Start Here: 5 Things You MUST Know
Mortgagor = BORROWER (gives the mortgage). Mortgagee = LENDER (receives it). The "-or" = person doing the action
Adverse possession requires 4 elements: exclusive, open, hostile (no permission), and continuous for a statutory period
Easement = permanent, runs with the land. License = temporary, revocable, personal
Trade fixtures belong to the TENANT and can be removed. Regular fixtures and improvements belong to the landlord
Eminent domain = government takes property for public use but MUST pay fair market value (just compensation)
1. Real Estate Security Interests
Mortgages
A mortgage is a security interest in real property given by a borrower to a lender to secure repayment of a loan.
Mortgagor = Borrower
The property owner who gives the mortgage. The "-or" suffix = the person doing the action.
Mortgagee = Lender
The bank that receives the mortgage as security for the loan.
Mortgagee's Rights
- Foreclosure — a legal process where the property is sold to satisfy the debt if the loan is not repaid
- Deficiency judgments — if the sale price does not cover the full debt, the lender can pursue the borrower for the remaining amount
- Rights against subsequent purchasers — the lender can collect from anyone who later buys the property after foreclosure
Trust Deeds & Land Contracts
Trust Deed (Deed of Trust)
An alternative to a mortgage with 3 parties: borrower, lender, and a trustee. The borrower conveys title to the trustee, who holds it as security. If the borrower defaults, the trustee can sell without court foreclosure (faster process).
Best for: Large loans where a faster foreclosure process is desirable.
Land Contract
The seller finances the purchase directly. The buyer makes payments over time but does NOT receive the deed until the full price is paid. The seller retains title during the payment period.
Best for: Buyers with poor credit or who cannot make large down payments.
Mechanics' Liens
Mechanic's Lien
A lien available to anyone who contributes labor or materials to the improvement of real property. Protects contractors, subcontractors, and suppliers. The claimant must file notice. Remedy: foreclosure — forcing a court sale of the property to recover payment.
Waiver of lien: A contractor may agree in advance to waive their right to file a mechanic's lien (sometimes required by lenders before funding construction).
Real-World Scenario: Mechanic's Lien
The Setup: A roofer installs a new roof on Jessica's barn. Jessica refuses to pay the $8,000 bill.
What Happens: The roofer files a mechanic's lien on the property.
The Result: The roofer can now force a court sale of the property to recover the $8,000. The lien attaches to the real property, and Jessica cannot sell or refinance without satisfying the lien.
2. Incidental Real Property Rights
Adverse Possession
Adverse possession = a way to gain legal title to someone else's land WITHOUT their permission, by occupying it for a long period under specific conditions.
4 Requirements (MUST MEMORIZE)
Exclusive Possession
Occupy and use it as your own (in the usual way)
Open and Obvious
Possession must be visible, not secret
Adverse / Hostile
Without the owner's permission
Continuous
For a statutory period (usually 10-20 years)
Real-World Scenario: Adverse Possession
The Setup: A farmer builds a fence 10 feet onto his neighbor's land and farms that strip for 25 years. The neighbor never objects.
What Happens: After the statutory period, the farmer claims adverse possession.
The Result: If all four requirements are met, the farmer gains legal title to the 10-foot strip. The original owner loses it. But if the owner had given permission, there would be NO adverse possession (not hostile).
Surface, Subsurface & Support Rights
Above Surface
Airspace rights (within reasonable limits)
Below Surface
Mineral rights (unless separately sold)
On Surface
Full use of the land itself
Lateral Support
The support soil receives from the land next to it. If your neighbor excavates their land and YOUR land collapses, you have a claim.
Subjacent Support
The support the surface receives from earth beneath it. If someone mines under your land and it caves in, they are liable.
Water Rights
Riparian owner = a person who owns land bordering a natural waterway (river, stream, lake). Riparian owners have the right to reasonable use of the water.
Fixtures
Fixture
An item of personal property that has been attached to real property in such a way that it is now considered part of the real property. Three tests:
- 1. Cannot be removed without substantial injury to the real property
- 2. Specially constructed or fitted for use in the building
- 3. Intent of the party who attached it — did they intend it to be permanent?
Trade Fixture = TENANT'S Property
An item attached by a TENANT for use in their business. Trade fixtures CAN be removed by the tenant when the lease ends.
Improvements/Betterments = LANDLORD'S Property
Changes by a tenant that increase the property's value and CANNOT be removed (new flooring, walls). These become part of the real property.
Real-World Scenario: Trade Fixture vs. Improvement
The Setup: A restaurant tenant installs a commercial pizza oven bolted to the floor and also tiles the entire kitchen.
What Happens: The lease ends. Both tenant and landlord claim the oven and tiles.
The Result: The pizza oven is a trade fixture (installed for the tenant's business) — the tenant can remove it. The tile flooring is an improvement/betterment (cannot be removed without destruction) — it belongs to the landlord.
3. Land Use Restrictions
Incorporeal Interests
Incorporeal interest = a right in real property that does NOT include the right to possess it. You have a right "in" the property, but you do not possess it.
Easement
The right to use someone else's land for a specific purpose (e.g., right of way).
- Created by: express words, implication, or prescription
- Key feature: "Runs with the land" — survives sale
- Permanent and transferable
Profits a Prendre
The right to enter someone else's land and remove something of value.
- Minerals, timber, crops
- Fish, game
- Sand, gravel
License
Permission to use someone else's land.
- Temporary and revocable
- Personal — cannot be transferred
- Example: Permission to park in a driveway
Easement vs. License — Critical Distinction
Easement
Permanent. Runs with the land. Survives sale. Transferable.
License
Temporary. Revocable. Personal. Cannot be transferred.
Government Controls
Zoning
Government laws that regulate how land can be used in specific areas (residential, commercial, industrial, agricultural).
Spot Zoning
Singling out a small parcel for different treatment. Generally disfavored by courts.
Exclusionary Zoning
Designed to keep certain groups out. Can be struck down as unconstitutional.
Special Exception
Permission for a use not normally allowed (e.g., a church in a residential area).
Hardship Variance
Granted because strict compliance would cause undue hardship to the owner.
Use Variance
Allows a completely different use than the zone permits.
Nonconforming Use
Pre-existing use "grandfathered" in. Allowed to continue but cannot be expanded.
Building Codes
Regulations governing construction quality and safety standards — electrical wiring, plumbing, structural integrity, fire safety.
Eminent Domain
The government's power to take private property for public use, but MUST pay fair market value (just compensation). The legal process is called a condemnation proceeding.
4. Landlord and Tenant
Types of Tenancies
Estate for Years
A lease for a fixed, definite period (e.g., a 2-year lease).
Periodic Tenancy
Auto-renews for successive periods (month-to-month, year-to-year) unless notice is given.
Tenancy at Will
Can be terminated by either party at any time. No fixed duration.
Holdover Tenant / Tenant at Sufferance
Stays after the lease expires without consent. Has no legal right to be there.
Landlord's Rights & Duties
- Primary duty: Deliver possession on the lease inception date
- Right to rent: Entitled to receive rent as agreed
- Remedies: Evict, apply to court, distraint (seize tenant's property), impose lien for unpaid rent
Tenant's Rights & Duties
- Primary right: To occupy the premises
- Primary duty: Leave premises in same condition (except reasonable wear and tear)
- Security deposit: Money held as security for lease obligations, usually refundable
Constructive Eviction
When a landlord's actions (or inaction) make the property uninhabitable, effectively forcing the tenant out. The tenant can terminate the lease without penalty. This is a defense for the tenant, not an action by the landlord.
Real-World Scenario: Constructive Eviction
The Setup: A tenant's apartment has no heat in January because the landlord refuses to fix the broken furnace despite repeated requests.
What Happens: The apartment becomes uninhabitable. The tenant moves out and stops paying rent.
The Result: The tenant can claim constructive eviction. The landlord's refusal to maintain habitability effectively forced the tenant out. The tenant can terminate the lease without penalty.
Liability for Injuries to Third Parties
- Landlords are liable for injuries from their negligent acts or latent (hidden) defects on the premises
- Tenants are liable for injuries occurring in areas under the tenant's control
Cheat Sheet
Print this page for quick referenceSecurity Interests
- Mortgagor = borrower; Mortgagee = lender
- Remedy: foreclosure + deficiency judgment
- Trust deed: 3 parties, faster foreclosure
- Land contract: no deed until full payment
- Mechanic's lien: labor/materials providers
Rights & Restrictions
- Adverse possession: exclusive + open + hostile + continuous
- Fixture tests: injury, fitted, intent
- Trade fixture = tenant's; improvement = landlord's
- Easement = permanent; License = revocable
- Eminent domain = must pay fair market value
Landlord-Tenant
- Landlord duty: deliver possession
- Tenant duty: leave in same condition
- Constructive eviction: landlord makes it uninhabitable
- Distraint: landlord seizes tenant's property
- Holdover = tenant at sufferance (no rights)
Exam Trap Alerts
1. Mortgagor vs. Mortgagee
Mortgagor = BORROWER (gives the mortgage). Mortgagee = LENDER (receives it). The "-or" suffix = the person doing the action. Memory trick: the mortgagOR is the bORrower.
2. Adverse Possession Requires Hostility
If the true owner gives permission to use the land, there is NO adverse possession. It is not hostile/adverse. The exam loves this trap — "neighborly permission" defeats the claim entirely.
3. Trade Fixtures Belong to the TENANT
Unlike regular fixtures which become part of the real property, trade fixtures remain the tenant's property and can be removed. But improvements/betterments (things that cannot be removed without destruction) become the landlord's.
4. Easement vs. License
An easement is permanent and runs with the land (survives sale). A license is temporary and revocable. If a property is sold, easements transfer to the new owner. Licenses do not.
5. Constructive Eviction Is the LANDLORD's Fault
This is about the landlord's actions (or inaction) making property uninhabitable. It is a defense for the tenant, not an action by the landlord. The tenant can walk away from the lease.
6. Nonconforming Use Cannot Be Expanded
A pre-existing use is "grandfathered" in when zoning changes, but it can only continue as-is. The owner cannot expand, enlarge, or intensify the nonconforming use.
Quick Reference Summary
Mortgage
Mortgagor (borrower) gives security to mortgagee (lender). Remedy = foreclosure.
Trust Deed
3 parties (borrower, lender, trustee). Faster foreclosure, no court needed.
Adverse Possession
Exclusive + Open + Hostile + Continuous. Permission defeats the claim.
Easement vs. License
Easement = permanent, runs with land. License = temporary, revocable.
Fixtures
Trade fixtures = tenant's. Improvements = landlord's. 3 tests to determine.
Eminent Domain
Government takes property for public use. Must pay just compensation.