Bar Exam Real Property 2 — Questions and Answers

Question 1: A grantor conveys Blackacre 'to A for life, then to B and her heirs.' B dies before A. What is the state of the title?

A's life estate ends because B's future interest has lapsed
B's remainder passes to B's heirs or devisees, and A's life estate continues (Correct answer)
The grantor has a reversion that takes effect immediately upon B's death
The property reverts to the grantor at the time of B's death, terminating A's life estate

Correct answer: B's remainder passes to B's heirs or devisees, and A's life estate continues

B holds a vested remainder in fee simple. A vested remainder is alienable, devisable, and descendible. When B dies before A, B's vested remainder passes by will or intestacy to B's heirs. The remainder interest survives B's death because it was already vested — A's life estate is unaffected.

This conveyance creates: (1) A life estate in A (present possessory interest); (2) A vested remainder in fee simple in B (future interest that is certain to become possessory upon A's death). Because B's remainder is a vested remainder — not contingent — it has all the characteristics of a fee simple: it is freely alienable during B's life, devisable by will, and descendible by intestacy. When B predeceases A: the vested remainder passes to whoever takes B's property (B's heirs if intestate, or devisees if B had a will). A's life estate continues unchanged and will end when A dies. If the conveyance had been to 'B if B survives A,' that would create a contingent remainder — if B failed the condition (surviving A), the interest would fail. The key distinction is contingent vs. vested remainders on the MBE.

Question 2: Under the common law Rule Against Perpetuities, an interest is void if it might not vest within:

100 years from the creation of the interest
21 years after the death of the grantor
A life in being at the creation of the interest plus 21 years (Correct answer)
Two generations from the creation of the trust

Correct answer: A life in being at the creation of the interest plus 21 years

The common law Rule Against Perpetuities (RAP) voids any future interest that might not vest or fail within a life in being at the creation of the interest plus 21 years. The interest must be certain to vest or fail within this period — any possibility, no matter how remote, of vesting outside the period voids the interest.

The common law Rule Against Perpetuities provides: 'No interest is good unless it must vest, if at all, not later than twenty-one years after some life in being at the creation of the interest.' The RAP applies to: contingent remainders, executory interests, and vested remainders subject to open (class gifts). It does not apply to reversions, possibilities of reverter, rights of entry, or vested remainders. Application: (1) Identify the measuring life (a life in being when the interest is created); (2) Determine if the interest must vest or fail within that life plus 21 years. The 'might not vest' test is strict — if there is any possible (though improbable) scenario where the interest could vest outside the period, the interest is void. Most states have abolished the common law RAP in favor of the Uniform Statutory Rule Against Perpetuities (USRAP) or have eliminated it entirely for trusts. The MBE tests the common law RAP.

Question 3: O conveys Blackacre 'to A and her heirs so long as the land is used for farming, and if not, to B and his heirs.' What interest does B hold?

A contingent remainder
A shifting executory interest (Correct answer)
A right of entry (power of termination)
A springing executory interest

Correct answer: A shifting executory interest

When a fee simple determinable is followed by a future interest in a third party (not the grantor), the third party holds a shifting executory interest — it divests the first grantee upon occurrence of the limiting condition. A right of entry/power of termination can only be retained by the grantor, not given to a third party.

This conveyance creates: A holds a fee simple subject to an executory limitation (the limitation is that farming must continue — if it stops, title shifts). B holds a shifting executory interest. The key classification rules: (1) If O conveys to 'A so long as farming' with no mention of what happens next → A has a fee simple determinable, O retains an automatic possibility of reverter; (2) If O conveys to 'A so long as farming, and if not, to O' → A has a fee simple determinable, O has a possibility of reverter; (3) If O conveys to 'A, but if not farmed, to B' → A has a fee simple subject to an executory limitation, B has a shifting executory interest (divests A); (4) If O later tries to give a right of entry to a third party → the right of entry is only available to grantors (it cannot be created in a third party directly). B's interest is shifting (from one grantee to another) as opposed to springing (from the grantor to a grantee after a gap).

Question 4: In a general warranty deed, which covenant is breached at the time of delivery if the grantor does not have the title she purports to convey?

Covenant of quiet enjoyment
Covenant of warranty
Covenant of seisin (Correct answer)
Covenant against encumbrances

Correct answer: Covenant of seisin

The covenant of seisin is a present covenant that warrants the grantor is currently seized of the estate being conveyed. It is breached at the moment of delivery if the grantor does not own the title purported to be conveyed. Present covenants (seisin, right to convey, against encumbrances) are breached at the time of delivery if false.

A general warranty deed contains six covenants: three present covenants (breached, if at all, at delivery) and three future covenants (breached when the grantee is disturbed). Present covenants: (1) Seisin: grantor owns the estate conveyed; (2) Right to convey: grantor has authority to convey (may differ from seisin if trustee conveys without authority); (3) Against encumbrances: no undisclosed mortgages, liens, easements, or other encumbrances. Future covenants: (4) Quiet enjoyment: grantee's possession will not be disturbed by a superior claim (breached when grantee is actually evicted or disturbed); (5) Warranty: grantor will defend title against lawful claimants; (6) Further assurances: grantor will execute additional documents to perfect title. Present covenants run with the land only in some states; future covenants generally run with the land. A special warranty deed contains the same covenants but limits them to claims arising through the grantor (not prior grantors).

Question 5: Which recording act type protects a subsequent bona fide purchaser who records first, even if the prior grantee had not yet recorded?

Race statute
Notice statute
Race-notice statute (Correct answer)
Pure notice statute

Correct answer: Race-notice statute

Under a race-notice statute, a subsequent bona fide purchaser (BFP) prevails over a prior grantee if: (1) the subsequent purchaser takes without notice of the prior conveyance, AND (2) the subsequent purchaser records before the prior grantee. Both elements must be satisfied. This is the most common type of recording act.

There are three types of recording acts: (1) Race statute: whoever records first wins, regardless of notice — rare in U.S. today (NC and LA); (2) Notice statute: a subsequent BFP who takes without notice of the prior conveyance wins, regardless of who records first — the subsequent purchaser does not have to record at all to be protected (common in many states, including CA and FL); (3) Race-notice statute: a subsequent BFP wins only if (a) they took without notice AND (b) they record before the prior grantee — they must satisfy both conditions (common in many states, including NY). 'Notice' can be: (a) Actual notice — direct knowledge of the prior conveyance; (b) Record notice — the prior deed is in the chain of title and properly recorded; (c) Inquiry notice — visible facts that would cause a reasonable person to inquire further (e.g., someone in possession of the land). A BFP must be a good faith purchaser for value — donees and heirs generally are not protected by recording acts.

Question 6: A landlord leases an apartment to a tenant for one year. The landlord's furnace fails during a harsh winter, leaving the apartment without heat for six weeks despite the tenant's repeated complaints. Under the implied warranty of habitability, what is the tenant's remedy?

The tenant has no remedy because the lease was entered into as-is
The tenant may vacate and terminate the lease, or remain and withhold or reduce rent, or repair and deduct (Correct answer)
The tenant must continue paying full rent until a court orders otherwise
The tenant's only remedy is to call the housing authority, as landlords have no civil liability for habitability breaches

Correct answer: The tenant may vacate and terminate the lease, or remain and withhold or reduce rent, or repair and deduct

The implied warranty of habitability (IWH), recognized in most jurisdictions after Javins v. First National Realty Corp. (1970), requires residential landlords to maintain premises in habitable condition. Tenant remedies for breach include: termination and vacate, withhold/reduce rent, repair and deduct (in many jurisdictions), and damages for the reduced value of the premises.

The implied warranty of habitability (IWH) was judicially created for residential leases, recognizing that the traditional caveat lessee ('let the lessee beware') rule was inappropriate for modern apartment leases. Javins v. First National Realty Corp. (D.C. Cir. 1970) is the landmark case. The IWH: (1) Cannot generally be waived in residential leases (unlike commercial leases); (2) Requires landlords to maintain the premises in compliance with housing codes or in a condition fit for human habitation; (3) Breach remedies vary by state: (a) Constructive eviction — vacate and terminate (requires actual vacation in most states); (b) Rent withholding — pay rent to escrow pending repairs; (c) Rent reduction — pay reduced rent reflecting diminished value; (d) Repair and deduct — in some states, tenant may hire a contractor and deduct from rent (usually capped); (e) Damages — tort or contract damages for diminished value. Commercial leases generally do not carry an IWH.

Bar Exam Real Property 2

A grantor conveys Blackacre 'to A for life, then to B and her heirs.' B dies before A.
What is the state of the title?