintenance Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152 3. ZONING............................................................ 152 1. Nonconforming Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152 2. Special Use Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152 3. Variance ........................................................ 152 4. Unconstitutional Takings and Exactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152 a. Denial of All Economic Value of LandTaking . . . . . . .............. 152 b. Denial of Nearly All Economic ValueBalancing Test .............. 152 c. Unconstitutional Exactions . . . . . . . . . . . . . . . . . . . . . . . . ............. 153 1) Essential Nexus . . . . . . . . . . . . . . . . . . . . . . . . . . . . .............. 153 2) Rough Proportionality . . . . . . . . . . . . . . . . . . . . . . . .............. 153 3) Burden of Proof . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153 d. Remedy..................................................... 153

REAL PROPERTY 1. A. IN GENERAL I. ESTATES IN LAND Estates in land are possessory interests in land. These interests may be presently posses- sory (present estates), or they may become possessory in the future (future interests). They may be freeholds, which give possession under some legal title or right to hold (e.g., fees or life estates), or they may be nonfreeholds, which give mere possession (i.e., leases). Estatesin land may be of potentially infinite duration, as in the case of a fee simple, or they may beof limited duration, as in the case of an estate for years. But whatever their characteristics, estates in land must be distinguished from nonpossessory interests such as easements, profits, covenants, and servitudes. This section of the outline will examine various estates in land. It divides the interests into two classes: present interests and future interests. However, some future interests (those following defeasible fees) will be considered with the present interests to which they are attached. B. PRESENT POSSESSORY ESTATES 1. Fee Simple Absolute An estate in fee simple absolute is the largest estate permitted by law. It invests the holder of the fee with full possessory rights, now and in the future. The holder can sell it, divide it, or devise it; and if she dies intestate, her heirs will inherit it. The fee simple has an indefinite and potentially infinite duration. The common law rule requiring technical words of inheri- tance (and his heirs) has been abolished by statute in nearly all jurisdictions. Typically, such statutes provide: A fee simple title is presumed to be intended to pass by a grant of real property unless it appears from the grant that a lesser estate was intended. Example: A conveyance from O to A is presumed to pass a fee simple interest if O owned one. At common law, absent the words of inheritance, even a convey- ance to A in fee simple would convey only a life estate to A. 2. Defeasible Fees Defeasible fees are fee simple estates of potentially infinite duration that can be terminated by the happening of a specified event. Because defeasible fees can result in forfeitures, courts will construe, where possible, a purported limitation as a mere declaration of the grantors purpose or motive for making the grant (i.e., as precatory language). (See b.1)a), infra.) a. Fee Simple Determinable (and Possibility of Reverter) A fee simple determinable, also called a determinable fee, is an estate that automati- cally terminates on the happening of a stated event and goes back to the grantor. (It must be distinguished from the fee simple subject to a condition subsequent, where the grantor must take affirmative steps to terminate the estate of the grantee if the stated event occurs.) It is created by the use of durational, adverbial language, such as for so long as, while, during, or until. A fee simple determinable can be conveyed by the owner thereof, but his grantee takes the land subject to the termination of the estate by the happening of the event. Example: O conveys land to A for so long as no alcoholic beverages are consumed on the premises. This gives A a fee simple because the estate may last forever if no one ever quaffs a brew. If A conveys his fee simple 2. REAL PROPERTY determinable estate to B, B will own the for so long as estate. If A does not convey his estate, on As death it will pass by will or intestacy to his successors, and so on. If, however, someone ever consumes an alcoholic beverage on the premises, the estate will automatically come to an end according to its own terms; and O will immediately and automat- ically become the owner of the fee simple, without taking any steps to terminate As interest. 1. 1) Correlative Future Interest in GrantorPossibility of Reverter Because the grantees estate may end upon the happening of the stated event, there is a possibility that the land may revert back to the grantor. The interest that is left in a grantor who conveys an estate in fee simple determinable is called a possi- bility of reverter. It is a future interest because it becomes possessory only upon the occurrence of the stated event. 1. a) Possibility of Reverter Need Not Be Expressly Retained At common law and in nearly all states today, the grantor does not have to expressly retain a possibility of reverter. It arises automatically in the grantor as a consequence of his conveying a fee simple determinable estate, with its built-in time limitation. 2. b) Transferability of Possibility of Reverter At early common law, the possibility of reverter could not be transferred inter vivos or devised by will. An attempted transfer of the interest was invalid; but the possibility of reverter was not extinguished by the attempted transfer and would still descend to the heirs of the owner. Today, in most jurisdictions, the possibility of reverter can be transferred inter vivos or devised by will, and descends to the owners heirs if she dies intestate. 2. 2) Correlative Future Interest in Third PartyExecutory Interest A possibility of reverter arises only in the grantor, not in a third party. If a compa- rable interest is created in a third party, it is an executory interest. (See C.3., infra.) b. Fee Simple Subject to Condition Subsequent (and Right of Entry) A fee simple subject to a condition subsequent is created when the grantor retains the power to terminate the estate of the grantee upon the happening of a specified event. Upon the happening of the event stated in the conveyance, the estate of the grantee continues until the grantor exercises her power of termination (right of entry) by bringing suit or making reentry. The following words are usually held to create condi- tions subsequent: upon condition that, provided that, but if, and if it happens that. Example: O, owning Blackacre in fee simple, conveys it to A and his heirs, on the express condition that the premises are never to be used by A for the sale of liquor, and in the event that they are so used, then O or her heirs may enter and terminate the estate hereby conveyed. A has a fee simple subject to a condition subsequent. O has a right of entry. If the condition is broken, O has a power to terminate the estate of A by asserting her right of entry. REAL PROPERTY 3. 1) Correlative Future Interest in GrantorRight of Entry A right of entry (also known as right of reentry or power of termination) is the future interest retained by the transferor who conveys an estate on condition subsequent. It is necessary to expressly reserve the right of entry in the grantor; this retained interest does not automatically arise as in the case of a fee simple determinable and possibility of reverter. a) Failure to Reserve Right of Entry Courts often hold that words of condition, standing alone, create only covenants, easements, or trusts, or are mere precatory terms. Example: O conveys land to A and his heirs, provided that liquor is not sold on the premises. O has not used words indicating the estate will terminate if liquor is sold on the premises. Nor has O retained a right to reenter. Because a statement of the grantors wishes as to how the property should be used does not ordinarily imply a right retained by the grantor to enforce the purpose, a court may construe the deed as giving A a fee simple absolute. [Wood v. Board of County Commissioners, 759 P.2d 1250 (Wyo. 1988)] b) Waiver of Right of Entry Because the grantor can elect whether or not to terminate the grantees estate, she may waive her right or power to enforce a forfeiture by express agreement or by her conduct. (Such is not the case with a fee simple determinable, where the forfeiture is automatic.) (1) Inaction by Itself Not a Waiver The general rule is that when there is a breach of the condition and the grantor simply does nothing about it, the power of termination is not waived. However, where there is any element of detrimental reliance by the fee holder, many courts treat inaction as a waiver on an estoppel or laches theory. c) Transferability of Right of Entry At common law, a right of entry was not devisable or transferable inter vivos to a third person. The right of entry did, however, descend to the heirs of the grantor on her death. Today, in most jurisdictions, a right of entry is still not alienable inter vivos. (Indeed, in a handful of states, an attempted transfer destroys it.) But in most states, rights of entry are devisable; and in all states, they descend to the owners heirs. 2. 2) Correlative Future Interest in Third PartyExecutory Interest A right of entry can be created only in favor of the grantor and her heirs. If a similar interest is created in favor of a third party, the interest is called an execu- tory interest (e.g., if the property is ever used for other than church purposes, then to B and his heirs). Unlike a right of entry, an executory interest is subject to the Rule Against Perpetuities. (See E., infra.) 3. 3) CompareFee Simple Determinable This estate is distinguished from a determinable fee in that the breach of the 4. REAL PROPERTY condition does not itself terminate the estate and immediately revest the fee in the grantor or her successor. The estate continues in the grantee or his successor unless or until the grantor or her successor affirmatively elects to terminate it. a) Construction of Ambiguous Language The general policy of courts is to avoid forfeiture of estates. Thus, a convey- ance that contains both durational language and a power of termination may be construed as creating a fee simple subject to a condition subse- quent, because the forfeiture is optional at the grantors election rather than automatic. Example: O conveys land to A so long as liquor is not sold on the premises, and if liquor is sold, O has a right to reenter. The words so long as point to a fee simple determinable. The retained right of entry points to a fee simple subject to a condi- tion subsequent. The court can classify the language to create either estate, but the fee simple subject to a condition subse- quent is preferred. c. Fee Simple Subject to an Executory Interest A fee simple subject to an executory interest is an estate that, upon the happening of a stated event, is automatically divested in favor of a third person rather than the grantor. Examples: 1) O conveys land to Church; provided, however, that if the premises shall ever cease to be used for church purposes, title shall pass to the American Heart Association. Church has a fee simple subject to an executory interest in favor of the Heart Association. O does not havea right of entry because no such interest was reserved in the convey- ance. T