1 Property Spring 2005, Hughes Adverse Possession of Land Background Permits one who owns title to property to lose title by inaction, while allowing another to gain new title w/o owners consent First in time does not apply b/w original owner and adverse possessor, but it does operate b/w subsequent parties attempting to adversely possess property. Theories Punitive – Sleeping Theory – an owner who fails to assert his rights w/in a given statutory period, loses the right to assert them thereafter Reward – Earning Theory – an adverse possessor has put the property to good use for a statutory period. Her efficient use entitles her to immunity to suit. Reward of property rights due to efficient use Requirements (1) Actual Entry giving exclusive possession Clock runs upon entry onto land Exclusive to owner (2) Open & Notorious Must be of such a character that puts owner on notice that someone is on her property Permissive entry can turn into AP if the person remains w/o permission (stays longer allowed originally) (3) Adverse under claim of right W/o permission Must inform owner that someone is challenging her property rights 3 Standards: • Objective Standard (majority) – State of mind is irrelevant, so long as AP acts as if the land is her own ♦ Mistake (believe the land belongs to her, when, in fact it doesn’t ♦ Knowing wrongful taking • Good Faith Standard – can only acquire title by AP if person believes the property belongs to her when in fact it does not • Aggressive Standard – can only acquire title by AP by knowing wrongful taking. Hostility does not arise where person mistakes land for his own (4) Continuous Not literal continuity AP must use land in the customary manner in which such land is used such that an independent 3rd party would believe the actual owner was occupying it TACKING • AP may TACK the time of previous AP when privity exists b/w those two parties ♦ Privity exists b/w voluntary transfers of property ♦ Where an involuntary transfer occurs (AP is kicked off by another) the period freezes. If the AP re-acquires possession (which he could legally against the subsequent person), the pd. Unfreezes If the subsequent person leaves the land unoccupied and then the AP reacquires possession, clock resets • Only assertion of property rights can prevent tacking Color of Title (not essential to AP) Color of Title exists where a written instrument purports to convey property but: The conveyer does not actually have title in the conveyed property or The property conveyed is not the same as the property occupied Actual Possession of a part of the land described in the deed is constructive possession of all the unoccupied land described. First in time is relevant in the application of constructive possession of the unoccupied land vis-à-vis the AP & true owner 2 • AP can divest O of the land the AP actually possesses, assuming she meets the 4 criteria, will divest O of title • AP cannot divest O of the unoccupied land. BOTH enjoy constructive possession of that part, but O has the doctrine of first in time on his side • AP cannot divest O of the land O occupies, even if the deed describes it b/c AP does not meet the requirements w/regard to that part of the property Improvements & Encroachments Erection of buildings/fixtures on land w/o right, irrespective of good faith, become property of true owner Courts acting equitably, usually soften the rule for good faith improvers by granting compensation equal to market value of improvements, or permitting the removal thereof Encroachments that result from innocent mistakes (especially if they are relatively small) usually get the sympathy of the courts and gets them to balance the relative hardships b/w the parties Encroachments that are willful or intentional receive little sympathy, and are often met w/requirements to remove the encroachments regardless of the relative inconveniences upon the parties Recognition of disabilities mitigates the harsh application AP against owners who are incapable of asserting their rights Common Disabilities include: (1) Insanity, (2) Minor Status, (3) Incarceration Gives the disabled person the longer of two periods to assert rights: (1) the SOL (2) 10 years from the cessation of the disability The only relevant disability is the one existing at the time AP commenced and the COA accrued Tacking of disabilities is NOT permitted Title acquired by AP can only be divested by voluntary transfer or subsequent AP Verbal agreements insufficient (SoF) Adverse Possession of Chattel True owner’s diligent efforts to locate and recover lost chattel TOLLS the SOL w/regard to AP. To acquire title, the AP must prove open & notorious possession (true owner knew or should have known that AP had it) To toll the SOL and prevent AP, true owner must: (1) have actual or constructive knowledge that property is missing (2) have knowledge that he has C/A • A person knows he has C/A when has discovered or should have discovered the identity of the current possessor • Confers the benefit of the discovery rule on true owners And (3) diligently pursues recovery of the chattel • Diligent pursuit is taking steps toward recovery (contacting police, listing item as stolen, etc.) • O’s inability to establish diligent pursuit permits SOL to run Chattel & Voidable Title In general, a seller can only convey to a buyer the title the seller has. Exceptions exist where voidable title is involved. One obtains voidable title when the transfers of chattel from true owner to another is based on fraud Exception 1: Transferor holding voidable title can transfer good title in chattel to a BFP for a value. • True owner has no c/a against the BFP, b/c b/w the 2 the BFP is the more innocent. • True owner does have conversion c/a against the seller Exception 2 – A person entrusted w/the chattel of another can transfer good title in that chattel to a 3rd party if the “entrusted” person is one who deals in such goods. • Note that the entrusted person has NO title in the chattel whatsoever • True owner has no c/a against BFP, but conversion c/a against transferor A thief cannot transfer good title UNLESS the transfer falls w/in the rules of AP & Discovery 3 Deeds Elements Premises Granting clause -O intends to transfer property to A, B… Recitation of consideration Description of property Habendum Tenendum Clause “to have and to hold” describes the nature of the estate. Warranty Clause Informs transferee of the strength of transferor’s conviction w/regard to quality of title & serves as a basis of potential liability for the seller. • Present Covenants ♦ Covenant of Seisin – Grantor promises that he owns and has the right to possess the property to be conveyed ♦ Right to Convey – Grantor promises that he has the power and legal ability to convey the property ♦ Covenant Against Encumbrances – Grantor promises and guarantees that no other has an interest in the property to be conveyed (i.e. the property lacks easements, mortgages, tax liens, etc.) • Future Covenants ♦ Covenant of Warranty/Covenant of quiet enjoyment – Grantor promises that the grantee will not be disturbed in possession or enjoyment of the property by a 3rd party’s lawful assertion of superior title. ♦ Covenant of Further Assurances – Grantor promise to provide grantee w/corrective documentation if any defects in the conveyance are uncovered. Testimonium • “In witness whereof” (seller’s signature) Acknowledgement • Seal of Notary Public Categories/Types (title of deed is irrelevant. What matters is what is provided in the text of the deed) General Warranty Deed -Grantor warrants that he will defend grantee’s title against all claims, including those arising from conduct prior to grantor’s title, even if grantor’s title is invalid Special Warranty Deed -Grantor warrants that he will defend grantee’s title against any claim arising through or under grantor Quitclaim Deed (the As Is transfer) -Grantor conveys to grantee whatever title grantor happens to possess. • No title, then grantor conveys no title; FS, then grantor conveys FS Freehold Estates Definitions Heir – person surviving decedent No heirs of the living Spouses aren’t heirs Hierarchy of Heirs: • Issue – children and descendants • Ancestors – parents • Collaterals – blood relatives who are not issue or ancestors Escheat – where dies intestate w/o heirs, title to real property transfers to the State encompassing the property Grantor presumably conveys entire estate unless clear intent to transfer a lesser quantum appears Restraints on Alienation Hostile to restraints &won’t uphold absolute restraints. Qualified restraints are enforceable if they are reasonable. A restraint is reasonable if it is not too restrictive. Types Disabling-divests owner of the ability to transfer the property to another Forfeiture – causes immediate forfeiture of title upon attempted transfer Promissory – creates c/a for grantor against grantee if grantee attempts to transfer to another. • Completed transferred relief limited to damages 4 Present Possessory Interests (PPI) Fee Simple Absolute (FSA) Defining it: • Fee – potentially infinite duration • Simple – w/o limitations on inheritability • Absolute – cannot be divested ♦ Lacks an automatic or artificial end Can be subject to encumbrances (e.g. mortgage) Creating it for transfer: • “to A and his heirs” ♦ “to A” – words of purchase ♦ “and his heirs” – words of limitation Fee Tail Defining it: • Fee – potentially infinite duration • Tail – limited to lineal descendants of grantee Creating it for conveyance: • “to A and the heirs of her body” No lineal descendants, then property: • Reverts to grantor, or • Transfers to Remainder-person Intervivos transfers of FT do not destroy the reversionary interest invested in the original transferor Abolished in most jurisdictions • Attempts to create it result in the creation of a FS Life Estate (LE) Defining it: • Estate that endures for the life of a particular person, not necessarily the life of the person holding the LE Creating it for transfer: • “to A for life” • “to A for the life of B” • “to A, then to B” by implication Valuation of LE & Remainder • Both the PPI – LE and the Future Interest – Remainder have value. • Courts must consider the interests of (read: “economic effect on”) both parties when making decisions • LE can not commit economic waste to the land: ♦ It is relevant in any situation where two or more persons have an interest in property (e.g. concurrent, present-future) ♦ Types: Voluntary waste – LE makes an affirmative act that results in diminution in value Involuntary waste – LE neglects to exercise reasonable care in maintaining property Legal Waste – LE changes nature of land such that the value increases substantially from its previous use (e.g. demolish modest single-family dwelling to erect strip mall) Defeasable Estates are applicable to all freehold estates and can terminate them upon the occurrence of a specified event. Determinable (FSD) • Corresponding Future Interest – Possibility of Reverter ♦ MUST BE CREATED IN GRANTOR • FSD will terminate automatically upon the occurrence of an event or the satisfaction of a condition. • FSD will transfer automatically to the grantor (or current possessor of the FI*) ♦ *Modern CL permits Grantor to transfer his possibility of reverter to a 3rd party • To create it, grantor must use duration language ♦ “As long as” ♦ “if the property ever” 5 ♦ “During the continuation of” Subject to Condition Subsequent (FSC) • Corresponding Future Interest – Right of Entry ♦ MUST BE CREATED IN GRANTOR • FSC becomes terminable upon the occurrence of an event or the satisfaction of a condition at the election of the FI-possessor ♦ The person holding the right of entry elects termination by taking affirmative steps to reclaim the property (e.g. sue for ejectment) ♦ SOL for AP begins to run upon occurrence of the event/satisfaction of the condition • To create it, grantor must use conditional language: ♦ “But if the property is used for purpose other than…” ♦ “Provided that” ♦ “Unless” ♦ “However” Subject to Executory Limitation (FSE) • Corresponding Future Interest – Executory Interest ♦ Created in 3rd party (not grantor or grantee getting the FSE) • FSE will terminate upon the occurrence of an event or the satisfaction of a condition • Unlike other defeasable estates, the FI is created in one other than the grantor • Transfer may occur automatically, or require affirmative act by 3rd party Future Interests Designation determined by the person in whom the interest was created (transferor, or transferee). Notwithsttandin subsequent transfers, the interest retains it name, unless merger operates to create a greater interest Terminology Subject to Open (STO) – attaches to interest conveyed to the class of A’s children where A is still alive and can have more children Subject to Total Divestment (STD) – attaches to vested future interests where a condition exists that would prevent the interest from becoming possessory Subject to Partial Divestment (SPD) – attaches to vested future interests where a condition exists that would vest title in a greater number of individuals than who current hold the vested interest. Created in Transferor Reversion is created where grantor has conveyed an estate of a lesser quantum to another. • Does NOT cut short the preceding possessory interest, but follows the natural termination thereof • Exists whenever there’s a possibility that all possessory interests could end, leaving no one w/title Possibility of Reverter is created where grantor has conveyed a FSD to grantee. • Cuts short the preceding possessory interest • Automatically becomes possessory upon the termination of the FSD • Holder cannot be divested of this interest Right of Entry is created where grantor has conveyed a FSC to grantee • Requires affirmative act by Grantor to become possessory • AP and the accrual of Grantor’s c/a ♦ Some jurisdictions say that SOL beings to run (c/a accrues) upon occurrence of the event w/o regard to grantor’s knowledge thereof? Once grantor discovers or should have discovered the event occurred? ♦ Others say that SOL beings to run once he asserts his right of entry Created in Another Executory Interest (EI) cuts short the preceding possessory interest upon the occurrence of a condition • It is shifting if it divests another transferee her interest. • It is springing if it divests the original transferor of her interest. • Vest upon becoming possessory. Vested Remainder (VR) is ready to become possessory upon the natural termination of the preceding possessory interest. • It is a remainder b/c it does not cut short the PPI 6 • It is vested b/c it: ♦ held by an ascertained person AND ♦ has preceding condition has been satisfied • VR divests O of any reversion he held • Neither a VR or a CR can follow a VR, ONLY EI can follow • VR, SPD = an EI exists that could partially cut it off (e.g. create 2 owners instead of 1) Contingent Remainder (CR) will become possessory upon the natural termination of the preceding possessory interest, IF AND ONLY IF, the condition is satisfied • It is contingent b/c ♦ It has been conveyed to an unascertained person, OR ♦ The preceding condition has yet to occur • Alternative CR – contemporaneously created CR such that the vesting of one destroys the other • Creating them: ♦ If condition is w/in the clause (inside the commas), then interest is contingent on that condition E.g. To A for life, then to such of A’s children as survive. Condition of survival is w/in the comma; thus, CR vests upon survival ♦ If condition is outside the clause (outside the commas), then the vesting of the interest is not conditional on the occurrence of the event. E.g. To A for life, then to A’s children and their heirs, but if at A’s death he is not survived by any children, then to B and heirs Condition of survival outside comma; thus, CR vests upon ascertainment of person • Rule in Shelley’s Case (Shelley) ♦ Applies to CR! ♦ Where an instrument purports to create a LE in A and a remainder in persons described as A’s heirs (heir’s of A’s body), the instrument actually creates a FS in A (provided there are no intervening interests). E.g. to A for life, then to A’s heirs ♦ Where intervening interests exists, merger cannot operate to join the LE and the remainder into a FS. Nonetheless, the remainder goes to A. E.g. to A for life, then to B (for life), the to A’s heirs ♦ Requirements Single instrument LE in A & Remainder in A’s heirs Both interests are legal, or both interests are equitable ♦ Examples to know: “To A for life, remainder to A’s children and their heirs” Shelley inapplicable b/c “A’s children” is NOT the same as “A’s heirs” Creates: • A: LE • A’s children: CR in FS, STO “To A for life, then to B for life, then to A’s heirs” Shelley operates. It doesn’t create a FS b/c of B’s intervening interest Intended to Create: A-LE; B-LE; A’s heirs-R in FS Actually Creates: • A-LE + CR in FS • B-LE • O – Reversion “To A for life, then to A’s heirs if A survives B” Shelley operates Intended to Create: A-LE; A’s heirs-CR in FS (conditioned on A surviving B) Actually creates • A-LE + CR in FS that vests if A survives B • O – Reversion that becomes possessory if A dies before B 7 • Destructibility of CR ♦ At old CL, CR that did not vest at or before the termination of the preceding possessory interest were destroyed. ♦ Merger also destroyed CR if the LE and the next vested estate is FS came into the hands of the same person E.g. “To A for life, then to B and heirs, if B survives A At Conveyance: • A – LE • B – CR (conditioned on B surviving A) • O – Reversion O conveys reversion to A • Merger operates combining LE and reversion to create FS in A, thus, destroying B’s CR A conveys LE to O • Merger operates combining LE and reversion to create FS in O, thus, destroying B’s CR ♦ Modern rule protects Rule Against Perpetuities (RAP) Applies to CR & EI! An intended transfer is void upon creation if at conveyance it is not guaranteed that the interest will definitely vest (or definitely not vest) w/in 21 years after someone dies. • Rule of Convenience operates to close the class upon any member thereof vesting her interest Determined at the time of conveyance Determined based on a measuring life • Must be born at the time of the conveyance • Categories of people who can be measuring life ♦ 1. Preceding life tenant ♦ 2. The Taker ♦ 3. Anyone who can affect the identity of the taker ♦ 4. Anyone who can affect a condition preceding Most jurisdictions have revised RAP to be a wait & see rule to wait and see if events actually happen Doctrine of Worthier Title Applies to R & EI! When a grantor makes an inter vivos attempt to create a remainder or an executory interest in the class of his heirs, she creates no interest in her heirs, but instead, retains a reversion for herself. • E.g. O conveys to “A for life, then to my heirs.” ♦ Intended to create: A – LE; Heirs of O – Remainder ♦ Actually Created: A – LE; O – Reversion Concurrent Interests Joint Tenancy (JT) Rights of each JT • Right of Survivorship ♦ Distinguishing characteristic ♦ Does not pass by intestate succession ♦ Decedent’s interest divides among surviving JT ♦ Must use this terminology in the conveyance to create this estate • Separate, undivided interests • Right to use whole of property ♦ Necessary corollary to right to use who is the lack of a right to prohibit the use of other JT • Right to sever, unilaterally ♦ Inter vivos conveyance severs JT (destroys unities of title and time) and creates TIC b/w devisee and devisor’s former JT. • exists where 2 or more persons have separate, undivided interests in property, each having the right to use the whole, and rights of survivorship. Requires 4 unities to create JT 8 • Title – must convey JT interest in same instrument • Interest – must have equal interest in property • Possession – must have the right to possess the whole of the property • Time – must receive interest at the same time Mortgages and JT • 1. Lien Theory ♦ A mortgage is a lien, a claim for debt payment secured by property), that does NOT sever JT ♦ Surviving JT is not obligated by a mortgage placed on the property by the decedent The mortgage disappears ♦ But foreclosure prior to death can result in partition by sale • 2. Title Theory ♦ A mortgage conveys legal title to the mortgager until the balance is paid ♦ Severs JT by destroying unities of time, title, possession Tenancy In Common (TIC) Only requires unity of possession No survivorship rights Interest held by TIC pass through intestate succession Default – in the face of ambiguity assume TIC Tenancy by the Entirety (TBE) Requires all for unities & marriage • Statutes have extended it to same-sex couples and relatives Survivorship rights • Neither tenant can defeat the survivorship rights of the other • Cannot destroy by unilateral inter vivos conveyance Only destroyed by: • joint conveyance • divorce Creditors and TBE • Creditors can only reach property held by the entirety if ♦ BOTH tenants made the credit obligation, or ♦ The surviving tenant made the credit obligation (whether before, during, or after creation of TBE) Only real property can be TBE Obligations of Cotenants Accounting – pro-rata share of rental income derived from a lease agreement that any T makes w/a 3rd party Repairs • Where less than all tenants pay for repairs to or maintenance of the property, those repairing tenants are NOT entitled to contribution from non-repairing tenants. • Instead, they receive credit for the COSTS of repairs in the event of: ♦ Accounting for rental values (repair costs come off the top, before non-repairing tenants see any $) ♦ Partition by Sale (repair costs come off the top, remainder is split evenly) Improvements • Where less than all tenants pay for improvements, those improving tenants are NOT entitled to contribution from the non-repairing tenants. Nor are they necessarily entitled to credit for the cost of the improvements. • To the extent the improvements increase the rental value (or market value for future sale), improver recovers his costs from the enhancements (they get them off the top) • Where property is partitioned in kind, to the extent the court can, it will divide the land such that the improver gets the land w/the improvements Taxation • When one cotenant pays the mortgage or taxes on property to reserve property from foreclosure, that cotenant IS entitled to pro-rata contribution from the other cotenants • Minority Exception: ♦ If the cotenant paying the taxes and mortgage is also the sole possessor of the property, he is NOT entitled to contribution from the other cotenants 9 Waste • Cotenants commit waste by taking actions (failing to take actions) that greatly change the value of the property • Waste creates a c/a for any cotenant (and an individual w/a future interest for that matter) • Remember: waste is not only diminution in value. Substantial changes that increase value count Terminating Concurrent Interests Ouster • Where one cotenant dispossesses another by affirmative actions (potentially ousted cotenant must attempt to possess and be denied by ousting cotenant) • Entitles ousted cotenant to a form of accounting—1/2 fair rental value ♦ Only entitled to rent if there is an ouster • SOL for AP begins to run against the ousted co-tenant upon the occurrence of the ouster JT & TIC • Partition in Kind ♦ To divide the land among cotenants, the division must be: 1. practical i.e. few tenants, evenly distributed resources, readily divisible 2. equitable does not benefit one party at the great detriment of another ♦ Default remedy for court b/c they prefer not to force the sale of property • Partition by Sale ♦ Only considered where partition in kind is impracticable or inequitable ♦ Sale of the property and pro-rata division of the proceeds Of course, entitlements from repairs, improvements, etc. come off the top Termination of Marriage & Division of property • By Divorce ♦ Equitable Division – Court decides how to divide the property b/w the former spouses based on principles of equity ♦ Community property – Marital property is divided 50/50 ♦ Educational degrees are not “property” and are exempt from division during divorce Argument that they ought to be: increased earning potential form of investment in human capital • By Death of one spouse ♦ Dower – upon death of H, W received LE in 1/3 of all real property owned by H Right attached to ALL property, irrespective of date of acquisition (before vs. during marriage) Right is releasable w/W’s consent Devisees of H’s inter vivos transfers took subject to W’s dower interest ♦ Curtsey – upon death of W, H entitled to LE in ALL of real property owned by W Only attached upon the birth of live children to the marriage and the wife’s survival of that birth Did not matter if the children died afterwards, only that they were born alive ♦ Elective Share-statutorily-defined percentage of property of the decedent to which the surviving spouse is entitled Can take the greater of elective share and willed-estate(s) Unlike dower and curtsey, it applies to all inheritable property NOT JT, insurance policy 10 Leasehold Estates Types Term of Years (Estate for Years) Fixed duration that is either specified at the outset or can be determined by the application of some formula Must be in writing if the term exceeds one year (SOF) Terminates automatically at the end of the period—does NOT require notice Neither party may unilaterally lengthen or shorten the term of years Not terminated at death of T or LL, except residential leases for tenant in some jurisdictions. Periodic Tenancy Intial fixed duration Automatically renews for either (1) another term (2) one year UNLESS a party provides termination notice Adequate Notice: • Periodic tenancy of a year requires 6-month notice to terminate by either party • Periodic tenancy of < a year, notice is equal to the lesser of 6 months or the period • Termination had to occur on the last day of the period • Courts can treat improper notices in two ways: ♦ Totally ineffective, thereby locking T in for the next period and requiring a future notice ♦ Ineffective as to the next period, but effective as to the following period Must be in writing if period is for a year or more (SOF) ♦ If pass deadline b/f the end of period to give notice you are locked in for the next period. • Notice was required to provide that the tenancy would terminate at the end of the period. • In most states, CL rule have been altered wrt notice periods PT by implication exists where parties agree to form a tenancy, but are unclear as to which type, and • The parties haven’t agreed to a specified term • BUT they have identified the time for payment of rent Tenancy At Will (terminated at death of T) Created when: • the parties expressly provide that either may terminate at will, OR • (1) T has possession, (2) parties don’t agree on a pd, & (3) rent is not denominated to cover a specific pd. Tenancy in Sufferance When a tenant remains in possession of property after expiration of the lease term. LL has two options: • Treat as trespasser, sue to evict and recover reasonable rent and damages • Treat as holdover, and renew lease for another term/period LL can’t do both, or change her mind Delivery of Possession English Rule LL must deliver both legal title and possession to T based on implied covenant present in ALL leases LL’s failure to deliver possession gives T c/a against: • LL for breach of the covenant • Tenant in sufferance b/c T has superior legal title American Rule LL need only deliver legal title to leased property • No implied covenant to deliver possession • Such covenant must be express T’s c/a is against Tenant in sufferance T still obligated to pay LL rent for time when other person is occupying his property under the lease Subleases and Assignments Terms Sublease exists where T (lessee) conveys an interest in the leased premises that is of a lesser quantum than his own and where he retains a reversionary interest in the premises. Assignment exists where T conveys his entire (balance of) interest to another party. Privity of Estate: Relationship established w/regard to property (original grantor-grantee, lessor-lessee) Privity of contract: Relationship established b/w parties from a contract. 11 Which is it? Formal Approach: if T has transferred his entire (remaining) interest it is an assignment • Corollary – if T maintains any interest, even a single day, it is a sublease Functional Approach: the quantum of the transferred interest is but one factor in determining the intention of the parties to create a sublease or an assignment When T needs the Consent of LL, LL cannot w/hold it arbitrarily and unreasonably. Rationales • Conveyance Theory holds that unreasonable withholding of consent would be a restraint on alienation • Contract Theory holds that assumption of good faith and fair dealing precludes unreasonable withholding Commercial property – implication of reasonableness w/regard to withholding consent • Sole factor in reasonableness is economics • Assumption is that LL primary concern is financial, so one tenant is as good as any other. • Thus, 700 Club renting commercial office space can’t deny consent to potential sublessee PFLAG, BUT mall can deny consent to potential sublesee, shoe store if the mall already has 2 shoes stores Residential: no implication of reasonable w/regard to provision preventing assignment absent consent Illegal Leases Exists where property substantially violates housing code at the time the lease is entered into and LL has notice, actual or constructive, of the violation. Minor technical violations (need four nails, only has 3) are not substantial T need not abandon property to lay claim to illegal lease T responsible for fair rental value in light of the violation (can’t be more than agreed upon rent) Voids the lease. T’s responsibilities to LL T can not commit waste to LL’s premises. May include fundamental changes to property or removal of fixtures LL’s responsibilities to T Short term furnished leases LL must ensure premises remain livable LL must disclose latent defects of which LL is aware or should be aware and of which T could not discover by due diligence LL must maintain common areas and remove disturbances there from which interfere w/the T’s use How T can get out of lease, pay less, etc. Implied Covenant of Quiet Enjoyment LL’s covenant that he will protect T from 3rd party claims of superior title Illegal Leases Exists where property substantially violates housing code at the time the lease is entered into and LL has notice, actual or constructive, of the violation. • Minor technical violations (need four nails, only has 3) are not substantial T need not abandon property to lay claim to illegal lease T responsible for fair rental value in light of the violation (can’t be more than agreed upon rent) Voids the lease. Constructive Eviction Exists where LL fails to rectify a situation which he caused or is responsible for fixing that effectively deprives T of quiet enjoyment of the property Requirements – T must show that: • Defective Situation exists that deprives T of useful enjoyment of property • LL is on notice as to the defect • LL has had reasonable time to rectify the defect • T has abandoned the property after passage of reasonable time and LL’s inaction Terminates T’s rent liabilities to LL Opens T to potential liability if the court holds that he was not, in fact, constructively evicted Implied Warranty of Habitability Exists where latent and palpable defects in the premises render the property reasonably uninhabitable Usual application in residential leases Requires LL to provide a minimum standard Legitimate Standard – cannot be contracted around/waived 12 Requirements – T must show that: • T did not create the defect • T put LL on notice of the defect • LL has had reasonable time to correct the defect • DOES NOT REQUIRE ABANDONMENT Actual/Constructive Partial Eviction T may w/hold rent = value loss from his inability to use part of the property If T is partially evicted, but that part is essential to T’s purpose(s) for leasing, he may be able to move out What can LL do if T screws up? T defaults To retake property LL must be legally entitled to possession, and do so peaceably • In most jurisdictions, ONLY way for LL to retake property peaceably is through judicial proceeding • Minority of jurisdictions define peaceably different – any manner that is not likely to cause a breach of the peace Closer scrutiny for residential property than commercial b/c of the intimate nature of residential property T abandons or surrenders possession Activates LL duty to mitigate damages (find a substitute lessee) • LL satisfies duty by placing abandoned premises back in the stream of commerce • LL does NOT have to undertake extra effort/expenses to re-rent the premises T is responsible for the entire rent amount under the lease LL’s acceptance of T’s surrender absolves T of rent obligations LL’s rejection of surrender maintains T’s rent obligations, but activates LL’s duty to mitigate • T responsible for the difference b/w her rent and the rent LL fetches from mitigation \ Discrimination and Rental Housing Statutes: Civil Rights Act (1866) § 1982 – All citizens of the U.S. shall have the same right, in every State and Territory, as is enjoyed by white citizens thereof to inherit, purchase, lease sell, hold, and convey real and personal property • Bars all racial discrimination, private and public in the sale or rental or property Fair Housing Act § 3604 • Unlawful to discriminate based on race, religion, gender, handicap (incl. AIDS), familial status, national origin, but not against marital status or sexual orientation or lawyers. Familiar status includes anyone with kids. • LL must make reasonable accommodations for disabled tenants. Reasonableness determined by burdens on both parties. Distinguishing the two: The 1866 law is narrower than FHA b/c reaches only racial discrimination, not discrimination in the provision of services and facilities, and does not prohibit discriminatory advertising; it is broader in that it contains none of the exemptions found in the FHA (and 1866 had no cap on damages) In private home, can rent to whomever you chose, but Fair housing Act says its unlawful to print or publish an ad that indicates any preference limitation or discrimination. E.g. ad that says apt in private white home is discriminatory. If just “private home” then violation of Civil Rights Act (1966) b/c she discriminated, but not FHA, because exemption. Proving discrimination in housing P proves: • Membership in statutorily protected class • Application to rent an apartment for which he was qualified • Availability of apartment upon application • Denial of lease D must then rebut presumption of discriminatory purpose by showing • Reasonable explanation of non-discriminatory purpose P must rebut explanation w/showing that D’s purpose is mere pretext to discriminate 13 Private Land Use Controls Servitudes are limited non-possessory interests in property which burdens one piece of property for the benefit of another parcel or person 5 Types: easements, profits, licenses, real covenants, and equitable servitudes Dominant Tenement – parcel benefited by the servitude Servient Tenement – parcel burdened by the servitude Easements A non-revocable legal or equitable rights that one has to use the land of another which burdens that land The scope is limited to the intent of the parties at formation Cannot increase the burden on servient tenement by expanding use or changing the nature of the use Must comply w/SOF unless created by Types as to use Negative Easement – permits a use that benefits dominant tenement and burdens servient tenement • Methods of creation: ♦ Express ♦ Implication by Necessity (yes or no?) ♦ Prescription ♦ Estoppel License + Interest • 4 English CL easements: ♦ Won’t block light to dominant tenement ♦ Won’t block air to dominant tenement ♦ Won’t block water flow to dominant tenement ♦ Won’t remove lateral support for structures on dominant tenement • American CL recognizes the English negative easements and permits others w/adequate showing • If one can’t get a negative easement, try private nuisance Positvie Easement -restricts use of the servient tenement that benefits the dominant tenement • Methods of creation ♦ Express ♦ Implication by Necessity ♦ Prescription ♦ Estoppel License + Interest Types as to benefits/burdens Easement Appurtenant • Benefit attaches to the dominant tenement and runs w/the land • Benefits do not disappear in a property transfer/conveyance • Who do we know it’s appurtenant ♦ It describes the land and not a person; speaks in terms of benefiting the land, not a person • Ambiguities are decided in favor of creating this type of easement Easement in Gross • Benefit attaches to person w/o regard to ownership of land & runs w/that person (no dominant tenement) • Assignable interest Types as to formation: Express Written Grant or Reservation • Must comply w/SOF Implication-creation by operation of law • Types ♦ Necessity Endures for as long as the necessity exists. Requirements Unity of servient and dominant tenements Existence of necessity at the time of severance Level of necessity If grantor is claiming necessity, then the standard is strict—there is no other way 14 If grantee is claiming necessity, then the standard is reasonably necessary – economically prohibitive ♦ Prior-use – before severance, then land was used in such a way, which use, the new parcels want to continue. Based on existence of Quasi-Easement (burdening one portion of land to benefit another) Servient/dominant uses are present at the time of severance of the parcel For easement by implication to arise from quasi-easement, the quasi-easement must be: • Existed w/regard to a unified parcel • Apparent – ascertainable from due diligence • Continuous – use in place before severance • Necessary – only reasonably, not strictly • Formations ♦ Implied Grant arises when landowner conveys quasi-dominant tenement and keeps the quasiservvien ♦ Implied Reservation comes up when landowner conveys the quasi-servient tenement and keeps the quasi dominant Same requirements as implied grants, BUT Necessity requirement is strict b/c grantor knew of situation and could have provided, expressly, for the easement Prescription • Requirements: ♦ Actual use of the easement (defines scope of the easement) ♦ Open & Notorious use – of such a character that it puts owner of servient tenement on notice ♦ Continuous use for the statutory period Period begins to run when the adverse use begins Continuity based on the nature of the use and the nature of the property (fact-dependent) Tacking permitted by subsequent users who are in privity w/former user ♦ Exclusive use – made in an individual capacity and not as a member of the general public ♦ Hostile – not at the permission of the servient tenement owner Estoppel • License + Interest Way to Terminate Easements By its own terms (e.g. I give you the right to use my land as a right-a-way until your house is built) Abuse by dominant tenement Non-use, Abandonment • Mere words insufficient • Requires intent to abandon and actions manifesting that intent Merger – dominant and servient tenements come into the hands of the same party Prescription – servient tenement owner wrongfully and physically prevents use of easement for statutory pd. Licenses Exists where landowner gives permission to another to use his land in a way that would otherwise be a trespass Revocable at the will of the licensor. UNLESS it is accompanied by an interest (e.g. right to come on land and pick strawberries) Licensor has encouraged licensee detrimental reliance whereby court will estop revocation • (e.g. Allowed considerable improvements to be erected on the land) Distinguished from easement – A license is only permission to use land, while an actual interest in the land. Thus, doesn’t require compliance w/SOF Covenants that Run w/the Land Types Real Covenants • Requirements ♦ The parties must intent to create a covenant 15 ♦ The covenant must touch and concern the land Touches and concerns the land when: It relates to the land Affects the promisor in his capacity as owner Benefits the promisee vis-à-vis use and enjoyment ♦ There must be privity between the parties Horizontal Privity (created in conjunction w/some transferred interest in land) Grantor-grantee relationship (conveyance of land) LL-T relationship Concurrent interest in property by both promisor & promisee Distinguish w/contractual privity where grantor and grantee make an agreement, but it does not occur during the conveyance of land • Why equitable servitudes became necessary Vertical Privity Relationship b/w original grantor/ee and her successor For burden to run, requires identical interest • Thus, A & B have horizontal privity and burden B. For B to transfer that burden to C, B must transfer all his interest to C. For benefit to run, requires some interest • Thus, B can transfer an interest of lesser quantum and C can benefit from the covenant • Runs w/the land at law which means that the available remefdies are damages or injunction • Must comply w/SOF Equitable Servitudes • Requirements ♦ The parties must intent to create a covenant ♦ The covenant must touch and concern the land ♦ Notice by subsequent owners (in the case of the burden running w/the land) Notice can be actual or constructive ♦ Does not require horizontal privity • Runs w/the land at equity which means that the only available remedy is injunction • Created by judicial action where real covenant was somehow defective • Implied Equitable Servitude is the same thing as a Reciprocal Negative Easement ♦ A scheme for development of a particular parcel has been established as the original owner divides and sells the parcel to subsequent owners Thus, where an owner divides his parcel into 100 lots and expressly burdens some by restricting their use to only residential, but not others, those lots that lack the express burden are nonetheless burdened by the restriction b/c: The lot retained by the original transferor is similarly burdened The subsequent owners have actual constructive notice Inquiry notice • Exists where the uniform nature of the property would compel a reasonable person to inquire about the purpose of the uniformity Once the implied equitable servitude/reciprocal negative easement has been created, it’s there until it’s mutually abandoned by all parties, or the nature of the land changes drastically Terminating Covenants By its own terms • E.g. Covenant to last for 5 years • Statutory schemes sometime impose time limitations By Merger • when ALL the land benefited/burdened by the covenant come into the hands of the same person. By Excess Use • when benefited parcel acts w/substantial noncompliance By Abandonment 16 • when widespread noncompliance exists among the parties, burdened & benefited, AND none of the parties object to this noncompliance. • Acquiescence – parties that have permitted noncompliance by other parties cannot enforce compliance thereafter • Unclean Hands – parties that have, themselves, been noncompliant cannot enforce compliance By Release • when the benefited party says the covenant is no longer enforceable against the burdened party Doctrine of Changed Circumstances • The change must effect the entire neighborhood, not just a portion (usually border) • The change must frustrate the purpose for which the covenant was created such that it is no longer capable of being fulfilled • The change must render the covenant of no substantial benefit to the parties to the covenant Private Nuisance Non-trespassory conduct that causes a substantial interference w/another’s use and enjoyment of land, where that conduct is either: Intentional and unreasonable, or • Threshold test a significant amount of harm to P is a nuisance irrespective of reasonableness • Balancing Test reasonableness determined by weighing utility of use vs. harm occasioned by use ♦ Factors to consider: Nature of interference Social judgment as to utility of activity Reasonable expectations of party who was first in time Frequency of occurrence Unintentional but negligent reckless or ADA Types as to definition: Per se – statutorily-defined nuisance, irrespective of reasonableness Per accidens-otherwise lawful activity/use of land that adversely affects the use and enjoyment of neighboring landowners by virtue of the property’s location, surroundings, or manner in which the activity is undertaken Methods of Resolution Balancing the Equities – Harm to public (and D) if injunction is granted vs. harm to P if it is not granted to determine appropriate remedy once a remedy has been found. Possible Remedies • Injunction – abate the activity by granting P injunctive relief • Damages to P – let the activity continue, but require D to pay damages to P • No Injunction – the activity continue (not a nuisance) • Injunction & Damages to D – abate the activity only if P pays D to abate it To avoid disingenuous situations w/meting out remedies, the court could find that a nuisance doesn’t exist in the first instance. Coming to the Nuisance is relevant where D’s activity did not become a nuisance until P moved near it, subsequently. Appropriate Remedies • If the nuisance would also be a public one, then Court could grant injunction and require P to indemnify D for abating the nuisance • If the nuisance is only private, the Court could deny relief, especially if P had notice of the activity Public Land Use Controls Public Nuisance occurs when someone engages in activity that is detrimental to the health, safety or welfare of the public any member has standing to sue for public nuisance, BUT remedy limited to injunction can also be a private nuisance if an individual can show unique damages vis-à-vis the rest of the community abatement of a public nuisance empowers government to regulate the activity Categorical Rule relating to nuisance abatement: Where the governmental action is nuisance abatement, a taking never exists, notwithstanding any loss worked by the regulation 17 • EXCEPT: Even a nuisance-abatement regulation is a taking if it deprives a private owner of ALL beneficial economic value, unless, of course, the proscribed use was a nuisance in the absence of the regulation Balancing the Equities – harm to the public if injunction is not gratned Eminent Domain & Regulatory Takings Eminent Domain permits government to take private land for public use for just compensation Just compensation = fair market value Public use is met when the use is rationally related to a legitimate public purpose. [Midkiff] • Broad view of public use ♦ Public use requires only that an advantage or benefit inure to the public ♦ Commercial business saving a town’s economy would work • Narrow view of public use ♦ Public use requires that the public actually use, or have the right to use the condemned property ♦ Shopping mall that serves a large population of the public Theoretical benefits • Aids the State promote progress (bilateral monopoly situation: RR company vs. Sole land owner) • Compensation requirement forces great governmental discretion in the exercise of the power Regulatory Takings occur where State regulations burden private land such that it is as if the state physically took the land. Three Categorical Rules of ED and Regulatory Takings 1. A permanent physical occupation is ALWAYS a taking, irrespective of public benefit, and requires just compensation. • Temporary takings require a balancing test • But what is “permanent”? ♦ Permanent when regulation required property owner to install cable lines for residents as long as the property was used for multi-family housing 2. A regulation aimed at abating a public nuisance is never a taking (doesn’t require just compensation); instead it is a legitimate exercise of the police power of the State. (caveat is rule 3) 3. Where regulation deprives owner of all economic benefit the regulation amounts to a taking if the proscribed use would be a nuisance absent the regulation. • Conceptual Severance: Do we look at the whole land, or just the affected interest? ♦ If we permit severance of interests, we can divide in such a way that a particular interest has been diminished of all its value (e.g. restriction on height could been drawn as a total diminution of the airuus right, but only a partial diminution of the total land-use right). • The proscribed use must be a nuisance independent from the regulation making it such. • If it has any economic benefit, go to ad hoc analysis The Ad Hoc Analysis: Where governmental regulation is neither a permanent physical occupation nor nuisance abatement must perform an ad hoc analysis to determine if the regulation goes too far. • Balancing test necessary to determine whether a regulation has gone too far: ♦ Substantial adverse economic effect ♦ Unreasonable interference w/legitimate (permissible) investment-backed expectations ♦ Illegitimate exercise of the State’s police power ♦ Reciprocity of Advantage While imposing a burden on the land owner, it simultaneously confers a benefit on her (e.g. restriction on the amount of coal extractable at property lines—burden in right to extract all, benefit in guaranteed structural support b/c adjacent landowners are similarly burdened). We don’t know a taking exist until the Court tells us so • Once a taking is established, the property owner is entitled to compensation for the temporary taking he suffered from enactment of the regulation until judicial determination. • Once the judiciary decides a regulation amounts to a taking, the State has the following options: ♦ w/draw the regulation ♦ amend the regulation such that it no longer amounts to a taking 18 ♦ maintain the regulation but pay just compensation Inverse Condemnation – instead of the government taking land and paying compensation, landowner asserts that government has effectively taken land vis-à-vis regulation and therefore owes him just compensation Exactions exists when the government requires a citizen to forego a right in exchange for something which only the government is capable of delivering (usually a permit) Exactions are NOT takings when: • They have a substantial governmental purpose, AND • The conditional regulation and the purpose enjoy an essential nexus ♦ The condition must serve the stated governmental purpose Once state shows nexus, it must then show a rough proportionality b/w the exaction imposed and the harm the State seeks to avoid (purpose) • Not proportional if the city is merely using the owner’s request for a permit as a way to extract something from the owner (extortion) Zoning Power held by the several States, but usually conferred upon inferior actors (municipalities) by enabling acts B/c it is the States’ power, the municipalities cannot act in such a way that benefits the people w/in the municipality at the expense of other State citizens Zoning ordinance are valid exercise of the police power if they are not arbitrary or unreasonable, or lack any substantial relation to protecting the public health, safety, morals or welfare. Courts are deferential to legislatively-determined “public purposes” A zoning ordinance can be constitutional on its face, but unconstitutional in its application to a particular property. Euclidean Zoning – hierarchal zoning where subsequent zones permit uses available in preceding zones, but not vice versa (highest is single family housing) Scope Ordinances pertaining to aesthetics are impermissible BUT ordinances concerning property value are permissible, even if they permit control of aesthetics— provided the aesthetic prohibition can be shown to reduce property value Rules Zoning ordinances can define “family” in any way that is rationally related to a legitimate interest. • But what of privacy right and ability to choose living mates • And what of clear evidence that regulation won’t achieve stated purpose? FHA does not prevent ordinances from reaching the protected groups if it applies merely to controlling occupancy. • Is the ordinance really controlling occupancy, or purporting to do so while it actually does something else Zoning ordinances must restrict for permissible reasons • Zoning out poor people isn’t permissible, especially in a State where housing is a fundamental right Ordinances that deprive property owner of a lawful pre-existing non-conforming use amounts to a taking that requires just compensation. • Ordinances must have a grandfather clause exemption such uses • Instead of paying compensation or grandfathering in the use, could try a nuisance Variance is governmental permission to use property in a manner in violate of a zoning ordinance. Variance granted where b/c of some exceptions situation of the property strict application of the ordinance would create (1) an undue hardship on owner, but (2) the variance would NOT substantially impair the public good and the purpose behind the ordinance. • Undue hardship exists where the ordinance creates complete deprivation of economic uses • Undue hardship does not exists where the non-conforming condition was created by the owner, himself, or his predecessors in ownership Additional Requirements • Affirmative actions to mitigate the non-conformity • Refraining from taking steps to further the non-compliance • Refraining from subverting the purpose of the ordinance