Docstoc

Virginia SBA

Document Sample
Virginia SBA Powered By Docstoc
					                                                           Property Outline
                                                                Liam J. Montgomery
I.   First Possession: Acquisition of Property by Discovery, Capture, and Creation ............................... 3
   A. Acquisition by Discovery ............................................................................................................... 3
   B. Acquisition by Capture ................................................................................................................... 4
   C. Acquisition by Creation .................................................................................................................. 7
II. Subsequent Possession: Acquisition of Property By Find, Adverse Possession, and Gift ................. 8
   A. Acquisition by Find......................................................................................................................... 8
   B. Acquisition by Adverse Possession .............................................................................................. 10
   C. Acquisition by Gift ....................................................................................................................... 13
III.    Possessory Estates ......................................................................................................................... 14
   A. Property Rights ............................................................................................................................. 14
   B. History........................................................................................................................................... 14
   C. The Fee Simple ............................................................................................................................. 15
   D. The Fee Tail .................................................................................................................................. 16
   E. The Life Estate .............................................................................................................................. 16
   F. Leasehold Estates .......................................................................................................................... 18
   G. Defeasible Estates ......................................................................................................................... 18
IV.     Future Interests.............................................................................................................................. 20
   A. Introduction ................................................................................................................................... 20
   B. Future Interests in the Transferor .................................................................................................. 20
   C. Future Interests in Transferees ...................................................................................................... 21
   D. The Trust ....................................................................................................................................... 22
   E. Rules Furthering Marketability by Destroying Contingent Future Interests ................................ 23
V. Co-ownership and Marital Interests .................................................................................................. 26
   A. Common Law Concurrent interests .............................................................................................. 26
VI.     Tradition, Tension, and Change in Landlord-Tenant Law ........................................................... 29
   A. The Leasehold Estates................................................................................................................... 29
   B. The Lease ...................................................................................................................................... 30
   C. Not Covered .................................................................................................................................. 31
   D. Delivery of Possession .................................................................................................................. 31
   E. Subleases and Assignments .......................................................................................................... 31
   F. The Tenant Who Defaults ............................................................................................................. 32
   G. Duties, Rights and Remedies ........................................................................................................ 33
VII. The Land Transaction ................................................................................................................... 34
   A. Introduction to Buying and Selling Real Estate ............................................................................ 34
   B. The Contract of Sale ..................................................................................................................... 35
   C. The Deed ....................................................................................................................................... 38
   D. The Mortgage ................................................................................................................................ 41
VIII. Title Assurance ............................................................................................................................. 42
   A. The Recording System .................................................................................................................. 42
   B. Registration of Title ...................................................................................................................... 50
   C. Title Insurance .............................................................................................................................. 50
   D. Summary of Chapter 8 .................................................................................................................. 51
IX.     Judicial Land Use Controls: The Law of Nuisance ...................................................................... 51
   A. Introduction to the Substantive Law ............................................................................................. 51
   B. Remedies (and more on the Substantive Law) ............................................................................. 53
X. Private Land Use Controls: The Law of Servitudes ......................................................................... 54



                                                                        1 of 80
                                                        Property Outline
                                                             Liam J. Montgomery
  A.   Background: .................................................................................................................................. 54
  B.   Easements ..................................................................................................................................... 55
  C.   Covenants Running With The Land ............................................................................................. 60
  D.   Summary of Servitude Law, the three types ................................................................................. 67
XI.    Legislative Land Use Controls: The Law of Zoning .................................................................... 68
  A.   Introduction ................................................................................................................................... 68
  B.   The Non-Conforming Use ............................................................................................................ 69
  C.   Achieving Flexibility in Zoning.................................................................................................... 70
  D.   Other Issues in Zoning .................................................................................................................. 72
XII.   Eminent Domain and the Problem of Regulatory Takings ........................................................... 72
  A.   The Power of Eminent Domain: Sources and Rationales ............................................................. 72
  B.   Public Use Doctrine ...................................................................................................................... 73
  C.   Physical Occupations and Regulatory Takings............................................................................. 74




                                                                     2 of 80
                                           Property Outline
                                               Liam J. Montgomery


I. First Possession: Acquisition of Property by Discovery, Capture, and Creation
     A. Acquisition by Discovery
            1. Historical background of M’Intosh:
                      a) King of England deeded ownership of VA territory through right of discovery established by
                      Cabot.
                      b) This deed inherently problematic because contained no western boundary since cabot just
                      sailed down the coast and claimed it.
                      c) Eventually, the French and Indian War settled the boundary at the MS river.
            2. Johnson v. M’Intosh (1823)
                      a) Stands for:
                               (1) Discovery was accepted by all European nations as the means of asserting title to
                               land against any other European government, no more so than by England. The existence
                               of absolute US title over lands passed down from this discovery originated chain of title
                               necessarily negate the right of the Indians to this title.
                      b) Facts:
                               (1) Π acquired title from Piankeshaw Indians. Δ subsequently claimed title from grant
                               of the US and ejected Π.
                      c) Holding:
                               (1) Indians are to be considered merely as occupants, protected while peaceful but
                               unable to transfer absolute title to others.
                      d) Marshall essentially creates a rule here that Indians can only sell land to the government in
                      order to void this sale.
                      e) Marshall language seems to imply the holding in this case is inexorable. Why, what is the
                      elephant in the room:
                               (1) Considering that virtually all grants of present settlers came from European deeds
                               settled through discovery, the opposite ruling would throw virtually every property right
                               into chaos.
                               (2) Idea is that despite the unfairness (which Marshall hints at) it is simply too late to go
                               back and unwind the past.
            3. Rule of first possession: the person who first possesses something that is unowned becomes
            its legal owner.
                      a) Acquisition by discovery: the sighting or finding of hitherto unknown or uncharted territory;
                      frequently accompanied by a symbolic landing and taking possession and must be perfected within
                      a reasonable time through occupation.
                      b) Acquisition by conquest: taking of enemy territory through force, followed by formal
                      annexation of defeated territory.
                      c) Applies more often than you would think, even on crowded planet, such as with patents.
                      d) Locke: first in time is justified by the labor theory of ownership: the discoverer mixes his
                      labor with the soil and thus becomes the rightful owner by natural law.
                               (1) Carved out that this did not apply to Indians because their labor was inferior and
                               insufficient.
                      e) Strengths of this rule:
                               (1) Clear
                               (2) Rewards people for perceiving value in property
                               (3) Creates an incentive to possess and thus to make economically productive use of the
                               land.
                               (4) Distributes to the strong and the swift
                               (5) Once the property ownership is made clear by this rule, it allows transfer, which is in
                               turn an economically productive behavior.
                               (6) Reduces burden on courts because they do not have to come and take the thing from
                               the possessor in order to place it with proper owner.
                      f) Weaknesses
                               (1) Ambiguity of the word “possess”
                                         (a) See Pierson and Ghen



                                                      3 of 80
                                     Property Outline
                                         Liam J. Montgomery
                         (2) Creates an incentive to rush and exploit
                         (3) Distributes only to the strong and the swift
                         (4) Doesn’t allocate to the most efficient user.
B. Acquisition by Capture
       1. Pierson v. Post (1805)
               a) Stands for: possession is 9/10 but not all of the law: ownership of something cannot be
               constituted through simple pursuit; one must physically capture the thing pursued.
               b) Facts:
                        (1) Post was hunting a fox on wild land.
                        (2) Pierson knew Post was pursuing the fox and nonetheless and in sight of Post, killed it
                        and carried it off.
                        (3) Post sued Pierson for ownership of the fox.
               c) Livingston, dissent (these arguments resonate as justifications in other areas of property law):
                        (1) Weight should be given to customs of the fox hunters in establishing ownership, not
                        ancient treatises.
                        (2) It is better policy to allow an efficient pursuer possession because it encourages
                        investment in efficient hunting methods.
       2. Ghen v. Rich (1881)
               a) Stands for:
                        (1) Custom is a strong factor in determining how ownership is determined in a particular
                        type of whale.
               b) Facts:
                        (1) Local custom held that whoever had killed a whale which then sank and
                        subsequently was discovered either floating or washed ashore held ownership of the
                        whale subject to paying a finders fee.
                        (2) Ellis found a whale killed by Π (libellant) and contrary to custom sold it at auction to
                        Δ who tried out and sold the oil. Π sued.
               c) Holding:
                        (1) Custom is sufficient to create a legal rule of occupancy in the whale carcass because
                        the custom is both fair and widely held and does not create doubt as to property rights in
                        other areas, it being so narrowly applicable to this field.
               d) Note, also makes the policy argument that this custom encourages this economically
               productive activity, thus agreeing with Livingston dissent in Pierson v. Post.
                        (1) But, this makes sense here because this is the ONLY means of taking the whale,
                        unlike in Pierson where many means were available to take the fox.
               e) This case falls under the other 10% of the law that is not possession.
               f) Custom so strong in this case that it disallowed the normal rule that a wrongful possessor
               cannot benefit from his taking: in this case Rich (Δ) is recompensed for his expenses because this
               would have been the custom anyway.
       3. Ellickson on prevailing norms in the whaling industry
               a) Each illustrates differing property concerns present based on the circumstances.
               b) Each aimed at maximization of wealth given this context.
               c) There efficiency is proven by the fact that both local custom and courts strictly adhered to
               them [example of organic property rights system?]
               d) Three standards:
                        (1) Fast fish/loose fish
                                  (a) Rule: claimant owned whale dead or alive provided it was fastened to the
                                  claimants ship.
                                  (b) Advantages: keeps other ships away because ownership is so clearly
                                  established and to compete would be fruitless.
                        (2) Iron holds the whale
                                  (a) Rule: the line holding the whale need not be attached to the ship: the whaler
                                  who implanted the harpoon has right of ownership provided they remain in fresh
                                  pursuit.
                                  (b) The fresh pursuit is an important theme, applying even to discovery:
                                  M’Intosh states that discovery does not ripen into ownership unless the land is


                                                4 of 80
                               Property Outline
                                   Liam J. Montgomery
                            occupied within a reasonable time.
                  (3) Split the value between the salvager and the shooter.
         e) NOTE, EXAM: analogizing to these three might provide a clever policy argument to justify
         an answer.
4.   Keeble v. Hickeringill (1707)
         a) Stands for:
                  (1) Property rights do not necessarily turn on property law: this case turns on an
                  economic tort based on interference with economically productive use of land.
         b) Facts:
                  (1) Keeble owned land (adjacent to H) on which he constructed a duck decoy for the
                  purpose of luring and capturing ducks.
                  (2) H took exception to this and on three occasions deliberately fired loud and noxious
                  guns over the property, such that the ducks left and did not come back.
         c) Key to this case that there was no competing economically productive behavior by the Δ: had
         he simply lured the ducks away through superior tactics, he would have won.
5.   Ownership of wild animals
         a) Ferae naturae: wild animals
         b) Ratione soli: conventional view that an owner of land has possession – constructive
         possession – of wild animals on the owner’s land.
6.   Aside: “constructive” possession
         a) A legal fiction that attempts to transform the reality facing the judge into the reality he thinks
         the law ought to find.
7.   “Fugitive” Resources
         a) Property rights in these analogized to ferarae naturae: if you capture it, it is yours.
         b) Oil and gas
                  (1) Race to pump: there often is no remedy when someone else draws a natural resource
                  out from under your land except for you to do the same back.
                            (a) Race to pump has obvious effect of depressing prices.
                            (b) So, land owners developed policy of unitization: by 2/3 vote of land owners
                            over an oil field, pumping is done in most productive manner possible.
                  (2) Slant drilling: common today and no remedy for it unless there is a physical trespass
                  on another’s property.
                  (3) Reinjected gas:
                            (a) Hammonds v. Central KY Natural Gas (1934): owner of gas reinjected into
                            the land that migrates under B’s land is not liable for use of that land because A
                            no longer owns the gas: it has returned to state of wild nature.
                            (b) Hammonds criticized because it undermined valuable practice of reinjection
                            storage by robbing the reinjector of property interest.
8.   Water rights
         a) Riparian water rights
                  (1) Rule: owner of land adjacent to water way had a right to develop that land and make
                  use of the water, but this is subject to the rights of other riparian owners.
                  (2) Developed in England (wet) and held in eastern states (also wet) but did not work in
                  the west (dry)
         b) First appropriator
                  (1) Rule: first appropriator who puts it to reasonable and beneficial use is entitled to
                  whatever they initially appropriate, even if it is the diversion of the entire water source.
                  (2) Necessary in arid west.
                  (3) ***This is a an example of concrete evidence of an organic property rights system (a
                  lot of written record of this) unlike the speculation by Demsetz re: Indian fur traders.
9.   Aside: why have property rights at all and how would you enforce an absence of them:
         a) Back to Ghen, what if Mass. Said no one owns whales
         b) People would just fight over them without recourse to courts
         c) So the state would have to prohibit the hunting itself.
         d) This, essentially, is an assertion of property right: by prohibiting others from taking the
         whales, they essentially own them.


                                         5 of 80
                              Property Outline
                                  Liam J. Montgomery
       e) Thus, property rights are almost inherent in human discourse and it is not easy to imagine how
       property rights might be disposed of.
10. Harold Demsetz: Toward a Theory of Property Rights (1967)
       a) Why do human beings establish property rights
                (1) Power
                          (a) Property rights are the spoils of the victor.
                          (b) M’Intosh is a striking example of this: we get the land because we are in
                          power.
                (2) Human nature
                          (a) Hard wired into human beings
                          (b) Can even see analogous behavior in animals
                (3) Demsetz theory: the invisible hand
                          (a) Arrangements that exist are the result of the operation of invisible forces
                          that have resulted in the best possible arrangements that could have happen.
                          (b) Property rights are an adaptation to the conditions that social groups face in
                          order to deal with problems they confront in the course of economic production
                          like food and shelter.
       b) Macro argument: efficiency
                (1) Social groups get a better return on property through property rights because a buyer
                of property will give value for the property.
                (2) How do we know the buyer will make most beneficial use of the property: a person
                will not exchange value unless they intend to make good use.
       c) Elements of the Demsetz theory:
                (1) Externalities: a factor that is not accounted for by a decision maker because of a lack
                of incentive to do so.
                          (a) Externalities tend to result in misused or misallocated resource but not all
                          externalities have bad consequences.
                                   (i) Also, externalities are not the end all and be all: Americans with
                                   Disabilities Act is an example of acceptance of costs in order to provide
                                   a moral benefit.
                          (b) Externalities exist because of transaction costs.
                          (c) Also
                (2) Transaction costs
                (3) Coase theorem
       d) 3 forms of ideal ownership:
                (1) Communal
                          (a) Def’n: right which can be exercised by any member of the community, as
                          with a sidewalk.
                          (b) Problem: there are incentives in this system to monopolize use or use up a
                          scarce resource.
                          (c) Negotiating costs here are very high because:
                                   (i) People can continue to rape the communal land while they
                                   negotiate.
                                   (ii) Enforcement costs are high
                                   (iii) Fails to project costs into the future.
                          (d) Bottom line: communal ownership fails to incentivize each communal
                          owner to internalize the externalities. In other words, the transaction costs
                          inherent cause the existence of the externalities.
                          (e) Demsetz never discusses how communities are organized:
                                   (i) His theory really only encompasses communities where each
                                   individual has access with no external governance.
                                   (ii) This can be solved by incorporating a small group: essentially you
                                   convert the group back into a unitary actor.
                (2) Private
                          (a) Problem: Has a similar scenario as above as with a river running through
                          private property where someone upstream damns it off.


                                        6 of 80
                                     Property Outline
                                         Liam J. Montgomery
                                  (b) But now, it is cheaper to negotiate around these problems because the
                                  number of parties is reduced.
                                           (i) Affected landowner’s downstream may offer value for cessation of
                                           the behavior
                                           (ii) Owner may refuse, even at a net loss, but at least he takes the
                                           externalities of his actions into account.
                                  (c) Free ride problem: as with factory smoke emissions: when a collective
                                  group is negotiating with a unitary actor, it may be impossible to coalesce the
                                  collective group around a offer of value.
                         (3) State
               e) Coase theorem: in a world with no transaction costs, all these worries about allocation of costs
               would be inconceivable because everyone would make deals.
               f) Demsetz prediction:
                         (1) If we see changes in the cost conditions of production, we ought to see a
                         corresponding adaptation on the legal side for property allocation.
                         (2) Cites the example of the aboriginal hunters who drastically changed property norms
                         when the European fur traders arrived and changed the value of furs dramatically.
                         (3) Somewhat simplistic conception of and explanation of this, though.
               g) Bottom line: lawyers are simply transaction cost engineers: we make it possible to address
               these problems through devices like contracts, property rights, torts.
       11. Beyond utilitarianism
               a) Demsetz, Bentham, Hume are all based around a law and economics utilitarian theme but
               there are other laudable goals of property law:
                         (1) Distribution and redistribution of wealth
                         (2) Nourish individuality and healthy diversity
                         (3) Essential to political freedom (Milton Friedman).
               b) Michelman: the anti commons
                         (1) Opposite of communal ownership and intended to encourage underconsumption of
                         resources.
                         (2) Can be used to preserve a wilderness refuge, for instance.
                         (3) Otherwise it is counterproductive, as with Moscow store fronts.
                         (4) Oversimplification: allows multiple owners to own competing pieces of property
                         ownership, each with the right to block the interests of the others.
       12. ****Summary:
               a) The rule of capture follows directly from the powerful principles of first in time and finds
               support in Locke’s theory of labor.
               b) It was applied early on to wild animals and then later by analogy to other fugitive resources
               like water and oil and gas.
C. Acquisition by Creation
       1. Copyright
              a) Subset of the first possession idea: your creation of the document springs it into existence and
              no formalism is require: you first possessed it and now own it.
              b) Ownership right is transferable.
       2. International News Service v. Associated Press (1918)
              a) Stands for:
              b) Facts:
                        (1) Parties are in keen competition in distro of news.
                        (2) 3 count bill filed against INS (Δ) for 1) bribery, 2) inducing AP members to violate
                        AP bylaws and most important for this case 3) “poaching news from bulletin boards and
                        early editions and using it in INS’s own papers.
              c) No copyright is asserted here because the only thing copyrighted is the expression of the
              information, not the information itself.
              d) Court troubled by this practice by INS but cannot fit it under the copyright category, so they
              create a new category in order to protect this business interest that they call quasi-property
              [constructive property?]
              e) Quasi-property: protection is available for so long as it has value as news. When this expires,


                                               7 of 80
                                           Property Outline
                                               Liam J. Montgomery
                    the interest in the property vanishes.
                    f) Again see the Ghen and Pierson dissent argument: if we did not protect this quasi-property
                    interest, the incentive to create it would disappear.
            3. Cheney Brothers v. Doris Silk Corp. (1930)
                    a) Stands for: In the absence of some property right recognized at common law or under S, a
                    man’s property is limited to the chattels which embody his invention. Others may imitate at their
                    pleasure.
                    b) Facts:
                               (1) Π manufacturers unique silk fabrics each season, only about 20% of which succeed
                               on the market.
                               (2) Impossible to copyright them and because they are ephemeral, impractical to patent
                               the designs.
                               (3) Δ copied a design and undercut the Π price. Π sued
            4. Baird on intellectual property and the legacy of INS
                    a) Disputes the analogy between wheat and information: wheat may be held and owned but
                    information can be used by many
                    b) Competition depends of imitation: as long as the freedom to imitate does not destroy the
                    incentive to come up with new information and devices, then it is economically productive.
            5. Patents and copyrights are attempts to strike this balance: they allow a limited monopoly
            without creating such a restrictive monopoly that it chokes economically beneficial behavior.
            6. The Right to Exclude:
                    a) Common maxim: the essence of property is the right to exclude embodied in the legal
                    enforcement of this right through an injunction or ejectment.
                    b) Right to include is also fundamental to property and together they help ensure the
                    transferability of the property.
                    c) Injunctions are uniquely suited to property rights and not tort rights, perhaps explaining the
                    creation of the quasi property right in INS rather than finding the unfair competition which is a tort
                    suit.
                    d) Jacque v. Steenberg Homes, Inc. (1997)
                               (1) Stands for: the right to exclude is strongly protected by property law such that even if
                               no harm occurred from a trespass, the court may award punitive damages simply to deter
                               the conduct and uphold this important right.
                               (2) Facts:
                                         (a) Δ had a mobile home to deliver and the easiest way to do so was across Π
                                         land.
                                         (b) Π refused and unable to convince him to change mind, Δ went ahead
                                         anyway, doing no damage.
                               (3) Policy: don’t want people engaging in self help if they think law will not support
                               their right to exclude.
                    e) State v. Shack (1971)
                               (1) Stands for: property rights, and specifically the right to exclude, are not absolute.
                               (2) Facts: Δ tried to exclude health and legal organizations from gaining unfettered
                               access to migrant workers on his property.
                    f) Common exceptions to right to exclude:
                               (1) Rent controls and limits on landlord authority
                               (2) Public right of access to private beaches
                               (3) Legislation protecting defaulting mortgagors.
                               (4) Adverse possession
II. Subsequent Possession: Acquisition of Property By Find, Adverse
Possession, and Gift
     A. Acquisition by Find
            1. Equivalent actions in personal and real property:
                  a) Personal Property              Real Property             Damages
                         Trover               Trespass                  $
                         Replevin             Ejectment          Return of Property



                                                     8 of 80
                              Property Outline
                                  Liam J. Montgomery
2. Armory v. Delamirie (1722)
       a) Stands for:
                 (1) Priority of property interest, specifically related to finder law: True Owner > Finder
                 > All else
       b) Facts:
                 (1) Π chimney sweep found a jewel and carried to Δ jewelry shop to appraise it.
                 (2) Shop gave it back minus the stones.
       c) Holding: the finder of a jewel has such a property [interest] as will enable him to keep it
       against all but the rightful owner.
       d) Granted damages equal to the maximum possible value of the jewel, with burden on Δ to
       show it is less:
                 (1) Acts as a deterrent to this behavior
                 (2) Incentivizes to produce the jewel in order to get out from under this.
3. Why give so much weight to possession?
       a) Convenience/realism: counterproductive to create a system of title in personal property,
       except for valuable chattels like cars and computers (serial number registration).
4. The Winkfield (1901)
       a) Stands for: in voluntary bailment case, the wrongdoer, having once paid full damages to the
       bailee, has an answer to any action by the bailor. The courts usually bar an action by the true
       owner against the present possessor if the bailee has recovered from the present possessor.
5. Situations if true owner returned for jewel in Armory:
       a) As in true case, sweep wins monetary award:
                 (1) TO cannot go against the sweep because he has no ownership interest in the money.
                 (2) However, TO could go against the jeweler, essentially creating a double jeopardy.
                 (3) The law here treats the situation as if the jeweler acquired the jewel through an arm’s
                 length transaction: the jeweler actually gets title by paying the first damages.
       b) Hypo: sweep enters replevin suit and gets the jewel back:
                 (1) If TO shows up now vs jeweler, he has no claim against the jeweler.
                 (2) When you combine this with above, you see the weight of incentive on the jeweler to
                 simply return the jewel. By doing so, he gets out from under any secondary liability to
                 the TO.
6. Hannah v. Peel (1945)
       a) Stands for:
                 (1) Owner of land does not necessarily possess a thing which is lying unattached to the
                 surface of his land and therefore the finder’s ownership is superior to that of the owner of
                 the property.
       b) Facts:
                 (1) Δ (Peel) acquired title to mansion which was subsequently twice requisitioned for
                 use by army during WWII. Δ never occupied the house at any point.
                 (2) Π, Hannah, was adjusting black out curtains and found something wedged above
                 window frame, which turned out to be a long lost broach.
                 (3) Π handed it over to police who were unable to find out real owner and returned it to
                 Peel, the owner of the house.. Δ sold the broach.
                 (4) Δ offered a reward, but Π refused and stated he was the owner against all except the
                 true owner, who was not found
7. Bridges v. Hawkesworth (c. 1847)
       a) Stands for: support of the Armory rule of F1 superior ownership interest.
8. South Staffordshire Water v. Sharman (1896)
       a) Stands for: Amory N/A where the finder is acting as an agent of the owner of the property on
       which the object is found.
9. McAvoy v. Medina (1866)
       a) Stands for: distinction between lost and mislaid property: where property is simply mislaid,
       owner of the locus quo where the property was left has a superior ownership interest as to all the
       world except the TO.
       b) Facts: Π found a purse in Δ barber shop and asked him to hold it in case owner came back.
       Owner did not, but Δ barber refused to return the money.


                                         9 of 80
                                   Property Outline
                                       Liam J. Montgomery
             c) Why distinction here: when property is mislaid, much greater chance the TO will come back
             to the locus quo.
      10. Abandoned Property: in this case, TO right extinguished because renounced claim to the
      land.
             a) Thus, there can be difficult questions in trying to distinguish between lost – mislaid –
             abandoned.
      11. Admiralty Law of Salvagers
             a) Stark contrast to the law of property above: salvagers are compensated for their effort of
             finding and salvaging.
             b) The TO does not lose property interest but must pay the salvager an award.
             c) This is less binary than CL of property where either the finder owns the whole thing or the TO
             does if he reclaims it.
             d) Maritime law may be superior because CL gives finder incentive to not find the TO because it
             will be a complete loss.
B. Acquisition by Adverse Possession
      1. The Theory and Elements of Adverse Possession
            a) Why have a statute of limitations at all
                     (1) If you fail to assert a claim in specified time, you forgo it.
                     (2) Evidentiary: stale claims are difficult to adjudicate.
                     (3) Peace: eventually you want the cloud of suits to go away.
            b) Powell: AP is tied to the statute of limitations on ejectment: once this has run, the adverse
            possessor takes title.
            c) Ballantine: the theory behind AP:
                     (1) Not to punish negligent or dormant owner.
                     (2) Not to reward diligent trespasser.
                     (3) Instead: to quiet title and encourage conveyancing.
            d) Holmes: once a person (an adverse possessor specifically) has used an enjoyed something for
            a long time, it becomes rooted in his being and cannot be torn away without eliciting resentment
                     (1) When the title vests in the adverse possession, it does so retroactive to the date the
                     person took possession and includes any fruits that occurred during that time (like calves
                     born or whatever)
            e) Rule of Adverse Possession:
                     (1) Actual entry giving exclusive possession that is…
                               (a) Demonstrates subjective intent to possess.
                               (b) Triggers the run of the Sof Lims in a concrete way
                     (2) Open and Notorious AND
                               (a) Must give owner fair notice that the S is tolling so that they may defend
                               their rights.
                               (b) Just as in fraud tort claims: the S doesn’t start running until the alleged
                               victim becomes (constructively) aware of the situation
                     (3) Adverse and under a claim of rights
                               (a) Example of non-adverse would be someone camping on the property with
                               permission of the owner.
                     (4) Continuous for statutory period
                               (a) Each new entry starts a new cause of action
                               (b) Case law is clear that this is defined by normal use of property: if it is a
                               summer cabin and you occupy it each and every summer for the statute, you
                               satisfy this part of the test.
            f) Prescription: like A-P but for an easement, as with an easement to cross someone’s property.
            g) Color of title
                     (1) Occupation of property under authority of a document that appears to make them
                     rightful owner but does not actually do so.
                     (2) Most US jurisdiction do not require this for A-P
                     (3) However, if it is present it circumscribes the scope of property being A-P’ed.
            h) Competing state of mind requirements in A-P (Radin):
                     (1) Objective: State of mind is irrelevant


                                             10 of 80
                             Property Outline
                                 Liam J. Montgomery
              (2) Good Faith: “I thought I owned it” [color of title?]
              (3) Aggressive Trespass: “I thought I didn’t own it and wanted to make it mine.”
              (4) Hemholz: courts consider state of mind implicitly even is law does not require nor
              allow them to.
      i) Van Valkenburgh v. Lutz (1952)
              (1) Stands for:
                        (a) Misapplication of the A-P rules by the court to find that A-P not satisfied
                        because they did not enclose the property nor sufficiently improve it (perhaps
                        reading too much in to the notion of “hostile” under factor 3 above).
                        (b) Most courts would have allowed A-P here.
              (2) Facts:
                        (a) 1912 Lutz’s bought two wooded lots in Yonkers, adjacent to a triangular
                        shaped lot they did not own but subsequently farmed and built a small residence
                        on (1920). Significantly, they also used a right of way along the north border of
                        lot 19 (the triangle) to access the road.
                        (b) After buying lots west of the property, VV’s (Π) came into conflict with
                        Lutz’s
                        (c) 1947: VVs bought lot 19 from city due to unpaid taxes and ordered Δs to
                        clear off.
                        (d) Δ conceded ownership to Π but asserted right to he traveled way. Π built a
                        fence to block.
              (3) This case also disagrees with the majority view that the subjective intent of the AP’er
              is irrelevant.
              (4) ***Exam: if presented with an adverse possession case, use rules and then say that if
              VV were applicable, case might come out a different way.
      j) Rule: A-P’er only gets right only to property actually occupied: must occupy as against all
      the owners you are asserting a claim against.
      k) Manillo v. Gorski (1969)
              (1) Stands for:
                        (a) Boundary dispute, the most frequent of adverse possession claims: No
                        presumption of knowledge arises from a minor encroachment on a common
                        boundary. In such a case, only where the true owner has actual knowledge is the
                        possession open and notorious.
              (2) Facts:
                        (a) 1946: Δs bought a lot in Keansburg. Π’s own adjacent lot to the west.
                        (b) 1946: Δ son made certain additions and improvements on the home, to
                        include concrete steps and a walkway on the west side.
                        (c) 1953: after raising the house, the steps were extended in such a way as to
                        encroach on Π land by 15”.
                        (d) Δ claims title to the 15” by adverse possession, Π rebuts that the requisite
                        hostile state of mind was not present as required by NJ law.
              (3) Court creates a special rule on minor encroachments in order to protect people from
              contraction of their property inadvertently.
              (4) Note: this only applies to unintentional encroachments. For intentional
              encroachments, courts are very harsh in rectifying, even if it means tearing down a whole
              structure.
2. The Mechanics of Adverse Possession
      a) Howard v. Kunto (1970)
              (1) Stands for:
                        (a) Tacking and A/P: Where several successive purchasers receive record title
                        to a tract under a mistaken belief they were acquiring tract B, continuous
                        possession is established through occupation of tract B such that there is
                        sufficient privity to establish AP of B.
              (2) Facts:
                        (a) House built on canal owned originally by McCall eventually conveyed
                        through to Δs (Kunto).


                                      11 of 80
                             Property Outline
                                 Liam J. Montgomery
                        (b) It turned out that McCall’s survey actually described the lot adjacent to
                        where his house actually stood, a mistake repeated by a survey by Kunto’s
                        predecessor.
                        (c) Kunto’s took deed in purchase from Millers in 1959. In 1960, Π’s
                        discovered through survey that they actually owned the land where Moyer house
                        was and that the Moyer’s owned the Kuntos house. The Π cut a deal with
                        Moyer’s to let them keep their own land in exchange for deed to the land where
                        the Howard’s house stood.
             (3) This was a test litigation to quiet title for everyone in the area and make sure they
             were insurable by title insurance companies.
      b) Tacking
             (1) Armory v. Delmarie notion of priority of ownership applies as well to A/P: if
             property is wrongly taken during period of A/P and then is taken back, the original
             adverse possessor has greater right of title and could eject on following hierarchy: O can
             eject A who can eject B (the taker).
             (2) Abandonment by A breaks the tacking privity and B subsequently will have to start
             the A/P all over again.
             (3) Where someone inherits a property for which the S of Lims is already running, they
             also inherent that burden and it continues to run: when you inherit land, you inherit all the
             stuff that goes with it.
                        (a) The remainderman to a current life estate has no standing to sue for
                        ejectment of an A/P’er: his only recourse is to pressure the owner of the LE to
                        sue.
                        (b) B has an obligation to take due care of the property for which he has LE and
                        if he does not can lose it to the remainderman.
             (4) However, if the A/P occurs after the owner dies and during the life estate, only that
             LE is A/P’ed by the intruder. Once the LE is over, it reverts back to the remainderman.
      c) Disabilities
             (1) Rule: allow extension of the S of Lims provided the disability existed at the time
             when the cause of action accrued.
             (2) Premised on fact that insane, minors are unable to assert their rights.
             (3) Ex: If O is insane until death, the S of Lims is prevented from running against him
             until his death.
             (4) However, per the rule above, a second, different or later disability does not affect the
             running of the S.
      d) Adverse Possession vs government
             (1) Majority: do not allow A/P against the government on theory that land is owned in
             trust for the people who should not lose it due to negligence of state employees.
             (2) Minority: allow it, often under stricter or narrower rules.
3. Adverse Possession of Chattels
      a) O’Keeffe v. Snyder (1980)
             (1) Stands for:
                        (a) Discovery Rule: to avoid harsh application of the SofLims, the discovery
                        rule provides that a cause of action will not accrue until the injured party
                        discovers or by exercise of reasonable diligence and intelligence should have
                        discovered facts which form the basis of a cause of action.
             (2) Facts:
                        (a) Π contends she owned three paintings which were stolen from husband’s
                        gallery in 1946. She did nothing effective to report the theft or find the
                        paintings until 1972 when she had them registered with a central service.
                        (b) In 1975, Π leaned paintings were in a NY gallery and in 1976 Π found that
                        the paintings had been sold by the 3PΔ to the Δ.
                        (c) Δ claims the paintings were owned by his father prior to the alleged theft
                        and therefore that he has continuous possession for over 30 years. However, for
                        purposes of his motion for AP, he concedes they were stolen
             (3) A/P is more problematic with chattels because even open and visible possession may


                                       12 of 80
                                     Property Outline
                                         Liam J. Montgomery
                        not put the owner on notice.
                        (4) However, you also don’t want to never allow A/P because then title would never be
                        quiet and descendents could sue forever.
                        (5) NY, where most major art is sold, rejects the discovery rule on the notion that the
                        burden ought to lie with the buyer to ensure good title. TO diligence is relevant but not
                        dispositive.
               b) UCC § 2-403
                        (1) Sets the rule for personal property in accordance with a general principle of property
                        law: possessor may transfer only those ownership rights which he legally has.
                        (2) Negative implication of this rule is that the transferor does not have title, then the
                        purchasers have nothing if they buy the item.
                        (3) However, if the purchaser is good faith purchaser for value, and buys without
                        knowledge of the defect, he is protected.
                        (4) This protection is provided to protect commercial transactions from uncertainty and
                        thus prevent the need for costly title assurance methods like those found in real property.
                        (5) If a party buys something with a bad check and then sells it again to B who sells it to
                        C, B cannot go and take it back from C: his only recourse is to go after the check
                        bouncer.
                                  (a) This is an exception to the general rule that you cannot acquire better title
                                  than your predecessor.
                                  (b) Same rule applies where the original seller obtained the item through fraud.
                        (6) If you entrust your chattel to a merchant and then merchant sells it out from under
                        you, the buyer has good title and your only recourse is against the merchant: provided
                        purchaser is good faith, he is protected by reasonably relying on the merchant.
               c) Native American graves protection: allows tribes to get out from under obvious A/P claim by
               museums unless the museum carries the burden of showing the item was obtained originally by
               consent.
C. Acquisition by Gift
       1. General rules:
             a) Rule for transfer by gift:
                      (1) Must be intention on part of owner to make a gift.
                      (2) Must be physical delivery of the item to the donee by the owner.
             b) Once these two conditions are satisfied, O can not change her mind on the gift decision: you
             are stuck with the consequences of this.
                      (1) This is one of the reasons for the strict rules on gifts.
             c) Engagement ring: general rule is legacy of contract law which says that breacher (if man)
             cannot get it back but if woman breaches he can.
             d) A check given is not a gift until it is cashed because O can always stop payment on it prior to
             that point. Essentially, factor 2 above has not happened because the funds have not actually been
             delivered, just a note (the check) promising the payment.
             e) Emerging split in gift law
                      (1) Restatement (Second) Property, Donative Transfers §32.2: now allows a written
                      transfer to be effective in effecting a gift transfer.
                      (2) Not supported by case law, yet, though.
                      (3) Still must physically transfer the writing to make it effective, so in a sense both
                      factors above are still present.
       2. Newman v. Bost (1898)
             a) Stands for:
                      (1) Donatio causa mortis gets a higher protection so that the intention of the S of Wills is
                      not undermined. Items which can be physically delivered must be so and those that
                      cannot must satisfy constructive possession shown below.
             b) Facts:
                      (1) Π alleges that Δ gave her all the furniture and other property in his house as a gift
                      causa mortis. Suit is against administrator of estate.
                      (2) Intestate was paralyzed and bedridden. He handed Π a bunch of keys including key
                      to a bureau containing a life insurance policy and pointed out all furniture he could see


                                              13 of 80
                                         Property Outline
                                             Liam J. Montgomery
                            and said it was hers.
                            (3) These were his last words.
                            (4) Π refused to allow Δ access to the bureau or keys.
                 c) Constructive delivery in donatio causa mortis occurs where it plainly appears that it was the
                 intention of the donor to make the gift and where the things to be given are:
                            (1) not present OR
                            (2) present but incapable of manual delivery due to size or weight. If present and
                            capable of manual delivery, this MUST be made.
                 d) If the donor lives after making a donation causa mortis, the gift is revoked.
           3. Gruen v. Gruen (1986)
                 a) Stands for:
                            (1) Bundle of sticks argument: an inter vivos transfer can be effective where the donee
                            does not take physical possession where the intention of the O is to simply keep a life
                            estate in the item.
                 b) Facts:
                            (1) Π father wrote in a letter to Π that he was giving him a Klimt painting but that father
                            would retain possession of it until death.
                            (2) Π never took possession and nor did he seek to do so.
                            (3) Δ, Π stepmother, has possession and refuses to give it up.
                 c) Father did not need to physically deliver the painting because physical possession is precisely
                 what he wanted to retain as part of the gift. Essentially he was only gifting a portion of the bundle
                 of sticks.
                 d) If father has wanted to transfer full ownership, delivery probably would have been required.
III. Possessory Estates
     A. Property Rights
           1. Scope
                 a) Real estate: boundaries
                 b) Patent: scope of claims
           2. Who
                 a) One or more persons or entities
           3. Time slice
                 a) Concept is that every piece of property has an infinite time slice that is then divided up.
                 b) Lease and life estate are examples of only a time slice being owned.
                 c) This is an important area for lawyers because if you misdescribe the time slice being granted
                 it can create a lot of headaches.
     B. History
           1. William the Conqueror solidified the feudal system that is now the basis for our property law
           through the commissioning of the Domesday Book.
           2. Rights of people to property was subject to two limitations:
                   a) Couldn’t sell property
                   b) When you died, it went back to the overlord, whose decision it was on how to convey the
                   property.
           3. These limits show up in the treatment of Native Americans in Johnson v. M’Intosh: the
           Indians could stay but they could not sell the land.
           4. Gradually over history, property rights became less firmly held by king and lords as
           innovations in the law and reform (like the Magna Carta) took place.
           5. Terms
                   a) Seisen: possessory use of the land.
                   b) Escheat: process by which land returned to the lord upon death of estate holder. Still exists
                   today provided no one else available under intestacy S to take the land.
                   c) Subinfeudatioin:
                            (1) process which evolved by which a tenant could add a new rung to the ladder below
                            him and become a mesne lord himself.
                            (2) Had the effect of devaluing feudal incidents.




                                                   14 of 80
                                    Property Outline
                                        Liam J. Montgomery
      6. Statue Quia Emptores (1290)
              a) Intended to end the practice of subinfeudation.
              b) Instead, had two major consequences:
                       (1) Established the principle of free alienation of land.
                       (2) Most land eventually devolved to the king
              c) King wanted this S because it encouraged productive and efficient use of the land which in
              turn increased his tax revenues.
              d) SQE spelled the decline of the feudal system because it transformed the feudal land interest
              into essentially an economic relationship that was freely alieanable.
      7. Henry Maine: our society is on a steady move from a system of status (feudalism) to a
      system of contract, where we obtain things by agreement rather than due simply to our social
      status.
C. The Fee Simple
      1. How the Fee Simple Developed
            a) Example of a “reification of abstractions:” lawyers think of the FS as a tangible thing that can
            be held and transferred.
            b) Fee simple is absolute owner ship so far as our law recognizes such a thing.
      2. Language conveying a fee simple
            a) “To A and his Heirs”
                     (1) To A = words of purchase which identify the grantee.
                     (2) “and his heirs” = words of limitation, in this case indicating a FS.
                     (3) A’s son would inherit the land if A still owned it at death, but A’s son had no interest
                     during A’s lifetime.
            b) Developed because “To A” implied a life estate; so lawyers added “and his heirs” to convey
            the meaning that a FS was being transferred.
            c) This language is no longer required but is still widely in use.
            d) Enduring hold of history on property law
                     (1) Very ancient starting rules still have impact today.
                     (2) In fact, default rule is that an interest in property is not alienable unless there is a S
                     found saying that it is.
                     (3) This traces all the way back to the 1066 default rule that no property was
                     transferable.
                     (4) There persist today some narrow forms of ownership that are not transferable.
            e) Fee simple is completely alienable: conveyance of “To A and her heirs” means that A can do
            whatever she likes with the land regardless of the heirs desire, including selling it completely.
            f) Key terms
                     (1) Only the dead have heirs: your heirs are determined at the moment of your death.
                     (2) Issue: term synonymous with descendants (not necessarily strictly children) and the
                     people whom take at exclusion of all others at death.
                              (a) Per stirpes: if a child of the decedent died before the decedent, that child’s
                              children divide the share the child would have gotten.
                              (b) Ex: A has three children B, C, D. B dies leaving 2 children X and Y. A
                              dies. C and D each get 1/3 of the estate and X and Y evenly divide B’s third
                              (they each get 1/6)
                     (3) Ancestors: by S parents take as heirs if decedent leaves no issue
                     (4) Collaterals:
                              (a) All persons related by blood to the decedent who are neither descendants
                              nor ancestors
                              (b) Ex: siblings, nephews, Uncles, etc/.
                              (c) If decedent leaves no issue and no parents, brothers and sisters generally
                              take. After that it is complicated.
                     (5) Escheat: if decedent dies with no heirs, the property goes to the state.
                        (6) Note Heirs does not = Issue
               g) Merrill and Smith:
                     (1) We have a finite number of property rights because transaction costs of defining and



                                              15 of 80
                                     Property Outline
                                         Liam J. Montgomery
                         defending idiosyncratic estates bars their effective creation and the law simply tries to
                         force you square peg into one of its defined round holes.
                         (2) Allowing such creation of idiosyncratic rights amounts to a clear externality.
                         (3) numerus clausus principle: Prohibits new or customized property interests; by
                         requiring that owners create only legally recognized property interests which have a
                         standardized form, the principle directly restricts freedom of ownership.

D. The Fee Tail
       1. Language: “To A and the Heirs of his body”
       2. Rule: Fee tail descends to A’s lineal descendents (heirs of his body) generation after
       generation and it expires when the original tenant in fee tail, A, and all of A’s descendants are
       dead.
       3. Rule: When A’s bloodline runs out and the fee tail ends, the land will revert to the grantor or
       the grantor’s heirs by way of a reversion or if specified in the interest will go to some other branch
       of the family.
       4. ***EVERY fee tail has a reversion or remainder after it.
       5. Old Rule: the tenant in fee tail could alienate his possessory interest but when he died, the
       rights of his issue to succeed in the land were unaffected by that alienation.
       6. Today, the fee tail has been replaced by the life estate to control inheritance in all but 4
       states.
                a) Even in those states where it remains, it can now be conveyed in fee simple, thus destroying
                the fee tail.
E. The Life Estate
       1. Rules
              a)  Two important consequences of the life estate
                       (1) Grantor of the life estate can control who takes at death of grantee.
                       (2) Encouraged the development of trust management of the life estate.
             b) Language: “To A for life”
             c) Life Estate pur autre vie:
                       (1) if A transfers life estate to B, B has that estate until A dies.
                       (2) But if B predeceases A, the life estate passes to B’s heirs or devisees until A dies.
             d) **Every life estate is followed by a future interest, either a:
                       (1) Reversion in the transferor
                       (2) Remainder in the transferee.
             e) Property can be sold in fee simple only if all remaindermen are located and agree to the sale.
             Together they can convey a fee simple.
       2. White v. Brown (1977)
             a) Stands for:
                       (1) Law prefers:
                                 (a) Fee simple to allow alienation of the land.
                                 (b) Construction of instruments such that part of the estate is not left intestate.
                       (2) Intent of testator is to be inferred from TotC.
                       (3) Lawyers exist precisely to prevent these issues from arising by ensuring will of
                       testator is precisely conveyed.
             b) Facts:
                       (1) Testatrix died, conveying house to Π, “not to be sold.” (will p 221).
                       (2) Π alleges this vests in her fee simple.
                       (3) Δ alleges it only vests a life estate.
             c) Holding:
                       (1) Fee simple found by the court, knocking out the restriction on the sale.
             d) Dissent points out that clearly the intent of the grantor was not done here given her desire that
             it not be sold.
       3. Restraints on alienation
             a) Why does the law object to them?
                       (1) Make the property unmarketable



                                               16 of 80
                               Property Outline
                                   Liam J. Montgomery
                (2) Tend to perpetuate the concentration of wealth by making it impossible for owner to
                sell property and realize the proceeds.
                (3) Discourages improvements of the land.
                (4) Prevent creditors from reaching the land and thus undermine the system of credit on
                which property law is largely founded today.
       b) Classes of restraints on alienation
                (1) Disabling restraint: withholds from grantee power to transfer his interest
                (2) Forfeiture restraint: provides that if a grantee attempts to transfer his interest, it is
                forfeited to another person.
                (3) Promissory restraint: grantee promises not to transfer interest.
       c) Restatement, rules:
                (1) absolute restraint on alienation of a fee simple is automatically void.
                (2) Absolute restraint on transfer of LE interest is void but forfeiture restraints are valid.
4. Valuation of Life Estate and Remainder
       a) In order to value life estate we need:
                (1) House value
                (2) Life expectancy of the tenant (social security table)
                (3) Interest rate
       b) Value of the LE = PV(annuity payment = interest * house value) discounted back by # years
       life expectancy of the tenant.
       c) Value of remainder
                (1) Value of the house discounted back by the amount of time until the reversion is
                deferred (again from life expectancy tables)
5. Baker v. Wheedon (1972)
       a) Stands for:
                (1) Waste: law in life tenancies is concerned with waste and will not allow the remainder
                to become worthless due to action or inaction of the life tenant.
       b) Facts:
                (1) Weedon bought Oakland farm. Weedon had three grandchildren (the Πs) by his first
                marriage and his most enduring marriage was to his third wife, Anna (Δ).
                (2) Weedon willed his house to Anna for life and then to her heirs and if no heirs then to
                the 3 grandchildren.
                (3) Anna came to bad financial straits and sought immediate sale of the property to
                resolve her situation. Although they made an interim financial arrangement for Anna, the
                Πs balked at outright sale because it would sell for more soon due to local development.
       c) Holding:
                (1) Deterioration and waste of property is not the only test to be used in determining
                whether a sale of land affected by future interest is proper, but also consideration should
                be given to question of whether a sale is necessary for all of the parties.
                (2) On remand, the court is ordered to assist at arriving at the best solution for all
                concerned Can sell just a parcel to lift burden but only if no other options.
                (3) Waste argument seems like a red herring here:
                          (a) If it will really be worth what the remainderman say, someone would pay
                          them for it.
                          (b) They could have just bought out the life interest
                          (c) The high IRR embedded in their assumed growth is an indicator of a fair
                          amount of risk that it would not pan out [see spreadsheet template under Chapter
                          3 folder)
6. Waste and life tenancies
       a) Applies in cases of
                (1) Concurrent owners
                (2) Consecutive owners
       b) Rule: A should not be able to use the property in a manner that unreasonably interferes with
       expectations of B.
       c) Policy: waste is an example of a bilateral monopoly where transaction costs are high and thus
       bar agreement.


                                        17 of 80
                                    Property Outline
                                        Liam J. Montgomery
             d) General rule: life tenant only obligated to those improvements equal to actual income of the
             property (commercial) or the imputed rent (residential). Derive this income for the whole length
             of the life interest working back.
             e) Life tenant is required to engage in standard maintenance of the property: can inflict ordinary
             wear and tear but must do things an ordinary owner would do, including pay taxes.
             f) Major capital repairs, like a new roof, are less clear, especially as the life tenant gets older
             (although this is captured in the PV aspect of the general rule above)
             g) Mines and forestland
                       (1) Life tenant may remove ore/timber even if means none left for the remainderman,
                       provided it was known to be a mine when granted LE.
                       (2) However, if after grant it becomes known as mine, this right is restricted.
      7. Problems with creating a LE
             a) Bars sale, lease and mortgage by A beyond her life.
             b) Waste
             c) Insurance: life T under no duty to insure and even if does gets all the proceeds.
             d) Inferior to trusts:
                       (1) Trust more flexible
                       (2) Trustee hold legal fee simple.
                       (3) Life T can be the trustee and can sell the property and use the proceeds to fulfill
                       fiduciary duty to remaindermen.
                       (4) Unsuited to modern economy that views land as just another form of income
                       producing wealth.
      8. Seisen
             a) Fee simple, fee tail and LE are freehold estates
             b) Livery of seisen: ceremony that was the only way to transfer a freehold estate.
             c)
F. Leasehold Estates
      1. Landlord has seisen and T merely has possession (leasehold is a non-freehold).
G. Defeasible Estates
      1. Definitions
             a) Defeasible fee simple: one that may last forever or may come to an end upon happening of an
             event in the future
                       (1) Fee Simple Determinable (FSD):
                                (a) fee simple so limited that it will end automatically when a stated event
                                happens/
                                (b) Language must connote that fee simple conveyed only until an event
                                happens:
                                          (i) “While used for school purposes”
                                          (ii) “so long as premises used for a school”
                                          (iii) “during continuance of said school”
                                          (iv) General: words with a durational aspect
                                          (v) Expression of motive for transfer not enough to create a FSD.
                                (c) Always accompanied by a future interest: possibility of reverter, usually
                                back to the grantor.
                       (2) Fee Simple Subject to a Condition Subsequent (FSStCS):
                                (a) Fee simple that does not automatically terminate but may be cut short or
                                divested at the transferor’s election when a stated condition happens.
                                (b) Language must state effect that fee simple may be cut short if O elects the
                                right of entry but it is not automatically terminated when the event occurs:
                                          (i) “to B, its successors and assigns, but if the premises are not used
                                          for school purposes, the grantor has a right to re-enter and retake the
                                          premises.”
                                          (ii) “provided, however that when the premises…”
                                          (iii) “on condition that if the premises…”
                                (c) Right of entry is the future interest paired with FSStCS.
                                          (i) Can be expressly retained or implied.


                                             18 of 80
                               Property Outline
                                   Liam J. Montgomery
         b) Lawyers default to transferring a fee simple absolute and say it when they mean one of the
         above. Laymen not always so clear.
2.   Mahrenholz v. County Board of School Trustees (1981)
         a) Stands for:
                   (1) Potential difficulties that arise when a layman creates a defeasible fee in interpreting
                   the language used and determining whether a FSD or a FSStCS was created
         b) Facts:
                   (1) Huttons conveyed a portion of their property for school board “for school purposes
                   only; otherwise to revert to Grantors herein.” Their only legal heir was their son.
                   (2) District used property for school until ’73 and then used it for storage.
                   (3) Meanwhile, remainder of property sold to eventually the Mahrenholz’s, who also
                   possibly obtained Hutton son interest in the school property (or maybe not)
                   (4) Π sued to quiet title in the school property for themselves.
         c) Holding:
                   (1) The language of the instrument creates a FSD with concurrent right of reverter. As
                   soon as school ceased to use building per the instrument, Harry was the owner and it was
                   salable.
         d) Court analysis of language:
                   (1) FSD words: so long as, while, until
                   (2) FSStCS: upon condition that, provided that
                   (3) Wording here indicates FSD with possibility of reverter.
         e) Why does the reversionary interest pass to the Hutton’s son (the original grantor’s heir) rather
         than the current owner?
                   (1) Recall that after the SQE, interests in property became transferable but only if
                   specifically made so by S.
                   (2) IL law at the time of this suit did not allow PoR or RoR to be devisable, except
                   through intestate succession.
3.   Mountain Brow Lodge No. 82, Independent Order of Odd Fellows v. Toscano (1968)
         a) Stands for:
                   (1) Defeasible fees can act as a restraint on alienation. However, law consistently allows
                   them and they will not be struck for this reason.
         b) Facts:
                   (1) Toscano, members of the lodge, conveyed property by gift deed to the lodge on
                   condition that it only be for the use and benefit of the lodge.
                   (2) The Π brought suit to quiet title against the trustees of the Toscano estate.
         c) Holding:
                   (1) The portions of the deed in question create a FSStCS if the land ceases to be used for
                   lodge purposes. These conditions may make alienation impracticable but they do not
                   make it impossible and the law of the state allows conditions to be set on the use of land,
                   even though they hamper or completely impede alienation.
         d) Note: link this to church case in chapter 9.
4.   Casey v. Casey (1985)
         a) Stands for: spiteful conditions, like not allowing your daughter in law on the property, are
         void.
5.   Ink v. City of Canton (1965)
         a) Stands for:
                   (1) Thorny issues that can arise when a defeasible fee is taken by eminent domain, thus
                   precluding fulfillment of the conditions on the property
         b) Facts
                   (1) Π’s are heirs of the estate of a grantor of property to the city on the FSStCS that the
                   land be used as “Ink Park.
                   (2) All but 6 ½ of the 33 ½ acres were condemned by the state as a taking for a public
                   highway and $130K was deposited in an account to be distributed for all those with an
                   interest. The dispute arises over the distribution of this and of the remaining land.
         c) Holding
                   (1) Provided the condition can no longer be fulfilled on the remaining land, that land


                                         19 of 80
                                            Property Outline
                                                Liam J. Montgomery
                              reverts. As to the money, it is to be placed in a fund for use for the same conditional
                              purpose. IF this is not possible, the difference between the value of the land with the
                              condition and without the condition is to be given to the grantor, less the cost of any
                              improvements made by the grantee.
                    d) Majority rule in cases of assertion of eminent domain over a defeasible fee where that
                    assertion precludes fulfillment of the conditions is that the grantee will get the entire interest in the
                    property.
                    e) Court here attempts to allow the value of the property to be divided between the grantor and
                    the grantee.
                    f) Problem is the difficulty in valuing the land when used as a park…zero?
             6. City of Palm Springs v. Living Desert Reserve (1999)
                    a) Stands for: court will no allow in equity a municipality to condemn a property it was given
                    through a defeasible fee solely so it could get out from under the conditions on the property.
             7. Defeasible Life Estates
                    a) Often created by a spouse for a surviving spouse and can conflict with the laws distaste for
                    restraints on marriage.
                    b) So long as it is worded to sound like simply concern for support of the spouse until remarried,
                    it is okay (“to A for life so long as A remains married, then to B”)
                    c) If worded to sound sort of spiteful and preventive of marriage, no good (“to A for life but if A
                    marries, then to B.”)
IV. Future Interests
      A. Introduction
             1. Future interests create a present property interest (a couple of the sticks).
             2. Recognized future interests
                       a) Interests in the transferor:
                               (1) Reversion
                               (2) Possibility of reverter
                               (3) Right of reentry (aka power of termination)
                       b) Interest created in a transferee
                               (1) Vested remainder
                               (2) Contingent remainder
                               (3) Executory interest
             3. General rule: when conveying a property, you should account for all time slices in the devise.
             If there is one not accounted for, it is a reversion
      B. Future Interests in the Transferor
             1. Reversion
                   a) Definition: the interest left in an owner when he carves out of his estate a lesser estate and
                   does not provide who is to take the property when the lesser estate expires.
                   b) All reversions are retained interests
                   c) Language examples
                            (1) To A for life
                            (2) To a for life and then to B and her heirs if B survives A.
                                      (a) Here O has a reversion in FS that is not certain to become possessory
                                      (b) Note: never use the term “possibility of reversion” in a situation like this;
                                      such a thing does not exist and can create confusion.
                   d) Problems:
                            (1) To a for life and then to B an her heirs: B has a fee simple absolute an thus all time
                            slices are accounted for. No reversion
                            (2) “To A for life then to B and the heirs of her body.” Creates a fee tail which,
                            although unlikely, could revert to O at the expiration of B’s bloodline. So there is a
                            reversion.
                            (3) “To A for life then to B and her heirs if B attains the age of 21 before A dies:”
                                      (a) A has a life estate
                                      (b) B has a contingent remainder: if B does not make the condition it reverts
                                      back to O. So there is a reversFion.



                                                      20 of 80
                                     Property Outline
                                         Liam J. Montgomery
                                (c) However, if B makes the condition, it becomes a vested remainder and the
                                reversion is extinguished.
              e) O’s reversionary interest is fully transferable.
       2. Possibility of reverter
              a) Definition: arises when an owner carves out of his estate a determinable estate of the same
              quantum, almost always a FSD carved out of an FSA.
       3. Right of Entry
              a) Definition: when an owner transfers an estate subject to a condition subsequent and retains the
              power to cut short or terminate the estate, transferor has a right of entry.
C. Future Interests in Transferees
       1. Introduction
               a) Remainder in general: a future interest that waits politely until the termination of the
               preceding possessory interest at which time the remainder moves into possession if it is then
               vested.
               b) Vested Remainder: known who takes the property at the death of the preceding estate holder
                       (1) Created if it is created in an ascertained person and is ready to become possessory
                       whenever and however all preceding estates expire
                       (2) “To A for life, then to B and her heirs” = vested remainder in fee simple
               c) Contingent remainder: permits the transferor to let future events determine who takes upon
               preceding estate holder death. Contingent if:
                       (1) Given to an unascertained person
                       (2) Is made contingent on some event occurring other than the natural termination of the
                       preceding estate
       2. Remainders
               a) Always need to state both the type of future interest and the kind of estate held as a remainder
                       (1) For instance: “To A for life then to B and her heirs”
                                 (a) B has a vested remainder
                                 (b) …in fee simple absolute
               b) Vested remainders
                       (1) Indefeasibly vested:
                                 (a) Remainder is certain of becoming possessory in the future and cannot be
                                 divested.
                                 (b) “To A for life, then to B and her heirs”
                       (2) Vested subject to open or subject to partial divestment:
                                 (a) Created in a class of persons where later-born children are entitled to a
                                 share in the gift.
                                 (b) “To A for life then to A’s children and their heirs”
                                           (i) If at time of conveyance A has one child, the remainder is vested
                                           subject to open to let in later born children.
               c) Problems
                       (1) “To A for life then to B for life then to C and her heirs”
                                 (a) A: vested life estate
                                 (b) B: vested life estate
                                 (c) C: vested fee simple absolute
                       (2) “To A for life then to B for life then to C and her heirs if C survives A and B”
                                 (a) A: vested life estate
                                 (b) B: vested life estate
                                 (c) C has a contingent remainder with a reversion back to O.
                       (3) “To A and B for their joint lives and then to the survivor in fee simple”
                                 (a) Contingent remainder for both because unknown who will be the survivor.
                                 (b) If die simultaneously, reverts to O, so there is a reversion embedded in here.
                       (4) “To A for life then to A’s children who shall reach 21”
                                 (a) B is 17: contingent remainder until 21
                                 (b) B is 21: vested remainder but if there are other children it is “vested subject
                                 to partial divestment” if other children reach 21.
               d) Rules:


                                               21 of 80
                                    Property Outline
                                        Liam J. Montgomery
                     (1) If the first future interest is a contingent remainder in fee simple, the second future
                     interest will also be a contingent remainder
                     (2) If the first future interest is a vested remainder in fee simple, the second future
                     interest will be a divesting executory interest.
                     (3) Where an instrument is ambiguous, courts construe in favor of a vested remainder.
                     (4) Why does it matter if vested or contingent?
                               (a) A vested remainder accelerates into possession whenever and however the
                               preceding estate ends. A contingent remainder cannot be possessory so long as
                               it remains contingent.
                               (b) Contingent remainders did not use to be transferable but today they are
                               transferable and reachable by creditors.
                               (c) Contingent remainders were destroyed if the did not vest upon termination
                               of the preceding life estate whereas vested remainders were not destructible in
                               this manner (modern law of this may have changed, see below)
                     (5) Contingent remainders subject to Rule Against Perpetuities, vested not.
      3. Executory interests
            a) Definition: a future interest in a transferee that must, in order to become possessory:
                     (1) Divest or cut short some interest in another transferee (shifting executory interest)
                     (2) Divest the transferor in the future (springing executory interest)
            b) Statute of Uses
                     (1) Allowed the possibility of making a will rather than the automatic divestment to the
                     eldest son.
                     (2) Use: allowed you to feoff property to a lawyer to hold for your use during life and
                     they would promise to give it to someone other than eldest son on your death [sounds a
                     lot like a trust].
                     (3) Real effect was to allow executory interests.
            c) Fee simple subject to executory limitation: fee simple that upon happening of a stated event is
            automatically divested by an executory interest in a transferee.
                     (1) “To A and his heirs but if A dies without issue surviving him, to B and her heirs.”
                     (2) Possibility of reverter or RoR can only be created in a transferor; a future interest in
                     a transferee after a defeasible fee is necessarily an executory interest.
            d) Problems
                     (1) “To A for life then to A’s children and their heirs but if at A’s death he is not
                     survived by any children, to B and her heirs.”
                               (a) A: vested life estate
                               (b) A’s children: contingent remainder (contingency that they are born)
                               (c) B and her heirs: contingent remainder (contingent on A having no children).
                               (d) In this problem, A’s children and B have alternative contingent remainders
                     (2) “To A for life, then to B and her heirs but if A is survived at his death by any
                     children then to such surviving children and their heirs.”
                               (a) A: vested life estate
                               (b) B: vested remainder subject to a divested executory interest
                               (c) C&D (A’s children): divesting executory interest (if they are alive at A’s
                               death, they essentially divest B of his future interest.
                     (3) Note in both of these problems above, substitution the word “issue” for “children”
                     would allow the initial grants to go to grandchildren as well as children.
                     (4) “To my cousin Don Little if and when he survives his wife”
                               (a) Springing executory interest: T and his estate retain the money until the
                               condition is met and then it is divested from them (divested from the transferor =
                               springing executory interest).
D. The Trust
      1. Trustee:
             a) Manages the property for the beneficiaries.
             b) Has legal ownership and usually legal fee simple of the land (same as the old “use”).
             c) Income of trust paid to beneficiaries and if it is terminated, trust assets also go to them.
             d) Equity courts enforce the duties of the trustee.


                                              22 of 80
                                     Property Outline
                                         Liam J. Montgomery
             e) Self dealing (selling or lending trust property to the trustee in his individual capacity) is
             prohibited.
             f) Often used for LE.
       2. Beneficiary
             a) Holds an equitable interest in trust
             b) This is subject to rule against perpetuities.


       3. Swanson v. Swanson (1999)
             a) Stands for:
                     (1) Interests in trust pass to children per a will even if that child is dead…it’s passage
                     from there is determined by the will of that child.
             b) Facts:
                     (1) George Swanson’s will left a life estate in trust to his wife with the remainder to his
                     nine children, one of whom was Bennie Swanson.
                     (2) Bennie left his interest to his wife and did not have surviving issue.
             c) Holding: the wife gets the trust interest per Bennie’s will.
             d) Court holding partially driven by:
                     (1) Preference for vested interests
                     (2) Policy of creating more certainty for planning
E. Rules Furthering Marketability by Destroying Contingent Future Interests
       1. Concern here is restraints on alienability.
             a) Estate “to A for life then to A’s heirs” could not be sold in fee simple because A’s heirs were
             not ascertainable prior to his death.
             b) In contrast vested interests in land were much more easily alienable and thus judges were less
             suspicious.
       2. Destructibility of contingent remainders
             a) Doctrine of destructibility, rule: contingent remainders were destroyed if they did not vest
             upon the natural termination of the life estate.
                        (1) “To A for life, then to B and her heirs if B reaches 21”
                        (2) If A dies when B is 17, the contingent remainder is destroyed and it reverts back to
                        O.
             b) Rule: life tenant can destroy contingent remainders by conveying the life estate back to O:
             the contingent remainder merges into the reversion, destroying it.
             c) Merger
                        (1) To A for life then to B and her heirs
                        (2) If A conveys LE to B, the LE and the remainder merge, giving B fee simple.
             d) Rule: destructibility doctrine does not apply to executory interests.
             e) Abolition of Destructibility Doctrine
                        (1) Encouraged remainders through executory interests that could endure for too long of
                        a time.
                        (2) Once the RAP came along, it made sense to apply that to all contingent remainders
                        and get rid of DD.
                        (3) Also dying today because most remainders today are in trust.
       3. The Rule in Shelley’s Case (1581)
             a) Rule: IF
                        (1) One instrument
                        (2) Creates a life estate in land in A AND
                        (3) Purports to create a remainder in persons described as A’s heirs or heirs of A’s body
                        AND
                        (4) The life estate and remainder are both legal and equitable THEN
             b) The remainder becomes a remainder in fee simple (or fee tail) in A.
             c) Applies regardless of intent of transferor.
             d) Basically an attempt to prevent a generation skipping conveyance of a fee simple.
             e) GILBERTS HERE



                                               23 of 80
                              Property Outline
                                   Liam J. Montgomery
      f) Abolished in overwhelming majority of states
4. Doctrine of worthier title
      a) Rule: where there is an inter vivos conveyance of land by a grantor to a person, with a
      limitation over to the grantor’s own heirs either through a remainder or executory interest, no
      future interest in the heirs is created but a reversion is retained by the grantor.
                (1) To A for life, then to O’s heirs
                (2) Remainder to O’s heirs is void, O has a reversion.

5. Rule Against Perpetuities (RAP)
       a) The Common Law Rule
              (1) John Gray, rule: “No interest is good unless it must vest, if at all, not later than 21
              years after some life in being at the creation of the interest.”
              (2) Essentially allows property to be tied up with contingent interests for lives in being
              plus 21 years but no longer.
              (3) This is a rule of logical proof: you must prove that a contingent interest is certain to
              vest or terminate no later than 21 years after the death of some person alive at the
              creation of the interest.
                        (a) If cannot prove that, contingent interest is immediately void.
                        (b) Time frames:
                                  (i) Will: life in being must be alive at testator’s death
                                  (ii) Irrevocable inter vivos trust: life in being must be alive at time of
                                  transfer.
                                  (iii) Revocable transfer: RAP N/A until trust becomes irrevocable.
              (4) Validating, or, measuring life:
                        (a) Looking for a person who will enable you to prove that the contingent
                        interest will vest or fail within the life of or at the death of the person or within
                        21 years after the death of the person.
                        (b) Validating life need not be mentioned in the instrument, but must be
                        persons who can affect the vesting of the interest.
              (5) An interest may not violate the rule if it is vested upon creation.
              (6) Examples
                        (a) To A for life then to A’s first child to reach 21
                                  (i) Validating life: A
                                  (ii) Any child of A must necessarily reach 21 within 21 years of A’s
                                  death.
                                  (iii) Remainder must then vest or fail in that period and cannot vest
                                  more than 21 years after A dies.
                                  (iv) The remainder is valid.
                        (b) To A for life then to A’s first child to reach 25
                                  (i) Validating life: none.
                                  (ii) Cannot prove A’s first child to reach 25 will do so within 21 years
                                  of A’s death.
                                  (iii) For example, A has one child, 3 years old at conveyance. A dies.
                                  That child will not reach 25 within 21 years.
                        (c) “To my grandchildren who reach 21”
                                  (i) T has 2 children and three grandchildren under 21.
                                  (ii) Validating life: T’s two children (who are not mentioned)
                                  (iii) All of T’s grandchildren must reach 21 by within 21 years of the
                                  death of T’s two children.
                        (d) “To A for life, then to A’s children who reach 25”
                                  (i) A has a child, B, who is 26 at time of conveyance.
                                  (ii) Not valid. [If at time of conveyance, B dies, A finds out pregnant
                                  and A dies in childbirth, the interest will not vest for >21 years.
                        (e) “To A for life, then to A’s widow if any, for life, then to A’s issue then
                        living”
                                  (i) A has a vested life estate


                                        24 of 80
             Property Outline
                 Liam J. Montgomery
                  (ii) This is an example of the RAP pitfall of the “unborn widow”
                  (iii) [At conveyance, A has no wife for a period of 25 years and then
                  marries and dies. The portion of the estate conveying to his widow,
                  then, did not vest until 25 years after conveyance]
         (f) T devises “To A for life, and on A’s death to A’s children for their lives,
         and upon the death of A and A’s children to:…”
                  (i) First part:
                             (a) A: vested life estate
                             (b) A’s children: vested life estate subject to open
                  (ii) “B if A dies childless”
                             (a) B has a fee simple subject to an executory limitation [?]
                             (b) Valid:[on death of A and A’s children we will know
                             instantly whether the childless contingency is satisfied and
                             therefore it satisfies RAP.]
                  (iii) “B if A has no grandchildren then living”
                             (a) Void: [A is the measuring life. A dies has 1 child. That
                             child has a child 25 years later and therefore the remainder
                             after A’s child cannot vest for another 25 years and it is void.]
                  (iv) “B’s children”
                             (a) Valid [B is the measuring life. At B’s death, the class of
                             B’s children is defined and it will vest to them immediately,
                             even if A’s children live another 30 years].
                  (v) “B’s children then living”
                             (a) Void [B is the measuring life. At B’s death, a child of A
                             lives another 25 years. During that entire 25 years, the class
                             of B’s children then living is left open and therefore their
                             contingent remainder does not vest for 25 years.
                  (vi) “A’s grandchildren”
                             (a) Void: A is the measuring life. On his death, A’s kids
                             could have a child (A’s grandchild) 25 years later and thus it
                             is void]
                  (vii) “T’s grandchildren”
                             (a) Valid: T’s kids are the measuring lives. At their death, the
                             class of T’s grandchildren is instantly defined and it vests at
                             that time.”
(7) Note: reversions are not covered by RAP; this is why you can make a grant to a
school for school use that runs for 100 years.
(8) Saving clause: include the last of the descendents now living of John Kennedy to
guarantee you have a life in being.
(9) Jee v. Audley (1787)
         (a) Stands for:
                  (i) Under RAP, it must be assumed that a person of any age can have
                  a child, no matter what the person’s physical condition.
         (b) Facts:
                  (i) Edward Audley left 1000# to his wife as a life estate.
                  (ii) Then to his niece, Mary Hall “and the issue of her body” [fee tail]
                  (iii) Then in default of any issue by Hall to the daughters then living of
                  John and Elizabeth Jee.
         (c) Holding:
                  (i) Fails RAP.
         (d) Problem here is that it is possible that there would be some future daughter
         of the Jees, thus violating the RAP.
                  (i) Court unwilling to grant that Elizabeth Jee is past age of fertility,
                  thus making this a practical impossibility.
                  (ii) Because this would create chance that the gift would vest in this
                  daughter later born, it is void.


                       25 of 80
                                         Property Outline
                                             Liam J. Montgomery
                            (10) Gifts to Classes: for RAP to be satisfied in a gift to a class of persons, the class must
                            be closed (every member then identified) and all conditions precedent for every member
                            must be satisfied.
                            (11) The Symphony Space, Inc. v. Pergola Properties, Inc. (1996)
                                     (a) Stands for:
                                               (i) Wait and see doctrine, not followed in NY in this case: wait and
                                               see says if everything vests within 21 years, the grant is okay. As soon
                                               as 21 years is reached and property has not vested, RAP still voids it.
                                               (ii) Where there are no measuring lives, as in commercial transactions,
                                               the period is simply 21 years from inception.
                                     (b) Facts:
                                               (i) Broadwest struggled to find tenants for its building and operated it
                                               at a loss.
                                               (ii) In 1978, engaged with Π to buy the building with an option to
                                               purchase back at a number of specific dates, the last of which was in
                                               2003. The purpose of this was to get a tax break in order to lower their
                                               operating cost while giving Π cheap use of the theater.
                                               (iii) Broadwest sold its interests, including the option, as well as the
                                               surrounding buildings and it was eventually conveyed to Δ.
                                               (iv) Δ tried to exercise option and Π sued saying it was void under RaP
                            (12) US Rule Against Perpetuities (USRAP)
                                     (a) Wait and see rule
                                     (b) Sets flat 90 year period and discards counting of lives and so on.
                                               (i) Given the shortness of memory, this may actually abolish RAP
                                               because no one will remember it needed to be satisfied due to the grant
                            (13) GILBERTS SAVE ME HERE!!!
V. Co-ownership and Marital Interests
     A. Common Law Concurrent interests
           1. Types, Characteristics, Creation
                 a) Future interests were about time slices, this is about contemporary ownership slices.
                 b) Three Types of co-ownership
                         (1) Tenancy in common
                                  (a) Rarely created on purpose but rather usually through intestacy.
                                  (b) Separate but undivided interests in the property.
                                  (c) Each interest is descendible and may be conveyed by deed or will.
                         (2) Joint tenancy
                                  (a) Can be severed by the action of one selling.
                                  (b) Have the right of survivorship, the main difference from TiC.
                                  (c) Joint tenants are regarded as a single owner: when one dies, nothing passes
                                  to the survivor; instead the estate simply continues freed from influence of the
                                  decedent.
                                  (d) Four unities of a JT
                                            (i) Time: interest of each JT must vest at the same time
                                            (ii) Title: Must acquire title by same instrument or by joint adverse
                                            possession. Can never arise by intestate succession.
                                            (iii) Interest: each must have equal undivided shares and identical
                                            interests measured by duration.
                                            (iv) Possession: each must have a right of possession of the whole.
                                  (e) Some jurisdictions abolish this and simply allow JT to be created by
                                  expressing intent to do so.
                                  (f) If any of the unities are later severed, the JT becomes a TiC.
                                            (i) This can occur by a JT unilaterally conveying his interest.
                                  (g) If a creditor waits til after the death of a JT, then he gets nothing because
                                  that persons interest is extinguished.
                         (3) Tenancy by the entirety



                                                   26 of 80
                                Property Outline
                                  Liam J. Montgomery
                          (a)   Only available to a married couple.
                          (b)   Divorce converts the TbtE into a TiC
                          (c)   Only both acting together can sell.
                          (d)   This and JT popular because of avoidance of probate.
                          (e)   You can convert a JT to a TbtE
                                    (i) Perhaps to co-habitant JT’s later marry.
                                    (ii) See property to a strawman and then convey back to you by a TbtE
        c)  Example
                (1) A, B, C joint tenants
                          (a) A conveys to D. Now D is TiC with B and C who remain JT’s together.
                          (b) B dies with H as heir.
                          (c) But B cannot convey because JT has survivorship to C. So end result is that
                          C owns 2/3, B 1/3 as TiC.
                (2)
2. Severance of Joint Tenancies
       a) Riddle v. Harmon (1980)\
                (1) Stands for:
                          (a) Rejection of the archaic rule based on livery of seisen that someone cannot
                          convey an interest as JT back to themselves as a TiC, thus providing the right to
                          convey that in testate proceedings.
                (2) Facts:
                          (a) Mrs Riddle owned a parcel of real estate in joint tenancy
                          (b) Behind her husband’s back, she had her half converted into a TiC so she
                          convey it in will
                (3) Court points out that this is possible anyway through legal maneuvering and thus
                allows it to simply be done outright.
                (4) Casebook: this encourages subterfuge, as happened in the case.
                (5) Note: you CANNOT do this in a TbtE
       b) Harms v. Sprague (1984)
                (1) Stands for:
                          (a) Mortgages are liens and not titles. Therefore, JT is not severed unless there
                          is foreclosure during life of mortgagor since unity of title is preserved.
                          (b) Π right of survivorship is immediate on death and therefore the lien does
                          not survive because the part JT interest instantaneously becomes a whole.
                (2) Facts:
                          (a) William Harms and John harms owned property in JT.
                          (b) Sprague asked John to cosign a loan for him, necessitating a mortgage of
                          John’s half interest. John died, conveying all his estate to Sprague.
                          (c) William was unaware
                (3) Very unwise of mortgage company to allow this without both brothers’ signatures.
       c) Problem:
                (1) A and B have JT; A conveys a 10 year lease to C.
                (2) A dies after five years devising all property to D.
                (3) Answer: B will own the entire thing through right of survivorship.
                          (a) C is out because lease was only between A and C, unless B allows it to
                          continue.
                          (b) D gets nada.
3. Joint Tenancy Bank Accounts
       a) Joint tenancy bank accounts are convenient but invite litigation as to the intent of the party in
       establishing the account.
       b) Banks prefer them because other arrangement open them up to greater liability if the mis-
       handle the account in testate proceedings.
       c) Possible intentions underlying joint bank account:
                (1) Deposit = gift to other holder with the account being held together with a right of
                survivorship.
                (2) Arrangement where the other account holder can get money later, but the older


                                        27 of 80
                              Property Outline
                                  Liam J. Montgomery
               depositor uses it while still alive.
               (3) Custodial sense: caretaker can withdraw funds for older person but no intention of a
               right of survivorship.
       d) Bottom line: the actual account agreement does nothing, so courts infer the intent of the
       account holders in deciding who the issue is handled in probate.
4. Relations Among Concurrent Owners
       a) Partition
               (1) Concurrent ownership in TiC creates a lot of problems: this is why trusts are the
               preferred mechanism
               (2) Partition is not available to TbtE
               (3) 2 principles of partition:
                         (a) Court will not settle arguments for parties: it will just partition
                         (b) Any single owner, however unreasonable, has the right to petition for
                         partition and the court will grant it.
               (4) Delfino v. Vealencis (1980)
                         (a) Stands for:
                                   (i) Partition by sale, where each TiC gets a monetary portion, is a
                                   fallback only when partition in kind, where each party gets a physical
                                   chunk of the land, is not feasible.
                         (b) Facts:
                                   (i) Πs own property as TiC with Δ. Δ lives on the property and runs a
                                   garbage business from it.
                                   (ii) Πs want to partition the land so that they can parcel it for RE.
                         (c) Court shows concern here for the economic well-being of each party rather
                         than the big picture maximization of the value as a whole.
               (5) Johnson v. Hendrickson (1946)
                         (a) Stands for: Opposite rule of Delfino, allowing a partition by sale rather than
                         partition in kind, even where the party petitioning for the latter lives on the land
                         and the other party does not.
                         (b) This rule may make more sense because the party wanting to stay can just
                         buy the property back at auction and thus internalize an externality he would not
                         otherwise take on in a partition in kind.
               (6) Gray v. Crotts (1982)
                         (a) Stands for: judicial rigidity in partitioning such that each party to the
                         partition is treated equally.
                         (b) Facts: one TiC owner petitioned to get the partition that happened to be
                         adjacent to his already existing property but judge refused.
               (7) However, if you convey by metes and bounds the physical portion of your part of the
               property used for a specific purpose, often in partition, the judge will award that
               particular parcel provided it does no harm to the other parties.
               (8) Partition of a family rocking chair
                         (a) Possible solution: judge can threaten to saw it in half as a device to pressure
                         parties into agreement.
                         (b) Real solution: each party gets it for six months.
               (9) Parties cannot make agreements to not partition because it would act as a restraint on
               alienation.
       b) Sharing the Benefits and Burdens of Co-Ownership
               (1) Spiller v. Mackereth (1976)
                         (a) Stands for: co-tenants truly do have the equal right to full use of the
                         property, even where they use more than their fair share unless one of them
                         takes actions consistent with ouster, such that they deny their co-tenant use of
                         the property.
                         (b) Facts:
                                   (i) Π and Δ owned a warehouse as TiC.
                                   (ii) After lessee left, Π entered and used as a warehouse. Δ demanded
                                   vacate half or pay her rent equivalent. Π demurred


                                        28 of 80
                                         Property Outline
                                             Liam J. Montgomery
                                      (c) Rule: the essence of finding ouster in A/P is a claim of absolute ownership
                                      and denial of cotenancy relationship.
                                      (d) Rule: to be liable for rent, the occupying cotenant must refuse a demand of
                                      other cotenants to be allowed use, regardless of superior claim of ownership.
                                      (e) Ouster essentially has the same requirements as A/P just applied against a
                                      co-tenant instead of a TO, but is actually harder to achieve than standard A/P.

                             (2) Swartzbaugh v. Sampson (1936)
                                    (a) Stands for: the difficulty of proving ouster even where a co-tenant leased a
                                    portion of the property against the will of the co-T.
                                    (b) Facts:
                                             (i) P co-owned parcel of land for walnut farming with her husband,
                                             one of the D’s.
                                             (ii) (12/33) D (Swartzbaugh) entered into negotiations with co-D
                                             (Sampson) to lease portion of land for a boxing pavilion.
                                             (iii) (2/2/34) Co-D’s entered into lease of property. P’s name appears
                                             on no lease documents.
                                             (iv) Walnuts removed from leased parcel, Sampson built boxing
                                             pavilion.
                                             (v) P injured and started action on 6/20/34. P received no proceeds
                                             from lease.
                                    (c) To get ouster, Π would have had to have gone and been physically removed
                                    from the leased premises, which she was unable to do.
                                    (d) Partition would be the only other remedy here.
VI. Tradition, Tension, and Change in Landlord-Tenant Law
     A. The Leasehold Estates
           1. Why do we study these categories below [vocabulary]
                 a) Vocabulary: using proper language for the scenario acts to bar future litigation.
                 b) Implication of exclusiveness:
                           (1) Just because a tenancy does not fit an established category does not make it void.
                           (2) However, courts will first try to interpret something by forcing it to fit one of these
                           categories, even where that potentially does violence to the intent of the parties.
                           (3)
           2. The Term of Years
                 a) Definition: a term of years is an estate that lasts for some fixed period of time or for a period
                 computable by a formula that results in fixing calendar dates for beginning and ending, once the
                 term is created or becomes possessory.
                 b) Every leasehold estate creates a future interest (reversion) in the landlord at the end of the
                 term, except where a third party takes at the end of the term, in which case it is a remainder.
           3. The Periodic Tenancy
                 a) Definition: a lease for a period of some fixed duration that continues for succeeding periods
                 until either the landlord or tenant gives notice of termination.
                 b) Death of landlord does not affect term of years or periodic tenancy but does affect a tenancy
                 at will
           4. The Tenancy At Will
                 a) Rules:
                           (1) Definition: a tenancy of no fixed period that endure so long as both landlord and
                           tenant desire.
                           (2) If a tenancy at will has been created, a lease that provides it can be terminated by one
                           party necessarily can be terminated by the other as well.
                           (3) TaW end by:
                                     (a) One of the parties terminating it.
                                     (b) Death of one of the parties.
                 b) Garner v. Gerrish (1984)
                           (1) Stands for: complications created when laymen create a conveyance not easily



                                                   29 of 80
                                    Property Outline
                                         Liam J. Montgomery
                     categorizable cause what seemed to be a TaW to not be terminable at the will of one of
                     the parties.
                     (2) Facts:
                               (a) Δ had a lease from estate of Π (executor) which stated he could live there
                               until a date of his own choice.
                               (b) Upon death of Donovan, executor sued for ouster claiming it was a tenancy
                               at will on both sides of the coin. Δ claimed it was a tenancy of will only on his
                               side of the issue.
                     (3) Holding: rather than a TaW a life estate determinable was created, which endures for
                     so long as Δ wants to occupy and pay.
            c) “To T for the duration of the war in exchange for $500 a month:” creates a TaW with the will
            here being the happening of an event, namely the end of the war.
      5. Tenancy at Sufferance: Holdovers
            a) Rules:
                     (1) Definition: arises when a tenant remains in possession (holds over) after termination
                     of the tenancy.
                     (2) Self help not permitted: must recourse to the legal system which takes time and can
                     harm future T’s who have relied on timely possession.
                     (3) Rule: basis for length of the imposed holdover is sometimes the basis for rent
                     computation in the original lease and sometime the length of the entire original term
                     but…
                     (4) Rule: regardless, though, every state limits the maximum holdover obligation to one
                     year, regardless of the writing (which is required because the SoF applies to lease
                     agreements, they being an interest in property.
                     (5) Rule tenancy created from holdover usually subject to all of the terms and conditions
                     of the original lease.
            b) Crechale & Polles, Inc. v. Smith (1974)
                     (1) Stands for: Once a landlord elects to treat a tenant as a trespasser and refuses to
                     extend the lease on a month-to-month basis, but fails to pursue his remedy of ejecting the
                     tenant and accepts monthly payment of rent, he in effect agrees to extension of the lease
                     on a month to month basis.
                     (2) Facts:
                               (a) Appellant corporation leased a building for 5 years to Appellee. When
                               Appellee realized he could not vacate on time, he requested to extend lease
                               month to month.
                               (b) Dispute over whether this was agreed to.
                               (c) When the Appellee sent a check, appellant accepted it but refused to
                               characterize as a month to month.
                               (d) Subsequently all checks refused and litigation ensued.
B. The Lease
      1. Creation of a lease is not always clear and instead can be construed to be a life estate or a
      license.
               a) A license does not convey a property interest: for instance when you let someone stay
               overnight in your house or rent a hotel room, you create a license relationship.
               b) License can be rescinded as long as not contractual; lease cannot.
               c) This is also important because leases create a L-T relationship that carries certain obligations.
      2. Leases are both:
               a) Contracts
               b) Conveyances of property interests.
      3. Courts today rely more on the K aspect.
      4. Form leases
               a) Leases tend to be far more detailed and wordy than a simply deed.
               b) Form leases are typically allowed because:
                       (1) Transaction costs: prevents detailed bargaining and drafting with each purchaser,
                       thus lowering the cost of the K for the T and therefore not implicating disparity of
                       bargaining power.


                                              30 of 80
                                   Property Outline
                                       Liam J. Montgomery
                       (2) Competition among landlords also mitigates this possibility.
C. Not Covered
D. Delivery of Possession
      1. Lease theory
            a) Sign a lease on 7/1 to start on 9/1
            b) As of 7/1, T has a vested future interest in the property which will become possessory on 9/1
            c) The lease is thus in some sense the property of the T as of 7/1 and becomes in their interest to
            protect it.
      2. Hannah v. Dusch (1930)
            a) Stands for:
                      (1) The difference between the English rule and the American rule governing delivery of
                      possession of a leasehold estate (see below).
                      (2) Default rules: lawyers can avoid the application of them by ensuring K’s sufficiently
                      detailed.
            b) Facts:
                      (1) Δ leased to the Π a real estate for term of 15 years.
                      (2) Δ failed to put Π in actual possession of the property and to assure that this was
                      possible. Also refused to take legal action to oust the holdover tenants.
                      (3) No express covenant in lease for the delivery or quiet enjoyment of premises.
            c) Holding: T has to litigate themselves for issue of actual physical possession.
            d) American rule: the landlord is only bound to ensure legal possession and not actual
            possession. Justification:
                      (1) There appears no instance where one is liable for the tort of another when totally not
                      complicit in it and this exception will not be here created.
                      (2) T has sufficient remedies available to protect himself and probably more incentive to
                      use them than does L.
                      (3) Another justification is that this is analogous to someone robbing your apartment: it
                      is not the landlord’s job to sue for recovery of the property.
            e) English rule: There is an implied covenant to ensure actual possession but only on the date of
            agreed possession and no further. Justifications:
                      (1) Why would a T knowingly contract for a lawsuit.
                      (2) L is better situated to have knowledge of potential problems and the facts required to
                      litigate the issue.
                      (3) Note: even under English rule, L would just sue the holdover T himself; it is not that
                      the L is out of luck.
            f) There must be actual harm, even under English rule, for L to become liable and for T’s
            obligations to pay rent to cease: for instance if L leases same premises to both T1 and T2 but T2
            never materializes, there is no cause of action for T1 unless T2 does so.
            g) Tenants, if contract accordingly, can be made to wait for reasonable delays in construction of
            a leased premises, but even under such K will not be made to wait beyond a reasonable time.
E. Subleases and Assignments
      1. Ernst v. Conditt (1964)
             a) Stands for:
                     (1) The distinction between sublet and assignment.
                     (2) Another case emphasizing importance of intention of parties over formalistic
                     interpretation.
             b) Facts:
                     (1) Π leased a property on which Rogers built a go kart track. Lease provided that it
                     could not be sublet or assigned.
                     (2) Rogers decided to sell business to Δ and got Π to agree to allow sublet/assignment to
                     Δ. In the agreement, Rogers agreed to be liable for any default by Δ.
                     (3) Δ defaulted and refused to pay, claiming not liable.
             c) Holding: the intent of the parties was to create an assignment, regardless of words used in the
             K.
             d) Assignment:
                     (1) essentially the original T is removed from the chain and the new T1 is directly liable


                                             31 of 80
                                    Property Outline
                                         Liam J. Montgomery
                      to L.
                      (2) These occur when the entire leasehold property interest is transferred to the new T.
                      (3) In this case, there is no privity of estate because T is divested of all of his property
                      interest.
            e) Sublease:
                      (1) the original T stays in the chain and L can obtain indemnity from T or from T1 if T1
                      defaults (presumably, then, T could sue T1 in turn). Choice would probably turn on
                      solvency of each.
                      (2) This occurs when only part of the leasehold property interest is transferred from T to
                      T1
                      (3) Here there is privity of estate.
                      (4) Presumably under a sublet, parties will K around this liability.
            f) Underlying this case is the fact that leases are ownership interests and are therefore inherently
            transferable.
            g) The feudal rule was that substitution was okay (because lord had to approve it) but that
            subinfeudation was not. The default move away from this is, though, is mitigated by landlords
            contracting around it to retain the substance of the old rule.
            h) If L specifically K’s that assignment cannot be done, then the default rule is N/A: most L’s
            will do this, i.e. will make it a condition of the transfer that T stays on the hook.
            i) The modern allowance of assignment arises from the rise of 3P contract interests where a 3P
            contract beneficiary (in this case L, who is not party to the T-T1 contract) may sue for
            enforcement.
      2. Kendall v. Ernest Pestana, Inc. (1985)
            a) Stands for: where a commercial lease provides for assignment only with lessor approval, that
            consent may be withheld only if supported by a commercially reasonable objection.
            b) Facts:
                      (1) Lease for aircraft hangar space assigned to Pestana but sublet to Bixler who
                      subsequently sold the business, including the sublease, to Kendall.
                      (2) Lease provided that such assignment of sublease be approved by the Lessor.
                      Respondent refused, providing no grounds and trying to force better terms.
            c) Reasons given in support of the rule in this case:
                      (1) Leases are conveyances and therefore should be subject to policy against restraint on
                      alienation. RSP supports this rule.
                      (2) Leases are contracts and as such are held to requirement of good faith and fair
                      dealing.
            d) Why sign a long term lease like the one in this case, but only somewhat long term with option
            to renew every five years for 20 years:
                      (1) L gets stable T
                      (2) T has incentive to invest in the property and maximize chances of success
                      (3) At the same time, the renewal clause allows T to have chance to back out if he fails.
            e) Note how economically huge this ruling was: there were billions of dollars tied in leases
            where the L was able to exact a benefit where a T sought an assignment. So L amici worked
            around this by:
                      (1) Assuring parties could still contract around this rule.
                      (2) Going to legislature to ensure that this rule only applies to parties that knew about
                      the issue (which essentially is only the two parties to this case).
                      (3) Bottom line: rule is not retroactive and parties can still contract around it and thus the
                      impact of this ruling is not nearly as large as it would have been.
            f) Note: the rule in Kendall is generally n/a to residential leases.
      3. Application of Kendall rule
            a) Commercial L’s may not object to an assignment based on morality (like an abortion clinic)
            because they are presumed by the law to be amoral entities.
            b) Leases which contract around Kendall by not allowing assignment at all can be worked
            around if poorly drafted by subletting the entire leased term minus the last day.
F. The Tenant Who Defaults
      1. The Tenant in Possession


                                              32 of 80
                                   Property Outline
                                       Liam J. Montgomery
              a)Berg v. Wiley (1978)
                    (1) Stands for: the law’s discouragement of self help through measures like locking a T
                    out by providing summary proceedings that must be resorted to in order to evict that T.
                    (2) Facts:
                              (a) Wiley leased a building for use as a restaurant which was sublet to Berg (Π)
                              (b) Δ objected to Π remodeling efforts and violation of health code. Health
                              department and Δ presented her with demands and Δ threatened to evict if no
                              compliance.
                              (c) Tried to lock her out but unsuccessful and then was successful
                    (3) The provision of summary proceedings actually still causes considerable delay and
                    cost in getting a defaulting T out and thus is not a very big help.
                    (4) This failure of summary proceedings to achieve their goal is then passed down to the
                    T’s through higher overall rents.
      2. The Tenant Who Has Abandoned Possession
            a) Sommer v. Kridel (1977)
                    (1) Stands for: Landlord seeking damages from a defaulting tenant has a duty to mitigate
                    damages by making reasonable efforts to relet an apartment vacated by the tenant
                    (2) Facts:
                              (a) Two cases, both of which involved a tenant who surrendered the leased
                              premises and a landlord who did nothing to re let and thus mitigate damages.
                    (3) The rule in this case reflects a move away from viewing a lease as a pure property
                    interest (which would prevent the landlord from mitigating damages) to a contract
                    remedy (which holds that breachee has an obligation to mitigate).
                    (4) This rule especially makes sense in the context of the L in this case which owned an
                    entire building with a rental office where the apartment could be placed back in the rental
                    pool.
                    (5) Unclear whether you can contract around this rule by either:
                              (a) Prohibiting it
                              (b) Charging a fee for abandonment
                    (6) Note most, but not all, jurisdictions require a L to mitigate damages from
                    abandonment: possible exam jurisdiction split (for instance, NY keeps old rule in interest
                    of stare decisis).
                    (7) Why the rule to mitigate damages:
                              (a) Prevents waste
                              (b) Prevents damage that can occur when a property is left abandoned.
            b) Surrender:
                    (1) Definition: a tenant’s offer to terminate a lease early, which the L accepts.
                    (2) Implied surrender occurs when a T abandons and L demonstrates intent to accept the
                    abandonment
G. Duties, Rights and Remedies
      1. Landlord’s Duties; Tenant’s Rights and Remedies
            a) Quiet Enjoyment and Constructive Eviction
                     (1) [Policy]: Residential vs commercial leases:
                             (a) Leases in general often have very little lawyer involvement, which explains
                             cases like Sommer where the T is getting stepped on.
                             (b) On the other hand, commercial leases generally are assumed to have fully
                             negotiated over risk and courts are less likely (although not completely unlikely)
                             to intervene.
                     (2) Reste Realty Corp. v. Cooper (1969)
                             (a) Stands for: constructive eviction: where the acts or omissions of a L are the
                             cause of disruption of quiet enjoyment of premises, T may charge constructive
                             eviction in order to get out of lease.
                             (b) Facts:
                                       (i) Cooper leased building for use as meeting space for business.
                                       (ii) Rain caused flooding of premises due to improperly designed
                                       driveway, not included in the lease.


                                             33 of 80
                                           Property Outline
                                               Liam J. Montgomery
                                                  (iii) Agent of former owner always made sure to mitigate damages
                                                  from the rain.
                                                  (iv) Δ re-let premises after one year of these conditions. Agent
                                                  promised at that time to fix the problem.
                                                  (v) Agent above died. Subsequently, Π (who bought the building) did
                                                  nothing to respond to complaints or fix problem.
                                                  (vi) Δ notified and abandoned.
                                        (c) Rule: Whenever a tenant’s right to vacate comes into existence due to acts
                                        chargeable to L, it is immaterial whether right is expressed in terms of QE,
                                        material failure of consideration or material breach of implied warranty against
                                        latent defects.
                                        (d) This case is an example of a rare case where court intervened on behalf of a
                                        commercial T: probably because in this case the promises of the original agent
                                        of L were frustrated upon his death.
VII.   The Land Transaction
       A. Introduction to Buying and Selling Real Estate
              1. Payne: A Typical House Transaction in the US
                      a) American lay public still not convinced of the need for a lawyer and prefer to entrust to
                      agents.
                      b) Registration of title is almost universal.
                      c) Title is deduced from the registration systems by tracing the grantee index backward to a
                      grant from the sovereign (or as far as Sorily required) and then tracing forward in the grantor
                      index to the title of the conveyor.
                      d) 3 advantages of title insurance
                               (1) Substitution of contract for tort liability
                               (2) Replacement of a mortal individual insurer (the seller, via warranty deed)
                               (3) Some additional protection against defects of title not appearing on the record.
                      e) In some cases, title insurance companies are far more efficient at documenting title and their
                      systems will be preferred over the locality (Chicago fire example)
              2. Introduction
                      a) Attorney approval clause:
                               (1) Some sales contracts allow for lawyer review for a specified time after signing.
                               (2) However, agents know most people won’t bother so these are probably not all that
                               effective
                      b) Courts increasingly allowing brokers to take on tasks that are properly handled by lawyers.
                      c) Typical house transaction
                               (1) Seller lists the property with a commissioned broker
                               (2) Seller and buyer sign a contract calling for a closing in the future
                               (3) Due diligence (or executory period): investigate title, inspections, financing
                               (4) Closing: buyer receives and records deed, executes mortgage, which is also recorded.
                               Seller receives money.
                      d) Why have this extensive procedure compared to ease of conveyance of personal property?
                               (1) Seriousness of investment (by far most Americans’ biggest asset)
                               (2) Financing takes time and buyer needs particulars of property to finalize approval.
                               (3) Nature of a house in that needs inspections, etc.
              3. The Contract for Sale of Land
                      a) What issues does the contract need to address
                               (1) Price
                               (2) Description of property
                               (3) Parties to the contract
                               (4) Conditions of the closing
                               (5) Allocation of losses
                               (6) Warranties
                                          (a) Permanent warranty: lasts beyond the closing (usually only on new homes
                                          sold by builders)



                                                    34 of 80
                                  Property Outline
                                      Liam J. Montgomery
                              (b) Conditional warranty: simple warranty that house is broom clean and in
                              move in condition, expires upon acceptance of house at closing.
                     (7) Closing date
                              (a) Time is of the essence clause
                     (8) Dispute resolution procedure (ADR, etc)
                     (9) Assignment of costs
                              (a) Realtor fee
                              (b) Taxes
                              (c) Stamps
                              (d) Deed recording
                              (e) Survey
                              (f) Title insurance
                              (g) Inspection
                     (10) Financing contingencies
                              (a) Loan commitment date
              b) Form contract, p. 565 of text:
                     (1) Earnest money: a form of liquidated damages if buyer breaches
                     (2) 5: promises to deliver good title, a fairly vague and probably too-ambigious term
                     (3) 12 Inspection Clause
                              (a) Very open ended and leases very little that will allow K to be held up.
                              (b) Refers you to 13b which states only that mechanical stuff must be in
                              workable condition and says nothing of structural defects like a roof.
                                        (i) These items may be implied by S, but you would not want to rely
                                        on this.
                              (c) BL: this K is very pro-seller, which is not a surprise since prepared by a
                              realtor, who ultimately have buyers interests at heart.
B. The Contract of Sale
      1. Statute of frauds
             a) Applies to K for aale of land, often excepting lease contracts of 1 year or less.
             b) Minimum requirements to satisfy SoF:
                      (1) Signed by party to be bound
                      (2) Describe the real estate
                      (3) State the price
                               (a) When price agreed upon, most courts agree this is an essential term
                               (b) When not agreed on, most courts will imply a reasonable price
             c) Exceptions:
                      (1) Part performance
                               (a) Allows specific performance when one of the parties has performed
                               particular acts.
                               (b) Often must be unequivocally referable to the contract of sale to make it
                               enforceable.
                               (c) Promissory estoppel seems to underlie this as well where the buyer has
                               taken possession and would be done harm to if not enforced.
                      (2) Estoppel
                               (a) Applies when unconscionable injury would result from denying
                               enforcement of the contract after one party:
                                        (i) Has been induced to seriously change position
                                        (ii) When unjust enrichment would result from not enforcing.
             d) Merger clause: prevents oral evidence extrinsic to the K from being introduced.
             e) Bottom line: must examine S and precedent carefully to determine if exceptions will make the
             oral agreement enforceable.
             f) Hickey v. Green (1982)
                      (1) Stands for: part performance and estoppel doctrines that allow enforcement of an
                      oral agreement for sale of land.
                      (2) Facts:
                               (a) Green owned a lot which she offered for sale to Hickey, who agreed to the


                                            35 of 80
                              Property Outline
                                  Liam J. Montgomery
                          sale price and provided a check of deposit which Green neither endorsed nor
                          deposited.
                          (b) Relying on this, Greens quickly sold their house.
                          (c) Green told Hickey soon thereafter that she sold it to someone else for 1K
                          more. Hickey offered to match, but Green refused.
                (3) Rule, RSK § 129: part performance doctrine of SoF: where it induces reasonable
                reliance and where the party seeking enforcement had changed position such that
                injustice can only be avoided by SP.
                (4) Court allowed that a check could act as a sufficient writing.
      g) Walker v. Ireton (1977)
                (1) Stands for: Opposite result of Hickey wherein PP not sufficient and nor is a check
                considered a sufficient writing.
2. Marketable Title
      a) Rule: Always an implied condition of a contract for sale of land.
      b) Definition: a title not subject to such reasonable doubt as would create a just apprehension of
      its validity in the mind of a reasonable person, one which such persons, guided by competent
      attorney, would be willing to take and for which they would be willing to pay fair value
      c) Specific performance is more common in real estate contracts than in general:
                (1) Buyers: theory is that parcel is unique and damages do not suffice
                (2) Sellers: theory is that too hard to fix difference between K price and FMV.
      d) Lohmeyer v. Bower (1951)
                (1) Stands for:
                          (a) Private restrictive covenants which restrict the use of land or type of
                          buildings make that title unmarketable if unrevealed.
                                    (i) Do affect marketability because less obvious and more esoteric.
                          (b) Municipal ordinances, though, do not make title unmarketable.
                                    (i) It is presumed these are public record and known to everyone.
                (2) Facts:
                          (a) Π entered into contract to buy property from Δ including a clause which
                          stated he bought it subject to all restrictions and easements.
                          (b) Abstract of title showed a restrictive covenant that house must be two story
                          and it was only one.
                          (c) City ordinance required certain easement around the house, which this
                          violated.
                          (d) Π sued for recission.
                (3) Holding: K in this case agreed to the restrictions existence, not to their violation.
                (4) Note that merchantable or marketable title is a fairly low bar: does not require
                perfect title but only what a reasonable local lawyer or mortgage company would accept.
                          (a) Even presence of hazardous waste does not make title unmarketable.
                (5) Almost every contract for sale includes a clause allowing marketable title excepting
                easements and restrictions of record: if you don’t make this exception, the title will be
                unmarketable given that virtually every property has these.
                (6) Note that in many of these cases suing over technicalities, it is probably an instance
                of buyer’s regret, suing on these issues as a pretext to get out from under K.
      e) Conklin v. Davi (1978)
                (1) Stands for: A/P title will be held marketable if:
                          (a) outstanding claimants could not succeed were they to assert a claim AND
                          (b) there is no real likelihood that a claim will actually surface.
                (2) Facts:
                          (a) Π contracted to sell and convey property to Δ but Δ refused to consummate
                          the sale due to alleged defects in the title since it came to light the title was
                          based on A/P.
                (3) Rule: Marketable title is default where K is silent.
                (4) Buyer could have contracted around this problem
                (5) Court rules that title must have been marketable at time of K, not at time of
                litigation.


                                        36 of 80
                              Property Outline
                                  Liam J. Montgomery
               (6) The real problem in this case is that the K did not have a “time is of the essence”
               clause: without such a clause, courts view closing dates as advisory and mere fact of an
               outstanding problem at closing date does not mean default.
3. The Duty to Disclose Defects
      a) This doctrine is complicated by the fact that it cuts across both K and tort law and really is not
      a pure property doctrine.
      b) Old doctrine of pure caveat emptor is steadily being eroded.
      c) Stambovsky v. Ackley (1991)
               (1) Stands for: equitable power of courts to grant recission due to latent defect in home
               purposely not revealed to the buyer.
               (2) Facts:
                         (a) Π discovered house he contracted to purchase was haunted and sought
                         recission
               (3) Holding:
                         (a) The house is haunted as a matter of law and recission is granted because of
                         the impact of the haunting on the value of the property.
               (4) Rule: where a condition created by the seller materially affects the value of the K and
               is peculiarly within knowledge of the seller and unobtainable by prudent purchaser,
               nondisclosure forms basis for recission as matter of equity.
      d) Johnson v. Davis (1985)
               (1) Stands for: abrogation of the common law rule which held that recission could be
               granted for fraud by commission but could not for fraud by omission.
               (2) Facts:
                         (a) Seller knew roof leaked but represented that it was fine and accepted
                         deposit.
                         (b) Π observed roof and windows gushing water on taking possession and sued
                         for recission.
               (3) Holding:
                         (a) where a seller knows facts materially affecting value of property which are
                         not readily observable and not known to the buyer, the seller is under duty to
                         disclose them to the buyer.
      e) CERCLA (Superfund legislation)
               (1) Allows for an innocent buyer defense: provided a person buys after a site is
               contaminated and is unaware of the fact, they can escape liability.
               (2) However, buyer has heavy burden to show that made all appropriate inquiry into
               status of property.
4. The Implied Warranty of Quality
      a) Rule: suits on warranty can only arise after closing.
      b) Tools to protect a buyer against latent defects:
               (1) Express warranty
                         (a) Most common from builders
                         (b) Often include restrictions such as no consequential damages or only
                         replacement and repair.
               (2) Implied warranty
                         (a) Can be waived by agreement: as is
                         (b) Similar requirement as with UCC that the seller must be a merchant of this
                         good in order for an implied warranty of fitness to apply.
                         (c) Ironically, many sellers include express warranties of limited scope simply
                         to get out from under implied warranties.
                         (d) Uniform Land Transaction Act
                                   (i) Like UCC, implies a warranty of fitness.
                                   (ii) Not adopted anywhere
                                   (iii) Applies only to sellers who are charged as merchants
               (3) Recission
                         (a) Seller need not be aware of the defect for this to apply.
               (4) Fraud


                                       37 of 80
                                    Property Outline
                                        Liam J. Montgomery
                               (a) Unlike straight rescission, here the seller is aware of the defect and either
                               actively or passively misrepresents.
                               (b) Not affected by merger clauses: oral evidence of this is always admissible.
                               (c) Remedy is typically damages and not recission
                      (5) Use contract to flush defects out
                               (a) Force the seller to include a clause forcing liability on them for non-
                               disclosure
                               (b) Either they will agree because have nothing to hide or it will flush out
                               anything they are hiding.
              c)   Lempke v. Dagenais (1988)
                      (1) Stands for: abrogation of the rule that their must by privity in order for an implied
                      warranty to convey with the property.
                      (2) Facts:
                               (a) Π predecessor contracted to have a garage built and then sold 6 mos after
                               garage finished.
                               (b) Buyers noted that the roof was defective. Δ agreed to repair but then never
                               did
                      (3) This rule makes sense because builder of garage should not be able to get out from a
                      promise simply because a property was sold within warranty period.
                      (4) Another example of court concern with whether tort or K rules should apply
                      (because of tort preference against economic loss recovery)
                      (5) Why court rules this way:
                               (a) Protect innocent buyers.
                               (b) Why let builder benefit from fortuity of intervening buyer.
                               (c) Latent defects sometimes hard to discover quickly
                               (d) Houses change hands more often in modern economy
                               (e) Ordinary buyers now less knowledgeable and able to discover defects.
                               (f) Not a surprise to builders.
                               (g) Don’t want to encourage sham first sales.
                               (h) Builder has superior knowledge as to risk of defect.
                               (i) Analogous to UCC implied warranty of merchantability
                      (6) Court sets strict limits to meet the traditional concern of tort economic liability
                      becoming unlimited or subject to fraud.
                      (7) However, this rule does not seem to recognize the law and economics policy issue
                      underlying this:
                               (a) it was entirely possible that the defect was noted by buyer at inspection and
                               that the purchase price reflected this
                               (b) So under the rule, it is possible that buyer profited twice paid for a defective
                               garage, got a nice fixed up one.
                               (c) [Seems like the burdens of proof court lays out (see (6) above) should be
                               sufficient to weed this out]
C. The Deed
     1. Warranties of Title
           a) Essential elements of a deed
                    (1) Grantor
                    (2) Grantee
                    (3) Words of grant
                    (4) Description of the land involved. Hierarchy of descriptions
                            (a) Natural monuments (trees)
                            (b) Artificial monuments (surveyor stakes)
                            (c) References to other boundaries (neighbor property line)
                            (d) Directions (northwest)
                            (e) Distances (30 feet)
                            (f) Place names (Quinn’s farm)
                    (5) Signature of grantor
                    (6) Sometimes: attestation or acknowledgement


                                              38 of 80
                     Property Outline
                         Liam J. Montgomery
b) 3 types of modern deed: p.612
        (1) General warranty deed: warrants title against all defects in title, whether they arose
        before or after the grantor took title.
        (2) Special warranty deed: warrants only against grantor’s own acts but not the acts of
        previous grantors and grantees.
        (3) Quitclaim deed: no warranties of any kind, often used in donative transfers.
c) 6 express warranties of a general warranty deed:
        (1) Present covenants: only broken, if ever, at time deed is delivered. [Rockafeller
        exception? Figure this out]
                 (a) Covenant of seisen: grantor owns the estate that he purports to convey.
                 (b) Covenant of right to convey: only time this really operates is when owner
                 has seisen through trustee relationship but cannot convey
                 (c) Covenant against encumbrances: like liens, mortgages, easements, etc.
        (2) Future covenants
                 (a) Covenant of general warranty: grantor will defend against lawful claims and
                 compensate grantee for any loss sustained through assertion of superior title
                 (b) Covenant of quiet enjoyment: grantee will not be disturbed in possession
                 and enjoyment (often seen as redundant with C of GW).
                 (c) Covenant of further assurances: promise to execute any documents required
                 to perfect title conveyed.
d) Issues with these promises:
        (1) Seller may not remain solvent
        (2) Covenant of QE is not breached if you win a suit challenging your title: when you
        win you have to pay for everything because no breach was found and therefore warranty
        not invoked.
        (3) Title insurance can mitigate a lot of these issues.
        (4) These promises have always been interpreted to concern the quality of the deed itself
        and have nothing to do with the quality of the actual structure.
e) Damages for breach of covenant of seisen:
        (1) Return all or portion of purchase price
        (2) If A buys 100 acres and 20 turns out to be bad title, A gets back 20% of purchase
        price.
        (3) If A struck a good bargain and FMV is much higher, A does not get this benefit: only
        is placed back to where was prior to K.
f) Damages for breach of covenant of encumbrances
        (1) If easily removable, damages equal cost of removal.
        (2) If not, damages equal difference in value of land with and without the encumbrance.
        (3) In all cases limited by the total price received by the warrantor.
        (4) Unlike damages for breach of seisen, this mirrors the K rule that breachee is placed
        in same position as if K had been properly executed.
g) Statute of limitations begins to run:
        (1) On breach of present covenant at time of delivery of deed.
        (2) On breach of future covenant at time of eviction or break of covenant.
h) Deeds are very standardized through custom and practice.
i) Warranties running with property:
        (1) If everyone purchased on same warranty, the purchases prices are all comparable.
        (2) A sudden change in type of warranty offered by seller compared to past is a big red
        flag.
        (3) If you give more warranty than you got, you are the final stop on liability created
        under this increase and can not go back to your seller.
j) Brown v. Lober (1979)
        (1) Stands for:
                 (a) Covenant of QE is not violated unless the property interest is actually
                 interfered with: potential for interference is not enough.
        (2) Facts:
                 (a) Owner of land conveyed to Bost, reserving two third interest in mineral


                              39 of 80
                     Property Outline
                         Liam J. Montgomery
                   rights to it.
                   (b) Bost conveyed to Brown by general warranty deed with no exceptions
                   (c) Browns contracted with a coal company for mineral rights to land at which
                   point it was revealed that Brown’s did not own the 2/3 rights noted above.
                   (d) 10 years S of Lims ran on the present covenants suit (i.e. covenant of
                   seisen), so Browns sued executor of Bosts (Lober) under breach of covenant of
                   quiet enjoyment.
         (3) Holding: covenant of QE has not been breached because the outstanding right to the
         other 2/3 reserved by the original owner has never been exercised and thus there has been
         no ouster.
         (4) This is the same issue that arises in a property that is leased twice. T has not
         recourse unless T1 actually tries to interfere with QE.
k) Frimberger v. Anzellotti (1991)
         (1) Stands for:
                   (a) The significant impact of environmental regulation on the value of property
                   by encumbering that property through things like this case, hazardous waste
                   cleanup (CERCLA) and the like.
         (2) Facts:
                   (a) Δ brother and predecessor in title constructed a residence on land abutting
                   tidal marshland subject to environmental regulation and in the process built a
                   bulkhead and filled part of that protected area.
                   (b) Δ conveyed the property to Π by general warranty deed free and clear of all
                   encumbrances except building and zoning.
                   (c) When Π decided to repair bulkhead, surveyor noted the violation and
                   government gave notice that it needed to be remedied.
         (3) This case is similar to Lohmeyer except that that case was pre-closing and this case
         is post.
         (4) Court finds that environmental regulation is a public restriction and as such, like
         Lohmeyer, are not covered by the general warranty deed.
         (5) Also of concern is fact that Π did not pursue the waiver offered by government.
         (6) Traditional warranties were never intended to deal with this types of issues and as
         such buyers should instead protect themselves against this through appropriate contract
         devices.
         (7) Also is a concern for liability exposure for attorneys and title insurance companies
         who would be liable for wetland violations if the rule went the other way: this would
         greatly increase price of title insurance.
         (8) Why the distinction between public and private encumbrances:
                   (a) Public encumbrances like building codes and wetland violations are detailed
                   and trivial and can be very difficult to identify.
                   (b) Private restrictions in contrast can generally be unearthed through detailed
                   title search.
l) Rule: future covenants run with the land to all successors. So if A gives general warranty
deed to B and B sells to C, A is liable to C on any of the future covenants in As deed.
m) Rockafeller v. Gray (1922)
         (1) Stands for: the distinction between a special and general warranty deed. The former
         only binds the specific grantor-grantee relationship while the latter runs with the land to
         all successive grantees.
         (2) Facts:
                   (a) Mortgage for $500 to gray
                   (b) 10/1907: Doffing (Π = Rockafeller) forecloses, sheriff’s deed, Connelly
                   wins
                   (c) 2/1911: Deed to Connelly
                   (d) 4/1911: Connelly conveys to Dixon via warranty deed.
                   (e) 6/1911: Dixon to Hanson and Gregson via special warranty deed.
                             (i) Note, Connelly and Dixon probably pro real estate speculators
                             given the speed they move the property.


                               40 of 80
                                     Property Outline
                                         Liam J. Montgomery
                                 (f) 8/1918: action to set aside transaction
                                 (g) Rockafeller sues saying he still owns due to lack of notice of sheriff sale.
                       (3) Hansen and Gregson cannot sue Dixon because he has not violated the special
                       warranty deed he granted them (he may have sensed the problem which would explain
                       the sudden switch from general to special warranty deed.
                       (4) But, H&G may go all the way back up the chain and sue someone he gave a general
                       warranty deed, provided the defect arose before them which it did here and that the S of
                       Lims has not run, which it has not.
                       (5) General warranty deeds allow a higher price: conveyers may grant one even
                       knowing of potential for problems in hopes that in the mine run, they will come out
                       ahead.
                       (6) Aside, why auctions tend to fetch lower prices:
                                 (a) No opportunity for full due diligence
                                 (b) Must pay cash.
                                 (c) Sheriff’s deeds make no warranties at all.
      2. Delivery of Deed
             a) Rule: for a deed to be effective, it need not be recorded, but it must be delivered to the
             grantee.
             b) Delivery is rarely a problem in commercial transactions but does arise at times in donative
             transfers.
             c) Sweeney, Administratrix v. Sweeney (1940)
                       (1) Stands for: majority rule that delivery makes a deed effective regardless of the
                       intention of the parties to make a workaround will.
                       (2) Facts:
                                 (a) Maurice conveys deed to John and records it.
                                 (b) But, what happens, they think, if John dies first. Intestacy S would send it
                                 to his heirs.
                                 (c) So they draw up a second deed conveying from John back to Maurice.
                                 (d) John delivers it with understanding that if John dies first, Maurice could just
                                 record this deed and get the property back.
                       (3) Holding: the deed back to Maurice was properly delivered and thus trumps the initial
                       deed to John. Property conveys to Mo’s wife.
             d) Rosengrant v. Rosengrant (1981)
                       (1) Stands for: an example of legal formalism where the court is unduly harsh about the
                       formalities of the transaction and makes no attempt to carry out the wishes of the parties.
                       (2) Facts:
                                 (a) Elderly owners of a house were taken care of by their nephew and his
                                 family and as a result wanted him to have the house when they died.
                                 (b) Rather than using a will or trust, they signed a deed over to him, placed it in
                                 an envelope marked with both their and his names, handed it to him and then
                                 had him give it to a banker to hold until their deaths.
                       (3) Holding: despite the handing over of the deed formality, the fact that the envelope
                       has both names indicates it could be taken back at any time and therefore it did not act to
                       transfer ownership of the property.
                       (4) The grantors could have achieved the same objective through a:
                                 (a) Will, but this would have brought probate costs.
                                 (b) Trust: this is probably what they were trying to replicate in order to avoid
                                 probate, but they failed.
             e) In both Sweeney and Rosengrant the parties are trying to achieve an end cheaply that is more
             properly achieved through a will satisfying SoW or through a revocable inter vivos trust.
             [***always note this if you see this type of shenanigans on exam and always note the mistake of
             not involving a lawyer, which he constantly harps on]
                       (1) Kitch: “This is a lot of what lawyers do: select the right instrument to do the job,
                       with no uncertainty as to whether it would work.”
D. The Mortgage
      1. History


                                              41 of 80
                                            Property Outline
                                                Liam J. Montgomery
                     a) Used to be a defeasible estate where the mortgagee took title on default, but the equity courts
                     in England eventually intervened to mitigate lender harshness
                     b) This has now been superseded by S requiring mortgages to be treated as liens, not titles to the
                     property, but lenders still look for work arounds to lower the cost of foreclosing and thereby
                     somewhat return to the old model.
                               (1) Example: in Virginia, you sign a deed of trust which deeds the property to a trustee
                               until the loan is paid off and that person can simply sell the property if you default.
              2. Deficiency judgments:
                     a) If a foreclosure sale yields less than the amount owed, the mortgagee may be entitled to a
                     deficiency judgment out of the mortgagors other assets.
                     b) However, this depends on whether the house was sold for FMV.
                     c) If it is sold through foreclosure proceedings, the price will generally be accepted and the
                     mortgagee will be entitled to a deficiency judgment, illustrating the prudence of taking this route.
              3. Murphy v. Financial Development Corp (1985)
                     a) Stands for: lenders at a foreclosure sale have a duty of both good faith and due diligence in
                     ensuring they get a fair price for the property and protect the buyer
                     b) Facts:
                               (1) Π bought a house with a mortgage, ran into financial troubles and became unable to
                               pay.
                               (2) After working with Π, Δ eventually forced a foreclosure sale but only parties present
                               were Π, lenders and an attorney.
                               (3) Lenders bid an won with a bid equal to the amount they were owed and then flipped
                               the house over almost immediately for a significant profit.
                     c) Holding: the lender did not exhibit bad faith but they did fail to exercise due diligence
                     (especially indicated by their ability to flip it, which they knew was going to be the case) and
                     therefore they owe the mortgagee the difference between the fair market price and the price
                     actually obtained.
                     d) Note: price alone is rarely enough to set aside a foreclosure sale, unless it “shocks the judicial
                     conscience.”
                               (1) Instead, the court will look for other indices of unfairness such as purposely not
                               advertising the sale or the like.
              4. Installment land contract
                     a) Used primarily in lower value residences where the buyer can only achieve financing from the
                     seller himself.
                     b) Like a mortgage it used to be under these that the seller remained the owner until all payments
                     made and if the buyer defaulted, the seller simply took possession back, treating all money
                     received as rent.
                     c) Today, these are treated as mortgages with title vesting immediately in the buyer and normal
                     foreclosure proceedings applying.
                     d) Bean v. Walker (1983)
                               (1) Stands for: modern rule of installment land contracts which says that upon the sale,
                               property law operates on the contract such that title is vested in the buyer and the seller
                               essentially becomes the legal equivalent of a mortgagee.
                               (2) Facts:
                                         (a) Buyer purchased land from seller on an installment land contract which
                                         included a forfeiture clause that allowed the seller to take the property back and
                                         treat all payments to that date as liquidated damages.
                                         (b) Δ made substantial improvements to the property and then defaulted, with
                                         the seller then commencing an ejectment action.
                               (3) Court rejects the old rule as formalism.
VIII.   Title Assurance
        A. The Recording System
              1. Introduction
                      a) Rules:
                              (1) A deed need not be recorded to be valid.



                                                      42 of 80
                             Property Outline
                                 Liam J. Montgomery
                        (a) However, recall the basic rule: if A transfers to B and then the next day
                        transfers to C, then C has nothing because A no longer had anything to transfer.
                        (b) This rule engenders a great deal of uncertainty in a very important area of
                        investment and thus the recording acts arose to mitigate this problem.
              (2) Thus, rule: unless a deed is recorded, it does not work to cut off the rights of a good
              faith purchaser for value.
                        (a) Book rule: a subsequent bona fide purchaser is protected against prior
                        unrecorded interests.
                        (b) In the hypo above, id the deed was not recorded, C wins.
                        (c) This also acts as a significant incentive for B to record immediately.
      b) Functions of the recording system
              (1) Establishes a system of public title record.
              (2) Secures important documents.
                        (a) There a numerous documents that are recordable, including:
                                  (i) Deeds
                                  (ii) Mortgages (and liens in general(?))
                                  (iii) Leases
                                  (iv) Options
                                  (v) Other instruments creating or affecting interest in land.
                                             (a) Judgment against the land
                                             (b) Lis pendens: notice of pending judgment
                                             (c) Wills
              (3) Protects purchasers and creditors against unrecorded instruments
2. The Indexes
      a) There are two types of indexes:
              (1) Tract index:
                        (a) Well suited to areas under government survey
                        (b) Less useful where property defined by metes and bounds.
              (2) Grantor-Grantee
                        (a) Most common type.
      b) Searching title:
              (1) You always want to go back to the root title.
              (2) Process in grantor-grantee index:
                        (a) From the present owner, work back in the grantee index a certain amount
                        (back to sovereign, back a S’orily mandated number of years, etc)
                        (b) From there, work back forward in the grantor index, tracing all grants (of
                        the grantors your ascertained above) to ensure that two parallel grants were not
                        issued at some point in the past.
                                  (i) In this process, you must run the title forward from the date the
                                  deed was executed, not the date it was recorded in order to ensure a
                                  grant was not executed prior to recording the one you found.
                                  (ii) However, you run that deed forward to the date it was recorded,
                                  not the date the subsequent deed was executed.
                                  (iii) So, there will be some overlap.
              (3) Aside: CERCLA has meant that you must search a longer time in commercial title
              search.
      c) Luthi v. Evans (1978)
              (1) Stands for: documents must be organized so that they will be found under standard
              title search procedure, and if the document won’t turn up under such a search, it is treated
              the same as a unrecorded interest.
              (2) Facts:
                        (a) Owens assigned to Δ all oil and gas interests in her property.
                        (b) This assignment was duly recorded.
                        (c) The assignment included 7 names leases in the first property and then also
                        included a clause assigning all other properties owned by Owens for lease as
                        well, without specifics. This vaguer category included the lease to a property


                                       43 of 80
                     Property Outline
                         Liam J. Montgomery
                 called Kufahl.
                 (d) 4 years later, Owens assigned the gas and mineral rights for Kufahl to
                 Burris.
                 (e) Burris conducted a title search and found the Δ lease but did not note the
                 vague portion of it and sued to quiet title in the Kufahl lease.
       (3) Holding: Π was not on actual nor constructive notice as a result of the recording of a
       deed with a MH clause.
       (4) This type of deed, with a broad catch-all is known as a Mother Hubbard (MH)
       clause. These are only typically used in:
                 (a) Death bed
                 (b) Time is of the essence
                 (c) No descriptive info is available.
       (5) If it is necessary to convey by MH clause, the grantee has the burden of taking
       measure to subsequently clarify that clause through recording an affidavit or other
       appropriate instrument.
       (6) Court notes that this may have been found in the G-G index but that searching this
       index is not standard practice.
       (7) Tie this case back to Messermith, infra, that also involves mineral and oil interests?
       (8) Note, FACT PATTERN CUE: these types of cases always arise where the owner
       makes a second transfer of the same interest.
d) Bottom line, when you create a document transferring property interest you must:
       (1) Drafting: Ensure the document is drafted so as to be a valid transfer
       (2) Acknowledgment: you must meet the requirements of the S for recording (notary,
       etc) in order to prevent fraud.
       (3) Recording: you need to make sure the recording office indexes it such that it will be
       found.
       (4) Adverse possession: you need to ensure there are no impending successful A/P
       attempts.
e) Government survey system
       (1) Very pervasive in the United States, particularly in the western states.
       (2) In most localities, the survey boundaries are marked by roads laying out the grid
       resulting in few, if any, landlocked parcels.
       (3) This breaks down somewhat in the western mountainous country where the survey
       did not always lay down demarcating roads and there are large landlocked parcels.
       (4) Made tract indexes quite feasible.
f) Orr v. Byers (1988)
       (1) Stands for: doctrine of idem sonans is inapplicable in the title search area (unlike
       criminal law where a slight misspelling will not hold up a criminal prosecution): it is the
       obligation of a party drafting a property interest document to spell the name properly and
       the doctrine of idem sonans will not alleviate a misspelling.
       (2) Facts:
                 (a) Orr obtained a judgment against Elliott.
                 (b) Abstract of judgment was filed in the recording office under Elliot and
                 Eliot.
                 (c) Elliott then obtained title to a property subject to this judgment lien.
                 (d) Elliott sold the property to Byers and a title search failed to disclose the
                 judgment.
       (3) Note, that some jurisdictions do allow idem sonans to create constructive notice
       provided they begin with the same letter.
g) Example: idem sonans in various permutations of names
       (1) Married-Maiden name
                 (a) Elizabeth Taylor Fisher gives a mortgage which is recorded under Fisher.
                 (b) She then divorces and resumes the last name Taylor, signing her name as
                 Taylor on the deed when she sells.
                 (c) The buyer in this case will win if the mortgagee tries to assert the lien: he
                 was not put on notice when he searched the index under Taylor.


                              44 of 80
                             Property Outline
                                 Liam J. Montgomery
                        (d) Lawyer for mortgagee should protect her by recording the mortgage under
                        all possible permutations of Taylors name.
              (2) Hyphenated names
                        (a) If the mortgage had been recorded under Taylor-Fisher instead, it still
                        would not act to put buyer on notice.
              (3) Permutations of first name
                        (a) Suppose the mortgage was recorded under Betty Taylor and the deed was
                        sold under Elizabeth Taylor.
                        (b) Now buyer is on notice because it is an obvious diminution of Elizabeth.
              (4) Bottom line: often these cases will come down to judge’s call on what is reasonable.
      h) Mortgages and the recording system
              (1) Given the fact that there is no visible sign of a mortgage, recording systems are very
              closely tied with mortgages and are a large part of what makes the mortgage system work
              (and presumably keeps the costs of lending down)
              (2) Similar to Armory v. Delmarie, there is a priority of interests where the property
              value cannot satisfy all liens. Example:
                        (a) Mortgage 1 = 70K, 2= 10K, 3 – 10L
                        (b) If property only fetches 85K, 1 and 2 are fully reimbursed and 3 only gets
                        half.
3. Types of Recording Acts
      a) Types of recording acts:
              (1) Race
                        (a) First to record wins, period.
                        (b) Simplest system in theory: limits title search into matters off the record,
                        which makes transfer more efficient.
                        (c) Judges didn’t like this because it was not equitable and they began to carve
                        out exceptions, thus undermining the simplicity of the system.
                        (d) Only LA and NC use this system.
                        (e) Example:
                                  (i) O conveys to A, who does not record
                                  (ii) O conveys to B, who knows of the conveyance to A but records
                                  first.
                                  (iii) B wins.
              (2) Notice:
                        (a) Protects a bona fide purchaser for value against unrecorded interests.
                        (b) About ½ the remaining states use this.
                        (c) Example
                                  (i) O conveys to A who does not record.
                                  (ii) O conveys to B for valuable consideration and B has no knowledge
                                  of A’s deed.
                                  (iii) B wins, whether or not recorded.
                        (d) But, in example under race statute, A would win if that were a notice
                        jurisdiction.
              (3) Race-Notice:
                        (a) Protects the same class as notice statutes with the additional requirement
                        that the bona fide purchaser record first before this protection takes effect.
                        (b) Rule: Under this S, a subsequent purchaser is protected against prior
                        unrecorded instruments only if the prior purchaser:
                                  (i) Is without notice of the prior instrument
                                  (ii) Records before the prior instrument is recorded.
                        (c) Example:
                                  (i) O conveys to A who does not record.
                                  (ii) O conveys to B, who does not know of the deed to A.
                                  (iii) A records
                                  (iv) B records
                                  (v) A wins because even though B had no notice, A recorded first.


                                      45 of 80
                              Property Outline
                                  Liam J. Montgomery
                                   (vi) (In a notice state, B would win this)
      b) Messersmith v. Smith (1953)
                (1) Stands for:
                         (a) Acknowledgement requirement: a deed to meet the recording acts
                         requirements such that it creates constructive notice must be properly
                         acknowledged before a notary. Here, even though the first deed had been
                         acknowledged immediately before, the effective deed was not.
                (2) Facts:
                         (a) Caroline executed and delivered a quitclaim deed to Fred in 1946 which
                         was not recorded until July 1951
                         (b) April 1951, Caroline executed a lease to Smith, recorded on May 14 1951.
                         (c) May 7 1951: conveyed to Smith an undivided half interest in the mineral,
                         oil and gas rights to her property, recorded on May 26.
                         (d) May 9, 1951: Smith executed a mineral deed to Seale a similar deal, also
                         recorded May 26.
                         (e) In the course of executing the May 7 deed, Smith made a mistake and had
                         to go back and execute a new deed. He took this deed to a notary to have it
                         acknowledged outside Caroline’s presence (phone verification).
4. Chain of Title Problems
      a) Introduction
                (1) Chain of Title: the period of time for which records must be searched and the
                documents that must be examined within that time period.
                (2) Definition of this varies from jurisdiction to jurisdiction in both:
                         (a) Time required to search
                         (b) Types of documents required to be examined.
      b) Board of Education of Minneapolis v. Hughes (1912)
                (1) Stands for:
                         (a) Chain of title issues that arise when deeds are conveyed but not recorded in
                         the order in which they were conveyed.
                         (b) In order for a document to be treated as properly recorded it has to be one
                         that a searcher following standard local search procedures will find.
                (2) Facts:
                         (a) 5/16/06: Hoerger conveyed lot to Hughes for $25, name left blank, but
                         executed and acknowledged
                         (b) 4/27/09: Duryea and Wilson paid $25 to Hoerger for quitclaim deed,
                         executed and delivered.
                         (c) 11/19/09: D&W delivered general warranty deed to school board (Π)
                         (d) 1/27/10: School Board recorded.
                         (e) Just prior to recording, Hughes filled name in.
                         (f) 12/16/10: Hughes deed recorded
                         (g) 12/21/10: D&W deed recorded
                (3) Holding: Hughes prevails. His deed was operative as of the date he filled his name
                in, for which authority to do so was implied by Hoerger. In order for the School Board
                deed to trump his (since it was recorded first), the deed to the Board must also have been
                recorded prior to Hughes, which it was not. Essentially Hughes was a subsequent
                purchaser for value and so is protected by the race-notice statute in question.
      c) Guillette v. Daly Dry Wall, Inc. (1975)
                (1) Stands for: Title search can be both vertical and horizontal: title search not only
                includes searching your own title but also searching recorded deeds to neighboring
                properties so that you ensure there are no restrictions on your property.
                (2) Facts:
                         (a) Gilmore sold lots in a subdivision to Π, Δ and others.
                         (b) 2 of the Πs purchased lots referring to a plan dated July 1967
                         (c) Third Π (Guilette) purchased deed referring to a plan dated March 1968
                         (d) Neither of these plans mentions a restriction
                         (e) Fourth Π purchased a lot referring to 1968 plan.


                                       46 of 80
                              Property Outline
                                   Liam J. Montgomery
                         (f) Each of these deeds either set out restrictions or referred to them by
                         reference which limited the subdivision to single family residences.
                         (g) Only the Guilette deed restricted the lots retained by the seller to be sold
                         later.
                         (h) Seller sold lot to Δ in 1972 referring to 1968 plan but did not reference any
                         restrictions.
                         (i) Δ then commenced building apartments
              (3) Holding: the deed to the Guilettes conveyed not only their property but also an
              interest in the seller-retained properties and this deed was properly recorded. Therefore Δ
              was on constructive notice of this restriction and should have not only searched his own
              title but also the titles of the surrounding properties.
              (4) NOTE: many jurisdictions now hold contra to the Guilette rule that it is too
              burdensome to search all of the names of surrounding purchasers. However, if they have
              a tract index, it is more easily done and will be required.
              (5) Luthi v. Evans, supra, is the contrary view to this case. (??)
              (6) Also raises the issue that if the developer had noted the restrictions on the
              subdivision map, and the deed had referred to that map, it would be a more easily
              effective restriction.
       d) Examples
              (1) Example 9, p 702:
                         (a) Facts:
                                   (i) A conveys blackacre to B
                                   (ii) B records
                                   (iii) A then gets title to blackacre from O
                                   (iv) A records the O-A deed
                                   (v) A conveys to C, purchaser for value with no knowledge of the A to
                                   B deed.
                                   (vi) C records
                         (b) Older jurisdictions would have allowed this under estoppel by deed: once
                         the O to A deed went through it immediately vested in B.
                         (c) Most current jurisdictions would not allow this though
              (2) Example 10, p 703
                         (a) Facts:
                                   (i) O conveys to A, who does not record
                                   (ii) O conveys to B, who knows of the O-A deal.
                                   (iii) B records
                                   (iv) A records
                                   (v) B conveys to C, who does not know of the O-A deal.
                                   (vi) C records.
                                   (vii) Who wins, A or C?
                         (b) Issue is what if a previously recorded deed is filed later, after the date of the
                         deed out to the present grantee?
                                   (i) Most jurisdictions say this is not notice
                                   (ii) In those that do, it greatly complicates the search.
              (3) In both of these examples, the deeds that would establish notice are not in the chain
              of title as it would be searched in a G-G index (I think, but am not sure, that a tract index
              would help this problem)
5. Persons Protected by the Recording System
       a) Who is protected
              (1) Creditors and subsequent purchasers
                         (a) It is imperative to record a deed as soon as possible after closing to protect
                         the buyer against subsequent transactions.
                         (b) FACT PATTERN CUE: The cases above ALL involve situations where a
                         buyer did not promptly record.
              (2) Subsequent purchasers must be bona fide purchasers for value
                         (a) Value:


                                        47 of 80
                              Property Outline
                                  Liam J. Montgomery
                                    (i) Note, the recording system generally does not protect donees and
                                    devisees, which is why consideration can be a factor.
                                    (ii) Most courts require more than a nominal value such as a
                                    substantial amount or an amount not grossly inadequate.
                                    (iii) However a deed that recites $1 and other good and valuable
                                    consideration raises a presumption of consideration and the burden falls
                                    on the party attacking the deed to prove it false.
       b) Daniels v. Anderson (1994)
                (1) Stands for: what constitutes value: here the money paid by Zografos was not
                sufficient to override the restriction because it was still in the executory period and the
                restriction was recorded.
                (2) Facts:
                          (a) Daniels contracted to buy two lots from Jacula
                          (b) L gave Daniels right of first refusal if Jacula sold an adjacent lot.
                          (c) This contract was not recorded and the recorded deed did not mention this
                          right.
                          (d) 8 years later, Zografos contracted to buy an adjacent lot and Daniels was
                          not notified.
                          (e) Zografos paid a down payment and installments
                          (f) Daniel’s wife informed Zografos of the right of first refusal.
                          (g) Zografos paid the balance and recorded his deed.
                (3) Holding: Zografos had to convey the deed to Daniels but then Daniels had to
                reimburse Zografos for the property taxes and payments he had made.
       c) Lewis v. Superior Court (1994)
                (1) Stands for:
                          (a) The modern definition of value: when a buyer places hard cash down and
                          makes a promise to pay more in the future, this is sufficient to satisfy the value
                          prong of the “bona fide purchaser for value” test.
                                    (i) When a purchaser pays through cash installments, they are just as
                                    protected as if they had bought with a mortgage and will not be
                                    required to search title each time they make a payment.
                          (b) Recording does not become effective until it is indexed; subsequent
                          purchasers not considered on notice until something is actually indexed.
                (2) Facts:
                          (a) Lewis contracted to buy a residence from Shipley.
                          (b) Days before Lewis acquired title (during the executory period of the K),
                          Fontana Films recorded a lis pendens against Shipley.
                          (c) 2/24: lis pendens recorded.
                          (d) 2/28: Lewis acquired title and recorded.
                          (e) 2/29: lis pendens was indexed.
                          (f) Lewis’s paid the money and made substantial improvements
                          (g) Lewis’s served by Fontana.
                (3) Holding: the recording of the lis pendens did not become effective such as to create
                notice until it was indexed. Therefore, Lewis’s not on notice and lis pendens is
                expunged.
       d) Alexander v. Andrews (1951)
                (1) Stands for: another issue of value, in this case only some of the value was paid prior
                to the subsequent purchaser being on constructive notice of the prior claim. Therefore,
                the subsequent purchaser for value is only protected for the amount of value paid, not the
                rest.
       e) Quitclaim deeds
                (1) Majority rule: there are legit reasons to use a quitclaim deed and the fact that one
                was used is not enough in and of itself to put the purchaser on suspicion of a problem.
                (2) Minority rule: quitclaim deeds creates either a strong suspicion or sometimes even
                inquiry notice of a problem with the title.
6. Inquiry Notice


                                        48 of 80
                              Property Outline
                                  Liam J. Montgomery
          Three types of notice created by recording system:
         a)
               (1) Actual knowledge: subsequent purchaser knew
               (2) Record notice
               (3) Inquiry notice: subsequent purchaser should have known.
                          (a) Definition: reasonable information to inquire further about a possible claim.
      b) Note, the law treats record and inquiry notice as constructive notice: you are on notice
      regardless of your actual knowledge.
      c) Harper v. Paradise (1974)
               (1) Stands for: inquiry notice: can be created even through language embedded in a
               recorded deed that refers to the existence of a past transaction that could affect the nature
               of the title.
               (2) Facts:
                          (a) 1922: Susan conveyed life interest warranty deed to Maude, with remainder
                          to Maude’s children.
                          (b) 1928: Susan’s legal heirs executed an instrument to Maude and recorded it.
                          (c) 1933: Maude executed a security deed to Thornton.
                          (d) 1936: Thornton foreclosed on Maude, obtained and recorded a sheriff’s
                          deed.
                          (e) 1955: Unbroken chain of title from Thornton through to Paradise who
                          recorded in 1955.
                          (f) 1957: The original deed, having been lost, was found by Clyde, one of the
                          remaindermen, who recorded it.
                          (g) Appellees also claim title by way of A/P running all the way back to 1940.
               (3) Holding:
                          (a) The 1928 deed made mention of the 1922 deed and that deed only conveyed
                          to Maude a life interest so Maude could not have conveyed anything more than
                          an LE.
                          (b) The Πs were on notice from the 1928 deed that something more was out
                          there (1922 deed) and thus were on inquiry notice of an issue.
                          (c) A/P unavailing because it cannot run against a life interest: it only runs
                          when the remainder takes title.
                          (d) End result: Π are out on the street after living in a house for over 20 years!
               (4) Waldorff insurance and Bonding Inc. v. Eglin National Bank (1984)
                          (a) Stands for: actual possession of a property can also act to place a
                          subsequent interest on inquiry notice.
                          (b) Facts:
                                   (i) Waldorff entered into a purchase agreement with Choctaw for a
                                   condo unit and occupied the unit for 1 ½ years.
                                   (ii) Choctaw executed a couple of notes against the entire property
                                   including Waldorff’s unit.
                                   (iii) Meanwhile, Choctaw owed Waldorff for insurance premiums and
                                   struck a bargain to write that debt off in exchange for purchase price on
                                   the condo.
                                   (iv) 1975: Waldorff recorded the quitclaim deed.
                                   (v) 1976: Δ bank brought foreclosure on Choctaw and Waldorff.
                          (c) Holding: the K for sale created equitable title in Waldorff and Choctaw
                          retained only legal title. The actual possession by Waldorff acted as
                          constructive notice to all the world that he and not Choctaw owned it and thus
                          the bank was on inquiry notice when it entered into all of the mortgage notes.
7. Marketable Title Acts
      a) Limit the search of title to a reasonable period, typically 30-40 years.
      b) Essentially acts as a S of Lims protecting someone who has record chain of title for a certain
      period such that inconsistent claims are extinguished.
      c) In fact, often driven by the S of Lims.
      d) Under a MTA, all claimants to a property can get out from under it by recording a notice
      every 30-40 years and thus restarting the clock.


                                        49 of 80
                                      Property Outline
                                          Liam J. Montgomery
                e) Reference to a past transaction also works to renew the MTA clock.
                f) Certain specific interests (mineral rights, easements, federal government claims) are also
                exempt from MTA and this tends to undermine their effectiveness.




B. Registration of Title
       1. McDougal and Brabner Smith on Title Registration
               a) The US title registration system is a mess:
                        (1) Disorderly
                                 (a) Great quote by Rood: “The fact is that the path of the searcher for a safe
                                 title of land is beset by more traps, sirens, harpies, and temptations, than ever
                                 plagued Ulysses…”
                        (2) Incomplete
                                 (a) Even the most basic search must go well beyond the official sources
               b) Thesis: fix this system through a 1 page title registration that lists all of the interests in the
               property under a tract index system.
       2. Title registration is also known as a Torrens system.
       3. How a title recordation system is shifted to a title registration system:
               a) The land is registered: lawsuit adjudicates title to be in the Π subject to existing claims like
               mortgages and easements and all other claims are wiped out
               b) When the registered land is transferred, a new certificate is issued noting all the past
               transactions.
               c) An insurance indemnity fund is established to protect those hurt by errors in the system.
       4. Title registration places security of title in the government whereas title recordation places it
       in hand of private insurers.
       5. Barriers to Torrens system:
               a) Initial upfront cost of the registration lawsuit
               b) Exceptions undermine effectiveness
               c) Fraud becomes a much bigger issue
               d) Special interests (title insurers) block its passage.
               e) Poorly trained registrars can create crises.
               f) Title insurance companies may be more efficient anyway.
C. Title Insurance
       1. Introduction
               a) No title search is infallible (delivery of deeds, A/P), making title search a prudent move.
               b) Title insurance is a set of technical promises that covers only certain contingencies
               c) Pay one up front fee at closing and the policy is effective for as long as the insured purchasers
               owns the property.
                          (1) Covers both buyers and mortgagees.
               d) Title insurance vs warranty deed:
                          (1) Has the advantage of covering all litigation whether you win or lose unlike a General
                          Warranty deed which only covers cost if you lose.
                          (2) Usually more willing to pay.
                          (3) No concerns with insolvency.
               e) Title insurance companies are generally more efficient than county offices because:
                          (1) Established their own tract indices.
                          (2) Early on started to computerize.
       2. Walter Rogge, Inc. v. Chelsea Title & Guaranty Co. (1989)
               a) Stands for: title insurance is not a substitute for an independent survey and unless an
               independent promise to cover other issues is made, all the typical policy guarantees is good quiet
               title, not subsidiary issues like acreage.
               b) Facts:
                          (1) Rogge purchased a tract under condition that it was a certain acreage, with a clause
                          that it would be reduced in price if less acres.



                                                50 of 80
                                          Property Outline
                                              Liam J. Montgomery
                               (2) Chelsea title handled the title work and in course of search unearthed a document
                               indicating the property was substantially less acreage.
                               (3) Title insurance policy, though, used the larger acreage survey.
                               (4) Rogge discovered the acreage discrepancy and sued.
                     c) Court doesn’t resolve much and leaves open whether the insurance company could still be
                     liable for not informing client that they had unearthed bad acreage info.

            3. Lick Mill Creek Apartments v. Chicago Title Insurance Co. (1991)
                   a) Stands for: the purpose of title insurance is not to protect the insured against loss arising from
                   physical damage to property and only is to protect against defects in title.
                   b) Facts:
                            (1) KSI contaminated the property in question with hazardous waste and did not comply
                            with cleanup orders.
                            (2) Π acquired part of this property and bought title insurance from Δ.
                            (3) Δ contracted for survey and inspection, noting the presence of pipes and tanks
                            (4) Department of Health services at time of search maintained records on hazardous
                            waste problems.
                            (5) Π’s incurred the costs for cleanup and sought to indemnify Δ.
                   c) Holding: Δ not liable because the policy covers nothing related to making the land less
                   valuable or useful; only things affecting the title itself.
     D. Summary of Chapter 8
            1. There is not single document that acts to establish you as owner of the property
                     a) Deed: only serves to say the grantor made a transfer to you but may not mean anything if
                     grantor had nothing to transfer
            2. The only document that truly ensures economic ownership is a title insurance policy because
            they will recompense you if something goes wrong.
            3. Torren system seeks to cure this, but as noted above is not widely adopted and still is not
            100% secure.
IX. Judicial Land Use Controls: The Law of Nuisance
     A. Introduction to the Substantive Law
            1. Concepts
                  a) One means by which judges resolve conflicting land uses.
                  b) Central maxim is sic utere tuo ut alienum non laedas: on should use one’s own property in
                  such a way as not to injure the property of another.
            2. Property rights are about the right to court enforcement of:
                  a) Trespass (archetypal protected right, see right to exclude, supra)
                  b) Water rights
                  c) Support
                  d) Nuisance
            3. Morgan v. High Penn Oil Co. (1953)
                  a) Stands for: paradigm example of a successful nuisance case under the majority rule that
                  nuisance law does not allow a balancing of harms/benefits: if it is intentional, it is nuisance and
                  gets a remedy based on the level of interference.
                  b) Facts:
                           (1) Oil refinery is 1000 feet from dwelling of Πs who have a home, a store and some
                           rental units.
                           (2) Some hours of each of 2-3 days a week, the refinery belches highly noxious odors
                           out and have done nothing to abate this effect.
                  c) Holding: this is an intentional nuisance intended to be carried on indefinitely and therefore
                  injunction is necessary.
                  d) Rule: a private nuisance exists in a legal sense when one makes an improper use of his own
                  property and in that way injures the land or some incorporeal right of one’s neighbor.
                  e) Intentional nuisance: conduct has the purpose of causing the injury or knows that it is
                  resulting or is certain to result in the injury.
                  f) The court here is unconcerned with the fact that this oil refinery may have to completely shut



                                                    51 of 80
                              Property Outline
                                  Liam J. Montgomery
         down, with severe economic consequences, in exchange for causing what court themselves sets as
         $2500 in damages.
                 (1) However, court may be recognizing that this one suit is protecting a multitude of
                 owners in the area.
                 (2) This basic

4. Intentional trespass v. intentional nuisance
       a) TP does not require substantial injury
                 (1) Remedy may be affected by insubstantial injury though
       b) TP has no requirement of unreasonableness
                 (1) Jacques v. Steenberg (mobile home case)
       c) TP only protects possessory interest
       d) Different S of Lims
5. Intentional
       a) In this context, it is not analogous to mens rea: simply means that the conduct I purposely
       undertook resulted in the invasion, not that I intended the actual invasion
       b) As opposed to negligence where I simply had reason to know the conduct could result in the
       invasion.
6. Unreasonableness:
       a) Plays a central role in law of nuisance.
       b) An interference with the use and enjoyment of land in order to give rise to liability must be
                 (1) Substantial AND
                 (2) Either intentional and unreasonable OR
                 (3) Unintentional and result of reckless, negligent or abnormally dangerous activity.
       c) If a nuisance is unintentional, the analysis of reasonable is the same as in traditional tort law.
       d) However, if it is intentional, there are two competing notions:
                 (1) Majority rule: Don’t evaluate cost benefit but rather eval the level of interference
                 (2) Minority rule (RST): balance weight of the harm to Π with the utility of the Δ
                 conduct.
       e) Comparison to trespass:
                 (1) Intentional trespass and intentional nuisance are substantially the same except
                 intentional trespass removes the extra step of determining if the invasion was substantial
                 (in trespass you win if one toe comes on your property.
                 (2) This is ironic: why have the substantiality requirement for water on your property
                 and not hazardous gases?
                 (3) Restatement (Second) Torts §826(b) attempts to remedy this irony.
                 (4) The underlying reason for this is the same as limitations placed on economic torts
                          (a) Unlimited liability
                          (b) Fraud
                 (5) There also is a rough sense to this as far as negotiations go:
                          (a) In physical invasion case, there is one definable trespasser with whom the
                          owner can “negotiate”
                          (b) The non-owner can in turn negotiate back and potentially pay for a right he
                          wants.
                          (c) In smoke/noise, there is no one unitary affected party and it is very hard for
                          an owner to sit down with all neighbors and reach a reconciliation
                          (d) This bar to resolution drives courts to apply a higher standard in granting a
                          remedy in such cases, hence the irony above.
7. Other rules
       a) General rule: nuisance law protects ordinary uses, not abnormally sensitive ones.
       b) Rule: building a structure out of spite (like a “spite fence”) = nuisance
       c) Rule: Ugliness alone does not equal nuisance.
8. Lateral and subjacent support
       a) Lateral support: that provided by one piece of land by the parcels of land surrounding it.
       b) Subjacent support: support from underneath.
       c) Rule: lateral support imposes a duty on neighboring land to provide the support that the


                                        52 of 80
                                   Property Outline
                                       Liam J. Montgomery
              subject parcel would need and receive under natural conditions and this is under absolute liability
              (no negligence need be shown)
              d) Rule: There is no right to support of structures on the land.
              e) Subjacent support pretty much tracks lateral support rules.



B. Remedies (and more on the Substantive Law)
      1. Estancias Dallas Corp. v. Shultz (1973)
             a) Stands for:
                       (1) Again, court refusal to balance the harm against the cost of the remedy, although it
                       does speak of factoring in the harm to the public in any such decision.
                       (2) The effects of granting an injunction remedy
             b) Facts:
                       (1) Δ built an apartment complex adjacent to Π home and placed a huge, horrifically
                       noisy air conditioning tower there that disrupted the Π’s sleep, etc.
             c) Court grants an injunction which has the following possible effects:
                       (1) Force the Δ to fix the noise problem [this is what happened]
                       (2) Force the Δ to buy their way out of the injunction (common possible effect of
                       injunctions)
                                 (a) But Shultz’s likely place sentimental value on the home.
                                 (b) This would open them up to buying out the whole neighborhood: this points
                                 out that the underlying balance of harm-benefit is not so out of whack as the
                                 single case comparison seems to indicate
             d) [Me: injunction works better as a remedy here rather than damages paid to each Π who brings
             suit. The sum of these suits may very well exceed the cost of injunction but transaction costs may
             bar them and the Δ may end up underdeterred.]
             e) Despite above, injunctions are generally seen as a means by which the Π’s true amount of
             damages costs by forcing a purchase of the injunction by the Δ.
                       (1) However, general distaste of bargaining rights for cash often deters post litigation
                       negotiation (i.e. Shutz’s not budging)
      2. General rule on damages:
             a) Damage = liability rule = remedy the past harm
             b) Injunction = property rule = remedies the future continuation of it.
                       (1) Injunctions can also be tailored and incremental
      3. Boomer v. Atlantic Cement Co. (1970)
             a) Stands for: Restatement balancing of equities approach: court award of “permanent damages”
             rather than issuing an injunction, recognizing the huge weight of economic benefit weighed
             against significant, but not equal, harm.
             b) Facts:
                       (1) Δ operates a large cement plant near a neighborhood and essentially makes that
                       neighborhood unlivable.
             c) Permanent damages = PV of all damages into the future to cover the Πs loss for life.
             d) Famous case for saying: there is a clear wrong to your property and your enjoyment of it and
             you cannot stop it.
                       (1) Essentially the Δ is permitted to seize or condemn the Π property because that is in
                       the interest of the greater good.
             e) The actual assessment of permanent damages was quite large, indicating the TC distaste on
             remand for the result here and the effort made to exact significant cost from the Δ.
      4. Weaknesses of the balancing of equities approach:
             a) Ignores intangible, non-monetary values (as in Estancias)
             b) Ignores harm to 3Ps: only factors in possible harm of granting the injunction to 3Ps, does not
             allow for benefit to 3Ps of injunction to be considered.
      5. Spur Industries, Inc. v. Del E. Webb Development Co. (1972)
             a) Stands for:
                       (1) very innovative move in a coming to the nuisance case awarding injunction but



                                             53 of 80
                                          Property Outline
                                              Liam J. Montgomery
                              forcing the Π to pay for the costs of the move, essentially recognizing the value of
                              progress and the need to adjust for it.
                   b) Facts:
                              (1) Δ cattle farm started long time ago in open country and eventually grew into a huge,
                              odor-producing activity.
                              (2) Π subdivided a huge tract of land north of the farm and began selling residences.
                              This effort was stymied as the residences spread south toward the farm and no one
                              wanted to live there. Π sued for nuisance.
                   c) Note:
                              (1) First in time in nuisance cases is an important, but not dispositive, factor
                              (2) The paradigm is thus the Morgan and Boomer situation where the neighborhood was
                              there and the nuisance came later.
                              (3) Spur is the opposite (known as a “coming to the nuisance case”) and is interesting
                              because of this.
                   d) Public nuisance: unreasonable interference with a right common to the general public,
                   protecting the public rights rather than a specific Πs quiet enjoyment
                   e) Many states responded to Spur ruling by passing right to farm statutes but is unclear what
                   effect, if any, this had on subsequent nuisance cases.
            6. “Rule Four”
                   a) Developed almost simultaneously in the Spur decision and by Calabresi and Melamed
           Damages to Π                                            No damages
                   +                                                     +
              Injunction                                           No Injunction
    (Morgan, classic nuisance case)
           Damages to Δ                                            Damages to Π
                   +                                                     +
              Injunction                                           No Injunction
                (Spur)                                              (Boomer)
            7. Nuisance Law and Environmental Controls
                   a) Important to environmental law but necessarily limited, in large part due to case by case
                   adjudication:
                            (1) Resulting transaction costs
                            (2) Externality issues.
                            (3) Uncertainty in use of property
                   b) Only really suited to small scale, incidental, localized, scientifically uncomplicated pollution
                   problems.
                   c) Judges generally reluctant to use nuisance law for this, as illustrated in Boomer.
                   d) Government action is the real heavy hitter in environmental law through:
                            (1) Regulation and zoning
                                    (a) Seeks to do consistently what nuisance law did on an inconsistent, ad hoc
                                    basis.
                            (2) Incentives
                                    (a) Much less centralized.
                                    (b) Embodied in Bush plan of pollution credits.
X. Private Land Use Controls: The Law of Servitudes
     A. Background:
            1. 4 types of servitudes:
                   a) Covenants
                            (1) Real
                            (2) Equitable
                   b) Easements
                   c) Profits
                   d) Licenses
            2. The law of servitudes is a study of how the tides of urbanization and the demands of the


                                                   54 of 80
                                    Property Outline
                                        Liam J. Montgomery
     market for efficient control of externalities swept around the artificial barriers limiting one form of
     servitude and forced the courts to recognize and develop other forms.
B. Easements
     1. Historical Background
     2. Creation of easements
            a) Easement rules
                     (1) Easements are under SoF, because they are interests in land, although there are
                     additional exceptions to taking tem out from under this.
                              (a) In fact a primary reason for the success of easements is that they are tied to
                              the recording system and buyers then become bound into perpetuity regardless
                              of their actual knowledge.
                              (b) Owners down the line can only remove the easement by negotiating with
                              the dominant tenement for release from it (usually at a price).
                     (2) Easement appurtenant: benefits the owner of the easement in the use of the land
                     belonging to the owner.
                     (3) Easement in gross: does not benefit the owner of the easement in the use of the land
                     belonging to the owner but benefits the owner of the easement without regard to
                     ownership pf the land.
                     (4) Easements may be limited in time, just like any other possessor estate.
            b) Willard v. First Church of Christ, Scientist (1972)
                     (1) Stands for: rejection of the common law rule that someone cannot create an easement
                     benefiting a third party.
                     (2) Facts:
                              (a) McGuigan owned two abutting lots, one of which she allowed her church to
                              use for parking.
                              (b) She sold lot with the building to Petersen who wanted to sell it and listed it
                              with Willard, who then wanted to buy both.
                              (c) Peterson conveyed deed for both to Willard, not actually owning the vacant
                              lot yet.
                              (d) McGuigan sold Petersen the lot on condition church could keep using it for
                              parking. An easement was added to the contract for sale.
                              (e) Willard recorded, Peterson did not mention the easement.
                     (3) Court expresses great concern at making the intent of the grantor carry and not the
                     technical common law rule.
                     (4) RTP supports the Willard rule but a minority of jurisdictions continue the CL rule.
                     (5) This could have been done instead in two documents
                              (a) One for the easement deeded directly to the church.
                              (b) Then, with the easement created, a deed for the fee simple of the lot: this
                              would be subjected to the previously granted deed of easement and this deed
                              could recite that easement. Even if not, if it is recorded, it is effective regardless
                              of recitation
            c) Licenses
                     (1) An oral or written permission given by the occupant of land allowing the licensee to
                     do some act that would otherwise be a trespass.
                     (2) Licenses, unlike easements, are revocable unless:
                              (a) Coupled with an interest
                              (b) Estoppel can make it into an easement
            d) Holbrook v. Taylor (1976)
                     (1) Stands for:
                              (a) Doctrine of estoppel: a license allowed by a servient tenement can be
                              converted into an easement, particularly (RTP) where there is an investment in
                              improvement to the landlocked parcel to which access is needed.
                     (2) Facts:
                              (a) Appellants used built a tenant house on their property for which access was
                              enabled by an old mining road they allowed to be cut into their property.
                              (b) Appellees bought the adjoining property and used the haul road to access


                                              55 of 80
                     Property Outline
                          Liam J. Montgomery
                   their house.
         (3) Easement by prescription: analogous to adverse possession. In this case, the
         neighbor never objected an appeared to consent to this use of the roadway, so easement
         by prescription is not possible.
         (4) However, the fact that the appellants tacitly approved of this use of the road turns
         what was a license into an actual easement through doctrine of estoppel.
         (5) This doctrine only creates an easement limited in scope to the original usage.
e) Van Sandt v. Royster (1938)
         (1) Stands for:
                   (a) Easement implied from a prior existing use: the easement is implied on the
                   basis of an apparent or continuous use of a portion of the tract existing when the
                   tract is divided.
                   (b) Inquiry notice: where it was apparent an easement must have run under the
                   property, the Π will be charged with inquiry notice to have checked this issue
                   upon conveyance.
         (2) Facts:
                   (a) Δ obtained title to land that had sewer access to the main sewer line through
                   a connection line that ran underneath the properties of her two next neighbors
                   over.
                   (b) The fact of this sewer is noted in none of the documents to any of the
                   current property owners.
                   (c) Π one day found sewage in his basement
         (3) Rule: Easement created by implication arises as an inference from the intentions of
         the parties to a conveyance of the land. To draw such an inference the prior use must
         have been known or possible to have been known at the time of use.
f) Easement by necessity: implied when the court finds the claimed easement is necessary to the
enjoyment of the claimant’s land and that the necessity arose when the claimed dominant parcel
was severed from the claimed servient parcel.
         (1) Note, there is an element of necessity to the easement implied from a prior existing
         use and so the distinction can be confusing.
g) Rule: if dominant and servient tenements come into same ownership, the easement is
extinguished, although a new implied easement may arise if the united title is subsequently re-
divided.
h) Othen v. Rosier (1950)
         (1) Stands for:
                   (a) Easement by necessity with no prior public use: only may arise where the
                   necessity existed at the time the land was purchased.
                   (b) Again, no easement by prescription where the use is not analogous to AP.
         (2) Facts:
                   (a) Rosiers own tracts of land over which Othen claims an easement
                   (b) Rosiers also use the claimed road for farm business.
                   (c) Othen has continuously used the road for access from his house to the
                   highway.
                   (d) Rosiers built a levee that diverted water onto the road and essentially made
                   it impassable.
         (3) Blackstone on easement by necessity: if a man grants me a piece of ground in the
         middle of his field, he has at the same time tacitly and impliedly given me a way to come
         to it and I may cross his land for that purpose without trespass.
         (4) Rule: before an easement can be held to be created by implied reservation it must be
         shown:
                   (a) That there was unity of ownership of the alleged dominant and servient
                   estates.
                   (b) That the roadway is a necessity, not a mere convenience.
                   (c) That the necessity existed at the time of severance of the two original
                   estates.
i) Rule: an easement by necessity endures for only so long as the necessity continues [note


                               56 of 80
                              Property Outline
                                  Liam J. Montgomery
       above also that courts seem more willing to place strict limits on these implied limits: scope and
       time].
                (1) Contrast this to the easement in Royster which endures even if a new sewer route
                becomes possible.
       j) Effect of implied easement doctrines is that you must:
                (1) Search title for easement documents
                (2) Examine the property for these kind of implied rights, like the sewer.
                (3) Examine possible sources of easement by prescription (worn paths)
                (4) Investigate possible adverse possession.
       k) Easement by condemnation proceeding
                (1) Common in western states where rugged country caused the breakdown of the road
                grid system and thus there are many landlocked parcels.
                (2) Upon requisite showing of necessity, legislature enacted laws that allow
                condemnation of an easement.
       l) Easement by prescription:
                (1) 95% like AP
                (2) Criteria:
                         (a) Adverse and under a claim of right
                         (b) Open and notorious
                         (c) Continuous for the prescribed period.
                (3) Unlike AP, the person claiming the prescription is not claiming a fee simple so they
                don’t have to go as far as AP: they can be of right along with other people.
                (4) Courts constructed the fiction of the lost grant in order to allow this right to arise
                given that there never really can be a running of an S of Lims in these cases.
       m) Beach Access
                (1) General rule: in most states, the state holds in public trust the beach from the water to
                the mean high tide line and the vegetation line us subject to private ownership.
                (2) Matthews v. Bay Head Improvement Association (1984)
                         (a) Stands for:
                                   (i) Public trust doctrine: applies not only to a municipality but also to
                                   a private organization that ownership of land flowed by tidal waters is
                                   vested in the state in trust for the people.
                         (b) Facts:
                                   (i) Bay Head prevented members of the public from accessing the
                                   beach by virtue of its individual and corporate ownership of the
                                   beaches and the street access points.
                                   (ii) Bayhead provides many service analogous to a municipality
                         (c) Holding: this private body, partly because it acts like a municipality, is
                         subject to the public trust doctrine ad as such has to allow access to the beach
                         area. However, they can still charge membership fees to everyone who wants to
                         come in [a tax of sorts].
                         (d) Court presumptively protects any landowner in a trespass claimed to be
                         justified under this ruling until the issue can be properly litigated.
                         (e) This case is similar to Royster’s implied easement except that it lacks
                         traceability to a common grantor unless you consider public trust to be formed
                         when land is granted originally from the sovereign.
                         (f) Note that this case amounts to a taking.
3. Assignability of Easements
       a) Miller v. Lutheran Conference & Camp Association (1938)
                (1) Stands for:
                         (a) Easements in gross are generally not assignable, based on concern with
                         restraints on alienation because it would be hard to locate the owner of the
                         easement in gross and potentially negotiate out of it. (However, the court allows
                         the easement in gross here to be assignable based on the intent of the parties).
                         (b) Courts will not even blink at the creation of an unusual use slice: they will
                         just apply normal rules of property to it and move on.


                                        57 of 80
                              Property Outline
                                  Liam J. Montgomery
              (2) Facts:
                        (a) 1895: owners of land, no lake
                        (b) Dammers get agreement of every adjacent landowner to give a 99 year
                        lease to corporation for purpose of damming the property and creating the lake.
                        (c) 3/20/1899: Pocono Spring Water and Ice Company conveyed to Frank
                        Miller his heirs and assigns forever the exclusive right to fish and boat the lake.
                        (d) 2/17/1900: Frank grants to rufus miller “1/4 interest in fishing boating and
                        bathing rights”
                        (e) Rufus dies conveying his interest to Lutheran Camp.
                        (f) Frank and wife don’t like this.
                        (g) So they say the original grant to Frank Miller did not include bathing and so
                        Frank could never have conveyed it since he never had it and therefore Rufus
                        does not have it.
              (3) This case is unusual in that the fact that it is a manmade lake means that there are no
              riparian rights.
              (4) This case illustrates the interaction of all three types of property right slices we have
              studied: time, space, and use.
                        (a) Space slice
                        (b) Time slice: seems like perpetuity but since grantor has 99 year lease they
                        cannot grant more than this
                                  (i) Estoppel by deed: someone grants property by deed that they do
                                  not own.
                                  (ii) So, the document has no effect.
                                  (iii) But if at some later time they acquire ownership of what they
                                  purported to convey, by estoppel court will treat this as retroactive to
                                  the point where they granted the interest and consider it transferred to
                                  the grantee.
                                  (iv) Remember that this creates title search issues.
                                  (v) So, if Pocono spring got more time on lease, under estoppel by
                                  deed Miller would get that same extension since he was granted what
                                  purported to be a perpetuity.
                        (c) Use slice: fishing and boating only.
              (5) This is clearly an easement in gross: it was granted to Frank as a person and is not
              tied to any plot of land owned by Frank on the shores of the lake.
              (6) Ultimately, this case turns on a concurrent interest rule: the rule of one stock. This
              says that all TiC owners must concur unanimously in the granting of a profit on a land.
              The concern is that you don’t want someone allowing 100 people coming on land in a
              way that is against the expectations of the other O.
      b) RTP § 4.6(1)(c): allows all easements in gross to be transferable, which reflects the modern
      trend.
4. Scope of Easements
      a) Brown v. Voss (1986)
              (1) Stands for:
                        (a) Rule: an easement appurtenant to one parcel of land cannot be extended by
                        the owner of the dominant estate to other parcels owned by him to which the
                        easement is not appurtenant.
              (2) Facts:
                        (a) Π’s owned an easement across Δ land to allow road access to their property
                        (b) Π acquired the next property down and used the easement to access both
                        properties in order to build a house that straddled the property line.
                        (c) After abusing the easement and lording his rights over Δ, Δ blocked his use
                        of the easement.
              (3) Holding: this was a misuse of the easement within legal definitions but TC was
              within its discretion in using its equity powers to allow this use.
              (4) Dissent points out that Browns could have condemned the easement under WA law
              (see above) but never took this action.


                                       58 of 80
                              Property Outline
                                  Liam J. Montgomery
      b) General rules on scope of easements:
              (1) Rule: a private easement of way does not usually permit the easement owner to
              install aboveground or underground utilities on it.
              (2) Location
                        (a) Majority Rule: the location of an easement, once fixed, may not be changed
                        by the owner of the servient estate.
                        (b) Minority Rule: (RTP): servient owners may change the location at their own
                        expense provided it does not:
                                   (i) Lessen the utility of the easement
                                   (ii) Increase burdens on owner of easement
                                   (iii) Frustrate purpose of the easement
              (3) Prescriptive easements generally more limited in scope than easements created by
              grant, implication or necessity.
5. Termination of Easements
      a) Preseault v. United States (1996)
              (1) Stands for: Abandonment rule: non use does not constitute abandonment. Instead,
              there must be acts by the owner of the dominant tenement conclusively manifesting either
              a present intention to relinquish the easement or a purpose inconsistent with its future
              existence.
              (2) Facts:
                        (a) Original easement was created across two parcels of property that are now
                        one.
                        (b) Congress established the rails to trails act to enable localities to change
                        easements formerly used for rail lines into hiking trails.
                        (c) RR shut down service on line in question in 1970 and pulled up the track in
                        1975 but never applied for an abandonment order.
                        (d) 1985: RR agreed with state to allow the easement to be converted to trail
                        use.
                        (e) 1986: government approved.
                        (f) Πs sued and SC ruled that the act was C’al but that Π on remand had an
                        individual right to sue for damages due to unlawful taking.
              (3) Holdings:
                        (a) The court first decided that both rights of way amounted to easements even
                        though part of it purported to be in fee simple because the applicable laws only
                        allowed the RR to acquire easements
                        (b) While scope of easement is changeable, this was not a proper change
                        because it was not consistent with the terms of the original grant.
                        (c) RR did abandon.
                        (d) Overall: this was a taking (can’t retroactively invoke RtT’s to justify it once
                        abandoned) and damages are awarded.
              (4) Abandonment rule: non use does not constitute abandonment. Instead, there must be
              acts by the owner of the dominant tenement conclusively manifesting either a present
              intention to relinquish the easement or a purpose inconsistent with its future existence.
              Other methods of abandonment:
                        (a) Transfer right back to servient owner
                        (b) Prescription: servient owner blocks use and dominant owner does nothing
                        to use it for statutory period.
6. Negative Easements
      a) Right of the dominant owner to stop the servient owner from doing something on the servient
      estate.
      b) Under English law, even today, there are only 4 traditionally allowed types of NE:
              (1) Blocking windows
              (2) Interfering with flow of air in a defined channel
              (3) Removing support to your building
              (4) Interfering with flow of water in an artificial stream.
      c) 19th century judges reluctant to create new NE because:


                                       59 of 80
                                                Property Outline
                                                    Liam J. Montgomery
                                   (1) Risk to purchasers of undiscoverable rights
                                   (2) Traditional negative easements could arise by prescription and courts did not want to
                                   allow a huge list of possibilities to be so granted
                                   (3) Conceptual: judges found it difficult to visualize the transfer of these rights
                          d) But, American courts had different underlying structures that allowed creation of new NEs:
                                   (1) Recording system prevented risk to purchasers.
                                   (2) In US, cannot create a NE by prescription
                                   (3) Modern judges able to imagine creation of these.
                          e) Nonetheless, creation of new NE has been very limited here, with only a few notable
                          exception of conservation easements, now authorized by statute. Rules:
                                   (1) Perpetual
                                   (2) Transferable
                                   (3) Can be in gross.
                          f) In addition, equitable servitudes arose as a more convenient doctrine to enforce these rights
                          and so there is little need for new NEs.
        C. Covenants Running With The Land
                1. Historical Background
                          a) Covenants Enforceable at Law: Real Covenants
                                  (1) Why allow these agreements:
                                            (a) Can operate to allocate resources efficiently by arranging land uses so as to
                                            minimize conflicts
                                            (b) Minimize the harmful impacts (externalities) that arise from conflicting
                                            resource uses.
                                            (c) But, in order to provide stability to the owners, they want such negotiations
                                            to be enforceable against subsequent owners, and thus a property, rather than
                                            just a contract, right is needed.
                                            (d) Successors are thus generally bound under these doctrines to protect the
                                            significant investments that can be made in reliance on the easement
                                            (e) Makes sense: original owner clearly did not intend that servient tenement
                                            could just sell the property the next day and thus extinguish the right.
                                  (2) This property right was allowed to convey originally through the concept of privity
                                  of estate, which originally only was allowed in L-T law
                                            (a) US courts rejected this limitation and allowed it in all property relationships
                                            through the doctrine of real covenants.
                                  (3) Burdens v. benefits
                                            (a) Important to distinguish because running of a burden is more stringent than
                                            running of a benefit.
                                  (4) Two types of privity
                                            (a) Horizontal privity: privity between the original covenanting parties.
                                            (b) Vertical privity: privity of estate between on of the covenanting parties and
                                            a successor in interest.
                  A                              Privity between original parties                         B
     Promisee; benefit to Whiteacre                    (horizontal privity)                Promisor; burden on Blackacre
                                               [Privity of contract easily applies]


    Privity between promisee and assignee                                                    Privity between promisor and
               (vertical privity)                                                              assignee (vertical privity)
[benefit must run to D to be able to sue B]                                                [burden must run to C for A to sue
                                                                                                C, a more onerous test]

                    D                          [Both benefit and burden must run                          C
                                               for D and C to be able to sue each
                                                             other]




                                                         60 of 80
                     Property Outline
                         Liam J. Montgomery
               (c) Rule: RC can be both a negative promise and an affirmative promise.
               (d) Rule: an RC is not enforceable against an assignee who has no notice of it.
               (e) Rule: generally held that vertical privity is required for an RC to run at law.
               (f) Rule: Real covenants to do not run with the land, they run with the estate in
               land. Thus, a RC will not pass upon vesting of title by AP because this creates
               an entirely new estate in the land.
      (5) These rights are inherently bound to recording acts.
      (6) Doctrine of horizontal and vertical privity arose during the early days of 3P K
      beneficiary law: it was easy in this to allow the benefit to run but more difficult to allow
      burden to run.
      (7) Example under the old doctrine of privity of estate:
               (a) A and B, neighbors, enter into an RC on behalf of selves, heirs and assigns
               to only use their lots for residences.
               (b) They record.
               (c) B sells to C and C builds an apartment
               (d) A sues C
               (e) Here A will lose because horizontal privity was not established between A
               and B: it must be created at the time of conveyance from O to both A and B.
               (f) Again, easy for a lawyer to handle this whole thing by conveying each
               property to X (strawman) and then conveying back to A and B, thus satisfying
               horizontal privity.
b) Covenants Enforceable in Equity: Equitable Servitudes:
      (1) Tulk v. Moxhay (1848)
               (a) Stands for: famous case creating the doctrine of equitable servitudes.
               (b) Facts:
                         (i) Π sold part of Leicester square in London to Elms with a
                         restriction that Elms would keep the square open and in present state
                         (ii) Elms conveyed by mesne conveyances to Δ who knew of the
                         covenant and yet intended to alter the character of the square.
               (c) Holding: if an equity is attached to the property by the owner, no one
               purchasing with notice of that equity can stand in different situation from the
               party from whom he purchased (i.e. if you have notice of it, the covenant is
               enforceable).
               (d) Unfairness is the rationale here: Δ could buy the property with the
               restriction at a reduced price and then flip it the next day for a higher price since
               the restriction would not run.
                         (i) However, this reasoning is highly circular: the original seller knew
                         this was the law and sold anyway: he is the fool.
                         (ii) So perhaps it was in fact sold at full price because the buyer knew
                         it would not run and in fact the unfair result is on him now that he
                         cannot convey himself for full price.
               (e) So…real rationale is restraint on alienation: owner could not sell a small
               part without making the rest worthless absent this doctrine.
      (2) Equitable servitude: covenant respecting the use of the land enforceable against
      successors regardless of its enforceability at law. Equity requires that the parties:
               (a) Intend the promise to run
               (b) That a successor have actual or constructive notice of the covenant
               (c) Covenant touch and concern the land.
      (3) Important effect of this doctrine is that it does away with both vertical and horizontal
      privity whether for burden or benefit running.
      (4) Equitable servitudes are property interests. Original buyer and seller therefore have
      no rights or obligations if problems arise re: enforceability among successors in interest.
      (5) ****Remedy is the real difference between an ES and RC:
               (a) RC: remedy is damages
               (b) ES: remedy is injunction
                         (i) This allows a better reflection of Π damages.


                               61 of 80
                              Property Outline
                                  Liam J. Montgomery
               (6) RTP holds that there is no difference between an RC and an ES and that they are
               functionally equivalent.
2. Creation of Covenants
      a) Rules:
               (1) RC’s are governed by the SoF and the writing must be signed by the covenanter (the
               person receiving the burden)
                         (a) If it is so created and also includes a promise by the grantee, that promise
                         by the grantee is also enforceable even if not signed by them; they are bound by
                         accepting the deed.
               (2) RC’s cannot arise by estoppel, implication, or prescription, as an easement can.
               (3) In contrast, an E-S can be implied in equity under limited circumstances
      b) Sanborn v. McLean (1925)
               (1) Stands for: restrictive covenants that are not actually in the writing directly
               applicable to a property can nonetheless be enforced against the property under the idea
               of constructive and inquiry notice created by the character of the neighborhood and the
               presence of the restriction in the neighboring deeds.
               (2) Facts:
                         (a) Δs own a lot in a Detroit residential district and began to erect a gas station
                         on it.
                         (b) The common original owner prior to conveying sublots included a
                         restriction in the deeds allowing only residences of a certain cost to be built on
                         the lots.
                         (c) However, the Δ lots do not contain this restriction
                         (d) Π neighbors claim this would violate a reciprocal negative easement barring
                         a use so detrimental to the enjoyment and value of its neighbors.
               (3) Holding:
                         (a) While the restrictions were not in the Δ actual deed, they are traceable back
                         to the original issuance of the deeds that do have such restrictions and the Δs
                         were therefore on constructive notice of the restrictions.
                         (b) In addition, the character of the neighborhood put the Δs on inquiry notice
                         as to the restrictions.
               (4) Reciprocal negative easement: runs with the land sold by virtue of express fastening
               until expired or destroyed.
               (5) Most courts follow this general reasoning but some are more literal about SoF
               requirements
               (6) However, even restrictions on a subdivision map can satisfy the SoF.
               (7) Note: this would certainly be accomplished by zoning today.
      c) Neponsit Property Owner’s Association, Inc. v. Emigrant Industrial Savings Bank (1938)
               (1) Stands for:
                         (a) The seminal case enabling common interest communities wherein the
                         owners association may levy and collect dues for common maintenance.
               (2) Facts:
                         (a) Π brought action to foreclose a lien on land owned by Δ, purchased at a
                         judicial sale.
                         (b) The lien concerns unpaid dues, an obligation which ran with the land.
               (3) Holding: this covenant runs with the land and the Δ is bound.
               (4) Court very concerned with substance over form in this case, repeatedly noting it was
               the intention of the parties that the restriction run with the land.
               (5) Rule: requirements for conveyance of an RC:
                         (a) Grantor and grantee must intend the RC to run.
                         (b) Touch and concern
                         (c) Privity of estate between the promisee (party claiming the benefit and the
                         right to enforce) and the promisor (party burdened by the RC).
               (6) Rule: Bigelow test for touch and concern
                         (a) If covenanter’s legal interest in land is rendered less valuable by the
                         covenant’s performance then the burden of the covenant satisfies the T&C


                                        62 of 80
                      Property Outline
                          Liam J. Montgomery
                  requirement
                  (b) If the covenantee’s legal interest in the land is rendered more valuable by
                  the covenant’s performance, the benefit of satisfies T&C.
                  (c) [Seems very circular]


d) Lawrence v. Fox (1859)
          (1) Stands for: first case to allow 3P beneficiary to a K to sue directly for enforcement of
          the K.
e) The interactions of the rules of different types of servitudes can create confusing results. For
instance:
          (1) CL rule: easement may not be created in favor of a 3P (Willard)
          (2) But, while an affirmative easement may not be created in favor of a 3P, a negative
          easement can be created through an E-S in favor of a 3P (provided there is privity of
          estate): this is a weird distinction and illustrates the irrational technical distinctions the
          law can make here.
          (3) RTP, S rejects this approach and allows the benefit of a servitude, both easements
          and covenants, to be created in a 3P.
f) Courts are wary of affirmative covenants against successors because:
          (1) Need for judicial supervision
          (2) May impose a large liability on the successor.
          (3) Resembles feudal service.
g) Touch and concern is widely criticized as
          (1) Vague and unpredictable
          (2) Based on obscure reasoning
          (3) Interfering with intent of parties.
h) Restatement (Third) of Property, Servitudes §3.1 (2000)
          (1) RTP, S thus discards this approach in favor of encouraging courts to more
          particularly articulate why an RC is objectionable at its inception. Hence it reformulates
          the inquiry so that the appropriate question is whether the servitude violates public
          policy.
          (2) §3.1 Validity of Servitudes: General Rule
                    (a) A servitude is valid unless it is illegal, un-C’al, or violates public policy.
                    Servitudes violate PP include but are not limited to:
                              (i) (1) Arbitrary, spiteful, capricious
                              (ii) (2) Unreasonably burdens a fundamental C’al right.
                              (iii) (3) Imposes unreasonable restrain on alienation
                              (iv) (4) Imposes an unreasonable restraint on trade or competition
                              (v) (5) Unconscionable.
i) Are the following examples of negative RC’s enforceable?
          (1) No flag of any kind including US flag:
                    (a) T&C: yes, has to do with what you do with the land
                    (b) RTP: no, see (2) above.
          (2) No signs except house location, including no Christmas lights.
                    (a) T&C: yes, again about physical use of land.
                    (b) RTP: unclear, perhaps free speech if involves a political sign However,
                    other applications may be okay.
          (3) No solar panels
                    (a) T&C: yes, same reason
                    (b) RTP: yes, probably would fly.
                    (c) However, legislatures often intervene against such restrictions in order to
                    further efficient energy usages.
                    (d) Something like a satellite dish, where no real societal interest involved,
                    probably could be restricted.
          (4) No private day care in residence



                                63 of 80
                              Property Outline
                                  Liam J. Montgomery
                        (a) T&C and RTP probably both would allow
                        (b) [?] Again, legislatures often intervene here.
              (5) Any house sale will pay 10% of capital gain back to the developer
                        (a) Idea here is to prevent short term speculators from flipping the house
                        quickly
                        (b) Acts to restrain alienation in both (4) above and probably under generalized
                        PP as well.
              (6) Homeowner installs a well water system and sues to get out of community water
              fees:
                        (a) Court allows it saying the system won’t be harmed by one drop out
                        (b) Commentators dislike this: what if large numbers drop out?
              (7) Note: the RTP section above only provides the subsections as examples; the
              preamble invites courts to take a more general view of PP.
      j) Caullett v. Stanley Stillwell & Sons, Inc. (1961)
              (1) Stands for: the problems of benefits/burdens running with the land.
              (2) Facts:
                        (a) Δ developer conveyed property to Π by general warranty deed.
                        (b) The deed contained a provision that the builder would have first right to
                        build a house on the lot and the restriction claimed to run with the land.
                        (c) Negotiations for this construction collapsed and Δ sued.
              (3) Holding:
                        (a) This RC is too vague and ambiguous.
                        (b) Does not touch and concern
                        (c) Overall: does not run with the land and so is stricken from the deed,
                        although the K obligation is enforceable (see below)
              (4) Note: this case is some clever legal maneuvering: the issue is between two original
              parties to the contract so whether the covenant runs with the land is largely irrelevant to
              their issue. It should be enforced as a valid contract. So Π lawyer brings this issue so Πs
              can use it to negotiate their way out from under this restriction: “We will just sell it and
              you will be SOL unless you make us a deal.”
              (5) Rule: vague or ambiguous covenants will not restrain alienation of the property
              (6) Court enumerates examples of RC’s that die T&C:
                        (a) Limit property to residential
                        (b) Setback and acreage requirements
                        (c) Architectural limits
                        (d) Minimum cost of future dwellings.
              (7) Rule: there is no PP against a benefit running with the land since a continuing benefit
              is presumed to help rather than hinder alienation. However when the burden – as here –
              is places on the land and the benefit is merely personal to one of the parties (in gross), the
              burden is generally held not to run with the land.
      k) Defeasible fees as land use control:
              (1) Can be used to control land use (see way above, as in only conveying if land used for
              a school, otherwise reverts).
              (2) However, this differs from a servitude in that the remedy is forfeiture.
              (3) Servitude remedy is damages, injunction or enforcement of a lien.
              (4) Rarely used except for charity donations.
3. Scope of Covenants
      a) Hill v. Community of Damien of Molokai (1996)
              (1) Stands for:
                        (a) RC’s will be read as to their intent and not hyper-textual meaning of the
                        words, which usually is to restrict the character of the building itself (apartment
                        vs house) rather than the character of the residents (literal single family vs.
                        family-like unit)
                        (b) Application RC’s cannot violate applicable property laws, in this case this
                        sued-for application violated the FHA.
              (2) Facts:


                                        64 of 80
                              Property Outline
                                  Liam J. Montgomery
                           (a) Δ leased a house in a residential neighborhood for use as a AIDS group
                           house
                           (b) Neighbor sued for violation of a restrictive covenant applicable to all of the
                           homes on the street that the lot cannot be used for other than a single family
                           home.

      b) Shelley v. Kraemer (U.S. 1948)
              (1) Stands for:
                        (a) RC’s cannot violate applicable constitutional prohibitions on discriminatory
                        classifications by race or other factors, even where, as here, the actor
                        discriminating is a private party.
              (2) Facts:
                        (a) RC excluded from residency in the neighborhood blacks and mongloids.
              (3) Holding: racially restrictive covenants are un-C’al.
              (4) The only doctrinally problematic part of this ruling is that the C only applies to state
              actors, not private discriminatory actors.
                        (a) Court gets around this by saying that this is a state actor because it can only
                        be given effect if enforced by state courts
                        (b) Problem, then, with this is that it makes virtually any program backed by
                        compellance of state courts a state action.
              (5) Court has never taken this tack, but this doctrinal implication still is out there.
4. Termination of Covenants
      a) Western Land Co. v. Truskolaski (1972)
              (1) Stands for:
                        (a) Courts are generally very stingy about allowing a change in RC based on a
                        changed circumstances like character of the neighborhood or a more efficient
                        economic use.
              (2) Facts:
                        (a) Π brought an action to enjoin Δ from constructing a shopping center in their
                        subdivision, relying on an RC for the subdivision restricting it to single family
                        residences.
                        (b) When the RC was placed on the subdivision, the neighborhood was
                        essentially rural but at the time of the suit it had been subsumed as an active
                        suburb of Reno.
                        (c) Δ asserted that the changed nature of the area argued for allowing a
                        termination of the RC to allow this new development
                        (d) Π argued that the neighborhood itself had not changed character and was
                        still a quiet family neighborhood.
              (3) Holding:
                        (a) The object and purposes of the restrictions had not been thwarted and the
                        RC’s therefore stand.
              (4) Rule: As long as the original purpose of the RC can still be accomplished and
              substantial benefit will inure to the restricted area by their enforcement, the covenant
              stand even though the subject property has a greater value if used for other purposes.
              (5) ****RTP, S Rule: where zoning and RC’s conflict, the more restrictive prevails.
      b) Rick v. West (1962)
              (1) Stands for: even more dramatic demonstration of fact that courts are pretty stingy
              about actually recognizing changed circumstances as justifying a modifying of
              restrictions
              (2) Facts: Π sold only a few lots and these few buyers refused to allow the restriction to
              be lifted in order to let the seller sell the rest of the lots to a factory and then a hospital
      c) Pocono Springs Civic Association, Inc. v. MacKenzie (1995)
              (1) Stands for:
                        (a) You cannot get out from RC mandating payment of dues to an association
                        by abandoning the property
              (2) Facts:


                                        65 of 80
                              Property Outline
                                  Liam J. Montgomery
                          (a) Δ bought a lot and then tried to sell it while still vacant.
                          (b) Inspection revealed it was unsuitable for a septic system and the sale was
                          lost.
                          (c) Believing the lot to be worthless, Δs made ridiculous attempts to abandon
                          the lot but nothing worked.

                (3) Holding:
                          (a) Since perfect fee simple title cannot be abandoned in PA, none of the Δ
                          strenuous efforts to abandon can possibly work and they are stuck paying these
                          dues for life.
                (4) Possible solution to this problem:
                          (a) Transfer the property to a corporation you own.
                          (b) Take the corporation into bankruptcy and extinct it.
      d) Rule: affirmative covenants that are violated, like the one above, place all the landowner’s
      assets at risk. In a way, this makes them more onerous than even feudal services, where other
      assets were not implicated (you just forfeited that specific piece of land).
5. Common Interest Communities
      a) Background:
                (1) Distinctive feature of these is that the bind the owners to contribute to support of
                common property and facilities whether or not the owner uses any of that junk. [forces
                internalization of externalities, but perhaps overly so]
                          (a) This amounts essentially to a power to tax and lien placed with a private
                          organization.
      b) Condo ownership
                (1) Each owner owns their unit separately in fee simple.
                (2) The common areas, land, exterior walls, etc are owned as tenants in common.
                (3) Satisfies all the technical requirements of horizontal and vertical privity because the
                original purchasers are all in privity with the developer and subsequent purchasers are in
                privity with the original purchasers.
      c) Nahrstedt v. Lakeside Village Condominium Association, Inc. (1994)
                (1) Stands for:
                          (a) Enforcement of condo restrictions do not depend on the conduct of a
                          particular condo owner but instead the restrictions must be uniformly enforced
                          in the development.
                (2) Facts:
                          (a) Owner sued for exception to the condo rules against pets as unreasonable
                          because her cats were indoor only and not disruptive.
                (3) Two tier rule in these cases:
                          (a) Rules from the original formation of the condo association deed are
                          presumed valid even if unreasonable and can only be overruled if against public
                          policy.
                          (b) Rules promulgated by the board must submit to a test of reasonableness to
                          limit abuse of the board’s discretion.
                (4) Court points out that the deed rules are built into the value and owners and
                purchasers rely on them.
                (5) Court also points out that enforcing these rules upholds the social fabric by enforcing
                written instruments that embody the expectations of the parties.
      d) Housing Cooperatives
                (1) Originally stemmed from the difficulties in property law with establishing fee simple
                in sub-properties on a vertical dimension (the whole livery of seisen thing).
                (2) Definition: title to land and building is held by a corporation and the residents are
                shareholders in that corporation. So residents are both owners and tenants of the corp.
                (3) Coops can turn people down for any arbitrary reason like political affiliations, etc,
                except for racial or ethnic discriminatory reasons.
                (4) While these still persist in NYC, elsewhere they began to create issues because
                lenders were unwilling to lend where the only security was shares in the corp and not a


                                       66 of 80
                                    Property Outline
                                        Liam J. Montgomery
                        fee simple.
                        (5) This explains why many of these converted into condo associations once the
                        underlying property law was conducive.
               e)   Gated communities
                        (1) The logical and ultimate extension of common interests communities whereby the
                        whole world is shut out and people live in mini-societies replete with minute self-
                        imposed obligations.
                        (2) Essentially takes the condo or coop idea and lays it our horizontally.
                        (3) Contribute greatly to the atomization of our society into income levels.
D. Summary of Servitude Law, the three types
      1. Easements
             a) Easiest for courts to handle in that they were analogues for property rights that one party
             could grant to another.
                      (1) In essence they are the sale of a use slice rather than a space slice
                      (2) No horizontal privity is required
             b) Easements in gross, however, did initially trouble courts
                      (1) Easements appurtenant were attached to an identifiable piece of land.
                      (2) In contrast easements in gross may be hard to find the owner of.
                      (3) As water and power lines were laid down, the use of EiG exploded
                      (4) Once this occurred, it made a lot of sense to make these transferable.
                      (5) For instance, Lake Naomi: subjects the EiG to the rule that as long as the creator’s
                      intent was to make them transferable, they could be conveyed.
                      (6) In cases where court says they are not transferable, this is generally due to
                      construction of the grant such that it appears this was the intent of the parties.
                      (7) EiG can be traced by chain of title.
      2. Real covenants
             a) Developed in the 19th century and initially more problematic for courts in that they were
             viewed at first as contractual and not property law and therefore you had to get past the 3P
             beneficiary issue.
             b) However, as the contract doctrine evolved, starting with Lawrence v. Fox (allowing 3P
             beneficiaries), the benefit side of an RC became easy.
             c) But the burden side remained problematic: how do you burden some unknown future party
             who was not party to the K.
             d) So court developed the doctrines of:
                      (1) Horizontal privity of estate
                      (2) Touch and concern the land: protected future parties from being burdened with
                      something that did not actually concern the land.
             e) Remember: RC’s run with the estate and as such do not run with an AP.
      3. Equitable servitudes
             a) Arose with Tulk v. Moxhay in the mid-19th century.
             b) Overlaps with RC.
             c) Requirements:
                      (1) Notice
                      (2) Touch and concern
                      (3) No privity required: beneficiary simply has to be in the benefited class, usually the
                      successor in interest to the person benefited.
             d) E-S run with the land, not with the estate.
      4. Alternate formulation: Restatement (Third) of Property, Servitudes:
             a) Reflects the modern sensibility of legal realism and carrying forward the parties’ intent
             b) Simply asks two questions:
                      (1) Is there a right (a valid restriction)?
                      (2) If so, what is the remedy?
             c) Abandons touch and concern as confused.
             d) Rule: Instead, shifts the inquiry to whether or not as a matter of public policy this is the kind
             of arrangement the court will support.




                                              67 of 80
                                          Property Outline
                                              Liam J. Montgomery

XI. Legislative Land Use Controls: The Law of Zoning
     A. Introduction
            1. Historical Background
                   a) Nuisance law and servitudes were unable to match the effects of the industrial revolution and
                   urbanization. Why:
                            (1) Judges were reluctant to interfere with “progress”
                            (2) Damages being the standard remedy did little to stem the tide.
                            (3) Lot by lot nature did not work in urban development
                                     (a) Nuisance
                                               (i) Case by case
                                               (ii) Only adjudicates between two parties
                                               (iii) Requires a significant problem to develop before law will
                                               intervene
                                     (b) Servitudes:
                                               (i) Do work well for large developments but only when the original
                                               owner of the big block ex ante imposed the restrictions
                                               (ii) Absent this, at best you would have to have each owner sign on to
                                               a servitude. Given issues of externalities, this is extremely unlikely.
                   b) Originator of zoning principles, Howard:
                            (1) Separation of uses
                            (2) Protection of the single-family home
                            (3) Low-rise development
                            (4) Medium density population.
                   c) Central question in thinking about zoning: the extent that these ideas are preferable to the
                   complexities of the free market in developing livable cities with opportunities for self-realization
                   in each individual.
                   d) First comprehensive zoning = NYC, 1916
                            (1) Initially thought to only apply to urban areas, but has spread virtually everywhere
                            now.
                   e) Village of Euclid v. Ambler Realty Co. (U.S. 1926)
                            (1) Stands for:
                                     (a) The legitimization of zoning ordinances by the SC, now known because of
                                     this case as Euclidean Zoning (referring to the cumulative type of zoning
                                     described below)..
                            (2) Facts:
                                     (a) Appellee owned a large tract of land in Euclid that it wanted to develop for
                                     commercial and industrial use.
                                     (b) 1922: Euclid established a comprehensive zoning plan divided into the
                                     following classifications:
                                               (i) 6 classes of use districts
                                               (ii) 3 classes of height districts
                                               (iii) 4 classes of area districts.
                                     (c) Uses are cumulative (U-1 is the most restrictive, U-2 adds different uses
                                     plus anything allowed in U-1, etc.)
                                     (d) The village had a comprehensive plan for adjudicating problems and
                                     exceptions to this zoning plan.
                                     (e) Appellee successfully proved that their land lost 75% of its value by these
                                     regulations.
                            (3) Holding:
                                     (a) Euclid is simply trying to channel and not restrict growth and thus this
                                     ordinance passes muster
                                     (b) However, this general conclusion that the ordinance is facially C’al does not
                                     preclude an individual case from being vindicated but only if those cases have
                                     gone through the process established by the zoning ordinance, which is not the
                                     case here (this forever shaped zoning challenges as case by case challenges



                                                   68 of 80
                                    Property Outline
                                        Liam J. Montgomery
                               rather than systemic).
                     (4) Court expresses deference to the legislature for zoning classifications if there is any
                     doubt as to its validity (low standard of review)
                               (a) General theory is that all laws have some DI in their classifications: because
                               zoning can be justified as reasonable in its broad impact, this is okay.
                     (5) There also are non-cumulative zoning ordinances which prevent housing in industrial
                     areas in order to preserve the maximum commercial value for the land.
                     (6) Rule: zoning challenges rarely succeed if based on a takings argument provided they
                     are either controlling a nuisance like activity or that they leave the owner with some other
                     reasonable use.
            f) Nectow v. City of Cambridge (1928)
                     (1) Stands for: follow through on Supreme Court statement that individual challenges to
                     zoning ordinances can succeed even though the overall ordinance is valid. This was the
                     last real SC zoning case for over 50 years, although recently it is again active.
            g) Criticisms of zoning:
                     (1) Unfairly distributes wealth
                     (2) Promotes econ and racial segregation
                     (3) Invites and responds to special interests
      2. The Structure of Authority Underlying Zoning
            a) Enabling Legislation
                     (1) The state legislature must delegate its power to localities through an enabling act.
                     (2) Standard State Zoning Enabling Act is adopted in one form or another in all 50
                     states.
                               (a) Requires a city to create a:
                                          (i) Planning or zoning commission
                                          (ii) Board of adjustment (or Board of Zoning Appeals): allows
                                          variances
                               (b) Zoning is an interaction of:
                                          (i) Citizens, who sit on the commissions
                                          (ii) Experts, who advise on plans
                                          (iii) Politicians, who enact and approve the necessary legislation11
                     (3) If the zoning ordinance has built in procedures for pursuing remedies (which
                     practically all do), then a court will not hear the case until those remedies are fully
                     pursued.
                               (a) However, almost all requests for changes include an underlying threat to
                               litigate the issue.
            b) The Comprehensive Plan
                     (1) Statement of local government’s objectives and standards for development
                     (2) Only ½ of the states require this and usually that requirement is very weak (often
                     easily allowing departures).
                     (3) Judicial deference in this is somewhat waning, though.
                     (4) Long-term planning is often not required because the future is too unpredictable. A
                     better approach is seen to be in short to midterm planning.
                     (5) Bottom line effect of “the plan:” separation of people by income and race and the
                     destruction of the heterogeneity of cities.
B. The Non-Conforming Use
      1. A pervasive feature of zoning ordinances is grandfathering: incorporates exceptions for pre-
      existing uses, sometimes permanent, sometimes with a time horizon.
               a) These tend, however, to undermine the entire orderly theory of zoning.
               b) This is met by setting a horizon on the exception.
                       (1) There is no consistent rule for how long a horizon needs to be in order for it to be
                       reasonable.
                       (2) Factors used in assessing reasonableness of an amortization ruling (very complicated
                       balancing standard)
                               (a) Nature of the use
                               (b) Amount invested in it.


                                             69 of 80
                                    Property Outline
                                        Liam J. Montgomery
                                   (c) Number of improvements
                                   (d) Public detriment caused by the use.
                                   (e) Character of surrounding neighborhood.
       2. PA Northwestern Distributors, Inc. v. Zoning Hearing Board (1991)
               a) Stands for:
                        (1) Amortization and discontinuance of a lawful and pre-existing nonconforming use is
                        per se confiscatory (a taking) and un-C’al.
               b) Facts:
                        (1) Adult book store obtained necessary permits and opened for business.
                        (2) The city then amended the zoning ordinance to prohibit adult commercial enterprises
                        (3) Π bookstore did not meet this change.
               c) Dissent counsels instead of this bright line rule to apply a test examining the reasonableness
               of the non-conforming use decision in order to balance the public and private interests at stake.
       3. Rule: the right to maintain a non-conforming use runs with the land and hence survives a
       change of ownership.
       4. Rule: however, destruction of a non-conforming use (act of God or otherwise) usually
       terminates it as does abandonment.
       5. Estoppel
               a) Another theory under which a non-conforming use will be allowed to stand.
               b) Rule: applied when a developer relies reasonably and to their detriment on the issuance of a
               permit and proceed to make substantial expenditures, but only if the developer proceeded in good
               faith and fulfilled a duty to inquire as to the permits validity from a reasonable person’s
               perspective.
C. Achieving Flexibility in Zoning
       1. Drawbacks of the Euclidean system:
              a) By drawing limited class of uses into tightly drawn districts, it can:
                     (1) Work inequitable hardships
                     (2) Promote inefficient patterns of land use.
                     (3) Inhibit socially and aesthetically desirable diversity.
              b) Nonconforming uses are one example of flexibility, as are the doctrines that follow…
       2. Variances and Special exceptions
              a) Commons v. Westwood Zoning Board of Adjustment (1980)
                     (1) Stands for:
                              (a) Variances: courts are very deferential to zoning board decisions as to
                              variances under the undue hardship requirement, even where the refusal
                              essentially makes the property worthless.
                     (2) Facts:
                              (a) Πs owned a lot in a residential neighborhood that did not meet the minimum
                              frontage and square foot requirements for the building of a lot under the zoning
                              ordinance.
                              (b) The neighbors refused to either buy them out or sell them any strips of land
                              that would bring the property close to compliance.
                              (c) Board of adjustment denied the variance, supported in this by many
                              residents who opposed it despite the fact that the home would be comparable in
                              value to the existing homes, many of which were built prior to the ordinance on
                              similar sized lots.
                     (3) Essentially the ruling in this case allows that the variance can be denied (upon proper
                     proof on remand) conditional on the town providing the owners with a fair price for the
                     property, which amounts to a taking by the town.
                     (4) Rule: A variance will be granted where the owner can prove that denial of the
                     variance:
                              (a) Will work an undue hardship AND
                              (b) Negative criteria: granting of the variance will not
                                        (i) Substantially detriment the public good.
                                        (ii) Impair the intent and purpose of the zone plan and zoning
                                        ordinance.


                                              70 of 80
                             Property Outline
                                 Liam J. Montgomery
               (5) Rule: undue hardship = no effective use can be made of the property if the variance
               is denied but and owner is not entitled to a grant of a variance simply because it would be
               more profitable under it.
               (6) Rule: denials of a variance must explain why in detail in order for a court to make an
               informed judgment as to the propriety of the denial.
      b) Rule: variances must run with the land and cannot be specific to an owner.
      c) Rule: hardships that are based on a personal circumstance (like personal infirmities) are
      usually not undue hardships.
      d) Hertzberg v. Zoning Board of Adjustment of Pittsburgh (1998)
               (1) Stands for: use variances are generally more difficult to get than area variances.
               General rules
                        (a) Use variances generally require “unnecessary hardship.”
                        (b) Area variances generally only require proof of “practical difficulties.”
               (2) However, in practice the standards generally come out the same.
      e) Commons is unusual: most cases reverse denials of variances due to the pervasive cronyism of
      Boards of adjustment.
      f) Cope v. Inhabitants of the Town of Brunswick (1983)
               (1) Stands for:
                        (a) Special exceptions: courts will generally view denials of these with greater
                        suspicion because it indicates abuse of discretion in turning down something the
                        legislature pre-determined to be generally okay.
               (2) Facts:
                        (a) Πs requested to build apartments in an area where such building was
                        allowed only as an exception granted by the Board of Appeals.
                        (b) The Board denied the application for the SE, stating it would change the
                        basic character of the neighborhood.
               (3) Holding:
                        (a) The legislature cannot delegate to a Board discretion to approve or disprove
                        applications for special exceptions that is not limited by any legislative
                        standards.
               (4) The overbroad delegation of discretion raises the specter of discriminatory decisions.
               (5) SE are not the same as a variance because SE is a conditional use under the zoning
               ordinance resulting from a decision that such use will not ordinarily be detrimental (in
               other words, they are seen as presumptively okay unlike a variance which is seen as
               presumptively no okay.
               (6) Basically, denial of a SE gets a higher standard of review because:
                        (a) A variance is essentially asking for mercy on something specifically
                        prohibited by the ordinance and so denial of exception is simply carrying the
                        intent of the ordinance.
                        (b) A SE is a request to do something permitted by the ordinance and discretion
                        here is more likely to be abused.
      g) 2 approaches to special exceptions:
               (1) Built in discretionary device for the Board (gives leverage and invites abuse).
               (2) Detailed criteria to guide Boards (seems preferable)
3. Zoning Amendments and the Spot Zoning Problem
      a) State v. City of Rochester (1978)
               (1) Stands for:
                        (a) Zoning amendment and spot zoning: attempt to achieve flexibility in zoning
                        by change to entire zoning ordinance to accommodate the change requested
                        along border between dense and residential area.
               (2) Facts:
                        (a) Developer agreed to buy a tract of land on condition that change to zoning
                        ordinance could be achieved to allow construction of luxury condos.
                        (b) The zoning council recommended rejection but the legislature allowed it.
               (3) Rule: [a very deferential RIB standard] A legislative re-zoning will be upheld unless
                        (a) It is proven that it has no rational basis to supporting general welfare OR


                                       71 of 80
                                           Property Outline
                                               Liam J. Montgomery
                                     (b) It amounts to a taking without compensation
                            (4) Spot zoning: pejorative term meaning a zoning change that creates an island of
                            nonconforming use and which dramatically reduces the value for uses around the spot
                            zone.
                    b) Rule: factors for invalidating spot zoning:
                            (1) Small parcel of land singled out for special and privileged treatment
                            (2) Singling out is not in the public interest but only for the benefit of landowner
                            (3) Action is not in accord with a comprehensive plan.
                    c) Spot zoning is the quintessential example of the corruption and special interests that can
                    pervade zoning schemes.
                    d) Another method of changing zoning ordinances is plebiscites:
                            (1) Two types
                                     (a) Referenda
                                     (b) Initiatives
                            (2) These have significant weaknesses:
                                     (a) Conspicuously undemocratic in application of majority will
                                     (b) Large zonings are often too complex for a simple yes-no.
                                     (c) Tend to devalue expert input by taking legislative debate out of the picture.
                    e) Other means of achieving flexibility in zoning:
                            (1) Conditional rezoning: property owner agrees unilaterally to use the land in the
                            specified manner.
                            (2) Contract rezoning: bilateral agreement between owner and zoning authority, perhaps
                            with the owner agreeing to covenant the property in exchange for promise to rezone.
                            (3) These both often raise problems courts will not allow, like a locality forcing the
                            owner to provide roads or fees, etc.
                            (4) Floating zones: define a zone but leave its location for the future.
                            (5) Cluster zones: developer is permitted to construct dwellings in a pattern not in literal
                            compliance with area restrictions of zoning ordinance.
                            (6) Planned Unit Developments: [seem like Reston idea]
             4. Bottom line: courts are very non-interventionist about zoning issues
       D. Other Issues in Zoning
             1. Zoning has expanded to restrict aesthetics of dwellings.
             2. Village of Belle Terre v. Boraas (U.S. 1974)
                     a) Stand for: SC allows zoning even to restrict unrelated people from living in a home because
                     of the primacy of quiet places to live in family neighborhoods.
             3. Moore v. City of East Cleveland (U.S. 1977)
                     a) Stands for: nonsense zoning such that a grandmother could not have her son and his kids
                     move in in order to get them on their feet. Court struck it down because the people are related.
             4. Bottom line: this is the kind of nonsense that is prompting efforts to reform zoning.
XII.   Eminent Domain and the Problem of Regulatory Takings
       A. The Power of Eminent Domain: Sources and Rationales
             1. ED: the power of government to force transfers of property from owners to itself.
             2. No one disputes the general power of ED: the conflicts arise around the reasons for its
             exercise (genuine public good vs economic gain)
             3. 5A: “nor shall private property be taken for public use, without just compensation”
                     a) A “tacit recognition of a pre-existing power”
                     b) 14A makes it operative against the states.
                     c) Four key concepts:
                             (1) Private property
                                      (a) Does not apply to things like drafting someone and thereby limiting their
                                      earnings
                             (2) Take
                             (3) Public use (not a significant limiting factor)
                             (4) Just compensation
             4. The ED power must be exercised pursuant to an enabling statute.



                                                    72 of 80
                                    Property Outline
                                        Liam J. Montgomery
      5. Rationales for ED:
             a) Doctrine of Implied Reservation: way back when sovereign granted the land, it impliedly
             reserved the right to take it back.
             b) Remnant of feudalism
             c) Necessary to existence of a government in the carrying out of its functions [most common
             reason today]

      6. Posner on ED justifications:
             a) Prevention of bilateral monopolies, as with rail lines, and therefore the lessening of
             inefficiencies by not allowing land to remain in an existing inefficient use.
             b) Posner rule for exercising ED:
                       (1) Low transaction costs: let market price the property
                       (2) High transaction costs: let courts shift resources to more valuable use
      7. Munch: no. ED is actually inefficient and the government could use the same methods as
      developers to get needed land.
      8. Just compensation requirement:
             a) Posner: compensation requirement acts to ensure the government acts efficiently (doesn’t
             simply take land when it could acquire it efficiently through other means)
             b) Fischel and Shapiro: compensation allows for more certainty in ownership (taking possibility
             could cast a pall on all property)
                       (1) But perhaps compensation goes to far: encourages overinvestment and private
                       insurance against ED taking would be better.
             c) Fairness issues (burden sharing: if a school is needed why should one property owner bear the
             cost rather than spreading it to all)
             d) Analogue to political process theory: compensation requirement protects those less politically
             powerful who could not stop it when others can.
             e) Kitsch, stability of political system: people would have huge incentives to advance their
             personal interests with legislature to prevent arbitrary takings and an already emotional debate
             would become even more visceral.
             f) Theory is that Madison inserted the compensation clause to prevent landed aristocracy from
             being broken up by special interests.
B. Public Use Doctrine
      1. Because of this term in 5A, the reach of ED necessarily hinges on the breadth of the meaning
      attached to PU.
      2. Hawaii Housing Authority v. Midkiff (1984)
              a) Stands for:
                        (1) Very low standard of review of ED power: where the exercise of ED is rationally
                        related to a conceivable public purpose, the court has never held a compensated taking to
                        be proscribed by the PU clause.
              b) Facts:
                        (1) HI legislature enacted a plan to compel large landowners to break up their estates in
                        a method that would prevent them from having huge tax liability by effecting the break
                        up through a takings system.
                        (2) After a certain number of lessees on a tract petitioned for private ownership, the
                        commission could take the land, compensate and then sell it to the lessee occupants.
                        (3) The system was entirely self funding.
              c) Rule: the public use requirement is coterminous with the scope of a sovereigns police powers
              and there is therefore a very narrow role for courts in reviewing a legislative definition of public
              use [RB review]
              d) Dicta: pure private takings are not permitted.
              e) In reality, one of the reasons O’Connor so emphatic in applying RB is that this scheme
              furthers very few goals:
                        (1) No increase in housing stock
                        (2) No increase in building lot availability
                        (3) State has no real interest in the scheme
                        (4) Overall, no lowering in price of land.


                                              73 of 80
                                   Property Outline
                                       Liam J. Montgomery
      3. Berman v. Parker (U.S. 1954)
              a) Stands for: the genesis of ED for economic reasons, a ruling later distorted by cases like
              Poletown, Midkiff and Kelo.
              b) Facts: city took property in order to revitalize crime-ridden slum.
              c) Broad language on deference to legislature in defining PU probably led to Midkiff.
      4. 2 views of PU (both of which appear in cases):
              a) Broad: The term simply means advantage or benefit of the public
              b) Narrow: it means actual use or right to use of the condemned property by the public.
      5. Possible PU tests:
              a) Ends based test: if the ends are sufficiently public by some definition, the test is passed.
                        (1) Given the broad meaning usually attached to PU, this would allow almost anything.
                        (2) To say, as Midkiff does, that PU = police power would mean no duty to compensate.
              b) Means based test: only take if there is a pressing need vice simple convenience.
      6. Merrill on each test:
              a) Ends based simply lets judiciary punt to the legislature.
              b) Means based is a familiar judicial role in evaluating applications of state police power.
      7. Merrill alternative rule: only invoke PU when ED is invoked in situations where transaction
      costs are sufficiently high to frustrate voluntary transactions in the market because owners can
      hold out during a lack of competitive conditions.
              a) Advantage of this is that the state will avoid ED where transaction costs are low because ED
              itself entails transactions costs like judicial proceedings and the like.
      8. Poletown Neighborhood Council v. City of Detroit (1981)
              a) Stands for: an early example of ED being exercised for economic gain.
              b) Facts: city exercised ED to allow construction of a GM plant in order to prevent the plant
              from moving out of state.
              c) Michigan courts have since backed away from the Poletown ruling.
      9. Kelo v. City of New London (U.S. 2005)
              a) Stands for: the unfortunate logical extension of Midkiff to allow a taking for the purpose of
              increasing tax base and economic use of land.
              b) Facts:
                        (1) After Navy left new London, Pfizer proposed building a new research facility on the
                        vacated area.
                        (2) City then decided to remake the waterfront in anticipation of this
                                  (a) Strangely, Pfizer never asked for this.
                        (3) No effort made to say the houses created any problems.
              c) Ironically, O’Connor dissent points out that state could always assert a more economic use of
              land and take it under this.
      10. Another note on compensation
              a) Obviously just compensation is not just or people would not object to the taking.
              b) This is due to the application of FMV formula which fails to capture all of the personal value
              people place in their property
              c) United States v. 564.54 Acres of Land (1979)
                        (1) Stands for: FMV rule: the owner is entitled to receive “what a willing buyer would
                        pay in cash to a willing seller” at the time of the taking.
              d) State could potentially keep negotiating but then you get bilateral monopoly problems.
              e) Instead, they just give you FMV and take, never compensating personal value.
C. Physical Occupations and Regulatory Takings
      1. Process
             a) Condemnation must follow specific DP procedure:
                   (1) Petition in court
                   (2) Serve notice of the taking
                   (3) Trial
                            (a) If jury trail, jury only rules on compensation
                            (b) Judge rule on public use and necessity arguments
                   (4) Pay the compensation
                   (5) Appeal process


                                             74 of 80
                              Property Outline
                                  Liam J. Montgomery
      b) General power is exercised through an enabling statute
               (1) Interpretations of enabling S’s may restrict condemnation power even further than
               the 5A limits, depending on the jurisdiction.
               (2) Once it is determined that the state has the power to take the subject property, the
               only remaining question is money.
      c) Issues arise not where a standard taking-JC occurs. This power is relatively uncontroverted.
      The issues instead arise when the government takes just a piece of the property (space or use slice)
      but leave the owner in possession of legal title.
      d) Note, external C’al restraints also act on the ability of the government to take:
               (1) EP: S must be enacted on general principles and cannot be enacted ad hoc against a
               specific individual.
               (2) See Hadachek: did not target only his brickyard.
2. Two Categorical Rules
      a) Loretto v. Teleprompter Manhattan CATV Corp. (1982)
               (1) Stands for: per se rule that a permanent physical occupation of property is
               automatically a taking without regard to the public interests it may serve and no inquiry
               into the level of economic loss incurred.
               (2) Facts:
                         (a) Δ installed cable lines, junctions and boxes on Π building.
                         (b) NY Law required landlords to allow such installations.
                         (c) Π brought class action suit.
               (3) This ruling is based on a
                         (a) Fundamental right of exclusion. Court states this is one of the principle
                         sticks in the bundle.
                         (b) Physical occupation can act as a restraint on alienation
                         (c) Violates the central property tenet of QE
                         (d)
               (4) How is this distinct from forcing a silence plate use:
                         (a) Health and welfare does not equal cable.
                         (b) License plate is not required: it is simply a condition of use of the public
                         highways.
                         (c) License plates are owned by the owner (like peepholes): they are not forced
                         on the owner like a cable line. Court specifically notes this saying if the S
                         required the company to install the line itself it would be legal because the L
                         would own the installation.
               (5) Rule: temporary physical invasions do not get the benefit of this dispositive rule.
               Temporary invasions, unlike permanent physical occupations, are subject to a balancing
               test.
               (6) Result: pyrrhic victory of only $1 though.
      b) United States v. Causby (1946)
               (1) Stands for: frequent flights above landowner’s property constitute a taking because
               analogous to a permanent physical occupation given the pervasiveness of the overflight.
               (2) Limited only to properties in the direct line of flight path (perhaps underlying this is
               economic tort concerns with unlimited liability and fraud).
               (3) Modified the longstanding property rule that owner of fee owns the rights all the way
               to the heavens.
      c) Hadachek v. Sebastian (1915)
               (1) Stands for:
                         (a) If government action in question is depicted as a nuisance control (nuisance
                         has a special definition here) measure, there is never a taking, notwithstanding t
                         he loss worked by the regulation.
                                   (i) Notion is that the gov’t is curbing a public bad rather than
                                   expropriating a public good.
                                   (ii) Essentially the opposite rule from Loretto which was when
                                   government action is always a taking.
               (2) Facts:


                                       75 of 80
                              Property Outline
                                  Liam J. Montgomery
                          (a) Π owned and operated a profitable brickyard in LA that could only be
                          operated there under the conditions it was already under. Very little nuisance is
                          created by it.
                          (b) Brickyard use over time foreclosed the possibility of any other use for the
                          property.
                          (c) City passed a regulation making it illegal to operate a brickyard in the city.
                (3) Progress dictates that some must suffer for the greater good. Otherwise the city will
                be frozen in a primitive state.
                (4) Only limit on this exercise of police power is that it cannot be done arbitrarily or
                unjustly (can’t be targeted against a specific owner.
                (5) This case is a predecessor to Euclidean zoning and an even starker example of a
                retroactive taking than that case was.
                (6) Very possible he is singled out because there are only two brickyards.
                (7)
       d) Freund:
                (1) Eminent domain = taking when useful = just compensation
                (2) Police power = taking when detrimental = nada
       e) Michelman: can be very hard to distinguish between benefit and detriment (one man’s benefit
       is another man’s detriment).
                (1) Good example is wetlands, which used to be regarded as bad and are now heavily
                protected.
       f) Berger: fairness would seem to dictate applying a Spur-like rule here. This is raised in the
       following cases, which also show the difficulty between good and bad takings:
                (1) Miller v. Schoene (1928)
                          (a) S required owners of infected trees to cut them down to protect orchards.
                          (b) Court allows this.
                (2) Empire Kosher Poultry v. Hallowell (1987)
                          (a) S required killing chickens to protect against avian flu.
                          (b) Allowed by the court.
                (3) Dept. Of Agriculture… v. Mid-Florida Growers (1988)
                          (a) S required owners of healthy trees to prevent spread of disease.
                          (b) Not allowed: state must pay JC to destroy healthy trees.
3. Rules Based on Measuring and Balancing
       a) Pennsylvania Coal Co. v. Mahon (1922)
                (1) Stands for:
                          (a) Diminution in value test: softer test than per se rules above: when
                          government regulation of a use that is not a nuisance works too great a burden
                          on the property owners, it cannot go forth without JC.
                                   (i) Possible formulation: if it affects 100% of a legally distinct
                                   interest, it is too far.
                          (b) Or as Holmes put it: “while property may be regulated to a certain extent, if
                          regulation goes to far, it will be recognized as a taking.”
                (2) Facts:
                          (a) Coal company conveyed surface rights of land over their mines but
                          conveyed no right of subsidence with it.
                          (b) PA S forbids mining of coal in such a way as to cause subsidence.
                (3) Important here that PA property law recognized the right of subsidence as a separate
                estate in land. So in effect the state action was taking this specifically recognized estate
                in land. Under the denominator problem, this provides a clear basis for saying 100% of
                the property was taken.
                (4) Absolute police power is a slippery slope to no private property [seems to oppose
                Midkiff notions of the police power here]
                (5) Unclear why city did not assert a Hadachek rule.
       b) Keystone Bituminous Coal Association v. DeBenedictis (1987)
                (1) Stands for:
                          (a) Conceptual severance (or the denominator problem)


                                        76 of 80
                     Property Outline
                         Liam J. Montgomery
      (2) Facts:
                (a) Mahon redux, except here the coal that must be left is enough such that a
                wall is maintained between one mine and the next to prevent flooding.
      (3) Holding:
                (a) Millions of tons of coal left were not a separate segment of property but
                only a few percent of the total coal owned by the companies.
                (b) Alternatively, could view it as a separate segment in which case, 100% of
                the property was taken: this is the denominator problem.
      (4) How is this different from Mahon:
                (a) Average reciprocity of advantage:
                           (i) In Mahon, the mining company gained no advantage from the
                           subsidence taking.
                           (ii) Here, protecting an adjacent mine from your flooding also will
                           protect you from flooding from adjacent mines yourself.
                (b) Less of a diminution in value (but only if define denominator a certain way)
                (c) Mahon was a private party asserting a right against another private property
                under state S. This case is a public official asserting under a S in his capacity as
                guarantor of public health and welfare.
c) Penn Central Transportation Co. v. City of New York (1978)
      (1) Stands for:
                (a) Distinct investment-backed expectations (DIBE): basically says the same
                thing as our discussion of Mahon that denominator can only be the subset when
                it is a legally distinct interest.
      (2) Facts:
                (a) Owner of grand central station wanted to sell the air rights over the station
                to allow a huge office building to be placed on top.
                (b) NY designated the station a historical landmark and then the commission
                denied the permit to build this, while also granting them Transfer Development
                Rights (TDR’s)
      (3) Sort of a flipside of Mahon: that was property underneath, this is property overhead.
      (4) Again, raises denominator problem: it could be said that state took 100% of the air
      rights, but court does not buy this.
                (a) See Symphony Space for an example of sale of air rights as a separable
                interest.
      (5) The thought was the Causby supported this case: that case was about interference
      with air rights and so was this.
      (6) Analytic process of the court:
                (a) No taking of title
                (b) No physical occupation (Loretto)
                (c) Not a regulation of nuisance (Hadachek)
                (d) Not specifically directed at this owner, because it occurs all over the city.
                (e) Left the owner with substantial economic value after this regulation.
                (f) Regardless, TDR’s act as a form of JC.
                           (i) Note, Brennan conflates this with analysis of whether this is a
                           taking: it should be specifically limited to the question of compensation
                           once the taking question is separately resolved.
      (7) Narrowly distinguishable from Mahon in that air rights are salable but are not a
      separate legal estate as in Mahon.
      (8) Another quasi-denominator problem pointed out by dissent: refutes that this is not
      individualized by saying that the fact that it applies to 400 other buildings is an
      insignificant percentage of the total buildings in the city.
d) TDR’s
      (1) Allow air rights to be apportioned to adjoining buildings that are then able to build
      higher than local restrictions allow.
      (2) Suitum v. Tahoe Regional Planning Agency (1997)
                (a) Scalia on TDR’s: should only apply to the JC question, not the question of


                               77 of 80
                              Property Outline
                                  Liam J. Montgomery
                         whether there is a taking; conflating the two allows the government to get off
                         without paying as much.
               (3) TDR’s invite cities to “mint” them by setting height restrictions lower than they
               otherwise would and then selling TDR’s to allow the buildings to go to the proper height
               limit.
               (4) Can also be seen as an exaction: the neighboring property owners are being recruited
               to pay for the preservation of Grand Central.
               (5) Kyoto protocol can be seen as a massive TDR: let’s underdeveloped countries sell
               unneeded pollution credits to the larger, developed countries that don’t have enough.
4. A Third Categorical Rule
      a) Lucas v. South Carolina Coastal Council (1992)
               (1) Stands for:
                         (a) Scalia breathing life back into Mahon by setting a categorical rule that
                         100% taking of property triggers the “too much” condition of Mahon.
                         (b) Rule: land use regulations that prohibit all economic uses of property are
                         takings unless the prohibited uses are common law nuisances.
               (2) Facts:
                         (a) Π bought beach lots intending to build on them
                         (b) State denied his permit such that he could build nothing on the lots.
               (3) Scalia viewed this as curing some of the good use-bad use definitional problems
               noted above re: Hadachek.
               (4) Blackmun, dissent:
                         (a) Court launches a missile to kill a mouse.
                                   (i) His point is that this is a capacious rule to deal with something that
                                   will rarely arise: rarely does a regulatory taking wipe out ALL value of
                                   the property.
                         (b) Implausible that the land had ZERO remaining value (seems like he is right
                         here).
               (5) Real effect of Lucas is to alter the nuisance exception created in Hadachek: it implies
               that legislative judgments of harm are not legitimate (legislature decided here that this
               use was not good) but that judge-determined nuisances are.
                         (a) Searchinger: this is a concern because much environmental legislation
                         targets problems that case-by-case nuisance law simply cannot handle.
                         (b) Humbach; Lucas = reassigning from the legislative branch to the courts the
                         final authority for determining what land uses are injurious.
               (6) Empirical evidence suggests Lucas impact is minor though, given the mouse issue
               above (rarely occurs and seems like states could tailor their actions so as not to trigger it.
      b) Palazzolo v. Rhode Island (2001)
               (1) Stands for:
                         (a) The fact that an owner attained title to a property after passing of a state
                         regulation and such with notice of that regulation does not prevent the regulatory
                         action from being a taking. Otherwise, the state would in effect “put an
                         expiration date on the Takings Clause” by being able to outwait property
                         owners.
               (2) Facts:
                         (a) Π owned a lot through a corporation.
                         (b) State passed wetlands legislation restricting his use of it.
                         (c) After this, he attained title when his corporation defaulted on taxes and the
                         title then reverted to him as sole shareholder.
               (3) Court denies the timing as dispositive but remands on the issue of whether residual
               economic value of the property is sufficient to not call this a taking.
               (4) Court, however, points that the state cannot avoid the operation of the Lucas rule by
               leaving a token interest in place
5. The Problem of Exactions
      a) Nollan v. California Coastal Commission (1987)
               (1) Stands for:


                                        78 of 80
                     Property Outline
                         Liam J. Montgomery
                  (a) Essential nexus test: state cannot exact a condition on land unless the
                  essential nexus exists between the legitimate state interest and the permit
                  condition exacted by the city.
                  (b) State cannot exact a property interest from owners though conditions on a
                  building permit unless the exaction is related to what the state defined as the
                  problem needing remedy.

        (2) Facts:
                  (a) Π applied for building permit, which was issued only on condition that the
                  owner turn over a lateral easement to let the public cross dry sand portion of the
                  beach.
        (3) Rule: state has the power to effect this taking but there must be a nexus between the
        taking and the end sought to be achieved (here the end was view of the beach from the
        street, which the lateral easement did nothing to advance).
b) Dolan v. City of Tigard (1994)
        (1) Stands for:
                  (a) Application of Nollan such that the exaction must be reasonably related to
                  the ends sought to be achieved.
        (2) Facts:
                  (a) Π wanted to expand her store and its parking lot.
                  (b) City exacted a condition of turning over a strip of the land for bike path and
                  drainage.
        (3) Here, court finds that
                  (a) The bike path would not extend anywhere (rejects one step at a time
                  argument) and thus does not advance state traffic interests.
                  (b) The drainage issue seems reasonable but state did not provide proof of how
                  this specific property will benefit and how it will directly help the overall
                  problem.
        (4) Extends Nollan rule to two prongs:
                  (a) Nollan: state cannot exact a condition on land unless the essential nexus
                  exists between the legitimate state interest and the permit condition exacted by
                  the city.
                  (b) New, rough proportionality test: If the nexus exists, there must be a rough
                  proportionality between the exactions and the projected impact of the
                  individualized proposed development (must help the specific problem related to
                  this property)
        (5) Another case centering on right to exclude.
        (6) Court also concerned that this transferred an out and out piece of the property rather
        than simply a use.
c) City of Monterey v. Del Monte Dunes (1999)
        (1) Note, Dolan is limited strictly to exactions and not regulatory actions in general
d) Exactions:
        (1) Used to be a small issue but have morphed into a major means of local funding for
        projects.
        (2) See Planned Unit Developments
                  (a) Developers present a comprehensive plan for a tract of land to be analogous
                  to a village.
                  (b) City often exacts conditions on these permits of building a school or a
                  firehouse, etc.
                  (c) Creates the temptation to only allow permits based on these exactions being
                  paid.
        (3) Dana:
                  (a) Single developers are more harmed by exactions because they cannot afford
                  them and are not willing to eat them for a continued relationship.
                  (b) In contrast, repeat players will eat them in order to continue getting permits
                  in the future.


                               79 of 80
            Property Outline
                Liam J. Montgomery
         (c) Nollan/Dolan can then be seen to encourage cronyism and inefficiency (and
         outright unfairness).
(4) Fennell: Also can be seen to encourage outright denials of property uses. If cities
think they will not be able to get the desired exaction, a beneficial bargain may never be
attempted.
         (a) In a sense, this is the worst of both worlds in that it robs the means of
         pushing back against over-regulation.




                      80 of 80

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:20
posted:12/25/2011
language:English
pages:80