Property Outline Connie

Property Outline I. Acquisition of Wild Animals- Pierson v. Post A. Ways to Establish Prop. Rights in a Wild Animal 1. Rationi soli a. owner of the real property has constructive possession of all wild animals on one’s property 2. Animus Revertendi a. one who tames a wild animal has constructive possession of the animal even when the animal is not in the person’s actual possession or on the person’s real property 3. Occupancy a. Elements 1) intent to appropriate the animal to individual use 2) deprives the animal of its natural liberty, and 3) brings the animal under certain control. b. Once a wild animal has been occupied, if the animal escapes, the party having occupancy of the animal does not lose his property claim to the animal until the animal returns to its natural habitat. B. Ordinarily, rationi soli will trump occupancy so as to deter trespass, at least where the party claiming occupancy is a trespasser. C. First in time, first in right 1. the first to acquire a property interest will trump a subsequent party’s property claim to the same thing. D. Jus Tertii Defense 1. possessor has superior rights to everyone except the true owner. E. Constructive possession 1. when a person does not have actual possession, but has the power to control an asset, he/she has constructive possession II. Acquisition of Intellectual Property A. There is no property interest in a design or idea, only physical object (Cheney Brothers) [A man’s property is limited to the chattels which embody his invention] B. Distinction between Cheney & INS 1. In Cheney, designer had time to profit from design. In INS, INS was not allowing AP the opportunity to reap the benefits of their labor (Labor Principle). C. Where there is deception [misrepresentation as in Bette Middler p. 77], it is unfair competition, but where there is open knowledge that one is imitating, that is fair competition. D. Intellectual property is to give people incentive to invest the labor to make ideas, music, etc.. (Copyright and trademark) III. Property over Body Parts A. Moore v. Regents of the University of California 1. Conversion requires strict liability, all subsequent parties would be liable. 2. Ct. didn’t want to set that precedent IV. Trespass to Land A. General Rule 1. Private landowner can exclude others from his land B. Exception- Title to real property cannot include dominion over the destiny of persons the owner permits to come upon the premises. Their well-being must remain the paramount concern of a system of law. 1. Once you allow the migrants to occupy your land, your property rights to the land are diminished/limited. Property rights are relative. 1 V. Finders’ Rights A. 2 Key Variables 1. how the property is characterized (lost, mislaid, abandoned, or treasure trove, and 2. where the object is found (private property vs. public property) B. Characterization of the Property 1. depends on the true owner’s intent when he relinquished the item. The state of mind is the owner’s probable state of mind under the circumstances. 2. Categories a. Lost 1) if the true owner unintentionally relinquished possession of the item. 2) Finder is entitled to possession against all but true owner. b. Mislaid 1) if the true owner intentionally relinquished possession of the item w/ the intent of returning and repossessing it later, but then forgot to return and pick it up 2) The owner of the premises is entitled to possession against all but the true owner b/c the true owner will most likely retrace his steps starting with the place he last saw it. c. Abandoned 1) if the owner intentionally relinquished possession (and title) of the item w/ no intent to ever repossess the item. 2) Finder obtains both possession and title if he exercises control over the property w/intent to assert ownership. d. Treasure Trove 1) if the item is gold, silver, or bullion and the owner intentionally hid the item underground intending to return later to reclaim it (though nowadays it needn’t be buried underground to qualify) 2) Belongs to finder if found on public property, landowner if found on private property 3. Private property which is open to the public generally is considered public property for the purposes of the law of finders. a. Items found on private property, not opened to the public, goes to the landowner in order to deter trespass. 4. Public policy promotes maximizing the possibility of the item being returned to the original owner. 5. Finder v. Owner of Premises a. When finder claims on object found on owner’s premises that does not belong to the owner. The owner will claim some type of constructive possession. Who prevails? 1) If the finder is a trespasser, owner prevails to deter trespass. 2) If the finder is an employee, the landowner is the employer and the employee is acting for the employer and cannot keep the object. 3) If the finder is there for a limited purpose, the owner gave permission to enter only for a limited purpose , under the direction of the owner, and owner is entitled to objects found. 4) If an object is found under or embedded in soil, it is awarded to the owner of the premises b/c they have expectations and think these objects are part of the land. Exception is if it is treasure trove. 5) If an object is found in a private home, it is awarded to the owner of the home. Landowner has expectation that the things inside his home belong to him. 6) Even if an item is stolen or the prior possessor is a trespasser, the prior possessor wins rule applies to objects acquired by theft or trespass over all but the true owner. 6. Tenants’ Rights a. The tenants’ legal right to possession does not include the right to remove valuable items from the property. 2 7. As to claims based solely on possession (i.e. no title), the key principle is first in time, first in right. 8. Possession for all purposes is equivalent to title unless superior title can be proven, b/c otherwise people have an incentive to lie about how possession was initially obtained. 9. A thief never passes a good title, but an agent can 10. Law of Subrogation a. If the true owner sues the 3rd party, rather than the 2nd party, and wins then the 3rd party becomes the true owner and can turn around and sue the 2nd party? Yes. 11. Bailment a. Rightful owner puts property in bailee’s possession and the bailee is to deliver the property to the bailor on demand or as agreed b. If someone borrows something and breaks it, is he liable? 1) Yes, b/c the act was for the bailee’s benefit. c. If someone is holding something for someone else and a 3rd party steals it, is the bailee liable to the bailor? 1) Not unless there was gross negligence. a) if the act is for the bailor’s benefit, the bailee owes only slight care b) if the act is for the bailee’s benefit, bailee owes extraordinary care c) if the act is for both the bailor and the bailee’s benefit, bailee owes ordinary care d. Strict liability applies when there is misdelivery of a bailment. 12. Finder can have rights over lost property on private property if the trespass is minimus. (However, gray area is what is considered severe trespass and what is trespass minimus.) 13. Society finds that if you give public notice, finder can receive true ownership over everyone, b/c the item becomes abandoned. Also, b/c society wants the item back into circulation, maximizing its efficiency. (Constructive Abandonment) FUN WITH FINDERS! Lost Unintentionally left, desires return F’s rights prevail (Want to give F incentive to come forward with find in order to maximize true owner’s chances to recover) Mislaid Intentionally left, desires return LO’s rights prevail if land is publicly used land on privately owned property (Want to maximize true owner’s chances of recovering); F’s rights prevail if the land is truly public land (e.g. beach) Abandoned Intentionally left by owner, does not desire return F’s rights prevail (No one w/superior claim) Treasure Trove Hidden or Buried Money or Bullion; Intentionally left, desires return Common Law: King Public Modern Trend: On Public, Public land, F’s rights; On public/private land, LO (Prop. Owner)’s rights prevail 3 Private (LO has expectation of rights on private property) On Surface: LO’s rights prevail, unless F is under trespass of minumus (minimal, inconsequential trespass), but it is questionable If finder is agent, goes to LO Embedded LO’s rights prevail (deter trespass) LO’s rights prevail (Want to maximize true owner’s chances of recovering) On Surface: LO’s rights prevail, unless F is under trespass of minumus (minimal, inconsequential trespass), questionable If finder is agent, goes to LO Embedded: LO’s rights prevail (Deter trespass) Common Law: King Modern Trend: LO’s rights prevail (Deter trespass) *Except with abandoned property, true owner has superior claim over finder or land owner. VI. Adverse Possession A. Elements (Lead w/ the penalty approach when defining the elements) 1. Actual Entry 2. Exclusive Possession a. act like an owner would (i.e. fence) 3. Open and Notorious a. In Lutz, open & notorious was defined as substantial enclosure or usually cultivated or improved. b. Must be open and notorious to give true owner “constructive notice” to take legal action 1) Penalty Approach 4. Adverse/Hostile a. when determining whether or not possession is adverse, consider first from true owner’s perspective (Was possession subservient?) b. Penalty approach does not qualify de minimus encroachments because it is not enough for true owner to be notified. 1) Encroachment is when something is slightly on someone else’s land, but mostly on one’s own land. c. Most jurisdictions do not require notice under expectations approach. 5. Claim of Title/Right a. focuses on the adverse possessor’s actions and/or state of mind b. Majority Approach (Penalty Approach) 1) objective approach, state of mind is irrelevant c. Minority Approach (Earnings Approach) 1) subjective approach 2) some jurisdictions require good faith, others require bad faith 6. Continuous for the Statutory Period B. Operates like a statute of limitations, cutting off the true owner’s cause of action for ejectment 1. Statutory Period begins to run when all 6 elements are satisfied and must maintain through the whole period. 2. Upon completion, AP gains the same title as the owner at the time the statute began to run. C. Different Approaches 1. Earnings/Expectations Approach a. Adverse possessor is rewarded for putting the land into use and he has the expectations of using it. 2. Penalty/Statute of Limitations Approach a. The true owner is punished and penalized for neglecting his rights to use the land and bringing up the cause of action of trespass against ∆. 3. Minority View 4 a. Adverse possession forces the administrative “cleaning up” of titles. b. Adverse possessor is a thief, but there must be a statute of limitations on it. 5 Earnings/Expectations Rationale Actual Entry Use of the property, must physically enter Act like TO; If exclusive, AP begins expectations Treat the property as if it is yours, act like TO Subservient to the TO, use the permission test Focus on AP’s state of mind; subjective test; good faith or bad faith? During the stat. period, the AP’s expectations grow Penalty/Statute of Limitations Rationale Use of the property, must physically enter ; Entry triggers the statute of limitations to run Easier for TO to identify AP Serves as constructive notice to TO Subservient to the TO, use the permission test Focus on TO, do not care about AP’s intent, so if other elements are satisfied, so is claim of right period of time increases TO’s opportunity to discover the adverse possession Exclusive Possession Open & Notorious Adverse/Hostile (did TO give consent) Under Claim of Right Continue for Statutory Period D. Characteristics 1. AP has superior right over anyone except for true owner under first in time, first in right. 2. Adverse possessor must occupy the property as an ordinary landowner would occupy the property. Inasmuch as ordinary property owners may lease their property, so too may adverse possessors. Since the tenant possesses the property subservient to the adverse possessor, the adverse possessor receives credit for the tenant’s possession. 3. Unless under color of title, title will only be over land in actual possession. 4. Once title is received, the ownership is credited back to the day after the AP begins E. Color of Title 1. a claim of adverse possession based upon a faulty written instrument which purports to transfer title 2. ordinarily entitles the adverse possessor to not only the land actually possessed, but also the land constructively possessed under the terms of the written instrument 3. The constructive possession, however, is limited to contiguous (side by side) lots which are owned by the same owner. 4. The transfer of real property does not require consideration. To voluntarily transfer something of property interest, there must be a writing signed by the party to be charged. It must identify the grantor, the grantee, and signed by the party to be bound. F. Privity 1. Earnings/Expectations Theory (American Approach) a. Tacking is only allowed with privity, a voluntary transfer or some meeting of the minds b. The adverse possessor has to earn the right to tack or reasonably be entitled to expect to tack. 2. Penalty/Statute of Limitations Approach (English) a. Tacking is allowed as long as there is no significant temporal gap in possession between successive adverse possessors. b. As long as there is no gap, the true owner has notice of the claim of adverse possession. 6 G. Disability Doctrine 1. Requirements a. qualifying disabilities which (Insane, Minor, Imprisoned) b. the party who has the right to possession has c. at the time the adverse possession begins 2. Qualifying disabilities which arise after the adverse possession began do not affect the running of the statute of limitations. Transfers of title which occur after the adverse possession began do not affect the statute of limitations, even if the new owner or new party with the right to possession suffers from a qualifying disability.” 3. Can be used only to extend the time period within which the party may bring cause of action 4. Always start from the beginning of the AP and determine date w/o disability. H. Boundary Dispute Arguments Doctrines 1. Agreed Boundaries a. Can gain title by oral agreement b. Exception to Statute of Frauds 2. Acquiescence a. If a party’s conduct is reflecting the intention for a long time, party can claim it through an implied agreement (Most in line with the Expectations Approach) 3. Estoppel a. reliance when one party makes representations or engages in conduct that tends to indicate the location of a common boundary, the other party is estopped from changing his position or denying the validity of the relying party’s statements or acts reliance on the representations or conduct I. Encroachments & Improvements 1. If the building extends onto the other lot, it is an encroachment; if it entirely on the other lot, it is an improvement. 2. If an adverse possessor builds an encroachment/improvement and the true owner catches you in time, what happens to the structure? a. If it is in bad faith, the improvement or encroachment is lost, torn down. b. If it is in good faith under common law, it doesn’t matter, it can still be lost. c. In good faith, under the modern trend, if possible, the improvement can be removed. If it is not movable, can require the true owner to sell the property used to the adverse possessor. (Forced Sale) J. Adverse Possession Against the Government 1. Doctrine is that the government is the people and one cannot adversely possess the government’s land, since people have the right to use it, subserviently. 2. If the land is used in a non-governmental function, it may be an exception and subject to adverse possession, but the statutory period is longer. K. Adverse Possession of Chattels 1. Elements: Possession must be a. Hostile b. Actual c. Visible d. Exclusive e. Continuous 2. Open & visible possession of personal property may not be sufficient to put the original owner on actual or constructive notice of the identity of the possessor. 3. Four Different Approaches a. Just a straight statute from day taken b. Apply basic AP doctrine c. Consider it as personal property, apply rule to discovery and toll the statute when true owner is exercising due diligence. d. True owner has to exercise due diligence to try to discover who has the item. As long as they are exercising due diligence, the statute never runs. 4. Statute does not run until the true owner actually requests from the adverse possessor the item back and has been rejected. 7 VII. Acquisition of Gift A. Elements 1. Intent to Transfer Title a. donor must intend to give the gift in present time 2. Delivery a. must deliver in present time b. If donee is already in possession, donor is not required to have it returned and then deliver it because intent to transfer is already present. 3. Acceptance a. presumption that gift will always be accepted, unless it is rejected B. Constructive delivery 1. handing over a key or some object that will open up access to the subject matter of the gift; gives holder control over the item C. Symbolic delivery 1. handing over something symbolic of the property given 2. However, if it is possible to manually deliver the item, manual delivery is mandatory. After manual delivery, there is no preference between symbolic and constructive delivery. D. Once title is transferred, it is not revocable. 1. A check is revocable by nature so it is an exception. E. The delivery has to occur while the donor is alive and the gift would be a testamentary gift and not qualify as an ordinary gift. If donor dies before delivery, no gift. F. Gift causa mortis a. made upon the assumption by the donor that death is imminent. b. if donor doesn’t die, the gifts are automatically revoked c. gifts causa mortis have more strict restrictions than gifts inter vivos VIII. Possessory Estates A. Six Possessory Estates 1. Fee Simple Absolute (FSA) a. largest possible estate someone can own b. Words of Limitation 1. “to A and her heirs” “and its successors and its assigns”- for a business or university Fee Simple Defeasibles *who takes the future interest 2. Fee Simple Determinable (FSD) a. future interest goes to grantor; future interest is possibility of reverter (need to define duration, which will usually be FSA) b. Words of Limitation 1. “to A and her heirs [as long as, while, until, during]” 3. Fee Simple Subject to a Condition Subsequent (FSSCS) a. future interest goes to grantor, but only if O exercises his right to re-enter FSA (rights as a grantor are fully protected compared to FSD where the grantee becomes an adverse possessor) b. Words of Limitation 1. “but if/provided that/however, if…then O may re-enter and reclaim” 4. Fee Simple Subject to an Executory Limitation (FSSExLim) a. if 3rd party holds the future interest, then future interest is always an executory interest 8 Finite Estates *who takes the remainder (identifies the name of the future interest, but not the duration) *must end 5. Life Estate a. possessory interest for the life of the grantee b. Words of Limitation 1. “to A for life” 6. Fee Tail a. possessory interest held by heirs of the bloodline b. Words of Limitation 1. “to A and the heirs of her body” 7. Term of Years a. fixed duration; on the first day must be able to calculate the last day B. Terms 1. Words of purchase-designate the grantee 2. Heirs apparent- one cannot have heirs until you’re dead 3. Expectancy- heir apparent’s expectation of inheriting upon one’s death Future interest is a property interest. 4. Devisable- one dies with a will and devises property to whomever he wants 5. Intestacy- No will inheritance 6. Reversion- Goes back to grantor, almost all will be in FSA 1. If the conveyance does not state who will take the future interest, it will go to the grantor. 7. Remainder- goes to 3rd party 1. only follows an expressed life estate C. Remainders 1. Vested Remainders a. Requirements 1. born 2. ascertainable- (must be identifiable by name when the interest is created) 3. no express condition precedent in the same clause creating the remainder or the preceding clause b. condition precedent must occur before the party has the right to possession, condition subsequent qualifies the right to possession after possession has been received 1. if contingent remainder is satisfied prior to the time when the party can take possession, the remainder becomes vested c. vested remainder cannot be taken away 2. Contingent Remainders a. default remainder unless vested remainder elements are satisfied b. subject to the destructability of contingent remainders c. contingent remainder is destroyed if it is not vested prior to the time when he should be taking possession D. 3 Ways Finite Estate Can End Prematurely 1. Forfeiture- life estate terminates if the possessor violates a crime (e.g. illegal drug activities: car used in illegal activity is forfeited) 2. Renunciation- party renounces his possessory estate, all other possessory estates move up 3. Merger- when same party holds two successive vested interests merge into one possessory interest; a party can be transferred a successive vested interest and any contingent remainder is destroyed under the destructability of contingent remainders a. transfer is almost always required for a merger to take place 4. If a finite estate is ended prematurely, test the remainders. a. Have any remainders vested, if so that party with VR would receive possession E. All possessory estates are, by definition, vested. Only interests not vested are executory interests and contingent remainders. All are transferable except executory interests, contingent remainders, and right of re-entry. 9 F. Shifting Interest v. Springing Interest a. Shifting Interest 1) If the party holding the preceding estate is not the grantor, the executory interest is shifting. (Majority) b. Springing Interest 1) If the party holding the preceding estate is the grantor, the executory interest is springing. G. Three Rules 1. Rule in Shelly’s case a. If in a single instrument, the grantor purports to give a remainder in the heirs of a life tenant, give the remainder to that life tenant. (Check for merger.) b. Rationale: administrative ease to give the estate to the life tenant in FSA. c. To A for life, then to A’s heirs. d. Only applies to remainders, not executory interests 1). Ex: To A for life, then to A’s heirs who attend A’s funeral. 2) Rule in Shelly’s case would not apply b/c of the gap scenario, which makes the possessory estate an executory interest, not a remainder 2. Doctrine of Worthier Title a. Look for future interests in the heirs of the grantor b. Where there is one instrument which purports to give either a remainder or an executory interest in the heirs of the grantor, give the future interest to the grantor. (Check for merger.) c. Grantor cannot have a remainder, so it would be a reversion. 3. Rule of Convenience a. Ex: To A for life, then to A’s children and their heirs. Assume A has two children, B & C. A year later A has a child D. b. If the class (A’s children) is open, there is a possibility of their estates shrinking. c. Once someone in the class is entitled to possession, the class is closed. d. Child is alive from the moment of conception to the extent that it benefit’s the party being added to the class. H. Modern Trend Rule 1. CL: Default estate is life estate if the words of limitation do not fall under one of the defined estates 2. MT: Default estate is FSA; MT is more intent based and assumes that the grantor wants to give all that he owns, unless the words of limitation indicate that he wants to give less Possessory Estate Fee Simple Absolute Fee Simple Determinable Fee Simple Subject to Condition Subsequent Fee Simple Subject to Executory Limitation Life Estate Fee Tail Term of Years Words of Limitation “to A and his/her heirs” “as long as/while/until/during” “but if/provided that/however, if…then O may re-enter and reclaim” “for life” “and the heirs of her body” Calculable by the first and last dates Future Interest Grantor 3rd Party None None Possibility of Reverter None Right of Re-Entry None Executory Interest Reversion Reversion Reversion Remainder Remainder Remainder Possessory Estate Future Interest Grantor 3rd Party LE Determinable Reversion Remainder LE Subj. to a Condition Subsequent Reversion Remainder LE Subj. to an Executory Limitation Reversion Executory Limitation *Reversion, not a possibility of reversion, b/c the life estate will definitely end. **If LE ends naturally or prematurely, Estate goes to Grantor. 10 Concurrent Estates I. Tenancy in Common (Modern Trend Default Estate) A. No Right of Survivorship B. Separate, but undivided interests in the property; the interest of each is inheritable and devisable 1. right to property will go to probate court if there is no will and will pass to heirs C. Parties can unilaterally divide the property (partition) F. MT’s default estate unless “right of survivorship” is explicitly mentioned II. Joint Tenancy A. Right to Survivorship- Key Characteristic B. Each owns the property in whole and in shares, cannot be devised when one dies, the decedent’s interest is merely extinguished C. Four Unities 1. Time a. interests must be acquired or vest at the same time. 2. Title a. must acquire title by the same instrument or by a joint adverse possession 3. Interest a. must have equal undivided shares of the same duration. 4. Possession a. must have a right to possession of the whole D. CL v. MT Approach to JT 1. CL presumes joint tenancy if unities are met, if not TC 2. MT has a high bar for JT, conveyance must state “w/ right of survivorship,” merely stating a Joint tenancy is not sufficient; however, b/c if is intent based, it is also more difficult to break a JT E. Rights and Benefits 1. JT can unilaterally sever his share intervivos by requesting a partition and becomes a tenant in common, while other tenants remain joint tenant. 2. Things that Sever a. Conveyance of interest by JT to a 3rd party or himself in TC b. Mortgage by JT to a 3rd party 1) CL Title Theory: Since title is transferred to bank, unities are broken, JT destroyed 2) MT Lien Theory: JT does not intend to transfer title, but rather grant lien, JT stands c. Lease by JT to a 3rd party 1) CL: Lease severs the JT b/c destroys interest unity a) If leasing co-tenant dies, a term of years lease or a periodic lease will still stand for the new landlord (tenancy at will would terminate with party’s death) 2) MT: JT stands b/c leasing tenant did not intend to transfer interest a) JT can lease w/o other tenants’ consent, but only his interest b) If leasing co-tenant dies, his interest is extinguished and the surviving JT is not bound (although he should be since MT is intent based); Lessee should have lease signed by both JTs d. Partition agreed by JTs e. Death of JT 1) If one JT murders the other, no right of survivorship, JT  TC F. Shares 1. CL requires both parties to contribute equal amounts, otherwise “interest” is not met 2. MT allows for different shares, each owns in proportion to his contribution G. CL Strawperson 1. CL requires a straw person if 2 parties want to create a JT; MT has no two to transfer rule 11 III. Tenancy by the Entirety A. Only exists between husband and wife with the right of survivorship that cannot be severed w/o consent of both 1. Requires the four unities above and fifth unity of marriage B. Cannot be unilaterally broken unless by divorce C. CL’s default estate when all 5 unities are met 1. MT has abolished TE and if 5 unities are me the default is a JT IV. Relations Among Concurrent Owners A. Partition 1. Methods a. Partition in Kind 1) historically preferred, but greater potential for error 2) When assigning to the parties, no consideration to external circumstances b. Partition in Sale 1) appropriate when physical partition is not practical due to physical attributes, # of tenants, rural land, type of crops, economic viability, water, road access 2) when interests of owners would be better furthered: bottom line economic—the larger the parcel, the greater the value. So, if land is worth more as a whole rather than partition, partition in sale might be seen as furthering the interests of owners 3) easier court administration; potential for error is low 4) Court’s preference for ease 2. For rural land, economic and efficiency factors are considered B. Sharing the Benefits and Burdens of Co-Ownership 1. If a co-tenant is in exclusive possession: what are duties to other co-tenant? 2. No duty to pay rent, unless there is OUSTER: 3. Ouster a. Some jurisdictions allow if there is a LONG period of time prior to a presumption of ouster which will start statute of limitations running b. Most courts will require ACTUAL notice, rather than constructive notice 1) ACTUAL notice and claim of absolute title; denial of co-tenancy relationship c. Purposes 1) triggers clock on statute of limitations for adverse possession 2) triggers duty to pay rent if co-tenant is in exclusive possession d. triggers payment of rent (fair market value) by co-tenant in exclusive possession 1) Majority—must have ouster to pay rent; Minority—liability for rent on a continued occupancy 2) CL; non-possessing party has to physically attempt and be denied entry a) changing of locks does not constitute ouster 3) MT: a demand to vacate or pay rent may be sufficient a) non-possessing party only needs to write a letter asking for rent and denying access (removes potential for violence) C. Accounting 1. one co-tenant sues another co-tenant 2. Situations a. Generation of profits from 3rd party land use 1) share of NET profits a) based on actual receipts not fair market value b. Action for Contribution 1) when one co-tenant is paying more than her fair share of taxes, mortgage payments or other carrying charges 2) Entitled to contribution of other co-tenants share, UNLESS one co-tenant is in exclusive possession (others should not have to pay tax or RENT!!) 12 c. Necessary Repairs 1) CL: no right to seek contribution a) considered during partition 2) MT: Right to seek contribution d. Improvements 1) CL: NO right to seek contribution a) considered during partition b) party will either receive improved land or payment for the improvement VI. Joint Tenancy Bank Accounts B. True Joint Tenancy 1. Right of survivorship 2. ½ to each joint tenant C. Convenience/Agency Account 1. Inter vivos—can only use funds in account for the principal on the account, e.g. only to pay bills 2. No right of survivorship D. Payable on Death Account 1. $ goes to other party only upon death (rt. of survivorship) 2. Upon death—100% paid to other person death E. Banks will often force a True Joint Tenancy Account 1. CL: b/c bank forces the true JT, after death of one, court would take extrinsic evidence of intent into account a. Assumes convenience account 2. MT: presume right of survivorship upon death of either; each party on the account has right to funds in proportion to the party’s contributions, absent clear and convincing evidence of a contrary intent a. assumes payment on death account b. if only one party deposits, it is clear and convincing evidence of a convenience account, no right of survivorship LANDLORD-TENANT LAW I. The Leasehold Estates A. Term of Years 1. Duration: Must be able to calculate the last day on the first day, fixed dates 2. Termination: No notice of termination is necessary 3. Effect of Death a. CL: none b. MT: may terminate (varies by jurisdiction) 4. Creation: To A for 10 years 5. Term of Years Determinable a. “outer date” or original scope of the lease must be calculable b. can end early depending on condition B. Periodic Tenancy 1. Duration: Lease for a period of some fixed duration that continues for succeeding periods until either the landlord or tenant gives notice of termination. 2. Termination a. CL: Notice must be equal to the period, but no greater than 6 months; notice must always be to terminate on the last day of a period b. MT: Must give at least 30 days notice and, as a general rule, end on the last day of the period, but if it is a month to month lease, then it can be terminated on any day as long as you give 30 days notice c. if no notice is given, the period is automatically extended (express periodic tenancies) 13 B. Periodic Tenancy (cont’d.) 3. Effect of Death a. CL: None b. MT: Tenant’s death may end 4. Creation: To A for month to month or, a. a tenancy at will can become a periodic tenancy if tenant begins to pay rent; under MT approach, which is pro-tenant, the court could require that the landlord give the tenant at will gone periodic tenant 30 days notice before terminating C. Tenancy at Will (CL Default) 1. Duration: No specific duration, as long as both consent 2. Termination: either party can unilaterally terminate a. any act which can be construed as inconsistent with the tenancy continuing is termination b. CL: can terminate at any time c. MT: If rent is involved and “fixed periods” of rent can be shown (more than one regular rent payment), then the tenant can bootstrap itself as a periodic tenant and thus be entitled to 30 days notice unilateral power to terminate a lease can be engrafted on a term of year or a periodic tenancy 3. Effect of Death: Death terminates the tenancy b/c it is inconsistent with continuing tenancy 4. Creation: To A for as long as B desires D. Tenancy at Sufferance: Holdovers 1. Duration: when a tenant remains in possession (holds over) after termination of the tenancy. 2. Termination: a. Landlord’s options: 1) eviction plus damages 2) treat him as a trespasser a) if treated as trespasser, landlord cannot unilaterally renew the lease 3) consent and renew the lease under the same terms and conditions, but for no longer than one year 3. Absent evidence to the contrary, a landlord who accepts rent form his holding over tenant will be held to have consented to a renewal or extension of the lease E. Invalid Notice 1. CL; must give proper notice and liability will run until then (until proper notice is given) 2. MT: first possible date that notice could be construed as valid, it will be construed as such F. Life Estate Determinable 1. CL: could not do, no livery of seisin 2. MT: look at intent II. The Lease A. Lease: Conveyance or Contract? 1. CL: Lease-as Conveyance 2. MT: Contractual nature B. Statute of Frauds 1. Leases for more than one year—must be in writing 2. most states all permit oral leases for LESS than a year 3. those who don’t—hold that entry under an oral lease + payment creates a periodic tenancy NOT subject to Statute C. Tenants may lose Bargaining Power 1. benefit—costs to buyer are reduced; not new negotiation every time 2. detriment—seller can impose burdensome terms D. Monopoly Power 1. courts may respond by policing “unequal bargaining” power 14 III. Delivery of Possession A. In the absence of an explicit covenant in the lease, does the landlord have a duty to provide actual possession? 1. The English Rule a. Landlord has the duty to provide actual possession (duty is only applicable to the first day of the term, if thereafter a trespasser shows up and takes possession before the tenant, landlord’s duty is not there) 2. The American Rule a. Landlord has the duty to provide legal possession, not actual B. Who should bear the risk of the wrongdoer’s wrongdoing? 1. Policy would say the landlord b/c he is in a better position to distribute the costs of the risk (spread to all tenants) 2. Court favored the American rule b/c it did not want to punish the landlord for the trespasser’s wrongdoing C. This doctrine applies to commercial and residential properties. D. Landlords have the upper hand and should be more conscientious when drafting leases IV. Subleases & Assignments CL: Views Leases as a Conveyance- Status Based Approach (Landlord favored) MT: Views Lease as a Contract- Intent Based Approach (Tenant favored) A. Privity of Contract 1. Privity of contract is achieved when 2 parties have an agreement or under 3rd party beneficiary principles, if the subtenant expressly assumes liability of one or more of the lease provisions between L and T 2. Absent a novation (releasing T from the lease), privity of K continues for the full term B. Privity of Estate 1. Privity of Estate is based on the relationship between the landlord and whoever has legal right to possession on the last day of the lease 2. A sublease effects privity of estate, but generally does not effect privity of contract. C. For a ∏ to sue a tenant or a sub-tenant have to show that the parties are either in privity of contract or privity of estate D. Subleases- (Lead with CL Analysis for Subleases and Assignments) 1. If a tenant transfers anything less than the whole period, it is a sublease. 2 CL: Right of re-entry is not considered a property interest, but merely a “chose in action,” so tenant is deemed to have assigned his interest and the subtenant and L are in privity of estate, not T and L 3 MT: If T retains any interest, T remains in privity of estate b/c he has not conveyed all of his interest E. Assignments 1. CL: If a tenant transfers all the rest of his interest, it is an assignment 2. MT: looks at parties’ intent, if T intends to transfer all interests, there is an assignment 3. L and Subtenant are in privity of estate 4. No effect on T and L’s privity in K F. If T assigns all rights, but reserves right to re-enter and S breaches his duties under his K w/ L 1. CL: more likely to consider it an assignment 2. MT: more likely to make it a sublease G. Novation or Surrender 1. A landlord’s express release from a lease is a novation, absent a novation, the original tenant is liable for the whole term of the lease. 2. A tenant will be liable under the privity of contract for the whole term of the lease, unless the landlord accepts a surrender or issues a novation. H. Modern trend is to focus on the parties’ intention when they formed the K. 1. consider the writings, words used 2. If the parties’ intent is unclear, apply CL analysis 15 I. Subrogation Doctrine 1. If a party who is not responsible for the misconduct has to pay, party can assume the role of the ∏ and sue everyone that ∏ could sue J. If the lease is silent, can T transfer his interests w/o L’s consent? 1. T is free to transfer his rights b/c public policy promotes free transfer of property to maximize productivity 2. L has the right to restrict T’s right to alienate interest within the lease a. CL construes a L’s restrictions narrowly (i.e. T can transfer interests in a sublease, just not an assignment) K. If a landlord has a consent clause, can the landlord arbitrarily withhold consent or must he have a commercially reasonable reason? a. CL: Landlord could act arbitrarily to withhold consent b. MT: Landlord must have a commercially reasonable reason to withhold consent. 1) Public policy is that a lease is more of a contract than a property conveyance and contracts always have an implicit duty to act in good faith. Arbitrary conduct is not good faith. Good faith means that consent can only be withheld for commercially reasonable reasons. 2) Commercial considerations are restricted to financial factors (e.g. credit rating) 3) Commercial reasonableness is extremely fact sensitive. c. Should it make a difference if it were commercial v. residential? 1) Depends on the jurisdiction, most jurisdictions allow residential landlords to be more arbitrary in its selection of tenants d. Consent clause in a lease does not run w/ the land. Approval clause only lasts for the first subtenant, unless there is an express clause applied to the first assignment. V. The Tenant Who Defaults A. The Tenant Who Has Abandoned Possession 1. CL Approach: Lease is a conveyance and T becomes the owner of the right to possession for the duration of the lease a. Considered tenant and landlord’s duties under the lease were independent of each other, so party is still bound to perform, but is awarded a cause of action b. L is not obligated to mitigate the subsequent damages c. Surrender- offer to terminate the lease in exchange for a release from the duty to pay rent 1) L has the option to accept or reject the surrender. a) If the landlord accepts the surrender, the tenant’s duty to pay rent is terminated, but may still be liable for damages. b) If landlord re-lets, look at the intent and actions. i. If he is acting as T’s agent, it is not an acceptance of the surrender. Must act as agent, i.e. only re-letting for the term of T’s lease, not for additional time. ii. If L acts for his own benefit, there is an implied acceptance of the surrender. 2. MT Approach: The lease is a contract, must act in good faith and mitigate damages a. L can still arbitrarily deny the surrender, but has to try to find new tenant b. L must mitigate the damages by trying to re-let the apartment b/c he must act in good faith 1) L has to treat it like any other vacancy, has to advertise, show it, but he is reimbursed for re-letting costs 2) L has the burden of proof to show that he has taken reasonable steps to re-let b/c he is better position to present the evidence (varies by jurisdiction) 3) If L does not properly mitigate, in some jurisdictions, the L’s ability to recovery is reduced as compared to if he had mitigated. In other jurisdictions, the nonmitigation is viewed as an acceptance of the surrender, so landlord loses his cause of action. 16 c. If L re-lets, is it an acceptance of the surrender or mitigation? 1) It’s a fine line b/c if he does too much it could be an acceptance, does too little not enough mitigation 2) If L mitigates for the benefit of the tenant, tenant can still be liable for damages B. The Tenant In Possession 1. CL Approach: Need Re-Entry Clause to Evict a. T and L’s duties are independent from each other, so L cannot evict if T does not pay rent, L can only seek damages. 1) Right to terminate and re-enter in the event of a breach clause can allow landlord to terminate and re-enter as opposed to just receive damages. b. Can a landlord use self-help to evict a tenant who has breached? a. Right to Evict Requires 1) L is legally entitled to possession, such as where T holds over after the lease term or where T breaches a lease containing a re-entry clause; and b) L’s means of reentry must be w/reasonable force 2. MT Approach: Can Evict w/o Re-Entry Clause a. If there is a serious breach, L has the right to terminate the lease and reenter, even without the clause. b. Right to Evict Requires: 1) L must be legally entitled to possession and 2) Self-help must be peaceable. a) Some jurisdictions require judicial action, no direct self-help. b) Courts construe “peaceable” narrowly, so L self-help is limited 3. With residential leases, stronger argument for no self-help b/c people will be more likely to be violent to defend their residence. a. Courts have said that landlords cannot contract use of reasonable force self-help eviction. VI. Duties, Rights, and Remedies (Especially Regarding the Condition of the Leased Premises) CL: L is not obligated to provide habitability (only COQE applies) MT: L is obligated to provide habitability A. Quiet Enjoyment and Constructive Eviction 1. Quiet Enjoyment a. General rule is there is an implied Covenant of Quiet Enjoyment 1) L agrees to provide quiet enjoyment, ability to use the leased premises without being disturbed 2. Breach of COQE a. Tenant’s Duties 1) Must show Landlord has a duty 2) Must show conditions were substantially unsuitable for the purposes of the lease or seriously interfere with the use of the property a) The condition must be permanent, includes regular and reoccurring conditions, temporary condition not enough for a constructive eviction. 3) Must give notice to L and give L reasonable time to fix the problem a) Tenant has to give notice and give landlord reasonable time to fix, if not fixed, tenant has to vacate in a timely manner b) If not vacated in timely manner, the condition is considered not that bad and the condition is accepted b. Landlord’s Duties 1) Duty to Disclose Latent Defects that L is (or should have been) aware of 2) Duty Not to Make Fraudulent Misrepresentations 3) Duty to Maintain Common Areas 4) Duty to Make Repairs that Landlord has Voluntarily Started to Undertake or Promised to Repair 5) Duty to Maintain Furnished Dwellings in Short Term Leases, e.g. hotel 6) Duty to Abate Immoral or Nuisance Behavior Which Arise from the Property 17 off the c. Under a lease, L is implicitly obligated to provide legal possession to T 1) If L lacks the right to convey legal possession and: a) T has not taken possession, T may terminate the lease b) T has taken possession, mere existence of a superior legal right to possession is not enough to constitute a breach of COQE, there must be an actual assertion of the superior right. 2) If L kicks off the tenant claiming superior right, L breaches the COQE. 3. Constructive Eviction a. If the landlord has a duty to provide quiet enjoyment and the conditions are so bad that the tenant is constructively evicted b/c the property is uninhabitable and forced property. 4. Partial Eviction (CL and MT) a. If there is an actual eviction, even though from a part of the premises only, the tenant is relieved of all liability for rent notwithstanding continued occupation of the balance. 1) Can terminate the lease, no longer pay rent, and sue for damages b. If there is only a constructive eviction of part of the property, tenant has to pay for the proportion occupied. 1) Courts tend to require that the tenant leave before he can sue for damages, but they do allow an action for declaratory judgment which, if granted, will allow tenant to leave and terminate the lease B. Illegal Lease Doctrine (MT only) 1. Under the illegal lease doctrine, if, on the first day of the lease, there is a violation of the local housing code which the landlord knew or should have known about and which constitutes a material threat to the safety of health of the tenant, the lease constitutes an illegal lease and the tenant is entitled to relief. 2. Tenant can possess without paying rent b/c he is not bound by a legal lease. COQE requires constructive eviction, but illegal lease doctrine does not require T to leave to seek relief. 3. If a condition impairing the habitability of the premises arises after the lease has commenced, then T has no recourse under the illegal lease doctrine. C. The Implied Warranty of Habitability- (Primary MT Doctrine; Most protective of tenant) -L has to not only provide habitable premises, but also maintain habitable premises 1. CL Approach: No IWH, tenant took possession as conveyance, property as is 2. MT Approach (T’s duty to pay rent is dependent on L’s duty to provide habitable premises) 3. Implied warranty to provide safe, clean premises fit for human habitation, covers all latent and patent defects in the essential facilities of residences a. What constitutes “habitable”? 1) Some jurisdictions still look to housing code, others consider habitability from the reasonable person perspective (e.g. jury) 2) Focus is on health and safety 4. If T is aware of defect before signing lease there is no assumption of risk. 5. Cannot contract out of IWH so T has equal bargaining power with L 6. T’s Benefits a. T is not required to leave (like under COQE) to seek damages or can terminate the lease and move out (L pays for incidental moving damages) b. Damages awarded will be the diff. btn the value of the dwelling as warranted and value as it exists c. Damages can include annoyance and discomfort damages d. Punitive damages if there is willful and wanton or fraudulent conduct e. Can also claim reimbursement if T repairs himself after giving reas. time f. T can also withhold payment of future rent and wait for L to sue and then claim IWH 7. T’s Obligations to Claim IWH: a. Give L Notice and Reasonable Time to Repair b. Show Defect Existed During the Time Rent Was Withheld 18 8. If T is not at fault, L is responsible to provide habitable premises (i.e. 3rd parties, nature) a. Rationale: L is in best position to bear the cost to distribute the costs across the relevant pool of people 9. Not all jurisdictions have adopted IWH 10. IWH only applies to residences, does not apply to commercial property (still need COQE) a. Often does not cover agricultural leases, short term leases, and others D. Retaliatory Eviction (MT only) 1. If L seeks to terminate a tenancy, increase rent, or decrease services within some given period after a good-faith complaint or other action by a T based on the premise’s conditions, L’s actions are prohibited. 2. Most jurisdictions say the period of retaliatory eviction is 6 months, but if after 6 months, T can prove L’s actions are retaliatory, then T can still claim retaliatory eviction Possessory Estates Review Session: Wed. Dec. 4 @ 7:00 p.m. in Room B General Review: Thurs. Dec. 5 @ 10:00 a.m. in Rm. B Home Phone: (805) 492-0061 until midnight Mon-Thurs. 9-12 available in office Exam Tips STATE THE RULE, THE WHOLE RULE AND NOTHING BUT THE RULE IN ONE SENTENCE. RULE MUST BE STATED IN THE AFFIRMATIVE, NOTE THE NEGATVIE. ADDRESS ALL THE ELEMENTS THAT ARE EASILY SATISFIED FIRST AND THEN ADDRESS THE ELEMENTS IN DISPUTE. READ AS IF YOU ARE REPRESENTING BOTH PARTIES, IN ORDER TO ADDRESS ANY POSSIBLE ARGUMENT. Reasoning: The intent of appropriating the animal to his individual use was achieved when he got the fox within his sight. (The more specific the statement, the more persuasive, the more points.) 19 To A for life, then to B for life, then to C and the heirs of her body, then to D and her heirs as long as she does not sell alcohol on the land A- LE B- REM-LE C- REM-FT D- REM- FSD O- Possibility of REV for FSA To W for life, then to T for life, then to D and his heirs: W-LE T-VR-LE D-VR-FSA O-Reversion Note: Although T has to outlive W, it is not an express condition. To A for life, then to B’s children and their heirs. Assume B has two children, X and Y. A year after A’s death, B has another child Z. A for LE X & Y- Vested Remainder in FS Subj. to Open (or FS Subj. to Partial Divestment) Z has no interest b/c the class is closed upon A’s death. To W for life, then to D and his heirs, if he graduates from law school W-LE D-CR-FSA O-Reversion If D does not vest, then O receives possession from W upon W’s death based on reversion for fee simple absolute. To W for life, then to D and the heirs of his body if he graduates from law school, then to N for life, then to A and her heirs: W-LE D-CR-FT N-VR-LE A-VR-FSA If A purchases W’s LE before D’s remainder is vested, cannot be merged. A would own W’s LE, but not as measured by her life, it would be as measured by W’s life. French term “per tavi”- A’s possessory duration of W’s LE To W for life, then to R for life if he graduates from law school, then to M and her heirs as long as she does not sell alcohol on the land W-LE R-CR-LE M-VR-FSD O-REV 20 If W dies before R graduates from law school: W-LE R-CR-LE M-FSD (no longer future interest, is possessory interest) O-POSS OF REV To W for life, Then to D and his heirs if he votes for Hillary for president, otherwise to G and his heirs W-LE D-CR-FS G-ALT CR-FS O-REV-FSA (If G dies before D’s heirs, G’s heirs will still have the possessory estate.) (O has possessory estate b/c if W’s life estate ends prematurely, the estate goes to O if the first contingent remainder has not vested. Both contingent remainders are wiped.) To W for life, Then to C and her heirs if she attends my funeral. W-LE O-REV- FSSEX LIM C-SPRINGING EX. INTEREST-FSA (The condition that needs to be satisfied cannot be satisfied during the preceding estate. Gap scenario because there is a gap between the end of W’s life and when the condition can be satisfied.) If the situation were: To W for life Then to C and her heirs one day after W dies. W-LE O-REV- TERM OF YRS. C-VR-FSA *Extra information, not necessary for test- one day situation.) To W for life, Then to F and his heirs, but if F sells alcohol on the land, Then H and her heirs. W-LE F-VR-FSSEX Lim. H-SHIFT. EX. INT-FS (Qualifying language begs the question of when can the qualifying condition occur, subsequent or precedent relative to the remainder.) 21 This case has subsequent condition. To W for life, Then to F and his heirs, but if W sells alcohol on the land, Then to H and her heirs. W-LE F-VR-FS Subject to Divestment H-SH. EXEC. LIM-FSA If the condition can be satisfied in the preceding estate, it is in Fee Simple Subject to Divestment. If the condition precedent is in a subsequent clause, it is a vested remainder in FS Subj. to Divestment. To W for life, then to N and her heirs, but if D votes for Hillary for President then to D and his heirs. W-LE N-VR-FS Subj. to Divestment D- Shifting Ex. Int.- FSA When there is a vested remainder and a clause following, must consider can the condition occur before the vested remainder becomes possessory. If so, then FS Subj. to Divestment. Vested remainder can only be for FSSEX LIM or FS SUBJ. to DIVESTMENT If W dies prior to the condition being satisfied, N- FSSEEX LIM D-SHIFTING Ex. Int.- FS Post-1536 Changes To B and his heirs if he goes to the Cal football game this weekend O- FS Subject to an Executory Limitation B- Springing Ex. Interest. in FS In this conveyance, the possessory estate has not been transferred yet from the grantor. O is only offering a future interest upon satisfaction of a condition, but until then O still has the possessory estate. The only possible combination would be a FS Subject to an Executory Limitation and a Springing Ex. Interest in FS. To B as long as he remains single B- LE Determinable O- Reversion in FS Difference between this hypo and the other is “as long as” which indicates a subsequent condition; “if” is indicates a precedent condition; Not a Fee Simple Defeasible b/c it doesn’t say “and his heirs”, under common law, default is LE, but is conditioned 22 To B as long as he remains single, then to R and his heirs B- LE S Ex Lim R- Shifting Ex. Lim O- REV To A for life, then to B and her heirs, but if B fails to survive A, then to C and her heirs. A- LE B- Vested REM FS Subj. to Divestment C- Shifting Ex. Interest, FS To determine whether it is a FS Subject to Divestment or FSSEx Lim, depends on when the condition has to occur. If the condition has to be satisfied during the condition, then it is FSSExLim. If it is a condition satisfied before, FSS Divestment Must look at terminating language As long as- goes to the 3rd party either way But if- goes to 3rd party only if the life estate is cut short, if life estate ends naturally, goes back to O To A for life, then to B & her heirs, but if A gets divorced, then to C & her heirs. A-LE B-VR in FS Subj. to Div. C- Shift. Ex. Interest in FS Both have the same answers the first looks at A’s life estate ending and the second looks at a condition during A’s life. But the difference is not relevant to the class. The fact that the condition in the second cuts short A’s life estate is not relevant. 23