Real Propery: Final Exam Ventura Spring 2014 (80%) Professor: Kaur Question # I

Blackacre and Whiteacre are adjoining tracts of land. In 1950, Abel, the owner of , deeded Baker, the owner of Whiteacre, a 40-foot-wide of way across Blackacre for the benefit of Whiteacre. The was properly recorded. Baker promptly paved the easement and began using the easement to access Whiteacre. He and later owners of Whiteacre also maintained the easement as necessary.

In 1965, Whiteacre was conveyed to Charlie. In 1967, Charlie subdivided Whiteacre into a planned, gated community. Before selling the individual lots, he recorded Covenants, Conditions, and Restrictions ("CC&R's") that stated:

(l) "These CC&R's are intended to run with the land and bind all parties and their heirs, successors, and assigns":

(2) "Owners may not park pick-up trucks, RV's, trucks with camper Shell, or off-road vehicles in the street, or on their in such a way that they are visible from the street"; and

(3) "ln order to insure the safety and security of the homes in the development, each lot is assessed $350 per year to pay a private security service to provide security." Charlie quickly sold all of the lots in the development. Each deed out from Charlie explicitly refened to and incorporated the recorded CCR's, and was properly recorded. The development is patrolled by a private security firm paid at least in part by the assessment. The development is govemed by the Whiteacre Homeowners' Association (HOA), which is made up of all the homeowners in the development.

In 1960, the residents of Whiteacre stopped using the easement across Blackacre, and the HOA goveming board did not keep the road maintained. It is now in some state of disrepair. but still usable.

In 1995, Abel conveyed Blackacre to Davis. The deed did not mention the easement.

This year, Edward bought a lot in Whiteacre. His deed did not reference the CC&R's. Edward owns a Hummer SUV that can be driven off road, although he does not use it for that purpose. He parks it in his open carport. which is visible from the street. He also has a large gun collection, which he feels provides adequate security for his home; he therefore refuses to pay the $350 security charge, which he says he did not know about when he bought his property.

Describe and explain the theories under which the HOA may require Edward to 1. stop parking his Hummer in such a way as to be visible from the street; 2. pay the security fee?

**+*Do not discuss any issues related to easement***+ Real Propery Final Exam Ventura Spring 2014 (80%) Professor: Kaur Question # 2

Owen owned Blackacre. ln 2002, he drew up a will in which he left all of his prope(y, including Blackacre, to Alice. In 2005, he drew up a deed in proper form transferring Blackacre to his best friend Bob. The deed was signed and notarized.

Owen handed the deed to Bob's business associate Ezra, telling him, "l'm giving Blackacre to Bob, but I want to live there until I die. Hold on to this deed and give it to Bob after I die." After Owen died in January 2006. Ezra gave the deed to Bob, who did not immediately record it. After his death, Owen's , including Blackacre, was distributed to Alice. Alice recorded her deed from Owen's estate in June 2006.

ln 2007 , Alice sold Blackacre to Debra for $ I 50,000.00. Alice gave Debra a general . Debra did not immediately record her deed.

Before selling the property to Debra, Alice had been renting it to Rick by a month-to-month lease that provided that Rick had to vacate if Alice sold the property. Debra moved on to Blackacre and built a house.

In June 2008, Debra sold Blackacre to Frank for $200,000 via a special warranty deed.

Frank recorded his deed from Debra the next day, and immediately moved on to the property. Bob recorded his deed from Owen that Ezra had previously delivered to him in august 2008.

In September 2008, Frank leamed that the Alice+o-Debra deed had never been recorded: he obtained that dead and recorded it in October 2008.

Bob and Frank now each claim of Blackacre.

L Does Bob or Frank have the better claim to Blackacre? Discuss

2. Presuming Bob prevails, does Frank have any claim against either Debra or Alice under the warranty ? Discuss ANSWER ISSI.JE OUTLINE

OUESTIONONE

HOA v. Edward

A. Requirements l. In order for the HOA to enforce the restrictions against Edward, there must either be a real or an that runs with the land. a. Since Edward is not original promissor, burden must run with his parcel. b. Since HOA is not original promissee, benefit must run to it. 2. Both equitable servitudes and real covenants are interests in land.

B. Is there a real covenant that runs with the land?

l. Does the burden run with Edward's parcel? a, Writing (l) Since real covenant is an interest in land, it must satisfy Statute of Frauds-i.e., be in a writing signed by party to be charged. (2) Real covenant cannot be created by , prescription. or implication. (3) Here, the restriction is in the original CC&R's, which are referenced in the original deed. (4) Not necessary that original grantee sign deed, since his acceptance binds him. b. Intent (1) Original promissor and original promissee must intend that burden run. i. Ascertained from word in grant. ii. Here. states that CC&R's intended to run with land and bind successors, heirs, and assigns ofall pa(ies. iii. This is sufficient to indicate intent. c. Privity (1) Horizontal i. Relationship between original promissee (Charlie) and original promissor. ii. Courts require either grantor-grantee relationship or lessor-lessee. iii. Promise must be in deed/lease. iv. Here, promise in CC&R's, which were incorporated into original deeds. v. Therefore, horizontal privity exists. (2\ Vertical i. Relationship between original promissor (person who first bought lot) and person to be bound @dward). ii. Person to be bound must succeed to same estate as original promissor through sale or cift. iii. Here, presumably both original promissor and Edward have absolute. iv. Edward "Bought" property, so this is voluntary transfer. v. Therefore, vertical privity exists. d, Touch and concern burdened property (l) Negative covenant re cars i. Since this prevents E from using his property in a certain way, it is a negative covenant. ii. Negative covenant always touches and concems burdened property, since it makes it less valuable. (2) Covenant to pay for security. i. This is an affrmative covenant, since it requires E to do something. ii. Performance takes place off land (paying $ for security is equivalent to actually patrolling property oneself) iii. Will touch and concem if it both burdens ProPerty and makes it more valuable. iv. Arguably, having private security will benefit burdened property, since it makes it safer. v. Therefore. this covenant touches and concems. e. Notice ofcovenant. (l) E will contend that he has no notice because covenants were not in his deed. (2) But notice may be either actual, constructive (from public records), or inquiry. (3) Actual i. Covenants weren't in E's deed, and there's no indication that he otherwise actually knew of covenants. ii. Therefore no actual notice. (4) Inquiry i. Cars i) E may have noticed that there were no pickup trucks, etc. visible fiom street iD Arguably should have asked why iiD But it'siffy. ii. Security fee i) E may have noticed thal development had security patrol. ii) But no indication that he should have noticed that he had to pay for it. iiD On fte other hand, ifhe'd asked, he may have been told.

(5) Constructive from Record. i. Original CC&R's recorded. ii. Original deeds (including one in E's direct chain of recorded. iii. Therefore, E is on record notice.

2. Does the benefit run to HOA? a. As explained above, the covenant is in writing. b. Intent--as explained above, CCTR's state all parties and heirs, etc. to be bound. c. Privity a. Horizontal privity not required (but is present as explained above) b. Vertical privity: person enforcing covenant must have some interest in benefitted estate. c. Here HOA does not own any property. But other owners whose lots benefitted enforcine covenant. d. Touch and Concem: a. Must make benefifted parcel more valuable. b. Must analyze each promise separately. i. Cars: 1. Makes neighborhood seem tonier not to have pickups and RV's visible. 2. Might increase value to have neighborhood look nice. ii. Security payment: l' Homes more secure 2. People probably willing to pay more for secure homes. e. Notice not required. C. Is there an equitable servitude that runs with the land?

(l ) Does the burden run? i. Writing satisSing SOF-yes as explained above ii. lntent- yes as explained above iii. Privity-neither horizontal nor vertical required for servitude to run iv. Touch and concem-see discussion above v. Notice-see discussion above

(2) Does the benefit run? i. Intent- yes as explained above ii. No Privity required iii. Touch and concem-see discussion above iv. NO notice required.

D. Which would HOA prefer?

l. Violation of real covenant allows promissee to recover damages, and some courts allow injunctions. 2. Violation of equitable servitude allows injunction, which is usually preferable. a. Better not to have E parking car than constant suits for damages. b. Injunction requiring that he pay easier to enforce than constant suits for damases.

E. Did E violate covenants/servitude re cars l. Is the Hummer an off-road vehicle? a. Pro: it can be used off-road, and its immaterial that E chooses not to. b. Con: its fancy car, and most SUV's are not use off-road 2. Either conclusion possible, but must state both sides, or at least not iust assume there's a violation OUESTIONTWO

I . Was the convevance to Bob valid? A. Valid conveyance ofreal property requires: a. A sufficiently specific writing signed by the grantor. i. Facts state that Owen drew up a deed in proper form, which he signed. ii. Therefore, there is a signed writing by the grantor.

b. Delivery, which requires intent 1o presently pass title. i. There can be delivery without handing over ii. Physical handing over compelling of intent.

c. Acceptance by grantee, which is usually presumed.

B. Was there an effective delivery of the deed to Bob? a. Intent i. B will argue that there was present intent, because O said "l'm giving Blackacre to Bob," which indicates present intent, as opposed to "l want B to have Blackacre when I die" or even "l want to give Blackacre to B" ii. Frank will argue that O only wanted B to be able to possess Blackacre after O's death, so no valid delivery. iii. But only intent required is intent to presently pass an intemet, and here O effectively granted himself a and B a . b. Handing over i. Most cases hold that wehre deed is unconditional on its face, handing to escrow agent (here Ezra) with instructions to deliver after grantor's death is effective. ii. This is especially true where escrow holder is no1 agent of grantor (e.9., attomey) iii. Here, E was B's business partner, so more likely B's agent, and delivery is effective.

c. Delivery presumed where deed notarized.

2. Who orevails under recordinq act?

a. Common rule: i. First in time, first in right ii. Here, B was first in time 1. Although O drew up will in 2002, that will was not eflective until 2006, when O died-will speaks only at death. Therefore, presuming transfer to B in 2005 was effective, then B took before A did. 2. Therefore, at , B would prevail over everyone. b. Effect of recordinq statute: i. Changed this result to allow later taker to prevail if later taker meets certain conditions imposed by jurisdiction's statute. ii. If later taker does not meet these conditions, then first in time prevails. c. Requirements of recording statute: i. Later taker must be for value ("BFP"). i. Need not pay fair market price, but must pay more thaqn nominal value. 2. Courts are divided on what need be paid, but under the facts here, should be no controversy. a. A is not a BFP, sicne she received Blackacre as a cift b. Debra (D) is a BFP, since she paid $150,000 c. F is a BFP, since he paid $200,000 3. It does not matter that first taker (B) got Blackacre as a , since focus is on whether second taker qualifies.

ii. Types of recording statute 1. Race statute: later BFP prevails over earlier taker if later taker property records complete chain of title first. Notice is irrelevanL. 2. Notice statute: Later BFP without notice prevails over earlier taker. 3. Race notice statute: Later BFP most fulfill both requirements, must take without notice and properly record complete chain of title first.

iii. Shelter rule: 1. A later taker who prevails under recording statute can transfer property to third party. 2. Third party protected even if third party would not be protected under recording statute 3. Necessary recording system to work. d. Does F win under recordinq act: i. F is a BFP, since he paid $200,000 ii. F wins under Notice statute. 1. Notice is either actual. constructive fiom record or inquiry. a. No indication that F knew about O's deed to B b. F bought property in June 2008, and B did not record his deed until August 2008, so no constructive notice. c. No facts to indicate that B was in or had any interest. so no inquiry notice.

2. Fact that F did not properly record until after B (see discussion below) irrelevant in Notice jurisdiction.

iii. F loses under both Race and Race notice Statute: I . In order to win, F must record complete chain of title before B. 2. True that F's deed from D was recorded in June, before B recorded in August. 3. But D ded from A was not recorded before B recorded in August. e. F cannot claim (or does not need) benefit of shelter rule:

i. D is ofcourse BFP, since she paid $150,000 ii. D also loses in race or race/notice jurisdiction L In order for D to win. D's deed from A must be recorded before B's deed from O. 2. But D's deed from A recorded after B recorded his deed.

iii. D wins in notice jurisdiction, but so does F. l. No indication that D knew ofO to B deed. 2. B's deed not recorded when D got property, so no constructive notice. 3. Inquiry notice a. Rick, who was not listed as owner. in possession. b. But he is renter claiming under A. c. Inquiry would have shown that he did not claim title. d. Therefore, inquiry would not have revealed B's claim.

iv. Neither D nor F can claim shelter from A, since A is not BFP, and therefore not protected. 3. Frank's claims asainst D and A under warrantv deeds if B orevails. a. Two types of warranty deed: i. General wananty deed: wanants against all six warranties ii. Special warranty deed only covers defects arising during time grantor had title, grantor only warrants that he has done nothing to make title defective.

b. Six warranties in a warranty deed: i. Three Dresent covenants: 1. Covenant of seisin: grantor warrants that he owns interest he/'she purports to convey: grantor warrants that she has right to convey title 2. Covenant of right to convey: grantor warrants that there are no , , or other encumbrances on title. 3. Covenant against encumbrances: ii. Three future covenants: not breached until grantee is actually or constructively evicted sometime in the future. 1. Covenant of quiet enjoyment: grantor warrants that grantee will not be disturbed in possession or enjoyment of property by third party claims 2. Covenant of warranty: grant warrants to defend against all lawfirl claims of superior title 3. Covenant of further arrurances: grantor promises to perform whatever acts reasonably necessary to protect purchaser's title, ifil is imperfect.

c. F cannot recover from D i. D gave F special warranty Deed. ii. D did not cause defect in title l. A had no title when she conveyed to D, since B was first in time, and A could not be protected by recording statute. Therefore, D's defective title did not arise when she owned Blackacre and she did not cause defect.

d. F may be able to recover from A i. A gave D a general warranty deed, therefore, she's liable even though defect arose before she got her deed. l. B got property in 2005, leaving O with nothing 2. Thus, O's executor had nothing to convey to A. ii. But even though she would be liable to D, is she liable to F, a remote grantee? l. Future covenants run with the land if there is privity of estate between A and F. a. Privity of estate ifA transfers title or possession. i, A had no title, but she nas in possession, ufiich she eansfened to D. ii. D tresfer€d possession to F

b. Therefore, there is privity of estate and covenant rurut. c. But even thoug! B has won, there is no indication that he has dispossessed F, or that F must buy title fiom B to stay. Therefore, may not be able to recover under future covenant ofquiet eNrjoyment

A clearly violated pr€sent covenant of seisin, but does it nm with the land? a Majority rule: No, it doe not nrn with the land. b. Minority rule: Yes