Property Quiz Quizlet

Tomlinson, regardless of whether this is a notice or race-notice jurisdiction because his deed was first and neither statute gives priority to Aaron, a donee.

Recording acts protect good faith purchasers so they do not protect Aaron, a donee. Thus the priorities are governed by first in time, first in right. Tomlinson deed came first, so he has priority over Aaron. A and B are wrong because Aaron does not have priority under either statute. D is wrong because Aaron good faith does not give him priority under either statute because he's not a purchaser.

Situation will win only in a pure race recording act jurisdiction where all that matters is who recorded first. B: Situation will lose only in a notice recording act jurisdiction.It seems like Dawn is between Rock and Hardplace but is she really? Joy properly conveyed a life interest to Dawn. She then conveyed a half-interest with right of survivorship to Rock, but because the conveyance to Dawn came first, at common law Rock's interest is burdened by the life estate. When Dawn dies, Rock has the fee simple, but it is still burdened by the previously conveyed life estate. When he conveys to Hardplace, at common law it remains burdened by the life estate. Therefore, the only way that Hardplace can take free of Dawn's interest is by coming within the terms of the recording act. In a notice or race-notice jurisdiction, a subsequent purchaser for value has to take without notice; clearly, Hardplace had notice here because he was told of Dawn's interest. Thus, answer B is incorrect because H will also lose in a race-notice jurisdiction. In addition, Dawn is occupying the property which would raise an issue of inquiry notice. However, in a jurisdiction with a pure race statute, we don't care what Hardplace knew. As long as he records his deed first, which he did, and which Rock did, he should win. You might think that Dawn would lose in any jurisdiction because she didn't pay value and didn't record, but remember neither recording nor consideration is required for a valid conveyance; thus, answer D is incorrect. You might think that Dawn would win in any jurisdiction because of the knowledge of Hardplace and Rock, but again, the pure race statute does not consider that, focusing on the certainty benefits of relying solely on the timing of recorded documents, and thus, answer C is incorrect. Recommended Reading: pages 437-439, 446-451 of Dukeminier, Property, Concise Edition 2E

If there is a statutory equity of redemption period in the jurisdiction, Borat can use it to protect his equity in Baghdad. The question concerns a power of sale mortgage which allows the mortgagee to conduct a private foreclosure sale instead of going through the judicial foreclosure process. This is permissible in most jurisdictions as long as required procedures are followed, and the validity of such a sale does not depend upon its yielding a sale at market value. Therefore, answer A is incorrect. The safeguards to ensure fairness to Borat do not require that anyone else bid on the property; as long as Lender didn't try to chill bidding and as long as the rules regarding notice were followed, the fact that Lebannon was the only bidder is not sufficient to set aside the sale, so answer B is also incorrect. Answer C concerns the sale price. It is true that a sale can be set aside if it shocks the conscience of the court; the fact that the price was below fair market value, even significantly below, is not sufficient, especially under the circumstances here, where the sale was advertised widely and listed with brokers. Foreclosures are distress sales allowing the lender to sell the property reasonably fast; otherwise, they would be forced to assume the risk of a declining market. Answer C is incorrect. A statutory equity of redemption is Borat's best option here; most states allow the mortgagor to redeem the property for a period of time after the sale. If Borat wants to protect his equity in the property, he needs to find funds to redeem the property from Lender. He could, for example, find a buyer for \$320,000, use \$255,000 of that (plus additional accrued interest) to redeem the mortgage, and pocket the difference. Recommended Reading: pages 406-423 of Dukeminier, Property, Concise Edition 2E

Defect 2. Remember that the rule is that seller must disclose material defects he knows about which are not discoverable upon reasonable inspection. Defect 1 is an off-site issue, which courts typically do not require the seller to disclose because it is not a problem with Blackacre itself. In addition, the existence of the Superfund site was readily discoverable by Glenny Balls. Answer A is therefore incorrect. Answer C is incorrect for the same reason.. Defect 2 is a stigma issue; it is not a physical defect, but if Glenny Balls can prove it as an effect on the property's value, some courts would hold that it is a defect that should be disclosed, especially since the seller exploited the stigma. See Stambovsky v. Ackley, 572 N.Y.S.2d 672 (App. Div. 1991) (haunted house) and Reed v. King, 193 Cal. Rptr. 130 (Ct. App. 1983) (multiple murder in house). Note that some courts would not require disclosure of the homicides, but it is the most promising basis of rescission among the three listed and is at least a plausible case in many jurisdictions, thus, making answer B the correct one. Recommended Reading: pages 371-378 of Dukeminier, Property, Concise Edition 2E

If he doesn't want to rescind, Steve should be able to get specific performance of the original agreement, because Donald can deliver her a deed to Unit 501. Steve entered into an enforceable real estate contract with Donald subject to normal contingencies, which he met. Equitable conversion theory indicates Steve was the equitable owner at the time he entered into the contract. Specific performance is typically available as a remedy for the breach of a real estate contract. The courts reason that, as in the case of Steve, damages or the substitution of property of the same value will not really remedy the breach due to the unique nature of property. Thus, answers A and B are incorrect. The fact that Donald sold the Unit to Cuban a few days later is irrelevant; at that point, Steve was the equitable owner of Unit 501. Cuban could possibly claim priority under the state's recording act, but since he was told of the contract with Steve, he can't qualify as a Bona Fide Purchaser. So Donald can perform by delivering he the deed. (Whether Developer is liable to Cuban in damages is not Steve's problem.) Answer D is incorrect because Steve need not have recorded the contract to sue for its breach, and his priority over Cuban does not depend upon his recording.

Bob will not be able to rescind based on either the financing or the barn defect. With regard to the barn defect, Steve's duty is limited to disclosing any material defects he knows about that would not be revealed upon a reasonable inspection. The barn defect seems to be readily discoverable -- Bob discovered it himself when walking the property -- so is not a latent defect that needed to be disclosed. The real estate contract did not contain an inspection clause; instead, Bob agreed to accept the premises as is. That means he agreed to accept any patent defects such as the barn's rotting. That makes answers A and C incorrect. With regard to the financing, the contingency is written very broadly to include any financing. It does not specify any financing parameters like down payment that Bob must accept. Therefore, Bob cannot complain that this is not the financing he hoped for to avoid the contract.

Mark can foreclose if the state has a race-notice recording act, but not a pure notice act. In a recording act problem, draw a little diagram showing when the conveyances and recordings occurred. In this case, Wes Edens conveyed to Mark, then Wes Edens conveyed to Bono, then Mark recorded, then Bono recorded. Because the conveyance to Mark was first in time, Mark will be able to foreclose unless Bono satisfies the requirements of the jurisdiction's recording act. If it is a race-notice act, Bono loses because even though he took without notice, he must also record first, which he did not. Bono loses because Mark recorded first. Mark wins. If it is a notice act, Bono wins because he took without notice of the previous transaction. Mark loses. Therefore, answer B is incorrect because Mark would be able to foreclose only in a race-notice state. Answers C and D are also incorrect for the same reason. Answer A is the only correct application of the law. Recommended Reading: pages 437-439, 446-451 of Dukeminier, Property, Concise Edition 2E

Buyer can recover damages because Seller had a duty to disclose the mold. A is wrong because physical defects don't amount to encumbrances on title. In most jurisdictions, a seller must disclose material defects that are known to them and are not discoverable upon reasonable inspection. The mold was a material defect because it would have an impact on the value of the property. It was not discoverable because a reasonable inspection would not include tearing up paneling. It was known to seller because she admits that. Therefore, answer B is correct. Answer C is too broad; certainly property does not have to be free of material defects. There can be defects, as long as they are either patent or disclosed by seller, so that buyers can factor them into the offer price. Answer D is wrong because we have no evidence that seller made any representations regarding mold or the general quality of the house. Recommended Reading: pages 371-378 of Dukeminier, Property, Concise Edition 2E

A wins. O executed a deed to A and delivered it to her. A now owns the property in fee simple; recording is not necessary. So D is wrong. For A to convey a life estate to O, a writing signed by A is required. Thus O's adding the note to the deed days later does not create a life estate in him. So A is wrong. A's oral permission creates, at most, a revocable license in O. So C is wrong. Note that there is no evidence suggesting part performance or estoppel that would allow O to claim a life estate without a writing.

Faust has no valid basis for rescission. Answer A is incorrect because the written memorandum of the agreement meets the Statute of Frauds requirements: Price, Parties, Property. Answer B is incorrect because a physical defect in the property has nothing to do with marketable title. Answer C has to do with the common law doctrine of caveat emptor. At common law, buyers took the property as is and bore the risk of any defects. Modern modifications require disclosure of latent defects, which are problems that cause a material impact on the property's value. The leaky roof is a material defect, but it is not latent. A latent defect is one that is known to the seller but cannot be discovered by reasonable inspection. This defect was patent; it was easy for Faust to see that the plaster was stained and buckling. Therefore, Faust cannot rescind on this basis. Typically, real estate contracts contain an inspection clause allowing the buyer a certain amount of time for a closer inspection to find physical defects. This contract, however, did not include such a clause. In addition, many states have statutes requiring disclosure of certain material defects; the problem asks you to ignore that possibility. Therefore, Faust is stuck with her bargain. Recommended Reading: pages 362-379 of Dukeminier, Property, Concise Edition 2E

The easement does not violate the contract's marketable title provision; the Parcel A issue does. Marketable title requires the seller to establish that she is the record owner, in fee simple absolute, of the property described, without encumbrances. In this case, there are two possible violations of this standard: the easement and the failure to establish record title to Parcel A. Under common law, both of those issues would violate the marketable title standard. However, in this case, Byers chose to accept a contract with slightly different terms, a promise to provide marketable title subject to all easements and encumbrances of record. Because the pipeline easement is recorded, it does not violate the marketable title provisions of this contract. Thus, answers A and B are incorrect. The Parcel A issue, however, is not covered by this contract exception. Even though Sayers might, in fact, have title to Parcel A, she does not have marketable title because marketable title cannot be subject to a non-frivolous prospect of litigation over ownership. That makes answer D incorrect. Sayers needs to either quiet title to Parcel A before attempting to sell it or get a potential buyer to make it a specific exception to the marketable title provision. Recommended Reading: pages 366-370 of Dukeminier, Property, Concise Edition 2E

If the jurisdiction applies equitable conversion, Eli would have the stronger claim to the proceeds of the sale. This question requires you to consider the application of equitable conversion and, of course, to understand the difference between personal property and real property. If the court applied equitable conversion, it would treat the sale as complete when the contract was executed, so that B was the equitable owner of Blackacre on January 1. At that point, Archie would have only an equitable right to the proceeds of the sale, which is personal property. Therefore, if the jurisdiction applies equitable conversion, Eli, the legatee, would have the strongest claim. Answer A is, thus, incorrect because it misstates the result of the application of equitable conversion. Answer C is incorrect because without equitable conversion Archie would have died with title to Blackacre, making Cooper's claim stronger. Answer D is incorrect because the will clearly specifies which beneficiary is entitled to which type of property rather than suggest equal treatment. There is no basis for overriding this intent

Barb should be able to claim her commission, because Sarah was at fault for the failure to close the deal. This answer requires you to consider the nature of brokerage agreements in the real estate context. In an exclusive right-to-sell listing agreement, which most such agreements are, the broker earns the commission when a ready, willing, and able buyer signs a binding real estate contract. Under that type of agreement, it does not matter who procured the buyer. So answer A is incorrect. Answer C is also incorrect because under an exclusive agency agreement, Barb would not be entitled to a commission. Such an agreement guarantees only that the seller will not use another broker, but can sell the property herself. If Sarah procures the buyer, under an exclusive agency agreement, no commission is due. The other issue here is whether the commission is earned despite the fact that the deal didn't close. Under the traditional common law rule, Barb would earn her commission when the contract was executed by the ready, willing, and able buyer, regardless of whether the deal actually closed. Under the modern Ellsworth Dobbs rule used in many jurisdictions, the commission is not earned until the deal actually goes through unless the seller is the cause of the failure to close. Answer B is incorrect because, under either the traditional rule or the Ellsworth Dobbs rule, Barb should be entitled to her commission because Sarah was the one who backed out. Recommended Reading: pages 347-348of Dukeminier, Property, Concise Edition 2E

First Bank can foreclose on its mortgage against Bonds, but Bonds can recover on the warranty deed for breach of the covenant of quiet enjoyment. First Bank recorded its mortgage, putting subsequent purchasers on record notice of its interest. Although Bonds did not know the mortgage when he bought, record notice prevents her from claiming priority under the recording act as a good faith purchaser. Thus, A is wrong. Can Bonds recover his losses from A-Rod under the special warranty deed? Since A-Rod gave the mortgage, he is liable under the special warranty deed in which he warranted against defects in title that he created. But has the statute of limitations run? Bond's cause of action accrued on the present covenants when the deed was delivered. The covenant against encumbrances is a present covenant, so the statute expired on breach of that covenant. B is wrong. Bonds cause of action accrued on the future covenants only when someone with superior title actually asserted superior right to possession by, as here, foreclosing on Blackacre (the right to affect a forced sale). The covenant of quiet enjoyment is a future covenant so the cause of action based on breach of that covenant did not accrue until Bank began foreclosure proceedings. Therefore, answer D is wrong and C is right.

The Church has good title to Lot because Baker had (at least) inquiry notice of the Church's claim and did not contact it. The first question is whether the Church has good title to Lot despite its failure to record before Baker bought. In a notice jurisdiction, Baker has to be a subsequent purchaser for value who took without notice. Baker purchased for value and had no record notice, so that part of the BFP test was met. However, he had inquiry notice with respect to the Church's interest (if not actual notice). Even though he searched the title and didn't find the deed, he should have inquired of the Church based on Able's comment, especially if, as appears, the Church remained in possession. Therefore, answer B is incorrect and C is correct. With respect to the deed warranties, Baker should be able to sue Able under the covenant of seisin or the covenant of quiet enjoyment. Unless Able specifically excepted Lot from the deed warranties, he is guaranteeing good title, regardless of what he told Baker. Therefore, answer A is incorrect. Answer D is also incorrect because in a notice jurisdiction (as opposed to race-notice) his priority will not depend upon on his recording first. Recommended Reading: pages 455-460 of Dukeminier, Property, Concise Edition 2E

The Bank is on record notice of Bailey's claim if the jurisdiction has a tract index, but not if it has a grantor-grantee index. The question is whether Bailey's recording gave the bank record notice of his claim. Her deed was recorded when First Bank took the mortgage, but was it recorded in a way the bank could find it? With a tract index, yes. Once would look up Blackacre and find the Alice to Bailey deed. In a grantor-grantee index, First Bank would look under Oscar's name in the grantee index and find that he owned the property. But when it looked in the grantor index to see if he conveyed it away, it would find nothing because the deed from Oscar to Alice was not recorded. The Alice-to-Bailey deed was recorded, but only under the names Alice and Bailey; there is no reason for First Bank to search their names. So answer B is correct.