Topic 10: Real Property on the MBE: Key Topics

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Real Property on the MBE: Key Topics

Here, we cover how you will see Real Property on the MBE! Out of the 175 scored multiple-choice questions, you can expect to see 25 scored Real Property ones. The NCBE has broken down the subject into five categories of topics, and there will be approximately five questions on the material in each of them.

Real Property on the MBE: Breakdown by Topic

Below is a chart of how Real Property is tested on the MBE. In terms of divvying up your study time, luckily most topics in Real Property are evenly tested. So, you don’t need to spend hours trying to understand future interests when you will only see a few questions at most on that issue. Each topic generally will be weighted the same.

Real Property on the MBE: NCBE Subject Matter Outline 

This Real Property subject matter outline is promulgated by the NCBE (and re-styled by JD Advising). You can see the primary Real Property categories that are tested as well as the topics tested within those categories. The NCBE subject matter outline is available for download here if you prefer to see it in PDF form. Any of the issues listed in the NCBE’s outline are ripe for testing.

Real Property on the MBE: Key Topics

The NCBE has broken Real Property down into five categories: real estate contracts, mortgages and security devices, ownership of property, rights in land, and title to property. We’ll take each of these in turn.

Real estate contracts

You will see about five scored real estate contracts questions on the MBE. Remember that real estate contracts must be in a signed writing unless the part performance exception applies.

The NCBE likes to test marketable title. Marketable title is one that is reasonably free of defects and it must be provided on the day of closing. Thus, it does not have to be provided before closing! This is one of the NCBE’s favorite issues to test. If you see someone sue before the day of closing for lack of marketable title, they should not win!

On the closing date, the deed is executed and delivered.  Once delivery has occurred, the buyer can only sue on the deed.  The contract is said to have “merged” into the deed.  Keep this in mind as any contractual provisions effectively disappear. The deed is all the buyer can sue on!

Mortgages and security devices

You will see about five mortgages and security devices questions in Real Property on the MBE. Remember that a mortgage is a document that indicates the existence of a debt. A mortgagor is a person who mortgages their home (the homeowner). A mortgagee is a person who lends money (usually a bank). If you forget this, remember “it’s better to be the mortgagee” (the bank/the lender, rather than the borrower).

Pay attention to the language used if the mortgagor transfers its property. If the new transferee takes subject to the mortgage, then they will not be personally liable, but their interest can still be foreclosed upon. If the transferee assumes the mortgage, then they also will be personally liable along with the mortgagor (e.g., they assume responsibility too).

The mortgagee can begin foreclosure proceedings upon default. One topic the NCBE likes to test is how the proceeds from a foreclosure sale will be distributed. Thus, it is important to remember the order in which mortgages will be paid off.

• First, the costs of the sale will be paid off.
• Second, the mortgage that was foreclosed upon is paid.
• Third, junior mortgages will be paid off in order of priority.
• Finally, anything left over goes to the mortgagor.

Remember, senior interests are not paid anything because their interests will continue to encumber the property! 

Ownership of property

You will see about five ownership of property questions in Real Property on the MBE. Present and future interests will be covered in this category. While this topic might seem confusing, the most important thing to remember when answering these questions is that grammar will be critical. Make sure you read these questions in Real Property on the MBE very carefully!

Concurrent estates also fall within this category. A concurrent estate is a property that is owned by more than one person at a time. The NCBE likes to test the nuances of and differences between joint tenancy and tenancy in common. The default tenancy is a tenancy in common. Tenants in common only have one unity: the right to possess the entire premises. They do not have a right of survivorship.

A joint tenancy is created by using the language “as joint tenants with rights of survivorship” or some very similar variant. Joint tenants do possess the right of survivorship, and the tenancy can only be severed in very limited ways. Watch out for a joint tenancy that becomes severed, as this destroys the right of survivorship and the resulting tenancy will be a tenancy in common!

Rights in land

You will see about five rights in land questions in Real Property on the MBE. Many students struggle with the differences between easements, covenants, and equitable servitudes. The NCBE likes to test whether future owners in land can hold previously existing easements or promises against another landowner, so it is important to understand these concepts!

An easement is a nonpossessory interest that gives one the right to use the land of another. Easements can be express, implied, or created through a form of adverse possession. One important thing to remember is that easements are generally perpetual (that is, they will last forever), although actions such as merger, abandonment, estoppel, etc. can terminate them.

Both covenants and equitable servitudes restrict how an owner can use its own land. So, if you’re having trouble telling them apart on the MBE, look for the remedy the plaintiff is seeking. If the plaintiff seeks money damages, we are dealing with a real covenant. If the plaintiff seeks an equitable remedy, such as an injunction, we are dealing with an equitable servitude. This difference becomes important if we are considering whether the promise has bound successors to the land. Equitable servitudes require that the condition touches and concerns the land, intent, and notice. Covenants have the additional requirement of privity in order to bind successors.

Title to property

You will see about five title to property questions on the MBE. Perhaps the most important topic in this category is recording acts. Not only can a recording act affect a priority battle regarding title to property, but it also can affect the order of priority of mortgages. So, the NCBE has many different avenues to test your knowledge of recording acts!

You should always remember the common law rule: first in time, first in right. A recording act has the power to change the common law result. On the MBE, if the applicable recording act wouldn’t protect anyone and change the common law result, then the correct answer will be the choice that applies the common law rule!

There are three kinds of recording acts:

• Notice acts protect subsequent bona fide purchasers for value who take without notice of an earlier transaction. Look for the key words “without notice” and no mention of recording first.
• A race-notice act is more restrictive–it protects subsequent purchasers for value who take without notice and are the first to record. The key words to look for are “without notice” and “first recorded.”
• Pure race acts are rare on the MBE, but they protect subsequent purchasers who are the first to record. There will be no mention of notice!

The NCBE will include the language of the relevant statute it wants you to apply, so read the question carefully!

Go to the next topic, Topic 11: Torts on the MBE: Key Topics.

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