Property-2-Outline-Keyed to Dukeminier by mkelly110

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									                                  Property 2 Outline
                             Keyed to Dukeminier/Krier 6th Ed.
                             UMKC, June Carbone Spring 2010

I   Transfers of Real Property


    y     Contract of Sale
    y     The deed by which title is transferred
    y     Financing device

A   Contracts for Sale. To be enforceable, a contract to convey real property must satisfy
    the Statute of Fraud. The purpose is to convince someone that the transfer has
    occurred and in the process prevent fraud.

    (1)      Statute of Frauds²applies to all transfers of real property by gift or by sale. At a
             minimum, the memorandum of sale/gift must be:

             (a)     Signed by the party to be bound (the party seeking enforcement)

             (b)     Describe the real estate

             (c)     State the Price/Method of arriving to the price.

    (2)      Exceptions to the Statute of Frauds. There are 2 principle exceptions to the SOF

             (a)     Part Performance²allows the specific oral agreements when particular
                     acts have been performed by one of the parties to the agreement. Acts
                     held to constitute part performance vary from jurisdiction to jurisdiction.

                     1       Theory 1²(strict common law doctrine) Unequivocal evidence of
                             a contract. Acts of the parties substantially satisfy the evidentiary
                             requirements of the SOF if the acts make sense only y as having
                             been performed pursuant to the oral agreement. Such as:

                             a      Payment²all or part of the purchase price

                             b      Possession²in physical possession

                             c      Improvement²above general husbandry

                     2       Theory 2²(reasonable reliance) prevents injurious reliance on the
                             contract; if the pl. shows that he would suffer irreparable injury if
                             the contract were not enforced, then the buyer¶s taking possession
                             alone is sufficient to set the court in motion. The modern trend is
                             to require proof of:

                             a      an oral contract and
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                     b       reasonable reliance on the contract²enough reliance that
                             it would be inequitable to deny specific performance.

                     c       Hickey v. Green- Green orally agreed to sell Hickey a
                             building lot for $15k and accepted but did not deposit
                             Hickey¶s ck for part payment. Hickey sold his house
                             expecting to build a new house on the lot. Ms. Green
                             refused to complete the sale. Court held that Hickey¶s
                             reliance was reasonable and that equity required specific
                             performance of the oral sale contract.

                     d       No reliance²Walker v. Ireton²Ireton orally agreed to sell
                             his farm to Walker for $30k. Parties discussed a written K
                             but no K was every prepared. When Walker asked for a
                             written K, Ireton assured Walker he was honest and none
                             was needed. Walker gave Ireton a $50 ck as part payment
                             and Ireton accepted, but did not cash the ck. Walker then
                             sold his own farm without ever mentioning to Ireton of his
                             intent to do so. Ireton refused to convey. Court ruled for
                             Ireton stating that Walker¶s sale of his own farm was not
                             reasonable reliance on the oral K because the parties
                             neither discussed that action or was it foreseeable by

      (b)    Equitable Estoppel²May be used to enforce an oral sale K if the seller
             has caused the buyer reasonably to rely significantly to his detriment
             upon the seller¶s oral agreement to sell. Similar to Theory 2 of Part

      (c)    Specific Performance²Injunction

             1       Irreparable Injury

             2       Balance of the Hardships²who is in the better position to avoid
                     the loss, and equitable compensation.

(3)   Implied in any contract to sell real property is the obligations of:

      (a)    Good Faith²each party is required to act in good faith in discharging the
             express duties of the K. Failure to do so will result in default.

      (b)    Timely Performance and Closing²most contracts state the date of
             closing(the completion of the transaction) but if the closing does not occur
             on the specific date, it still may be enforced in equity if full performance is
             tendered within a reasonable time after the closing date. To get around
             the lingering uncertainty add the term² time is of the essence²this
             expressly makes time an essential term of the agreement, a party able
             and willing to perform on the closing date is relieved of any future
             obligations under the sale of the K if the other party fails to perform on the
             required closing date, and
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      (c)    Delivery of marketable title. See B

(4)   Brokers and Agents²

      (a)    Brokers. Brokers (listing agent) are hired by sellers to sell the property on
             the terms and for a commission as specified by the listing agreement.
             Commission is earned when a broker has produced a buyer who is ready,
             willing, and able to purchase on the terms of the listing agreement or
             other terms acceptable to the seller.

             1       Majority²in majority of jurisdictions, the broker is entitled to his
                     commission if the deal falls through regardless of the seller¶s or
                     buyer¶s default.

             2       Minority²if the deal falls through because of the seller¶s default or
                     the seller refuses to sell on the terms of the listing agreement the
                     broker is entitled to the commission anyway; but if the buyer
                     defaults, no commission is earned.

             3       Duties²a listing agent is the seller¶s agent and owes to the seller
                     all of the fiduciary duties that come with an agency relationship.

      (b)    Licari v. Blackwelder²The broker was charged with having withheld from
             his client the fact that he was negotiating the sale of the property to a 3rd
             party even before he purchased it; failed to exercise his best efforts to
             obtain the best price for his client; and misrepresented other facts.

(5)   Assurance of Good title²There are 3 ways a Buyer is assured of getting good
      title to property.

      (a)    Certificate of Title²The attorney does a direct search of title

      (b)    Abstract of Title²the abstractor assembles all of the pertinent records
             and abstracts or abbreviates their contents. The abstractor is usually the
             Title Company

      (c)    Local Title Insurance²Issued by a corporate insurer on the basis of a
             certificate furnished by the local attorney. You are being insured on the
             original purchase price and if there is something wrong; you would have
             to pay extra if you want to get the appreciated market value. Advantages
             include²substitution of K liability for tort liability; and the replacement of a
             mortal individual assurer by an immortal corporation and some additional
             protections against defects of the title not appearing on the record.

(6)   Lawyer¶s Role²role in the sale of commercial property is greater.
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                           Keyed to Dukeminier/Krier 6th Ed.
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B   Marketable Title. Every real estate contract contains the implied duty of the seller to
    supply title free and clear of encumbrances. If the seller cannot convey a merchantable
    title to the buyer, the buyer is entitled to rescind the K. The law implied the duty to
    deliver. The obligation can be expressly disclaimed by agreement between the buyer
    and the seller. Any defect must be substantial and likely to result in injury to the buyer.

    (1)    Proof of Marketable Title. A seller can deliver marketable title by either:

           (a)     Production of good record title²a recorded chain of title , showing
                   unbroken transfer of title from some original root of title in the past to the
                   seller, with no recorded encumbrances (e.g., mortgages, liens,
                   easements, or servitudes) or

           (b)     Proving Title by Adverse Possession²either through a successful quiet
                   title action or evidence sufficient to establish that the rival claim to title
                   would not succeed if asserted and that there is no real likelihood that nay
                   claim will ever be asserted.

    (2)    Defective Title. The defect in title must be substantial and likely to injure the
           buyer. Defective title does not always prevent the transaction from taking place.
           Common defects of title include:

           (a)     Defective chain of title²the chain of title may have a faulty or nonexistent
                   link. (e.g., describes the wrong land.)

           (b)     Encumbrances²an encumbrance is a burden on title, such as a
                   mortgage, judgment liens, easements, or covenants.

           (c)     Zoning Restrictions²use limits imposed by public authority through
                   zoning laws are not regarded as encumbrances on title. The rationale is
                   that all property is subject to the lawful regulation of a public authority,
                   and that all land titles implicitly incorporate such use limits. However, if
                   the existing use of the property violates a zoning ordinance the title will be
                   held unmarketable on the theory that the buyer could not possibly have
                   intended to purchase a violation of law and consequent liability.

    (3)    Lohmeyer v. Bower. Bower and Lohmeyer entered into a written agreement by
           which Bower agreed to sell and Lohmeyer agreed to buy a one-story wood-frame
           house in KS. The lot was burdened by a covenant requiring all residences
           constructed on the land to be 2-stories tall. The Court stated that the mere
           existence of the covenant restricting use is an encumbrance making title
           unmarketable. Only because Lohmeyer had agreed to take title ³subject to all
           encumbrances of record´, did the mere existence of the covenant not make title
           unmarketable; however, Lohmeyer did not agree to accept existing violations of
           the covenant. The present and continuing violation of the ordinance sufficiently
           exposed Lohymeyer to the hazard of litigation to make the title unmarketable.
           Those existing violations make title unmarketable.

           2 exceptions exist:
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      (a)    An easement that benefits the property (utility easement)

      (b)    If the sale K specifies a particular use that is permitted by the restrictive
             covenant. (The buyer has bargained for a specific use, not all possible
             lawful uses).

(4)   Default and Remedies. Default occurs when one party has tendered
      performance in time, and demanded timely performance from the other party,
      and reciprocal performance is not forthcoming. Remedies include:

      (a)    Specific Performance²Because land is unique, damages may be

             1      Sought by Buyer²are generally able to demand specific
                    performance. If the seller¶s title is defective, and the buyer still
                    wants the property, the buyer is entitled to abatement of the price
                    to reflect the diminution in value attributable to the defect.

             2      Sought by Seller²traditionally have been able to demand,
                    however the trend is to deny the sellers specific performance if
                    they are still able to sell the property at a commercially reasonable
                    price. A seller entitled to specific performance will be required to
                    reduce the price if there is an insubstantial defect in title. If the
                    defect is substantial then the title is not marketable, and the seller
                    is not entitle to specific performance.

             3      Equitable Conversion²if a contract is specifically enforceable, this
                    doctrine operates to treat the buyer as the equitable owner from
                    the moment the K becomes effective, even if title passes later.

                    a       Majority--The risk of loss is on the buyer from that moment

                    b       Minority²the risk of loss is on the seller if the loss is
                            substantial and central to the contract.

                    Parties should explicitly agree who bears the risk of loss until title
                    passes and express that agreement clearly in the sale K.

      (b)    Rescission²If the seller breaches, the buyer may elect to rescind,
             recover his partial payments already made, and ³walk away´ from the
             deal. If the buyer breaches, the seller may elect to rescind the contract
             and sell the property to another party. The rescission right does not ripen
             until the closing date, however, because either party has until then to
             tender performance. An attempted rescission prior to the closing date is
             not only ineffective but is a breach of the sale K.

      (c)    Damages²if the pl. does not want (or cannot obtain) specific
             performance she may obtain money damages. Damages include:
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1   Benefit of the Bargain²the measure of damages gives the
    aggrieved party the difference between the K price and the fair
    market value of the property at the time of the breach. This is not
    the future value but the value as of the date of the breach.

2   Jones v. Lee² the Lee¶s entered into a K to purchase the Jones¶s
    home for 610K and then unjustifiably refused to perform. Jones
    later sold the house for 540K and sought to collect 70K difference
    from the Lees. The award of special and punitive damages was
    upheld, but the award of compensatory damages was vacated
    and the case remanded to determine whether the fair market
    value of the house on the date of the breach had declined. The
    Court instructed in making the determination, the latter sale for a
    lesser price may be considered evidence of the market value at
    the time of the breach, and should be considered with all other
    relevant evidence.

3   Deposit Retention²Common law rule²is that a seller may elect
    to retain the entire deposit made by the buyer in the event of the
    buyer¶s breach, even if the deposit exceeds the actual damages to
    the seller. Economic Efficiency²criticizes this rule an unfair and
    inefficient because it entitles the seller to a windfall and it deters
    efficient breaches. Minority²limits retention of the buyer¶s deposit
    to the actual damages incurred by the seller, unless the parties
    have agreed to retention as liquidated damages.

    a      Kutzin v. Pirnie²Pirnie¶s agreed to purchase the Kutzins¶
           house and deposited $36K toward the purchase price.
           The K contained no liquidated damages provision. After
           the Pirnies unjustifiably failed to perform the Kutzins
           sought to retain the entire deposit. The court placed the
           burden of proof upon the party in breach and stressed that
           the rule was limited to real estate K that did not dispose of
           the deposit of liquidated damages. Court abandoned
           common law rule in favor of economic efficiency and unjust

4   Out-of-Pocket²Limits the exposure of the seller who breaches
    innocently (breach in good faith).

    a      ½ states limit damages awarded against a seller who has
           breached in good faith to the actual money that the buyer
           has expended in reliance and interest and fees incurred
           with obtaining a loan.

    b      ½ states make the good faith seller in breach liable for the
           entire benefit of the bargain.

5   Liquidated Damages²Sellers typically protect themselves against
    a buyer¶s breach by stipulating in the K that the buyer¶s deposit
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                          Keyed to Dukeminier/Krier 6th Ed.
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                          may be retained as liquidated damages in the event of the buyer¶s
                          breach. This is enforceable as long as there is some reasonable
                          relationship between the deposit amount and the actual damages
                          suffered by the seller.

C   Duty to Disclose. The common law rule is that absent a fiduciary relationship, a seller
    has no duty to disclose know defects in property.

    (1)    Common Law View²Caveat Empetor (Buyer Beware, buy at your own risk) The
           seller¶s duty was to refrain from intentional misrepresentation²the outright lie
           about the property¶s condition. Active concealment of know defect. Caveat
           Empetor was justified on the theory that buyers ought to use diligence and care
           to examine the property for themselves²Caveat Empetor has been abandoned

    (2)    Fiduciary Relationships²if the parties were in a fiduciary relationship²a
           relationship where one party is dependent upon and has special trust in the
           other²the fiduciary is obligated to reveal all defects know to him. This duty
           arises from the fiduciary¶s obligation to place the other party¶s interests ahead of
           his own.

    (3)    Imposition of the Affirmative Duty²the trend is that silence can operate as a
           misrepresentation since other areas of the law have taken this step. The modern
           rule equates nondisclosure with fraudulent misrepresentation, imbedded in the
           elements of the modern rule. If there is a defect that the seller does not know
           about then they do not have a duity to disclose because they don¶t know anything
           about it.

           (a)    Material Defect²Standards applied.

                  1       Objective²whether a reasonable person would attach importance
                          to it in deciding to buy

                  2       Subjective²whether the defect ³affects the value or desirability of
                          the property to the buyer.´ The mind of this particular buyer.

           (b)    Undisclosed Defects²Standard applied. What are the remedies for the
                  breach of the seller¶s duty:

                  1       Ability to rescind

                  2       Have the seller correct the defects

                  3       Sue for damages

    (4)    Disclosure of seller-created conditions²the seller is obligated to disclose
           conditions that:

           (a)    Are created by the seller
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      (b)    Materially impair property value

      (c)    Is not likely to be discovered by a reasonably prudent buyer using due

      (d)    Stambovsky v. Ackley. Ackley owned a home, and repeatedly publicized
             various abnormal phenomena that had occurred in the house,
             encouraging the reputation of the house as haunted by ghosts.
             Stambovsky agreed to buy the house and then learned that the house
             was reported to be possessed. He sought to rescind the K. NY Ct.
             stated that caveat empetor did not apply because the seller promoted the
             property¶s reputation and that the reputation was likely not to be
             discovered by a reasonably prudent buyer (inspection may not reveal the
             presence of ghosts) therefore, the reputation materially impaired the
             value of the K.

(5)   Latent Material Defects²Majority rule²the seller must reveal all latent material
      defects. Latent Material Defect is a defect that:

      (a)    Materially affects the value or desirability

      (b)    Is known to the seller (or only accessible to the seller)

      (c)    Is neither known to or within the reach of the diligent attention and
             observations of the buyer.

      (d)    Johnson v. Davis. The Davises purchased Johnson¶s house, moved in,
             and learned within a few days the water leaked in around the windows
             and from the ceiling in 2 rooms. The Davises sued to rescind. The court
             found the Johnson misrepresented when they told the Davises that the
             roof was sound and therefore, were liable for fraud. Also, Johnson was
             obligated to disclose any facts know to him or accessible only by him that
             materially affects the value or desirability of the property and which are
             either unknown to the buyer or cannot be learned by diligent search.

(6)   Misrepresentation²in all cases in all jurisdictions there is a duty not to

      (a)    Misrepresentation²is a statement in which the seller can expect the
             buyer to rely to his detriment. The critical element is reliance (looks like

      (b)    Seller always has a duty not to make a material misrepresentation.

      (c)    If you don¶t disclose and you a blanket ³as is´ clause, the clause will not
             cover latent material defects. However, an ³as is´ clause that is
             accompanied by full disclosure is enforceable, as long as what is
             disclosed is in reasonable contemplation of the buyer.
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(7)   Implied Warranty of Quality²

      (a)    Traditional View 1²a builder had no liability to anyone for his poor
             workmanship unless he had given an express warranty of quality.

      (b)    Traditional View 2²a builder¶s warranty of quality is implied into the K
             between the owner and the builder but the builder¶s liability for economic
             loss resulting from the breach of this warranty was limited to those with
             whom he was in privity of K ±the immediate purchaser of the structure
             from the builder or the owner with whom the builder contracted.

      (c)    Modern View²Implied warranty of quality by the builder of a new home
             that may be enforced by subsequent purchasers of the structure.

      (d)    Lempke v. Dagenais. Dagenais build a garage for owners of property
             who then sold the property to the Lempkes. Shortly after the Lempkes
             took possession they noticed severe structural problems with the roof of
             the garage. After some attempts to persuade Dagenais to repair the
             garage the Lempkes sued Dagenais for negligence and breach of an
             implied warranty of quality. The court concluded that when a builder sells
             his structures a warranty of workmanlike quality is implied by law and
             runs for the benefit of subsequent purchasers with respect to latent
             defects that become apparent after the remote purchaser acquired title
             and which could not have been discovered prior to the remote
             purchaser¶s acquisition.

             1      No disclaimer²the Implied warranty of quality in favor of
                    subsequent purchasers may not be disclaimed.

             2      Limitations period²Courts permit subsequent purchasers to bring
                    suit against the original builder for a ³reasonable time´²usually a
                    period long enough for latent defects of the original construction to
                    become apparent.

             3      Subsequent Owner¶s Liability²the owner of a home who is not
                    the builder has no liability based on the implied warranty of quality.
                    Only the original builder is liable on that theory, but a seller may
                    be liable for breach of duty to disclose a known defect.
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D   The Deed. What you get after the sale is complete.

    (1)    Components²A deed is the usual method by which title is transferred.

           (a)    Writing Required²the SOF requires a writing signed by the grantor in
                  order to transfer an interest in land. Because the grantor is the only party
                  bound by the deed (distinguish from the K of sale) only the grantor needs
                  to sign the deed.

           (b)    Notarial Acknowledgement²Notary public attests to the grantors
                  signature and identity. A deed is valid without it though.

           (c)    The Grant²the first clause of the deed is the granting clause, which
                  recites the parties, the words effecting the grant, the consideration, and
                  the description of the property.

    (2)    Warranties of Title²A seller¶s warranties concerning the state of the title
           conveyed are expressly contained in the deed. No warranties are implied.

           (a)    Types of Deeds:

                  1      General Warranty Deed²deed guaranties the 6 present and
                         future covenants concerning title (see below). Each covenant is a
                         promise that title is absolutely free of the warranted defect,
                         regardless of whether the defect arose before or during the time
                         the grantor had title.

                  2      Grant Deed²in some jurisdiction when the deed states, ³I grant´
                         the use of the word grant comes with 2 warranties:

                         a       The covenant against encumbrances

                         b       The covenant of seisin.

                  3      Special Warranty Deed²warrants that there are no defects in
                         title created by the grantor. This deed type contains the same 6 or
                         fewer covenants of the general warranty deed. the only difference
                         is that the grantor warrants against defects of title that arose
                         during the grantor¶s time of holding title. Defects arising before
                         the grantor¶s ownership are not covered.

                  4      Quitclaim Deed²contains no warranties, this deed operates to
                         convey to the grantee whatever interests in the property that the
                         grantor may own. The usual function is to remove apparent and
                         uncontested defects in title without resort to litigation.

                  5      Merger Doctrine²Traditional rule²any promises in the K of sale
                         with respect to title are ³merged´ into the deed once the buyer
                         accepts the deed. The buyer can only sue for breach of the deed
                         covenants of title and may not rely on the K of sale¶s provisions
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            with respect to title. Exceptions: fraud, promises deemed
            collateral to the deed. Merger doctrine now in disfavor²avoid it
            by saying that the obligation in dispute is a independent or
            collateral obligation.

(b)   Deed Warranties:

      1     Present Covenants²a present covenant is broke, if ever, at the
            time the deed is delivered (the date of the closing). SOL begins o
            toll o the date of the delivery of the deed. The following are
            present covenants:

            a      Covenant of Seisin-- Grantor warrants that he owns the
                   estate that he purports to convey. Breached if the grantor
                   does not in fact own what he purports to convey regardless
                   of whether he is aware of the defect or not.

            b      Covenant Of Right To Convey²The Grantor warrants that
                   he has the right to convey the property. Breached if the
                   grantor lacks to power and authority to convey the interest
                   whether or not he is aware of the limits on his authority to

            c      Covenant Against Encumbrances²The grantor warrants
                   that there are no encumbrances on the property.
                   Breached if the title is encumbered at the time of delivery
                   of the deed, whether or not the owner is aware of the

            d      Frimberger v. Anzellotti. DiLoreto owned property abutting
                   a tidal marsh. He constructed a bulkhead, filled a portion
                   of the marsh, build a house, and sold it to Anzellotti by
                   quitclaim deed. 2 years later, Anzellotti conveyed the
                   property to Frimberger under a general warranty deed.
                   when Frimberger sought to repair the bulkhead he learned
                   that a significant portion of the lot unlawfully encroached
                   on protected wetlands. Rather than seeking a variance fro
                   the use regulation, Frimberger sued Anzelloti on the
                   covenant against encumbrances. The court held that
                   ³latent violations´ of governmental land use regulations
                   that do not appear on the record, and are unknown to the
                   seller because no official action by the govt. has compelled
                   compliance, at the time the deed was executed, and that
                   have not become an interest do not constitute an

                   i.     prevailing rule is that violations of governmental
                          land use regulations that are not known to the seller
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                  and which have not become the subject of
                  government enforcement are not encumbrances.

2   Future Covenants²promises the Grantor will do some act in the
    future, such as defending against claims of 3rd parties or
    compensating the grantee for loss by virtue of failure of title. A
    future covenant is not breached until the grantee or his successor
    is evicted from the property, buys up the paramount claim, or is
    otherwise damaged. SOL begins to toll at the time of eviction or
    when the covenant is broken in the future. The following are
    future covenants.

    a      Covenant Of General Warranty²The grantor warrants that
           he will defend against lawful; claims and will compensate
           the grantee for any loss that the grantee may sustain by
           assertion of superior title.

    b      Covenant Of Quiet Enjoyment²The grantor warrants that
           the grantee will not be disturbed in possession and
           enjoyments of the property by assertion of superior title.
           This covenant is usually omitted from general warranty
           deed because it mirrors the covenant of general warranty.

    c      Covenant Of Future Assurances²The grantor promises
           that he will execute any other documents required to
           perfect the title conveyed. Usually dropped from general
           warranty deeds because of its open-ended obligation
           imposed on the seller, or because it adds little to the first 4
           covenants, or because the doctrine of after-acquired title
           has made this covenant redundant.

    d      Brown v. Lober. Bost conveyed 80 acres to Brown under a
           general warranty deed containing no exceptions, even
           though Bost only owned 1/3 of the mineral rights. After the
           SOL on the present covenants had expired, Brown agreed
           to sell the mineral rights to Coal for $6K, but was forced to
           accept only $2K once it learned that Brown only owned 1/3
           of the mineral rights. The ct. found that Brown had not be
           constructively evicted because the mere existence of a
           paramount title does not constitute a breach of the
           covenant of quiet enjoyment. If the owner of the other 2/3
           of the mineral rights were to start mining coal under
           Brown¶s land, Brown would be actually evicted. If , in order
           to prevent a real and manifest the threat of mining, Brown
           purchased the other 2/3 of the mineral rights from the
           owner, Brown would be constructively evicted, but if Brown
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           purchased the other 2/3 of mineral rights without such
           threat it would probably not constitute a constructive

    e      To have a adverse possession claim the injured party must
           start to do the activity claimed in violation (i.e., mine the
           minerals themselves thus tolling the SOL and carrying the
           other elements of Adv. Possession).

3   Breach of Future Covenants²Breached only when the grantee¶s
    possession has been disturbed by someone holding superior title.
    That can occur years after the original transfer and after the SOL
    has barred suit on the present covenants.

    a      Benefits runs with the estate. If there is privity of estate b/t
           the original grantor and the remote grantee the benefit of
           the future covenant given to the original grantee runs with
           the estate conveyed to the remote grantee.

           i.      Privity of estate²that the original grantor conveyed
                   either title or possession and the same interest was
                   conveyed to the remote grantee. If the original
                   grantor had neither title nor possession there is no
                   estate created which the covenant can run. After-
                   acquired title (estoppel by deed)²created because
                   the rule insulates wrongdoers from liability to
                   remote grantees. Courts will grant an ³estate´ held
                   by the original grantor and passed on to the remote
                   grantee , usually off the mere possibility that the
                   original grantor might later acquire an interest that
                   would be passed on to the remote grantee.

           ii.     Obligation to Defend²The covenant of general
                   warranty imposes no obligation of the grantor to
                   defend against spurious claims of paramount title.
                   The effect is to require the grantee to defend. Once
                   the 3rd parties paramount claim becomes lawful, the
                   grantee will be able to recover the costs of defense
                   plus damages. But if the 3rd party claim is
                   defeated, the costs of defending are entirely on the
         Property 2 Outline
    Keyed to Dukeminier/Krier 6th Ed.
    UMKC, June Carbone Spring 2010

    b      Assignment of present covenants.

           i.     Majority rule (American rule)²is that a present
                  covenant is for the benefit of the immediate grantee
                  and that , if breached when made, the grantee has
                  a chose in action (right to sue) that is not impliedly
                  assigned if the grantee conveys to a remote

           ii.    Minority rule (English courts)²that a transfer to a
                  remote grantee implicitly operates to assign the
                  grantee¶s chose in action to the remote grantee.

    c      Rockafellor v. Gray²Connelly acquired title to 80 acres at
           a foreclosure sale, then conveyed the property by general
           warranty deed to Dixon, who in turn conveyed by special
           warranty deed to H&G. The foreclosure sale was invalid
           so Connelly never owned the 80 acres and thus breached
           the covenant of seisin given to Dixon, but because Dixon
           had conveyed by special warranty he had not breached
           the covenant of seisin the had given to H&G. H&G sued
           Connelly on the covenant of seisin he had given to Dixon.
           the Ct. ruled that Dixon¶s chose in action was impliedly
           assigned to H&G by the conveyance to H&G.

4   Damages for Breach²Majority rule is that the grantee may not
    recover more than what the grantor-in-breach received for the

    a      Suit by the original grantee: Original grantee is limited to a
           return of his purchase price. Courts are split as to whether
           interest should accrue from the date of the promise or the
           date of eviction.

    b      Suit by the remote grantee²Most all courts agree that if
           the remote grantee has paid more for the property than the
           original grantor received, the remote grantee is subject to
           the general damage limit and will only recover what the
           original grantor received. But if the remote grantee paid
           less for the property, courts differ on whether the remote
           grantee should recover what the remote grantee paid or
           actual damages up to the amount received by the original
                               Property 2 Outline
                          Keyed to Dukeminier/Krier 6th Ed.
                          UMKC, June Carbone Spring 2010

E   Delivery. A deed must be delivered by the grantor in order to be effective to transfer an
    interest in land. Delivery means that the grantor has said or done things that can
    demonstrate the grantor¶s intent to transfer immediately an interest in land to the
    grantee. The key is the grantor¶s intent, the paper deed if destroyed does not invalidate
    the deed, and if delivery is proper the deed is valid. A deed cannot convey a future
    interest, a will can.

    (1)    Presumed Delivery. Courts hold the presumption that delivery has occurred
           under any of the following:

           (a)    Physical Transfer to the grantee

           (b)    Notarial Acknowledgement of the deed, or

           (c)    Recording of the Deed.

           Courts also hold the presumption that no delivery has occurred if the grantor
           retains physical custody of the deed.

           (d)    Sweeney v. Sweeney. Maurice Sweeney, estranged from his wife Maria,
                  wished to ensure that upon his death his brother John would take
                  Maurice¶s farm and tavern, rather than Maria. Maurice executed and
                  recorded a deed of the property to John, and John executed a deed of the
                  property to Maurice, which was not recorded. Both deeds were prepared
                  at the same time by the town clerk, who gave the originals to Maurice.
                  Maurice gave both deeds to John. When Maurice died, Maria contended
                  that the unrecorded but fully executed deed from John to Maurice had
                  been delivered to Maurice and operated to vest title in Maurice.
                  Accordingly, she claimed her elective share in Maurice¶s estate, including
                  the farm and tavern. John asserted that there had been no delivery
                  because he had never intended to deliver the deed to Maurice or, in the
                  alternative, that there was an oral condition attached to the delivery. The
                  court ruled that because the John-Maurice deed had been manually
                  delivered to Maurice there arose the presumption of delivery, which was
                  not rebutted by the fact that the motivation of John and Maurice was to
                  defeat Maria¶s elective share by ensuring that title to the farm was in John
                  at Maurice¶s death, but to cause title to return to Maurice if and only if
                  John died before Maurice.

    (2)    Attempted Delivery. An attempt to deliver a deed:

           (a)    At the death of the grantor is almost always ineffective. If the grantor
                  intends that the deed become effective only upon his death, the deed is
                  void unless it can be admitted as a will. (Usually void by the Statute of
                               Property 2 Outline
                          Keyed to Dukeminier/Krier 6th Ed.
                          UMKC, June Carbone Spring 2010

           (b)    During his life, the grantor¶s death does not destroy the delivery already
                  accomplished by that intent to be effective during his life.

           (c)    Rosengrant v. Rosengrant. The Rosengrants (childless) owned a farm
                  which they wished to convey to their nephew, effective at their death.
                  They executed a deed of the farm (during their life, thus creating a life
                  estate?) which they handed to the nephew, the nephew then handed to
                  the banker for safekeeping. They instructed the banker to keep the deed
                  until they died, then give it to the nephew to be recorded. the banker put
                  the deed in an envelope marked with both parties name (the rosengrants
                  and the nephew) and kept it in a bank vault. After their death, the
                  nephew retrieved and recorded the deed. The court cancelled the deed
                  stating that it was never delivered during the Rosengrants lifetime
                  because there was never intent to give ³outright ownership´ at the time of
                  delivery. The bank¶s policy to write both parties name on the envelope
                  provided justification.


G   Title Assurance. How current owners can obtain assurance that they actually have
    good title to the land they purchased.

    (1)    Recording Acts²the recording system developed to keep record of deeds and
           mortgage demonstrating title to real property. The purpose to provide certainty in
           the real estate transaction²our market system would not work if the buyer didn¶t
           believe that when he bought a property, he actually owned it. Recording acts
           apply if:

           (a)    The grantee is protected in that jurisdiction

           (b)    The document can be recorded.

    (2)    Types of Recording Acts²

           (a)    Race Statute²the concept of underlying the earliest type of recording
                  acts²a race statute²was literally a race to the county courthouse to be
                  the first one to record the conveyance. Notice of a prior transfer of an
                  interest in property is irrelevant. (2 states still have this North Carolina
                  and Louisiana).

                  1      Recordation cuts off the possibility that either a prior unrecorded
                         purchaser or a later purchaser could prevail.
                          Property 2 Outline
                     Keyed to Dukeminier/Krier 6th Ed.
                     UMKC, June Carbone Spring 2010

      (b)    Notice Statute²Subsequent bona fide purchaser without notice of a prior
             unrecorded transfer prevails over the prior purchaser who fails to record
             (1/2 of American states recognize this statute):

             1       BFP: one who gives valuable consideration to purchase the
                     property and is without notice of prior unrecorded conveyance

             2       True: even if the subsequent BFP has not recorded.

      (c)    Race-Notice Statute²Protects subsequent BFPs who lack notice of prior
             conveyance and record before the prior purchaser.

             1       Encourages Recording

             2       Eliminates Disputes over which of the 2 conveyances was first
                     delivered. .

             3       Recordation cuts off the possibility that either a prior unrecorded
                     purchaser or a later purchaser could prevail.

(3)   Consequences of NOT Recording: There are 2 important consequences to
      failure to record:

      (a)    Common law rule applies²If nobody has recorded the common law
             principle of ³first-in-time, first-in-right´ apply, except in a notice jurisdiction
             when the subsequent BFP lacks notice.

      (b)    Grantor can convey good title to a later purchaser: Without recordation,
             the grantor is left with the power to convey good title to a later purchaser.
             The Grantor may be liable to losing first purchaser for the proceeds
             received from the second purchaser.

(4)   When is an instrument recorded? To be recorded, an instrument must be eligible
      for recording and be entered into the records in a manner that complies with the
      jurisdiction¶s requirements. Common instances when instrument of the record
      that is wholly or partially unrecorded:

      (a)    Instrument not indexed. The recorder¶s failure to index and instrument or
             to index it so improperly that I cannot be found by a diligent searcher
             using the standard search methods.

      (b)    Omnibus or Mother Hubbard clauses: A variation on the improperly
             indexed instrument is an instrument that accurately describes 1 parcel
             and also includes ³all other land owned by the grantor in the county´.
             These clauses µsweep the cupboard bare´. The recorder can only record
             this instrument by reference, because it is an unreasonable burden on the
             recorder to search the records to identify all the other property owned by
                          Property 2 Outline
                     Keyed to Dukeminier/Krier 6th Ed.
                     UMKC, June Carbone Spring 2010

             the grantor. They are void against the later purchasers of the grantor¶s
             property because a diligent searcher of the index will never locate any
             reference to the omnibus clause.

      (c)    Luthi v. Evans. Owens owned interests in 8 oil and gas leases. She
             assigned to International Tours her interest in those leases under an
             assignment that specifically described each of the seven different parcels
             and included an omnibus clause that assigned to Tours Owen¶s interest in
             ³all oil and gas leases´ owned by Owens, where or not such leases are
             specifically identified by the assignment. The 8th lease was not
             specifically described. 4 years after Tours recorded the assignment
             Owens assigned her interest in the 8th lease to Burris who obtained an
             abstract of title which did not reveal the existence of the omnibus clause
             in the Owens to Tours assignment. the court held that the omnibus
             clause in the assignment did not give constructive notice to the later
             purchaser, Burris.

      (d)    Misspelled Names²Jurisdictions are divided over whether a misspelled
             name in a recorded instrument gives constructive notice. all jurisdictions
             agree that if the misspelling is so significant that it does not even sound
             like the correct name, there is no constructive notice. the problem that
             divides jurisdictions is whether the misspelling that sounds like the correct
             name supplies constructive notice

             1      Doctrine of idem sonans. Holds that a misspelling that sounds
                    substantially identical to the correct name gives constructive
                    notices. This doctrine is NOT the prevailing rule with respect to
                    the issue of constructive notice from the real estate records.

             2      Orr v. Byers. Orr obtained a judgment against Elliott, but Orr¶s
                    lawyers prepared the judgment by spelling Elliott¶s name as
                    ³Elliot.´ And abstract of judgment, listing the judgment debtor as
                    ³Elliot´ or ³Eliot´ was recorded in CA, and indexed under those 2
                    names only. Elliott later conveyed property subject to the
                    judgment lien to Byers and Orr sought to foreclose his lien against
                    the parcel acquired by Byers from Elliott. The Court held that
                    idem sonans did not apply in CA., and that the recorded
                    instrument did not give constructive notice of Orr¶s lien. Byer
                    prevailed. If Byer had actual notice of Orr¶s lien he would have

(5)   Notice: to be protected under the notice or race-notice jurisdictions, a BFP must
      be without actual or constructive notice at the time they pay the consideration.

      (a)    Actual Notice²real, actual knowledge of the prior unrecorded transaction.
                          Property 2 Outline
                     Keyed to Dukeminier/Krier 6th Ed.
                     UMKC, June Carbone Spring 2010

      (b)    Constructive Notice²

             1      Record Notice: the entire world is responsible for constructive
                    notice of the contents of the record.

             2      Inquiry Notice: what a reasonable person should have known
                    based upon the facts present. In most states a subsequent
                    purchaser has the obligation to make reasonable inquiries, and is
                    charged with knowledge of what those reasonable inquiries would

                    a       Record reference to an unrecorded instrument²if a
                            recorded instrument refers expressly to an unrecorded
                            instrument, a purchaser is under an obligation in many
                            states to inquire about the substance of the unrecorded
                            instrument to which the record refers.

                    b       Harper v. Paradise. Harper conveyed her farm to Maude
                            for Life, remainder to Maude¶s children. The deed was
                            mislaid and thus not recorded. After Harper died her
                            children executed a quitclaim deed to Maud by conveying
                            any interest they may have in the farm (which is nothing).
                            Maude executed a deed of trust to Thornton for a $50 loan.
                            Thornton foreclosed after a default and rec¶d a sheriffs
                            deed which she recorded. Then, Thornton conveyed to
                            the Paradises. Later the deed was found by Maude¶s
                            children who recorded. Her children sued after her death
                            to recover possession of the property. The court found
                            that the Paradise¶s could not rely on the GA statute
                            protecting the title of innocent purchasers from heirs who
                            lack actual notice of prior claims because the Maude-
                            Thornton deed made reference to the Harper-Maude deed.
                            Thornton owned only the LE possession of Maude and at
                            her death the future interest of her children was vested.

(6)   Chain of Title Problems. Chain of title is the recorded sequence of transactions
      by which title has passed from a sovereign to the present claimant. The period of
      time for which records must be searched and the documents must be examined
      within that time period. The meaning of chain of title varies from jurisdiction to

      (a)    IF an instrument is improperly indexed, some jurisdictions say that it is not
                         Property 2 Outline
                    Keyed to Dukeminier/Krier 6th Ed.
                    UMKC, June Carbone Spring 2010

      (b)    Shelter rule²Deals with the notice, race-notice issue. The only way to
             protect a subsequent BFP is to protect further down the chain. Only
             when the person would actually be the winner can the people down the
             line be protected.

      (c)    Wild Deeds²A deed which is outside the chain of title. If a complete
             stranger to the record chain of title records a conveyance (a wild deed),
             the conveyance does not give constructive notice because it is not within
             the chain of title.

      (d)    Estoppel by deed²I convey it before I own it am I subsequently stopped
             from conveying my title? Most jurisdictions say that if the record is clean,
             the person wins.

      (e)    Board of Education of Minneapolis v. Hughes. In MN, a race-notice
             jurisdiction, Hoerger conveyed a lot to D&W, who did not record. D&W
             then conveyed the lot to the BOE, who did record, after which Hoerger
             conveyed the same lot to Hughes, who lacked notice of the conveyance
             from Hoerger to D&W. Hughes recorded. The court stated that Hughes
             prevailed over BOE because the conveyance form D&W to the BOE was
             outside the chain of title and did not impart constructive notice. At the
             time Hughes purchased from Hoerger, a diligent title search would reveal
             Hoerger to be the record owner. Even thought the deed to the BOE was
             recorded first, it would appear to be a deed made by a complete stranger
             to the chain of title because the Hoerger to D&W link was not recorded a
             diligent title searcher would never find the D&W to BOE conveyance.

(7)   Expanded Chain of Title (ALWAYS ON EXAM)²deeds from a common grantor.
      Reciprocal implied covenants restricting land use may be implied by a
      developer¶s conveyance of property subject to express covenants burdening the
      developer¶s retained land, but such a covenant does not appear in the chain of
      title of the retained land, if it is conveyed without the implied covenant being
      made express.

      (a)    Jurisdictions are split, most concluded that the burden on title searchers
             to locate and read all deeds out from a common grantor is unreasonable.

      (b)    Few states conclude that purchasers of property from a common grantor
             have constructive notice of the contents of all deeds out from a common
             grantor, thus imposing the practical burden of searching all deeds from a
             common grantor.

      (c)    Guillette v. Daly Dry Wall, Inc. A developer conveyed a lot to Guillette
             under a recorded deed that restricted the lot¶s use to a single-family
             residence, and recited that ³same restrictions are hereby imposed on
                          Property 2 Outline
                     Keyed to Dukeminier/Krier 6th Ed.
                     UMKC, June Carbone Spring 2010

             each of the lots now owned by the seller´ This was effective to impose
             the single-family residence use restriction on all the developer¶s
             remaining lots. Later the developer conveyed a restricted lot to Daly
             under a recorded deed that made no mention of any restrictions. Daly
             obtained a permit to construct 36 apartments on the lot. The other
             owners sought to restrict this use. The court held that Daly acquired the
             lot with constructive notice of the restriction even thought the restriction
             was not in the chain of title from the developer to Daly. The Guillette rule
             requires a purchaser to expand his search of title to include all
             conveyances made by the grantor of other adjacent property he owned, in
             order to be certain that the grantor did not burden his remaining property
             with a use restriction contained in a deed to a 3rd party. Jurisdictions
             rejecting this rule reason that this search burden is unreasonable.

(8)   Title Insurance. For a fee, a title insurer agrees to defend title and to
      compensate for the loss of the insured title to the claim of a paramount owner.
      Generally, title insurers will not insure unless the purchaser¶s deed is recorded
      and the insurer is satisfied that no rival would have a better title.

      (a)    Coverage. (Duty to disclose)The scope of coverage is determined by the
             K for insurance. The usual policy insures only that the title stated in the
             policy is a good record title. The policy does not insure against claims or
             interest that are not part of the record. Courts impose on title insurers a
             duty to disclose anything they know about the parcel in question that is
             material or important, breach of which is an actionable tort. Jurisdictions
             are split that the title insurance company has a duty to disclose

             1       Maj.²no independent tort action outside the policy

             2       Min.²duty to disclose the title search

      (b)    Walker Rogge v. Chelsea Title. Kosa acquired title from Aiello under a
             deed that state the total acreage was 12.486 acres, based on a survey.
             Walker agreed to purchase the tract from Kosa after being shown a
             different survey stating the property¶s total acreage as 1833 acres. The
             Kosa-Rogge K state that the acreage was 19 acres. and stipulated that
             the price was to be reduced by $16k per acre if the tract was in fact
             smaller than 19 acres, the K referred to the 2nd survey. Walker hired
             Chelsea title to examine and insured title. Chelsea did so and issued a
             policy that excepted from coverage matters that could be disclosed by an
             accurate survey. At the time the policy was issued Chelsea had in it files
             the Aiello-Kosa deed, which stated the acreage to be 12.489. The court
             held that the K exception immune them from K liability , but there was
             evidence that Chelsea had undertaken a duty to only insure title, and that
                     Property 2 Outline
                Keyed to Dukeminier/Krier 6th Ed.
                UMKC, June Carbone Spring 2010

      any search of title was for its own benefit and ancillary to its duty to

(c)   Marketable Title and Encumbrances-- Courts limit the scope of this
      coverage to title rather than extending it to cover diminutions of value that
      affect marketability but have no bearing on the clarity or certainty of
      ownership. Insurance policy typically insure for:
      1       Defects in title

      2      Liens

      3      Encumberances upon title

      4      Unmarketable title.

      5      Lack of right of access

(d)   Lick Mill v. Chicago Title. Lick Mill Apts. Purchased and developed a
      portion of a 30-acre tract that had been formerly the site of chemical
      processing plants and warehouses. Chicago title insured the title against
      defects, liens, encumbrances, and unmarketability. Prior to insuring the
      title Chicago Title hired Caroll to inspect the site and Carroll reported the
      presence of certain pipes, tanks, and pumps. When the title was insured
      the records of various government agencies disclosed the presence of
      hazardous substances on the property, but that it was not clear whether
      those records were inspected by or know to either Lick Mill or Chicago
      Title. After Lick Mill took the title it was required to expend considerable
      sums to remove and clean up the toxins on the site. Lick Mill then sought
      to recover those costs from Chicago Title. Alleging that the toxins made
      the title unmarketable and constituted an encumbrance on title.

      1      Distinguish-

             a        Loymeyer v. Bower²enabled the buyer to rescind his
                      purchase contract; a violation of a public ordinance =
                      encumbrance. This did affect marketability of title; if they
                      don¶t fix it they are exposed to the hazards of litigation.

             b        Frimberger v. Anzellotti²a present violation of a zoning
                      law did not constitute unmarketable title for purposes of
                      breach of the covenant of general warranty. The
                      difference in the result is due to the ex post, ex ante
                      posture of the problem.

            c         Loymeyer²when the deal is still inchoate it makes sense
                      to allow it to unravel, for that permits avoidance of damage
                      before it hardens, but when it is done (Frimberger and Lick
                      Mill) a finding of unmarketable title shifts costs, perhaps
                               Property 2 Outline
                          Keyed to Dukeminier/Krier 6th Ed.
                          UMKC, June Carbone Spring 2010

                  2      Diligent investigations on Lick Mills part would have enabled it to
                         avoid the loss, shifting the loss to Chicago Title would greatly
                         increase the scope of liability for title insurers, thus raising the cost
                         of title insurance generally and probably imperiling the continuing
                         existence of some insurers. (public policy issue)

II   Land Use Controls

A    The Law of Nuisance²A nuisance is any substantial non-trespassory invasion of
     another¶s interest in the use and enjoyment of their land.

     (1)   Private Nuisance²is an interference with the use and enjoyment of land, in order
           to give rise to liability, must be substantial; it must also be intentional or
           unreasonable, or the unintentional result of negligent, reckless, or abnormally
           dangerous activity.

           (a)    Unreasonableness²in case of air and water pollution, noise, odors, etc.
                  There¶s intent, but liability only arises when the resulting interference is
                  substantial and unreasonable. Instead of looking at social benefits v.
                  Costs (RST view), the relevant inquiry is whether the level of interference
                  rises to a level of liability. A lot of courts won¶t even consider the social
                  benefit of the intentional nuisance (Jost-like view)

           (b)    Morgan v. High Penn Oil. High Penn operated an oil refinery that emitted
                  noxious fumes several times each week, polluting the air for about a 2-
                  mile radius from the refinery. Along with many other people who owned
                  land within that radius, Morgan sued to enjoin the refinery¶s operations,
                  alleging that the noxious odors made me sick and deprived him of use
                  and enjoyment of his property. High Penn intended to operate the
                  refinery and knew or should have known that its operation would produce
                  the noxious odors and the court assumed its use was unreasonable but
                  did not explain quite why. The court applies the Jost-like view but you
                  don¶t see the court in expressly stating how they are viewing it seems to
                  be a mixture of the RST and the Jost approach which is not uncommon.

           (c)    Lateral and Subjacent Support.

                  1      Lateral support of land²is that provided to one piece of land by
                         parcels of land surrounding.

                  2      Subjacent support²where one person owns surface rights and
                         another subsurface rights.
                         Property 2 Outline
                    Keyed to Dukeminier/Krier 6th Ed.
                    UMKC, June Carbone Spring 2010

(2)   Remedies. 4 outcomes of a Nuisance Suit.

      (a)   No nuisance, the use continues without constraint (Property Rule)

            1       If challenged the activity if found not to be a nuisance the use right
                    is allocated to the challenged user and is implicitly protected by
                    the property rule.

            2       The challenged user cannot be forced to stop without his consent

            3       The use will continue unless the challenged use is the less
                    valuable one and the transaction costs do not inhibit its transfer.

      (b)   Enjoin the nuisance to stop it (Estancias Dallas Corp v. Schultz) (Property

            1       If a challenged activity is found to be a nuisance and the
                    challenger¶s use is protected by a property rule, the challenged
                    activity will be enjoined and it will thus stop.

            2       The challenger can continue his use at his pleasure.

            3       If the enjoined activity is the more valuable the use right will likely
                    be shifted to the enjoined user unless the transaction costs
                    prevent the transfer.

      (c)   Award damages to landowners affected by the nuisance but permit it to
            continue (Boomer v. Atlantic) (Liability rule)

            1       The view of transaction costs In situations where there are a
                    large number of landowners affected by a more valuable use that
                    is, on balance a nuisance, the presence of holdout transaction
                    costs may prompt a court to protect the use right of the numerous
                    landowners by a liability rule instead of a property rule.

            2       The damages awarded are permanent damages²an amount
                    sufficient to compensate now for all past and future injury that may
                    be inflicted by continuation of the nuisance.

      (d)   Enjoin the use (though maybe not a nuisance) and award damages to the
            enjoined user. (Spur Industries v. Del E. Webb) (not on exam; Liability

            The court may enjoin an activity, but require the benefitted landowners
            compensate the enjoined actor for the lost use. This may occur when:
            The pl. asserts that his activity is more valuable It is not clear that either

                y   The challenged activity is a nuisance or
                y   If it is, equity favors an unadorned injunction and
                                Property 2 Outline
                           Keyed to Dukeminier/Krier 6th Ed.
                           UMKC, June Carbone Spring 2010

                      y   It is unlikely that ht e pl. is able or willing to acquire the use right in
                          the market.

           (e)     Estancias Dallas Corp v. Schultz. Estancias Dallas constructed an apt
                   complex in Dallas adjacent to Schultz¶s residence. To save $40K
                   Estancias located its central air conditioning unit about 5 feet from
                   Schultz¶s lot line. 55 ft. from his house, and 70 feet from his bedroom.
                   The air conditioner was quite noisy, and prevented Schultz from
                   entertaining outdoors, and even interfered with an indoor conversation
                   and his sleep. To change the location of the unit would cost Estancias
                   140k-200k. The apts. could not be rented in sweltering Dallas without air
                   conditioning. The value of Schultz¶s house was 25K.

           (f)     Boomer v. Atlantic Cement Co. Atlantic Cement¶s factory produced dirt,
                   smoke, noise, and vibration that substantially interfered with the use and
                   enjoyment of land owned by a large number of neighbors. The factory
                   was a nuisance and an award of damage instead of a injunction was
                   warranted. Remanded for the determination of the amount of permanent
                   damages to be awarded for the µservitude¶ thus created over the affected
                   land. The court reasoned technological impossibility of abatement,
                   coupled with recognition that the factory was the more valuable use (it
                   produced positive externalities in the form of jobs and other economic
                   benefits to the region), but that the holdout possibility might well frustrate
                   a marker transfer of the right if the factory was enjoined from further

           (g)     Property Rule²under either property rule outcomes, any later transfer of
                   the right must be voluntary and economically efficient transfers may be
                   inhibited by high transaction costs

           (h)     Liability Rule²under the liability rule outcomes the judicial system forces
                   a transfer of rights upon compensation to the other party. The justification
                   for using liability rules instead of property rules is that this will produce a
                   socially efficient outcome.

B   The Law of Servitudes.

    Estates in Land²give the holder the right to exclusive possession/occupation of the

    Servitudes²give the holder the right to use someone else¶s property, or to restrict the
    owner¶s use of the owner¶s property

    (1)    Various Types of Servitudes²Depending on what remedy is sought for
           enforcement, these agreements create either a real covenant or a equitable

           (a)     The Easement²the right to enter and perform an act on some servient
                   parcel of land.
                   Property 2 Outline
              Keyed to Dukeminier/Krier 6th Ed.
              UMKC, June Carbone Spring 2010

      1      Affirmative easement²the right to enter or perform on the parcel
             of land. Ex. A is given the right to enter upon B¶s land.

      2      Negative Easement²prevents the owner of the parcel fro doing
             something with their land. Ex. A is given the right to enforce a
             restriction o the use of B¶s land.

      3      Can be characterized as appurtenant/in gross

      4      Falls within the SOF²being an interest in land; creation requires

             a       Written instrument signed by the party to be bound

             b       In addition to the exceptions for fraud, part performance,
                     and estoppels, and easement may be created by:

                     i.      Implication, or

                     ii.     Prescription

      5      Can have duration comparable to any of the possessory estates.
             An Easement can be in fee simple (perpetual duration) or for life,
             or for a term of years.

(b)   The Profit²to take off the land that is traditionally thought of as part of the
      land (e.g., timber, mineral rights, wild game, and fish).

      Example        A is given the right to enter upon B¶s land and remove
                     something attached to the land.

      1      Can be characterized as appurtenant/in gross

      2      Falls within the SOF²being an interest in land.

(c)   Real Covenants/Equitable Servitudes²

      1      Real Covenants²Covenants enforceable at law with the remedy
             as damages.

      2      Equitable Servitudes²Covenants enforceable in equity with the
             remedy as an injunction.

      Depending upon several factors, including the remedy that A seeks in the
      even the restriction is breached. Examples²

      3      A is given the right to enforce a restriction on the use of B¶s land²
             This is a negative covenant because B cannot use the land in
             some way.
                         Property 2 Outline
                    Keyed to Dukeminier/Krier 6th Ed.
                    UMKC, June Carbone Spring 2010

            4      A is given the right to require B perform some act on B¶s land²
                   This is an affirmative covenant which states that B must/has to

            5      A is given the right to require B to pay money for the upkeep of
                   specified facilities²Affirmative obligation, but it is different from 3
                   and 4 because in this example, it is a payment of money and is
                   going to be used for something in connection with the land.

      (d)   Appurtenant²an easement or profit that benefits a particular parcel of
            land. This µbenefit¶ is transferred along with the titled to the parcel to each
            subsequent owner. This type of easement/profit benefits the easement
            owner in the use of the land. Requires:

            1      Dominant tenement (or estate) and

            2      Servient tenement.

            3      The easement attached to and benefits the dominant tenement.

            4      This type of easement usually is transferrable. Transfers along to
                   with the dominant tenement to successive owners. However,
                   appurtenant easements can be made personal to the easement
                   owner only and are not transferable to others.

      (e)   In Gross²The easement/profit is held by a particular person, not in
            connection with the ownership of a specific parcel of land. The easement
            owner benefits personally rather than in connection with the use of the
            land which that person owns.

            1      Involves only a Servient Estate

            2      Does not benefit any land

            3      May be alienable or inalienable

            4      Said to be personal, but they are personal only in the sense that
                   they do not attach to any parcel of land owned by the easement
                   owner, not in the sense that they may not be transferred to
                   another person.

(2)   Creation of Easements--

      (a)   Easement created by Grant²Easement created by grant in a deed need
            to identify the property, describe the easement (nature of right), must be
            in writing, should be notarized and recorded

            1      Willard v. 1st Church of Christ, Scientist. The trial court went by
                   the common law rule that "one cannot 'reserve' an interest in
                   property to a stranger to the title." However, the court notes that
                  Property 2 Outline
             Keyed to Dukeminier/Krier 6th Ed.
             UMKC, June Carbone Spring 2010

             times are changing, and now they want to give effect to the intent
             of the grantor. The court adds this rule frustrates the grantor's
             intent, and b/c it produces an inequitable result b/c original
             grantee presumably paid a smaller price for title to the property.
             Here, McGuigan testified she discounted the land to Peterson.
             There was also no evidence of any reliance by the insurance title
             company. No evidence of a policy issued, thus no showing of
             alliance to an insurance company. And Willard couldn't say he
             had no knowledge of the easement, as the land was being used
             as such while he was in the negotiating process, and after Willard
             acquired title.

             a      At common law²the grantor cannot reserve an easement
                    in favor of a 3rd party (stranger of title

             b      Modern law²Rst. 3rd of Servitudes; an easement can be
                    created in favor of a 3rd party,

      2      Reservation²is a provision in a deed creating some new
             servitude which did not exist before as an independent interest.

             Example:       O conveys Blackacre to A reserving a 20-foot-wide
                            easement of way along the south boundary of

                            The easement did not exist as an independent
                            interest prior to the conveyance by O.

      3      Exception²is a provision in a deed that excludes from the grant
             some preexisting servitude on the land.

             Example:       After the above conveyance, A conveys Blackacre
                            to B, except for the easement previously reserved
                            by O.

(b)   Licenses²oral or written permission given by the occupant of land
      allowing the licensee to do some act that otherwise would be a trespass
      (like plumber coming to fix the drain) License is revocable where an
      easement is not. Exceptions to the rule that a license is revocable
      (irrevocable licenses treated like easements)

      1      A license coupled with an interest cannot be revoked²when a
             license is tied together with some other legally recognized interest
             the license is irrevocable until that other interest is vindicated.

             Example        O grants A the right to take timber from property
                            owned by O²A has an interest (a profit) and an
                            irrevocable license to enter the land an take the
                  Property 2 Outline
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      2      A license can also become irrevocable under the rules of

      3      Holbrook v. Taylor. When a person has a license which includes
             the right to erect structures and acquire interest in the land in the
             nature of an easement by making improvements thereon, the
             licensor may not revoke the license and restore his premises to
             their former condition after the licensee has exercised the privilege
             given by the license and erected the improvements at
             considerable expense. When the land owner or previous
             landowners granted permission to adjoining landowners in the use
             of an easement on the land, and watched while the current party
             spent substantial money in reliance on this representation, the
             original landowner is estopped from. The court looked to the
             intent of the party as part of the prescription claim. Here, the land
             was granted permission by appellant since 1944 to be used as an
             easement, which gave the appellees to feel as if they had license
             to be on the land as well. They acquired an interest by improving
             on the land by building the $500 worth on the ingress/egress
             road. This building was done in reliance on the road being
             property of both parties (mentioned above). Furthermore, there
             was no dispute as to who could and could no use the roadway
             until the fall of 1970. In sum, appellants agreed tacitly (w/o
             consent) to allow the use of the easement, and thus should not be
             denied now.

      4      Differing Views:

             a      Shepard v Purvine: An oral license promptly acted upon in
                    the manner the plaintiffs acted is just as valid, binding, and
                    irrevocable as a deeded right of way.

             b      Henry v. Dalton: and oral license to do an act on the land
                    of the licensor, while it justified anything done by the
                    licensee before revocation is revocable at the option of the
                    licensor (at their own peril); required by public policy. This
                    prevents the burdening of lands with restrictions founded
                    upon oral agreements, easily misunderstood.

             c      Transactions costs: who is the lowest cost avoider, it is not
                    that burdensome to require if you are the licensee to put it
                    in writing

(c)   Easement by Estoppel²if a licensor grants a license on which the
      licensee reasonably relied on to make substantial improvements to the
      property, equity requires that the licensor be stopped from revoking the
      license. License made irrevocable though estoppel continues to exist
      until the reasonable expectations of the parties have been satisfied. See
      B above.
                  Property 2 Outline
             Keyed to Dukeminier/Krier 6th Ed.
             UMKC, June Carbone Spring 2010

(d)   Easement by Implication²an implied easement arises where the prior
      use waws or might have been know of by the parties can be assumed to
      have contemplated its continuance.

      1     Quasi Easement²You can¶t have an easement on your own
            property, but you can make use on one part of your own land for
            the benefit of another part, this is a quasi-easement.

      2     Elements necessary to establish an implied easement from prior

            a      Common owner prior to division

            b      Prior use must be reasonably necessary for the use and
                   enjoyment of the quasi-dominant estate.

            c      Prior use must be continuous, not sporadic

            d      Parties must intend, at time of division, to continue prior

            e      Prior use must be apparent, but does not necessarily mean
                   that it is visible. (Notice)

            f      Property law assumes that if the grantor had been using
                   the other parcels to benefit the parcel they chose to keep
                   then they would not have cut off that right, it is implied by

      3     Van Sandt v. Royster. Pl. discovered his basement filled with
            sewage from the df. house. Df. had been draining sewage across
            pl. land. Pl. sued to stop this practice. Prior owner of both lots had
            created a quasi easement, so easement by reservation implied
            from prior use had been validly created when she conveyed title to
            each of the purchasers.

      4     If the dominant and servient tenement come into the same
            ownership, easement is extinguished, and will not be revived by
            the land being divided again. but a new easement by implication
            may be created, if intended.

(f)   Easement by Necessity²where property has been divided by a common
      owner in such a manner that an easement for access is absolutely
      necessary (e.g., landlocked).

      1     Elements needed:

            a      Unity of ownership alleged of the dominant and servient
                  Property 2 Outline
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             UMKC, June Carbone Spring 2010

             b      that a roadway is a necessity, not a mere convenience.

             c      that the necessity existed at the time of severance of the 2
                    estates (no other roadway existed at the time of
                    conveyance) (critical element)

      2      Necessity must exist at the moment the parcel is divided. NO
             prior use is needed.

      3      Othen v. Rosier. Hill owned a large parcel of land, which eh
             divided up and sold. One of the parcels was landlocked and
             acquired by Othen (pl.), who would cross Rosier¶s (df.) land to
             reach the public road. When Hill had conveyed the parcel to
             Rosier, he had owned other land that was continuous to Othen¶s
             parcel and a public roadway. Othen had an easement implied by
             necessity across some other property, but not Rosier¶s.

      4      Easement by necessity lasts as long as the necessity exists; if
             necessity is removed (by creating a new public road), the
             easement is terminated.

      5      The servient estate owner is permitted to select a reasonably
             convenient location for the easement, because he can best
             minimize the damage to the servient estate.

      6      Important to look at the sequence of events in which the parcels
             are conveyed.

(g)   Easement by Prescription²Adverse use for a sufficient period of time can
      ripen into an easement by prescription. Similar to Adverse Possession.

      1      Elements needed--

             a      open and notorious

             b      continuous

             c      Throughout the prescriptive period

             d      Exclusive use of the property

      2      Public Prescriptive Use. Where the public uses, can be acquired
             by the public at large. Owners must be put on notice the adverse
             right is being claimed by the general public, not by individuals.

(h)   Bona Fide Purchaser w/o Notice²any of these if you are a bona fide
      purchaser w/o notice you will take free of the easement regardless of how
      it came into being, by expression, by implication, by prescription.
                            Property 2 Outline
                       Keyed to Dukeminier/Krier 6th Ed.
                       UMKC, June Carbone Spring 2010

(3)   Assignability of an Easement. See appurtenant and Easement in gross.

      (a)       Miller v. Lutheran Conference and Camp. Pocono grants to Frank and
                heirs and assigns the exclusive right to fish and boat in the lake. Then,
                Frank granted to Rufus ¼ interest in the right to fish, boat, and bathe in
                the lake. Rufus dies, and his estate granted licenses to Lutheran to boat,
                fish, and bathe in the lake. Frank sued to stop Lutheran from sue of the
                lake. The court said that bathing right acquired by prescriptive use, so
                there was an easement in gross acquired. Since this was a commercial
                easement, it was intended to be transferable, but even though they were
                transferable, they were not divisible.

                1      Recreational easements in gross are not assignable²intended to
                       be personal, and we don¶t want to burden the servient land
                       beyond the original contemplation of the parties.

                2      Easement in gross is divisible when the creating instrument so
                       indicates or when the easement is exclusive (or if it would create a
                       burden on the servient estate).

      (b)       Benefits automatically pass to the assignees of the land to which they are
                appurtenant, if the parties so intend and the burdened party has notice of
                the easement.

(4)   Scope of Easements²the scope of an easement involves two separate

            y   How extensively and intensively may the easement hold use the
            y   To what degree may the owner of the servient estate use or interfere with
                the easement.

      (a)       Parties intention to Control²The overriding principle in determining the
                scope of an easement is to identify and uphold the parties¶ intentions, but
                this is not always easy. The courts examine the following factors.

                1      Easement by Grant

                2      Easement by Implication (Prior Use/Necessity)

                3      Easement by Prescription.

      (b)       How conditions have changed to affect the originally intended use

                1      Change in location of easement²if an easement specifies a
                       specific location, or one has been agreed to by the parties
                       conduct, the location is permanently fixed unless the parties agree
                       to a change.
                        Property 2 Outline
                   Keyed to Dukeminier/Krier 6th Ed.
                   UMKC, June Carbone Spring 2010

            2      Enlargement of the dominant estate²an easement, however
                   created, cannot be used for the benefit of land that is not the
                   dominant estate.

            3      Brown v. Voss. Easement existed b/t Parcel A (servient) and
                   parcel B (dominant). B subsequently acquired another parcel of
                   land and used the easement for both parcels of land. There was
                   no increase in burden to the servient estate by this use.

                   a       when an easement is created by an express grant, the
                           extent of the right acquired is to be determined from the
                           terms of the grant properly construed to give effect of the
                           intention of the parties. Grant gave easement to Parcel B,
                           not parcel C. doesn¶t matter that C is now combined into
                           the same ownership w/ the dominant estate; have to look
                           at what parties intended to agree on when easement was

                   b       An easement appurtenant to one parcel of land may not be
                           extended by the owner of the dominant estate to other
                           parcels owned by him, whether adjoining or distinct tracts,
                           to which the easement is not appurtenant.

                   c       Just because there is no added burden on the servient
                           estate, doesn¶t mean that there¶s no misuse of the
                           easement. If an easement is appurtenant to a particular
                           parcel of land, and extension to the other parcels is a

      (c)   What changes in use were reasonably foreseeable by the parties? didn¶t
            talk about.

(5)   Termination of Easements²Once the easement has been extinguished it cannot
      be revived²it must be created anew in one of the ways easements are formed.

      (a)   Expiration²expire by its terms if by grant; or when purpose of easement
            has ceased.

            1      Necessity²expires when the necessity is eliminated

            2      Estoppel-expires when the licensee gets full value of expenditures
                   made in reliance on the license.

      (b)   Merger²If dominant and servient estates merge (get same owner),
            easement is extinguished.

      (c)   Release²a waiver; generally, it must be written, oral release is valid
            through equitable estoppels (when servient owner relied on it to his
            substantial detriment)
                               Property 2 Outline
                          Keyed to Dukeminier/Krier 6th Ed.
                          UMKC, June Carbone Spring 2010

           (d)     Abandonment²if the easement holder manifests a clear and unequivocal
                   intention to abandon the easement. Mere nonuse will not suffice to prove
                   this. Abandonment is established by either a present intent to relinquish
                   the easement or purpose inconsistent with its future existence.

                   1      Can be abandonment if not sued within the statutory period

                   2      Act of obtaining alternative means of access to the dominant
                          parcel could constitute an intent.

                   3      Presault v. United States. RR had right of way easement on Pl.¶s
                          property, for its rail line. then RR ceased operations over that
                          portion , and removed tracks. RR then entered into an agreement
                          with the US. for the lines to be used as a public trail. Pl sued b/c
                          government taking their property. The court looked at the intent of
                          the parties when the conveyance was made. Since the estate
                          was acquired solely for RR¶s needs it was an easement, not a fee
                          tail. Intent was to grant an easement for RR lines, and it was not
                          reasonably foreseeable that it would be used as a public trail. RR
                          intended to abandon the easement when they removed the tracks,
                          and there was no intent to revive the use of the easement for that

           (e)     Estoppel. If the servient owner relies upon a statement or representation
                   by the easement owner.

           (f)     Condemnation²if the government exercises their power of eminent
                   domain (taking)

           (g)     Prescription²if the servient owner wrongfully and physically prevents the
                   easement from being sued for the prescriptive period, the easement is

C   Covenants running with the Land.

    Estates in Land²give the holder the right to exclusive possession/occupation of the

    Servitudes²give the holder the right to use someone else¶s property, or to restrict the
    owner¶s use of the owner¶s property

    (1)    Real Covenants²A promise about land usage that runes with an estate in land,
           meaning that it binds or benefits subsequent owners of the estate. A real
           covenant may be affirmative or negative. The promise to use the land in some
           fashion is affirmative; A promise not to use the land in a specified fashion is a
           negative covenant. Both types are enforceable.

           (a)     Benefit and Burden²A promise about land usage burdens some land
                   and normally benefits other land.
                  Property 2 Outline
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(b)   Runs with the land²if one party breaches a covenant made with another
      person ±even if it concerns land usage²the issues presented are purely
      a matter of contract law.

(c)   Remedy²Money damages.

(d)   Development of the Real Covenant²

      1      English²only the immediate parties to the covenant are able to
             sue to enforce the covenant or were liable for the breach

      2      American²real covenants may be created when a fee simple is
             transferred or even between neighbors with no transfer of title;
             Horizontal privity of estate.

(e)   Covenant, not condition²A real covenant is a promise concerning land, it
      is not a condition of continued land use. Conditions concerning land use
      are Defeasible estates.

(f)   Creation²may not be created by implication or prescription; only created
      by written instrument. (hence contract law)

(g)   Enforceability by or against successors²Because the burden of a real
      covenant exposes the successor to liability that is potentially unlimited,
      this burden out to be imposed only to those people who acquire the
      identical estate that was initially burdened. Elements are as follows.

      1      Intent²the original parties must have intended the burden (or
             benefit, or both) to run. Explicit statement ³successors, heirs, and

      2      Horizontal Privity²The older discarded view²horizontal privity of
             the estate between the original parties²is required for the burden
             to run, but not for the benefit to run. Three relationships:

             a       Landlord-Tenant View²Horizontal privity is met only if the
                     original parties were landlord and tenant²no longer
                     recognized in America.

             b       Grantor-Grantee²Promise has to be related to the grant (it
                     has to be in the actual grant and needs to exist at the time
                     of conveyance).

             c       Simultaneous Interest²Fee and easement²that exists AT
                     ALL TIMES that the covenant is created.

             d       RST does not require Horizontal Privity.

      3      Vertical Privity²All courts require vertical privity---of the estate
             between the original promisor and the successor to the burdened
                         Property 2 Outline
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                    estate²for either the benefit or burden to run, but is more easily
                    met for benefits to run than for burdens to run. STEPPING INTO
                    THE SHOE= taking EXACTLY what the person that had it before
                    you had.

                    a       Harder to establish vertical privity to enforce the burden of
                            the covenant than it is for the benefit of the covenn it is for
                            the benefit of the covenant.

                    b       Benefit²RST says that the benefit will run to the assigns
                            of any interest in land, not just to the assigns of an estate
                            of the same duration as held by the original promisee.

                    c       Neposit exception: a homeowner¶s association may sue to
                            enforce the benefitof a covenant even thought the
                            association succeeds to no land owned by the original
                            promisee. The association is regarded as the agent of the
                            real parties in interest who own the land.

                    d       There is no vertical privity btwn adverse possessor and the
                            person that he is taking it away from (particularly w/
                            respect to an affirmative obligation).

             4      Touch and Concern²the substance of the promise must touch
                    and concern the burdened land and in most states, the benefitted
                    states as well. Common if the real covenant is in gross
                    (personal), the burden will not run.

(2)   Equitable Servitudes²A covenant about land use that will be enforced in equity
      (by an injunction) against a successor to the burdened estate who acquired it
      with notice of the covenant. Covenant does NOT need to meet all the criteria of
      a real covenant to be enforceable. Covenants are more likely to be enforces as
      an equitable servitude rather than a real covenant because they are easier to
      enforce by or against successors and most people prefer enforcement of a
      covenant by injunction than damages for its breach.

      (a)    Differences b/t equitable servitudes and Real covenants²

             1      Remedy²injunction.

             2      No privity needed--

             3      Creation²may be created by implication in many jurisdictions²
                    real covenants can only be created expressly and in writing.

      (b)    Property theory of E.S.²at first it started out as a promise enforced in
             equity, now its and interest in land. unlike a covenant, which only
             attaches to estate in land., E.S. burdens the land itself, not the estate
             (similar to an easement)
                   Property 2 Outline
              Keyed to Dukeminier/Krier 6th Ed.
              UMKC, June Carbone Spring 2010

(c)   Tulk v. Moxhay. Covenant to maintain land as a garden and not build any
      structure; subsequent purchaser¶s deed did not contain the covenant and
      he asserted right to build even though he knew of the original covenant.
      Held, if a covenant is attached to property, no one with notice of that
      covenant can purchase the property and not be bound by covenant.
      A covenant which is not enforceable at law is enforceable as an equitable
      servitude in equity. Policy:

      1      Price of land reflects burdens;    paid burdened price so he gets
             burdened land

      2      If covenants can be rendered null, owners will be more hesitant to
             sell surrounding land can be burdened by unenforced covenant

(d)   E.S. created by Implication²many states will imply a negative E.S. where
      a real estate developer sell lots in a subdivision on the promise that all the
      lots will be burdened with the same restriction, and later fails to carry
      through on the promise to burden all the lots.

      1      Sanborn v. McLean. Neighborhood of lots all contained covenant
             in deed to build solely for residential purposes; lot sold to did not
             contain covenant and started to build a gas station; neighbors
             sought to enforce covenant. Held, a negative servitude can be
             implied on a lot in the absence of a written instrument if the
             developer has set up a scheme for residential subdivision
             and the purchaser is found to have notice of the covenants in
             the scheme. had both record and inquiry notice.

      2      Reciprocal negative easement²initial common ownership,
             situated so as to receive reciprocal benefits, sale of one lots with
             benefit to retained lots the burden runs to the retained lots of there
             is notice

(e)   Validity and Enforceability of Covenants²Equity imposes 3 requirements:

      1      Intent²original parties must have intended the burden, benefit, or
             both to run (this is intended when covenant says it binds
             successors, heirs, and assigns). If the covenant is silent, the court
             will look at surrounding circumstances whether the running
             covenant was intended.

      2      Notice²on the part of the purchasers of the original promisor

      3      Touch and Concern²the substance of the promise must touch
             and concern the burdened land.

             a       the effect²to determine whether covenants are sufficiently
                     economically beneficial they would be imposed by the
                     present owners if they had the opportunity to negotiate
                     between themselves.
                  Property 2 Outline
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             UMKC, June Carbone Spring 2010

             b       Also not good if illegal, unconstitutional, or violates public
                     policy. May modify or terminate.

      4      Vertical Privity²may be required in some jurisdictions for the
             benefit (but not the burden) of a covenant running in equity.

(f)   Neponsit v. Emigrant-- covenant on the land requires members of
      residential community to pay maintenance charges; does this covenant
      run with the land? Held, yes. A covenant touches and concerns the
      land when it substantially affects the legal rights of the parties to the
      covenant. By paying the fees, a land owner acquires an easement to the
      public spaces so it clearly touches and concerns the land. Vertical
      privity²association is a convenient instrument for parties who do have
      vertical privity

(g)   Hill v. Community of Damien of Molokai (1996): Community is a group
      AIDS home; neighbors sued to enforce restrictive covenant limiting
      property use to ³single family home´. Held, ambiguous restrictive
      covenants should be construed in favor of the free use and
      enjoyment of property and against restrictions; term ³family´ is
      ambiguous and so it is construed against restrictions; restrictive
      covenants violate the FHA when they have a discriminatory intent,
      effect or constitute a failure to make reasonable accommodations.

(h)   RST 3rd of Property²Servitude is valid unless illegal or unconstitutional or
      violates public policy. Violation of public policy may be because:

      1      its arbitrary, spiteful, or capricious

      2      Unreasonably burdens a fundamental constitutional right

      3      imposes an unreasonable restraint on alienation

      4      Imposes and unreasonable restraint on trade or competition

      5      Is unconscionable.

(i)   Caullet v. Stanley Stillwell. D sold P property with the condition that his
      construction company would build the house. P and D couldn¶t negotiate
      so P sued to quiet title. Clause too vague and it didn¶t touch and concern
      the land. To constitute a real rather than a personal covenant, the
      promise must exercise direct influence on the occupation, use, or
      enjoyment of the premises. It cannot be a use incidental to the
      performance of a promise. There must be a reasonable limitation or
      proscription to the land (like limiting for residential purposes), but this
      provision is not similar.

(j)   Termination of E.S.²See Real Covenant Termination. also
                  Property 2 Outline
             Keyed to Dukeminier/Krier 6th Ed.
             UMKC, June Carbone Spring 2010

(k)   Termination by Changed Condition²because E.S. are enforceable in
      equity, the following equitable defense, if proven, will effectively
      extinguish an E.S. by blocking its enforcement.

      1      Change conditions within the affected area²a covenant will no
             longer be enforced in equity if condition have so radically and
             thoroughly changed within the area affected by a covenant usually
             a subdivision that the covenant can no longer achieve its purpose.

      2      Changed conditions in surrounding area²The nature and
             character of the surrounding area has so changed that it would
             now be inequitable to enforce the servitude. To succeed it is
             necessary to establish that the extrinsic changes in the
             neighborhood have been so pervasive that all the benefitted lots
             have lost the benefit of the covenant.

             i.     Western v. Truskolaski-- lots in a subdivision were
                    restricted to single-family dwellings; residents sued to
                    enjoin the construction of a shopping center on one of the
                    plots of land. Held, the residential character of the
                    neighborhood remained of value to the landowners;
                    changed conditions do not invalidate a residential
                    covenant where the character of the subdivision
                    remains residential (isolated deviations do not effect a
                    waiver); a change in zoning will not override a private
                    restrictive covenant, even where economic efficiency
                    would be served by invalidating covenant

             ii.    Rick v. West-- lots restricted to residential use and all but
                    one resident agree to release covenant in order to build a
                    hospital; suit to void covenant for changed conditions.
                    Held, a landowner in a subdivision under a restrictive
                    covenant has the right to insist upon adherence to the
                    covenant even when other owners consent to its
                    release; holdout landowner relied on covenant in
                    purchasing property and expectations should be upheld;
                    enforced unless unconscionable or oppressive
                    (Restatement § 7.10 applies here as well to give discretion
                    to terminate)

             iii.   Holdout problem²Balance the hardships²Even when
                    injunctive relief is otherwise appropriate, a court may deny
                    an injunction if the hardship imposed by the injunction is
                    very large in relation to the benefits produced, but this
                    principle is rarely invoked by the courts in servitude cases,
                    and may be more theoretical than actual.

(l)   Affirmative Covenants to pay money²perpetual burden²Affirmative
      covenants to pay money (usually dues to a HOA) may be enforced either
      by foreclosure of the equitable lien created by nonpayment or by suit to
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                    recover as money damages the unpaid dues. The burden of these
                    covenants is personal and may not be easily avoided.

                    1       Pocono Springs v. MacKenzie-- attempt to sell land under
                            covenant to pay association fees and when they can¶t sell it they
                            attempt to abandon it. Held, a covenant running with the land
                            cannot be terminated by abandonment when the owner still
                            holds title in fee simple absolute. [Restatement § 7.12 now
                            permits court to terminate covenants to pay maintenance fees
                            after a reasonable period of time.]

III   Legislative Land Use Controls

A     The Law of Zoning. The proactive response to nuisance laws with early principles of
      (1) separation of uses (2) production of single-family home (3) low-rise development (4)
      medium-density of population. Zoning is the use of public power to impose uniform
      results that might otherwise be accomplished in more piecemeal and selective fashion
      by private bargains (via servitudes) and nuisance law.

      (1)    Constitutional Validity²zoning laws are constitutionally valid, even though they
             restrict the uses to which a landowner may devote his property (possibly to his
             economic detriment).

             (a)    Village of Euclid v. Ambler Realty Co.²Euclid, OH adopted a
                    comprehensive zoning ordinance that restricted the permissible uses of
                    property, limited the height of structures, and imposed minimum lot size
                    requirements for certain types of structures. The Supreme Court upheld
                    the validity of the law against a due process and equal protection
                    challenge. The law¶s objective²minimizing land use conflicts to prevent
                    nuisances from ever occurring²was a legitimate exercise of the states
                    inherent police power because its content was neither unreasonable nor

             (b)    Zoning law applied to an individual and not a community may be valid but
                    applied in an unconstitutional manner.

                    1       A zoning law that so severely restricts use that no economically
                            viable use is permitted is an unconstitutional taking of property
                            without compensation²see Lucas v. South Carolina Coastal

                    2       Zoning Ordinances that openly infringe constitutionally
                            fundamental rights (e.g., free speech) or that employ suspect
                            criteria (e.g., race) are presumptively unconstitutional.

                    3       However, zoning laws that don¶t have the above characteristics
                            are presumptively valid.
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(2)   Police Power²The state possess an inherent police power²the power to act to
      achieve the people¶s vision of public welfare as communicated through their
      governmental agents²but that power is not unlimited.

      (a)   Zoning power must conform to:

            1      The US Constitution

            2      The valid federal law pre-emptive of the local zoning law

            3      The relevant state constitution

            4      State law, particularly the states enabling act, and judicial
                   doctrines developed to curb unreasonable and arbitrary exercises
                   of police power.

      (b)   Various Tests²

            1      Police power--Rational Relationship for a legitimate State purpose

                   a      Health

                   b      Safety

                   c      Welfare

                   d      Preventing Congestion

            2      Equal Protection (EP)

            3      Substantive Due Process (DP)²triggers²when the regulation
                   intends to regulate the defined family relationship²high level of
                   scrutiny²the court must examine the importance of the
                   governmental interest advanced and the extent to which they are
                   served by the challenged regulation

            4      Takings²See B below.

            5      Zoning Controls of Household Compositions²Zoning laws can
                   interfere with important civil liberties concerning living
                   arrangements, liberties protected by federal and various state
                   constitutions, or by federal and state law that is paramount to a
                   local zoning ordinance.

      (c)   Police Power v. Rights²these are often symmetrical

            1      Ask does the state have the power?
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             2       And assuming that they do is there a right to the individual that is
                     to be protected from the state¶s power to do this?

             3       Rights include²due process, equal protection, takings«

             4       Test the statute on its face.

(3)   Cumulative Zoning²this type of zoning identifies land use in a spectrum form
      ³higher´ to ³lower´. The lease dense single-family residential use is the highest
      use, proceeding down to the more dense residential use (e.g., apartments and
      other multi-family dwellings). Euclidian Zoning

(4)   Mutually Exclusive Zoning²this type of zoning law permits some uses and
      excludes all others within the zoned area.

(5)   Density Zoning²In addition to use regulation, zoning laws often seek to control
      the density of the occupation within any given use district. This is usually done
      though a wide variety of limits on the size or height of structures, their location
      upon their site, and the functional uses created within the structure. Density
      controls supplement use controls; they are not generally considered an
      alternative for use controls.

(6)   Statutory Discretion and Restraint²Appropriate land usage should change as
      the underlying economic and social conditions dictate. Zoning responds to this
      fact in several ways:

      (a)    tolerating the continued existence of land uses existing prior to the
             adoption of the zoning law,

      (b)    Providing for amendment of zoning law, and

      (c)    Conferring discretion on administrators in the application of the zoning

      The Controversy

      (d)    Non-Conforming Uses: Some existing land uses will not be in
             conformity with the uses permitted under the new zoning law. These
             nonconforming uses are permitted to continue to exist because their
             immediate abatement would amount to either a taking of property without
             just compensation or an unreasonable exercise of the zoning power.
             Non-Conforming uses may be eliminated gradually; one mechanism to
             abate non conforming uses is the forced phase out. The zoning law may
             specify a period after which the nonconforming use must cease. This
             period must be long enough to avoid a successful charge that the forced
             phase-out amounts to an uncompensated taking or denial of substantive
             due process.

             1       Majority rule²Valid if reasonable period: Forced phase-outs are
                     valid so long as the period is reasonable as to the affected non-
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                   conforming user. The general calculus of reasonableness
                   involves a process of weighing the public gain to be derived
                   from a speedy removal of the nonconforming use against the
                   private loss which the removal of the use would entail.

                   a      Nature of the use

                   b      The character of the structure

                   c      The location

                   d      What portion of the user¶s total business is affected

                   e      Salvage Value

                   f      The extent of depreciation of the use

                   g      Any monopoly or other advantage conferred on the user by
                          reason of the foreclosure of similar and competing uses.

            2      Minority rule²Invalid Per Se: A minority of states hold that forced
                   phase outs are invalid. Other state conclude that forced phase-
                   outs constitute an uncompensated taking of property, no matter
                   what the length of the period may be.

            3      Minority Rule²PA Northwestern v. Zoning Hearing Board.
                   ordinance zoned adult entertainment and gave nonconforming
                   uses 90 days to comply; Held, a zoning ordinance is generally
                   presumed to be valid but must be balanced with an individuals
                   const. right to use property unrestricted by govt except when use
                   creates a nuisance or violates a covenant or easement; a lawful
                   nonconforming use creates a vested property right that
                   cannot be infringed unless there is nuisance, abandonment
                   or eminent domain; if this right is deprived it amounts to a taking

(6)   Limits to Zoning Power²See also, 2(a) above.

      (a)   Fundamental of Family Association²

            1      Due Process²laws that substantially interfere with the
                   constitutionally fundamental liberty of people to marry and
                   associate together in a traditional family relationship are
                   presumptively voidl.

            2      Validity²To sustain validity the government must prove:

                   a      A close connection b/t the regulation and the government
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             b      and establish that the government¶s interest in regulating is
                    sufficiently important to merit the challenged regulation

             c      This may or may not be strict scrutiny²the requirement
                    that he government proves that the regulation is necessary
                    to achieve a compelling governmental purpose.

      3      Moore v. City of East Cleveland. The court applied a higher level
             of scrutiny because the zoning law substantially interfered with the
             right of members of the same extended family to arrange their
             living relationships. The test is that the court must examine
             carefully the importance of the governmental interest advanced
             and the extent to which they are served by the challenged
             regulation. And when it engaged in that examination.

      4      Unrelated Persons²where does the family begin? Zoning laws
             that substantially interfere with the ability of unrelated persons
             (person not related by blood, marriage, or adoption) to live
             together are presumed valid and subject only to minimal scrutiny.

             a      Village of Bella Terra v. Boraas²The town¶s zoning
                    ordinance prohibited occupancy of dwellings by more that
                    2 unrelated persons. Supreme Court applied the minimal
                    scrutiny because the law did not substantially burden the
                    deeply rooted liberty of related family members to arrange
                    their living patterns. The courts view was that the liberty of
                    unrelated person to live together in a group is simply not
                    constitutionally fundamental. Because the law was
                    rationally related to the legitimate governmental objective
                    of residential tranquility and low residential density was

             b      the analysis of defining marriage is not constitutional

(b)   Statutory Limitation on zoning controls of household companions.
      Federal and state laws prohibit housing discrimination against persons
      with handicaps, the most important such statute being the FHA. The
      mandates of this law can collide with local zoning laws limiting occupancy
      by unrelated persons when handicapped people seek to live together in
      group homes for various therapeutic purposes.

      1      City of Edmonds v. Oxford House, Inc. ordinance controlling
             ³family´ composition limited to 5 or fewer unrelated persons; group
             home for recovering alcoholics sued for violation of FHA for failure
             to make reasonable accommodation for disabled people; city
             conceded that residents were handicapped under FHA but cited
             exception in FHA for ordinances controlling maximum household
             capacity. Held, the purpose of the FHA exception is to permit
             ordinances controlling the number of occupants in relation to floor
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                      space for safety reasons; Edmond¶s purpose is to control the
                      character of the neighborhood. A single-family zoning
                      ordinance is not automatically exempt from FHA scrutiny
                      because it limits household size.

                2     Threshold Question²is this a violation of the zoning ordinance²if
                      going with the previous cases the statue would be in violation of
                      FHA. The other is to expand the definition of Family to include
                      residents who live as a single house-keeping unit.

B   Eminent Domain and Regulatory Takings.

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