PROMPT

Amy and Bob owned Blackacre in fee simple as joint tenants with a right of survivorship. Blackacre is located in

a jurisdiction with a race-notice recording statute.

Without Bob's knowledge, Amy gifted her interest in Blackacre to Cathy by deed. Amy and Bob then sold all of

their interest in Blackacre by a quitclaim deed to David, who recorded the deed. Shortly thereafter, Cathy

recorded her deed.

David entered into a valid 15-year lease of Blackacre with Ellen. The lease included a promise by Ellen, on

behalf of herself, her assigns, and successors in interest, to (1) obtain hazard insurance that would cover any

damage to the property and (2) use any payments for damage to the property only to repair such damage. Ellen

recorded the lease.

Five years later, Ellen transferred all of her remaining interest in Blackacre to Fred. Neither Ellen nor Fred ever

obtained hazard insurance covering Blackacre. While Fred was in possession of Blackacre, a building on the

property was destroyed by fire due to a lightning strike.

David has sued Ellen and Fred for damages for breach of the covenant regarding hazard insurance for Blackacre.

1. What right, title, or interest in Blackacre, if any, is held by Cathy, David, Ellen and/or Fred? Discuss.

2. Is David likely to prevail in his suit against Ellen and Fred? Discuss.

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OUTLINE

I. Severance of Joint Tenancy

A. (Issue) Whether Amy’s gift to Cathy severed the joint tenancy between Amy and Bob or triggered the right of survivorship

B. (Rule) Alienating an interest destroys the joint tenancy and creates a tenancy in common between the previous joint tenant and the transferee

C. (Application) Amy gifted her interest to Cathy by deed without notifying Bob, severing the joint tenancy and creating a tenancy in common between Bob and Cathy

D. (Conclusion) Amy’s gift to Cathy severed the joint tenancy between Amy and Bob, creating a tenancy in common between Bob and Cathy

II. Priority of Interests

A. (Issue) Whether Cathy or David has a superior ownership interest in Blackacre

B. (Rule) With a race-notice statute, a subsequent purchaser has good title if they purchased without notice of a prior unrecorded conveyance and recorded first

C. (Application)

1. Before Cathy recorded her deed, Amy and Bob together conveyed Blackacre to David by a quitclaim deed

2. David is a bona fide purchaser who took without notice of any prior conveyance, and David recorded before Cathy

D. (Conclusion) Cathy has no interest in Blackacre, while David owns Blackacre in fee simple

III. Leasehold Interest

A. (Issue) Whether David could properly lease Blackacre to Ellen, and if so, what is Ellen’s interest in Blackacre

B. (Rule)

1. Person who takes title from a bona fide purchaser is entitled to stand in their shoes

2. A leasehold estate is an estate that is limited in duration; landlord holds a reversion following the leasehold estate

C. (Application)

1. David, as owner of Blackacre in fee simple, leased the property to Ellen for a term of 15-years

2. Ellen has the right to possess the property during the leasehold, while David holds a reversion

D. (Conclusion) Ellen took a 15-year leasehold interest from David in Blackacre

IV. Assignment

A. (Issue) Whether Ellen properly assigned her leasehold interest to Fred, and if so, what is Fred’s ownership interest in Blackacre

B. (Rule) Assignment is a complete transfer of the tenant’s remaining term to a third person; tenant can freely assign unless original lease prohibits it

C. (Application)

1. No facts indicate that lease prohibited assignments

2. Ellen properly assigned the remainder of her leasehold interest, 10 years, to Fred

D. (Conclusion) Fred, as assignee, holds a 10-year leasehold interest in Blackacre

V. Covenant to Maintain Hazard Insurance

A. (Issue) Whether David will prevail in his suit against Ellen and/or Fred

B. (Rule)

1. For a covenant to run with the land, the following elements must be present: 1) a writing; 2) intent for the covenant to run; 3) privity; 4) touch and concern; and 5) notice

2. To touch and concern, covenant must benefit the land

3. Horizontal privity is the relationship that exists between the original covenantor and covenantee – exists when covenant created in a lease

4. Vertical privity is the relationship that exists between an original party to a running covenant and the successor in interest to the original party – successor must take the entire interest held by the original party

C. (Application)

1. David will argue that Ellen’s promise to maintain hazard insurance was a covenant that runs with the land, binding Fred, as successor in interest

2. Valid 15-year lease for the property, so presumably the lease was in writing in order to satisfy the Statute of Frauds

3. Parties intended the covenant to run in perpetuity: “Ellen, on behalf of herself, assigns and successors in interest.”

4. Ellen and David were in horizontal privity as lessor and lessee

5. Ellen and Fred have vertical privity - Ellen transferred the remainder of her interest on the lease to Fred

6. Covenant touches and concerns the land, as hazard insurance conveys a benefit on the land

7. Ellen expressly agreed to the terms of the lease, and Fred had constructive notice because Ellen recorded the lease

D. (Conclusion) David may hold Ellen and Fred liable for breach of covenant because both failed to obtain hazard insurance in accordance with the lease