Tips For Real Property on the Multistate Essay Exam
After last week’s discussion of Secured Transactions on the Multistate Essay Exam, this week we move on to Real Property. When thinking about Real Property on the Multistate Essay Exam, you should consider two questions: how is it tested? And how often is it tested? In the last 10 years (20 administrations), we’ve seen Real Property on the Multistate Essay Exam for exactly half of the number of administrations. However, it has been turning up less frequently as of late. Since February 2013 (9 administrations), we’ve seen Real Property on the Multistate Essay Exam only 3 times.
Tips For Real Property on the Multistate Essay Exam
That’s not to say, though, that you should write off this subject as rare and ignore it! Real Property on the Multistate Essay Exam is still quite common. These statistics should merely be used in determining how much to study for the subject, not whether to study for it at all. Spend the most time on the subjects that are the most likely to come up. But you should not be skipping over any of the potential subjects!
Here are a few commonly tested topics in Real Property on the Multistate Essay Exam:
Real estate contracts and deeds
The topic of deeds is rather frequently tested when we see Real Property on the Multistate Essay Exam. Remember that there are two different types of deeds: the quitclaim deed and the warranty deed. If a quitclaim deed is given, the grantee gets whatever the grantor has. There are no covenants. A warranty deed, however, comes with six covenants: right to convey, seisen, no encumbrances, further assurances, quiet enjoyment, and warranty.
Another common issue in this area is the execution of the contract of sale. The doctrine of equitable conversion states that as soon as the contract is signed (but before closing), the buyer’s interest is Real Property and the seller’s interest is personal property. The risk of loss passes to the buyer upon the signing of the contract.
Further, Real Property on the Multistate Essay Exam often tests an examinee’s knowledge of how recording acts affect who holds priority in a piece of land. Your answer should always begin with the common law principle of “first-in-time, first-in-right.” A grantor can only convey the rights it has at the time of conveyance. Many states have implemented recording acts that change the common law result. There are three different types of recording acts:
- Notice acts: “A conveyance of interest in land is not valid against any subsequent purchaser for value without notice unless it is recorded.” (This has the word “recorded” but says nothing about recording first.)
- Race notice acts: “No conveyance of an interest in land is valid against any subsequent purchaser for value without notice unless it is recorded first”
- Pure race acts: Protects a subsequent purchaser who records first (rare).
Who is liable on a mortgage
It would not be surprising to see a question on Real Property on the Multistate Essay Exam test who is liable on a mortgage when the title to the property gets transferred. When the mortgagor transfers title to the property, the mortgage remains and the mortgagor is still personally liable. Tip: If you mix up “mortgagor” and “mortgagee” remember, “it is better to be the mortgagee” (or the bank).
- Generally, if the transferee takes the land “subject to” the mortgage, it will not be personally liable. Indeed so if Amy transfers land to Bob and he takes it subject to the mortgage, she is personally liable. He is not liable. (Note: His land could be foreclosed on if Amy does not pay the mortgage, so he may end up paying it to avoid foreclosure. In most states, this does not mean he “impliedly assumes” the mortgage, so even if he does this, he is not liable.)
- If the transferee “assumes” the mortgage, it will be personally liable along with the original mortgagor. So if Amy transfers land to Bob and he “assumes” the mortgage, the bank could go after Amy or Bob for the mortgage payments due. They are both liable.
- Additionally, a novation can occur if the original mortgagor, the transferee, and the mortgagee all agree that the mortgagor is no longer liable and the transferee will assume all its duties. So in this case, if Amy transferred the land to Bob. And Amy, Bob, and the bank all agree that Amy is no longer liable and Bob “steps into her shoes”, then only Bob is liable on the mortgage. Amy is no longer liable.
In the first case, only Amy is liable. In the second case, Amy and Bob are liable. In the last case, just Bob is liable.
The concept of leases turns up frequently in Real Property on the Multistate Essay Exam, including just recently in February 2017. Assignment or sub-leasing is permitted as long as there is no language in the original lease prohibiting it. The tenant has specific duties, including the duty to pay rent. If the tenant does not pay rent but has abandoned the property, the landlord can sue the tenant for damages or treat it as a surrender. Under the common law, the landlord has no duty to mitigate damages. However, many states have instituted their own laws requiring landlords to make a reasonable attempt to mitigate damages.
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