Video 1 Real Property Introduction

Feelings are not facts!!

 Property Law or property interest that attaches to something conjures(calls) up a host of

rights and duties.
 To say Jon has certain property rights in the book means that he has certain rights
associated with the book, which means he:
o He has the right to use the book, enjoy, exclude others, lend the book, sell the
book, give the book away.
o He has duties as he has property interest in the book
o The duties are to do no harm with the book
o If he slams the book and hurts someone

3 Principles of Property:
1) Personal Property-Tangible, moveable things= jewelry, home furnishing,
cars
2) Realty Real Property- Land, Black acre refers to land (mostly this one)
3) Intellectual Property- Products of the mind, inventions, ideas, copy rights

Video 1 Real Property: Landlord and Tenant

1. Types of Leases hold interests:

o 4 Ways to Create a Lease: (Leasehold Interest)

1) Tenancies for Years:

 Terms of years for a fixed period of time
 Estate of years
 A lease for a fixed period of time as long as you know the termination time
 It could be for 2 weeks or 30 years
 If it is greater than 1 year it must be in writing to satisfy the Statute of Frauds

2) Periodic Tenancies (implied periodic tenancy)

 This is a lease which continues for successive intervals, until landlord or tenant
give proper notice to terminate the lease hold and put it to an end
 Periodic Tenancies can arise expressly and by implication
 Periodic Tenancies can be created expressly such as L conveys to T for year to
year or week to week or month to month
 It is successive, open-ended, continuous nature of the leasehold, that’s the
hallmarks of the periodic tenancies

1
  When land is leased with no mention of duration or termination but provision is
made by payment with set interval’s such as paying on the 1st of every month
then a notice for termination is needed
When Can a Lease be Terminated?
 At common law at least, equal length of the period itself
 A month to month 1-month notice
 Week to week 1-week notice
 If it is year to year or greater only 6 months’ notice would be needed
 Statutes have modified the length of time

Periodic Tenancies Can Arise by Implication in 3 ways:

 1) When land is leased with no mention of duration but the payment is

set at set intervals
o Payment is made at set intervals such as payment every 1st of the month
o Year to year, Month to month, Week to week

 2) The oral term of years in violation of the statute of frauds

o Terms of years more than 1 year must be in writing to be enforceable, if
its oral and it is not enforceable but it creates instead an implied periodic
tenancy
o The intervals will be set based on how rent is tendered
 Example: Landlord and tenant negotiate on the phone for a 5-year
commercial lease, they agreed that rent will be paid on the
1st of each month for all of the 5 years.

 Does that oral agreement create a term of years?

o No, because a term of years greater then 1 year must be in writing to be
enforceable.
o So, 5 years will not be enforceable on a term of years because of the Statute of
Frauds but it creates instead an Implied Periodic Tenancy.

 3) Hold Over Doctrine

o In a residential lease if the landlord elects to hold over a tenant who has
wrongfully stayed on passed the conclusion of the original lease, an
implied periodic tenancy arises when he accepts the next payment
o Measured by how tenant tenders rent and how landlord accepts rent -
could be month to month, this is an Implied Month to Month Periodic
Tenancy
o The original lease has expired and a new lease has risen from a hold over
to an implied periodic tenancy

3) Tenancy at Will
 This is a tenancy for no fixed duration
 It endorse (approved) at the will of either the landlord or the tenant

2
  Termination is at the will of either party, it can be any moment
 By statute a reasonable demand to vacate is usually needed to put the tenancy at
will to an end
 Example: To the tenant for as long as the landlord or tenant
desire

4) Tenancy at Sufferance
 It is created when a tenant has wrongfully held over, passed the expiration of the lease
 The tenant at sufferance is referred to as such, whenever the tenant has held over pass
the expiration of the original lease and the landlord has decided not to tolerate that, the
landlord has to decided not to accept the next rent cheque, the landlord has decided to
evict the wrong doer
 We give this wrongdoer a lease hold interest
 We call him a tenant at sufferance to permit the landlord to recover rent, until such
time that the tenant is successfully evicted
 Now that hold over in the present of a pending eviction action has a lease hold interest,
that’s called a tenancy at sufferance
 The tenancy at sufferance is labelled as a lease hold interest simply for expedience
sake, its labeled as such to give the landlord mechanism on which he could proceed
against the wrong doer for rent
 A tenant’s status as a tenant at sufferance will always be short lived, the tenancy at
sufferance lasts only until such time as a successful eviction is completed

When do you have a Tenancy at Sufferance?

o When a tenant has stayed on passed the conclusion of the original lease and this
hold over rather than seeing his lease transform potentially into an Implied
Periodic Tenancy because the landlord tolerates the hold over.
o This tenant finds that the landlord does not tolerate the hold over, the landlord is
bringing an eviction proceeding against the wrong doer.
o The wrong doer by virtue of the pending eviction proceeding, is called a tenant at
sufferance
o The landlord is entitled to the rent from a tenant at sufferance until such time that
the eviction proceeding is lawfully concluded

2a. Tenant Duties

 The 2 Most Important Tenant Duties are:
1) Tenants Duty to Maintain the Premises
2) Tenants Duty to Pay Rent

1) Tenants Duty to Maintain the Premises

 A tenant has to maintain the premises and make ordinary repairs
 A tenant does not have to do anything more than maintain the premises but
nothing less than maintaining the premises

3
  You have to keep up with the leased premises not fix wear and tear
 You must not commit waste, a tenant must not commit voluntary or affirmative
waste such as: overt destruction,
 Example1: Suppose one morning you become motivated and you decide to
clean your dirty hair brush, you pull all the hair out of the brush
and you put the hair down the drain. The drain gets clogged.

As a tenant what do you have to do?

o You have to make that ordinary repair, go to the store and buy liquid plumber

 Example2: After cleaning your sink you go and take a shower, you notice
that the shower tiles look yellow. Why are they yellowing?
Because of wear and tear because of the passage of time.

Are you as a tenant responsible for fixing the tiles?

o No, that is beyond ordinary repair.
o You are not responsible for the wear and tear, that’s the landlord’s job

3 Types of Waste:
 A tenant must not commit waste that is an:

1) Overt Destruction- voluntary or affirmative waste

2) Permissive Waste- is neglect, it’s a pattern of remiss that causes harm to the premises

3) Ameliorative Waste- Changes made to enhance the value when unilaterally made by a
tenant without the landlord’s consent, give rise to a landlord cause
of action. Even if the change enhances the premises value, it is no
defence if a tenant makes a unilateral or substantial change to the
leased premises, that the change enhances the value of the premises
BUT it is conceivable that they tenant will be perceived as a wrong
doer. Where a cause of action for Ameliorative waste resides.

 Example 3: You as a tenant decide that you are going to hang up a few
pictures and you decide that measuring pictures before you hang
them up is overrated. You start nailing and you hang up the
picture and it is not quite right so you nail a few more holes and
it’s still not quite right and you hit a beam and a part of the wall
comes off and all of a sudden part of the under wall are showing.

What are you doing tenant?

o You are committing voluntary waste, that is willful destruction and you are
responsible for restoring that wall back to its original condition.

 Example 4: You are leaving the apartment and you are late for work and you
leave the facet on because you forgot to turn it off. You created a
flood scene.

4
  You as a tenant are responsible for the pattern or 1 incident of remiss, it is neglect
that has caused harm to the premises

 Example 5:You are handy and decide to build new cupboards in the kitchen,
you decide you are going to put a medicine cabinet into the
bathroom, you decide you are going to put new floor boards all at
your expense all contributing and enhance value to the premises.

Could the landlord still proceed against you for all the enhancements?
o Yes, it’s called ameliorative waste

What are the landlord’s damages? Isn’t he reaping(gathering) the benefit and a windfall(lucky)?
o It depends sometimes yes, he is benefiting and sometimes the landlord won’t have
any actual damages to invoke, but usually the landlord will.

How so?
o Maybe the landlord expectations have been disruptive or maybe the upkeep for
what you thought was such a great improvement was too much for the landlord to
bare or the next tenant to bare, when your leasehold comes to an end
o Or maybe the cabinets that you installed in the kitchen that you thought were so
perfect did not meet the local housing specifications and it’s the landlord who will
be on the hook for that housing code violation

Scenario 1 On Tenants Not Paying Rent:

 Suppose that you are doing really well in the practice of law and some of your work
takes squarely into the province of Landlord and Tenant Law. You are blessed to
have a host of landlords and tenants that you have represented
 One such landlord has you on retainer and on this day the landlord comes to you
and says
 ”Counsellor, remember that tenant in apartment 3B, you helped me to draft the lease.
It’s the apartment in Carol Gardens”
 And you say “oh yes, I remember that, how is that going?”
 and your client says “not so good, the tenant is there, but she’s not paying me rent. I
haven’t seen rent of this month, or last month. I’m getting the feeling she’s ducking
me she hasn’t responded to any of my letters and I’m in a fix, I have mortgage
payments to make.
 What are my rights?”
 There are several here is the context

2) Tenants Duty to Pay Rent

o A tenant breaches the duty to pay rent but is still in possession of the
premises
 What Are the Landlords Options?

The Landlord has 2 Options:

1) To Proceed Against the Wrong Doer for Eviction

5
  Requires that the landlord to proceed through the courts, through the judicial
process such as the summary eviction proceedings
 Proceed against the wrong doer, through an appropriate summary proceeding a
court action to evict the wrong doer
 You are still entitled to rent from that wrong doer, who is now called a tenant
at sufferance by virtue of the pending eviction action
 You are still entitled to rent from that wrong doer until she vacates
2) Continue the Relationship and Sue For Rent Owed

You sue the tenant for the rent owed and the tenant gets to remain in possession
of the leased premises, but will still be held to task in a judicial proceeding for
the rent still owed
 Landlord must not engage in self-help it is outlawed and punishable criminally
and civilly.
 Self-help- is when the landlord : changes the locks on the tenant or put the
tenant’s possession out to the curb or harassing the tenant or takes back the
lease through force or stealth(sneakiness) or other deceitful means, no forcing the
tenant out no matter how frustrated the landlord is.
 If the landlord wants the tenant evicted the landlord must proceed lawfully
through proper judicial actions
 These are the Only 2 options

Scenario 2 On Tenants Not Paying Rent:

 Tenant breaches the duty to pay rent, but is no longer in possession or the premises

 A Different Landlord who you also represent comes to you and says:
 ”Counsellor, do you remember the apartment in midtown on the westside,
west 59th street in Manhattan, apartment 4D”
 And you say “oh yes I remember that, we leased that in a term for 5 years to
the nice couple, the doctor and her husband”
 and the landlord says “ yes but not so nice for me, the problem is the couple
still has 3 years left on the 5-year term leased and they have left and nowhere
to be found. They haven’t paid me rent for this month or last month the mail
is piling up at their door and there belongs are no longer there”
 What are my rights?

 SIR Refers to 3 Options Available to the Aggrieved Landlord when:

 The tenant wrongfully vacated with time left on a term of years lease, without any
warnings

1) S- stands for- Surrender or

 The aggrieved landlord could choose to treat the tenants vacating as a tacit (hint
unspoken, understanding) offer of surrender, which then the landlord must accept.

What is Surrender?
 Tenant shows by words or conduct that she wants to surrender the lease

6
  Her conduct shows that she wants to be released from her terms in the lease as she
wrongfully vacated without cause- that’s her conduct-
 The landlord then could decide if he wants to treat this vacating as an offer of surrender,
by accepting if he accepts
o The lease is amicably (a friendly and peaceful manner) discharged

2) I- stands for- Ignore the Abandonment

 Ignore the abandonment and hold the tenant liable for each month unpaid rent,
just as if tenant were still there
 Do nothing and let the rent will accumulate over time as if the tenant were still
there, so then the Landlord proceeds in a lump sum cause of action against the
wrong doer, is available in only a minority of states is admissible for the landlord
do nothing in the presents of a defaulting tenant’s wrongful abandonment with
time left on a term of years in the lease.

3) R- stands for- Rights only is minority states

 The abandonment is only available in a:
 A minority of states because of the “R” in the SIR acronym,
 We left the premises, on the wrongdoer tenants’ behalf and hold her liable for any
deficiencies/shortfalls

 A majority of state require that an aggrieved landlord to at least TRY to re-let

the premises
 The landlord does not have to succeed in finding a tenant in substitution
for the defaulting tenant, but must make a reasonable attempt at it
 Why does he need to at least try?
 This is a mitigation principle, this is an opportunity to even the aggrieved
landlord to cut his losses
 Mitigation from Contract Law Applies to Land Law because a Lease is a Contract and
is construed as a contract

2b)Landlord Duties

1) The Duty to Deliver Possession

2) Implied Covenant of Quite Enjoyment

3) Implied Warranty of Habitability

4) Refrain from Committing Retaliatory Eviction

1) The Duty to Deliver Possession

7
  The vast majority of states require that the landlord provide the tenant with legal
possession of the premises and actual, physical possession of the premises

What does that mean? & How?

o The landlord must provide the new tenant with the legal right to be there
o With a lease typically or with keys to thy apartment or leased premises
o The Landlord in a vast majority of states must also provide the new tenant with
actual, physical possession of the premises
What does that mean?
o If at the start of a new tenant’s lease, a prior hold over tenant is still in possession,
the landlord has breached the new lease and the new tenant gets damages

What is a prior hold over ?

o It is a tenant who remains in a property after the expiration of the lease
o A prior hold over is the landlord problem in a vast majority of jurisdictions
 It wasn’t always that way, the earlier common law cases did not oblige the landlord to
actually have to provide of actual, physical possession to the new tenant all the
landlord had to do was provide legal possession, the legal right to be there. This made
sense before because the domain might have been far from the landlord but today
residential properties are more congested.
 But now since residential properties are congested and we are not in the
Wild, Wild West, the landlord has to provide legal right to be there and
actual, physical possession of the premises to the new tenant.

2) Implied Covenant of Quite Enjoyment Very Important: Duty of an:

 It applies to both residential and commercial leases
 It is a fundamental implied promise that every landlord makes
 That the tenant is able to possess the premises in peace, without disturbance by hostile
claimants.
 The implied covenant of quite enjoyment has the landlord implicitly promising to provide
the tenant with quite use and enjoyment of the leased premises

The landlord can breach this fundamental implied promise in 1 of 2 ways:

1) Beach by Actual Wrongful Eviction

 If the landlord wrongfully excludes the tenant from possession of the whole or any part,
then she has breached the implied covenant of quite enjoyment.
 She has interfered or disrupted the tenants right to quite use and enjoyment of the
premises

2) Constructive Eviction
 When a landlord commits a constructive eviction, such as by his actions of remiss or
essentially giving the tenant no choice to have to vacate the premises, when that occurs
you have a constructive eviction, meaning a breach of the landlord to provide the tenant
with a quite enjoyment of the premises
 Example: Suppose as the years pass you are growing in stature and
destemmed in the professional community, now you have a

8
 whole roster of clients that come to you for counsel, one such
client happens to be the British recording artist Ditto. She
comes to your office. Ditto is having a problem with her
apartment. Every time it rains, including too hours ago, water
floods the apartment, and I have had it.

 To plead Constructive Eviction the aggrieved tenant must SING:

SING- The 3 Elements of Constructive Eviction

1) SI- stands for- Substantial Interference

 Due to the landlord’s actions or failures to act
 Substantial interference could be a permanent problem or a chronic
problem
 Every time it rains it floods the apartment, it doesn’t rain everyday but this
is a chronic infirmity, fundamentally incompatible with the tenants right to
quite use and enjoyment of the premises

2) N- stands for- Notice

 The tenant must notify the landlord of the problem
 Landlord must fail to act meaningfully
 The notice requirement is presented in fairness to a good faith landlord
who simply cannot remediate what he or she doesn’t know about

3) G- stands for- Goodbye or Get out

 Tenant must vacate within a reasonable time after the landlord fails to fix the
problem
 Might be hard for an aggrieved tenant who doesn’t have anywhere else to
go but it is an element that is strictly construed (strictly applied). She
cannot have it both ways. She can’t plead successfully because she can’t
constructively evict while still in possession of the premises

Is the Landlord Liable for the bothersome conduct of other tenants?

 As a general rule they are not but there are 2 significant exceptions

1) Landlord must not permit a nuisance on site

 Example: Landlord leases an apartment upstairs from you with casts
from dancing with the stars, their practice sessions are
driving you crazy. The landlord will be held to task

2) Landlord must control common areas

 If it is occurring in a common area like a hall way or a stairwell, landlord
is liable

9
3) Implied Warranty of Habitability
 A fundamental implicit promise that every landlord makes
 The implied warranty only applies to residential domains not commercial leases
o The term habitation means only-human dwelling or human habitat
o It is non-waivable- it is null and void due to public policy
o To try to extract the implied warranty of habitability by putting it the lease or
any other way is unenforceable as it is nonwaivable

What does it mean and what is the standard for an implied habitability?
o That the premises will be inhabitable
o The premises must be fit for basic necessities/essentials for human dwelling be
provided
o The standard is elaborated upon in local housing code and case law in your
jurisdiction

What does a breach of an Implied Warranty of Habitability consist of:

o No heat in the winter
o No plumbing
o No running water

What is the aggrieved parties’ entitlements when the landlord has breached an Implied
Warranty of Habitability?
 Here use the acronym of Mr. RR

 M- Move out
 End the lease it is in the tenant’s rights if a breach occurred
 but she doesn’t have to

 R-Repair and Deduct (allowed by statute)

 It allows the tenant to repair and deduct the cost from future rent

 Reduce Rent or Withhold all Rent

 Withhold all rent until the court asses fair rental value of the premise’s defects
 The aggrieved tenant must place any withheld sums and put it into what’s called
an escrow account simply to show that she is a good faith player and to show the
courts that she has the sum for rent. She is not tendering it until such time that the
court asses fair rental value in view of the defects and the defects are cured

 Remain in Possession
 Continue to pay rent and sue the landlord for damages

4) Refrain from Committing Retaliatory Eviction

 The Doctrine of Retaliatory Eviction is that a landlord must not take reprisals
against a good faith whistle blower tenant

10
  What does that mean?
o Protects the tenant who in good faith reports the landlord for housing code
violations,
o That good faith whistle blower tenant blows the whistle on the landlord for not
abiding housing code regulations or local heath ordinances
o This tenant is protected against the landlords because the doctrine restricts the
landlord from harassing the reporting tenant, must not raise the rent, must not
move to evict the reporting tenant or any other reprisals against the tenant
 If the landlord does, then he is in breach of the doctrine of Retaliatory Eviction and
damages against the landlord will be assessed
3. Assignments Vs. Subleases
 In the absence of a prohibition in the lease between the landlord and the tenant, the tenant
is permitted to transfer her lease hold interest in whole thereby accomplishing an
assignment or in part thereby accomplishing a sublease.
o In the lease it is permissible that the landlord to demand prior to assigning a
subletting tenants must get the landlords prior written approval, those sorts of
clauses are permissible
o Once the landlord consents to 1 transfer by the tenant typically waives the right to
object to any future transfers by that tenant, unless the landlord expressly waives
the right
The assignment arises whenever the tenant transfer everything that she has left
under the original lase to another
 Example: Tenant1(assignor) has 10 months remain in a 2-year
term lease, T1 then transfer the 10 months of the
original lease to Tenant2(assignee), this is an
assignment
o As a result, the Landlord and Tenant2 (assignee) have a relationship called Privity
of Estate

Privity of Estate
o Is a property-based nexus?
o Tenant2 is now in possession of the premises, as a result of the relationship that between
the landlord and tenant2 (assignee) is called privity of estate
o Now the Landlord and tenant 2 are liable to each other for all of the covenants (a fancy word
promises) in the original lease that runs with the land when it effects the leased premises

Covenants in the original lease that run with the land are:
 The promise to pay rent
 Promise to repair the premises
 Promise to paint the premises

The landlord and tenant2 (assignee) while they share a privity of estate they are not in
privity of contract

Privity of Contract
 is a contract-based nexus?

11
  It is born of the parties exchanging the original promissory words
o Landlord and tenant2 didn’t do that
o Landlord and Tenant2 are not in privity of contract but are in privity of
estate
o Landlord and Tenant1 are no longer in privity of estate because they are
no longer in possession of the premises HOWEVER
 Landlord and Tenant1 are still in privity of contract because they were the ones
who exchanged those promissory words.
 Tenant1 remains secondarily liable to the landlord, so if Tenant2 the wrong doer
is unavailable, or fled the jurisdiction or is bankrupt then,Tenant1 is the backup
plan and remains on the hook for Tenant2
Can the Landlord proceed directly against Tenant2 for abusing the premises?
o Yes because of privity or estate by virtue of Tenant2 possession it doesn’t
matter that they have a privity of contract
o Landlord and T2 share privity of estate

Can the Landlord proceed against Tenant1 against Tenant2 abuse to the premises?
o Yes, tenant1 is secondarily liable under privity of contract
o If Tenant2 the direct wrongdoer is unavailable or insolvent Tenant1 is the
backup plan
The Sublease
 In the absence of a prohibition in the lease between the landlord and the tenant, the tenant
is permitted to transfer her lease hold interest in part thereby accomplishing a sublease.
 It arises when tenant1(sublessor) transfers less then everything she has under the terms of
the original lease
o If T1 commits to a mere sublease if she has 10 months remaining on the 2-year
lease and only transfers the next 3 months to tenant 2
o The relationship between the landlord and tenant 1 remains fully intact, its
unchanged if all we have is a mere sublease
o If you only have a sublease the relationship that resides is between T1 and T2, T1
is liable to T2, but Landlord and tenant 1 remains fully intact
o L and T2 share no nexus, they are in neither privity of estate or privity of contract
o If T2 engages in abuse to the promises that T1 problem, T1 remains fully liable to
the Landlord for any of T2 abuse

4. Landlord’s Liability in Tort

 In Tort and under the common law the doctrine of “caveat lessee” or, “let
the lessee beware the landlord had no duty to make the premises safe for the tenant
and his or her guests.

What does that mean?

o In tort landlord has no duty to make premises safe so if tenant is personally injured on
site or another lawfully is on site is personally injured, the common law baselines of
the injured tenant or injured guest or invitee assumes no liability on the landlord

12
  Landlord is not liable of any tort based personal injury on the tenant or invitee sustained
on the premise of the leased premises BUT
 If the aggrieved tenant has sustained personal injury in Tort because of a defect or
problem on site and it falls within 1 of the 5 exceptions “CLAPS” in Caveat Lessee”:

 C- stands for Common Areas

 Landlord must maintain safely common areas, even under caveat lessee tort-based
norm, Landlord is liable for any personal injuries sustained in a common area

What do we mean by common area?

o Hallways, stairwells

 L- stands for: Latent Defects

 Landlord must warn the Tenant of any hidden defects on site of which the
landlord has knowledge or reason to know
 This is a duty to warn, it is not an accompanying duty to repair
 Example: As a perspective tenant, the tenant engages in a
walkthrough of the premises with the landlord. When you
get to the kitchen the landlord says “by the way I must warn
you the electrical wiring system in this portion of the
premises is severely flawed” So one morning you pop in
blueberry egos and you remember and ask the landlord if he
is going to fix it. The landlord says no, I satisfied my tort
based common law duty to warned you of the hidden defect.

 A- stands for: Assumption of Repairs

 A landlord who voluntarily makes repairs must complete them within a
reasonable care
 Example: A chef who is a tenant on Blackacre, one day the chef was
cooking and notice that Blackacre kitchen ceiling is falling
apart. You ask the landlord if he can repair it before his
family comes over. He feels bad so decides to fix it even
though under the tort-based landlords’ obligation he does not
need to fix this problem, but he’s a nice guy so he says he
will. If the landlord voluntarily assumes performance of the
repairs and is negligent in the completion, so that the tenant is
personally injured in tort as a proximate cause, the landlord is
liable even in tort of assumption of repairs.

 P- stands for: Public Use Rule

 A Landlord who leases public space and who should have known given the nature
of the lease(ought to have known) because of the length of the lease and the
nature of the defect(significant defect) that the tenant wont repair, is liable even in
tort for any defects on site that have caused a personal injury in site
 Example: A high school leased the Philadelphia Museum of
Natural History for 2 weeks to hold graduation festivities

13
 including the prom. On prom night a student was
dancing and noticed the skeletons of a T-rex was
swinging as it was hanging from the ceiling. If that piece
fell it would be an exact use of the public use doctrine.
 A landlord who leases public space who ought to have known given the length of
the lease, usually for a short-term lease like the high-school for 2 weeks and the
nature of the defect usually significant defects, more than minimal and de
minimise like the faulty T-rex is a mighty defect and is far different than just a
burnt-out light bulb that has to be replaced
 A landlord who ought to know given the typically abbreviated nature of the lease
and the significant nature of the defect that the tenant is in no position to make the
repairs will be liable even in tort under the aegis(protection) of public use rule
What is Public Use?
o a museum, ample theater, auditorium.

 S- stands for: Short Term Lease of a Furnished Dwelling

 The landlord is liable for any defects on site of a short-term lease of a furnished
dwelling
 Example: After exams Sara decide to go away and lease a
furnished dwelling bungalow along the seashore for a
week. The landlord is liable even in tort for any defect on
site that proximately caused Sara any personal injury
 Why is the Landlord Liable?
o If all you got is a short-term lease of a furnished dwelling, tenant has neither the
expectation nor the ability nor the inclination to make the repairs themselves, landlord
is therefore liable

14
Video 2 Real Property: Rights in the Land of Another
Outcomes:
1) Nonpossessory Interest in Land
2) Easements
3) Licenses &
4) Profits
5) Real Covenants
6) Equitable Servitudes

1) Nonpossessory Interest in Land

 The law of servitudes refers to a family of non-possessory interest in land.
 There are 5 Kinds of Servitudes:
 1) Easements
 2) License
 3) Profits
 4) Real Covenants
 5) Equitable Servitudes
 Example: We get onto a helicopter for an aerial view for
the forest of servitudes, as you look down I tell
you:

1) Easements: Look at the mighty red woods, the most formidable, giant trees, most permanent
in this forest. those are the Easements. The easement is the grant of the property interest that
tends to stick around

2) License: Saplings(young tree, slender trunk) are kind of flimsy those are the license. A license
is a mere privilege to enter the land of another for some limited purpose. License are weaklings
in the forest because they are typically freely revocable they can be taken away at the will of the
licensor unless an estoppel applies to bore that revocation

3) Profits: The orchid of an apple tree, the apple tree represent the profits. The profits is similar
to an easement but unique in the respect it entitles its holder to enter the land of another and
harvest and extract from the land some if its natural resources. Such as the apples from the apple

15
tree, or the minerals from the tree, or the oil from the dirt. The profit must allow the holder to
take something away from the land.

4) Real Covenants: Covenant starts off with a contract regarding land it is a very different
species of servitudes with unique rules. We look at the azaleas bush which is the metaphoric of
the covenants which is very different then the trees. It has it roots in law

5) Equitable Servitudes: Next to the azalea bush we look at hydrangeas which is an equitable
servitude, very different then the trees we looked at. The equitable servitudes has its roots in
equity

2) Easements:
 Definition: The easement is the grant of a non-possessory interest that entitles its holder
to some form of limited use or enjoyment of another’s land, called the servient tenement
(land that has the burden or land that suffers from the burden)
 Examples: the right to lay utility lines on another’s land, the
easements giving its holder the right of way across a tract
of land, or a farmer Jack’s right to water his cattle at
another’s pond, are all affirmative easements.

 Building an Affirmative Easement: Easements can be affirmative or negative, however

most are affirmative. It gives the right to do something on another’s land called the
servient land which is the servient tenement, the land that carries the burden.

 Negative Easements- Far more narrow, it entitles its holder to compel the servient owner
to refrain from doing something but for the negative easement would be permissible.

 Building a Negative Easement: It can be only created expressly, there is no implicit or

automatic right to a negative easement. To create is you must bar for it and reduce your
understanding to signed writing. (Heavily tested with light)
 There is no implicit right, it can only be created by express grant

Negative Easements are Only Permitted in 4 narrow settings by the LASS acronym
o You may acquire a negative easement for:
 Light
 Air
 Support
 Stream Water from an artificial flow
 Scenic View (ONLY IN SOME STATES have a 5th )

 Example 1: I the holder of the negative easement for light have acquired the right to
compel my neighbour the servient owner to refrain from building a top of
her structure in such a way that would impede my parcels access to free
unfettered sunlight.

16
  Example 2: In Boston the new John Hancock building has a 360 thousand mirrored
light reflective glass panels, that it because the old Trinity Church a land
mark has a negative easement for light over the new John
Hancock(servient tenement) building. The architects of the new John
Hancock building found a way with that mirrored light reflecting glass
panel to abide by the terms of Trinity Church’s negative easement for
light over it, but also enhancing the amount of sunlight that Trinity
Church is able to receive of all hours of the sunlight day.

 Example 3: I the holder of the negative easement for air have acquired the right to
compel my neighbour the servient owner to refrain from building a top
her parcel that would somehow interrupt or impede my parcels access to
free unobstructed air flow .
 Example 4: I the holder of the negative easement for support have acquired the
right to compel my neighbour the servient owner to refrain from
excavating or digging on his parcel in such a way as might work to the
detriment of my parcels subjacent(situated below something) support.

 Example 5: I the holder of the negative easement for stream water from an
artificial flow meaning, I acquired the right to compel my neighbour the
servient owner to refrain from doing anything on her parcel that would
impede or interfere with my parcel access to a flow of stream water
coming from an artificial source. Meaning we live in a very dry climate
area where that artificially flowing water source really matters to use.

 Example 6: (Only in a minority of states) I the holder of the negative easement for
scenic view have acquired the right to compel my neighbour the servient
owner to refrain from building a top her parcel, in such a way that would
impede the negative easement holders’ access on her parcel to a scenic
unfettered scenic vista

Easements are Either Appurtenant to Land or Held in Gross

 Easement is Appurtenant when: it benefits its holder in his physical use and enjoyment
of his own property

(Song: It takes 2 babyyyy, it takes 2 babyyyy, me & you)

How do you know on an exam when you have an Easement Appurtenant?
o It takes 2 parcels to be involved such as a dominant tenement derives the benefit of the
easement and a servient tenement bares/suffers the burden of the easement
o Appurtenant means relevant to or pertaining to the land
 Example7: A grants B a right of way a cross A’s land, so
that B can more easily reach B’s own land.

2 parcels are/must be involved: (It takes 2 baby to make an easement appurtenant)

 1-A’s land - Servient Tenement- Suffers the burden
 2- B’s land- Dominate Tenement- Derives the benefit or gain

17
  A’s land is serving B’s easement
 B has an Easement Appurtenant to B’s dominate tenement because it allows B
to derive a benefit/gain/advantage in B’s use and enjoyment of B’s own land
 B has an Easement pertaining/relevant to B’s use and enjoyment of B’s own
land and that’s how you have an Easement Appurtenant

Easement Held in Gross

 Easement in Gross- Confers upon its holder only a personal, financial, commercial
gain/benefit, not linked to the easement holders use and enjoyment of any of the
easement holders own land
 The owner of the easement in gross may not even have any land of his own
 Servient land is burdened, but there is no dominant tenement because only 1 parcel is
involved when you have an easement in gross, it’s the servient land.
o Reworded: There is no dominant tenement because by definition the holder of an
easement in gross is deriving a benefit or commercial gain not linked to the
easement holders use and enjoyment of any of his own land, the easement holder
may not even have his own land and still have the easement in gross as only 1
parcel is involved the servient land

Easements in Gross Consists of:

 Right to post a billboard on another’s lot
 Right to swim on another’s pond
 Right to lay power lines on another’s land
 Example8: The Bean Growers Association of American
acquired the right to place a billboard on your front
lawn, its says” Eat Beans and you will never have to
stop for gas”- THAT’S GROSS- That’s an Easement
in Gross
The Difference in the 2 Easements:

 Easement in Gross – Benefits its holder in a personal, financial, commercial way. It

consists of only 1 person

 Easement Appurtenant- Benefits its holder in the use and enjoyment of his own land
and burdens another – It consists of 2 persons

The Easement and Transferability:

 Easement Appurtenant- Passes automatically with the dominant tenement

o Regardless of it even being mentioned in any document of transfer
o The burden of an easement appurtenant will pass with the servient land, unless the
owner of the new land is a bona fide purchaser without notice of the easement

 Easement in Gross- are not transferable, unless they are for commercial purposes

18
  Example 9: A has the right to swim in B’s pond, that is an easement in
gross, only 1 parcel is conjured up in your facts which is B pond
it is the servient land that would be a personal easement in gross

Is the Personal Easement in Gross transferable?

o No, personal easements in gross are considered personal to their holder and cannot
be transferred
 Example10: Bumble Bee Tuna Company has the right to fish for bait in
Bee’s lake. This is a commercial easement in gross because
only 1 parcel is involved the servient land such as Bee’s lake

Is the Commercial Easement in Gross transferable?

o Yes, commercial easements in gross are assignable, they are transferable because
its commercial and not personal. It’s not personal its business

The Scope of an Easement

 The scope of an easement is set by the terms or conditions that created it.
 That means there cannot be any unilateral expansion of an easement to benefit a non-
dominate parcel
 Example11: You acquire an easement by express grant to utilize A’s
driveway for purposes of getting to and from your parcel
known as B acre. Your parcel B Acre would be considered
the dominate tenement, A’s Parcel an Acre would be
considered the servient tenement.
 Would you the holder of that Easement Appurtenant to your dominate tenement be
able to unilaterally expand the scope of the easement, so that it can be used to benefit
your newly acquired nearby sea acre?
o No unilateral expansion of an easement is not allowed
o To say that the scope of an easement is set by the terms or conditions that created
it, it is already created and set

 How to you Create an Affirmative Easement?

 Negative Easements- can only be created expressly, by express grant

 Affirmative Easement- the right to do something on another’s land can be

created in 1 of 4 ways: The acronym “PING”

The 4 Ways to Create an Affirmative Easement: “PING”

 1) P- stands for: Prescription
 An easement may be acquired by analogy(similarity) to the elements of adverse
possession, those elements are reduceable to an acronym COAH

4 COAH Elements that allows an Affirmative Easement to arise by Prescription:

19
  1. C- stands for: Continuous Use for the Given Statutory Period

 2. O- stands for: Open End Notorious Use

 Meaning a visible use

 3. A- stands for: Actual Entry

 Actual entry that need not be exclusive

 4. H- stands for: Hostile Use

 Without the servient owner’s consent

 Example 12: Every day Paula cuts across your front lawn to more
efficiently get to her parcel. Paula has no right to do that,
she’s a trespasser.
 Paula makes it a continuous habit of that use for the requisite statutory period.
 Paula’s use is open and notorious meaning its visible, if you bothered to look you
would see her most days cutting across.
 Her entry is actual, it doesn’t have to be exclusive in the immediate setting for
purposes of acquiring an affirmative easement by prescription. It doesn’t have to be
an exclusive right of use for good reason, it’s only a right of use. So, you the owner
of the land upon which Paula is trespassing for now, of course I’m continuing to
use my land. Paula’s entry for purposes of acquiring an affirmative easement by
prescription represents just a very limited use, its actual but it doesn’t have to be to
the exclusion of me. I can still do what I need to do on my land, including cutting
across the same portion of my land the same land Paula is cutting across.
 Paula’s use is also hostile, meaning I never gave her permission to cross my lawn.

 Over time the magic of analogy to adverse possession tells us that Paula a mere
trespasser for now, could be transformed to the rightful holder of an affirmative
easement by prescription

 2) I- stands for: Implication

 Easement implied from prior use

 Example 13: A owns lots 1&2. lot1 is hooked up to a sewer drain located on
lot2. A sells lot1 to B with no mention of B’s right to continue to
use and enjoy that sewage drain located on A’s remaining lot2.

Will the courts imply an easement on B’s behalf to continue to use the sewer drain located
on A’s remaining lot2?
o Yes, the court will imply an easement on B’s behalf if the previous use was apparent&
o Easements continuation is reasonably necessary to the dominate lands use & enjoyment
o The courts will imply an easement based upon a pattern of pre-existing use before the
land was subdivided
o If that previous use was apparent and continued use is reasonably necessary for the
dominate lands use and enjoyment, then the courts will imply that easement

20
  3) N- stands for: Necessity
 The courts will simply an easement of necessity whenever grantor conveys a part
of his land with no way out, except over some part of the grantors remaining land

 Example 14: Paula owns 100 acres, Paula conveys 2 of those acres to
me. The acres leave me right in the middle of Paula’s
remaining 98 acres and I’m land locked. The courts will
not abide(accept) a land lock situation. The courts will
simply an easement of necessity on your behalf over some
portion of Paula the grantors remaining acres.

 4) G- stands for: Grant

 An easement to endure for more than 1 year must be in a writing that complies
with the formal elements of a deed.
 In a writing that comports with all of the formal elements of a deed
 The writing to create the easement is called the deed of easement
 The need of the writing requirement is linked to the Statute of Frauds
 The instrument to evidence the creation of the easement by express grant is called
a deed of easement

3) Licenses :

 Definition: Licenses is a mere privilege to enter another’s land for some

delignated(precise) purpose, they are not subject to the Statute of Frauds.
 They are very informal devices, as you don’t need a writing to create a license, they are
not subject to the Statute of Frauds and they can be created orally.
 However, there is a price to be paid for this informality
 Licenses are freely revocable at the will of the licensor, unless estoppel applies to bar
revocation, that’s why the licenses are the flimsiest ( as the weakling saplings in the
forest) of all servitudes
 Estoppel Applies to bar revocation only when the licensee has invested substantial money
or labour or both, in reasonable reliance/legitimate expectation on the license’s
continuation

How does a Licenses Apply and How does it Come Up?

 There are 2 types of License Scenarios that to be used most frequently with the License

1. The Ticket Case

2. Neighbours talking by the fence -(Important usually on exam)

1) The Ticket Cases

 Tickets create freely revocable licenses

21
  Example15: Paula purchased tickets to a show and noticed that all the
other 350 ticket holders all afforded entry into the theater
except Paula.
Can they do this?
o As a property matter yes
o Paula’s ticket created only a freely revocable license
o She does not have an entitlement actually to see the theaters performance, even
though she has purchased a ticket. At will it can be taken away
o As a contract matter you have a claim for breach of contract against the seller,
direct measure of recovery, incidental, out of pocket losses, consequential
reasonably foreseeable losses, tort-based claim based on emotional distress and
embarrassment
o But as a property matter they can deny Paula the right to see the show

 2) Neighbours Talking by the Fence

 Example 16: Neighbour A is talking by the fence with neighbour B. A

is feeling generous and says “ B you can have that right of
way across my property” The next day A is in her rights
when she has a change of heart and says “ B I hereby
revoke any entitlement that you presume what I conferred
upon you previously”, when B made the mistake by
talking with A by the fence.
o That seemingly oral easement is unenforceable because it violates the Statute of Frauds,
instead is creates a freely revocable license.
o Nothing good comes when neighbours talk by the fence beware on the exam

4)Profits
 Definition: The profit gives its holder the right to enter servient land and take from it the
soil or some substance or the soil or a natural resource.
 Could be crops like the apples from the apple tree in the scenario, oil, timber, minerals or
any natural resource
 The Profit shares all the rules of easements, everything you know about an easement you
can apply to the profit, but you don’t call this entitlement to enter another’s land and
extract from it, harvest from it some of its resources, an easement you call it a profit

 Example17: Elijah acquires the right to go to the top of Mount Sinai

and extract from the land its minerals. He can do that
because he’s a profit lol.
5) Real Covenants
 Definition: A Covenant starts off as a contract regarding land.
 Covenants can be Restrictive(-) or Affirmative(+), but most are restrictive covenants

Definition of: Restrictive Covenant & Affirmative Covenant

22
1) Restrictive Covenant- is a promise to refrain from doing something related to land.
 A contract or promise regarding land obliging its maker to refrain from doing something
related to land
 Restrictive covenants had to be born because of the property law insistence that negative
easement be so limited in scope as they can only be acquired for: Light, air, support,
stream water from artificial flow and scenic view in a minority of states.
 Because the Negative Easement would not allow neighbouring land owners to restrict
their respective land uses more broadly. A new device had to come to the fore and it
started in contract law and it’s called a Covenants, a contract regarding land.
 Most covenants are restrictive to pick up the slack left behind from the negative
easements

 Example18: I promise not to build for commercial purposes on my

land/property. This is a Restrictive Covenant.
 This comes up often in the exam
Examples of Restrictive Covenants
 I promise not to paint my shutters brown
 I promise not to post a for sale sign on my front lawn
 I promise not to have any pets
 I promise not to maintain a petting zoo on my rear acreages

2) Affirmative Covenant- is a promise to do something related to land

Examples of Affirmative Covenants (Construe- interpret)

 I promise to maintain our common fence
 Exam Tip: It is important to know, whether to construe the given promise
regarding land as a Covenant on the one hand or as an Equitable
Servitude on the other hand. There is a factual overlap between
those 2 forms of closely related servitude.

A trick to figure out the difference, is to look for the relief your plaintiff is seeking
o When a plaintiff wants money damages to be made whole as a consequence of the
defendants alleged betrayal of the servitude.
o When plaintiff wants money damages from the defendant construe the promise at
law as a Covenant.
o A covenant is a legal device, meaning it is accompanying by the legal remedy
such as money damages
o When the facts of the questions tell you: ”plaintiff seeks money damages for the
defendants alleged betrayal of a promise obliging him to build solely for
residential purpose” You got to construe at law, construe the promise and the
rights pertaining there to in terms of covenant analysis.

When you told the plaintiff wants an injunction

o Construe in equity as an Equitable Servitude

23
  You got to construe rights and duties in equity and pick the path of Equitable Servitude
Analysis
 When the facts reveal to you that the plaintiff wants money damages to be made whole
for defendants alleged betray or breach of a given promise concerning land/(given
contract concerning land), you are now on the Covenant Path Analysis

 Example19: Plaintiff seeks to enjoin/orders the defendant from going

forth with his proposed construction in violation of the
restriction pertaining to his land.
 No damages/money is involved it is an injunction to stop him
from doing something

In a Covenants Questions Analysis-(covenant language/parlance)

 In covenant parlance you would begin by noting that 1 tract is burdened by the promise
and the other is benefited

When will this covenant run with the land at law?

o A covenant is said to run with the land at law when it is capable of binding
successors to the originally promising parties

 Example20: Neighbour A promises neighbour B that A wont build for

commercial purposes on A’s land.

A B- Originally Promising/Covenanting Parties

 A’s parcel is burdened by the promise
 B’s parcel is benefited by the promise

 Continued Example 20 : A then sells her burdened parcel to A1. B then sells his
benefited parcel to B1. A1 is now commencing a
manufacture of a steak sauce plant. B1 wants to
proceed against A1 for money damages, for A1’s
alleged betrayal of a promise that A1 predecessor A
made to B1 predecessor B that A would not build for
commercial purposes on the land
Will B1 Succeed?
o Depends on whether the facts can support the conclusion that both the burden of
the original promise runs from A to A1 and then the benefit of A’s original
promise to B runs from B to B1.
o We need to know the relationship of the covenanting parties of A & B
o A & B would have need to be in succession of estate for horizontal privity to be
satisfied
o We need to know whether or not they are in a relationship of Grantor/Grantee or
less likely Landlord/Tenant or less likely Debtor/Creditor relationship existed
between A & B at the time A made that promise to B
A B

24
A1 B1
When Answering a Question Always Start with the Burden first
 Does the burden of A’s original promise to be run with the land from A the originally
burdened party to A’s successor A1?
 For the burden of a covenant to run with the land at law, several elements are needed

How Does a Burden of a Covenant Run with the Land at Law? Use
Acronym “WITHN”

 W stands for Writing

 The original promise must have been in writing

 I stands for Intent

 The original parties A and B intended that the burden would run

 T stands for Touch and Concern the land

 The promise effects the parties as landowners
 A promise touches and concerns the land when it is relevant/pertaining to the parties
as land owner

 H stands for Horizontal and Vertical Privity

 Horizontal and Vertical privity are both needed for the burden to succeed in running
from A to A.1

Definition of Succession of Estate:

 Succession of Estate means that at the time A made her promise not to build for
commercial purposes to B, A and B were in a grantor and grantee relationship
towards each other. Perhaps B purchased his benefited parcel from A or perhaps A
purchased her burden parcel from B.
 Succession of Estate is also satisfied if A and B in addition to sharing this covenant
happen to share a Landlord/Tenant relationship in regards to another parcel
 Succession of Estate in addition to sharing the covenant making also happen to be
each other’s Debtor/Creditor in a land finance transaction.
 Maybe A borrowed the money she needed to buy her parcel from B or vice versa.

 Definition of Horizontal Privity:

 Refers to the nexus between A and B, the originally covenanting parties. It
requires that they be in succession of estate. Horizontal Privity is difficult to
establish and its likely to be absence as it tends to be the sticking point the
impediment to a burden succeeding in running with the land.
 It is not often the case that covenanting neighbours happen to also been each
other’s grantor and grantee with regard to the affected parcel. Even less likely that

25
 they happen to share another parcel or be each other’s Debtor/creditor in a land
finance mortgage
 If you have Horizontal privity you also need Vertical Privity

 Exam question look for the absence of a Horizontal Privity of the originally covenanting
parties
 When you have horizontal privity on an exam its typically because A and B the originally
covenanting parties were in a grantor/grantee relationship when the original promise was made.
 A bought the parcel that she then voluntarily burden from B or B bought the parcel that he
voluntarily burdens from A at the time the promise was made extracting from A his grantor that
promise

 Definition of Vertical Privity:

 For a burden to run A and her successors A1 must have vertical privity
 Vertical Privity is much easier to establish
 It simply demands a non-hostile nexus between A and A1 that typically comes
from a contract, a deed, family relationship, devise in a will
 The only time a vertical privity will be absence is if A1 acquired her interest
through adverse possession
 Adverse Possession is hostile to A as it allows a person to claim a property right
in land owned by another such as “squatter rights” or “history of possession”

 N stands for Notice

 A1 must have had notice of that promise when she took

Will B1 succeed if all the elements are met, the 2nd part of the question needs to be
answered

Does the benefit of A’s promise to B run from B to B1?

o Property law makes it easier for benefits to run then for burdens to run, all you
need for the benefit side to run from B to B1 remember the acronym “WITV”

For a Benefit Run use the Acronym “WITV”

 W stands for Writing

 The original promise was in writing

 I stands for Intent

 The original parties intended that the benefit would run
 The courts are very generous to imputing to the parties the requisite intent

26
 T stands for Touch and Concerns the land
 The promise affects the parties as land owners, it is of and pertaining to their rights
and duties as land owners

 V stands for Vertical Privity

 Non-hostile nexus between B and B1
 Horizontal privity is not needed for the benefit side to run,
o That’s why it’s easier for benefits to run then burdens

 On the Exam when your asked about whether or not a covenant runs with the land at law you
will need to analyse both sides. The originally burden parcel that was transferred and the
originally benefited parcel that was transferred

6) Equitable Servitudes- hydrangeas

 Definition: Equitable Servitudes is a promise regarding land that equity will enforce
against successors
 The Equitable Servitude is accompanied by an injunctive relief
o It is very similar to a Covenant but you will know the difference because your
plaintiff will want an injunction instead of damages
 To create an Equitable Servitude capable of binding successors, use the acronym
“WITNESS”

To Create an Equitable Servitude capable of binding successors- acronym

“WITNES”

 W stands for Writing

 The original promise was in writing

 I stands for Intent

 The parties intended that the promise would bind successors
 Courts are liberal in imputing to the parties the requisite intent

 T stands for Touch and Concerns the land

 The promise effects the parties as land owners

 N stands for Notice

 The successors of the burdened land had notice of the promise when they took

 ES stands for Equitable Servitude

 Privity is not required to bind successors to an equitable servitude

27
  That’s why Equitable Servitude analysis is different from Real Covenant analysis

 Is an Equitable Servitude Capable of Binding Successors to the Original Promise

Regarding Land?
o You do not engage in any discussion of either horizontal or vertical privity,
privity is not needed to bind successors
o Indeed, the Equitable Servitudes was born as a way to alleviate some of the harsh
consequence of the covenant insistences of privity and particularly Horizontal
Privity for a given burden to run
o The Equitable Servitude has its roots in fairness, no need to use privity when
asked if capable of binding successors

 On the exam, you might be tested on an Implied Equitable Servitudes. Most states,
most courts will allow Equitable Servitudes to sometimes be implied.
 The Implied Equitable Servitude is also known as the general or common scheme
doctrine
 It arises always in the context of a sub divider.
 Example 21: A is a sub-divider, she has many Lots. A sells the first 50
through deeds, restricting use to residential purposes
only. A then sells 2-3 of the remaining lots with no such
restriction included. A got sloppy and wanted to unload
the last of the units in the subdivision and thought she
could do so without that restriction.
 The remaining 2-3 are not similarly restricted

 Example 22: B buys one of those 2-3 remaining lots that is no way no
how restricted. B decides to build a convenient store as
it’s in a residential sub division he would make a killing.
His deed is not restricting to residential purposes only.

Can B be enjoined from building commercially? (when used enjoined know its equity)
o In equity yes, the 2 elements of General or Common Schemed Doctrine Apply

General or Common Schemed Doctrine

 Under the General or Common Schemed Doctrine, the court will imply a Reciprocal
Negative Servitude a fancy way of referring to an Implied Equitable Servitude
 To hold defendant B”s unrestricted Lot to the terms of the very same residential
purposes only restriction contained in all of those predecessor lots out from A the
common grantor
 The court will imply that Reciprocal Negative Servitude against B if the 2 elements of the
Common Scheme Doctrine are met

The 2 Elements of the Common Scheme Doctrine:

28
 1) When the sales began, the sub-divider had a general scheme of residential
development which included defendants Lot

2) Defendant unrestricted Lot holder had notice of the restriction contained in the
prior deeds

1) When the sales began, A- the sub-divider had a general scheme of residential development
which included defendants Lot.

2) Defendant B- unrestricted Lot holder had notice of the restriction contained in the prior
deeds
 B says how can I have notice of a restriction that was not contained in my deed
and only in the predecessor deeds?
 3 Forums of Notice that are potentially attributed to B, the Acronym is “AIR”

3 Forums of Notice Used in Common Scheme Doctrine:

 1. A stands for Actual Notice

 Prior to B’s closing, B came to know of the common restriction

 2. I stands for Inquiry Notice

 Are both forms of Constructive Notice
 Sometimes imputed to a defendant, regardless of whether the defendant had
actual notice
 Synonymous (related) with the lay (condition) of the land
 Inquiry notice tells us that B is charged with notice of the common restriction, if
the neighbourhood appears to conform to the common restriction

 Example 23: Whether B bothers to check out the subdivision or not

prior to his closing, B will be charged with Inquiry
Notice of whatever a reasonable inspection of the land
should have told him. If a drive around would have
showed him that it was a subdivision, there must be a
Common Residential Scheme in place. Whether he gets
it or not he is held to an Inquiry Notice of the Common
Restriction.

 3. R stands for Record Notice

 Are both forms of Constructive Notice
 Record Notice is the form of notice sometimes imputed to buyers on the basis of
the publicly recorded document.

Jurisdictions in the US are Split in 2 Different Record Notices View Some:

29
  1) Take the very harsh view and others take
 2) The more progressive courts take a more efficient point of view

 Harsh Rule: A later buyer (like B) ought to be charged with Record Notice, knowing
about the contents of all of those prior deeds transferred to others by the common grantor

 Efficient View: Determine that a later buyer (like defendant B the unrestricted Lot
holder) ought not be charged with Record Notice of the contents of all of those prior
deeds transferred to others by the common grantor. It is deemed more progressive
because it is less burdensome in defendant B title searcher.
o It won’t oblige the searcher of B’s title on B’s behalf to have to very tediously
examine the intricate contents of every prior deed out to others, simply
because those others happened to take from a common grantor (A the sub-
divider).

 The Implied Equitable Servitude is widely recognised across the vast majority of
jurisdictions in the US today.
 There is however a very small pocket of states lead by Massachusetts that refuses to
imply Equitable Servitudes.
 That minority of jurisdictions very strictly construes the Statute of Frauds and the writing
requirement and therefore will not allow any implicit restriction regarding land to accrue
in equity because of the absence of a writing.

Equitable Defences to an Enforcement of an Equitable Servitude

The Doctrine of Changed Conditions:

 The doctrine of changed conditions comes up whenever someone subject to the

terms of an Equitable Servitude restricting their land use argues to the court to be
released from the terms of the restriction because the neighbourhood has so
changed that the restriction no longer makes sense

 Example 24: S is held to the terms of an Equitable Servitude

restricting her land use to residential purposes only. The
problem is the whole area has been infected by
commercialization and S also wants to make a
commercial use on the property. S goes to court and ask
the judge to release her from this Equitable Servitude.
She invokes the Doctrine of Changed Conditions.
Commercialization has so steeped in to render that
residential purposes only restriction untenable (it doesn’t
make sense anymore)

To Satisfy the Doctrine of Changed Conditions

 You must show that the change you allege is so pervasive that the entire areas essential
character has been forever altered

30
  What is never good enough is mere pockets of limited change

Video 3 Real Property: Multistate Approach Video

o Answer the question systematically means you need a system or framework to
organize and access the rules like in Tort of Negligence: Duty of care, Breach,
Causation
o Try to visualize how Real Property rules work by applying them to a familiar
property interest, like your mother’s house
o You have a minute and a half for each question

 27 Real Property questions evenly distributed

 1-2 questions on Perpetuity
 1/5 or approximately 5-6 questions will come from these topics:

 1) Ownership including:
o Present Possessory Estate, Future Interest, Co- tenancy and the Rules
Against Perpetuities

 2) Landlord- Tenant Relationship

 3) Non-possessory Rights including:

o Covenants, Easements, Profits, Fixtures and Zoning

 4) Real Estate Contracts including:

o The Statute of Frauds, Marketability, Equitable Conversion, Merger etc.

31
  5) Mortgages including: (Crucial)
o The types of Real Estate Security Interests, Transfers, Priority,
Foreclosure etc.

MBE Real Property Approach:

1) Read the Call of the Question

 Use the call to determine the subject being tested

 Usually the call of the question would tell you if you have a property question by
stating:
 Which of the following is the most accurate statement regarding title to the land?
 Which loan has priority?
 Who owns the land?

 Use the call of the question to redirect your focus when reading of the facts
o It will ask you a specific party’s interest in land or a particular parcel of land

 Or the call might lead you to the sub topic being tested by asking something such as:
o If the court rules that the sub-lessee is not liable to the landlord for the unpair rent,
what will be the most likely reason?
 This is testing landlord and tenant relationships such as if there was a
constructive eviction or if a hold over tenant is liable for increased rent

 If the question is vague like asking which party will prevail?

o If necessary, skim the answer choices for words that reveal the subject being
tested
o If you skim the answer choices and you see words like Mortgage or Covenant
then you know the question is testing the subtopic
o Remember that even though you have determined the sub topic being tested you
have isolated the narrow issue being tested
o Find that narrow issue and you will usually get that question right assuming you
know the applicable rule

2) Find the Legally Significant Facts in the Hypo

 Any facts that tie into the call of the question
o Once you know what broad property topic is being tested keep on the lookout for 2
broad important facts:

1) Any facts that tie to the call of the question

 Example 1: If the call of the question asks “ Will the farmer prevail?”
 You will need to pay very close attention to every little thing that the farmer
did, didn’t do, received, signed, said, took etc.
 Then connect the farmer to the facts, especially to the action

32
  Example 2: If the call of the question asks “ Is the farmer the sole
owner of the land?”
 Pay close attention to the type of property interest that the farmer has and
weather anyone else has an interest in the same land

2) Any facts that are legally significant that tie to the call of the question

 Actively read hypo, identifying facts that trigger legal issues by underlining,
circling or highlight facts like:
 Dates
 Parcels of land
 Parties
 Facts that relate to key words in the answers choices that you
skimmed
 Issues are triggered by facts

 Example 3: The call of the question “A man erected a fence around

the property without the permission of the owner”
 This should trigger several issues such as Adverse Possession, this is getting at the the
actual, hostile and open notorious possession

BUT DEPENDS- read the call of the question and the hypo

 This could trigger the part performance exception to the Statute of Frauds because the
man is making improvements to the land which would intend to show possession

3) Determine What Real Property Category the Question is Testing:

 1. Ownership Interest
 2. Landlord & Tenant Relationship
 3. Non-possessory Rights
 4. Conveyance of Property
 5. Security Interest

 She will be referring the estate as Grandmas house, provide grandma with a life
estate, when grandma dies the house goes to my mom then to me

 To understand an Easement, think of Grandmas driveway, the next-door neighbour wants

to park his motor home

 Real Property contracepts with contracts and wills

 When someone dies her real property may be distributed by intestacy succession or by
trust or will

33
  Just because a fact pattern mentions a will it could be a contract question or a real
property question depending on what’s being asked this is why you need to read the call
of the question first and skim the answer choices

 When you sell real property, you use a contract and the Statute of Frauds apply

Question Type 1: Ownership Interest

 Identify the type of ownership interest:

 Fee Simple,
 Subject to a Condition Subsequent,
 Life Estate,
 Joint Tenancy,
 Tenancy at will,
 Easements, Covenants, Licenses, Equitable Servitudes
 Many more etc.

 If Grandma owns the house what does that mean? can she possess it, sell it, devise it
to someone else by will, can she exclude others from coming on to the property?
o An owner can usually do all these things.
o Real Property law gives grandma the right to sell or give away some of these
rights while pertaining others, this is why we have so many different interests in
land.

What does Grandma want to do with her land?

 Maybe grandma wants it for church purposes, she may convey a fee simple determinable
to her parish reserving a possibility of reverted so she would get the property back if its
ever used for non-church purposes.
 Grandma might sell an easement to her neighbour to give her neighbour the right to use
her driveway.
 Maybe she wants to share the use of her property with her daughter now and have it
transferred to her daughter upon her death, so she would want to hold the land with her
daughter as joint tenants with right of survivorship

 The word ownership means more than just 1 right in property law
 These situations involved grandma giving some, not all of her ownership
property rights
 Ownership rights can be shared by different people, so there is a lot of
different ownership interests to memorize

 When you have a real property question, you should be able to identify or label the
property interest.
 Does grandma have a:

 1) Present Possessory Interest-

34
  Fee simple, fee simple determinable, fee simple subject to conditions subsequent,
fee simple subject to an executory interest or
 a life estate or

 2) Future Interest
 A remainder, reversion, executory interest.

 3) Concurrent Interest (joined)

 Tenancy in common, joint tenancy, tenancy by the entirety

 Know the rights and duties that come with that interest
 You need to understand grandmas’ rights as a life tenant and
 Her duties are to the person who holds the remainder
 You also need to know what it means to hold property jointly with someone else
and what rights and duties a co-tenant has
 What if grandma has a joint tenant with aunty and fails to pay property taxes
 Or commits waste

 Understand how that interest can be created and destroyed

 You need to understand how an executory interest is created and under what
circumstances can it be destroyed this is when the rules of perpetuity comes in

 Know the elements for adverse possession

 Adverse Possession- is 1 way in which grandma can lose some of her property
 If a person is not stopped from squatting or by staying long enough on grandma’s
property, a person can own some of grandma’s property and she can eventually
forfeit her interest
 Grandma went to a nursing home and no one has check on her house for many
years and a squatter moves in, if they meet the adverse possession requirements
they could have acquired possession and then it is no longer grandma’s house.
Study this one:

Exclusive
Continous
Hostile
EC Hostile
Open and notorious HE Exclusive
HO Entry (actual posession) LU Lasting for the statutory
ES period
Statutory Period V Uninterrupted
A Visible (open & notorious)
Actual

35
 Open
Continuous
OC Exclusive
EA Actual
NS Notorious)
Statutory Period

Question Type 2: Landlord and Tenant Relationship

 Identify the type of Landlord/ Tenant Relationship

 Lease- Property owner gives possession to a tenant for a period of type

 4 Types of Tenancies

 Tenancies are classified based on how they can be terminated:

1. Tenancy for Year has a definite ending dates (could be 3 months instead of
years)

2. Periodic Tenancies continues for successive periods until terminated by proper

notice (month to month tenancy). They are created
expressly or when a tenancy for years expires

3. Tenancies at Will are terminable with reasonable notice by either party. These
are usually created by express agreement otherwise the
court would treat is as a periodic tenancy

4. Tenancies at Sufferance refer to tenants who hold over or wrongfully remain.

Last until landlord evicts. The tenant is in the wrong,
the landlord has the choice to either evict the tenant or
create a periodic tenancy. Don’t forget the exceptions
to the hold over doctrine when the tenant wrongfully
remains on the premises for a small amount of time
such as 5 hours or where the delay of leaving was not
the fault of the tenant or if it was a seasonal lease

Examiners like testing about:

 Lease Assignments-make sure you know the difference between an assignment and
a sublease.
 When she conveys the entire duration of the lease it’s an assignment
 When part of the lease it’s a sublease
 Look at the facts to see if anything other than the full duration was conveyed

36
  Absent and Express Restrictions in the lease- a tenant can transfer her interest in
the lease to someone else.

 Examiner often ask who it liable for rent?

 Privity of Contract- 2 people signed a contract and can now sue each other based on
that contract. If L and T1 signed a contract, L can sue T1 for T2 not paying rent, T1
will have to pay T2’s rent even if he subleased it to T2. T1 is liable for rent because
they have a signed contract such as a privity of contract

 Privity of Estate- the landlord can sue the assignee for rent but cannot sue a sublease
for rent

Assignment Sublease

Conveyance of Conveyance of a
entire duration part of the
of lease duraction of a lease

Only initial tenant1

Initial tenant 1 liable to landlord and
and new tenant2 subleasee (t2) is only
both liable to liable to the original
landlord tenant1 not landlord.

Examiners also like to test you on:

 The obligations of subsequent landlords who purchase the real estate

 Only covenants that touch and concern the land, meaning whose obligations benefit
the landlord and burden the tenant or vice versa or

 Covenants running with the land bind the subsequent owner or landlord

 Original landlord remains liable for all lease covenants in the original lease through
privity of contract
Original New
Landlord Landlord

Liable for all

lease Liable for all lease
convenants covenants that"touch
and concern" the land

Question Type 3: Non-Possessory Rights

 Identify Non-possessory interest right:

37
 1) Easements- give someone else the right to use real property without giving them
the right to exclusively possess that property:

o Their interest in the estate is: “the right of use”

 Example 4: Grandmas neighbour wants to use her driveway
too, so grandma sells them an easement giving
them that right

1. Creation of an Easement:
 Express Creation- grants or reservations made in a deed
 Example 5: Grandma gives her neighbour a deed of the
right to use her driveway
 Creation by Implication- prior use by a common owner and by
necessity which arise when land is cut off from access or landlocked

 Creation by Prescription-exclusive use is not required, if the

neighbour just uses grandmas drive way for 20 years without
grandma’s permission, eventually he acquires a prescriptive
easement, eventually grandma loes the right to tell him to stop

 The neighbour sells his property to someone else, does the Easement Transfer?
o The neighbour has an Easement Appurtenant because it benefits him in the use of
his land, when the land is transferred the benefit of any Easement Appurtenant
transfers with it. The new neighbour will own the easement after buying the
neighbour’s house

2. Types of Easements:
 1) An Easement Appurtenant- benefits its owner in the use of
another’s piece of property

 An Easement in Gross is unrelated to other land

 Example 6: a telephone company has an easement on a
strip of grandma’s property to run telephone
wires
Examiners also like testing Easements on:

 Scope of use- what kind of use can you make of easements, we cannot over burden the
easement or exceeds its scope

 Maintenance of Easements- who repairs easements? The user must repair them not the
owner of the land
 Example 7: Grandma is off the hook if the neighbour Rv
leaks oil everywhere and kills the grass, the
neighbour has to repair

38
  Termination of Easements- How can you terminate easements? There are 6 ways
beyond what is specified in the terms of the easement
itself. LEARN THEM

Make sure you understand:

 How an easement differs from a license
 A license is permission to use someone’s land, a privilege
 An easement is a property interest in someone’s land
 Therefore, a license is revocable and an easement is not

Test Tip: If an intended easement doesn’t meet all of the requirements, it becomes a license

2&3) Real Covenants and Equitable Servitudes

Landowner Requirements & Restrictions
 These are promises related to the use of a person’s own real property
 The promise can either require the owner to do something like maintain a fence or it can
restrict the owner from doing something like building an apartment or building on the
property.
 These are types of private restrictions that arise when 2 or more land owners essentially
create a private land use regime
 Real Covenants and Equitable Servitudes are essentially the same thing they are
both promises that effect the use of one’s own property.
 The main difference between a Real Covenants and Equitable Servitudes is in the way
that they are enforced
 Enforcing a Real Covenant is a legal action; only legal remedies such as money damages
 Enforcing an Equitable Servitude is an action in equity so only equitable remedies such
as an injunction or specific performances that are available.
 Example 8: Grandma decided to move out of her house to move into
a condo from a woman who owns 2 condos side by side.
The women kept 1 to live in and sold the other to
grandma. When Grandma bought the condo, she signed
an agreement that said neither party can hang a reef on
their front door. Grandma hated this covenant because
she liked the seasonal reef that she bought.

 Is Grandma agreement to keep the reef of her door a Real Covenant or an

Equitable Servitude?
o Agreements like this are usually both until they are enforced

 Grandma hangs that reef, what are the neighbour option?

o The neighbour can enforce the agreement as a Real Covenant and ask a
court for damages or to
o Enforce the agreement as an Equitable Servitude and ask the court to order
grandma to take the reef down

39
  What if Grandma conveys the condo to you? You never made this agreement? So
why should it be enforced against you?
o Because the restriction is not a mere contract it’s a property interest and as long
as the covenant runs with the land, it will be enforceable against anyone who
takes a subsequent possessory interest in the land.

Examiners like to test these questions:

 How can you tell if this restriction is enforceable against you or any subsequent
purchaser?
 When can subsequent owners enforce or be subject to these restrictions?

To use the terminology that you may see on the exam is:
 When does the burden of the restriction run with the land?

What the Examiners are Asking is:

 When can a real covenant or equitable servitude be enforced (restrict) against

subsequent owners and when can subsequent owners enforce the covenant?
 The court would make the plaintiff prove a little bit more if he wants to
enforce the restriction as a real covenant and get money damages
 If he wants just an injunction to get the conduct to stop, the law makes it
easier on him- (look at the chart)

 Continuing Example8: Suppose the neighbour wants to enforce the reef

agreement against you as an equitable servitude.

When can the burden of a restriction be enforced against subsequent owners?

 The neighbour has to prove 3 things: Intent, Notice, Touch and Concern
 The neighbour has to prove that the original parties to the agreement (that’s her and
grandma) intended that the restriction run with the land to future owners
 It would be unfair to enforce this agreement against you if didn’t have notice of it
 There are multiple types of notice such as:

 Actual Notice-

 Constructive Notice- deed containing the restriction was recorded in the chain of
title

 Inquiry Notice-facts would have put a reasonable person to notice of the agreement

 Does the agreement Touch and Concern the land, is the agreement related to the use of
the land or some other agreement?
 On the Exam Touch and Concern is usually the option being tested

40
  If the neighbour can prove those 3 things, he can enforce the restriction as an
Equitable Servitude
Equitable Servitude
(equity)

3) Touch and
1) Intent 2) Notice
Concern

Agreement
Actual related to
use of land
Constructive/inquiry

Horizontal Privity- original parties

Grantor-grantee, Landlord-tenant, Mortgagee-mortgagor

Grandma Neighbour
Step 1
Vertical Privity
Entire durational Interest

You

If the neighbour wants to enforce a Real Covenant:

2 additional requirements that need to be satisfied to enforce a Real Covenant on

the new buyer:

 Horizontal Privity– When the covenant was created the 2 original parties shared an interest
in the property. (Grantor-grantee, Landlord-tenant, Mortgagee-
mortgagor)
o Grandma and neighbour have a grantor-grantee because he sold her the condo
o 2 neighbouring landowners sign a covenant to maintain a fence between them. There is
no Horizontal privity because there is not shared interest listed above

 Vertical Privity- You and grandma- Grandma must have given the whole property not just
leased it to you or no vertical privity

Real
Covenant

3)Touch & 4) Horizontal 5) Vertical

1) Intent 2) Notice
Concern Privity Privity

41
Test Tip: Horizontal privity only concerns the original covenanting parties, so when future
owners are trying to enforce a covenant they only need vertical privity

When can subsequent owners receive the benefit of the Restriction?

 When the elements are satisfied on the 2nd row below

Equitable Servitude
(equity) Real
Covenant

Intent Touch and Touch and Vertical

Concern Intent
Concern Privity

When analyzing Real Covenants and Equitable Servitudes there are 4 types of
analysis:
1) Whether the burden of an equitable servitude runs with the land
2) Whether the benefit of an equitable servitude runs with the land
3) Whether the burden of a real covenant runs with the land
4) Whether the benefit of a real covenant runs with the land

Question Type 4: Conveyance of Property

 This is the law on how you obtain, transfer and keep property interests

 Example 9: Grandma wants you to sell her house

1) The buyer and seller agree to sign a contract of sale

2) The seller signs and delivers the deed to the buyer at closing

 Once the deed is accepted the terms of the contract are merged into the deed and as a
result the parties can no longer sue on the contract itself, they would have to sue based on
the rights that arise from the deed

Real Estate Contract: To convey real property:

1. Real estate contracts require a writing that satisfies the Statute of Frauds.
 A description of the property, names of the parties, price and the signature of the
party to be charged

2. Remember the exceptions to the Statute of Frauds

 An oral contract is okay only if part performance or another exception applies

42
  In order to show part performance, you need a valid oral contract, plus any 2 of
these 3 factors:
 The buyer is in possession
 Has paid in full or part
 Or has made improvements to the real estate

3. The Deed:
 A valid deed must be properly executed and properly delivered
 Statute of Frauds- Seller signs the deed and the deed provides a sufficient
description of the land
 Delivery doesn’t have to be physical it comes down to the grantor’s intent
 Recording a deed creates a presumption of delivery
 Know the warranties for title- A quick claim deed contains no promises
 General Warranties Deed contains 6 covenants for title (study and know what they
provide)

Main Testing Areas in Conveyances

 What if the property is damaged or destroyed after the contract is signed but before
closing?
 Under the common law, which is what you use in the MBE unless stated
otherwise.
 The risk of loss is on the buyer, even if grandma is still living in the house as long
as she is not at fault

 What if a party dies before closing?

 The doctrine of Equitable Conversion is that the sale happens anyway, Grandmas
estate has to go through with the sale and grandmas’ interest is considered
personal property, a right to receive cash.
 This means that if grandmas will give you all of her real property and gives my
sister all her personal property she will get the cash from the sale
 If the buyer dies his interest is considered real property and grandma closes with
the buyer’s estate
 In the period of time between the signing of the contract of sale and the closing, the
doctrine of equitable conversion says that the buyer is treated as a landowner with the
exception that the seller keeps possession of the land till closing

 What are the requirements of marketable title?

 Every land sale contract has an implied warranty that the seller will give
marketable title at closing not necessarily perfect title but something a reasonable
person would accept
 Marketable title includes proof of title, title free of incumbrances such as
easements, real covenants or mortgages that not other wised agreed to.
 A valid title on the day of closing, this is important because grandma has up until
the day of closing to clear up any title issues before the buyer can resend, even if
the problems are clearly impossible to resolve

43
  When must the parties perform?
 Time of performance, time is not of the essence, unless it is specifically stated in
the contract
 Grandma is given a reasonable time after the date is set for closing usually about
2 months to cure any defects
Recording:
 Recording comes in when we start talking about 3rd parties, buyer wants the whole world
to know that she bought the property, otherwise what is stopping the seller from selling it
to someone else, making twice the money and skipping town
 The buyer records the deed usually at a county recorder’s office
 Anyone who wants to know who owns the property can find out by checking the public
records
 A deed conveys property from 1 person to a second person, recording is never required
for a deed to be valid
 In common law if someone conveyed the same interest in property to 2 different people,
first conveyance prevailed. That was not fair
 States passed laws and changed this common law outcome

On the bar exam you need to be able to identify 3 Recording Statutes

Notice- Race-Notice-
Race Statute-
Subsequent Subsequent BfP
First to record
BFP wins (value who record first
wins
and no notice) wins

BFP- someone who paid value

3 Recording Statutes

1) A pure race statute protects whoever records first so the first buyer to get to the
court house and record it wins, notice is irrelevant. Even if the buyer knew the
land had been purchased by someone else.

2) In a notice jurisdiction a subsequent BFP who had no notice of the first

conveyance, prevails over the previous grantee.

3) In a Race Notice jurisdiction, a later BFP is protected only if she records her
interest thus she had to take without notice for value and be the first to record (this
one is most commonly tested)

 When looking at a recording question look to see if it has notice, race or both to figure
out which statute is being used
 Recording statutes protect only subsequent purchasers
 Notice and Race-notice statutes protect only BFP’s
 If you get the property for free you are not protected in neither

Test Tip: Recording statues come up often in mortgage questions

44
Test Tip: Look out for a non-BFP who is protected under the shelter doctrine
 Example: If grandma was a BFP and she died and her nephew got the
read property, the nephew would take shelter under grandmas
BFP status

Question Type 5: Security Interest

 Examiners test Mortgages more and more each year
 When buying a house, you get a loan from the bank called a mortgage
 This loan is secured by a lean on the real property
 If you don’t pay the payments on the loan the bank can take your home
 It can foreclose on this lean by reselling the house and keeping the money to satisfy the
loan amount, this lean is called a MORTGAGE
 A mortgage is the most common type of security interest

The MBE likes to test you on Mortgages by asking about the priority of the mortgage
holder when the homeowner doesn’t pay

A potential home owner has different financing tools available to purchase a home, she can
use a:
 Mortgage
 Deed of Trust
 installment land contracts

What happens when you have a deed of trust and a mortgage and you fail to pay?
o Foreclosure and Redemption
o The lender with initiate foreclosure proceedings which eventually conclude with a
foreclosure sale
o Prior to the foreclosure sale the debtor can redeem the property by paying the
amount in arears(the amount owed)
o Unless there is a valid Acceleration Clause, then the debtor must pay the entire
balance remaining due on the loan
 This is all known as the Equitable Right of Redemption

Understand the priority of payments of there are multiple mortgages

 All mortgages are NOT created equal
 The lender with the highest priority mortgage gets paid first
 Unless there was a recording act in place, common law rule of first in time,
first in right applies
 But if you see a recording act apply those rules

 Foreclosure on a lean does not destroy interest’s senior to that lean

 But it can destroy interest’s junior to that lean

Example: Over time grandma has taken 3 mortgages on her house in chronological order.
 Grandma stops paying Bank 2 and its foreclosure on the house
 The proceeds in the foreclosure go first to pay off the mortgage in bank2

45
  If there is any money left over the rest go to pay off bank3
 If there is any money left it goes to grandma
 After all of that Bank1 mortgage is still valid because it was senior to Bank2 mortgage
 Bank2 and Bank3 mortgage are gone regardless if they got paid in full

Exception: A purchase money mortgage holds the trump card

 This was the mortgage that was taken out to buy the actual property
 A purchase money mortgage has priority over earlier mortgages even if those mortgages
are recorded first
 Subsequent mortgages or leans may defeat a purchase money mortgage priority by
operations of the recording act, if the purchase money mortgage fails to record

Bank 1

Bank 2 1st
Bank 3 2nd

46