A profit is a nonpossessory interest, which entitles the holder of the benefit to take some resource from the servient estate.
Henry owns land regarded as dominant estate compared to Paul’s servient estate adjacent to it. His dominant estate is rich in iron ore, which extends to Paul’s servient estate. He has therefore obtained a profit that grants him the right to exploit the mineral deposits found on Paul’s servient estate as well.
Exclusive profits grant a sole right to the grantee by the owner to take resources from his land. The grantee is allowed to even take the exclusion of the owner of the servient estate.
Paul realized that the iron ore deposit in his estate is little in comparison to Henry’s estate. Under a signed legal agreement with Henry, Paul has granted Henry an exclusive profit to obtain iron ore from his estate. Exclusive profit in this case guarantees Henry that no other person will obtain the right to collect iron ore from Paul’s estate.
Nonexclusive profits grant similar rights to others for the removal of resources from the servient estate.
Alternatively, Paul can decide to grant Henry nonexclusive profit, which means that he can grant any other person the right to collect iron ore from his firm whenever he wishes. Under such agreement, any other person can obtain the right to exploit iron ore from Paul’s estate.
The surcharge doctrine states that if the owner of a profit unfairly increases his use, even though increased use could not have been intended by the original conveyance, then the servient estate is surcharged and the profit is thereby extinguished.
Although Henry obtains a profit to exploit the resources in Paul’s estate, he has to abide by the agreement. Should he collect more iron ore than was stated in the agreement, then Paul can apply the doctrine of surcharge to extinguish the profit.
An affirmative covenant is a covenant, which promises that the holder of the servient estate will do something.
Even though Paul’s estate is of great interest to Henry, given the mineral deposits, the land is open and trespassers can easily access the important resource. While obtaining an exclusive profit to Paul’s estate, Henry made Paul sign a binding agreement that he will fence the land.
A negative covenant promises that the holder of the servient estate will not do something he is normally entitled to do.
Henry pays Paul for collecting iron ore from his firm given the exclusive profit rights he has on Paul’s servient estate. As a result, Henry forced Paul into signing an agreement that he will not undertake any form of development that is likely to interfere in his estate.
Real covenants are covenants that run with the land at law. They are treated as if they were physically attached to the land and thus enforceable by or against a successor in interest to one of the original parties of the covenant.
Petra was unable to change her land use from agricultural to industrial because of the real covenant attached to the land she bought from Cathy.
An equitable servitude is a covenant that there will be equal enforcement of previous covenants against assignees of the burdened property.
John bought land from Paul. Henry already holds profit rights on Paul’s land. This, therefore, means that the covenants Paul agreed to will also apply to John.
Merger is one method of terminating a covenant or servitude. If the title to the land benefited and the title to the land burdened come into the hands of one person, they will merge into a fee simple and cease to exist.
Paul and Henry decided to merge their estates into one title and hence terminate all the covenants that arose because of profits rights.
Abandonment is an equitable defense to enforcement of an equitable servitude claim. An equitable servitude will be extinguished if:
- a subdivider sells a few lots with restrictions, then sells lots unrestricted;
- or where owners in a subdivision have with general consent violated restrictions so that the purpose of the restrictions can no longer be carried out.
After John took over ownership of Paul’s estate, he violated the existing covenants. This made Henry abandon his operations on the servient estate and all the profits and covenants attached were extinguished.
Part performance is an equitable doctrine that may cause a court of equity to enforce specifically an oral contract for the sale of interest inland.
Tom sued Peter for failure to perform his part of the agreement as stated in their written contract concerning a property.
Equitable conversion regards the buyer, inequity, as the owner of the land and the seller have a security interest for payment of the purchase price.
Mercy bought Miriam’s land thus became the owner of the land by paying Mercy for the purchase.
A deed is writing used to transfer an interest inland. The usual requirements include:
- grantor’s signature;
- words indicating a present intent to transfer and;
- a description of land and parties.
Miriam has transferred the interest in her land to her eldest son by transferring the deed to his name.
Delivery refers to the grantor’s intent to convey an interest inland. It is satisfied by words or conducts evidencing the grantor’s intention that the deed has some present operative effect, i.e., that title passes immediately and irrevocably even though the right to possession may be postponed until some future time.
Miriam conveyed the transfer of her deed to her son in writing indicating that she has no more right on the land in question.
Conditional delivery is an effective delivery only upon the occurrence of a condition. Conditional delivery involves two important forms of deliveries; a neutral third party, e.g., a lawyer, and the grantee respectively.
After selling her land to Mary, Miriam was under the obligation to deliver her interests to Mary.
Relation Back Doctrine
The relation-back doctrine is used in an escrow situation (use of a third party for delivery). The title will not normally pass to the grantee until the performance of the named conditions. However, under certain circumstances, the title of the grantee will relate to the time of the deposit of the deed in escrow. Generally, the doctrine is applied when:
- the grantor dies, to avoid the rule that title must pass before death if the instrument is not a will;
- the grantor becomes incompetent, to avoid the rule that an incompetent cannot convey title and;
- a creditor of the grantor attaches the grantor’s title.
Mary transfers her title deed to Jonah but keeps it a secret with her lawyer that Jonah should only learn about the transfer after her death.
Covenants for Title
Covenants for the title are assurances regarding the title conveyed that determine the seller’s liability, should a defect in the title arise.
Gina signed an agreement with Tina stating that Tina remains liable for any defect that arises in the title after the sale of land.
General Warranty Deed
A general warranty deed is a type of deed, which guarantees the grantee that no defects had occurred before or during the period the grantor had a title. It contains all six of usual “covenants of the title” assuring the grantee of grantor’s ownership and powers to convey property, quiet enjoyment of property, no encumbrances, warranty of title, and further assurances on perfecting the title.
Peter bought land from John and received a general warranty deed. A defect in the title emerged four years later. Tom, John’s son, owns one-third of the land and has sold it to Mark. Since the deed warrants peter against all defects in the title, he can claim compensation for the one-third piece.
Present covenants are those, which either the described situation exists or not at the time the covenant is made. A breach will only occur at the time the covenant is made. The present covenant involves such covenants as the grantor’s ownership of property, the grantor’s power to convey his interests, and assurances against encumbrances.
X enters in to contract with Y to sell his land. To initiate the purchase, X makes a covenant with Y that he will convey his interests once the purchase is over.
Future covenants are continuing covenants, which will not be violated until the grantor revokes possession from the grantee. Such covenants involve assurances of no disturbance and guarantee of warranty.
X leased his land to Y. Y insisted that X makes a covenant with him to assure him that he will not interfere with Y’s property until the ten years lease period is over.
Bona Fide Purchaser
A bona fide purchaser is a person who obtains legal title to the property by incurring all the purchase costs involved whereby the property has no other third party claim as stated in the common source of the title.
Tina became the bona fide purchaser of Jonah’s land after completing payment for the sale and acquiring the legal title.
Estoppel by Deed
Estoppel by deed is where a grantor purports to convey an interest in property that he does not then own, but later acquires the title. He subsequently acquired title works to the benefit of the grantee under his deed.
X purports to sell a piece of land that he inherited from his father to Y. During the time of sale X had not completed the process of transferring the title to his name but assured Y that he will facilitate the process and change the deed to Y’s name.
Special Warranty Deed
A special warranty deed is a type of deed used to convey property interests apart from leaseholds. This deed will normally contain all the six contents of the usual covenants. However, the grantor only guarantees that he has done nothing to make the title defective.
Peter grants James a special warranty deed, which guarantees James that he has not interfered with the title in any way. James later realized that the title was defective. James can use the special warranty deed to seek compensation from Peter.
Notice requires that for a bona fide purchaser to qualify for protection under the recording acts, he cannot have any kind of notice of the prior conveyance at the time of the conveyance.
X was fully aware of prior conveyances involving Y’s land at the time of their contract. He, therefore, did not qualify for any protection under-recording acts, despite the controversy that arose from Y’s land.
Actual Notice is where the grantee knows of the prior conveyance.
Jonah conveys his title to John even when he knew that the title was defective. Under property law, John can serve Jonah with actual notice.
Constructive Notice is a notice, which the law will impute whether or not the grantor knows of the prior conveyance. Notice is constructive when an instrument has been recorded.
Whereas Peter claims that his title is not defective, the recording officer finds several recorded contents that he assumes peter ought to have been fully aware of and declines to carry on the transfer.