Final Outline RP

I. First Possession A. Acquisition by Creation 1. General Rule: What you create or invent is yours and yours alone to exploit 2. Copycats/Imitation a. General Rule: copying is allowed so long as using own efforts and say that you are copying; imitation and copying are allowed (Cheney Bros – designers couldn’t copyright designs) AND allowed to say you are copying (Chanel Perfume – allowed to say their perfume smelled just like Chanel #5) UNLESS you steal the actual product and sell it off as your own (INS – stole their newswires from AP and made no effort to ―knock-off‖ their own version) b. Policy Implications b1. improved quality b2. lower costs for comparable goods b3. stimulates competition b4. monopoly = BAD 3. Cyberspace (VW – sued Virtual Works when they registered a domain name vw.net, guilty) a. Cybersquatters liable if: A1. bad faith intent to profit from distinctive mark/sign AND A2. registers, traffics in, or uses a domain name that: 2a. in the case of a mark that is distinctive….is identical or confusingly similar to that mark OR 2a. in the case of a famous mark….is identical or confusingly similar to or dilutive of that mark b. Safe Harbor - protects the little guys from the big guys in an attempt to level the playing field; however, it does not apply when Δ’s acting with unlawful intent b1. 2 prong test 1b. Subjective – person believes 1b. Objective – reasonable grounds 4. Property in One’s Persona a. Celebrity’s right of publicity is widely recognized as a property interest, assignable during life, descendible at death b. Property interest includes names, likeness and other aspect’s of ones identity II. c. Right of publicity (rooted in right of privacy) guards against appropriation by one person of another person’s self 5. Property in One’s Person a. Property rights in general consist of the right to include, exclude, give away, share or sell. A1. certain things can only be given away and not sold (market inalienable; i.e. body parts); also, certain things can be sold and not given away b. you have a right to your body parts when they are in your body, but once they have been excised, they are not yours (Moore – spleen taken out and patented for a cell line, court holds not his property once excised) c. In general, you have a right to exclude form your property, and no reason as to why must be given (Jacque – didn’t want people to cross his property, had the right to exclude) UNLESS the exclusion prevents conduct essential to occupants health, welfare and dignity or governmental services (Shack - CANNOT sue government officials for trespass when they come onto the land to talk to migrant workers living there) Subsequent Possession A. Acquisition by Find A. General Rules 1. finder of personal property keeps title against all others but the true owner and first/prior possessor even if property not acquired legally (Armory – kid finds jewel, takes it to jewelry store; Δ take sout stones to value them, weigh them. Kid wants jewel back but Δ doesn’t give it to him; court holds that Δ must give jewel back to the chimney sweep) 2. if finder is customer/employee of owner/employer, property will often remain property of the owner/employer (McAvoy – pocketbook left by store customer, found by another customer; court holds that store owner gets to keep it) [deemed mislaid property] 3. a landowner is considered to be in possession of anything on or attached to the land (Hannah – brooch found on window sill, Δ never knew it was there and never in physical possession; court holds it must go to the finder of brooch) 4. dominant concern here is to protect the rights of true owners 5. if not sure whether property is lost or misplaced, the default rule is to call it misplaced B. 3 Characterizations (depends on mind of the true owner) 1. Mislaid a. Def – true owner placed or put it there intentionally and forgot to retrieve it b. Theory – true owner will return to get it so want to protect them if/when they return to get it 2. Lost a. Def – true owner drops it involuntarily or unintentionally b. Generally, the finer gets to keep it 3. Abandoned a. Def – initially mislaid or lost, true owner stops looking for it B. Acquisition by Adverse Possession C. Adverse Possession of Chattels A. Elements 1. E = possession 2. C = Continuous 3. H = Hostile 4. O = Open and Notorious B. Okeefe v. Snyder 1. When does the SoL begin to run? a. A thief CANNOT convey good title b. Therefore, a Bonafide Purchaser (one who pays in good faith) cannot get good title if purchased from the thief c. Court here will focus on the actions of the TRUE OWNER d. Rule of Discovery d1. burden of proof on the True Owner to show that they have used due diligence in trying to locate the property. d2. SoL doesn’t begin to run until the TO knew or should have known where the chattel was AND who has it d3. SoL DOES NOT start over each time the chattel is transferred e. New York/Common Law Rule e1. SoL starts to run when the True Owner makes a demand for the chattel and is refused f. Equitable Doctrine of Laches f1. Basically, it says, you snooze, you lose; if you fail to enforce your rights and others act in reliance on that, then equity will bar you from all of a sudden deciding that you want to exercise your rights. 2. Void Title vs. Voidable Title a. Void Title: true owner does not intend to convey title [stolen] (thief can only get good title and consequently convey good title if the SoL has run) b. Voidable Title: true owner intends to convey title [Bounced Check] c. Unlike Void Title, the Bonafide Purchaser gets to take good title when he purchases a chattel that has Voidable Title D. Acquisition by Gift A. Two Types 1. Causa Mortis – this is when death is imminent; the gift is revoked if the person doesn’t die but if you still want the person to have it you only need to redeliver it 2. Inter Vivos – these are while the person giving the gift is alive and well. They are IRREVOCABLE B. Elements 1. Intent a. Must be a PRESENT intent b. Intent to make a gift when you die must be done through a will; a promise to give someone something when you die is unenforceable unless it is in the person’s will 2. Delivery (Three Types) [although IF AN OBJECT CAN BE HANDED OVER IT MUST BE] a. Manual – actually handing the object over (Newman – life insurance policy could have been manually handed over even though the keys that he gave to housekeeper opened the bureau where the policy was so court holds against delivery of insurance policy) b. Constructive (key) – handing over a key or object that will give access to the subject matter gift (Newman – housekeeper gets furniture that the keys unlock) c. Symbolic (writing) – handing over something symbolic of the property given (Gruen – father gives son a future interest, vested remainder, in painting; court holds valid gift because son has a present ownership interest despite not having possession at this time) 3. Acceptance a. Generally, acceptance is assumed when the gift is of value III. Possessory Estates (―You can only convey what you have!‖) A. The Fee Simple A. How the Fee Simple Developed 1. property now is already acquired; so, we are dividing ownership over time B. Creation of a Fee Simple (―To A and his heirs) 1. Words of Purchase = ―To A‖; words granting the fee, tells you who has an interest 2. Words of Limitation = ―and his heirs‖; tells you how long the duration of the interest 3. Fee Simple Absolute (Default Estate) a. The most complete estate a person can hold b. There is no future interest c. The most heirs can have is an expectancy; therefore, they have no legally enforceable present property interest d. It is freely inalienable, devisable or inheritable e. Represented by the language ―To A and his heirs‖ C. Inheritance of a Fee Simple 1. Heir = Intestacy (No heirs until you die) 2. Devisees = Will D. The Life Estate 1. Represented by the language ―To A for life‖ or ―To A for the life of B‖ 2. future interest in the grantor following a LE is a Reversion 3. if the future interest is created in a grantee, it is ordinarily a remainder, but can be an executory interest 4. a LE may be made determinable, subject to condition subsequent, or subject to an executory limitation in the same manner as a fee simple may be so limited. For example, ―To A for life or until remarriage‖ creates a life estate determionable 5. White v. Brown a. Court uses Rules of construction, which say that generally speaking we assume the grantor is willing away all that he/she has unless we have pretty good evidence otherwise b. Court says will was not a life estate but rather a fee simple because there was no remainder and there was a complete restraint on alienation; alienation declared void (contrary to public policy because it decreases the value) 6. Baker v. Weedon a. Here, court construes language as a life estate b. ―all of my property during her life and on her death to her issue or, if none, to the grandchildren c. conflict of interest between the life estate holder and the remaindermen because holder of LE has no incentive to keep property up because when she dies she has no interest d. property worth more commercially than privately but LE holder cant sell it because all she has is an LE; she could sell LE but she wont get much back for it because shes old and LE generates very little income e. Limits on the Life Tenant i. Cannot commit affirmative waste (acts that substantially reduce value of property) ii. Cannot commit permissive waste (must pay property taxes, and take reasonable care of the property, must pay interest on existing mortgages) [remaindermen must pay principal] E. Leasehold Estates (See Landlord/Tenant) F. Defeasible Estates 1. 2 Types a. Fee Simple Determinable a1. Represented by language ―To A and his heirs so long as used for library‖ 1a. FSD can also indicated by language ―until‖ or ―while‖ a2. duration will last as long as condition is met a3. Grantor has a Possibility of Reverter, which becomes possessory automatically on cessation of library use a4. if the conveyance provides that on cessation of library use the property will go to another grantee (B), rather than return to the grantor, the grantee (B) has a future interest called an executory interest a5. Mahrenholz v. County Board of School Trustees – upon a grant of exclusive use followed by a possibility of reverter when that use ceases, courts and commentators have agreed that a FSD is created; land given to school board ―to be used for school purposes only otherwise to revert to Grantors herein‖. The land was inheritable NOT deviseable and went intestate to son. A6. Mountain Brow Lodge (IOOF) v. Toscano – gift deed with condition that property was restricted for use and benefit of IOOF only and if it fails to be used by IOOF or in the event of sale or transfer it reverts to Δ. However the court ruled that the second condition was void because it puts a restriction on alienation; yet, it upholds the first clause because it encourages charitable donations and this clause is not an absolute restraint. Now the property can be sold but it would have to go back to π by lease for their use b. Fee Simple Subject to Condition Subsequent b1. Represented by language ―To A and his heirs, but if the land is not used for a library, O has a right to reenter‖ 1b. also indicated by language ―upon condition that‖ or ―provided that‖ or ―however‖ b2. O, the grantor, has a Right of Entry, which he may elect to exercise or not b3. duration will last unitl the happening of named event AND reentry by grantor 2. Tiebreaker always goes to FSCS a. ―Equity abhors a forfeiture‖ b. Under FSCS, the land is not forfeited right away, and the court prefers to protect the right of the possessor 3. Who cares if FSD or FSCS a. In FSD, title automatically reverts back and the clock for AP starts ticking when the condition is broken b. In FSCS, no transfer of title until the grantor enters and kicks others off the property; the clock for AP is split, some say it starts when the condition is broken, others say its when the demand for return takes place 4. Eminent Domain (Contract theory of Impossibility of Performance) a. Ink v. City of Canton i. Court says that we have a FSD here with possibility of reverter ii. Wanted to put a highway through a park, violating the condition. State brings eminent domain iii. Majority rule: no reverter to grantor, grantee keeps all the money; no the fault of the grantee due to Eminent Domain iv. Minority rule: divide it and litigate it, State paying money for unrestricted land; city gets the value of land as park, Ink gets excess b. City of Palm Springs i. Here court says there is an FSCS ii. City of palm springs decides to ise property as a golf course, so the city not the state is bringing eminent domain iii. Golf course not allowed iv. The grantee CANNOT bring eminent domain, it must come from a higher authority IV. Future Interests A. Steps A. Who has the Present Possessory Interest (FSA, LE, FSD, FSCS, FSEI) B. Who is next in line? 3rd Party? Grantor? (if 3rd party then Executory Interest) (if the grantor, then Reversion, Possibility of Reverter, or Right of Entry) C. Then Figure Out who has the Future Interest 1. Remainder waits patiently for the natural termination of the preceding estate 2. Executory interests either divests the prior estate (shifting) or springs out of the grantor’s interest (springing); but in both cases it cuts short the prior estate 3. Reversions usually follows the natural termination of the prior estate 4. Possibility of Reverter does not cut short the preceding estate, it succeeds it 5. Right of Reentry, like executroy interest, divests the preceding estate D. Then Determine Whether the Future Interest is Vested or Contingent 1. LOOK AT THE WORDS BETWEEN THE COMMAS a. Condition precedent comes between the commas i. ―To A for life, then to B if B survives A, and if B does not survive, to C‖ b. Condition Subsequent divests a vested interest i. ―To A for life, then to B, but if B does not survive A, to C‖ 2. Contingent Remainder is given to a person that is either unascertained or is subject to a condition precedent 3. Vested Remainder is given to a person that is ascertained and is not subject to any condition precedent B. Future Interest in Transferor A. Reversions 1. a reversion is a future interest left in the grantor after the grantor conveys a vested estate of a lesser quantum than he has 2. O, owning Blackacre in fee simple conveys Blackacre ―to A for life‖; O retains a reversion and when A dies Blackacre will revert to O 3. all reversions are vested 4. a reversion is fully transferable both inter vivos and by way of testate or intestate succession B. Possibility of Reverter 1. a possibility of reverter arises when a grantor carves out of her estate a determinable estate of the same quantum. In almost all cases it follows a FSD 2. O conveys Blackacre ―to Board of Education so long as Blackacre is used for school purposes‖; Board of Education has a determinable fee and O has a possibility of reverter 3. CANNOT be created in a grantee 4. in most jurisdictions, the possibility of reverter is freely alienable both during life and by will C. Right of Entry 1. a right of entry is retained when the grantor creates an estate subject to condition subsequent and retains the power to cut short the estate 2. O conveys Blackacre ―to Board of education, but if the Board ceases to use Blackacre for school purposes, O retains the right to reenter‖; Board of Education has a FSCS and O has a right of entry 3. in some states the right of entry is now alienable; in others, it is inalienable inter vivos but could be released to the owner of the fee simple and it was inheritable by the heirs of the grantor C. Future Interest in Transferees A. Remainders (must follow a life estate) 1. when in doubt, make it a VR; construe the divesting condition as narrowly as possible 2. Vested Remainders a. CAN ACCELERATE b. Vested Remainder Subject to Open i. This means that the remainder is vested in a class of persons, at least one of whom is qualified to take possession, but the shares of the class members are not yet fixed because more persons can subsequently become member of the class ii. O conveys ―To A for life, then to A’s children‖ At time A has one child B. B has VR subject to open because A can have more kids c. Vested Remainder Subject to Divestment i. O conveys ―To A for life, then to B, but if B does not survive A, to C‖ The VR in B is subject to complete divestment on the occurrence of a condition subsequent (B dying, leaving A surviving); C’s executory interest will divest B if the condition subsequent happens ii. O conveys ―To A for life, then to B for life, then to C and his heirs‖ B has a VR for life subject to total divestment if B fails to survive A. The divestment occurs because of the inherent limitation in a remainder for life: it fails if it does not become possessory within the life tenant’s life. C has an indefeasibly VR in fee simple d. VR Subject to Open & to Complete Divestment i. ―To A for life, then to the children of A, but if no child survives A, to B‖ A who is living has a child, C. C has a vested remainder remainder subject to open because A can have more kids and it is also a vested remainder subject to complete divestment if A leaves no children surviving him (i.e. C and any other children of A die before A) e. Are alienable inter vivos and devisable by will; they descend to heirs if not otherwise disposed of 3. Contingent Remainders a. Unascertained persons (remember you cannot have heirs until you die) i. ―To A for life, then to A’s kids‖ At time of conveyance, A has no kids so the remainder is contingent b. Subject to a condition precedent i. ―To A for life, then to B if B marries C‖ B’s remainder is expressly contingent upon marrying C ii. Keep in mind, if the conditional element is incorporated into the description of, or into the gift to the person taking the remainder, then the remainder is contingent; but if, after words giving a vested interest, a clause is added divesting it, the remainder is vested subject to complete divestment c. Whenever there is a contingent remainder in fee simple, the grantor maintains a reversion d. Are alienable inter vivos or when survivorship is not a condition precedent, devisable by will B. Executory Interests (can only follow any of the fee simples) 1. Represented by language ―To A and his heirs, but if the land is not used as a library during the next 20 years, to B‖; here, B has an executory interest a. Also indicated by ―To A and his heirs for so long as…and if not…, to B‖ 2. Duration will last as long as condition is met and then to 3rd party OR until happening of event 2. Two Types a. Springing: a springing EI is a future interest that springs out of the grantor at a date subsequent to the granting of the interest, divesting the grantor i. O conveys ―To A and her heirs if A quits smoking‖ A has a springing EI. It will divest the FSA of O, the grantor, if it becomes possessory b. Shifting: a shifting EI is a future interest in a grantee that divests a preceding estate in another grantee prior to its natural termination i. O conveys ―To A and his heirs, but if B returns from Rome, to B and his heirs‖ A has a FSEI. B has an EI; once B returns B divests A. D. The Trust A. Definition 1. a trust is a fiduciary relationship with respect to property in which one person, the trustee, holds the legal title to property subject to equitable rights in beneficiaries 2. net income is paid to the beneficiaries and upon termination the beneficiaries get the assets as they exist 3. Avoids probate 4. eases maintenance B. The Trustee 1. any person with legal capacity can be a trustee 2. the trustee is entitled to a fee for managing the trust property 3. typically has broad powers of management; can sell the trust assests and invest the proceeds in other assets; can give leases and mortgages on real property V. 4. personally liable; owes undivided loyalty and must invest prudently 5. must act impartially between the trust’s income beneficiary (interested in high income) and the remaindermen (interested in the growth of capitol) C. Swanson 1. ―to my wife G for life, then as she may appoint by will. If she doesn’t appoint, then to my 9 kids equally, but if any child predeceases G, share of the deceased child goes to his or her surviving issue‖ Bernie (one kid) then predeceases G 2. G=LE, 9 kids=VR subject to complete divestment, Bernie’s Kid=EI 3. But, if Bernie had no kids and leaves only his wife it still DOES NOT divest and Bernie can will it away to his wife Co-Ownership & Marital Interests A. Common Law Concurrent Interests A. Types, Characteristics, Creation 1. Tenancy in Common (Default Tenancy) a. Two or more persons own the property (―To A + B‖) b. NO right of survivorship c. When one T in C dies, her interest passes to her heirs or devisees d. Each tenant has the right to possess and enjoy the entire property all the time; ONLY unity of possession is necessary e. Equal shares are presumed but NOT necessary f. Separate yet undivided interests in the property; the interest of each is descendible and may be conveyed by deed or will g. A T in C can sell, give, devise, or otherwise dispose of her undivided share in the same manner as if she were the sole owner of the property h. If the tenants cannot agree they may seek a partition (in kind or sale) from the courts i. Is part of the probate estate at death 2. Joint Tenancy a. Two or more persons own property b. With the Right of Survivorship; when one JT dies the survivor takes it all c. Express words are needed to establish the JT (―To A + B as Joint Tenants and not as Tenants in Common‖) d. All 4 Unities required and must be created simultaneously d1. Time 1d. the interest of each joint tenant must be acquired or vest at the same time d2. Title 2d. all joint tenants must acquire title by the same instrument or by joint adverse possession d3. Interest 3d. all must have equal undivided shares and identical interests measured by duration d4. Possession 4d. each must have a right to possession of the whole; after the joint tenancy is created, however, one joint tenant can voluntarily give exclusive possession to another joint tenant e. a tenant can convey his interest to a 3rd party, which severs the JT as between the 3rd party and his cotenants f. if a JT is is severed it turns into a T in C; this can be done by mutual agreement, destroying one of the four unities g. if JT’s cannot agree, they may ask the courts to partition (in kind or sale) h. JT’s can agree among themselves that one tenant has the right to exclusive possession—this does not sever the JT i. JT’s cannot pass on interest through a will j. divorce does not sever k. murder does sever l. Avoids probate because no interest passes on the JT’s death m. If a creditor acts during JT’s life, the creditor can seize and sell the JT’s interest in the property severing the JT. However, if the creditor waits until after the JT’s death, the decedent’s JT’s interest has disappeared and there is nothing the creditor can seize 3. Tenancy by the Entirety a. Exists only between Husband and Wife (―To Husband and Wife‖) b. Right of Survivorship CANNOT be severed without the consent of both parties c. All four unities required (time, title, possession and interest) [they must be created simultaneously] as well as Marriage (except Hawaii) d. Neither tenant by acting alone can do anything to destroy the right of survivorship e. Neither spouse can convey separately; NO unilateral conveyance f. Innocent Owner – any interest in the property of an innocent owner is exempt from forfeiture g. Divorce terminates tenancy by the entirety h. Not part of probate estate at death B. Severance of Joint Tenancies 1. How can a JT be Severed? (to sever must convey title to someone) a. Partition in kind or sale b. Simultaneous death and/or homicide B1. one half will go to each JT’s estate c. One JT conveys his share to a Strawman who returns the conveyance rendering a T in C; no notice is required d. One JT conveys his share to a third person e. One JT conveys his share to himself (Riddle – minority rule says you can unilaterally sever JT absent notice so long as you record the deed; if you don’t record the deed, the severance is binding on you but not the other JT 2. Rules a. An indisputable right of each JT is the power to convey his or her separate estate by way of gift or otherwise without the knowledge or consent of the other JT; thereby terminating the JT. Majority rule is that no notice is required b. CANNOT will away a JT c. The voluntary or involuntary destruction of any of the unities by one of the JT’s will sever the JT d. An inherent feature of the JT is the right of survivorship, which is the right of the last survivor to take the whole of the estate e. Lien Theory (Majority) – a JT is NOT severed when one JT executes a mortgage on his interest in the property since the unity of title has been preserved (Sprague – whole property was attached so lien did not sever the JT) f. Title Theory (Minority) – since a mortgage by the JT conveys a legal title of the JT, the mortgage destroys the unity of interest and severs the JT; it cant be revived by the mortgagor’s paying off the mortgage 3. What DOES NOT sever a JT? a. Mortgage according to the majority lien theory; if one JT puts a mortgage on the property and then dies, tough luck for the creditor; the lien attaches to the entire JT b. Term of years c. Contract to sever (Divorce) C. Joint Tenancy Bank Accounts 1. During the lifetime of the parties the presumption is that the joint account belongs to the parties in proportion to the net contribution of each party 2. Three types (assume O puts in $1000 for O and A) a. True Joint tenancy – O intends to make a present gift to A of ½ the sum deposited in addition to survivorship rights to the whole on deposit; A can withdraw all the money while O is alive a1. surviving joint tenant takes the sum remaining on deposit in a joint account unless there is clear and convincing evidence that a convenience account was intended. The burden of proof is on the party challenging the surviving joint tenant b. Payable on Death – O intends to make a gift to A only of survivorship rights c. Convenience – O may intend for A to have the ability to draw from the account to pay O’s bills (like power of attorney) and not to have survivorship rights 3. Safety Deposit Boxes a. not a joint tenancy with the right of survivorship; it only means that both can access the box 4. Creditors can reach the amount contributed D. Relations Among Concurrent Owners 1. each tenant owns an equal interest in all of the fee and each has an equal right of possession to the whole 2. by definition, each tenant is entitled to possession of the entire parcel of land yet he cannot exercise that possession without coming into conflict with the reciprocal right of his cotenant 3. Partition (2 Kinds) (this action is available to any joint tenant or tenant in common; it is not available for tenancy by entirety) (severs the JT) a. Partition in Kind – where the property is physically divided; time can also be divided here (Delfino – trial court erred when it ordered partition in sale, should have ordered partition in kind) b. Partition by Sale – where the property is sold and the proceeds are divided b1. Should only be ordered when: 1b. the physical attributes of the land are such that a partition in kind is inequitable or impracticable OR 1b. the interests of the owners would be better promoted by a sale;burden is on the party requesting partition by sale to demonstrate that such a sale would better promote the owner’s interests c. Owlty payments are made when you cannot partition the property equally d. Generally, agreements not to partition the land are taboo; we want the land to be alienable (free to transfer inter vivos). Courts will not uphold open ended agreements but are more likely to accept specific agreements 4. Sharing Benefits and Burdens of Co-Ownership a. Concurrent owners might enter in to an agreement concerning their rights and duties with respect to use, maintenance and improvement of the property; if prior agreement has not been established, the court has a series of default rules b. Rules b1. a cotenant in possession is NOT liable to his cotenants for the value of his use and occupation of the property UNLESS: 1b. the tenant using the property has ousted (refused entry, denied keys) the cotenant seeking to collect the rent (Spiller – tenant moves out, spiller moves his stuff in to use it as a warehouse, his cotenant Δ never tries to possess the property just asks him to leave or pay; court holds for Spiller) OR 1b. there was a prior agreement 1b. minority would reward rent b2. a cotenant CAN demand ½ of the rent from a third party lesee; however, the cotenant CANNOT evict the 3rd party because the leasor had a right to give his share of the property to someone else through the lease (Sampson – H+W own property as JT w/right of survivorship, H leases land for cheap to be used as boxing arena; W can make H pay her ½ the rent or she can partition taking her ½ and renting it out for more or W can get T to oust her and demand ½ FMV of rent) b3. Each JT during the existence of the joint estate, has the right to convey, mortgage or subject to a mechanic’s lien an equal share of the joint property b4. one cotenant can rent the entire premises to a 3rd party 5. Suit for Accounting a. Accounting: An equitable action in which one cotenant seeks to have another state the net income, profits or rents for the property and give the asking cotenant his or her share A1. The process 1a. its a judicial procedure to get: - rents from a 3rd party - profits - necessary repairs - taxes and mortgages a2. When trying to make profit from the land, if one cotenant profits, they all profit absent an agreement to the contrary 2a. if it is waste? The cotenant is liable for half of the property you destroyed regardless of what you got 2a. Crops depleting the soil or minerals extracted from it may be subjected to an accounting unless the crop or mineral extraction was customary at the time the tenancy was created b. Contribution: an action in which a cotenant seeks reimbursement from his fellow cotenants for expenses in repairing, maintaining or operating the property. Real property taxes, mortgage payments, repair costs, and insurance premiuims are examples of expenses subject to contribution. b1. Generally, each cotenant has to pay his share of the taxes/mortgages/expenses b2. However, if one cotenant is in sole possession and has paid taxes, he won’t be able to get reimbursement from the other cotenants b3. Generally, one cotenant does not have to pay for improvements made by another cotenant b4. However, if the property is partitioned either in sale or in kind, the party who made the improvements should get the improvements as part of his section or should get extra money from the sale 4b. the improver gets the value of the improvement upon sale not the cost of the improvement; so if it costs 50,000 to renovate the bathroom but only raises the value by 45,000, then they only get 45,000 B. Common Law Marital Property System (Separate) A. CL Marital Property System (40 states) 1. married woman to be supported for her entire life but was not entitled to ownership; W dependent on H 2. at time of marriage, W moved under cover (femme covert) of H; then in 1839, this statute was removed and W gained control over all her property; her separate property was immune form H’s creditors and W also gained control of her earnings 3. 25/40 states allow T by E (need the 4 unities plus marriage); they are trying to encourage the earner to put title in both spouse’s names. The benefit here is that the creditor of one spouse cannot reach that property. The cost you pay here though is that one spouse CANNOT sever T by E so once it’s in, it’s in. Therefore, One spouse cannot sever/convey and the estate is not subject to separate debts of the spouses (Sawada) 4. When the government goes after a forfeiture action, they essentially get a contingent remainder. The government can step in as the other ½ in a T by E. But, if the person whose interest they are assuming dies first, then they get nothing (1500 Lincoln Ave – H being shady, govt seizes property under forfeiture but W was innocent; Court couldn’t sever the T by E only death or divorce could) B. Termination of Marriage by Divorce 1. at CL, each party took what he or she contributed to the marriage 2. Property now divided through Equitable Distribution 3. Alimony is support for a limited period of time until the spouse can enter the job market and become self sufficient 4. Division of Property a. Divide up anything and everything that each spouse has a legally recognized ownership interest in (Graham) b. mba DOES NOT equal property (Graham) c. percentage of future earnings can be divided if one spouse has contributed to the earning potential of another (Elkus – husband coach of wife d. reimbursement alimony – supporting spouse reimbursed for financial contributions made to other spouse’s successful professional training (Mahoney) e. professional goodwill (reputation in community) of 1 spouse’s practice, based on past track record, constitutes marital property and is divisible C. Community Property System A. Generals 1. minority of states follow this system 2. fundamental idea is that earnings of each spouse during the marriage should be owned equally in undivided shares by both spouses 3. separate property is property acquired before marriage and property acquired during marriage by gift, devisee or descent 4. If divorce, some courts require equal division of community property; others, will leave it up to the courts 5. no community property state recognizes T by E 6. community property can only exist between husband and wife 7. spouse needs consent of other to convey his/her undivided ½ share of the community property UNLESS conveying to other spouse; one spouse CANNOT convey inter vivos 8. each spouse has the power to dispose by will of ½ the community property at death 9. No survivorship feature 10. tax advantage 11. creditors can get to property 12. there is such a thing as Joint Tenancy in Community Prop. B. Step Up on Death (Tax Payments) 1. Separate Property a. H + W buy stock for $100,000; so each contributes $50,000 and they hold the property as JT with right of survivorship. 10 years later, H dies and stock is worth $150,000. W now owns it all but only H’s half steps up. The previous basis was the purchase price ($100,000) but now since his half steps up, W’s new basis is $125,000. So if she sells it 5 years VI. later for $200,000, W must pay taxes on $75,000 (200,000 – 125,000) 2. Community Property (both halves step-up) a. H + W buy stock for $100,000; When H dies 10 years later, stock is worth $150,000. W now owns it all and both sides step up. The previous basis was the purchase price of $100,000 but now W’s new basis is $150,000. So if she sells it 5 years later for $200,000, W must pay taxes on $50,000 (200,000 – 150,000) Landlord/Tenant A. Leasehold Estates A. Term of Years 1. set for a fixed period of time that has a computable start and end date, but can be terminated earlier upon the happening of some event or condition 2. death of LL or T has no effect 3. No notice is required 4. it can be assigned unless an express clause in lease forbids it B. Periodic Tenancy 1. period to period (month to month, year to year) 2. rolls over on the same terms unless notice of termination is given (if terms are longer than 1 year cannot rollover without a writing due to SoF) 3. death of LL or T has no effect 4. Majority rule is that 30 days notice to terminate is necessary C. Tenancy at Will 1. no stated duration; can end whenever T or LL decides to terminate 2. ends at death of either LL or T, personal to the 2 parties making it 3. doesn’t survive change in 4. Notice required 5. ½ Tenancy at Will (Garner – life estate terminable at the will of the tenant) a. same as determinable life estate; the majority rule is that it is ok for the T to have the right to terminate unilaterally but not the LL D. Tenancy at Sufferance 1. tenant remains after the end of tenancy; tenant remains in possession/holds over after termination of tenancy (no holdover if stuff is left behind or if a sick person must stay) 2. LL has 2 options (Once LL picks one, he is stuck with it) a. Evict and sue for damages b. Elect to hold him to a new term governed by same provisions of the lease (no increases in rent allowed) which is NO longer than 1 year although month to month is preferred by modern courts c. (Smith – since LL accepted rent, stuck to new term) B. The Lease A. Lease 1. a lease is a contract for exclusive possession of the land (ex. Crop farming 2. most leases are a term of years or a periodic tenancy; therefore, they generally cannot be terminated at any time 3. can be assigned to anyone typically 4. SoF applies here B. Factors in Cosidering Whether a Lease or not 1. intent of the parties 2. how broad and exclusive is possession 3. rent 4. restrictions 5. services C. Easement/License 1. a right to use the land, but owner can still use the land so long as his use is not incompatible with licensee (ex. Billboards, cosmetic concession) 2. generally, these can be terminated at any time C. Selection of Tenants A. General Rule 1. CAN discriminate unless person fits into one of the specified categories in the statute B. Fair Housing Act 1. CANNOT discriminate based on race, color, sex, national origin, religion, disability or familial status (parent w/kid < 18) 2. Prima Facie Case (Burden on π to show) a. That he is member of a protected calss/status b. He is a qualified renter c. Was denied d. At this point, burden shifts to Δ to show: D1. evidence that proves that the refusal to rent was motivated by legitimate considerations having nothing to do with the π’s race, religion, ethnic origin, sex, disability or family status e. Then the burden shifts back to π to show: e1. the alleged reasons are pretextual 3. CANNOT discriminate in ads (no exceptions) 4. Exceptions a. Single Family Home (aperson leasing or selling a dwelling she owns is exempt if a1. she does not own more than 3 such dwellings a2. does not use a broker a3. does not advertise in a manner that indicates her intent to discriminate b. Mrs. Murphy/Small owner-occupied multiple unit b1. a person is exempt if she is offering to lease a room or an apartment in her building of four units or less, one unit of which she occupies and she does not advertise in a discriminatory manner C. 1866 Civil Rights Act 1. NOT applicable to ads 2. must prove discriminatory intent 3. applies to race ONLY 4. no exemptions for private owners D. Soules 1. In this case, the rule teaches us that in determining whether an ad or statement indicates impermissible racial discrimination, we ask whether ―an ad for housing suggests to an ordinary listener/reader that a particular race is preferred or dispreferred for the housing in question; the ordinary listener is neither the most suspicious nor the most insensitive of our citizenry‖ D. Delivery of Possession A. Majority/English Rule 1. implied promise on behalf of LL to give tenant possession on first day of lease 2. Remedies a. T can terminate leases and recover damages b. T can affirm lease, refuse to pay a portion of the rent and sure for damages B. American Rule (Hannan) 1. it is the T’s issue; NO duty on behalf of LL 2. Remedies a. T can sue for eviction and recover damages b. T’s remedies are against the person in wrongful possession E. The Tenant who Defaults A. The Tenant in Possession 1. Self Help (Berg – lady opens restaurant, in violation of health code, remodeling against express consent of lease; LL tries to reenter and court holds self help not peaceable here) a. Majority – allowed if (1) LL has a legal right to possession when T is holding over or T breaches a lease containing a reentry clause AND (2) LL’s exercises this right peaceably b. Minority/Modern – LL has to resort to the courts to reenter; NO self help allowed B. The Tenant who has Abandoned Possession (Sommer) 1. Mitigate Damages (see section later) C. The Tenant who Surrenders Possession 1. Surrender = here are the keys, I’m out of here 2. if LL accepts surrender, it terminates the lease F. Duties, Rights & Responsibilities A. Landlord’s Duties 1. Old Common Law a. LL has NO duty to repair; T takes premises as is 2. Quiet Enjoyment a. A tenant has the right of quiet enjoyment of the premises, without interference by LL b. This right need not be express in every lease; it is implied c. Any act or omission of the landlord the renders the premises substantially unsuitable for purposes of which they are leased or seriously interferes with T’s beneficial enjoyment (Reste Realty – drive was a common area, kept draining into leased portion, rendered it unsuitable for use) d. Violation of enjoyment is permanent (regular and serious) and is a consistent occurrence e. If LL breaches this covenant by ousting or evicting T, T’s duty to pay LL rent ceases f. 3 Remedies f1. Constructive Eviction – T abandons and terminates the lease due to LL’s failure to act/fix problem within a reasonable time and sues for damages (Reste Realty) f2. Stay put and Sue for damages 2f. if T stays though he may be declared to have waived his right to constructive eviction if a reasonable amount of time passes f3. Partial Eviction 3f. Actual – eviction by LL from part of premises Majority – T owes nothing Restement – T owes 1/2 3f. Constructive – where T cannot use premises because of specific reason T can sue for damages 3. Implied Warranty of Habitability a. LL agrees to provide habitable premises and T agrees to pay b. CANNOT be waived by T c. Looks for serious defects/problems that pose a serious risk to health or safety although loud noise can violate it d. Remedy Steps a1. discover defect a2. notify landlord a3. give landlord a reasonable time to fix a4. if fixed its over; if not fixed: 4a. Recission – ends contract, lease over; acts like constructive eviction, T moves out and sues for damages 4a. Reforming Contract – T stays in possession but withholds entire rent, LL will sue T and court will order T to pay reasonable value can sue to get money back, revalue the apartment at fair market value 4a. Punitive Damages ( if breach is willful or fraudulent) 4a. Damages for Discomfort and Annoyance 4a. Repair damages and deduct expense from rent payment e. Applies only to residential leases; covers all latent and patent defects in the essential facilities of the residential unit f. Disadvantages f1. drives up prices of housing f2. applies only to residential leases g. Hilder 4. Duty to Mitigate Damages (Sommer) a. Common Law a1. LL has NO duty to mitigate if T abandons b. Majority/Modern Rule b1. LL has a duty to make reasonable attempts to mitigate his damages; thereby, putting the property back into his vacant stock and attempting to re-let it b2. Typically, should place ads more than once, and should show the apartment to others looking b3. T has burden of proof to show that LL made good faith efforts b4. LL can recover his attempts to re-let the premises from T c. Minority Rule c1. LL has burden of proof to show his due diligence in his efforts to re-let d. Monetary Concerns d1. if LL re-lets the apartment for less than the original lease, LL can recover the difference from T d2. if LL re-lets for more than the original lease 2d. some jurisdictions say LL keeps difference 2d. other jurisdictions say T gets difference or gets a credit against what he owes d3. if LL finds new tenant or should have found new tenant and new tenant paying same as old one, old T owes nothing d4. if LL makes reasonable efforts to re-let and fails to do so, T owes the balance d5. If LL makes no effort to re-let, 4d. some courts say LL gets nothing 4d. Some courts say take what T would have owed an subtract it from what a new T would have paid d6. If LL cannot re-let the apartment due to breach because he doesn’t mitigate his damages and T has breached too, LL gets NO future rents from T 5. Retaliatory Eviction a. Claim triggered by: a1. T makes a good faith complaint a2. LL evicts, raises rent or cuts services within 90-180 days a3. there’s a presumption of retaliation against LL within a few days after T makes his good faith complaint; thereafter, T must prove it’s a retalition 6. Landlord’s Tort Liability a. General Rule – LL not liable for tortuous acts of third party b. Exceptions b1. LL has a duty to maintain common areas throughout the tenancy b2. LL has duty to repair latent defects, those that exist at the outset that LL either knew of or should have known of and that T doesn’t b3. LL knows premises open to use of the public (has to be unreasonably dangerous) B. Tenant’s Duties 1. Waste a. T CANNOT commit waste a1. Affirmative Waste – T does something and it lowers the value a2. Permissive Waste – T doesn’t do maintenance and it lowers the value b. the shorter the lease, the greater the expectancy for LL to receive the property just as it was given c. in commercial lease, T has to make minor repairs to avoid permissive waste 2. Fixtures a. T CANNOT remove fixtures; even ones that T puts in b. Fixture – something originally moveable but is now annexed to the land c. Can it be removed without anyone telling/knowing? G. Problem of Affordable Housing A. It’s a problem