Real Estate Transactions: A Jump Start - PowerPoint Presentation

1. Real Estate Transactions: A Jump Startrev. 5.15.2017

2. The ContractThe Real Estate ContractBasic elementsPurchase of titleImplied covenant of marketable titleReal covenants and zoningConditions precedentEquitable conversionClosing

3. Amy Farrah Fowler and Sheldon Cooper vacationed for a week every year at Sheldon's ski house. After fifteen years, Sheldon could no longer ski. While sitting around the dinner table drinking wine, Sheldon agreed to sell the ski house to Amy. After negotiating for over an hour, they agreed on a purchase price of $250,000. Amy wrote Sheldon a check for $25,000. Sheldon cashed the check. Two weeks later, Amy moved in some of her furniture and signed a contract with a builder to build a $20,000 redwood deck in the backyard. Sheldon died. In his will, he devised the ski house to his nephew Leonard Hofstadter. Amy offered to tender $225,000 to Sheldon's executor, however Leonard filed suit to eject Amy from the house. Should the court rule in favor of Leonard?A. Yes, because there was no contract for the sale of the house.B. Yes, because the Statute of Frauds bars oral contracts for the sale of real property.C. No, because the transaction falls under an exception to the Statute of Frauds.D. No, because there was a binding oral contract for the sale of the house.

4. The DeedBasic elementsConcept of deliveryThe doctrine of mergerEstoppel by deed2015 Houck  Elkin, Blackacre2016 Romero  Houck, BlackacreWho has title, Elkin or Houck?

5. Reilly was quite taken with her neighbors' new son, Carbonneau. She doted on the child to such an extent that her own son, French, became quite jealous. At a party given by Reilly in honor of Carbonneau’s graduation from high school, she announced to all the guests that she had instructed her attorney to draft a deed giving her property on the edge of the town golf course to Carbonneau. Then, with a great flourish, Reilly signed the deed in front of the entire assemblage. She then put the deed in her wall safe, "for protection," she told everyone. Several years later, Reilly died suddenly while on a camping trip with French. After the funeral, Carbonneau asked the French for the deed, saying he thought it should be recorded before the Reilly's estate went into probate. French insisted the deed no longer existed and, further, that Reilly had later changed her mind about the conveyance and tore up the deed. Carbonneau brought suit for equitable relief.Who prevails? Why?

6. The Deed5. Exoneration: death of the vendeeIn her will, Vendee leaves her real property to her son and her personal property to her daughter. Real estate contract signed May 1; closing June 15. Purchase price is $100,000. Vendee dies on June 1, before deed is delivered.“equity regards as done that which will be done”$100,000 comes from Vendee’s estate to purchase the property (the debt must be exonerated). The daughter’s personal estate is depleted by $100,000. Son receives the property free and clear.We gave effect to the will.

7. The Deed6. Ademption: death of the vendorIn her will, Vendor leaves her real property to her son and her personal property to her daughter. Real estate contract signed May 1; closing June 15. Purchase price is $100,000. Vendor dies on June 1, before deed is delivered.Even though vendor held legal title at her death, “equity regards as done that which will be done” and the property is considered as adeemed, meaning not in her estate at the time of her death. The son does not receive the property—it’s gone. The daughter receives the money.

8. 7. Warranties of TitleFull or General Warranty Deeds: Contains all six common law covenants:Covenant of seisinCovenant of the right to conveyCovenant against encumbrancesCovenant of quiet enjoymentCovenant of general warrantyCovenant of further assurancesThree Present (do not run with the land): Seisin, right to convey, no encumbrances. “I own it, I have the right to transfer it, and there are no outstanding interests that limit or financially diminish the value of it.”Three Future (run with the land):Quiet enjoyment, general warranty, further assurances. “You will not be disturbed by someone with superior title, I’ll defend you against such claims and compensate you for any loss, and I will do anything I can to perfect title.”

9. Special Warranty DeedContains all six covenants but vendor makes no promises with respect to predecessors in title, only that she has done nothing to detrimentally affect title.

10. Quitclaim DeedContains no warranties of title.“Whatever I have, I’m transferring to you.”

11. A seller and a buyer executed a purchase-and-sale agreement that called for the buyer to purchase a parcel of land for $60,000. The agreement stated that the seller warranted he held marketable title to the property free of any liens. The seller gave the buyer a warranty deed, and the buyer promptly recorded his title. Ten years later, the buyer found a notice posted on the property. It stated that the bank was commencing foreclosure proceedings against a woman for defaulting on a mortgage on the land. The buyer spoke to the bank and discovered that the seller had indeed sold the land to the woman one hour before he completed the transaction with the seller. Furthermore, the woman had recorded her deed before the seller recorded his. The statute of limitations in contract suits is six years, and the adverse possession period is 25 years. The buyer filed suit against the seller.Who will prevail, and why? a. The seller, because any breaches of the purchase and sale agreement merged with the deed. b. The seller, because the statute of limitations has passed. c. The buyer, because the seller breached the implied warranty of marketability. d. The buyer, because the seller breached the covenant of quiet enjoyment.

12. The Mortgage ConceptElkin buys a house on a golf course for $500,000. He puts $100,000 down and signs a promissory note with First Bank to pay back $400,000 at 4% interest.

13. Purchase Money Mortgage

14. PMM: Which Lien has Priority?On February 1, Olivia Pope obtains a judgment lien for $15,000 against Huck. On March 1, Cyrus Beene, the owner of Blackacre, and Huck enter into a contract for the sale of Blackacre. The contract provides for a purchase price of $50,000. Huck agrees to pay $10,000 in cash at the settlement date and Beene agrees to take back a promissory note and mortgage on Blackacre for the balance of the price. On April 1, the date of settlement, Beene conveys Blackacre to Huck who pays $10,000 in cash to Beene. Several days later, Huck delivers to Beene a promissory note for $40,000 secured by a mortgage on Blackacre. At the time Beene takes the mortgage, Beene has actual knowledge of Pope's judgment. Beene's mortgage is never recorded.

15. Title TheoriesLien: MR holds title and right to possession until foreclosure; the ME holds a security interest. This is the majority rule. Title: ME retains title until mortgage is satisfied or foreclosed. ME has the right of actual possession.Intermediate: MR has title until default; after default, title passes to ME.Who cares?

16. Transfers by the MortgagorThe Clean Method:The End of the MR-ME RelationshipTE pays cashNovation

17. Transfers by the MortgagorThe Clean Method: Novation (substituted party)Laurel owes Asher $100,000. Asher promises Laurel that he will discharge the debt immediately if Annalise will promise to pay Asher $100,000. Annalise is substituted for Laurel; Laurel is discharged.

18. The End of the MR-ME Relationship3. Cancellation and release4. Execution of a new mortgage

19. Two Important Concepts for the Dirty Method:Suretyship and SubrogationA surety is a person that assumes the responsibility of paying a debt in case the debtor defaults. Subrogation is the process of substituting one person in the place of another.  The substituting person succeeds to the claims and rights of the substituted person. 

20. The Dirty MethodTE takes “subject to”Dembe borrows $100,000 from Red and gives Red a promissory note for that amount, secured by a mortgage on Dembe's house. Subsequently Dembe sells the house to Elizabeth for $125,000. Elizabeth pays Dembe $25,000 in cash and takes subject to the mortgage. Elizabeth defaults.

21. TE takes “subject to”Donald Ressler borrows $100,000 from Red and gives Red a promissory note for that amount, secured by a mortgage on Donald's house. The note provides that Donald will not be personally liable on the debt. Subsequently Donald sells the house to Aram, who is Donald's son, for $125,000. Aram pays Donald $25,000 in cash, and does not enter into an assumption of liability. Thereafter Aram defaults in payment on the note. In order to protect Aram from eviction as a result of Red's foreclosure of the mortgage, Donald pays $ 100,000 to Red, thereby fully discharging the debt.

22. TE takes “subject to”Red sells Blackacre to Tom Keen who doesn’t wish to be personally liable for the mortgage. The FMV is $100,000 but it has a mortgage of $75,000 held by Harold Cooper. Tom pays $25,000 and takes subject to the mortgage. Tom walks away from the property.Is Tom personally liable to Red?Is Tom personally liable to Harold?

23. TE takes “subject to”Dembe executes a $10,000 note and mortgage to Red. Dembe then conveys to Elizabeth by deed which provides that title is “subject to” the mortgage. Elizabeth fails to pay the note. Red sues Dembe on the note w/o foreclosing. Dembe pays Red $10,000 and is subrogated to Red’s right to foreclose. Dembe forecloses; the property is sold for $8,000. Dembe comes to you and asks whether he may pursue a deficiency judgment against Elizabeth for $2,000.How much may Dembe recover?(A) $10,000(B) $8,000

24. TE “assumes”3rd Party BeneficiariesKevin borrows $100,000 secured by a mortgage from Randall. Kevin sells to Beth for $125,000 who takes possession of the property and assumes the mortgage meaning she agrees to make payments to Randall. Randall is the 3rd party beneficiary of the Kevin-Beth contract. If Beth defaults, what is her liability? Kevin’s?Beth Kevin RandallTE MR/TR ME/3rd PB

25. TE “assumes”Walter executes a $30,000 note and mortgage to Saul. Walter conveys to Jesse by deed that provides Jesse assumes the debt. Jesse fails to pay. Saul sues Walter on the note. Walter pays Saul $30,000 and is subrogated to Saul’s right to foreclose. Walter forecloses; the property is sold for $28,000. Walter comes to you and asks whether he may pursue a deficiency judgment against Jesse for $2,000.

26. “Subject to”Summary 1. Not a promise from TE to pay mortgage debt. TE not personally liable on the debt, but commonly pays the obligation to avoid losing the property to foreclosure. 2. Upon default, ME may foreclose and have the encumbered property sold, but ME may not proceed against subject to TE for deficiency judgment. 3. MR remains personally liable on the debt and is liable for any deficiency resulting from the foreclosure sale. 4. If MR is forced to pay the entire debt, MR can foreclose in order to be reimbursed to the extent of the value of the land (MR is subrogated to the ME’s rights in the mortgage) but may not purse a deficiency judgment against TE.

27. “Assumption of”SummaryTE personally liable to ME for the mortgage debt (ME is a third party beneficiary of the assumption contract between MR and ME). Upon default, the ME may foreclose and obtain a deficiency judgment against TE. MR becomes surety, liable for any deficiency resulting from a foreclosure sale. MR personally liable to ME for mortgage debt. The MR who pays the debt is subrogated to ME’s rights in the mortgage and note and may sue TE on the note or foreclose (and obtain a deficiency judgment)

28. Due on Sale ClauseProvides at the option of the lender for acceleration of the maturity of the loan upon the sale of real property.

29. Mortgage ModificationFirst Bank held a $100,000 purchase money mortgage on a cottage. Since the cottage was too small, the owner took a $50,000 mortgage from Second Bank to build an addition. The initial terms of the first mortgage included a 5% interest rate for a term of 15 years. The owner was having trouble making her payments. First Bank offered to modify her loan. The modification increased the term to 30 years and lowered the monthly payment accordingly. The owner defaulted. Second Bank claimed it’s mortgage had priority over First Bank.Is Second Bank correct?

30. An owner has a home valued at $100,000 and owes Bank No. 1 $50,000 for a first mortgage lien. The owner owes Bank No. 2 $40,000 for a second mortgage. The owner applies to Bank No. 1 for additional funds to purchase a motor home, and the bank provides the funds. Bank No. 1's mortgage is increased to $100,000 after it increases the homeowner's mortgage. Should Bank No. 2 feel under-secured as the result of Bank No. 1's increasing the amount added to the homeowner's mortgage?A. Yes, because Bank No. 2 should have been required to authorize the additional loan.B. Yes, because the homeowner increased his loan obligation by $50,000.C. No, because the homeowner increased the principal amount owed to Bank No. 1.D. No, because the homeowner will have larger installment payments as the result of the additional monies loaned.

31. Present Estates and Future InterestsRelax, this is not the Rule against Perpetuities…O A for life, remainder to B in fee simple absolute.What is A’s mortgage liability?What is B’s mortgage liability?

32. H devises a 50-acre tract of land and cabin to his wife, W for life, then to his child, C. W took out a mortgage with First Bank to remodel the cabin. FB recorded. After the cabin was remodeled but before the mortgage was paid off, W died. Who owns the property, First Bank or C?

33. A widower entered into a mortgage in order to purchase his dream home. At the time of his death, he was paying $1,200 in principal and approximately $1,000 in interest each month. The widower's last will and testament bequeathed his home to his brother for life, with a remainder to widower's daughter. The brother leased the house to a friend for $800 per month. The brother paid $800 each month on the mortgage. After about three months, the widower's daughter receives a notice from the bank for foreclosure for the unpaid principal and interest of the mortgage each month. After paying the unpaid principal and interest to avoid foreclosure and arguing with her uncle for several months, the daughter sued her uncle for six months of principal on the mortgage ($7,200) and a judgment from the court ordering her uncle to pay the full principal and interest per month on the mortgage in the future.How much is the widower's brother legally required to pay on the mortgage? A. $1,000 each month. B. $800 each month. C. $2,200 each month. D. $2,200 each month plus a one time payment of $7,200.

34. Rights and duties prior to foreclosureAccelerationThe equitable right to redeemPlus a right after foreclosure: Statutory redemption

35. The Equity of RedemptionThe following language is contained in a mortgage on Blackacre:"In the event Mortgagor defaults under this mortgage, Mortgagor waives any right to be foreclosed and agrees that title to the mortgaged real estate shall vest immediately and automatically in Mortgagee." Mortgagor fails to pay the debt promptly and Mortgagee declares a default. Three months later, Mortgagor tenders the full amount of the debt then due and owing.

36. The Equity of Redemption The following language is contained in a mortgage on Blackacre: "Mortgagor agrees that the right to redeem under this mortgage shall terminate four months after Mortgagee declares a default under this mortgage." Mortgagor goes into default and, six months thereafter, tenders to Mortgagee the full amount due and owing under the mortgage.

37. Foreclosure:Terminating the equitable right to redeemPower of SaleJudicial StrictDeed in lieu of

38. Distribution of the ProceedsHomer and Marge Simpson failed to make timely mortgage payments and eventually defaulted on their loan. The ME, First Bank, foreclosed and sold the house for $900,000. At the time of the sale, the couple owed $950,000 on the loan. Costs, including attorney fees, were $60,000. A second ME, Second Bank, held a second loan for home improvement in the amount of $40,000. How will the proceeds be distributed?

39. Priorities: Key ConceptsME transfers the same quality of title it encumbered when it originally placed the mortgage on Blackacre. If SR forecloses, property is transferred free of junior mortgages.  JR may foreclose, but SR lien(s) remain.Subordination — An agreement whereby a holder of a prior superior mortgage agrees to subordinate or give up his or her priority position to an existing or anticipated future lien.

40. Foreclosure eliminates liens, not debtThe total debt owed on the first mortgage is $200,000. There is a second mortgage for $40,000 and a $10,000 judgment lien. The home then sells for $250,000 at the foreclosure sale. The home sells for $200,000 at the foreclosure sale.

41. SR forecloses2010 OA Blackacre for $100,000A arranges for financing from First Bank, a $80,000 mortgage.2011A borrows $10,000 from Second Bank to build an addition. 2013A executes a home equity loan for $15,000 from Third Bank secured by a mortgage to buy a new car.

42. A defaults on all the mortgages and First Bank seeks to foreclose.First Bank must notify the junior lienholders of the foreclosure action. If the junior lienholders are not notified, the junior lien(s) remain.First Bank is selling the state of title it encumbered when it placed its mortgage on Blackacre.First Bank will make a “credit bid” of $80,000 to protect its security interest in the property.

43. JR forecloses2010 OA Blackacre for $100,000A arranges for financing from First Bank, a $80,000 mortgage.2011A borrows $10,000 from Second Bank to build an addition. The loan is secured by a mortgage.2013A executes a home equity loan for $15,000 from Third Bank secured by a mortgage to buy a new car.

44. A defaults on all the mortgages and Second Bank seeks to foreclose.(1) Second Bank must notify Third Bank of the foreclosure action, but NOT First Bank.(2) Second Bank is selling the state of title it encumbered when it placed its mortgage on Blackacre.(3) JR’s don’t normally foreclose (but they may on the bar exam).

45. May 18 MortgagesVery Brief ReviewDeeds and mortgages are interests in real estate and must be in writing to satisfy the SOF.The mortgage is a security interest for repayment of a loan. A landowner is free to mortgage the same property to as many lenders as are willing to make loans.The equitable right of redemption allows the MR in default to pay the ME up until the foreclosure sale. This right to redeem MAY NOT be waived in the mortgage document.

46. A purchase money mortgage is given to a lender to the extent that the proceeds are used to purchase real estate. A PMM, whether or not recorded, has priority over any mortgage, lien, or other claim that attaches to the real estate but arose against MR prior to MR’s acquisition of title to the real estate.The MR may sell Blackacre free from the mortgage (“clean method”) or with the mortgage remaining on Blackacre (“dirty method”).

47. If the mortgage remains on the property, the TE will either take Blackacre subject to the mortgage or will assume the mortgage. In either case, the MR is still liable for the promises in the note and mortgage. The issue is the liability of the TE.A “subject to” TE has no personal liability to MR or ME (but risks loss of title through foreclosure if the secured obligation is not performed).A TE who assumes the mortgage is personally liable to the ME because the ME is a 3rd party beneficiary to the assumption agreement between MR and ME.

48. A MR who is sued on the note is subrogated (steps into the shoes of the bank) and may foreclose. No deficiency judgment against a “subject to” TE; deficiency judgement if TE assumes the mortgage.Mortgages may be modified as long as they do not materially prejudice junior lien holders.Life estate holder is liable for the interest; remainderman for the principal.

49. 13. Credit bidding: a secured creditor is allowed to bid the amount of its debt as a “credit bid” (not cash) which allows secured creditor to protect its interest in the property/compete with cash bidders.

50. Operation of the Recording SystemMay 18, 2017If a real property interest (e.g., deed, easement, mortgage) is transferred, normally the document is recorded.Provides notice to subsequent buyers/lendersCan see chain of title of sellerCan see non-ownership interests (e.g., easements, other servitudes)Can see other conveyances made by grantorJuly 1, 2015: O to A August 1, 2015: O to B

51. Recording ActsProtect buyers who record against other (subsequent) transferees of the same propertyOften yields different results than 1st in timePMM have priority over prior liens but must be recorded to protect against subsequent transferees of the same propertyMost jurisdictions protect later bona fide purchaser (BFP) for value against unrecorded interests

52. BFP for VALUE: DefinitionsBona Fide Purchaser for Value = No notice of prior transaction plus consideration“Doomed donee”

53. First Exception to General Rule: First Purchaser for Value to Record PrevailsRace Statute: “No conveyance shall be valid as against purchasers for value until it is recorded.”Race1st to Record WinsO to A BlackacreO to B BlackacreB records.

54. Second Exception to General Rule: Subsequent Bona Fide Purchaser PrevailsNotice: “Every conveyance not recorded is void as against any subsequent purchaser in good faith and for valuable consideration.”2. NoticeProtects BFP for Value against prior unrecorded interests regardless of when or if BFP recordsAbout half the statesO to A Blackacre (not recorded)O to B Blackacre

55. Third Exception to General Rule: Subsequent Bona Fide Purchaser Who Records First PrevailsRace-Notice: “Every conveyance not recorded is void as against any subsequent purchaser in good faith and for valuable consideration whose conveyance is first duly recorded.”3. Race-NoticeProtects BFP for Value against prior unrecorded interests only if BFP records 1stAbout half the statesO to A BlackacreO to B BlackacreB records.

56. What Constitutes Notice? Actual NoticeRecord Notice/constructive noticeInquiry Notice

57. Applying the Recording ActsFebruary 1: O conveys Blueacre to A, who does not record February 8: O purports to convey Blueacre to B, who pays value (and who has no knowledge of A’s unrecorded deed), but who does not record February 10: A records her deed to Blueacre February 12: B records his deed to Blueacre • As between A and B, who has the superior claim under a notice statute? Race-notice statute? Race statute?

58. Hypo: Consequences for failing to record2010 OA Blackacre for $100,000A arranges for financing from First Bank, an $80,000 mortgage which is duly recorded.2011A borrows $10,000 from Second Bank, secured by a mortgage, to build an addition. Second Bank fails to record.2013A executes a home equity loan for $15,000 from Third Bank secured by a mortgage to buy a new car. Third Bank records.The recording statute in the jurisdiction reads: “No interest in real property shall be good against subsequent purchasers for value and without notice unless duly recorded.”Foreclosure sale nets $85,000. How will the money be distributed?

59. Hypo2009Sheldon obtains and records a judgment lien in the amount of $40,000 on any real property Leonard acquires.2010 Penny  Leonard Blackacre for $100,000Leonard arranges for financing from First Bank, an $80,000 mortgage which is duly recorded.2011Leonard borrows $10,000 from Second Bank, secured by a mortgage, to build an addition. Second Bank fails to record.2013Leonard executes a home equity loan for $15,000 from Third Bank secured by a mortgage to buy a new car. Third Bank records.The recording statute in the jurisdiction reads: “No interest in real property shall be good against subsequent purchasers for value and without notice unless duly recorded.”Foreclosure sale nets $140,000. How will the money be distributed?

60. Hypo2009Farrah Fowler obtains and records a judgment lien in the amount of $40,000 on any real property Wolowitz acquires.2010 Rajesh  Wolowitz Blackacre for $100,000Wolowitz arranges for financing from First Bank, an $80,000 mortgage which is duly recorded.2011Wolowitz borrows $10,000 from Second Bank, secured by a mortgage, to build an addition. Second Bank records.2013Wolowitz executes a home equity loan for $15,000 from Third Bank secured by a mortgage to buy a new car. Third Bank records.The recording statute in the jurisdiction reads: “No interest in real property shall be good against subsequent purchasers for value and without notice unless duly recorded.”Foreclosure sale nets $150,000. How will the money be distributed?

61. Hypo2009Daenerys Targaryen obtains and records a judgment lien in the amount of $40,000 on any real property Tyrion Lannister acquires.2010 Missandei  Tyrion Blackacre for $100,000Tyrion arranges for financing from First Bank, an $80,000 mortgage which is duly recorded.2011Tyrion borrows $10,000 from Second Bank, secured by a mortgage, to build an addition. 2013Tyrion executes a home equity loan for $15,000 from Third Bank secured by a mortgage to buy a new car.2014Third Bank Records2015Second Bank RecordsThe recording statute in the jurisdiction reads: “Every conveyance of real property is void as against any subsequent purchaser taking for value and without notice whose conveyance is first duly recorded.”Foreclosure sale nets $140,000. How will the money be distributed?

62. Hypo2010 Red  Dembe Blackacre for $100,000Dembe arranges for financing from First Bank, an $80,000 mortgage which is duly recorded.2011Dembe borrows $10,000 from Second Bank, secured by a mortgage, to build an addition. 2013Dembe executes a home equity loan for $15,000 from Third Bank secured by a mortgage to buy a new car.2014Third Bank Records2015Dembe executes a home equity loan from Fourth Bank for $5,000 to buy Penn State football tickets. Fourth Bank records.2016Second Bank RecordsThe recording statute in the jurisdiction reads: “Every conveyance of real property is void as against any subsequent purchaser for value and without notice whose conveyance is first duly recorded.”Foreclosure sale nets $105,000. How will the money be distributed?

63. HypoA builder is the record title owner of Ableacre. In order to finance some construction on neighboring land that he also owns, the builder obtained a loan from a bank secured by a mortgage on Ableacre executed in the name of the bank. Ableacre was in a lien theory jurisdiction, where a mortgage is effected by an instrument that does not qualify as a deed. This mortgage was not recorded. At a time when the builder was current on his payments to the bank, he sold Ableacre to a buyer, for a reasonable price, via a warranty deed. The builder did not inform the buyer of the outstanding mortgage on Ableacre, since he both intended to continue to make the payments on the loan and assumed that the buyer knew of the mortgage. In fact, the buyer had no knowledge of the mortgage. Several years later, the builder ran into hard times and ceased to make payments on the loan. As a result, the bank brought a foreclosure action against Ableacre and named the buyer one of the defendants. This was the first that the buyer had heard of the mortgage. She immediately recorded her deed. The bank recorded its mortgage immediately thereafter.The buyer will not take title free and clear of the bank's mortgage interest under which of the following recording statutes? a. A recording statute that follows the common law. b. A race recording statute. c. A notice recording statute. d. A race-notice recording statute.

64. The Shelter Rule (N and RN Jurisdictions)2015 Sheldon  Penny (does not record)2016 Sheldon  Raj (BFP who records)Who owns Blackacre, Penny or Raj?2017 Raj  Wolowitz (Not a BFP)Who owns Blackacre, Penny or Wolowitz?

65. Searching TitleGrantee Index (chain of title) Grantor Index (adverse conveyances) LopatkaReilly Reilly Purvis (easement)Romero RomeroHouck HouckAberProspective buyer Elkin is thinking about purchasing Blackacre from Aber.

66. Special Problem #1: Wild Deed(Document outside chain of title)2012 O  A (not recorded)2013 A  B (recorded)2014 O  C (recorded)Who has title, B or C?

67. Special Problem #2: Deed Recorded Too Early (always estoppel by deed scenario)2010 A  B (records)2012 O  A (records)B prevails over A under estoppel by deed.2014 A  CWho prevails, B or C?

68. Special Problem #3: Deed Recorded Too LateFor issue perception, valid conveyance not recorded until grantor has conveyed property a second time.2010 O is record owner2011 OA2012 OB (not a BFP) records2013 A records2014 BC

69. Special Problem #4:Circular PriorityFor issue perception, purchase money mortgagee fails to record.First Bank executes a $20,000 mortgage on Blackacre. NR.Second Bank executes and records $15,000 mortgage on Blackacre with actual notice. Result: first in time b/c Second Bank is not a BFP. First Bank has priority.Third Bank executes and records a $10,000 mortgage on Blackacre with record notice of Second Bank’s mortgage but without any knowledge of First Bank’s unrecorded mortgage.Result: Third Bank is superior to First Bank but inferior to Second Bank. Second is superior to Third but inferior to First. First is superior to Second but inferior to Third.

70. Hypo #1In 2010, Elkin is the true owner of Blackacre. In 2011, he conveys Blackacre to Lopatka for valuable consideration. In 2012, Elkin conveys Blackacre to Romero for valuable consideration. Romero has no reason to know of the Elkin to Lopatka conveyance. In 2013, Romero records his deed. In 2014, Lopatka records his deed. The recording act in the jurisdiction in which these conveyances take place states: No conveyance of real property shall be good against subsequent purchasers for value and without notice unless the conveyance is recorded. Whose title is superior, Lopatka’s or Romero’s?Lopatka because he is first in time.Romero because he purchased without notice of Lopatka’s deed.Romero because he recorded first.Romero because he purchased without notice and was the first to record.

71. Hypo #2In 2010, Elkin is the true owner of Blackacre. In 2011, he conveys Blackacre to Lopatka for valuable consideration who never records the deed. In 2012, Lopatka conveys Blackacre to Romero who immediately records. In 2013, Elkin conveys Blackacre to Reilly, who has neither actual nor inquiry notice of the other deeds. In 2014, Reilly records. The recording act in the jurisdiction states: “Every conveyance not recorded is void as against any subsequent purchaser in good faith and for valuable consideration whose conveyance is first duly recorded.” Who owns Blackacre?RomeroReillyLopatkaElkin