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LAND ACQUISITION

-- ISSUES --
Many issues in real property center around the acquisition of real property or an interest in real proepty. Typically property is acquired by adverse possession or by an intervivos transfer, such as through a land sale contract or by granting a deed, or by a devise in a will.
LAND ACQUISITION

-- ADVERSE POSSESSION ---

DEFINED
Adverse possession allows one who has wrongfully entered a property to obtain possession  of that property when there has been actual possession, which is open and notorious, and the possession is hostile continuously for the statutory period.
LAND ACQUISITION

-- ADVERSE POSSESSION --

REQUIREMENTS

ACTUAL POSSESSION
The claimat must actually have exclusive use of the property; which means he must physically occupy the premises.
LAND ACQUISITION

-- ADVERSE POSSESSION --

REQUIREMENTS

ACTUAL POSSESSION

Exclusive use
The true owner must be excluded from the premises and the property may not be open to the public.
LAND ACQUISITION

-- ADVERSE POSSESSION ---

REQUIREMENTS

ACTUAL POSSESSION

Partial Possession
A reasonable percentage of the property must be actually used. A claimant may only claim possession of the portion of the property actually used. (e.g., if a claimant occupied 1 acre of 200-acre parcel, he may only claim adverse possession of the 1 acre.)
LAND ACQUISITION

-- ADVERSE POSSESSION --

REQUIREMENTS

ACTUAL POSSESSION

Tenant Possession
The claimant may lease the premises to a tenant to satisfy the actual possession element.
LAND ACQUISITION

-- ADVERSE POSSESSION --

REQUIREMENTS

OPEN AND NOTORIOUS AND VISIBLE
The claimant must possess and use the property in a way that a typical owner of similar property would use the property. The use must be sufficiently open to put the true owner on notice of the trespass by the adverse possessor. (e.g., If a typical owner would only use the land in the summer months, the adverse possessor may only use the land seasonally also.)
LAND ACQUISITION

-- ADVERSE POSSESSION --

REQUIREMENTS

HOSTILE POSSESSION
Possession of the land must be without the owner's consent.
LAND ACQUISITION

-- ADVERSE POSSESSION --

REQUIREMENTS

HOSTILE POSSESSION

Permissive
Hostile possession is simply not permissive; it does not mean that the possession must be done in a hostile manner.
LAND ACQUISITION

-- ADVERSE POSSESSION ---

REQUIREMENTS

HOSTILE POSSESSION

Boundary Disputes
Wher one property owner occupies land, mistakenly thinking it is his own but it actually belongs to the adjacent property owner, this possession will be deemed hostile (e.g., building built over property line.)
LAND ACQUISITION

-- ADVERSE POSSESSION --

REQUIREMENTS

HOSTILE POSSESSION

Ouster of a co-tenant
Ouster of a co-tenant is required to find a hostile possession with concurrent property owners since all co-tenants have equal right to possession of the property.

a. Ouster occurs when a co-tenant claims an exclusive right to possession and refuses occupancy to his co-tenant.
LAND ACQUISITION

-- ADVERSE POSSESSION --

REQUIREMENTS

CONTINUOUS USE FOR STATUTORY PERIOD

Statutory Period
At common law, the statutory period is 20 years; it varies among the states but is typically at least 15 years.
LAND ACQUISITION

-- ADVERSE POSSESSION --

REQUIREMENTS

CONTINUOUS USE FOR STATUTORY PERIOD

Continuous use
Continuous possession means that the owner may not reenter to regain possession during the statutory time. If he doesn, the adverse possessor's time for possession starts over.
LAND ACQUISITION

-- ADVERSE POSSESSION --

REQUIREMENTS

CONTINUOUS USE FOR THE STATUTORY PERIOD

Seasonal Use
Seasonal use of a property may still satisfy the continuous possession element if this is the way a typical owner of similar property would use the land. The intermittent activities must be of the sort only done by the true owners (e.g., Erecting a small cabin to use during hunting season may be typical seasonal use, but simply using the property to hunt would not be since nonowners would do the same.

LAND ACQUISITION

-- ADVERSE POSSESSION --

REQUIREMENT

CONTINUOUS USE FOR THE STATUTORY PERIOD

Tacking
One adverse possessor may tack his time with the time of another adverse possessor to meet the required statutory period for adverse possession if the two adverse possessors are in privity (e.g., adverse possessor leases the premises to another and acts as landlord.)
LAND ACQUISITION

-- ADVERSE POSSESSION --

EFFECT
Adverse possesion does not convey marketable title. However, the title can be perfected and made marketable by means of a judicial action to quiet title.
LAND ACQUISITION

-- ADVERSE POSSESSION --

FACT TRIGGERS
- Attempted transfer of property that is ineffective and the purported new owner acts like an owner (K fails to meet SOF, deed not properly delivered, etc.)
- Fact pattern includes events occurring 15 to 20 years in the past.
- Seasonal use of a property, such as a vacation home or hunting cabin.
- Building is placed over the property line and onto neighbor's land.
LAND ACQUISITION

-- LAND SALE CONTRACT --

GENERALLY
The K for a conveyance of an interest in real estate typically governs the agreement until the time of closing, at which time the deed becomes the operative document governing the land transfer.
LAND ACQUISITION

-- LAND SALE K --

CONTRACT LAW GOVERNS

SOF REQUIREMENTS
The SOF applies:
1. SOF requirements:
    a. The K must be in writing;
    b. Name the parites;
    c. Signed by the party to be bound;
    d. Sufficiently describe the land; and
    e. State some consideration (purchase price).
LAND ACQUISITION

-- LAND SALE K --

CONTRACT LAW GOVERNS

SOF APPLIES

Part performance exceptions to the SOF
A. Possession plus payment: Buyer has possession of the land and paid all or part of the purchase price.
B. Substantial improvements are made to the premises.
C. Conveyance made by the seller.
LAND ACQUISITION

-- LAND SALE K --

MARKETABLE TITLE
There is an implied promise in every land sale K that the seller covenants to transfer marketable title at the time of closing. Marketable title is title free from reasonable doubt about the seller's ability to convey what he purports to convey.
LAND ACQUISITION

-- LAND SALE K --

MARKETABLE TITLE

FACT TRIGGERS
- Encumbrances, such as an outstanding mortgage or lien (but the seller has until escrow closes to pay it off).
- Record chain of title indicating the seller does not have a full interest in the property to convey.
- An easement that reduces "full enjoyment" of the premises.
- Use restrictions, such as real covenants.
LAND ACQUISITION

-- LAND SALE K --

EQUITABLE CONVERSION
The doctrine of equitable conversion provides that once the K is signed, the buyer is deemed the owner of real property, even though closing has not yet occurred. If the property is destroyed prior to closing, the risk of that loss is imposed on the buyer of the property. Some states have statutes that provide for the opposite result.
LAND ACQUISITION

-- LAND SALE K --

REMEDY
The nonbreaching party to a land sale contract can sue for damages or specific performance. Specific performance is usually the preferred remedy because land is unique.
LAND ACQUISITION

-- LAND SALE K --

REMEDY

DAMAGES
Typically, damages are calculated as the difference between the market price and the K price.
LAND ACQUISITION

-- LAND SALE K --

REMEDY

SPECIFIC PERFORMANCE
SP is a permanent injunction in K where the court orders the D to perform on the K as promised.
LAND ACQUISITION

-- LAND SALE K --

REMEDY

SPECIFIC PERFORMANCE

Requirements
1. K is valid.
2. K conditions imposed on the P are satisfied.
3. Inadequate legal remedy: Damages can be inadequate because they are too speculative to calculate with certainty, the D is insolvent, there is potential for a multiplicity of suits, or because property is unique so money damages are inadequate to compensate for the loss of the property. (Real property is ALWAYS unique.)
4. Mutuality of performance: Both parties to the K must be eligible to have their performance under the K ordered by the court.
5. Feasibility of enforcement: The injunction cannot be too difficult for the court to enforce.
6. No defenses, such as laches, unclean hands, or any defenses to the underlying K (e.g., lack of consideration, SOF, sale to a bona fide purchaser, etc.)
LAND ACQUISITION

-- LAND SALE K --

REMEDY

EXAM TIP
Use the mnemonic Chocolate Cake Is My Favorie Dessert to memorize the 6 essential elements of specific performance: valid Contract, contract Conditions satisfied, Inadequate legal remedy, Mutuality of performance, Feasibility of enforcement, and no Defenses.
SECURITY INTERESTS

-- MORTGAGE --
Real property is often encumbered by a mortgage.

A mortgage is a financing arrangement that conveys a security interest in land where the parties intend the land to be collateral for the repayment of a monetary obligation. The buyer and/or borrower is the mortgagor. The lender is the mortgagee.
SECURITY INTERESTS

-- MORTGAGE --

WRITING REQUIRED
1. SOF: A mortgage must typically be in writing and satisfy the SOF.
2. Exception to SOF. An equitable mortgage can occur. (e.g., A buyer delivers a deed to the mortgagee rather than signing a note or mortgage deed. Parol evidence is allowable to show intent of the parties.)
SECURITY INTERESTS

-- MORTGAGE --

RIGHTS OF THE PARTIES
Until a foreclosure occurs, if ever, the buyer-mortgagor has right to possession of the property and title; the credit-mortgagee has a lien, which grants the right to look to the land in the event of default. Mortgages are transferable.
SECURITY INTERESTS

-- MORTGAGE --

FORECLOSURE
Foreclosure is a process by which the mortgagee may reach the land in satisfaction of debt if the mortgagor is in default.
SECURITY INTERESTS

-- MORTGAGE --

FORECLOSURE

JUDICIAL FORECLOSURE
A mortgagee must foreclose by proper judicial proceeding.
SECURITY INTERESTS

-- MORTGAGE --

FORECLOSURE

PRIORITY OF LOANS
The land is sold and proceeds go to satisfy the debt(s) secured by the property. Any debts secured by the property are paid in descending order of priority (usually chronologically). Each morgagee/lien holder is entitled to payment in full before a lower-ranking creditor receives any payment.
  a. Purchase money mortgage(PMM) is a mortgage given to secure a loan that enables the debtor to originaally purchase the property. A PMM receives priority over non-PMM mortgages, but a PMM may not get a deficiency judgment against the debtor.
SECURITY INTERESTS

-- MORTGAGE --

FORECLOSURE

ANTIDEFICIENCY STATUTES
Antideficiency statutes limit a lender to receiving no more than the value of the loan.  Any excess remaining is returned to the buyer from the proceeds of a foreclosure sale after paying off all debts.
SECURITY INTERESTS

-- MORTGAGE --

FORECLOSURE

DEFICIENCY JUDGMENT
Deficiency judgment occurs when the property is worth less than the amount owed on the outstanding loan(s). A lender can only sue the debtor personally for the difference if:
a. There was a judicial foreclosure; and
b. The loan was not a "purchase money mortgage."
SECURITY INTERESTS

-- MORTGAGE --

REDEMPTION
When a mortgage is paid off, the property is "redeemed" from the mortgage.
SECURITY INTERESTS

-- DEED OF TRUST --
A deed of trust is similar to a mortgage, except the debtor is the trustor and the deed of trust is given to a third-party trustee.
SECURITY INTERESTS

-- INSTALLMENT K --
A buyer makes a down payment and pays off the balance in installments. The difference between this and a mortgage is that the buyer does not receive a deed until the land is paid off, and the foreclosure process is simplified. Typically, if the buyer is in default, the seller gets back the property and gets to keep the installment payments.
SECURITY INTERESTS

-- CONVEYANCE BY DEED --
A deed is a document that serves to pass legal title from the grantor to the grantee when it is lawfully executed and properly delivered.
SECURITY INTERESTS

-- CONVEYANCE BY DEED --

DEED REQUIREMENTS
Much like a land sale K, a deed must meet the following formalitites in order to be lawfully executed (with the big difference being that consideration is not required for a deed):
a. Identification of the parties.
b. Signature of the grantor, which is witnessed or notarized.
c. Adequate description of the property.
d. No consideration is required (it may be an intervivos gift).
SECURITY INTERESTS

-- CONVEYANCE BY DEED --

THREE TYPES OF DEEDS

QUITCLAIM DEED
A quitclaim deed conveys whatever interest the grantor actually has in the property but contains no covenants of title.
SECURITY INTERESTS

-- CONVEYANCE BY DEED --

THREE TYPES OF DEEDS

GENERAL WARRANT DEED
Warrants against all defects in title and contains six covenants for title. Three of the covenants are present and three are future covenants.
SECURITY INTERESTS

-- CONVEYANCE BY DEED --

THREE TYPES OF DEEDS

GENERAL WARRANTY DEED
 
Present Covenants
Present covenants are breach at the time of the sale (when deed is deliverd), if breached at all.
a. Seisin: Grantor warrants he owns what he purports to own.
b. Right to convey: Grantor warrants he has the power to make the conveyance.
c. Against encumbrances:Grantor warrants there are no mortgages, liens, easements, or use restrictions on the land.
SECURITY INTERESTS

-- CONVEYANCE BY DEED --

THREE TYPES OF DEEDS

GENERAL WARRANTY DEED

Future covenants
Future covenants run with the land, are continuous, and are breached, if ever, at the time the grantee is disturbed in possession.

a. Warranty of title: Grantor promises to defend should there by any lawful claims of title asserted by others.
b. Quiet enjoyment: Grantor promises grantee will not be disturbed in possession by any third parties' lawyful claims of title.
c. Further assurances: Grantor will do whatever future acts are reasonably necessary to perfect title.

TIP: Look for a warranty deed issue where there is an undisclosed easement.
SECURITY INTERESTS

-- CONVEYANCE BY DEED --

THREE TYPES OF DEEDS

STATUTORY SPECIAL WARRANTY

Some states enforce promises by statute where the grantor promises (on behalf of himself only) that he hasn't conveyed the property to others and that the estate is free from encumbrances.
SECURITY INTERESTS

-- CONVEYANCE BY DEED --

DELIVERY OF DEED
A deed must be property delivered and accepted to have effect.
SECURITY INTERESTS

-- CONVEYANCE BY DEED --

DELIVERY OF DEED

DELIVERY REQUIREMENTS
1. There must be a physical transfer of the deed by the grantor to the grantee or a third party; and
2. Words or conduct indicating the grantor's intent to make a present transfer of the deed. The following create a strong presumption of present intent to transfer:
  a. Recording the deed.
  b. Grantor giving the deed to the grantee.
3. Acceptance of the deed by the grantee must also occur. Rejection of the deed by the grantee defeats delivery.
SECURITY INTERESTS

-- CONVEYANCE BY DEED --

DELIVERY OF DEED

TITLE PASSING
Tite passes immediately to the grantee upon propery delivery, thus it is not revocable.
SECURITY INTERESTS

-- CONVEYANCE BY DEED --

MERGER DOCTRINE
Once the property closes, the deed, rather than the underlying land sale contract, becomes the operative document governing the transaction. Any obligation imposed in the K is deemed discharged at closing unless the obligation is repeated in the deed.
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