Property Outline

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Property Outline

Prof. Ron Rosenberg, Spring 2009

Based on Dukeminier, Krier, Alexander & Schill’s Property 6th Edition

 

  1. Chapter One: First Possession – Acquisition of Property by Discovery, Capture and Creation
    1. Acquisition by Discovery (Conquest)
      1. First-in-Time
        1. Fundamentally: The first person to take possession of a thing owns it.
        2. Also known as the rule of capture
        3. Implements important social policies related to rewarding labor and protecting investment in resources
      2. Johnson v. M’Intosh
        1. Conquest = subduing others to claim their property rights
          1. Title acquired and maintained by force
        2. Discovery = claiming a right to property
        3. The Native Americans were not regarded as first in time
          1. To invalidate the first in time principle Marshall uses the discovery principle and says that European rules control. (The British consolidated/discovered the land and subsequently transferred title to the US). The first in time principle only ends up applying to European discoverers to sort out competing claims. The tribes have a right of occupancy, but…
          2. Once the European nations apply first in time to discovery rules, the rights go to the winner, and the right to buy off the land from the Native Americans or take the land through conquest.
          3. The US Gov’t is the only buyer empowered to acquire title to Native American lands.
        4. John Locke – rewards go to the person who puts in labor, makes something more valuable, who takes initiative
    2. Acquisition by Capture
      1. Possession is the denial of a natural liberty
        1. It’s about making something unowned owned.
      2. Pierson v. Post
        1. Title over wild animals (ferae naturae) arises from possession/occupancy
        2. Pursuit is inadequate. To own, you need to possess and control. P chases fox, but D catches, so it’s D’s fox.
          1. Rationale:
            1. Competition: To foster competition, society rewards the captor; supposed to promote more effective means of capture
            2. Ease of administration: Rewarding capture is easier than protecting both pursuit and capture.
      3. Mortally wounded or trapped animals that are virtually certain to be captured are considered to be captured.
      4. Ghen v. Rich
        1. Firm possession: he who does all that is possible to do to make the animal his own has title over it (i.e. as soon as the harpoon goes into the whale and sticks; doesn’t matter if someone else finds the whale later)
        2. Rationale
          1. Custom is important factor in deciding possession, especially since no person would engage in hunt if animal could be appropriated by any chance finder, ignoring custom.
            1. Court follows whaling custom and abandons rule requiring physical control to find property right in hunter (i.e. Pierson) to encourage industry
      5. Keeble v. Hickeringill
        1. Malicious competition for un-owned property will give rise to liability.
          1. Policy – court rule designed to promote trade/business activity and productivity.
        2. “Ratione soli” – owner has “constructive possession” of wild animals on their property (ex: superior property right to trespasser w/ physical possession or if someone takes the animal off her land can sue for possession) ® Landowners are regarded as prior owners of any animals ferae naturae on their land until the animals take off
          1. Note ® once the animal leaves his land, it is free to be captured.
            1. Exception ® captured wild animals that develop a habit of return belong to the captor when they roam
          2. tame animals that run off temporarily do not become ferae naturae while away
      6. Policy: All these decisions take economic interests into account
        1. Demsetz: goal is to internalize all externalities. We want to create competition for resources so that they are used efficiently.
    3. Acquisition by Creation
      1. Property in One’s Ideas and Expressions: General
        1. A person can acquire property by creating it.
        2. Locke Theory: You own what you create. You always own the fruits of your own labor.
        3. Prof. Libling: When someone puts forth mental or physical labor into the creation of something, then the creator has a right to commercial exploitation of that thing (whether concrete or abstract), which is a right that is separate from that of ownership.
        4. Large expenditure of money does not itself create a protected right. Smith v. Chanel
          1. Rationale: Because intellectual goods are nonrivalrous, policies may need to be balanced differently, but excludability can still create healthy incentives. Douglas Baird
          2. Rich public domain and liberal fair use can encourage creation (“progress of science”) just as does monopoly protection. White v. Samsung.
            1. Ultimately, though, this court holds
              1. Even though there is no intent to deceive, the use of an imitation (not a likeness) of a celebrity for commercial profit infringes her right of publicity.
              2. Celebrities have property rights in their name/likeness/persona/”identity”
          3. Systems of limiting/creating competition:
            1. Eternal Monopoly: Creator has unlimited (and exclusive) property right
            2. Limited (intermediate) Monopoly: Creator has limited property right (to the extent social policy dictates). Usually social policy is to increase innovation and lower prices.
            3. Sharing Regime: Imitator pays royalties to the creator
            4. None: Don’t intervene and let the market sort things out.
              1. Maybe allowing for unbridled competition is a good thing (increases supply, decreases prices) Cheney, Chanel
        5. The common law
          1. The common law commonly allows copying and imitation of ideas, as opposed to their expression.
        6. Statutes
          1. Copyright, trademark, and patent laws have been enacted by Congress to solve the dilemma of how much protection to give creativity. Intellectual property rights are limited in time. Moreover, copyright law includes fair use exception and a right to parody. A person cannot copyright an idea, but can copyright the expression of it.
        7. Copyright.
          1. Protects original expressions of ideas fixed in works of authorship.
          2. News article can possess literary quality, a subject of copyright protection, but the news element is the public domain. INS v. AP.
          3. Copyright is created by statute, if at all. Statute creates no copyright in clothing design. Cheney Bros. v. Doris Silk.
          4. Ideas not the proper subject of copyright protection, but expression is.
          5. Courts need to separate these for a given work. Nichols v. Universal.
          6. Can infringe indirectly by intentionally inducing or encouraging the infringement of others. Knowledge of actual infringement not required and substantial non-infringing uses will not excuse. MGM v. Grokster.
          7. Distinguish: product distributed with knowledge of potential infringing uses OK if there’s no inducement and if there are commercially significant non-infringing uses. Sony v. Universal.
        8. Patent.
          1. Granted for novel, useful, and nonobvious processes or products. Granted for 20 yrs.
          2. Patent rights created by statute, if at all. Cheney Bros. v. Doris Silk.
          3. Patentable subject matter is broad. Products of human ingenuity (the way you cultivate or distribute). May not however, patent laws of nature, physical phenomena, and abstract ideas.
          4. Genetically engineered bacteria are patentable. Diamond v. Chakrabarty.
        9. Trademark.
          1. Protects marks/symbols as source-identifiers from other confusing uses.
          2. Perfume copier can use competitor’s trademark to market its copy to consumers as being a substitute product. Smith v. Chanel.
          3. Parasites: people who infringe on trademarks to get the trademarked logos business – want them to think they’re going to the other company when really not
          4. Dilution: what happens to another’s trademark and selling capacity when other’s infrigne
            1. Decreases brand recognition and makes it indistinctive
            2. Decreases public’s understanding and appreciation of image of product
        10. Unfair competition. INS v. AP.
          1. AP is balancing protection, lack of protection, and years of protecting
          2. Quasi-property in gathered news retains some property rights but not others. This is a right not as against the world, but as against a competitor.
            1. (INS & AP = quasi // AP & Public = none)
            2. Policy – AP doesn’t have the right to control the news. The content isn’t AP’s product, it is an event that anyone could see and write about. Since the public strongly values the free access to information this will probably win over AP’s desire to profit off of their reporting. Court is concerned with monopoly.
      2. Property in One’s Person
        1. See White v. Samsung above.
        2. Moore v. Regents of the Univ. of CA
          1. No remaining interest in cells removed from body, or in the medical research IP resulting from their cultivation
          2. A cell line patent is property distinct from the cells used to create it
            1. Rationale:
              1. Majority: There is no law to allow for conversion of body parts and court is unwilling to extend the law – that’s for the legislature.
              2. Arabian Concurrence: Moral objection to equating body parts with property.
              3. Dissent: Property law is all about the bundle of rights; they’re not all the same, they should be altered for Moore.
          3. Concept of market transferability
            1. There are some objects that are property, but that you can’t sell. Dissent says body parts are one of them.
            2. Majority: We want to encourage research and avoid creating a market for organs.
        3. Hecht v. Superior Court
          1. Sperm deposited in sperm bank was property of the donor and can be devised by will
    4. Note: The Right to Include/The Right to Exclude
      1. Jacque v. Steenberg Homes
        1. Rights package is inviolable; we’re going to punish trespassers so that landowners feel confident that wrongdoers who trespass upon their land will be appropriately punished and won’t resort to ‘self-help’ remedies…
      2. State v. Shack
        1. The right to exclude is not absolute; you can exclude certain people. Common law being interpreted to give criminal trespass statute meaning.

 

  1. Chapter Two: Subsequent Possession – Acquisition of Property by Find, Adverse Possession and Gift
    1. Acquisition by Find
      1. Vocabulary
        1. Trover – return of value of property – generally results from defendant’s conversion of property
        2. Bailment – when you keep a good in trust for someone else – there are fiduciary duties that come with this
          1. Constructive possession – the law treats the bailer as the actual owner of the property
          2. Rental does not count as a bailment
        3. Replevin – return of property taken illegally
        4. Ejectment – removing someone off of property to return it to original owner
      2. General Rule
        1. An owner of property does not lose title by losing the property. The owner’s rights persist even though the article has been lost or mislaid. So generally, a finder has superior rights to everyone but the true owner, but there are exceptions.
        2. True Owner > Possessor > Subsequent Possessor
        3. To become the owner of found property, must:
          1. Acquire physical control
          2. Intent to assume dominion over the property
            1. Need not always be complete physical possession
        4. Finder acts as bailee and takes on its obligations
      3. Types of found property: (RR thinks distinctions are arbitrary)
        1. Lost – The owner accidentally and casually parted with possession and does not know where to find property
          1. There is a right against everyone but the “true owner”
            1. Ex.: Jewel found by A, takes it to B to be appraised. B steals it. A can sue to get it back. [Armory v. Delamirie]
          2. In public place, finder trumps locus in quo [Bridges v. Hawksworth – store floor]
          3. In private place
            1. Possession of site by locus in quo give constructive possession
            2. BUT absent possession by locus in quo, OR knowledge of the lost property, right of the finder trumps locus in quo [Hannah v. Peel]
        2. Mislaid – Owner intentionally placed property in the spot where it’s found and forgot it
          1. Owner of premises entitled to possession against all the world except true owner (b/c true owner might come back looking for it)
          2. McAvoy v. Medina: Owner of premises where property is found has temp. rights, but must use reasonable care for safekeeping of true owner
        3. Abandoned – Owner voluntarily and intentionally relinquished ownership with intent to give up both title and possession
          1. Finder obtains both possession and title if he exercises control over the property with the intent to assert ownership
          2. Lost or mislaid property can be subsequently abandoned
          3. Multiple finders leads to equitable division: sell it and divide the proceeds.
        4. Finder vs. Owner
          1. Trespass: the owner prevails over finder. (discourages trespass)
          2. Employee of the owner:
            1. Some courts hold the employee cannot keep it.
            2. Others reason that the employee is an agent and therefore acts on behalf of the owner.
            3. Most will hold that the employee has a duty to report to owner.
              1. If guest never claims, should it go to employee? We should reward honesty
          3. On premises for limited purposes: owner prevails.
          4. Underneath the soil: owner prevails.
            1. Exception: Treasure Trove
              1. Old/English rule: money, coin, gold, silver, or bullion, hidden in the earth with the intent to reclaim them belong to the crown
              2. Modern/Majority rule: treat as lost, mislaid, or abandoned property
          5. Private home or highly private place: owner prevails. [owner has right to exclude]
            1. Exception: Owner not in possession
              1. Hannah v. Peel: Owner has not moved in, or made it his “personal space”, then owner is not in constructive possession.
        5. Statutory changes in some states have wiped away the lost/mislaid/abandoned distinction and award everything to the finder.
    2. Acquisition by Adverse Possession
      1. The Theory and Elements of Adverse Possession
        1. Theory
          1. If, within the number of years specified in the state statute of limitations, the owner of land does not take legal action to eject a possessor who claims adversely to the owner, the owner is thereafter barred from bringing an action in ejectment. Once the owner is barred from suing in ejectment, the adverse possessor has title to the land.
          2. Policy: Encourages productive use of property. Helps prove meritorious titles. Corrects errors in conveyancing. Honors expectations.
        2. Elements
          1. Actual entry giving exclusive possession [actual possession + exclusive]
            1. The adverse possessor must be in actual possession of the property he claims [Van Valkenburgh v. Lutz]
            2. Cannot be contained to a small sliver of land
            3. Must use it as an average true owner would under the circumstances
            4. If claim arises under Color of Title, restrictions are relaxed
              1. When someone bases their claim on faulty document, the at least think they own the entire property and intended to use it all
            5. Exclusive
              1. Cannot share possession with owner nor the public.
                1. If adverse possessor was sharing with owner, then owner probably wouldn’t know that AP was claiming ownership against him
          2. Open and notorious
            1. Property must be used in such a way to give owner notice of possession
              1. Acts must constitute reasonable notice to the owner that she is claiming dominion so that owner can defend property rights.
              2. Can be measured through the “average use” element [Howard v. Kunto]
              3. Some state statutes require that A.P.s without color of title must show that the land was either “protected by a substantial enclosure” or was “usually cultivated or improved” [NY in Van Valkenburgh v. Lutz]
              4. Small encroachment without actual knowledge by property owner is NOT sufficient [Mannillo v Gorski]
          3. Adverse and under a claim of right [hostile + adverse]
            1. Possession is without the owner’s consent – it is not subordinate to the true owner
            2. Intent/Claim of Right
              1. Three types of intent:
                1. Objective Standard (Maj.) – State of mind is irrelevant. Connecticut Doctrine.
                2. Good-Faith Standard (Subjective) – Possessor believe the property is his
                3. Aggressive Trespass Standard – Possessor believes the property is not his but does intend to appropriate it. May not be based on mistake. Maine Doctrine.
              2. Connecticut Doctrine – Majority Rule [Mannillo v. Gorski]
                1. Objective. State of mind of possessor doesn’t matter – only the actions
                2. As long as someone has possession under the elements above they can claim adversity, and get title after the statute of limitations runs.
                3. Some states add a good-faith component
                  1. Policy: We’d rather reward people who make innocent mistakes, and don’t want people to gain title by seizing land
              3. Maine Doctrine – Minority Rule [Mannillo v. Gorski]
                1. If possessor mistakenly takes the land there is no intent, and thus no adversity
                2. Without a hostile claim, the true owner gets the property back at any time – the statute of limitations doesn’t come into play
                3. Policy: This rewards those who have bad-faith claims, and punishes those who make innocent mistakes, or those claiming color of title.
                4. This is the Aggressive Trespass Standard
          4. Continuous
            1. Use must continue for the statutorily required period, showing the intent to possess for the required time
            2. Period resets with each break in possession
              1. Exception: possessors in privity can tack on the same clock [Howard v. Kunto]
            3. Determined through the nature of the property
              1. Summer homes used during the summers are continuous use; as long as such lands are normally used this way [Howard v. Kunto]
            4. No tacking when:
              1. There is an ouster by a third party
              2. AP abandons
              3. Interruption by true owner
      2. The Mechanics of Adverse Possession
        1. Effect
          1. Adverse Possession is a means of acquiring title to property by long, uninterrupted possession. The running on the statute of limitations on the owner’s action in ejectment not only bars the owner’s claim to possession, it also extinguished old title and creates a new title for the adverse possessor by operation of law
          2. Title acquired by adverse possession cannot be recorded until a quiet title action is filed by the AP against the former owner b/c title arose from operation of law instead of a recordable document
        2. Color of Title v. Claim of Title
          1. Claim of Title – When a person believes they own the land due solely to adverse possession under the statute of limitations. Another way of expressing the hostility requirement.
          2. Color of Title – When the possessor believes they own property but don’t due to a defective instrument
            1. Ex: The possessor has a title that he was given when he was sold the property, but the title actually describes a different piece of land than he actually thinks he owns. [Howard v. Kunto]
            2. This satisfies the adversity requirement regardless of intent
          3. Constructive Adverse Possession
            1. When the adverse possessor is only using a sliver of land, but they are making their claim under color of title, they can gain title over the entire piece from the defective title.
        3. Burden of Proof
          1. Burden of proof lies with the party claiming adverse possession.
            1. Policy: We should put assumption of title with the person who is harmed, and force the person who’ll benefit to prove all the elements of the case.
          2. To quiet title or avoid ejectment by record owner, you must show all the elements by clear and convincing proof. [Van Valkenburg v Lutz]
        4. Mistaken Boundaries (in modern times)
          1. Boundary disputes can be resolved by agreement, acquiescence, or estoppel
          2. For innocent improves there may be a liability remedy [Manillo v. Gorski]
            1. Old: property of landowner
            2. Modern: court can force a sale to improver at market price [Amkco v Welborne]
              1. If trivial: could deny relief all together
              2. If big: might be removed. Infringed must show irreparable harm and hardship
        5. Tacking
          1. Adding a previous period of adverse possession to the current adverse possessor’s
            1. Ex: adverse possession passed through owners via color of title [Howard v. Kunto]
          2. Can also add plots of land that the adverse possessor thinks he owns and satisfies the elements for.
            1. Ex: A possesses lot X legally and lot Y through adversity. A sells B a title that only describes lot X, but both A and B believe they are transferring lots X and Y. B can tack on lot Y to the title as long as the possession satisfies all other requirements.
          3. Must be privity –there must be a legal relationship (ie deed) between the two parties that are trying to be tacked together.
            1. English law recognizes tacking for aggressive adverse possessors.
              1. Policy: Notice issue is the same.
        6. Disabilities
          1. The statutory period doesn’t run against those who cannot take action against an adverse possessor
          2. Disability must have existed at the time the adverse possession began
          3. Period begins to run at the time when the disability is removed
          4. Policy: Actual owner must have “notice” of the adverse possession. If the elements aren’t sufficient due to disability then we wait until notice could be given to start the period.
          5. Types of disabilities: Age, Unsound Mind/Insanity, Imprisonment. Death = cure
          6. No tacking of disabilities
        7. Government Owned Land
          1. At common law there was no adverse possession against the government
            1. Policy: The state owns land in trust for the people and they shouldn’t lose it because of the negligence of a few government officers
          2. A few states treat government land like private land, others require the statutory period to be much longer
        8. Owner’s Remedies:
          1. Trespass
          2. Trespass on the case
          3. Trover
          4. Replevin
          5. Ejectment
    3. Acquisition by Gift
      1. Definition
        1. Voluntary transfer of property w/o any consideration w/three requirements:
          1. Donor must intend to make the gift;
          2. Donor must deliver the chattel to the donee (there are some acceptable substitutes to manual delivery); and
          3. Donee must accept the chattel.
        2. Gift inter vivos: made during a donor’s life w/o threat of impending death, and once made, is irrevocable
        3. Gift causa mortis: made in contemplation of immediately approaching death, and is revocable if donor survives
        4. Testamentary gifts: made through a will.
        5. Intestate: a statute in each state determines who gets what in the absence of a will. Default rule.
      2. Elements
        1. Intent
          1. Donor must intend to pass title presently, not in the future
          2. Promise of a gift at death is unenforceable provided there is no consideration or reliance that contract theory can enforce
        2. Delivery
          1. Actual physical delivery: Donor physically vests donee with possession of the item such that donee has dominion and control
          2. Constructive delivery: Actual manual delivery is impracticable; donor surrenders the means of obtaining possession and control, i.e., A hands B a safe combination instead of handing over safe
          3. Symbolic delivery: Actual manual delivery is impracticable; donor hands over some object symbolic of the thing given, i.e.,  A executes a document stating that he gives B that something
          4. Delivery through third person: Donor instructs his agent to deliver a gift, OR donor delivers gift to agent of donee
        3. Acceptance
          1. Usually not a problem, or there wouldn’t be  a lawsuit
      3. Mechanics
        1. Burden of Proof: Clear and convincing evidence by the donee
        2. No Obligation of Return once gift is completed and elements are satisfied
        3. Engagement Rings
          1. Traditional: If donor was at fault, donor cannot recover
          2. Alternative: Gift is conditional upon marriage; “no fault” approach

 

  1. Chapter Three: Possessory Estates
    1. Up from Feudalism
      1. Norman Conquest: in 1066 William of Normandy crossed the English Channel, conquered England, and claimed it as his own. William parceled out land to his supporters and imposed a highly organized feudal system.
      2. Feudal Tenure and Services: Every landowner had a lord above him. Every tenant owed services to his lord. “Estate” comes from the word “status”: the free tenures had higher status
        1. Free(hold) Tenures: Military, Economic, Religious
        2. Non free(hold) Tenures: Villeins/Peasants (worked the land)
      3. Feudal Incidents: In addition to services, tenants were also responsible for feudal incidents, which generally came due on the tenant’s death and were a form of inheritance tax.
        1. Relief: payment by the heir to relieve the land from the lord’s grasp
        2. Wardship: lord was entitled to possession of the land, including rents and profits while the heir was a minor
        3. Marriage: lord could sell the marriage of a minor heir
        4. Escheat: the land reverted to the lord if the tenant died without heirs
      4. Decline of Feudalism:
        1. The plague killed off many peasants and the surviving labor became more valuable
        2. Feudalism died with the rise of the market
        3. Quia Emptores ended subinfeudation and thus established the free alienation/ transferability of the land
      5. Modern Relevance
        1. Feudal Services have no modern relevance
        2. BUT feudal tenures created the system we have today
        3. Out of feudalism developed the system of estates in land. A “property owner” legally just holds an estate in land
          1. Estate is an interest in land that is or may become possessory
          2. Estate is an interest measured by some period of time
      6. System of Estates
        1. Types of estates
          1. Fee simple
            1. An estate that has the potential to endure forever. Created by O, the owner of Blackacre, granting the land “to A and his heirs.” This estate resembles absolute ownership and the holder of the fee simple is commonly called the owner of the land.
          2. Fee tail
            1. An estate that has the potential to endure forever, but will necessarily cease if and when the first fee tail tenant has no lineal descendants to succeed him in possession. A fee tail is created by O granting the property “to A and the heirs of his body”.
          3. Life estate
            1. An estate that will end necessarily at the death of a person. Created by granting the property “to A for life”.
          4. Leasehold estate – estates that endure:
            1. Term of years: for any fixed calendar period
            2. Periodic tenancy: period to period
            3. Tenancy at will: so long as both the landlord and tenant desire
        2. Freehold and Nonfreehold estates
          1. Freehold: Fee simple, fee tail, and life estate (highest form of holding under feudal tenure)
          2. Nonfreehold: Leasehold estates
            1. Seisin: Freeholder in possesion has seisin, whereas a leaseholder only has possession. Important in feudal times. A person seised of the land was responsible for feudal services, and feudal incidents (taxes) were due on the death of a person holding seisin. To keep wealth flowing, someone always had seisin. There could be no abeyance.
        3. Hierarchy: Fee simple > Fee tail > Life estate
        4. No other estates are allowed.
    2. The Fee Simple
      1. Fee Simple Absolute: Absolute ownership as far as our law allows
        1. Potentially infinite duration
        2. No limitations on inheritability
        3. Cannot be divested, nor will it end on the happening of any event
        4. Alienability: Owner can sell, can be forced to sell by creditors
        5. Divisibility: Will
      2. Words of purchase and words of limitation: “To A” are WOP indicating to who, “and his heirs” are WOL indicating what interest is being given to A
      3. Creation of the fee simple
        1. Common Law: “To A and his heirs”
        2. Modern Law: “To A” is sufficient
        3. Heirs have no present interest. A can do whatever the hell he/she wants with the land.
      4. Inheritance
        1. Heirs: if a person dies intestate (w/o a will), the decedent’s real property descends to his or her heirs (a living person has no heirs until he dies)
          1. Preference: first issue; if no issue, parents; and if none, collaterals
          2. Spouse: not an heir at common law; In most states, this is abolished and a spouse gets a fractional share as heir of the decedent
          3. Next of Kin: Person who succeeds to the personal property of an intestate decedent under the applicable statute of intestate succession. Today, all children share equally.
          4. Issue: descendants
          5. Ancestors: parents
          6. Collaterals: brothers, sisters, nephews, nieces, uncles, aunts, cousins. (Blood relatives not parents or children).
          7. Escheat: now, property escheats (s-cheat) to the state where the property is located if there are no heirs
          8. No limitations can be put on the inheritability of the fee simple (as opposed to fee tail).
        2. Typical statute:
          1. Share of spouse: 1/2 to spouse, 1/2 to issue, if no issue->parents, if no parents->spouse
          2. Share of issue: all children share equally (after 1/2 to spouse)
        3. Devisee and legatee: If a decedent leaves a will, the persons who are devised land are called devisees. Persons bequeathed personal property are legatees. Heirs exist only when there is no will.
    3. The Fee Tail
      1. Almost universally abolished.
        1. Can be disentangled and converted into a fee simple by deed.
      2. Creation: “To A and the heirs of his body”
      3. Descends to the tenant’s lineal descendants and expires when all are dead.
      4. Secures land for heirs by making it inalienable.
    4. The Life Estate
      1. Definition
        1. An estate that has the potential duration of one or more human lives.
        2. Very common today, particularly life estates in trust. When property is held by X in trust for A for life, A is entitled to all the rents and profits or other income from the property.
        3. If A transfers his life estate to B, B has a life estate pur autre vie – an estate measured by A’s lifespan, not B’s (since A cannot convey more than A has)
        4. Every life estate is followed by a future interest
          1. Either a reversion in the transferor
          2. Or a remainder in a transferee
      2. Types of Life Estates
        1. Legal life estate: the owner of the life estate owns the legal right of possession/use
        2. Equitable life estate: creates triangular ownership form. O grants Blackacre to a trustee, trustee manages Blackacre for the benefits of someone else. Trustee invests the assets, runs the farm, etc. to create a flow of income to beneficiaries. Trustee has legal ownership and beneficiaries have equitable ownership.
      3. White v. Brown
        1. Rule: The law presumes a fee simple interest was conveyed. To overcome this presumption, the will, when taken as a whole, must clearly show the intent to convey only a life estate.
        2. State statute stated this presumption.
          1. Economic Utility: bigger pieces of property are more usable, alienable, and give incentives for development, etc.
      4. Waste
        1. Definition
          1. Conduct by the tenant that permanently impairs the value of the land or the interest of the person holding title or having some subsequent estate in the land. Common law form of action exists against the life tenant for damages to the land
          2. Rationale
            1. Grantor intends that the life tenant shall have use in a reasonable manner, but that the land shall pass to the owner of the remainder unimpaired in its nature, character, and improvements
            2. When two or more persons own interests in land, fairness requires that one shall not impose severe economic damage on the other
        2. Types of waste
          1. Affirmative (voluntary): Actively causing permanent injury
          2. Permissive (involuntary): Life tenant allows property to go into disrepair
          3. Ameliorating waste: Life tenant substantially changes principal use of the land but the change increases the value of the land
          4. “Open mines” rule: life tenant only allowed to mine if mines on property opened before LE created
        3. Baker v. Weedon
          1. Rule: A judicial sale of land which is subject to future interests is proper when the sale of the land is merited by waste and when it is in the best interest of all the parties
          2. Tension: between interest of the life estate and the remainder holders
          3. Life tenant can have a judicial sale with appointment of a trustee to reinvest the proceeds
            1. Unless the decedent contended that the specific land was to go to the remaindermen
              1. But even if the remaindermen were to receive the land, a judicial sale could still be ordered if the value of the land was in jeopardy
          4. Here, there was not waste as the farm was not deteriorating and there was enough income from rental to pay taxes (but just barely)
          5. And while a judicial sale would be in the interest of Anna, it would not be in the interest of the grandchildren
          6. Court remands with the suggestion that part of the land be sold to keep Anna comfortable for the rest of her life and the rest retained for eventual sale by the grandchildren
    5. Defeasible Estates
      1. Miscellaneous
        1. Grantor creates two interests (present possessory and future)
        2. Defeasible fee simples are not absolute but have the potential of infinite duration (type of fee simple)
          1. Note: grantor can also create a defeasible life estate. Ex. “to A for life or until remarriage” creates a life estate determinable. Rare.
        3. Grantor creates a defeasible estate to control certain aspects of the land and the possessor’s conduct on that land. Effectuates grantor intent.
        4. If a condition is breached the land is or may be forfeited. Condition is much more onerous than a covenant, where breach results in injunction or damages.
      2. Fee simple determinable: will end automatically when a stated event happens
        1. Language:
          1. “so long as premises are used for…”
          2. “during the continuance of …”
          3. “until X no longer uses the land for…”
          4. “unless…”
          5. “while…”
            1. The word “only” indicated that the estate was a fee simple determinable. [Mahrenholz v County Board of School Trustees]
        2. Future Interest: grantor has a future interest called a possibility of reverter (may be retained expressly or may arise by operation of law). Third party has a future interest called executory limit.
        3. Forfeiture: fee simple automatically reverts to the grantor
        4. Adverse possession clock starts on reverter.
        5. Mod: transferable. Old: Not transferable during life.
      3. Fee simple subject to condition subsequent: does not automatically terminate but may be cut short at the grantor’s election when a stated condition happens
        1. Language:
          1. “but if…”
          2. “provided, however, that when the premises…”
          3. “on condition that if the premises…”
        2. Future Interest: grantor retains a right of entry (does not have to be expressly retained by the grantor. If the words of the instrument are reasonably susceptible to the interpretation that this type of forfeitable estate was contemplated by the parties, the court will imply a right of entry. [Mountain Brow v Toscano]). Future interest in third party is executory interest.
        3. Forfeiture: not automatic. If the contingency occurs, grantor merely has the power to re-enter and terminate the estate.
        4. Adverse possession clock starts if holder uses option and is rebuffed.
          1. Doctrine of Laches: Equitable defense when a holder of a right waits too long and recovery would be unfairly prejudicial
          2. Minority: Adverse possession clock starts immediately
        5. Modern: transferable. Old: Not transferable.
      4. Fee simple subject to executory interest: future interests (possibility of reverter and right of entry) may be retained only by the transferor and his heirs. When it is created in a transferee, it is an executory interest. So, on the happening of a stated event, the fee simple is automatically divested in favor of a third person (see infra).
      5. Mahrenholz v. County Board of School Trustees
        1. Rule: fee simple determinable is found where the construction of the language points to such a finding
        2. It can be difficult to determine a fee simple determinable from a fee simple subject to condition subsequent.
        3. If the court has a choice, a fee simple subject to condition subsequent is preferred on the ground that the forfeiture is optional at the grantor’s election and not automatic. The general policy of the courts is to avoid forfeiture of estates.
      6. Policy Question: How far forward does the intent of the grantor reach? How far should it reach? (you want to honor grantor’s intent but that intent might not make sense 100 years from now—farm in Midtown Manhattan)
    6. Restraints on alienation – disfavored for making property unmarketable, discouraging investment
      1. Absolute Restraint – void if on a fee simple
      2. Disabling Restraint – withholds power of transferring interest from grantee – absolutes void for L.E.
      3. Forfeiture Restraint – if grantee promises not to transfer interest, it’s forfeited – valid for life estates
      4. Promissory Restraint – grantee promises not to transfer, enforceable by damages/injunction (rare)
      5. Partial Restraint (e.g. limiting conveyance, putting time limit on restraint) – valid if reasonable

 

  1. Chapter Four: Future Interests
    1. Introduction
      1. Definition
        1. Nonpossessory interest capable of becoming possessory in the future. It is a present interest in the sense that it is a presently existing interest, and that’s why it’s called a future interest
    2. Future Interests in the Transferor
      1. Reversion (life estate): future interest left in the grantor after the grantor conveys an estate of lesser quantum
        1. May be expressly retained, i.e. O conveys Blackacre to A for life, then to revert to O.
        2. Lesser quantum determined by hierarchy of estates
        3. Is a vested interest; significant because it is alienable, accelerates into possession upon the termination of the preceding estate, and is not subject to the Rule Against Perpetuities
        4. Do not confuse with possibility of reverter; reversion is when O conveys a lesser quantum, possibility of reverter is when O carves out a determinable estate of the same quantum
      2. Possibility of reverter (fee simple determinable): future interest left in the grantor once the grantor carves out of her estate a determinable estate of equal quantum
        1. Cannot be created in a grantee
        2. Alienability
          1. Common Law: Not an existing interest, so therefore could not be transferred inter vivos; however, on the death of the owner, it was treated as a thing and it descended to heirs
          2. Modern Law: Freely alienable, both during life and by will; Now viewed as a property interest – alienability is an inherent characteristic of any property interest
          3. Releasable: A possibility of reverter, although inalienable to a stranger at common law, was releasable to the owner of the determinable fee. A release made the land marketable.
        3. Termination: Discussed below in connection with a right of entry.
        4. Valuation: When gov’t exercises eminent domain, and A owns a fee simple determinable and B owns the possibility of reverter:
          1. Majority Rule: Entire condemnation award belongs to A unless the fee simple determinable would expire within a reasonably short period
          2. Minority Rule: Determinable fee = Full fair market value of fee simple – value of land for uses permitted; Possibility of reverter = Full fair market value of fee simple – determinable fee
      3. Right of entry (fee simple subject to a condition subsequent): future interest left in the grantor when the grantor creates an estate subject to condition subsequent and retains the power to cut short the estate (once the happening of some event occurs)
        1. Example: O conveys Blackacre “to A and his heirs, but if intoxicating liquor is ever sold on the premises, O had a right to reenter and retake Blackacre.” A has a fee simple subject to condition subsequent; O has a right of entry for breach of the condition subsequent.
        2. Alienability:
          1. Common Law: Inalienable inter vivos b/c it was treated as a chose in action, and choses were inalienable. A right of entry could be released to the owner of the fee simple, and it was inheritable by the heirs of the grantor.
          2. Modern Law: In some states it’s alienable. Others, the common law is followed. Possibly in a few, the mere attempt to transfer the right destroys it.
        3. Termination:
          1. Common Law: Right of entry or possibility of reverter could endure indefinitely and was inheritable. Not subject to Rule Against Perpetuities. Remains the law in majority of states.
          2. Minority Rule: Some states limit period of existence to 30 years, after which fee simple becomes absolute. Some states make the termination statute retroactive.
    3. Future Interests in Transferees
      1. Remainders
        1. Definition: Future interest created in a grantee that is capable of becoming a present possessory estate on the expiration of a prior possessory estate created in the same conveyance in which the remainder is created. Never divests or cuts short the preceding estate; always waits patiently for the preceding estate to expire.
        2. Characteristics:
          1. Must have a preceding estate; Can only be created by express grant in the same instrument in which the preceding possessory estate is created and cannot arise by operation of law
          2. Must follow a fee tail, life estate, or term of years
          3. Must be capable of becoming possessory on natural termination of preceding estate; cannot divest a preceding estate prior to its normal expiration. A divesting interest is an executory interest.
            1. Example: “To A for life, then to B.”
            2. No remainder after a fee simple
              1. There can never be a remainder divesting a fee simple; any interest divesting or following a fee simple must be an executory interest. This applies to all fee simple.
        3. Classifications:
          1. Vested
            1. Characteristics
              1. Created in an ascertained person AND
              2. Not subject to any condition precedent
                1. Condition precedent is an express condition attached to the remainder, such as “to B if B reaches age 30”
            2. Subclassifications
              1. Indefeasibly vested remainders
                1. Holder of remainder is certain to acquire a possessory estate at some time in the future, and is also certain to retain permanently thereafter.
              2. Vested remainder subject to open
                1. It is vested in a class of persons, at least one of whom is qualified to take possession, but the shares of the class members are not yet fixed b/c more persons can subsequently become members of the class
                  1. Example: “To A for life, then to A’s children.” If A has no kids, it’s contingent. If A has a kid, B, A can still have more children, so it’s subject to open. B’s interest is “vested subject to partial divestment.”
                2. Class gifts
                  1. Gift to a group of persons described as a class, e.g. “children of A”. Class is either open or closed. A class is closed if it’s no longer possible for others to enter.
              3. Vested remainder subject to divestment
                1. Vested subject to being divested by the operation of a condition subsequent or vested subject to divestment by an inherent limitation of the estate in remainder
                  1. Illustration – condition subsequent
  1. O conveys “to A for life, then to B, but if B does not survive A, to C.” The vested remainder in B is subject to total divestment on the occurrence of a condition subsequent (B dying before A). C’s executory interest will divest B if this happens.
                  1. Illustration – inherent limitation
  1. O conveys “to A for life, then to B for life, then to C and his heirs.” B has a vested remainder for life subject to total divestment if B fails to survive A. The divestment occurs b/c of the inherent limitation in a remainder for life: It fails if it does not become possessory within the life tenant’s life. C has an indefeasibly vested remainder in fee simple.
                  1. Vested subject to open and to complete divestment
  1. A remainder can be both vested subject to open and to complete divestment. For example, O conveys “to A for life, then to the children of A, but if no child survives A, to B.” A, who is living, has a child, C. C has a vested remainder subject to open up and let in her siblings; it is also subject to complete divestment if A leaves no children surviving him.
            1. Alienability: Alienable inter vivos and devisable by will. Descends to heirs if not otherwise disposed of.
              1. Can be so limited that it’s not transmissible at death but is divested at death.
                1. “To A for life, then to B, but if B does not survive A, to C.” B’s vested remainder is not transmissible. If B dies during A’s life, B can pass nothing on B’s death. C’s executory interest would divest B at A’s death and become a vested remainder.
          1. Contingent
            1. Characteristics
              1. EITHER created in an unascertained person OR
              2. Subject to a condition precedent
            2. Remainders in unascertained persons
              1. Not yet born or can’t be determined until the event
                1. Unborn children
                2. Heirs – you don’t have heirs until you die, only an “heir apparent”. To be an heir, you must survive the decedent.
                3. Reversion: In each of the above, there is a reversion in O. Whenever O creates a contingent remainder in fee simple, there is a reversion in O. Whenever O creates a vested remainder in fee simple, there is never a reversion in fee simple in O.
            3. Remainders subject to condition precedent
              1. A condition precedent is an express condition set forth in the instrument (other than the termination of the preceding estate), which must occur before the remainder becomes possessory.
                1. What is a condition precedent
                  1. A condition expressly stated in the instrument. For example, “to A for life, then to B if B marries C.” B has a remainder subject to a condition precedent, with the condition that B marry C. If B marries C during A’s life, the remainder vests indefeasibly in B.
                2. What is not a condition precedent
                  1. Termination of the preceding estate.
                  2. Superfluous words
                  3. Survivorship
  1. For example, “to A for life, then to A’s issue, and if A dies without issue, to B”, B’s interest is contingent on A dying w/o issue, not B surviving A. If B died before A, B’s heirs would inherit.
            1. Distinguish – conditions subsequent
              1. If the conditional element is incorporated into the description of, or into the gift to the person taking the remainder, then the remainder is contingent (condition precedent); BUT if, after words giving a vested interest, a clause is added divesting it, the remainder is vested (condition subsequent).
              2. LOOK AT THE COMMAS
                1. All info within the commas: contingent remainder (condition precedent)
                2. Separated by commas: vested remainder subject to divestment (condition subsequent)
              3. Whether a condition is precedent or subsequent depends on the words of the instrument. The words must be read in sequence and the interests classified in sequence.
                1. Example: “to A for life, then to B,  but if B does not survive, to C.” B has a vested remainder subject to divestment by C’s executory interest. The words “then to B” give B a vested remainder; the clause following is a divesting clause, giving the property to C if B dies before A.
                2. Example: “to A for life, then to B if B survives A, but if B does not survive A, to C.” B & C have alternative contingent remainders. A condition precedent has been expressly attached to B’s remainder. O intended exactly the same thing as in the preceding example, but her intention was phrased differently. Here, O stated the condition of survivorship twice, once in connection with each remainder.
              4. Reversion in O with alternative contingent remainders
                1. In the preceding examples, O has a reversion if the life estate terminates before the death of A by forfeiture or merger. Or A & B could die simultaneously.
                2. However unrealistic, in classifying future interests on an exam, you must assume that the life estate can terminate before the death of the life tenant by forfeiture, merger, or simultaneous death of the grantees.
              5. Preference for vested remainders
                1. If the instrument is ambiguous, the law favors a vested construction rather than a contingent one.
                  1. Example: “to A for life, and at his death to A’s children, the child or children of any deceased child to receive his or their deceased parent’s share.” A’s children take a vested remainder subject to condition subsequent at birth. Each child’s interest is subject to being divested by their own children if he dies before A.
                  2. In the above example, the condition subsequent does not operate to divest a child of A who dies before A without children. If A had two kids, B and C, and C had a kid D, and B and C both died before A, B’s share would go as devised under his will or to his heirs, but C’s share would be divested to D.
                2. The law favors early vesting. Thus, the preference is for vested remainders subject to divestment rather than contingent remainders or executory interests.
            2. Alienability
              1. Vested remainders have always been alienable. Under the common law, contingent remainders were not alienable inter vivos at common law, except in equity for a valuable consideration, by operation of the doctrine of estoppel, or where released to the owner of the possessory interest.
                1. Modern Law: Contingent interests are alienable inter vivos or, when survivorship is not a condition precedent, devisable by will. Of course, if the remainder is contingent because the limitation is to an unborn person, there is no one to make the conveyance, so the interest is inalienable.
                2. Creditors: If debtor can voluntarily transfer it, the creditor can reach it.
        1. RULE: If the first future interest created is a contingent remainder in fee simple, the second future interest in a transferee will also be a contingent remainder. BUT if the first future interest created is a vested remainder in fee simple, the second future interest in a transferee will be a divesting executory interest.
      1. Executory Interests
        1. Definition
          1. An executory interest is a future interest in a transferee that must, in order to become possessory,
            1. Divest or cut short some interest in another transferee (shifting executory interest), OR
            2. Divest the transferor in the future (this is known as a springing executory interest)
        2. Springing Executory Interest: future interest in a grantee that springs out of the grantor at a date subsequent to the granting of the interest, divesting the grantor
          1. Ex. O conveys “to A and her heirs if A quits smoking.” A has a springing executory interest that will divest O, the grantor of the fee simple.
        3. Shifting Executory Interest: future interest in a third party that divests a preceding estate in the grantee prior to its natural termination (divests the prior interest)
          1. Example: O conveys “to A and his heirs, but if B returns from Rome, to B and his heirs.” A has a fee simple subject to an executory interest. (B’s interest cannot be a remainder, because it is a divesting interest, and remainders never divest)
          2. Example: O conveys “to A for life, and on A’s death, to B and his heirs, but if B does not survive A, to C and his heirs.” A has a life estate. B has a vested remainder subject to divestment. C has a shifting divesting executory interest.
        4. An Oddity: An executory interest is always springing or shifting except in the case of a future interest in a grantee following a fee simple determinable. This executory interest is neither because the fee simple determinable ends by its own special limitation. The executory interest does not divest it but rather succeeds it.
    1. The Trust
      1. The trustee holds legal title to the trust property and manages that property for the benefit of the beneficiaries
      2. The trustee is the legal owner, but is subject to orders of an equity court, which enforces the trustee’s duties to the beneficiaries, who are said to hold equitable interests (interests enforceable by the court of equity)
      3. The trustee must act for the exclusive benefit of the beneficiaries and is not permitted to benefit personally. Trustee is a fiduciary and has a duty of loyalty.
      4. Benefits:
        1. The settlor of the trust can protect the beneficiaries’ interests by making them inalienable (beneficiaries cannot transfer their trust interests and creditors cannot reach them)
        2. “perpetual” or “dynasty” trusts: trusts that can control the disposition of wealth forever into the future
    2. Rules Furthering Marketability by Destroying Contingent Future Interests
      1. The Rule Against Perpetuities
        1. Test
          1. what is the condition
          2. who is the validating life for that condition
          3. when the validating life dies will we know if the condition has happened?
          4. Note: ignore clauses that don’t apply; strike those that violate.
        2. Application:
          1. Applies to: contingent remainders and executory interests
          2. Does not apply to: vested remainders, reversion, possibility of reverter, right of entry
        3. Policy: Destroy contingent interests
          1. Furthers marketability of the land
            1. Contingent remainders make the land unmarketable (someone with a present interest might not develop the land because he doesn’t know if contingent future interests will be realized)
          2. Eliminates concentration of wealth
          3. Power of ancestors should only reach so far (dead hand problem)
        4. “No interest is good unless it must vest, if at all, not later than 21 years after some life in being at the creation of the interest”
          1. No interest: only contingent future interests in 3rd parties
          2. Is good: test applied to contingent future interests in 3rd parties
          3. Unless:
            1. It must vest: with 100% certainty
            2. If at all
            3. Within the RAP period: must the interest vest within the period of lives in being + 21 years? If the interest must vest within the period, it is good/valid. If the interest may vest, it is bad/void.
        5. Lives in being: look for a person in being when the future interest is created who enables you to prove the interest will vest or fail during that person’s life, or at that person’s death, or within 21 years after that person’s death. If you find such a person, that person is the validating/measuring life.
        6. Remote possibilities:
          1. The fertile octogenarian: the law conclusively presumes that a person can have children so long as the person is alive.
          2. The unborn widow: the law assumes that a person’s surviving spouse might turn out to be a person not now alive
        7. Symphony Space v. Pergola Properties
          1. Rule: Courts are hostile to interests that may vest remotely (not within 21 years)
          2. Court treated the purchase option as a contingent remainder. Since the purchase option could have been exercised in 2003, 25 years after purchase option was created, it was void.
          3. Court could have saved the option:
            1. Saving statute: when there is a problem with the RAP, a court can reform the grant to make it fit within the RAP
            2. Not apply the RAP to the purchase option and use pre-emptive options (the right of first refusal): the owner must offer it to the option holder before anyone else (different than a purchase option)
              1. In NY law: RAP did not apply to pre-emptive options
                1. With a pre-emptive option, the owner gets to decide whether or not to sell. With a purchase option, the option holder decides when there will be a sale. Courts thinks the purchase option is more destructive to improvement of property.
                2. Adopt “Wait-and-See” Approach: see infra
        8. Reform Movement
          1. Trad: Strike the interest. Prior valid interests stand.
          2. Reform Movement – Liberalizing of the doctrine
          3. Early reforms
            1. 1. focus on actual rather than possible facts existing at the end of the estate preceding the future interest in question
            2. 2. statutory repairs designed to avoid purely technical violations
            3. 3. cy pres: immediate reformation. Construe a violating interest to effect the ascertainable general interest of the creator.
            4. 4. wait and see approach.
          4. Uniform Statutory Rule Against Perpetuities (USRAP)
            1. Provides for a 90-year permissible vesting period. Though it’s not always necessary to wait the full 90 years.
          5. Qualified Abolition of the Rule and the Rise of the Perpetual Trust
            1. ¼ of states have statutes that abolish RAP in the case of trusts containing a power of sale in the trustee 
        9. Policy
          1. This rule is about centralizing and clarifying ownership. Its against perpetual uncertainty, not perpetual ownership.
          2. Courts disfavor contingent interests as they make land unmarketable. (Can’t see the future and want to make sure land is used wisely. Want to eliminate dead hand.)
          3. Allow perpetual (“dynasty”) trusts if the trustee has the power of sale.

 

  1. Chapter Five: Co-ownership and Marital Property
    1. Tenancy in common (only difference w/ joint tenancy is survivorship rights; otherwise all the rules apply equally) -> no survivorship rights in remaining tenant once other tenant dies.
      1. Ex: T devises the property “to A and B.” If B dies, B’s heirs or devisees are tenants in common w/ A.
        1. note -> when heirs inherit property by intestate succession, they ALWAYS take as tenants in common
      2. possession -> Each tenant owns a separate but undivided share of the whole, including right to possession of the whole
        1. note -> equal interests and same type of estate not necessary (ex: A owns ¾ of the land and B ½. A dies, devising her interest to C for life, then D. C owns a life estate and D a remainder as tenants in common w/ B.)
      3. alienability -> can sell, give, devise, or dispose of share as if tenant in common were the sole owner
        1. remember -> whoever takes the property becomes tenant in common
      4. Modern rule -> presumption of tenancy in common whenever a conveyance is made to 2+persons who are not husband and wife—intent to create a joint tenancy must be expressly declared
        1. ex: unmarried couple create tenancy by the entirety. This is tenancy in common.
      5. life estates + leases—can have tenants in common for life or tenants in common for a leasehold—does not have to be fee simple interest
    2. Joint Tenancy -> each tenant owns an undivided whole of the property w/ survivorship rights—joint tenants are one entity w/ EQUAL interests.
      1. Survivorship rights: If A dies, B is sole owner of the property b/c A’s interest disappears from the joint tenancy
        1. note -> avoids probate of will b/c no interest passes to the surviving joint tenant
        2. remember -> joint tenant cannot devise his interest by will b/c upon his death it vanishes
      2. Four Unities traditionally needed to create joint tenancy
        1. Possession—equal right to possess the whole property
          1. one joint tenant can voluntarily give exclusive possession to the other
        2. Interest—equal undivided shares and identical interests (type of estate)
          1. ex: O -> one-half to A and his heirs and one-half to B for life, A and B to hold as joint tenants. A and B are tenants in common.
          2. Ex: O -> one-half undivided interest to H and W as joint tenants and one-half interest to A. H & W are joint tenants to their ½ interest. H& W and A are tenants in common to the whole.
          3. Note -> modern rule: many courts ignore requirement of equal interests
        3. title—must acquire title by the same deed or will
          1. Creation in self -> ”O -> O and A as joint tenants”—modern rule: creates joint tenancy and don’t need strawman
        4. time—interest of each tenant must VEST at the same time
          1. ex: O -> A for life, then to the heirs of A and the heirs of B as joint tenants. Remainders vest at diff times b/c heirs not ascertainable until A and B die. Heirs take as tenants in common.
      3. severance of joint tenancy -> joint tenant can terminate the joint tenancy unilaterally (i.e. 1 of the 4 unities destroyed), creating a tenancy in common (no survivorship rights)
        1. Conveyance by joint tenant -> severs joint tenancy w/ respect to that share (remember—equal shares, so if 3 joint tenants, each owns 1/3 share)
          1. Ex: O -> A, B, and C as joint tenants. A conveys his interest to D. B and C hold 2/3 as joint tenants and D 1/3 as tenant in common w/ B and C. B then dies intestate, leaving H as his heir. C now has 2/3 interest via survivorship rights. D has 1/3 interest as tenant in common w/ C.
            1. Remember—D is not joint tenant w/ B and C b/c D does not have unity in time and title
          2. Ex: O -> A and B as joint tenants. A conveys to D. D and B each own ½ interest as tenants in common. No joint tenancy among anyone!!
        2. Conveyance to self -> Riddle v. Harmon—a joint tenant can unilaterally terminate the tenancy and create a tenancy in common by conveying her interest to herself (i.e. deed—doesn’t have to be recorded) w/o using a strawman
          1. Common law rule: joint tenant must convey title to strawman who would convey title back as tenancy in common
        3. murder of one joint tenant by another -> murderer cannot take the victim’s share by right of survivorship (severs joint tenancy/tenancy by entirety and creates tenancy in common).
          1. Ex: A murders B. A gets ½ of the property and B’s estate gets ½.
        4. simultaneous death of all joint tenants -> Uniform Simultaneous Death Act says the estates of each joint tenant gets the tenant’s proportion of the whole (i.e. divided equally as if each had survived and jt became tic)
          1. Ex: A and B die in plane crash. ½ goes to A’s estate and ½ B’s estate.
          2. Ex: A and B are in car crash. No signs of life in A. B is decapitated w/ spurting blood, indicating he is still “alive.” B’s will coveys everything “to the children of his 1st marriage,” Children get the property b/c B had survivorship rights by outliving A, even by one second.
        5. Lien theory states
          1. Most states hold that the mortgagee (lender) does not have legal title, but rather a security interest called a lien. Legal title remains in the mortgagor (borrower). In lien theory states, a mortgage does not sever the joint tenancy but the states differ on whether the surviving joint tenant takes one-half subject to the mortgage if the debt is not paid off before the debtor joint tenant dies.
            1. Example: Harms v. Sprague
              1. William and John go into a joint tenancy on property. John later wills all of his property to Charles as collateral on a mortgage.
              2. If severance has not occurred, then the mortgage is in nothing, William takes all. If severance has occurred, then the mortgage would not have been destroyed, and you would have a tenancy in common interest.
              3. The trial court concludes that the mortgage severed the joint tenancy. It continued as a 1/2 common interest in the lien that continues to Charles. PAY ATTENTION TO THE METHOD THEY USE IN THIS CASE.
              4. We have these cases that say that liens do not sever.
              5. Argument on the other side: the lien, in effect, is signing over the title, destroying one of the unities, and cause the J/T to become a T/C.
              6. It is a question of how we characterize this act; do we say it’s a title transfer or something less than that? The Kling case that is cited is really important here. B/c the court uses Kling by analogy, it is not considered to be a transfer of title, but a lien; it rejects the title theory and accepts the lien theory of mortgaging.
      4. Indestructible survivorship rights—created through express writing in instrument creating the joint tenancy. Joint tenants cannot destroy right of survivorship by severing the joint tenancy.
        1. Ex: O -> to A and B as joint tenants for their joint lives, remainder to the survivor. A then conveys her entire interest to X. X has life estate (A’s ½ interest) + contingent survivorship rights. If A dies first, B gets the entire property b/c A did not destroy his survivorship rights. If B dies first, X gets the entire property.
    3. tenancy by the entirety -> only in husband and wife
      1. overview -> must have four unities + unity of marriage—husband and wife hold as one person
        1. Divorce terminates tenancy into tenancy in common (only way to get right to partition)
        2. surviving tenant has INDESTRUCTIBLE right of survivorship
          1. note -> cannot separately destroy the right of survivorship by a conveyance to a third party
      2. default rule: joint conveyance to husband and wife creates tenancy by the entirety
        1. exception#1 -> deed expressly creates another type of joint ownership
        2. exception#2 -> community property states (i.e. CA) do not have tenancy by entirety—married couples enter joint tenancies
    4. Relations among concurrent owners
      1. liability for rent to co-owners -> Spiller v. Mackerethtenant in common/joint tenant DOES NOT have to pay rent for use of the property to other co-owners UNLESS the co-owner can prove she was OUSTED.
        1. ouster -> any sort of exclusion of another co-tenant/joint tenant from use and possession of the property
          1. remember -> disliking how another co-owner uses the property is not an ouster
        2. Ex: M and S are tenants in common. S began using their vacate warehouse and M demanded ½ rental value. If S denied M a key or filled the entire warehouse w/ boxes preventing M from storing anything, M would have been ousted.
          1. note -> co-owners must be reasonably careful w/ other owners personal property on the realty
      2. leases -> Swartzbaugh v. Sampson—husband and wife own property jointly. H entered lease w/o W. Held. W and lessee are co-tenants for term of the lease. Just b/c she is an owner of the realty does not give her superior rights.
        1. Rule: Co-owner (tenant in common or joint tenant) has the right to lease her interest, even over the objection of the other owner. However, tenant has NO RIGHTS against the other owners if they are not parties to the lease contract (no 3rd party detriment). Tenant can only exclude from the property the owner that entered into the lease. ALL other owners can enter the property and share possession w/ the tenant.
          1. note -> if tenant doesn’t let wife on the land, he has ousted her and must pay her fair market rent value for his share. (Spiller)
        2. 3rd party conferring benefit -> rule:
      3. adverse possession against co-owner -> NO adverse possession claim b/c co-owner not a trespasser and thus SOL never begins to run.
        1. note -> this rule applies to tenant/landlord or tenant/co-owner that didn’t sign lease b/c tenant has right to possession
      4. monetary income generated from the property
        1. general rule: co-owner not entitled to ANY monetary income from the other co-owner
          1. this includes no right to contribution from co-owners (ex: if one co-owner fixes the roof, the other co-owner does not have to pay ½)
        2. exception -> 3rd party conferring the benefit: if 3rd party gives money to one co-owner for use of the property, the other co-owner is entitled to half.
          1. Ex: Wife entitled to ½ the rent from lease b/w 3rd party and husband
    5. Right to Judicial Partition -> General Rule: ANY ONE co-owner (in joint tenancy, joint tenancy w/ indestructible survivorship rights, or tenancy in common) can ask the court to physically partition the land (partition in kind) or order the land sold and divide the proceeds based on share in the land (partition by sale) when the owners have a dispute over the realty.
      1. Partition in kind vs. partition by sale -> which type are parties entitled to?
        1. Black Letter Rule: partition in sale should be ordered only when two conditions are satisfied: (1) the physical attributes of the land are such that a partition in kind is impracticable or inequitable and (2) the interests of the owners would be better promoted by a partition in sale.
          1. Burden of proof -> on the party requesting partition by sale to demonstrate that such a sale would better promote the owner’s interest
        2. Modern trend -> partition by sale esp w/ multiple co-owners
          1. Improvements—subtract from value of the land and split remainder
      2. Ex: Delfino v. Vealencis -> P and D tenants in common. P wants to sell the property to create residential subdivision and wants partition by sale b/c D’s garbage business will have adverse economic impact upon the sale of the land. Held. D has right to partition in kind, keeping part w/ her house and business. D had strong interest in partition in kind b/c her livelihood is tied to the land. (bad decision b/c technically Ps house too and P never demanded rent).
    6. Rights of Tenants during Marriage -> tenancy by the entireties—4 categories of states:
      1. common law tenancy by the entirety -> possession and property of estate subject to husband’s exclusive control
      2. interest of one spouse in the estate may be sold or taken by creditors subject to the other spouse’s contingent right of survivorship
        1. creditor can get present + future interest -> any conveyance by debtor spouse separately is fraudulent
          1. Hypo: H and W convey to their sons. W’s conveyance not fraudulent. Sons hold present and future interests by the mother while creditor hold present and future interests by the father. If H outlives W, creditors get ALL the property. If W outlives H, sons get the property.
        2. Tenancy by entirety treated as tenancy in common w/ alienable survivorship rights
      3. single spouse can do nothing w/o consent of the other spouse + estate may not be subject to the debts of one spouse
        1. creditor has NO present or future interest
          1. husband and wife can transfer the house—never fraudulent
        2. ex: Sawada v. Endo -> P in car accident w/ D. D + wife conveyed their property to their sons after P filed suit. D could not pay damages. P claimed the conveyance was fraudulently. Held. D’s interest in the property is not subject to his creditors and conveyance was legal.
      4. right of survivorship is alienable separately and attachable by one spouse’s creditors during marriage but the use is not alienable separately
        1. creditor has NO present interest but has future interest (gets survivorship right of the husband)
        2. Husband had right to transfer his present interest to his sons (not fraudulent). But if husband outlives wife, creditor gets the property.
          1. 1st conveyance to sons not fraudulent. But if sons convey (present + future interest) that would be fraudulent b/c sons don’t have full survivorship rights to convey—done to prevent creditors from receiving the property if wife dies 1st.
            1. note -> If buyer doesn’t have notice of creditor’s interest, he is BFP against creditor and gets the property.
          2. Creditor MUST file paper at ct house to put buyers on notice that they would only be buying the wife’s survivorship rights (buyer not BFP) 

 

  1. Chapter Six: Tradition, Tension, and Change in Landlord-Tenant Law
    1. The Leasehold Estates
      1. The Term of Years
        1. Agreed for a fixed time period OR upon the happening of specific event
        2. At the end of the period the lease terminates automatically—no notice is required
        3. Time period
          1. At common law there is no limit
          2. Modern law limits the duration
        4. Could have determinable tenancies
          1. Term is for a fixed period and terminable if a specified condition occurs
            1. O conveys “To A for 25 years so long as A wears red pants in public”
          2. This can also be for a unilateral severance
            1. O conveys “To A for life or so long as he desires” [Garner v. Gerrish]
      2. The Periodic Tenancy
        1. This is your average month to month tenancy
          1. For a fixed period but continue for succeeding period until either the landlord or tenant gives notice of termination—notice required to terminate
            1. Common Law: Notice must usually be given one period in advance, except when the period is a year or longer; for a year -> 6 months
              1. Modern Trend: allow for shorter notice
              2. Notice must be the last day of the period
            2. Without notice, automatically extended
            3. Can only terminate at end of period
        2. Periodic tenancies can be determinable
      3. The Tenancy at Will
        1. Terminable at the will of either landlord or tenant; no fixed period
          1. Traditionally: if one party has the right to terminate, then both do
            1. Maj: find implied tenancy at will
            2. Min: possible for only the tenant to have the right, and thus have a determinable life estate [Garner v Gerrish]
          2. Modern: Most state have a notice period. Usually 30 days.
            1. Old: terminates immediately on notice
            2. Presumably death of party will end the will
        2. Trend: although perpetual rights are disfavored, if intent is clear, enforce the agreement.
        3. This tenancy is personal and can’t be conveyed
        4. Statute of Frauds
          1. All leases must be written except those for 1 year or less. An oral lease for more than a year creates only a tenancy at will.
      4. Tenancy at Sufferance
        1. Deliberate acquiescence in occupation of property.
          1. Normally arise after a lawful interest terminates. Ex: holdover.
        2. Landlord Options. EITHER (and can’t change mind)
          1. Evict the tenant and collect damages
          2. Bind the tenant to an additional term. Expressly or impliedly creating a new tenancy
            1. Holding over.
              1. Accepting and cashing holdover tenant’s check implies acceptance of holdover [Crchale & Polles v Smith]
              2. Maj: holding over creates a periodic tenancy. Generally the same as the old term, up to max one year
              3. Min: Creates a term of years tenancy
      5. *Distinctions Matter – Categorical difference in the termination rights (and assignability)
    2. The Lease
      1. lease is both a conveyance and a contract for a non-freehold estate
      2. Property – Lease conveys a short term possessory interest in the land, so it creates a property right. Tenants have exclusive possession and control during the leasehold.
      3. Contract – Lease also contains covenants such as the promise to pay rent, provide utilities, etc
      4. Statute of Frauds – requires writing for terms of one year or longer.
      5. Bargaining Power – not totally eliminated due to market economics
        1. Form leases avoid transactional costs and don’t eliminate power as expected
      6. Mutual Dependency
        1. If one side breaches their part of the contract, the other side must still fill theirs
          1. This is different from contract law and material breach theory
        2. The LL must do everything possible to mitigate damages that result from tenant’s breach
          1. This is similar to mitigation theory in contracts
      7. Note:
        1. Future Interests
          1. A future interest is always created with leaseholds
            1. Reversion if retained by the landlord
            2. Remainder if provision is made for some third party
        2. Responsibility for destruction of property
          1. Common law the tenant was responsible –LL leased actual property, not the buildings
          2. Modern law it is the responsibility of the LL
    3. Delivery of Possession
      1. Paramount Title
        1. LL has duty to transfer to the tenant at the beginning of the tenancy the legal right to possession. If someone else has paramount title (i.e., superior title) and is legally entitled to possession, LL is in default.
          1. Remedies prior to entry
            1. May terminate if unaware
            2. If tenant knows at the signing of the lease, T is presumed to waive the possibility of eviction by a paramount claimant.
          2. Remedies after entry
            1. The tenant has no remedy unless T is actually evicted by paramount title.
      2. Two rules governing possession [Hannan v. Dusch]
        1. English/Majority/Contract/Restatement 2: Landlord implies a covenant to deliver possession to the tenant and must get rid of any holdover.
        2. American/Minority/Property: No implied covenant. Tenant’s remedy is against the person wrongfully in possession.
          1. There is a duty for the LL to put lessee in legal, not actual possession.
            1. This is satisfied when there are no other legal claims to possession
          2. Policy: No reason for the lessor to he held accountable for the wrongs of a third party, lessee has a cause of action against the holdover tenant
          3. Counter Policy: the landlord has superior information to keep this from happening; they can write leases as to not be back to back
    4. Subleases and Assignments
      1. Tenant Transfer
        1. Determining one from the other [Ernst v. Conditt]
          1. Old Maj: Focus on the length of the term
            1. If for the entire remaining term, then it’s an assignment
            2. If for less than the remaining term, then it’s a sublease
          2. Mod Trend: Focus on the intent of the parties
            1. Language of the instrument in light of surrounding circumstances
            2. Use of term “sublet” in instrument is not dispositive
        2. Assignment
          1. Transfer of entire property interest for unexpired term. No future interest.
          2. Privity of contract
            1. Landlord and tenant have privity of contract [L–>T]
              1. Tenant may remain liable for covenants—unless granted novation
              2. Landlord has secondary rights against tenant as a surety (
            2. Tenant and assignee have privity of contract [T–>A]
            3. Landlord and assignee CAN have privity of contract. [L–>A]
              1. Only have if they enter into a contractual relation-1 or 2 above.
              2. If so, Landlord has primary right against assignee and can sue directly. Sue form the bottom up—that is who is enjoying premises.
          3. Privity of estate (only one can have)
            1. Extinguished between landlord and tenant [Lx T]
            2. Created between landlord and assignee [L–>A]
        3. Sublease
          1. Does not convey the whole term. Reversionary interest in sub-lessor.
          2. Privity of contract
            1. Landlord and tenant have privity of contract [L–>T]
            2. Tenant and sub-lessee have privity of contract [T–>S]
            3. Land and sub-lessee do NOT have privity of contract. Landlord may not sue the sub-lessee directly. Must recover through tenant [Lx S]
          3. Privity of estate (only one can have)
            1. Not affected. Remains between landlord and tenant [L–>T]
        4. Two ways to get privity of contract:
          1. enter into agreement
          2. third party beneficiary theory of contract
        5. Remain in privity of contract for as long as contract. Under privity of estate for length of estate.
      2. Alienability
        1. Default: free transferability of leases (it’s a property right!)
        2. When covenants again assignments/subleases are valid, they must be narrowly construed
          1. Landlord can waive covenant through express or implied consent.
        3. Two ways to view this:
          1. property analysis: restraint on alienation
          2. contract analysis: restraint of good faith and fair dealing
        4. Majority – landlord may arbitrarily refuse to accept new tenants
        5. Trend/Minority/Restatement – Landlords refusal must be reasonable [Kendall v Ernest Pestana, Inc.]
          1. Especially true in commercial properties.
          2. Commercially reasonable test
            1. 1. Financial responsibility of proposed assignee
            2. 2. Suitability of the use for the particular property
            3. 3. Legality of the proposed use
            4. 4. Need for alternation of the premises
            5. 5. Nature of the occupancy
            6. Class: credit concerns, neighbors, useage will make less valuable
          3. Policy
            1. Unreasonably withholding consent is an unreasonable restriction on alienation
            2. We shouldn’t let lessors get out of contracts they freely bargained for under a technicality just so they can get more rent
            3. Wouldn’t be able to raise rent if absent an assignment request; this keeps them in the same position, no detriment
    5. The Tenant Who Defaults
      1. There are statutes in every state that allow for a expedited proceeding to recover possession from a tenant.
        1. The LL gives notice for an expedited proceeding along a very narrow basis; there’s no counterclaim allowed for P. In theory, P can bring another action for unlawful eviction. However, in reality, with low-income tenants, summary proceeding is usually the end of it.
      2. The Tenant Who Has Abandoned Possession
        1. LL’s 4 Options:
          1. Sit back and wait until the end of the term, or sue as each cause of action accrues
          2. Accept surrender and end the lease. No future liability for tenant.
          3. Relet the Premises for Tenant’s Benefit [Sommer v. Kridel]
            1. This is essentially mitigation
            2. The new tenant is a substitute, who offsets the breaching tenant’s responsibility, but this is not an acceptance of surrender
            3. So if the rent is lower, original tenant is still liable
          4. Anticipatory Breach
            1. Some jurisdictions allow a suit for all rents owing in the future period
          5. * Re: Mitigation
            1. Most jurisdictions require “reasonable effort” to relet the premises to mitigate
            2. Must treat premises as vacant stock – can’t give preferential or adverse treatment
            3. LL has burden to of proof that actions were reasonable to recover damages
              1. Policy: LL is in the best position to provide evidence of reasonable actions
            4. If LL doesn’t satisfy reasonableness:
              1. LL may recover nothing
              2. LL may recover rent owed less steps you should have taken
                1. I like second because if LL could rent but for less this is what would happen, and T did breach so owes something.
    6. Duties, Rights, and Remedies (Especially Regarding the Condition of the Leased Premises)
      1. Landlord’s Duties; Tenant’s Rights and Remedies
        1. Common Law – the only duty of the LL was the duty to deliver possession. The promises were independent, so T has to pay regardless of LL action’s. But like all common law, a new rule is formed with the continual addition of exceptions [furnished dwellings, warn of know latent defects, common areas, fraudulent misrepresentation, abate nuisances, constructive evictionà IWH] so now there are implied covenants in leases.
        2. Quiet Enjoyment and Constructive Eviction
          1. Quiet Enjoyment
            1. As against all claiming a right through landlord.
              1. However, landlord need not assure tenant’s quiet enjoyment against third-party wrongdoers or intruders.
            2. Actual Eviction – when tenant is barred from the premises.
              1. Tenant released from liability, even if only a partial actual eviction
          2. Constructive Eviction [Reste Realty Corp v Cooper]
            1. Where through the fault of the LL, there occurs substantial interference with the T’s use and enjoyment of the leased premises, so that the T can no longer enjoy the premises as the parties contemplated, T can terminate the lease, vacate the premises, and be excused from further rent liability.
            2. Elements:
              1. Substantial interference
              2. Tenant must vacate the premises
              3. Fault of LL
            3. Note: Maj – partial constructive does not remove all T liability.
            4. Note: this is a defense not a cause of action
        3. The Implied Warranty of Habitability
          1. Old: Landlord made no covenants about the condition of the premises
          2. Majority: Landlord must maintain premises that are safe, clean, and fit for habitation, covering all defects in essential facilities. [Hilder v. St. Peter]
            1. Housing regulations imply a warranty of habitability measured by the statutory standards (Ex: violates housing codes, violates health and safety)
            2. Need substantial compliance. Habitable for a reasonable person.
          3. Policy: there is no incentive for either party to maintain (LL isn’t using it, T isn’t staying long) so this forces maintenance. Ensures qualitative minimums.
          4. Cannot sell IWH—this is distinct from known waivor.
        4. Retaliatory Eviction
          1. At common law, LL could end at will. Now they can not, this is a resulting problem:
          2. Prohibited by statute. LL can’t evict tenant to punish good-faith exercise of legal rights
          3. Triggering actà retaliatory actà timeà raising presumption (rebuttable or irrebuttable)
            1. Rebuttable: shifts the burden of proof to the to the landlord
            2. Irrebuttable: landlord can say nothing, chronology speaks for itself—to harsh!
          4. If the eviction occurs within statutory period of the complaint, there is a prima facie case of retaliation. The burden of proof is on the landlord to show it was not retaliatory. Otherwise, on tenant
        5. Tenant Remedies
          1. Options
            1. Contractual relief: recission, reformation, damages
            2. Withhold rent. Tenant must notify the landlord of the problem first and must pay the rent into an escrow account.
            3. Rent abatement
            4. Punitive damages
            5. Injunctive relief (unusual)
            6. Fix yourself and be repaid (unusual)
          2. Tort Liability
            1. Common Law: only liable for traditional common law exceptions
            2. Modern: general negligence standard for care for premises
              1. Despite such developments, the majority of jurisdictions neither impose strict liability nor recognize a general duty of care on the part of LL’s; rather, they hold to the conventional common law exceptions 
          3. Rent control statutes are constitutional, but losing favor. [Chicago Bd. Of Realtors, Inc.]
            1. Can be below market prices and/or limitation on eviction
              1. Argument for: there are factors more important than efficiency
              2. Argument against: could constitute a taking if rent very low; benefit to T as expense of future T; doesn’t encourage maintenance
      2. Tenant’s Duties; Landlord’s Rights and Remedies
        1. Tenants Duties
          1. Pay rent
          2. Generally no duty to repair, but this can (and usually is) contracted out
          3. To not commit nuisance
          4. No illegal use
          5. Waste – Tenant has a duty not to engage in voluntary waste
            1. Permissive – allowing the place to deteriorate by not making routine maintenance
            2. Affirmative – changing the structure of the building without permission
              1. This usually must be detrimental to the rental value
        2. Landlord Remedies
          1. Rent and damages (from the lease)
            1. Abandonment by tenant is an implied offer of surrender
              1. If LL accepts possession from T with intent of effecting surrender lease terminate
              2. Implied surrender
                1. Trend Majority: LL must make reasonable effort to relet the property to mitigate damages. [Sommer v. Kridel]
                2. Minority: LL may let the property sit and collect full rent
            2. Rent acceleration term. If T defaults, entire term is due.
            3. Liquidated damages
            4. Security Deposit must be returned minus any amount needed to compensate for defaults
        3. To Get the Tenant Out
          1. Judicial Process: Summary Proceedings
            1. Eviction proceedings are meant to be quick, but often take a while, so self help is quicker, though existence of proceedings eliminates need for self help
              1. T can bring affirmative defenses
                1. Constructive eviction – LL essentially evicted T through breaching duties [Reste Realty Corp v. Cooper]
                2. Tenant self-help – the withholding of rent because the apartment fails the standard of habitability
            2. Ejection is a longer process. Summary proceedings are meant to be the quicker.
          2. Self-Help Notice the public, private dichotomy of self-help!
            1. Ex: Forcible eviction by landlord. Changing the locks.
            2. Modern Majority: Prohibited [Berg v. Wiley]
              1. Policy: too much potential for violence with self-help
              2. Policy: greater availability of summary proceedings obviates need.
            3. Tradition Rule: LL who is entitled to retake possession can use self-help but only as much as is reasonably necessary to retake possession
              1. Minnesota Test [Berg v. Wiley]
                1. 1. LL must be legally entitled to possession
                2. 2. The means of possession are peaceable

 

  1. Chapter Seven: The Land Transaction
    1. Introduction to Buying and Selling Real Estate
      1. Process
        1. Seller owns something; seller comes to the conclusion that they want to sell it
        2. How do I go about selling what I own?
          1. The overwhelming majority of sales are broker or agent assisted transactions
          2. The breadth of reach may not be that great; the seller may not know how to market the property; how do they price the property (individuals have a lack of information to set pricing)
          3. Compensation usually expressed in a percentage of the purchase price (usually 6%)
        3. Purchase Contract
          1. Most buyers do not contact lawyers and instead rely on the advice of the broker they deal with; however, the broker’s loyalties are with the seller
          2. This is the vehicle for negotiation between the buyer and the seller
          3. Formalizing of an executory K
            1. We look ahead to the executory period (the end point being the closing)
            2. If everything goes right, then at the closing we have an exchange
            3. It’s an executory contract because it looks ahead to the execution of an agreement (the execution being the exchange of money and title)
            4. The gap period is where everything gets sorted out (between contract signing and closing)
              1. House is inspected
              2. Buyer obtains a mortgage
              3. Assuring title
                1. Land title in America is kept in a very odd fashion
                  1. Every county courthouse there is a recorder’s office
                  2. Everyone who has a deed comes in and brings it in to have it recorded
                  3. Gov’t runs a library; doesn’t look at how good the title is
                2. Title insurance companies have sprung up to cover buyers
                  1. Most title insurance is bought for their lender, unless a second is bought to cover the owner
              4. Contingencies may be built in
        4. The Closing
          1. This is the enfeoffment in seisin equivalent
          2. Transfer of document
            1. The seller signs the deed
          3. Promissory note (it’s an IOU) is signed by the buyer for the lender
          4. Mortgage or deed of trust
            1. If the borrower (buyer) doesn’t pay, the lender has the right under the mortgage to sell the collateral to pay the balance of the loan
          5. The Deed
            1. Buyer ends up with a copy of the deed and the mortgage (they are sent the courthouse immediately and recorded)
              1. IT MUST BE DONE IMMEDIATELY because otherwise creditors can come in and buyer’s interest will be subordinate
        5. Varying levels of attorney contact
          1. Purchase contracts can have attorney review clauses that allow for attorneys to look it over
          2. If there is no attorney review clause, lawyers get involved afterward (the problem here is that the contract terms are already established)
    2. Brokers
      1. Almost all houses and a large percentage of other real property are sold through brokers. The seller signs a contract with the broker, giving the broker the right to list and show the property to prospective buyers and, if the property sells, to collect a commission out of the purchase price. The broker’s commission may run from 5% to 8% of the selling price. Two major legal issues involving brokers are:
        1. When commission is earned.
          1. Traditional rule. Broker is entitled when she produces a ready, able and willing buyer on the terms set by the seller in the brokerage contract even if the sale falls through b/c buyer defaults.
          2. New rule. Almost all courts that have considered the matter in recent years have discarded the traditional rule and hold that the broker earns a commission only when the buyer completes the transaction. If the buyer defaults, the seller is not liable. If the seller defaults, the seller is liable to the broker. Modern court may refuse to enforce contracts with the traditional rule as unconscionable or against public policy.
        2. Practicing law
          1. Because brokers draft contracts of sale, which change the legal relationships of the parties, the broker’s work borders on the practice of law. Courts have had difficulty in drawing the line between practicing law and brokerage services. A broker who practices law without a license may be liable in damages, enjoined, or penalized in some other way by the court.
      2. Licari v. Blackwelder: Broker has a fiduciary duty; as a sub-agent, Blackwelder was supposed to act in fidelity and good faith and not put himself in a position antagonistic to the principal’s interests.
    3. The Contract of Sale
      1. The Statute of Frauds
        1. Once a buyer and seller have come to an agreement, the contract of sale must be in writing, signed by the party to be charged thereby. Otherwise, the contract is not enforceable.
          1. Kind of writing
            1. Can by a formal contract, informal memorandum, or even several documents taken together to be a contract; fundamental is whether the writings show a meeting of the minds sufficient to constitute a contact
              1. If the parties are negotiating with an understanding that the terms of the contract are not fully agreed upon and a written formal agreement is contemplated, a binding contract does not come into existence until the formal contract is executed. Preliminary informal agreements do not constitute a binding contract if the parties do not intend to be bound until the formal contract is signed.
          2. Essential Terms
            1. Parties
            2. Description of the property
            3. Terms and conditions (such as price and manner of payment, if agreed upon)
            4. Parol evidence can be used to clear up ambiguities
              1. Price: if it has been agreed upon, must be set forth, otherwise failure to put in the memo makes it unenforceable; however, if no price was agreed upon, court may imply an agreement to pay a reasonable price if such an agreement is inferable from the circumstances
              2. Conditions
                1. Financing
                  1. “Subject to Financing” clauses may be void due to vagueness
                  2. May be interpreted to mean that the buyer must act in good faith and use reasonable diligence in procuring a loan
                2. Building Permits
                  1. Contracts may be conditioned on buyer receiving all the necessary permits; buyers must use reasonable efforts to obtain – if not, buyer is in default
          3. Oral Contract
            1. Part performance; equitable doctrine that allows enforcement of oral contracts under certain circumstances
              1. Acts of “unequivocal reference to contract”: acts done by parties that make sense only as having been done pursuant to a contract
                1. Paying all or part of the purchase price, and
                2. Enters into possession, and
                3. Makes improvements, then the contract is enforceable
              2. Variations include one of the above, or all plus more
            2. Injurious Reliance
              1. Alternatively: Rst. 2nd Contracts Sec 129
                1. A contract for the transfer of an interest in land may be specifically enforced notwithstanding failure to comply with the Statute of Frauds if it is established that the party seeking enforcement, in reasonable reliance on the contract and on the continuing assent of the party against whom enforcement is sought, has so changed his position that injustice can be avoided only by specific enforcement. (Hickey v. Green)
            3. IF THERE IS A QUESTION ON ORAL CONTRACTS:
              1. Note that generally, oral contracts are not enforceable under SOF
              2. Then, exception for part performance that unequivocally references a contract

 

    1. Marketable Title
      1. Implied duty to provide marketable title at closing, even with a quitclaim deed; duty ends at closing. Buyer will not be able to rescind or get damages after closing.
        1. Contract provisions
          1. Insurable title: only a title insured by a title insurance company is required if that’s what the contract asks
          2. “Good record title”: seller must offer a marketable title based on recorded documents alone, not upon adverse possession
      2. Definition:
        1. “A title not subject to such reasonable doubt as would create a just apprehension of its validity in the mind of a reasonable, prudent, and intelligent person, one which such persons, guided by competent legal advice, would be willing to take and for which they would be willing to pay fair value.”
        2. Although perfect title is not required, the title must be such that there is no reasonable probability that the buyer will be subjected to lawsuit.
          1. Unless title “of record” is called for, many states hold that marketable title can be based on adverse possession; must be clearly proven; seller must offer written evidence or other proof admissible in court that the buyer can use to defend any lawsuit challenging title
      3. Defects in Title
        1. As a general rule, marketable title means an unencumbered fee simple. Mortgages, liens, covenants, and easements make title unmarketable unless the buyer waives them. A mortgage is not an encumbrance if the seller pays it off before closing or at closing with the proceeds from the sale.
        2. Easements: Majority holds that easements that benefit the property are encumbrances, minority holds that open and visible for the benefit of the property made known to the buyer is not.
        3. Covenants: If the contract expressly states that the property has been purchased for a particular use and such use is permitted under private covenants, title may be held marketable.
        4. Express Waiver: A waiver of an encumbrance in the contract of sale is not a waiver of the violation of the encumbrance when the buyer does not know of the violation.
    2. The Duty to Disclose Defects
      1. Old Rule: Caveat emptor. Seller does not have to disclose defects unless the defect was fraudulently concealed. Buyer has the opportunity to inspect, and caveat emptor applies.
        1. Exception: In some states, out-of-town buyers who may not know the reputation of a house (like it’s haunted!) can rescind the contract of sale. (Stambovsky v. Ackley)
      2. Duty to Disclose
        1. Most states hold that the seller must disclose all known material defects to a buyer. One of two tests of materiality is applied:
          1. An objective test of whether a reasonable person would attach importance to it in deciding to buy, or
          2. a subjective test of whether the defect affects the value or desirability of the property to the buyer.
        2. Johnson v. Davis: This case is about a fraud and misrepresentation; but the 2nd issue that’s adopted is about moving away from the caveat emptor doctrine.
          1. The rule says that when a seller has (1) knowledge of (2) facts materially affecting the value of the property which are (3) not readily observable by the buyer (latent) and (4) not known by the buyer, (5) then there is a duty to disclose them to the buyer. (6) When it has not been satisfied, then the buyer is entitled to damages.
    3. The Implied Warranty of Quality
      1. Builder’s Liability
        1. Common Law: Builder of houses had no liability to buyer, absent express warranty
        2. Modern Law: Almost all jurisdictions imply a warranty of quality in the sale of new homes.
          1. Builder impliedly warrants that the building is free from defective materials and is constructed in a sound and workmanlike manner.
          2. Lempke v. Dagenais Rationale (subsequent purchasers):
            1. Common experience says that latent defects won’t manifest themselves for some time in which the house could be sold.
            2. Society is changing, and a builder should know that a house can be resold in a relatively short period of time.
            3. Subsequent purchasers have little opportunity to inspect and little experience and knowledge of construction.
            4. The builders should not be unduly taken unaware by the extension of the warranty to a subsequent purchaser.
            5. W/o it, then it might encourage sham building.
      2. Seller’s Liability
        1. Seller that’s not a builder is not liable based on this doctrine, but is nonetheless liable for misrepresentation and fraud.
        2. Law in this area is moving in the direction of requiring the seller to divulge all known information that has a significant and measurable impact on market value.
    4. Remedies for Breach of the Sales Contract
      1. Buyer’s Remedies
        1. Rescission: On breach, buyer may rescind and recover the down payment. If seller has agreed only to furnish title at the date of closing, buyer cannot rescind prior to closing. Seller has until closing to make the title good.
        2. Specific performance: Court will not grant if D will suffer undue hardship, or if circumstances would make it inequitable.
        3. Damages:
          1. Benefit of bargain: difference between the contract price and the market value of the land on the date performance is due.
          2. Exception – Good faith of seller: half of the states say that if the seller acts in good faith, the buyer is limited to recovery of any money paid to seller, plus interest and expenses in examining the title (buyer restored to original position).
      2. Seller’s Remedies
        1. Rescission
        2. Specific Performance: if defects are insubstantial and not material, seller can enforce contract specifically with a price abatement to compensate for the deficiency.
          1. Defenses: New trend may deny when seller can easily resell and damages at law are adequate.
        3. Damages:
          1. Majority rule: In the event of buyer breach, the seller is allowed to retain the entire amount of the deposit, even if the deposit exceeds the amount of damages.
          2. Minority rule: Buyers are entitled to restitution of the deposit, less damages. (Kutzin v. Pirnie)
          3. Liquidated-damages clause: a clause that says what happens to money in escrow in the event of breach. Generally, if the amount of down payment bears some reasonable relationship to the actual damages the seller sustains as a result of the buyer’s breach, the provision will be upheld.
          4. Seller can sue for the difference between the contract price and the market price when performance is due.
    1. The Deed
      1. Types of Deeds:
        1. General Warranty Deed
          1. Warrants against all defects in title and has the broadest coverage of covenants.
        2. Special Warranty Deed
          1. Warrants only against grantor’s own acts, but not the acts of others
        3. Quitclaim Deed
          1. No warranties
      2. Warranties of Title
        1. Present Covenants: Breached when they are made, if at all (at the time of conveyance). The grantee has an immediate cause of action and the statute of limitations will begin to run.
          1. Covenant of seisin
            1. Grantor warrants that he owns the estate that he purports to convey
          2. Covenant of right to convey
            1. Grantor warrants that he has the right to convey the property
          3. Covenant against encumbrances
            1. Grantor warrants that there are no encumbrances (mortgages, liens, easements, and covenants)
        2. Future Covenants: Covenant is not breached until the grantee is actually or constructively evicted sometime in the future.
          1. Covenant of general warranty
            1. Grantor warrants that he will defend against lawful claims and will compensate the grantee for any loss that the grantee may sustain by assertion of superior title
          2. Covenant of quiet enjoyment
            1. Grantor warrants that the grantee will not be disturbed in possession and enjoyment of the property by assertion of superior title. This covenant is, for all practical purposes, identical with the covenant of general warranty and is often omitted from general warranty deeds.
          3. Covenant of further assurances
            1. Grantor promises that he will execute any other documents required to perfect the title conveyed.
        3. Merger Doctrine
          1. An old common law doctrine that says that the contract merges into the deed. If there is a seller promise as to warranty or quality in the contract period, then the merger doctrine says that any contract covenant that is not found in the deed is destroyed.
          2. The merger doctrine is now in disfavor because it has become riddled with exceptions. A primary exception is the collateral agreement exception; if an agreement is collateral to the transfer of title, then it continues to live after the deed is conveyed. This is an express promise, not an implied promise.
        4. Damages for breach
          1. Covenant of seisin: Usually limited to the purchase price from the grantor, or proportionate to whatever damages grantee suffers.
          2. Covenant against encumbrances: Difference in value at the date of sale of the land with and without the encumbrance; grantee is entitled to nominal damages if it’s removable unless actual damages are proven.
      3. Delivery
        1. In General
          1. A deed is not effective until it has been delivered by the grantor
          2. Requires words or conduct of the grantor that shows an intent to make the deed operative and to pass an interest immediately
          3. The crucial issue is intent, though physical transfer of the deed is compelling evidence of intent
            1. Presumptions
              1. If deed is handed to grantee;
              2. The deed is acknowledged by the grantor before a notary; or
              3. The deed is recorded.
              4. These are presumptions only and can be rebutted with extrinsic evidence.
          4. Cancellation of delivery is ineffective b/c the deed has already been transferred.
        2. Conditional Delivery
          1. Written Condition. When there is a condition precedent, two interpretations:
            1. No delivery and the deed is not effective at all until the condition happens; OR
            2. Intended to be legally effective now, but passing only an interest that is subject to a condition precedent. [Springing executory interest]
          2. A conditional delivery (delivery must be made to a 3rd person and not the grantee) requires that the deed be placed in a third person, not a party to the deed, until the event occurs, at which time the deed would be delivered to grantee.  It guards against false claims, fraud and fabrication of evidence. [Sweeney v. Sweeney]
        3. Deed Given to Third-Party Custodian (Escrow Agent)
          1. Although generally a deed delivered directly cannot have oral conditions attached, a deed delivered in escrow can. Rule differ on whether they are donative or commercial.
    2. The Mortgage
      1. Mortgage/Deed of Trust: recorded instrument giving the lender priority rights to the value of the house if the borrower defaults on the payments; if borrower pays up, lender extinguishes it. Also specifies what happens when the borrower defaults.
      2. Note: lists terms of the mortgage, and is the dominant instrument over the mortgage. Basically an IOU.
      3. Financing: 30-year level-payment mortgages most popular; pay off mostly interest first and then principal later. If borrower defaults early, little equity in principal is built up, and lender gets most of the proceeds of sale. Borrowers may refinance w/2nd mortgages.
      4. Unsecured purchase: the lender can only look to the buyer to return the money.
      5. Lenders will want more security that they will be repaid what they have lent; so in land transactions we have secured lending; buyer will repay under certain terms, but lender will also look to the asset that was purchased with the loan to serve as security (collateral).
      6. Mortgagor: Borrower. Mortgagee: Lender.
      7. Equity: The borrower’s interest in the land (short for equity of redemption)
      8. Deficiency judgment: On a foreclosure sale, if the land doesn’t bring enough money in, the lender can sue the borrower for the difference.
      9. Purchase money mortgage: Given to secure the purchase price of land. If the borrower already owns the land and gives a mortgage to secure a debt, this mortgage is not a purchase money mortgage. If the debt is incurred to finance improvement of a house, the mortgage is a home improvement mortgage.
      10. Balloon payment mortgage: Periodic interest payments until the due date of the debt, when the whole principal sum must be paid at once.
      11. Amortized payment mortgage: 25 or 30 year mortgage with even monthly payments.
      12. Second mortgage: Riskier than first ones; rights are subject to the rights of the first mortgagee
      13. Installment land contract: An agreement by the buyer to buy land and to pay for it over a period of years – maybe 10 or 20. The seller agrees to deliver title at the end of the period. Keeping title is the seller’s security. This is between buyer and seller (w/o institutional lender).
        1. Advantages: (1) seller can repossess on default w/o judicial foreclosure, and (2) seller can keep all payments made under the contract as damages on the buyer’s default.
        2. Functions as a mortgage, and courts are more and more extending traditional mortgagor rights to buyers.

 

  1. Chapter Ten: Private Land Use Controls – The Law of Servitudes
    1. Easements
      1. Generally
        1. Easements are the oldest servitude. It’s a private land use control. It gives the right to enter the land of anther to do something. Nonposessory interest that authorizes the holder to use the property only for specific purposes. Remember: it’s a right of use to the property, not the owner.
        2. Divide Property by Use
          1. Easement in Gross – Right to use parcel not in conjunction with your own parcel. Benefits Easement owner personally. Ie: electric company
            1. Assignability
              1. Old: assignable if of a commercial character. R1st.
              2. Modern: Assignable if NOT intended to be personal
            2. May be divided and used independently if both:
              1. 1. Would not put an unreasonable burden on servient estate
              2. 2. Not contrary to the intent of the original parties.
          2. Easement Appurtenant – benefits easement owner in use of his land
            1. Requires dominant tenement and servient tenement and runs with the land
            2. If dominant tenement and servient tenement come under common ownership, easement is extinguished
            3. Black letter law: appurtenant easements are attached to the land, not to people. A person living on parcel B (the dominant tenement) cannot convey the easement to another person, because the easement is attached to the land and cannot be sold to be used with another parcel.
            4. Dominant Tenement – estate which the easement benefits
            5. Servient Tenement – estate which is detrimented
          3. Affirmative Easement: the right to act on another’s land
          4. Negative Easement: forbids a landowner from doing something on the land
            1. Strictly limited in scope.
              1. Ex: blocking windows, interfering with air flow, removing building support, interfering with water flow
            2. Can not be acquired by prescription
              1. Policy: rights are harder for a purchaser to discover
            3. Restatement 3rd considers negative easements restrictive covenants
            4. Conservation and other novel easements (738)negative easement developed to preserve scenic and historic areas and open space.
              1. Land owner can give a public or private group a conservation easement which prevents the servient owner from building on the land except as specified in the grant.
              2. Perpetual duration, transferable, can be in gross
              3. The value of the easement is deductible as a charitable gift for taxes.
              4. Statutes exists to ensure these easements are upheld
            5. Equitable Servitudes (covenant)
              1. Negative easements can be treated as a promise
              2. It was easer to take these away from being interest in land and make them equitble servitudes
        3. Distinct from
          1. Profit a Pendre – right to enter the land of another and remove something of value from it
            1. This is an affirmative easement in gross
            2. This is not a property interest, but it comes with an implied easement
          2. License – Permission to do some at that would otherwise be trespass
            1. Can be oral or written
            2. Licenses are generally revocable (easements are not)
              1. Irrevocable License
                1. License coupled with interest is not revocable
                  1. Ex: A sells car to B located on A’s land. B has irrevocable license to get the car
                2. License can become like an easement under rules of estoppel.
      2. Creation
        1. 1. Expressed Grant (Reservation)
          1. An easement may be reserved by the grantor over the land granted. If the grantor conveys land, reserving an easement, the land conveyed is the servient tenement
          2. Written instrument signed by the party to be bound thereby
            1. If there is notice, by inquiry or other, then the easement also holds
          3. Subject to the statute of frauds
          4. Primary goal is to give effect to intent of grantor. [Willird v First Church]
          5. Reservations in favor of a third party. [Willard v First Church]
            1. Common law, an easement could not be reserved in favor of a third party. Wanted livery of seisin (no modern relevance)
            2. Modern rationale: we don’t want to encourage deeds that create two interests. Interests might get lost or missed. BUT, may reserve an interest to a third party [Willard v. First Church] R3d
        2. 2. Easements by Estoppel
          1. License made irrevocable by estoppel ((reliance))
            1. This is about equity and fairness. Means of avoiding waste.
          2. RST: servitude (easement) may be created by estoppel. Normally the change that triggers the change from license to easement is an investment in improvements
          3. If the license includes the right to erect structures and gain an interest in the land at expense, it’s irrevocable [Holbrook v. Taylor]
            1. Has to be within reason
            2. Has to be reasonable reliance on permission given
            3. Irrevocable natures stands until it is not needed anymore
          4. Oral licenses
            1. Split: They can be made irrevocable. [Shepard v. Purvine]
            2. Split: They cannot be made irrevocable. [Henry v. Dalton]
          5. This is an alternative to prescription
          6. Other ways to find easement by estoppel
            1. Look to part performance – says that there would probably be a writing. Evidence of an agreement
            2. Silence may be enough to establish justifiable reliance
            3. If speaker intended claimant to act on representation during a sale transaction
        3. 3. Implied Easements
          1. A. Implied from prior use [VanSandt v. Royster]
            1. If at the time a tract is divided into 2 or more lots, a use of one part of the tract exists from which it can be inferred that an easement permitting its continuation was intended (quasi-easement), a prior use easement exists.
            2. An easement implied from prior use only exists where the previous use was
            3. 1. apparent, 2. continuous, and 3. necessary
            4. Implied to protect the probably expectation of grantor and grantee that existing use will continue.
              1. Policy: protect the parties probable expectations. Efficiency. Intent.
              2. Thus problems arise with bona fide purchasers who lack notice. Ownership rights are that which you had notice of.
            5. Owner of land cannot have an easement on his own land but he can have a quasi-easement.
              1. Benefited part of the property is the quasi-dominant tenement
              2. Burdened part is the quasi-servient tenement
            6. Grants of quasi-dominant tenements
              1. Split: Depends on intent of parties at conveyance.
              2. Split: Must be expressed.
            7. This becomes a typical easement and is not terminated when necessity ends
          2. B. Easement by necessity [Othen v. Rosier]
            1. It happens when a common owner divides his property in such a way that one of the resulting parcels is left without access to
            2. Reasonably necessary for the fair enjoyment of the property
              1. Policy: Doesn’t focus on intent; rather need and efficiency
            3. Unity of ownership of the alleged dominant and servient estates
            4. Easement is necessary, not merely convenient
              1. Majority: Strict necessity is required.
              2. Minority: Access exists but is inadequate, difficult, or costly
            5. Necessity existed at the time of severance of the two estates
              1. But: easement endures only for so long as is necessary.
                1. Policy: law only wants to force servient owner so long as is necessary. This is based on public policy not party intent
        4. Prescriptive Easements
          1. Adverse use. Permissive use is a license.
          2. Criteria
            1. Adverse
            2. Continuous use for the statutory period
            3. Open and notorious use
            4. Actual use
            5. Exclusive use. Use does not depend on a like right in others.
          3. Majority: possible to obtain a public prescriptive easement.
          4. Tacking is allowed with privity of estate
        5. Public Prescriptive Easements
          1. Use by public under a claim or right
          2. Homewoner must be put on notice
          3. Theory of Implied Dedication – when the land owner shows an intent to dedicate to the state by permissive use
      3. Assignability
        1. Easement Appurtenant
          1. Transfer of the deed transfers the easement
        2. Transfer of an Easement in Gross
          1. Must be for commercial and not for personal enjoyment (old view)
          2. Must be the intent to transfer the easement
          3. Generally now all easement in gross are transferable
          4. Except for recreational easements
          5. The easement can be transferred to more than one person
          6. Or only part of it can be transferred
        3. Division of an Easement in Gross
          1. Nonexclusive Easements in gross cannot generally be divided
          2. Exclusive easements in gross can be divided so long as it is only the profits from the easement in gross that are divided    
      4. Scope
        1. Scope is a question of judicial interpretation of limits. Based on purpose and location.
        2. Use in manner reasonably necessary for convenient enjoyment of servitude. R3d.
          1. Manner, frequency, and intensity of use may change with technology or the normal development of the dominant estate.
          2. Consider the foreseeability of use.
          3. Unless authorized by terms, may not cause unreasonable damage to servient estate or interfere unreasonably with its enjoyment.
        3. Ex: An easement appurtenant to one parcel may not be extended by its holder to other parcels even if the burden on the servient estate does not change. Voss.
          1. But: Must balance the equity factors for injunctive relief.
        4. Ex: When a railroad acquires a right-of-way, it generally only acquires an easement for the limited purposes of running trains across it. Presault.
          1. Easements can change with the times a little bit, but not from railroad (couple trains per day) to a nature trail (hundreds of hikers)
        5. Servient owner unilateral change.
          1. Old: Need mutual agreement. Davis.
          2. Mod: Can change the location, subject to requirements. R3d.
            1. At own expense.
            2. Does not significantly lessen the utility of the easement.
            3. Does not increase use and enjoyment burden on its owner.
            4. Does not frustrate the purpose for which it was created.
        6. A prescriptive easement is narrower in scope than an easement by grant, implication, or necessity.
      5. Termination
        1. Release. Owner can agree by a writing satisfying the Statute of Frauds.
        2. Expiration if easement is of limited duration.
        3. Merger. If dominant and servient estates come under common ownership, easement extinguished
        4. Abandonment. [Presault v. US]
          1. Majority: Mere non-use does not constitute abandonment.
            1. Acts by easement holder conclusively manifesting present intent.
            2. To relinquish the easement or purpose inconsistent with existence.
            3. Ex: Tearing up railroad tracks is sufficiently conclusive.
          2. Minority: Prescriptive easement can end by abandonment for statutory period.
        5. Condemnation. Eminent domain for purpose inconsistent with easement.
        6. Prescription. Servient estate wrongfully and physically prevents the use.
        7. Misuse. Rare but if dominant estate uses it in such excessive way, consequence can be forfeiture.
        8. Limitation. In time; purpose; through defeasance.
    2. Covenants
      1. History
        1. Easements, as we have seen, run with the land. But then only 4 kinds of negative easements could run with the land. The market desired agreements that would “run with the land” much like easements. So..
      2. Restrictive covenants.
        1. Contract right respecting land use enforceable against successors in title.
        2. Can be a negative promise not to do an act or an affirmative promise to do an act.
          1. Somewhat reluctant to enforce affirmative promises.
            1. Pol: Reluctance to issue orders to perform a series of acts requiring judicial supervision.
            2. Pol: Large imposition of personal liability on successors.
            3. Pol: Resemblance to feudal service or perpetual rent.
        3. Two types. Based on the remedy sought.
          1. Common law real covenants. Damages remedy.
            1. Writing.
            2. Intent. Parties intend that benefits and burdens run with land.
            3. Touch and concerns the land. Neponsit Property Owners.
              1. Note: this is a judicial tool for decision making
              2. Must affect the legal relations of the parties as owners of particular parcels and not just as part of the community.
              3. Decided as a matter of fact. Spectrum from personal services contracts (never) to land use restrictions (always).
              4. Ex: Individual parcel can benefit through payment of money to the community for public improvements.
              5. Mod trend: Eliminates this requirement. Presumes validity unless against public policy. 766. R3d.
            4. Horizontal privity. Original covenanting parties made the covenant in connection with an estate in land. R1st.
              1. Satisfied by landlord-tenant or conveyance relationship.
              2. Required for the burden to run.
              3. Not required for the benefit to run.
              4. Mod trend: Eliminates this requirement. R3d.
            5. Vertical privity. Privity between the original parties and their successors in interest. Assignee takes same quality of estate.
              1. Benefit. (Enhance value by causing something done/not done)
                1. Runs if taken possession and acquired some portion of the promisee’s estate. R1st.
                2. No vertical privity necessary
              2. Burden. (Keep from changing or doing)
                1. Old: Enforceable only against someone who succeeds to the entire estate. R1st.
                  1. Not to adverse possessor.
                  2. Not to lesser estate. Ex: Life estate.
                2. Mod: If covenant is affirmative, vertical privity required. If negative, not required. R3d.
                  1. Only runs to lessees if more reasonably performed by person in possession.
                  2. Life tenant burden liability limited to the total value of the life estate.
                  3. Adverse possessors without title are liable.
          2. Equitable servitudes. Injunctive remedy. [Tulk v Moxhay]
            1. Evolution towards flexibility.
              1. Policy rationales
                1. Want seller to be able to protect land
                2. Don’t want unjust enrichment if cost is cut for covenant and then resold without price cut without covenant
            2. Notice.
              1. Actual notice.
              2. Constructive notice. [Sandborn v. McLean]
                1. Rejects Bona Fide Purchaser excuse (BFP is immune to legislation, but not if they should have notice)
                2. Inquiry notice. Looking around the neighborhood would prompt further inquiry.
                3. Record notice. Extensive title search would lead to actual notice.
            3. Intent. Parties intend that benefits and burdens run with land.
            4. Touch and concerns the land. [Neponsit Property Owners]
              1. Must affect the legal relations of the parties as owners of particular parcels and not just as part of the community.
              2. Decided as a matter of fact. Spectrum from personal services contracts (never) to land use restrictions (always).
              3. Ex: Individual parcel can benefit through payment of money to the community for public improvements.
              4. Mod trend: Eliminates this requirement. Presumes validity unless against public policy 766. R3d
            5. Can be written or implied.
            6. NO Privity.
          3. Modern: Call them covenants running with the land. Don’t distinguish between them anymore. R3d.
          4. Modern: Valid unless illegal, unconstitutional, or violates public policy. R3d.
            1. Public policy problems.
              1. Arbitrary, spiteful, or capricious.
              2. Unreasonably burdens a fundamental constitutional right.
              3. Imposes an unreasonable restraint on alienation. (reasonable restraint okay)
              4. Imposes an unreasonable restraint on trade or competition.
              5. Unconscionable.
            2. Initially valid obligations can become invalid over time.
      3. Common purpose.
        1. Reciprocal negative easements (aka covenant) can arise at sale by a common owner and can pass by actual or constructive notice. [Sandborn v. McLean]
        2. In equity, imply negative easement from a general plan. R3d.
        3. Pol: thought to be socially and economically good to create compatible social structures
        4. If a common owner of two or more lots sells one with restrictions of benefit to the land retained, the servitude becomes mutual. [Sanborn v. McLean]
        5. Property owners association could get standing
          1. To represent benefitted property owners. R3d. [Neponsit.]
          2. Mod: As a third party beneficiary. R3d.
      4. Covenants in gross.
        1. Even if a burden is personal, the benefit, if attached to land, can run. Caullett.
        2. Where the benefit is personal, the burden cannot run with the land. Caullett.
        3. Mod: Benefits in gross with running burdens are permitted, but a court may terminate or modify the servitude if impracticable to locate the beneficiaries.
      5. Scope.
        1. If language is ambiguous, construe in favor of free enjoyment.
        2. Will not read restrictions on use and enjoyment in by implication.
        3. Interpret reasonably, but strictly, not to create illogical or strained construction.
        4. Words have ordinary and intended meaning
        5. Ex: Can read “family” in restrictive covenant broadly to include a group home in light of covenant’s failure to define, the locality’s broad definition, the public policy favoring group homes in single-family residence areas. [Hill v. Damien]
      6. Courts will not enforce racial housing restrictions, as enforcement would violate the Equal Protection Clause of the 14th Amendment. Enforcement is state action. [Shelley v. Kraemer]
      7. Claims against covenants under the Fair Housing Act. Hill v. Community of Damien. Violates when:
        1. Discriminatory intent. (Difficult to show.)
        2. Disparate impact.
        3. Reasonable accommodation.
      8. Termination
        1. By: expiration, release, abandonment, merger, estoppel, prescription, condemnation, or by consent of all interested parties. (see definitions above!)
          1. Both: merger, condemnation, release and expiration
          2. Only to ES: abandonment, estoppel, prescription, and changed circumstance
        2. Changed circumstances can extinguish restrictions.
          1. If there is sufficient evidence that their objects and purposes have not been thwarted, they will stand despite possible higher-value uses. Western Land Co.
            1. Will not terminate unless entirely frustrated and without substantial value.
          2. Not a matter of balancing the equities. Restrictions will be enforced by preventive remedies unless the attitude of the complaining owner is unconscionable or oppressive. Plaintiff has but to insist upon adherence. Rick v. West.
            1. Restatement 7.10 sets the bar very high to overrule adherence. Compensation may be awarded.
          3. Fatal conditions for injunctive relief under Massachusetts statue (792) (Restriction not enforced except by $ damages if:)
            1. Restriction not of actual and substantial benefit to enforcing party.
            2. Changed conditions materially reduce the need for the restriction.
            3. Conduct of the persons entitled to enforce the restriction has made it inequitable to enforce except by award of money damages.
            4. In common purpose, enforcing party no longer subject to the restriction.
            5. Enforcement would impede suitable, reasonable use or cause a deterioration of nearby properties.
            6. Enforcement, except by money damages, is otherwise inequitable or not in the public interest.
      9. Homeowner’s associations.
        1. Analog/proxy to public government
        2. Most states have statutory scheme for organizing a common interest community.
          1. Declaration of rules disclosed to purchasers.
          2. Association in which all owners are automatically members.
          3. Elected board that may adopt reasonably necessary new regulations.
          4. Rules of servitudes generally apply, with the additional power to levy assessments, enforceable by fine or property lien.
        3. Restrictions are presumed valid unless unreasonable. [Nahrstedt v. Lakeside Village]
          1. Reasonableness is determined in the abstract, not as applied.
            1. Pol: Do not wants lots of expensive factual investigations.
            2. Business judgement review: good faith exercise of discretion for members after reasonable investigation. Even lower review standard.
          2. Stronger presumption to rules in the deed than to governing board rules. There are only unreasonable if arbitrary, unconstitutional, violative of public policy, or the burden far outweighs burden in community. Deference protects expectations. Rsd.
            1. Rule for enforcing expectations: contractual community, benefit for autonomy is exit power, alternatives exist.
          3. Ex: Restrictions on cats and dogs are reasonable. Considerations of health, sanitation, and noise legitimately held. [Nahrstedt]
        4. Direct restraints on alienation are valid if reasonable and indirect restraints like pet or paint color restrictions are valid if it has a rational justification. R3d.
        5. Condominiums. Unit owned separately in fee simple, with exterior walls, land, and common areas owned as tenants in common.
        6. Cooperatives.
          1. Almost exclusively in New York.
          2. Title to the property is held by a corporation.
          3. Each unit is tied to stock in the corporation.
          4. Corporation hold a mortgage. If one cooperator fails to pay his share, then the others must make it up to prevent foreclosure.
          5. Applicants can be rejected for any non-protected reason.

 

  1. Chapter Eleven: Legislative Land Use Controls – The Law of Zoning
    1. Theory of Zoning
      1. Policy
        1. Dividing up a city into use zones allows harmful or incompatible uses from coming into conflict with each other (kind of like a nuisance law planned out in advance)
        2. Modern zoning also regulates uses to achieve maximum benefit, economic utility, or property value (but it can also and has been used to exclude unwanted groups)
      2. Separation of Uses
        1. Fundamental means of accomplishing the goals of zoning
        2. Euclidean Zoning: Separation of uses into different districts
          1. Highest use: Housing
            1. Policy: Wholesome housing must be protected from harmful neighbors (like commerce and industry)
              1. Single family housing -> Two-family housing -> Multi-family housing
          2. Commercial and Industrial Districts
            1. Commercial is lower than residential, and industrial is lower than commercial
          3. Principle of cumulative uses
            1. Higher but not lower uses are permitted in any district; in some situations, however, the ordinance may not be cumulative and may exclude higher uses (like houses/commercial uses in an industrial park)
            2. Policy: Prevent discord between houses and industry, and keep land available for industry
      3. Density Controls
        1. Rule that indirectly control the number of people using an area of land – including height limitations, setback requirements, and minimum lot and house sizes.
    2. Source of Zoning Power
      1. Usually enacted by a city or county.
      2. The state legislature is the sovereign power, and the city or county has no power to zone unless given power by the state by  an enabling act
      3. All zoning ordinances must be authorized by and conform to an enabling act, or else it is ultra vires (i.e., beyond the authority of the local body) and is therefore void
      4. Delegation of Power
        1. Legislature cannot delegate discretionary power to an administrative body unless it lays down standards to govern the exercise of power – delegation without standards is improper.
        2. Courts want to restrict discretionary administrative powers as far as is practical because they fear the potential for abuse
        3. Where the standard applied is vague, the delegation of authority can be attacked as an improper delegation of power
    3. Constitutional Limitations
      1. Enabling acts are enacted under a state’s “police power” – the legislative power a state has to regulate human affairs so as to promote health, safety, welfare, and morals.
      2. Power of states to authorize regulation of property use by zoning laws and the power of local governments to enact such laws have been specifically upheld as valid uses of the police power under Village of Euclid v. Ambler Realty Co.
        1. Holding:
          1. The Court argued that the zoning ordinance was not an unreasonable extension of the village’s police power and did not have the character of arbitrary fiat, and thus it was not unconstitutional.
          2. Further, the Court found that Ambler Realty had offered no evidence that the ordinance had in fact had any effect on the value of the property in question, but based their assertions of depreciation on speculation only. The court ruled that speculation was not a valid basis for a claim of takings.
          3. Ambler Realty had argued their case on the basis of the 14th amendment’s due process clause. The Court noted that the challenger in a due process case would have to show that the law in question is discriminatory and has no rational basis.
        2. Two ways in which constitutional analysis factors in:
          1. On its face; trying to get zoning declared unconstitutional in totality
          2. As applied; trying to get zoning as it is applied to me
      3. Due Process Clause
        1. Procedural Due Process
          1. Landowner can argue that zoning action deprived him of procedural due process if it was enacted without notice and without an opportunity to be heard
            1. Legislative actions: Notice not needed.
            2. Administrative actions: Variances and special exceptions – fair and reasonable to require notice to affected parties since there are so few
        2. Substantive Due Process
          1. Does the ordinance bear a rational relationship to a permissible state objective? If so, then valid. The ordinance must be a way of achieving the objective, not the best way. (Village of Belle Terre v. Boraas)
          2. Legitimate state objectives: public health, safety, general welfare
          3. Strict Scrutiny:
            1. Must infringe on fundamental right; housing is not fundamental
      4. Equal Protection Clause
        1. Plaintiff must prove a discriminatory purpose or intent; effect is not enough
        2. Rational relationship test from Belle Terre also applies here
        3. Strict Scrutiny – problematic classes
      5. Takings Clause
        1. Fifth Amendment: “…nor shall private property be taken for public use without just compensation.”
        2. Don’t mix up takings and due process – the remedies are different
          1. Takings: Injunction, interim or permanent damages
          2. Due Process: Ordinance is void.
      6. Summary
        1. Ultra Vires: The action is not authorized by, or violates an express provision of, the enabling act.
        2. Improper delegation: The action is unconstitutional because the delegation of discretionary authority to the local decisionmaker is without any governing standards
        3. Procedural Due Process: The action – an administrative decision – was taken without notice and hearing to the affected parties
        4. Substantive Due Process: The action deprives persons of due process of law because
          1. It lacks a rational relationship to a permissible state objective, or
          2. It infringes on a fundamental right and cannot be justified by a compelling state interest.
        5. Equal Protection: The action deprives persons of equal protection of the law because
          1. It lacks a rational relationship to a permissible state objective, or
          2. It operates by reference to a suspect classification and cannot be justified by a compelling state interest
        6. Taking: The action takes P’s property without compensation
    4. Nonconforming Uses
      1. It’s a use in existence when the zoning ordinance is passed that is not permitted in the district under the new zoning ordinance
      2. Allowed to remain because requiring immediate termination would be either a violation of substantive due process or an unconstitutional taking
      3. Limitations:
        1. Changing use.
          1. Zoning ordinances may prohibit expanding a nonconforming use beyond the precise space it occupied when the ordinance was enacted, or
          2. May stipulate that in the event of destruction by fire, cannot be rebuilt, or
          3. May prohibit change to another nonconforming use
        2. Amortization
          1. May provide that a nonconforming use must be terminated w/in a specified period of time; periods may be different depending on investment and use of building
            1. Majority view: Amortization valid
              1. Ordinances must be reasonable as applied to each nonconforming use terminated
            2. Minority view: Amortization unconstitutional
              1. They’re takings of property (PA Northwestern Distributors, Inc. v. Zoning Hearing Board)
        3. Vested Rights
          1. If someone has acquired a “vested right”, the zoning cannot be changed so as to deny the person a right to succeed.
          2. A vested right arises when the person spends a substantial sum in reliance on the building permit
          3. Minority: vested right created any time a building permit is legally granted
    5. Administration of Zoning Ordinance
      1. Comprehensive Plan
        1. Section 3 of the Standard Zoning Enabling Act requires that local zoning ordinances “be made in accordance with a comprehensive plan.” To prepare the plan, the enabling act requires that a planning commission composed of citizens be appointed by the mayor or other executive officer. The commission employs a staff of expert professional planners to prepare plans and give its advice. The commission also recommends to the local legislative body a zoning ordinance to implement the comprehensive plan.
          1. Legal effect of plan
            1. A master or comprehensive plan is a guide for development within the city; it states policies and guiding principles. Its adoption by the commission or by the local legislative body does not have the legal consequence of restricting the use of property. To restrict the use of property, the plan must be implemented by the local legislature enacting a zoning ordinance or subdivision regulations, which have legal effect. A comprehensive plan places an important constraint on exercise of discretionary powers.
          2. Existence of comprehensive plan
            1. Many cities don’t have comprehensive plans – ordinances not based on plans are generally held valid on the theory that a separate, comprehensive plan is not required. If one is required, it doesn’t have to be a formal document – comprehensive plan can mean comprehensive planning.
      2. Amendment of Zoning Ordinance
        1. Spot Zoning
          1. An amendment not in accordance with the comprehensive plan is “spot zoning”. This is illegal.
          2. In some contexts, the zoning of one lot differently from its neighbors could be in accordance with a comprehensive plan.
          3. In determining spot zoning, deviation from the plan is controlling.
        2. Amendments generally presume d valid
          1. Change or Mistake rule
            1. Some courts hold that there is no presumption of validity of piecemeal amendments
            2. The original zoning is presumptively valid and correct
            3. To sustain a piecemeal change therein, the proponent must show strong evidence of mistake in the original ordinance or of a substantial change in conditions
          2. Must show public need
            1. Some courts hold that proposed amendment proponents must show that there is a public need for a change of the kind proposed, and that such need will be best served by changing the zoning of the proponent’s parcel as compared with other available parcels
            2. Findings of fact and written reasons by the zoning commission supporting the amendment may also be required
        3. Variances
          1. Zoning by its nature is general; it does not take into account the particularities of every lot in the zone. For that reason, boards of zoning adjustments have been established locally. They are empowered to grant variances for conditions that are unique to a particular lot of two. If the condition is not unique, a change in zoning should be sought. Suppose, for example, that when a tract of land was changed from a commercial zone to a residential zone, a 20-foot side yard requirement was imposed. If there were a few lots that due to their shape, could not be used for housing if the 20 foot-side yards were required, the zoning adjustment board could grant a variance.
          2. Standard: If because of a unique circumstance (e.g., the atypically small size of a landowner’s lot) compliance with the zoning ordinance (e.g., a setback requirement) would cause practical difficulty or unnecessary hardship, a variance may be granted. Hardship must not be self-created.
            1. If hardships generally exist in a neighborhood, then an amendment is proper, not a variance.
          3. Commons v. Westwood Zoning Board of Adjustment
            1. Held: Zoning boards must specify reasons for refusing a variance request
            2. “Undue hardship” involves the notion that no effective use can be made of the property in the event the variance is denied.
              1. An owner is not entitled to have his property zoned to its most profitable use.
              2. If the owner, or his predecessors in title, created the nonconforming condition, then the hardship is said to be self-imposed. Related to the self-imposition of hardship are the efforts that the owner has made to bring the property into compliance with the ordinance’s specifications.
            3. Once an undue hardship is found to exist, then the local board of adjustment (such as D) must be satisfied that the granting of the variance will not substantially impinge upon the public good and the intent and purpose of the zoning board and ordinance.
              1. There lurks in the background of cases such as this the possibility that the denial of a variance will zone the property into inutility so that an exercise of eminent domain is called for and compensation will have to be paid.
              2. In viewing variance requests, there is a conflict between the right of the owner to use his land as he pleases, the right of the public to restrict the exercise of property rights, and the rights or property owners in the immediate vicinity.
          4. Variances run with the land
          5. Special exceptions: A special exception is not the same thing as a variance. Where a particular use is compatible in theory with the surrounding zoning if certain conditions are met, a special exception can be issued to the landowner. Criteria must be established for granting special exceptions to avoid gross arbitrariness and delegation of power without standards.
            1. Example: A gas station may be compatible with a residential neighborhood if the gasoline storage tanks are placed underground. The ordinance regarding special exceptions would have to set forth the requirements for permitting a gas station in a residential neighborhood.
        4. Discretionary or Non-Euclidean Zoning
          1. Cities have experimented with various types of non-Euclidean zoning to provide for more flexibility, but initial judicial objections have included the tendency toward favoritism, unfairness, and unpredictability. However, the trend is to uphold such devices as necessary for zoning.
          2. Contract Zoning (Conditional Zoning)
            1. Where a city agrees to zone or rezone a particular tract of land on condition that the owner execute a contract or covenant restricting the use of the tract in specified ways.
            2. It’s a method whereby, on application by the owner, the city can tailor planning considerations to the particular tract, permitting the owner to develop the land in ways that do not harm the neighborhood.
            3. For example, the city might require a developer to renovate a traffic intersection adjacent to her property in return for its changing the zoning so that she can build a grocery store.
          3. Density Zoning (Cluster Zoning)
            1. Rather than having 100 families living on 10,000 square-foot lots, some developers wanted to cluster the houses by putting them on smaller lots, leaving the unused land for a park or recreation are. The overall density does not change, only the distribution of the population. This was once forbidden but now is common.
          4. Floating Zoning
            1. A city, as an example, can create a new zone but not provide any geographic location for it. A developer can come along to have the zoning for her tract of land changed to the “floating” zone. Once forbidden, this is now a common way of encouraging new types of developments.
            2. Policy: Allows planners to postpone site selection until specific proposals are made; prevents over-zoning for uses before they’re needed.
              1. Criticism. It used to be argued that these are in violation of the requirement of a comprehensive plan, which gives predictability as to future use. Also denied equal protection. Courts now usually hold that they are like variances and special exceptions and therefore should be upheld.
          5. Planned Unit Development
            1. This takes cluster zoning one step further and permits several different uses to be clustered on one tract of land. Thus, an apartment building may be next to a single-family home, which may be next to a park area.
              1. Criticism. Violates the essence of zoning by ignoring lot lines and mixing uses
    6. Purposes of Zoning
      1. Zoning for Aesthetic Objectives
        1. Old Doctrine
          1. Police power cannot be used to accomplish objectives that are primarily aesthetic.
          2. No rationale, but probably based on a couple of things:
            1. Beauty is subjective
            2. Zoning was originally conceived to deal with nuisance, and visual nuisances were not actionable while nuisances that offended other senses were
        2. New Doctrine
          1. Police power can be used to regulate for primarily aesthetic objectives
            1. Limitations by some courts:
              1. The standard must be one that the prohibited use offends the sensibilities of the average person and tends to depress property values
              2. Basically, is it ugly and will it make property less valuable?
            2. State ex rel. Stoyanoff v. Berkeley
              1. Held: A building permit may be refused if a proposed house is found to be grotesque by a city architectural review board
              2. The stabilizing of property values is one of the most cogent reasons behind zoning ordinances. It is well within the promotion of the general welfare as state in the enabling act.
              3. Property that offends sensibilities and debases property values affects not only adjoining property owners but also the general welfare. Grotesque structures, detrimental to the value and welfare of surrounding property and to the general welfare and happiness of the community, are to be avoided.
              4. Aesthetic considerations are  a matter of general welfare.
              5. The fact that the ordinance provides for an architectural board, composed of three architects (nonelected officials), is not an impermissible delegation of power. The general standards provided for in the statute are sufficiently specific to guide the board (“conform to the existing character of the neighborhood and not cause a substantial depreciation in neighboring property values”). This is adequate protection against the exercise of arbitrary and uncontrolled discretion of the city council. Further, after an adverse determination, a property owner may appeal to the city council.
            3. Advertising Signs
              1. Commercial advertisements may be prohibited in residential areas, on the theory that they are harmful to the quiet tranquility sought in residential areas. If the commercial use itself can be excluded, the advertisement of it can also be excluded.
              2. Political Advertisements
                1. City of Ladue v. Gilleo
                  1. Political speech occupies a preferred position and is given greater protection than most other kinds of speech.
                  2. Signs displayed at one’s residence carry a unique message. They identify the speaker, an important component of efforts to persuade. They reach neighbors. They have played an important part in political campaigns. A special respect for individual liberty in the home has long been part of our culture and our law; that principle has special resonance when the government seeks to constrain a person’s ability to speak there.
              3. Commercial Advertisements
                1. In Metromedia, Inc. v. San Diego, the Court held unconstitutional a San Diego ordinance imposing substantial prohibitions on outdoor advertising displays within the city in the interest of traffic safety and aesthetics. The Court found that the city treated commercial speech more favorably than noncommercial speech and in effect eliminated the billboard as an effective medium of communication for noncommercial messages.
      2. Zoning against adult entertainment
        1. A zoning ordinance that permits adult entertainment, but disperses or limits it to certain zones is constitutional. Even though it seems to violate equal protection and discriminates based on content, the Court has found that it serves a substantial government interest while still allowing for reasonable alternative places for adult entertainment.
        2. The Court has held that total bans on nude dancing have been valid because of the government’s substantial interests in combating crime and the secondary effects by the presence of such facilities.
      3. Zoning and religious establishments
        1. RLUIPA prohibits:
          1. Land use regulations that impose substantial burdens on religious exercise unless the government demonstrates that the regulation is in furtherance of a compelling state interest and is the least restrictive means of furthering that interest;
          2. Regulations that treat religious institutions unequally relative to nonreligious institutions or otherwise discriminates against them; and
          3. Total exclusion of religious institutions from a jurisdiction
      4. Zoning for preservation
        1. Historic Preservation
          1. Historic Districts
            1. Ordinances directed toward historic preservation are generally valid. Standard for new buildings is conformity with the “character of the district” and is usually much clearer because the architecture is usually more uniform. Not a taking; preservation of a historic district is a gain, not a loss, to landowners, so there is a reciprocity of benefit from the regulation.
          2. Individual Landmarks
            1. Preservation of individual buildings that are deemed historically important but are not in a historic district raises serious constitutional issues (EP & takings) not raised by district wide problems.
            2. Because there is no historic district with many owners affected, one historic building can impose huge costs on everyone else
            3. Penn Central Transportation Co. v. City of New York
              1. The Court sustained NYC’s landmark law, which prohibited building an office tower  above Grand Central. It held that owners could not establish a taking by showing that they had been denied the right to exploit airspace.
              2. The court resolved the issue by focusing on uses permitted, not uses prohibited.
        2. Preservation of Open Space
          1. Agricultural Zoning
            1. A city may establish policies regarding conversion of agricultural land on the edge of the city to urban development. It may hold land in an agricultural zone until such time as the land is needed for urban purposes.
          2. Wetlands Zoning
            1. Most state courts now uphold wetlands preservation legislation.
      5. Exclusionary Zoning
        1. Nontraditional Families
          1. Village of Belle Terre v. Boraas
            1. Police Power is not confined to elimination of filth, stench, and unhealthy places, but may be used to lay out zones where “family values, youth values, and the blessings of quiet seclusion and clean air make the area a sanctuary for people.”
            2. Justice Douglas defers to the government here, and finds that as long as the definition of family has a rational basis to preserving family values and quiet seclusion, it passes muster
            3. Prof. thinks the most damaging thing about this case is the over- and under-inclusivity of the law; there’s no numerical limits on related people even if there health and safety related reasons for there to be so (underinclusive); and there’s a strict limit on unrelated people even when there might not be a reason (overinclusive)
        2. Excluding Group Homes
          1. City of Edmonds v. Oxford House, Inc.
            1. The Fair Housing Act (FHA) prohibits housing discrimination against handicapped persons. Section 3607(b)(1) of the FHA exempts reasonable governmental restrictions on the max number of occupants permitted to occupy a dwelling.
            2. While maximum occupancy rules clearly fall within the FHA’s exemption, rules designed to preserve the family character of a neighborhood, fastening on the composition of households rather than the total number of occupants living quarters contain, do not.
          2. Reasonable Accommodation
            1. In accommodating group homes, a city may not require a permit for group homes that is not also required for other multiple-residence dwellings. This reflects prejudice against handicapped persons and does not bear a rational relationship to a legitimate state objective.
        3. Excluding traditional family
          1. The Supreme Court held invalid a single-family zoning ordinance that defined “family” as not more than one set of grandchildren. [Moore v. City of East Cleveland, 431 U.S. 494 (1977)] The reason was that the intrusion into the family was too great; the Court could not defer to the legislative findings. Belle Terre was distinguished because it affected only unrelated individuals.
          2. If the definition of family excludes the traditional family, including extended family, the ordinance requires a higher standard of justification that rational relationship, but less than strict scrutiny
        4. NIMBYism
          1. The federal Constitution generally will not prohibit a ban on unrelated persons living together (think “frat house”), but the Fair Housing Act might if the ban discriminates against persons with handicaps.
          2. The FHA has an exception for ordinances that cap the total number of persons who live within a home, but not ordinances that attempt to limit occupants by composition (e.g., no more than five unrelated persons)
          3. An attempt to limit the number of traditional family members (including extended family) probably will be found unconstitutional.
        5. Low-income persons
          1. By regulating various zoning requirements (density, minimum floor space, types of housing), a community can separate the rich, the poor, and the middle class. The old line of cases required that the zoning requirement or regulation bear a rational relationship to a permissible governmental purpose. One of these purposes was to prevent overcrowding.
          2. Exclusionary goal: If the particular zoning ordinance bore no reasonable relationship and had an exclusionary purpose, it was struck down.
          3. Modern trend – the fair share test
            1. Some recent cases have held that any zoning ordinance with an exclusionary impact must be scrutinized in light of the needs of the region. The impact of this is that developing communities must have their share of low and moderate income housing.
          4. Southern Burlington NAACP v. Township of Mount Laurel
            1. Considering the basic importance of the opportunity for appropriate housing for all classes, no municipality may exclude or limit categories of housing solely for fiscal reasons.
            2. Every developing municipality must, by its land use regulations, presumptively make realistically possible an appropriate variety and choice of housing.
            3. When land use regulation has a substantial external impact, the welfare of the state’s citizens beyond the borders of the municipality cannot be disregarded.
            4. When it is shown that a developing municipality has not made realistically possible a variety and choice of housing, a facial showing of violation of substantive due process or equal protection has been made out and the burden shifts to the municipality to establish a valid basis for its action.
            5. A developing municipality’s obligation to afford the opportunity for decent and adequate low and moderate income housing extends at least to that municipality’s fair share of the present and prospective regional need therefor.
          5. Mount Laurel II
            1. The constitutional power to zone, as a portion of the police power, must be exercised for the general welfare. Thus, zoning regulations that do not provide the requisite opportunity for a fair share of the region’s needs for low and moderate income housing are unconstitutional.

 

  1. Themes/Policy of Property
    1. Property refers to the legal relations between persons with respect to things.
      1. Essence of property is ownership
        1. With ownership comes power
        2. Property is a socially enforceable claim to ownership
    2. Bundle of rights theory
      1. Property consists of many different rights. When one part is affected, the whole property interest is affected.
        1. Right to include
        2. Right to exclude others (VERY IMPORTANT)
        3. Right to do things on that property
        4. Right to sell v right to give [Moore v Regents]
      2. State stands behind property owner’s assertion of right
    3. Right to Include, Right to Exclude
      1. Policy
        1. Power of exclusion helps to deal with tragedy of the commons – overconsumption of commonly owned resources. Private property helps to internalize externalities. Demsetz.
        2. Ability to enjoy future stream of revenue incentivizes conservation. Owners can more easily transact with others. Demsetz.
        3. Externalities a function of transaction costs. Dukeminier.
        4. Against policy: multiple rights to exclude can yield tragedy of anti-commons, as with Moscow storefronts. Heller.
          1. This is due to high negotiation costs, hold-outs, free riders…
      2. Individual has a strong interest in excluding trespassers. [Jacque v Steenberg Homes]
        1. Courts see infringements on this stick as serious, it destroys the private property right, and look unfavorably at it, punitive damages.
      3. Power to exclude is not absolute. [State v. Shack]
        1. There may be contravening social policies for ignoring this right. Ex: There is no right to exclude state or aid workers from housing owned by a company.
        2. Policy:
          1. Title is to the land, not to the people who live on the land.
          2. Real property rights are not absolute. They’e relative to the rights that property is being weighed against. Here it’s property v. human rights.
    4. Alienability
      1. For property to be property it has to be alienable (capable of being sold or transferred) to an extent – if you can’t get rid of it then it doesn’t really count
      2. The value of owning property is in the current use AND in the ability to sell for a higher price in the future.
      3. Why non-alienability is adverse to fee simple possession:
        1. The land might not be able to be used for the best use
        2. Perpetuate concentration of wealth by not allowing owner to sell and use profits
        3. Discourage improvements because the owner won’t benefit from increasing the land value, and because no mortgagers would provide money for improvements because they couldn’t sell the land to recover if the owner defaulted
        4. Prevent the owner’s creditors from reaching the property, so the creditors can’t use the property as a basis for extending credit.
    5. Theories of Property (from class notes)
      1. Property systems are a means of distributing and redistributing the wealth of a society
      2. Private property nourishes individuality
      3. Private property is essential to political freedom
        1. Friedman: importance of free transferability (allows A to sell property to B at a price they both agree on)
        2. Jefferson: tension arises from unfettered transferability: it liberates individuals from one form of dependency—feudal hierarchy—but exposes them to another kind of dependency—markets and manufacturing
      4. Property gives an individual a degree of protection from the state
      5. Property ownership also gives an individual an incentive to participate in the government to protect their own interests—gives the individual a stake, a sense of commitment to the state