Heather’s Parcho Outline
Bundle of rights
o Right to possess, exclude, and transfer
o Rights are not absolute (can’t always do what you want – pollute, play loud music,
I. Acquisition of Property and Resolution of Conflicting Claims
A. THE RULE OF CAPTURE
1. General Rule: A person who first captures resources is entitled to them. (i.e. Whoever is
prior in time wins)
2. Capture of Wild Animals: If wild animals are captured, they belong to the captor. Capture is
required; chasing is not enough.
a. Pierson v. Post
i. Post was in pursuit of fox but Pierson swooped in at last minute and captured the
fox. Hunting on wasteland, nobody owns that property. Otherwise, landowner
would own fox if killed on the property.
ii. Pierson’s arg: actual capture gives possession. No reason he couldn’t have right
to the wild animal.
iii. Post’s arg: pursuit should mean possession.Held: pursuit doesn’t give
possession. It is the person who captures it. → capture rule
iv. Majority: uses philosophers from Roman law that capture justifies possession.
Precedent: couldn’t find precedent, so look to statutes, custom, look to English
CL, legal commentato
v. Dissenting Rule: Pursuit should be enough. Should be left to the sportsmen.
Invested time and $ to devote effort into hunting. Don’t want someone to waste
vi. (Foxes are a bad thing b/c they’re bad for farmers. Law should do things to
i. Fosters competition (promotes killing).
ii. Ease of Administration
iii. But note: The rule of capture was laid down in the 19th C when it was
desirable to destroy animals. Today the rule goes against conservation,
which may be the goal of society today. Statutes that protect endangered
species may also limit these rules.
c. Wounded or trapped animals: If an animal has been mortally wounded or trapped
so that capture is virtually certain, the animal is treated as captured. But if the
animal is only in the process of being entrapped, and the door has not snapped shut,
it has not been captured.
i. Ghen v. Rich
Heather’s Parcho Outline
ii. (Whale Shooting)
iii. Issue: Does common practice of lancing give Ghen entitlement to whale
iv. Holding: Yes we defer to industry custom as long as:
1) custom embraces entire industry
2) custom is of limited application (not too vague & not all encompassing)
3) custom is fair and in social interest.
v. Keeber v. Hickeringill
vi. pg. 30)(Δ shot at decoy pond to scare ducks away)
vii. Issue: Is a free animal on private property considered the prop. of the land
viii. Holding: Since the ducks are on his land he has some control but not full
(awarded $ for disruption but not for damages)
ix. Policy Issues: Useful v. Harmful activity-here ct. allows for some
constructive poss. in
Pierson/Post doesn’t- courts will differ depending on whether the outcome is useful or
harmful (If the Def. was Greenpeace and they were scaring ducks to save them from
extinction(useful) the ct. may have rejected constructive poss.)(flexibility in law)
d. Interference by noncompetitor: A person who doesn’t want to capture the animal
cannot maliciously interfere w/ a person who is in the process of entrapping animals.
Rationale: We want to encourage competition and there is no social value in
interloping. The underlying principle of capitalism is that you can injure others
through competition, but not otherwise.
e. Custom: While the general rule is that physical control over the animal is required, in
some hunting trades, a custom which is thought more efficient in getting animals
killed, may dictate a diff result. Cts apply a custom when:
i. custom embraces an entire business
ii. custom is of a very limited application; specific, not broad
iii. industry is dependant on custom to thrive
Rationale: Customs are based on superior knowledge.
Note: As a general rule, courts are likely to defer social norms in industry
practices when they are fair and align w/ the greater social interest; This is bec
some social norms can be inefficient and exclusionary.
f. Relativity of rights: Poacher vs. Owner – The owner has greater rights than the poacher,
but the poacher has greater rights than anyone else. This rule is designed to minimize
future conflict and to preserve public order.
g. Habit of Return: If a wild animal escapes your possession you lose your property right.
But if you have a domesticated animal which escapes, they are not available for capture
by another. Rationale: Domesticated animals are valuable to society. Efforts to tame
wild animals should be rewarded.
h. Rule of Increase: Title to the offspring of a domesticated animal follows the title to the
3. Rights to Gas and Oil: Originally the rule of capture was applied by courts to oil and gas.
a. Hammonds v. Central Kentucky
b. (p.1 in SM)(Δ was re-injecting/storing gas under π’s
c. Issue: who owns gas after it’s re-injected?
Heather’s Parcho Outline
d. Holding: Lower Ct. Gas was re-injected on purpose so we can’t compare to wild animal
that escaped so the gas remains in possession of the re-injector. Appellate Ct.- said it’s
like an animal & goes back into the commons
e. Water- 3 types- Underground, Water Courses(lakes, rivers), Surface(runoff from rain)
f. Underground- apply rule of capture w/ reasonableness purpose limitation
4. The most persuasive reason for applying this rule is that it gives an incentive to produce oil
and gas. The problem w/ the rule of capture is that it led to the tragedy of the commons – overuse
of communal resources (people were trying to get as much as they can bec if not someone else
would take it). Today, the Texas Railroad Commission regulates oil and gas not under capture,
but under an elaborate system. However, it’s a little too late bec much of the resources have been
depleted. Possible alternative regimes for regulating oil/gas could be:
a. Nationalization – compensate property owners for takings and/or storage. Problems =
corruption, inefficiency, high transaction costs
b. Consolidated Management
c. First in Time – You could just flag a well and claim it
d. Gov Regulation – Problems = corruption, high monitoring and enforcement costs,
government not always in touch w/ needs of the public
e. Proportional Extraction – Problems = Enforcement and division of the resource.
5. Rights to Water – The rule of capture is applied to rights in water in certain contexts. The
source of the water makes a difference.
a. Underground Water: In most eastern states, where underground water is plentiful,
the rule of capture is applied. The rule of capture is only limited by a reasonableness
doctrine. If your use of underground water is harmful to others it will not be considered
reasonable. In western states, where water is less abundant, the rule of first
appropriation + beneficial use = right to water is followed.
b. Surface Water
c. Streams and Lakes
i. Stratton v. Hermon Boy’s School
Facts: School diverts water from a river and P doesn’t like how much is diverted. (He says the water should
be used for only those who live right on the stream.)
Issue: Was the school liable for any damages caused to P?
Trial Court says diversion is not allowed and awards damages to P b/c water was diverted.
Appellate court says diversion is ok as long as there is no actual harm. P still showed that he was
harmed. So they affirmed the damages and gave him money even though they changed the rule.
ii. Coffin v. Left Hand Ditch
D tore down a part of P’s dam that was diverting water from their property. The P won the first case but
the defendant won in the appeal b/c water was just as much the property of those who divert it to water
crops etc. as it was those who were right on the river upstream.
Rule: You’re entitled to the use of water if you’re the first person to use it for a beneficial use. This
gives one incentive to overuse resources. People try and maximize the amount of water they can use.
Another problem – who decides what is more beneficial – it is relative.
d. Thus emerges the debate between private property and communal property. The
evolution of private property was to internalize externalities. But with this comes
the desire to use as much of a resource as possible before some one else can use it.
B. ACQUISITION BY CREATION
Heather’s Parcho Outline
1. Intro: A person can acquire property by creating it, but it is diff to define “creation”. The
primary purpose in recognizing prop by creation is to reward labor, but when one’s labor is mixed
w/ the labor and goods of another, the Q becomes tricky.
2. Rights in Body Parts:
a. Moore v. Regents of the University of California
i. the ct held that a man did not have a prop right in his spleen following its
removal by doctors who made it into a patented cell line of great commercial
value. The doctors who created the cell line thus acquired original ownership.
The ct held that the patient had only the right to sue the doctors for failure to
disclose their research and econ interest in the patient’s cells. In ruling, the ct
was concerned about making body products property that could be sold.
However, transferability in the market is not an essential characteristic of prop.
Although most prop is freely transferable, some property is not alienable and
some property can be given away but not sold. The hard Q w/ body parts is not
whether they should be treated as prop, but whether they should be sellable.
Majority Arabian (Conc.) Mosk (Dissent)
Statutory Interpretation 1.Health and Safety Code n/a Health Code; discussed the
(primal analysis) regulates ‘spleen disposal’ fact that you can donate organs
(this statute was created to but there is no statute that says
protect the public – not for you can sell it; so you
possession of spleen; technically can TRANSFER
2.Right of publicity-he equates body parts; so Moore has AS
his situation with the value MUCH right as U of C to
famous people get from their profit from his body parts.
fame; 3. Moore not entitled to
full value of patent: they put
the work in to develop the
patent – his cells were just the
Institutional Incompetence Legislative: their decision to n/a Says that the court actually has
deal with depending on the right to decide – they can
statute: they have to say divide the money two ways;
whether situations like this whereas majority says
constitute incompetence legislature should decide
issues on splitting the money
and how it should be done
Perception of property Narrow tradition: there is no “not our right to decide” Bundle of Rights: just b/c you
precedent in this case b/c this don’t fit into every
is new technology – there is no classification, it doesn’t mean
perception of property your property right is null.
regarding human cells that has You need not have them all to
existed before the present still have claim to money
made from your body
Policy Analysis Whether we should extend 1.Respect to the human body
conversion to consider cases of the members of our society.
like this as property: 1. Moore 2. Fairness to Moore
did not expect to get his cells 3. Informed Consent is
back. 2.would have a insufficient. Moore would
detriment effect on policy b/c have to show that not just him,
the medical field wouldn’t be but anyone, who received full
able to progress as usual due information would not consent
to the constraints of getting to the operation. However,
permission to do research Moore had leukemia – he
really did not have much of a
3. Intellectual Property: IP is the catchall label for prop created by exercising the mind. IP
includes copyrights, patents, and trademarks, but may also cover prop in ideas or in a persona.
a. Cheney Bros v. Doris Silk Corp
Heather’s Parcho Outline
Said that there was no copyright or patent protection - Instead plaintiff wants seasonal protection: didn’t
want to go as far as copyright, just wanted it for the season. The court says that you can’t have seasonal
protection in court. Under common law, imitation and competition are legit b/c it keeps monopolies
from forming (the exception to this is IP).
b. Smith v. Channel
Extends principle that imitation is legitimate. Court holds that D had right to copy and to mention the
trademark in their advertisement. You cannot get protection for the scent OR the trademark that goes
with it. Can’t defame original but public policy favors allowing imitation for the sake of competition.
c. INS v. AP
Court has to decide if AP has property right in news, and if it does, does that right include publication?
-Courts grant AP quasi-property right: a right that only exists against competitors.
*this case is not considered bad law. (he doesn’t think so)
Information Goods – public good.
non-rivalrous consumption – consumption of one good does not detract from the use or benefit of
others; non exchangeability of benefits
d.The dilemma: The dilemma in recognizing IP is how to nurture individual creativity and
reward labor w/o going too far by creating monopolies and stifling creativity in others.
After all, creativity thrives on imitation.
e. The solution: Time limits are placed on copyrights and patents.
f. Alternative Means of Protection:
i. Branding - consumers rationally or irrationally develop loyalty to certain brands
and would not buy alternative brands even when the products are quite similar.
Branding provides strong protection.
ii. First Mover Advantage - If your product is first on the market it takes a while
before people can copy your products, and by that time you can use branding to
solidify your market position.
g. The common law: To avoid monopoly and encourage competition, the CL commonly
allows copying and imitation. But there are exceptions, such as the right of publicity =>
A person may not use a celebrity’s name, likeness, voice, or signature for profit w/o
the celebrity’s consent. The celebrity’s labor in creating a persona of value is protected
against another’s using it for profit.
h. Acquisition by creation: Copyrights and Patents
i. Copyrights last 70 years after death of author or 120 years if corporation
b/c they never die.
i. Capture/First in Time: Trademark and Domain Names
i. Trademarks last as long as you want them (20 yrs at a time)
ii. VW v. Volkswagen
Domain name case. New type of property invented with technology.
Domain names are subject to the rule of capture
Case deals with those who beat companies to trademark domain name so that the companies would have to
purchase it from them. VW.net
iii. ACPA is started to regulate – allows courts provide remedies. The public at
large is also the third party which should be considered – cyber-squatters hurt
not only the company but also consumers
iv. Right of Celebrity: The celebrity of famous people has a right to all things
representing their likeness (impersonations, dolls, other depictions) This
right is grounded in principles of privacy but there are also other
rationales, E.G. – labor theories.
Heather’s Parcho Outline
C. ACQUISITION OF CHATTELS (MOVABLE PROPERTY)
1. Acquisition of Chattels by Creation: As is the case with IP, property rights in personal property
may be obtained through creation.
E.g. Carpenter builds a table.
a. Law of Accession: Acquisition by accession comes into play when a person improves
the property of another by mistake (i.e. addition of labor or labor and new materials). A
person whose prop is taken and used by another is always entitled to the value of the
prop taken, but that person may lose title by the accessions (additions) of the other.
If the improver is denied title by accession, the original owner is entitled to the value
added by the taker.
i. Labor Added: Where A adds labor to B’s raw material, the courts usually
award the final product to the owner of the raw material (B), unless A’s
efforts have sufficiently increased its value to make it unfair to award the
final product to B. Just how much is “sufficient” is diff to determine. Also,
most states require that for A to recover, he must show that he acted in good
faith and not willfully.
Ex. A, relying on permission that he thinks came from B, enters B’s land, cuts
timber, and makes hoops from the timber. The standing timber was worth $25;
the hoops are worth $700. The hoops belong to A b/c of the great increase in
value and b/c he acted in GF, but B can sue A for $25 in damages for trespass.
ii. Labor and materials added: Where A, an innocent trespasser, adds labor
and materials to raw material owned by B, the final product is generally
awarded to the owner of the principal material. However, where A is not
innocent, most courts will award the final product to B regardless of the extent
of the labor and materials that were added.
Ex. A’s car is stolen and stripped by thieves. The thieves dispose of the car’s
nearly worthless body on an empty lot. B subsequently spots the body and,
incorrectly believing that its owner had abandoned it, takes the body home for
restoration. B installs the body, and engine, transmission, etc. If A
subsequently discovers his car body in B’s hands, A will not be entitled to the
car; B will only have to pay A the value of the stripped car body.
2. Acquisition of Chattels by Purchase: The general rule is that a seller can’t convey better title
than that which he holds. Therefore, if a good is stolen and a BFPV purchases that good, the
original owner will still prevail over the BFPV. However, there are two exceptions to this rule:
a. Voidable Title – BFPV may prevail over original owner where the scoundrel from
whom he purchased the goods has gained possession of the goods through fraud or
misrepresentation. For instance, if the scoundrel paid for the goods w/ counterfeit
money or a bounced check or if he deceived the owner about his identity. The law says
the title of the scoundrel is voidable, but not completely void. Because it is voidable, a
perfect title can be created in the BFPV. Rights of original owner are distinguished.
b. Estoppel – If the owner, by his words or conduct, has expressly or impliedly
represented that the possessor of the goods is the owner of them, or that he has the
authority to sell them, the owner is “estopped” from denying the trust of theses
representations to one who buys in good-faith reliance on the representation.
i. Entrusting to merchant: Estoppel usually arises in cases where the true owner
entrusts the goods to a merchant, who then (in violation of his agreement w/ the
true owner) sells them to a good-faith purchaser. At CL, the mere fact that the
true owner entrusted the goods to a merchant was never enough to estop
him from recovering them from the good-faith purchaser; some additional
Heather’s Parcho Outline
conduct by the true owner inducing reliance on the part of the good-faith
purchaser had to be shown.
ii. UCC expands doctrine: Under UCC, any entrusting of possession of goods to
a merchant who deals in goods of that kind gives him the power to transfer
all rights of the entruster to a buyer in ordinary course of business. Thus, in
contrast to the CL, the mere act of entrusting goods is sufficient to estop the true
owner from recovering them once they have passed to a good-faith purchaser.
iii. Rationale for expansion:
Protect Commerce - when people go into a store and buy
something, they should be secure about purchasing an item.
Efficiency (Least Cost Avoider) – The original owner could have
avoided the conflict at the least cost so the responsibility is placed
Fairness – Except in a case where property is stolen, the moral
fault should be placed on the owner. An owner can take steps to
prevent theft; things usually get stolen bec of an owner’s
3. Acquisition of Chattels by Find: An owner of prop dose not lose title by losing the prop. The
owner’s rights persist even though the article has been lost or mislaid. As a general rule, a finder
has rights superior to everyone but the true owner, however, there are important exceptions to
a. Example: A finds a jewel and takes it to a jewel to have it appraised. The jeweler
refuses to give the jewel back to A, saying that A does not own it. A is entitled to
recover from the jeweler either the jewel or the full money value of the jewel. As bet
A and the jeweler, A, the prior possessor, has the superior right. (note: even if A then
loses it himself, and B finds it, A’s rights are not lost by losing the jewel). (note: the
prior possessor wins rule even applies to objects acquired through theft or trespass)
i. Rationale for prior possessor rule:
Preserve public order
Protect interests of true owner – If you don’t give the finder
something, they will just hide the found goods and the true owner
might never learn that the goods were found.
Protect possession – When it comes to moveable prop, possession is
pretty much the only way to establish ownership.
b. Armory v. Delamirie
Facts: Chimney sweeper finds jewelry and bring it to a shop for appraisal, they offer him a
very low amount and when he says no, they won’t give it back to him.
Holding: the finder has superior rights to the property against everyone else except the
Remedy: Court said that if the jeweler did not bring the stone back then they had to
compensate him for the most expensive jewel that would fit the jewelry.
c. What constitutes possession?: For a finder to become a prior possessor, the finder
must – like w/ animals – acquire physical control over the object and have an intent
to assume dominion over it.
i. Constructive possession: A person is in “constructive possession” when the
law treats him as if he is in possession although, in fact, he is not or he is
unaware of it. The owner or occupant of premises may constructively possess
something on the premises of which he is unaware. If so, he is entitled to the
benefit of the prior possessor wins rule.
Ex. A landowner is in constructive possession of the objects located under the
surface of her land even though she is unaware of the objects. If A hires B to
Heather’s Parcho Outline
clean out her pool, and B finds a ring at the bottom of the pool, the ring
belongs to A, even though A was unaware the ring was there.
d. Finder vs. Owner of Premises:
e. McAvoy v. Medina
Facts: P was in a barber shop and found a wallet. He asked to barber to keep it to try and find its owner.
He couldn’t find the owner and the P wanted it back. Barber refused.
Issue: who should get the good found in a private place?
Rule: It is not the finder but the owner of the private place where the good was found until the
rightful owner shows up to claim it. Why? Barbershop has the best chance of returning it to the
rightful owner because that is where the owner is likely to look for it.
Property Found in Public Place
CIRCUMSTANCES EXAMPLE FINDER’S RIGHTS
LOST Owner accidentally and O does not notice that Finder entitled to possession
casually parted w/ his watch has slipped off against all the world except
possession and does not his wrist and landed on the true owner (exceptions
know where to find prop the street where owner of premises gets
possession = finder is a
trespasser, employee of owner
of premises, guest, on
premises for a limited
purpose, prop is found in a
highly private place, prop is
MISLAID Owner intentionally O lays his watch on the Owner of premises entitled to
placed prop somewhere sink in a hotel room and possession against all the
and then forgot about it forgets to pick it up world except the true owner
ABANDONED Owner voluntarily and O throws his old watch Finder obtains both possession
intentionally into a garbage can bec a and title if he exercises control
relinquishes ownership new battery for it would over the prop w/ intent to
w/ intent to give up both cost too much assert ownership
title and possession
Example: A finds a wallet on the floor of a beauty shop and a ring on the counter in the same shop. The
wallet is lost prop b/c it is assumed that it was not intentionally placed on the floor. A, the finder, prevails
over the owner of the shop and can take the wallet home to keep for the true owner. The ring is mislaid
prop b/c, from its position, it is assumed it was intentionally placed on the counter and forgotten. The ring
goes to the owner of the shop to keep until the true owner claims it. The finder has no rights in the ring.
Note: NY abandons distinctions bet lost, mislaid and abandoned. All such prop is treated as lost prop and
goes to the finder.
f. Bailment: A bailment is the rightful possession of goods by one who is not the owner.
The true owner is the bailor; the person in possession is a bailee. The bailee has the duty
to care for the goods and deliver them to the owner if the owner claims the find. A
bailment can be created by agreement, by find, or by implication.
i. Creation: To create a bailment, the alleged bailee must assume actual physical
control w/ the intent to possess.
ii. Parking lot cases: If A leaves the keys w/ the attendant, who gives A a ticket
identifying the car for redelivery, a bailment is created by agreement.
Heather’s Parcho Outline
iii. Custody distinguished: A person who has custody but not possession is not a
bailee. Custody is where goods are handed over but the owner does not intend
to relinquish the right of dominion over them.
iv. Duties of bailee: The standard of care varies w/ the type of bailment.
Bailment for the sole benefit of bailor – A gratuitous bailee must
use only slight care and is liable only for gross negligence.
Ex. You ask someone to watch your car when you go on vacation.
Bailment mutually beneficial – Bailee must exercise ordinary care
and is liable for ordinary diligence. A mutual benefit is clear where
the bailee charges for the service. Note: Some courts have stretched
the facts to find some benefit to both parties from the service rendered.
Thus if a hotel cashier accepts a ring for delivery to a guest in the hotel,
the hotel gets a benefit from rendering a service to a guest (goodwill if
Ex. Parking garages and hotels
Bailment for sole benefit of bailee – Bailee is required to use
extraordinary care. The bailee is liable for even slight neglect that
results in the goods being lost, damaged, or destroyed.
Ex. You borrow someone’s lawn mower.
Involuntary bailment – If the bailee has the goods thrust upon her,
the bailee does not have to take affirmative steps to protect the
prop and must only use slight care.
Ex. Someone leaves their dog on your doorstep.
4. Acquisition of Chattels by Gift: A gift is a present (in time) voluntary transfer of property
from one person to another w/o any consideration or compensation. It must be a present
transfer for if it is to take effect in the future it is unenforceable b/c there is no K.
a. Gift inter vivos: Gift made during the donor’s life when the donor is not under any
threat of impending death. The ordinary gift is an inter vivos one. An inter vivos gift,
once made, is irrevocable.
b. Gift causa mortis: Gift made in contemplation of immediately approaching death. A
gift causa mortis is revoked if the donor recovers from the illness that prompted the
gift. (note: it is possible to be near death and still make an inter vivos gift – look to the
intent of the donor; did he want it to be irrevocable nevertheless?)
i. Newman v. Bost
Facts: D was dying and promised P (his housekeeper) gifts; he pointed at several things (one of which was a bureau that
had a life insurance policy on it. Among other things, he promised her 3000, household furniture, 300 piano, and
bedroom furniture. He died and she is trying to get this from the administrator. She won it all in the first case.
Appeal – she did not get the life insurance, she got some of the furniture, she got the piano and the bedroom
ii. Life insurance – she did not get it for these reasons
He never discussed giving it to her
It could be manually delivered
Life insurance was not normally kept in a bureau
iii. household furniture – she only got some for these reasons
it was unclear how much he was talking about giving her; they gave her the things
that he gave her the keys to, everything else was insufficient delivery
furniture was in here bedroom so it was a more adequate delivery.
c. Requirements for a gift of chattels:
i. Donor must intend to make a gift;
Heather’s Parcho Outline
ii. The donee must accept the gift; (law presumes acceptance when the gift is
beneficial to the donee)
iii. There must be a delivery from the donor to the donee (see chart)
Delivery of Gift
ACTUAL PHYSICAL Donor physically vests donee w/ X hands a pearl necklace to Y
DELIVERY possession of the item such that
donee has dominion and control
CONSTRUCTIVE Actual manual delivery is X hands Y the a piece of paper w/
DELIVERY impracticable so donor surrenders the combination to a safe or the
the means of obtaining possession key to the safe
and control X hands Y the bank book to the
SYMBOLIC DELIVERY Actual manual deliver is X executes a written document
impracticable so donor hands stating he is giving Y his car
over some object symbolic of the
DELIVERY THROUGH Donor instructs his agent to X tells jewelry store (X’s agent)
THIRD PERSON deliver a gift to donee to deliver a pearl necklace to Y
Donor delivers gift to agent of X personally delivers a pearl
donee necklace for Y to Y’s butler
Note: The delivery requirement is dispensed w/ when the donee already has possession (ex. donee is
bailee). But when this is the case, the donative intent must be very clear.
d. Intangible interests: For a gift to be valid, a present interest, not necessarily a
possessory interest must be transferred. Therefore, a remainder interest, which has no
physical existence, can also be transferred by a written assignment. (ex. donor reserves a
LE for himself in the subject matter of the gift).
i. Gruen v. Gruen
Facts: Father promised to give son a painting in a letter written in 1963. After he died (1980), it remained in
his mother’s hands and she refused to give it to her son.
Issue: One can’t say that a future promise will take effect when they die. It is not valid according to inter
vivos (giving a gift while you are alive) because when one dies, their will supercedes such gifts.
- you can divide property by time; this was not a division by time
Court says for a gift to be valid present interest must be transferred but not necessarily by physical transfer
Son was given the remainder of interest in the painting.
- if I promise to give you something in the future, my promise is not legally binding and you
cannot enforce it
- however, if I vest a property interest in you now, then you have a vested interest and it will be
binding in court
e. this case is prime example: I write you a letter that says this is yours, but I am
retaining it until I die. You would have a vested interest and would have legal
rights to it when I die.
Heather’s Parcho Outline
f. Rationale for requirements: B/c gifts lie outside of the market system b/c they lack
K, you want to eliminate all ambiguity and have no doubt as to the intent to effect a
gift and the delivery of the gift.
D. ACQUISITION BY DISCOVERY
1. Discovery of America: “In the beginning all the world was America” John Locke wrote, meaning
that it was up for grabs. The European nations had a convention that discovery of America gave
title to a gov when its subjects made the discovery. When the Native Americans contested this,
the S.C., through C.J. Marshall, held that discovery gave title to the European nations which
passed title to the states or to the U.S. The Native Americans were not regarded as in prior
possession of America; they were hunters who moved their villages and, unlike the Europeans,
were not settlers who built permanent homes, staked out farms, and took possession of tracts of
land. As an alternative to title by discovery, Marshall held that Europeans – and subsequently the
U.S. – acquired title by conquest.
a. Native American right of occupancy: Although not recognized as having title or
ownership, Indian tribes have a right of occupancy on their land. This right has been
granted, and remains subject to the control of, the sovereign Congress.
b. Lessons from America: Two lessons can be drawn from above. First “possession” is an
elastic word. Its meaning is culturally determined. The European idea of possession of
land was unknown to the Native Americans, who used the land but never thought of
“possessing” it. Second, the determination and enforcement of prop depends on the
power of the state to impose its will. Prop thus both confers and rests on power.
II. The Rights of People Who Own Land in Fee Simple
A. THE BLACKSTONIAN MODEL OF ABSOLUTE RIGHTS W/IN ONE’S BOUNDARIES
1. Intro: This model is the most expansive view of property rights. It is a nice theoretic benchmark
against which we can measure existing rules, but it is inapplicable in the real world.
2. The traditional Blackstonian bundle of rights for prop in land included:
a. ownership by a single individual
b. in perpetuitiy
c. of a territory demarcated horizontally by boundaries drawn upon the land, and extending
vertically downward and upward
d. w/ absolute rights to exclude
e. absolute rights to use and abuse land, and
f. absolute rights to transfer
3. Fee Simple: The strongest property right we have today that comes closest to this model is called
a fee simple. A fee simple is a modern concept of ownership that is restricted on social grounds.
1. Intro: An encroachment is any infringement on the prop of another. (Ex. A erects a building, or
part of a building, on neighbor B’s prop, mistakenly believing the building is on A’s own land).
a. Pile v. Pedrick
Heather’s Parcho Outline
Facts: D wanted to build on their land, had a surveyor come out and tell them where their land ended – they built;
few years later a city surveyor comes out and says that the D’s building is 1 3/8 inch over the boundary. D
offered them many options but the P sues for trespass. P wants the entire wall removed.
b. Court says that he is entitled to that (even though they suggest he consider the other options -
damages). Court grants injunctive relief.
c. P holds out b/c he wants the max amount of money (says you can either tear the wall down or just
give me the money it would cost to do this) He now has an injunction so it’s his call – it’s his
property right now.
d. Efficient thing to do in this case would be to award Pile the $1 that the inch of land would cost.
i.The court, however, considers the possibility that Pile values his land more than the
‘market’ would (which is $1)
Why didn’t the court just award market value?
e. Court couldn’t say what the harm to Pile was
f. Said that there could be post trial negotiations in which Pile and Pedrick would be reasonable
i.Problem with this argument is that it never happens in reality – the player with the
injunction is very unlikely that they would speak, let alone negotiate; in practice,
we shouldn’t rely on this to happen. Damages relief would be the best
2. Innocent encroachment: If the encroachment is the result of an innocent mistake, courts
tend to look at the relative hardships to the parties of granting or denying injunctive relief. If
removal is diff or expensive for the intruder compared to the inconvenience it causes the
landowner, injunctive relief is usually denied and only damages awarded. Where
encroachments are minor and trivial, some courts deny all relief.
a. Raab v. Casper
Facts: P and D were adjoining land owners. Casper decides to build (without getting it surveyed). When he was
halfway through with the cabin, Raab warns Casper that he is encroaching. Casper ignores the warning. Raab
orders a survey and finds out the Casper was encroaching and brings a suit for trespass.
D did two things wrong
- Casper didn’t order a survey
- Didn’t listen to Raab
Trial court believes that Casper is a good faith encroacher; P appeals
Appellate court does not find Casper to be a good faith encroacher. They said he was negligent in building before
he had a surveyor check and he didn’t listen to Raab when he should have. Court says we cannot condone this
type of behavior.
What is the remedy?
If you are a good faith encroacher, then you get to keep your improvement and pay damages for the
land you encroached upon, and pay for the survey, and pay for the rent for the time you were there
before the trial
They found Casper to be a bad faith encroacher and found him to be negligent.
In most states now, If you are a good faith improver, the encroached upon party gets 1) the option of getting
the property they built on your land – and paying them for the improvement or 2) the option of selling the
land to the encroacher.
b. CL: This “good faith improver” rule is a modern law doctrine. At CL, an uninvited
encroachment by one person on another’s land, no matter how slight or unintended, was
considered a violation of prop rights which gave the encroached upon owner the right to
remove the encroaching party.
c. Negligent Encroachment: If someone’s negligence leads to an encroachment, even
though it may be innocent, many courts wont apply good faith improver rule
Heather’s Parcho Outline
3. Willful/Intentional encroachment: If the encroachment is willful or intentional, most courts
issue an injunction requiring removal of the encroachment regardless of the balance of
convenience or relative hardships.
C. LIMITATIONS ON THE RIGHT TO EXCLUDE - TRESPASS
1. Intro: Like the modern law of encroachments, the modern law of trespass has gotten more lenient
and reflects a retreat from right to exclude under traditional common law. Yet b/c trespass is an
intentional tort, it is likely to be punished severely even now. As a general rule, courts will be
more willing to condone trespass when it serves an important social goal, but will deter
a. Jacque v. Steenberg Homes
Facts: Some one wanted a mobile home delivered in the middle of winter from Steenberg homes; the road
was covered in snow and so they asked Jacque if they could drive across his field to deliver it, Jacque says
no, they do it anyway.
He wins $1 in nominal damages and $100,000 in punitive damages
Court says this was a premeditated decision – it was a deliberate trespass. The court wants to punish
those who deliberately break property law.
b. State v. Shack
Under fed law, workers have a right to organize a union, and unions have a right to communicate w/
workers on the employer’s premises seeking their votes. Ownership of prop does not include the right
to bar government services, hence there was no trespass and no breach of the right to exclude.
c. Protection of Marginalized group: Policy considerations must be looked at when
determining a prop owner’s rights. In this case, the court was trying to protect a
marginalized group so it limits the rights of the prop owner in order to achieve a
social goal. (Migrant workers are disadvantaged, isolated, and powerless and
government supported programs to help them depend on reasonable access)
d. Other justifications: Entry on the land of another may also be justified by:
i. Public/governmental interests
ii. Emergency – in emergency situations compensation should still be given,
but should not require punitive
2. Prop owner’s right to exclude vs. right of free speech:
a. Pruneyard Shopping Center v. Robbins
Facts: Students protest on the property of the shopping center. Owner makes them leave because they have
a policy prohibiting activism. They sue for a violation of their constitutional rights. The students win.
The ct held that property owners cannot prohibit free speech completely, but they can regulate the
manner, place, and time of the expression. The ct said that allowing the demonstrators did not
amount to a governmental taking b/c the events failed to demonstrate that the right to exclude others
is so essential to the use or economic value of the property. (Said that the shopping center could post
signs saying that they do not endorse protests so that they aren’t tied to it)
b. Case by case analysis: These competing rights must be balanced by looking at how
much the speech hurts the property owner’s interest.
D. THE RISK OF ADVERSE POSSESSION
Heather’s Parcho Outline
1. Overview: AP is the most unusual way of acquiring prop rights. If, within the number of years
specified in the state SOL, the owner of land does not take legal action to eject a possessor
who claims adversely to the owner, the owner is thereafter barred from bringing an action in
ejectment. Once the owner is barred from suing in ejectment, the adverse possessor has title
to the land.
2. Effect of adverse possession: The running of the SOL not only bars the owner’s claim to
possession, but it also extinguishes the old title of the owner and creates a new title by
operation of law in the adverse possessor. The adverse possessor’s right to possession,
heretofore good against all the world except the rightful owner, is now good against the rightful
owner as well. Once the adverse possessor has title, it can be transferred in the same manner as
any other title to land (by deed, will, or through intestacy to heirs). **However, title acquired
through AP can’t be recorded in the courthouse b/c it does not arise from a recordable document
but rather from operation of law. Thus, if the adverse possessor whishes to have his title and name
as owner recorded in the courthouse, he must file a quiet title action against the former owner.
The decree in this lawsuit will be recorded and will declare that the adverse possessor has legal
3. Justifications for AP:
a. Utilitarian view – adverse possession rewards active use of land and prevents diff
b. Psychologically – doctrine permits people who develop a special attachment to the
land to keep it
c. Morally – doctrine punishes/discourages slothful or indifferent owners
4. Requirements for AP:
a. Actual Possession: Adverse possessor must show that she was an actual occupier of the
land; must prove that she used or maintained the land in some way (farming, gardening,
i. Standard used: The standards used by courts is to ask how the neighbors
viewed the adverse possessor. If the neighbors viewed her as an actual owner,
that should create a presumption in favor of actuality
ii. NY law: To meet this requirement, NY requires the occupier to enclose the land
or substantially cultivate or improve it.
iii. Van Valkenburgh v. Lutz
Facts: Lutz’s were using land that wasn’t theirs; Van Valkenburghs bought the land and then told the Lutz’s
that they bought it and asked them to stop using it (walking across and building on it). Lutz’s still claimed
that they had the right of way. P built a fence so the D could not cross it; D sued the P claiming a right of
way. D won. P now sues to gain possession. D contends that they acquired the lots through adverse
D did get rights to prescriptive easement (road), but by doing this – they admitted that this land
was not theirs – they would have been wiser to claim it was theirs through adverse possession.
Since they did not claim it as theirs – they were unable to claim it later under adverse possession.
Claim of title – you have claim to the land under legal principles; Color of title – you have actual legal
Issue: 1. Must possession be actual to acquired title by adverse possession? 2. Where a person claims title,
not founded upon a written instrument, must a person either protect land by a substantial enclosure or
cultivate or improve on it to gain title? 3. Must land be possessed under a claim of title under adverse
Holding: yes to all three
Heather’s Parcho Outline
Rule: in order to acquire title by adverse possession, possession must be actual, it must be under claim of
title, and the land must be either enclosed or sufficiently improved.
Rationale: The garden occupied only a small portion of the lots. Their garage only encroached by a few
inches. Statute says there must be substantial improvement, cultivation, or it must be enclosed.
Wasn’t substantially improve for three reasons:
1. shack was too small
2. garden was insubstantial
3. putting trash on the land is not improvement.
b. Continuous Possession for Statutory Term: Continuous possession requires only the
degree of occupancy and use that the average owner would make of the particular
type of property. An adverse use is continuous when it is made w/o a break in the
essential attitude of mind required for adverse use. A person can be in continuous
possession even though there are considerable intervals during which the prop is not
i. Seasonal use: Use of a summer home only during the summer for the statutory
period is continuous use. Similarly, seasonal use of a hunting cabin during the
hunting seasons, or the grazing of cattle on range lands in summer, may be
sufficiently continuous possession if such lands are normally used in this way.
(Howard v. Kunto – used it as a summer home and court found that to be
1. Ewing v. Burnett held that you can use AP even if you don’t reside on
the land (making use of it is sufficient).
ii. Abandonment: If the possessor abandons the prop for any period of time,
w/o intent to return, continuity of AP is lost. The AP comes to an end, and
possession returns constructively to the true owner. If the adverse possessor
returns later, the SOL begins to run anew. (Intent of the adverse possessor must
iii. Interruption by true owner: If the true owner reenters the land openly and
notoriously for the purpose of regaining possession, an interruption has
occurred and SOL stops running. (Most states use objective test – if the
owner’s acts are ordinary acts of ownership and would give notice of claim to
the average person, they are an interruption)
iv. Statutory Term:
1. common law – 20 year
2. eastern states – 15-20 years
3. western states – can be as short as 5 years (to compensate for shorter
term, many states require tax payments by adverse possessor)
c. Hostile Possession w/ a Claim of Right: To be an adverse possessor, a person must
hold adversely to the owner and under a claim of right. Hostility does not mean
animosity; rather it means only that the possession is w/o the owner’s consent. The
occupier must claim the land as his own in defiance of the true owner’s title.
i. Mannillo v. Gorski
Facts: Guy sues neighbor b/c his pathway encroaches 15 inches. Neither were aware of the encroachment
for a long period of time. When they found out, D claims it was his through adverse possession – for 15
years. (good faith)
Issue: 1. Must possession be accompanied by a knowing, intentional, hostility for adverse possession? 2.
Does a minor border encroachment satisfy the “open and notorious” requirement for adverse possession. 3.
Can adverse possession come out of a situation where a person does not know he is encroaching?
Holding: no to first 2, yes to third
Heather’s Parcho Outline
Rule: Possession need not be knowingly and intentionally hostile but it must be notorious enough to
give the true owner actual or constructive notice of the encroachment. Subjective state of mind is
irrelevant. No good faith or bad faith is required.
ii. If you take possession with the true owner’s permission, it is very unlikely that
you could win under an adverse possession argument; this is presumed to last
until the occupier does a certain act that defies the true owner
iii. Three views as to state of mind of occupier:
1. Subjective Standard (NY): To prevail in NY the adverse possessor
has to state “I truly thought that I owned the land I occupied => Good
2. Minority view: Some states require adverse possessor to act in bad
faith; must state “I knew the land was not mine but nevertheless I
wanted to take it”.
3. Objective standard (modern view): In most states, it doesn’t
matter if it was good or bad faith as long as the other requirements
are met. (See Mannillo v. Gorski)
iv. Permission: There cannot be AP if the true owner permits the possession or the
use. If a possession begins permissively, as in the case of a tenant-landlord, it is
presumed to continue permissively until a hostile act occurs.
d. Open and notorious possession: The adverse possessor must occupy the prop in an
open, notorious, and visible manner. Her acts must be such as will constitute
reasonable notice to the owner that she is claiming dominion, so that the owner can
defend her rights. Open and notorious acts are those from which the community,
observing them, would infer the actor to be claiming ownership. Actual notice to the
true owner is not required in most states.
i. Surveying mistakes and encroachments: Sometimes an encroachment may
occur and a party may not even be aware of it bec of a surveying mistake. There
are two views:
1. If there is a surveying mistake, the prop owner is protected against AP
bec statute time will not begin to run until you learn of the mistake.
2. You are at risk of losing your prop to AP even if you didn’t know of
e. Exclusive: The adverse possessor’s use must be exclusive of the owner throughout
the statutory period. Therefore, if the owner periodically uses his/her land during the
adverse possessor’s period of possession it will usually be enough to defeat a claim of
5. What can a true owner do to prevent AP?: Letters generally do not suffice. An owner must
file and successfully prosecute a suit to gain ownership rights. It the suit is successful, it will
relate back to the date on which it was filed; you must file before the statutory period lapses.
6. Extent of Land Acquired by AP: Assuming all requirements for AP are satisfied, to what
physical area does the adverse possessor’s claim extend?
a. Property Actually Occupied (general rule): Normally he acquires title only to that
prop “actually” occupied. The amount of prop occupied by a particular act of
dominion will vary w/ the nature of the prop.
b. Constructive AP (color of title): By the doctrine of “constructive” AP, one who
enters prop under color of title (i.e. a written instrument that is defective for some
reason) will gain title to the entire area described in the instrument, even if he
“actually” possesses only a portion of it.
i. Must be recognized as a unit: The parcel of land claimed to be constructively
possessed must be one which is recognized in the community as a single parcel
likely to be owned by a single owner.
Heather’s Parcho Outline
Ex. Ted Turner owns a piece of land consisting of Sections 1,2, and 3 and a
militia group occupies section 3. If there is no color of title, the militia group
will get only section 3. If there is color of title and Turner does not use the land,
the militia group will get it all. Otherwise, the group will get all but what Turner
7. Disabilities of Owner: Most legislatures think it unfair for a SOL to run upon a person who
is unable to bring a lawsuit (under a legal disability). Therefore, most statutes give an
additional period of time to bring an action if the owner is under a disability. However,
disability provisions are strictly limited in two ways:
a. Only the disabilities specified in the statute (e.g. insanity, infancy, imprisonment, etc.)
can be considered; and
b. Usually only disabilities of the owner at the time AP begins count.
c. Note: Disabilities cannot be tacked; you only count the first one.
8. AP against the government: At CL it was impossible to acquire title in state owned land by
adverse possession. However, a number of states deviated from common law rule, and now allow
AP, even against the gov. In some states the statutory period is much longer w/ gov land, in others
it’s the same period.
9. AP of Chattels: As is the case w/ land, title to chattels may also be acquired through AP.
However, AP of chattels raises a unique problem. The problem is in determining when the statute
of limitations begins to run. An owner knows that their property was stolen, but do not know who
to bring suit against. Unlike land, personal property is easily moved and is hard to track down.
a. General Rule: The general rule is that the SOL begins to run from the date of theft.
b. Exception: If the owner exercised due diligence, he will be entitled to the rule of
discovery => SOL begins running when true owner discovered or should have
discovered the identity of the possessor of the stolen goods.
c. NY approach: The statutory period will not begin to run, regardless of the diligence of
the owner, until the owner demands the possessor to return the goods and the latter
refuses. In NY, there must be an act of defiance.
d. O’Keefe v. Snyder
1946- Painting stolen
O’Keefe does nothing (doesn’t report it)
1972 – lists paintings as missing
1973 – D buys painting
1976 – O’Keefe Sues
Cause of action for adverse possession began the day when the paintings were displayed; were displayed
Discovery rule: rule that states that statutory time began at discovery:
10. this rule only applies to diligent owners; she would have to sue as soon as she knows the identity of
11. Rule does 2 things
a. Puts the burden of showing that she used due diligence in trying to recover on the
b. If the owner is successful, the statutory period will begin to run at the moment that
the owner learned or should have learned of the identity of the owner
i. NY rejected the discovery rule because it thought that the discovery rule puts
too much burden on true owners; NY adopted a more protective rule stipulating
that the statutory period will not begin to run regardless of the diligence of the
owner until the owner demands that the possessor returns the goods and the
Heather’s Parcho Outline
1. This, in essence, requires BAD FAITH – the AP must defy
12. Tacking and AP: To establish continuous possession for the statutory period, an adverse
possessor can tack onto her own period of AP any period of AP by predecessors in interest.
Thus, separate periods of actual possession by those holding hostilely to the owner can be tacked
together, provided there is privity of estate bet the adverse possessors.
a. Privity: Privity exists when the subsequent possessor is admitted to the estate w/ the
permission/consent of the former owner (not formalistic).
b. Ex. A has a 99 year lease, and then after that the land reverts to the owner. Two
i. If AP occurred within period of lease, first 99 years, the adverse possessor will
only acquire title against A, and not against the owner. A will have the right to
possess for the remainder of the 99 years.
ii. If AP occupies in the period after the lease is over and when the land is
supposed to revert to the original owner, the adverse possessor can gain full title.
The time A spent on the property is tacked onto the time that the adverse
possessor has occupied the land. It is up to the lessor to watch over their land
instantaneously after the lease expires and he must take action right away.
III. Possessory Estates
1. Introduction: The system of land estates was devised in feudal times but still exists today.
a. Present vs. Future Estates: Present estates vest in their holders an immediate
possessory right. Future interests defer the vesting of the interest until some future point
i. Present Interests Include:
1. Fee Simple Estate
2. Life Estate
3. Fee Tail Estate
B. THE FEE SIMPLE
1. Fee Simple Absolute: A FSA is absolute ownership, so far as absolute ownership is known to
Anglo-American law. It is of potentially infinite duration. There are no limitations on its
inheritability. It cannot be divested, nor will it end on the happening of any event.
a. Words of Purchase and Words of Limitation: Estates are created by using appropriate
words in a deed or will. “Words of purchase” identify the person in whom the estate is
granted. “Words of limitation” are words describing the type of estate created.
Ex. O conveys Blackacre “to a and her heirs.” The words “to A” are words of purchase,
identifying A as the taker. The words “and her heirs” are words of limitation indicating a
b. Creation of a fee simple: At CL it was necessary to use words of inheritance (and his
heirs) to create a fee simple by deed.
i. Heirs have no present interest: The words “and his heirs” are only words of
limitation indicating that A takes a fee simple. A can sell or give away the fee
simple, or devise it by will, thus depriving A’s heirs of the land.
ii. Modern Law: The ancient requirement of words of inheritance in a deed
(and his heirs) has been abolished in all states. Under modern law, a deed or
will is presumed to pass the largest estate the grantor or testator owned. Thus a
Heather’s Parcho Outline
conveyance of Blackacre “to A” conveys a fee simple if the grantor had a fee
1. Note: Be the legal system favors fee simple estates, in cases of doubt,
courts will presume that the grantor intended to grant a FSA.
2. Inheritance (intro): An important attribute of fee simples in general is that they are
inheritable. In transferring upon death, the controlling instrument is the will. First question
you ask yourself is if there is a will. If there is no will, intestacy laws of the state will
determine how the prop of the decedent is to be divided.
a. Intestate: A person who dies w/o a will dies intestate. The people who are entitled to
the property of such person are called heirs (it is important to avoid the mistake of saying
that a living person has heirs).
b. Devisees: People who receive prop by way of a will are called devisees.
a. Share of Spouse: If the decedent leaves a spouse, the spouse is entitled to some share
of the decedents property (usually ½). The other ½ goes to the decedent’s issue, or,
if no issue, to the decedent’s parents, or, if no parents, to the spouse.
b. Share of Issue: The word “issue” means children, grandchildren, great-grandchildren,
and all further descendants.
i. Children’s share: If the decedent leaves a spouse and children, the spouse
takes half, and the children divide half. If the decedent leaves no spouse, the
children take all in equal shares.
1. Representation: If a child predeceases the decedent, leaving issue,
the issue represent the child and take the child’s portion. This is
called a per stirpes distribution.
2. Grandchildren’s share: Grandchildren do not take if their parent
is alive. Generally speaking – and subject to much variation if the
decedent leaves no children but only grandchildren and more remote
issue – grandchildren share only under the principle of representation.
Ex. O dies intestate, leaving no spouse, a child A, and two
sons of a child B who predeceased O. A and the two sons of
B are O’s heirs. A takes ½; the two sons of B, representing B,
take the other half.
c. Share of parents (ancestors): If the decedent leaves issue, parents do not take. If
decedent leaves a spouse and no issue, parents take ½ and the spouse ½. If the
decedent leaves no spouse and no issue, parents take all.
d. Share of Collateral relatives: “Collateral relatives” includes all blood kin except
ancestors and descendants. Hence it includes brothers, sisters, nephews, nieces, uncles,
aunts, and cousins. If the decedents leaves no spouse, issue, or parent, the collateral
e. Escheat: If a fee simple owner deis w/o a will and w/o heirs, the fee simple escheats to
4. Restraints on Alienation (Restraints on transferability of interest): In general, the law views
restraints on alienation w/ great disfavor.
a. Objections to R on A:
i. makes prop unmarketable
ii. perpetuates concentration of wealth
iii. discourages improvements both b/c owner cannot sell the land to realize the
full value of the land and b/c she cannot finance improvements by
mortgaging the land
iv. may adversely affect creditors
b. Three types of Restraints:
i. Disabling restraints – Outright forbid owner from transferring
Heather’s Parcho Outline
ii. Forfeiture restraints – Provide that if grantee attempts to transfer the house his
interests will be forfeited to another person
iii. Promissory restraints – grantee contractually promises not to alienate the land
c. Restatement approach: R2nd provides that absolute restraints on fee simple,
regardless of type, are VOID. Partial disabling restraints are VOID. Partial
forfeiture or promissory restraints are generally void unless they are reasonable in
purpose, duration, and effect.
C. THE LIFE ESTATE
1. Definition: A LE is an estate that has the potential duration of one or more human lives.
a. White v. Brown
Will left house to White with a clause that said that it is only to live in, not to sell. She eventually wants to
sell. She can only sell if it is a fee simple estate. D argued that the will was ambiguous; it really isn’t. The
terminology was missing – should have explicitly said that this was a life estate. If it was a life estate and
she didn’t live in it, then the house would pass to her heirs at law. She is suing to get the title of the house
from her heirs (Brown).
Court determined that it was not a life estate; on appeal the SC said that it was a fee simple absolute b/c
when a transfer lacks terminology and intention that would be required to show that it was just a life
estate, it is a fee simple by default.
2. Types of Life Estates:
a. For life of grantee: The usual LE is measured by the grantee’s life. Ex. O conveys
Blackacre “to A for life.” The grantee, A, gets an estate in the land for so long as A lives.
On A’s death, the land reverts to O, the grantor. (note: could say “to A until he dies”)
b. Pur autre vie: Where the estate is measure by the life of someone other than the
owner of the LE, it is classified as a LE pur autre vie. It comes to an end when the
measuring life ends.
i. Creation of LE pur autre vie: One of two ways:
1. O conveys Blackacre to B for the life of A. If B dies before A, the LE
pur autre vie descends to B’s heirs.
2. A, a life tenant, conveys her LE to B. B has a LE pur autre vie. A is
the measuring life.
3. LE is always followed by a future interest: Two possible scenarios:
a. Reversion: land returns to grantor. This is the default is a third party is not specified.
(note: this is a reversion in fee simple b/c it reverts to the grantor forever)
b. Remainder: land returns to anyone but the grantor (third party)
4. Transferability: A life tenant ordinarily is free to transfer, lease, encumber, or otherwise alienate
her estate inter vivos. Of course, the transferee gets no more than the life tenant had – an estate
that ends at the expiration of the measuring life.
a. Problems w/ LE:
i. limited duration significantly impairs their marketability.
ii. sometimes impose excessive maintenance costs on life tenant. As a life
tenant, you can legally sell the land, but no one will want to buy it.
iii. Baker v. Weedon
Heather’s Parcho Outline
Weedon dies and leaves a life estate to his 3rd wife; will says that if she dies and has children – the land goes to
them, if she doesn’t the land goes to his grandchildren. Suit arises b/c she can’t farm it alone and wants to sell it.
His kids don’t want to sell it.
Issue: when can a life tenant file to sell?
- no one will want to buy b/c they don’t know when she will die
- however, she can’t work the land or make anything out of it
Court says that to sell it is a very drastic remedy and not in the best interest of the entire family. Court
does allow her to sell part of it to alleviate her financial burden.
5. Sale of Prop by a Court: If the life tenant and the owners of the remainder are all adults,
competent, and agree, a fee simple in the land can be sold. If they cannot agree, can the life
tenant order the proceeds reinvested in trust w/ the income paid to the life tenant?
a. Holders of the remainder are able to consent: If the holders of the remainder are all
ascertainable, adult, and competent, they can consent to the sale and the general rule is
that a court will not give the life tenant relief in this case. The parties can bargain among
themselves about sale and division of the proceeds.
i. Equitable intervention: Equity may intervene and order sale of the prop if
the sale is necessary for the best interest of all the parties. This is a flexible
remedy used sparingly b/c of the underlying notion that the grantor wants
the land itself, not the econ value represented by the land, passed on to the
holders of the remainder.
b. Holders of the remainder cant consent: A court may order a sale if it finds that a
sale is in the best interests of the holders of the remainder.
6. Valuation of Life Estates: Two ways to evaluate the perspective shares of the life tenant and the
a. Rely on tables promulgated by the Treasury for tax purposes (easy way)
b. See pages 218-219 (hard way)
7. Duties of Life Tenant: B/c LE’s are always followed by future interest, the life tenant and
the future interest holder are essentially co-owners of the prop. Therefore the life tenant
owes basic duties to the future interest holders:
a. Duty not to commit waste: When two or more parties have the right to possess prop
concurrently or consecutively, neither has the right to use the prop in a way that
unreasonably interferes w/ the expectations of the other.
i. Affirmative wastes: (act) consists of voluntary acts ex. breaking a wall
ii. Permissive wastes: (omission) consists of failure to act when action is required.
as a tenant you cannot allow the property to fall into disrepair.
iii. Exceptions: Neither type of wastes are permitted, but there are some
1. Minerals can be extracted if they were extracted when the future
interest was created.
2. Trees can be cut down if good husbandry requires.
(note: Changes that increase the value of the prop are not typically
considered waste, but this standard is objective)
b. Duty to make repairs: duty to make reasonable repairs that result from normal use of
c. Duty to pay prop taxes and mortgage interests payments: however, the duty to make
payments is capped by the actual or reasonable rent (i.e. you cannot get more than you
paid for the property)
8. Trusts as an alternative: B/c of the problems w/ LE’s, most modern grantors prefer to use trusts.
Trusts preserve the value of LE’s, but eliminate the vices. A trust is basically a device whereby
one person manages prop for the benefit of others. It is a legal instrument which enables the
Heather’s Parcho Outline
grantor to benefit whomever they wish to benefit w/o giving them a possessory interest.
Usually a grantor grants property to a trust and appoints a trustee, who is under a strict obligation
(fiduciary duty) to manage the trust for the sole benefit of the beneficiaries. The trustee and the
beneficiary can be the same person.
a. Mahrenholz v. County Board of School Trustess
Trust that stated that this land was only to be used for educational purpose
Main question: Did the original grant create a FSD or a FSSCS?
Trial court says FSSCS, appellate court reversed finding a FSD.
Additional question: Was the condition breached? Found that the land never stopped being used for a school
b/c the school still store things there.
Rule: Little determinative language can make a huge difference.
HH is the future interest holder: he was to get it as soon as the land wasn’t used for school purposes
Rule: you cannot convey future interests independently but most states have enacted statutes allowing
intervivos transfers. 2 questions here:
1. What interests were conveyed by the transfer? (future, present, etc)
2. Was the condition breached?
- If you are dealing with a FSD, the condition begins to run the moment the condition is
breached, but the breach needs to be open and notorious
- With an FSSCS, the property is conveyed as soon as the future interest holder exercises
their right of entry
- Sometimes a restrict will take effect due to a promise – instead, it forms a covenant
o Only the duty implied BY the grantor makes it a Defeasible fee
o The grantor may be able to get damages but no forfeiture occurs
Courts typically do not like forfeiture – they would rather award remedies
(especially in modern times)
D. THE FEE TAIL
1. Historical Background: In feudal England, land was the basis of family power, status, and
wealth. One of the chief objectives of landowners, particularly large landowners, was to keep land
in the family. The fee tail was invented for just that purpose – to keep the land safe for succeeding
generations. It was designed to transfer generation to generation until the grantor’s bloodline ran
out. At that point it would revert to grantor (grantor’s heirs), only if the creating instrument was
silent as to who would take over when bloodline ran out. So fee tail could be followed by a
reversion or a remainder.
a. Restrictions: Fee tail holders could not give the right to possession for their lives to
third parties; they could not break the chain and thus affect the rights of the issue.
This changed in the 19th C when the law permitted the fee tail tenant to disentail by
conveying a fee simple to a third person.
2. Significance today: Fee tail is of little importance now. Fee tail was abolished in all states but
4 (Del, Ma., Mass, R.I). In these 4 states, fee tail tenant can convert his interest into a fee
simple by executing a deed during her life. She cannot do it by will.
3. Creation of fee tail: At CL, the fee tail was created by an instrument using words of
inheritance and words confirming succession to the issue of the grantee: “to A and the heirs
of his body.”
4. What we should know about the fee tail: The only thing we should know about the fee tail is
what happens in states which have abolished the fee tail when fee tails are attempted to be
Heather’s Parcho Outline
a. Ex. O → to my son A, and the heirs of his body. If A dies w/o issue, to my daughter B,
and the heirs of her body. There are 3 ways to deal w/ this:
i. Minority: A takes the LE and A’s issue gets a remainder in fee simple. B gets
ii. Majority 1: A gets a FSA and B gets nothing, even if A dies w/o issue.
iii. Majority 2: A gets a FSA but if A dies w/o issue, then B gets a FSA.
E. DEFEASIBLE ESTATES
1. Defeasible Fees: A FS can be created so that it is defeasible (subject to revocation) on the
happening of some event, and the owner of the FS then loses, or may lose, the property. If
the fee simple is defeasible, it is not absolute. Defeasible fees are most commonly encountered in
deeds restricting the use of land, but they may be used for other purposes as well. There are 2
types of defeasible fees simple:
2. Fee Simple Determinable: FSD terminates immediately and automatically upon the
occurrence of the specified even or condition, as long as the condition is not unreasonable or
Ex. O → A and his heirs, as long as no alcohol is served on the premises. A has a FSD that will
automatically end if they serve alcohol. When that happens the fee simple reverts to O.
a. Creation: A determinable fee is created by language that connotes that the grantor is
giving a fee simple only until a stated event happens. (“to A so long as”, “to A until”, “to
A while”, or lang providing that on the happening of a stated event the land is to revert to
b. Future Interests in FSD: By essence, every FSD is followed by a potential interest.
There are two types of future interests in FSD:
i. Possibility of reverter – Future interest in grantor (default)
ii. Executory interest – Future interest in third party
c. Transferability: A FSD may be transferred or inherited so long as the stated event
has not happened. But the fee simple remains subject to the limitation no matter
who holds it.
d. Valuation: When the gov exercises eminent domain, taking title to land where a
FSD is owned by A and a possibility of reverter is owned by B, it is necessary to
value the separate interests. The majority rule is that the entire condemnation award
belongs to A unless the FSD would expire w/in a reasonably short period. A minority
rule sets the value of the determinable fee as the diff bet full market value of a fee simple
for all uses and the value of the land for the uses permitted. The diff bet the value of the
determinable fee and the full fair market value is the value of the possibility of reverter.
i. Ink v. City of Canton
(246) (Ink gives land to city for use as a park only-It’s a park for 20 years-state now wants to build a
highway on most of the land)
Issue: The highway department is compensating people for their land. Who should they pay Ink
or the State.
Holding: Ink gets the value of the land the City gets the value of the structures built on the land
ii. City of Palm Springs v. Living Desert Reserve
D gives the land to P only to be used for a Museum; P (who is the local government) condemns it. So, they
basically have to pay themselves. And then they get to turn it into a golf course.
Court gave it back to D
3. Fee Simple Subject to Condition Subsequent: Only diff bet FSD and FSSCS is that the
FSSCS does not terminate automatically upon the breach of the condition or occurrence of
the specified event. FSSCS gives the future interest holder an option to reenter and take.
Future interest holder can either act on the option or not act.
Heather’s Parcho Outline
Ex. O → A, but if Bud Light is served on the property, then O can reenter the premises. If O does
not choose to exercise her right of entry when liquor is sold, the fee simple continues in A.
a. Creation: A FSSCS is created by first giving the grantee an unconditional fee
simple and then providing that the fee simple may be divested by the grantor or her
heirs if a specified condition happens. (“to A, but if X event happens…” or “to A, upon
condition that if X event happens…” or “to A, provided, however, that if X event
happens…” or “to A, however if…” the grantor retains a right of entry)
b. Future Interests in FSSCS: Like the FSD, FSSCS can create potential future
i. Right of entry – Future interest in grantor
ii. Executory interest – Future Interest in third party
c. Distinguished from FSD: These two estates are very similar and often the language in
deeds can be classified either way. If the courtt has a choice, the FSSCS is preferred
on the ground that the forfeiture is optional at the grantor’s election and not
automatic. The general policy of the courts is to avoid forfeiture of estates.
4. Practical Differences bet FSD and FSSCS:
a. Transferability of the Right of Entry: In some states the right of entry that follows a
FSSCS is not transferable during life. It is unalienable during life. The majority of
states, however, allow the right of entry to be transferred inter vivos.
b. RAP: RAP only applies to future interest (FSSCS) but not to possibility of reverter
c. SOL: W/ an FSD, limitation period begins to run the moment the condition is
breached, however, the breach must be open and notorious. W/ a FSSCS, the
limitation period begins to run from the moment the future interest holder attempts
to exercise the right of entry.
5. Interpretation: It is up to the ct to determine whether some actions constitute a violation of the
restriction. (Ex. is cooking w/ alcohol a violation of the condition that alcohol not be sold on the
6. Covenants vs. Defeasible Fees: Sometimes the duty or restriction will take the form of a promise
(covenant). The grantee will promise or undertake an obligation (ex. not to sell alcohol on the
land). However, only a duty imposed by the grantor creates a defeasible fee. A promise by the
grantee is different and a breach implicates the standard contractual remedies (damages,
injunction). A breach of a defeasible fee results in forfeiture.
7. Relationship bet Defeasible Fees and Restraints on Alienation: When a condition is too broad
or goes too far, the cts may use the doctrine against restraints on alienability to strike it down.
8. Defeasible Life Estates: Like a fee simple, a LE can be created so as to be determinable, subject
to condition subsequent, or subject to an executory limitation.
a. Ex. O → “to A for life so long as A remains unmarried”. A has a LE terminable upon
marriage. (note: this might violate the rule against restraints on alientation)
b. Ex. O → “to A for life, but if A does not use the land for agrigulture, O retains the right
to reenter.” A has a LE subject to a condition subsequent.
c. Ex. O → “to A for life, but if B marries during A’s life, to B.” A has a LE subject to an
IV. Future Interests
Heather’s Parcho Outline
1. Introduction: A future interest is a nonpossessory interest capable of becoming possessory in the
future. A future interest is a present interest in the sense that it is a presently existing interest. But
it is not a presently possessory interest, and that is why we call it a future interest.
a. Ex. O conveys Blackacre “to A for life, and on A’s death to B.” A has a possessory LE.
B has a future interest called a remainder. It will become possessory on A’s death.
Before A’s death, the remainder exists as a property interest in Blackacre. As w/ other
prop interests, B can transfer the remainder to C, and B’s creditors can reach the
remainder. It is an existing prop interest, which will become possessory in the future.
2. Types of Future Interests: Future interests are divided into two basic groups:
a. Future Interests in the Grantor:
i. Reversion – Follows present finite estates (life estates and leaseholds)
ii. Possibility of Reverter – follows FSD
iii. Right of Entry – follows FSSCS
b. Future Interests in Third Parties:
i. Vested Remainders – Follow finite present estates (life estates and
leaseholds). Three varieties:
1. Vested Remainder (absolute)
2. Vested Remainder Subject to Divestment (VRSTD)
3. Vested Remainder Subject to Open (VRSTO)
ii. Contingent Remainders – Follow finite estates
iii. Executory Interests – Follow defeasible fees. Two varieties:
1. Shifting – cuts short the interest before it
a. OA ahh, but if B returns from Rome then to B ahh
2. Springing – gap between termination of the previous estate and the
a. OA for life then to B 30 days after funeral (O has title in
B. FUTURE INTERESTS IN THE GRANTOR/TRANSFEROR
1. Reversion: A reversion is a future interest left in the grantor after she conveys a finite estate
(LE or leasehold) w/o providing who will take the prop afterward, or when she expressly
reserves the future interest to himself.
a. Reversion need not be certain:
Ex. O → A for life, then to B and her heirs if she outlives A. A has a LE, B has a
contingent remainder. If B dies before A, there is a reversion to O.
b. Ex. O → to A for life, then to B and her heirs if B attains the age of 21 before A dies. O
has a reversion bec B may not attain 21 before A dies. However, if B does attain 21, O’s
2. Possibility of Reverter: A possibility of reverter is a future interest remaining in the grantor
(who has a FSA) when a FSD is created. If you see a grant of a FSD, know that the grantor has
a possibility of reverter unless the grant transfers the prop to a third party upon the occurrence of
the specified event.
3. Right of Entry: A right of entry is created when a grantor creates a FSSCS and retains the
power to cut short or terminate the estate.
a. Ex. O conveys Whiteacre to A but provides “if land ceases to be used for library
purposes, O has the right to re-enter.” A has a FSSCS and O has a right of entry.
C. FUTURE INTERESTS IN THIRD PARTIES/TRANSFEREES
1. Remainder: A remainder is a future interest created in a grantee that follows directly after
finite present estates (Defeasible Life Estates and Defeasible Leaseholds). A remainder
Heather’s Parcho Outline
never divests or cuts short the preceding estate; instead fit always waits patiently for the
preceding estate to expire. There are two types of remainders:
Ex. O → to A for life, then to B if B is then living. B has a remainder bec B’s interest is capable
of becoming possessory upon the termination of the LE.
a. Vested Remainder: A remainder is vested if the holder of the remainder is alive,
ascertainable, and there is no condition precedent in the grant.
i. Subclassification of Vested Remainders:
1. Indefeasibly vested remainder: When a remainder is indefeasibly
vested, the holder of the remainder is certain to acquire a possessory
estate at some time in the future, and is also certain to be entitled to
retain permanently thereafter the possessory estate so acquired.
Ex. O → A for life, then to B and her heirs. B is to take permanent
possession on A’s death. If B dies before A, B’s heirs are entitled to
possession. Thus, B’s remainder is indefeasibly vested. If B dies
intestate and w/o heirs before A, B’s remainder escheats to the state.
Ex. O → A for life, then to B for life, then to C and her heirs. A = LE.
B = VR in a LE. C = VR in FSA.
2. Vested Remainder Subject to Open (VRSTO): When a remainder is
vested subject to open, it is vested in a class of persons, at least one of
whom is qualified to take possession, but the shares of the class
members are not yet fixed bec more persons can subsequently become
members of the class. (ex. by being born).
Ex. O → A for life, then to A’s children and H/H (A has one child, x).
A = LE, x = VRSTO (bec more kids may be born later), A’s unborn
children = CR (they are unborn, but still have an interest).
3. Vested Remainder Subject to Divestment (VRSTD): When a
remainder is subject to divestment, it may be divested in the future by
operation of a CS. (look for “, but if”). A VRSTD is followed by an
executory interest if it shifts to another party.
Ex. O → A for life, then to B H/H, but if B fails to grow sunflowers on
the land, then to C H/H. A = LE, B = VRSTD, C = Executory interest
Ex. O → A for life, then to B H/H if B survives A, and if B doesn’t
survive A, then to C H/H. A = LE, B = CR (no ,but), C = CR (C has a
CP as well and also doesn’t cut anything short). O has a technical
reversion, but this will cease once A dies.
b. Contingent Remainder: All remainders that are not vested are contingent. The
remainder will be contingent if any of the above conditions for a vested remainder
are not satisfied.
i. Ex. O → A for life, then to B and her heirs. A has a LE. B has a VR (we
assume, w/o other info, that B is alive and ascertainable). There is no reversion
b/c if B dies it goes to B’s heirs.
ii. Ex. O → A for 10 yrs, then to whomever is the president of the U.S. and his
heirs. A has a leasehold. The pres has a contingent remaninder (it is not
ascertainable at the time of the conveyance who this person is so the
remainder is contingent, not vested).
Note: there is no CP in the conveyance – someone will be pres, but for now its
just an abstract entity.
iii. Ex. O → A for life, then to B if B attains 21, and if B doesn’t to C. A = LE, B =
CR, C = CR. If A dies, and B is only 18, the land reverts to O for the 3 yr
c. Note on CR: When there is a CR, you must look for someone to take the prop should the
condition fail. You must look for either a reversion or an executory interest.
d. Condition Precedent vs. Condition Subsequent: A condition precedent is a condition
that must occur before the person moves into possession. A condition subsequent is a
condition that cuts short a possessory estate if it occurs.
Heather’s Parcho Outline
i. Ex. O → A for life, but if she sells alcohol O can re-enter. A has a LE subject
to condition subsequent (CS = selling of alcohol). B has a right of entry (right
of entry always follows CS).
ii. Ex. O → A for life, then to B and her heirs if she survives A. A has a life
estate. B has a contingent remainder. (B has to survive A in order to take the
property. Since this is a CP, B’s remainder is contingent).
e. Distinction bet Vested and Contingent Remainders:
i. CR subject to RAP, while VRSTD are not (only VRSTO is subject to RAP)
2. Executory Interests: There are two types of executory interests – shifting and springing.
For a shifting executory interest to vest, it must cut short the interest preceding it. A
springing executory interest exists when there is a gap bet the termination of the preceding
estate and the vesting.
a. Executory Interests are subject to RAP.
b. Ex. O → A and H/H, but if B returns from Rome, then to B H/H. A = FSSCS, B =
c. Ex. O → A for life, then to his daughter B one month after the funeral. A = LE, B =
springing EI (there is a gap; B takes over a month after funeral)
d. Ex. O → A for life, then to B H/H, but if B fails to graduate from law school then to C
and H/H. A = LE, B = VRSTD, C = shifting EI
D. RULES FURTHERING MARKETABILITY BY DESTROYING CONTINGENT FUTURE
1. The Rule in Shelly’s Case (Rule of Merger): If the same instrument creates a LE in A, and then
purports to create a remainder in persons described as A’s heirs, we change the remainder to the
heirs to become a remainder in FSA in A; A gets the full conveyance.
a. Ex. O → A for life, then to A’s heirs. A = FSA.
b. Relevance today: This rule is of no use today and has been abolished in most states.
2. Doctrine of Worthier Title (Rule Forbidding Remainders to Grantor’s Heirs): If an
intervivos conveyance ( a conveyance bet two living people) grants land to a person, and also
creates a future interest (remainder or EI) in Grantor’s Heirs, we change that future interest
into a reversion for O in FSA.
a. Ex. O, while alive → A for life, then to O’s heirs. O = reversion in FSA.
b. Relevance today: This doctrine is still enforced in most states, however, it is considered
a rule of construction, which means it only creates a rebuttable presumption that a
reversion in O, rather than a remainder in O’s heirs, is intended. However, this
presumption can be easily rebutted.
3. Rule Against Perpetuities (RAP): No interest is good unless it will vest or fail not later than
21 years after the expiration of some life in being at the creation of the interest. If an
interest vests later than the perpetuities period that interest is struck down by the rule.
a. Interests Subject to Rule:
i. Contingent Remainders
ii. Vested Remainders Subject to Open
iii. Executory Interests
iv. Purchase Options
Ex. O → A for life, then to B H/H. Rule doesn’t apply b/c B’s interest is a VR in
b. Lives in Being: Refers to people who are alive at the time of the conveyance and
who can affect the vesting.
i. Note: If a condition is attached to one of the lives in being, and this person must
satisfy the condition personally, the future interest is always good under the
Heather’s Parcho Outline
Ex. O → A for life, then to Jeter and H/H if Jeter attains 30. Jeter = CR. Jeter
will either attain 30 or die in his lifetime so his interest is not affected.
c. Create, Kill, Count Approach:
i. Create a person who may be eligible to claim the property under the terms of the
ii. Kill all the lives in being except for the new person you created
iii. Count 21 yrs from the moment of everyone’s death.
iv. If the interest is sure the vest or fail w/in the perpetuities period, the RAP will
not strike it down.
d. Class Conveyances: Whenever a conveyance is made to a group of people (ex. to A’s
children), the RAP requires that the future interest of all the members of the group
will necessarily vest or fail within the perpetuities period. If the gift to one member
of the class might vest too remotely, the whole class gift is invalid.
i. Ex. O → A for life, then to A’s children H/H. A has one child, C.
Create D (A’s new child)
Count – if everyone else is dead, the interest in D will vest immediately, so the
rule isn’t violate.
ii. Ex. O → A for life, then to A’s children for their lives, then to B if B is then
alive, and if B isn’t alive, then to B’s heirs. (A has a child, M; B is alive)
A = LE, M = VRSTO, A’s unborn children = CR, B = CR, B’s heirs = CR. All
interests are good.
e. Re-Purchase Options: RAP was extended to options to re-purchase land. In a
typical purchase option, the grantor reserves in himself the right to re-purchase the
land upon the occurrence of a certain contingency.
i. Ex. A → B and her heirs, but if B holds trance parties on the prop, A will have
the right to buy back the land for $1000.
ii. Central Delaware v. Greyhound Corp.
Land to be used for public purpose and if it wasn’t, the seller could repurchase. They argued that this was a right
of entry, not a repurchase agreement.
1. Trial court found that it was an option but decided not to apply the rule on
public policy grounds.
a. They thought applying the rule would deter people from giving
their land for public purposes
b. Supreme court reverses and says that the RAP is a preemptory
rule that cannot be held back – it’s not discretionary.
iii. Exceptions to Purchase Options:
1. RAP doesn’t apply to options to lessees (as opposed to lessors) to
buy the prop at the end of the lease.
a. Symphony Space, Inc. v. Pergola Properties, Inc
Heather’s Parcho Outline
1978, Broadwest Rail Corp sells building to symphony space (a non profit organization) for a tax break (they sold at
10,010). Then they lease back the commercial space for $1. In a separate agreement, they created a repurchase
option for $10 and the option could be exercised in 1987, 1993, 1998, or 2003.
Issue: Is the repurchase item valid under the rule of perpetuities?
Holding: Court says that the option is subject to the rule and when applied to the rule the repurchase option is
Courts could have eliminated the last date option and not applied the rule. However – they didn’t b/c the whole
purpose of this deal was to avoid taxes. Bad policy.
- RAP does not apply to leases. Why?
Because options to purchase what you are leasing gives you an incentive to improve on it which is
The courts could have used this too, but they chose not to.
2. RAP doesn’t apply to pre-emptive options held by governing boards of co-ops
and condos. Pre-emptive option means that when you go to sell, the governing
board has the first chance to buy.
f. Wait and See Approach: Most states (not NY) have abandoned the traditional RAP
approach in favor of the wait and see approach. There are two approaches under
i. Wait out the perpetuities period; don’t analyze at the time of conveyance
(lives in being + 21)
ii. Wait 90 yrs
V. Co-ownership and Marital Interests
A. COMMON LAW CONCURRENT INTERESTS
1. Tenancy In Common: A TIC is a form of concurrent ownership wherein each co-tenant is
the owner of a separate and distinct share of the property, which has not been divided
among the co-tenants. Each owner has a separate undivided interest in the whole. Each co-
tenant has the right to possess and use the entire property subject to the right of the other
i. A TIC can be created either expressly by grant or will. (O → A and B)
ii. A TIC can be created by operation of law. (Ex. when people inherent prop
together – i.e more than one heir)
b. Default: When a conveyance is made to two or more persons who are not husband
and wife, they are presumed to take as TIC and not as joint tenants. This
presumption can be overcome by evidence that a JT was intended.
c. Transferability: A tenant in common can sell, give, devise, or otherwise dispose of
her undivided share in the same manner as if she were the sole owner of the prop.
i. If all tenants in common transfer to a third party, that party will have full
ownership and the TIC will be terminated.
ii. If the property is partitioned among the co-tenants, the TIC is terminated.
iii. If the value of the land would be substantially lower is it was parceled, then
the court will order a sale (and the money split).(Johnson v. Henrickson)
iv. Delfino v. Vealencis
I FACTS: The Delfinos (P) owned 99/144 of the property and wanted a residential development, while
Vealencis (D) owned 45/144 and wanted to keep her garbage business on it. (Tenants in common.)
(Delfinos want partition by sale b/c one tenant will own entirety and fully account for benefits; Vealencis
Heather’s Parcho Outline
want in kind to keep business.)
RULE: A partition by sale should only be ordered if the physical attributes of the land in question
are such that a partition is impracticable or inequitable, and the interests of the owners would be
promoted by a partition by sale.
e. No right of survivorship: When a tenant in common dies, her interest passes to her
devisees or heirs. It does not go to the surviving tenant in common.
2. Joint Tenancy: A JT is a TIC + a right of survivorship. When one of the joint tenants
passes away, her interest will automatically pas to the other surviving JT. It will not become
part of her estate.
a. Advantages of right of survivorship:
i. Transfers the prop automatically to the surviving joint tenant w/o the time and
expense associated w/ probate
ii. JT protects the surviving joint tenant from the claims of secured and unsecured
creditors of the dead joint tenant.
b. Creation: A JT requires that the interests of the joint tenants be equal in all
respects. They must take their interests at the (i) same time, (ii) by the same
instrument, (iii) w/ identical interests, and (iv) w/ an equal right to possess the whole
property. These unities must exist at all times. So if a JT transfers his interest, it
severs the JT.
i. Unity of Interest: – interest granted (type, amount, and duration of the estate
must be identical for each owner)
ii. Unity of Title – the interest must be created in the same grant, not in successive
iii. Unity of Time – the interest must vest at the same moment
iv. Unity of Possession – all joint tenants must have equal right of access and use
in the land.
c. Severance: Severance can occur either by mutual consent or by unilateral acts, such
as unilateral transfer. If there is a transfer, JT turns into a TIC. Some states (NY)
offer protection to the unsuspecting JT and require recordation of unilateral transfers.
Recording is a mechanism for informing the other JT that a transfer has taken place.
d. Unilateral conveyance to oneself
i. Used to have to transfer through a dummy to sever: Riddle v. Harmon
Wife unilaterally conveyed her joint tenancy to herself in order to change it into a tenancy in common so
that she can convey it to whoever she wants in her will. Didn’t use the third party dummy.
Issue: Does this act sever the JT and her husbands right of survivorship?
Holding: Yes. She can unilaterally sever by transfer a ½ interest in the property to herself.
Rationale: Since she could easily convey to a dummy and then back to herself, the court sees no
reason to make one do this.
ii. Harms v. Sprague
William Harms and John Harms were joint tenants. John executes a mortgage on HIS share and executes a
will to devise his property to Sprague.
Issue: Does a mortgage sever a JT? (If it does – it goes to Sprague? Does the mortgage have any effect
after the death of the mortgager?
2 theories about severance: the mortgage shifts the title to the mortgagee and he has an equitable right to
the property; or the lien theory (majority view) which states that the mortgagee has a lien and so the
interest doesn’t vest until the loan is not paid off.
- this state says it was a lien and so the right of survivorship survives (because at the death, the
property goes to other JT before the mortgagee could get it as equitable property.
- The mortgage does not attach to the property and so Harms gets it without the lien
iii. Tehnet v. Boswell
Johnson and Tehnet have JT. Johnson leases property to Boswell without telling Tehnet. Johnson dies.
Heather’s Parcho Outline
Issue: Does the lease sever the JT? If it doesn’t sever it, does the lease survive?
Holding: No, it does not sever the JT. A lease is not so inherently inconsistent with a JT as to effect
however, if there was clear and unambiguous intent to sever the JT, then the lease can sever it.
Secondly, the lease here does not survive (Boswell’s lease was extinguished with Johnson’s tenancy)
The court said that ruling otherwise would upset the legitimate expectations of the joint tenant
Said to Boswell that a careful or prudent lessee should have conducted a title search
Important here that the court created a standard, not a rule – “Without clear and unambiguous intent
to sever the JT, then the lease can’t sever it”
iv. Transfers by will: Transfers by will do not sever the JT. The right of
survivorship supersedes the will.
e. Construction/Interpretation: JT’s are out of favor w/ courts today, so if you want to set
up a JT you have to express your intent VERY clearly. (To A and B as joint tenants, and
not as tenants in common. Or mention right of survivorship. “To A and B as joint
tenants” may not be enough)
2. Effect of Various Unilateral Acts on a JT:
a. Conveyance to Oneself: The CL required that in order to have a legal transfer, one
person must convey to another person, and not to herself; hence the joint tenant could not
convey directly to herself. Some recent cases have allowed a joint tenant to
unilaterally sever the tenancy by conveying her interest to herself w/o using an
i. Conveyance to a strawman or creation of a trust and then having that person
transfer to you are ways to get around the CL bar.
b. Mortgaging: When one joint tenant gives a mortgage on the prop, does this sever the JT
b/c the unity of interest is destroyed? Jurisdictions are not in agreement: (see Harms)
i. Title theory states: the execution of a mortgage conveys title to the
mortgagee, therefore JT is severed b/c a prop interest was transferred
ii. Lien theory states: JT survives b/c no prop interest was transferred
c. Leases: Several approaches to leases: (see Tehnet)
i. Complete Severance – (dominant view in England; only a small # of US states
accept it) A conveyance of a lease or a LE terminates the JT and hence the
interest of the lessee survives the death of the JT lessor.
ii. No Severance – (some states adopt this rule) execution of a lease does not
sever a JT and thus the lease does not survive the death of the lessor JT.
iii. Partial Severance – other states hold that a lease or a LE partially severs
the JT, turning it into a TIC for the duration of the lease. The original joint
tenants become joint tenants in the reversion.
3. Tenancy by the Entirety: A TBE is a form of concurrent ownership that can be created only
between a husband and wife, holding as one person. The TBE is like a JT in that the 4 unities
(plus a fifth – unity of marriage) are required for its creation, and the surviving spouse has the
right of survivorship. What distinguishes it is that the H and W and considered to hold as one
person and neither of them, acting alone, can partition the prop or terminate the other
spouses right of survivorship by conveying her or his interest to a third party.
a. Termination: Divorce terminates the TBE.
i. Effect: If you terminate a TBE it will become a TIC.
b. Rights of Creditors: Under the majority view, creditiors of one spouse cannot reach
the prop bec neither the husband nor the wife acting alone can transfer his or her
i. To protect themselves, creditors can get both spouses to agree to the
transaction in the contract.
1. Sawada v. Endo
Endo injures Sawadas in car accident. Mrs. Sawada sued but the Endos had given their property to their
son. The Sawadas win lawsuit but cannot collect b/c Endos have given most of their property away and
Heather’s Parcho Outline
what they have left is in a tenancy by the entirety. So he doesn’t have enough $ to pay unless they get some
of the TIC prop.
Issue: Can an interest of a spouse in a TBE prop be taken by creditors?
2. U.S. v Craft
For years, between 1979 and 1986, Don Craft failed to file his tax return files and so incurred a debt of
482,446 to the IRS. In 1998, they try to get the money from Don. The IRS wants to attach the lien to
entirety property held by Don and wife Sandra. Sandra opposes this.
Issue: Does a tenant by the entirety possess the property or rights to property to which a federal tax
lien may attach? Lower court says yes, SC reverses.
Courts look at the state law. O’Conner says that the indivisibility of this property is a common law fiction.
Both can use it, make money off it, and exclude others. The only thing they cannot due is transfer it
unilaterally. Court included the policy concern that there could be massive tax evasion.
- Dissents say that in other areas of joint ownership (corporations) they are technically legal
fictions. Said tax evasion is an unsubstantial fear.
3. United States v. 1500 Lincoln Avenue
Mr. Bernstien was selling lots of illegal drugs at his pharmacy. He was married and his wife had a TBE
and she had no knowledge of what was going on. The government wants forfeiture. Mrs. Bertstien raises
the innocent owner defense. Government wants to give her a TIC and take his half. She wants to retain her
property rights – says this property is out of reach – it is hers in the entirety.
Issue: What interest is forfeited when one of the tenants engages in illegal activity?
- government says that they will not effect the property rights during her lifetime if she
outlives her husband. If he outlives his wife- the property will forfeit to the government.
ii. NY Rule: In NY, creditors who levy on a debtor spouse’s interest step into the
spouse’s shoes and get the rights of a tenant by the entirety. Neither party can
unilaterally sever the entirety by partition and each has a right of survivorship.
Ex. X and Y hold by the entirety and C is a creditor. C can become a tenant by
the entirety w/ Y.
c. Forfeiture under drug laws: Fed drug laws provide for the forfeiture to the gov of
any prop used in the sale of illegal drugs. Any interest in the prop of an innocent
owner is exempt from forfeiture. Cts have held that the gov is in the same position as a
creditor of the drug-dealing spouse and can reach whatever interest of H (drug dealer) a
creditor can reach. Thus, W’s protection against forfeiture may differ from state to state.
B. RIGHTS AND DUTIES OF CO-TENANTS
1. Intro: The rights and duties of co-tenants are more or less the same regardless of the type of
co-tenancy. Unless otherwise noted, these rules apply to all co-tenants.
2. Partition: Any tenant in common or joint tenant has the right to bring a suit in partition.
This is an equitable proceeding in which the court physically divides or sells the common
prop, adjusts the claims of the parties, and separates them. Partition is not available to a
TBE b/c neither spouse can destroy the right of survivorship of the other spouse.
Heather’s Parcho Outline
a. Partition in Kind: The ct may order physical partition of the property into separate
tracts if feasible. Once partitioned, each party owns her tract in fee simple.
i. Advantages: Preserves current tenants on the land and protects the weaker
tenant against abuse.
b. Partition by Sale: If physical partition is not feasible or in the best interests of the
parties, the ct will order the property sold and the sale proceeds divided equally
among the co-tenants.
i. Advantages: Increases the value of the land, it is administratively easier, and it
prevents a hold out problem.
c. Waiver of right to seek partition: Some states allow a waiver either by express or
implied agreement. Also, the right to seek partition may be negated by the
3. Possession: Each co-tenant is equally entitled to the possession and enjoyment of the entire
co-tenancy property. No co-tenant may exclude another co-tenant from any part of the
a. Accounting for reasonable rental value by co-tenant in possession: Suppose A and B
are co-tenants. A goes into exclusive possession. B voluntarily remains out of
possession. Must A pay B 1/ the fair rental value of the prop?
i. Majority Rule: If B is not excluded (ousted) by A, A is entitled to use and
occupy every part of the prop w/o paying any amount to B. B cannot
recover a share of the rental value of the land unless B has been ousted by
A, or A agreed to pay B, or A stands in a fiduciary relationship to B. Rule of
Spiller v. Mackereth
1. Ouster: Ouster is an act by one co-tenant that deprives another co-
tenant of the right to possession. The other tenant must request to use
the land, be denied, and only then can he demand payment.
4. Accounting: Any rents or other income collected by a co-tenant from a third party must be
shared equally w/ the other co-tenants if the income exceeds the collecting co-tenant’s
proportionate share. The collecting co-tenant must account to the others for their proportionate
shares. The collecting co-tenant must account for the net amount actually received, not for the
reasonable rental value of the land. If there is an ouster, the accounting will be based on the fair
a. Co-tenant leases only his interest: This is similar to self-use, however the lessee is
subject to the same obligations as the other co-tenants. Any co-tenant that is
unhappy w/ the lease can take the necessary measures to gain the right to
5. Contributions: The general principle is that a co-tenant who pays money to keep up the
prop, which benefits all co-tenants, is entitled to reimbursement for more than her
proportionate share of costs. But this is subject to exceptions and qualifications.
a. Repairs: Repairs are voluntary. A co-tenant who makes necessary repairs cannot
compel contribution from her co-tenant. However, repairs may be taken into account
in a case of partition or accounting. Only reasonable repairs under the
circumstances will be considered.
b. Tax Payments: Each co-tenant has a duty to pay her share of taxes. If one co-
tenant pays more than her share, she can compel the other to reimburse her
immediately, or she can wait and present her claim in a suit for partition.
c. Mortgage Payments: There is generally a right to contribution for mortgage
d. Improvements: Same rule applies here as for repairs.
6. Co-Tenants have two duties:
Heather’s Parcho Outline
a. Make tax and mortgage payments when such payments become due
i. Swartzbaugh v. Sampson
Mr. Swartz (D) leased part of some land for a boxing pavilion, but Mrs. Swartz (P), the JT, never signed
the lease and wants to cancel it.
RULE: A JT, during the existence of a JT estate, has the right to convey or mortgage his/her interest
in the property, even if the other JT objects.
PROC: Appeal from granting of motion for nonsuit in action to cancel leases.
ISSUE: Can one JT, who has not joined in the leases executed by a cotenant and a lesee in exclusive
possession of the leased property, maintain an action to cancel the leases?
HELD: No. Lease is valid. The leasee is subject to the rights of the other JTs who haven't entered
into the lease.
b. Duty not to commit waste; not let prop fall into disrepair.
C. MARITAL PROPERTY
1. Types of Marital Property Regimes: Two types of regimes were handed down to us from the
a. Separate Property: Originated in England; under this system each spouse owns the
prop he/she acquires. However, under the old English rule, the husband had full control
of the wife’s prop for the duration of the marriage.
b. Community Property: Treats the husband and wife as a single unit that shares prop
equally. It is enacted in 8 states. Married couples can opt for either a JT or a TIC should
they wish to do so. However, it is an either/or option – either JT/TIC or Community
Prop. In many comm. prop states there is a strong tax incentive to elect comm. prop
and not the more traditional forms we know of.
i. Note: even in comm. prop states, the prop the spouses bring into the
marriage can remain under separate ownership; it is not totally
encompassing. All other property will be split equally at the dissolution of the
c. Co-Ownership: H and W can hold prop as either JT, TIC, or TBE.
2. The CL System – Effect of Divorce:
a. Traditional “title” view: Upon divorce the spouse who held formal title to the prop got
to keep it; only marital prop was affected - separate prop remained separate upon divorce.
i. Co-Tenancy: If prop was held the co-tenancy forms JT or TIC, divorce did not
affect it. If tenancy was held in TBE, it was converted to a TIC or a JT.
b. Modern Doctrine of Equitable Distribution: Today, every state that follows the CL
approach to prop has abolished the doctrine that legal title controls and replaced it
w/ a system of equitable distribution. (again, only marital prop was affected) No longer
divide prop by who the title holder is. Equitable distribution empowered courts to
consider various factors, such as:
i. duration of marriage
ii. prior marriage
iii. age, health, education
v. custody of children
vi. respective contributions of the spouses to the prop they have in deciding how the
prop is to be divided
vii. NOTE: An important change from the CL was that this was a system that
didn’t take fault into account. At CL, prop wouldn’t be granted if there was
adultery, cruelty, etc.
Heather’s Parcho Outline
c. Today’s trend: Today, the trend is to engage in equal distribution. Property is
usually divided in half. Courts can grant alimony to needy spouse.
3. What constitutes Marital Property: Earnings and prop acquired from the earnings are
surely marital property. Assets brought into the marriage are usually kept separate. States
are split as to whether gifts, inheritances, and bequests are considered marital prop or
should be considered separate prop.
a. Professional Degrees: Whether professional degrees are considered marital prop is
questionable, but the majority say no (NY says yes). In states where it isn’t, a party
may make an expectations argument (i.e. the legitimate expectations of the parties
mandate equitable distribution of the value of the degree)
i. In re Marriage of Graham
Mrs. Graham is suing her ex husband for equitable relief. She claims that the MBA is marital property that she is
entitled to. (They were married for six years. Trial court gave her a percentage of his future earnings for financing
his education. ($33,134.00) Assessed her investment in comparison with his future earnings.
Appeals court reversed saying that education is not considered marital property. Supreme court affirmed.
Said it doesn’t fit the standards of common law marital property (can not be divided, transferred, and
does not survive death, etc.)
Dissent says that that is not an equitable division of the money each brought in. 70% of their income was
from her job (since he was in school)
he says that if they had stayed married longer, she would have gotten a division of those
future earnings that she helped him to get
he also uses wrongful death actions to support his theory
ii. O’Brien v. O’Brien
Couple married for 9 years. Husband gets an M.D She supported him. Trial court found that degree obtained during
marriage was marital property, appellate court reverses. SC ruled that the marital license constituted marital
Rule: In NY, medical license DOES constitute marital property. Domestic relation law which allows court to
consider careers and contributions to career if acquired during marriage.
Second issue: What should the damages be?
1. reliance – amount contributed
2. value- future value of degree
court says value if the license is marital property
- Almost all courts agree with Graham – educational degrees are not considered marital property.
However, many of these courts allow reimbursement alimony to reimburse other spouse for contribution to
iii. Elkus v. Elkus-
(NY Case) Similar situation as above but the Husband was an opera singer who made it big years after he
Issue: Does the π’s (husband’s) career/celebrity status constitute marital prop. subject to equitable
Holding: To the extent that the wife’s contributions & efforts increased the value of her husbands
career, she should be compensated for this increase. (An opera career is subject to equitable distribution)
b. Good Will and Forfeited Salary
i. In most states good will is considered marital property
ii. Forfeited salary is usually also considered marital property
Heather’s Parcho Outline
1. So if you forfeit a high salary, your spouse is entitled to a portion of
your previous salary
4. The CL System - Death of a Spouse: CL vested two prop rights in the surviving spouse:
a. Curtesy: Upon the death of the wife, the husband acquired a life estate in all her land if
she gave birth to live issue; if she didn’t the husband got nothing.
b. Dower: if wife outlived husband she was entitled to a life estate and 1/3 of the land the
husband owned during the marriage.
i. Today: Curtesy and dower exist in only 6 jurisdictions today. Other systems
abolished the CL system and adopted the system of elective shares, under which
the surviving spouse can disregard the will and receive instead a statutorily
defined fraction of the estate, usually 1/3 or ½ depending on the existence of
children. The elective shares applied not only to land, but to all the prop of the
5. Community Property: 8 states follow the community property regime. By contrast to the CL
that assumes that during marriage prop is owned separately, this system is based on the idea that
each spouse should each hold an equal fraction of prop acquired. Comm prop includes the
earnings of the spouses during marriage, and anything bought w/ those earnings.
a. Assets brought into the marriage: Anything brought into the marriage remains
b. Distinguishing Factor: Each spouse has unrestricted authority to manage, use, and
dispose of his/her separate property. But the parties have equal authority to
manage, use, or dispose of community property; they have to do it together. Neither
spouse, acting alone, can convey his/her share to others (third parties) except to the other
c. Opting out: In most comm. prop states, parties can opt out of the system, but
neither spouse can opt out unilaterally.
6. What Constitutes Community Property?:
a. Assets from prop brought into the marriage which accrue during marriage: In ID,
LA, and TX, profits and rents are considered community prop. It is separate prop in
other states, unless there is a joint effort which then is considered comm. prop.
b. Personal Injury Damages:
i. Loss of earning potential + community expenses (hospital bills) = comm.
ii. Pain/suffering + loss of body parts = separate property
c. Assets acquired in part w/ community prop money and partly w/ separate property
money (mixing of funds): Three approaches:
i. Inception of Right Rule: The first payment made determines who owns the
ii. Time of Vesting Rule: The status of property is determined by the last
iii. Pro-Rata Rule: Pro-rate the payments and divide the prop accordingly.
d. Substitution of Original Assets: What happens when an asset, originally owned
separately, was exchanged for a diff asset? A newly purchased asset will remain
separate prop if it can be traced back to a separate source.
e. Commingling of Money: If you commingle funds the account will be considered
community prop unless the comm. contribution was negligible or trifling.
f. Transmutation: Transmutation is the process by which comm. prop is converted in
sep prop and vice versa. This happens either by agreement or by gift.
g. Migrating Couples: If domiciled in a comm. prop state, the earnings of both are
comm. prop. Once the prop rights are determined, they don’t change if a couple
changes domicile. Comm prop acquired in a comm. prop state remain comm. prop when
a couple moves to a CL prop state. Similarly, sep prop from earnings acquired while the
Heather’s Parcho Outline
couple was domiciled in a CL prop state remains sep prop when they move to a comm.
h. Rights of Creditors: Creditors can reach comm. prop, but they cant reach the sep
prop of the non liable spouse.
i. Separate Prop:
1. AZ, CA, ID, LA. – award separate prop to the spouse who owns it,
however, Ca. and Id. allow alimony and allowance payments.
2. NV, NM, TX, WA – divide separate property equitably. In these
states, ct will give weight to the fact that prop was owned
separately to determine what is equitable.
ii. Comm Prop:
1. General Rule of equitable or equal distribution (judge’s discretion)
j. Death: Will controls if there is one. If there is no will, in CA, NV, WA, ID, and NM,
if one of the spouses dies intestate (w/o will) his/her share of the community prop
will pass to the surviving spouse in its entirety. With separate property, you follow
the relevant laws of the state.
7. Contracts Between Spouses: Every rule may be superceded by agreements during, before,
or after marriage.
8. Contracts Between Unmarried Couples: NY doesn’t recognize implied K’s bet parties, but
does recognize express K’s.
a. Marvin v. Marvin
FACTS: agreement btwn 2 adults living together; Michelle and Lee Marvin lived together for 7 yrs w/out
marriage and didnt' hold themselves as husb and wife; when they split up Michelle sued to enforce an
alleged oral agreeement under which she was entitled to half of the property and support payments
ISSUE: Are contracts btwn unmarried couples enforceable?
HELD: 1) Crts should enforce explicit contracts btwn unmarried partners unless the contract is
explicitly founded on maritricious sexual services. In the absence of an explicit contract, the crt
should inquire whether the conduct of the parties est. an understanding regarding the division of
property and support payment. On remand, no contract and awarded Michelle rehab support of
$104,000. Lee Marvin appealed and won; Michelle received nothing.
* NY in general does not recognize implied contracts between unmarried parties, but does enforce explicit
ones. IL refused to follow Marvin, reasoning that the issue is complex and should thus be left to the
legislature. WA went even further than Marvin and awarded unmarried partners status rts by equating their
status to that of married couples. Contractual and equitable remedies were also granted to same-sex
couples following Marvin in WA.
VI. The Law of Landlord and Tenant
A. THE LEASEHOLD ESTATES
1. Term of Years: Tenancy for a period of time w/ an ascertainable beginning and ending date.
It is usually created by express agreement. At CL, the time span of the lease could be infinite.
Modern law differs. Under modern law there are usually term limitations on leases. For example,
Ca has a 51 year limit on agricultural leases and a 99 year limit on residential leases. A term of
years terminates automatically on the last day of the lease, so no termination notice is required.
The death of either the landlord or the tenant does not effect the validity of the lease.
2. Periodic Tenancy: A periodic tenancy is a tenancy for a period of some fixed duration, but
unlike the term of years, it is renewed automatically at the end of each lease term. For
Heather’s Parcho Outline
example, “to T from month to month.” An affirmative act is required to terminate this lease. One
of the parties must send the other a timely written notice of termination.
a. Death: The death of either party does not affect the validity of the lease.
b. Creation: Most periodic tenancies are created by agreement.
i. Creation by Operation of Law: A periodic tendency may arise in certain cases
even in absence of an agreement:
1. Tenant holds over after expiration of term: Where a tenant
remains in possession after the end of the term, the LL may elect to
consent to T’s staying over and hold T liable for further rent as a
period tenant for an additional term.
2. Tenant takes possession under an invalid lease: The mere entry
into possession creates a tenancy at will. However, the payment of
rent periodically converts the tenancy at will into a tenancy from
period to period.
c. Notice Requirement:
i. CL: At CL, notice had to be given one month prior to termination for leases
shorter than one year and a six month notice was required for leases longer than
or equal to one year.
ii. Modern: 30 day notice is required. (note: if state has no relevant statute,
CL rule applies)
d. Ex. “for no fixed term at an annual rental of $2,400 payable $200 per month on the first
of each month” => The majority would deem this a year to year periodic tenancy b/c it
states an annual rate. How the rent is paid should not change the nature of the period. A
minority of states would view it as a month to month periodic tenancy.
3. Tenancy At Will: Taw is a lease that is terminable at will by either of the parties. Thus, the
lease endures for as long as the landlord and tenant want it to last – there is no stated
duration. Even in cases of tenancy at will, you cannot terminate at the spot. Modern law
requires an advanced timely notice (usually 30 days).
a. Creation: TaW may be expressly provided for, but more often it will arise when the
parties failed to reach an agreement, but nevertheless the tenant took possession w/o
permission from the landlord.
b. Power of Termination: In most states an attempt by the landlord to reserve the
power of termination solely to himself would result in the creation of a similar
power in the tenant. In other words, the law forces symmetry in that particular
i. Garner v. Gerrish
Lease between Gerrish (tenant) and Donvan (Landlord). The lease said that Garish had the right to
terminate his lease at will. Donovan dies and Garner (executor of estate) moves in and wants Gerrish out.
Question: Whether a lease which grants the tenant the right to terminate the agreement at a date of his
choice creates a determinable life tenancy on behalf of the tenant or merely establishes a tenancy at
Court says tenancy on behalf of the tenant. Tenant can stay as long as he wants.
4. Tenancy at Sufferance: Created when a tenant remains in possession after the termination of the
lease (holdover situations). The traditional common law rules give the landlord two options in
a. evict the tenant and collect damages for the hold over period – back rent due OR
b. Holdover: consent explicitly or implicitly to the stay and create a new tenancy w/ the
same terms w/ a maximum duration of one year
i. Crechale & Polles, Inc. v. Smith
Heather’s Parcho Outline
Crechale and Polles enter into an original 5 year lease with Smith. Smith’s new building isn’t ready so he
seeks an extension on a month to month basis. (They have different versions of the story). Then, there is a
lot of correspondence. One letter said sent to confirm their oral agreement. Crechale denies ever getting it.
Crechale sends letter demanding that Smith vacates and yet cashes Smith’s first check but not subsequent
checks. Two and a half months after the lease was supposed to end, Crechale’s attorney sends him a lease
saying that are choosing to bind him to a new 1 year lease with same conditions.
Can a landlord initially treat his former tenants as trespassers and attempt to evict them and then change his
mind and hold them over for another period?
- Court said that once a landlord treats a tenant as a trespasser and tries to kick him out,
he is prevented from changing his mind and holding him over
- Court says a month to month periodic tenancy had been created when Crechale cashed
o Courts don’t generally like holdovers
Most states have adopted legislation to deal with holdovers but the laws enacted diverge widely.
- Some limit the duration of a holdover tenancy
- Some convert holdovers to tenancies at will
- Others provide that landlords may collect double rent for the holdover period
C. THE LEASE
a. Beginning: Leases were a status symbol and they were pro-landlord.
b. Middle: Contractual ideology takes over.
c. Today: Leases are again a status symbol, but they are pro-tenant.
2. Leases vs other arrangements: You must be careful to distinguish leases from other
arrangements that look like leases but are not (ex. a license or a LE)
a. Ex. Billboards: In a typical billboard situation, you don’t have a lease. It is either an
easement or a license. It is not a lease b/c the use of the billboard does not substantially
interfere w/ the possession of the landowner.
b. Determining leases: To determine if there is a lease, look at the control retained by
the LL. The more control the LL has the less likely the relationship will be
considered a lease. The breath on exclusivity of possession of a tenant is very
3. Property and Contractual Elements of Leases:
a. Past: In the past, the conveyance aspect (prop element) was dominant. Under traditional
CL, all obligations under the lease were independent, meaning that the T had to keep
paying rent even if LL breached its obligations. The one exception was the LL obligation
of quiet enjoyment, and the T obligation to pay rent.
b. Present: Now, the contractual element is dominant. Under K law, the LL’s
obligations are mutually dependent w/ the duty to pay rent.
i. Limits to K approach:
1. Certain aspects of the lease cannot be contracted away.
2. Most LL’s use pre-printed form leases, which typically include clauses
favorable to LL. The negotiations between LL and T are not very
D. SELECTION OF TENANTS AND UNLAWFUL DISCRIMINATION
1. CL: LL’s were free to exclude any T’s they didn’t like w/o having to explain why.
Heather’s Parcho Outline
a. Note: This changed w/ the Civil Rights Act and w/ the Fair Housing Act of 1988.
2. Fair Housing Act: The purpose of the Act is to provide fair housing throughout the US. It
significantly restrained the power of LL’s to discriminate.
a. Exemptions: The FHA provides that private clubs, dwellings for religious
organizations, and certain specified persons are exempt from the Act. The purpose
of these exemptions is to protect some types of close personal relationships from what is
thought to be an invasion of privacy.
i. Single family dwelling: A person leasing or selling a dwelling she owns is
exempt if she (i) does not own more than three such dwellings, (ii) does not
use a broker, and (iii) does not advertise in a manner that indicates her
intent to discriminate. The owner can only use the exemption once every 24
ii. Small owner-occupied multiple unit: A person is exempt if she is offering to
lease a room or an apt in her building of four units or less, one unit of which
she occupies, and she does not advertise in a discriminatory manner.
b. Prohibitions: Section 3604 provides that it is unlawful to:
i. to refuse to sell, rent, negotiate or otherwise deny a dwelling to any person
bec of sex, race, color, religion, familial status, or national origin.
1. Soules v. U.S. Dept. of Housing and Urban Development
FACTS: Sherri Soules, a single woman, lives w/ mom and a young child. Downes is a real estate owner.
Soules is interested in an apt that Downes is renting. Downes asks her if she has children and Soules
becomes defensive. Downes doesn't like her attitude, but she does explain to her that there are older people
in the bldg and noisy children will be a problem. After the conversation 2 things happen. 1) Soules
complains to HOME (enforces fair housing act). 2) HOME sends 2 testers (T1 w/o kids, T2 w/ kids - T1
shown apt and T2 is not shown the apt). Soules later arrives and is shown a different apt. Other applicants
w/ children were shown the disputed apt., although at the end it is rented to a person w/o children. A
ISSUE: Was there a violation of the fair housing act?
HELD: 1) Fair housing act does not require discriminatory motivation, just discriminatory impact
(about familial status). At the end it finds that although there was a prima facie case (presumptive
violation), the realtor had a good reason that is not discriminatory (securing quiet neighbors). Not
enough to show discrimination.
2. U.S. v. Starrett City Associates
FACTS/PROC: AG brought suit against City b/c in violation of fair housing act. City said needed to limit
blacks b/c of white flight risk. 64% White, 22% Black, 8% Hispanics. D claim that if there is to be a
shot at achieving sustainable integration. If below 64% white, it will become segregated.
ISSUE: Is this a violation of the Fair Housing Act?
HELD: Yes. Majority explains that the fair housing act outlaws practices whose effect is
discriminatory. Minority apps had to wait much much longer for application processing. Court
imposed a ceiling and no time limit and therefore they should be struck down. (end discrimination -
focuses on process/equal treatment)
DISSENT: Take into consideration circumstances; you'll just get segregation in the end. Reads FHA
differently. FHA to prohibit the main tenants of racial segregation. The fair housing act did not mean to
prohibit promotion of integration in private housing. The point is to end segregation. The process was
necessary to affect integration. (end segregation - result based/integration; if you have to use quotas, so be
it; result that matters)
ii. To discriminate in the provision of services (ex. repairs) or conditions based
on the above categories. [you cannot discriminate at any point]
iii. To make, print, or publish any notice, statement, or advertisement that
indicates a preference, limitation, or discrimination based on the above
categories or handicap.
Heather’s Parcho Outline
iv. To tell people in the listed categories that a dwelling is unavailable whereas
in fact it is.
v. For profit, to attempt to induce any person to sell or rent by representation
regarding the entry into the neighborhood of the above categories.
[attempts to combat blockbusting – brokers would spread rumors that
minorities were moving in order to cause mass panic]
vi. To discriminate based on handicap of buyer or renter or any person
c. Remedies for Violations of Act: Injunctions, damages, and punitive damages are all
d. The FHA cannot be overridden contractually
e. Categories NOT included in the Act:
ii. Sexual orientation
iii. Economic Status – Problem w/ this is that there is a correlation bet econ status
and minority status so LL’s can get past the FHA by claiming econ issues.
3. Theories on why it is Difficult to Achieve Integration in the Housing Market:
a. Richard Muth: Consumer aversion theory. Whites have an aversion to living w/
minorities and are willing to pay more to live in white neighborhoods. Whites will
b. Thomas Shelling: Game Theory Explanation. Whites least tolerant to minorities move
out. As more minorities move in, more whites move out.
E. LANDLORDS’ DUTIES: TENANT’S RIGHTS AND REMEDIES
Introduction: At CL, T accepted the premises as is, and LL’s were under no obligation to guarantee
their fitness or suitability. In the 60’s there began a period of sweeping reform that riddled the CL rule
1. Duty to deliver possesion:
a. English Rule: Requires LL to put the T (lessee) in physical possession of the premises
(NY has English Rule)
b. American Rule: Recognizes the lessee’s right of possession as a legal matter, but it
implies no duty upon lessor (LL) to ensure delivery of physical possession. In other
words, the American Rule requires landlords to deliver legal, but not physical possession
c. Policy: English rule is better on policy grounds b/c the LL is in a better position to
prevent any problems, such as holdover tenants. On the other hand, the new tenant can
d. Hannan v. Dusch
FACTS: When Hannan's (P) lease was to begin, Dusch (D) failed to evict a hold-over tenant. (P contents D
must deliver actual possession and that he should have evicted a hold-over tenant. D contends that he need
only deliver the legal right to possession.)
RULE: A landlord only has a duty to deliver the right to possession of the premises to a tenant, not
PROC: Appeal from the sustaining of a demurrer in action for damages for failure to deliver possession.
ISSUE: Must the landlord deliver actual possession to the tenant?
HELD: No. Once the tenant takes possession, he is responsible for ejecting a tresspasser. A covenant
stating whether or not the landlord did or did not have a duty to put the tenant in possession would
prevail. If no covenant, two rules: (1) The English rule says that the landlord must place the tenant in
possession and (2) The American rule says that the landlord must only give the tenant the right to
possession. Choose American rule b/c it is unfair to hold the landlord liable for the wrong of another.
(Although Eng. rule good b/c 1. A tenant contracts for possession and not for a lawsuit to evict a hold-
Heather’s Parcho Outline
over and 2. The landlord is in a better position to assess whether a current tenant will in fact hold-
2. Covenant of Quiet Enjoyment: A T has a right of quiet enjoyment of the premises, w/o
interference by the LL. This right arises from the LL’s covenant of quiet enjoyment, which
may be expressly provided for in the lease. If not expressly provided, such a covenant is
always implied in every lease. Note: This covenant does not cover trespassers.
a. Reste Realty Corp v. Cooper
Cooper enters 5 year lease. Basement floods and they just clean it up. One bad flood and Cooper leaves with
2 ½ years left on lease. D is unhappy and sues. District court found for D. Appellate reverses. SC reverses
Issue: Can a tenant abandon when the lease premises don’t satisfy the covenant of quiet enjoyment?
Court says yes they can.
Covenant of quiet enjoyment is implied in every lease. Where there is such a covenant either express
or implied, it’s substantial breach by the landlord constitutes constructive eviction. A remedy must be
sought in a timely fashion.
Court said since the source of the problem was driveway (not part of property) and the tenant had no duty to
inspect the premises.
i.Says it’s the duty of the LL who knew of the problem to disclose it
ii.D was entitled to rely on the promises of the P to fix the problem
This case presents a dramatic shift in the law
Common law held that the tenant took the property “as is”
Now, the law tends to protect the less informed party and tenants are perceived to know less
than the LL
b. Breach: The covenant of quiet enjoyment can be breached by either actual or
constructive eviction. It can also be breached by failure to make certain repairs,
failure to provide utilities, or failure to remedy nuisances.
i. Acts of Third Parties: Generally LL’s duty doesn’t extend to acts of
neighbors or third parties, but if the LL controls the acts of such persons,
LL will also be responsible.
c. Actual Eviction: Actual eviction requires physical explusion or exclusion from
possession. An example of actual eviction would be changing the locks or when the
LL occupies the space himself.
d. Partial eviction by LL: If T is evicted from any portion of the leased premises, his
rent obligation abates entirely until possession is restored. Note: Restatement takes
a diff approach – W/ partial eviction T can abate the rent only in part. So if you
were evicted from 20% of the premises, you can abate only 20%.
e. Remedies: Whether T is actually or partially evicted, T can choose from the following
i. Terminate the lease and collect the benefit of the bargain (i.e. the diff bet the
reserved rent and the rent on the market) and consequential damages.
Ex. You rented for 1200, and rent went up to 1300, so you can collect 100 for
every month you lost.
ii. Keep the lease, abate the rent in full, and collect consequential damages.
f. Constructive Eviction: Where, through the fault of the LL, there occurs a
substantial interference w/ T’s use and enjoyment of the leased premises, so that T
can no longer enjoy the premises as the parties contemplated, T may terminate the
lease, vacate the premises, and be excused from further rent liability.
Heather’s Parcho Outline
i. Requirements if used as a Defense: T must show:
1. Failure to perform a duty on part of LL;
2. Substantial interference w/ enjoyment
3. Giving LL timely notice and a reas opportunity to fix the problem
4. In most states, T must terminate the lease and vacate the premises
w/in a reas time. Vacating the premises proves that the interferece
g. Illegal Lease Doctrine: The illegal lease doctrine applies when the conditions of the
leased premises, at the time the lease is made, violate the relevant housing code b/c
they are unsafe or unsanitary. Minor technical violations do not render the lease
illegal, nor do violations of which the LL had neither actual nor constructive
knowledge. (Most courts consider the illegal lease and implied warranty of
habitability together). If the lease is illegal, the LL can’t enforce any covenant to
pay rent. LL can sue only for the reasonable rental value of the premises as they
3. Implied Warranty of Habitability: At CL, the LL was not obliged to insure habitability or make
repairs. However, this doctrine has taken over in most states. It covers latent and patent defects
(things you cant see and things you can). T has no duty to inspect the apt before the signing
of the lease. The IWH cant be waived. Even if I moves in w/ knowledge of the defect, T does
not assume the risk just by knowing of it.
a. Hilder v. St Peter
P (Hilder) was renting a COMPLETELY unlivable apartment. LL won’t fix anything. She doesn’t move
out but sues for all rent and damages (money she spent to fix it). Trial court gave her damages of
reimbursement and compensatory damages. LL appeals claiming that P remained on the property so she
shouldn’t be reimbursed. This is why this is NOT constructive eviction – she stayed.
Issue: Does an implied warrant of habitability exist in oral rental leases – should it be implied?
Court says YES.
b. T’s obligations in exercising this right: T must give LL timely notice and a
reasonable time to fix the problem. If LL doesn’t respond, then T is entitled to
c. Diff bet IWH and right of quiet enjoyment: To claim constructive eviction you must
leave the apt. W/ IWH you can stay in the apt and get remedies.
d. Possible remedies:
i. Recission (K remedey)
ii. Rent application – you can repair and deduct the cost
iii. Rent withholding – stop paying rent until problem is fixed
iv. Rent abatement – Two abatement measures:
1. Reserved rent minus rent value of defective premises (abate the rent by
2. Rental value of apt as warranted minus rent value of defective premises
e. Standard for Breach of IWH:
i. any non-compliance w/ housing code
ii. substantial non-compliance or non-compliance that affects the habitability
of the premises.
iii. Note: Non-compliance creates a presumption of breach but the LL can
rebut this presumption.
iv. P just argues that condition is sub par w/o measuring against housing code
f. IWH and commercial leases: IWH doesn’t extend to commercial leases. The
assumption w/ commercial leases is that commercial parties are more equal in bargaining
power, so the law doesn’t worry about them too much.
Heather’s Parcho Outline
4. Right Against Retaliatory Evictions: At CL LL’s were allowed to evict T’s at any time and for
any reason. Modern law, however, forbids a LL, acting under a retaliatory motivation, to evict a
T. A common approach taken by courts is to create a rebuttable presumption of retaliatory
purpose if the LL seeks to terminate the tenancy, increase rent, or decrease services within a
reasonable proximity (usually 90-180 days) to a complaint or legal action by a T. The
burden would be on the LL to prove there is no retaliatory motive.
a. LL’s Tort Liability: Is LL responsible for injuries on the premises?
i. CL – LL not responsible
ii. Modern Law - several states impose liability in neg on LL’s for injuries to T’s
resulting from breaches of contractual obligations or IWH. (Section 358
Restatement 2nd of Torts) This is especially true when LL knew of a defect and
attempted to conceal it from the public. In almost all states, the LL is
responsible for injuries when he takes it upon himself to repair a problem and
does it in a neg way.
1. Multi-unit buildings: LL has a duty ot keep common areas safe.
F. TENANT’S DUTIES: LANDLORD’S RIGHTS AND REMEDIES
Duties of Tenants:
1. Fulfill the obligations of the Lease: most obvious is the duty to pay rent; but remember, T is
relieved of this duty, at least temporarily, if LL materially breaches an obligation to T or
IWH or the covenant of quiet enjoyment
2. Not to Commit Waste or Nuisance: What constitutes waste?
a. Acts affecting vital and substantial portions of the premises
b. Acts changing the characteristic appearance
c. Acts changing the realty itself – Ex. permanent changes
d. T must comply w/ building and health codes
3. Duty to Vacate at the End of the Lease
1. LL can sue for damages – back rent; this is a breach of K
2. Ask for a security deposit – most states put limits on the amount; typically two months rent.
LL’s are also required to put them in a security account and accrue interest on it.
3. Use self-help measures – cut off utilities, etc. Even though this is illegal in most states, LL’s
are not allowed to force T’s out of the premises, so LL cannot change locks, cut off utilities,
or seize T’s belongings in order to force her to leave or pay rent.
4. Summary proceedings – these proceedings were enacted to alleviate the plight of LL’s.
a. LL must send T a notice of breach and give T a reasonable time to address to problem.
No notice is necessary in hold over cases.
b. After notice is sent, LL brings an unlawful detainer action seeking repossession. Usually
a hearing will be scheduled within 3-8 weeks from the filing.
c. If the court found for the LL, LL can get a sheriff to evict the T.
5. Holdover Tenants – W/ holdover T’s LL has two options:
a. Terminate and initiate eviction proceedings OR
b. Hold the tenant over for a new lease under the same terms (usually 1 year lease)
Heather’s Parcho Outline
6. Abandonment – If T abandons premises LL can:
a. CL – when T abandoned LL could either:
i. Sue T for rent due OR
ii. Retake possession and let at T’s expense (collect the consequential damages)
Note: NY follows CL
b. Modern – The trend is to eliminate the LL’s choice and treat the lease as any other
K by imposing on the LL the duty to mitigate damages. Ex. LL must use reas
diligence to re-let the apt.
i. Sommer v. Kridel
2 yr lease. Kridel says he has to get out of lease (before it starts) b/c his marriage fell through. Contacts LL and says “I
cannot live there – keep my rent and security deposit.” Sommer says nothing. A chick wants to rent it but he turns her
down and then sues Kridel for the lost rent.
Does the LL have a duty to mitigate (look for another tenant) when a tenant abandons?
c. Yes, court rejects the majority rule that was grounded in notions of property and moves towards the
i.Must take reasonable actions to lessen the harm by attempting to re-rent that
ii.Burden of proof is on the LL
Court let Kridel out of the lease but had to pay attorney’s fees – but case was remanded
This duty to mitigate was adopted in 42 states (NOT NY)
G. THEORIES ON LL/TENANT LAW
a. Chicago passed laws regulating housing – question of its constitutionality. Ended up
b. Policy Analysis
- Posner says if we force LL to make improvements, they will just end up raising
rent and hurting the poorer tenants that we were trying to protect
- Prevents low income people from getting housing
- Just wealth transfer from LL to middle class business owners
c. Rising Tide – Weicher
i. New Argument – the market can do better than the government in
improving the housing situation
1. Believes that there is an underlining economic disparity and
housing situation is improving for four reasons
Higher income on the whole
Trickling down effect: as the wealthy people make
more money, their standards rise, they buy more.
Each time they move up, the bottom level housed
become affordable b/c everyone moves up.
o There actually was very little redistribution
H. THE PROBLEM OF AFFORDABLE HOUSING
1. Rent Control: Many cities have enacted rent control ordinances. Rent control is a form of
price regulation. Regulating rents has been held C on the theory that it bears a rational
relation to a legitimate public purpose: the welfare of housing consumers. There are two
degrees of rent control – rent control per se and rent stabilization.
a. Common approach: The common approach to RC is to set a baseline rent for a given
unit ,and then through time, adjust the baseline for inflation and other circumstances.
Baseline for new units is usually set by the market.
Heather’s Parcho Outline
b. NY: elaborate RC scheme; old buildings are subjected to RC, while newer ones are
subject to rent stabalization. RS allows for higher and more frequent rent increases than
c. Termination: Rent control schemes require a good cause for termination. (ex. in NY,
when a T dies, the surviving occupant is entitled to the same conditions if she is a family
member or life partner)
d. Downside: Those who cant get into a RC scheme pay more. There is also a fear that RC
will extend to new buildings, so this suppresses development.
I. SUBLEASES AND ASSIGNMENTS
1. Intro: Assignment and subletting are two possible exit strategies for lessees. An assignment
occurs when a T transfers the entire remaining lease period. A sublease occurs when a T
transfers just part of the interest and then the interest reverts back to the original T. The
distinction is imp b/c of the nature of the relationship bet the LL, the T, and the subsequent
taker. (It is possible for something that looks like a sublease to really be a partial assignment
if the T transfers ALL rights under the K to the subleasee for a period of time.
2. Importance of the Lease: A lease creates both privity of estate and privity of contract. The
LL and T are parties of the same K and of the same prop so there is dual privity.
3. Assignments: An assignment changes the privities of the parties involved:
a. LL ↔ Main T = Privity of K
b. Assignee ↔ Main T = Privity of K
c. LL ↔ Assignee = Privity of Estate (unless the LL requires the new T to sign a new K)
4. Sublease: A sublease changes the privities of the parties involved:
a. LL ↔ Main T = Privity of K and Estate
b. Subleasee ↔ Main T = Privity of K and Estate
c. LL ↔ Subleasee = No relationship
5. Practical Implications of the Diff Bet Assignments and Subleases:
i. original T remains responsible for her original obligations under the lease
w/ the LL.
ii. The main tenant and assignee relationship is governed by whatever K they
themselves decide on.
iii. Between the LL and assignee, the relationship is controlled solely by the
rules of Prop Law. The assignee is only liable to the LL for the covenants
that are attached to the land (don’t stem from the K). These covenants are
covenant to pay rent and taxes, and the duty not to commit waste
i. Bet the LL and main T, both privities remain in tact. Same is true bet the T
and the subleasee
ii. Bet the LL and subleasee there is nothing, so the LL cannot get damages
from the subleasee, even if the subleasee doesn’t pay any rent at all. LL can
only evict; to get back rent LL has to go through the main T. The only way
to bind the subleasee, is to have him sign another K
6. Restrictions on Transfer: How much power do LL’s have to restrict transfers?
a. NY Standard: If the lease contains an express provision barring transfers altogether, it
is allowed. If transfers require written consent from the LL, consent cannot be
b. CA Standard: If the K requires the LL’s written permission, the LL cannot withhold
permission arbitrarily. This rule only applies to non-residential leases.
Heather’s Parcho Outline
c. American Book Co v. Yeshiva University
D owns real property. P seeks to sublet the premises to Planned Parenthood. Yeshiva objects on
ideological grounds and a lawsuit ensues.
Rule says that any assignment or sublease requires consent of LL but consent will not be withheld
- Court must decide whether this is unreasonable
o Courts usually don’t like inalienability of land, but if there’s an express clause in the
lease granting the LL the power to deny consent arbitrarily, in NY such clauses will
o But they say that this case is different – a LL lack of consent is valid for reasons of
Lack of financial responsibility
The business, character or rep of propose transferee
Legality of the proposed dues
Nature of occupancy
Ideological reasons are not valid
- Landlords are NOT sensors!
- Most states agree that a LL cannot arbitrarily deny right to transfer
Issue: Does a commercial leaser have the power to deny subletting and assigning when the contract requires
his prior consent without saying more?
- if the lease contains such a clause, consent may be withheld only if there is a commercially
reasonable objection to the assignment
o the lease is primarily a contract so there is a duty to behave in good faith
Legitimate reasons to withhold consent
Need for alteration of the premises
Nature of occupancy
Desire to charge higher rate
This case happened in 1989 and the legislation is restricted to commercial leases and any ambiguity should be
construed in favor of transferability but if there is express language prohibiting transfers, it will be honored.
When you initially lease the apartment out, you can be very picky. This changes for subleases
VII. The Land Transaction
IX. The Law of Nuisance
Heather’s Parcho Outline
1. Intro – Land Use Controls: land use controls have been developed to deal w/ the prob of
externalities and to allow for coordinated use. Under the old fashioned Blackstonian model of
absolute rights, prop owners could use their assets in a way that was detrimental to their
neighbors, thereby harming neighboring prop and decreasing the overall value of prop on the
a. Performance of Land Use Controls: Controls can be performed either:
i. Privately: Nuisance law and K law
ii. Publicly: Zoning, housing codes, and takings
2. Nuisance: A nuisance is an unprivileged interference w/ a person’s use and enjoyment of her
land. All that is required is an intent to do an activity that you know or should know will cause
harm. A nuisance is termed a private nuisance when it involves interference w/ the private use
and enjoyment of one or a number of nearby properties. It is a public nuisance when the
interference is w/ a right common to the general public.
a. Approach by Judiciary: Judiciary has played a large role in the development of the law
of nuisance. The look at cases on a case by case basis in order to accommodate both
fairness and efficiency. Factors the ct takes into account are:
i. Utility of D’s operations
ii. Magnitude of the harm to P
iii. Cost of avoidance
b. Unintentional Nuisance: If the nuisance is unintentional it can still meet the
nuisance standard if the conduct is negligent, reckless, or abnormally dangerous.
3. Types of unreasonable interference: Case law says that the interference should be unreasonable.
(Restatement differs) The practical meaning of the term “nuisance” is best grasped by looking at
the particular cases in which the interference has been held to be a nuisance.
a. Character of the Harm:
i. Depreciation of Prop Value: Use of prop in a manner that depreciates the
value of surrounding prop is not enough by itself by constitute a nuisance.
ii. Discomfort: Measure discomfort by the sensibilities of the average person.
b. Fear of Harm: Fear of harm may constitute a nuisance (ex. storage of explosives). But
even though a person may fear a use, it may be permitted b/c it has a high social value –
there is always a balancing.
4. Compare – Trespass vs. Nuisance: A trespass is an actionable invasion of a possessor’s
interest in exclusive possession of land. A nuisance is an actionable invasion of a possessor’s
interest in the use and enjoyment of land. Trespass requires a physical invasion, but nuisance
doesn’t. In nuisance, a reasonableness standard is used, while in trespass, strict liability is used.
The remedies for nuisance are more flexible than trespass.
5. Right to Lateral and Subjacent Support: At CL, and still today, every landowner is entitled
to the support her land would receive under natural conditions. The right to lateral support
could be jeopardized, for example, if your neighbor started digging on the property line, and your
land began to give way. The right to subjacent support could be violated, for example, if the
neighbor digs under your property like if someone was building a mine under your house.
6. Economic Analysis:
a. Suppose that landowner A has a factory on her land belching smoke into the air, which
flows across to landowner B, who has an amusement park on his land.
i. Who is At Fault?: Neither party alone causes the conflict. Under the economic
theory, the party emitting smoke is no more the cause of the conflict than the
party sensitive to the smoke. In the same way that you can regulate A, the law
Heather’s Parcho Outline
can regulate B. The traditional fairness analysis which showed the flow of harm
from A to B has no place in econ theory.
ii. Externalities: An externality is a cost (or benefit) of any given action that is not
taken into consideration by the actor in determining the level of that activity that
is optimal from the actor’s point of view. Econ theory suggests that resources
will be allocated more efficiently if costs are internalized – taken into account
by the actors. In the above ex, an external cost of the factory is that B’s land is
made unsuitable for uses sensitive to smoke.
b. The Coase Theorem: The goal of econ theory is to maximize the social value of
production by putting land to its most valuable use while internalizing costs. Econ theory
doesn’t care about compensation to the loser as long as the more valuable activity
prevails and the most efficient result is achieved.
i. Ex. Suppose the cost to A of installing smoke abatement equip is $100, and the
damage to B’s land is $50. If the ct gives A the right to belch smoke, A will
continue to do so bec B will give A only $50 to stop it, and it is worth $100 to A
to continue. If the ct gives B the right to stop the smoke, B will sell the right to
smoke to A at somewhere bet $50 and $100, bec the right is only worth $50 to B
and is worth $100 to A. A sale will make them both better off. Thus regardless
of wether A or B is given the right, it will end up in A’s hands by operation of
the market, at least in cases where transaction costs are low. The market
determines whether the activity (smoke emission) will continue, not the
allocation of rights by the courts.
c. Transaction Costs: The Coase theorem, which provides that the market will move the
right to the highest valued use, assumes that transaction costs are low. This may be an
unrealistic assumption. Transaction costs include costs of obtaining info, conducting
negotiations, coming to terms w/ the other party, and enforcement of any bargains made.
i. Holdout Problem: Suppose A’s factory belches smoke over 50 neighbors. If
each neighbor is given the right to enjoin A, A has to buy all of them out. Each
neighbor would have an incentive to hold out for an exorbitant price. A can
avoid this problem by not making any firm offers until all 50 neighbors agree to
a set price.
ii. The Free Rider Problem: If 50 neighbors are affected, but do not have the
right to enjoin A, they should get together to pay A to install abate equipment.
But each neighbor is going to want a free ride and wont want to pay his share.
iii. The Strategic Behavior Problem: If A or B behaves in a strategic way in an
effort to get as much of the gains from trade as possible, bargaining may be diff
1.Judicial Remedies: In determining what remedy to give in cases of land use conflict, a ct has
the four choices below. The basic choice is bet injunctive and damage relieve. When an
injunction is granted, P receives the entitlement or property right; P can refuse to sell this right if
D does not offer enough. When damages are given, the invader is in effect given power to destroy
the entitlement of P on payment of its value, objectively determined by a jury.
a. Enjoin A: The ct may grant B an injunction forbidding A to emit smoke. B then
has the right. A and B can then bargain, and according to Coase, transfer the right
to A. B is made richer by the entitlement and is also in a strong position to get most
of the gains from the trade.
i. Estancias Dallas Corp v. Schultz
FACTS The Schultzs (Ps) owned and lived in a house next to which D built a 155 unit apt building.
Ds air conditioning equipment made noises described as jet planes. Ps could not use
backyard, lost sleep, etc. Ps sued Ds seeking to abate nuisance.
PROCED Trial ct found for P ($1000 for Mr. and $9000 for Mrs.) and granted injunction.
Heather’s Parcho Outline
ISSUE On appeal: Whether balancing equities in a nuisance action is the rule of necessity to be
RULE Injunctive relief requires Balancing equities or comparative injury considers the injury
that may result to the D and the public by granting an injunction. If damage to public greater
than to P than no injunction
HOLDING Trial ct did not abuse discretion in balancing equities in Ps favor:
-public have other places to live- no shortage of apt in Houston
-Ps use and enjoyment greatly impaired
-financial cost to D private financial benefit is not sufficient to justify rule of necessity
DEC Affirmed (for P- affirmed injunction)
ii. High Transaction Costs: If trans costs are high (ex. P’s are 50 neighbSors),
the right as initially allocated would probably not be transferred, even though it
would be to society’s econ advantage. For this reason, some suggest that the
second or third remedy, which leaves the right w/ the highest valued use while
giving damages to the other party, is appropriate in such a situation.
b. Give B damages: The ct may refuse an injunction but grant B damages. This has
the effect of giving the right to B, but forcing a sale of it to A (damages). Since the
forced sale is at the price of B’s damage, B gets his damages but A gets all the
possible gains from trade.
i. Boomer v. Atlantic Cement
Cement Plant nuisance case. Lots of damage to the residents – cracked walls, bad air, etc. P asked for an
injunction and it was denied b/c of the economic disparity in the parties fixing it. (Plant cost $45 million to build
with 300 employees and damages to P was $185,000)
Issue: Should an injunction against the polluters be given to the P?
- issues injunction but if they pay permanent damages, injunction is revoked
o dissent says you’re sanctioning a continuing nuisance
“they’re selling a license to create a nuisance”
this will eliminate and motivation for the nuisance causer to invest in better
technologies that would be less of a nuisance
- Debate over whether this is most efficient decision – is the value of the plant greater than the value
of the community not being exposed to pollution? In the 70’s we didn’t know the far reaching
extent of pollution
o Ts decision could have gone either way
Endowment effect: you value the things you own over their market value
- people who got married there, had children there might value it more than the law accounts for
Case for injunctions is stronger when there are only two parties according to the law of economics. Cases
involving multiple parties, damages should be preferred. Why?
- They are a corrective measure
- Value of the operation is higher than the amount they would have to pay in damages
o If they can abate for cheaper (develop better technology so no problem) they will ask
o Courts may not get the damages amount right
o Not all parties that are hurt are represented
o Don’t know enough about possible later damages (cancer, e.g.)
o Best thing to do; check every few years and revisit amount
c. Enjoin A and give A damages: The ct may grant B an injunction against A and
require B to pay A damages. This has the effect of giving the right to B, but forcing
Heather’s Parcho Outline
B to pay A for it. This solution may not be feasible when there are many potential
B’s and high transaction costs.
i. Spur Industries, Inc. v. Del E. Webb Development Co.
Cattle feedlot – P attains an injunction in trial court.
1. Where the operation of a business, such as a cattle feedlot is lawful in the first instance, but becomes
a nuisance by reason of nearby residential area, may the feedlot operation be enjoined in an action
brought by the developer of the residential area?
2. Assuming that the nuisance may be enjoined, may the developer of a completely new town or urban
area in a previously agricultural land be required to indemnify the operator of the feedlot who must
move or cease operation because of the residential area created by the developer?
Court says yes to both.
1. Injunction to stop
2. Makes P pay D because court said the residents (and developer) was in the wrong for moving into
this area when D was there first.
d. Refuse B any remedy: The ct may refuse to grant B any remedy – either injunction
i. Corpart Indus. V. Consolidated Edison Co.
Operator of car selling business seeks damages from power plant b/c emissions damaged P’s cars causing him to go
out of business.
Court of appeals finds no nuisance. Why?
Value to D is far greater than the harm to the P
No way to abate
So, no nuisance OR damages
Court distinguishes Boomer on the ground that it involved unreasonable and intentional
Economic power prevailed again, but with a distributional element b/c unlike
Boomer, here Corpart gets nothing.
2. Theories for Granting Remedies
a. Cabbresi and Melamed say that there are two things to consider-
1. to whom should a entitlement be given (who’s in the right)
2. how to protect that person’s interest
a. property protection rule: either the entitled person sets the price
i. e.g. injunction
b. liability rule: a third party sets the price
i. e.g. damages
Mode of Protection
Property Rule Liability Rule
Initial Resident Rule 1- Rule 2-
Entitlement Estancias Boomer
Polluter Rule 3- Rule 4-
Corpat (must pay polluter Spur
Heather’s Parcho Outline
Legislation to Deal with Pollution
1. Government regulation
a. Sets standards
b. Limits emissions
c. Prohibits certain activities
2. Establish and incentive system
a. No safety zone but rather you are charged a fee for certain activites
i. E.g. fee for each unit of pollution released
ii. Supposed to get us to appropriate level
iii. Permit for amount of pollution rights
1. Intro: Servitudes are interests in land created by private land use agreements. They involve at
least two parcels of land. The purpose of those agreements is to increase the total value of the
parcels involved and the effect of such agreements is to burden one parcel for the benefit of
2. Easements vs. Covenants:
a. Easement: Gives a third party a right to use the burdened land. In a typical
easement a land owner says “I give you the right to use my land as follows…”
b. Covenant: A restriction on the landowners own use. Landowner says “I promise
you that my use of the land will be restricted as follows.”
1. Intro: Typical easements are made for:
d. Pipes and utility lines
2. Easement vs. Fee Simple: An easement is a privilege to use the land of another. The
easement does not give the holder a right of possession, but only a right to use or to take
something away from the parcel to which the easement attaches.
3. Types of Easements: All easements are either affirmative or negative and either appurtenant or
a. Affirmative Easement: Allows the holder to perform a physical act on the land of
another. (Ex. O grants A a right away across O’s land)
b. Negative Easement: The owner of a negative easement can prevent the owner of the
servient land from doing some act on the servient land.
c. Easement Appurtenant: An easement that attaches to the dominant parcel and runs w/
the land. (Ex. If A has an easement to cross B’s land, if A sells to C, C has the right to
cross B’s land). Easement appurtenant is the default rule when it is unclear what
type of easement was created.
Heather’s Parcho Outline
d. Easement in Gross: An easement that attaches to a certain person or a group of people,
regardless of ownership. This easement is personal and cannot pass to another person.
It is not assignable and frequently not even divisible.
Appurtenant Right of way View easement
In gross Right of way for utility Conservation easements
4. Easements vs. Licenses: A license is permission by a land owner to do some act on the land
that would otherwise be a trespass. In this sense, easements and licenses are identical.
However, a license is always revocable whereas an easement is irrevocable after its creation.
Two exceptions to license being revocable:
a. License is coupled w/ an interest in the land
b. Estoppel – If a licensee expended resources in reasonable reliance of the continuous
existence of the license. This doesn’t apply in NY.
5. Creation of Easements: 5 ways to create easements:
a. Creation by Express Grant: An easement over the grantor’s land may be granted to
i. Willard v. First Church of Christ Scientists
McGuigan owns both lots and sells one to Peterson who sells to Willard without
mentioning the easement that McGuigan granted to the church to use the
parking lot next to it (where he is running his office).
Lack of easement in deed does not get McGuigan off the hook b/c
one, it was already being used by the church and two, it was
recorded and he could have looked it up
Issue: may a grantor in a deed reserve an easement in a third
Court says yes. You can effectively create an easement
for the benefit of a third party. Church’s easement is
valid – court focuses on equity.
Easement should be enforced for equity reasons
because the price was adjusted to reflect the presence
of the easement.
Easement appurtenant because it was only an easement
for the church – if they moved, it was lost
NY holds that you cannot reserve an easement to
b. Creation by Implication: An easement by implication is created by operation of law,
not by written instrument. An easement by implication may be recognized given the
i. The two parcels were once under single ownership
ii. There was a pre-division use (when the lots were under single ownership)
that extended to the servient parcel
iii. The previous use was apparent on reas inspection (ex. beaten path or
anything that would put a person on reas notice of a use)
iv. The use is reas necessary
1. Van Sandt v. Royster
a. Laura Bailey owns 3 lots in 1903. Series of transfers; lot 19
from Bailey to Jones to Reynolds to Van Sandt; conveyed 20
to Murphy and kept 4. No easement was mentioned in any of
Heather’s Parcho Outline
the deeds but there was an easement to connect her sewer pipe
to the city lines through lot 19 and 20.
i. Van Sandt finds out and tries to enjoin Royster (new
owner of 4) from using the pipeline.
ii. Issue: Is there an easement?
1. Yes, by implied reservation. Original buyer
of lot 19 was aware of it AND it was
necessary for the comfortable enjoyment of
2. Rule: Court says: If land may be used
without an easement but cannot be used
without disproportionate expense, an
easement may still be implied in favor of
the grantor or the grantee on the basis of
3. Also ruled that P had a constructive notice
of the easement b/c his house was
constructed with modern plumbing and had
to realize that the plumbing had to drain
c. Creation by Necessity: An easement by necessity will be found where two parcels of
land are situated in a way that an easement over one of them is absolutely necessary
for the enjoyment of the other. (ex. land locked parcel). The requirements are:
i. Dominant and servient estates were once under single ownership
ii. The easement is absolutely necessary
iii. The necessity existed at the time of the severance of the two tracts of land
1. Othen v. Rosier
Hill, a Common Grantor divides the land & sells to different people. Othen
is landlocked and needs to use a road through Rosier’s land to get to the
main road-Othen sues for injunction to get a right of way.
1. Is there an easement by necessity?
2. Is there an easement by prescription?
Neither easement exists according to court
2. The mere fact that the two
parcels are landlocked does not
justify a finding of an easement.
d. Creation by Prescription: The requirements mirror the requirements for AP. The
only diff is that once the requirements are satisfied, the claimant gets an easement,
not a possessory right. Only affirmative easements can be formed this way.
Requirements – Use must be:
i. Open and Notorious
iii. Adverse w/ a claim of right (cant be permissive)
iv. Continuous for the necessary statutory period
e. Easement by estoppel (reliance)
i. Holbrook v. Taylor
ii. Initially Holbrook gave Taylor permission (license) to drive through & maintain
a road on his prop. & Taylor spends $100 to improve the road & also spends
Heather’s Parcho Outline
money remodeling his house- They have a fight & Holbrook builds a fence-
Issues: Is there an easement by prescription? Is there an easement by estoppel?
Holding: This is easement by estoppel because Taylor spent $ in reliance of
the original license
GP- Be careful when you grant a license
Interesting b/c the court not only considered how much they spent on the
road but they also considered how much they spent on the house
6. Public Easements and the Doctrine of Public Trust: The public at large can acquire a public
easement in private land by prescription if members of the public use the land in a manner
meeting the requirements for prescription. Note: If the land used is vacant or undeveloped, the
presumption is that the use is permissive. Thus, except for a public road, it is diff to acquire a
public easement by prescription.
a. Doctrine of Public Trust: Broad doctrine that may be employed to give the public
access rights reasonable under the circumstances (ex. access to dry sand area b/c
public has access to wet sand area)
i. Mathews v. Bay Head Improvement Association
Δ bought land close to the ocean & effectively blocked/denied access to the
public from getting to a public beach-π’s demanded public access. The
land property was private but the water was public and the public had a
right to use the land.
Issue: Can public pass through Bay Head prop. to get to the public
Holding: Ct. said yes, and relied on a doctrine of public trust in
allowing the public to go on the Δ’s land-but eas. was not created
- made them open their membership to all
- affirmative easement in gross
-didn’t use prescriptive easm b/c this would have been hard to prove
7. Environmental Easements: The Uniform Conservation Easement Act (17 states) allows for
positive and neg easements that protect natural, scenic, or open-spaced values.
8. Scope of Easements:
a. Easement created expressly: Terms of the grant control the scope. Thus it is imp to
clearly articulate the terms of the easement and to bear in mind possible needs for future
b. Easement created by Implication: Scope depends on prior use or on any similar use the
parties might have expected.
c. Easements created by Prescription: Scope remains consistent w/ the use which gave
rise to the prescriptive easement.
i. Brown v. Voss
3 parcels of land A,B & C. A is owned by Voss, B & C are both owned by Brown. The previous owner of
Parcel B had an easement on A that ran w/ the land but he was not the owner of C at the time(owner of C
did not have an easement at that time) The question is now that Brown bought & extended his house to C,
does the easement extend to C as well?
Issues: Can a dominant tenement extend the easement’s scope to include an additional parcel?
Holding: No, Since this easement is specific to a parcel of land, Brown can’t extend it to C but the
remedy given to Voss was only $1 because it didn’t effect Voss at all-he was just trying to bust
Heather’s Parcho Outline
c) 1)Restatement 3rd on Property § 410- Ct. should permit changes necessary for
normal development of the Dominant estate
2) What if servient land owner wants to slightly change the location of an
easement i.e. move the road over to build something
Majority view: Can’t do it
Minority view: Restatement 3rd § 408: Can do it, if it does not significantly
lessen the utility of the easement or frustrate its purpose
d. Use for the benefit of nondominant land: An easement granted for the benefit of lot 1
cant be used for the benefit of lot 2, even though the same person owns lots 1 and 2. The
dominant owner can’t increase the scope of the easement by using it to benefit a
i. Limitation: Courts permit changes that are necessary for normal development
of the dominant estate; the easement can be modified to allow for such
9. Division of easements in gross: If nonexclusive (i.e. use is enjoyed both by the beneficiary
and the servient owner), an easement in gross cannot be apportioned. If an easement in
gross is exclusive, (e.g. beneficiary has the exclusive right of enjoyment), the easement can be
apportioned or divided.
a. Limitation: One stock Rule – An easement that is apportioned or divided is subject to
the one stock rule. This means that all the parties that hold an interest in the
easement must act as “one stock” and not as independent owners. The parties must
make the decisions together. (Miller v. Lutheran Conference- fish and boat case)
10. Termination of Easements:
a. Expiration – Easements can simply expire. Some are created for the life of the holder or
for a term of years. Likewise, easement of necessity ends when necessity ends.
b. Release – Easement holder can willingly give up her privilege by giving the servient
property owner a document of release, but the document must comply w/ the relevant
requirement of the statute of frauds.
c. Abandonment – Requires that the holder stop using the easement and independently
manifest intent to abandon.
i. Presault v. United States
FACTS: (Prop. owneres sued the Govt. for an unauth. taking after the govt. authorized the conversion of an
abandoned RR easement into a nature trail across the owners' property.)
PROC: Appeal from judgment for D in action for damages for unauth taking of land by govt.
RULE: An easement is terminated by abandonment when nonuse is coupled w/ an act manifesting a
present intent to relinquish the easement or a purpose inconsistent w/ its future existence.
d. Estoppel – If the easement holder represents intent to stop using it and the servient owner
relies on this representation and materially changes her position in reasonable reliance on
the representation. (Servient owner has to reasonably rely on the dominant owner’s
representation not to use the easement)
e. Excessive use – In several states, an easement may terminate if the holder overuses it. In
most states however, excessive use will be remedied either by damages or injunctive
relief, but not forfeiture.
f. Merger – All easements are extinguished when the servient and dominant lots come
under the same ownership. Ex. If servient owner buys the dominant lot, the easement
g. Prescription – b/c easements need not be exclusive, the servient owner can negate an
easement by blocking the dominant owner from exercising the easement for the statutory
period of time.
Heather’s Parcho Outline
h. Condemnation – All easements are terminated when a gov agency takes the servient
tenement by eminent domain. Since an easement is a property interest its owner is
entitled to compensation and the value of the easement is measured by the diminuition of
the value in the dominant tenement.
(Ex. The gov takes your parcel which is subject to an easement. After this the gov has to
pay compensation. You also lost the value of the easement so you figure out how much
the land is now worth w/o the easement and determine what you loss.)
1. Intro: Private bargaining can serve to allocate resources effectively by minimizing land use
conflicts and establishing coordination. However, for such bargaining to be effective, the
agreements must be binding. To make them binding, covenants were developed.
2. Definition: A covenant is a promise to do or refrain from doing something that a property
owner takes upon herself. Like easements, they are a private means of land control.
3. Types of Covenants:
a. Real Covenant: A contractual promise that traditionally was enforceable in a court
of law. Remedy for a breach was damages.
b. Equitable Servitude: A covenant enforceable in equity by or against successors to the
land of the original parties to the K. Can be formed without an actual K. Hence, if P
wants equitable relief (injunction or specific performance), P must show that the
covenant qualifies as an equitable servitude. Remedy for breach is an injunction.
4. Real Covenants: The major issue involving real covenants is whether the burden of the
covenant will run to successor owners of the promisor’s land. It is also sometimes and issue
whether the benefit will run to successor owner’s of the promisee’s land. To run w/ the land, the
covenant must satisfy the following requirements:
a. Original covenanter and covenantee must intend the covenant to “run w/ the land” (i.e.
that the benefit of the covenant would bind successors)
b. Must be in writing (required by statute of frauds)
c. Successors must have notice of this intent; either actual or constructive
d. Covenant must touch and concern the land – According to the traditional view, this
requirement is satisfied if it can be shown that the covenant either enhances the value of
the land and confers a benefit on the land OR conversely (if it is a burden) if it imposes a
burden on the land.
i. Ex. Covenants affecting the physical condition of the land are always held to
touch and concern.
ii. Ex. Covenants restricting business activity on the land
iii. Ex. Obligation to buy water from a neighbors well was held not to touch and
iv. Ex. Older cases hold that covenants to pay taxes do not touch and concern, but
contemporary holdings provide that obligations to buy prop insurance or pay a
security deposit touch and concern.
v. Note: Restatement 3 replaces the touch and concern requirement w/ a
reasonableness test based on three factors:
1. The purpose or goal of the covenant
2. The fairness of the arrangement
3. The degree of interference w/ personal autonomy
Note: The Rest view suggests that covenants imposing unreasonable
restraints on alienation and trade, or unconscionable covenants should not
Heather’s Parcho Outline
e. There must be horizontal and vertical privity (the two together are called privity of
estate) between all parties on which the covenant is binding. Privity exists whenever a
title to the land is acquired by devise, intestacy, grant, or judicial conveyance and the
conveyance contains the promise; but AP doesn’t establish privity
i. Horizontal privity (relationship bet the contracting parties) When a court
requires horizontal privity, it means that there must be some land transfer
between the original promissor and the original promissee. Hor will always
exist in the case of LL and T or if the covenant was created simultaneously w/ a
transfer of interest in the land. Most J’s don’t require horizontal privity for
running of a burden.
ii. Vertical privity (privity between litigants) Vertical privity refers to the original
relationship between the promissor and his successor and the promissee and his
successor. For the burden to run, the same interest must be transferred
(ex. if you started w/ a FS, you must continue w/ a FS). For the benefit to
run, a lesser interest can be transferred (if A started w/ a FS and conveyed
a LE, there is still a covenant)
5. Creation of Covenants: Although not an interest in land, a writing is required for a real
covenant. A real covenant will not be implied or arise by prescription.
a. Exception – Implied From a General Plan: Where a developer has previously sold
restricted lots, many courts will imply a negative servitude on a lot subsequently
conveyed even though there is no writing that creates a servitude. The developer must
have had a reasonably uniform general plan for an exclusively residential subdivision,
and subsequent grantees must have had notice of restrictions on lots previously conveyed.
6. Equitable Servitudes: An equitable servitude is a covenant that fails to satisfy the privity
requirement but nevertheless would run w/ the land on equitable grounds.
a. Equity Requires 3 things:
i. Parties (covenator and covenatee) intended the promise to run
ii. Subsequent purchaser has actual or constructive notice of the covenant
iii. Covenant touches and concerns the land. (Note: Remember that Rest 3 applies
to equitable servitudes too)
1. Tulk v. Moxhay (p.864)
(Crt. of Chaucery, 1848)
FACTS: Tulk was the owner of a vacant lot in Leicester Square and neighboring houses (property); series
of transfers; orig one was between Tulk and Elms yr was 1808 (modern Eng. law); Elms covenanted to
keep the square; not to bld anything on the square. After several conveyances, goes to Moxhay (no
mention of covenant w/ this last one, yet Moxhay had actual knowledge of the covenant; ignored it and
built on the square)
Inherently not enforceable b/c no horizontal privity; for Horizontal you need two orig. parties (in UK,
landlord an tenant);
HELD: Chancellor crafts a new instrument since Moxhey actually knew; inequitable not to enforce
covenant against Moxhey (fairness - guy knew & efficiency - since he knew, he adjusted the purchase price
to reflect existence of covenant - if not enforce covenant, we would provide him w/ windfall)
2. Sanborn v. McLean (p.870/149)
(S.Crt. of Mich., 1925)
FACTS: (The McLeans tried to build a gas station on their lot in a residential district, but were enjoined
from doing so by their neighbors.) Dealing w/ a subdivision; original owner (developer) is McLaughlin;
series of sales/deeds: 1) Dec. 1892 - 10 lots all restricted to single family residences; 2) 1893 - 11 more lots
were conveyed w/ similar restrictions (sticky b/c some sold w/ restrictions, some not; the ones w/ were
single family); in 1911, McLean had one of the lots and wanted to start a gas station (no restriction in
exchange of title); tried to enjoin from operating; T CRT issued an injunction for the bldg to be destroyed
PROC: Appeal from decree providing injunctive relief for violation of reciprocal negative easement.
Heather’s Parcho Outline
RULE: An equitable servitude can be implied on a lot, even when the servitude is not created by a
written instrument, if there is a scheme for development of a residential subdivision and the
purchaser of the lot has notice of it.
7. Restrictive Covenants
a. Group Homes
i. Hill v. Community of Damien
FACTS: C.ofD., a home for AIDS patients, leases a home in Far Hills Village. Patients live there and
conduct a normal life. Residents not happy; claim use of this violates single family residential use
restriction. The neighbors further claim Fair Housing Act does not apply.
T CRT: issues injunction against group home
ISSUE: (1) Is operation of a group home for 4 unrelated individuals a residential use? (2) Single family?
S.CRT: (1) Yes; w/ trad structure and atmosphere. (2) Yes; b/c term "family" not defined in the
covenant and should thus be cross referenced w/ Albequerque Zoning; defined broadly - no more
than 5 unrelated persons living together in a dwelling. court adds that there are strong public policy
reasons to incl. group homes in family. Fear of increased traffic has no bearing here. Evidence here
insufficient to prove discriminatory intent. The court does find discriminatory impact in that the
enforcement of the covenant would deny housing to the handicapped. Should make reasonable
efforts to accommodate handicapped. This group home doesn't require excessive effort.
b. Racially restrictive covenants
i. Shelley v. Kraemer
Until 50s racially restricted covenants existed; restriction on sale to on minorities (couldn't sell to blacks);
Shelley's purchased property in MO that was subject to prior restriction; neighbors sought injunction of
sale. The S.Crt. of MO ordered the trial crt to grant relief and the same happened in Mich.
HELD: SCOTUS reverses.
* problem w/ covenants is that they're private. 14th: no state shall make or enforce any law which shall
abridge priv. and immunities of citiz. of U.S., but have to show state act. How does S.Crt. provide since
they're private? Enforcing by injunction is a state act. Even though private contract, there is a function to
be enforced by the crt. For us to enfoce such a contract would violate.
NOW: use Fair Housing Act
8. Termination of Covenants:
a. Expiration – A real covenant may be expressly designed to expire at some fixed
point in time or upon some contingency.
b. Express waiver or release – This is similar to release under easements, but the
underlying nature of covenants make things more complicated. W/ easements you
have a small number of parties in the typical case. W/ covenants you usually have
multiple parties, and to get all of them to waive their rights or release the covenant
is very difficult.
c. Changed Conditions in Neighborhood – If the character of a neighborhood has so
changed that it is impossible any longer to secure in substantial degree the benefits
of the restrictive covenants, equity may refuse to enforce the covenant. However, for
the defense of changed conditions to succeed, most cts require either that (i) the change
outside the subdivision must be so pervasive as to make all lots in the subdivision
unsuitable for the permitted uses, or (ii) substantial change must have occurred w/in the
i. Western Land Co. v. Trusckolaski
FACTS: W.L. divides property into 40 lots and all are restricted for residential use (single family
dwelling); as the city of Reno expands, all of a sudden, W.L. wants to construct a shopping mall on the
Heather’s Parcho Outline
land; homeowners in the subdivision bring a lawsuit to enjoin.
ISSUE: (1) Can orig. restrictions be abolished in light of new conditions? (2) Does a zoning change that
allows commercial uses, override restrictions? (3) Is efficiency test applicable?
HELD: (1) no. changes not sufficient enough; subdivision still suitable for residential use, and thus the
purpose of the original plan has not been thwarted; (2) no. not enough and can't supercede covenants. (3)
no. paramount interest is of residents in plotted area; crt refuses to take into accnt other residents who could
take advantage of the shopping mall
ii. Rick v. West
Rick is a subdivider that restricts to single-family use; Rick then sells half-acre lot that builds a house on it.
After running into trouble selling other lots, Rick contracted 45 acres for industrial use, but Rick is a
holdout. West refuses to lift covenant. P sue West, covenant unenforceable.
ISSUE: Is the covenance of single-family use still valid?
HELD: Yes; neither obsolete nor outmoded; West entitled to enforce full power of covenant
RULE: A landowner in a subdivision under a restrictive covenant has the right to insist upon adherence to
the covenant even when the other owners consent to its release
d. Abandonment - If enough violations of the covenant occur, w/o any beneficiary
attempting to enforce the covenant, it is evidence that most owners no longer want
the covenant to be effective. The test is whether the average person reasonably
concludes by looking at the relevant property that the restriction has been
e. Merger – ALL lots must be merged under the same ownership.
9. Common Interest Communities:
a. Condos: Features:
i. You own your own unit, but you co-own common areas w/ other tenants
ii. Since each owner owns in FS, failure to pay by an owner does not affect other
iii. Common areas, exterior walls, are owned in tenancy in common
iv. Owners association has maintenance responsible for common areas but owns no
interest in them
v. Each condo has a declaration. By joining you consent to the homeowner’s
association. You accept the by-laws.
vi. Homeowners association can make and amend by laws that govern owners and
occupants. Courts usually allow amendments as long as they are reasonable.
Courts will approve of changes as long as they don’t diminish the size of the
common areas and are not retroactive. Note: Courts will usually give more
deference to covenants in the declaration, over subsequently adopted covenants
1. Pocono Springs Civic Association v. Mackenzie
Mack. Bought a lot as part of a CIC. They later realize it has sewage problems & is essentially inhabitable
but are still being charged association fees. They are trying to abandon the land so not to have to pay these
Issue: Can a resident of a condo negate his obligation to the assoc. by abandoning the prop.?
Holding: They have perfect title & can’t abandon it
Rationale: Tort Liability, If someone falls on the prop. we want someone to be responsible
GP- What they should have done was create a corporation, give the prop. to the corp. & go bankrupt t- b/c
as we know from our favorite novel (no Eric not “Private Parts”) Buffalo Creek “the educational tool”
Disaster it’s hard to pierce the corporate veil
2. Nahrstedt v. Lakeside Village Condo
Heather’s Parcho Outline
When Nahrs. bought the condo she brought her 3 cats despite the “no pets allowed” restriction. She
claimed the cats were quiet & didn’t disturb anyone b/c they remained in her apt. all the time.
Issue: Does the restraint have to be reasonable in general or should they look at whether the rule is
reasonable when applied to each individual case independently (i.e. if the rule was designed to protect from
nuisance of animals and her cats were not bothering anyone they should be allowed to stay)?
Holding: Look at the prohibition in general/abstract b/c can’t go case by case-it would be
unreasonable- a restraint in the Declaration is struck down only if the burden it imposes
will be substantially outweighed by the benefit from removing the restriction - & obviously
you can’t restrict a person’s liberties or constitutional rights; Burden to show
unreasonableness is on the owner not the association.
Rationale: 1) She had notice-it was in the declaration
2) Market- many communities allow pets she could have gone there
Epstien- makes these two points & likens the declaration to mini-constitution that a person
can buy into or not-if you do you are bound by the rules
b. Co-Ops: Diff from condos in several ways:
i. Building is owned by a non-profit organization
ii. The residents own shares in the org and can vote for the board of directors; they
themselves have no prop right
iii. If one T defaults, the other T’s have to cover her share. Therefore, there is a
strong tendency to screen applicants ahead to time, but they still cant violate the
iv. B/c the building is owned by a corp, it may be diff for individual owners to
secure financing; you must have independent assets or credit
v. The premises are maintained by a management firm hired by the board.
XI. The Law of Zoning
1. Theory: By dividing up a city into use zones from which harmful uses are excluded, zoning
purports to prevent one landowner from harming his neighbor by bringing in an
incompatible use. In a sense, zoning is nuisance law made predictable by declaring in
advance what uses are harmful and prohibited in the various zones. This is the theory used
in Village of Euclid to uphold zoning from constitutional attack. But zoning has purposes
beyond preventing harm. Modern zoning often regulates uses to achieve public benefits or
to maximize prop values in the city. Zoning also has a darker side: it has been used to
exclude low income groups who cant afford the housing permitted in a city.
a. Village of Euclid v. Abler Realty (950) (S. Ct. 1926) Ambler challenged a zoning scheme
created by the village. The scheme imposed size & use restrictions & divided the city
into different districts. Ambler’s lot was divided into 3 different use classes-It was,
therefore, worth only 1/4 of its value if it could be used for industrial purposes. He
claimed the zoning scheme violated his 14th Ammend. rights & his right to due process
because it dropped the land’s worth from $10,000 to $2,500.
Issue: Is the ordinance a violation of the π’s constitutional rights?
Holding: Nope-Zoning is constitutional-t.f. the ordinance stands
Rationale: The complexity of urban life calls for land use controls- therefore, can
zone to avoid nuisance b4 it happens by separating industrial from residential
Note, zoning rules at the time sought to protect single family homes-which all the
Justices were a part of.
Heather’s Parcho Outline
b. Cumulative Zoning: (Euclidian zoning) The notion of cumulative zoning separates
conflicting uses and classifies them on a scale from “highest” use to “lowest” use.
The highest use is deemed the least harmful to others, the lowest the most harmful.
It permits higher uses in lower use areas, but not the opposite. (Ex. you can build a
house in an industrial area, but not a factory in a residential area).
B. The Non-Conforming Use
1. Nonconforming Uses: A nonconforming use is a use in existence when the zoning ordinance
is passed that is not permitted in the district under the new zoning ordinance (Note: land has
to be put to use). Nonconforming uses are allowed to remain b/c requiring immediate termination
would be either a violation of substantive DP or an unconstitutional taking of prop rights.
Nontheless, nonconforming uses may be limited or terminated under certain conditions:
a. Amortization: A zoning ordinance may provide that the nonconforming use must
terminate after a specified period of time. The ordinance may provide for diff
amortization periods, depending on the amount of investment in the use and building.
i. Majority view – amortization valid: The maj of cts have held such
ordinances constitutional as a reas exercise of the police power – not a
violation of DP and not a taking. Nonetheless, the ordinance must be reas as
applied to each nonconforming use terminated. If not reas as applied to each
particular landowner, it is un-C as to that landowner.
ii. Minority view – amortization un-C: A min of cts have held amortization
ordinances un-C as a taking of prop w/o compensation.
iii. PA Northwestern Distributors v. Zoning Hearing Board
Shortly after the π opened an adult bookshop, the town established a zoning ordinance that prevented such
shops in that area. An amortization clause gave business owners 90 days to comply. (relocate or change the
nature of the store). P argues that this violates his due process rights>
Issue: Can a municipality re-zone an area and force existing land owners to comply or relocate without
Holding: Non conforming uses are vested prop. interests & although it’s OK to rezone, you must
compensate (This is a PA case-different in other states as in next case)
Concurrence: Don’t necessarily need compensation- amortization may work w/out compensation but it
must be reasonable under the circumstances and 90 days in this case is not reasonable-must give a longer
period to relocate
GP- loves the concurrence b/c compensation would be very expensive & impractical b/c it would be passed
along to the tax payer
iv. Buzzetti v. City of NY
Upheld a zoning ordinance regulating permissible locations of adult entertainment establishments. The Ct.
basing their opinion on studies indicating that the businesses lower the prop. value, & decrease the
character of the community, increased crime rates, and lower the quality of urban life, gave the
establishments 1 year to relocate w/out compensation. (Bottom line- if you’re going to open a porn shop
do it in PA not NY)
C. The Scope of the Zoning Power
1. Intro: Zoning was originally established to ensure adequate amounts of light and air, to
minimize the risks of fire and other public hazards and to prevent overcrowding.
Eventually, regulation expanded.
Heather’s Parcho Outline
2. Aesthetic Regulation: In recent years, many courts have held that cities may enact
regulations primarily for aesthetic objectives. Some of these courts, attempting to put some
limits on what can be legislated in the name of beauty, have said that the standard to be applied to
aesthetic ordinances is whether the prohibited use offends the sensibilities of the average person
and tends to depress prop values.
i. Stoyanoff v. Berkeley (1012) (1970)
Stoyanoff applied for a permit to build an unusual house. The permit was denied b/c the city’s board did
not approve the design. Soyanoff claims the aesthetic rules are too vague & outside the scope of zoning
Issue: Does the legislation enable aesthetic zoning regulation? Is it allowed to do so?
Holding: Yes it does, Yes it can. The legislation protects the character of the community & its prop.
value which are legitimate grounds for zoning. This ct. establishes the right of local municipalities to
control architectural design.
ii. Anderson v. City of Isaaquah (1020)
Similar facts as in Stoyanoff (except it was a commercial property) but after his original plans were rejected
Anderson drew up another set of plans which were also rejected by the development committee. He asked
for a concrete set of guidelines but none were ever given. They told him to “drive around the neighborhood
and see what’s there” After spending $250,000 he appealed to the city council & lost (He wanted to build a
modern building with off white stucco)
Holding: Aesthetic restrictions are allowed but they must be clear & can’t be arbitrary. Here, they
were unclear & the committee did nothing to illuminate them. The board must let the applicant know
exactly what to change in the design in order to comply w/ the guidelines
b. Architectural Review Boards: Most courts now uphold the power of city
architectural review boards to deny building permits for proposed buildings that
the board disapproves. B/c the standards these boards apply are often vague and diff to
apply, they raise problems of improper delegation of power and equal protection of the
laws. A fav standard is that the building must “conform to the existing character of
the neighborhood and not cause a substantial depreciation in neighboring prop
values”. Such a standard has been upheld, even when the existing character of the
hood is not entirely uniform.
i. Contrast: (Anderson case – Holding a substantially similar statute to be
c. Advertising signs: It has long been held that commercial ads may be prohibited in
residential areas, on the theory that they are harmful to the quiet and tranquility
sought in residential areas. But problems arise when political ads are banned or when
commercial billboards are banned from commercial areas. Here the zoning ordinance
may conflict w/ freedom of speech:
i. Political Ads: Ordinances prohibiting political signs entirely in front yards
of residential areas have usually been void, b/c adequate alternative means
of communication are not available to owners (note: if there is another
plausible way, the ban might be upheld)
ii. Related Decisions:
1. Linmark - N.J. S.C. strikes down ordinance prohibiting “for sale”
and “sold” signs. Ct says alternative such as newspaper not likely
to reach same audience, and also, the town didn’t prove the
measure was necessary.
2. Metro Media – Ca S.C. strikes down ordinance prohibiting
everything except on site commercial signs. Ct says the ordinance
wasn’t sufficiently narrowly tailored, aesthetic interest wasn’t
3. Vincent – Ordinance prohibiting posting on public property
Heather’s Parcho Outline
4. Gilleo - Signs are protected speech - physical aspects may be
regulated but not content. The ordinance closes off a cheap &
convenient means of expressing oneself for which there is no close
3. Exclusionary Zoning - Controls On Household Composition: Zoning can be used to
purposefully exclude various groups from the community or from certain districts.
Excluded persons may be unmarried or unrelated persons who live together as a family, low
income persons, or racial minorities. Even when there is no intention to exclude these
persons, the zoning ordinance may in fact result in exclusion.
a. Nontraditional Families: At the heart of the zoning system is the protection of the
single family home. But what is a single fam home? Legislatures have defined it in
various ways. If the definition bears a rational relationship to the objective of
preserving “family values” and quiet seclusion, the def passes muster under the C.
Only arbitrary laws will be struck down. (Belle Terre – controls in all but 3 states;
NY, Ca, NJ)
i. Subsequent Decisions:
1. Moore – S.C. invalidates single family restriction which defined
family as including “no more than 1 set of grandkids”). Ct
distinguishes this case from Belle Terre because the restriction here
prevents family members from living together, whereas Belle Terre
restricted unrelated people.
2. McMinn and Baer both stuck down ordinances limiting housing to
no more than 2 or 4 unrelated people living together (or cooking
together as in Baer)
3. State ct approach: Several state cts, however, have held that
occupancy restrictions based on biological or legal relationships violate
the state C bec the definitions do not bear a rational relationship to the
city’s goal of controlling density.
4. State v. City of Rochester said that a zoning amendment was a
legislative act that could not be struck down by the court.
5. City of Edmonds v. Oxford House
City sought to close Oxford House, a group home of 10-12 adults recovering from substance abuse, on the
grounds that it violated its definition of the one family ordinance. OH challenges claiming a violation of
the Fair Housing Act (FHA)
Issue: Can Zoning be used to override the FHA?
Holding: FHO prevails-zoning can’t override
Rationale: FHO accepts restrictions on maximum occupancy but does not preserve family character
concerns-here family definition rules were concerned w/ family living & not space for living
6. Oxford House v. City of St. Louis
city ordinance defined family as no more than 8 unrelated ppl. living together. 3rd cir. felt this was a
Seemingly benign ordinances such as this are very detrimental to group homes
Raises the NIMBY problem (not in my backyard)
Even those who don’t mind these homes still do not want them in their back yard.
Now, rule in most places is 8 people
4. Exclusionary Zoning – Growth Controls: Exclusionary zoning seeks to keep out the poor;
growth controls seek to keep out everyone. Growth controls may be adopted to preserve certain
attributes of the local community. Courts are more sympathetic to growth control measures
Heather’s Parcho Outline
(if reas and limited in time and effect) than exclusionary zoning measures. May be there to
keep personality of town, to have better air and water, to prevent overtaxing, etc.
a. Most common measure to do this is restrictive schedules or moratoria, or the greenbelt
strategy which prohibits building altogether
b. Mt Laurel – The Mt. Laurel decision of NJ has become famous for laying down a
requirement that each community must provide its fair share of housing needs in the
region. Mt Laurel I held that a city’s zoning regulations, which did not provide
opportunity for a fair share of the region’s need for low-income and moderate income
housing, were in violation of the state constitutional requirements of substantive DP and
equal protection because the regulations were not concerned w/ the general welfare of all
persons. The intent of the town leg is not controlling; the effect of excluding low income
persons is. The ct reaffirmed this decision in Mt Laurel II where they also extended
the rule to all communities not just developing communities.
XII. Eminent Domain and the Problem of Regulatory Takings
A. Sources and Rationales
1. Intro – When private land use controls fail, the government may intervene to improve on the
workings of the market; government regulation of land is desirable when it can help prevent
harmful third party effects (negative externalities) or can coordinate positive externalities.
When the gov intervenes, it can do so in one of two ways;
a. Zoning OR
b. Eminent Domain (physical taking)
i. Ex. Gov wants to build a highway. By ED they can just take your prop. By
zoning they can just provide that the land can only be used for highway use.
ii. Note: When the gov decides to exercise its ED powers, it must pay
compensation. But w/ zoning, it doesn’t. So we have to determine when the
gov says its zoning, but is really exceeding this zoning power and should be
forced to pay compensation.
2. Applicable Constitutional Amendments:
a. 5th (Takings Clause) - The authority of the gov to take land derives from its police
power. To safeguard against abuse, the takings clause provides that private prop can
be taken only for public use and only for the exchange of just compensation.
i. Public Use – Public use is required b/c the gov can’t favor one private owner
ii. Just Compensation – Just compensation (i) mitigates the harm of the prop
owner and (ii) forces the gov to account for its actions.
iii. 5th Amendment does two things
1. says govt can take land
2. says how they can take land
a. see above (public use and just compensation)
b. 14th (Due Process Clause) - Property cannot be deprived w/o DP of law.
i. Procedural Dimension – Requires that none of the liberties listed (life,
liberty, prop), can be taken w/o giving the affected party an opportunity to
ii. Substantive Dimension – Requires that:
1. Any gov legislation or regulation affecting life, liberty, or prop
must advance some public interest.
Heather’s Parcho Outline
2. The means chosen to advance the public interest must be
reasonably necessary (not unduly cumbersome).
- Lochner was arguably one of the worst decisions of the supreme court b/c it struck down almost
any property regulation/taking
o Today, economic substantive due process isn’t used to strike invalidate
- Among state courts, this is very different – they may be willing to use ESDP to challenge
regulation of property
3. Definition of ED: The power of the gov to transfer title to private prop from the private
owners to itself. The gov may assume control over private prop and dispose of it as it deems
necessary. Sequence of events involved:
a. First, the gov usually tries to strike a voluntary bargain/negotiation w/ the prop owner.
b. If negotiations fail, the gov will begin a condemnation proceeding and the presiding ct
will evaluate the claim of the gov. If it approves it, it will also determine compensation
amount the gov has to pay. Gov may take the entire bundle of rights of the prop owner,
or just one of the sticks in the bundle.
c. Inverse condemnation proceeding: When the gov physically or regulatorily makes use of
a prop or strips the prop of all its value or a substantial part of the value w/o initiating a
formal condemnation proceeding, the owner may bring an inverse condemnation action
to secure a ruling that the gov has taken the prop and must pay just compensation.
B. Public Use and Just Compensation
1. Public Use – In modern times, most cts have held that the term “public use” means the
condemnation must benefit the public. Under this broader construction, most condemnations are
permissible. So long as the legislation serves some public interest, and the means chosen is not
irrational, cts should uphold the legislation w/o questioning its wisdom.
a. Ex. A public purpose may be served by transferring ownership from one private person
to another private person. Examples include urban renewal, where the gov condemns
blighted land and resells it to a developer. (Note: A purely public holding – serving no
public interest – would be un-C, but this is very rare)
2. Just Compensation - Just compensation means that the owner must be paid fair market value
for the prop taken. Compensation includes the recovery, not only for the part condemned, but
also for damage to the remainder. (Ex. gov condemns land to operate a garbage dump and takes
half your lot. But of course a garbage dump on ½ of your land affects the value of the remainder,
so JC covers any depreciation of the remainder)
a. Note: Just compensation does not cover personal or subjective value.
3. Academic Perspective –
a. Berger – Traces two possible interpretations of public use. Broadly defined, a use is
public whenever it confers a benefit on the public. Narrowly defined, a use is public only
when the public actually gets to use the condemned land. Berger’s account is mainly
historical. He tells us in the early years it was the narrow interpretation that dominated,
but through time we’ve moved to the broader approach. (ex. Midkiff shows how minimal
the requirements are now).
b. Merrill – Merrill introduces the distinction between ends and means. Thus far we have
focused on ends (what use has the property been put to). Merrill thinks the emphasis
should be on the means. Merrill’s theory is that the gov may use its ED power whenever
transaction costs prevent private bargaining or make it impossible. Gov must intervene
and has a legitimate right to do so, when it is acting as a facilitator of a socially desirable
c. Munch says transactional costs can always be lowered to a manageable level
Heather’s Parcho Outline
d. Epstein- public use is only a provision of public goods (highways and parks – open to
e. Hawaii Housing Authority v. Midkiff
Hawaii wanted to distribute wealth b/c a few owners owned all the prop. They pass a land reform act to
take the land & give it to others
Issue: Is this a public use?
Holding: Yes, Ct. says they only have to check for reasonable behavior-it’s really up to the local legislator-
Doesn’t literally have to be for public use, just for a public purpose, & breaking up an oligopoly is a
public interest & therefore, fits under police power
Public Use Requirement is Minimal
This is problematic b/s its equivalent to saying that if it’s legit police power than it is a reasonable
If this is so, why do we need public use requirement in the first place
f. Poletown Neighborhood Council v. City of Detroit
Detroit wants to take land from this neighborhood and build GM a plant in order to keep GM in the city
Issue: Is helping the local economy to be considered a public benefit enough to take private prop.?
Holding: Yes it is a public benefit- not really helping GM just creating jobs for hundreds of people
Dissent: Primary benefit was for GM- GM had engineered this move using its political power
GP- Doesn’t think this is what the framers of the amendment had in mind when they gave this right to the
gov.- Dissenters make more sense
g. City of Oakland v. Oakland Raiders
Issue: may the city of Oakland condemn a sports franchise to keep them from relocating? Is this a public
Trial court concluded as a matter of law that no statutory provision allows for taking AND this is not a
recognized public use
Holding: Maybe, Anything that promotes education, recreation or public enjoyment may be
considered public purposes (City owned the arena and what went on there) They can own sports
Other Solutions: 1) give munic. Right of 1st refusal 2) Give munic. Rights to the name
Problems w/ focusing on the means:
a. In one way or another, all real estate is unique
b. There are ways to diminish transaction costs
C. Physical Takings
What constitutes a taking?
Permanent physical occupation/invasion – If the gov physically invades property permanently,
it has taken the prop and must pay for it, no matter how trivial the invasion. Any permanent
invasion is a taking – this is a per se rule. Must compensate.
1. Loretto v. Telepromter Manhattan CATV Corp.
NY passed a law providing that landowners must allow cable TV companies to install wires on
their prop. for a $1 payment. Loretto who bought the prop. not knowing about the wires later
finds out & sues for compensation.
Heather’s Parcho Outline
Issue: Does a permanent, physical occupation authorized by the gov. give rise to an obligation to
Holding: Yes, any permanent, physical occupation is automatically a taking (per se rule-
degree of taking is not considered(degree only considered when assessing the damage). Ct.
remands for compensation. Regulation of prop. can be done w/ out compensation if it promotes
public interest. If the physical taking is temporary, there is a balancing test
-Brightline rule cuts administrative costs
-The court makes this distinction b/c permanent occupations are an especially severe intrusion
on the owner’s rights (right to exclude)
On remand NY ct. held one dollar was enough compensation
Dissent: Per Se rule is stupid(my language-not the dissent) There are certain regulatory measures
that are much more harmful to the rights of the property owner than a little wire like in this case.
Brightline rule of majority makes no sense.
-and wont cut administrative costs b/c need courts to decide how much compensation anyway
Temporary physical taking- one case that says one can be compensated for a temporary
taking: 1st English Evangelical Lutheran church of Gledale v. County of Los Angeles
Flood that ruined churched property. City put temporary moratorium on construction on the flood
susceptible area and church sued to get use for the amount of time they “took” it.
CA courts rejected this claim holding that property owners under CA law have to right to compensation
until the regulation is declared a taking and the government decided never-the less to let it stand. Only then
can you get compensation, up until then you can only get regulation repealed. Appeals to SC and court
rules that if indeed the regulation were a taking the church can get compensation.
- Said that IF there was a taking, then the govt can not just go back and repeal, they must
pay for the time the regulation was enacted (even when temporary)
- Court never said whether this WAS a taking – this case was strictly about remedies
o Most people took it to say that temporary moratoriums do give rise to
o Court dealt with this in next case:
D. Regulatory Takings
1. Intro: When is governmental regulation of a person’s property – which does not involve
physical entry by the gov or third parties – a taking? The gov can regulate the use of prop
under the police power, for the purpose of protecting health, safety, or public welfare, but at some
point these regulations – imposing an onerous burden on the landowner – may become a taking of
prop. There is no set formula to determine this, but there are several factors cts will weight to deal
w/ the problem.
2. Factors: Not one particular factor is dispositive, except for the wipe out rule. Courts will weigh
a. Harm/Benefit Test:
i. If the gov regulation has the purpose or effect or protecting the public from
harm (or a nuisance broadly defined), this is a valid exercise of police
power; NO TAKING IF NUISANCE (Hadecheck)
1. Note: Any potentially harmful activity may be considered a nuisance
for these purposes, even if we wouldn’t classify it as a CL nuisance.
ii. If the regulation has the purpose of extracting a public benefit, it is an
exercise of ED and the owner must be compensated.
Heather’s Parcho Outline
b. Test of severe economic loss: If a regulation unduly diminishes the value of the prop
it will be a taking. Thus, large damage to the owner may be compensable, but small
c. Reciprocity test: Regulations that involve reciprocal advantages and disadvantages
are not a taking. If the regulated owners obtain some advantage, though it be less
than the advantage obtained by others, the regulation is w/in the police power.
d. Entirety test/Conceptual Severance: If you can separate the prop into separate and
independent estates and show that one part was taken in its entirety, this is a taking.
(Ex. Party argues that you can conceptually sever air rights or surface rights)You
cannot conceptually sever temporal rights and claim a wipeout (Tahoe)
e. Extent of Regulation
f. Impact on investment-backed expectations: Gov should not be permitted to
demoralize investors by destroying their expectations. Reliance interest deserves
g. Character of the government action
h. Destruction of All Economic value: If the regulation denies all economically
beneficial uses of land (i.e. wipes out), it is a per se taking, unless the state can justify
its actions as preventing a common law nuisance.
i. Wipeout: If it is a complete taking (wipeout) then there must always be
j. Hadacheck v. Sebastian S.Ct. (1140)
LA passes an ordinance prohibiting the manufacturing of bricks in certain parts of the city. π, a brick
manufacturer, had prop. in that part of the city which lay on a bed of clay. He claimed it was a taking b/c it
caused a huge diminution in value. He also claims disparate treatment b/c othrs in rest of the city were
allowed to remain open
Issue: Is this a taking to be compensated for?
Holding: No, it was w/in the police power of the city. It is never a taking if the regulation/ordinance is
reasonably regarded to be a nuisance control measure-t.f. no compensation
-keep in mind they apply a loose definition of nuisance don’t have to meet rigorous level of public/private
i. Lucas v. South Carolina (1198) S.Ct.
In 1986 Lucy bought 2 beachfront properties in SC for $975,000. In 1988 SC passes a law barring all dev.
From beachfront prop.
Holding: Scalia adds a new per se rule: Wipeout- Holds if the prop. is rendered valueless (aka wipeout)
it is automatically a taking –says this applies in this case
On Remand: Ct. found it was a taking but just a temporary taking b/c the π could apply for a residential
Heather’s Parcho Outline
v. Palazolo v. Rhode Island
P and others owned company and company had 3 waterfront plots. P was the one shareholder. RI enacts regulation
that prohibites developing of wetlands. (Same story as in Lucas)
1978, The company ceases to exist and by operational flaw, P becomes owner. (This is considered ownership change
under our system) P submits several development plans and is denied repeatedly and brings an inverse condemnation
suit and alleges that the council’s decision deprives him of all economical use. RI superior court finds against him and
state SC affirms. They rely on the assumption that P got title to the land after the regulation was enacted. (Court
assumed that if you buy land after regulation, you can’t claim taking.
Key here is that he bought the land AFTER the regulation and courts say you can still bring inverse
condemnation action but in THIS case is doesn’t work under Lucas and might work under Penn Central.
1. May a post regulation acquirer bring an inverse condemnation action?
i.The extinction rule discriminates against old owners who may not live long enough to see
their claim ripen and discriminates against poor owners who may not have the money to
2. Was there a taking under Lucas?
i.He could do other things with prop – did not render it completely useless
3. Was there a taking under Penn Central?
a. Maybe, case is remanded
ii. Tahoe v. Sierra Preservation Council
To save the beautiful water from becoming muddy from erosion, the council established the Tahoe Regional Planning
Agency and they enacted an ordinance banning development on environmentally sensitive land until original plan is adopted.
(plan supposed to be adopted in 83 but they fail to meet deadline and extends then ban until 84) Ban was for 32 months.
1984, a group of 700 property owners brought a lawsuit based on Lucas and Penn Central. 1999 district court rules for the
property owners, denying then on Penn but succeeding under Lucas. Appeals court reverses, appeal to SC.
Is the temporary moratorium a taking under Lucas?
o A property right has both a physical dimension and a temporal dimension, for a wipeout to exist,
both dimensions must be taken.
“Parcel as a whole” term
This isn’t a taking, just a diminution in value so it should be decided under Penn central and
You cannot take your property and divide into time units and claim a taking b/c the property
value will go back to normal once regulation is lifted
Dissent says that this is a taken b/c the distinction between permanent and temporary
regulations is not that different b/c temporary one can be extended and permanent one can be
repealed. He says this is a forced leasehold.
Dimunition in Value (these cases are ad hoc – they look at all the factors)
PENNSYLVANIA COAL CO. V. MAHON
Pennsylvania Coal sold the surface land to private owners but reserved the right to mine the coal
underneath (right was in the deed along w/ warning that purchasers took the risk of subsidence-and waive
Heather’s Parcho Outline
damage rights). PA passed the Kohler act, which forbade mining in a way that would cause subsidence
(endanger houses from falling in) thus taking the mining right away.
Holding: Holmes: It was a taking. When regulation effects a diminution of value of considerable
magnitude it must be construed as an exercise of Eminent Domain & t.f. a taking that must be
compensated for. According to Holmes there was no nuisance control in this case
Rationale: 1) Holmes saw the coal rights as a separate estate that was taken entirely(right to mine is its own
estate)-establishes Doctrine of Severance-If you can show that a right/estate was taken in its entirety ct. will
probably consider it a taking 2) No nuisance b/c the situation was private- the price of the pprop. Sold
probably reflected the risk
Dissent: Brandeis: Act curbed public nuisance so it’s not a taking. There was no considerable diminution of
value to the π b/c the overall value increased (the houses won’t fall down)
k. Keystone Bitonimus Coal v. Debenedictus(S.Ct.)
Coal co. is bound by an act that requires them to keep 50% of the coal in the ground & to restore the
surface wherever they dig Main point of this case is that even with the same fact pattern and same
tests, the courts came up with a different holding – COURTS CAN GO EITHER WAY ON THESE
Holding: It’s not a taking- Ct. (Stevens) distinguishes from Penn Coal on 4 grounds
1) protects the public at large-not just the homeowner(weak distinction)
2) aims to abet a problem “akin to a public nuisance” (weak distinction)
3) creates average reciprocity of advantage (Weak)
4) Does not create Considerable Diminution (b/c it only limits 50% of mining)
(also no problem of Holmes’ Conceptual Severance)
M. PENN CENTRAL TRANSPORTATION (PCT) V. NY S. Ct. (1159)
NY passed a landmark designation law that designated Grand Central Station a historical landmark-requires
PCT to keep the exterior in good repair & seek commission approval for any architectural changes. PCT
sought to build a skyscraper on top of the station-commission disapproves- so PCT sues claiming it’s a
taking that deserves compensation
Holding: Ct. says no taking-t.f. no compensation- Ct. makes a mess of existing common law & creates it’s
own ad hoc test/ ad hoc inquiry into the facts in order to determine whether it’s a taking or not
-Ct. uses 3 factors: 1)Economic impact 2) Investment backed Expectations 3)whether there was a
physical taking (obviously not in this case)
-PCT had 3 arguments- Ct. disputed all
1) Conceptual Severance- of air space above building is a complete takingCt. says NOPE! (not BOOP)
Taking does not arise b/c you lost your air rights (only Holmes would buy this crap)
2) Diminution in Value- Losing millions of dollars of future rent from the skyscraper we want to
buildCt. answers threefold: a) you can still operate profitably(Michael Jordon’s steakhouse-Ms. Fong has
been there twice) b) No investment Backed expectations were upset in this case c) There’s Reciprocity of
Advantage- b/c now NY as a whole is nicer (tell that to the guy who’s losing millions b/c of this- GP: Ct.
should have left this out it sounds foolish)
3)Disparate Treatment Effect – Ct. says They were not singled out for this measure just happens to be it
effects them more
-Ct. admits it is ad hoc decision- basically comes to a conclusion then fits it into a rule/test or makes up a
Ct. does award them Transfer Development Rights (they can build on their other properties even if
violates of other rules)
3. Post-regulation Transfer: An owner who received title to the property after the enactment of the
regulation can still bring an inverse condemnation proceeding. Post-regulation transfer does not
extinguish pre-exiting compensation
Heather’s Parcho Outline
- When a prop owner applies for a building permit, the city may impose a condition on the
development which doesn’t benefit the owner but benefits the city. These conditions are
called exactions. (Ex. A public path to cross the owner’s prop for beach access) An exaction
must be logically related to the specific public need or burden that the owner’s building
creates or to which it contributes. There must be an essential nexus bet the legitimate state
interest and the permit exacted by the city. The condition attached to the permit must be a
credible way of securing the state’s interest, which dispels any suspicion that it is a subterfuge to
allow physical occupation of prop w/o paying.
i. Reasonable Relationship: Even though the city can show a logical nexus for
its action (i.e. action is related to the state interest), it must also show that the
permit conditions imposed on the owner bear a rough proportionality to the
negative impact of the development on the public. (The owner can be
required to pick up a cost roughly proportionate to the injury inflicted on the
ii. Nolan v. California Coastal Commission (CCC) (1181)S. Ct.
Nolan bought the prop. between two public beaches. He wants to knock down & rebuild a bungalow on this
prop. & applies for a permit to do so. Council conditions the permit on him allowing the public to move
Issue: Does the exactment of an easement for access to a public beach = a taking?
Holding: YES- Scalia points out that-1) had he not requested a permit & they would have demanded
access from one beach to another it would be a physical taking which would get compensation 2)
Does the goal advance a substantial gov. goal 3)Creates essential Nexus test- even if it advances a
substantial government goal the means must fit the ends you are trying to promote - here the
bungalow had nothing to do with the public access it was just blackmail (Scalia also joins the ad hoc
club and makes this new requirement)
iii. Dolan v. City of Tigard (1186) S Ct.-
Dolan wants to expand her store and add a parking lot and applies for a permit -the city claims since it is
prone to flooding she must make a bicycle path on her prop. and she must leave an open space
This makes no sense what does a bicycle path have to do w/ flooding? – That’s exactly her argument.
Issue: 1) Is there an essential nexus between the goal & the means
2) Are the conditions of the permit sufficiently related (rough proportionality
between the means and the end) (this fine-tunes Issue 1)
Holding: 1) Yes there is an essential nexus between the required dedications and the legitimate state
interest i.e. the bike path would alleviate the extra traffic her new store would bring but…