Property II Outline

Property II

Hines

Spring 2012

1) The Land Title System

A) Common law rule: First in time, first in right

1) Applies to both legal and equitable interests

(a) When one conveyance is a legal interest and the other equitable

(i) The legal title holder wins: Default rules

B) Recording Statutes

1) Race: B must record his own conveyance before A records (only one state – North Carolina)

2) Notice: B must be a purchaser for value and without notice (23 States)

3) Race-Notice: B must both be a purchaser for value and without notice and also record before A (27 states)

(a) Never ask the question of whether the first purchaser is a BFP (first person wins at common law); Policy behind recording statutes

C) Lawyer title states: title insurance is not allowed in those states (only Iowa)

D) Types of Index: Grantor-Grantee; and Tract Index

1) G-G Index: includes the name of each grantee for all land in the county for a given period of time (opposite for grantor index)

2) Tract Index – index where all documents affecting a parcel of land are indexed for that parcel of land; contains all documents affecting the parcel

E) Marketable Title Acts: Limit the search to a reasonable period (40-60 years)

F) Practical (Relevant) Chain of Title concept: What a reasonable title search would expect to recover

G) Waldrop v. Town of Brevard [CP 1] (Original deed contained language of negative easements and a right of way that ran with the land, but they weren’t in subsequent transfers-garbage dump case)

1) Rule: You are on constructive notice on everything that is in the records

(a) Deed out: a recorded document that refers to an unrecorded document

(b) Deed outs have to be read (you ignore them at your peril)

(i) Doctrine of Muniments of Title: a recorded document that refers to an unrecorded document (must be investigated because it imparts constructive notice of the unrecorded document and its contents)

(c) You are on constructive notice for anything that a reasonable title searcher would find

H) Gregerson v. Jensen [1206] (Husband →Wife NR; Husband→P via installment contract NR)

1) Rule: One who has transferred his legal estate to one person cannot thereafter detract from the effectiveness of such transfer by undertaking to transfer it to another

(a) Legal v. equitable interest (legal interests are protected more)

(i) Mrs. Jensen’s interest was a legal interest

(ii) P’s: equitable interest because it was an installment contract

(b) Bad Lawyering: State had Race-Notice statute, instead case fell under common law

I) Messersmith v. Smith [1207] (Grantor quitclaimed real property to P, and subsequently granted mineral deed to D grantee who thereafter transferred his interest to D purchaser. Each D recorded before P recorded; P filed suit to quiet title)

1) Holding: D purchaser was not “subsequent purchaser in good faith, and for a valuable consideration” within meaning of recording statute because, in absence of proper acknowledgment, mineral deed was not entitled to be recorded and thus did not constitute notice of its execution or contents.

2) General Rule: The recording of an instrument affecting the title to real estate which does not meet the statutory requirements of the recording laws affords no constructive notice

(a) The court said because it was a latent defect (notarized over the phone), Seale’s transaction really didn’t take place (the deed was not entitled to be recorded, so the record did not constitute notice of its execution)→goes against policy reason behind recording acts since Seale relied on the recording system and there was no way for him to notice the defect

3) Modern Trend (Rule): Defectively acknowledged but recorded instruments provide notice to subsequent purchasers if the acknowledgment appears to be good on its face. The deed itself must be valid

J) Recorded deed that was not delivered to grantee

1) The deed itself conveys no property interest and is invalid even as between the original grantor and grantee

K) Don’t have to give full value, just some value to become a purchaser for value

L) Guerin v. Sunburst Oil & Gas Co. [1218]

1) Rule: One who purchases land from the owner, after the recording of an option given by the owner to another person to purchase the same land, takes with constructive notice of the option, and cannot claim to be an innocent purchaser

2) Inquiry Notice: a party to a transaction is deemed to be aware of material facts that a reasonable person would have discovered through a reasonable inquiry.

(a) Enough to put you through the process of investigating what is in another document but is not dully recorded

M) Swift v. Tyson [1220] (Federal Rule: A BFP without notice of earlier title defects takes clear of the defects (#)

N) Error by clerk in filing:

1) Majority Rule: Someone who has recorded his instrument has fulfilled his obligation, and the instrument imparts constructive notice to subsequent grantees even if it is lost because improperly indexed (misindexed document is properly recorded)

2) Emerging Minority Rule: a misindexed deed does not impart constructive notice, so a subsequent grantee takes clear of the earlier deed (Iowa)

2) Easements

A) Appurtenant: benefits a particular piece of property

1) Burden on the servient estate and benefit on the dominant estate

B) In gross A particular person is benefitted rather than a particular parcel of land

C) How they are created: Express, Implication, Necessity, Prescription, Estoppel

D) Express

1) Grant

2) Reservation: conveyor saves or reserves an easement in the property

3) Willard v. First Church of Christ, Scientist [625] (2 lots across from church where church reserved an easement when it sold property to P)

(a) Common law rule: “one cannot reserve an interest in property to a stranger to the title” (stranger to the deed rule)

(b) Modern Rule: A conveyance reserving an interest in a third party is valid, if that is the intent of the grantor (most states use this)

(i) To avoid litigation: Pederson could have granted two deeds

E) Estate: an interest in land in which

1) Is or may become possessory; and is ownership measured in terms of duration

(a) Estates are possessory and easements are not possessory according to the text but not necessarily according to the Professor

F) License: the right to enter or do something on the land of another, and is revocable at the will of the licensor simply by the withdrawing of his permission (passes no interest in the property to the licensee)—detrimental reliance by the licensee/licensor also has theory

1) Exception: When expenditures contemplated by the licensor have been made by the licensee, the license, having been acted upon so as to greatly benefit the licensor, is said to have been executed, and thus becomes irrevocable and confers upon the licensee a substantive equitable right in the property (this adds the requirement that the expenditure must somehow have benefitted the licensor)

(a) Called an easement by estoppel or license coupled with an interest

(b) Expenditure must be reasonable

(i) Not all states hold that a license plus reliance expenditures can turn into an easement by estoppel (Iowa-only requires detrimental reliance)

2) Shearer v. Hodnette [631] (Hodnette’s received a right of ingress and egress down 900 feet of road from neighbors, built home, granted an easement to provide water and sewer to the neighbors, repaved the road, and then were cut off from using it

(a) Rule: The Hodnettes’ expenditures and their grant of an easement to the Water and Sewer Board conferred benefits upon the landowners, thus making the license to use the private road an executed, irrevocable license

(i) The irrevocable license does not run with the land

G) Implied Easement

1) They come into existence when property owners make use of one part of their property for the benefit of another part. Such implied easements are often described as “quasi easements” because logically no easement can exist when property is in the same hands.

2) Requirements

(a) a separation of title

(i) Quasi easement (easement is necessary but for the single ownership)

(b) Continuous and apparent use of the q