Property II Flashcards

Property II Flashcards Wansley v. First National Bank of Vicksburg Facts: Tom and Julian Wansley were brothers and farmers, owning about 4,200 acres of farm land. Each year, they received crop production loans from the First National Bank. When they encountered difficulty in repaying the loans, the Bank demanded additional security. Accordingly, the Wansleys executed deeds of trust encumbering their farm land as security for over $1.4 million in loans.When they defaulted on these loans, the so-called trustee under the deeds of trust (John Wheeless) began nonjudicial foreclosure proceedings.The Bank was the lone bidder at the ensuing public auction sale, and purchased the land for $1,000,000, paying $500,000 for each brother's interest; Wheeless executed trustee's deeds conveying the land to the Bank.The Wansleys sued to set aside the trustee's deeds; the Bank counterclaimed for deficiency judgments.The trial court dismissed the Wansleys' complaint and entered a deficiency judgment against each brother and his wife.The Bank later sold the land to a third party for a price

substantially lower than $1,000,000.Rule: The court

emphasizes that "every aspect" of a foreclosure sale must be commercially reasonable, at least if the lender intends to seek a deficiency judgment (p.677).This standard is higher than many states require.-One concern is that the vagueness of the standard may create uncertainty about the validity of the sale. After all, it is fairly easy for a mortgagor to argue that the sale fell short of commercial reasonableness in some respect.In turn, the risk that a sale might be invalidated on procedural grounds might produce lower bid prices.Their main argument is that Wheeless was a trustee and therefore owed a fiduciary duty to them, which he violated by the manner in which the sales were conducted.-How does the court answer the issue regarding Wheeless' role as a "trustee?""[T]he deed of trust under our law is little more than a common law mortgage with a power to convey in the event of default" (p. 675).Quoting

Lancaster Security, it continued: "The trustee of a trust

deed is not a trustee in the strict sense of the word. The role of such a trustee is more nearly that of a common agent of the parties to the instrument..." (p. 676).A Mississippi court quoting, with approval no less, a California court!**MORE SUCCINCTLY: Accordingly: (1)

Wheeless was not required to exercise the utmost care to protect the Wansleys' interests, but only had to ensure that the sale was "commercially reasonable"; and (2) his status

as a bank "insider" was irrelevant.Holding: the plaintiffs

provided no evidence that the sales proceeds did not fairly reflect the value of each Wansley's interest at the time.

Issue and survive spouse:-Issues are lineal descendants,

such as children and grandchildrenParents and their

issueAncestors and collaterals:-Ancestors are

grandparents-Collaterals are other blood relatives.Title "escheats" intestate Modern Freehold Estates

Statute of Frauds: requires that contracts for transfer of real

property, in order for them to be enforceable, must be written and include the following:-Essential terms: the essential terms of the contract (identity of the parties, the price, and the property description) must be set forth in

writing.-Writing: the writing can be a formal contract or an

informal memorandum.-Signature: the writing must be

signed by the party sought to be bound.NOTE: SOF does

not make contracts void, just unenforceable Hickey v. Green-This case could have gone either way!What constitutes notice?-Actual notice: knowledge of a prior interest.Record notice: notice of any prior interest that would be discovered by a standard search of the public land records. Also known as

constructive notice.Inquiry notice: notice of any prior

interest that would have been obtained by investigating suspicious circumstances.--->"In notice and race-notice jurisdictions, a subsequent purchaser gains priority only if she takes her interest without notice of any adverse title claims. But when is a purchaser 'without notice'?"Is notice ever relevant in a race jurisdiction?Usually the answer is no. As we have seen, if it is a matter of the real estate recording system, notice is irrelevant in a race jurisdiction.It is simply a race to the courthouse.But, as we shall see in the next chapter, notice becomes relevant in connection with implied easements.Plus, remember our discussion of easements in connection Each co-owner, or co-tenant, has the right to use and possess the entire property.

Three kinds of modern concurrent estates:

Fee simple absolute, fee simple determinable, fee simple subject to a condition subsequent, fee simple subject to an executory condition, life estate absolute, some form of defeasible life estate, fee tail.-Every kind of estate originates in deeds or wills.What determines the type of estate

Facts: On August 2, 1884 the decedent and his wife

conveyed by deed the property in question to the Tacoma

Light and Water Company (a corporation)-The deed states that the property is to be used for the purpose of providing a right of way to conduct fresh water by ditch, canal, flume, or other conduit for the supply of the City of Tacoma and its inhabitants.-Tacoma Light Co. entered upon and utilized the property for the required purpose prior to January 1, 1886 and until 1893 when it conveyed the property to the city of Tacoma. The city continued the intended use until sometime prior to February, 1 1905 (because there was an ordinance that would not allow it). The estate conveyed

was a fee simple subject to a condition subsequent.Rule:

Fee simple subject to a condition subsequent does not terminate automatically upon breach.-A party cannot possess, as a grantee, until the possession becomes adverse, which can be when the grantor or their heirs elect to declare a forfeiture.-The grantor has a reasonable time after breach within which to declare a forfeiture; if he fails to declare a forfeiture within that time his power to do so has

expired.Holding: The defendants made no election of

forfeiture prior to the suit, the defendants did not establish a valid reason for delay and therefore title is quieted to the Plaintiffs.***The words "so long as" are words of duration that indicate a fee simple determinable. Compared to "but if" which indicates a fee simple subject to a condition subsequent-"blankmay enter and reclaim" indicates thatblankintends to retain a right of entry which he may or may not exercise, and suggests a fee simple subject to a condition subsequent-When the deed is ambiguous, most jurisdictions construe it as creating a fee simple subject to a condition subsequent Future Interests retained by the transferor

brokers, escrow agents, and title insurance agencies process transactions and are all advised by their own counsel.-are more often involved in commercial transactions The purchase contract Largely obsolete whose duration was measured by the lives of lineal descendants of a designated person.-Limited rights compared to fee simple owners because there are others with a future interest.-Possessory rights end at the time of death-Largely abolished in American because of the fear that they would create a hereditary hierarchy of sorts, it was economically wasteful.Life Estate Limits the duration of a contingent interest by providing that it is void unless it must vest or forever fail to vest within 21 years of the expiration of a life in being.-allows the transferor to control tittle to his property during the lifetimes of persons alive at his death, and into the next generation up to age 21, the age of majority.-It functions almost as a

rule of proof:--->a contingent interest is valid only if you can

logically prove that will either vest or forever fail to vest within the perpetuities period, 21 years.--->if there is ANY POSSIBILITY that the interest might vest more than 21 years from the death of the relevant lives in being, the

future interest is void when created-or ab initio.-"vesting":

where the given uncertainty is removed.-Only three

interests are subject to RAP:1) Contingent remainders2)

Executory interests3) Vested remainders subject to

open-The remaining estates: fee simple absolute, fee

simple defeasible, fee tail, life estates, and leaseholds are

considered already vested.-Future interests in a grantor:

reversions, possibilities of reverter, and rights of entry are also deemed vested for purposes of the rule.-Indefeasible vested remainders and vested remainders subject to divestment are exempt from this rule.Jee v. Audley (Court of Chancery 1787) let the buyer beware.the modern trend is that most jurisdictions reject the rule.-the modern rule is that the seller-and often the broker-must disclose defects that materially affect the value of residential relationships property if those defects are not readily observable by or known to the buyer.-but why a more favorable rule for tenants and grantors?--->there is a substantial difference in bargaining power, and to reduce overall scamming.Strawn v. Canuso-off-site conditions.General Warranty deedsSpecial Warranty deedsQuitclaim deeds

• standard covenants

Exercising rights following foreclosure: protecting the

lender The lender's main potential right after foreclosure is to obtain a deficiency judgement against the borrower, if sale