Property Outline 2014.docx

Property Outline 2014 Chapter 1: The Concept of Property

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Private Property is the preferred method of owning property—What are the justifications for protecting private prop rights?: o Protect first possession o Encourages Labor & investing in your property (John Locke Theory) o Maximizes societal happiness- maximizes wealth of society (Utilitarian theory) o Fundamental tenant of democracy o To facilitate personal development—property becomes part of your “self” and that should be protect (personhood theory) Jeremy Bentham – “Without law, there are no enforceable property rights.” NO LAW = NO PROP Ownership by 1st possession

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Pierson v. Post – fox chase on the beach, one party chased, one party killed o KEY: Actual possession = Possession. Pursuit is not enough. o

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Rule of Capture is the test- you have to actually capture and possess the thing in order to have ownership

o Dissent: the one who labors after the object should get possession o Constructive Possession: (common law) – the owner of land has rights to animals on their prop (make distinction between domestic and wild animals) Popov v. Hayashi – Barry Bond’s record home run ball, one tried to catch it, mob swarmed and another ended up with it o KEY: The actor must have complete control in order to gain possession; thus, ownership. (Gray’s Rule) o PP: court did not follow this because it would encourage violence from people attempting to get full control of the ball (actual result would encourage people to try and get a small interest in the ball) Rights to a prop – bundle of sticks

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Bundle of Sticks 1. Right to possess/occupy 2. Right to exclude 3. Right to use 4. Right to the income 5. Right to consume 6. Right to destroy 7. Right to transfer/alienate

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Right to transfer – any owner may freely transfer or alienate any of her property to anyone o Johnson v. M’Intosh – Indians attempting to transfer land, but they did not have the right

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Jeremy Bethane logic – The rights of the prop only exist to the point that the govt allows  Holding: the Indians have a right to occupy and exclude all others, but the law only gave them the right to transfer land to the fed govt.  KEY: The prop rights of individuals are limited by the sovereign govt. o Moore v. Regents of Univ. of Cal. – man has operation to remove spleen and doctors use his spleen w/o consent for research, they make millions.  KEY: Human cells are not unique, so he has no prop rights to them in regards to research. Humans lose rights to their tissue once it leaves their body due to Health and Safety Codes. (omitted) 

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Right to Exclude – comes up in trespass cases o Trespass – any intentional and unprivileged entry onto land in possession of another o Common law limitations on right to exclude:  Consent  Necessity  This is because there is a clash between individual’s rights to exclude and society’s interest in access/use of resources. o Jacque v. Steenberg Homes – mobile home delivery crossed P’s prop after D was told not to.  Balance of owner’s interests and Society’s interests  Owner’s interest: must protect their right to exclude others from their property. Otherwise, this could lead to adverse possession.  Society’s interest: Private landowners should feel confident that wrongdoers who trespass upon their land will be appropriately punished. Must protect integrity of the legal system. This ruling helps prevent self-help violence. Society should be able to expect that wrongdoers will be punished to deter this behavior.  KEY: The court gives damages here because the harm is to the right to exclude, NOT harm to the prop. o Nominal damages – damages that recognize a right has been violated, but there was NO harm done. o Punitive damages – damages used for punishment o State v. Shack – workers need help, people come to give help, land owner excludes them from coming onto land  KEY: creates exception to the right to exclude.  If you invite someone onto property, you CANNOT exclude their guests, as long as their purpose in being there is not hurtful to others.  The right to exclude is NOT absolute, you must look at the interests of everyone involved. Right to use o Sundower Inc. v. King – D built a fence on his property which restricted light onto the P’s prop.

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KEY: The right to use your property allows you to do things that could possible harm your neighbor, as long has it has some value to you.  If it is done out of spite or with no value then it is not allowed. o Spite fence: fence that has no purpose, and purely spiteful  If it has a purpose, then NOT a spite fence o Prah v. Maretti – D builds a house that interferes with P’s ability to use his solar panels (omitted)  KEY: Use the private nuisance rule.  An intentional, nontresspassory, unreasonable, and substantial interference with the use and enjoyment of the plaintiff’s land.  This could possibly be a private nuisance, but not in all cases.  Most of the time a nuisance case is a balance b/t two people who are doing things right and we must decide which way to rule that benefits the most people. SOMETHINGS GOTTA GIVE. Right to Destroy o Eyerman v. Merchantile Trust – Woman dies and leaves will saying she wants house destroyed at her death. Neighborhood sues to keep from destroying it.  KEY: The taking of prop by inheritance or will is not an absolute or natural right, but one created by the laws of the sovereign power and can be limited by law.  While living a person may manage, use, or dispose of prop with fewer restraints than a decedent will have by will.  The rights to the prop are limited upon death  PP: destruction would harm the surrounding neighbors Adverse Possession

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Adverse possession operates as a SOL on a landowner to remove a trespasser. Justifications for adverse possession 1. Prevent fraud claims - longer you’ve been in possession, the more likely your claim is valid

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2. Correct title defects 3. Encourage development (old school) – encourages those who put prop to good use, rather than those who let it sit 4. Labor theory – who has put the labor in it 5. Protect personhood reliance - (Justice Holmes)– the longer the adverse possessor has been there, the more the prop is a part of the owner, this trumps true title. Elements of Adverse Possession 1. Entry and actual possession a. The physical use of the land in the same manner that a reasonable owner would given its character, location, and nature b. RULE: the AP only takes title to the land actually possessed. 2. Exclusive possession a. The claimants possession cannot be shared with the owner or the public 3. Open and notorious possession

a. Possession must be visible and obvious. If the true owner inspected, he would become aware of an AP (cannot be hidden). 4. Adverse and hostile a. Possession authorized by the owner does NOT meet this requirement b. If use is permissive, it is NOT adverse c. SPLIT of Jurisdictions over what mindset is required: i. GOOD FAITH JURIS - Met ONLY if the claimant believes in good faith that he owns land ii. NO FAITH JURIS - Claimants state of mind is irrelevant iii. BAD FAITH JURIS - Requires bad faith – the claimant MUST intend to take title from owner (Extreme minority) 5. Continuous Possession a. Claimants possession must be as continuous as a reasonable owners would be given the character, location and nature of the land 6. Statutory Period – differs juris to juris When all the elements for adverse possession are met, title has ripened and you are the true owner Gurwit v. Kannatzer - Surveyor pointed out the wrong boundaries, which everyone relied on, and Ps lived there for 20 years until Gruender found out he actually owned the land and wanted them off…goes through the elements

1. Actual Possession- Claimant must actually use the land the way the actual owner would a. It was woods and they cut firewood, cleaned it up, etc. 2. Exclusive- Can’t be shared with the owner or public in general- (dominion or control independent of the true owner) a. Everyone knew the property was theirs and nobody went there without permission 3. Open & Notorious- Possession must be out in the open a. They were out in the open and weren’t hiding it- the actual owner doesn’t have to see you 4. Adverse & Hostile- Permission by the owner will NEVER satisfy this element. Three approaches to mindset: a. Good faith- Only met if he believes in good faith he owns the land but actually doesn’t b. State of Mind is Irrelevant c. Bad faith (minority rule)- Only met if he intends to take title from the owner 5. Continuous- As continuous as a reasonable owner’s use would be given the character, location, and nature of the land a. Does not require continuous occupation and use. The splitting of the firewood was enough because that was continuous use of a reasonable owner. 6. For the statutory period a. Gerwits possessed the land for 20 years (juris only required 10)

Fulkerson v. Van Buren – Church uses property without owner’s permission. Bad faith juris.

1. Actual possession – There was actual possession bc they improved the land like a reasonable owner would 2. Exclusive possession – They put up a fence to keep others off the premises 3. Open and Notorious – Next to a highway so improvements were obvious. True owner even complimented the updates. 4. Adverse and hostile – does not meet element because this was a bad faith juris and they believed the property was theirs in good faith 5. Continuous possession – they used it in a continuous fashion that reasonable owners would 6. Statutory period – Rule: A possessor is NOT adverse if he recognizes the ownership of another and does not make it clear that he intends to hold adversely. Tigoa v. Supermarket Gen. Corp – NO SOM (faith) juris. The adverse possessor believed the wrong party owned the prop. HOSTILE ELEMENT is in dispute Rule: If an adverse possessor actually takes possession of land in a manner that is open, notorious, exclusive, and continuous, his action will imply hostility to the true owner of the land as well as to the world at large, regardless of the adverse possessor’s state of mind. The Hostile possession element in no SOM juris is implied. Howard v. Kunto - Everyone was on the wrong property because the deeds were all mixed up. Ds were living on the property that P’s had the deed to. CONTINOUS ELEMENT is in dispute.

1. Actual possession – it was used how it should be used. They resided in it during the summer. 2. Hostile – had good faith that this was their prop. a. If it was a bad faith juris, they would not win. b. If it was objective juris, they would establish because it wouldn’t matter what they thought 3. Exclusive – did not share with the public or true owner. Exclusivity is established. 4. Open and notorious – used the land in such a way that the true owners could see them using the land. It was NOT hidden they lived there. 5. Continuous – used it during the time expected of a reasonable owner and as a normal owner would continuously use it. a. RULE – if you use the property as ordinarily expected, even if only during the summer, it can meet the continuous element. This was a summer home so it should only be expected to be lived in during the summer months. 6. Statutory period (10 years) – they meet this element due to TACKING a. Tacking is using more than one owner’s possession to equal the statutory limit requirement. b. Tacking REQUIRES privity. i. Privity requires some sort of substantial legal connection such as conveyance by deed or will. ii. Privity is no more than judicial recognition of the need for some reasonable connection b/t successive occupants of real property so as to

raise their claim of right above the status of the wrong doer or the trespasser. iii. Mere friendship will likely not be enough to establish privity. It is not a good enough reasonable connection iv. A will or intestate succession will likely be enough for privity for

Adverse Possession & the SOL (statutory period requirement) o When an adverse possessor dies the heirs will prob have privity and can take their time onto the previous possessors o When the true owner transfers the property it doesn’t affect the adverse possessor’s rights…the time keeps running o Disability: When the true owner is under disability, the SOL may stop…  The disability must be there when the adverse possessor satisfied all adverse possession elements  If the true owner is under disability, it stays the SOL and the SOL doesn’t start running until the disability is removed  If multiple disabilities, it’s the first present one and when that first disability is removed, the SOL starts running  Common disabilities: minor, unsound mind, imprisoned ****Know five justifications and six elements --Know three jurisdictional splits—good faith, bad faith, no faith gurwit, tagoya (no fiath),

Random adverse possession rules:

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The adverse possessor receives on the ownership interest that the true owner has. Adverse possession of property owned by government. o Unless there is a statute that says otherwise, there is no adverse possession of government property. Vertical Dimension of Ownership

5th amendment – private prop. Shall not be taken for public use without just compensation United States v. Causby – Military planes are flying over P’s prop. D attempts to get easement. (how high do your property rights go?)

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Rule: The landowner owns at least as much of the space above the ground as he can occupy or use in connection with the land. This is a case by case analysis. o Flights over prop. Are not a taking, unless they are so low and so frequent as to be a direct and immediate interference with the enjoyment and use of the land and decrease the value of the prop.

Chance v. BP – the P’s prop had been injured by the D’s plant. Waste went under the P’s property due to the D.

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Rule: Denies absolute ownership of everything below surface. Owners ONLY have rights to exclude subsurface invasions that interfere with their use and enjoyment of their property. To prove a subsurface trespass, the owner MUST show actual damages. Common law rule that they own to the depths is REJECTED.

Water Law

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Riparian use (reasonable use doctrine) (above ground water) o Allows a riparian owner to take water for reasonable uses on her land, but not to unreasonably interfere with the uses of other riparian owners. Prior Appropriation system (above ground water) o Water rights are allocated to the first person to divert the water for beneficial use Permit system (above ground water) o Require a permit for the diversion of surface water Ground Water doctrines (subsurface water) o Reasonable use – dominant view – surface owner may use groundwater only for a reasonable use on the overlying land o Correlative rights – surface owner is entitled to a proportional share of the groundwater beneath his land o Permit system – title to groundwater is vested in the state, so the surface owner can obtain water rights ONLY be securing a permit.

Sipriano v. Great Springs – water company uses up water under P’s land

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TX uses the rule of capture—very big minority o Rule of Capture – you can take as much water as you want o Follows first possessor logic (first come, first serve) extends Pierson v. Post FINDER’S LAW

Categories of found property - found means it is no longer in possession of the true owner and has come into possession of another

1. Lost Property – property is lost when the owner unintentionally and involuntarily parts with it a. Finder has better title 2. Mislaid Property – property that is voluntarily and knowingly placed somewhere, but then unintentionally forgets it a. Finder has better title 3. Abandoned property – when the owner knowingly relinquishes all rights, title, and interest to it a. MUST have intent element from true owner b. Ex. Garbage, donations

c. Finder has better title bc true owner relinquished rights 4. Treasure Trove property – when the owner concealed it in hidden location long ago. a. Usually limited to gold, silver, coins, or currency b. Almost never happens in the USA c. Key is “long ago” d. Some juris do not recognize this e. Finder has better title

Armory v. Delamirie – chimney sweep finds jewel

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Rule: Finder has superior rights against everyone, but true owner OR previous possessors. Trover – is cause of action to recover the value of the object Replevin – is a cause of action to recover the object itself

Relationship between the finder and the property (sweep to boss relationship)

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Bailment o Rightful possession of goods by a person (bailee) who is NOT the true owner (bailor) o This is a conveyance of property without conveyance of title o In a found property situation – the finder is the bailee o The bailee becomes the owner once the adverse possession elements are met

Hannah v. Peel – P finds brooch in D’s house. KEY to case is what type of “found property” is the brooch.

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Common law app – ct rules the brooch was lost property, so it will go to the finder because the D never had prior possession of the brooch. It was clear the brooch was never his, and he NEVER had possession. Rule – Modern approach – The landowner would get rights to the brooch because of constructive possession o Constructive possession – make believe possession  From the time you took title to the land, you took possession of everything on the prop; thus, giving you first possession.  Further, if he was trespassing and found the object, then the landowner would win even never being in possession bc we will NOT reward trespassers. Notes: o Hannah Court rewarded “meritorious” behavior of soldier who found and came forward. o South Staffordshire Water Company v. Sharman – established that if a man finds a thing as a servant or agent of another, he finds it not for himself, but for his employer.

o Elwes v. Brigg Gas Co. – pre-historic boat found by gas company who leased the land to dig for gasline; boat was ruled property of the lessor (landowner), though he was ignorant of its existence. (KEY = BURIED) o In H v. P, could challenge court’s definition of “lost” property; brooch was more like mislaid property. LOST = TO FINDER. MISLAID = PROBABLY TO LANDOWNER. McAvoy v. Medina - Man set down his wallet on purpose in a barber shop and forgot about it, then customer found it

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The property was mislaid and for mislaid property, the landowner will have relatively better title than the finder This is because the landowner has the best chance of returning the property to its true owner. The true owner would check with the landowner first. PP: Goal is to get the prop back to the true owner

Haslem v. Lockwood – (abandoned property) P leaves collected manure in street, D takes it. Who has rights to manure?

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RULE: The finder (P) to abandoned property (like we have here) takes title. The person who put in the labor to collect, should have a reasonable amount of time to return to collect it. RULE: If property is abandoned by the true owner, the finder (P) has the best title because the true owner has relinquished his rights to the prop. (Finders Keepers)

Benjamin v. Linder Aviation Inc. – P finds money in the wing of plane. Three parties claim rights to money. ILLUSTRATES mislaid prop.

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RULE: if the money is mislaid, the owner of the property it is found on is the owner. o Bank owned the plane where money was found, so the Bank has rights to the money. RULE: a finder is not entitled to a finder’s fee if they find mislaid property, ONLY get finder’s fees in cases of lost property. GIFTS

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Gift – the immediate transfer of property rights from the donor to the donee, without any payment or other consideration o Different between a gift and a k is consideration o 2 types of gifts  Inter vivos = gift during life  Elements: o Donative intent – the donor must INTEND to make an IMMEDIATE transfer of prop o Delivery – the prop must be delivered to the donee, so that the donor parts with dominion and control, this ensures the

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donor realizes the significance of the action. (the wrench of delivery) and provides evidence of intent  Manual delivery – when the donor physically transfers possession of the item to the donee. Common Law says that if the gift can be physically handed over, then it MUST be.  If it can be physically delivered, then it MUST be  Constructive delivery – donor transfers to the donee an object that provides access to the gifted item  Ex. Keys to a car or safe  Constructive delivery is allowed if manual delivery is impracticable or impossible  Symbolic delivery – the donor physically transfers to the donee an object that represents or symbolizes the gifted item  Allowed if manual delivery is impracticable or impossible  Ex. Stock notes o Acceptance – donee must accept prop, but acceptance is presumed for valuable prop. Causa mortis = gifts in contemplation of death  Elements: o Donative intent – donor must intend to make immediate transfer of property o Delivery – prop must be delivered to the donee, so the donor loses dominion and control of prop o Acceptance – donee must accept the prop, although usually presumed o Donor’s anticipation of imminent death o Death from anticipated ailment/event  Unlike an inter vivos gift, the gift causa mortis is revocable any time before donor’s death o Maj App – revoked automatically if the donor does not die o Min App – must affirmatively revoke if donor does not die  Statute of Wills – when you want to leave something at your death, you have to satisfy the following elements for the court to enforce it o In writing o Notarized o Two witnesses o Hypo: “I will give you this painting when I die.”  This is not a valid lifetime gift bc there was no present intent  AND it is not valid upon death because it does not satisfy the SOW elements.

JKG v. SG – P asks D to watch dog, D thought he was giving dog as gift – shows intent element of inter vivos gift

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Ct rules P was not able to form the necessary intent due to his state of mind and clearly due to his actions after, he was planning to keep the dog.

Gruen v. Gruen – P receives letter from dad saying he would retain possession until death and then P would get painting – shows intent element

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Rule: Intent to presently give a future interest satisfies the intent element. Rule: Since future interests are intangible, the delivery was satisfied by symbolic delivery. (dad sending letter) Rule: Acceptance is presumed because the gift was so valuable.

Extra Rules on gifts:

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If delivery happens before the intent element, and the donee is in current possession of the gift, subsequent intent to make it a gift to make it a gift satisfies the elements. The elements do NOT have to go in order or be at the same time When a gift is by check, the gift is not delivered until cashed.

Albinger v. Harris – case on engagement rings/conditional gifts – P gave D a diamond ring, broke up several times, P wants ring back because no marriage

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Question: If the condition of a gift is not met, what do you do with the gift? o Maj Approach – if the condition is not met, then the gift MUST be returned o Some Cts Approach – use a fault based system, whoever is at fault MUST give up gift

Brind v. International Trust – P gave D several instructions to give things in the event she dies from surgery, P does not die from surgery, but later dies from original ailment

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Rule: Delivery to an agent with instruction to delivery to the donee is sufficient to create delivery. Delivery by agent is sufficient. Issue in this case is the element of death from anticipated ailment/event o She did not die of her feared ailment so there is no gift because 5th element not met. o Rule: MUST die from anticipated ailment or event SYSTEM OF ESTATES

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Fee Simple – most common – forever normally o Fee Simple Absolute – lasts for an infinite time o Fee simple Determinable o Fee Simple on a Condition Subsequent – has some limitations Fee Tail – issues on the body of children

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Life Estate – for life of the holder Leasehold – for term of lease

Common Ways to transfer land

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By deed – a living person conveying prop to another living person. o The transaction is called a conveyance or grant. o Grantor to grantee relationship By will – prop of a dead person. o The transaction is called a devise. o Testator (male), Testatrix (female) to devisee relationship By intestate succession – prop of a dead person who had no will. Usually given to closest relative. o The transaction is called intestate succession o The recipient is called an heir Additional notes: o A living person has NO HEIRS. God creates heirs by killing someone. o A living person only has heir apparents (people who will inherit). o A table of consanguinity will determine who the heir is.

Fee Simple Absolute – largest/longest estate possible. The owner can hold it for an infinite time an dyou have all the sticks in the bundle.

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Language creating o “to A and his heirs” (trad. App) o “to A” (mod. App.) o Today, the words “his heirs” have no rights, the A must leave to heirs Duration o Potentially infinite and no limitation Future Estate o No future interest associated with it because the estate lasts forever Transferability o By deed o By will o By intestate succession

Cole v. Steinlauf – proves traditional approach – P and D enter into K to sell land and P says “to Y and his assigns forever”

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Issue: Does this convey a life estate or fee simple absolute? o Does not include “and his heirs” as required by traditional approach, so it is assumed to be life estate. o Rule: Under the traditional approach, if the language is ambiguous it is presumed to be a life estate.

Life Estate

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Language creating o “to A for life” Duration

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o For life of grantee Future estate o Reversion – back to the grantee o Remainder – future interest for a 3rd party  Ex. B conveys “to A for life, then to C” Transferability o By deed - YES o By will and by intestate succession – NO bc your rights to the property terminates at your death o Remember: The grantor can create a life estate in their will, BUT if you own a life estate you cannot convey in a will.

White v. Brown - modern approach for ambiguous language – Lide leaves house in a will to P, P argues it is a FSA, D argues that Lide left a Life Estate to P

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Rule: You presume a FSA, if the language of the will is ambiguous. This overturns the common law which presumed life estate. Modern rule

Restraints on alienation of a life estate – provision in a deed or will that prohibits or limits a future transfer of the prop. Not applicable to Fee simple estates. Forfeiture and Promissory restraints normally are invalid unless reasonable because it goes against public policy.

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Disabling Restraint – a restraint that prevents the transferee from transferring her interest is always void. Forfeiture Restraint – individual forfeits interest if she attempts to transfer her interest Promissory Restraint – stipulates that the transferee promises not to transfer her interest

Waste – the grantor intends the future interests holder to obtain the property in the same condition the life tenant obtained it. This is doctrine to make sure that happens.

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Types of Waste o Voluntary Waste – results from an affirmative act that diminishes the value o Permissive Waste – results from failure to take reasonable care to protect from waste o Ameliorative waste – results from an affirmative act that leads to substantial change in the property and increases its value. (they make it better)  Even an increase in value is frowned upon because the purpose of waste is to have the property passed from life tenant to future interests holder in the same condition

Woodrick v. Wood – shows ameliorative waste – P has a future interest in a prop and D (life tenant) wants to destroy a barn on the property which would help increase the prop value.

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RULE: Some juris do not recognize the concept of ameliorative waste, and give people the ability to change the prop if it will increase the value. o If this happens, it is not a rule to award money to the disgruntled party.

Fee Tail – a way of holding onto a property in a family for a long time

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Language creating o “to A and the heirs of his body” creates reversion. If the lineal descent of A ever ends it will go back to the grantor o “to A and the heirs of his body, then to B” creates remainder. If the lineal descent of A ever ends it will go to B. Not devisable because when A dies, it automatically goes to his descendants, no matter who is in possession Future interests – reversion or remainder Only four states recognize fee tail. IF the juris does not recognize fee tail, then you are simply creating a FSA in the grantee.

Defeasible estates (with condition) – present interest that terminate at the happening of a specified event, the condition cannot be the death of the current possessor (that would be a life estate)

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3 types of defeasible estates: o Fee simple determinable o Fee simple subject to condition subsequent o Fee simple subject to executory limitation

Fee Simple Determinable – a fee simple estate that automatically ends when a current event or condition occurs, giving the right of possession to the grantor

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Future estate o possibility of reverter (held by grantor). It reverts automatically. Language creating o O “to A so long as it…” o “to A as long as…” o “to A until…” Duration o Potentially infinite unless the condition is broken o Remains with grantee until condition is broken Transferability o By deed – yes o By will – yes o By intestate succession – yes o The condition transfers with the prop. o When the condition is breached in a FSD, the title reverts back to the grantor. NO MATTER who is in possession. o The condition RUNS WITH THE LAND

****Adverse possession SOL starts running as soon as you break the condition Fee Simple Subject to Subsequent Condition – fee simple estate created in a transferee that may be terminated at the re-entry of the transferor when a certain condition occurs.

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Future interest o Right of reentry by the grantor Language creating o O “to A so long as it remains a farm, upon termination of farming, O has right to reenter and reclaim the land.” o MUST have the right of reentry language to be this type of fee simple Duration o Potentially infinite unless the condition is met and the grantor re-enters Transferability o By deed – yes o By will – yes o By intestate succession – yes o So long as the condition is continued to be met and no reentry by the grantor o The condition RUNS WITH THE LAND

***Adverse possession SOL starts running when the grantor re-enters Fee simple to an executory limitation - estate created when grantor transfers a defeasible fee simple and creates a future interest in a 3rd party (rather than the grantor himself)

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Present possessory interest – fee simple subject to executory limitation (grantee) Future interest o Executory interest (3rd party) If there is a 3rd party, it is this!

Mahrenholtz v. County Bd of School Trustees

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Rule: Traditional Approach – You CANNOT convey future interests through will or deed, ONLY inheritance. Modern Approach– You CAN transfer your future interests.

Red Hill v. Hammond – D owns ski slope in FSA, conveys to P in FSSCS. D claims P breached the condition, but P claims she did not.

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Rules: When you have a FSSCS or FSD, the court will strictly construe the language when determining it was a breach. –they don’t want to take the property from you, so it has to be clear that you broke the condition All ambiguities will be construed against forfeiture, unless it is OBVIOUS the condition has been breached. The ct is against reversion. The breach must have occurred from such neglect that it was obvious. They must have intended to disregard the condition. Substantial compliance with the condition will be adequate to avoid a breach.

Wood v. Bd. County Comm. – P owns prop and conveys to D to use as memorial.

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Extends Red Hill Precatory Language – language only showing the intent and desire, rather than expressly giving a condition does not create a defeasible fee. Party MUST use words such as “so long, until, during” to create the limitation

In Re 88 – P gives town prop in FSD. D breaches the condition in 1927, but they continued to remain on land. P never took possession again. D gets land due to adverse possession.

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Rule: The SOL for adverse possession starts running as soon as the condition is breached in a FSD.

Metro v. Heirs of Rigney – D conveys to P in FSSCS. The condition is breached but D never reenters. P claims by adverse possession, but D says this cannot work because he never reentered (which would start the SOL clock)

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Traditional Rule: The grantor must reenter to start the SOL clock for adverse possession. Modern Rule: The grantor loses the right to reenter after a reasonable time. Due to equity, we cannot allow people to sit and wait until they are ready to reclaim.

Field v. LHA - When she conveyed she required 1/3 of gate receipts and if they don’t pay $600 every 6 months the property will revert to her heirs

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Language was confusing and was poorly written. Ct strictly construed the language, so this is another example to be clear. MODERN FUTURE INTERESTS

Future interests in the GRANTOR

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Reversion – is an interest retained by the grantor any time they convey less than the entire estate. Transferable by deed, will or intestate succession. Possibility of Reverter – future interest when grantor transfers a FSD. Transferable by deed, will or intestate succession. Right of entry – when the owner transfers a FSSCS. Transferable by deed, will or intestate succession.

Future interests in a 3RD PARTY

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Remainder – future interest in a grantee. Remainders are capable of becoming possessory immediately upon the expiration of the prior estate AND does not cut short any interest in a prior transferee

FOUR TYPES OF REMAINDERS VESTED REMAINDERS

1. Indefeasibly vested reminder a. Given to an ascertained (named) person b. NOT subject to a condition precedent (other than natural termination of preceding estate) c. Ex. To Y for life, then to X i. Ascertained party ii. No condition except death of Y 2. Vested remainder subject to divestment (or subject to complete divestment) a. Remainder that is vested, but subject to a condition precedent

b. A life estate then a vested remainder then says it can be taken away if doesn’t satisfy a condition c. Ex. To B for life, then to D, BUT IF D DOES NOT SURVIVE B, THEN TO E. d. Look for the “but if” language 3. Vested remainder subject to open (or vested remainder subject to partial divestment) a. This is known as the “Class gift rule” b. Vested remainder held by one or more living members of a group or class that MAY be enlarged in the future. c. Ex. To B for life, then to D’s children d. As long as the person is alive, they CAN have children. The class can always grow if person is alive. CONTINGENT REMAINDERS

4. Contingent remainder a. It is given to an unascertained person i. Ex. To B for life, then to A’s first born child 1. A is alive and has no child, so it is contingent on her having a child b. A remainder can also be contingent because it is subject to a condition precedent i. Ex. To B for life, then to A if A survives B 1. A’s remainder subject to a condition precedent 2. A getting the estate is contingent on her surviving B 3. NOTHING HAS BEEN GIVEN. The condition must be met to be given. (this is the difference between this and VRSD) 4. Look at the wording to differentiate Executory Interests – future interest in a transferee that must (in order to become possessory). MUST be conveyed to a 3rd party

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1. Divest or cut short some interest in another transferee (shifting executory interest) 2. divest the transferor in the future (springing executory interest) Shifting Executory Interests o Ex. “to B so long as alcohol is not sold on premises, but if sold to C.”  B has FSSEL  C has shifting exec interest o Shifting exec interests comes from grantee to the 3rd party Springing Executory Interests o The “Gap” situation o When the condition precedent cannot be fulfilled during the preceding estate or immediately upon its termination o Ex. Homer “to Moe for life, then to Barney and his heirs if Barney attends Moe’s funeral”  Moe – life estate  Barney – springing exec interest  Homer – reversion in FSSEL

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Homer owns property during the gap between Moe’s death and his funeral. If Barney goes to funeral, then the interests springs to him, but if he does not then Homer keeps the prop. o The interest springs out of the grantor because the prop reverts back and then goes to 3rd party when condition is met. DESTROYING CONTINGENT REMAINDERS

1. Rule in Shelley’s Case - used to avoid taxes a. If one instrument b. Creates a life estate, fee tail or defeasible fee estate in a transferee AND c. Purports to create a remainder in persons described as “A’s heirs” AND d. The life estate and remainder are both legal or both equitable Ex. O “to A for life, then to A’s heirs” = RISC converts this into O “to A for life, then to A” Question on exam: What is the impact on the RISC? It converts the future interest in A’s heirs into a remainder in A.

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The Doctrine of Merger creates a FSA in A

Ex. Homer “to Lisa for life, then to Lisa’s heirs if Lisa survives Bart”

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If a RISC juris = then Lisa has a FSA If not a RISC juris = then Lisa’s heirs have a contingent remainder

2. Doctrine of Worthier Title a. Where there is an inter vivos conveyance of land by a grantor to a person, with a limitation over to the grantor’s own heirs either by way of remainder or executory interest, no future interest in the heirs is created; rather a reversion is retained by the grantor i. Ex. Homer conveys “to Marge for life, then to Homer’s heirs.” 1. If a DWT juris = it will be changed “to Marge for life, then to Homer” a. It will create a reversion in Homer because it eliminates the future interests in the heirs 2. If not a DWT juris = the heirs will retain the future interest 3. Destructibility of Contingent Remainders – a remainder in land is destroyed if it doesn’t vest at or before the termination of the preceding estate a. If a remainder is subject to a condition precedent, when the estate terminates, the remainder destroys if the condition isn’t met b. Ex. Homer conveys “to Marge to life, then to Bart and his heirs if Bart reaches 21.” i. If at Marge’s death Bart is not 21 then…. 1. In a DCR juris = the remainder is destroyed and Homer has a reversion in FSA

2. In a no DCR juris = Homer will have a reversion in FSSEL and Bart will have a spring exec interest (because he is cutting short the estate of the transferor) a. When Bart turns 21, it will spring from Homer to him. c. Ex. Homer conveys, “To M for life, then to B’s children.” but B has no children…reverts back to Homer when Marge dies because FSA to M without the contingent remainder…just cross out the part that doesn’t apply 4. Rules Against Perpetuities – 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 a. Elements: i. “No interest is good” – if the interest violates the RAP – it is void and treated as if it never existed. You strike out the interest and see what is left.” 1. Ex. Burns “to Springfield, but if the property isn’t used as hospital, then to Homer.” ii. “Unless it must vest, if at all” – What does it mean to vest? The point where title uncertainty is removed 1. Ex. “to Marge for life and then to Bart if Bart reaches age 21.” a. Bart reaching the age of 21 will vest the title. 2. “to Homer when a human walks on Saturn.” a. A human walking on Saturn will vest the title 3. If there’s ANY possibility that you can imagine- no matter how unlikely- that it will vest too late, it’s void iii. “Not later than 21 years after some life in being” 1. What causes the interest to vest? 2. Who is the validating life? It’s the person alive at the time the interest is created who we can use to prove the determining event is certain to occur within that person’s life or 21 years afterward a. If the interest is subject to the RAP and you can’t find a validating life- the interest is void events cannot meet the test

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c. d.

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iv. “At the creation of the interest.”  when was the interest actually created? 1. Deed- time it was validly delivered 2. Will- At the time the testator dies Landowner can hold onto land for his lifetime and the life of everyone alive at time of conveyance plus 21 years. If you try to hold onto it beyond that, Court will strike it and balance turns in favor of marketability. ONLY applies to contingent remainders, exec interests, and vested remainders subject to open NOT subject to RAP: all present possessory estates (FSA, defeasible fees, fee tail, life estate, and leasehold) and these future interests: vested reminders, vested remainders subject to divestment, reversion, poss of reverter, right of entry if the interest is an executory interest that is based on the happening of an event, then it will ALWAYS violate the RAP. i. Ex. Burns conveys “To Homer so long as no liquor is sold on the premises, then to Moe”

f. Go through the following when analyzing a conveyance for violation of RAP: 1. What is the future interest? 2. Is it subject to RAP? 3. Who are the lives in being at time of conveyance? 4. What must occur to vest future interest (remove uncertainity)? 5. Kill off lives in being 6. AT this point (or within 21 years), will we know for certain if future interest vests? 7. If NO, then it violates the RAP g. LOOK AT EXAMPLES!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! h. Fertile Octogenarian Problem - If a person is alive, they are presumed to be able to have a child. i.

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All or nothing rule: If a gift to one member of the class might vest too remotely, the whole class is void i. A gift that is vested subject to open isn’t vested under the RAP—to be vested for RAP purposes the class must be closed ii. Ex. “to Bart for life, then to Bart’s children who reach 25” 1. Bart is alive and has a child who is 26 2. There is a possibility Bart could have another child, so it MUST be eliminated Modern modification on the RAP; instead of searching for any way to invalidate the interest subject to the RAP, just “wait and see” if it actually does violate the RAP CONCURRENT OWNERSHIP

Types of concurrent interest o o o 

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Tenancy in common Join tenancy Tenancy by the entirety

Tenancy in Common - this means they have a separate, undivided interest in the property. o Meaning they both have their own interest and their respective interests will go to their own devises o Undivided means they both have the right to use the entire property o KEY: each tenant in common has right to use/possess the whole property(even if fractional interest of one tenant is smaller) o Language creating: “to A& B as tenants in common” or “to A and B” o Estate – concurrently own FSA o Transferability – by deed, by will, by intestate succession o NO SURVIVORSHIP RIGHTS Joint tenancy o Language Creating: “to Bart and Lisa as joint tenants with right of survivorship” or “to Bart and Lisa as joint tenants” o Contains right of survivorship – when one tenant dies, the dying tenant’s interest is terminated and the surviving parties gain their interest. This gives the surviving party full tenancy. o Estate: FSA

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4 unities critical for the creation of a joint tenancy  TIME (interest must be created or vested at the same time)  TITLE (must acquire title by the same instrument)(cannot be created by intestate succession or other law)  INTEREST (tenants acquired identical interests –both in size and duration)  POSSESSION (each must have right of possession to the whole)  If any of these unities does not exist then a joint tenancy is NOT created and instead it is a tenancy in common o Remedy: Partition  Applies to both tenants in common and joint tenants  Court will either physically partition the tract of land into separately owned parts (in kind partition) OR order the land sold and divide the proceeds among the tenants  Cts prefer partition in kind o Burns conveys to “Bart, Lisa, and Millhouse as joint tenants.” If Bart conveys his interest to Allison, Allison becomes tenants in common with both Lisa and Millhouse, but Lisa and Millhouse will still be JTs with each other  You can sever the unities between one of three joint tenants while the remaining two are still joint tenants with each other if the unities haven’t been severed between them  Tenancy by the entirety o Language creating: “to Ned Flanders and Maude Flanders as tenants by the entirety” o Can ONLY be created in married people  Allows for “reciprocal beneficiaries” to benefit same sex couples o Contains the right of survivorship (if one dies, the other gets the whole) o Conveyance or partition is only valid if both husband and wife sign and agree o Divorce terminates the tenancy – creating tenants in common  Presumption if ambiguous o Mod App – if conveyance is ambiguous as to whether it is a joint tenancy or tenancy in common, then the courts presume a tenancy in common o Trad App – joint tenancy was presumed James v. Taylor – Redmon conveyed her estate jointly and severally

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RULE: Every interest is tenancy in common unless expressly declared otherwise.

SEVERING A JOINT TENANCY Taylor v. Canterbury - He owned a FSA then conveyed it to himself and D as joint tenants, then executed a second deed to transfer the property back to himself and D as tenants in common

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Taylor severed the joint tenancy when he conveyed it to himself and D as tenants in common- so they were effectively tenants in common Court didn’t see the point in keeping people from unilaterally severing the units when they were doing it already through straw man o Strawman – a third party that you convey the prop to in order to sever the unities (this is what the trad app required) Mod App: Ct concludes it is a useless formality to require a strawman and you should be able to convey the prop from joint tenancy to a tenant in common which would sever th unities.

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Dissent: the transfer to strawman has some meaning because it has some risk and makes it clear that was your intent

Tenhet v. Boswell – P and D own as joint tenants and one leases out. Does this sever the unities?

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Three views on this o Full Severance – leases DO sever the unities o No Severance – leases DO NOT sever the unities o KEY: Temporary Severance – if the lessor dies when the lease is in effect, then it is severed, but if the terms of the lease expire before lessor, then the lease does not sever o RULE: No severance from a lease

Mortgage Severance

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Mortgage – if one joint tenant takes out a mortgage on the prop. Does it sever the unitites? o YES: title theory jurs – mortgage seen as a conveyance of title to the prop to be return upon satisfaction of the mortgage – severs time and title o NO: lien theory juris – mortgage seen as a lien on the prop and not a conveyance of the deed and therefore does NOT sever the unities

PARTITION

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Tenants cannot come to an agreement on how to use prop Two types: o Voluntary partition – cotenants agree to divide prop and sell it and share in the proceeds o Involuntary partition – cotenant can go to court and seek a physical division of the prop (physical partition or partition in kind) or seek to have the prop sold and the proceeds divided among the cotenants (partition by sale)  Physical partition/in kind is preferred over partition in sale

Ark Land Co. v. Harper – parties are tenants in common. They cannot decide how to divide land, so they file with the ct. One party wants partition by sale and one wants partition by kind.

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RULE: We must take emotional attachments and sentimental value into account when determining partition. RULE: Court rules for partition in kind because it prefers this type.

Notes

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When is a partition by sale appropriate? 1. physical attributes of land make partition in kind impracticable or inequitable 2. Nature of the interests in the land make division in kind impracticable (ex. Multiple small fractional interests Agreements NOT to partition 1. Enforceable so long as reasonable in duration/purpose 2. If unreasonable –not enforceable- invalid restraint on alienation

COTENANT RIGHTS

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Rent between COTENANTS (if one is living there, and one is not – does present cotenant owe rent?) o Maj. Rule – a cotenant in exclusive possession does NOT owe rent to his cotenants unless there is ouster (physically keeping out the absent cotenant and not allowing him to use his portion)  Refusal of a demand to vacate – NOT ouster  Refusal of physical entry – ouster RENTS AND PROFITS from a 3rd party: o If co-tenant is collecting rent from a third-party for the co-owned land, must account to the cotenants for the amounts received.  Cause of action: ACCOUNTING Operating Expenses o Gen. Rule – cotenant paying more than her share of taxes, mortgages, or other necessary charges has the right to seek contribution from the other cotenants at least up to the amount of the value of their share. o Each cotenant MUST pay his proportionate share of operating expenses. Repairs and Improvements o Necessary Repairs - cotenant making necessary repairs has no right of contribution from the other cotenants (unless there is an agreement) o Improvements – no right of contribution for costs of improvements  BUT in partition action could get an amount above her % to account for the increased value caused by the improvements or repairs.

Esteves v. Esteves – P and D own prop together. P lives there. P paid operating expense. D wants rent from P. P wants operating expenses credit from D.

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Rule: P gets credit for D’s lack of operating expense payment, then Ct rules due to fairness and equity the D should get a credit for the reasonable value of the usage. o Usually represented by the rental value When on a final accounting following sale of the prop, the tenant who had been in sole possession of the prop demands contribution toward operating expenses from his coowener, fairness and equity dictate that the one seeking that contribution allow (subtract) a corresponding credit for the value of his sole occupancy of the premises. Operating Expense – Value of Sole Occupancy = Amount absent party must pay LEASEHOLDS – creating a tenancy

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Lease – a document that the owner of the land (the landlord) and a tenant executed to create a leasehold estate in the property Leasehold Estates 1. Term of Years tenancy – leasehold for a specific term a. Must know a for sure start and end date b. Does NOT have to be a year or more c. Once a term ends – tenant’s possessory rights automatically expire d. No notice required to terminate because it terminates on its own terms

2. Periodic Tenancy – lease for a period of some fixed duration that continues from period to period until landlord or tenant gives notice of termination a. Ex. “to T from month to month beginning on Jan. 1, 2014” b. Notice of termination i. CL - year to year lease – requires 6 months notice or will be held over for another year ii. CL – less than one year lease – notice equal to the term of the lease maxing out at 6 months 1. Week to week lease – week notice 2. Month to month lease – month notice 3. 8 month to 8 month lease – ONLY 6 month notice 3. Tenancy at will a. No fixed period b. Lasts as long as both landlord and tenant desire i. Ex. “to T so long as both of us wish” c. CL – terminable by either party i. Death of party terminates ii. Tenant abandonment terminates iii. Landlord selling terminates d. Maj of juris now require notice to terminate and do NOT allow termination at will 4. Tenancy at Sufferance a. Holdover tenant b. Landlord has two options i. Treat as trespasser and evict ii. Renew tenant for another term Uniform Residential Landlord and Tenant Act If the tenant remains in possession without the landlord’s consent after the expiration of the term of the agreement or its termination, the landlord may bring an action for possession and if the tenant’s holdover is willful and not in good faith the landlord may recover an amount not more than 3 month’s periodic rent or threefold the actual damages sustained by him, whichever is greater, and reasonable attorney’s fees. If the landlord consents to the tenant’s continued occupancy, [treat as week to week if rent paid on weekly basis or month to month periodic tenancy in all other situations.] Difference between lease and license

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Obligations both common and statutory are attached to a lease; rights only apply to tenants, not social guests (licensees) o Tenant – lease, utility payments, rent, room and key o Guest (licensee) – no lease, no rent, no prop tax paper, no contribution of costs o Lease – notice required o License – no notice required

Irish Bend Farm v. Pinney

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D had no interest in the land since he was merely a social guest Without a deed, written contract or written agreement, there is no life estate or lease established and therefore Leeland had no rights; he was simply a guest.

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RULE: Social guest do not have rights in land.

Kajo Church Square v. Walker

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RULE: Numerus Clausus – there can be no new created estates RULE: When the lease does not fall into one of the categories, it defaults into a tenancy at will that can be terminated at a reasonable time.

SELECTING A TENANT - property owners have right to exclude HOWEVER these rights may be limited by statutes such as the Fair Housing Act and Civil Rights Act of 1866.

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Fair Housing Act o Discrimination prohibited based on race, color, religion, sex, familial status, national origin, or disability o Covers dwellings ONLY. NOT commercial Exemptions to FHA – if you fall under this then you can refuse to sell/rent o 3603(b)(1) – “any single family house sold or rented by an owner” IF  Owner owns no more than 3 such dwellings AND  Does NOT use a broker AND  Has not posted a discriminatory ad, posting or mailing  Mrs. Murphy rule o 3603(b)(2) – “owner occupies one of the units as a residence in a multiunit dwelling contains no more than 4 units.”

Neithamer v. Brenneman Prop – P tries to rent from D. P tells them his partner died of AIDS and D rejects application. Issue: is this prop exempt under FHA?

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RULE: the FHA does not apply to sexual orientation discrimination, BUT the P’s HIV counts as a handicap, so he is protected under the FHA USE BURDEN shifting from memo to show discrimination when there is no direct evidence ESTABLISHING DISCRIMINATION UNDER FHA / CRA a. Does the property qualify? b. Is the alleged discrimination against a member of a protected class in FHA? c. Is there direct evidence of discrimination? PRIMA FACIE CASE: 1. Lessee member of protected class and defendant knew or suspected he was; 2. Lessee applied for and was qualified to rent the property in question; 3. Lessor rejected the application; and 4. Property remained available thereafter. d. THEN burden shifts to lessor to “articulate some legitimate, nondiscriminatory reason for the rejection.” e. Lessee must show that Lessor’s reasons are merely a pretext. 1. Landlords can still exclude a protected class if based upon: credit risk or bad credit; criminal record, especially violent; and/or too many occupants to satisfy housing regulations 2. If evidence shows landlord did not follow his own policy, this is always evidence of pretext.

Fair Housing Council of San Ferdando v. Roomate.com

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Definition of “dwelling” under statute – does not include roommates (sharing same living space). A dwelling MUST have separate living room, bathroom, kitchen. To hold otherwise would raise constitutional question: First Amendment freedom of association (right to associate also implies the right not to associate): “Holding that the FHA applies inside a home or apartment would allow the government to restrict our ability to choose roommates compatible with our lifestyles. This would be a serious invasion of privacy, autonomy and security.”

DELIVERING POSSESSION Keydata v. US – NASA wanted to lease a space and on move in day the other tenant was still there

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Legal Right of Possession: the deed/agreement Actual Right of Possession: the actual room English Rule - there is an obligation for the landlord to put in actual possession o If they do not, the tenant can get out of the lease AND get damages o Can negotiate out of this o Maj. Of Juris follow this American Rule – landlord only has obligation to put in legal possession o Old tenant has the obligation to ensure actual possession o If they do not, the new tenant can get punitive damages from holdover tenant o Arguments in Favor of American Rule 1. New tenant has power to protect tenancy against old tenant 2. Landlord should not be held liable for 3rd party (old tenant) 3. English Rule could encourage landlords not to rent due to fear of being held liable for holdover LEASING REAL PROPERTY

Housing Codes – minimal standards for a building. Things covered include structural, facilities, services and occupancy limits

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Difficult to enforce VERY severe punishment if you break codes Has not worked out as well as intended In Re Clark case is an example of how hard it is to enforce

Quiet Enjoyment and Constructive Eviction

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Common Law: Quiet Enjoyment – Every lease implies a covenant of quiet enjoyment which is a promise by the landlord that he will not wrongfully interfere with the tenant’s possession of prop. If evicted, there is a breach and tenant is NOT liable for rent. Constructive Eviction – wrongful conduct by the landlord that substantially interferes with the tenant’s beneficial use and enjoyment of lease premises. (Theory = living is SO BAD that landlord’s actions are the equivalent to bar tenant from the premises)

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o Allows tenant to move out and stop paying rent Elements of Constructive Eviction 1. Wrongful conduct – can be an act or omission a. Omission i. Failure to perform an obligation of the lease ii. Failure to adequately maintain and control common area iii. Failure to perform promised repairs iv. Failure to alleviate nuisance like behavior 2. By the Landlord 3. That substantially interferes with tenant’s use or enjoyment a. ASK: is there sufficient interference? ***Procedurally: Must notify the landlord and give opportunity to fix and you must move out

Fidelity Mutual Life V. Kaminsky – abortion doctor is protested outside his office and clients do not come in. landlord does not prevent this.

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Wrongful conduct – the landlord had the obligation to protect from the protestors, but failed. Substantial interference – Very fact specific and debatable – the Court rules that interference with his ability to profit and do business is substantial.

JMB v. Paolucci – D leases space next door to stereo store. It is loud and D claims constructive eviction because P did not stop it. This meets elements, but he did not leave in reasonable time. (stayed 2 yrs.)

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RULE: Court rules that since the person did not leave within reasonable time, he has waived the opportunity to use constructive eviction as a defense to paying rent. o If you stay on the prop, but also claim the situation was so bad, then it must not have been that bad. REMEMBER you must leave prop to claim CE. Partial Eviction: Actual vs. Constructive 1. If actually evicted from only part of the premises: tenant relieved from duty to pay ALL rent. 2. If constructively evicted form part of leased premises: tenant is NOT relieved form duty to pay all rent (may reduce rent by % of property evicted from)

IMPLIED WARRANTY of HABITABILITY – rejection of caveat emptor (buyer beware). This doctrine protects residential tenants from defective housing conditions. Arkansas is only state that does not follow this. Wade v. Jobe – D leases P’s prop but it had bad conditions and failed code inspection. P sues to recover rent that D did not pay.

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Trad App - Caveat Emptor – Buyer beware - you take prop as it is and cannot complain Mod App – Implied Warranty of Habitability – States that landlord must maintain “bare living requirements” and premises “fit for human occupation.” o Minor defects do NOT count o It cannot be waived o Only applies to residential spaces

o Tenant must give notice and opportunity to fix Weiler v. Hooshiari – P rents from D with the agreement it had a safe parking spot

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RULE: a parking spot is not required for human life. If the court ruled it was vital, then every living space would require a parking spot.

Teller v. McCoy – dissent – The landlord cannot make substantial renovations without passing some of the costs on to the tenant, and the tenant may then find that the tenant has been given more luxury than he can afford

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It is not simple to make things habitable o The landlord will fix it up, but likely raise price o The landlord may not fix it, and just shuts it down o Thus, it could affect the people who live there Serves as a sword and a shield

Remedies for breach for Warranty of habitability (do NOT have to get a remedy) HYPOS ON 481

1. Withhold rent – if there is a breach 2. Repair and deduct – tenant can make repairs and then take amount out of the rental payment 3. Sue for damages – tenant can sue after leaving or while remaining a. Calculate damages i. Value as warranted (what place should be worth) – Value as provided (what place is worth) = damages total 1. Must have an expert to assess value ii. Percent Diminution = amount of rent reduced by % which use/enjoyment has been reduced 1. Does not require expert, judge can determine TRANSFERRING THE TENANT’S INTEREST ASSIGNMENTS AND SUBLEASES – tenant transferring interest to a 3rd party

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Assignment – tenant transfers all of her interests under the lease for the entire unexpired term o The new tenant (tenant 2/assignee) is responsible to the LL for all undertakings in the original lease because they are in privity of estate, but not privity of K. o The provisions of the original K “run with the Land” o LL has option of suing tenant 1 or tenant 2 in assignment situations Sublease – when a tenant transfers the leasehold for a period LESS than the full remaining time o In sublease situation – Landlord must go after leasee (tenant 1), and not sublease(tenant 2) because they have NO relationship o Privity of K and Privity of estate exists between LL and T1, but not LL and T2 o The provisions of K do NOT “run with the land” 3 situations regarding whether you can assign or sublease

1. Lease is silent on the ability of tenant to assign or sublease. If silent, then the tenant CAN sublease or assign. 2. Lease provides that assignment /sublease can occur with landlord’s consent 3. Lease provides that assignment/sublease are prohibited. Ernst v. Conditt – P and D are arguing over whether their agreement was a sublease or assignment.

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RULE: Simply using the words sublet/subletting does not signify a sublease Two approaches to determine if assignment or sublease o Maj. App: Obj. Theory – Looks at whether the party gave all of his interest away (assignment) or kept a right of reentry (sublease). Look at deed language.  Most Juris: if the transfer contains a contingent right of reentry, then it is still an assignment o Min. App: Sub. Theory – Looks at parties’ intent Novation – landlord expressly release the tenant from future liability

When does a sublease/assignment require landlord’s consent?

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Common law – if the lease requires consent and the lessee does not get it, then the lessor has the option to terminate the lease. Sole Discretion Clause – LL can refuse consent for any reason whatsoever Reasonableness Clause – the lease says the LL can only refuse consent on a commercially reasonable basis No standard in lease – the lease might require LL’s consent, but contains no standard for his decision. Such a provision is called a silent consent clause.

Kendall v. Ernest – No standard in lease clause issue

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The lease required express permission for assignment sublease and they refused to consent to an assignment. Airplane hangar. o Should commercial lessor be allowed to deny sublease for any arbitrary reason?  Minority (Mod App in commercial lease) (ct. took this approach): consent may be withheld ONLY where the lessor has a commercially reasonable objection to the assignment, even in the absence of a provision in the lease stating that consent to the assignment will not be unreasonable withheld  Majority test- the lessor may refuse to approve a proposed assignee NO MATTER how suitable the assignee appears to be and NO MATTER how unreasonable the lessor’s obligation  ONLY applies to No standard in lease. (DOES NOT apply to sole discretion or reasonableness clauses.)

ENDING A TENANCY – the tenant who defaults

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Abandonment o An abandonment of the leased premises by the tenant occurs when he vacates the leased property without justification and without any present intention of returning and he defaults in the payment of the rent. o If tenant abandons by justification, no abandonment

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Reasons for justification: constructive eviction and breach of implied warranty of habitability If tenant abandons without justification, the Landlord has three options: 1. sue for all rent = keep premises vacant until lease expired and sue for al rent 2. terminate the lease = treat tenant’s abandonment as an implied offer of surrender and terminate the lease a. surrender – when the T and LL agree to end lease early 3. mitigate damages and then sue for rent = LL can relet the premises, retain the rent and sue tenant for the balance

Sommer v. Kridel – This is the Maj. App. P agrees to rent from D for term of years. P decides not to rent and notifies D. D does not try to relet. Issue: Did he have obligation to mitigate damages?

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Maj – In regards to residential housing, there is an obligation to mitigate the damages. When trying to mitigate you must treat the prop in question as your other empty spaces. Make ordinary stock of it and do what you normally do. LL has the burden of proving that he used a reasonable diligence to mitigate. He can show this by showing the apt, advertising, using a broker, etc. More LL can show he took reasonable steps to mitigate, the more you can get in rent from tenant. The tenant bears the cost of any reasonable expense incurred by LL attempting to relet. No attempt at mitigation = No recovery from tenant

EVICTION

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Retaliatory eviction o A LL may not bring eviction proceedings against tenants to recover possession and may not otherwise retaliate against tenant (ex. Raising rent) if motive is to retaliate against tenant for asserting rights. (ex. Related to condition of premises)

Hillview v Bloomquist – P formed a tenant association, D evicted P. P filed retaliatory eviction claim.

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RULE: A LL cannot increase rent, decrease services, threaten to bring an action, or fail to renew rental agreement after any of the following: o Tenant complained to govt agency who enforces Housing codes o Tenant complained to LL for violate of Housing codes o Tenant organized a tenants union Evidence of one of these three within the past 6 months creates a presumption that the LL acted in retaliation.

When the LL is entitled to evict the tenant, how may he do so?

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Trad. App - Use self help: physically entering premises and causing tenant to leave, so long as LL either o Uses only a reasonable amount of force (English rule) OR o Is able to do so peaceably (this is only an option in certain juris) Mod. App - Sue to tenant: judicial action tells tenant to leave

Berg v. Wiley – P breached the lease, D entered premises without P’s knowledge and changed the locks. Issue: Did D act lawfully in retaking the prop?

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RULE: Maj. Rule – Landlord must go to court in order to get judicial help and does NOT have the right to self help whether peaceable or not. o Overturns trad app that allowed self help is peaceful What if lease includes right of LL to take self help measures? o Some cts – you can use it if tenant is sophisticated o Other cts – still CANNOT use self help TRANSFER OF LAND

THE LAND TRANSACTION Major steps in the typical real property sales transaction

1. Agreement between real estate agent and seller 2. Purchase K – parties negotiate and sign a written purchase K, and prepare to consummate the transaction 3. Closing – sales K is fully performed at close. Buyer pays the purchase, lender advances the loan, Seller transfers the title. 4. Title Protection – buyer protects their title through title covenants, opinions based on search of public record and/or title insurance. 

Purchase K – must satisfy the SOF (writing, essential terms (parties, price and description), signed by party to be bound) o Exceptions to SOF:  Promissory Estoppel  One party acts to his detriment in reasonable reliance on another’s oral promise AND  Serious injury would result if enforcement was refused  Partial Performance  Buyer has paid all or part of purchase price AND/OR  Buyer has made substantial improvements AND/OR  Buyer has taken possession  Note: most juris require payment and then one of the other elements

Hickey v. Green – P and D enter agreement. P pays deposit with a signed check. D sells prop to higher bidder. Issue: Does the check satisfy the Statute of Frauds or and exception?

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RULE: The document will only satisfy the SOF if it is in writing with the parties, price, description and a signature. This situation possibly meets the prom. Estop. Exception.

Electronic Signatures in Global and National Commerce Act - signature, contract, or other record… may not be denied legal effect, validity, or enforceability solely because it is in electronic form MARKETABLE TITLE

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Marketability – every k has an implied obligation of marketability, even if the K doesn’t expressly say so o Must be marketable at the day of the closing, not the date of making the K o Marketable means free from reasonable doubt, free of possibility that litigation comes with the deed o Can contract around defects if they are present Defects that make title unmarketable 1. Seller has less interest in the property than she purports to convey a. Ex. A has a life estate, but tries to convey FSA 2. Property is not free from a. encumbrances: leases, mineral reservations, mortgages, liens and easements b. violation of restrictive covenants (ex. Neighborhood) c. encroachments d. adverse possession e. ordinance violations 3. BUT harder cases: visible or beneficial encumbrances such as power lines, open and visible public road easement Things that do NOT render title unmarketable o Violation of housing/building codes  This is because we do NOT care about condition of property, ONLY condition of title o Mere presence of zoning ordinances

Lohmeyer v. Bower – P wants to purchase form D, P finds out it has restrictive covenant and a zoning ordinance and wants out of K because P thinks this makes title unmarketable

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RULE: it is not the presence of the restrictive covenant or the zoning ordinance, BUT the violation of these two things that make it unmarketable. o P agreed to the restrictive covenant but not the violation. If it is unmarketable, then the buyer can get his money back. Accepting a property with zoning violations would subject the buyer to litigation.

EQUITABLE CONVERSION – equitable title passes to the purchaser when enforceable K is entered into. Legal title remains with the seller until title is passed.

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Why it matters? o Seller’s interest (legal title) is treated as personal prop and includes the right to enforce the K and receive the purchase price. o Buyer’s interest (equitable title) is treated as real prop which includes the right to seek specific performance of the K. Executory period – time between signing of the K and closing

Brush Grocery v. Sure Fine Market – P signs lease with option to purchase, while negotiating costs there is hail damage. Issue: Who is responsible to pay for damages?

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After you have entered into a valid K (like P and D)… o Common Law (Maj. Rule) – the risk of loss on the prop goes on the buyer if it occurs between the signing of the K and the closing

 Bc they got benefit of equitable title, but burden of responsibility o Massachusetts Rule (Min. App) – the seller bears the risk of loss until the closing is complete o Right to Possession (Min App) – the person with the right to possession bears the risk of loss (Normally seller, but could be buyer)  Bc the possessor is getting the benefit of prop DUTY TO DISCLOSE DEFECTS

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Trad View – caveat emptor (buyer beware) o The seller has no duty to disclose defects unless the seller  Affirmatively misrepresents the facts OR  Actively conceals defects OR  Owes fiduciary duty to the buyer Mod App – the seller must disclose defects that materially affect the value of residential real property if those defects are not readily observable or known to the buyer (elements in bold)

Stambovsky v. Ackley – P and D enter into K to sell house, P wants out of K because D did not disclose that the house was haunted.

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RULE: Even in caveat emptor jurisdictions, there can be an exception: o Where a condition which has been created by the seller materially impairs the value of the K and is peculiarly within the knowledge of the seller OR unlikely to be discovered by a prudent purchases exercising due care with respect to the subject transaction non disclosure constitutes a basis for rescission of the K due to equity. o Caveat emptor is used EXCEPT when seller creates defect. o REMEMBER: rescission is ONLY an option if you have NOT closed yet, if you have closed you must request damages.

Strawn v. Canuso – P bought a lot from D, D did not disclose that it was near a hazardous waste dump. Did D have to disclose this?

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RULE: A real estate profession MUST disclose off-site conditions that materially affect the use, enjoyment, or value of the property AND the buyer could not observe or know of the condition. o Must decide if it materially affects the value AND if the condition was known or readily observable NOTE: New Residential Construction Off Site Conditions Disclosure Act o Immunizes sellers of new homes from L for nondisclosure of off sire conditions if they have given notice that lists of certain conditions are available at the municipal clerk’s office.

Psychologically Impacted Property – when it has a non-physical defect which “causes emotional or psychological discomfort to a buyer”

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More than half states (including MS) have adopted “Stigma Statutes” o “Stigma Statutes” – limiting the obligation to disclose and sellers and brokers L for failure to disclose psych defects in residential real estate transactions

o Stigmatizing events  Natural death, suicide, homicide or felonies occurred on property  Ghosts (Stambovsky)  Seller’s exposure to HIV or AIDS  Sex offender within vicinity  8 states do not require disclosure  2 require disclosure  Others analyze under common law app. THE CLOSING ****If there is a section that says “time is of the essence” then it is a breach of K to not close on date listed. If there is no such section, then you only must close within a reasonable time. Typical Closing

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Buyer pays purchase price Buyer executes note/mortgage in favor of lender Lender transmits funds to seller Seller conveys deed (subject to SOF)

3 types of deeds (subject to SOF)

1. General Warranty deed a. Warrants against all defects in title whether they arose before or after grantor took title b. Most common c. Made by seller with regards to status of title d. If defect comes up, seller/grantor is responsible for it 2. Special Warranty deed a. Warrants against the grantor’s own actions BUT NOT the actions of others before him b. If a defect caused by grantor comes up, the grantor/seller is responsible c. If caused by someone else, the grantee/buyer is responsible 3. Quitclaim deed (gambler deed) a. No warranties of any kind. b. Conveys title grantor has (if any) c. If a defect or issue arises, the grantee/buyer is responsible  Deeds are subject to SOF: identify parties, description of prop, state intent to convey, signed by grantor (sometimes by grantee) Description of Land Requirement (element needed by deed/SOF)

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Establish boundaries of what the grantee will own – allows a reader of a deed to distinguish a prop from another prop o How do you describe boundaries?  Can reference documents outside the deed

 Ex. Subdivision plot  Can be based on monuments and distances of the prop from those  Ex. Metes and bounds  Can be based on govt survey o Puts subsequent purchasers on notice of prop grantor is claiming and interest in

Deed must be delivered to be valid/effective

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REMEMBER: this is different than delivery of personal property Deed is only effective if it is delivered. o An undelivered deed (even if signed) conveys nothing Definition of Delivery – intent to immediately transfer an interest to the grantee and acts by the grantor that manifest an intent to immediately be bound o The issue of delivery does NOT come up in traditional conveyances of prop, but normally in family situations

Rosengrant v. Rosengrant – H goes to the bank and hand deed to J, but J hands back to banker for safe keeping until H’s death. Envelope says it can be picked up by H or J. Issue: was this delivery?

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RULE: If the grantor “delivers” a deed with a right of retrieval, and attaches the condition that the deed is to become operative only after his death, and he continues to use the land as if no transfer has occurred, there is NO delivery. There is intent to transfer, but not intent to transfer immediately. Biggest problem was H having right of retrieval.

Vasquez v. Vasquez – J originally leaves to I, but later deeds to B upon her death. J “to B” but not until her death. J tells only her atty this.

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RULE: When a grantor delivers a deed to a third person without reservation of a right to retrieval and instructs the third person to deliver it to the grantee on the grantors death, he makes effective delivery as a matter of law. Possession is NOT determinative. o This differs from Rosengrant because J did not reserve a right to retrieval. J delivered her interest immediately. Example of a Death Escrow – deed given to a third party to be recorded at the grantor’s death. Recognized only if grantor intends to give current interest and does not have a right to retrieve the deed.

THE MORTGAGE

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Promissory note – k by which the borrower promises to repay the loan on certain terms and conditions Collateral – gives the lender some interest in a prop so that they can sell it if the person defaults

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Mortgage – gives the lender the right to use a special remedy(foreclosure) if the borrower defaults o Foreclosure – the lender can sell the prop and use sale proceeds to pay loan o Mortgagor – borrower/homeowner o Mortgagee – lender/bank Deed of trust – the borrower (trustor) gives a deed of trust to the third party (trustee) for the benefit of the beneficiary( bank), if the trustor defaults then the trustee will sell the property through foreclosure and give the proceeds to the beneficiary to repay the loan o Trustor – homeowner o Trustee – third party o Beneficiary – bank Difference in mortgage an deed of trust is the parties Mortgage juris – the bank files a lawsuit to foreclose on the house o Judicial foreclosure Deed of trust juris – the bank notifies the trustee who goes and forecloses on the house o Non-judicial foreclosure Deficiency judgment – a judgment to pay the balance on the loan that the mortgagee did not receive through the sale of the prop.

Wansley v. 1st national bank of Vicksburg – P took loan from D, trustee foreclosed after P could not pay mortgage. Ct finds deficiency judgment for the bank.

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RULE: every aspect of the foreclosure sale must be commercially reasonable RULE: if sales price “shocks the conscience,” the court will set aside the sale. Reinstatement – if mortgagor can repay missed payments the note/mortgage can be reinstated Statutory right of redemption – can buy prop back from purchaser (sales price plus interest and cost) LAND TRANSACTION

THE K OF SALE Buyer options when seller breaches

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When the seller breaches the sales K, the buyer can choose between these remedies: o Specific performance  The k is carried out (default) o Return of down payment and walk away. o Money damages  Benefit of the bargain (difference between the value of the K and the value at the time of the breach) Situations where specific performance will be denied 1. impossibility of performance by the seller a. Seller does not have title 2. adequacy of legal remedy a. All property is unique, so merely giving damages is not sufficient. But if we can find a situation where damages would be sufficient, you

might get damages. You cannot get specific performance if prop is NOT unique and damages would be adequate. 3. hardship of the seller Gianini v. First National Bank of Des Plaines – P buys condo from D, but D doesn’t finish condo. P requests specific performance. Issue: Does the meet a specific performance exception or is specific performance applicable?

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RULE: condos are not unique, so this would not require specific performance. Apply to elements

TITLE ASSURANCE – how can I assure that when I buy prop from someone, they have the title they are trying to convey 3 primary types

1. Title/deed covenants – grantor promises in the deed that he has good title to convey 2. Title opinion - an atty or other professional renders an opinion about the state of the title after searching public land records 3. Title insurance – a title insurance company issues a policy that insures the grantee’s title ***Remember: Doctrine of Merger

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Once the deed is accepted all covenants/promises in the purchase sale agreement merge into the deed You can no longer sue on the k based on rescission, you must now sue on the deed and get damages

Covenants in the deed (promises)

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Difference between Covenants and Implied Warranty of Marketability: o Covenants – after the deed has been conveyed o Implied Warranty of Marketability – before the deed has been conveyed. Possibly during the executory period. Present Covenants – breached at time of conveyance o Covenant of seisin – a promise that the grantor owns the estate that he purports to convey  Ex. This conveyance is breached if the grantor purports to convey a FSA, but only owns a life estate o Covenant of Right to Convey - promise that grantor has the right to convey the prop conveyed  Ex. Covenant is breached if the grantor is a trustee who lacks the authority to transfer title o Covenant against encumbrances – promise that there are no encumbrances (liens, mortgages, easements, etc.) other than those expressly listed in the deed Future Covenants – breached at the time of the happening that breaches the covenant ***The next two go hand in hand

o Covenant of Quiet Enjoyment – the promise that grantee’s possession will not be disturbed by someone with superior title

 Another person comes to you and says I own this, NOT YOU o Covenant of Warranty – promise by grantor to defend against any claim of superior title o Covenant of Further Assurances - a promise that the grantor will take all further steps reasonably necessary to cure title defects that existed at closing  Ex. The person leaves off a signature, so the grantor has agreed to come back and finish it off if necessary Brown v. Lober – P bought land from D, but D did not tell him he did not own all the mineral rights. P tried to convey mineral rights to 3rd party and 3rd party realized P did not have all the mineral rights. P sued for breach of cov. Of seisin and breach of cov. Of quiet enjoyment.

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RULE: The SOL for a present covenant breach starts running at the delivery of the deed. o Applied here: there was clearly a breach of cov. Of seisin, but the SOL had run. RULE: The SOL for a future covenant breach starts running when the event occurs that breaches the covenant. RULE: The cov. Of Quiet enjoyment is breached ONLY when there is an actual or constructive eviction by a paramount title holder. o A mere existence of a title does NOT constitute a breach. o To be evicted, the person with superior title must come and take it from you and assert a right to do what the land is used for OR demand the right to come on. o KEY: action by the true owner

Damages for Breach of Covenants

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Covenant of Seisin & Covenant of Right to Convey o Seller Return all or part of purchase price to buyer (capped at purchase price) Covenant against Encumbrances o If it is Easily removable: buyer gets the cost to remove o If it is Not easily removable: difference between the value of the land as warranted and the value of the land as encumbered (the encumbrances MUST devalue the prop. o Max you can recover is the amount you paid the warrantor plus incidental expenses you incurred

TITLE OPINION BASED ON SEARCH OF PUBLIC RECORDS

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Recording system – American invention used to record prop transactions. Not required by statute. What is recorded? Deeds, mortgages, leases, options, judgments declaring rights in land, wills, other interests in land How to search title? (1) locate the recorded documents that affect title to the parcel and (2) evaluate their legal significance Every states uses one or two systems to organize documents o Grantor-grantee index – (most common) – every recorded document is indexed in two places: grantor index and grantee index o Tract index – simple search process – each parcel of land is assigned a unique identifier (partial identifier #) and every document affecting the parcel is filed under this #.

Luthi v. Evans – D used Mother Hubbard clause to convey all prop in Coffee County, a piece of prop was later conveyed again. Issue: Does a Mother Hubbard clause give notice?

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RULE: Mother Hubbard clause is valid, enforceable, and affectively transfers the entire property interest between the parties to the instrument, but this does NOT give subsequent purchaser record notice. o The grantee needs to take additional steps to protect his title against subsequent purchasers.  Take possession  Identify the specific prop covered in the property by filing an additional document RULE: If clerk/indexer makes mistake when filing in the index, it still provides record notice.

THE RECORDING ACTS – always the second grantee that is trying to get protection from this Common Law App – first in time, first in right (who was first? First always wins) Important!!!! – if a claimant cannot claim protection of the recording acts – first in time rule governs

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Recording Act 1 – Race Act – race to the courthouse o EVEN if purchaser who first records has actual notice of a prior transfer o Gives public records certainty o Language – “no conveyance of real prop is valid as against a purchaser, but from the time of its recordation.” o ONLY LA and NC still use this o Problem: inequitable Recording Act 2 – Notice Act – protects subsequent purchaser who is a bona fide purchase (BFP) o BFP – one who takes hit interest without either actual, constructive, or inquiry notice of the prior transfer and who pays value for the interest  (1) no notice  (2) pays value o A subsequent BFP prevails over prior unrecorded transferee, regardless of whether or not he records first o If you do NOT meet the elements of BFP, then it reverts back to the common law app o In a notice act, the winning grantee does not have to record only that they met elements o Problem: lazy grantee protection o Language – “A conveyance of an interest in land shall not be valid against any subsequent purchaser for value, without notice thereof, unless the conveyance is recorded.” o Ex. O conveys to A, who does not record. O subsequently conveys the prop to B for value. B has no knowledge of A’s deed. B prevails over A even though B does not record the deed from O to B. Recording Act 3 – Race-Notice Act – protects BFP ONLY if they record first o Subsequent purchases prevails over prior unrecorded interest ONLY if she:  MUST do these and record first!

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(1) had no notice of the prior conveyance at the time she acquired her interest AND  (2) records first before the prior instrument is recorded  Language – “Any conveyance of an interest in land shall not be valid against any subsequent purchaser for value, without notice thereof, whose conveyance is first recorded.” o Ex. O conveys to A, who does not record. O then conveys to B. B has NO knowledge of the earlier conveyance from O to A. A records, then B records. A wins. Shelter Rule – if grantee can claim protection of recoding act, then those taking from grantee can claim protection of the act

Messersmith v. Smith - Issue: In race notice jurisdiction, if notary was not present for deed conveyance, can the grantee of that deed be a BFP and therefore have superior title to a prior grantee?

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RULE: When an acknowledged deed (not notarized) is entered into the public land record, it is NOT deemed to be “recorded” and thus it does not provide constructive/record notice. Extra Notes: o Deed induced by fraud: voidable, but BFP from grantee can prevail against the defrauded owner. o Forged deed: always always always void, and those claiming UNDER a forged deed receive nothing, even BFPs. o SHELTER RULE: if grantee can claim protection of recording act, then those taking from the grantee can claim protection of the act.

CHAIN OF TITLE PROBLEMS 4 types of problems

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Will deed Common plan or scheme Deed recorded too early Deed recorded too late

Problem #1 – Wild Deed – a deed that is unable to be captured/found by the reasonable purchaser/title searcher

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When the grantor conveys the land to another person and does not record it, then that grantee conveys it to another person. Wild deeds do NOT give constructive notice to subsequent buyers. To find this deed, you would have to search every deed in juris. This would violate public policy because it is NOT efficient.

Problem #2 – Common Plan or Scheme – juris are split over whether a restriction contained in deed to one parcel in the common plan is in the chain of title of other parcels in the development

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If your title shows there are similar plans/schemes of houses around, then you might have an obligation to look at the restrictions on the surrounding prop bc they could affect you.

o This is bc a developer owns a huge piece of land and then breaks it up  Even if the restriction doesn’t make it into your deed, it could still put you on notice if it is in a deed of a surrounding lot.  The more houses that are in a subdivision the more likely there will be restrictions in some deeds and not in others.  If you live in a covenant community, then you are on inquiry notice! Problem #3 – Deed recorded too early – Maj. Deed recorded too early is NOT in the chain of title, thus does not give notice. Problem #4 – Deed recorded too late – the first grantee did not record until after the second grantee recorded

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Juris are split over whether a deed “recorded too late is in the chain of title o Maj. App – a deed recorded too late is NOT in the chain of title  Thus, it does NOT give record notice

Who is protected by the recording statute?

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Only those paying valuable consideration o Heirs/donees/devisees are NOT protected by recording statutes o Deeds that recite “$1 and other good and valuable consideration” raises a presumption that the grantee is a purchaser for valuable consideration

What does it mean to have “notice” in a notice or race-notice juris? 3 types of notice

1. Actual Notice – the subsequent grantee has received a direct communication about the prior interest – nothing is left for inference a. You were told of the prior interest 2. Record Notice – notice of any prior interest that would be discovered by a standard search of public land records a. This is where the chain of title problems come up! i. If it is within the chain of title, then it is record notice 3. Inquiry Notice – notice of the prior interest that would’ve been obtained by investigating suspicious circumstances Lott v. Saulters – race notice juris

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REMEMBER – if you are not protected under the juris recording act, then it defaults to the common law app (first in time, first in right).

Raub v. Gen Income – P owned prop, gave to D, but P continued to live there. Issue: Does this mean the grantee was on inquiry notice?

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1st question to ask in inquiry notice: Are there suspicious circumstances that would lead you to think something is going on? o If there is, then you have an obligation to reasonable inquire o Maj App – Possession of land by another (including the grantor) is sufficient to put parties on inquiry notice. o Min App – If it is the grantor living there, then that is NOT suspicious and does NOT give inquiry notice if within a reasonable time.

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2nd question to ask: Would a reasonable inquiry have given notice? o If there are suspicious circumstances and you fail to inquire, then you will be held to what a reasonable person would have found if they had inquired.

TITLE INSURANCE – protects you against a future claim or superior claim to title 2 types of policy

1. Owner’s policy 2. Lender’s policy  Exclusions – risk that will not be covered in a policy o Ex. Claims that could have been discovered upon physical inspection of prop  Exceptions – problem that concerns the particular parcel that the insurance company will not cover o Your parcel is unique in some way, and the insurance company will not cover the uniqueness PRIVATE LAND USE CONTROLS

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Servitude – non possessory interest in land o Types  Easement  Real covenant  Equitable Servitude o “Runs with the land”

EASEMENT – and interest in land which grants one person the right to use or enjoy the land owned by another

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Easement terminology o Property  Dominant tenement – land benefited by the easement  Servient Tenement – land burdened by the easement o Parties  Dominant owner – easement holder (gets benefit)  Servient owner – owner of the servient tenement (gets burden) o Appurtenant or In gross  Appurtenant easement – benefits the holder in her use of a specific parcel of land (dominant tenement)  Ex. Easement for the right of way  This benefits the land  Easement In Gross – not connected to the holder’s use of any particular land; rather it is personal to the holder  Ex. Electric company or other utility easement  This does not benefit the land, it benefits the individual o Affirmative or Negative (almost always will be affirmative)

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Affirmative easement – allows the holder (dominant) to perform an act on the servient land Negative easement – allows the holder to prevent the servient owner from performing an act on the servient land  Ct’s are hesitant to enforce these

CREATING AN EASEMENT

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Express easement by grant – arises when servient owner grants an easement to the dominant owner Express easement by reservation – arises when the dominant owner grants the servient land to the servient owner, but retains(reserves) an easement over the prop o A grantor grants their prop, but reserves an easement in themselves o Maj. App – Trad App - if a grantor wanted to reserve an easement it could only be reserved in favor of the dominant party (not a 3rd party)  When conveying prop to someone, you cannot reserve an easement for a 3rd party  To get around this, the grantor could have granted the easement to the third party, then convey the prop to grantee (easement runs with the land) o Min App – Mod App – easement may be reserved in favor of a 3rd party

EASEMENT MUST SATISFY SOF

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An easement is an interest that MUST satisfy the SOF 1. Identify the parties 2. Describe the servient land and dominant land 3. Describe location of the easement on the servient land 4. State scope of easement

Millbrook Hunt v. Smith – P was given easement by previous owner of D’s property, D does not want to keep the easement. Issue: Was it an easement or a license?

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RULE: if there is an exact amount of time, it is clearly an easement because a license is revocable at any time. This was an easement in gross because there was a time period AND the easement benefited the individuals not the land. When trying to determine if it’s a license or an easement, look to the nature of the right rather than the name given to it by the parties o Easements are permanent in nature, licenses are temporary and can be revoked at anytime

LEASE V. LICENSE V. EASEMENT

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License – personal privilege to use the land of another that can be terminated at any time Lease – transfer of a right of possession of property Easement – transfer of right to use property of another

TRANSFER OF EASEMENTS

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Appurtenant Easements – automatically run with the land Easement in Gross o For commercial purposes – runs with the land o For recreational purposes – does not run with the land

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Profit o combines the right to enter property of another with the right to remove natural resources o SUPER easement

WHAT IS REQUIRED TO CREATE AN EASEMENT - an interest in land – therefore governed by the SOF (express easements)

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BUT an easement may be enforced where an easement is implied by the conduct of the parties o Easement by estoppel o Easement implied by prior use o Easement by necessity o Prescriptive easement

1. Easement implied by prior use – RUNS WITH THE LAND a. Severance of title to land held in common ownership b. An existing, apparent, and continuous use of one parcel for the benefit of another at the time of severance (look at the initial severance) AND c. Reasonable necessity for that use i. Means beneficial or convenient for the use of the dominant, but it does not have to be essential Van Sandt v. Royster - Owner builds sewer line across her property, then divides the lot into three lots and sells two of them. Issue: was there an implied ease?

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Elements o Common ownership – yes, owner owned it all o Existing, apparent and continuous – already underground, original grantee (because you look at the time of severance) knew this, and always had been use o Reasonable necessity – yes, it was beneficial and convenient to have sewer line RULE: if an easement is created after severance, it CANNOT be implied easement. Second issue in case: Was there notice of implied easement? o YES – Court said the fact that the house had plumbing put the P on inquiry notice that the house had sewer lines. So P cannot claim protection of BFP.

2. Easement by necessity – a. when an owner sells a portion of his land (division of commonly land) AND b. division resulted in creation of a landlocked parcel AND c. strict necessity for easement existed at the time of severance i. the easement exists only as long as necessity exists.

Berge v. VT – Owner sells 7000 acres to VT, but reserved 38 acres, Owner sold those acres to a developer who turned into neighborhood. There was no access to the landlocked piece of property except by boat. Issue: is an implied easement by necessity present? Met the elements, but adopts new std for strict necessity.

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Maj. – The only way strict necessity works is if there is absolutely no method or alternative way to get there. o Expense and convenience do NOT get taken into account. o If you have water access, there is NOT strict necessity. o Extreme jurisdictions even say access by helicopter is adequate “Berge” strict necessity – Middle position – Strict necessity means the lack of reasonably practicable access. Min. – Takes a reasonable necessity – The access must be beneficial or convenient for the use of the dominant parcel, but NOT absolutely necessary.

3. Prescriptive Easement – similar to Adverse Possession a. Use must be: i. Open and notorious ii. Continuous and uninterrupted iii. Adverse and hostile 1. Min. App – Burden is on the prescriptive easement claimant to show it was adverse. VERY difficult burden to meet because you must prove no permission. “he said, she said” battle 2. Maj. App – Adverse is presumed from the other elements. a. Makes it a 3 part test. iv. For the statutory period (same as AP) b. ONLY affirmative easements can be created by prescription, Negative easements MUST be express c. REMEMBER: does NOT have to be exclusive 4. Easement by Estoppel a. Landowner allow another to use his land = creating license b. The licensee relies in GF on the license, by making physical improvements or incurring significant costs AND c. Licensor knows or reasonably should expect such reliance will occur i. The licensor created an impression that license will not be revoked Kienzle v. Myers – prop owner gives neighbor permission to use her sewer line (never makes actual easement). Later, the P sues D to stop using land, but D claims easement by estoppel.

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RULE: if an owner misleads or causes another in any way to change his or her position to their detriment the owner is estopped from denying the existence of an easement. o Easement by estoppel is irrevocable.

Questions to ask with easements:

1. Did you establish an easement? 2. Am I bound by the easement?

3. Do I have any claims against my grantor since I didn’t know of this? Look and see if it breaks covenants INTERPRETING EASEMENTS Scope and Use of Easement

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Scope of the easement o Use that can be made of easement Ambiguities in favor of the grantee(presumption in favor of broad use of easement) How to determine the scope of the easement(both type of use and intensity of use)? o Intent of the parties  Language of the deed  Circumstances surrounding the creation  Behavior of the parties RULE: if the increase in intensity of use constitutes an unreasonable increase in the burden on the servient tenement, then this exceeds the scope of the grant.

Prescriptive Easement Use – much more narrow use because you can only use it in the way you were using it at the time created. Specifically how you were using it adversely. Ex. Prescriptive easement acquired by pedestrian traffic does not extend to car traffic. Marcus Cable v. Krohn – Conveyance of easement in gross for electric transmission, Cable company tries to read in that the purpose of the easement included cable.

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Common Law – Does allow some flexibility in determining an easement holder’s rights. The manner, frequency and intensity of an easement’s use may change over time to accommodate technological development. o BUT changes must fall within the easement’s purpose as determined by the grant’s terms o

WHO DETERMINES WHERE AN EASEMENT SHOULD BE LOCATED?

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If by grant – location of ease is determined by the grant, and CANNOT be changed without consent of party Implied o Prior use easement – location determined by prior use o Necessity easement – if in existence the location of the use o Prescription easement – location where the elements are satisfied What if they want to change the location? o Maj. App – location can only be changed if both servient and dominant owners agree o Minority App – servient owner may relocate an easement as long as the change does not significantly lessen the utility of the easement, increase the burden on the easement holder, or frustrate the purpose of the easement

MAINTENANCE AND REPAIR OF EASE

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Owner of easement (dominant tenement) has the right/obligation to repair and maintain the easement.

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Owner of easement is liable for harm caused by failure to maintain NOTE: These can be modified in the grant.

TERMINATION OF EASEMENT When will an easement terminate (Remember easement by necessity terminates on its own)

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Release – must satisfy the SOF By its terms – when the easement says it will terminate(ex. Hunting easement expired after 75 years) Merger – (cannot own both fee simple and easement of some land) both dominant and servient estate come to be owned by the same person Abandonment – owner of the easement by her conduct clearly indicates an intent to abandon the easement Prescription or AP – by the owner of the servient estate or a third party Condemnation – eminent domain Estoppel – servient owner substantially changes position in reasonable reliance on the holder’s statement that easement cannot be used (similar to abandonment, but takes much less to show)

Hickerson v. Bender – terminating an easement. P claims easement ended because of AP/abandonment.

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RULE: Mere non-use will NEVER be enough to show abandonment. Must be something more. o Non-use plus something else is required. o Ex. Failure to object to your easement being blocked by the servient owner is enough to show non-use plus. The court ruled it was adverse possession, so now the P owns the FSA and the easement, so it MERGES into one FSA and there are no longer any encumbrances.

Negative Easement – allows the dominant owner to prevent the servient owner from doing something on the servient land. Today, we never see negative easements except in conservation situations. These are enforced as covenants and equitable servitudes. LAND USE RESTRICTIONS

1. Real Covenants 2. Equitable servitudes 

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What is the difference between an easement and a covenant? o An easement is an agreement to allow someone TO DO something on the property o A covenant is a promise NOT TO DO something on your land Covenant – promise between two or more individuals with an interest in land o Ex. A and B covenant to build only single family dwellings on the property o Problems come up when the prop is transferred to other people  The original parties obviously agreed to it How to make covenant binding on subsequent owners? o These covenants can be enforced upon subsequent owners in two ways

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Real covenants – remedy is damages Equitable servitude – remedy is injunction

WHEN ANALYZING THIS ALWAYS ASK FIRST WHO WERE THE ORIGINAL PARTIES?

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These problems only arise with successors. No problem with original parties.

Deep Water Brewing v. Fairway – restaurant gave right away to their property as long as houses were not built over a certain height. Restaurant conveyed to another party so does the benefit of not having house over a certain height run to the subsequent owner.

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We are only concerned with whether the benefit will run because the burden is still held by the original party Elements required for the BENEFIT to run: 1. in writing – meets the SOF 2. intent to bind successors a. the original parties must intend to bind their successors b. if it was only intended to be between the original parties, then it does not meet the intent element c. the needed intent is usually found in the express language of the document 3. Vertical Privity a. All you have to ask: did the successor get the entire interest from the predecessor in title? b. Exists only if the successor receives the ENTIRE estate 4. The covenant touches and concerns the land a. Must relate to the enjoyment, occupation or use of the property b. Pretty easy to find – if it relates to the land at all then you have this

Tulk v. Moxhay – P conveyed a garden to person and it had a covenant that that person had to keep up the garden and allow use of it. D was aware of the covenant. ISSUE: does the covenant enforceable – does the burden run?

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Elements for the BURDEN to run in a real covenant (notice the extra two elements): 1. in writing – meets the SOF 2. intent to bind successors a. refer above 3. vertical privity a. refer above 4. horizontal privity (relationship between original parties to promise) a. mutual interest (narrowest type of horizontal privity) – requires that the original parties have mutual interests in the affected land i. ex. Landlord-tenant, cotenants, or owners of the dominant and servient lands for an easement b. successive interests – there must be a grantor-grantee relationship between the original parties, so that they have successive interest in the affected land

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c. no requirement – an increasing number of states have abandoned the requirement; this is the modern trend 5. touch and concern a. refer above 6. notice a. the successor must have of the covenant. This requirement is satisfied by actual notice, record notice or inquiry notice Burden running for an EQUITABLE SERVITUDE: 1. In writing - meets the SOF OR COMMON PLAN 2. NOTICE - Purchaser was on notice of the covenant at the time of acquisition 3. INTENT – original parties intended the covenant to run with the land 4. TOUCH AND CONCERN Benefit running for an EQUITABLE SERVITUDE 1. In writing – meets the SOF or COMMON PLAN 2. INTENT 3. TOUCH AND CONCERN

Implied Covenants: Common Plan or Scheme

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A property may be bound by restrictions on property that are made part of a common plan or scheme – even though not recorded on the chain of title o Every lot in a subdivision is benefitted or burdened by the servitudes o Evidence of general plan

Restatement has merged the two doctrines into one called: the covenant that runs at law. COMMON INTERESTS COMMUNITIES Enforcing restrictive covenants

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They can be unenforced if o 1. Unreasonable o 2. Abandonment o 3. Changed circumstances When seeing if it can be enforced…. ASK: 1. Is this enforced by law or equity? 2. Are they a BFP? 3. Has the covenant gone away or been removed?

UNREASONABLE Nahrstedst v. Lakeside Village Condo – P moves into condo and there is a covenant that no pets can live there. She claims UNREASONABLENESS. Tests to determine if a covenant is unreasonable?

1. The burden outweighs the benefit

a. Do not base on P. Base on unit as a whole. (applied to this case: The benefit of no noise and health benefits outweighs the burden of not having pets) 2. Arbitrary a. Not rationally related to the benefit b. No connection to the protection of the community 3. Violates public policy a. Breaches some constitutional right ABANDONMENT – widespread violation of the covenant may result in abandonment and lead to giving up the restriction Fink v. Miller – There was a restrictive covenant that said all exterior roofs had to be wooden. There is no issue of notice. Several house break the rule. Does this count as abandonment? Tests for abandonment?

1. Violations are so great as to lead the mind of the average person to reasonably conclude that the restriction in question has been abandoned. MUST BE VISIBLE. a. Things to consider: #, nature, the severity of the violations b. Last things to consider: 1. What were the prior enforcement efforts? 2. Is there a realization at this point that we no longer get the benefit? ***Remember if there is an abandonment it removes the covenant from everyone. Not just the parties of the case. CHANGED CIRCUMSTANCES – very hard to find.

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Has there been such a radical change in the conditions since the creation of the servitude that it no longer benefits the dominant estate? So radical as to defeat the essential purpose of the covenant or render the covenant valueless to the parties

Vernon Township v. Connor – P wants to build social hall and sell alcohol but the restrictive covenant says alcohol cannot be sold. P thinks changed circumstances gets rid of it because there are now other bars in the area. Tests for changed circumstances:

1. Where the changed or altered conditions in a neighborhood render the strict adherence to the terms of a rest covenant useless to the dominant lots, we will refrain from enforcing such restrictions. Rule: Look and see does anyone still benefit from this. IF anyone does then there will likely not be changed circumstances. Rule: you can take surrounding area into account, but it is NOT determinative. Ex. Of changed circum: where a highway is basically running through your neighborhood, there is NO benefit anymore to the single family house restriction. NO ONE wants to live there. GOVERNING A DEVELOPMENT

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Declaration – the governing document of the CIC (neighborhood) o Provides the powers of the HOA

o Includes the power to govern the CIC  Enforce restrictive covenants  Administer day to day decisions Scharfer v. Eastman Community Association – the HOA took out the ski slope amenity that was a part of the reason people bought the property

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Rule: if the declaration gives broad scope, they can act broadly. Questions to ask 1. Is it within the scope of HOA? Did they have this authority? a. Look at docs/declaration 2. Is the decision reasonable under the docs?

Fountain Valley HOA v. Dept of Vet Affairs – community tries to make P clean up the inside of his house.

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Test for reasonableness of a provision in an HOA o Is it within legitimate interest of protecting the community? Applied here: court says this goes too far because it is inside his house. It would have been a legitimate interest if it had been outside his house RULE: Corrections of outside issues are legitimate interests.

NUISANCE Elements

1. Intentional a. The D’s conduct is intentional if he acts for the purpose of causing the harm or he knows that the harm is resulting or is substantially certain to result from his conduct 2. Non-Trespassory a. The interference must not involve any physical entry onto the land of another 3. Unreasonable a. Gravity of the harm test: the D’s conduct is unreasonable if it causes substantial harm, regardless of social utility of the conduct b. Restatement test: conduct is unreasonable if the gravity of harm outweighs the utility of the conduct 4. Substantial Interference a. There must be a real and appreciable invasion of the P;s interest 5. Use and enjoyment of land a. The conduct must interfere with the use and enjoyment of land; cause physical damage to the property or personal injury to occupants Boomer v. Atlantic Cement Co. – cement company causes vibrations and a cloud of smoke

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Uses the gravity of the harm test for unreasonableness Social utility keeps them from getting an injunction, they assess permanent damages o They get granted a servitude in the P’s prop for $185,000

Thompson v. Greve – P claims the D’s smoke is coming into their house. The court uses the restatement test for nuisance.

Elements:

1. Intentional 2. Nontrespassory 3. Unreasonable – does the gravity of the harm outweigh the utility of the conduct? a. FACTORS that weigh the gravity of the harm i. extent of the harm involved ii. character of the harm involved iii. Social value that the law attaches to the type of use or enjoyment invaded 1. Value of breathing, opening window, etc. iv. Suitability of the particular use or enjoyment invaded to the character of the locality 1. Is the use and enjoyment harmed suitable for the area? v. The burden on the person harmed of avoiding the harm 1. Big harm because they would have to move b. FACTORS to determine social utility of conduct i. Social value that the law attaches to the primary purpose of conduct (nuisance behavior) ii. Suitability of the conduct (nuisance behavior) to the character of the locale iii. Impracticability of preventing or avoiding the invasion 1. It would be practicable for them to not have a wood burning stove 2. It would not be difficult to stop