Property outline

Property I: Outline







Disclaimer: These notes and outlines are provided as-

is without any warranty as to their correctness,

completeness, or quality. They are not meant to be a

substitute for your own efforts. You may copy and

forward this document as long as you do not alter its

contents.









12/13/2005

Revision 0.1



Author: Philip Larson

703.798.5244 (tel)

Property: Outline





Table of Contents

1. PROPERTY: OUTLINE ....................................................................................................... 3

1.1 ACQUISITION OF PROPERTY ............................................................................... 3

1.1.1 ACQUISITION OF PROPERTY............................................................................... 3

1.2 ESTATE SYSTEM ..................................................................................................... 10

1.2.1 POSSESSORY ESTATES ....................................................................................... 10

1.2.2 FUTURE INTERESTS ............................................................................................ 13

1.2.3 CO-OWNERSHIP.................................................................................................... 17

1.3 LANDLORDS AND TENANTS................................................................................ 19

1.3.1 LEASEHOLD ESTATES ........................................................................................ 19

1.3.2 LANDLORD’S DUTIES ......................................................................................... 24

1.3.3 TENANT’S DUTIES AND OBLIGATIONS .......................................................... 25

1.3.4 GOVERNMENT INTERVENTION ....................................................................... 25

1.4 VOLUNTARY TRANSFERS OF PROPERTY ...................................................... 26

1.4.1 SALES AND GIFTS ................................................................................................ 26

1.4.2 DEEDS ..................................................................................................................... 27

1.4.3 REAL ESTATE FINANCE ..................................................................................... 30

1.4.4 THE RECORDING SYSTEM ................................................................................. 31

1.4.5 CHAIN OF TITLE PROBLEMS ............................................................................. 31

1.5 EASEMENTS, SERVITUDES, AND THE LIKE ................................................... 32

1.5.1 EASEMENTS .......................................................................................................... 32

1.5.2 REAL COVENANTS .............................................................................................. 34

1.5.3 HOMEOWNERS’ ASSOCIATIONS ...................................................................... 36

1.6 ZONING ...................................................................................................................... 36

1.6.1 INTRODUCTION TO ZONING ............................................................................. 36

1.6.2 ADMINISTRATION OF ZONING ORDINANCES .............................................. 37

1.7 EMINENT DOMAIN ................................................................................................. 39

1.7.1 INTRODUCTION TO TAKINGS ........................................................................... 39

1.7.2 PUBLIC USE ........................................................................................................... 39

1.7.3 TYPES OF TAKING ............................................................................................... 40

1.8 ECONOMIC THEMES ............................................................................................. 42

1.8.1 ECONOMIC THEMES IN COURSE...................................................................... 42









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1. PROPERTY: OUTLINE

1.1 ACQUISITION OF PROPERTY



1.1.1 ACQUISITION OF PROPERTY

A. Introduction: “possession is 9/10th of the law”. Today, property is conceived of as a bundle of rights that

attach to a parcel of land. The guiding principal of real property in the US is the free alienability of land.

1. Ownership != Possession: when tenant leases apartment, absent K provision, landlord could be

arrested for trespass if he does not leave when asked.

2. Constructive Possession: person not in actual possession but still treated as though he were by

the law. E.g. Grantor gives deed to 3rd party with instructions not to deliver until grantor’s death.

Some ct’s would find that the grantor was still in constructive possession of the deed.



B. CONQUEST: dominion can be based on discovery or conquest. Economic problem: allowing acquisition

by conquest does not assure that the person w/ the most valuable use for the land gets it. Freely

transferable land would be better.

1. Johnson v. M’Intosh (Native American rights to property)

a. Rule: Discovery of land by Europe gives absolute title.

b. Facts: M’Intosh owned land in IL from US grant. P purchased same land from

Indians. P brought suit and D won.

c. Issue: May courts of US recognize title to real property obtained under grant from

Indians?

d. Held: No.

(1) Exclusive Title: when Europeans claimed America, they obtained exclusive title.

(2) Treaty: US got all the land by treaty.

(3) Discovery: discovery gives an exclusive right to extinguish Indians’ right of

occupancy. Indians are mere occupants and cannot transfer absolute title.



C. CAPTURE: there used to be an involved set of rules determining who possessed a wild animal. Basically,

it was only when they were captured.

1. Pierson v. Post (Hunting Wild Animals)

a. Rule: To gain title to a wild animal, a hunter must trap or mortally wound it.

b. Facts: P found fox. P was hunting it when D, knowing P was in pursuit, killed it and

carried it off. P brought suit saying D trespassed and won. D appeals.

c. Issue: Does merely pursuing an animal acquire a right to it?

d. Held: No.

(1) Ferae naturae: only obtain title to these animals through “occupancy”. Mere

pursuit is not enough.

(2) Mortal wounding: or trapping of the animal would have given possession.

(3) Floodgates of litigation: to allow possession based on mere sight or pursuit

would produce large numbers of cases.

e. Dissent: death of foxes is in the public interest. Law should encourage their demise.

f. Comment: now the rule is you have a right to wild animals on your land as long as

they stay there. Why, you need to give incentive to cultivate domestic animals but not

wild animals.

2. Tragedy of the Commons: whales almost became extinct b/c the usage of trade rule in Ghen was

too efficient.

a. Somin I: resources are unowned until they are used/exploited  overexploitation

b. Somin II: Impacts of the actions of any one individual person are not heavily seen 

under regulation of people's actions

c. Ghen v. Rich (Dead whales – chance finders)

(1) Rule: Title to a wild animal can also be acquired by apprehending it according

to custom.

(2) Facts: P shot a whale which sank and was taken by tide. D found whale and

rather than send word, as was custom, he sold it. P sues.





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(3) Issue: Who owns the whale?

(4) Held: If the dead whale has identifying marks (e.g. harpoon) the property

belongs to the killer not the finder.

(a) Ferae Naturae: while other rules require possession, this is not the

custom for whales. The custom is that “the iron holds the whale.”

3. Keeble v. Hickeringill (Luring wild animals onto one’s property)

a. Somin: Coase Theorem - Regardless of where the right is placed or which rule is

applied (property vs. liability), parties will bargain to achieve the most efficient

compromise - assuming no transaction costs

(1) When transactions costs are high, bargaining will not occur and it become

important which rule of law is applied to ensure the most efficient rule is

achieved

b. Rule: A person may not maliciously prevent another from capturing wild animals in

pursuit of his trade.

c. Facts: P owned land including a pond. P put decoys, nets, etc. to lure and catch fowl.

D discharged his gun to scare away the fowl. P sued for damages.

d. Issue: Does landowner have a right to attract fowl to his property unimpeded by

interference of neighbor?

e. Held: Yes. P’s conduct was unlawful

(1) Violent and malicious: one who hinders another’s trade violently or maliciously

is liable for damages.

(2) Competition: If D had a competing pond, P would have no action.

(3) Public policy: favors protecting those who use their skill to promote trade.



D. CREATION: notion that person who creates property also owns it.

1. International News Service v. Associated Press (Quasi-property)

a. Somin Comments:

(1) There is no incentive for AP to invest in “getting” the news if they can't profit

from it (from not having a property right to it)

(2) Others can "free ride" on the efforts of journalists

(3) Issues are more significant today then they were 80 or 90 years ago b/c the cost

of gathering has fallen, but the cost of disseminating has fallen more drastically

b. Rule: The right to imitate an inventor’s creation is illegal if it destroys the incentive to

create.

c. Facts: AP (P) and INS (D) were competitive news organizations. P sued to keep D

from stealing Ps news by 1) bribing employees to give D news before publication and

2) inducing Ps employees to violate its bylaws and giving Ps news to D, and 3) copying

news from Ps bulletin boards and selling it.

d. Issues: May D be lawfully restrained from appropriating news taken from newspapers

of bulletins published by P?

e. Held: Yes. There is quasi-property in news.

(1) Copyright: D contended that unless P copyrighted its news, once the news is

made public the property right is lost as to the public. While this is true, there is

still a quasi-property right between P and D.

(2) Quasi-property: while Ps publication makes it common to public, there si still a

property right against D as a competitor.

2. Cheney Brothers v. Doris Silk Corp (No protection against imitation)

a. Facts: P makes silk patterns. Designs don’t support patents and they are impossible to

copyright. D copied a design and undercut Ps pricing. D knew the design was Ps.

b. Issue: May Ps designs be protected for the first season in which they are introduced?

c. Held: No, a person’s property is limited to the chattels that embody the invention.

Others may imitate these at their pleasure.

d. Comment: In Smith v. Chanel, court upheld perfume company’s right to copy the

unpatented Chanel No. 5. The copier “serves an important public interest by offering

comparable goods at lower prices.”

3. Virtual Works, Inc. v. Volkswagen of America, Inc. (Cybersquatting)



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a. Facts: P registered domain name vw.net. Two of Ps principles were aware of

Volkswagon (D), but decided they would buy it and in the future sell it “for a lot of

money.” P told D that unless D bought the rights, they would sell to the highest bidder.

D sued for trademark dilution, infringement and cybersquatting under ACPA.

b. Issue: Did P have a bad faith intent to profit from a protected trademark?

c. Held: Yes. Person is liable if they 1) have a bad faith intent to profit from the mark, 2)

if they use a domain name that is confusingly similar to a trademark.

(1) Bad faith: circumstantial evidence of bad faith includes 1) fame of VW mark, 2)

similarity of mark to domain name, 3) Ps admission that it never did business as

VW, 4) availability of VWI.new and VWI.org, 5) intent to “sell for a lot of

money, 6) attempting to sell to D.

4. Can Patents Deter Innovation? - The Anticommons in Biomedical Research

a. Discusses possibility of anticommons in medical research with the privatization of

"upstream research"

b. individual genomic sequences that are patented may need to be rebundled to create a

product ("downstream research"), requiring collecting rights from all the owners of the

rights in various sequences to create the product

(1) the cost may become prohibitive b/c of blocking positions, hold-outs, and

inflation of prices

(2) Private Universities have an incentive to set up large research entities to ensure

synergies

(3) Usually the decision to share hard science discoveries is decided by corporations

or universities, not the individual scientists

(4) Individual scientists might overvalue their own discoveries



E. FINDING: when an owner loses property, she is still the owner. Her title is superior to everyone else,

including the finder. The finder has superior title to all but the true owner, with some exceptions.

1. Armory v. Delamirie (Finder’s Interest)

a. Rule: A finder of lost property has a title superior to all but the true owner.

b. Facts: P, chimney sweep, found a jewel and took it to D’s jewelry shop. Under pretext

of weighing it, D removed the stones. D refused to return the stones.

c. Issue: Does finder of lost property have title superior to all world except true owner?

d. Held: Yes. Unless D produces the stones, damages will assume they are of the highest

quality.

2. Somin Comments:

a. Why is the chimney sweep preferred in the law to the jeweler?

(1) Finders would loose the incentive to "find" property in another rule

(2) Finders lose incentive to tell / report the missing item (thus hopefully locating

the real owner) in fear of the item being taken away by a subsequent "finder"

(3) Finders would lose the "trust" to utilize experts to understand the objects found

and ensure its most valuable use

(4) The more hands an item changes, the least likely the real owner will re-find the

object

3. Elements of Possession: 1) must acquire actual possession of lost property, and 2) intend to have

dominion over it.

4. Finder vs. “Unconscious” Possessor: often finder of lost property doesn’t own the land on which

the property is found. For landowner to prevail, he must have actual possession of the object. If

property is found in private residence, property owner usually prevails.

a. Servants: if a servant or employee finds the object while doing his masters business,

master prevails.

b. Trespassers: trespassers lose.

c. Buried property: belongs to landowner.

d. Hannah v. Peel (Absentee owner)

(1) Rule: If the owner of property has never occupied his land, the finder of

property has superior title.





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(2) Facts: D bought house but never moved in. It was requisitioned by military. P,

soldier, found a brooch in an obscure place covered in cobwebs. P gave it to

police but no owner was found. It was given to D who sold it. He never

possessed the house or had knowledge of brooches existence. P sued.

(3) Issue: Does finder have claim superior to that of owner upon which property

was found if owner was never physically in possession?

(4) Held: Yes. The law was unclear, but in this circumstance the finder prevails.

(a) Bridges v. Hawkesworth – parcel containing bank notes found on floor

of shop. Court held parcel was never in custody of shop owner.

(b) South Staffordshire v. Sharman – worker, under landowner’s orders,

cleaned pool. Servant finds something, he finds it for the master.

(c) Elwes v Brigg Gas – prehistoric boat discovered buried on land.

Landowner owned boat even though he did not know it existed.

(d) Rule: landowner possesses 1) everything attached to his land and 2)

does not possess everything unattached on the surface of his land.



e. Public/Private part distinction: some ct’s hold that object found in private part of

business (e.g. behind counter) belongs to owner. If found in public part, it belongs to

the finder.

(1) McAvoy v. Medina (Property “forgotten” vs. property “lost”)

(a) Rule: If property is “forgotten” rather than “lost”, a finder has no title

to the property. The shopowner has a duty to safeguard for the true

owner.

(b) Facts: D owned barbershop. P found pocketbook on table. P told D to

keep it until the true owner came for it, otherwise to advertise the

money had been found. True owner never found. P demanded money

and D refused.

(c) Issue: Does property voluntarily placed in shop, who then neglects to

remove it, belong to finder?

(d) Held: No. Finding did not acquire property right. It was his duty to

use reasonable care for safekeeping of property.

i. Distinguishing Hannah v. Peel: in Peel, parcel was not

voluntarily placed there.

(2) Somin: Basic Idea is good -

(a) Distinguish b/w a lost item and one accidentally left behind;

i. Lost = less realistic the owner can retrace his steps and find

where he lost an item

ii. Mislaid = more realistic the owner can retrace his steps and

find his item

(b) However, where do you draw the line?

F. RIGHT TO EXCLUDE

1. Jacque v. Steenberg Homes, Inc. (moving mobile home thru your land)

a. Rule: Trespassers can be subject to punitive damages

b. Facts: After several requests by Steenberg to use Jacques land to move a mobile home

across b/c the road itself was too dangerous (covered in 7' of snow and had a dangerous

curve), Steenberg moved the mobile home over Jacques land anyway.

c. Issue: was he entitled to punitive damages?

d. Held: Yes. When nominal damages are awarded for trespass to land, the jury may

award punitive damages

(1) Society has an interest in deterring trespass for:

(a) Rights of landowner

(b) Integrity of legal system

(c) Prevent "self-help" by landowners

2. State v. Shack (migrant workers rights v. farm-owner's rights)

a. Rule: A man's right to exclude others from his property is not absolute. Necessity,

private or public, can justify entry on his land against his consent.



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Facts: Two government workers, one with SCOPE providing health services and one

b.

with CRLS providing legal services, tried to enter a private farm to provide services to

migrant farm workers living there. The farm owner refused to allow them to enter and

had them arrested for trespass.

c. Issue: Do migrant workers have the right to accept visitors on the farm where they are

housed?

d. Held: Yes. This was not trespass. Property rights take a back-seat to the well-being of

the occupants of the land. Necessity, private or public, is an exception to right to

exclude.

(1) Other exceptions:

(a) Anti-Discrimination statutes

(b) Rent controls

(c) Limits on Landlord's right to evict tenants

(d) Adverse possession

(e) Public rights on private beaches

(f) Protection for homeowners who default on mortgage

e. Somin: this increases the cost of hiring migrant workers. It lessens incentive to hire

them and might make them worse off.

G. ADVERSE POSSESSION

1. Introduction: Adverse possession is a method of acquiring land. If a person who does not own

land possesses it for a period of time, they acquire title and prior owner loses right to land. Period

can be anywhere from 5-21 years.

2. Rationale: while initially seeming like theft, these policies encourage the productive use of land.

This goal also appears in the laws of easements, those promoting alienability, and the law of

concurrent interests.

a. Policy is to reward those using the land in a socially beneficial way

b. Automatically quiet all titles that are asserted, provide proof of meritorious titles and

correct errors in conveyances

c. Bias toward active use of land vs. passive use, such as nature preserve

3. Elements: 1) actual entry and possession, 2) open and notorious possession, 3) continuous for

statutory period, 4) possession must be adverse.



a. Actual possession: must be exclusive and of nature that community would think of

adverse possessor as true owner.



b. Open and Notorious: what is open and notorious depends on land, size, condition, etc.

(farming on farmland is “open and notorious.” This puts the title holder on notice that

someone else claims his property and that he should act.

(1) Van Valkenburg v. Luntz (Claim of title)

(a) Rule: To acquire by adverse possession, possession must be actual,

and land must be either enclosed or sufficiently improved.

(b) Facts: D purchased lots 14 and 15. P bought 31 and 32. B/w lots was

unsold, irregularly shaped land composed of lots 19-22. D used them

for access to property, built a shed and chicken coop, gardened on the

lots. P purchased land in 1947 and erected a fence. D sued P to get

access across the land. D hired a new attorney and asserted acquisition

by adverse possession prior to P buying the lots.

(c) Issue: Must a party occupy another’s land “under a claim of title” in

order to acquire title by adverse possession?

(d) Held: Yes. D failed to show “actual” occupation by enclosing land or

improving it.

i. Elements: D’s garden was not substantial. D’s shed was not

much of an improvement. D’s garage only encroached land

by a few inches, not a substantial occupation. D put junk on

the land and did not improve it.





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ii. Prior suit: D voluntarily admitted P owned the land in a

previous suit.

(e) Dissent: it is obvious D intended to acquire the land and use the

property.



(2) Mannillo v. Gorski (Mistaken claim of ownership)

(a) Somin: If you allow mistakes to justify adverse possession, it

disincentivizes people from avoiding mistakes

(b) Rule: Adverse possession must be open and notorious enough to give

the true landowner notice. Small border encroachments do not imply

notice.

(c) Facts: D entered K to purchase land. Land was conveyed to D and her

husband. Ds son made some improvements, including building

concrete steps to replace wooden ones. D’s steps encroach on Ps lot by

15 inches. P sought injunction against D’s trespass. D claimed title to

disputed 15 inches by adverse possession.

(d) Issue: Is entry and continuous possession under mistaken belief that

they have title “adverse” for the purposes of obtaining title via adverse

possession?

(e) Held: Yes.

i. Maine doctrine: widely criticized, would reward possessor

only with premeditated hostility.

ii. Connecticut doctrine: makes no inquiry into adverse

claimant’s mind. The very nature of the act is an assertion of

his own title.

iii. Open and notorious: may not be met when encroachment is

small area or where intrusion requires an on-site survey.

(f) Remanded: remanded to see if true owner had actual knowledge of

intrusion.



c. Adverse: to satisfy this element, adverse possessor must have claim to land adverse to

owner. If possessor has permission, it is not adverse. This prevents a possessor from

lulling the true owner into believing he will make no claim against him.

(1) Majority: adverse depends on actions of possessor, not subjective intent.

(2) Minority: possessor must have good faith belief that they have title to property.

(3) Color of title: minority also require possessor to claim title via written doc.

(4) Boundary Disputes: Ct’s typically apply objective test to determine if the

disputed strip was acquired through adverse possession. Putting up a fence and

using the land can sometimes be enough.

(5) Somin Says: there are three mindsets:

(a) State of mind of adverse possessor is irrelevant (English)

(b) State of mind must be "innocent error" - to enter on land dishonestly

should never ripen into a title

(c) State of mind must be "intentional adverse possession"



d. Continuous Possession: this is met when possessor uses land in a customary manner

for the requisite number of years. This amount of time gives the true property owner a

fair amount of time to assert his rights.

(1) Tacking: some courts will allow adverse possessor to tack the time she is in

possession onto that of her predecessor to obtain adverse possession. There

must be privity of estate b/w two adverse possessors, usually more than just

transfer of physical possession, sometimes requiring a document.

(2) Howard v. Kunto (Parol transfers)

(a) Rule: Tacking is permissible where there is a reasonable connection

b/w the successive adverse possessors. After a good deal of time has

passed, uncertain titles should be stabilized.



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(b) Facts: P and D were property holders of summer resort, only used in

summer. P owned land one lot away from D. P tried to convey their

land but found they had title to Ds land. Most of the property owners

owned the wrong land. Ps conveyed their deed to the occupant of the

adjacent lot in exchange for the lot occupied by D.

(c) Issue: May a person who receives record to tract 1 under belief they

have tract 2 use the period of possession of tract 2 by predecessors to

establish adverse possession?

(d) Held: Yes.

i. Continuous: use only in summer is not a problem.

ii. Tacking: lower ct said that actual transfer of possession did

not establish privity b/c deed did not describe the actual land.

iii. Privity: ct held that privity requirement only requires

reasonable connection b/w successive occupants and the

property. In this case, there was enough connection and prior

estates could be tacked onto D’s time to meet statutory

requirement for adverse possession.

(e) Comment: A



H. GIFTS

1. Introduction: a gift is a voluntary conveyance w/o consideration. Gift must be intended and there

must be delivery. Grantee must accept. Manual delivery is not required if impractical.

Constructive delivery (e.g. handing over car keys) is sufficient. Symbolic delivery (through

written instrument) is okay in some courts if manual delivery is impractical.

2. Elements: 1) intent, and 2) delivery. Justifications for delivery requirement:

a. Demonstrates seriousness of intent

(1) If sufficient documentation of intent is allowed in a K situation, why is it not

sufficient in the gift situation?

3. Types of Gifts

a. Gifts INTER VIVOS: gifts made during grantor’s life when death was not imminent.

This is irrevocable. Elements in Gruen v. Gruen, infra…



b. Gifts CAUSA MORTIS: gifts made in contemplation of imminent death. If donor

survives, gift is revoked.

c. Newman v. Bost (No symbolic or constructive delivery)

(1) Rule: Constructive delivery of a gift is allowed to pass title if it is impractical to

deliver actual possession.

(2) Rationale: protects owners of property from being defrauded and 2) promotes

free alienability of property.

(3) Facts: widower became ill. In presence of witness she gave P, her housekeeper,

everything, including several keys. He repeated that everything in the house

was hers. He died. P sued D (administrator) for 1) insurance policy ($3,000), 2)

household property, etc.

(4) Issue: is constructive delivery sufficient if actual delivery is not possible?

(5) Held: Yes. However, here there was no constructive delivery.

(a) Insurance policy: she could not have the insurance money ($3,000)

because , had he intended it, he could have made actual delivery by

having the witness get it out of the bureau. Insurance policy belongs to

estate.

(b) Other articles: did not pass to P because it was not constructively or

actually delivered.



d. Gruen v. Gruen (Retention of Chattel by Donor)

(1) Rule: A person can give a future interest in chattels as a gift while reserving a

life estate.





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(2) Rationale: tension b/w possibility of fraud and the free alienability of property.

Possibility of fraud in future interest is great b/c a person can easily claim that

he was given a gift, but wasn’t in possession b/c it was a future interest.

(3) Facts: P, college student. Father wrote saying he was giving him a painting but

would retain possession for his lifetime. For tax reasons, father asked P to

destroy the first letter. When P died it was in possession by D, P’s stepmother.

P never had physical possession. D refused to give it to P.

(4) Issue: may a donor make a valid inter vivos gift of chattel if donor retains life

estate in the chattel and never surrenders possession prior to death?

(5) Held: Yes.

(a) Elements of Inter Vivos Gift: 1) intent by donor to make a present

transfer, 2) actual or constructive delivery of the gift, 3) acceptance by

donee. Critical difference b/w this and testamentary disposition is

whether donor intended gift to transfer present interest or intended gift

to have no effect until after donor dies.

(b) Irrevocable: after inter vivos gift is made, it is irrevocable.

(c) In this case: evidence shows he intended to transfer and retain a life

estate.

(d) Delivery: actual delivery would have been impractical (e.g. son going

to house to receive the painting just to redeliver it to his father).

(e) Acceptance: P told others about the gift and kept the letter for 17 years

to verify the gift.



1.2 ESTATE SYSTEM



1.2.1 POSSESSORY ESTATES

A. Background

1. Feudal system: William the Conqueror said England owned his property. In return for certain

services (e.g. providing some food, some money, and some knights or soldiers), William gave vast

tracts of land to his tenants-in-chief. These tenants-in-chief, in order to fulfill their obligations,

subdivided their lands to subtenants who provided certain services. Feudal ladder was created.

Since services were fixed, but value of land increased, landlords were anxious for tenants to die

w/o heirs (so that land would return to landlord) or breach their obligations.



2. Statute Quia Emportes: this began the decline of the feudal system. statute prohibiting further

subinfeudation of lands. Rather, a tenant could transfer his interest to another tenant without the

Lord’s permission. Lords had to give tenants right to alienate their land w/o lord’s consent. Idea

that land should be freely alienable was established. This is the keystone of English and American

freehold law.



3. Inalienability – Objections include: free alienability is the passing of land without restricting its

future use. However, the law also recognizes that it is not desirable for every transfer of land to be

completely unfettered.

a. Makes property unavailable for highest and best use (unmarketable)

b. Perpetuate concentration of wealth

c. Discourages improvement of land – both b/c there is no incentive for the owner and b/c

owner cannot mortgage land for loan

d. Creditors are less likely to take a security interest in land if they cannot hold absolute title



4. Estates in Land

a. History: from feudal ages evolved system of leasehold estates and freehold estates.

b. Freehold Tenancies: Fee simple, Fee tail, and Life Estate

(1) Fee Simple: fee simple has potential to endure forever.









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(2) Fee tail: has potential of lasting forever, but will cease whenever tenant doesn’t

have a descendant to succeed him. (only recognized in a handful of American

jurisdictions).

(3) Life Estate: estate that will end at the death of some person.



c. Seisin: Legal possession of property. “Seisin” was extremely important in feudal times

and is still used frequently. Only the holder of a freehold estate could have seisin. One

was “seised” of the land if he had a freehold estate and was in possession or a tenant

was in possession from him. (e.g. a landlord has seisin). Livery of seisin is the

official delivery of land to a new owner.

d. Escheat: Estate of a person w/o any heirs goes to the State

e. Intestate: dying w/o a will

f. How estates are created: I, John Doe, convey to John Brown the following

property…

g. Present and future estates: all estates are classified as either present or future.

(1) Present estates: give the grantee immediate right of possession.

(2) Future estates: estates that don’t give grantee immediate possession. They’ll

get it at a future date.



5. FEE SIMPLE

a. Introduction: one of the simplest to understand. It is an absolute grant by grantor w/o

limitations as to duration. “to A and his heirs”

b. Defeasible estates: A defeasible estate is created when a grantor transfers land

conditionally. A defeasible fee may or may not endure forever. A fee simple may be

defeasible (determinable or subject to condition precedent). Fee simple absolute is not

defeasible.



6. FEE TAIL ESTATE

a. Introduction: “to A and the heirs of his body” – if A does not have lineal descendants,

estate reverts back to grantor or grantor’s successor. This operates to keep land in the

family. Only recognized in a few states.

b. Disentailing: Fee tail fell into disapproval of courts. You could deed a fee tail to a

“straw man” who then reconveyed the estate as a fee simple.

c. Today: most states hold conveyance of fee tail to be a fee simple absolute. Fee tails

are disliked b/c:

a. Tend to perpetuate aristocracy

b. Make land inalieanable

c. Recording is not as reliable – land subject to a fee tail could be sold in fee

simple and then re-taken when the fee tail was discovered/claimed



7. LIFE ESTATES

a. Introduction: life estate means that the grantee can hold and use the property for his or

her life, after which the property goes to another person. There are two types: pur autre

vie and for life of the grantee. Future interest is called a reversion if the future interest

is in the grantor. It is called remainder if it is in someone else.

(1) Life of grantee as measuring life: this is the usual life estate. Typically, G will

convey land to A “for her life”. When A dies, the life estate is terminated and

reverts back to G.

(2) Pur autre vie: measuring life is someone elses.

b. Defeasible life estates: life estates can be made defeasible, just like fee simples. Or,

they can be made subject to a condition subsequent.

c. Transferability: holder of a life estate may lease estate, convey it, etc. Transferee gets

nothing more than the transferor’s amount of time.

d. White v. Brown (Preference for largest estate in Construing Wills)

(1) Somin: Fee Simple preferred to life estate b/c:





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a. Efficiency - easier to execute wills and get property to the right hands

when "fee simple" vs. trying to ensure the property goes to all

successive individuals named

b. Alienability

c. Transferability at lower transaction costs

(2) Rule: W/o evidence to the contrary, here is a presumption that a transferor

intends to transfer all of his interest.

(3) Facts: Lide gave P her home “to live in and not to be sold.” P said she had a fee

simple. Hiers (D) said it was only a life estate, leaving the remainder to pass to

D by intestate succession.

(4) Issue: should language of will be construed to create in P a fee simple?

(5) Held: Yes. When intent of testator is ambiguous, a will should be construed to

pass the entire interest.

(a) In Contrast to Common Law: presumption that a life estate is intended

unless the intent to pass a fee simple is clearly expressed.

(b) “Not to be sold”: did not create life estate. It attempted to create a

restraint on alienation of the fee, which is inconsistent with the

principle of free alienability and is contrary to public policy.

(6) Dissent: a house to live in and “not to be sold” unambiguously creates a life

estate.



e. Limitations on life tenants: life tenants cannot do anything to estate to detract from its

value. If they improve it, the party receiving it after life estate terminates is not liable

for the value of the improvements. Life tenants make improvements at their own

financial risk. life tenants must also keep the estate in good order. Given the

constraints on life estates and their inflexibility, trusts are often a better way of

providing someone with an estate for her lifetime.



f. Equitable intervention: equity may intervene and order sale of life estate if the sale is

necessary for the best interests of all parties. If the holders of remainder are legally

incapable of consenting to the sale, the ct may consent for them.

(1) Baker v. Weedon (Approval of Sale of property)

(a) Somin: This case shows how the largest problem with life estates is

economic waste. Moreover, division of sale is hard b/c how do you

calculate value of life estate vs. value of remainder?

(b) Facts: P sought order permitting her to sell certain real property against

interests of his grandchildren (Ds). Weedon bequeathed by will certain

property to his third wife, P. Will gave P a life estate with remainder in

Ps children, if any. If P had no issue, Ds were named beneficiaries.

Will failed to provide for Weedon’s children. P remarried and

continued to live on the land. P wanted to sell the land because she

needed money but Ds opposed the sale because it was increasing in

commercial value.

(c) Issue: Can court approve a sale of property when there are future

interests in that property?

(d) Held: Yes. Ct in equity has power to order sale of property with future

interests. Test is whether the sale is necessary for best interests of all

parties.

i. Rationale: unproductive property can be put to better

economically justifiable uses.



8. DEFEASIBLE ESTATES: A defeasible estate is created when a grantor transfers land

conditionally. Although any type of estate can be made defeasible, fee simple defeasible is most

common. There are two distinct types of fee simple defeasible estates, each having a related

future interest.





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a. Fee Simple Determinable: this fee simple estate automatically ends if a specified

event occurs. It is fee simple because it may last forever. It is “determinable” because

occurrence of an event will make it automatically end. (e.g. “to A so long as…” or “to

A while…” or “to A until…”) –

(1) Grantor’s future: is called a “possibility of reverter”



b. Fee Simple subject to a condition subsequent: fee simple (could last forever) that

will be cut short at occurrence of specified event. However, unlike determinable, it

does not automatically end. Grantor may end it, if he wishes, after the occurrence of

the event. (e.g. “to A, but if A ever…, then G may reenter.”

(1) Grantor’s future: is called a “right to reenter”



c. Key Differences: whether the transfer happens “automatically” at occurrence of event.

In case of ambiguity, the court will always declare the estate a fee simple subject to a

condition subsequent because courts disfavor the automatic divesting of estates.



d. Fee simple subject to an executory limitation: same thing as fee simple determinable

except that, by definition, it divests in favor of a third party rather than the grantor.

(e.g. “to A, unless he becomes insane, else to B”)

(1) Third Party’s future interest: the springing executory interest.



e. Mahrenholz v. County Board of School Trustees (Fee simple determinable v condition

subsequent)

(1) Rule: “to be used for school purposes” creates a fee simple determinable that

automatically ends if the land is used for another purpose.

(2) Facts: Hutton deeded land to school (D) to be used only for school, otherwise to

revert to Grantors. Huttons deeded remaining land to 3 rd party, excluding Ds

tract, who then conveyed it to P. Hutton conveyed all his interest in the school

property to P. School used the land for storage. P sues for the land.

(3) Issue: Did trial court correctly interpret language?

(4) Held: No. This was a fee simple determinable.

(a) Future interest: whether characterized as possibility of reverter or right

of reentry, IL statute prevents transfer of either interest by will or gift.

Future interest could only be Hutton’s.

(b) Language: language “otherwise to revert to Grantors” seems to trigger

automatic return (determinable) not permissive return (condition

subsequent).



1.2.2 FUTURE INTERESTS

A. Introduction: complex area of property law. Attention to detail needed. The mere existence of future

interest can inhibit the alienability of land. Therefore, the law has developed many rules that void certain

types of future interests.

1. Definition: future interest actually exists at present time, but only becomes possessory at some

time in the future.

2. Limited forms of future interest: all future interests retained by transferor are either 1) reversion,

2) possibility of reverter, or 3) right of reentry. A future interest created in a transferee may be 1)

vested remainder, 2) contingent remainder, or 3) executory interest.

3. Future interest is fixed when created: if it is later transferred, that does not change its original

character.

4. Alienability of future interest: while C/L may differ, all future interests are alienable with

exception of rights of entry. Many states apply the C/L and do not allow a right of entry to be

alienated. Some do.

5. Statutory termination of future interest: Rule Against Perpetuities, discussed later, prevents

executory interest from being handed down perpetually. Rule does not apply to possibilities of

reverter and rights of entry. Some statutes limit the duration of such interests to 30 years.





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B. Future Interests in Grantors: three possible types of future interests a transferor can have 1) reversion,

based on a life estate, 2) possibility of reverter, based on a fee simple determinable, 3) right of reentry,

based on a fee simple with condition subsequent.

1. Reversion: future interest left in grantor after he conveys a lesser estate to someone else.

2. Possibility of reverter: future interest that arises when G conveys a determinable fee simple.

Automatically vests if event occurs but may or may not become possessory at some point in the

future.

3. Right of Reentry: future interest arising from an estate subject to a condition subsequent. It may

or may not become possessory at some point in the future.



C. Future Interests in Grantee: all future interests in grantees are either remainders or executory interests.

1. Remainders: future interest that becomes possessory at expiration of the prior estate. It cannot

divest or cut short the prior estate.

a. Vested remainders: vested remainders are 1) created in an ascertained person (e.g.

“Paul”, “my children” if G already has children) and 2) are not subject to a condition

precedent. Indefeasible vested remainders are certain to become possessory. Ones not

certain to become possessory are defeasible vested remainders.



b. Contingent remainders: remainders that are either not created in an ascertained

person or are subject to a condition precedent.



c. Categories of Vested Remainders:

(1) Indefeasibly vested: remainder in which 1) holder is certain to acquire

possessory estate, and 2) once he receives estate, he is entitled to retain it

permanently.

(2) Vested remainder subject to open: same as indefeasibly vested remainder

except that the “holder” of remainder is a class of people which may expand

(e.g. “to B for life, remainder to Bs children.”

(3) Vested remainder subject to complete defeasance: if vested remainder is

subject to being divested by the occurrence of a condition subsequent or there is

an inherent limitation on the remainder. (e.g. “to A for life, then to B, but if B

does not survive A, then to B’s eldest surviving son.”



d. Examples of Contingent remainders

(1) “to A for life, then to A’s children” (A has no children) – until A has a child,

there is no ascertainable person.

(2) “to A for life, then to Bs heirs” – no one is an heir until B dies. Thus, no

ascertainable person.

(3) “to A for life, then to B if B returns from war prior to As death” – there is an

ascertainable person, but that person’s remainder is subject to a condition.



e. Conditions subsequent vs. Conditions precedent: if conditional language is in the

description of the gift to the grantee of the remainder, it is condition precedent. If it

follows words giving a vested remainder to the grantee, the remainder is vested

subsequent to a condition subsequent. Ambiguity  vest the remainder.



f. Alienability: At C/L, no contingent interest is alienable. Most allow alienation of inter

vivos contingent interests. Most also allow alienation of them by will as long as

survivorship is not a condition precedent.



2. Executory Interests: future interest in grantee that either divests (cuts short) the prior estate or

springs out of G at a later date. They may or may not become possessory in the future.

a. Shifting Executory interest: “to A, but if A returns from the war alive, then to B” B

has an executory interest that will divest A when B returns alive. Estate will shift from

A to B.





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b. Springing executory interest: “to A, if A returns from the war alive” when A returns

alive, A’s future interest will spring from G to A.

D. TRUSTS

1. Introduction: a trust is a legal device that allows the grantor to control the future use of the

property where the trustee holds a fee simple but has a strict duty to use the trust to the best

advantage of the beneficiaries. A trust arises when a person, called a trustee, holds legal title to

property for the benefit of another person, the beneficiary. Person creating the trust is the trustor

or the settlor. Common example is a parent (settlor) setting aside money (the res) for the benefit

of his children (beneficiaries). Trust being managed by a bank (trustee). Express trusts are

expressly created either inter vivos or by will. Implied trusts are either resulting or constructive.



2. Resulting Trusts: these trusts arise 2 ways. 1) if an express trust fails, 2) when someone gives an

agent (broad interpretation) money to make a purchase. If the agent takes title to property

purchased with master’s money, he holds property in a resulting trust for benefit of the master.

The key with resulting trusts is that the person holding legal title did not furnish the consideration

for the trust res.

3. Constructive Trusts: these arise to prevent unjust enrichment. The person unjustly enriched is

said to be trustee for person who was cheated. (e.g. A fraudulently induces G to convey land to A.

it is said to be held in a constructive trust for G as beneficiary).

4. Requirements for an Express Trust: trustor must manifest intent that res be held in trust by a

trustee for benefit of someone. Unlike gifts, there is no delivery requirement. Trustee has high

fiduciary duty not to use the res for his own benefit. He must prudently invest or manage the res.

A trustee may charge for their services.



5. Judicial modification of trusts: settlor cannot anticipate every possible future contingency when

creating a trust. If there is a change of circumstances, trustee or beneficiary can petition the court

to modify the trust.

6. Swanson v. Swanson (Intent clearly expressed)

a. Rule: Law favors vested remainders to contingent remainders because they are more

transferable.

b. Facts: George Swanson died, survived by wife and 9 children. Under 2 trusts, wife

had life estate with remainder left to children, all named in will. Bennie, one of the 9,

died and his wife Peggy sought his remainder interests in the trust when wife died.

c. Issue: Does P inherit from deceased husband the remainder interests he had in the

trusts created by his father?

d. Held: Yes.

(1) Vested vs Contingent Remainders: since the person was ascertainable, the

remainder was vested. GA law favors construing conditions to be subsequent

and vesting remainders. There were 9 identifiable children who had remainder

interest after the life estate. Therefore, each had a vested remainder interest.

Bennie’s interest remained vested and passed under his will.

(2) Condition subsequent: there weren’t any.



E. DESTRUCTION OF CONTINGENT REMAINDERS

1. Introduction: C/L rule, still recognized in minority of states, was that if a contingent interest did

not vest at the termination of the prior freehold estate, the remainder was destroyed and never took

effect. (e.g. “to A for life, then to A’s children who marry before 25” – G gets reversionary interest

if none of As children are married b/f 25 when A dies).

2. Destruction of contingent future interests: given that contingent interests can make land

unmarketable, rules have been created to preclude parties from creating them.

a. Rule in Shelly’s Case: (most jurisdictions have abolished this rule) This rule stated

that if an instrument 1) creates a freehold estate in A, and 2) creates a remainder in As

heirs, and 3) both estates are legal, then the remainder becomes a fee simple remainder

in A. Using the merger doctrine, this fee simple remainder + the life estate merged into

a fee simple for A. This worked for fee tails as well.





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b. Doctrine of merger: if A has both a life estate and a remainder, unless there is some

vested estate that intervenes, these merge so that A has a fee simple title. If an

intervening estate was only a contingent remainder, it would be destroyed when the

two interests merge.

c. Doctrine of worthier title: (largely abolished in the US) if 1) an inter vivos

conveyance 2) creates a future interest in the heirs of the grantor, then the future

interest is void and the grantor has a reversion. This improves alienability because

reversions are transferable whereas a remainder or executory interest may not be.

d. Rule against perpetuities: below…



F. RULE AGAINST PERPETUITIES

1. RULE AGAINST PERPETUITIES: This rule is the downfall of many practitioners. It was

created to control the limitations on the alienability of land caused by contingent remainders and

executory interest. It says: No interest is good unless it must vest, if at all, not later than 21 years

after some life in being at the time of the creation of the interest. The Rule applies to contingent

remainders and executory interests. It does NOT apply to future interests in the grantor, nor to

vested remainders.

a. Another way of putting it: if a future interest, such as a contingent remainder, is not

certain to vest within a life in being +21 years, it is void.

2. Does not apply to: reversions, possibility of reverter or rights of entry (the 3 future interest

retained by the grantor)

3. Purpose of rule: to prevent vesting of contingent future interests in the distant future. It there is

any possibility, no matter how remote, that the contingent future interest involved will vest outside

the “life in being plus 21 years,” the future interest is void.

4. Justifications and Rebuttals:

a. Furthers alienability to ensure maximum productivity and wealth for society.

i. Not relevant in today’s world where most future interests are settled in a trust.

ii. Trustee has broad powers to sell and re-invest.

iii. Trustee has “prudent man rule” to assist in making trust investments productive

b. Prevents concentration of wealth in hands of a few

i. Threat is removed by system of income and estate taxes

c. Prevents perpetuating weaklings by allowing “the fittest to survive”

i. Restriction on tying up property does not eliminate survival of weaklings b/c our

welfare system is set up to help the weak, not the strong

5. Corporations: Corporations can last hundreds of years, therefore the 21 year period is used.

6. Gestation: For the purposes of the rule, if the person is later born alive the life in being is from the

time of conception. ???

7. Examples:

a. Example: 2005 O creates gift to X’s oldest child. 2010 – X has a child. 2050 – O dies.

 Interest is ok, b/c no child of X will be born more than 21 years after X (the validating

life) dies.

b. Example: 2005 O creates a gift to X’s oldest child >22 years old. Oldest living child

born in 2000.  Not valid interest b/c oldest son could die and the "newest” oldest child

may be born directly before X dies and thus not be 22 w/I 21 years of X’s death.

8. Vesting: Exception

a. Special Rule: while for most purposes a grant to a class vests as soon as there is a

member of the class, for this rule, a grant to a class does not vest until the class closes

and all conditions precedent are satisfied. The Rule applies if there is any possibility of

vesting outside of the prescribed time period.

b. Jee v. Audely (“Fertile octogenarian”)

(1) Rule: purest form of Rule Against Perpetuities does not wait to see if interest

actually will vest

(2) Facts: Audely gave interest on $1000 to his wife during her life. Principal was

to be given to niece and her issue. In case of default, money was to be given to

daughters of his kinsmen, the Jees. He died after his wife. At time of death,

Jees were 70 and niece was 40 and unmarried. Daughters (Ps) sued to have



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money secured for their benefit, in the event Mary died w/o children. Ps

claimed Jees were too old to have any more children and therefore request did

not violate Rule Against Perpetuities.

(3) Issue: Does the Rule Against Perpetuities apply even if it is physically

impossible for it to be violated?

(4) Held: Yes. The bequest clearly transgresses the Rule because it does not say

“daughters living at time of my death” and is therefore void.



9. Reforming the Rule Against Perpetuities: there has been a trend to reform the Rule.

a. Modern Trend: many jurisdictions have gotten rid of the Rule Against Perpetuities.

b. Wait and See: majority of states apply the wait and see doctrine. They wait to see if

vesting occurs within 21 years. Others wait to see the length of measuring lives of ppl

statutorily listed. The Uniform Statutory Rule Against Perpetuities provides for a 90yr

wait and see period.

c. Cy pres: some courts permit conveying instrument to be modified to comply with

presumed intent of the grantor. Thus, if a contingent future interest would be void

under the Rule the court will modify to comply with the apparent intent of the grantor.



1.2.3 CO-OWNERSHIP

A. CONCURRENT TENANCIES: at C/L, three basic forms of concurrent tenancies: 1) tenancies in

common, 2) joint tenancies, and 3) tenancies in entireties.



1. TENANCIES IN COMMON: this form of concurrent ownership is the simplest. It is created by

an express conveyance or when the property is inherited. Each tenant (co-owner) has a stated

share of the property. Each tenant has undivided interest in the whole property. Unless co-tenants

object, one tenant can enter and use the whole property. When one tenant dies, his interest goes to

his heirs (not the other co-tenants). Tenants in common can have unequal shares of the property.

a. Presumption: unless otherwise stated, conveyances are presumed to be tenancy in

common.

b. Partitioning: tenants in common can petition courts to divide property among them.

Court will do so if it is in the interest of the tenants as a whole.



2. JOINT TENANCIES: each tenant has an undivided interest in the whole property, just like

tenancy in common. However, when one tenant dies, the surviving joint tenants receive the

decedent’s interest in the property. The interest can never pass to his heirs.

a. Special requirements in creating joint tenancy: C/L and modern law have four

requirements for creating a joint tenancy called the four unities. Any failure of the four

unities means it is a tenancy in common, not joint tenancy.

i. Unity of Title: Every one of the joint tenants must acquire title by the same

conveyance (will or deed). For example, at common law you could not convey

property to yourself. Therefore, saying “I grant land to myself and my wife as

joint tenants” this would actually be tenancy in common.

ii. Unity of Time: each joint tenant’s interest must vest at the same time. “to A for

life, then to her heirs and the heirs of B as joint tenants” all that is created is a

tenancy in common b/c A’s heirs are determined at A’s death and B’s at B’s

death.

iii. Unity of Interest: each joint tenant’s interest must be equal and must be the

same type of estate. Conveyance of 1/3 to A for life and 2/3 to B in fee simple

fails b/c 1) interests are not equal and 2) estates are not equal (one is life estate,

other is fee simple)

iv. Unity of possession: When each joint tenant acquires his interest, he must have

the right to possess the whole. (After the tenancy is created, tenants can agree

that only one of them will have actual possession)

v. Split Conveyance: a conveyance can be split, meaning that it creates a joint

tenancy combined with another tenancy. (e.g. G conveys ½ to A and B as joint

tenants, the other half to B and C as tenants in common)



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b. Grantor’s Intent: C/L it was presumed that grant to two or more ppl was a joint tenancy.

This presumption has been abolished. Clear intent is now needed to create a joint

tenancy.



3. TENANCY IN THE ENTIRETY

a. Introduction: Can only be created via marriage. Requires all four unities + the unity of

marriage

b. Right of Survivorship - regarded as one person at law, thus both own the whole (neither

owns a "share" as in tenants in common) Neither, acting alone, has the right to convey

property or request judicial partition

c. Termination: Divorce terminates the tenancy b/c it terminates the marriage - absent

other legal arrangements, the couple become tenants in common



B. SEVERANCE: A joint tenant may sever the right of survivorship by severing any of the four unities. C/L

viewed this strictly. Modern law requires that a joint tenant intend to sever a unity. Many states say that

divorce converst a joint tenancy into a tenancy in common.

a. Riddle v. Harmon (Elimination of common law fictions)

i. Rule: A joint tenant can unilaterally sever a joint tenancy w/o use of a 3 rd party by

conveying the interest to themselves.

ii. Facts: P and wife acquired land as joint tenants. Wife decided to terminate joint tenancy

so she could dispose of her share in her will. He attorney had her execute a deed granting

herself undivided one-half interest in the real estate specifically to terminate joint

tenancy.

iii. Issue: may a joint tenant terminate the tenancy by granting herself ½ undivided interest?

iv. Held: Yes.

1. Conversion: joint tenant can convert to tenancy in common by destroying any of

the four unities: interest, time, title, or possession. Each joint tenant clearly has

the right to destroy the joint tenancy w/o consent or knowledge of other joint

tenants.

2. Strawman in C/L: only way to create a joint tenancy was to use a “strawman”

who would receive the property, then reconvey it to the original owner plus the

other tenants.

3. Prior cases: said that joint tenancy can only be terminated w/ a strawman. This

is outdated



C. PARTITION: Delfino v. Vealencis (Partition by sale vs. Partition in kind)

a. Somin: While law technically favors "partition in kind", modern court usually revert to partition

in sale due to complications of “in kind.”

i. Arguments against the rule favoring “in kind”:

1. Forcing people to be neighbors who, at least in part, do not want to be

neighbors. Keeble v. Hickeringill; Van Valkenburgh v. Lutz

2. Partitions in kind can lead to an anticommons problem

3. Could result in lowering the market value of the land

b. Rule: Partition by sale should only be ordered if partition in kind is impractical or inequitable.

(note: present trend has been the opposite b/c it tends to be fairer)

c. Facts: Ps and D own land as tenants in common. D occupied land. P sought to develop property

into building lots. P brought action to partition property by sale.

d. Issue: Did court properly order the sale, pursuant to statute, of the property owned by Ps and D as

tenants in common?

e. Held: No. Partition in kind (dividing property) is favored to partition in sale (selling and dividing

proceeds).

i. Partitions in Sale: only done in emergencies or when division cannot be well made

otherwise.

ii. Actual possession: trial court erred in not considering that D had actual possession for a

substantial period of time, had made a home on the property, and derives her livelihood

from the operation of a business on the property.



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D. RIGHTS AND DUTIES OF CO-OWNERSHIP

a. Spiller v. Mackereth (rights and duties of co-ownership)

i. Rule: Cotenants are not liable to cotenants for rent unless there is ouster.

ii. Facts: D and P owned a building as tenants in common. Lessee vacated and D entered

building, using it as a warehouse. He got new locks. P demanded that D vacate half of

the building or pay half the rental value and D refused.

iii. Issue: Is a co-tenant in possession liable to co-tenants for the value of his use of the

property in the absence of an agreement to pay rent?

iv. Held: No. There was no agreement to pay rent. D was not preventing P from equal use

or enjoyment of the premises.



E. LEASING THE PROPERTY

a. Introduction: special rules apply if one tenant leases property to third parties w/o consent of co-

tenants. C/L this severed the concurrent interest. Modern view is represented in Swartzbaugh.

b. Swartzbaugh v. Sampson (Lessee in possession)

i. Somin: Coase Theorem: If transactions costs are low enough, the two could bargain w/

each other. As co-tenants, the transaction costs are usually low – unless there are too

many co-tenants.

ii. Rule: A joint tenant can convey his interest, even if the other joint tenant objects.

iii. Facts: P and husband owned land as tenants in common. Husband leased property to D

to use for boxing. P sued to have lease canceled. P disapproved and wouldn’t sign lease.

Husband entered lease w/o Ps knowledge.

iv. Issue: Can one joint tenant who has not joined in the leases executed by co-tenant and 3rd

party cancel the leases?

v. Held: No.

1. Unity of possession: joint tenancy can be severed by destroying unities,

including possession.

2. Rent: while co-tenant cannot sue co-tenant for rent, she can compel tenant in

possession to account for rent paid by third parties.

3. Binding rights of co-tenants: co-tenants cannot, w/o consent, sell his co-tenant’s

interest. Generally, one tenant can’t bind or affect the rights of co-tenants.

a. Exception: leasing entire property w/o consent of co-tenant. Theory is

that one joint tenant is entitled to possession of entire property so a

lease merely gives to lessee a right that he had been enjoying.

Therefore, it is not prejudicial to the co-tenant.

c. Expenses: Each tenant splits taxes, mortgage, etc. Rent from 3rd parties is divided equally.

d. Ouster by exclusive possession: sole possession by a tenant is not adverse to rights of other co-

tenants, even if it is long, exclusive and uninterrupted.



1.3 LANDLORDS AND TENANTS



1.3.1 LEASEHOLD ESTATES

A. Introduction: A leasehold is a right to possession of land by the permission of another. This is contrasted

with profits, easements and licenses which involve only the right to use land, not possess it. Landlord-

tenant law originated in feudal ages. Buildings were maintained by tenant and landlord had few duties.

This agrarian model was inadequate for residential tenants.

B. Types of Tenancies

a. TENANCY FOR YEARS: 1) fixed period of time, 2) calendar dates for beginning and ending of

lease period are ascertainable.



b. PERIODIC TENANCY: fixed period of time until either landlord or the tenant gives notice of

termination (e.g. “from month to month”). Absent K provisions to contrary, terms and conditions

carry over from period to period.







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c. TENANCY AT WILL: similar to periodic tenancy. However, tenancy lasts only so long as the

landlord and tenant desire. Both can terminate the lease at any time.



d. TENANCY AT SUFFERANCE: tenant who wrongfully maintains possession after tenancy

expires. Tenant is not a trespasser. Tenancy at sufferance lasts until landlord either evicts tenant

or holds him to another term.



e. Garner v. Gerrish (Construing Lease Terms)

i. Rule: If lease is terminable at will of only one party, a determinable life tenancy is

created

ii. Facts: Donovon leased house to D for $100/month. Lease continued until D terminated

at date of his choice. D moved in and lived there 4 yrs when Donovan died. P, executor,

told D to leave. D refused and P initiated eviction claiming lease was a tenancy at will.

iii. Issue: If tenant has right to terminate a lease at a date of his choice, does the tenant have

a determinable life tenancy?

iv. Held: Yes.

1. Common law: a lease at will of lessee was also deemed to be at will of lessor.

This was required because of livery of seisin (delivery of land to new owner).

2. Livery of seisin: has been abandoned so there is no reason to convert a lease

granting tenant exclusive right to terminate at will into a tenancy at will

terminable by either party.

3. Life tenancy: rather, lease created a life tenancy terminable at tenant’s will.



f. Holdover Tenants: a tenant that holds over is a tenant at sufferance. Landlord chooses to either

1) evict tenant (trespasser) or 2) holdover tenant for lease term (or 1yr, whichever is shorter). At

C/L there were NO excuses for being a holdover tenant.

i. Rent Increases: If landlord notifies that a higher rent will be charged for holding over,

the tenant is liable for the increased rent unless he notifies landlord that he will not pay it.

Silence construed as consent.

ii. Crechale & Polles, Inc. v. Smith (Landlord’s election)

1. Rule: Once a landlord chooses to treat a holdover as a trespasser or hold him

to a new term, he cannot change his mind.

2. Facts: P brought suit for back rent. P leased store to D for 5 years. D told P that

new building D was moving into was not complete. D wanted month-to-month

basis. D stayed beyond lease term. P accepted and cashed check for first

holdover month. P refused Ds check for the second month. 3.5 months after, P

notified D that he was a holdover tenant and that the lease had been renewed. D

moved out and did not pay rent. P sued.

3. Issue: Once a landlord elects to treat a holdover tenant as a trespasser, may he

rescind that election?

4. Held: No. a landlord can either 1) treat holdover tenant as trespasser, or 2) hold

him over as a tenant for another term.

a. Having chosen to treat D as a trespasser, landlord cannot rescind and

hold him over. By accepting the check, he in effect consented to the

month-to-month extension.



C. THE LEASE

a. Introduction: A lease is both a conveyance and a contract. At first, lease was a conveyance. In

16th century, ct’s recognized tenant’s interest as a possessory interest in the land. It was a

conveyance as well as a contract. Recent courts emphasize the contractual nature of leases.

i. Conveyance: to extent lease is a conveyance, tenant acquires right of exclusive

possession. Landlord can only reenter if tenant breaches a covenant. Tenant must care

for the property. If landlord breached covenants, tenant still had to pay rent.

ii. Contract: Now, a tenant leases land primarily for a place to live. He bargains less for a

conveyance of land, and more for a habitable place to live. Contractual nature involves





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promises b/w landlord/tenant. Promises are mutually dependent, so if one party doesn’t

perform, the other is excused.



D. SELECTION OF TENANTS

a. Soules v. US Dep’t of HUD (Discrimination based on familial status)

i. Somin: courts don’t recognize “rational stereotyping” – discriminating against children is

probably okay b/c it is arguably a nuisance.

ii. Rule: Landlords can defeat discrimination claims by showing legitimate reasons for

refusing rent

iii. Facts: P, single woman w/ 12yr-old daughter, sought housing from R, realtor. R’s lease

asked # and ages of children. R was caring for elderly aunt. P contacted HOME, an

organization that investigates allegations of discrimination.

iv. Issue: did ALJ err by inquiring into Rs intent?

v. Held: No. case dismissed.

1. Fair Housing Act (FHA): made it unlawful to refuse to rent based on familial

status (in addition to race, religion, sex, etc). FHA is not necessarily violated if

one asks whether a child is noisy.

2. Noisy: D never only asked how old the child was, always if she was noisy as

well.



E. LANDLORD’S DUTY TO DELIVER POSSESSION

a. Introduction: landlord must give tenant the right of possession at beginning of lease term. If not,

the landlord is in default.

b. Majority: “English rule” imposes on landlord duty of giving tenant both the legal right of

possession and actual possession. If a prior tenant is holding over, it si the duty of the landlord to

get him out.

c. Minority: “American rule” only requires landlord to deliver legal right of possession. Holdover

tenants become the new tenant’s problem and he has to sue to get them out at his own expense.

d. Hannan v. Dusch (No implied covenant)

i. Somin: Coase theorem – doesn’t really matter whether to use the English or American

rule because parties can K around it.

ii. Rule: Some jurisdictions, following English Rule, require a landlord provide actual

possession

iii. Facts: D leased property to P for 15 yrs. Prior tenant was holding over and refused to

give estate to P. D refused to take legal action to remove holdover tenant. P brought suit

against D (landlord) to force him to deliver possession.

iv. Issue: Does a landlord have implied duty to deliver physical possession to the tenant at

the beginning of the lease term?

v. Held: No. There is no implied covenant that the leased premises shall be open for

possession, only that the tenant has the right to possession.

1. Remedy: is against the wrongdoer, not the landlord. Landlord should not be

liable for wrongdoings of a 3rd party.

2. Majority: requires landlord to 1) provide right to possession, 2) not interfere

with physical possession, and 3) (majority) place tenant in actual possession.



F. ASSIGNMENT AND SUBLEASING

a. Introduction: since the tenant has a property interest in the land, he has the right to sublease or

assign his leasehold.

b. Assignments: Leases may be assigned by either lessee or lessor absent a K provision to the

contrary. Assignee is in privity of estate with landlord, so their obligations are the same as in

original lease.

c. Subleases: different from assignments in that the tenant who subleases is a landlord to his

sublessee. There is no privity of estate b/w original landlord and sublessee. Neither one can sue

the other.

i. Effect of Reversion: At C/L, if subleasing tenant conveyed to sublessee anything less

than the whole leasehold estate (e.g. retained a reversion), it was a sublease and not an



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assignment. Conversely, if the new lessee received the whole leasehold estate, an

assignment was involved.

1. Effect of retaining right of entry: if a transferring tenant retains a right of entry

in the event the transferee breaches a condition of the lease, C/L regards transfer

as an assignment not a lease. Modern view would hold this as a sublease.

ii. Modern Trend: examine intention of parties to determine if it is a sublease or

assignment. If transferring tenant charges more rent than he has been paying, ct’s view

this as an indication of a sublease. If transferee tenant pays a lump sum, ct’s take this as

an indication it was an assignment.

d. Ernst v. Conditt (Construing terms of a sublease)

i. Somin: Somin thinks this case was wrongly decided b/c he thinks sublets have a "well-

known" meaning

ii. Rule: Court looks to intentions of parties to see if it is an assignment or a sublease.

iii. Facts: P leased land to Rogers for 53wks to operate a go-cart business. D decided to

purchase Rogers business. P, Rogers, and D negotiated a 2-yr modification to lease. P

consented to Rogers “subletting” to D. Rogers remained personally liable to P. D

defaulted. D said he had sublet so there was no privity between P and D.

iv. Issue: Are the words “sublease” and “subletting” controlling to determine if transfer is a

sublease?

v. Held: No. Look to intent of parties.

1. Privity: if sublease, no privity. If assignment, there is privity.

2. Rules: under both the C/L rule and the modern rule it is an assignment, not a

sublease.



e. Kendall v. Ernest Pestana (Commercial lessor’s duty to act in good faith)

i. Somin: Court erred b/c it did not consider the K in light of the entire bargain / K

ii. Rule: A landlord cannot unreasonably or arbitrarily withhold consent to an assignment

or sublease (rationale: promotes free alienability)

iii. Facts: D leased hangar space at airport that was subject to preexisting sublease w/ Bixler.

Bixler sold business to Ps but b/c Bixler’s lease required consent of lessor for an

assignment, Bixler sought Ds consent. D refused. Ps sued, claiming Ds refusal was an

unlawful restraint on alienation.

iv. Issue: May a commercial lessor unreasonably and arbitrarily withhold consent to an

assignment by the lessee?

v. Held: No.

1. Common law: free alienability is still valid, but parties may restrict alienability

by K. Restraints are strictly construed against lessor. Public policy favors

alienation and conditions unreasonably restraining alienation are void.

2. Majority: allows lessor to arbitrarily refuse to consent to an assignment.

3. Minority: an increasing minority modify this rule only permitting lessor to

withhold consent when it has a commercially reasonable objection. This is the

better approach.

4. Good faith: lessor must act in good faith.

f. Landlord’s remedies for defaulting tenants: Most leases have rent acceleration clauses saying

all rent is due immediately if tenant defaults. Security deposits are also common.

i. Eviction: serving tenant a notice to quit. It tenant does not leave, landlord files an

unlawful detainer action. Ct can then have sheriff evict the tenant. Landlord cannot get

back rent.

ii. Self-help: C/L, landlord could use self-help to evict a tenant. In America, landlord has

traditionally been allowed to use reasonable self-help (e.g. changing locks). Modern

trend, however, is to hold a landlord liable if she uses self-help. This harshness is

appropriate in light of the availability of summery proceedings (usually heard in 5 days or

less).



iii. Berg v. Wiley (Damages for wrongful eviction)

1. Somin: Modern rule is not yet the majority rule



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2. Rule: Some states prohibit landlord self-help, requiring use of the judicial

process

3. Facts: D leased restaurant to P. P violated lease by remodeling restaurant w/o

Ds consent. Ps restaurant got health code violations. D gave P two weeks

notice to make the remodeling changes or D would retake possession. Health

Department also gave P two weeks to fix violations. P closed restaurant and put

“closed for remodeling” sign up. While P was gone, D changed the locks. P

sued for wrongful eviction.

4. Issue: Can a landlord use self-help to regain possession of his property?

5. Held: No. changing locks while P was gone was not peaceable.

a. Jury determined that P was planning on reopening the restaurant.

b. Common Law: landlord could retake possession peaceably. This was

not peaceable.

c. Public policy: discourages landlords from using self-help, especially

when it might breach the peace.

d. Modern trend: requires landlords to use legal process, rather than self-

help.

6. Self-help authorized by lease: most courts will uphold the use of self-help in

this case

1.

G. ABANDONMENT

a. Landlords options: if tenant abandons property, landlord may leave premises vacant and sue the

tenant for the rent. (most jurisdictions don’t require landlord to mitigate). Or, she can retake the

premises and try to lease again. Ct’s disagree about whether this terminates lease with original

tenant who left.

b. Duty to Mitigate vs No duty to Mitigate:

i. Justifications for Common Law "No Mitigation" Rule

1. Tenant-wrongdoer should not impose a duty on landlord

2. Landlord should not be forced into relationship w/ a new tenant he does not

want simply to "mitigate"

3. Landlord should not be required to continually seek out new tenants

4. Law should encourage tenants not to abandon

5. Mitigation is sometimes viewed as "acceptance" of surrender offering

ii. Justifications for Duty to Mitigate:

1. Common law rule encourages economic and physical waste, where mitigation

returns the property to productive use

2. Mitigation prevents vandalism by ensuring the property does not sit vacant



c. Sommer v. Kridel (Duty to mitigate damages)

i. Rule: Some jurisdictions require a landlord mitigate damages from defaulting tenants

ii. Facts: Ps sued Ds for rent. D entered 2yr agreement w/ P. After lease but prior to

occupancy, D wrote P letter saying wedding plans failed and he couldn’t afford

apartment. P did not respond. 3rd party was ready and willing to move in but P said it

was rented. After 3 months, P rented apartment under same terms. P sued D for the full

2-yrs.

iii. Issue: Does a landlord have a duty to mitigate damages from a defaulting tenant?

iv. Held: Yes

1. Minority: landlord does have obligation to mitigate damages.

2. Majority: landlord has no duty to mitigate. This court thinks the majority view

is antiquated.

v. Comment: there is a trend for ct’s to apply K law (duty to mitigate) rather than pure

property law to residential leases. This encourages the most productive use of the land.









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1.3.2 LANDLORD’S DUTIES

A. Introduction: At C/L, landlord had no duty to furnish hospitable premises. Premises were “as is”. If there

were defects, landlord had a duty to disclose them. In modern times, landlord has duties that if he violates,

he will be held to have constructively failed to deliver possession to the tenant.



B. Quiet Enjoyment and Constructive Eviction

a. Quiet Enjoyment: tenant has right to “quietly enjoy” the premises. Landlord cannot interfere w/

tenant’s use of and enjoyment of premises. This is implied in every lease. This covenant is

breached by either actual eviction or constructive eviction.

b. Actual Eviction: if landlord evicts tenant from entire leasehold, tenant may treat lease as breached

and terminate it. He no longer has to pay rent. If evicted from only part of the leasehold, he may

stay on premises and refuse to pay rent until entire premises are restored.

c. Constructive Eviction: If, through landlord’s own fault, tenant’s quiet enjoyment is substantially

interfered with, tenant may treat lease as terminated and vacate the premises, no longer liable for

rent. Elements required are:

d. Substantial interference: tenant’s use and enjoyment must be substantially interfered w/

i. Notice to landlord: tenant must give notice to the landlord of the defect and give a

reasonable amount of time to fix the problem.

ii. Tenant must vacate: tenant cannot stay on and refuse to pay rent.

iii. Fault: interference must be the fault of the landlord.

e. Damages: after vacating, tenant can recover damages including cost of substitute premises, lost

profits, etc.



C. IMPLIED WARRANTY OF HABITABILITY

a. Traditional Approach: At C/L, landlord had no duty to keep premises in repair once tenant

moved in. Tenant still had to pay rent.



b. Implied warranty of habitability: most courts now imply, in every noncommercial lease, a

covenant that the premises be delivered to tenant in fit and habitable shape.

i. Commercial leases: some courts have extended this to commercial leases.

ii. Standards applied: typically require it to be “fit for human habitation”

iii. Waiver: this implied covenant cannot be waived by the tenant. Any waiver is held to

violate public policy.

c. Arguments for and against warranty:

i. Against rule:

1. The impact on renters who cannot afford to pay for the higher quality that

landlords are forced to provide

2. Disincentive to the "handyman" who is willing to rent a place in poor shape and

repair himself

ii. For rule:

1. The danger to tenants if allowed to live in uninhabitable places simply b/c they

choose to pay a lower rent



d. Hilder v. St Peter (Tenant need not abandon premises)

i. Somin: Leases give rise to moral hazard problem where landlords have incentive to

neglect everyday repairs and tenants have incentive to neglect maintenance. Moreover,

the rule created here may be bad for renters if it increases rent and makes housing less

affordable. Why should an informed renter be denied the opportunity to rent? Safety?

ii. Rule: If landlord breaches implied warranty of habitability, tenant may withhold rent

iii. Facts: P rented apartment from D for herself and 3 children. P agreed to $140/month. P

also cleaned apartment from previous tenants in reliance on D’s refunding damage

deposit. D never refunded. P notified D of many problems including broken window, no

key to front door, clogged toilet, lack of electricity, raw sewage, etc. P paid for own heat

contrary to arrangement. P sued for reimbursement.

iv. Issue: When landlord breaches implied warranty of habitability, must the tenant abandon

the premises to obtain reimbursement of the rent?



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v. Held: No.

1. Traditional approach: treated leases as conveyances such that possession by

tenant created duty to pay rent.

2. Modern approach: treats leases as contracts. Tenant’s duty to pay depends on

landlord’s maintaining the premises.

3. Cannot be waived: implied warranty of habitability cannot be waived.

4. Notice requirement: before suing, tenant must notify landlord of the defects and

allow reasonable time for correction.



D. TORT LIABILITY

a. Conditions existing at time of lease: general C/L rule was caveat lessee. Landlord was not liable

except if she failed to disclose a latent, dangerous defect. Once disclosed, landlord was no longer

liable.

b. Modern Rule: Most ct’s hold landlords liable if they fail to disclose dangerous defects, including

ones they should have discovered.

c. Publicly used portions of the premises: landlord is liable for injuries occurring to public portions

of the premises. If the landlord does not know that that portion of the premises was going to be

used by the public, she is not liable.



1.3.3 TENANT’S DUTIES AND OBLIGATIONS

A. Duty to Repair: At C/L, a tenant had the duty to keep the premises in as good a condition as when he

leased it.

B. Duty to Not Commit Waste: tenant is liable for waste. Two types of waste:

a. Ameliorating waste: if tenant improves premises, he commits ameliorating waste. At C/L, he is

not liable for this.

b. Damaging waste: It a tenant substantially damages the premises, he is liable. Tenant is not liable

for ordinary wear and tear.

C. Duty to Pay Rent: traditionally, tenant had obligation to pay rent whether or not landlord performed her

part of leaes. At C/L, tenant was liable for rent even if the premises burned to the ground. Today, most

jurisdictions excuse further performance from both parties in cases of accidental destruction.



1.3.4 GOVERNMENT INTERVENTION

A. Selection of Tenants: traditionally, landlord could lease or not lease to whomever she wanted for any

reason. Discrimination were possible. Changes began to occur after Civil Rights Act of 1866.

a. Civil Rights Act 1866: prohibited racial discrimination in leasing and selling of real property.

b. Fair Housing Act 1968: prohibits discrimination in selling or renting based on race, color,

religion, sex, or national origin.

i. Exceptions: In single-family dwellings, lessor can discriminate if she owns fewer than

four dwellings, does not use a broker, and does not advertise in a manner that indicates an

intent to discriminate.

ii. Remedies: only US Attorney General, HUD, or aggrieved party may sue discriminating

landlord or seller.

iii. Prima facie case: once aggrieved party makes prima facie case, burden of proof shifts to

landlord or seller.

B. Rent Control: shortage of affordable housing has led to an escalation in rent. Courts have generally

upheld rent control regulations, as long as the interests of landlords are fairly considered.

a. General View: General view is that rent controls aid affluent households (with lower rent) and

hurt poor households (reduced access to housing)



C. Chicago Board of Realtors v. Chicago (The Chicago Ordinance)

a. Rule: rent controls that are reasonably related to a legitimate public goal are okay

b. Facts: P realtors challenged ordinance codifying implied warranty of habitability and establishing

new landlord responsibilities and tenant rights. P argued that it violated the K clause, procedural

and substantive due process, EP, Takings Clause, and the Commerce Clause.

c. Issue: Is the ordinance sufficiently specific and reasonable in light of its stated purpose to promote

public health, safety and welfare?



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d. Held: Yes.

e. Dissent: ordinance will not promote health, safety or welfare.

i. Forbidding landlords from charging interest on rent payments is silly.

ii. Requiring interest be paid on security deposits are remote from stated purpose.

iii. Not in the interest of poor ppl b/c it puts no caps on rents.

iv. Depressing the price artificially reduces supply and the poorer, newer tenants are hurt.



1.4 VOLUNTARY TRANSFERS OF PROPERTY



1.4.1 SALES AND GIFTS

A. Contracts of Sale: sale of land usually involves 1) contract signed, and 2) closing (seller gives buyer deed

to property).

a. Statute of Frauds: provides that no interest in real property can be conveyed w/o a writing signed

by the party to be charged. Purpose of SoF is to prevent sellers / buyers from reneging to get out

deals when a better offer comes along



b. Essential terms: writing must contain all the essential terms for the agreement.

c. Specific performance: all property is unique so courts often use equity powers to compel a buyer

or seller to go through with the deal, rather than award damages. Specific Performance would be a

stronger deterrence in other areas as well b/c cannot decide to breach knowing you will fare better

economically; Somin has a sympathy for this argument, but recognizes the arguments for damages

vs. specific performance



d. Oral revocation: Most states allow subsequent oral modifications or revocation of the K.

e. Time of Performance: Unless K says time is of the essence, if K is not performed on date called

for, each party has a “reasonable” time to complete the performance.

f. Hickey v. Green (Specific Performance)

i. Rule: Court may enforce K for sale of land even if it fails SoF if there is a clear oral

agreement and actions in taken in reliance

ii. Facts: Ps put deposit on Ds lot after orally agreeing to a sale. D accepted the deposit. D

held the check, did not indorse it, and did not fill in the payee’s name. Ps sold the house

and accepted a deposit check. D told Ps she had decided to sell the lot to 3 rd party. Ps

sought specific performance and D claimed Statute of Frauds.

iii. Issue: May K for transfer of land be enforced w/o Statute of Frauds if party seeking

enforcement reasonably relied on the K?

iv. Held: Yes, as stated in the 2nd Restatement of K.

g. Marketable Title: absent an express provision to contrary, it is implied in every K for land that

seller furnish buyer “marketable title” to the property at closing. Marketable title does not mean

perfect title, just good enough for a title insurance company to be willing to insure it.

h. Good Record Title: less frequently, Ks call for good record title meaning that precludes title by

adverse possession.

i. Defects in Title: Common ones include problems in chain of title, private encumbrances,

unrecorded easements, covenants, and restrictions on use of property.

j. Curing Title Defects: seller has until closing to cure any defects in title. Generally, seller must

deliver the property unencumbered (no outstanding mortgages or liens). If an easement benefits

the property it does not make the title unmarketable. Zoning restrictions do not, except in unusual

circumstances, make title unmarketable.



k. Violations of building codes and zoning restrictions: if there are violations of zoning

restrictions for which gov’t can demand correction, title is usually held unmarketable. Reason is

that the law is loath to require someone to buy into the possibility of a lawsuit.



l. Lohmeyer v. Bower (Violation of public and private restrictions)

i. Rule: Marketable title in real estate requires that the buyer not be exposed to litigation







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ii. Facts: P contracted to buy house provided D could give good merchantable title. In the

event of imperfections in title, D would have a reasonable time to correct them. Under a

zoning ordinance, no frame building could be erected within three feet of the lot line

(house was 18 inches from lot line). D offered to buy P two feet of adjoining lot. P

refused offer and brought suit to rescind K.

iii. Issue: Does violation of private and public restrictions render title unmarketable?

iv. Held: Yes.

1. Violations of restrictions: P doesn’t base suit on the fact that a private restrictive

covenant on building height and a public zoning restriction (3 ft from lot line)

existed. He bases the suit upon the violation of the restrictions.

2. Policy: the two violations have exposed P to the hazard of litigation. Therefore,

D could not convey marketable title.

B. RISK OF LOSS

a. Introduction: property is subject to being damages or destroyed b/w time of K and closing.

Allocation of risk of loss is important.

i. Equitable conversion: two-step method of K for sale of land can create problems. Cts

created doctrine of equitable conversion to solve these problems. Between K and

closing, the doctrine treats the buyer as having title (equitable owner) while the seller is

the legal owner.

ii. Alternative Approaches: majority rule is that once buyer acquires equitable title, the

risk of loss passes to him. Minority rule is opposite.



C. DUTY TO DISCLOSE DEFECTS

a. Stambovsky v. Ackley (Duty to disclose defects)

i. Rule: Where seller has unique knowledge of a latent defect, he has a duty to disclose it

ii. Facts: P discovered house he had K’d to purchase was possessed. House’s reputation

affected resale value. P wanted to rescind K.

iii. Issue: Does seller have duty to disclose conditions that materially impair the value of the

K and is peculiar knowledge of the seller?

iv. Held: Yes. Inspection would not reveal this (latent) so D had duty to disclose.



D. WARRANTIES FROM THE SELLER

a. Introduction: C/L rigidly applied caveat emptor. Modern courts overruled C/L holding there is

an implied warranty that the building is fit for the use contemplated by both parties.

b. Lempke v. Dagenais (Implied warranty of workmanlike quality)

i. Rule: Buyer does not have to show privity to sue for breach of implied warranty of

workmanship for latent defects

ii. Facts: 3rd party K’d w/ D to build a garage. Then they sold the property to Ps. P noticed

structural problems with garage. D agreed to make repairs but never completed them.

iii. Issue: May a subsequent purchaser sue the builder for latent defects that cause economic

loss?

iv. Held: Yes. Privity of K is not needed for latent defects that manifest themselves a

reasonable time after purchase that cause economic harm.

1. Implied warranty: many ct’s find an implied warranty exists. We agree. We

limit liability to latent defects and limited time period.



1.4.2 DEEDS

A. Requirements: Deeds of land typically contain warranties of title and must be effectively delivered. It is

an instrument for transferring interest in land is a deed. Only the grantor MUST sign the document.

a. Consideration: deed does not require consideration to support it. A grantor may give the property

away.

b. Failures in the description of the property: C/L classified ambiguities as 1) patent or 2) latent.

A patent ambiguity (one on face of deed) could not be resolved with extrinsic evidence. A latent

ambiguity could be resolved with extrinsic evidence.

c. Modern Trend: allows admission of extrinsic evidence for both ambiguities.





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B. Warranties of Title

a. Introduction: all deeds contain the “usual covenants”. These covenants run from the seller of real

property to the buyer. There are six “usual” covenants, one which is unusual for the US:



b. Types of Deeds Warranting Title

i. Warranty Deed: usual type of deed. Warrants against any title defect and contains usual

covenants.

ii. Special warranty deed: contains usual covenants but only warrants title from defects

arising during time the grantor held the land.

iii. Quitclaim deed: deed does not warrant anything. It only transfers interest grantor may

have in the property.



c. Usual Covenants

i. Present Covenants: in essence, these say “I, the grantor, warrant that…” These are

breached, if at all, when the conveyance is made.

1. Covenant of Seisin: seller covenants he owns the property conveyed.

2. Covenant of right to convey: seller warrants that he has the right to convey the

property.

3. Covenant against encumbrances: seller promises that there are no easements,

covenants, mortgages, liens, etc. on the property.

ii. Future Covenants: These may be breached anytime after conveyance. They run with

the land.

1. Covenant of quiet enjoyment: seller warrants buyer will not be disturbed in

possession of property by lawful claim of 3rd party.

2. Covenant of warranty: seller warrants that the title is good and that grantor

will defend, at his own cost, from a party claiming paramount title.

3. Covenant for further assurances: (this is unusual in America) seller promises

to perform whatever acts are necessary to perfect the buyer’s title to the

property.



C. BREACH OF COVENANTS

a. Introduction: present covenants are breached, if ever, at conveyance. Future covenants are

breached anytime in the future. Present covenants are “personal” and do not run with the land.

b. Brown v. Lober (present vs. future covenants)

i. Rule: Covenant of quiet enjoyment vs covenant of seisin

ii. Facts: D bought land and owner retained 2/3rd mineral rights. D conveyed land to Ps

with no exceptions. Ps were going to convey mineral rights to Consolidated Coal. P

sued D under covenant of quiet enjoyment (10-yr SOL had run, barring suit on present

covenants).

iii. Issue: Does the warranty of quiet enjoyment constitute a warranty that grantor is the

owner of the entire estate conveyed?

iv. Held: No.

1. Covenant of quiet enjoyment: only guarantees buyer’s peaceable possession of

land will not be taken from him. It does not guarantee there is no one with

paramount title.

2. Seisin: covenant of quiet enjoyment should not be extended into an area covered

by another covenant (seisin).



c. Frimberger v. Ansellotti (Latent land use violation)

i. Rule: Latent violation of restrictive land use statute does not violate warranty against

encumbrances

ii. Facts: Ds predecessor conveyed to D by quitclaim deed property on which he had built a

bulkhead and a dwelling near the wetlands. D conveyed property to P by warranty deed,

free and clear of all encumbrances but subject to zoning restrictions, etc. P discovered a

violation of a land use statute and claimed breach of warranty against encumbrances.





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iii. Issue: Does a latent violation of a restrictive land use statute constitute a breach of

warranty deed covenant against encumbrances?

iv. Held: No.

1. Latent violations unknown to seller: where no agency has taken official action

are not an encumbrance for a warranty deed. Such enlargement of the covenant

against encumbrances would create uncertainty and confusion in the law b/c

neither a title search nor a physical examination would disclose the violation.

2. Proper way to deal w/ violations: K provisions or language in deed.



d. Rockafellor v. Gray (Remote Grantees)

i. Rule: Covenant of seisin runs with the land and is broken the moment conveyance is

delivered

ii. Facts: Doffing conveyed land to P. P assumed Doffing’s mortgage owed to D. P

defaulted and D foreclosed on the mortgage. C party purchased land at sheriff’s sale and

sold to E. E sold to H. Later, P had sheriff’s deed set aside and foreclosure declared

void. H sued C for breach of warranty of seisin.

iii. Issue: Does the covenant of seisin run to a remote grantee even if the original grantor

never had actual possession of the land?

iv. Held: Yes.

1. Minority rule: (English) warranty of seisin runs with land to remote grantees and

is broken the instant a defective conveyance is delivered.

2. Breach of seisin: Because C had no title and no possession of premises when he

sold to E, covenant of seisin was breached. It ran with the land to H.



D. DELIVERY

a. Introduction: one of the requirements of a deed is that it must be delivered by the grantor.

b. Definition: two requirements: 1) grantor, by words or conduct, must manifest intent to make the

deed effective, and 2) grantor must immediately give it to the grantee. Modern cases have relaxed

the manual delivery requirement:

i. Evidence of clear intent: extrinsic evidence can be used to prove delivery or nondeliver

ii. Delivery cannot be canceled: once delivery has taken place, it cannot be canceled.

iii. Estoppel: even if there is no delivery, grantor may be estopped from denying delivery

c. Types of Delivery: two types: 1) those involving only grantor and grantee, and 2) those involving

a 3rd party intermediary.

i. Grantor/Grantee Delivery: if grantor has the deed there is a rebuttable presumption that

there was no delivery. If grantee has the deed, there is presumption that there was

delivery.

ii. Delivery subject to a condition: if condition is in the deed, it usually constitutes valid

delivery of a future interest. Modern trend is to give effect to ddeds that reserve in

grantor power to revoke deed prior to date it passes legal title to grantee.



d. Sweeney, Administratrix v. Sweeney (Unsuccessful conditional delivery)

i. Rule: A deed is properly delivered when handed to grantee, even where evidence shows

it is only to take effect upon death of grantor.

ii. Facts: Maurice Sweeny deeded farm to brother D. If D predeceased Maurice, D

immediately deeded it back to Maurice. First deed was recorded, second was not. D

never received any rent or made repairs to property. Maurice died. Administratrix (P)

sought the property.

iii. Issue: May delivery of a deed be deemed conditional when it is made to the grantee?

iv. Held: No. Maurice did not physically possess the unrecorded deed that reconveyed the

property to himself.

1. Intent to deliver; delivery must be made with intent to pass title. Physical

possession is evidence of legal delivery.

2. Signatures: provide evidence that deed was delivered.

3. Conditional: D claims delivery was conditional on Ds predeceasing Maurice.

However, delivery cannot be conditional. Delivery vests absolute title in the



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grantee. Conditional deliveries can only be effected through third person who

delivers deed to grantor upon occurrence of the condition.





1.4.3 REAL ESTATE FINANCE

A. Introduction: In most real estate transactions, buyer makes a small downpayment and finances the rest.

The financing institution (e.g. bank) usually takes a note from the buyer as well as a mortgage. Borrower is

liable for the note. Mortgage gives lender the right to sell the property to pay off the note if the borrower

defaults. The lender is the morgagee and the borrower is the mortgagor.



B. Mortgages and Foreclosure: Under C/L, lender would get fee simple absolute title if borrower failed to

pay promptly. Eventually, borrowers were given an equitable right to redeem the property. Right of

redemption could be foreclosed by lender through a judicial foreclosure proceeding. The result of the

foreclosure would be a decree that the property be publicly sold and the proceeds used to pay the debt, with

any balance going to the mortgagor.



C. Murphy v. Financial Development Corp. (Mortgagee’s Duty upon Foreclosure)

a. Somin: principle/agent problem b/c D is acting as an agent to Murphy but has a different set of

incentives.

b. Rule: A mortgagee executing a power of sale has a duty to protect the interests of the mortgagor

by using good faith and due diligence to obtain a fair price at foreclosure.

c. Facts: Ps bought house and financed w/ a mortgage, then refinanced with D. P failed payment

and D notified of intent to foreclose. P paid arrearage of mortgage but did not pay certain costs

and legal fees incurred due to foreclosure. Ds postponed sale to give Ps more time. D refused to

wait longer. At sale, P, D and attorney were present. Ds lowballed and bought the place for $27k.

Ds sold property 2 days later for $38k. P sued to have foreclosure set aside. Court awarded Ps

$27k in damages.

d. Issue: Does a mortgagee foreclosing a property have a duty to secure a portion of the mortgagor’s

equity if it is reasonably possible to do so?

e. Held: Yes. Mortgagee has a dual role as seller and potential buyer. 1) he has duty to act in good

faith and with due diligence and 2) he must use reasonable efforts to obtain a fair and reasonable

price.

i. Ds should have done more to secure a higher sales price. D failed to use due diligence.

ii. Ps entitled to difference b/w a “fair” price and the price actually obtained, not difference

b/w “fair market value” and price obtained.

D. Deed of Trust: most states permit use of a deed of trust, where borrower conveys title to property to

trustee. If borrower defaults, trustee can sell the property without going to court. The power of sale avoids

burdensome judicial foreclosure proceedings.

E. Installment Contracts: seller may finance the sale of real estate instead of a third-party lender. The seller

promises to convey title to buyer once the purchase price is paid. The terms of an ordinary installment K

provide that if buyer defaults, seller can keep all payments already made. Ct’s usually hold these K’s

invalid.

F. Bean v. Walker (Defaulting Vendee)

a. Somin: This is an inalienability rule b/c K not enforced and could lead to fewer poorer people

being able to purchase homes.

b. Rule: Installment contracts can be inequitable

c. Facts: Ds purchased home from Ps. Ps retained legal title until payment was made in full. K said

that if D defaulted and failed to cure within 30 days, Ps could elect to call the balance due

immediately or terminate the K and repossess. If Ps chose termination, Ps could retain all money

paid as liquidated damages and money paid would be considered rent. D defaulted after 9 years.

d. Issue: Is this installment K valid?

e. Held: No.

i. Vendee has equitable title and vendor may not eject the vendee. He may only foreclose

the equitable title. Foreclosure not forfeiture would have been correct.

ii. Forfeiture: not appropriate here. Only appropriate where vendee abandons property or

absconds or has paid a minimal amount of the K.



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1.4.4 THE RECORDING SYSTEM

A. Title Insurance: Title assurance assures a landowner they have clear title to the land and assures the

purchaser of land that they are buying from someone who has the right to pass title. There are three

methods: 1) public recording system, 2) title registration, 3) title insurance.

B. Introduction: Recording does not directly affect the rights of the grantor and the grantee. It does affect the

right of people who subsequently receive the property from the grantee. The purpose of recording is to

give notice to the public as to who has what interest in the property.



C. Method of recording: grantee files deed with county recorder. Deed is typically filed one of two ways:

a. Grantor/Grantee Index: conveyance is filed chronologically. Record of the filing is kept in two

books, one for grantors and one for grantees. Tracing through these indexes is very laborious.

b. Tract Index: Recorded documents are filed in chronological order under each tract. This

simplifies title searching.



D. Types of recording: C/L, the first person had priority. All states have recording acts replacing C/L.

a. Race statutes: few states have these statutes. Under race statutes, the first to record had priority,

even if the person recording knew of prior unrecorded conveyances.

b. Notice statutes: A subsequent purchaser prevails over a prior grantee who has not recorded unless

actual or constructive notice of prior conveyance is given.

c. Race/Notice statutes: in order to cut off a prior grantee, subsequent purchaser must both record

first and have no actual or constructive notice of the prior conveyance.



1.4.5 CHAIN OF TITLE PROBLEMS

A. Introduction: To give notice to subsequent purchasers, an instrument must be recorded in the “chain of

title”. Chain of title refers to the title established by the grantor’s predecessors up to the time of the

conveyance to the grantee. Problems arise when instruments are improperly recorded.

a. Board of Education v. Hughes (Prior unrecorded deeds in chain)

i. Rule: A deed from a grantor outside the chain of title, even if recorded, is treated as

though it were unrecorded and gives no notice.

ii. Facts: D offered to buy a lot from Hoerger. Offer was accepted and deed forwarded to D

by mail. Name of grantee was blank. Hoerger quitclaimed the lot to certain agents who

then sold lot to P under warranty deed. P recorded. D recorded his deed from Hoerger

shortly after he filled in his name as grantee.

iii. Issue: Is a record of a deed from an apparent stranger to the title notice to a grantee of a

prior unrecorded conveyance by the grantor?

iv. Held: No.

1. Valid deed?: the insertion of Ds name did not invalidate the valid deed. D had

authority to fill in his name. D’s deed was only effective when he filled in his

name, therefore he was a subsequent purchaser.

2. Race/Notice: D recorded first and 3rd party recording was not notice.

b. Deeds recorded before grantor obtains title: if grantor does not have title at the time he conveys

but subsequently obtains title, the doctrine of estoppel by deed applies. He must convey property

to grantee.

c. Subdivision restrictions: courts are split as to whether subdivision restrictions contained in deeds

of other lots in a subdivision are outside the chain of title. To hold they are within the chain of

title imposes a would-be buyer the burden of searching all the deeds flowing from a common

grantor.

i. Guillette v. Daly Dry Wall, Inc. (Restrictions in neighbor’s deed)

1. Rule: In about 50% of jurisdictions, a subsequent purchaser from a common

grantor in a subdivision has constructive notice of the restrictions on the rest of

the subdivision.

2. Facts: P purchased lot in subdivision. Ps deed contained restrictions intended to

maintain subdivision as single-family dwellings. D bought lot with no reference

to restrictions and started constructing a multifamily apartment building. P

sought injunction.



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3. Issue: is a grantee bound by restrictions in deeds to its neighbors from a

common grantor when it did not have knowledge of the restrictions and its deed

did not mention them?

4. Held: Yes.

a. Chain of title: D claimed he was only required to see if there were

restrictions in prior deeds in his chain of title. Ct said that it may be

burdensome to search all the deeds given by a grantor, but it is not

impossible.

b. D could have discovered the restrictions from the records.

5. Comment: other courts hold that a restrictive covenant on one parcel created by

a deed on a separate parcel is not in the first parcel’s chain of title.



1.5 EASEMENTS, SERVITUDES, AND THE LIKE



1.5.1 EASEMENTS

A. Introduction: an easement is a right to make a limited use of another’s property. A common example is a

“right of way” across the land of another. An easement may endure for years, for life, etc. It is more than a

mere promise; it is a nonpossessory interest in the land.

a. Easements, Profits and Licenses: an easement is not a profit, though the two are similar. A

profit is the right to enter the land of another and take something off the land (e.g. animals, timber,

coal). An easement is not a license. A license is the permission to enter upon or do acts upon the

land. Most licenses can be revoked at will by the landowner.



B. Types of Easements

a. Affirmative easement: this is the most common easement. It is the right to go onto the land of

another and use it (e.g. right of way).

b. Negative easement: This is the right to make the owner of a servient land not do something he

otherwise would be entitled to do (e.g. build swimming pool w/i 20 feed of neigbbor’s yard).



C. Easements Appurtenant: An easement that confers a benefit upon a dominant tenement is appurtenant to

the dominant estate. The burdened land is called the servient tenement.



D. Easements in Gross: easements that are personal to their owner (that are not appurtenant to a dominant

tenement) are easements in gross. The servient land is burdened but there is no benefited land. Excamples

are billboards on private land.



E. Creation of Easements: Easements may be created by written instrument, by implication, necessity or

prescription.

a. Reservation of an easement: generally easements are created by grant. At C/L, an easement

could never be reserved. Modern law recognizes the reservation of an easement.

b. Willard v. First Church of Christ (reservations of easements in favor of 3rd parties)

i. Rule: A grantor may reserve an easement for 3rd parties. (some jurisdictions don’t agree)

ii. Facts: D (member of church) sold lot adjoining church to Petersen. Clause gave D an

easement on the lot for parking during church. Petersen recorded the deed then sold the

land to P but did not mention easement. P commenced action to quiet the title saying D

could not reserve an easement for benefit of a third party.

iii. Issue: May a grantor reserve an easement to benefit a stranger to the title?

iv. Held: Yes. The C/L rule preventing reservation of easements is rejected.

1. Intent: it was clearly Ds intent to reserve an easement.

v. Comment: majority of jurisdictions follow C/L saying you can’t create easements that

benefit 3rd parties.



c. Licenses: licenses can become irrevocable in some circumstances. Many states will estop the

grantor of a license from revoking it if the licensee has relied upon the license to his detriment.

i. Holbrook v. Taylor (Licensee’s reliance)





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1. Rule: A license cannot be revoked if the licensee has relied by making

improvements to the land at considerable expense.

2. Facts: D purchased land over which P claims an easement. D gave P right to

construct mining road on Ds land for which D received royalties. P brought suit

to establish right to use the roadway, claiming right had been established by

prescription or estoppel.

3. Issue: is a licensor estopped from revoking a license to use a roadway if the

licensee has expended money in reliance of the license?

4. Held: Yes.

a. Creation of easements: either by 1) express agreement, 2) implication,

3) prescription, or 4) estoppel.

b. Easement by prescription: one must show that he has openly,

peaceably, continuously, and under a claim of adverse right to the

owner, and with his knowledge and acquiescence used a way over his

land. P did not show this because his use was not adverse or

continuous.

c. Easement by estoppel: he acquired a license by spending money to

improve the way.

5. Comment: they may have also been able to win on necessity b/c there was

evidence showing no other outlet for P.



F. CREATION BY IMPLICATION

a. Introduction: an easement may be implied when necessary to carry out the intent of the parties or

when required by public policy.

b. Two types of easements: implied easements are either 1) easements by necessity, or 2) intended

easements based on quasi-easement.

i. Easements by necessity: if the only means of ingress or egress is over the remaining

land, an easement will be implied for Bs benefit across the remaining land. This

easement terminates when the necessity terminates.

ii. Intended easement based on quasi-easement: less strict test for an easement than one

by necessity. This says that if an existing quasi-easement exists, you only have to show

that the easement is “reasonably necessary” rather than a necessity.

iii. Prescription: just as by adverse possession one can obtain title to property, so by

prescription one can obtain an easement. The elements are the same as adverse

possession.



c. Van Sandt v. Royster (Equity)

i. Somin: The same rules apply to easements by implication and reservations by

implication - here, it is a reservation by implication b/c Bailey sold lots 19/20 but

reserved to herself the implied right to use the underground sewage across them

1. US differs from UK in that UK requires an explicit reservation to grant or

reserve an easement - Somin prefers this rule

ii. Rule: implied easements may be created for grantor or grantee if they are reasonably

necessary.

iii. Facts: Common grantor built a sewer under all her property. Grantor conveyed property

to Jones and Murphy but did not reserve an easement for the sewer line. Jones conveyed

to Reynolds who built a house with basement near the sewer line. Reynolds conveyed to

Van Sandt (P). Ds sewage floods Ps basedment. P sought injunction against continued

use of sewer under his land.

iv. Issue: May a court of equity recognize an easement that exists, if at all, only by virtue of

an implied reservation?

v. Held: Yes.

1. Quasi-easement: when landowner uses portion of her estate to the benefit of the

remainder, a quasi-easement is created.

2. Necessity: reasonable necessity, such as a sewer, can result in an implied

reservation of the prior quasi-easement, even w/o reference in the deed.



Philip Larson Page 33

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3. Notice: In fairness to grantee, the reserved use must give notice of its existence

and necessity. Ct held this notice existed.

vi. Comment: implied reservation doctrine is recognized only in about half of the

jurisdictions.



d. Othen v. Rosier (easement of necessity)

i. Somin: Reason to require necessity at the time is to provide incentive for him to K for

the easement prior to his purchase - very similar to the "coming to the nuisance" law

ii. Rule: An implied easement can be created when the necessity existed at the time the two

estates were severed.

iii. Facts: Hill deeded land to P. D owned land close by. Ps land was not near a highway so

he crossed Ds land for years. D constructed a levee that turned the lane P used to get to

the highway into a muddy mess. P sued D to prevent him from making the levee.

iv. Issue: For an easement of necessity, must the necessity have existed at the time the

original grantor severed the two estates?

v. Held: Yes.

1. Easement of necessity: can be implied only if 1) originally there was unity of

ownership of alleged dominant and servient estates, 2) roadway is a necessity,

not mere convenience, 3) necessity existed at time of severance of two estates.

2. Here, there was no necessity. There was no prescriptive easement either.

3. Presciptive easement: requires adverse use of easement. Here there was implied

permission.

e. Brown v. Voss (attempt to expand scope of use of easement to nondominant tenement)

i. Rule: An easement may not be extended to other parcels of land.

ii. Facts: D purchased parcel A. B, dominant tenement, had easement to travel across A. P

bought B and C and wanted to use easement to get from A to C.

iii. Issue: May court grant an injunction against the owner of a servient tenement that allows

the owner of the dominant tenement to use the easement for access to a nondominant

parcel?

iv. Held: No, he can’t use the easement on A to get to C.





1.5.2 REAL COVENANTS

A. Introduction: real covenants are promises to use or not use land in a specified way. Covenants run with

the land but are not an interest in the land. Similar to easements, they can be affirmative or negative.

a. Benefits and Burdens: benefited land is comparable to dominant tenement. Burdened land is

similar to the servient tenement.

b. Writing required: C/L required real covenants ot be in writing.

c. Enforceability: covenants are enforceable by the parties. Problems arise when 3rd parties try to

enforce.

d. Elements? A burden runs with the land if 1) it is the intent of the contracting parties that it do so,

2) there is vertical privity of estate, and 3) the covenant “touches and concerns” the land.

e. Privity: privity of estate between two parties to promise is horizontal privity. Privity of estate b/w

promisor and successors is vertical privity. For the burden to run, all courts require vertical privity

and some require horizontal privity.

f. Third Restatement: says there is no real difference between real covenants and equitable

servitudes and they should be treated the same.

i. A servitude is valid if:

1. It is legal

2. It is constitutional

3. It is not a violation of public policy



B. Equitable Servitudes: equitable servitudes is a covenant enforceable at equity against the assignees of the

burdened land. It does not matter whether the covenant runs with the land. Now that courts of law and

equity have merged, there is no difference b/w this and covenants. It burdens the land (including

successive owners) whereas a real covenant burdens the deed.



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a. Writing: most courts feel that an equitable servitude is an interest in land and therefore require

writing.

b. Reciprocal negative or restrictive equitable servitudes: courts may enforce reciprocal schemes

in neighborhoods (i.e. other property in neighborhood has similar restrictions).

c. Equitable servitudes may be enforced by 3rd parties: Enforcement of the servitude requires 1)

intent that servitude be binding on assignees, 2) vertical privity (not horizontal), 3) covenant must

tough and concern the land, 4) a subsequent purchaser w/o notice is not subject to the covenant.



C. Tulk v. Moxhay (Enforceability by and against subsequent assignees)

a. Somin: after Tulk, not all real covenants run with the land.

b. Rule: Covenants can be applied against later buyers who had notice of the covenant.

c. Facts: P sold land w/ covenant that certain portion would remain open for use of tenants to 3rd

party. D got land from 3rd party and threatens to build on it. D had notice of restrictive covenant

even though his deed doesn’t mention it.

d. Issue: May D, not being in privity of estate with P, disregard a previous covenant restricting use

of land even though he had notice?

e. Held: No. A covenant that does not run with the land will not typically be enforced against a

subsequent vendee but here, he purchased with notice of the covenant.

f. Comment: This was the first case to hold that a covenant was enforceable against a subsequent

purchaser who acquired title to the burdened land with notice of the covenant.



D. Sanborn v. McLean (Inquiry notice)

a. Somin: Court may have gotten this case right, but the danger with this precedent is that the court

has to use its own judgment to decide the purpose of the restrictions because the covenant and/or

plan is not written down - a rule that encourages writing down this agreements/covenants might be

better.

b. Rule: An equitable servitude can be implied on a lot, even w/o being in the deed if 1) there is a

scheme for development, and 2) the developer has notice of it.

c. Facts: D owned lot in residential neighborhood and constructed a gas station. Ps sued and

obtained injunction. Some deeds contained restrictions while others did not.

d. Issue: Will lots conveyed by common grantor, some conveyed w/ restrictions and some without,

all be impressed with the restrictions?

e. Held: Yes. A reciprocal negative easement arises on the lot and runs with the land to purchasers

with notice. Even though there were no restrictions in the deed, D had notice b/c of the uniform

use of the land.



E. Neponsit Property Owners Ass’n v. Emigrant Industrial Savings Bank (Affirmative covenant)

a. Somin: did this really “touch and concern” the land? It creates a collective action problem

because you need multiple people to contribute but any one person’s contribution is insignificant.

b. Rule: A homeowners’ ass’n, as the agent of actual owners, has privity to enforce a covenant to

pay money for maintenance. This “touches and concerns” the land.

c. Facts: P filed subdevelopment plan. A deed of a parcel of the development contained covenants

binding grantee to pay fixed annual charge for maintenance of common areas. D acquired parcel

in foreclosure but refused to pay charges under the covenant. Original parties intended the

covenant to run with the land. P sought foreclosure of D based on failure to pay.

d. Issue: Are subsequent purchasers bound by affirmative covenants to pay money for use in

conncetion with the land that is subject to the burden?

e. Held: Yes.

i. Covenants run with land if: 1) parties intend it to, 2) covenant touches the land ti

concerns, 3) there is privity b/w party claiming benefit and party burdened by covenant.

ii. Privity: privity exists even though it is a corporate entity representing all property

owners, rather than the direct seller.









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1.5.3 HOMEOWNERS’ ASSOCIATIONS

A. Introduction: Homeowners associations subject themselves to certain restrictions in return for protection

of knowing other homeowners have the same obligations. Condo’s and cooperatives typically involve

some degree of joint ownership.

a. Condominiums: fairly common now. Each individual owns a fee simple living unit while the

land, exterior walls, and common areas are owned by all unit owners as tenants in common.

Association has authority to manage common areas.

b. Cooperatives: long-term renewable lease in the living unit and owns shares in a corporation that

holds title to the land and improvements. Resident is a tenant of the corporation.

B. Nahrstedt v. Lakeside Village Condo Ass’n (no cats allowed)

a. Rule: Condo restrictions on pets may be enforced.

b. Facts: P sued the condo ass’n and two employees (Ds) to obtain declaration allowing her three

cats in her condo, notwithstanding the recorded covenants and restrictions. P said she was not

liable for fines for refusing the remove her cats.

c. Issue: Does enforceability of a pet restriction depend on proof of interference w/ the right of quiet

enjoyment of other homeowners?

d. Held: No. Recorded use restrictions are essential to a stable and predictable living environment.

Restrictions that are arbitrary, against public policy, or impose a burden that greatly outweights

any benefit will not be enforced.

i. Reasonable: the pet restriction is not arbitrary. It is rationally related to health, sanitation

and noise.

C. Mulligan v. Panther Valley Property

a. Rule: Gated communities ban on registered sex offenders may violate public policy

b. Facts: asdf



1.6 ZONING



1.6.1 INTRODUCTION TO ZONING

A. Zoning Power: only the state has power to zone. This power can be delegated to cities and counties

through “enabling statutes”. Local zoning activity must abide by the enabling statutes.

B. Goals of Zoning: zoning has the goal of the orderly development of the community, promoting economic

growth, community health, welfare and safety. It was preferred to nuisance laws or restrictive covenants

because nuisance laws could not prevent use, rather only provide damages or injunction after the fact and

restrictive covenants could not be used in urban area neighborhoods with multiple owners. Basically, the

idea is that rational planning could control shortsighted and uncoordinated decisions of individuals – hence

zoning.

a. Problem: many believe new zoning controls are (a) takings of property w/o compensation or (b)

deprivations of property w/o due process.



C. How Zoning works: zoning segregates the use of land into geographic regions. Zoning can regulate

building heights, yard sizes, density of human population, etc.

D. Constitutional considerations: zoning is affected by the constitution. If zoning is going to be changed,

due process requires that landowners be given a hearing. Equal protection requires all landowners similarly

situated to be treated equally, unless there is a legitimate reason for not doing so. If zoning amounts to a

taking, just compensation must be given by the state.



a. Taking: local government’s can exercise their police power to phase out uses inconsistent with

new zoning changes. Most courts require landowner be given reasonable time to cease his

nonconforming use.

b. Village of Euclid v. Ambler Realty (LEADING CASE)

i. Rule: Zoning is a valid exercise of police power and does not violate the Due Process

clause.

ii. Facts: D enacted comprehensive zoning ordinance restricting uses of property. Ps land

fell in 3 categories despite being one parcel. P brought suit to avoid the ordinance and

trial ct found it unconstitutional.





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iii. Issue: Is a comprenensive zoning plan restricting uses of property where it divides a

continuous parcel unconstitutional (DP or EP)?

iv. Held: No, reversed. Justification based on police power of the state.

1. Deference to legislature: it is reasonable for legislature to regulate to avoid

nuisances and promote safety

2. Single property: if regulations applied to a single property, they may be found to

be arbitrary and unreasonable.

3. Zoning laws are now presumptively valid.



1.6.2 ADMINISTRATION OF ZONING ORDINANCES

A. Introduction: Zoning ordinances present numerous opportunities for abuse and objection.

B. Comprehensive plans: Enabling acts inevitably require the local zoning authority to adopt a

comprehensive plan. The zoning must conform with the plan. The plan limits local zoning board’s whims.



C. PA Northwestern Distr., Inc. v. Zoning Hearing Board (Nonconforming Use)

a. Somin: the concurrence is correct. About 50% of states allow amortization, which requires the

termination of nonconformities. .

b. Rule: If a zoning law deprives a property owner of the lawful preexisting nonconforming use, it

amounts to a taking.

c. Facts: P opened adult bookstore and town (D) amended zoning ordinances to regulate “adult

commercial enterprises”. It had an amortization provision requiring preexisting uses that conflict

w/ amendment to become compliant in 90 days. P sued and won.

d. Issue: Is a zoning ordinance that requires discontinuance of a lawful preexisting nonconforming

use violative of the state constitution as a taking of property w/o just compensation?

e. Held: Yes.

i. Lawful nonconforming use: establishes in property owner a vested property right that

cannot be abrogated or destroyed, unless it is a nuisance, it is abandoned, or extinguished

by eminent domain.

f. Concurrence: blanket rule against all amortization provisions should be rejected. Balancing test

should be used.



D. VARIANCES

a. Introduction: Zoning is general and does not account for particularities of every lot. Therefore,

local zoning boards are empowered to grant variances for conditions unique to a particular lot or

two. If it is not unique, a change in zoning should be sought. Example: land changed to from

commercial zone to residential in which a 20-ft side yard requirement made some lots useless.

These lots could get a variance.

b. Characteristics: 1) run with the land, 2)

i. Special exceptions: special exceptions are not the same as a variance. Where a

particular use is compatible in theory with the zoning a special exception can be issued.

1. Example: gas station may be compatible w/ residential neighborhood if gasoline

tanks are put underground.



ii. Commons v. Westwood Zoning Board (Justification for refusing a variance request)

1. Somin: Ct seems to understand Coasian bargaining argument. Therefore, they

remand to the Bd of Adj to give it a chance. The case for gov’t intervention is

stronger if Coasian bargaining won’t work.

2. Rule: Zoning board may grant a variance if there is undue hardship and the

variance would not substantially impair the public good or intent of the zone.

3. Facts: P owned a lot with 40-ft frontage. Ordinance required a 70-ft frontage.

P sought a variance. Many neighbors opposed the variance. D refused to grant

a variance saying P failed to prove hardship.

4. Issue: Must a zoning board specify its reasons for refusing a variance?

5. Held: Yes.

a. Undue hardship: notion that no effective use can be made of the

property in the event the variance is denied.



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b. Conflicting interests: in viewing variance requests, there is a conflict

between the right of the owner to use his land as he pleases and the

right of the public to restrict the exercise of property rihts, and the right

of the property owners in the immediate vicinity.



iii. Cope v. Inhabitants of Brunswick (excessive discretion granted to local zoning board)

1. Rule: Power to zone cannot be delegated from legislature to municipality w/o a

detailed policy guide.

2. Facts: Ps sought exception to local zoning ordinance so they could construct

apartments on land classified for residential use. Ordinance permitted

Brunswick Zoning Board (D) to grant an exception if the applicant shows 1) use

requested won’t adversely affect health, safety or welfare of public and 2) use

will not devalue surrounding property. D found Ps project complied with

ordinance except these two factors and therefore denied application.

3. Issue: Does local zoning board have authority to take action based on general

statements of the policy in the zoning ordinance?

4. Held: No.

a. Authority: Local zoning boards have no inherent authority to regulate

the use of private property. The authority may only be conferred by the

state. The determination of rights may not be left to the purely

arbitrary discretion of the administrator.

b. Generality: the two factors upon which D rejected Ps application for

exception were so general they did not limit Ds discretion. Lack of

detailed standards would permit discriminatory application of the law,

so the ordinance is unconstitutional.

c. Exceptions allow: owner to use property as the ordinance permits.



E. AMENDING ZONING ORDINANCES

a. Introduction: local legislative body has power to amend zoning ordinances. It need not follow

the zoning board’s recommendations.

b. Spot zoning: Spot zoning is an invalid zoning amendment that occurs when the local legislative

body amends the zoning ordinance to permit a new zone that is limited in size (although it can be

more than one lot) and does not conform to the comprehensive plan.



i. State v. City of Rochester (No spot zoning found)

1. Somin: this is the City Council. There is arguably more of a principle/agent

problem between people and the city than people and the board. Therefore, City

gives deference. However, most ppl know little about zoning boards.

Information asymmetries can cause some to exploit their knowledge.

2. Rule: Amending a zoning ordinance, under the police power, is upheld if there

is a rational basis related to promoting public health, safety and welfare.

3. Facts: Ps opposed a zoning change that allowed construction of a condominium

in an area zoned for single-family homes. Across the street were two other

condos. Planning commission recommended the rezoning application be

denied. D rejected recommendation and rezoned the tract for condos. P

challenged.

4. Issue: was the ordinance a valid exercise of the city’s delegated legislative

police power, reasonably related to health, safety and welfare?

5. Held: Yes.

a. Declined to follow rule: that the rezoning of a single tract should be

subject to close judicial scrutiny. We give deference to the legislative

body.

b. Rational basis: unless opponents can show no rational basis to support

the reclassification or a taking w/o compensation, it will be upheld

regardless of the size of the tract in question.

c. Legislative body: better able to serve public welfare than the courts.



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1.7 EMINENT DOMAIN



1.7.1 INTRODUCTION TO TAKINGS

A. Background: Local gov’ts can control the use of land in their community in two ways. First, they can

leave the property with its owner while regulating that owner’s use of it using zoning ordinances. Second,

they can take the property for a “public use” with the power of eminent domain.

B. Defined: eminent domain is the power of the government to take privately owned land for public use.

Under the 5th Amendment of the US Constitution, “just compensation” must be made for the taking.

C. Government “taking”: Whether a particular government action constitutes a taking is a frequently

litigated issue. In some areas, the government must first attempt to purchase from the landowners, but in

most jurisdictions, the gov’t petitions the ct to condemn the land.

D. Michelman’s Criteria for Analyzing Takings:

a. Physical use or occupation

b. Size of harm or devaluation

c. Whether loss is outweighed by public gain

d. Nature of gov’ts action

i. Note: some say if the benefit is greater than the harm, it should not be a taking. However,

Somin says if the benefit is so great, the gov’t should be willing to pay for it.



E. Justifications (Posner)

a. It is an inherent attribute of sovereignty and is necessary for existence of gov’t

b. Helps ensure land is used effectively

c. Necessary to prevent monopoly

d. Solves hold-out problems

e. Helps shift property in situations w/ high transaction costs



1.7.2 PUBLIC USE

A. Introduction: Condemnation of private property for private use or purpose is forbidden. Eminent domain

only extends to condemnation for a public use. However, the meaning of “public use” depends on what the

legislature declares to be the public interest. Ct’s typically defer to the legislature on this.

B. Berman v. Parker (DC slums redevelopment)

a. Somin: this stands for the rational basis rule

b. Facts: DC Redevelopment Act declared areas of DC injurious to public health. TO combat blithe,

project undertaken to redevelop the area. Required acquiring rights to all land in the area. P

owned a department store and objected to taking of their store as a violation of 5th Amend.

c. Issue: Can legislature take private businesses for the purpose of beautifying the community?

d. Held: Yes. Once a public purpose was established, it was up to Cong. to choose the means to

execute it.

i. Public policy: if owner after owner were permitted to resist the redevelopment programs,

integrated plans would suffer greatly. The rights of these owners are satisfied when they

get their just compensation.

ii. Private use: eminent domain can be used even if condemned property is sold to private

interests.



C. Hawaii Housing Authority v. Midkiff (Public Use that Benefits Individual Homeowners)

a. Rule: A taking transferring property from one private person to another is a “public use” if it is

rationally related to a public purpose.

b. Facts: In Hawaii, gov’t owned 49% of land and 72 private owners owned 47%. Legislature was

concerned over the high concentration. They enacted the Land Reform Act which established HA

Housing Authority (D). D proposed acquisition of Ps land, ordering P to negotiate with lessees to

buy the land. P wanted act declared unconstitutional.

c. Issue: Does “public use” clause apply to states facilitating transfer of land from one private

individual to another?

d. Held: Yes. Legislature determines what a public use is, as long as it is not clearly unreasonable.





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i. Reasonably related to a public purpose: if the taking is reasonably related to a public

purpose, it is constitutional even if the taking is transferred to private parties.

D. City of Oakland v. Oakland Raiders (football team a public use?)

a. Rule: The promotion of education, recreation and pleasure of public constitutes a “public use”.

b. Facts: 1980 Raiders owners decided to move football team. Oakland tried to keep them via

eminent domain.

c. Holding: remanded. District ct. then dismissed on other grounds.



E. Poletown Neighborhood Council v. Detroit (more private interests)

a. Somin: private owner benefiting from taking is not legally required to provide the claimed benefit

(e.g. GM only provided 3k jobs instead of 6k.

b. Rule: When taking occurs for specific private interest, a court must employ heightened scrutiny to

ensure there is a significant public interest.

c. Facts: Detroit condemned a residential neighborhood to allow GM to construct a plant. GM

threatened to move its facilities to another state unless Detroit found a place for the site. Court

said eminent domain was properly used.

d. Held: plan was okay because economic revitalization is a public use.



F. County of Wayne v. Hathcock (overruled Poletown)

a. Facts: Wayne County condemned 19 parcels of land over 1300 acres, 1000 of which were

voluntary sales. Acquisition was to turn area into a business and technology park, creating 30k

jobs.

b. Issue: was this a taking?

c. Held: Yes, overruled Poletown. there is no reason to allow eminent domain simply for a

generalized economic benefit. To allow eminent domain would render the Constitutional limits of

gov’ts meaningless.

i. Eight other states have prohibited private to private takings.

G. Kelo v. New London

a. Rule: economic development can constitute a public purpose.

b. Facts: City of New London adopted plan to revitalize a distressed area including purchasing

property from private owners and reselling to private developers.

c. Held: This was a “public use”, relying on Berman and Midkiff.

i. Public purpose: includes revitalizing a distressed economy. This passes the rational basis

test.

ii. Rejected Ps request: P wanted a “bright-line” rule that economic development is not a

public use.

d. Dissent: O’Connor argued that you could only take for private use if it was correcting property

harmful to society. Here, private residences are not a social harm that must be remedied. Thmoas

wants to overrule both Berman and Midkiff, a much more radical idea.



H. FAIR MARKET VALUE

a. Problems: the problem w/ using fair market value for “just compensation” of takings is that it

excludes 1) subjective value or property (owner’s haven’t sold), 2) moving costs.

b. Benefit of just compensation: forces government’s to internalize the costs so they only undertake

a project when it is worth more than the pre-existing property.

i. Problem: risk of taking can cause rational investment that does not benefit the market.

(e.g. investor might invest $10 to get $8 value if it will prevent a taking)



1.7.3 TYPES OF TAKING

A. Physical Invasion: If the government invades property substantially enough, it must pay for this taking

even though it has not undertaken a condemnation proceeding. This is inverse condemnation. Physical

invasion includes noise, vibration, odors, etc. Therefore, it is similar to nuisance law.

B. Loretto v. Teleprompter (Permanent physical invasion)

a. Rule: A permanent physical invasion is a per se taking requiring just compensation.

b. Facts: P bought NYC apartment. Previous owner allowed D to install cable on the building and

granted D exclusive privilege to providing cable TV to building’s tenants. State law prohibited



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landlords from interfering with installation of cable facilities. P sued D saying D trespassed and

that the statute allowed a taking without just compensation.

c. Issue: Is a minor but permanent physical occupation authorized by gov’t a taking for which just

compensation is due?

d. Held: Yes. There is no set formula for determining whether compensation is constitutionally due.

The degree of interference and economic impact are significant considerations.

i. Permanent physical invasion: per se taking, regardless of the important public interest

or slight economic impact.

ii. Interference and economic impact: these are significant considerations, but a permanent

physical invasion is per se taking.

e. Dissent: the statute involved a valid regulation within the state’s police power and the per se rule

undercuts the carefully considered legislative judgment.



C. Taking by regulating: if the gov’t regulates land to the point that it loses all of its value, the injured party

can sue to invalidate the regulation or seek damages for the taking. However, problems arise when not all

the value is lost.

a. Harm: some court hold the test whether land has been regulated to the point of being a taking by

looking to see if the regulation’s goal is protecting the public from harm. If so, it is valid.

b. Loss of economic value: Other courts look to see if the regulation deprives the affected land of

any practical economic value.



D. Pennsylvania Coal v. Mahon (Total restriction of use of land)

a. Rule: If gov’t goes to far in diminishing the economic value or property, it is a taking.

b. Facts: Ps purchased surface rights to certain land from D. Deed expressly reserved right to mine

under the surface. Ps built a house on the property. PA then enacted an act forbidding mining of

coal in a way that would cause houses to subside. P sought injunction against Ds mining.

c. Issue: May a state regulate use of private property so as to preven the property owner from using

its property?

d. Held: No.

i. Economic diminution in value test: when it reaches a certain magnitude, there must be an

exercise of eminent domain and compensation granted. Gov’t should pay the full cost of

implementing its changes.

e. Dissent: right to mine coal is not absolute. He cannot create a public nuisance. Legislature has

power to prohibit uses that threaten the public welfare w/o paying compensation.



E. Penn Central Transportation Co. v. NY (Historical Landmarks)

a. Somin: GM orchestrated this deal to maximize its benefits. Should have used heightened

scrutiny.

b. Rule: A law is not a taking if it does not interfere with the owner’s primary expectation

concerning the use of the property and allows a reasonable return on investment.

c. Facts: Grand Central Terminal in NY was designated a landmark. P, owner, entered into lease

with 3rd party to construct a multistory office building above the termina. Proposals were rejected

by Landmark Commission and P sued the city (D), claiming property was taken w/o just

compensation.

d. Issue: May city restrict development of individual historic landmarks, beyond applicable zoning

regulations, without a “taking” requiring payment of just compensation?

e. Held: yes. This was not a taking.

i. Factors: 1) nature of economic impact on P, 2) character of gov’t action, 3) expectation-

based investments. Here, the economic impact is mitigated by “Transferable

Development Rights” TDRs giving P opportunity to enhance other properties.

ii. Arbitrary: P claims the law is discriminatory and arbitrary.

f. Dissent: this is a taking w/ a traditional public benefit where one person is paying the full burden.

literal interpretation of 5th Amend favors P. Ps valuable property right has been destroyed.

i. Nuisance and broad zoning: Destruction of rights is a taking except in two instances: 1)

prohibition of nuisances, and 2) prohibitions covering broad areas that secure average

reciprocity advantage, such as zoning laws.



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F. Lucas v. South Carolina Coastal Council (Property Value Extinguished)

a. Somin: it should not be a taking if it is a public nuisance or violates some other common law tort.

b. Rule: A regulation that deprives owner of all economically valuable use of property is a taking.

c. Facts: P purchased beachfront lots to build single family homes. Beachfront Management Act

enacted that barred construction on Ps lots. Trial court found lots were stripped of all economic

value.

d. Issue: Does a regulation that renders property valueless constitute a per se taking?

e. Held: Yes. Regulations that deny owner all “economically viable use of his land” is a per se

taking.

i. Harm vs. Benefit: distinction b/w regulations that prevents harm vs. those that confer

benefit is difficult to discern.

ii. Nuisance: D must identify background principles of nuisance and property law that

prohibit the uses P intends for his property.

f. Concurrence: reasonable expectations must be a factor to be considered. Nuisance is too narrow

a confine for the exercise of regulatory power.

g. Dissent: majority’s test says that regulation must do no more than duplicate state’s nuisance law is

an error. It is unsound, too rigid, and too narrow.



Michelson: compensation should only be due when “demoralization costs” exceed “settlement costs”.

Epstein – except for nuisance controls and some police power, any gov’t modification of rights of possession, use

and disposition of property is a taking.



Final thoughts:

- Property is based on (and all in b/w)

o Pro-Property, Pro-Markets on one side (Richard Epstein)

o Suspicious of Markets, Pro-Gov’t on the other side (Radin)



1.8 ECONOMIC THEMES



1.8.1 ECONOMIC THEMES IN COURSE

A. Advantages of private property / ownership advantages:

a. Efficient use of resources (internalization of constant benefits)

b. Transferability of property promotes transferring the right to one who can use it more productively

B. Disadvantages of private property / ownership advantages:

a. Costs:

i. Transaction costs

ii. Enforcement costs

b. Social norms can curtail efficient use of resources, e.g., bathroom w/ roommates

C. Communism and Facism both held distaste for property rights

a. Communism: Too invested in property, diverted from true nature of unity with the community and

working together

b. Facism: Too invested in property, diverted from primary loyalty to your nation and people

c. Arguments made by extreme Right on “property” also boil down to a diversion from Religion,

family, etc.

d. Arguments made by extreme Left on “property” also boil down to a diversion from community,

helping everyone achieve, etc.

D. Property Rules, Liability Rules and Inalienability

a. First issue faced by legal systems: “entitlement”, e.g., who gets the entitlement

b. Second issue: how to enforce the choice made and limitation on the entitlement

c. Enforcement Rules:

i. Property rules: The willing buyer must find a willing seller and pay the seller’s price.

This rule has the least amount of state intervention.

ii. Liability rules: The one who destroys an initial entitlement is forced to pay the owner its

objective value as determined by the state.





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iii. Inalienability: Transfer is simply not permitted b/w a willing buyer and seller, or the

transfer has strict rules around it.

d. Property v. Liability Rules:

i. Economic efficiency requires a liability rule in cases where the transfer will not occur,

though socially desirable, w/o the rule

ii. E.g., Eminent Domain:

1. If protected by property rule, owners may hold-out and prevent a socially

desirable transfer from taking place due to prohibitive costs, e.g., New London

2. Likewise, buyers may hold out for a lesser sale price and the transfer will not

occur.

iii. E.g., Accidents:

1. Under a property rule, people have to contract with owners prior to engaging in

activities in the event an accident occurs, vs. simply paying the accident

objective cost after the fact if it occurs

2. Property rule could discourage socially desirable activities b/c of costs to

contract our of potential accidents

iv. Concern w/ Liability rule – it can over/under value the property owner’s true value since

value is objectively determined by the State

v. Inalienable Entitlements:

1. Transactions that could create significant externalities (3rd party costs), e.g.,

land transfers that lower market value of community

vi. Moralisms: the offense third parties suffer from seeing things that are “against

conscience”, e.g., slavery, prostitution, organ sales, etc.

vii. Self-paternalism: allows individuals to choose what is best in the long run, while giving

up short term freedom of choice, e.g., passing the bill of rights

viii. Paternalism: Government’s belief it knows better, e.g., prohibited activities for minors,

pornography restrictions, etc.

e. Clash b/w Property Rules and Inalienability

i. Property rule proponents focus on ability to maximize wealth and freely decide the value

of property

ii. Inalienability rule proponents focus on moral implications of putting money first









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Characteristics

Definition Holder of Alienability Time when

Interest (under interest vests

traditional

common

*

law)

Reversion Transferor interest transferror Yes Automatically at

that vests upon the end of previous

Interest end of an inferior estate.

transferee estate.

Possibility of Interest held by transferror No Automatically

Reverter transferor that vests when event

after fee simple ending previous

determinable estate estate occurs.

terminates.

Right of Entry Transferor interest transferror No If condition

that vests after fee potentially ending

simple subject to previous estate

condition precedent. occurs and

transferor

chooses to

exercise his/her

rights.

Vested Transferee interest transferee Yes Automatically at

Remainder that automatically end of previous

vests upon end of estate.

previous estate.

Contingent Transferee interest transferee No When previous

Remainder vesting upon end of estate ends and

previous estate and additional

after additional condition occurs.

condition.

Shifting Interest that divests transferee No When event

Executory estate held by (because occurs divesting

Interest transferee. treated as previous

contingent transferee.

interests)

Swinging Interest that divests transferee No When event

Executory estate held by (because occurs divesting

Interest transferor. treated as transferor.

contingent

interests).









*

Note: Modern statutory law has in most cases relaxed or eliminated these restraints on alienation. See

textbook for more detailed discussion.



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Property Rules Liability Rules Inalienability Rules

Major 1. Cannot be taken 1. Can be taken away if 1. Not transferable by

Characteristics away w/o owner’s violator willing to pay owner

of Owner’s consent price 2. Government sets

Rights 2. Freely transferable by 2. Price set by both “price” and identity

owner government of third parties to whom

3. Owner sets price right may be transferred

Major areas where (if any)

Major areas where applies:

applies: - Eminent domain Major areas where

- Land - Torts applies:

- Organ sales

– Slavery

Key Arguments 1. Voluntary price- 1. “Objective” valuation 1. Avoid

For setting 2. Overcome collective dehumanization

2. Free transferability actions problems 2. Self-control (Ulysses

3. Incentives for efficient 3. Overcome holdouts and sirens)

use 4. Promotes “just” 3. Paternalism (prevent

distribution “irrational decisions)



Example: Could not

“negotiate” prior to an

accident;

Key Arguments 1. Fetishism & 1. Impossibility of 1. Loss of autonomy

Against dehumanization finding “right” value 2. Loss of economic

2. Collective action 2. Danger to “sincere efficiency

problems dissenters” from 3. Collective action

3. High transactional collective valuation problems

and enforcement costs 3. Enforcement costs 4. Public choice/interest

(e.g., contracting out of 4. Interest group group problems

accidents; contracting manipulation

for air pollution) Example: People are

4. Distributional dying all the time b/c we

concerns don’t allow organ sale



Estate Duration Termination Upon Death of

One Party

Term of Years Period fixed by K No

Periodic Tenancy Automatically renewable No

period fixed by K

(continues unless one side

affirmatively chooses not to

renew)

Tenancy at Will No fixed period. Yes

Estate terminable at any time

by either party.









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Acquisition by Capture Doctrine of Worthier Title ................................................ 16

Ghen v. Rich .................................................................. 3 Duty to Disclose Defects ...........................24, 25, 26, 27, 28

Keeble v. Hickeringill .............................................. 4, 18 Stambovsky v. Ackle .................................................... 27

Pierson v. Post ............................................................... 3 Easements.............................. 2, 7, 19, 26, 28, 32, 33, 34, 35

Acquisition by Conquest ..................................................... 3 By Implication ............................................................ 33

Johnson v. M’Intosh ...................................................... 3 Brown v. Voss ........................................................ 34

Acquisition by Creation Necessity............................................ 6, 7, 32, 33, 34

Cheney Brothers v. Doris Silk Corp .............................. 4 Othen v. Rosier ...................................................... 34

International News Service v. Associated Press ............ 4 Quasi-easement ...................................................... 33

Smith v. Chanel.............................................................. 4 Van Sandt v. Royster .............................................. 33

Virtual Works, Inc. v. Volkswagen of America, Inc. ...... 4 By Prescription ..................................................... 32, 33

Acquisition by Finding ............................................... 4, 5, 6 Willard v. First Church of Christ ................................ 32

Armory v. Delamiri ........................................................ 5 Eminent Domain ..... 2, 25, 36, 37, 38, 39, 40, 41, 42, 43, 45

Hannah v. Peel .......................................................... 5, 6 Physical Invasion ................. 8, 10, 21, 23, 29, 39, 40, 41

McAvoy v. Medina ......................................................... 6 Loretto v. Teleprompter ......................................... 40

Acquisition of Property....................................... 3, 7, 39, 40 Public Use ......................................................... 2, 39, 40

Adverse Possession ............................. 7, 8, 9, 19, 26, 33, 34 Berman v. Parker ................................................... 39

Howard v. Kunto ........................................................... 8 City of Oakland v. Oakland Raiders ...................... 40

Mannillo v. Gorski ......................................................... 8 County of Wayne v. Hathcock ................................ 40

Van Valkenburg v. Luntz ............................................... 7 Hawaii Housing Authority v. Midkiff ..................... 39

Alienability ..................................................... 10, 13, 14, 43 Kelo v. New London............................................... 40

Anticommons................................................................ 5, 18 Poletown Neighborhood Council v. Detroit ........... 40

Bad faith ............................................................................. 5 Taking by Regulating

Coase Theorem ................................................. 4, 19, 21, 37 Lucas v. South Carolina Coastal Council .............. 42

Constructive Possession .......................... 3, 9, 10, 15, 24, 31 Penn Central Transportation Co. v. NY ................. 41

Continuous Possession........................................................ 8 Pennsylvania Coal v. Mahon ................................. 41

Co-ownership Equitable Servitudes ................................................... 34, 35

Duties .......................................................................... 19 Sanborn v. McLean ..................................................... 35

Joint Tenancies .......................................... 17, 18, 19, 36 Escheat ............................................................................. 11

Delfino v. Vealencis................................................ 18 Estate System . 2, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 21,

Riddle v. Harmon ................................................... 18 26, 28, 30, 32, 33, 34, 35, 45

Swartzbaugh v. Sampson ........................................ 19 Fair Housing Act ........................................................ 21, 25

Unity of Interest ..................................................... 17 Fee Simple................... 10, 11, 12, 13, 14, 15, 16, 17, 30, 36

Unity of possession .......................................... 17, 19 Absolute ...................................................................... 11

Unity of Time ......................................................... 17 Condition Subsequent ............................... 11, 13, 14, 15

Unity of Title .......................................................... 17 Determinable ............................................................... 13

Partitioning .................................................................. 18 Mahrenholz v. County Board of School Trustees ... 13

Tenancies in Common ............................... 17, 18, 19, 36 Fee Tail ................................................................ 10, 11, 15

Tenancy in the Entirety................................................ 18 Free Riders ......................................................................... 4

Cybersquatting .................................................................... 4 Freehold Tenancies .............................................. 10, 11, 15

Deed Future Interests ......................................2, 12, 13, 14, 15, 16

Warranty Deed ................................................ 28, 29, 31 Executory Interests.................................... 13, 14, 15, 16

Deeds ..2, 3, 9, 11, 17, 18, 26, 27, 28, 29, 30, 31, 32, 33, 34, Remainder ................................ 11, 12, 13, 14, 15, 16, 33

35, 41 Contingent ......................................13, 14, 15, 16, 17

Quitclaim ..................................................................... 28 Swanson v. Swanson .............................................. 15

Requirement of Delivery ................. 9, 10, 11, 15, 20, 29 Vested .............................................13, 14, 15, 16, 37

Sweeney, Administratrix v. Sweeney....................... 29 Reverter........................................................... 13, 14, 21

Special Warranty Deed ................................................ 28 Possibility Of ............................................. 13, 14, 16

Usual Covenants .......................................................... 28 Right of Reentry.................................................... 13, 14

Against Encumbrances ............................... 26, 28, 29 Gifts.......................................................................... 2, 9, 26

Frimberger v. Ansellotti .................................... 28 Causa Mortis ................................................................. 9

Further Assurances ................................................. 28 Gruen v. Gruen ............................................................. 9

Quiet Enjoyment ........................................ 24, 28, 36 Inter-Vivos ............................................ 9, 10, 14, 15, 16

Brown v. Lober ................................................. 28 Newman v. Bost............................................................. 9

Right to Convey ............................................... 18, 28 Hold-outs............................................................................ 5

Seisin ................................................................ 28, 29 Homeowners’ Ass’n

Rockafellor v. Gra ............................................. 29 Mulligan v. Panther Valley Property .......................... 36

Warranty................................................................. 28 Nahrstedt v. Lakeside Village Condo Ass’n ................ 36

Defeasible ............................................................. 11, 12, 14 Information Asymmetries................................................. 38

Division of Sale Installment Contracts........................................................ 30

Baker v. Weedon .......................................................... 12 Bean v. Walker ............................................................ 30





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Property: Outline





Landlord Notice Statutes ............................................................ 31

Duty of Quiet Enjoyment ................................ 24, 28, 36 Race Statutes ............................................................... 31

Duty to Deliver Possession .......................................... 21 Race-Notice Statutes ................................................... 31

Hannan v. Dusch .................................................... 21 Rent Control ..................................................................... 25

Duty to Mitigate .......................................................... 23 Chicago Board of Realtors v. Chicago ....................... 25

Sommer v. Kridel .................................................... 23 Right to Exclude................................................................. 6

Evicting Tenants ........................................ 20, 22, 23, 24 Jacque v. Steenberg Homes, Inc.................................... 6

Implied Warranty of Habitability .......................... 24, 25 State v. Shack ................................................................ 6

Hilder v. St Peter .................................................... 24 Rule Against Perpetuities ..................................... 13, 16, 17

Self-help ................................................................ 22, 23 Jee v. Audely ............................................................... 16

Berg v. Wiley .......................................................... 22 Wait and See ............................................................... 17

Landlords and Tenants2, 3, 7, 10, 11, 17, 18, 19, 20, 21, 22, Seisin .............................................................. 11, 20, 28, 29

23, 24, 25, 36 Shelly’s Case .................................................................... 15

Lease Statute of Frauds .............................................................. 26

Assignment .................................................................. 21 Hickey v. Green ........................................................... 26

Contract ........................................................... 20, 26, 43 Subdivision Restrictions

Conveyance ......................... 9, 11, 16, 17, 20, 28, 29, 31 Guillette v. Daly Dry Wall, Inc. .................................. 31

Subletting .............................................................. 21, 22 Tacking .......................................................................... 8, 9

Ernst v. Conditt ...................................................... 22 Tenancy

Kendall v. Ernest Pestana ...................................... 22 At Sufferance .............................................................. 20

Leasehold Estates........................................ 2, 10, 19, 21, 24 At Will ........................................................................ 20

Licenses ...................................................................... 19, 32 Garner v. Gerrish .................................................. 20

Holbrook v. Taylor ...................................................... 32 Discrimination

Life Estate ................................. 9, 10, 11, 12, 14, 15, 16, 17 Soules v. US Dep’t of HUD ................................... 21

White v. Brown ............................................................ 11 For Years .................................................................... 19

Marketable Title.......................................................... 26, 27 Holdover ............................................................... 20, 21

Lohmeyer v. Bower ...................................................... 26 Crechale & Polles, Inc. v. Smith ............................ 20

Migrant Workers ............................................................. 6, 7 Periodic ....................................................................... 19

Mortgages ......................................................................... 30 Tenant

Foreclosure ...................................................... 29, 30, 35 Duty to Pay Rent ....................................... 19, 20, 24, 25

Murphy v. Financial Development Corp. ............... 30 Duty to Repair ....................................................... 24, 25

Open and Notorious ........................................................ 7, 8 Tragedy of the Commons ................................................... 3

Ownership ........................................................................... 3 Trusts................................................................ 5, 15, 16, 30

Patents................................................................................. 5 Warranty of Workmanlike Quality ................................... 27

Possession ...3, 4, 5, 6, 7, 8, 9, 10, 11, 17, 18, 19, 20, 21, 23, Lempke v. Dagenais .................................................... 27

24, 25, 26, 28, 29, 33, 42 Wild Animals ................................................................. 3, 4

Principle-Agent Problems ..................................... 12, 30, 38 Zoning Ordinances .............. 2, 26, 27, 28, 36, 37, 38, 39, 41

Profits ................................................................... 19, 24, 32 Cope v. Inhabitants of Brunswick ............................... 38

Quasi-Property .................................................................... 4 PA Northwestern Distr., Inc. v. Zoning Hearing Board

Quia Emportes .................................................................. 10 ............................................................................... 37

Real Covenants ....................................................... 2, 34, 35 Special Exceptions ...................................................... 37

Neponsit Property Owners Ass’n v. Emigrant Industrial Spot Zoning................................................................. 38

Savings Bank .......................................................... 35 State v. City of Rochester ....................................... 38

Tulk v. Moxhay ............................................................ 35 Variances .............................................................. 37, 38

Recording................................................................ 2, 11, 31 Commons v. Westwood Zoning Board ................... 37

Chain of Title............................................... 2, 26, 31, 32 Village of Euclid v. Ambler Realty .............................. 36

Board of Education v. Hughes................................ 31









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