System of Estates

150 150 tony

System of Estates

Present Estates

Fee simple absolute and Defeasible Fees

Fee Simple Determinable with Possibility of Reverter

FS subject to condition subsequent with right of entry

FS subject to Executory limitation with Executory Interest

Wood v. Board Commrs

Cathedral v. Garden City

Life Estates, Reversions and Remainders

Contingent and Vested Remainders

Vested Remainders subject to open or divestment

Destructiblity of contingent remainders

Rule against Perpetuities

Traditional Rule

Modern Modifications

Concurrent Ownership

TC and JT

Tenancy in Common (no right of survivorship): two or more people own the property with no right of survivorship between them; when one tenant in common dies, her interest passes to her heirs or devisees

  • Undivided interest: right to possess entire parcel
  • Magic words: O to A and B as Tenants in Common
  • Modern default: presumed if unspecified conveyance to two or more
  • Divisible in varying fractional amounts: O to A, B, C as TC with 25% interest in A etc.
  1. Nature of TC
    1. Right to Possession: each TC has right to possess and enjoy the entire property, subject to the same right in each co-tenant.
    2. No right of Survivorship: when one TC dies, interest passes to her devisees or heirs. Does not go to surviving TC.
    3. Equal shares not necessary
  2. Alienability:
  • A TC can sell/give/devise/dispose of her undivided share in the same manner as if she were sole owner of property.
  • Presumption of TC: when conveyance is to people who aren’t married, presumption is that they’re TC not JT. ..for unmarried AB to get JT, grant must EXPRESSLY INDICATE that JT is intended, sually done by express mention of right of survivorship. If married, then it’s Tenancy by Entirety.

Joint Tenancy (right of survivorship): Two or more people own the property with a right of survivorship; when one joint tenant dies, the survivor takes all. Remember that CL required four unities (time, title, interest, and possession) for joint tenancy.

  • Undivided interest: right to possess entire parcel + survivorship rights
  • Magic Words: O to ABC as JTs
  • Requires four unities…
        1. Time: created at same moment in time
        2. Title: by same instrument of title
        3. Interest: conveying equal undivided fractional interests
        4. Possession: that give all JTs right to possess entire P.
  • Severance: can reduce a TC by severing 4 unities..except??
  1. Nature of JT
    1. Right of survivorship…the T who lives longest takes property by herself
    2. Conveyance/devise required: JT can be created by deed or will or joint AP.
    3. Can be real or personal property
  1. Four Unities Requirement (must take their interests at the same time, by the same instrument, with identical interest, and with equal right to possess the whole property..all four must be present)

Tenancy by Entirety: exists only between husband and wife, with right of survivorship that cannot be severed without consent of both spouses.

  • Minority Rule..20 states
  • Magic Words: O to A and C as TE
  • Requires that holders are legally married (cannot be partitioned except by divorce…cannot be unilaterally destroyed…creditors cannot attach to satisfy debt by one spouse)
  1. Nature of TE (form of concurrent ownership that can be created only between a H and W, holding as one person..it’s like JT plus one more factorunity of marriage)
  1. Fiction of one person
  2. Severance by one T impossible (in JT, severance is possible)
  1. Creation: presume that conveyance to H and W creates TE.
  2. Divorce: divorce terminates unity, and therefore TE. Sometimes it’s converted into JT, but some convert into TC on theory spouses don’t’ want surviroship rights after divorce.

1. The Mortgage Comes Due.  Who Pays What?

They both owe equal amounts.

2. A Transfer Her Interest To C.  Who Has What?

A cannot transfer her interest.

3. A Runs Up Enormous Gambling Bill, Casino Comes Knocking, Remedy?

A must pay the debt and cannot attach the house. 

4. B Runs Up Enormous Credit Card Debt on Family Charge Card?  Remedy?

The house can be attached. 

5. A Changes the Locks and Bars B From the Premises. Remedy?

Ouster.  A owes B $

6. A & B Have a Fight, B Moves in With Girlfriend. Remedy?

Husband has left voluntarily and has no remedy

7. B Conveys to “Straw” Party and Back. Who Has What?

B cannot convey or transfer her interest. 

8.  A Sues For Partition but B Objects.  Remedy?

Partition is no remedy for tenancy in the entirety.  Divorce is the only remedy. 

Possession, ouster and rent

Olivas v. Olivas

FACTS

Husband moves out of house that he and his wife had lived in and moves in with his girlfriend. 

Claims that he was constructively ousted and is entitled to payment for his ownership share.

THE RULE

When a spouse departs a residence held as community property due to marital friction, a constructive ouster is effected

A constructive ouster can occur when the emotions of a divorce make it impossible for the former spouses to continue to share the marital residence. 

The ousted cotenant bears the burden of proving his claim for ouster.

HOLDING

In this particular case, P fails to prove his claim for ouster; his claim was three years late and he had moved out of the house to be with his girlfriend. 

Transfer: Use?

Carr v. Deking

FACTS

Father and Son are tenants in common.  Father strikes a deal with a rentor without consent of the son. 

THE RULE

A cotenant may lawfully lease his own interest in the common property to another without the consent of the other tenant and without his joining in the lease. 

P had other options; he could have forced an accounting with his father, he could have leased to someone else for cash, he could have asserted his right to possession and used the land to the detriment of D, he could have sued for partition. 

  • Any rent or other income collected by a co-tenant from a 3rd party must be shared equally with other co-tenants if the income exceeds the collecting co-tenatn’s proportionate share. The collecting co-tenant must account to others for their proportionate shares. Collecting Co-T must account for the net amount actually received, nto for the reasonable rental value of the land.

Transfer: Death?

Tenhet v. Boswell

FACTS

Johnson and P owned a parcel of property as joint tenants.  Without P’s knowledge or consent, Johnson leased the property to D for a period of ten years.  Johnson died shortly thereafter and P sought to establish her sole right to possession of the property as the surviving joint tenant.

After an unsuccessful demand upon D to vacate the premises, P brought an action to have the lease declared invalid.

HOLDING

A lease entered into by a joint tenant does not sever the joint tenancy

A lease entered into by a joint tenant expires upon the death of that tenant

REASONING

A joint tenancy must be expressly declared by a written instrument or a tenancy in common results.  Likewise, severing a joint tenancy requires a demonstration of a clear and unambiguous intent to terminate the estate. 

NOTE

There is great jurisdictional variation on this issue

Transfer: Divorce?

Kresha v. Kresha

FACTS

The Kreshas were husband and wife and co-owners.  The husband, without knowledge or consent of the cotenant, leased the land to the son for a six year period. 

The couple divorced, and a dissolution decree awarded the lands to the wife who attempted to remove the son from the lands and terminate the lease.

HOLDING

Pursuant to a divorce proceeding where one party is awarded the entire ownership of certain lands, those lands are taken subject to leasehold interests in the ex-spouse’s former ownership interest. 

REASONING

As long as the new owner has notice of the encumbrance, they are bound.

Marital Property

TE

Sawada v. Endo

FACTS

P’s, who were injured when struck by a car driven by D and unable to obtain satisfaction of their judgments from D’s personal property, sought to set aside a conveyance by D and his wife of some land which had been held by them as tenants by the entirety.

HOLDING

The interest of one spouse in real property, held in tenancy by the entirety, is not subject to levy and execution by his or her individual creditors absent consent of both spouses. 

REASONING (MAJORITY)

Following the passage of the Married Women’s Property Acts, the estate became indivisible except by joint action of the spouses. 

Neither the husband nor wife has a separate divisible interest in the property that can be conveyed or reached by execution. 

The spouses can jointly convey the property free of any judgment liens against the husband or wife as individuals. 

This is in accord with the purpose of the estate; to protect a spouse from the other spouse’s improvident debts. 

The court here makes a “pro-family” policy decision. 

REASONING (MINORITY)

The effect of the Married Women’s Act, if properly interpreted, was not to take from the husband his common law right to transfer his interest but to give the wife the same right to alienate her interest in the estate.  Thus, the judgment creditors of either spouse should be able to levy and execute on the separate interests, at least to the extent of the husband’s or wife’s right of survivorship.

Covertures, Dower and Curtsey

Community Poprety, Pre Nups, Homestaed

Homestead Laws

Almost all states have homestead acts designed to protect the interests of the surviving spouse and children in the family home from the claims of creditors of the deceased spouse. 

Marital Dissolution

Obrien v. O’Brien

FACTS

The divorcing wife (D) of P claimed a marital property interest in his medical license. 

HOLDING

A professional license may constitute marital property

REASONING

Husband argues that the medical license is not alienable and has no market and that it is therefore not at all like “property”

The wife, however, argues along the lines of a labor investment theory.  Additionally, the license will provide future earnings and is similar to a real estate investment

New York’s Equitable Distribution Law provides that spouses have an equitable claim to things of value arising out of the marital relationship, whether or not such things of value fit into the common law notion of property. 

Here P’s professional license constitutes the most valuable marital asset, and an equitable division of its value is proper.

NOTE

The NY opinion as set forth in this case, is the minority in the United States.  Most jurisdictions do not consider graduate degrees as property whose value is divisible on divorce under statute providing for equitable distribution of property acquired during the marriage. 

Marital Property

Separate Property:  Everything belongs to whoever received it, unless conveyed as joint property. 

Divorce: CL: if H earned wages & W not, H owns all (W gets dower);

  Modern statutes: equitable distribution (up to ½ on sliding scale). 

Death: some give spouse 1/3-1/2 of estate even if willed elsewhere.

Community Property:  All acquired before the M is separate prop; all acquired during the M (including earnings!) is community prop.  (Exc.: gifts & inheritances to 1.) Ergo: both own undivided ½ of CP.

Divorce: some: spouse gets ½ of CP, some: “equitable distribution.” 

Death: spouse gets ½ of CP even if willed away (b/c already owns it).

Leaseholds

The Leasehold Estate

  Lease sets basics: duration, rent, location, parties; SoF if >year

All other terms can be set either by K or lgl defaults.

  Entitles: ▪ T to immediate and exclusive possession of land

LL to reversion, right to receive any specified rent.   Self-help?

  During Ls, T may exclude all others, incldg LL (unless K otherwise) 

Covenant of Quiet Enjoyment: LL promises not to disturb T’s psn

  Unless K otherwise, L & T may transfer all or some rights to others

T must not commit “waste” (damage beyond normal wear & tear)

Types of Tenancies:

Term of Years: Lasts for any specified period of time.

  • FI retained by grantor is reversion
  • FI retained by possible third party is remainder
  • Death of either party does not terminate the tenancy

Periodic: Automatically renews at specified intervals, unless stat. notice given by LL or T; heritable. M2M, Y2Y

  • Renewd automatically each month if neither party notifes the other that he intends to end the relationship.
  • Death does not terminate tenancy, unless the devisees choose to do so.
  • Notice of termination should be equal to length of period…but exception is year to year, then only 6 months notice is required.

At Will: Informally created, mostly by mistake or in families.  Less or no notice to terminate, ends at death of either LL or T.

  • Can terminate at any time, either party.
  • Endsn at death of either party

At Sufferance: Not really a tenancy at all—but useful to describe the “holdover” tenant (1 rung above trespasser re: eviction rights).

          • A tenant rightfully in possession who wrongfully stays after the leasehold has terminated is called a tenant at sufferance or a holdover tenant. 
          • No legal right to possession
          • They differ from a trespasser in that an eviction proceeding and court judgment are usually required to evict them. 

If take under invalid ToY but pay monthly?  Oral multi-yr Toy?

Statute of Frauds

The statute of frauds in most states provides that contracts for more than a one-year term must be reduced to writing while those for less than a one-year term may be enforceable whether they are oral or written. 

Conveyance or Contract?

  • Conveyance of an estate or contract for a service?
  • Both…

Landlord’s Rights

  1. Right to receive rent
  2. Righ to have premises intact and not damaged
  3. L’s reversion or right to regain possession

Landlords’ Remedies When Tenant Breaches and Refuses to Leave

1. Possession and Back Rent

2. Renewal of Tenancy for Holdover Tenant

3. Self-Help

No longer allowed in most jurisdictions

4. Summary Process

Aka: forcible entry and detainer, unlawful detainer, summary proceedings, and summary ejectment.

Landlords’ Remedies When Tenant Breaches and Leaves

1. Accept the Tenant’s Surrender

This does not mean that the tenant is relieved of all financial liability

Landlord may still sue for damages and breach of the lease (agreed upon rental price – the fair market price)

2. Re-Let on Tenant’s Account

The landlord may refuse to accept the surrender, instead, the landlord may, after notice to the tenant, actively look for a new tenant and re-let the apartment on the tenant’s account. 

3. Wait and Sue For the Rent at the End of the Lease Term Versus Mitigate Damages

However, most states now impose a duty upon landlords to mitigate damages – to act reasonably in finding another tenant.

Duty to Mitigate Damages

Efficiency Argument

We want to encourage the efficient use of space because space is rare.

However, it is important to note that if there is a surplus of space

Counter-Argument

The whole system of contracts only works when there are  penalties for violating contracts.  This rule decreases the incentives of a tenant to adhere to their contract.

LL’s Right to Receive Rent

Duty to Mitigate Damages

Sommer v. Kridel

FACTS

P did not attempt to re-let the premises he had leased to D, even though the opportunity to do so existed and D had specifically informed P that he was unable to go through with the leasing for personal reasons and asked for acceptance of his surrender. 

HOLDING

A landlord has an obligation to make a reasonable effort to mitigate damages when a lessee “surrenders,” meaning that he must make a reasonable effort to re-let the premises. 

REASONING

The lease is no longer simply a conveyance giving the tenant control over an estate and making his abandonment of as little concern to the landlord as would be the tenant’s abandonment of property he owned out-right and not simply for a term.

The introduction of contractual obligations suggests a duty to mitigate damages.

As the landlord is in a better position to prove that he used reasonable diligence in attempting to re-let the premises, the burden of proof on that issue lies with him.

NOTE

It is now the majority rule that the landlord has an obligation to mitigate the damages. 

Acceleration Clauses

Such clauses make the rest of the rent due immediately if the tenant abandons the premises or otherwise breaches the lease in a material way.  This is a way of contracting around the duty to mitigate. 

Subletting and Assignments

Slavins v. Brookline

FACTS

P sought a certificate of eviction in an attempt to evict a tenant for violation of a lease provision requiring the landlord’s consent for another person to occupy the premises, D refused to issue the certificate on the ground that P had acted unreasonably. 

HOLDING

A lease provision requiring the landlord’s consent to an assignment or sublease permits the landlord to refuse arbitrarily or unreasonably.

REASONING

In light of prior decisions and in the absence of a demonstrable trend involving residential leases in other jurisdictions, there appears no need to impose on residential landlords a reasonableness requirement.  The question is one of public policy which the legislature is free to address. 

A rule of reasonableness would engender a plethora of litigation about whether the landlord’s withholding of consent was reasonable. 

Tenant’s Right to Assign or Sublet

A. When the Lease is Silent

General Rule: the tenant is entitled to transfer her possessory interests in the premises by either assignment or sublease (Note: this is justified by the policy of promoting alienability).

I. Assignment

Conveys all the tenant’s remaining property interests without retaining any future right to enter the property

New tenant is responsible for dealing with landlord and covenant’s

II. Sublease/Sublet

Tenant retains some future interest or the right to control the property in the future. 

Subtenant and landlord are in privity of estate and tenant and landlord are in privity of contract.

Landlord may have no ability to sue the subtenant but retains the right to evict.

B. When the Lease Requires the Landlord’s Consent

Difficulties in this area arise with regard to whether a clause stating “no subletting without the landlord’s consent” also encompass assignments.

C. The Lease Prohibits Assignment and Subletting

T’s right to Habitable Premises

Constructive Eviction

Minjak v. Randolph

FACTS

D’s withheld their rent due to the condition of the loft space they were leasing

P brought action for non-payment, and D’s counterclaimed for breach of warranty and habitability.

HOLDING

A tenant may assert a defense of constructive eviction for the nonpayment of rent, even if he or she has abandoned only a portion of the demised premises due to the landlord’s act.

There is a proper claim to partial constructive eviction

REASONING

A portion of the property had in fact been abandoned because it was made unusable by P’s acts.

The morally culpable conduct allows for punitive damages as it was dangerous and offensive.

The Doctrine of Constructive Eviction

Landlord’s acts that are so injurious to T’s quiet enjoyment as to justify abandonment will be regarded as tantamount to eviction

Applies When:

Landlord engaged in an intentional act that causes the interference, or

Landlord failed to act in accordance with an express or implied duty in the lease agreement. 

Traditional Rule

To claim complete constructive eviction, you had to abandon the property.  This has been modified, See Restatement.

L’s Duty Not to interfere with T’s Quiet Enjoyment

  1. Covenant of Quiet Enjoyment
  • A T has right of quiet enjoyment of the premises without interference by the landlord. If not expressed in the lease, such a covenant is ALWAYS implied
  1. Actual Eviction
  • If a T is evicted from entire premises by anone, the T’s rent obligation terminates
  1. Partial eviction: If T is evcited from all or any portion of the leased premises by the L, his rent obligation abates entirely until possession is restored to him. If T is partially evicted by 3rd party with paramount title, T can termiatne lease, recover damages, or receive proportionate rent abatement
  1. Constructive Eviction
  • If L substantially interferes with T’s enjoyment of the premises without actually evicting T, T can claim constructive eviction and vacate the premises (where water floods basement office)
  1. Remedy: T’s only remedy is to move out within a reasonable time and claim damages

Blackett v. Olanoff

FACTS

D alleged that P. the landlord, had breached his covenant of quiet enjoyment as a defense to an action for rent

Landlord rented space to a bar/lounge next door to his residential properties. 

HOLDING

Where a landlord permits conduct of third persons which substantially impairs the ability quiet enjoyment of other tenants, it is a constructive eviction.

REASONING

Normally there must be some action by the landlord himself which causes the constructive eviction; however, where the landlord permits an activity to continue, which he can control, which causes significant impairment of the rights of other tenants, this constitutes a breach of the landlord’s covenants.

The court extends the landlord’s duty to encompass the behavior of third parties whose behavior the landlord might be partially responsible for. 

NOTE

Where do we draw the line as far as the landlord’s responsibility is concerned?  When are a third party’s acts foreseeable?

Express and Implied Terms

Implied terms are those which need not be written down of explicitly discussed to be binding.  This includes the covenant of quiet enjoyment.

Restatement (Second) of Property (pg. 707)

There is a breach of the landlord’s obligations if, during the period the tenant is entitled to possession of the leased property, the landlord, or someone whose conduct is attributable to him, interferes with a permissible use of the leased property by the tenant.

Implied Warranty of Habitability

Javins v. First National Realty Corp.

FACTS

D refused to pay rent due to approximately 1,500 housing code violations in the building.  The landlord, P, brought suit to recover possession and past-due rent.  The trial court refused D’s offer of proof as to the violations, finding that their presence was not a defense.

HOLDING

Leases of urban dwelling units contain an implied warranty of habitability, and breach of this warranty gives rise to the usual remedies for breach of contract

REASONING

The old common law rule that the lessor is not obligated to effectuate repairs unless he covenants to do so in the lease is outdated and must be rejected. 

Because a lease contract specifies a time period during which the tenant has a right to use the apartment for shelter, there is a legitimate expectancy that the apartment be fit for habitation during the term of the contract.

The common law rule must give way to the public policy demands of modern times – contract law is applicable to leases.  The continued vitality of the common law depends upon its ability to reflect contemporary community values and ethics. 

Caveat emptor is void.  There are implied warrantees of product based upon least cost avoider arguments.  The market for real estate is the same as the market for other goods and services.