Larson Property II Outline Pepperdine

PROPERTY II – LARSON SPRING 2007 I. Future Interest Present Estate Fee Simple absolute Fee Simple Subject to Condition Subsequent Fee Simple Determinable Fee Simple Subject to Executory limitations Fee Tail Life Estate Leasehold Future Interest in Grantor None Right of Entry Possibility of Reverter None Reversion Reversion Reversion Future Interest in 2nd Grantee None None None Executory Interest And/or Remainder And/or Remainder And/or Remainder A. Reversion and Remainder 1. Definitions: a. Reversion – future interest leftover after the grantor transfers a lesser estate that is certain to end w/o specifying in the deed who is to receive that future interest b. Remainder – If the deed creating a lesser estate specifies some 2nd grantee who is to receive the leftover future interest i. Vested remainder – remainder held by an ascertained person that will become possessory upon the natural termination of the preceding estate. If you can identify a person who will get the estate, then the remainder is vested 1. Vested remainder subject of Defeasances (or Vested Remainder Subject to Divestment) – such a future interest is vested because it is held by an ascertained person and not subjected to a condition precedent in order to become possessory. It is subject to a condition subsequent that may prevent it from ever becoming possessory. ii. Contingent remainder: remainder held by an unascertained person or subject to a condition precedent other than the natural termination of the preceding estate c. Doctrine of Merger – a possessory or vest life estate merges into the next vested future interest in fee simple when both are held by the same person d. Doctrine of the destructibility of contingent remainders – any intervening contingent remainders are destroyed e. Defessance – the possibility that a vested remainder would be diminished by some subsequent event i. Subject to open (partial defessance) – when the contingent remainder can pass on to more people ii. Complete defessance – One party with vested remainder dies 1 2. 3. 4. 5. ABO Petroleum Corp. v. Amstutz a. Quick Facts: Parents gave 3 deeds to their daughters. The first deed was a life estate with a contingent remainder to the daughter’s kids, if the daughter had any kids. The daughters died w/o any kids b. Holding: when a granter leaves property to grantee with a contingent remainder in a 2nd granted, and that contingent remainder is not triggered, then the grantor has a reversionary interest and the property goes back to them Swanson v. Swanson a. Quick facts: Dad died and left the property to mom as a life estate, with remainder left to 9 kids. The kid’s interest was contingent upon mom exercising power of appointment. If any of the kid died before the mom, then the share of the dead kid goes to the dead kid’s surviving children b. Holding: neither of 2 conditions occurred so therefore the share would go to the dead guy’s wife (b/c he died after mom w/o kids) Baker v. Weedon a. Quick Facts: Grantor left grantee (17 yr old 3rd wife) a life estate to pass to her kids (if she had any) then to O. Grantee is still living and does not have any kids (& is old). The state wants to buy the property from the grantee for a highway. Grantee uses land as farm. b. Holding: In order to force sale of contingent remainder, there must be necessity. The ct should consider deterioration, waste, and whether the sale is of the best interest of all parties Hypos: a. “O to A for life, then to A’s children” i. A’s Children have a vested remainder. Since A can have more children, their remainder is subject to defessance. b. “To B for life, then to B’s kids who survive her. If no surviving kids, then to B’s heirs”. i. B’s surviving kids have a vested remainder b/c they are identifiable at B’s death. The remainder is subject to defeasance b/c the kid could lose the estate by dying. ii. B’s heirs have a contingent remainder b/c B could have surviving kids. iii. Grantor has a reversion if B has no heirs. c. “To B for life, then to B’s kids who survive her. If no surviving kids, then to B’s estate”. i. Grantor has no reversion b/c it says estate. If B has no estate, then prop goes to the St. d. “To B for life, then to Z and heirs” i. Grantor has no reversion b/c the entire phrase “Z and heirs” is read as one complete phrase. This phrase is classic language for creating a F/S A in Z. e. “To B for life, then to A for life, then to C and heirs” i. A has vested remainder subject to defeasance b/c B might die before A and lost the prop. 2 ii. C has vested remainder in F/S A b/c they will definitely get the prop when A and B dies. B. Right of Entry and Possibility of Reverter Type of interest Inheritable? Devisable? Alienable? All types F/S Life Estate Reversion Possibility of Reverter Right of entry Vested remainder Contingent remainder Executory interest 1 Yes No Yes Yes Yes Yes Yes Yes Yes No Yes No No Yes Yes Yes Yes Yes Yes No1 No2 Yes No No The owner of possibility of reverter could transfer it to the owner of the F/S D. Then the holder of the F/S D would have F/S A. This type of transfer is a release. 2 The right of entry, like possibility of reverter, is releasable. 1. Definitions a. Possibility of Reverter – the future interest a grantor has if the fee simple determinable expires. The property will revert automatically i. Under common law you can’t sell possibility of reverter, but it is inheritable b. Right of entry: the future interest a grantor has if fee simple subject to condition subsequent expires. The grantor must go onto property to claim the right i. At common law future interest of right of re-entry and possibility of reverter can be disclaimed to the present owner ii. Rules of construction says the law abhors forfeiture, so cts favor F/S CS over a F/S D Mahrenholz v. County Board of School Trustees a. Quick Facts: Land conveyed to school dist to be used for school purposes only otherwise revert back to grantor. b. Holding: Conveyance created fee simple determinable (instead of subject to condition subsequent) and therefore M (who got interest from grantor) had right if condition was breached i. Provision of exclusive use: The use of the word “only” followed immediately by “for school purpose.” ii. Provision for reversion: the use of the word “revert” doesn’t automatically create a possibility of reverter. But when the deed has a provision of exclusive use followed by an express provision for reverter when that use ceases, it is F/S D 3 2. Ink v. City of Canton a. Quick Facts: I conveyed 33.5 acres to city for use and purpose of a public park only. State condemned 27 acres for a highway and paid the city for the compensation. I said they should get $. b. Holding: City received amount representing value of structures and I received value of land for non-park purposes. i. Minority rule: when land granted in F/S D is taken due to eminent domain, the property would revert and city would be forced to pay damages to the holder of the possibility of reverter c. Majority Rule: there is no reverter in eminent domain and the city takes all the money for the property appropriated C. Executory Interest 1. Definition a. Executory Interests – A future interest created in an alternative grantee that either cuts short a present estate before its natural end or follows a F/S D i. Becomes possessory automatically ii. Is inheritable and devisable, but not alienable b. Springing interest – Divests the grantor in the future. i. “From O to A when he marries” c. Shifting executory interest – Divests an initial grantee of his present estate i. “From O to A, but if property is not long used as a library, then to B” ii. Holder of an executory interest has current legally recognized property rights akin to those possessed by the holder of a possibility of reverter or a right of entry 2. City of Klamath Falls v. Bell a. Quick Facts: Grantor gave some land to grantee under F/S D with an executory interest in O. However there was a problem with the rule against perpetuities and the grantee argued that the executory interest is void. b. Holding: When a deed contains an unquestionable intent to limit the interest of the grantee, the courts won’t grant the grantee a F/S A just b/c the executory interest is void under the rul. i. Grantor retains possibility of reverter in this scenario D. Rule Against Perpetuities 1. Definition a. RAP – No interest is good unless it must vest, if at all, not later than 21 yrs after some life in being at the creating of the interest i. Purpose – Promote the marketability and development of present estates and limit the dead-hand control of grantor over future interests ii. “Life in being” must be validating or measuring life, which is a life of someone alive when the interest was created whose life will determine whether and when the interest will vest or fail. All the conditions must either vest or fail not later than 21 yrs after the deal. 4 3. 2. 3. iii. The clock starts when the testator dies, not when the will is signed iv. Exception to the rule: When both the present and future interests are initially held by charitable organization v. When RAP is violated, then the remainder interest is void. The clause granting the remainder would be removed from the conveyance b. Affected Interests – Includes non-vested remainders such as contingent remainder, executory interests, power of appointment, and vested subject to open i. Not included: interests held by the grantor such as possibility of reverter, right of entry, vested remainders, reversions, power of termination, trust Approaches a. “Wait and See” Approach: ct would wait to see if the remainder actually vested w/in 21 yrs after the life. The contingent future interests remain valid throughout the 21 yrs, and are voided only if the contingency isn’t resolved by the end of the period. i. Most juris don’t take this approach ii. USRAP holds future interest for RAP period or 90 yrs; whichever is longer – wait and see approach in those period 1. Doesn’t apply to options to purchase 2. Commercial purposes are also exempted b. Logical Certainty Approach: From the moment the conveyance is created, if there is any possible way the contingent remainder would vest 21 yrs after the life in being, then the conveyance is automatically void. i. Children are alive from moment of conception ii. All living people are considered capable of having kids regardless of age or condition c. Cy pres – as near as possible – doctrine allows cts to carry out a will which for some reason is impossible to carry out as directed. The ct follows the intention of the testator as near as possible. Warren v. Albrecht a. Quick Facts: Decedent died and left a life estate to W, then to W’s kids, their kids, W’s sisters, sister’s kids then grantor’s estate. W wants to squash the sister’s future interests and argues RAP b/c W’s kids could be divested longer than 21 yrs after his death if his kids were to die leaving no descendants b. Holding: Just b/c there are alternate contingent remainders doesn’t always mean RAP is violated. i. The W is the life in being in this case. Once W dies, the interest will vest or fail. W will either have kids that survive him or won’t. Therefore the devise to his kids doesn’t violate the rule. ii. 3 step process to determine the interest 1. Language of the devise is explained (determine testator’s intent, look at words in ordinary meaning) 2. Statutes of title is identified 3. Rule applied 5 United Virginia Bank v. Union Oil Co of Cal a. Quick Facts: Oil bought option to buy land if highway expanded. Whether it was valid right b/c it might be postponed beyond 21 yrs b. Holding: RAP requires the option must be exercised w/in the period fixed by the rule. If there exists at the time the agreement is entered into a possibility that exervcise of the option might be postponed beyond the prescribed period, the agreement is invalid b/c it is in violation i. Adopted wait and see standard E. Rules of Construction and Rules of Law 1. Harris Trust and Savings Bank v. Beach a. Quick Facts: Dad left 2 trusts to mom for her life. Upon her death the trust would be divided among dad’s heirs, share and share alike. b. Holding: technical term for heirs is the people appointed by the law to inherit an estate in case of intestacy. This juris never adopted the technical meaning as a rule of law. i. Sometime heirs may mean diff things, depending on the intent of the testator ii. Courts will apply the technical term unless the testator’s intention ot the contrary is shown by preponderance of the evidence In this case, the evidence shows testator meant the heirs to be determined at mom’s death. The intent is shown, so the ct will not apply the technical term to determine heirs at dad’s death. II. Concurrent Ownership A. Cotenants 1. Right to Shared Possession a. Tompkins v. Superior Ct. i. Quick Facts: T had roomie who got arrested for possession of marijuana. Roomie gave consent to search apt w/ T even though Roomie wasn’t there. ii. Holding: One joint tenant or cotenant is entitled to possession of the entire premises and may be lease or license transfer his right of possession to another or authorizes another to exercise it iii. Required for possession: 1. Person in current possession of the prop must give consent to enter 2. Permission is not valid if it was granted to the prejudice of the cotenants b. Barrow v. Barrow i. Quick Facts: Husb owned proper prior to marriage. Wife moved and said husb changed locks. Wife sued for rental value. Husb sued for taxes. ii. Holding: Partitioned: an action btwn cotenants that splits up the proper. If prop can’t be portioned then ct. orders a sale and splits proceeds. 4. 6 Adverse holding: can be accomplished by physical means such as barring entry, or when the tenant in possession communicates to the other tenants that he is claiming exclusive possession a. How much adverse holding is required? If the tenant does activities that would force a reasonable person to leave, he is holding adversely b. If there is adverse holding, the tenant in possession must pay the other tenant reasonable rental value c. If holding is not adverse, the tenant cannot collect rent but can sue for partition c. Improvements on land i. Mandatory and required expenses – the cotenant out of possession has to pay 1. i.e. property taxes, property insurance, services to maintain, services to improve ii. To maintain property not required – need to talk to other party and tell them ahead of time that you are going to do it. If they don’t object you are entitled to contribution. iii. Improving the property – you can’t get contribution 1. Can get a court order that the value that the improvement should go only to you, but need to show as much as you can get d. White v. Smyth i. Quick Facts: Def owned 1/9th interest in mining property. Def told Pl he was going to mine his share of the asphalt out of the mine and he sold it at profit. Was prop partitionable? ii. Holding: (Minority) One cotenant cannot take material from the prop. If he does then the ct shall order a forced sale and each tenant should get their share of the net profits iii. Majority: Each cotenant is entitled to their share of the property 1. CL: the greedy cotenant would have to pay the raw value of the material taken to his cotenants and would be denied his costs in taking the material 2. Most states have statutes that say greedy cotenants must pay the other tenants the raw value 2. Joint Tenancy Joint tenancy Tenancy in common Tenancy by entireties Right of survivorship No right of survivorship Right of survivorship (tenant dies  tenant) (tenant dies  heirs) Not inheritable or devisable Not inheritable or Is inheritable or No right to partition devisable devisable Conveyance by single spouse is Conveyable Conveyable ineffective Grantee is a tenant in Grantee is also tenant in No right to partition common common Right to partition Right to partition 1. 7 a. Definitions i. Survivorship – the right of property possessed b/c one tenant has out lived another. When one joint tenant dies, it is not inheritable and that share is redistributed among living tenants. ii. Creation of Tenancy in Common: By listing names of the tenants on the conveyance – without further detail as to type of deed – creates a tenancy in common. 1. Can occur all at once or at different times 2. Cts favor iii. Creation of Joint Tenancy: 1. 4 unites of joint tenancy must be present: a. Unity in interest – all the tenants have an equal portion of the interest b. Unity in title: tenancy is created in the same title c. Unity in time: the property is conveyed at the same time. d. Unity of possession: all the tenants have possession rights. 2. Any act that destroys any of the unites operates as a severance to the joint tenancy. b. James v. Taylor i. Quick Facts: Mom left deed for 3 kids. 2 of 3 died before mom. “jointly and severally” – does that make it joint tenants? ii. Holding: If in doubt tenancy in common. Not enough from deed to create joint tenancy. 1. Some states say “jointly” creates joint tenancy c. Jackson v. O’Connell i. Quick Facts: 3 sisters owned land as joint tenants. Sis 1 quit claimed interest to Sis 2, then died. Sis 2 died and left interest to nieces. Who gets land, nieces or Sis 3? ii. Holding: Unity is only broken within Sis 1 and Sis 2. Sis 2 and 3 still hold 2/3 in joint tenancy. So Sis 3 gets 2/3 and nieces get 1/3. d. Duncan v. Vassaur i. Quick Facts: Husb and wife had joint tenancy. Wife killed husb. Wife conveyed interest to her dad. Husb dad said he gets land. ii. Holding: right of survivorship says prop goes to survivor when one joint tenant dies. But a joint tenant can terminated the tenancy by an act that is inconsistent with the continued existence of the tenancy. 1. Joint tenancy is terminated by murder and a tenancy in common takes it place 2. ½ of prop goes to dead husb and ½ goes to wife 3. Policy: to deny murder fruits of their crime 4. State statutes say that murders can’t inherit, convey, devise, descent, or get any interest of the land of their victim a. If they are acquitted can get property B. Marital Property 1. Tenancy by the Entirety a. To create – parties have to be married at the time 8 2. 3. If there was a foreclosure under joint tenancy or tenancy in common – then creditors could take ½ 1. Under tenancy by the entirety – outside range of creditors, except tax liens by govt ii. If husb and wife divorce, the converts to tenancy in common iii. Requires the 4 unities of tenancy in common + unity of being married when it was purchased and married throughout iv. Lose ability to convey your half b. US v. Craft i. Quick Facts: husb owned taxes & IRS put lien on the house. Husb quitclaimed his interest to the wife. ii. Holding: govt still has right under tenancy in the entirety. Death a. If a spouse dies intestate, in most states, the surviving spouse gets everything if there are no children. i. If there is one child, then the spouse will get half and the child will get half (own as tenants in common) ii. If there are multiple children, then the spouse will get 1/3 and the children will split up the remaining 2/3 b. If the spouse dies testate – the surviving spouse gets to take the choice either what the will says or what they would be entitled to under the tenancy statute. i. Forced share or go under the will. ii. The Uniform Probate Code – all assets received at the time of death because of death if you go the forced shares then they are accounted. I.e. insurance policy, joint tenancy property 1. Ex. If 1 million life insurance and will leaves 2 million to child. If wife forces then she would only get the 1 million insurance because it is equal to half. c. At traditional common law, dower and curtsy rights, the amount was just of the estate in the will i. Did not include joint tenancy or life insurance. Divorce a. Rules i. Old divorce law: fault divorce w/ a separate title system ii. New divorce law: Equitable division of property w/ 2 separate groups: separate and marital (or community v. separate) 1. Separate property: gifts and bequests made solely to one spouse and the separate property is brought into the marriage. This is not divisible during divorce action 2. Marital Property: Everything else, including all property acquired by either or both spouse during marriage (but before separation) regardless of the form in which the title is held a. Also includes separate property carried into marriage that is mixed with marital property 9 i. 4. b. Includes separate property that has been actively managed or improved after marriage b. O’Brien v. O’Brien i. Quick Facts: Wife support husb getting medical license. Is license marital property? ii. Holding: Enhanced earning potential is not marital property c. Goldstein v. Goldstein i. Quick Facts: Wife divorcing husb lawyer and wants to know pending contingency fee arrangements. Husb says they are speculative and violate attorney client privilege. ii. Holding: contingent fees aren’t marital assets b/c they are too speculative and it is impossible to know in advance whether any contingent gee case will ultimately yield a fee or how much that fee will be. iii. If the attny worked hourly and had already billed his clients then that would be marital property. d. Pension i. Types: 1. Vested: You are entitled when you retire or when you reach 65 to get pension for life. 2. If partially vested, get a percentage. 3. Unvested: if you leave co, you get nothing ii. Rules 1. Majority: Whatever goes into pot at time of divorce is split equitable; aim for 50/50 but only if equitable 2. Minority: It is 50/50 equal 3. In CA: triggering line – in CA physical separation – other states look at divorce decree 4. Vested pension is marital property 5. Unvested is also marital even though if pension party quits they get nothing – still owe half of value at time of divorce Community Property a. Definition of marital property in nine states i. Differs from common-law system: ii. Common law starts with premise of separate title where each spouse holds a separate title or ownership to the property. 1. Wealthier spouse may owe duty of support 2. Surviving spouse has right to inherit a share of the deceased’s estate 3. Each has claim to equitable share after divorce iii. Community property starts with the premise that marriage is an economic partnership 1. Accumulations of wealth during the marriage belong to the couple together, regardless of who actually does the work and receives the income 2. Each has claim to equal share after divorce (in some states) 10 b. Features: i. In all nine states spouses are allowed to own separate property, but there is a strong presumption that all property owned by either spouse is community property. 1. Contrast with universal community property theory which does not recognize separate property—premarital property becomes community property upon marriage. ii. Proceeds of community property are community property. iii. Manner in which the couple holds title does not matter. c. Different states have different approaches to the following issues: i. Income generated by separate property while the couple is married 1. Such income = separate property 2. Such income = community property ii. Dividing property upon divorce 1. Equal division 2. Equitable division iii. Changing separate property into community property or vice versa by agreement (known as “transmuting”) 1. Prohibited 2. Allowed only if written 3. Both written and oral agreements allowed iv. Ability to convey title to community property 1. Buyer is bona fide purchaser and can obtain property through conveyance without consent of one spouse 2. If buyer has notice that he bought from a married person, the other spouse can be protected v. Making a gift of community property 1. One spouse acting alone can make reasonable gifts 2. Non-generous spouse can set aside any gift of community property vi. Debt of one spouse being classified as “community debt” 1. Most states do not recognize this 2. Some allow community debts to be psid out of community assets vii. Death of a spouse 1. All states say each spouse has testamentary capacity to devise his half of the community property 2. If spouse dies intestate, decedent’s children take the half 3. If spouse dies intestate, surviving spouse takes the half d. In Re Marriage of Horn i. Quick Facts: Husb has disability pay from NFL ii. Holding: severance pay – for work done during course of marriage – would be community property 1. Disability pay – would be treated like income earned in year after the separation so would be separate property e. Osuan v. Quintana i. Quick Fact: husb gave mistress and his kids from mistress lots of gifts. Wife wants gifts back. 11 ii. Holding: “Fraud on the Community” – the breach of a legal or equitable duty which violates the fiduciary relationship existing between spouses 1. 3rd party who knowingly participates in that fraud can be held liable 2. Spouse may make moderate gifts but a gift of community funds that is capricious, excessive or arbitrary may be set aside as a constructive fraud on the other spouse 5. Property Rights of Unmarried Couples a. Many juris will split up prop of unmarried couples in the same way as married couples i. Some juris require the contract to be express and will not imply a contract or find unjust enrichment b/c they want to encourage marriage b. Marvin v. Marvin c. Modern approach: i. Majority rule 1. Courts should enforce express Ks between nonmarital partners except to the extent that the K is explicitly founded on the consideration of meretricious sexual services. 2. In the absence of an express K, the court can look at the parties’ conduct to determine if there is an implied K. 3. Courts may employ the doctrine of quantum meruit or other equitable remedies when warranted by the facts of the case. 4. Policy: a. Adults who agree to live together are competent to make agreements as to their property rights and may order their affairs as they choose. b. Reasonable expectations of parties have value. c. Prevalence of nonmarital relationships in modern society and acceptance of them makes old law fail to apply. ii. Moderate rule: Only express Ks between nonmarital partners can be enforced. iii. Minority rule: Ks between nonmarital partners are void as against public policy. d. Same-sex couples i. Defense of Marriage Act: 1. Defines marriage as “only a legal union between one man and one woman as husband and wife” 2. Provides that states are not required to give effect to same-sex relationships that are treated as marriages in other states. ii. Courts and legislatures have gone both ways on this. III. Landlord and Tenant A. Nature and Types of Leasehold Estates 1. Types a. Estate for Years (aka Tenancy for Years or Term of Years) 12 2. 3. 4. 5. i. Fixed period of time agreed upon by the parties ii. i.e. Leased for 99 yrs b. Periodic Estate (aka Periodic Tenancy) i. Fixed period that repeats automatically until one party gives proper notice ii. i.e. Year to year or month to month c. Estate at Will (Tenancy at Will) i. Tenant has possession for no definite length of time ii. Either party can terminate at any time d. Estate at Sufferance (aka Tenancy at Sufferance) i. Estate only results when a tenant under one of the other three types holds over (remains in possession without landlord’s consent) ii. Lasts indefinitely, until the landlord is evicted or surrenders possession or until the parties enter a different type of lease Types of Governing Law a. First a contract (either written or oral) b. Common Property Law – sometimes will prevail over contract and sometimes it will flush out what the contract doesn’t say c. Statutes d. Ordinances enacted by local governments Types of Leases a. Residential i. Typically more vulnerable than commercial or home owner – more involved by common law or statute b. Commercial Cook v. University Plaza a. Quick Facts: student at dorm wants to fall under housing regulations for leases (to get back deposit). Is a dorm a lease or a license? b. Holding: Whether a contract is a lease or a license is determined by the legal effect of its provision, not the language used by the parties i. It is a lease if it transfers possession so that the lessee has exclusive rights against the world and the lessor; creates a possessory interest in the land ii. It is a license if it entitles one party to use property subject to the management and control of another party; creates no interest in the land 1. Ex. Classic license – parking lot w/ no assigned spots; hotel rooms; movie entertainment ticket 2. Found dorm to be license – but close call Prescott v. Smits a. Quick Facts: P leased land to S for S’s cows. Land made S’s cows sick and he left before a lease was actually signed. b. Holding: Any agreement to lease property for over a year is required to be in writing. 13 An estate at will can be converted to a year to year tenancy (periodic estate) where there is continued possession over a period of years and payment of annual rent 1. The fact that a tenant lives on the land for less than a year is not determinative, not ios the form of the payments – look to the character of the agreement itself. 2. When it becomes a year to year tenancy, notice is necessary to terminate a. Under common law notice must be given at least one period in advance b. 6 month notice is sufficient for an annual tenancy B. Delivery of Possession 1. Dieffenbach v. McIntyre a. Quick Facts: M leased whole building from D for a beauty parlor – there were still tenants in 2 of the spaces when she moved in. b. Holding: American rule: Placing of a lessee in possession requires only that he be placed in legal possession i. English rule – holds that there is an implied covenant to place the lessee in actual possession (Majority) ii. Under Eng. Rule – LL was under a complete breach by not having complete possession to T C. Quiet Enjoyment 1. Smith v. McEnany a. Quick Facts: S built a wall that encroached btwn 9-34 inches onto the land that M was renting from S. M stopped paying rent b. Holding: A wrongful eviction of the tenant by the landlord suspends the rent under the lease. i. The degree of interference w/ the use and enjoyment of the premises is important only in the case of acts not physically excluding the tenant, but alleged to have an equally serious practical effect ii. Eviction does not necessarily end the whole lease iii. Affirmatively taking an action to encroach on quiet enjoyment is a substantial interference. iv. Tenant will either not have to pay any rent until the problem is corrected or the rent is abated depending on what was lost 1. Same rules apply for actual eviction, partial eviction and constructive eviction 2. Blackett v. Olanoff a. Quick Facts: LL leased nearby property to cocktail lounge (even though he owned residential properties nearby). Tenants eventually moved out b/c of noise b. Holding: For constructive interference have to move out w/in a reasonable amount of time to show that subjectively not bearable i. Partial Eviction Requirements 1. Can be physical or constructive 2. LL must be resp 14 i. a. Caused it himself b. LL successor’s caused it c. Paramount titleholders caused it 3. If constructive – T must abandon the premises w/in a reasonable amount of time a. Can abandon just the part that is negatively affected b. Interference must be substantial (in some states) 4. Remedies a. Traditionally – T can remain in possession of the remainder of the premises and pay no rent regardless of the degree of interference b. RS calls for partial abatements of rent based on the extent of the eviction c. T can remain in possession w/o paying rent only if the interference is substantial d. Lease is voided D. Condition of Premises 1. Edward v. Habib a. Quick Facts: Tenant filed complaint w/ the housing authorities and L gave 30 days notice and sued for possession. b. Holding: Prohibition on retaliatory eviction i. Ct imposes implied warranty of inhabitability for residential property based on housing codes 2. Javins v. First Nat’l Realty Corp. a. Quick Facts: T stopped paying rent b/c of building code violations (but didn’t report them) – was habitable when moved in, but now not b. Holding: Implied warranty of habitability in residential leases. L has continued duty to make habitable premises i. Most states don’t recognize this warranty in commercial leases 1. Commercial have implied warranty of suitability that the premises are suitable for their intended commercial purposes. 2. At the inception of the lease there are no latent defect sin the facilities that are vital to the use of the premises for their intended commercial purpose and these essential facilities will remain in a suitable condition ii. Remedies 1. Damages a. Fair rental value as repaired minus fair rental value as unrepaired b. Agreed rent less fair rental value in unrepaired condition c. Percentage reduction of agreed rent based on breach 2. Termination by tenant giving notice to landlord while premises are inhabitable 3. Specific performance whereby landlord is compelled to make premises habitable 15 4. 5. “Repair and deduct” whereby tenant repairs and deducts the cost from rent; tenant must notify landlord and give him reasonable time to make repairs himself first Tenant may withhold rent while habitability dispute is being adjudicated (put into escrow to protect parties) E. Tenants Use 1. Stroup v. Conant a. Quick Facts: C told S that he would selling watches and novelty items but instead set up an adult bookstore b. Holding: Proof of pecuniary damages are not a requirement for rescission i. If the T’s use is legal, LL can rescind lease by showing misrepresentation 2. Brown v. Dubois a. Quick Facts: T took light fixtures and wall to wall carpeting at end of 5 yr commercial lease. T had right to take “trade fixtures” b. Holding: Gen rule: tenant retains the right to remove articles which the tenant places in or on the leasehold during the term of the lease, which items were so placed to enhance the tenant’s use or enjoyment of the premises i. Fixtures become part of real prop and can’t be removed w/o LL’s consent ii. Exception is for trade fixtures – an article which the tenant placed on the premise to promote the purpose of his occupation and which are removable during his term iii. Factors: 1. Nature of prop 2. Manner in which it is annexed 3. Purpose for which annexation is made 4. Intention of the annexing party to make the property party of the realty 5. Degree of difficulty and extent of any economic loss to LL in removal 3. White v. Molyneux a. Quick Facts: T renting a house which was burnt down. Does T have to cont to pay rent? b. Holding: T still liable for rent since T is more reasonable to bear this risk b/c he is in possession i. Modern Rule: relieve T from liability when the leased premises consist only of part of a building F. Landlord’s Remedies for Tenant’s Breach 1. Commonwealth Building Corp. v. Hirschfield a. Quick Facts: T held over for 10 hrs b/c of delays in moving out & LL says he is liable for the next month’s rent b. Holding: A T who holds over after the expiration of his term may, at the election of the LL, be held to either be a trespasser or a T for another similar term 16 i. T liable for the rent 2. Berg v. Wiley a. Quick Facts: 5 yr com lease for restaurant. T violated health code and remodeled with LL’s permission (which was in K). b. Holding: Common law – a LL may rightfully use self help to retake leased premises from a T in possession w/o incurring liability for wrongful condition provided: i. The LL is legally entitled to possession ii. LL mean’s of reentry are peaceful c. Modern trend is that self-help is never available if a T has not abandoned or voluntarily surrender the premises i. Use judicial process for eviction ii. Majority rule 3. Khan v. Heritage Property Management a. Quick Facts: T didn’t pay rent for 3 mo. T went out of town, told manager, & left check for rent. LL filed forcible entry and detainer in small claims ct and sheriff took all of T’s stuff and put it on the street. b. Holding: LL has not duty to store or maintain a T’s personal property after a T has been lawfully evicted i. LL would need to assume possession to create a bailment ii. LL followed process – if went in himself then would have been gross negl and LL would owe a duty 4. Holy Properties Ltd. v. Kenneth Cole Productions a. Quick Facts: After change in LL, w/ 3 yrs on 10 yr lease, T vacated b/c of deterioration in level and quality of building services b. Holding: When T abandons, LL has 3 options i. Do nothing and collect full rent under lease ii. Accept the T’s surrender, reenter the premises and relet for its own account, thereby releasing T from further liability for rent iii. Notify T that it was entering and reletting the premises for T’s benefit. It would first be apportioned to pay LL’s expenses for reentering and reletting and then towards T’s rent obligations. 1. In most states LL has a duty to mitigated damages after T’s abandonment G. Transfers By Landlord and Tenant 1. Jaber v. Miller a. Quick Facts: J(T1) transferred com lease to T2. Building is destroyed by fire. Need to figure out if sublease or assignment. b. Holding: Sublease v. Assignment i. Assignment is when a tenant assigns the remainder of his entire lease 1. Assignee would owe money to LL for length of original lease for all the same terms 2. If assignee doesn’t pay, the original T is still liable unless the LL releases the T ii. Sublease creates an additional lessor/lessee relationship w/in the original T and the new sub-T 17 The new sub-lessee owes rent to original T and the original T is liable to the LL 2. No relationship is created btwn sub and LL 3. In traditional law, a sublease is in some way less than the whole (either in length of time or restrictions upon the property) iii. How to know which one is which? 1. English Rule: if the instrument top transfer the lessee’s estate for the entire remainder of the term, it is an assignment regardless of its form or of the parties’ intention a. Conversely, if the instrument purports to transfer the lessee’s estate for less than the entire term, even for a day less, it is a sublease b. Clearest indication is: i. Who are you paying ii. What are you getting 2. New “Minority” Rule – look at the parties’ intentions 2. Kendall v. Ernest Pestana, Inc. a. Quick Facts: Com lease said T couldn’t assign or sublease w/o LL’s consent. Can LL w/hold consent for no reason? b. Holding: i. Majority: where a lease contains an approval clause, the lessor may arbitrarily refuse to approve proposed assignee no matter how suitable the assignee appears to be and no matter how unreasonable the lessor’s objections ii. Minority: Where lease contains an approval clause, the lessor can only withhold consent where the lessor has a commercially reasonably objection to the lease. IV. Private Land Use Restriction A. Easements 1. Definitions a. Easement i. An enforceable property interest ii. Tied either to land or to a person to iii. Make specified use of another’s property b. Impertinent Easement – tied to the land (most are this type) c. Easement in gross – tied to a person d. Subservient – land that has the easement e. Dominant Property – land that benefits from the easement f. License – a right granted to a person to do that which he otherwise couldn’t legally do. This is a permissive right that can be revoked at any time. 2. Types a. Expressed i. Needs to be documented in a written recorded deed b. Implied by Prior Use i. Unitary ownership 18 1. 3. 4. 5. ii. Used at time of severance iii. Reasonably continuous iv. Reasonably necessary c. Implied by Necessity i. Unitary Ownership ii. At severance, easement was absolutely necessary for reasonable use and enjoyment of property d. Prescriptive i. Open ii. Obvious/Notorious iii. Continuous for requisite length of time iv. Adverse v. Under claim of right e. Estoppel i. Actor relied on something by the adverse party at their own detriment ii. Other party knew of reliance iii. Only lasts as long as detriment continues Marcus Cable Associates v. Krohn a. Quick Facts: K entered into easement agreement with elec co for elec lines. Cable co didn’t get own easements but got permission to attach cable co to elec lines. b. Holding: if a use does not serve the easement’s express purpose, it becomes an unauthorized presence on the land whether or not it results in any noticeable burden to the servient estate i. Shifting public use: the scope of the original easement can be expanded to include other uses which the conditions surrounding the easement change. However the expansion must still serve the original purpose. Brown v. Voss** a. Quick Facts: B had easement to get to parcel 2 through parcel 1. B also bough parcel 3, which was just above 2. B is building a house on the line btwn 2 and 3. b. Holding: If an easement is appurtenant to a particular parcel of land, any extension thereof to other parcels is a misuse of the easement. i. Can’t use the easement to get to another property other than the dominant parcel. ii. Normally ct would grant injunction, but if there if new use in reasonable and there is no increased burden or damages then might not. Thompson v. E.I.G. Palace Mall a. Quick Facts: Rest used mall parking lot for patron parking and deliveries (even though had own parking lot). All originally owned by same person. Mall wants to build over that part of the parking lot. b. Holding: Not prescriptive easement b/c parking is for gen pub and that isn’t adverse to mall. No implied easement by necessity for parking b/c 19 6. 7. 8. 9. they have their own lot, but maybe implied easement b/c delivery truck can only fit that way. Schwab v. Timmons a. Quick Facts: S divided land so that part no longer touched the public road. S wanted to use a private road that ended just before S’s property. b. Holding: Easement of necessity arose where an owner severs a landlocked portion of his or her property by conveying such parcel to another i. S severed himself – so no right to private road Lobato v. Taylor a. Quick Facts: T fenced of land that originally was used as a common area. b. Holding: All 5 elements of easement from prior use had been est c. Profit pendre – easement that confers the right to enter and remove timber, minerals, oil, gas, game or other substances from land in possession of another Preseault v. US a. Quick Facts: RR long unused easement was turned into public hiking and biking trail. b. Holding: An easement is terminated by abandonment when nonuse is coupled with an act manifesting either a present intent to relinquish the easement or a purpose inconsistent with its future existence c. Termination of Easements: i. Expires: easement for a specific duration expires at conclusion of that time ii. Consent: both parties expressly consent to release iii. Merger: ends automatically if same person now owns dominant and servient tenements iv. Prescription: if servient owner uses land adversely to dominant owner for sufficient period v. Forfeiture: dominant owner abuses easement in way that cannot be solved by injunction or upon failed attempt to convert easement appurtenant into easement in gross vi. Estoppel: servient tenement relies upon statements of easement owner vii. Condemnation: govt exercises eminent domain viii. Easement by estoppel: ends if fairness of change circ no longer requires easement to continue ix. Easement by necessity: ends when necessity ends Miller v. Lutheran Conference & Camp Association** a. Quick Facts: Ice co had exclusive rights to use water of lake and gave interest to one brother who gave ¼ to other bro who wants to give to someone else. b. Holding: A profit in gross may be made assignable i. An easement w/ 2 or more owners have to act as one – so all interest holding parties would have to act together ii. Gen rules 20 1. 2. B. Covenants 1. Tulk v. Moxhay a. Quick Facts: T deeds garden to E with limitations how it needs to be kept. E then deeds to M w/o limitations, even though M was aware. b. Holding: At law covenants don’t run w/ the land but in the ct of equity they do i. Doctrine of equitable servitudes ii. Other party must have notice of covenant 2. Neponist Property Owners’ Association v. Emigrant Indust. Savings Bank** a. Quick Facts: NPO was 1 st planned vacation community w/ a Prop Owner Association. Deed said that annual dues came w/ prop. Bank repossessed house. b. Holding: For real covenant that runs with the land you need 3 requirements: i. Intent to create covenant ii. Privity of estate 1. Privity of estate btwn buyer and seller iii. Covenant must touch and concern the land 3. Fong v. Hasimoto a. Quick Facts: Height restriction covenant for ocean view. b. Holding: If there is no common pattern, and the buyer would have no idea of restriction, the land is not bound by restriction i. Majority: If there is a visible plan that a reasonable prudent buyer would be on notice of, they are bound at equity. (Dominant view) ii. Needs to be clear restriction – one story in height limit is too vague to enforce. 4. Nahrstedt v. Lakeside Village Condo Association a. Quick Facts: Cat lady v. Condo. b. Holding: 2 categories of use restrictions i. Use restrictions set forth in the declaration or master deed of the condo project itself 1. Are clothed with a very strong presumption of validity 2. In CA – use balancing test even on original restrictions (minority) ii. Use restrictions that are rules promulgated by the governing board of the condo owner’s association 1. Subjected to a reasonableness test 5. Peckham v. Milroy a. Quick Facts: running a day care in house when covenant says no prop for business purpose. b. Holding: Few violations of covenant does not constitute abandonment i. Must be habitually and substantially violated c. Ways to invalidate covenant i. Abandonment 21 Commercial easements in gross are assignable unless they say otherwise Personal easements aren’t assignable unless they say otherwise ii. Violation of public policy iii. Equitable estoppel or laches iv. Changed conditions 1. Applies when the character of the neighborhood has changed since the covenant was made so that the benefits of the covenant cannot be substantially realized. C. Nuisance Law 1. Definitions a. Private Nuisance – any substantial non-trespassory invasion of another’s interest in the private use and enjoyment of land by any type of liability forming conduct i. Person can only sue if they have a property interest that is affected ii. Spite fences – actions taken for revenge or hostility have been held to be a nuisance, even if wouldn’t qualify otherwise iii. Nuisance per accidence – a nuisance given its place and time b. Public Nuisance – a nuisance that affects the property or health of many persons or an entire community i. Specifically declared pub nuisances include: any condition or place in populous area which constituted a breeding place for lice, rodents, mosquitoes, and other insects which are capable of carrying and transmitting diseases ii. Usually brought by state or govt. If it is a private person, they need to show a special injury that is different from the public injury. c. Nuisance Per Se – something that is always a nuisance no matter where it is located or who it is next to (any place, any time) i. You get your damages, but no automatic injunction ii. Damages are until violation is correct iii. See Luensmann for tests 2. Morgan v. High Penn Oil Co. a. Quick Facts: Oil refinery moved 1000ft from mobile home park and restaurant. b. Holding: Test if a reasonable and prudent person is unreasonably bothered i. Hypersensitivity don’t get nuisances in most cases 3. Luensmann v. Zimmer-Zampese & Ass a. Quick Facts: Little old lady v. drag racing strip b. Holding: Nuisance Per Se can be shown in 2 ways: i. By proving that the activity was a nuisance at all times, under any circumstances, and in any location ii. By proving a violation of law 1. However a violation of statute or ordinance w/o additional evidence of nuisance is insufficient to prove the claim 4. Prah v. Maretti a. Quick Facts: M blocking P’s solar powering sunlight b. Holding: factors for determining private nuisance i. Gravity of harm 22 Extent of harm involved Character of the harm Social value that the law attaches to type of use or enjoyment involved 4. Suitability of the particular use or enjoyment invaded to the character of the locality AND 5. Burden on the person harmed of avoiding the harm ii. Utility of conduct 1. Social values that the law attaches to the primary purpose of the conduct 2. Suitability of the conduct to the character of the locality AND 3. Impracticability of preventing or avoiding the invasion 5. Mark v. Oregon a. Quick Facts: Nudist at state wildlife park b. Holding: In order to be liable for the acts of 3d party that creates nuisance on their land, def must both: i. Know that the activity is being carried on and will involve an unreasonable risk of cause9ignb the nuisance and ii. Consent to the activity or fail to exercise reasonable care to prevent it 6. Spur Industries, Inc. v. Del E. Webb Development Co. a. Quick Facts: Housing development encroaching upon slaughter yard. b. Holding: Coming to nuisance: i. Cts have held that residential landowner may not have relief if he knowingly came into a neighborhood reserved for industrial or agricultural endeavors 1. Still found to be pub nuisance b/c W not only one affected ii. Webb had to indemnify for reasonable cost of moving or shutting down 1. No state has follow indemnity rule V. Public Land Use Restriction A. Zoning 1. Village of Euclid v. Ambler Realty Co. a. Quick Facts: Village enacted zoning ordinance that designated allowable uses in various property zones. b. Holding: Upheld constitutionality of zoning. Reasonable exercise of police power. i. Typical Euclid zoning scheme classifies conflicting uses, from highest (residential) to lowest (industrial) ii. Zones are inclusive, meaning the lower ranking uses cannot invade the upper ranks, but the upper ranks can come into the lower ranks. 1. Exception: industrial parks are exclusively for industry 2. When does zoning go too far? a. If you have a non-conforming use that was once legal, you have a right to maintain it, if the downzone at least as for so long as you can amortize out of your business b. Reduces too much 23 1. 2. 3. 3. 4. 5. 6. 7. c. Spot zoning – rezoning one part of the large zone to give an owner a benefit or detriment i. If non arbitrary, then it would be okay ii. If it is arbitrary then it is unconstitutional d. Private benefit with arbitrary public benefit e. Use variance Snake River Brewing Co. v. Town of Jackson, Wyoming a. Quick Facts: SR first had options of parking on site, off site, or fee in lieu of parking. SR did mix of first two, but when expanded wanted to do fee in lieu. Fee and lieu was not longer option from city. b. Holding: Right to continue a non-conforming use exists only so long as the use continues to exist (Grandfather clause) i. Termination shown by: 1. Abandonment 2. Discontinuance or no-use for prescribed period a. Cts have upheld year long periods (even if furniture is still there, etc.) 3. Amortization 4. Voluntary or involuntary destruction ii. Test: whether enforcement of the new ordinance would render valueless substantial improvements or business built up over the years or cause serious financial harm to the property owner Watergate West, Inc. v. DC Board of Zoning Adjustment a. Quick Facts: DC board approved turning old hotel in dorm for GWU b. Holding: Have to follow both comprehensive plan and the zone – the Zoning Commission is the exclusive agency vested with resp for assuring that zoning regulations aren’t inconsistent w/ the comprehensive plan Omnipoint Comm Enterprises v. Zoning Hearing Board of Easttown a. Quick Facts: Omni wanted to put a 110ft high cell tower on top of a synagogue in a 35ft high zoned area b. Holding: In order to overcome the presumption of constitutionality, the challenger must demonstrate that the ordinance totally excludes an otherwise legitimate use Price v. Planning Board, City of Keene a. Quick Facts: Board approved subdivision w/ avg lot size of 2.72 acres when zone required min 5 acres b. Holding: Planned unit development is an instrument of land use control with augments and supplements existing master plans and zoning ordinances and permits a mixture of land uses on the same tract i. Don’t have to abide by both the planned unit development and the zoning ordinance – it is a special use district and would overrule the zoning restrictions H.H.B v. D&F a. Quick Facts: wanted to put in CVS b/c back in the day it was a neighborhood pharmacy 24 b. Holding: Judicial review of municipal decisions re zoning ordinance is severely limited i. If the application of zoning classification to a specific parcel is reasonably subject to disagreement (if its application is fairly debatable) then the application of the ordinance by the zoning authority should not be disturbed by the courts ii. Would have to show arbitrary and capricious B. Growth Controls 1. Construction Indus Ass of Sonoma County v. City of Petaluma a. Quick Facts: P limited the number of dwelling homes that could be built in next 5 yrs. b. Holding: Must determine whether the exclusion bears any rational relationship to a legitimate state interest i. If it does not then zoning regulation is invalid ii. If it does further a legitimate state interest, cts must defer to the legislative act C. Regulating Particular Uses of Land 1. City of New Orleans v. Pergament a. Quick Facts: gas station had too big of a sign in a zoned historical district b. Holding: preventing or prohibiting eyesores is w/in the police power and w/in the scope of this muni ordinance 2. Carson Harbor Village, Ltd. v. Unocal Corp. a. Quick facts: Found slag and tar material in wetlands of property. Who has to pay for clean-up? b. Holding: 4 Categories of potentially resp parties i. Current owner ii. Prior Property Owner – so long as there was a deposit of waste iii. Disposal/Depositing Party iv. Accepting Party VI. Takings A. Power of Eminent Domain 1. Poletown Neighborhood Council v. City of Detroit a. Quick Facts: D wanted to condemn a residential neighborhood and give the land to GM for an assembly plant b. Holding: Condemnation for a public use is permitted, but not for a private use i. Public benefit cannot be speculative or marginal, but must be clear and significant if it is to be w/in the legitimate purpose ii. Irrelevant that transferred to private party 2. City of Oakland v. Oakland Raiders a. Quick Facts: Oakland trying to buy Raiders b/c they want to move to LA. b. Holding: Intangible (and personal) property are just as susceptible to eminent domain as real property i. Public Purpose Test: Public use is a cause which concerns the whole community or promotes the general interest in its relation to any legitimate object of government 25 Not essential that the entire community or even any considerable portion thereof, shall directly enjoy or participate in an improvement in order to constitute a public use 3. Georgia Dept of Trans v. Jasper County a. Quick Facts: J wants to condemn land held by GDOT and lease for 99 yrs to private co to have maritime terminal b. Holding: Need to take land for public use not just public benefit. i. Pub use – a fixed definite, and enforceable right of use, independent of the will of a private lessor of the condemned property 4. US v. 564.54 Acres of Land a. Quick Facts: US condemning church’s camp for a park b. Holding: Only have right to recover fair market value (what a willing buyer would pay to a willing seller) and not replacement value i. Except: 1. Application of FMV would be impracticable OR 2. An award of FMV would diverge so substantially from the indemnity principle as to violate the 5 th amend B. What Constitutes a Taking? 1. Loretto v. Teleprompter Manhattan CATV Corp. a. QF: Cable co put cable installation on L’s building. NY statute requires LL’s to allow cable co. b. If govt comes and physically occupies land, or authorize someone else to occupy your land, it is a physical taking and compensation is due. i. Even if as small as a cable wire. 2. Hadacheck v. Sebastian a. QF: Brick-maker was outlawed from making bricks b/c city ordinance. H’s land value has dropped 90%. b. Regulation, where no nuisance was show, even if there is a significant drop in value, does not constitute a taking. 3. Penn Coal Co. v. Mahon a. QF: M owned only surface right, and PA statute said coal cos couldn’t mine where there is a house on the land above. This made PC’s land interest worthless. b. If all the value of the property is taken by a regulation then it is a taking and compensation is due 4. Penn Central Tran Co v. New York City a. QF: PC wants to build an office building on top of Grand Central Station. NYC denied request b/c it is a historical building b. 3 significant factors to determine whether govt regulation amounted to a taking: i. The effect of the regulation the value of the property ii. The extent to which the reasonable investment-backed expectations of the property owner have been interfered with AND iii. The character of the govt action 5. Lucas v. South Carolina Coastal Council 26 1. 6. 7. 8. a. QF: L bought beach front prop and then city passed ordinance that said you couldn’t build on breach front property. b. Property found to be worthless b/c of high property taxes i. Can get into situation that you take all the value but it is from govt and not market place ii. When a regulation denies all economically beneficial or productive uses of land, it is a taking. c. 2 categories that constitute a taking i. Physical taking ii. Taking all economic value from the land Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency a. QF: 32 month moratorium on development to study effects of development on lake water b. Total temporary moratoriums that deprive land of all value won’t qualify if it is for a valid reason Phillip Morris, Inc. v. Reilly a. QF: statute requires list of ingredients on all cigarettes. Does that take PM’s trade secret? b. Found to be a taking b/c there was no specific govt goal to support the trade secret c. Need to also look at govt reasoning as well Dolan v. City of Tigard a. QF: Commission would approve improvement permit if D agreed to allow a bikeway and an creek drainage b. Needs to have rough proportionality for a conditional approval i. The city must make some sort of individualized determination that the required dedication is related both in nature and extent to the impact of the proposed development 27