Property Law Outline FALL 2008 PROPERTY OUTLINE FOR PROF LIU Common Law

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Property Law Outline FALL 2008 PROPERTY OUTLINE FOR PROF LIU Common Law Powered By Docstoc
					FALL 2008 PROPERTY OUTLINE FOR PROF. LIU

Common Law Limits – Public Access ........................................................................................................................... 5 Limits on Right to Exclude: The right to exclude is not absolute. ............................................................................... 5 Access: Public Policy/Social Need ......................................................................................................................... 5 Statutory Limits: Anti-Discrimination .......................................................................................................................... 6 Federal Statutes ........................................................................................................................................................... 6 Civil Rights Act of 1964 (42 U.S.C. §§ 2000a to 2000a-6) .................................................................................... 6 Civil Rights Act of 1886 (42 U.S.C. §§ 1981 and 1982) ........................................................................................ 6 State Statutes ............................................................................................................................................................... 7 New Jersey Law Against Discrimination (N.J. Stat. §§10:5-1 to 10:5-49)............................................................. 7 Constitutional Limits: Free Speech ............................................................................................................................... 7 Exceptions ................................................................................................................................................................... 8 Policy Considerations .................................................................................................................................................. 8 Competing Interests ..................................................................................................................................................... 9 Water Rights ................................................................................................................................................................... 9 Diffuse Surface Water ................................................................................................................................................. 9 Majority Rule: Reasonable Use Test ...................................................................................................................... 9 Minority Rule: Common Enemy Doctrine ........................................................................................................... 10 Minority Rule: Natural Flow or Civil Rule .......................................................................................................... 10 Land Rights ................................................................................................................................................................... 10 Lateral Support .......................................................................................................................................................... 10 Majority Rule: Support of Land ........................................................................................................................... 10 Majority Rule: Support of Structures ................................................................................................................... 10 Split Rule: Support of Structures Absent Negligence ........................................................................................... 11 Subjacent Support ...................................................................................................................................................... 11 Nuisance (Pollution, Light and Air)............................................................................................................................. 11 General Considerations.............................................................................................................................................. 11 Nuisance as Different from Trespass and Negligence .......................................................................................... 11 Nuisance Doctrine Applied to Light and Air ............................................................................................................. 12 Majority Rule: Rejection of Nuisance Doctrine ................................................................................................... 12 Minority Rule: Inclusion of Light and Air............................................................................................................ 12 Nuisance Remedies.................................................................................................................................................... 13 Transfers of Property Rights ....................................................................................................................................... 13 Adverse Possession.................................................................................................................................................... 13 Elements of the Doctrine of Adverse Possession ................................................................................................. 13 Servitudes – Easements and Constructive Trusts ....................................................................................................... 15 Prescriptive Easements ......................................................................................................................................... 15 Easements By Estoppel ........................................................................................................................................ 16 Constructive Trusts .............................................................................................................................................. 16 Implied From Prior Use ........................................................................................................................................ 17 Implied By Necessity ........................................................................................................................................... 17 Express Easements – In General .......................................................................................................................... 18 Express Easements – Appurtenant ....................................................................................................................... 18 Express Easements – In Gross .............................................................................................................................. 19 Terminating Easements ........................................................................................................................................ 19 Servitudes – Covenants.............................................................................................................................................. 19 Formal Requirements ........................................................................................................................................... 19 Intent to Run ......................................................................................................................................................... 20 Privity of Estate .................................................................................................................................................... 20 Touch and Concern .............................................................................................................................................. 21 Enforcement in Gross ........................................................................................................................................... 21 Implied Reciprocal Negative Servitudes (IRNS) .................................................................................................. 22 Modifying or Terminating Covenants .................................................................................................................. 23 Servitudes – Homeowners Associations & Condominiums....................................................................................... 25 Reasonableness Test for Amendments & Enforcement ........................................................................................ 25 Restraints on Alienation ............................................................................................................................................... 27 Restraints on Alienation ............................................................................................................................................ 27

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Types of Restraints ............................................................................................................................................... 27 Consent/Approval Clauses ................................................................................................................................... 28 Right of First Refusal (Preemptive Rights) .......................................................................................................... 29 Present Estates and Future Interests ........................................................................................................................... 29 Background ............................................................................................................................................................... 29 Freehold Estates......................................................................................................................................................... 29 Fee Simple Absolute ............................................................................................................................................ 29 Fee Simple Determinable ..................................................................................................................................... 29 Fee Simple Subject to Condition Subsequent ....................................................................................................... 30 Fee Simple Subject to Executory Limitation ........................................................................................................ 30 Nonfreehold Estates................................................................................................................................................... 30 Life Estates ................................................................................................................................................................ 31 Remainders and Reversions ................................................................................................................................. 31 Trusts ......................................................................................................................................................................... 32 Regulation & Interpretation of Future Interests ......................................................................................................... 32 Presumption Against Forfeitures .......................................................................................................................... 32 Rule Against Perpetuities .......................................................................................................................................... 34 Application of the Rule Against Perpetuities ....................................................................................................... 34 Modern Approaches to the Rule Against Perpetuities .......................................................................................... 35 Preemptive Rights ................................................................................................................................................ 36 Regulatory Rules of Present Estate and Future Interests ........................................................................................... 37 Concurrent Ownership ................................................................................................................................................. 38 Ownership in Common .............................................................................................................................................. 38 Tenancy in Common ............................................................................................................................................ 38 Joint Tenancy ....................................................................................................................................................... 39 Rights and Obligations of Cotenants ......................................................................................................................... 40 Partition ................................................................................................................................................................ 40 Joint Management, Repairs & Maintenance ......................................................................................................... 40 Rental Benefits and Obligations ........................................................................................................................... 41 Landlord Tenant Law................................................................................................................................................... 42 Leasehold Estates ...................................................................................................................................................... 42 Term of Years Tenancy ........................................................................................................................................ 42 Periodic Tenancy .................................................................................................................................................. 42 Tenancy at Will .................................................................................................................................................... 43 Tenancy at Sufferance .......................................................................................................................................... 43 Tenant‘s Obligations & Landlord‘s Remedies ........................................................................................................... 43 Tenant‘s Duty to Pay Rent ................................................................................................................................... 43 Illegality ............................................................................................................................................................... 43 Forfeiture (Landlord‘s Recovery of Possession) v. New Tenancy ....................................................................... 44 Self-Help v. Summary Process ............................................................................................................................. 44 Surrender, Reletting, Damages, & the Duty to Mitigate Damages ....................................................................... 44 Landlord‘s Duty to Deliver Possession ................................................................................................................ 45 Actual Eviction ..................................................................................................................................................... 45 Transfers by Landlord or Tenant ............................................................................................................................... 46 Landlord‘s Right to Transfer the Reversion ......................................................................................................... 46 Tenant‘s Right to Assign or Sublet....................................................................................................................... 46 Tenant‘s Right to Habitable Premises ........................................................................................................................ 47 Constructive Eviction ........................................................................................................................................... 47 Implied Warranty of Habitability ......................................................................................................................... 49 Remedies Available for Breach of the Implied Warranty of Habitability............................................................. 49 Retaliatory Eviction .............................................................................................................................................. 50 Discrimination in the Housing Market........................................................................................................................ 51 Discriminatory Treatment .......................................................................................................................................... 51 The Fair Housing Act of 1968 (42 U.S.C. §§ 3601 to 3619 & 3631) ................................................................... 51 Prohibited Conduct under the FHA ...................................................................................................................... 52 Standards of Proof Under the FHA ...................................................................................................................... 53 Disparate Impact ........................................................................................................................................................ 53 Claims Allowable Under the FHA ....................................................................................................................... 53

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Land Use Regulation..................................................................................................................................................... 54 Planning Process ........................................................................................................................................................ 54 Zoning Enabling Acts ........................................................................................................................................... 54 Comprehensive Plans, Zoning Ordinances & Boards of Adjustment or Appeals ................................................. 54 Zoning Laws .............................................................................................................................................................. 55 Prior Nonconforming Uses ................................................................................................................................... 55 Variances .............................................................................................................................................................. 56 Vested Rights ....................................................................................................................................................... 57 Takings .......................................................................................................................................................................... 58 Historical Background ............................................................................................................................................... 58 Ad-Hoc Test .............................................................................................................................................................. 59 Categorical Takings ................................................................................................................................................... 60 Physical Invasions of Property ............................................................................................................................. 60 Deprivation of All Economically Viable Use ....................................................................................................... 61 Temporary Deprivation of Economic Use ............................................................................................................ 62 Property Purchased After Regulations are Passed ............................................................................................... 63 Public Use.................................................................................................................................................................. 63

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REGULATION OF OWNER’S RIGHTS
I. Common Law Limits – Public Access: Owner can use property as he sees fit subject to rights of neighbor and police authority. A. Possessor: Current possessor has all rights of a true owner – can exclude everyone but titleholder. B. Trespass: Intentional intrusion onto property owner by another. 1. Intent 2. Intrusion C. Limits on Right to Exclude: The right to exclude is not absolute. 1. Necessity i. To save lives or property, must show (i) choice between lesser of two evils, (ii) reasonably anticipated their actions would prevent harm, (iii) harm was imminent and (iv) no legal alternatives. 2. Access: Public Policy/Social Need i. State v. Shack Facts: Social workers attempted to enter a farm to help migrant workers but the owner prevented. Holding: A property owner does not have a right to exclude social workers that are providing aid from entering the property. ―Property rights serve human values. They are recognized to that end and should be limited by it.‖ Court relied heavily on context – migrant workers as an isolated social group in need of access to aid. Pro: Ownership of property does not give dominion over those on the property. The public interest of helping disadvantage people outweighs the private interests of property owner. Con: Infringes on property rights; freedom of contract and self-determination; possible economic harm on property value. 3. Fraudulent Consent: Entry under false pretenses is not trespass if the entry does not infringe on the kind of interest the law is intended to protect—this interest is generally the right of a private person to keep people out. If person entering is one who would not be welcome under other circumstances, even if they were representing themselves truly, entry under false pretenses is a trespass and vice versa. Ex. A restaurant has no claim against a critic posing as a customer, as the restaurant would want customers. A homeowner has a claim against person posing as a meter reader, who would not be allowed in otherwise (Desnick v. ABC). 4. Access – Reasonable Test: Majority of jurisdictions allows arbitrary exclusion and only requires inns and common carriers to allow public access to private property. Minority of jurisdictions requires reasonableness if opened up to the public. i. Uston v. Resorts International Facts: A card counter is excluded from a casino. Holding: ―…when property owners open their premises to the general public in the pursuit of their own property interests, they have no right to exclude people unreasonably. On the contrary, they have a duty not to act in an

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arbitrary or discriminatory manner toward persons who come on their premises.‖ Pro: Private rights should not overrule personal dignity; property owners who advance own interests by benefiting from public opens self up to burden; owner is not being asked to suffer harm. Expanded the types of establishments that could fall under the umbrella of being open to the public. Con: Market forces alone should prevent discrimination; opens property owners to undue litigation; infringes on property rights; all property owners have the right to expel any who disrupt the regular and essential operations of the premises, or threaten security. D. Remedies for Trespass 1. Monetary damages; 2. Injunction; 3. Declaration; and 4. Criminal Sanctions. E. Policy Considerations: The right to exclude protects interest in exclusive possession; protects ability to prevent others from using your land and the enjoyment of your property. Basic human value of empowering people to use their land to maximize its value and thus its value to society. II. Statutory Limits: Anti-Discrimination A. Federal Statutes 1. Civil Rights Act of 1964 (42 U.S.C. §§ 2000a to 2000a-6) i. Provides that ―all persons shall be entitled to the full and equal enjoyment of the goods, services, facilities, privileges, advantages and accommodations of any place of public accommodation…without discrimination or segregation on the ground of race, color, religion or national origin‖ (not gender). Only allows for injunctive relief; not damages. a. Places of public accommodation: Includes establishments contained within or has within it inns, motels, hotels, restaurants, theatres and places of entertainment; also includes establishments that engage in commerce or state/federal subsidies. Courts that have considered the issue have considered the list to be exclusive and not illustrative. b. Private Establishments: Affects private conduct as well as state actions; however it does not apply to any ―private club or other establishment not in fact open to the public,‖ unless its facilities are ―made available to the customers or patrons‖ of establishments covered by the act. 2. Civil Rights Act of 1886 (42 U.S.C. §§ 1981 and 1982) i. § 1981 provides that ―all persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts, to sue, be parties, give evidence, and to the full and equal benefit of all laws and proceedings for the security of persons and property as is enjoyed by white citizens.‖ Amended by Congress in 1991 to provide in § 1981(b) that ―the term ‗make and enforce contracts‘ includes the making, performance, modification, and termination of contracts, and the enjoyment of all benefits, privileges, terms, and conditions of the contractual relationship.‖ Courts have

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held that § 1981 covers establishments that are not covered by the Civil Rights Act of 1964. a. Establishing a prima facie case: Plaintiff must show (i) that they are members of a racial minority, (ii) that ∆ intended to discriminate against them on that basis, and (iii) that ∆‘s racially discriminatory conduct abridged contract or other rights enumerated in § 1981(a). ii. § 1982 provides that ―all citizens of the United States shall have the same right as is enjoyed by white citizens to inherit, purchase, lease, sell, hold, and convey real and personal property.‖ iii. The Civil Rights Act of 1991 amended §1981 to clarify that the ―right to make and enforce contracts‖ included a right to nondiscriminatory terms and conditions in those contracts. 3. Public Accommodations Laws in General i. Public accommodations must also not impose ―eligibility criteria‖ that ―screen out or tend to screen out‖ individuals with a disability from ―fully and equally enjoying‖ the goods or services of the establishment ―unless such criteria can be shown to be necessary‖ for the provision of the accommodations being offered. B. State Statutes 1. New Jersey Law Against Discrimination (N.J. Stat. §§10:5-1 to 10:5-49) i. Extends protection against discrimination to inhabitants based on ―race, creed, color, national origin, ancestry, age, sex, affectional or sexual orientation, marital status, familial status, liability for service in the Armed Forces or nationality…‖ ii. The Legislature ―intends that this act shall be liberally construed in combination with other protections available under the laws of this State.‖ iii. Dale v. Boy Scouts of America Facts: A gay troop leader is excluded from the BSA. Holding: Because π‘s scoutmaster position was a privilege of membership, and because ∆s revoked π's membership based on his avowed homosexuality, ∆s violated the LAD. The court found that the LAD did not violate ∆s' First Amendment rights, because π's presence in the organization was not tantamount to ∆s' endorsement of homosexuality. The statutory noun "place" is a term of convenience, not of limitation, employed to reflect the fact that public accommodations are commonly provided at fixed places. Further Comments: BSA was a place of public accommodation because of its (i) broad solicitation for membership, (ii) close relationship with the government and (iii) similarity to other recognized public accommodations. SCOTUS Holding: Found that BSA‘s 1st Amend right of freedom of association had been violated because forcing them to accept an openly gay member was inherently contrary to their charter and beliefs. Dissenting opinion found Dale‘s presence not an endorsement of homosexuality and that BSA never had a clear stance on homosexuality. III. Constitutional Limits: Free Speech A. Federal Law: Under federal law property owners, even if property is open to the public, have a right to prohibit protests and other exercises of free speech on their property. Courts have also been reluctant to identify every instance of enforcement of trespass law

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as a form of ―state action‖ that triggers protection of constitutional rights under the 14th Amend. B. Exceptions 1. Free speech is protected in cases where (i) owners of private property have become the functional equivalent of a municipality (Marsh v. Alabama), (ii) picketing/expression of free speech is directly related to the operation of the private property and would ineffective elsewhere (Amalgamated Food Employees Union v. Logan Valley). i. Lloyd Corp v. Tanner Facts: Students protesting the Vietnam War handed out leaflets at a mall. Mall officials forced them off the property and the students claimed a violation of their 1st Amend right to free speech since mall functioned as a public commercial area. Holding: Court found that a shopping center was not the equivalent of a public square and that the 1st Amend did not require shopping centers to allow leafleting on its premises. Pro: Protects rights of property owners; allows them to forbid speech that would disturb commerce; other cheaper means to disseminate messages available. Con: For free speech to be meaningful it must reach its audience. Malls open themselves up to the public and benefit from non-shopping activity. C. State Expansion: Constitution protects both free speech rights and property rights to a certain extent, and states are entitled to go further in protecting those rights than mandated by federal law, as long as those further protections do not violate another constitutional right. i. SCOTUS ruled in PruneYard Shopping Center v. Robins that although the 1st Amend did not grant a free speech right to shopping centers, a state could choose to require such access under its constitutional, statutory, or common law and that such a limitation on the right to exclude would not constitute an unconstitutional taking of property. ii. NJ Coalition v. J.M.B. Realty Corp Facts: An owner excluded protestors of the Gulf War at several NJ shopping centers. Holding: NJ affords extra protection for freedom of speech under its state constitution, and if property owners have opened their place to the public, leafleting and other forms of expression must be allowed if it passes a reasonable test: (i) nature, purpose and normal use of the private property, (ii) extent and nature of public invitation to use the property and (iii) purpose and intent of expressional activity. D. Policy Considerations 1. For the Right to Exclude (a narrow reading of precedent) i. In Lloyd Corp, majority opinion emphasized ―Nor does property lose its private character merely because the public is generally invited to use it for designated purposes.‖ ii. Court has never held that a trespasser may exercise general rights of free speech on private property. iii. Constitution protects property rights – ―no person shall be deprived on life, liberty, property without due process.‖

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2. For the Right to Free Speech (a broad reading of precedent) i. In Lloyd Corp, dissenting opinion emphasized, ―When competing interests are fairly weighed, the balance can only be struck in favor of speech.‖ ii. Greater harm in not allowing freedom of speech, especially if those has limited resources to reach their audience.

REGULATIONS AMONG NEIGHBORS
I. Policy Considerations: The right to use one‘s property is limited by the legal rights of others to be free from harm. A. Competing Interests 1. Justice in Social Relationships i. Justice Abrahamson of the Wisconsin Supreme Court stated ―the rights of neighboring landowners are relative; the use of one must not unreasonably impair the uses or enjoyment of the other.‖ 2. Rights as Freedom of Action i. Justice Callow of the Wisconsin Supreme Court stated ―landowners may claim the right to use their property as they wish, or the right to develop their property without regard to the effect of such development upon others.‖ 3. Rights as Security i. The converse of the right to use one‘s property is the right to have one‘s property protected from harm. The freedom to use property is limited to the extent necessary to protect other property holders‘ rights of security. 4. Promoting the General Welfare by Enacting Appropriate Incentives i. Social utility arguments appeal to the goal of generating rules of law that promote socially desirable conduct and deter socially harmful conduct. 5. Promoting Competition i. Shielding property holders from liability encourages investment in socially beneficial economic activities. 6. Protecting the Security of Investment i. The basis of the institution of property is to provide security for justified expectations. Development generally should be encouraged, but not to the extent that its harmful effects outweigh its benefits. 7. Flexibility v. Formal Rules i. Flexibility allows the courts to take into consideration all relevant factors but a hard and fast clear rule is easier to apply. II. Water Rights A. Diffuse Surface Water 1. Majority Rule: Reasonable Use Test i. The ―reasonable use‖ test is similar to nuisance law generally, allowing reasonable discharge but not allowing substantial harm to be committed. Test requires consideration of: (i) purpose for which the improvements were

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undertaken, (ii) amount of surface water runoff added to the streamflow by the ∆‘s improvements, (iii) mitigating measures available to both upstream and downstream owners and (iv) the magnitude of the potential for downstream damage. ii. A difference between reasonable use and nuisance is that the reasonable use test does not necessarily envision weight the utility of the conduct against the gravity of the harm; rather, substantial harm caused by discharge of water is likely to be held unlawful even if the utility of the ∆‘s land use far outweighs that of the π‘s land use. iii. Armstrong v. Francis Corp Facts: Francis Corp, a developer, built a housing subdivision that caused excessive water to be cast onto the Armstrong‘s property. Holding: Court considered three approaches to surface water (civil law rule, common enemy rule and reasonable use) and decided to adopt the reasonable use rule because while development is beneficial, costs should be borne by those who profit from it. 2. Minority Rule: Common Enemy Doctrine i. Under this rule ―each landowner has an unqualified right, by operations on his own land, to fend off surface waters as he sees hit without being required to take into account the consequences to other land owners, who have the duty and right to protect themselves as best they can.‖ Some states have modified the rule to require owners from negligent actions that create avoidable harms to neighbors. 3. Minority Rule: Natural Flow or Civil Rule i. This rule prohibits owners from discharging water in any way other than through natural drainage paths. Liability will be imposed under this rule for ―any interference with the natural surface drainage pattern that causes injury to another‘s land.‖ This rule privileges interests in security and amounts to strict liability. III. Land Rights A. Lateral Support 1. Owners have a legal right to have their land supported laterally by their neighbor‘s land. This obligation is absolute and does not rest on showing that a ∆ acted negligently. It is sometimes called a ―natural right‖ because it inheres in land ownership; one does not have to purchase such a right from one‘s neighbor. 2. Majority Rule: Support of Land i. Owners have a duty to support their neighbor‘s land in its natural condition but have no duty to support structures on their neighbor‘s land. 3. Majority Rule: Support of Structures i. Although there is no duty to support a structure on a neighboring land (beyond the duty to support the land itself), there is a general duty on all owners of land and contractors to act reasonably in excavating so as to avoid negligently withdrawing support for a neighboring structure. ii. Actions to avoid negligence include providing temporary support or providing advance notice so that other support may be furnished.

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4. Split Rule: Support of Structures Absent Negligence i. Absent negligence, some courts immunize owners from liability. However, others impose liability if the land in its natural condition was sufficient on its own to support the structure and the withdrawal of lateral support caused the damage. ii. Noone v. Price Facts: An owner, the ∆, located downhill from π had a retaining wall that was not maintained. The wall started to give way and undermined support for the land uphill. Holding: Court found that if the π could prove that the land would have supported his structure in its natural condition, then ∆ would be liable. The owner has a duty to maintain the wall in a sufficiently strong condition to maintain the neighbor‘s land in its natural state. B. Subjacent Support 1. Surface owners have an absolute right to subjacent support for their land. Those who withdraw subjacent support for the surface are strictly liable for damage to the land in its natural condition. Most courts, however, refuse to impose liability for withdrawal of subjacent support to structures in the absence of negligence. i. Friendswood Development Co. v. Smith-Southwest Industries, Inc. Facts: ∆ pumped large volume of water from property, which caused neighboring land to subside. The π claimed that the volume withdrawn was unreasonable and that ∆ was aware of potential harm. The ∆ claimed an absolute right to withdraw water under Texas law, which stated that an owner was free to withdraw groundwater under the absolute ownership rule and would not be liable for any resulting harm. Holding: The court rejected the free use rule and adopted a negligence standard which considered (i) was the conduct wasteful, (ii) full of malice or negligence and/or (iii) the proximate cause of the subsidence of the neighboring land. The rule was not applied retroactively. Dissent: Argued that the general laws regarding subjacent support should apply rather than focus on water withdrawal. IV. Nuisance (Pollution, Light and Air) A. General Considerations 1. Nuisance as Different from Trespass and Negligence i. ―Trespass is any intentional invasion of the π‘s interest in exclusive possession of his property, whereas nuisance is a substantial and unreasonable interference with the use and enjoyment of his property. The interest being protected is the right not to exclusive possession but to quiet enjoyment of the land; protection of this interest is not absolute because the harm must be substantial and the interference deemed unreasonable before a nuisance will be found. ii. Negligence law prohibits and provides remedies for unreasonable conduct; this implies a judgment that a reasonable person would have foreseen harm and prevented it. Nuisance focuses on the result of the conduct rather than the conduct itself; the question is not whether the ∆‘s conduct was unreasonable but whether the interference is unreasonable. B. Reasonableness Test: In determining nuisances, courts focus on (i) what interests are encompassed by the right to the ―use and enjoyment of land‖, (ii) how serious must the

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interference be for a nuisance to be present and (iii) if the ∆ has substantially interfered in one‘s use and enjoyment of land, how does one determine whether that harm is unreasonable. 1. Restatement (Second) of Torts §826(a) i. Defines land use as unreasonable when the ―gravity of the harm outweighs the utility of the actor‘s conduct.‖ Courts consider (a) the extent and (b) character of the harm involved; (c) the ―social value that the law attaches to the type of use or enjoyment invaded; (d) the suitability of the particular use or enjoyment invaded to the character of the locality; and (e) the burden on the person harmed of avoid the harm.‖ ii. In evaluating the utility of the conduct, courts analyze (a) the social value that the law attaches to the primary purpose of the conduct; (b) the suitability of the conduct to the character of the locality; and (c) the impracticability of preventing or avoiding the invasion. 2. Applying the Reasonableness Test i. Page County Appliance Center v. Honeywell, Inc. Facts: Appliance center‘s TVs were affected by radiation from neighboring travel agency‘s Honeywell computer. Holding: When the alleged nuisance is claimed to be offensive to the person, courts should apply the standard of "normal persons in a particular locality" to measure the existence of a nuisance. A person responsible for a harmful condition found to be a nuisance may be liable even though that person has used the highest possible degree of care to prevent or minimize the effect. C. Nuisance Doctrine Applied to Light and Air 1. Majority Rule: Rejection of Nuisance Doctrine i. Fontainebleau v. Forty-Five Twenty-Five, Inc. d/b/a Eden Roc Hotel Facts: Fontainebleau began constructing a 14-story addition to hotel that would cast a shadow over the Eden Roc‘s pool. Eden Roc claimed a right to uninterrupted light and air. Holding: ―There being no legal right to the free flow of light and air from the adjoining land, it is universally held that where a structure serves a useful and beneficial purpose, it does not give rise to a cause of action, either for damages or for an injunction under the maxim sic utere tuo ut alienum non laedas.‖ Applying Rule: Maxim means only that one must use his property so as not to injure the lawful rights of another. However, holding in this case could allow for structures built out of spite if they also have a beneficial purpose. 2. Minority Rule: Inclusion of Light and Air i. Prah v. Maretti Facts: Prah sought injunction to prevent Maretti from finishing construction of his home because it would block direct sunlight to his solar panels. Maretti claimed he should be able to build so long as he was in accordance with regulations. Holding: Private nuisance law is applicable in the case of the right to the free flow of light and air. Furthermore, compliance with zoning codes does not bar a cause of action. Policy Considerations: (i) Society increasingly regulates use of land for general welfare, (ii) sunlight now has a greater value than merely for aesthetics and (iii) policies favoring unfettered development are no longer necessary.

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Dissent: Nuisance law should not apply. The right of a property owner to lawful enjoyment of his property should be vigorously protected, particularly in those cases where the adjacent property owner could have insulated himself from the alleged problem. Also rejects (i) –(iii) above. D. Nuisance Remedies 1. There are three basic types of remedies available in the nuisance context: (i) property rules, (ii) liability rules and (iii) inalienability rules. i. Property Rules – fix an absolute entitlement either to engage in the conduct (no liability) or to be secure from the harm (injunctive relief ordering the ∆ to stop committing the harm). ii. Liability Rules – prohibit each party from interfering with the interests of the other unless the party is willing to pay damages determined by a court of law. iii. Inalienability Rules – assign entitlements and prohibit those entitlements from being sold or transferred. Remedies Property Rule π’s Entitlement
π can get an injunction ordering ∆ to stop the harmful conduct; if ∆ wants to commit the harm, ∆ must offer π enough money to induce π to agree to give up π‘s right to be free form harm (injunction). π can get damages from ∆ for committing the harm, but no injunction; ∆ is free to commit the harm if ∆ is willing to pay a damage judgment (damages).

∆’s Entitlement
∆ has the legal liberty to commit the harm without liability; if π wants to prevent the harm, π must offer ∆ enough money to induce ∆ to agree to stop the harmful conduct (dismiss the complaint). π can stop ∆‘s conduct if π is willing to pay damages as determined by a court to compensate ∆ for ∆‘s loss of profits (purchased injunction). ∆ has the right to engage in the protected activity; any agreement whereby ∆ gives up the right to engage in the conduct is unenforceable.

Liability Rule

Inalienability Rule

∆ has no right to commit the harm; any agreement by π to allow ∆ to commit the harm is unenforceable.

REGULATION OF AGREEMENTS BETWEEN PARTIES
I. Transfers of Property Rights A. Adverse Possession 1. Elements of the Doctrine of Adverse Possession i. Adverse possession is established when one (i) actually possess property, in a manner that is (ii) ―open and notorious‖, (iii) exclusive, (iv) continuous, (v) nonpermissive (―adverse or hostile‖) and (vi) for a period established by the statute of limitations for ejectment. ii. Some states have enacted different statutes of limitation depending on whether possessor has acted under (vii) color of title or (viii) paid property taxes on the land. iii. Some courts have formally required a showing that the occupation was in (ix) good faith or that the possessor must act (x) under a claim of right. iv. Courts generally hold that adverse possession claims cannot prevail against government property. However, some states have limited or abolished governmental immunity from adverse possession.

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v. A 1986 federal statute (43 U.S.C. § 1068) allows adverse possession of federal lands in certain instances if a claimant has occupied the property for 20 years in good faith reliance on a claim or color of title and has either cultivated the land or constructed improvements. a. Actual Possession – means the ―ordinary use to which the land is capable and such as an owner would make of it.‖ In the absence of a fence or other physical markings, the extent of the area acquired is determined by the extent of the occupation and use. b. Open and Notorious – possessory acts must be sufficiently visible and obvious to put a reasonable owner on notice that her property is being occupied by a non-owner with the intent of claiming possessory rights. c. Exclusive – generally means that the use ―is of a type that would be expected of a title holder of the land in question‖ and that ―the adverse claimants possession cannot be shared with the true holder.‖ d. Continuous – commonly meant that the adverse possessor must exercise control of the property in the ways customarily pursued by owners of that type of property. Moreover, the general rule is that succeeding periods of possession by different persons may be added together – this is called tacking. Most states require however that successors can add to the original possessor‘s holding only if they are in privity with one another – meaning the original possessor transferred title to the property to the successor. e. Non-Permissive (Adverse or Hostile) – adverse possessor must treat the property as her own and the use must not result from the title holder‘s permission. Various tests of this element include (i) an objective test based on use and a number of subjective tests based on (ii) a claim of right, (iii) intentional dispossession and (iv) good faith. In the absence of a clear revocation of permission by the title holder of a clear ouster by the adverse possessor, an initial permission will constitute an absolute defense to an adverse possession claim notwithstanding the duration of the occupancy by the non-owner. f. Statutory Period – varies widely form state to state. Many states will toll the statute of limitations if the title holder is under a disability such as infancy, insanity, or incompetence, either providing that the statute begins running only after the disability ends or shortening the limitations period once the disability is removed. g. Color of Title – is ―something in writing which, at face value, professes to pass title but which does not do it, either from want of title in the person making it or from the defective mode of conveyance that is used.‖ When color of title exists, it functions must as fences do to help the court determine the boundaries of the land being claimed by adverse possession. vi. Brown v. Gobble Facts: Gobbles fenced in property actually included a two-foot wide tract of the Browns‘ property. Gobbles sued for adverse possession to prevent Browns from building a road. Holding: A higher standard of ―clear and convincing evidence‖ must be used to adverse possession claims to minimize the risk of erroneous decisions. vii. Nome 2000 v. Fagerstrom Facts: Fagerstroms used a parcel of land owned by Nome 2000 seasonally from 1944 to 1987, building various improvements/structures during the period.

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Holding: ―The conditions of continuity and exclusivity require only that the land be used for the statutory period as an average owner of similar property would use it.‖ 2. Policy Justifications for Adverse Possession i. Most courts and scholars have justified adverse possession by suggesting that it (i) clarifies titles by eliminating stale claims and (ii) that it encourages ―active and efficient use of land.‖ However, the best explanation for adverse possession is that it protects justified expectations. a. The failure of the titleholder to object might be understood as effective abandonment of the owner‘s rights, at least in relation to an adverse possessor. b. One purpose of the adverse possession doctrine is to create security by encouraging owners to rely on existing practical arrangements that have persisted for a long time. c. Another policy behind the statute of limitations is to give victims incentives to bring lawsuits within a reasonable time; when this is done, everyone has repose, knowing that she is not subject to lawsuits for actions undertaken long ago. B. Servitudes – Easements and Constructive Trusts 1. Prescriptive Easements i. Prescriptive easements are established when one (i) actually uses property, in a manner that is (ii) ―open and notorious‖, (iii) exclusive, (iv) continuous, (v) nonpermissive (―adverse or hostile‖) and (vi) for the statutory period. Similar to the doctrine of adverse possession. ii. Prescriptive easements run with the land and are binding upon subsequent owners of the servient estate. iii. Negative easements may not be acquired by prescription! A negative easement is a right to prevent another owner from doing something on her land. Such easements can be created by contractual arrangements. iv. Community Feed Store, Inc. v. Northeastern Culvert Corp. Facts: Two businesses were located next to each other, separated by a gravel area that was used by trucks serving the Community Feed Store to deliver bag feed to the facility. Although Northeastern bought the property in 1956, it wasn‘t until 1984 that a survey revealed that the feed store‘s trucks were using part of Northeastern‘s land. Holding: The use of another‘s property in a manner that is open, notorious and adverse (silence was presumed to be non-permissive) was sufficient for a prescriptive easement. Further Comments: The extent of an easement created by prescription is fixed by the use through which it was created. No use can be justified under a prescriptive easement unless it can fairly be regarded as within the range of the privileges asserted by the adverse user and acquiesced in by the owner of the servient tenement. Yet, no use can ever be exactly duplicated. If any practically useful easement is ever to arise by prescription, the use permitted under it must vary in some degree from the use by which it was created. Hence, the use under which a prescriptive easement arises determines the general outlines rather than the minute details of the interest.

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2. Easements By Estoppel i. Easements by estoppel are established if (i) initial permission to use the land, (ii) the licensee invests substantially in reasonable reliance on that permission and (iii) revocation of the license would work an injustice. ii. Doctrine only applies if the reliance is reasonable and that is the case only if the licensor created the impression that the license would not be revoked or a reasonable licensee would so construe the situation. iii. Doctrine also applies when grantor purports to grant an easement but does so orally or without a sufficient written memorandum that satisfies the requirement of the statute of frauds. iv. Holbrook v. Taylor Facts: ∆ gave π, neighboring landowners, permission to use a road on ∆‘s property to get to π‘s land. π constructed a house on the property based on this reliance. ∆ later tried to revoke permission and close off the road. Holding: ―Where a license is not a bare, naked right of entry, but includes the right to erect structures and acquire an interest in the land in the nature of an easement by the construction of improvements thereon, the licensor may not revoke the license and restore his premises to their former condition after the licensee exercises the privilege given by the license and erects the improvements at considerable expense.‖ Pro: Grantors should be responsible for their actions/statements; prevents wasteful economic activity by grantee; protects those who act on reasonable assumptions. Con: By relaxing formal rules, more difficult for grantors to protect themselves; perhaps unreasonable for licensee to invest without a formal acknowledgement. 3. Constructive Trusts i. Constructive trusts are implied by law rather than created expressly by a donor. They effectively require a property owner to use her property for the benefit of another, or to grant a non-owner access to the property, or to transfer possession or ownership to another. ii. A constructive trust is ―implied whenever the circumstances are such that the person holding legal title to property, either from fraud or otherwise, cannot enjoy the beneficial interest in the property without violating some established principle of equity.‖ iii. The doctrine generally is intended to prevent ―unjust enrichment of the legal holder,‖ and may apply when a party is ―induced to make valuable improvements on real property.‖ iv. Rase v. Castle Mountain Ranch Facts: Owner allowed friends to build cabins on property but refused to sell or lease the land and instead granted licenses orally and later in written form. When property was sold, new owner attempted to terminate licenses. Holding: ―that original landowner engaged in a course of conduct that game the cabin owners an implied assurance of a somewhat permanent tenure sufficient that they made substantial investments in erecting and maintaining the cabins openly recognized by the landowner.‖ Pro: Licensor should have known that one would not build a permanent structure on land belonging to another if license was revocable at will; focus on informal expectations; prevents people from fraudulent dealings.

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Con: Licensee knew their licenses were revocable and that they had no legitimate expectation that they had a lease or easement or any more permanent right. 4. Easements Implied From Prior Use i. Courts will imply an easement from prior use if (i) the two parcels were at one time in common ownership, (ii) one of the parcels had derived ―a benefit or advantage‖ from the other parcels prior to the sale, (iii) this use was both apparent and continuous and (iv) continuation of the use is ―reasonably necessary‖ or ―convenient‖ to the enjoyment of the dominant estate. Moreover, the more open and obvious the use, the less necessary it must be. ii. A grantee (or buyer) who claims an easement over remaining land of the grantor seeks an easement by grant; the grantee claims that the land she bought includes an appurtenant easement to cross the grantor‘s remaining land. iii. When the grantor claims that she intended to reserve an easement over the land conveyed to the grantee, most courts want a higher level of certainty that the easement is necessary to the enjoyment of the grantor‘s land. iv. Granite Properties LP v. Manns Facts: Granite held three continuous parcels but then sold the middle parcel to Manns. Trucks servicing a shopping center on one parcel and a driveway to an apartment building on another parcel, used driveways that were on Manns‘ property. Holding: The court held that (1) the driveways in question had been used by the dominant estate owner or its predecessors in title since the respective properties were developed, (2) the driveways were permanent in character, being either rock or gravel covered, and (3) the servient estate owners were aware of the driveways' prior uses before they purchased the parcel. Pro: Use was open and obvious so the parties should have known; simply effectuates intent; more efficient to continue with prior use. Con: Promotes sloppiness; might have bargained differently in parties had known. 5. Easements Implied By Necessity i. Courts will imply an easement by necessity when an owner sells a landlocked parcel. No prior use is required unlike easements from prior use but the necessity requirement is strictly interpreted; only landlocked parcels that have no other access to a public road can benefit form this doctrine. ii. Important to remember that the doctrine only applies to remaining land of the grantor, not to neighboring land generally. iii. Finn v. Williams Facts: π claimed that nearest and only available means of access from their land to the highway and to market for livestock and crops was by means of right-ofway over ∆‘s tract immediately to north. π sought declaration of right-of-way easement of necessity. Holding: The court stated that where an owner of land conveyed a parcel thereof which had no outlet to a highway except over the remaining lands of the grantor or over land of strangers, a way of necessity existed over remaining lands of the grantor. Pro: Effectuates intent of the parties since the law presumes that a grantor implicitly conveys or reserves whatever is necessary to put property to beneficial use.

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Further Comments: If the parties clearly intended not to create an easement, then one will not be recognized. 6. Express Easements – In General i. Four negative easements have traditionally been recognized: light, air, lateral support and the flow of an artificial stream. In recent years, conversation easements and historical preservation easements have been enforced. Negative easements are limited because unlike affirmative easements, it may be hard or impossible to observe their existence. ii. When created, easements are generally understood to be permanent, and unlike covenants, are not governed by changed conditions or undue hardship doctrines that may nullify them is conditions change. iii. Traditional law of easements does not allow the creation of an affirmative duty to do something on one‘s own land such as a duty to build a structure or pay monthly fees to a condo association. iv. Owner of an appurtenant easement cannot convey it separate from ownership of the dominant land unless the original easement made the benefit of the easement severable. In other words, an appurtenant easement cannot be converted into an easement in gross without the consent of the owner of the servient estate and even with consent, it is considered a new easement. 7. Express Easements – Appurtenant i. Easements that are intended to ―run with the land,‖ such that the benefit of the easement will pass to any future owner of the dominant estate and the burden will pass to any future owner of the servient estate. ii. Easements intended to be appurtenant will in fact only run with the land if: (i) they were intended to run with the land (if ambiguous, courts look to language of easement and tend to presume in favor of grantee), (ii) they are in writing and (iii) the owner of the servient estate purchased with notice of the easement. iii. The three types of notice are: (i) actual notice, where the owners in fact know about them, (ii) inquiry notice, where there are visible signs of use by nonowners and (iii) constructive notice, where the deed conveying the easement is recorded in the proper registry and the subsequent owners should have known. iv. Main issues that arise in interpretation of easements are: (i) the scope of allowable uses encompassed by the easement, (ii) divisibility of the dominant estate, (iii) whether the easement can be extended to obtain access to land other than the dominant estate and (iv) whether the easement can be relocated by either the easement owner or the servient estate. v. The scope of the easement is determined by the intent of the grantor; narrow interpretations limit the dominant estate and provide clarity while broader interpretations allow for changes over time necessary to maintain the usefulness of the easement. vi. Green v. Lupo Facts: The easement grantors interfered with the easement that they granted to the easement holders after they constructed a mobile home park. The park's residents were supposed to use the road created by the easement for ingress and egress but soon used it as a runway for motorcycles. Holding: Where the language is ambiguous the court may consider the situation of the property and of the parties, and the surrounding circumstances at the time the instrument was executed, and the practical construction of the instrument given by the parties by their conduct or admissions.

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Further Comments: Court found that there was a strong presumption against personal easements (in gross) for policy reasons. vii. Cox v. Glenbrook Co. Facts: Glenbrook granted the predecessor of Cox an easement over the estate to reach the Cox‘s estate. Glenbrook sought a declaration as to the extent of the estate after Cox planned to subdivide and develop his estate. Holding: Held that the dominant estate owners could maintain, repair or improve the way; language of the easement didn‘t contain any limitations regarding use. To the extent that it is silent, the court was not going to imply any restrictions; and when the width is not specified, the conveying instrument must be construed in the light of the facts and circumstances existing at its date and affecting the property, the intention of the parties being the object of inquiry. 8. Express Easements – In Gross i. Most courts hold that easements in gross are transferable when they are commercial in nature, such as easements for utility lines, but will not allow them to be transferred if they serve a personal, or noncommercial purpose, and appear to have been intended only to benefit the immediate recipient of the easement. ii. Most courts hold that easements in gross are apportionable, where the easement owner can grant others similar rights to use the easement, if they are exclusive, meaning the owner of the servient estate has no right to use the easement in the same way as the easement owner. They are not apportionable if they are nonexclusive, where the servient estate retains the right to conduct the same use as the easement owner. 9. Terminating Easements i. Easements last forever unless they are terminated by: (i) agreement in writing (release of the easement holder), (ii) their own terms, for example if the easement expressly states a duration, (iii) merger, when both the servient and dominant estate are to be owned by the same party, (iv) abandonment, when one‘s conduct clearly indicates intent to abandon easement, (v) adverse possession or prescription and (vi) many states have now enacted ―marketable title acts‖ that require easements, along with other encumbrances on property interests, to be re-recorded periodically. iii. Mere nonuse of an easement does not constitute abandonment; the easement owner must engage in affirmative action that clearly indicates intent. iv. Some courts have also applied the doctrine of frustration of purpose in terminating easements; moreover, the Restatement (Third) suggests also allowing changed conditions doctrine to apply. C. Servitudes – Covenants 1. Formal Requirements i. Traditionally, real covenants were said to run with the land if: (i) the covenant was in writing, (ii) the purchaser of the servient estate was on notice of the covenant at the time of purchase, (iii) the original covenanting parties intended both the burden and benefit to run with the land, (iv) the original covenanting parties were in privity of estate with each other (horizontal privity) and subsequent owners were in privity with the original contracting parties (vertical privity) and (v) the covenant “touched and concerned” the land. a. The traditional remedy for breach of a contractual obligation associated with a real covenant was the assessment of damages.

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ii. Also traditionally, covenants were said to be enforceable by injunctive relief as so-called equitable servitudes if: (i) the purchasers of the servient estate was on notice of the covenant at the time of acquisition, (ii) the original covenanting parties intended the covenant to run with the land and (iii) the covenant “touched and concerned” the land. a. This test omits both the horizontal and vertical privity requirements. b. Equitable servitudes, though usually created on the basis of a written agreement, may also be recognized sometimes in the absence of writing through the doctrine of equitable estoppel. 2. Intent to Run i. A deed or lease that includes a restrictive covenant will be deemed to show the grantor‘s intent for the covenant to run with the land if it expressly recites that the covenant is made to, or is enforceable by, the ―heirs or assigns‖ or ―successors‖ of the covenantee and/or if the covenant expressly states that it ―is intended to run with the land‖ or ―to bind (benefit) future owners.‖ ii. However, if the covenant lacks such language, most courts will hold that it does run with the land if it is the kind of covenant that was probably intended to run with the land. iii. Covenants are likely to be intended to run with the land if they satisfy the traditional ―touch and concern‖ test. 3. Privity of Estate i. The idea behind privity is that the law will attach such burdens and benefits to ownership of particular parcels only when the burden to the servient estate is justified by a compensating benefit to one or more dominant estates. ii. Horizontal privity can be satisfied by either mutual privity or instantaneous privity. a. Mutual privity is established if: (i) the covenant is contained in a lease transferring possession of land from landlord to tenant, (ii) the covenant is contained in a deed that divides property ownership between a present estate and a future interest or (iii) if the covenant is contained in a deed conveying ownership of land and one or both parties owns an easement burdening the property of the other (the so-called Massachusetts test). b. Instantaneous privity is established by placing the covenant in a deed of sale that creates the restriction and impliedly or expressly states that the covenant is intended to benefit remaining land of the guarantor. iii. Strict horizontal privity requirements traditionally excluded three types of relationships that are, today, considered to be adequate. a. Agreements between neighbors that are not part of a simultaneous conveyance of another property right. b. A covenant between a grantor and grantee that is not entered into at the same moment the affected property interest was transferred. c. Covenants involving developers and subdivisions. iv. Vertical privity refers to the relationship between the original covenanting parties and their successors in interest. a. Vertical privity is absent when an owner of a servient estate leases her property; the tenant is not bound by any covenants that would have bound the landlord.

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b. Most courts agree that ―intended beneficiaries‖ of a restrictive covenant are entitled to enforce it, regardless of whether they are in strict vertical privity with the grantor who originally imposed the restriction. c. Some courts have required vertical privity only for the burden to run with the land and have allowed a covenant to be enforced by a succeeding owner of the dominant estate despite a lack of strict vertical privity on the benefit side (relaxed vertical privity). 4. Touch and Concern i. Traditionally, a covenant met this requirement if it has something to do with the use of the land and/or is connected with the enjoyment of the land. ii. Today, both anticompetitive covenants and covenants to pay dues to homeowners associations are universally understood to touch and concern the land. iii. However, the Restatement (Third) would abolish the touch and concern requirement and provide instead that covenants will run with the land unless they are unconsciousable, without rational justification, or otherwise violate public policy. iv. Davidson Bros., Inc. v. D. Katz & Sons Facts: Davidson conveyed property to Katz with restrictive covenant not to operate property as a supermarket. NJ Housing Authority later purchased property from Katz and leased it to C-Town. All parties involved had actual notice of restrictive covenant. Holding: The court held, the test of whether such a restrictive covenant ran with the land should be the reasonableness of the covenant, adding that the "touch and concern" test was just one of the factors to be considered in determining reasonableness. Further Comments: In determining whether a restrictive covenant is "reasonable" and hence enforceable, the following factors should be considered: (i) the intention of the parties when the covenant was executed, and whether the parties had a viable purpose which did not at the time interfere with existing commercial laws, such as antitrust laws, or public policy; (ii) whether the covenant had an impact on the considerations exchanged when the covenant was originally executed; (iii) whether the covenant clearly and expressly sets forth the restrictions; (iv) whether the covenant was in writing, recorded, and if so, whether the subsequent grantee had actual notice of the covenant; (v) whether the covenant is reasonable concerning area, time or duration; (vi) whether the covenant imposes an unreasonable restraint on trade or secures a monopoly for the covenantor; (vii) whether the covenant interferes with the public interest; (viii) whether, even if the covenant was reasonable at the time it was executed, "changed circumstances" now make the covenant unreasonable. 5. Enforcement in Gross i. Covenants that touch and concern the use of land for the benefit of the owner of neighboring land are presumed enforceable only by the current owner of the benefited parcel. ii. Although some courts state they will allow enforcement by the original covenantee if the parties to the original covenant intended to allow enforcement by the original covenantee after transfer of the dominant estate, they are extremely reluctant to find such an intent, absent explicit language to that effect.

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iii. Courts make an exception to the policy restricting enforcement of covenants whose benefit is held in gross when the covenants is held by a homeowners association on behalf of the owners in the neighborhood, by a government entity, or by a charity. iv. The Restatement (Third) would abolish the rule that disallows the benefit of a covenant to be held in gross; it would substitute a requirement that the beneficiary of the covenant has a legitimate interest in enforcing the covenant. 6. Implied Reciprocal Negative Servitudes (IRNS) i. Solves problems associated with privity and notice in the context of subdivision developments. a. Allows enforcement by early buyers against later buyers. b. Imposes obligation on purchasers to research the titles not only to the parcels they‘re buying but also to neighboring parcels previously owned or conveyed by the seller. ii. For IRNS to apply there must be an (i) original common owner/grantor and (ii) uniform restrictions placed upon a majority of the lots. iii. Many states require the developer to file a declaration (general plan/scheme). a. Clarifies which properties are restricted and puts subsequent purchasers on notice of application restrictions. iv. Evans v. Pollock Facts: Pollock contracted to sell several lots adjacent to property owners' land for the purpose of building a commercial development. Evans et al., whose deeds contained restrictive covenants limiting the use of the property to residential purposes, sued for equitable relief under the implied reciprocal negative easement doctrine. Evans claimed that the restrictive covenants expressly imposed by deed upon their property were implied upon Pollock's property. Holding: The court held that there needed only be a clearly defined, restricted district to which the restrictions applied as part of the plan of development, for the implied reciprocal negative easement doctrine to apply. Further Comments: Where a common grantor develops a tract of land for sale in lots and pursues a course of conduct, which indicates that he intends to inaugurate a general scheme or plan of development for the benefit of himself and the purchasers of the various lots, and by numerous conveyances inserts in the deeds substantially uniform restrictions, conditions and covenants against the use of the property, the grantees acquire by implication an equitable right, variously referred to as an implied reciprocal negative easement or an equitable servitude, to enforce similar restrictions against that part of the tract retained by the grantor or subsequently sold without the restrictions to a purchaser with actual or constructive notice of the restrictions and covenants. v. Sanborn v. McLean Facts: McLeans wanted to build a gas station on a lot behind their house. No restrictions appeared in the chain of title to the lot, however, there were restrictive covenants in 53 of 91 of the neighboring lots. Holding: The court held that the McLeans were on constructive notice of the restrictions in the deeds to neighboring properties and that the uniform residential character of the surrounding properties also put the McLeans on inquiry notice to determine whether there were restrictive covenants on neighboring lots that might be interpreted to create a plan to restrict the entire neighborhood to residential use.

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vi. Riley v. Bear Creek Planning Committee Facts: Rileys had purchased first lot in subdivision upon representation of the seller that the properties would be subject to the restrictions they were handed before purchase. However, declaration containing restrictions was not recorded until after they purchased their lot; moreover, because of a mistake by the title company, their deed did not mention the restrictions. Holding: California Supreme Court held that the Rileys were not subject to the restrictions because there was no writing in their deed limiting the use of their land and the intent of the owner to impose those restrictions was not binding on them. Evidence of their prior knowledge of the grantor‘s intent was not admissible under the parol evidence rule. Further Comment: In 1995, the CSC clarified Riley by holding that any buyer of a lot covered by a recorded declaration is bound by the restrictions in the declaration even if his deed nowhere mentions the declaration or the restrictions. 7. Modifying or Terminating Covenants i. Changed Condition a. A covenant will not be enforced if the conditions have changed so drastically inside the neighborhood restricted by the covenants that enforcement will no longer be of substantial benefit to the dominant estates. b. Doctrine is applied very strictly when changes have occurred outside the restricted subdivision that affects lots on the fringe of the restricted area. c. The Restatement (Third) suggests modification of covenants in lieu of termination if modification will allow the covenant to serve its original purpose. d. El Di, Inc. v. Town of Bethany Beach Facts: El Di, Inc. d/b/a Holiday House was granted a license to sell alcohol, by the State Alcoholic Beverage Control Commission. El Di appealed a permanent injunction granted on application by the town enjoining the sale of alcoholic beverages under the license on the basis of the undisputed chain of title for the restaurant that included a restrictive covenant prohibiting such sales. Holding: The court reversed the grant of the permanent injunction finding that the trial court erred in holding that the change of conditions was insufficient to negate the restrictive covenant. Further Comments: A court will not enforce a restrictive covenant where a fundamental change has occurred in the intended character of the neighborhood that renders the benefits underlying imposition of the restrictions incapable of enjoyment. Although a change in zoning is not dispositive as against a private covenant, it is additional evidence of changed community conditions. ii. Relative Hardship a. A covenant will not be enforced if the harm caused by enforcement, that is, the hardship to the owner of the servient estate, will be greater by a ―considerable magnitude‖ than the benefit to the owner of the dominant estate. b. However, if the benefit is substantial, the courts are unlikely to apply the doctrine even if the hardship to the servient estate is substantial. c. The Restatement (Third) treats the doctrine has a factor to consider in determining the availability and selection of appropriate remedies.

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iii. ―Unclean Hands‖ a. Enforcement of a covenant may be denied if the complaining party has violated the covenant himself. iv. Waiver or Acquiescence a. Enforcement of a covenant may be denied when the servient owner violates the covenant and the servitude beneficiary fails to object. v. Laches a. Enforcement of a covenant may be denied when an owner who has waited too long to enforce his rights and is barred from doing so if the other party has changed his position on the reliance of such a failure. vi. Abandonment a. A covenant will not be enforced when there is widespread violation of the covenant, not only by the servient estate, but by the entire neighborhood. vii. Estoppel a. If a servitude beneficiary represents to the owner of a servient estate ―by conduct, words, or silence, an intention to modify or terminate the servitude,‖ he may be estopped from enforcing the covenant if the servient owner changes his position in reasonable reliance on the representation, if such reliance is ―reasonable to forsee.‖ viii. Prescription a. A covenant may be terminated by open and notorious violation of the covenant without permission for the statutory period. ix. Language in Instrument a. A covenant may contain such language that may set a termination date or require action for continued enforcement/expiration. x. Marketable Title Acts a. Many states have statutes that terminate restrictive covenants if they are not re-recorded after a specified period of time. xi. Merger a. If the servient and dominant estate come under the ownership of the same party, the covenants will be terminated. xii. Release a. If both the owner of the servient and dominant estate privately contract to release the covenant. xiii. Statutes a. Many courts will only enforce covenants that have a substantial benefit. b. Blakely v. Gorin Facts: Petitioner property owners filed suit seeking a determination and declaration that certain restrictions on their parcel of land were obsolete and unenforceable. Holding: The court held that Mass. Gen. Laws ch. 184, § 30, which allowed for the removal of restrictions on petitioners' parcel, was constitutionally applied; as the evidence showed that the public interest would not be served by the enforcement of the restrictions. The court held that the restrictions would not be specifically enforced, as the properties and neighborhood had drastically changed and because the restrictions would impede reasonable use of the land. A balance of the equities and a consideration of public interest required that respondents accept money damages by way of enforcement of the restriction.

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Further Comments: Mass. Gen. Laws ch. 184, § 30 provides that no restriction shall be enforced or declared to be enforceable unless it is determined that the restriction is, at the time of the proceeding, of actual and substantial benefit to a person claiming rights of enforcement. Further, even if a restriction is found to be of such benefit, it shall not be enforced except by award of money damages if any of several enumerated conditions are found to exist. D. Servitudes – Homeowners Associations & Condominiums 1. Formation and Requirements i. A homeowners association is created by a declaration filed by the developer with the registry of deeds prior to the sale of the first lot. Each subsequent owner becomes a member of the association. ii. A condominium association is created by a declaration filed with the registry of deeds but it also often details management structure, powers of the association and board, bylaws, and covenants. a. Because both require the filing of a declaration, future purchasers are said to be on actual or constructive notice of the declaration‘s contents and are deemed to have impliedly agreed to its terms. iii. Many states and the Restatement (Third) provide that the association can repudiate any contracts entered into when the developer was in control of the association. a. Contracts for the provision of management or maintenance services; b. Any contract between the association and the developer; and c. Any contract that is ―unconsciousable‖. iv. Condominium and Cooperative Conversion Protection & Abuse Relief Act (15 U.S.C. §§ 3601 – 3616) gives associations the power to terminate management contracts of more than three years entered into between the association and the developer while the developer had majority control of the association. 2. Reasonableness Test for Amendments & Enforcement i. Some courts have imposed a reasonableness test to determine when rights should be enforced. a. In general, a clause allowing the owners the right to alter, amend, repeal, or modify restrictions at any time in its sole discretion is a valid clause so long as it is exercised in a reasonable manner so as not to destroy the general scheme or plan of development. ii. Appel v. Presely Companies Facts: Presley recorded a set of restrictive covenants. The covenants regulated the land use, building type, quality, and size of the residential single-family dwellings that were to be placed on the subdivision property. The Appels alleged that the restrictive covenants were used as a sales tool, which they relied on in purchasing a lot and constructing their home. Presley's employees or officers amended the restrictive covenants. The amendment deleted nine lots from the effect of the restrictive covenants. Holding: A determination of whether the exceptions were reasonably exercised or whether they essentially destroyed the covenants required resolution of a factual matter. Thus, summary judgment on that issue was inappropriate. Further Comments: The developer's exercise of his right to cancel or modify the restrictive covenants must be reasonable, with due regard for the property rights and investments of the persons who rely upon the residential covenants

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which are in full force at the time of their purchase. The court also stated that any request for injunctive relief is directed to the sound discretion of the trial court. In determining whether such relief should issue, the court may consider a number of factors and should balance equities and hardships where required. Factors for the trial court to consider include: (1) the character of the interest to be protected, (2) the relative adequacy to the plaintiff of injunction in comparison with other remedies, (3) the delay, if any, in bringing suit, (4) the misconduct of the plaintiff if any, (5) the interest of third persons, (6) the practicability of granting and enforcing the order or judgment, and (7) the relative hardship likely to result to the defendant if an injunction is granted and to the plaintiff if it is denied. iii. O‘Buck v. Cottonwood Village Condominium Association Facts: Condo residents filed a suit against their condominium association challenging a bylaw banning the mounting of television antennae on the buildings. Holding: The court also held that the mere mention of the word "antennae" in the declaration did not allow the residents, as owners, to reasonably infer a right that was superior to that of the association's authority to ban them because the declaration subjected the antennae to association rules, and merely clarified that presence of privately owned antennae in common areas did not render the antennae subject to common ownership. Further Comments: Provided that a board-enacted rule does not contravene either an express provision of the declaration or a right reasonably inferable therefrom, it will be found valid, within the scope of the board's authority. In evaluating the reasonableness of a condominium association rule, it is necessary to balance the importance of the rule's objective against the importance of the interest infringed upon. In a case where a rule seriously curtails an important civil liberty, such as, for example, freedom of expression, a reviewing court will look with suspicion on the rule and require a compelling justification. iv. Neuman v. Grandview at Emerald Hills Facts: Several condominium unit owners reserved the auditorium on Saturday mornings for what they claimed was a party, although they actually conducted religious services. Other unit owners objected, and after a meeting, the condominium board of directors amended the auditorium use rule to provide that no religious services could be held in the auditorium or in any other common elements. The members filed suit. Holding: The court held that the condominium board's rules were reasonable and therefore not violative of Fla. Stat. ch. 718.123. The court noted that there was no peaceful assembly violation, as it was not a categorical ban of the members' right to use the auditorium for any gathering. Further Comments: Inherent in the condominium concept is the principle that to promote the health, happiness, and peace of mind of the majority of condominium unit owners since they are living in such close proximity and using facilities in common, each unit owner must give up a certain degree of freedom of choice which he might otherwise enjoy in separate, privately owned property. Condominium unit owners comprise a little democratic sub-society, of necessity more restrictive as it pertains to use of condominium property than may be existent outside the condominium organization.

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II. Restraints on Alienation A. Restraints on Alienation 1. Types of Restraints i. A ―disabling restraint‖ directly forbids the owner from transferring his interest in the property. ii. A ―promissory restraint‖ is a covenant by which the grantee promises not to alienate his interest in the property. iii. A ―forfeiture restraint‖ provides for a future interest that will vest if the owner attempts to transfer his interest in the property. iv. Options are likely to be held to be unreasonable restraints on alienation if they are for a fixed price and have no termination date. 2. Policy Reasoning for Holding Void i. The rule promoting alienability serve a variety of policy goals such as promoting efficiency by allowing property to shift easily to a more valued use; promoting liberty by freeing current owners from undue restrictions imposed by past owners (―dead hand control‖); and promoting equality both by promoting dispersal of ownership and preventing arbitrary or exclusionary interests, such as schemes to engage in wholesale racial discrimination. ii. However, such restraints are sometimes also viewed as positively because a grantor might be more inclined to transfer his land if he has some future control. iii. Modern trend is to weigh the utility of the restraint against the injurious consequences of enforcing restraint. iv. Total restraints on alienation of fee simple interests, whether in the form of disabling, promissory, or forfeiture restraints, are uniformly held void and unreasonable unless some specific, strong public policy justifies the restraint. 3. Direct Restraints on Alienation i. Traditionally held that restraints on alienation of fee interests in land were absolutely void on the formalistic ground that they were ―repugnant to fee.‖ ii. Horse Pond Fish & Game Club v. Cormier Facts: A fishing and hunting club was re-conveyed a deed from two of its member with restriction. The re-conveyed deeds stipulated that the land used by the club could not be alienated, unless 100 percent of the members agreed to a sale, or the club was officially dissolved. The surrounding area of the club became increasingly residential, and the majority of the members voted to conduct a land swap for a more suitable location. Cormier objected. Holding: The court held that the policy of freedom to alienate property prevailed where a restraint was found to be unreasonable. However, a restraint imposed upon a charity was deemed rebuttably reasonable and a material issue as to the club's charitable status existed. Further Comments: The rule of "reasonable restraints," generally does not apply in the case of a gift to a charitable trust or charitable corporation. In other words, an express provision or condition against alienation contained in a gift made to a charitable trust or charitable corporation may constitute a valid restraint.

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2. Consent/Approval Clauses i. Courts often give more latitude to condominium associations/cooperatives in placing restraints on alienability on property, if exercised reasonably, because of the unique property arrangement. ii. However, prohibitions on transfer of property without the consent of another are unreasonably restraints on alienation unless ―there is a strong justification for the prohibition, and, unless the consent can be withheld only for reasons directly related to the justification for the restraint.‖ iii. Consent/approval clauses are often found to be valid on leaseholds. iv. Northwest Real Estate Co. v. Serio Facts: A covenant in a deed that conveyed real property to another party in fee simple restricted the party's right to sell their property to Northwest's reservation of the right to determine the suitability of any potential purchaser. Holding: The court held that the covenant was an invalid restraint on alienation because on the one hand it gave the party a fee simple estate, and on the other hand restrained the party's power to sell as fee simple estate owners. Further Comments: The authorities agree that conditions or limitations in restraint of alienation or essential enjoyment of an estate in fee cannot be validly annexed to the deed or devise by which the estate is created, because they are repugnant to the inherent nature and qualities of the estate granted and tend to public inconvenience. v. Riste v. Eastern Washington Bible Camp, Inc. Facts: EW Bible Camp sold lake property only to people who agreed to subscribe to the tenets of a certain religious faith. Riste had obtained two lots through his parents' purchase of them. When Riste attempted to sell the property contrary to deed restrictions, the EW Bible Camp refused to remove the restrictions, and Riste sought declaratory relief. Holding: The court held that a restriction requiring the grantor's approval for the sale of a lot was a restraint on alienation of land that was void as repugnant to the nature of an estate in fee. Further Comments: Where the fee simple title to real estate passes under a deed or will, any restraint attempted to be imposed by the instrument upon the grantee or devisee is to be treated as void, and the grantee or devisee takes the property free of the void condition. An exception allows reasonable restraints that are justified by legitimate interests, such as "due on sale" clauses in real estate mortgages. vi. Aquarian Foundation v. Sholom House, Inc. Facts: Shalom sought to set aside a conveyance of a unit to Aquarian, claiming that the sale to Aquarian was in disregard of a provision in the declaration of condominium that required Sholom‘s written consent to the sale. Sholom claimed that the declaration contained a reverter clause which was the functional equivalent of a preemptive right and that made the restraint on alienation lawful. Holding: The court held that the reverter clause was not the functional equivalent of a preemptive right because it would not come into play until a violation of the restriction on an unapproved transfer would occur. The court held that since Sholom could prevent the activation of the reverter clause and thereby eliminate accountability to a unit owner, the provision was an invalid and an unenforceable restraint on alienation. Further Comments: Despite the law's recognition of the particular desirability of restrictions on the right to transfer in the context of condominium living, such restrictions will be invalidated when found to violate some external public

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policy or constitutional right of the individual. Where the restriction constitutes a restraint on alienation, condominium associations are not immune from the requirement that the restraint be reasonable. If an association is empowered to act arbitrarily, capriciously, and unreasonably in rejecting a unit owner's prospective purchaser, it must in turn be accountable to the unit owner by offering payment or a substitute market for the property. When this accountability exists, even an absolute and perpetual restraint on the unit owner's ability to select a purchaser is lawful. 3. Right of First Refusal (Preemptive Rights) i. Wolinsky v. Kadison Facts: Wolinsky owned a condominium and was a member in good standing of the condominium association. She wished to sell her unit and purchase another in the building, but the board exercised its right of first refusal. Holding: The court held that the board could only exercise a right of first refusal, reasonably, upon consideration of the resident's qualifications. Further Comments: A board of directors of a condominium association must exercise a right of first refusal reasonably upon consideration of the prospective purchaser's qualifications in light of the economic and social reasons, which justify the restraint itself. Thus, a requirement that the right of first refusal be exercised reasonably must be implied. The criteria for testing the reasonableness of an exercise of this power by a condominium association are (1) whether the reason for exercising the right of first refusal is rationally related to the protection, preservation or proper operation of the property and the purposes of the association as set forth in its governing instruments and (2) whether the power was exercised in a fair and nondiscriminatory manner. III. Present Estates and Future Interests A. Background 1. Division of Ownership Over Time i. The present estate holder has the right to possess the property while his property rights last; the future interest holder will obtain the right to possess the property when and if the present interest terminates. B. Freehold Estates 1. Fee Simple Absolute i. Ownership potentially lasts forever; has the right to possess and use the property; the right to sell it or give it away; and the right to devise it by will or leave it to his heirs. ii. “O to A” / “O to A and his heirs” / “O to A in fee simple” a. The words ―and his heirs‖ is technical in nature; it does not give A‘s heirs any interests in the property. 2. Fee Simple Determinable i. A type of defeasible fee. ii. Created when the future interest reverts automatically to the grantor on the happening of a stated event; the present interest is called a fee simple determinable and the future interest is called a possibility of reverter.

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iii. “O to A so long as used for residential purposes” / “O to A during residential use” / “O to A so long as used for residential purposes; if used for a nonresidential purpose, the property shall automatically revert to O” iv. Majority of states hold that such future interests are alienable, devisable and inheritable. v. When the condition is violated or occurs, the possibility of reverter kicks in automatically giving the holder immediate possession and the statute of limitations starts running. vi. The magic words are ―as long as‖, ―during‖, ―while‖, or ―unless‖. 3. Fee Simple Subject to Condition Subsequent i. A type of defeasible fee. ii. Created when a grantor may choose to retain for himself or his heirs the right to decide, at the time the condition is violated, whether to retake the property. If the future interest owner chooses to assert his rights when the condition is violated or the stated event occurs, the property ownership shifts to him; if he does not assert his rights, ownership stays with the current owner. The current interest is called a fee simple subject to condition subsequent and the future interest is called a right of re-entry. iii. “O to A, but if used for nonresidential purposes, O shall have a right of reentry” / “O to A on condition that the property be used for residential purposes; in the event it is not so used, O shall have a right of re-entry” iv. Majority of states hold that such future interests are alienable, devisable and inheritable. v. Since a right of entry does not become possessory until the holder asserts a right of possession, the statute of limitations does not start running until the holder asserts his right. However, the modern approach is to treat the right of possession the same as the possibility of reverter. vi. The magic words are ―on condition that‖ and ―provided that‖. 4. Fee Simple Subject to Executory Limitation i. A type of defeasible fee. ii. Created when the future interest in a defeasible fee belongs to someone other than the grantor; interest is identical to the fee simple determinable except that ownership shifts automatically to a third party rather than reverting to the grantor. The current interest is called a fee simple subject to executory limitation and the future interest is called an executory interest. iii. “O to A so long as used for residential purposes, then to B” iv. Most important difference between executory interests and future interest in the grantor is that executory interests have traditionally been subject to the rule against perpetuities. v. Options to purchase, rights of first refusal and preemptive rights are generally viewed as executory interests. C. Nonfreehold Estates 1. Leaseholds i. Transfer possession for a fixed period of time (a term of years) or a renewable period (periodic tenancy) or exist at the will of the owner (tenancy at will).

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D. Life Estates 1. Remainders and Reversions ii. A life estate lasts for the life of the present holder and if followed either by a reversion in the grantor (or his heirs) or a remainder in a third party. iii. Unlike the owner of a fee simple, the owner of a life estate has no right to pass on the property when he dies. iv. “O to A for life” a. Gives a life estate to A and a reversion to O or his heirs. v. “O to A for life, then to B” b. Gives a life estate to A and a remainder to B. vi. Life estates are transferable but the recipient obtains was the transferor owned; an estate for the life of the transferor; or a life estate per autre vie. 2. Vested Remainders i. A vested remainder belongs to an ascertainable person and there are no conditions precedent that must be satisfied before the remainder is certain to become possessory. ii. “O to A for life, then to B” a. Because B is a named person and no conditions must be satisfied before B‘s interest will take effect (other than the death of A), B‘s interest is a vested remainder. iii. Vested remainders are further classified as: a. Absolutely Vested 1. A remainder that will not change. 2. ―O to A for life, then to B” b. Vested Remainders Subject to Open 3. A remainder that is subject to a class that can increase. 4. “O to A for life, then to the children of B” 5. When a remainder is given to a class that can increase in size, the courts will close the class when any member becomes entitled to distribution or possession. c. Vested Remainders Subject to Divestment 6. A remainder that can be divested by the happening of an event. 7. “O to A for life, then to B, but if B drops out of law school, then to C” 3. Contingent Remainders i. A contingent remainder belongs to an unascertained person or there is a condition precedent that must be fulfilled before it can become possessory. ii. “O to A for life, then to B if he has graduated law school” a. Creates a contingent remainder because B will never get the interest unless he graduates from law school. iii. “O to A for life, then to the first child of B” b. Creates a contingent remainder if B has no children at the time of the conveyance from O to A; the remainder is not vested because we do not know who the first child of B is; moreover, the interest may never vest because B may never have children. 4. Destructibility of Contingent Remainders i. Almost all states now hold that contingent remainders hang around after the life estate terminates even if the contingency has not yet been fulfilled.

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ii. Thus, in “O to A for life, then to B if he has graduated form law school” the property will revert back to O if B has not graduated law school when A dies; however, if B later graduates from law school, the property will spring from O to B. a. This means that O‘s reversion is effectively a fee simple subject to executory limitation. E. Trusts 1. In General i. Grants power to one person (the trustee) with instructions and enforceable obligations to manage the property for the benefit of another (the beneficiary). ii. The trustee is said to possess ―legal title‖ to the property while the beneficiary possesses ―equitable‖ or ―beneficial‖ title. iii. Trusts can be created in real or personal property and can be in any of the estates that apply to real property; including defeasible fees and life estates. F. Regulation & Interpretation of Future Interests 1. Presumption Against Forfeitures i. When the grantor‘s intent is not clear, most states express a strong constructional preference for an interpretation that protects the holder of the present estate and avoids forfeiture to the future interest holders. b. Precatory language is words of request, recommendation, suggestion, or expectation; key point is that is it unenforceable, no legal effect. c. This means: Fee Simple > Defeasible Fee or Life Estate Defeasible Fee > Life Estate Fee Simple Subject to Condition Sub > Fee Simple Determinable Fee subject to a covenant > Defeasible Fee Fee with precatory language > Fee subject to a real covenant ii. Wood v. Board of Commissioners of Fremont County Facts: The Woods filed a complaint against the board of county commissioners, seeking the recovery of the value of land conveyed to the County for the construction of a county hospital. Woods claimed the deed was a fee simple determinable or fee simple subject to condition subsequent with a right of reversion if the land was every used for anything but a hospital. Holding: The court affirmed the lower court‘s summary judgment in favor of the County and held that: (1) the language in the deed did not create a fee simple determinable; and (2) the deed failed to clearly state the grantors' intent to retain discretionary power to reenter the land if the land ceased to be used as a hospital. The plain language of the deed was considered in determining the grantors' intent; precatory language is not legally binding. Reasoning: Conditions tending to destroy estates, such as conditions subsequent, are not favored in law. They are strictly construed. Accordingly, no provision will be interpreted to create such a condition if the language will bear any other reasonable interpretation, or unless the language, used unequivocally, indicates an intention upon the part of the grantor or devisor to that effect and plainly admits of such construction. iii. Edwards v. Bradley Facts: A grandmother devised property to the mother in her will with a restriction that if the mother tried to sell the property, the property would be vested in the grandchildren. The mother tried to sell the property but one of the

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grandchildren refused. In the mother‘s will, the one grandchild who refused received $1.00 and the other grandchildren received the property with a request that it be sold. The one grandchild who refused claimed the grandmother left the mother a life estate, and not a fee simple or fee simple subject to executory interest as the other grandchildren claimed. Holding: The court found that the testatrix intended the beneficiary to have the use and benefit of the real estate free of the claims of her creditors. The court also found that, although the will did not expressly designate the beneficiary's children as remaindermen, the conditional limitation to them indicated that they were intended to take the farm when their mother's interest terminated, whether by violation of the conditions or otherwise. The court concluded, therefore, that the trial court properly ruled that the beneficiary acquired a life estate in the property with remainder at her death in fee simple to her six children. Reasoning: The intention of the testatrix is to be upheld if the will can be reasonably construed to effectuate such intent and if it is not inconsistent with an established rule of law. In addition, the language of the will is to be understood in the sense in which the circumstances of the case show that the testatrix intended. 2. Cy Pres i. Most often used in regard to trusts, when it becomes impossible to administer a trust in the way that was intended by the settlor. ii. Courts will often correct the offending language to direct the interest to the appropriate party or a similar party within the general intention of the settlor. a. For example, a trust that establish for helping young white boys and girls; would be altered, if reasonable, to help boys and girls in general. b. “O to A for life, then to the first child of B to reach 25 years of age,” the court would reduce the age to 21 to validate the future interest. 3. Abolition of Fee Tail i. An estate that kept property within the family. ii. “O to A and the heirs of his body” a. Created a life estate in the property to A, with the remainder going to his children for life, then to their children for life, etc… iii. Abolished everywhere in the U.S. 4. Restrictions on New Estates i. The policy against creating new estates is based on the notion that complicated estates both impede the alienability of the property and may constitute illegitimate dead hand control from the past. ii. Johnson v. Whiton Facts: A conveyance of property stated ―…to Sarah A. Winton and her heirs on her father‘s side.‖ When Whiton tried to sell the property, the buyer refused on the ground that one of the grandchildren could not convey a fee simple absolute because her conveyance of the land also included her relatives on her father's side. Holding: The court held that the conveyance should be construed as a fee simple absolute on the ground that it violated public policy to create an estate that would descend only to the grantee‘s heirs on one side.

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G. Rule Against Perpetuities 1. Definition and Background i. According to J.C. Gray‘s formulation, ―no interest is good unless it must vest, if at all, no later than 21 years after the death of some life in being at the creation of the interest.‖ a. The rule is ―designed to prevent remoteness of vesting and thereby leave control of the wealth of the world in the hands of the living…‖ 2. Application of the Rule Against Perpetuities i. The rule regulates nonvested interests such as (i) executory interests and (ii) contingent remainders. a. Options to purchase property and rights of first refusal or preemptive rights have traditionally been classified as executory interests and thus subject to the rule. b. The main exception to executory interests being subject to the rule is if both the present estate owner and the future interest owner are charities. ii. Central Delaware County Authority v. Greyhound Corp. Facts: County Authority brought an action to quiet title in two parcels of land, alleging that the conveyance deeds' public use, ownership and repurchase restrictions were void as violative of the rule against perpetuities. Holding: The Supreme Court determined that the deeds were ambiguous, but concluded that the interest created was a repurchase option and that the repurchase option was void. Reasoning: If the language and circumstances of a conveyance of an estate in fee simple are otherwise reasonably susceptible of two constructions, under one of which it creates either a possibility of reverter or power of termination, and under the other of which it creates an option to repurchase, the latter of the two constructions is preferred. iii. All interests in the grantor or his heirs, such as reversions, possibilities of reverter, and rights of entry, are exempt from the rule. iv. Corporations are not counted as ―lives in being‖; must vest within 21 years only. v. N.B. that it is possible for an interest to be valid under the rule but invalid as an unreasonable restraint on alienation. 3. The Rule Against Perpetuities and Executory Interests i. In general, executory interests are invalid unless they are limited in time. ii. The traditional remedy applied by the courts is to strike out the offending language. a. “O to A, as long as used for residential purposes, then to B” becomes “O to A, as long as used for residential purposes.” iii. However, it is possible to draft around the Rule Against Perpetuities. b. “O to A, as long as used for residential purposes, then to B‖ can be equivalently achieved by O granting a fee simple determinable to A, and then transferring O‘s possibility of reverter to B. 4. The Rule Against Perpetuities and Contingent Remainders i. Often trickier to analyze; important to focus on finding a validating life in being. ii. “O to A for life, then to the children of B.” a. If B is alive at the time of the conveyance from O to A and B has children at that time, those children have a vested remainder subject to open. Their interest is subject to the rule against perpetuities but does

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not violate it because their interest will vest when A dies, the class will close and there is no possibility the interest will vest more than 21 years after the death of A, a life in being at the creation of the interest. b. If B has no children at the time of the conveyance, they have a contingent remainder because they are not ascertainable at that time. The remainder will vest when B has a child and B must have a child within B‘s lifetime (or nine months after B‘s death if B is a man). 5. Examples NOT Subject to the Rule Against Perpetuities i. “O to A so long as used for residential purposes.” ii. “O to A for life.” iii. “O to A for life, then to B.” iv. “O to A for life, then to B, but if B marries C, then back to O” 6. Examples Subject to the Rule Against Perpetuities but NOT Void i. “O to A for life, then to B if B marries C.” ii. “O to A for life, then to the children of B if B has children.” iii. “O to A for life, then to children of B.” a. At most can vest nine months after B‘s death. 7. Examples Subject to the Rule Against Perpetuities AND Void i. “O to A so long as used for residential purposes, then to B.” ii. “O to A but if ever used for nonresidential purposes, then to B.” iii. “O to A for life, then to the first child of B to be elected president.” a. Even if B has children, B could have subsequent children not alive at the time of conveyance. iv. “O to a fore life, then to A’s widow, then to A’s surviving children.” a. It is possible that the widow may not have been alive at the time of conveyance; so it is possible that the widow could die 21 years after the last party of interest to die, which would mean it would vest past the period of perpetuities. v. “O to A for life, remainder to A’s grandchildren.” a. While we are certain A‘s children can be born within nine months of his or her death, grandchildren can be born much later.‖ 8. Modern Approaches to the Rule Against Perpetuities i. Under the “Wait and See” approach, the courts will not hold that a future interest violates the rule until the perpetuities period has passed and they are certain that the future interest has not vested within that period. ii. Some states have passed statutes that cut off interests in the grantor following defeasible fees if the condition does not occur within a stated period after the initial conveyance. iii. Some states have marketable title statutes that require future interests to be rerecorded periodically in the local registry of deeds. iv. Most recently, about ½ the states have adopted the Uniform Statutory Rule Against Perpetuities (USRAP). a. It exempts all future interests in commercial transactions from the rule; the effect is to limit application of the rule to donative transfers. b. It creates a wait and see period of ninety years for all interests that would otherwise be void under the traditional rule. Such interests are

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good, even though they violate the traditional rule, as long as they vest within ninety years of the date of the creation of the interest. 9. An Exception to the Rule: Options to Purchase Under A Leasehold i. The courts have found that an option coupled with a long-term commercial lease is consistent with the public policy objectives of favoring free alienability of property and against restricting a property‘s marketability over long periods of time by restraints on alienation. ii. Texaco Refining & Marketing v. Samowitz Facts: Texaco brought an action for specific performance of an option agreement for the purchase of real property in a long-term commercial lease against Samowitz as successor in interest to the lessor. Holding: The court held that an option to purchase contained in a commercial lease, at least if the option must be exercised within the leasehold term, is valid without regard to the rule against perpetuities. Reasoning: The rule against perpetuities applies to an unrestricted option to purchase real property but not to an option to renew the term of a real property lease. Court also reasoned that an option contained in a lease would provide incentive for the lessee to develop and improve the property. 10. Preemptive Rights i. Most jurisdictions appear to retain the traditional rule that freestanding preemptive rights not held by a condominium or homeowners association are subject to the rule against perpetuities. ii. Cambridge Co. v. East Slope Investment Corp. Facts: Cambridge Co., a partnership and its partners who already owned a condo unit, wanted to purchase the condo unit sold to the Burgetts. Under the terms of the condominium declaration, existing owners of condo units had a right of preemption or the first right to purchase another condo unit. East Slope was timely notified that Cambridge Co. wanted to purchase the unit on the same terms as the Burgetts but sold the unit to the Burgetts. The partnership filed suit to reverse the sale and recover damages. Holding: The court held that: (1) a mechanical application of the rule against perpetuities voided the right of preemption in this case; (2) the reasons for a mechanical application of the rule were not appropriate in this case because the public policies promoted by the rule did not outweigh the policies served by the preemptive right; (3) and because the preemptive right in this case posed no threat to the free alienability of the condo unit, there was no reason for the rule against perpetuities to invalidate the preemptive right. Reasoning: The rule against perpetuities is applied to preemptive rights only where the purposes of the rule, such as preventing a practical restraint upon alienation or encouraging improvement of the property, are served. The validity of a restraint on alienation depends upon its reasonableness in view of the justifiable interests of the parties. In determining whether a restraint is reasonable, a court must look at the totality of circumstances, taking into account the respective interests of the parties and the duration and nature of the restraint used to enforce those interests. iii. The Restatement (Third) provides in Comment b to § 3.3 that the rule against perpetuities should not apply to options to purchase land and rights of first refusal.

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a. However, the reporter of the Restatement acknowledges that this is a minority position; perhaps adopted to influence the future direction. H. Regulatory Rules of Present Estate and Future Interests 1. Waste i. A life tenant is permitted to use the land for present purposes as a reasonable owner would but is not permitted to commit ―waste.‖ a. Traditionally this meant the life tenant had (i) a duty to repair the premises, to pay the appropriate taxes, maintain insurance on the property and (ii) that the life tenant had no power to harm the property or to make major alterations of any kind. b. If the life tenants actions in changing the property increase, rather than decrease, the value or utility of the property, it is called ameliorating waste, and is sometimes, but not always, condoned by the courts. ii. More v. Phillips Facts: A husband devised certain farmland to the life tenant, his wife, for her life. Initially, the wife resided in the farmhouse. However, the farmhouse was unoccupied for 11 years prior to the wife's death. The daughter and her husband, the remaindermen, filed a demand against the wife's/mother‘s estate following her death on the theory of waste to recover for the deterioration of the farmhouse. The wife‘s/mother‘s executrix asserted the defense of laches or estoppel. Holding: The court held that under the circumstances, the trial court did not err in rejecting the defense of laches or estoppel. The evidence was clear that the life tenant failed to carry out her duty as life tenant and quasi-trustee to keep the property in reasonable repair. Preservation of the property was the life tenant's responsibility, and the fact that permissive waste occurred was proved beyond question. Reasoning: The law imposes upon a tenant the obligation to return the premises to the landlord or remainderman at the end of the term unimpaired by the negligence of the tenant. 2. Restraints on Marriage i. Restraints on marriage were traditionally held to be void. a. “O to A, but if A marries, then to B.” ii. However, the Restatement (Second) provides that restraints on marriage are ―normally valid‖ if the ―dominant motive of the transferor is to provide support until marriage.‖ iii. Now traditionally held that restraints on marriage are invalid unless reasonable under all the circumstances; moreover, partial restraints are more likely to be valid than total restraints. iv. Lewis v. Searles Facts: Lewis sought to have title to real estate quieted in her in fee and to have a will construed. The will contained a provision giving property to Lewis if she remained unmarried, if she was to marry, the property would be equally divided between Lewis and two others. Holding: The court held the provision was not against public policy because it was not punishing plaintiff for marrying, but was intended as aid while single. Further, the court held the testatrix intended terms of fee interests and the devise was in fee because there was no intent expressed to create a life estate only and no further devise was made to take effect after plaintiff's death. Thus, Lewis

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received a determinable fee, subject to defeasance of two-thirds upon her marriage. Reasoning: The right of a donor to attach such conditions as he pleases to his gift will outweigh the maxim that marriage should be free, except where such conditions are evidently attached through caprice rather than from a desire to carry out a reasonable purpose.

REGULATION OF THE HOUSING MARKET
I. Concurrent Ownership A. Ownership in Common 1. Tenancy in Common i. Most common form of concurrent ownership, in which two or more persons own the same property at the same time. ii. Each tenant in common owns the right to possess the entire property. a. Fractional ownership interest may be unequal but irrelevant except as to entitled proceeds at the time of sale of the property. iii. Each tenant‘s interest is alienable, inheritable and devisable. a. If a tenant in common transfers his interest, the grantee receives exactly what the grantor owned, unless the tenant in common sells less than his full interest. iv. Each tenant has the right to lease their interest to a third party without the consent of the other tenants in common; allows lessee to possess entire property subject to sharing with other tenants in common. a. Cotenants can accept lease and receive a proportional share of payments, claim ouster, or ask for partition. b. Leases survive a transfer of interest. v. Carr v. Deking Facts: Joel Carr, George Carr, and Deking had an oral agreement regarding the lease of the tenants in common property. Subsequently, Deking entered a written lease with George Carr without the agreement of Joel Carr. Holding: The court affirmed the summary judgment granted to Deking on Joel Carr‘s ejectment claim because the George Carr could lease his undivided interest in land without the consent of the Joel Carr, and the Deking stepped into the Geroge Carr's shoes as a tenant in common for the duration of the lease. Further, Joel Carr‘s sole remedy was partition of the land. Reasoning: It is well settled that each tenant in common of real property may use, benefit and possess the entire property subject only to the equal rights of cotenants. Thus, a cotenant may lawfully lease his own interest in the common property to another without the consent of the other tenant and without his joining in the lease. The non-joining cotenant is not bound by this lease of the common property to third persons. The lessee steps into the shoes of the leasing cotenant and becomes a tenant in common with the other owners for the duration of the lease. A non-joining tenant may not demand exclusive possession as against the lessee, but may only demand to be let into copossession. vi. Kresha v. Kresha Facts: A father, without the mother's consent, leased the land to the son for a six-year period. When the mother learned of the lease, she filed an action for separate maintenance against the father and was awarded the land in question.

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The mother then attempted to terminate the lease, but the son continued his occupancy. The mother brought a forcible entry and detainer action against defendant son to obtain possession of certain land. Holding: The court held that one of several tenants in common was entitled to lease his own interest to a third person. The court held that the mother took the property subject to the lease because she knew at the time of acquisition that the property was encumbered by the lease. Reasoning: Where a lease is executed by one tenant in common of the entire estate for a term of years, and such lease is repudiated by the cotenants, the lessee in the lease is held to be not a trespasser but a tenant by sufferance of the estate occupied under such lease. In other words, the lessee of one tenant in common stands in the shoes of his lessor, and has no other or greater rights in the common property than that attaching to his lessor. 2. Joint Tenancy i. Characterized by four formal ―unity‖ requirements: (i) interest must be created at the same moment in time; (ii) all tenants must acquire interest in the same title; (iii) all must possess equal interests and such interests must last the same amount of time; and (iv) all tenants must have the right to possess the entire parcel. ii. Unlike a tenancy in common, a joint tenancy is not inheritable or devisable. a. Joint tenancy is characterized by a right of survivorship, whereby if A and B own property as joint tenants, and A dies before B, A‘s interest immediately pass to B who will own a 100% interest in fee simple absolute. b. If three persons own a property and one dies, each surviving joint tenant will now hold ½ of the interest; must be held in equal shares. iii. If joint tenants die simultaneously, the courts will treat their interests as tenants in common and such interests can be inherited by heirs or devisees. iv. If a joint tenant transfers his interest, the right of survivorship is destroyed and the new third party and cotenant have interests in tenancy in common. c. Some states allow a joint tenant to convey to his interest to himself in order to sever the joint tenancy. v. Courts are divided on whether a lease severs a joint tenancy. d. Courts that allow leases under a joint tenancy hold, however, that the lease terminates upon the death of the lessor/joint tenant with the surviving joint tenant receiving the full interest in the property. vi. Tenhet v. Boswell Facts: Tenhet owned property as a joint tenant with Johnson. Johnson leased the property without Tenhet‘s knowledge and subsequently died. Tenhet sought to have the lease declared invalid. Holding: The court reasoned that because joint tenancy estate arises only upon the intent of the parties, severance should be found only when circumstances established a clear and unambiguous intent of the parties to terminate. The court determined Tenhet took the property through right of survivorship, and that Tenhet took the property unencumbered by the lease because the interest of the non-surviving joint tenant who made the lease extinguished upon his death. Thus, the court concluded the lease expired when the lessor joint tenant died. Reasoning: Some authorities support the view that a lease by a joint tenant to a third person effects a complete and final severance of the joint tenancy. Others adopt a position that there is a temporary severance during the term of the lease.

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If the lessor dies while the lease is in force, under this view, the existence of the lease at the moment when the right of survivorship would otherwise take effect operates as a severance, extinguishing the joint tenancy. If, however, the term of the lease expires before the lessor, it is reasoned that the joint tenancy is undisturbed because the joint tenants resume their original relation. vii. Courts are divided on whether a mortgage severs a joint tenancy. a. In the vast majority of states, the courts characterize the mortgage as a lien, keeping title in the hands of the owner and merely granting the bank a security interest in the house; such courts are likely to hold that a mortgage does not sever a joint tenancy. b. In some states, however, the courts retain the title theory of mortgages in that the lender receives legal title to the house and the owner only retains an equitable interest call the equity of redemption; such courts are like to hold that a mortgage effectively transfers ownership and thus severs a joint tenancy. viii. Courts hold that murderers are not entitled to the right of survivorship; some states accomplish this by providing that murder severs the joint tenancy, converting it to a tenancy in common with the fractional interest belonging to the victim devolving to his heirs or devisees. 3. Tenancy by the Entirety i. A form of joint tenancy recognized in about ½ the states, only available to married couples. ii. Different from a joint tenancy in that (i) the individual undivided interests cannot be transferred without the consent of both spouses; (ii) the individual interests cannot be reached by creditors of one spouse; (iii) partition is unavailable as a remedy for owners who cannot agree about what to do with the property; instead owners can sever their ownership only through divorce. B. Rights and Obligations of Cotenants 1. Partition i. If cotenants cannot agree on how to use the property, the main legal remedy is partition. a. The owners may voluntarily partition the property by dividing it physically or selling it and sharing the proceeds (voluntary partition). b. They are also entitled to force the other owners to a partition by bring a suit for partition against the other cotenants (involuntary or judicial partition). ii. In most jurisdictions, physical partition is preferred to partition by sale; the property is generally sold only if physical partition will result in ―great prejudice‖ to one of the owners. iii. If a property is subject to a lease granted by all the cotenants, that leasehold would normally continue to exist after partition; if only one of the cotenants has granted a lease, that interest will persist unless the sale proceeds are used to compensate the lessee for loss of the leasehold. 2. Joint Management, Repairs & Maintenance i. Each tenant in commonly owned property has an equal right to manage or control how the property is used; unless otherwise privately contracted.

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i. Courts are divided with regard to requiring cotenants to share the cost of repairs, however some courts find that cotenants are obligated to share the costs of ―necessary‖ repairs. ii. Cotenants do have a duty to share the costs of charges necessary to preserve the property, and which could result in a lien against the property if not paid, including property taxes and mortgage payments they have jointly assumed. iii. Most courts agree that cotenants have no obligation to contribute to the cost of major improvements unless the parties have previously agreed to share those costs. a. However, an owner who contributed more than his share to substantial improvements is likely to be awarded a greater proportion of the proceeds if the property is sold pursuant to a partition. 3. Rental Benefits and Obligations i. If property is rented out, co-owners have the right to share the rental income in proportion to their respective fractional ownership interests. a. However, if one owner rents his interest without first obtaining the consent of the other co-owners, they are not free to join in the lease but retain their possessory rights, including their right to lease their fractional interests. ii. Courts agree that rent is due if the possession has ousted the other tenants by preventing them from occupying commonly owned property; in the absence of ouster, the overwhelming majority of states hold that owners who chose to occupy commonly owned property have no obligation to pay rent to their coowners who chose not to occupy the premises. a. Ouster can be accomplished only by such conduct as is sufficient both to exclude non-occupying tenant(s) and to communicate to them an intent to do so; mere occupation of property by one of several owners is not sufficient to communicate an intent to oust the others. b. Some courts hold that constructive ouster may be shown where it is impracticable for the co-owners to occupy the property either because it is too small (physical impracticability) or because the parties cannot be reasonably expected to get along sufficiently well to live together (emotional impracticability). iii. Olivas v. Olivas Facts: A husband appealed the district court's order regarding property and argued that he was constructively ousted from his property. Holding: The court held that the husband was not entitled to compensation for his alleged constructive ouster from the community residence. There was substantial evidence that the husband's purpose in leaving the community residence was to live with a girlfriend and his departure was the reason that the wife filed for a divorce. Reasoning: The mere occupation by a tenant of the entire estate does not render him liable to his co-tenant for the use and occupation of any part of the common property. The reason is easily found. The right of each to occupy the premises is one of the incidents of a tenancy in common. Neither tenant can lawfully exclude the other. The occupation of one, so long as he does not exclude the other, is but the exercise of a legal right. Before a tenant in common can be liable to his cotenants for rent for the use and occupation of the common property, his occupancy must be such as amounts to a denial of the right of his cotenants to occupy the premises jointly with him, or the character of the

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property must be such as to make such joint occupancy impossible or impracticable. II. Landlord Tenant Law A. Leasehold Estates 1. Background i. A leasehold is the transfer of possession of real property for either a determinative or indefinite period. a. While a leasehold is a temporary transfer of possession, it is also a ―bilateral contract,‖ comprising express and implied rights and obligations. ii. A tenant‘s right to exclusive possession is the key characteristic, which distinguishes a lease from other property interests such as a license or an easement. a. An easement confers a ―special right of use‖ rather than ―complete possession.‖ iii. Historically, the landlord granting temporary possession was all that was required; today, there are many more obligations on both parties. 2. Term of Years Tenancy i. A term of years is a leasehold for a specific term, such as one year. ii. The tenancy ends automatically when the specified term expires; property reverts to owner; similar to a life estate. a. Note that because the parties‘ interests are for a fixed duration, they also survive the death of either party. iii. Both the tenant‘s term of years and the landlord‘s reversion are transferable and inheritable unless the lease agreement prohibits transfer of the tenant‘s leasehold. iv. Most states require that a lease for more than one year must be in writing to satisfy the Statute of Frauds. v. Although such leases end at the expiration of the specified term, most states require landlords to use court eviction proceedings to remove holdover tenants. 3. Periodic Tenancy i. A periodic tenancy is for a period of time and is renewed automatically unless either party terminates the arrangement. a. Either party must give notice at the end of a period of intent to terminate. ii. The tenancy is both transferable and inheritable unless the lease agreement provides otherwise. iii. Some states require leases to be in writing if the parties intend to create either a periodic tenancy of more than a year; failure to use a writing results in a tenancy at will. iv. Notice to terminate a periodic tenancy is often one period; however many states have statutes governing the amount of notice that must be given (i.e. 30 days). a. If the landlord fails to give adequate notice, some courts have held that the notice is ―a nullity and ineffective to terminate the tenancy at any date,‖ while other courts hold that the notice is effective to terminate the tenancy at the end of the next period.

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4. Tenancy at Will i. At common law, a tenancy at will is terminable at any time by either party. b. It therefore resembles a license, however, the tenant has been given the right to possess the property rather than a right to use it. ii. The tenancy terminates at the death of either party and is generally held to be nontransferable. c. A transfer of the landlord‘s title also terminates a tenancy at will. iii. At least half the states require notice to terminate a tenancy at will thus effectively converting the tenancy into a form of periodic tenancy. iv. A tenancy at will may also be found if a tenant holds on after the end of a prior tenancy with the consent of the landlord and the parties have not reached any agreement as to term or payment of rent. 5. Tenancy at Sufferance i. A tenancy at sufferance arises when the tenant wrongfully holds over after the termination of a prior tenancy. a. The term ―at sufferance‖ is intended to distinguish the holdover tenant from a trespasser who never had lawfully occupied the premises; although a holdover tenant is wrongfully occupying the property, he is legally entitled to do so until statutory procedures to evict the tenant have granted the landlord the right to have the tenant physically excluded from the premises. ii. Such a tenant is liable to the landlord for the fair rental value of the property during the period of wrongful occupation. iii. A landlord must choose to begin proceedings to evict the tenant or to hold the tenant to a new tenancy. a. If the landlord accepts payment by the tenant, he may have agreed to a new tenancy based on the payment schedule (i.e. one month‘s rent would create a month-to-month tenancy). B. Tenant’s Obligations & Landlord’s Remedies 1. Tenant’s Duty to Pay Rent i. When a tenant promises to pay rent, the rental obligations is usually based on the tenant‘s express covenant to pay rent; when such a promise exists on the tenant‘s part, the liability will persist even if the tenant assigns her interest in the leasehold. ii. Statutes in all states empower landlords to recover possession upon default in rental obligations; in effect they provide that the tenant forfeits his possessory rights when he fails to pay rent. iii. When a lease agreement is ambiguous or indefinite about the amount of rent owed by the tenant to the landlord, the courts may infer that the tenant agreed to pay ―fair rental value.‖ a. However, the courts are more likely to find the entire agreement void for want of a material term. 2. Illegality i. If both the landlord and tenant contemplated that the tenant would use the property for an illegal purpose, the courts are likely to hold the contract to be void and unenforceable by either party. b. The landlord cannot sue for unpaid rent and the tenant has no defense to a claim for possession.

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ii. If, however, only the tenant intended to use the property for illegal purposes, the lease is enforceable against the tenant. iii. A lease may also be terminated if a change in the law makes a previously lawful use of the property unlawful. 3. Forfeiture (Landlord’s Recovery of Possession) v. New Tenancy i. State statutes expressly make the continuation of tenancy contingent on the tenant‘s payment of rent, thereby entitling landlords to recover possession if the tenant fails to pay rent when due. ii. Most states require a landlord to use court eviction proceedings to remove a tenant. iii. If the landlord wishes to hold the tenant to a new term or periodic tenancy, he may choose to do so. a. The modern approach is to treat the new tenancy as a periodic tenancy. 4. Self-Help v. Summary Process i. Every state has a statute, often called forced entry and detainer or summary process laws, that enable the landlord to recover possession in an expedited court proceeding/ ii. If the landlord is entitled to use self-help, as stated in a lease, the landlord‘s entry will not constitute a trespass but a privileged entry. a. However, the trend is to hold such clauses void on the ground that they are inconsistent with the policy underlying the forcible entry and detainer statutes. iii. If self-help is allowed in a jurisdiction, it must be ―peaceable‖ rather than ―forcible.‖ iv. Vasquez v. Glassboro Service Association Facts: Plaintiff and other Puerto Ricans signed a contract with defendant, agreeing to harvest crops for six months in exchange for living quarters and wages. The contract did not provide for transportation back to Puerto Rico unless plaintiff fulfilled the contract. After plaintiff was fired for poor job performance, defendant immediately ejected plaintiff from the barracks. Holding: The court held that plaintiff was not a tenant; therefore, state law ejectment procedures were inapplicable. However, the court found that the parties' bargaining power was inherently unequal; thus, their agreement was a contract of adhesion and unenforceable as against public policy. The court devised an equitable remedy, ordering that disputes concerning the dispossession of migrant farm workers upon job termination be addressed in summary judicial proceedings. Reasoning: In the absence of a contractual provision or legislation addressing the plight of a migrant farm worker on termination of his employment, the courts, exercising equitable jurisdiction, should devise a remedy to fit the circumstances of each case. Depending on the circumstances, an equitable adjustment of the rights of the parties may vary from one case to another. 5. Surrender, Reletting, Damages, & the Duty to Mitigate Damages i. When a tenant moves out and stop paying rent prior to the end of the lease, the landlord can (i) accept the tenant‘s surrender of the lease; (ii) relet the premises on the tenant‘s account; or (iii) sue for damages. a. If the landlord accepts the tenant‘s surrender, the lease terminates, as do all obligations under it owed by either party to the other.

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ii.

iii.

iv.

v.

b. If the landlord relets the premises on the tenant‘s account, the original tenant remains liable should the landlord be unable to find a new tenant or should the new tenant‘s rent be lower than the original rent. c. If the landlord accepts the tenant‘s surrender, he may also sue immediately for damages. Courts generally treat acceleration clauses as liquidated damages are refuse to enforce them if the amount far exceeds a reasonable estimate of the damages upon default. The strong modern trend is to impose on the landlord a duty to mitigate damages either by common law decision or state statute. a. Note that it is not actually a duty in the sense that the landlord must mitigate damages; it simply means that if the landlord does not mitigate damages, the amount of damages a landlord can recover from the tenant will be reduced by the amount of damages that would have been avoided had the landlord complied with the duty. Most courts hold that the duty to mitigate damages is nondisclaimable as well. a. The argument against a duty to mitigate damages is that he landlord has bargained for a particular arrangement that includes the right to receive a certain rental income from a certain tenant in exchange for giving up possessory rights to property. b. The counterargument is that as long as the landlord‘s financial interests are fully protected, the landlord should be indifferent as to whether the rent comes from the original tenant or an equally creditworthy substitute. Sommer v. Kridel Facts: Kridel signed a residential lease for apartment, which he vacated. Landlord admitted he did not attempt to re-let, and even denied a potential tenant the opportunity to rent the vacated apartment. Holding: The court held that the landlord had an obligation to make a reasonable effort to mitigate damages in wrongfully vacated apartments. Reasoning: A landlord has a duty to mitigate damages where he seeks to recover rents due from a defaulting tenant. As part of his cause of action, the landlord shall be required to carry the burden of proving that he used reasonable diligence in attempting to re-let the premises. In assessing whether the landlord has satisfactorily carried his burden, the trial court shall consider, among other factors, whether the landlord, either personally or through an agency, offered or showed the apartment to any prospective tenants, or advertised it in local newspapers.

6. Landlord’s Duty to Deliver Possession i. Traditionally, the landlord gave the tenant the right to possess the property and it was not the landlord‘s fault if the old tenant wrongfully held over; the tenant‘s only recourse was to sue to eject the holdover tenant. ii. Today, the courts have held that the landlord is required to deliver to the new tenant not only the right to posses the property but also to deliver actual possession of the premises. 7. Actual Eviction i. Every lease has an implied covenant of quiet enjoyment by which the landlord promises not to interfere with the tenant‘s possession, use and enjoyment of the property.

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a. If the tenant is physically excluded from the property, the tenant is immediately relieved of the obligation to pay rent and can choose to terminate the lease and move out. b. Alternatively, the tenant can sue for damages and injunctive relief ordering the landlord to stop barring the tenant from possession. ii. If the landlord bars the tenant from part of the premises, this can constitute partial actual eviction and relieves the tenant of the rent obligation; some courts hold that it warrants a complete abatement of rent while other courts and the Restatement (Second) provides that the proper remedy is partial rent abatement. C. Transfers by Landlord or Tenant 1. Landlord’s Right to Transfer the Reversion i. The landlord has the legal power to sell property subject to existing leaseholds. ii. The transfer of the reversion carries with it the contractual rights of the landlord under the lease, including the right to receive the agreed-upon rent. a. If the lease is a periodic tenancy, the new owner is free to terminate the tenancy with the requisite notice. b. If the lease is a term of years, then the new owner holds the property subject to the leasehold and cannot terminate the lease before the fixed term runs out. 2. Tenant’s Right to Assign or Sublet i. In the absence of any covenants to the contrary (i.e. if the lease is silent), leaseholds held in the form of a term of years or periodic tenancy are transferable. ii. If a tenant assigns all her interests under the lease for the entire unexpired term of the lease, the transfer is called an assignment. a. Traditionally, the courts hold assignment of the tenancy establishes vertical privity between the assignor and the assignee; thus, all the covenants of the original lease run with the land and are binding on the assignee (i.e. if the assignee fails to pay rent, the landlord can sue the assignor or the assignee). iii. If a tenant transfers the leasehold for a period less than the full remaining time, or reserves a right of entry, the arrangement is called a sublease. b. Traditionally vertical privity is missing so if the subtenant fails to pay rent the landlord would sue the original tenant, who would implead the subtenant to recover what the tenant owed. iv. Clauses requiring the landlord‘s consent to assign or sublet were traditionally interpreted as giving the landlord absolute discretion to withhold his consent; however, recently courts have implied into these covenants that the landlord must consent to an assignment or sublease unless the landlord has a reasonable business interest for withhold such consent. v. Kendall v. Ernest Pestana Facts: A person subleasing sold his business to Kendall, who agreed to be bound by the lease. The lease provided that written consent of the lessor (Pestana) was required before the lessee could assign his interest. Kendall requested consent from Pestana, who refused. Kendall brought suit for injunctive relief and sought a declaration that the refusal to consent was unreasonable and an unlawful restraint on alienation. Holding: The court found that where the commercial lease provided for assignment only with the prior consent of the lessor, the consent could be

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withheld only where the lessor had a commercially reasonable objection to the assignee or the proposed use. Reasoning: Where a lessor retains the discretionary power to approve or disapprove an assignee proposed by the other party to the contract, this discretionary power should be exercised in accordance with commercially reasonable standards. Where a lessee is entitled to sublet under common law, but has agreed to limit that right by first acquiring the consent of the landlord, the lessee has a right to expect that consent will not be unreasonably withheld. The determination whether a lessor's refusal to consent is reasonable is a question of fact. Some of the factors that the trier of fact may properly consider in applying the standards of good faith and commercial reasonableness are: financial responsibility of the proposed assignee; suitability of the use for the particular property; legality of the proposed use; need for alteration of the premises; and nature of the occupancy, i.e., office, factory, clinic, etc. vi. Most courts, however, are unwilling to apply the same rule where residential sublets or assignments are concerned. vii. Slavin v. Rent Control Board of Brookline Facts: Landlord sought to evict a tenant for violating an obligation of his tenancy. Rent Control Board found that the tenant had allowed another person to occupy his apartment without first obtaining plaintiff's written consent. Nonetheless, defendant refused to issue the eviction certificate, observing that plaintiff had not acted reasonably in categorically refusing to allow the tenant to bring in someone new after his original co-tenant moved out. Holding: The court found that imposition of an obligation for a landlord to act reasonably was a public policy matter for the legislature. Reasoning: Our review of the commercial lease cases, however, and particularly of the rationale that appears to have motivated the courts in those cases to adopt a reasonableness requirement, does not persuade us that we should adopt such a rule in this case, which involves a residential lease in a municipality governed by a rent control law. First, courts have exhibited concern that commercial landlords may exercise their power to withhold consent for unfair financial gain. In several of the cases cited by the board, a commercial landlord refused to consent to a proposed subtenant and then attempted to enter into a new or revised lease for the same premises at a more favorable rental rate. The second concern that appears to have motivated the commercial lease decisions is a desire to limit restraints on alienation in light of the fact that "the necessity of reasonable alienation of commercial building space has become paramount in our ever-increasing urban society." D. Tenant’s Right to Habitable Premises 1. Constructive Eviction i. Refers to intentional acts by the landlord (or an intentional failure to act where the landlord has a duty to act) that so substantially interfere with the tenant‘s quiet enjoyment of the property as to justify the tenant‘s abandonment of the property. ii. When constructively evicted, the tenant is entitled to leave the property and cease rent payments or in the case of partial constructive eviction rent abatement; it is therefore a defense to a landlord‘s claim for unpaid rent. iii. The tenant may also be entitled to damages, including the costs of relocating and the difference between the reserved rent and the fair rental value of the premises.

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iv. Traditionally, tenants could not take advantage of the constructive eviction doctrine unless they moved out within a reasonable time. a. Most courts still require the tenant to move out. b. However, a few recent cases suggest a doctrine of “partial constructive eviction” where only part of the premises are uninhabitable and does not require the tenant to move out. c. The Restatement (Second) would apply the doctrine whether or not the tenant moves out. d. It is arguably inconsistent to require the tenant to move out to take advantage of the constructive eviction doctrine when the implied warranty of habitability doctrine authorizes the tenant to stay. v. Courts disagree about whether the landlord is responsible for conduct of other tenants. vi. Minjak Co. v. Randolph Facts: Landlord filed suit against respondent tenants for the nonpayment of rent. The tenants occupied a loft pursuant to a commercial lease. The counterclaims comprised claims of a breach of the warranty of habitability and constructive eviction related to certain dangerous construction work and other conduct interfering with the tenants' ability to use and enjoy possession of their loft. Holding: The court held that the tenants were allowed to assert the doctrine of constructive eviction as a defense to the nonpayment of rent when they abandoned a portion of the demised premises due the landlord's improper acts. Reasoning: A tenant may assert as a defense to the nonpayment of rent the doctrine of constructive eviction, even if he or she has abandoned only a portion of the demised premises due to the landlord's acts in making that portion of the premises unusable by the tenant. However, the covenant of quiet enjoyment is a very high standard; there could be many problems with a premise but it would have to be substantial enough to be on par with an eviction. vii. Blackett v. Olanoff Facts: Plaintiff landlord sued defendant tenant to collect past-due rent. Tenant raised the defense of constructive eviction. They claimed that late evening noise from a nearby lounge leased by the landlord to others violated their implied warranty of quiet enjoyment. Holding: The court affirmed, holding that landlord had it within his control to correct the conditions that caused the tenants to vacate their apartments. Reasoning: Where a landlord has not intended to violate a tenant's rights, there can nevertheless be a breach of the landlord's covenant of quiet enjoyment which flows as the natural and probable consequence of what the landlord does, what he fails to do, or what he permits to be done. The noise problem was the natural and probable consequence of plaintiff landlords permitting the lounge to operate where it did and, therefore, they were not entitled to collect rent for residences that were not reasonably habitable. a. Generally, a landlord is not responsible for interference of one tenant‘s enjoyment by another tenant‘s activity. The claims would be have to be between the tenants. b. For the doctrine to apply more broadly the court would have to imply into a lease: (i) an implied covenant that the tenants will not disturb the quiet enjoyment of other tenants; (ii) an implied duty on the landlord to evict an offending tenant or to otherwise control his or her behavior; and (iii) a power in the victimized tenant to abandon the lease early if

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the landlord fails to evict the offending tenant or control his or her behavior. 2. Implied Warranty of Habitability i. An implied warranty enforced in every jurisdiction recognizing that tenants legitimately expect to be furnished with premises suitable for habitation. ii. The implied warranty of habitability is nondisclaimable; however the Restatement (Second) would authorize parties to increase or decrease the obligations of the landlord as long as the agreement was not unconsciousable or against public policy. iii. The courts began to treat landlord and tenant covenants as dependent rather than independent. a. Under property law, the traditional remedy for breach of an implied covenant to maintain the premises was to file an action for injunctive relief ordering the landlord to fix the premises and/or for damages caused by the breach. b. The adoption of the contract doctrine of dependent covenants was interpreted to authorize the tenant to stop paying rent and abandon the premises. iv. The implied warranty of habitability is applied to violations of housing codes as well that are sufficiently serious enough to render the premises unsafe, unsanitary, or uninhabitable. v. Javins v. First National Realty Corp Facts: Tenants rented apartments from an apartment complex. Landlord attempted to evict tenants. The lower court allowed evictions, finding proof of housing code violations was inadmissible when proffered as a defense to an eviction action for nonpayment of rent. Holding: The court held that leases should have been viewed as contracts, and modern contract law implied warranties of quality to meet expectations of buyers. In addition, a comprehensive regulatory scheme of the housing code displaced a common law rule. Reasoning: The old no-repair rule cannot coexist with the obligations imposed on the landlord by a typical modern housing code, and must be abandoned in favor of an implied warranty of habitability. The tenant's obligation to pay rent is dependent upon the landlord's performance of his obligations, including his warranty to maintain the premises in habitable condition. In order to determine whether any rent is owed to the landlord, the tenants must be given an opportunity to prove the housing code violations alleged as breach of the landlord's warranty. Pro: A fairness argument that this should be a basic right for all people; the market won‘t achieve a similar result because of an imbalance of power and high bargaining costs. Con: Could actually hurt those you are trying to protect if the cost of housing increases the then the supply will diminish. 3. Remedies Available for Breach of the Implied Warranty of Habitability i. Termination of the Tenancy (rescission of the contract). Breach of the implied warranty of habitability gives the tenant the right to stop paying rent and abandon the premises, moving out before the end of the lease term and repudiating the lease agreement.

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ii. Rent Withholding. The tenant is entitled to withhold rent until the landlord fixes the problem. a. Note that the tenant is empowered to stay in the premises while the condition continues, even though the condition supposedly renders the property uninhabitable. iii. Rent Abatement. If the landlord sues to evict the tenant for nonpayment of rent or sues for back rent, the court may reduce the rent owed during the period of the violation. iv. Damages. The tenant may sue the landlord for breach of warranty and may request that some amount of past rent paid be forfeited by the landlord because of violations of the implied warranty during the time for which those rental payments applied. v. Injunction or Specific Performance. The tenant may sue the landlord for a court order requiring the landlord to remedy the problem. vi. Repair & Deduct. By statute or common law, the tenant may be authorized to make minor repairs and deduct from the rent paid to the landlord the costs of making those repairs. vii. Housing Code Remedies. If a housing code is in effect, the tenant may be empowered to call on a local housing inspector to inspect the premises and order the landlord to fix the problem. 4. Retaliatory Eviction i. Landlords may not bring eviction proceedings against a tenant if their motive is to retaliate against the tenant for asserting his or her legal rights protected by the implied warranty of habitability. a. If allowed this would deter many tenants from reporting such violations. ii. The Uniform Residential Landlord and Tenant Act creates a presumption that an eviction is retaliatory, and therefore unlawful, if it comes within one year of the tenant taking a number of specified actions that were intended to protect or further the tenant‘s rights to habitable premises. a. The presumption can be rebutted by the landlord if he can show a legitimate business reason for evicting the tenant or can otherwise demonstrate that his motive was not retaliatory such as (a) the landlord's decision is a reasonable exercise of business judgment; (b) the landlord in good faith desires to dispose of the entire leased property free of all tenants; (c) the landlord in good faith desires to make a different use of the leased property; (d) the landlord lacks the financial ability to repair the leased property and therefore, in good faith, wishes to have it free of any tenant; (e) the landlord is unaware of the tenant's activities which are protected by statute; (f) the landlord does not act at the first opportunity after he learns of the tenant's conduct; and (g) the landlord's act is not discriminatory. b. This requires the landlord to carefully document reasons for wanting to evict tenant. iii. Hillview Associates v. Bloomquist Facts: Due to concerns over the physical condition of the mobile home park and rent increases, a number of tenants formed a tenants' association and met to discuss the problems. One such meeting resulted in an altercation between the tenants and the regional manager of the park. The park then evicted the tenants after the forcible entry and detainer action.

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Holding: The court held that six of the tenants offered substantial evidence of retaliatory termination. They were active, vocal members of a newly formed tenants' association. They made good faith complaints about the mobile home park and, though they participated in the meeting where the regional manager was allegedly attacked, they did not encourage or participate in it. The tenant who did the attacking of the regional manager did not establish the affirmative defense of retaliatory termination. Reasoning: The burden of proof of the affirmative defense of retaliatory termination of the lease remains upon the tenant. If the landlord does not meet the burden of producing evidence of a non-retaliatory reason for termination, the statutory presumption compels a finding of retaliatory lease termination. iv. The retaliatory eviction doctrine protects tenants from retaliation by landlords only when the tenant‘s activity was related to the tenant‘s housing rights. v. Imperial Colliery Co. v. Fout Facts: The tenant was employed as a coal miner and rented a house trailer from the landlord, which was allegedly interrelated with the tenant's employer. When the landlord filed suit for possession of the premises, the tenant asserted that the suit was brought in retaliation for his involvement in a strike by union mine workers. Holding: The court held that retaliation could be asserted as a defense to a summary eviction proceeding only if the landlord's conduct was in retaliation for the tenant's exercise of a right incidental to the tenancy. Reasoning: The central theme underlying the retaliatory eviction defense is that a tenant should not be punished for claiming the benefits afforded by health and safety statutes passed for his protection. These statutory benefits become a part of his right of habitability. If the right to habitability is to have any meaning, it must enable the tenant to exercise that right by complaining about unfit conditions without fear of reprisal by his landlord. Further Comments: First Amendment rights of speech and association unrelated to the tenant's property interest are not protected under a retaliatory eviction defense in that they do not arise from the tenancy relationship. Such rights may, of course, be vindicated on other independent grounds. III. Discrimination in the Housing Market A. Discriminatory Treatment 1. The Fair Housing Act of 1968 (42 U.S.C. §§ 3601 to 3619 & 3631) i. The FHA prohibits discrimination in the housing market on the basis of race, color, religion/creed, sex, familial status, national origin or disability. ii. § 3603(b)(1) provides that the FHA does not apply to ―any single family house sold or rented by an owner‖ only if (i) the owner owns no more than three such dwellings, and (ii) does not use a broker and (iii) has not posted a discriminatory advertisement, posting, mailing, or notice in violation of § 3604(c). iii. § 3603(b)(2) exempts owners if (i) they occupy one of the units in a multi-unit dwelling and (ii) the dwelling contains no more than four units. a. Note that the exemptions under §§ 3603(b)(1) and (b)(2) do not apply to the provisions in § 3604(c) prohibiting discriminatory advertisements. b. Moreover, those owners who are exempt under the FHA are not exempt from the Civil Rights Act of 1866, § 1892 prohibiting racial discrimination in all real estate transactions.

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iv. § 3607(a) exempts religious organizations who are entitled to limit the sale, rental, or occupancy of dwellings that they own or operate ―for other than a commercial purpose to persons of the same religions, or from giving preference to such persons, unless membership in such religion is restricted on account of race, color, or national origin.‖ v. § 3607(b) allows owners to exclude children if their facilities constitute housing for older persons when (i) intended for and solely occupied by persons 62 years of age or older; or (ii) intended and operated for occupancy of at least one person 55 years of age or older per unit (at least 80% occupancy by 55 or older, owner publishes and adheres to policies which illustrate an intent and the owner complies with regulations designed to verify such requirements). vi. § 3606(b)(4) allows owners to discriminate against individuals who have been convicted of the manufacture and distribution of illegal drugs. 2. Prohibited Conduct under the FHA i. § 3604(a) makes it unlawful to ―refuse to sell or rent after the making of a bona fide offer, or to refuse to negotiate for the sale or rental of, or otherwise make unavailable or deny, a dwelling to any person because of race, color, religion, sex, familial status or national origin.‖ a. The ―make otherwise unavailable‖ language has been interpreted to prohibit racial steering by real estate brokers and to prohibit discriminatory zoning laws including those that have an unlawful disparate impact on a protected group. ii. § 3604(b) makes it unlawful to ―discriminate against any person in the terms, conditions, or privileges of sale or rental of a dwelling, or in the provision of services or facilities in connection therewith, because of race….‖ iii. § 3604(c) makes it unlawful to ―make, print, or publish, or cause to be made, printed, or published any notice, statement, or advertisement, with respect to the sale or rental of a dwelling that indicates any preference, limitation, or discrimination based on race… or an intention to make any such preference, limitation or discrimination.‖ iv. § 3604(d) makes it unlawful to ―represent to any person because of race… that any dwelling is not available for inspection, sale, or rental when such dwelling is in fact so available.‖ v. § 3604(e) makes it unlawful ―for profit, to induce, or attempt to induce any person to sell or rent any dwelling by representations regarding the entry or prospective entry into the neighborhood of a person or persons of a particular race…‖ a. This practice was traditionally referred to as ―blockbusting‖ when realtors urged white owners to sell their homes because AfricanAmericans were moving into the neighborhood. vi. § 3605 prohibits discrimination in ―real estate-related transactions including brokerage and appraisal services and in residential real estate financing.‖ vii. § 3606 makes it unlawful to ―deny any person access to or membership or participation in any multiple-listing service, real estate brokers‘ organization or other service, organization, or facility relating to the business of selling or renting dwellings, or to discriminate against him in the terms or conditions of such access, membership or participation.‖

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3. Standards of Proof Under the FHA i. To facilitate proof of discriminatory intent, the plaintiff may establish a prima facie case by showing (i) that he is a member of a racial minority or other protected class; (ii) the plaintiff applied for and was qualified to rent or purchase the unit; (iii) the plaintiff was denied the opportunity to rent or purchase; and (iv) the unit remained on the market. ii. Asbury v. Brougham Facts: A potential tenant, an African-American woman, filed an action under the FHA alleging discrimination by defendants, apartment complex owner, the apartment complex business and the apartment complex's employee. Holding: The court held that plaintiff had sustained a prima facie case by showing that she was a minority that was qualified to rent from defendant apartment complex, that she was denied the opportunity to rent or negotiate for a rental, and that the housing opportunity remained available. Defendants were not able to prove a legitimate, non-discriminatory reason for the rejection. Reasoning: The court held that statistical data offered by defendant was relevant but not conclusive. iii. United States v. Starrett City Associates Facts: US brought suit to enjoin management company's use of rigid racial quotas in the rental of apartments. Holding: The US Supreme Court found that in order to maintain a policy of rigid racial quotas, there had to be a prior history of discrimination, and the quotas had to be tailored so that they were sufficiently temporary to meet a defined goal as that quota's termination point. The court found that the policy of the management company was of an indefinite duration and that it restricted minority access to available apartments in violation of the FHA. Reasoning: A race-conscious plan cannot be ageless in its reach into the past, and timeless in its ability to affect the future. A plan employing racial distinctions must be temporary in nature with a defined goal as its termination point. Furthermore, the use of quotas generally should be based on some history of racial discrimination or imbalance within the entity seeking to employ them. Dissent: Congress enacted the Fair Housing Act to prohibit racial segregation in housing. Starrett City is one of the most successful examples in the nation of racial integration in housing. I respectfully dissent because I do not believe that Congress intended the Fair Housing Act to prohibit the maintenance of racial integration in private housing. E. Disparate Impact 1. Claims Allowable Under the FHA i. Most courts have held that disparate impact claims are available against both public and private defendants. ii. Facially neutral policies that have a discriminatory impact on protected groups will violate the FHA unless they further ―a legitimate bona fide governmental interest‖ and ―no alternative course of action could be adopted that would enable that interest to be served with less discriminatory impact.‖ iii. Huntington Branch, NAACP v. Town of Huntington Facts: Citizens brought suit in district court against the town and its board members alleging that the town violated the FHA by restricting private construction of multi-family housing to a narrow urban renewal area and by refusing to rezone the parcel outside of this area where appellants desired to build multi-family housing.

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Holding: The appellate held that the zoning restriction had a discriminatory effect and that town had not shown a legitimate justification for their actions that outweighed this effect. Reasoning: The discriminatory effect of a rule arises in two contexts: adverse impact on a particular minority group and harm to the community generally by the perpetuation of segregation. iv. Southern Burlington, NAACP v. Township of Mount Laurel Facts: A trial court found that defendant township had unlawfully excluded low and moderate income families from the municipality by means of its zoning ordinance, and declared the zoning ordinance void. The township appealed. Holding: The court found that under the zoning restrictions, only single-family homes and expensive multi-family housing could be built. The reason for this course of conduct was to keep down local taxes on property and while a municipality could consider that factor in its zoning decisions, it could not make it impossible to provide low and moderate income housing in the municipality. Reasoning: Proper provision for adequate housing of all categories of people is an absolute essential in promotion of the general welfare required in all local land use regulation. The universal and constant need for such housing is so important and of such broad public interest that the general welfare which developing municipalities must consider extends beyond their boundaries and cannot be parochially confined to the claimed good of the particular municipality. Further, its obligation to afford the opportunity for adequate lowand moderate-income housing extended at least to its fair share of the present and prospective regional need therefor.

PROPERTY AND SOVEREIGNTY
I. Land Use Regulation A. Planning Process 1. Zoning Enabling Acts i. State governments have basic ―police powers‖ to pass laws to promote public health, welfare and safety. ii. Every state has a zoning enabling act that delegates power to municipalities to pass land use regulations. 2. Comprehensive Plans, Zoning Ordinances & Boards of Adjustment or Appeals i. Zoning enabling acts require zoning laws to be made ―in accordance with‖ or ―to be consistent with‖ a comprehensive plan. a. Such plans include maps showing the general divisions of the municipality into residential, commercial, industrial and agricultural districts with details describing the objectives of the plan and the policies and standards that are to guide real estate development within the municipality. ii. Both the comprehensive plan and the zoning ordinance itself are generally prepared by a planning commission before adoption by the city council or other legislative body. iii. Once the planning commission creates the comprehensive plan and drafts the proposed zoning law, the legislative body holds public hears and enacts the zoning law, generally called an ordinance in the case of city or a by-law in the case of a town.

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iv. The zoning law is administered by a local agency often called the zoning board of adjustment or the board of zoning appeals. B. Zoning Laws 1. Lot and Building Regulations i. Zoning laws regulate development in at least three ways: (i) area or lot zoning regulates the size and shape of lots; (ii) building or bulk regulations restrict the size, shape and placement of buildings on the lot; and (iii) use zoning limits the kinds of activities that be performed on the land. ii. Area or lot zoning typically involves (i) minimum lot sizes and (ii) minimum frontage requirements. a. Minimum lot sizes have been challenged on the ground that they exclude low- or moderate-income families. iii. Building or bulk regulations typically involve (i) setback requirements; (ii) height restrictions; (iii) lot percentage restrictions; (iv) floor-area ratio restrictions; and/or (v) minimum floor space restrictions. 2. Use Regulations i. Often called Euclidean zoning after the US Supreme Court case that first upheld the constitutionality of zoning, such zoning is relatively rigid, focusing on separation of different uses (i.e. residential, commercial, industrial, etc…). ii. Such zoning was originally cumulative in the sense that ―less intense‖ uses (such as residential uses) were allowed in more intense zones (such as commercial or industrial) but more intense uses were excluded from less intense zones. iii. Because such zoning proved to be overly rigid, exceptions and more flexible devices emerged to regulate increasing diverse mix of uses. 3. Special Exceptions i. A special exception or a conditional use is a use that is permitted by the zoning law in a particular district provided that certain specified conditions are met. ii. Rather than generally permitting these uses, the zoning law will authorize them as special uses, usually regulating their placement by defining criteria for where they can be placed and requiring the owner to apply for a special permit to obtain authorization for the use. 4. Contract or Conditional Zoning, Floating Zones & Overlay Zones i. Contract or conditional zoning occurs when developers who want to construct projects that are inconsistent with the zoning requirements may approach the planning board or the city council with a proposal to rezone the parcel in a manner that will authorize the project. ii. A floating zone is an ―unmapped district with detailed and conditional use requirements.‖ In effect, the zone ―floats‖ over the city until a developer seeks to locate it. iii. Overlay zones place a parcel in two different zones. 5. Prior Nonconforming Uses i. The nonconforming use doctrine is based on the sense that it would be unfair to make a lawful use unlawful unless the use amounts to a nuisance or otherwise is causing substantial harm.

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ii. For a nonconforming use to be entitled to continue it must have been lawful and in existence at the time the zoning ordinance was passed. iii. Though tolerated, municipalities still want to limit the inconsistency. a. Thus, changes in intensification of the use or changes in the nature of the use are generally prohibited. b. Some zoning ordinances also place time limits on the nonconforming use. c. In instances of disagreement, any doubts are generally resolved against a change in use. iv. Some zoning ordinances also apply time limits, referred to as a procedure of amortization, on the theory that the owner will recoup a reasonable return on the investment of time; once that return is earned, it can be argued that the municipality may prohibit the use. v. Town of Belleville v. Parrillo‘s, Inc. Facts: City challenged an appeals court's reversal of defendant business owner's conviction for violating plaintiff's zoning ordinance. For many years, defendant had operated a restaurant in a residential zone as a preexisting non-conforming use under plaintiff's zoning ordinance. Without seeking plaintiff's approval, defendant began operating a discotheque on the premises. Holding: The court held that the lower court erred in applying a quantitative rather than qualitative analysis in evaluating the change in the character of defendant's business. Defendant's conversion of his business from a family restaurant to a disco with a disc jockey and several bars represented a substantial, and, therefore, impermissible, change in use. Reasoning: Because nonconforming uses are inconsistent with the objectives of uniform zoning, consistent with the property rights of those affected and with substantial justice they should be reduced to conformity as quickly as is compatible with justice. In that regard municipalities may impose limitations upon nonconforming uses. Such restrictions typically relate to the change of use; the enlargement or extension of the repair or replacement of nonconforming structures; and limits on the duration of nonconforming uses through abandonment or discontinuance. 6. Variances i. Variances are permissions to deviate from the zoning law when application of the ordinance to a particular parcel would (i) impose an unnecessary hardship and (ii) the proposed use would not be contrary to the public interest and would not substantially impair the purpose of the zoning plan and ordinance. ii. Unlike special exceptions, which are uses permitted by the zoning law as long as specific conditions are met, variances are uses prohibited by the zoning law but nonetheless allowed because the ordinance, as applied, would effectively constitute an unconstitutional taking of the owner‘s property rights. iii. In most states, the formal test for showing ―hardship‖ is quite stringent. a. The court will generally not find a hardship unless there is no economically viable use of the property if the zoning law is enforced. b. The statutory terms "effectively prohibit or unreasonably restrict the utilization of the property," "unnecessary hardship" and "undue hardship" are construed to mean that a board of zoning appeals has no authority to grant a variance unless the effect of the zoning ordinance, as applied to the piece of property under consideration, would, in the

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absence of a variance, interfere with all reasonable beneficial uses of the property, taken as a whole. c. However, most zoning boards routinely grant variances ignoring the law especially if there is no opposition to the variance and it would not result in a dramatic change to the property. iv. Rationales for imposing a stringent standard include preventing arbitrary outcomes resulting from favoritism; must protect property owner‘s expectation of their own property rights; variances are not free, they inevitably come at a cost to other property owners. v. Rationales for flexibility in the standard include that it is unfair to impose costs on specific individuals who suffer under the ordinance; allows for changes in the community. vi. Cochran v. Fairfax County Board of Zoning Appeals Facts: In a consolidated appeal, property owners and the board of zoning appeals appealed lower court rulings on the appropriateness of granted variances. Holding: The court held that notwithstanding the presumption of correctness to which BZA decisions were entitled, each of the cases failed to meet the standard prescribed in regulating the BZA‘s authority to grant variances. Reasoning: While compelling reasons were presented for each variance application, including the desires of the owners, supported by careful planning to minimize harmful effects to neighboring properties, probable aesthetic improvements to the neighborhood as a whole, together with a probable increase in the local tax base, greatly increased expense to the owners if the plans were reconfigured to meet the requirements of the zoning ordinances, lack of opposition, or even support of the application by neighbors, and serious personal need, by the owners, for the proposed modification, they were immaterial as the BZAs had no authority to act. The threshold question was whether the zoning ordinance interfered with all reasonable beneficial uses of the property, taken as a whole. As the answer was "no," the BZAs had no authority to act. 7. Vested Rights i. An owner who begins construction in good faith reliance on a particular zoning designation will be protected from retroactive changes in the zoning law if the owner‘s efforts and expenditures were ―so substantial as to created a vested right in the completion of the project.‖ ii. What a court will consider to be substantial differs from state to state. a. Many states require the granting of a building permit before they will find a vested right while others do not. b. However, the granting of a building permit alone will generally not constitute a substantial investment. iii. Stone v. City of Wilton Facts: The landowners purchased property for the purpose of building a low income, federally subsidized housing project. Three-quarters of the land they purchased was zoned for multi-family residential, and the remainder was zoned for single-family residential. Prior to the commencement of their project, the city rezoned the land to be only single-family residential, and the landowners brought an action against the city. Holding: The court found that the zoning ordinance in question was passed as a general welfare measure. The court held that the landowners did not have such a vested interest in the completion of the housing project on the particular tract of

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land because the rezoning only deprived the landowners of what they considered to be the land's most beneficial use. Reasoning: Land use restrictions reasonably related to the promotion of the health, safety, morals, or general welfare repeatedly have been upheld even though the challenged regulations destroyed or adversely affected recognized real property interests or flatly prohibited the most beneficial use of the property. Hence, such laws, when justifiable under the police power, validly enacted and not arbitrary or unreasonable, generally are held not to be invalid as taking of property for public use without compensation. II. Takings A. Historical Background 1. Basis of Property Law i. Property cannot exist as a social institution without laws that define its scope and contours; government power is therefore necessary to create property rights. ii. However, the power to define is the power to destroy. a. The state must have the power to define the scope of property rights, and to redefine them over time by new legislation and common law rules as circumstances and values change, but if this power to redefine property is unlimited, the state would be able to unjustly deprive owners of pre-existing rights, infringing on their justified expectations based on prior law. 2. Mugler v. Kansas i. In this 1887 case, the US Supreme Court held that a state statute that prohibited the manufacture and sale of alcoholic beverages did not constitute a taking of the plaintiff‘s property. ii. The court declared, ―a prohibition simply upon the use of property for purposes that are declared, by valid legislation, to be injurious to health, morals or safety of the community, cannot, in any just sense, be deemed a taking or an appropriation of property.‖ iii. A central component of the police power reserved to the states in the Constitution is the power to protect the public. 3. Pennsylvania Coal Co. v. Mahon i. In this 1922 case, the US Supreme Court held that a state statute that prohibited a coal company from removing subjacent support effected an unconstitutional taking of property. ii. Justice Holmes reasoned that regulations that deprive owners of the value of their property were as harmful to the legal right and justified expectations of owners as outright seizure of their land. a. Holmes commented, ―the general rule at least is that while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking.‖ iii. Holmes also argued that the state statute would have been upheld if it had effectuated an average ―reciprocity of advantage;‖ in other words, a regulatory law that limits an owner‘s use of land may be justified if those owners are benefited by the fact that similar restrictions on imposed on others.

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iv. Justice Brandeis in his dissent argued that the diminution in value was slight and that it should be calculated by looking at the property as a whole, and not by focusing on one particular set of rights or values. a. Brandies commented, ―coal in place is land, and the right of the owner to use his land is not absolute.‖ v. Brandies also responded to Holmes‘ reciprocity of advantage argument by arguing that such considerations are relevant only when the legislation requires an owner to confer benefits on the community. When the legislation protects the ―public from detriment and dangers, there is in my opinion, no room for considering reciprocity of advantage.‖ 4. Miller v. Schoene i. In this 1928 case, the US Supreme Court upheld a state statute that mandated the destruction of ornamental red cedar trees because they produced cedar rust fatal to apple trees cultivated nearby. ii. A unanimous court held that the state might properly make ―a choice between the preservation of one class of property and that of the other‖ and concluded that the state had not exceeded ―its constitutional powers by deciding upon the destruction of one class of property [without compensation] in order to save another, which in the judgment of the legislature, is of greater value to the public.‖ B. Ad-Hoc Test 1. Background i. Instead of a clear rule, the court engages in ad-hoc factual inquiries involving a balancing test of (i) the economic impact of the regulation (the diminution of value of the property); (ii) the extent to which it interferes with reasonable investment-backed expectations; and (iii) the character of the government action. 2. Ad-Hoc Test in Application i. The court has repeatedly stated that the ultimate question is whether the regulation at issue wrongfully ―forces some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.‖ ii. Penn Central Transportation Co. v. New York City Facts: Property owners and their lessee, brought an action in the Supreme Court of New York County, alleging that the application of the New York Landmarks Preservation Law, by the city and its landmarks commission, to the property owners‘ railroad terminal had resulted in a taking of their property without just compensation. Holding: The U.S. Supreme Court affirmed the judgment of the Court of Appeals of New York holding that defendants had not taken plaintiffs' property without just compensation and did not arbitrarily deprive plaintiffs of their property without Fourteenth Amendment due process of law. Reasoning: The Court held that plaintiffs could not establish a "taking" simply by showing that they had been denied the ability to exploit a property interest that they had believed was available for development. The court noted that landmark laws were not like discriminatory or "reverse spot" zoning. The Landmarks Law did not interfere in any way with the terminal's present uses and plaintiffs' primary expectation concerning the use of the parcel. The restrictions imposed were substantially related to the promotion of the general welfare and

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not only permitted reasonable beneficial use of the landmark site, but also afforded plaintiffs opportunities further to enhance not only the terminal site, but also other properties. Dissent: Justice Rehnquist argued the question in this case is whether the cost associated with the city of New York's desire to preserve a limited number of "landmarks" within its borders must be borne by all of its taxpayers or whether it can instead be imposed entirely on the owners of the individual properties. Where a relatively few individual buildings, all separated from one another, are singled out and treated differently from surrounding buildings, no such reciprocity exists. iii. Keystone Bituminous Coal Association v. de Benedictis Facts: Petitioners filed a civil rights action that sought to enjoin officials of the Department of Environmental Resources from enforcing the Bituminous Subsidence and Land Preservation Act (Subsidence Act), which required leaving behind a certain percentage of coal to prevent subsidence. Petitioners alleged that a portion of the Subsidence Act constituted a taking of their private property without compensation. Holding: The Court found that the Subsidence Act survived scrutiny under the Court's standards for evaluating impairments of private contracts. Respondent assessed the necessity of imposing liability on operators who engaged in mining practices that could have severe effects on the surface. The Court concluded that the impairment of petitioners' right to enforce damages waivers was justified by the public purposes served by the Subsidence Act. Reasoning: Prohibition simply upon the use of property for purposes that are declared, by valid legislation, to be injurious to the health, morals, or safety of the community, cannot, in any just sense, be deemed a taking or appropriation of property. The power which the states have of prohibiting such use by individuals of their property as will be prejudicial to the health, the morals, or the safety of the public, is not, and, consistently with the existence and safety of organized society cannot be, burdened with the condition that the state must compensate such individual owners for pecuniary losses they may sustain, by reason of their not being permitted, by a noxious use of their property, to inflict injury upon the community. C. Categorical Takings 1. Background i. Aside from the Penn Central balancing test, the Supreme Court has held that certain types of regulations are categorical or per se takings, such as: (i) permanent physical invasions of property; (ii) deprivation of certain core property rights; (iii) deprivation of all economically viable use; (iv) interference with ―vested rights;‖ and (v) exactions that prohibit certain types of development unless the owner meets certain specified conditions. 2. Physical Invasions of Property i. It is stated that permanent physical invasions of property are per se unconstitutional takings of property regardless of the circumstances and regardless of the public interest served by the invasion. ii. However, in cases of temporary invasion, the invasion might be allowed. iii. Loretto v. Teleprompter Manhattan CATV Corp. Facts: Loretto purchased an apartment building in which the prior owner had allowed Teleprompter to install a cable on the building and to furnish cable

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television services to the tenants. Two years later, New York state adopted a law that required residential landlords to allow cable television companies to install cable boxes and cables on their property to enable tenants to get access to cable television. Loretto filed a class action alleging that the installation was a trespass and a taking without just compensation. Holding: Reversing the Court of Appeals of New York, the US Supreme Court held that the physical occupation of an owner's property authorized by the government was a "taking" of property. The Court explained that to the extent the government permanently occupied physical property, it effectively destroyed the right of the owner to exclude or control that portion of her property. Reasoning: When the "character of the governmental action," is a permanent physical occupation of property, the United States Supreme Court has uniformly found a taking to the extent of the occupation, without regard to whether the action achieves an important public benefit or has only minimal economic impact on the owner. Property rights in a physical thing have been described as the rights to possess, use and dispose of it. To the extent that the government permanently occupies physical property, it effectively destroys each of these rights. Dissent: Expressed the view that the court erected a strained and untenable distinction between temporary physical invasions, which constitutionality concededly is subject to a balancing process, and permanent physical occupations, which are takings, and adopted an approach that is potentially dangerous as well as misguided. The regulation differs little from the numerous other New York statutory provisions that require landlords to install physical facilities "permanently occupying" common spaces in or on their buildings. iv. PruneYard Shopping Center v. Robins Facts: High school students sought to exercise free speech and petition rights on PruneYard‘s property, a privately owned shopping center to which the public was invited. The California Supreme Court held that the state constitution protected speech and petitioning, reasonably exercised, in shopping centers even where the centers were privately owned – thus there was no taking. Holding: The Supreme Court held that the California Supreme Court's construction of the state constitutional provisions regarding rights of free expression and petition so as to require the shopping center owner to permit the high school students to distribute literature and seek support for their petitions did not constitute a "taking" under the Fifth Amendment's prohibition against the taking of property for public use without just compensation, since the value or use of the shopping center owner's property as a shopping center was not unreasonably impaired by preventing him from prohibiting the high school students' activities, his right to exclude others from the shopping center not having been demonstrated as being so essential to the use or economic value of the property that the state's limitation of the right amounted to a "taking.‖ Reasoning: A state in the exercise of its police power may adopt reasonable restrictions on private property so long as the restrictions do not amount to a taking without just compensation or contravene any other federal constitutional provision. 3. Deprivation of All Economically Viable Use i. Lucas v. South Carolina Coastal Council Facts: The landowner purchased two residential lots in 1986 on which he intended to build homes. In 1988, S. Carolina enacted the Beachfront

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Management Act, which barred the landowner from erecting any permanent habitable structures on his two parcels. Holding: The court held that where a state seeks to sustain a regulation that deprives land of all economically beneficial use, it may resist compensation only if the logically antecedent inquiry into the nature of the owner's estate showed that the proscribed use interests were not part of his title to begin with. Therefore, must interpret in light of precedent since legislature would otherwise be able to redefine what constitutes a nuisance to serve an alternate purpose. Reasoning: Scalia stated that regulations that prohibit all economically beneficial use of land cannot be newly legislated or decreed (without compensation), but must inhere in the title itself, in the restrictions that background principles of the state's law of property and nuisance already place upon land ownership. In other words, if the property owner was intending to engage in a use that was a nuisance under the common law, no taking has occurred if the property owner was not free to engage in the use in the first place. a. Scalia follows a ―total taking inquiry.‖ b. Test would be easier to apply but possibly too rigid to allow for change. Blackmun Dissent: Justice Blackmun stated that nothing in the record undermined the legislature's assessment that prohibitions on building in front of the setback line were necessary to protect people and property from storms, high tides, and beach erosion and that because that legislative determination could not be disregarded in the absence of such evidence and its determination of harm to life and property from building was sufficient to prohibit that use under the Court's cases, the state supreme court had correctly found no taking. a. Blackmun would give legislatures greater power to define harmful or noxious uses. b. Blackmun‘s approach is subject to the critiques leveled by Scalia that allowing the legislature to define harmful or noxious uses does not provide any limit. Kennedy Dissent: Justice Kennedy pointed out that the finding of no value had to be considered under the Takings Clause of the Fifth Amendment by reference to the owner's reasonable, investment-backed expectations, and he expressed the view that the state supreme court had erred by reciting the general purposes for which the state regulations were enacted without a determination that they had been in accord with the owner's reasonable expectations and therefore sufficient to support a severe restriction on specific parcels of property. a. Most common source would be nuisance law, but suggests that it is an error to rely solely on nuisance law for such limits; there could be other expectations that the property owner might have (other regulatory statutes, customs, etc…). b. The common law might be too narrow; need to give the legislature some ability to redefine what constitutes a noxious use. 4. Temporary Deprivation of Economic Use i. Tahoe-Sierra Preservation Council v. Tahoe Regional Planning Agency Facts: The agency imposed the temporary moratoria to maintain the status quo while studying the impact of development near a popular resort lake and designing an environmentally sound growth strategy. The landowners contended that the moratoria against all viable economic use of their properties imposed a

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constitutional obligation on the agency to compensate the landowners for the value of its use during the moratoria. Holding: The court held that the mere enactment of the regulations implementing the moratoria did not constitute a per se taking of the landowners' property. Rather, whether a taking occurred depended upon consideration of the landowners' investment-backed expectations, the actual impact of the regulation on the landowners, the importance of the public interest involved, and the reasons for imposing the temporary restriction. Reasoning: Adoption of a categorical rule that any deprivation of all economic use, no matter how brief, constituted a compensable taking would impose unreasonable financial obligations upon governments for the normal delays involved in processing land use applications and would improperly encourage hasty decision making. Logically, a fee simple estate cannot be rendered valueless by a temporary prohibition on economic use, because the property will recover value as soon as the prohibition is lifted. 5. Property Purchased After Regulations are Passed i. Palazzolo v. Rhode Island Facts: The landowner invested in the subject property. The resource management council promulgated regulations designating salt marshes such as those on the property as protected coastal wetlands. The council denied the landowner's application to fill the property. Holding: The court held that the lower state court did not err in finding that the landowner failed to establish a deprivation of all economic value, because it was undisputed that the upland portion of the parcel retained significant worth for construction of a residence. The case was remanded so the claims could be examined under the Penn Central analysis. Reasoning: Where a regulation places limitations on land that fall short of eliminating all economically beneficial use, a taking nonetheless may have occurred, depending on a complex of factors including the regulation's economic effect on the landowner, the extent to which the regulation interferes with reasonable investment-backed expectations, and the character of the government action. D. Public Use 1. Analysis i. The Fifth Amendment allows property to be taken for ―public use‖ as long as ―just compensation‖ is paid to the owner. a. Property can only be taken if it is for public use. ii. Following Berman v. Parker and Hawaii Housing Authority v. Midkiff, the Supreme Court has held that the public use requirement is met if the taking serves a legitimate public purpose, even if the government achieves this purpose by taking property from one owner for the purpose of conveying it to another owner. iii. Kelo v. City of New London Facts: The city approved a development plan that had been submitted by the development agent. The plan called for construction of a waterfront hotel, restaurants, retail stores, residences, and office space; also, portions of the development area were to be used for marinas and for support services. The city authorized the agent to purchase property in the development area or to acquire

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it by eminent domain. The agent purchased most of the required property, but nine owners refused to sell. Holding: The Court found that the development plan served a public purpose and therefore constituted a public use under the Takings Clause of the Fifth Amendment. The plan was not adopted to benefit a particular class of identifiable individuals. Although the owners' properties were not blighted, the city's determination that a program of economic rejuvenation was justified was entitled to deference. There was no basis for exempting economic development from the broad definition of "public purpose." Reasoning: With respect to the "public purpose" requirement for condemned property, without exception, the United States Supreme Court's cases have defined that concept broadly, reflecting the Court's longstanding policy of deference to legislative judgments in this field. When the legislature's purpose is legitimate and its means are not irrational, the United States Supreme Court's cases make clear that empirical debates over the wisdom of takings – no less than debates over the wisdom of other kinds of socioeconomic legislation – are not to be carried out in the federal courts. Concurring Opinion: Kennedy, J., concurring, expressed the view that (1) a court applying rational-basis review under the Fifth Amendment's public use clause should strike down a taking that, by a clear showing, is intended to favor a particular private party, with only incidental or pre-textual public benefits; (2) where the purpose of a taking is economic development and that development is to be carried out by private parties or private parties will benefit, a court must decide if the stated public purpose is incidental to the benefits to private parties; and (3) a court confronted with a plausible accusation of impermissible favoritism to private parties should review the record to see if the objection has merit, though with the presumption that the government's actions were reasonable and intended to serve a public purpose. a. Though courts should be deferential, they should still be involved in oversight and skeptical. Dissent: O'Connor, J., joined by Rehnquist, Ch. J., and Scalia and Thomas, JJ., dissenting, expressed the view that (1) as a result of Supreme Court's opinion in the case at hand, under the banner of economic development, all private property was vulnerable to being taken and transferred to another private owner, so long as the property might be "upgraded" – given to an owner who would use it in a way that the legislature deemed more beneficial to the public – in the process; and (2) the reasoning, expressed in the court's opinion, that the incidental public benefits resulting from the subsequent ordinary use of private property rendered economic-development takings "for public use" (a) washed out any distinction between private and public use of property, and (b) thereby effectively deleted the words "for public use" from the Fifth Amendment. a. Would hold that economic development is not a public use, especially through private investment. Dissent: Thomas, J., dissenting, expressed the view that (1) if such economicdevelopment takings as the one in question were for a public use, than (a) any taking was for public use, and (b) the Supreme Court had erased the public use clause from the Constitution; and (2) the case at hand was one of a string of the court's cases that (a) had strayed from the public use clause's original meaning, and (b) ought to be reconsidered.

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a. Puts forth an even stricter test and would reinstate an actual public use requirement. Either the public would own the property or a private entity could own the property but it would have to be open to the public. 2. State Reactions to Kelo i. In the wake of the holding in Kelo, many state legislatures made significant restrictions to the use of their eminent domain power. a. Some courts have applied regulations based on the dissents.

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