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Law School Outline - Property Outline

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Law School Outline - Property Outline Powered By Docstoc
					PROPERTY

I. General A. Property is identity, power, and control; that which defines relationships among persons with respect to a thing. B. 5 Commandments of Property 1. You can’t give more than you’ve got. 2. You can’t take more than a person has to give. 3. Sum of the parts must equal the whole. 4. Somebody’s got it. Must be no abeyance of seisen (suspension of possession). Someone must have right of possession at all times. 5. Read it. All answers may depend on the placement of a comma.

ADVERSE POSSESSION I. Rule – Statute of limitations that bars a cause of action by a prior claimant in the face of an AP who has met all of the requirements. AP does not have title, prior can just no longer bring lawsuit. II. Requirements A. Actual & Exclusive 1. Actual a. Claim of Use – AP trumps only as to that which he actually uses in a manner that is open and notorious, adverse and hostile, and continuous for the statutory period, and no more. b. Color of Title – if AP is engaging in their actions based in part upon a written instrument, the validity of which is irrelevant, two things change: (1) doctrine of constructive possession applies – if AP uses some of land, he is deemed to have constructively possessed all the land within the bounds of the instrument R: it is fair for AP who enters on written instrument to think that entire property belongs to him w/o having to cultivate every inch

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Exceptions: (a) constructive possession (& color of title) does not apply if someone else is in possession of part of the property given in the instrument when statutory period begins (p. 146, #1) R: AP can’t think it’s his if someone else is in possession

(b) Constructive possession which spans multiple underlying owners will not apply absent actual entry (p. 146, #2) (1) shorter statutory period 2. Exclusive – there must be no one else using property except by permission of the AP R: adverse possessor is exercising dominion and control over property

B. Adverse & Hostile 1. Intent and Motive a. Majority rule – actions of AP must manifest control and dominion in a way that is adverse and hostile to the underlying owner; good faith intent of AP not required; look at actions not state of mind b. Minority rule – good faith belief of right required by AP

2. Any instrument or action by which AP acknowledges that their claim is inferior to the actual owner, within the statutory period, defeats adverse possession (and statutory period starts over again)  get it signed and in writing

3. Boundary Line Exception - If true boundary is uncertain and both parties desire to create a boundary line, then where they lay it out will be the boundary line (exception to Statute of Frauds, not AP) a. Requirements: (1) Factual uncertainty/ambiguity as to boundary line (can not be I’m not sure and you’re too tired to care) (2) Intent on the part of both parties to create a boundary line

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C. Open & Notorious 1. Activity of AP must be such that would put an ordinary owner of that kind on land on notice that someone else was claiming/using. a. Activity required depends upon the nature of the use of the underlying property (size of property, what property is used for, is use buried, etc.) b. Ex. Using 3 feet of a lot that is 1,000 acres might not constitutive open and notorious

D. Continuous for the statutory period 1. Continuous requires that AP use property in a manner that is as continuous as the normal user of that property. a. Note: Timeshare by prescription may arise if AP uses during July and actual owner used it the rest of the year. AP element that is missing is exclusivity.

2. Tacking a. Among APs – permitted if successive occupants are in privity, i.e. consensual relationship (A purports to give whatever he has to B); no privity exists if A abandons and B then possesses b. Among Owners – The critical question is who had what rights in the property at the time the AP began b/c those are the only rights that are trumped by the AP. In 2, what P acquired from O was already tainted by AP so tacking exists. In 3, when O gave property to P and Q, the rights were not tainted b/c AP had not begun, so not tacking. III. Purpose – prevents owners from sleeping on their rights; if you own land, you should think enough of it to check it out once every 20 years or so

IV. Disabilities – Read the statute: Statute giving an additional period of time to bring an action if the owner is under a disability at the time adverse possession begins. Disabilities are limited to those listed in the statute. Additional time allowed is ordinarily statutory period or x years after the disability is

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removed, whichever period is longer. Disability can be removed at death in which case statutory period would begin running against heirs x years after death (or original statutory period).

Note: Walking across land does not manifest control and dominion or exclusivity, but may allow prescriptive rights. Prescriptive rights are subset of AP. Actor is only claiming one activity (right of use) on land, so less is required; whereas AP is claiming right of exclusive possession.

V. Notes from reading: A. AP “relates back” to the date of the event that started the statute of limitations running, and law acts as though AP were owner from that date B. Mistaken improvers – when one, in good faith, mistakenly builds on land owned by another, modern statutes protect the innocent improver by forcing a conveyance of the land from the owner to the improver at market value or requiring the owner to buy the improvement. FSA probably does not like this rule b/c it requires courts to look at a person’s state of mind. FSA would say it belongs to the land owner if the statutory period has not yet run. C. AP against the government 1. At common law, AP did not run against the government b/c government land was held in trust for all people, who should not lose the land b/c of the negligence of a few officials 2. Several states now allow AP against government either (1) with the same statutory period as private land, (2) with a much longer statutory period, or (3) only for lands held in proprietary, as opposed to public or governmental, capacity 3. Government can get private property by AP

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COMMON LAW ESTATES I. History A. Hierarchical structure (King – Lord – Mesne Lords – Tenant) - Every party holds interest by virtue of someone else above them in the rung. B. Before 1536, a freehold estate could only be created or transferred by a ceremony know as feoffment with livery of seisin (ex. transferring of dirt).

C. In early feudal times, there were two ways to transfer possession of land: a. substitution – transferring estate to someone else (ex. assignment) b. subinfeudation – bringing in a new tenant beneath them on the bottom of the feudal ladder; could be used to avoid feudal incidents (ex. subleasing) D. Statute of Que Emptores (1290) – established the principle of free alienation of land; prohibited subinfeudation, but, in return, it required that lords allow all free tenants the right to substitute a new tenant for all or part of the land without the lord’s consent E. When a person dies intestate without heirs, the person’s property escheats to the state.

II. Ways of Dividing Ownership A. Division as to space – vertical and horizontal (ex. condominium) B. Division as to item – one party owns land, another owns trees, gas, etc. C. Division as to use – ex. easements, RC, etc. D. Division as to owners – ex. concurrent owners, partnership E. Division as to time – common law estates, landlord-tenant law

III. 4 Necessary Elements of a Deed at Common Law A. Premises – contains granting clause, ex. “assigns, conveys, grants, etc.” and recital of consideration B. habendum and tenendum clause – describe quantity of estate being conveyed and how it is to be held; “to have and to hold”

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C. warranty clauses – promises of grantor, “will warrant and forever defend” D. testimonian – signed and witnessed

IV. Freehold Estates Note: Fee Tail – form of freehold estate recognized at common law in which the conveyance of the fee was conditioned upon descent to the heirs of the grantee; no longer allowed, i.e. the inheritability of a fee simple cannot be limited Ex. “to my granddaughter Sarah and her heirs on her father’s side” – Sarah gets FSA A. Life Estate - an estate measured by the life of someone 1. Types a. Life Estate - person holds an estate for their life b. Life Estate Pur Autre Vie (PAV) – “the life of another;” length measured by life of someone other than holder (1) Ex. O to A for life. A then conveys to B. B = life estate PAV (for A’s life) A = nothing (if B dies before A, it goes to B’s heirs) O = reversion in fee simple c. Determinable life estate – life estate which will end upon another event (1) Ex. O to A for life. A then conveys to B for B’s life. B = life estate determinable Estate held by B is measured by B’s life, unless A dies first – condition if met will cause the end of the life estate A = reversion for life O = reversion in fee simple

2. Rules a. Every life estate is followed by a reversion (future interest in grantor) or a remainder (future interest in third party), or an executory interest (if the interest in the third party can cut short the life estate) (1) Any time there is a L.E. not followed by a vested remainder in fee,

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there will be a reversion.

b. Always classify interests on the assumption that the life estate can end prior to the death of the life tenant. Two ways: (1) Renunciation – holder says, “I don’t want life estate,” life estate ends (2) Forfeiture – if the holder is destroying or causing waste on the property, a court can declare a forfeiture c. The law presumes that so long as a man or woman is alive, he/she can have issue (even if the woman has had a hysterectomy). B. Fee Simple - may endure forever; “O to A” or “O to A and his heirs” 1. Fee Simple Absolute (FSA) – “you have it all;” cannot be divested nor will it end if any event happens in the future Exists only in theory in the U.S. b/c: a. federal gov’t can take property anytime it wishes, AND b. nuisance law – someone can stop you from using your property in a particular way 2. Defeasible Fees - may last forever or may come to an end upon the happening of an event in the future a. fee simple determinable + possibility of reverter (FSD + POR) – will end automatically when the stated event happens (1) Requires words of a durational aspect such as “so long as,” “while,” “until,” “during.” b. fee simple subject to condition subsequent + right of entry (FSCS + ROE) – does not automatically terminate, affirmative act required after condition has been broken (1) Requires express reservation of a right to re-enter. (2) Also, look for words indicating that the estate may be cut short at transferor’s election (words of condition) such as “but if…,” “provided, however, that when the premises,” “on condition that if the premises…” c. fee simple subject to executory limitation + executory interest

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C. Term of Years – endures for some period of time measured by the calendar D. Rules 1. If language of conveyance is ambiguous, constructional preference is that grantor transferred all that he had (maximum estate). Examples: a. life estate v. fee simple = fee simple b. FSD v. FSCS = FSCS 2. Restraint on alienation of a fee is void as a matter of public policy and will be stricken. Restraint on alienation of a life estate is enforceable. a. R: efficiency - restraint on alienability takes property off the market and results in externalities (ex. things won’t be able to be built on adjacent lands); time period for life estate is limited, so not much waste will result b. Restraint on use is valid. If use restraint is so narrow that there is no market out there for anyone else to use it, it is tantamount to a restraint on alienation (void). (1) The time for determining if use restraint is restraint on alienation is when interest is transferred. Ex. selling land to be used as horse stable in the 1800s c. Restraints on who are usually void under Constitution and/or Fair Housing Act. d. If deed says grantee is to use for the benefit of grantee, court will allow grantee to lease land to someone else and use the rent for the grantee’s benefit. If grantor wants to control the use of property, do a long-term lease. 3. Restraints on Use a. Statement of Purpose: “O to A for purposes of developing residential property.” Counts for nothing in terms of a defeasible fee. O cannot get land back or damages. b. Covenant: “O to A, and A covenants to use the property for residential purposes.” Promise that gives rise to damages for breach, but O cannot get property back. c. Condition: “O to A so long as used for residential purposes.” Creates a fee simple determinable. 3. Transferring PORs and ROEs

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a. Majority rule – PORs and ROEs are transferable inter vivos b. Minority rule – PORs and ROEs not transferable inter vivos c. Some states allow transfer of POR, but not ROE. A few states hold that the mere attempt to transfer an ROE during life destroys it.

3. Adverse Possession a. Statute of limitations begins to run on POR when the condition occurs. b. Right of Entry (ROE) (1) Majority rule – statute of limitations begins to run when condition occurs (2) Minority rule – statute of limitations does not run until the grantor attempts to re-enter. 4. Doctrine of Waste a. Voluntary Waste – life tenant is voluntarily destroying the property, harming the value of the remainder (ex. bulldozing house) (1) Life tenant is free to consume anything on property which would normally be consumed in her lifetime. She cannot consume that which would have a life expectancy beyond her life. (2) Remedies – damages, injunction, forfeiture b. Involunatary/Permissive Waste – life tenant does not maintain and protect asset (ex. letting roof fall down) (1) You cannot require a life tenant to invest more than would be required to maintain the house for her lifetime. All you can require is for the life tenant to protect the value of their asset, i.e. a life estate. (a) R: Would be confirming a benefit on the remaindermen 5. Petition to Sell – Courts will usually grant a petition to sell to a life tenant if the money from the sale is likely to help support the person, even if it will decrease the value of the asset to the remaindermen. Factors to consider include the age of the life tenant and the relationship btw the life tenant and the property (ex. home, vacation property.

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VI. Future Interests Interests Remaining in Grantor/Transferor A. Reversion B. Possibility of Reverter C. Right of Entry Interests in Third Party A. Remainder - a future interest created in someone other than a transferor which, according to the terms of its creation, will become a present estate (if ever) immediately upon and no sooner than the expiration of all prior estates created simultaneously with it. Ex. O to A for life, then to B if B gives A a proper funeral. A = life estate B = springing executory interest O = reversion in an FSEL The way the question is constructed, the future interest is not capable of becoming possessory immediately upon A’s death, so it cannot be a remainder, but is rather an executory interest. The estate goes back to O until B give A a proper funeral. 1. Vested Remainder – 1) no condition precedent, and 2) to ascertained persons; always alienable a. indefeasibly vested b. vested subject to open c. vested subject to complete defeasance 2. Contingent Remainder – 1) condition precedent, or 2) to unascertained persons; may not be alienable a. Alternative contingent remainders - the vesting of one must causes the other to disappear b. A grant to the heirs of a living person is contingent b/c a living person does not have heirs. Issue = children, or the children of children who die before their parent B. Executory Interests – a interest which takes effect in possession by divesting or cutting off prematurely the preceding estate; can follow a life estate or defeasible fee 1. Springing – interest being cut short is in the grantor 2. Shifting – interest being cut short is in a grantee

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VII. Marketability Rules R: designed to promote the ability to alienate a FSA by reducing the likelihood of certain contingent future interests existing A. Rule in Shelley’s Case (rule against remainders in grantee’s heirs) – If one instrument creates both a life estate in A and a remainder in A’s heirs, and both the life estate and the remainder are both legal or both equitable, the remainder becomes a remainder in fee simple in A. Abolished in most jurisdictions. B. Doctrine of Worthier Title - rule against remainders in the grantor’s heirs; one instrument C. Doctrine of Merger - If a life estate and the next vested estate in fee simple come into the same person, the estates merge into fee simple and cut off the contingent remainder. Requires 2 instruments. D. Destructibility of Contingent Remainders – If a contingent remainder does not vest on or before the termination of the preceding estate, it is destroyed. Abolished in most jurisdictions. Ex. O conveys to A for life, and on A’s death to B and his heirs if B lives to attain the age of 30. B is 5 years old at the time of the conveyance. A = life estate B = contingent remainder O = reversion A dies ten years later, and Destructibility applies. O = FSA B = nothing; CR is destroyed If Destructibility has been abolished: O = FSEL (or complete divestment by) B = springing executory interest E. Rule Against Perpetuities - No interest is good unless it must vest, if at all, not later than 21 years after some life in being at the creation of the interest (LIB+21 = life in being plus 21) R: to eliminate contingent future interests that last for a long time a. Only applies to the follow future interests: (1) Contingent remainders (2) Executory interests (3) Vested remainders subject to open

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Note: Ink v. City of Canton (1965) Fact – Ink donated land to city only for use as a public park. State came in and took most of park under eminent domain. How do you divide the appropriation of money by the State btw the city and Ink’s (grantor’s) heirs? Ink argued that since the land is no longer being used as a park, the land would revert back to Ink’s heirs (POR); hence, the Ink’s should get all the money. City argued that since it did not cause the park not to be used for park purposes, it should not be penalized. The entire amount of the appropriation should remain with the city, and the money should be used for park purposes (substitute the condition of the land for the cash). Holding – Value of land for park purposes only (Encumbered or conditioned land) = City Unencumbered fee simple value – value of land for park purposes only = Ink Historically, case law has gone both ways (i.e. 100% to future interest, 100% to holder of present interest so long as money is used for purposes specified). Court tries to split the difference.

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CONCURRENT ESTATES

I. Types A. Joint Tenancy B. Tenancy in Common C. Tenancy by the Entirety – terminated by divorce; only alienable or partitionable with consent of both husband and wife D. Community Property (in states with civil law origin) E. Partnerships (both general and limited) F. Condominiums (held in fee simple but with common areas held concurrently) and Cooperatives (asset is held in a corporate structure; ownership of share of corporate structure gives one the right to occupy a unit) G. Trusts (trustee holding legal title and beneficiary holding equitable title)

II. Classifications 4 Unities Alienable (ability to transfer inter vivos) Yes Yes No (one spouse acting alone cannot transfer) No Inheritable Survivorship (does interest go to surviving coowner) Yes No Yes

Joint Tenancy Tenants in Common Tenancy in the Entirety (can only exist btw spouses) Community Property (generally…)

Yes No Yes

No Yes No

No

Yes

(?) depends on jurisdiction

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III. Four Unities 1. Time – interest of each tenant must be acquired or vest at the same time 2. Title – all tenants must acquire title by the same instrument or joint AP 3. Interest – all tenants must have equal undivided shares and identical interests measured by duration 4. Possession – each tenant must have a right to possession of the whole D. Rules 1. Presumption is a tenancy in common unless there is language indicating a joint tenancy AND the 4 unities are present. a. Majority rule – words “with right of survivorship” not necessary to create JT b. “jointly” not sufficient to create JT 2. Either party can unilaterally sever a joint tenancy. However, tenant can only do so by conveying all of his interest. a. A mortgage is not sufficient to convey all of a JT’s interest, and therefore does not destroy at JT (Harms). b. If three parties hold as JT, conveyance by one does not destroy the JT btw the other two. c. Ex. O to A and B as joint tenants. A leases to L for 10 years. L = term of years determinable (if A dies, B gets it all) A = reversion following the term of years All held in JT with B d. Ex. O to A and B as JT. A conveys to X for life X = LE determinable A = reversion All held in JT with B

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E. Partition Actions 1. Any concurrent owner may always file for a partition action; agreement not to seek partition are void as a matter of policy b/c it makes property inalienable 2. Majority rule – partition in kind is favored over partition by sale a. Partition by sale should only be ordered when 2 conditions are met: (1) the physical attributes of the land are such that a partition in kind is impracticable or inequitable (ex. too many cotenants, asset that cannot be divided like a house), AND (2) the interests of all owners would better be promoted by a partition by sale b. Partition in kind may decrease assemblage value of land b/c per unit value of land goes up when you have an assembled tract of land, b/c possibilities of what you can do with more land are greater 3. Partition in kind – division not based on land acreage, but on the underlying value of he land; if division is not equal, the party receiving more gives an owelty (i.e. cash payment) to make up for the difference

F. Rights and Responsibilities Among Concurrent Owners (apply to both JT and TC) 1. Preference is always that concurrent owners negotiate a solution via contract 2. Each tenant is entitled to use the entire property. a. One co-tenant can sign a lease with a third-party; however, the other co-tenant is still has a right to use the leased space. One co-tenant cannot convey more than he has. 3. Action for accounting always available. a. Any owner can ask to see books about who spent what, where. Does not involve any transfer of money 4. One co-tenant in possession generally cannot force a case contribution from a co-tenant not in possession.

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a. Improvements - when a co-tenant in possession conducts improvements he may be entitled when the property is partitioned to be reimbursed to the extent the improvement increased value (1) Accounting for improvements is usually based on increase in value of property, not cost of improvements (not in all jurisdictions) (a) If improvements lowered value  possessor is not reimbursed, but party out of possession still bears cost of reduction in value (2) Jurisdictional split: (a) Increase in value split among co-tenants (b) Improver gets 100% of gains from his improvement 5. If no one is in possession, contribution is permitted. One party can recover costs from the other. 6. Co-tenant in possession must distribute net positive cash flow upon demand (includes back rent). a. Ordinary operation expenses - can be deducted from positive cash flow. b. Capitol expenses - Expenditures for big ticket items which last for more than one year; treated as improvements 7. No value is imputed to tenant in possession in the absence of ouster. 8. If ouster, imputed value can be charged. a. Ousted party gets 50% of fair rental value 9. AP does not apply to co-tenants b/c possession cannot be adverse or hostile b/c cotenant is a true owner

G. Marital Estates 1. Tenancy by the Entirety – only held by husband and wife, equivalent of an inalienable JT, neither party can unilaterally transfer their interest a. only recognized by 19 states b. Majority rule – express language required to create a tenancy by the entirety ; if document is silent, a tenancy in common is created

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2. Accessibility to creditors of single spouse a. Majority rule - Creditors cannot levy upon the interest of one spouse as to property held as a tenancy in the entirety (Sawada) (1) Voluntary creditors are not disadvantaged by this rule b/c they know about it beforehand; usually creditors require both parties to sign on a loan. (2) Sawada v. Endo – If the Endo’s had not conveyed the land to their sons, Sawada (involuntary creditor) would have gotten her money. Ms. Endo died and so all the property went to Mr. Endo under survivorship, so Sawada’s could have gotten to it then.

b. Minority rule – A creditor can levy upon the present possessory estate of one tenant in a tenancy by the entirety by stepping into that tenant’s shoes, but the other tenant still maintains survivorship rights (1) Ex. Sears and wife have TC in fee simple with indestructible survivorship rights in the wife Husband dies = wife gets it all Wife dies first = Sears gets it all If wife bars Sears from moving in, see ouster 3. The law has increasingly moved toward equitable division of property upon divorce, and a degree is included in the calculation. However, some jurisdictions still hold that a degree is not property for purposes of dissolution of property at termination of marriage.

IX. Leasehold Estates A. Types 1. Term of Years – tenancy for a fixed period of time; no notice required to terminate 2. Periodic Tenancy – tenancy for a fixed period which renews automatically unless one party terminates a. Notice

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(1) At common law, notice 6 months in advance of the end of the period was required. (2) Today, 30 days is sufficient if lease is silent. b. Length of Period – if language is ambiguous, look at the period of payment (1) Ex. lease for no fixed term “at an annual rental of $24,000 payable $2,000 per month at the first of each month” = month-to-month periodic 3. Tenancy at Will – no fixed period; continues so long as both landlord and tenant desire (i.e. can be terminated by either landlord or tenant) a. if contract says tenancy is terminable only at the will of the landlord, most jurisdictions will imply that it is terminable at the will of the tenant also b. if tenant has the ability to terminate at anytime, it is not necessarily implied that the landlord can terminate at will as well (contract will usually be enforced as written in this instance) 4. Tenancy at Sufferace – holdover tenant; not really tenancy b/c there are no rights; tenant is a trespasser 5. Others – if a lease does not fit into one of these classifications, it is still allowed (ex. tenancy for the duration of the war) B. Rules 1. General Rule - If document/contract addresses an issue, the document controls b/c of freedom of contract. Property rules are default rules that apply only if the contract is silent.

2. Contract v. Lease

Contract Dependent Covenants (promise for promise)

Conveyance (property) Independent Covenants (ex. obligation to pay rent not dependent on house being there) Caveat Vendor (seller has some obligations usually with respect to quality of title, not quality of premises)

Caveat Emptor (buyer beware)

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Damages Duty to Mitigate

Specific Performance No Duty to Mitigate (some jurisdictions have imposed a duty to mitigate)

3. Possession – There is no implied covenant for the landlord to deliver possession. (default rule) a. R: the tenant is the party with the legal right of possession; the landlord has no legal right to evict the trespasser

4. Destruction of Premises & Obligation to Pay Rent a. Common law – as long as tenant has the legal right of possession, he must pay rent; rent not dependent upon the existence of any structure or improvement Exceptions: (1) Space Lease – when the subject-matter of the lease is only a portion of an improvement and the entire improvement is destroyed, your obligation to pay rent ceases (property law) R: you do not control the space that is necessary to rebuild; matter of control (2) Impossibility of Performance – if subject-matter is destroyed, you don’t have to pay (contract law) 5. Repair and Restoration - a tenant must return the premises in the same condition in which they are found, ordinary wear and tear excepted a. Common law – this meant if the warehouse tenant was leasing burned down, tenant had to rebuild even if it wasn’t his fault; tenant would just get insurance

b. Relevant factors for determining whether tenant has an obligation to repair: Main rule: If tenant caused, tenant has obligation to repair. (tort) (1) Terms of lease generally control

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(2) residential or commercial – greater duties on tenant in commercial context; greater duties on landlord to maintain and repair in residential context (a) ex. commercial – if infested with termites and floor falls in, commercial tenant must fix (3) length of lease – longer lease = greater duty on tenant (4) extent of tenant’s control over premises v. rights retained by landlord – greater control for tenant = greater responsibility for tenant (a) ex. if lease expressly grants tenant ability to demolish and rebuild, paint walls, etc. = greater responsibility of tenant (5) who has control over the cause of damage or potential damage (6) what is the cost of damage avoidance (7) who is in the best posture to know about the possibility of damage (8) who is in the best posture to avoid or repair damage

6. Upon Default a. Self-Help – landlord evicts tenant on their own b. Summary Proceedings – judicial process where landlord goes to court and gets a conviction, then gets sheriff to evict tenant; takes 2 weeks to 3 months (1) R: prevents violence, and protects the tenant’s rights by preventing what may be arbitrary destruction of tenant’s rights/living space c. Majority rule – summary proceedings are required in most jurisdictions in the residential context. Only a minority of states require summary proceedings in the commercial context. d. Status legislation – cannot be contracted out of. e. Note: check for state action which may require a hearing for due process

7. Damages a. Common law & in some states today – no duty to mitigate damages

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b. Other states – Landlord has a duty to make reasonable efforts to mitigate damages (1) landlord does not have an affirmative duty to rent defaulting tenant’s apartment at the expense of other apartments; landlord just cannot discrimination against he defaulting tenant (2) if landlord makes reasonable efforts, but is unsuccessful, tenant is still liable

8. Condition of Premises & Obligation to Pay Rent a. Common law – Only dependent covenant is that right of possession is dependent on rent. All other covenants are independent. If covenant is breached, tenant must still pay rent, but can sue for breach of covenant. Exceptions: (1) Furnished House – when tenant is lessee of furnished house and house is not habitable, tenant is excused from obligation to pay rent (2) Latent Defects – if there is a latent defect that interferes with use and possession then the tenant may leave and be absolved of the obligation to pay rent b. Implied Covenant of Quiet Enjoyment (Constructive Eviction) (1) Requirements: (a) Substantial interference with use and enjoyment of property i. No normative standard - what is required for quiet enjoyment is fact specific; depends upon the nature of the agreement, the property, and the culture in the area (b) tenant must give landlord notice of defect and opportunity to repair (c) tenant must vacate premises (2) Waivable – by express language in contract (3) Does not apply to defects in common areas

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Note: All jurisdictions allow a and b above. c. Illegal Lease – see def. in book; in the face of concern about the terrible quality of leasehold structures, courts stepped in and said the landlord could not longer rent until the premises were improved d. Implied Warranty of Habitability (1) No normative standard. Sources of extent of landlord duty: (a) housing code-local government (most important indicator) (b) building code-state government (look if no housing code) (c) culture in particular jurisdiction (2) Tenant not required to vacate premises (3) Allows for immediate partial remedy (repair and deduct from rent or prorate rent). Also allows suit to recover rent, compensatory damages for cost of repair and punitive damages. (a) Calculation of Damages i. Damages = fair rental value warranted – fair rental value in defective condition Problem – encourages slumlords to extort highest possible rent from tenants ii. Damages = Contract rent – fair rental value in defective condition (b) FSA says it might be better to get rid of IWH and just have strict housing code and require landlords to pay fines; prevents game btw landlords and courts that occurs with IWH damage calculation (4) Not waivable

C. Transfers: Subleases & Assignments 1. Definitions a. Privity of estate – a direct, unmediated tenurial relationship that one party holds by virtue of the possessory interest of another party

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(1) Liability – only gives rise to liability for rent for the time of actual possession b. Privity of contract – parties to a contract (1) Liability – gives rise to liability for everything promised in the contract c. Assignment – transfer of all of tenant’s (T) property rights to a third-party (T-1) d. Sublease – transfer of less than all of T’s property rights to T-1; if there is anyway that T can get property back, it is a sublease (ex. transfer of less than full term of lease, transfer of entire term but retain right to re-enter) 2. Diagrams a. Basic Lease

b. Assignment

c. Sublease

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3. Rules a. Calling something a sublease or assignment does not make it so; look at what interest is transferred. b. T is always liable to L for everything (unless T is released or full payment is made) b/c there is always PC btw T and L. However, T can always turn around and sue T-1 b/c there is PC btw T and T-1. (1) L’s consent to assignment or sublease does not affect T’s liability b/c consent is not release. c. For sublease, T-1 is not liable to L at all. L can terminate the original lease and evict T-1. (1) Third-party beneficiaries – L can sue T-1 to enforce covenant to pay rent btw T and T-1 if: (a) instrument of transfer btw T and T-1 says T-1 “agrees to pay the rents” reserved in the head lease, (b) promise is intended by both T-1 and T to benefit L, AND (c) jurisdiction recognizes 3rd party beneficiaries in this context

d. For assignment, T-1 is liable to L for rent so long as T-1 remains in possession of the estate (b/c there is PE). e. Other Covenants (i.e. other than to pay rent; ex. no pets) (1) If sublease, L cannot directly enforce covenant against T-1 (no PC), but L can enforce against T and sue for injunctive relief. (2) If assignment, L may be able to sue T-1 for the enforcement of restrictive real covenant; however, there are additional requirements for real covenants to be enforceable against assignees.

f. Consent (1) Majority rule – Most jurisdictions do not assess motive behind consent

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(2) Minority rule - If lease requires landlord consent to assignment/sublease, but is silent on the issue of under what circumstances consent is to be given, the court will imply a reasonableness standard. If lease expressly says landlord has sole discretion, lease will be enforced as written. (a) Most jurisdictions allow economic gain as reasonable basis. (3) If a leasehold clause says there shall be no assignment without the consent of the landlord, it has nothing to do with subleasing, and vice versa.

D. Limits on Discrimination 1. 14th Amendment a. Racially restrictive covenants do not violate the Constitution. b. Judicial orders enforcing racial RCs do violate the 14th A. (Shelley) (1) This decision has not been expanded to include other forms of discrimination or state enforcement of other private agreements. (2) An FSCS or FSD with a racial restriction (ex. so long as used for park for whites) is allowed under 14th A. b/c it does not require court enforcement, but rather automatically reverts back. (Evans) 2. Civil Rights Act of 1866, 42 U.S.C. Sec. 1982 – passed pursuant to 14th Amendment, but broader than Amendment a. Applies to all racial discrimination in the sale or rental of property. b. Suit must be brought by individual. c. Attorney’s fees not available. 3. Fair Housing Act, as amended – goes far beyond CRA 1866; a. Applies to discrimination based on race, color, religion, sex, national origin, familial status, or handicap (includes AIDS). Applies to brokers. b. Unlawful to refuse to sell or rent or otherwise make unavailable (i.e. represent that dwelling is not available for inspection, sale, or rental when it really is) a dwelling to any person because of categories above

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c. Prohibits printing or publishing of any statement indicating a racial, religious, or ethnic preference with respect to the buyer of a dwelling (ex. deed containing RC against particular race violates FHA) d. For handicapped persons, reasonable accommodation is required. e. Exceptions: (1) Ms. Murphy Exception – FHA does not apply to private single family homes, or rooms/units for up to 4 families in a dwelling where the owner actually occupies on of the units as his residence (a) Printing or publishing statements (c above) still applies to these groups (b) Also, if Ms. Murphy is refusing to rent b/c of race, she can still be sued under CRA 1982. (2) Provisions regarding familial status do not apply to housing for elderly (3607) (3) Religious organizations and private clubs exempt under some circumstances (3607) f. Procedure (1) P must make out a prima facia case of discrimination (a) (b) (c) (d) member of protected class applied for and meet minimum qualifications for housing rejected unit remained available

(2) Burden then shifts to D to show a legitimate reason for rejecting P (3) Burden shifts back to P to show that proffered reason by D is pre-textual (cover-up for an illegitimate motive). P does not have to show that D’s reason does not exist, just that there is an illegitimate reason as well. (4) FHA has strong provisions for administrative enforcement through HUD. (5) Relief allowed: injunctive (to prevent from selling to someone else), compensatory, emotional distress (inc. to others that might want to buy), punitive

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PRIVATE LAND USE CONTROLS I. General A. Range of Interests Permit  License  Usufruct  Lease  Freehold | Irrevocable License | Easement 1. Permit – owner gives permission to someone to come on property for limited action and time; oral or written; terminable at owner’s will (contract right) 2. License – written instrument in which owner conveys to licensee the right to enter or use property for a specific purpose; generally revocable at will of owner of fee; under certain circumstances license will become irrevocable  easement (contract-property) 3. Usufruct – only exists in a few jurisdictions; long term right to use, occupy, and possess, but not a lease; non-taxable estate (vs. lease which is subject to ad velorum taxes); possessor cannot alter property (contract right) 4. Lease – conveyance of interest in real property; compensable in the event of imminent domain

B. Classification 1. A right to go on someone else’s land is either an affirmative easement or a license or a profit. 2. Imposing an affirmative obligation on the owner of the burdened land (ex. maintenance) is either an affirmative real covenant or an affirmative equitable servitude. 3. A right to compel another not to do an act is either a negative easement or a restrictive real covenant or an equitable servitude. 4. Language that suggests a grant/conveyance/reservation is an easement. Language of promise is an RC. 5. RCs usually do not permit the holder of the benefit (or a third-party) to enter the burdened property. 4. Rights and responsibilities among concurrent owners applies to private land use controls – dividing interest according to use/activity

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II. Easements 1. Definitions/Types a. servient tenement – property that is burdened by the easement; every easement has a servient tenement b. dominant tenement – property that has the benefit of the easement c. Every easement is either: (1) Easement Appurtenant – easement where there is a dominant estate; whoever lives on the dominant estate reaps the benefits of the easement (2) Easement in Gross – the benefit is personal and benefit is enforceable regardless of where the person receiving the benefit lives; there is no dominant estate d. Every easement is either: (1) Affirmative Easements - permits holder of the benefit to do something on the servient estate (2) Negative Easements – an activity is prohibited on the servient estate (a) At Common Law, only a narrow category of negative easements existed; today, we recognize a much broader range of categories (b) No negative easements by prescription 2. Creation – go step by step a-d a. Express Grant or Reservation – written instrument (1) Grant can occur at anytime by anyone that holds the fee (2) Reservation – grantor conveys greater estate, but reserves an easement carved out of greator space (3) Negative easements are usually not implied b. Estoppel – license + interest (reliance, investment by person with license) = irrevocable license/easement c. Prescription – elements same as AP except it need not be exclusive; claim is only for limited use

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(1) if permission was given to use the right of way, it is not prescription b/c not adverse and hostile d. Implication – dirt lawyers don’t like b/c it creates uncertainty Note: Common law rule - One shall not be permitted to derogate from the terms of his/her own grant, i.e. you can’t take it back once you sell something. (1) Implied Grant vs. Implied Reservation (a) Implied grant - O owns a large circular tract of land with a mountain in the middle. O sells the mountain to X. X demands access. (b) Implied reservation - Same facts, except O decides to keep the mountain and sells the rest. O now is the one who demands access. (c) In most jurisdictions, it is tougher to find an easement by implication when it is an implied reservation than when it is an implied grant b/c owner of the unified estate was in a better position to anticipate the problem (2) Reasons if Implication: (a) Necessity – must have existed at the time the estate was severed; some states require strict necessity, i.e. there must be no other option (b) Pre-existing Use – use must exist when the lot is severed (c) Easement was obvious or apparent (weak) (3) If easement is implied, should recipient still have to pay for it?

e. You can reserve an easement in favor of a third-party f. You can’t have an easement in your own property 3. Classification – Fee or Easement: Note: Words of document don’t control! a. lack of particularity of the subject property – if description of land is specified with great deal of particularity, it is usually a fee; if general (right to cross property) it is an easement b. large disparity between purchase price and full market value of fee

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c. express retention by Grantor of substantial right to use (easement) d. specificity of purpose or use - greater extent to which rights are limited to particular rights, more likely an easement (I give you a fee, but you can only do A, B, or C – probably an easement or fee with restrictive covenant)

4. Transferability a. Easements in Gross are generally assignable and transferable subject to the one stock rule or the surcharge doctrine (1) One stock rule – the holders of the benefit of an easement in gross must exercise that benefit as a single entity (ex. two holders must both agree to assignment, etc.), OR (2) Surcharge doctrine – limits the divisibility of an easement in gross; the easement is divisible, but the benefits cannot be subdivided in a manner that increases the aggregate burden b. Appurtenant Easement (1) Burden runs with Servient Tenement - transfer of servient tenement will transfer with it the burden of the easement (2) What about dominant tenement c. One can adversely possess against an easement; however, the property must be used in a way that is adverse to the easement. 4. Scope a. Expansion of dominant estate - A servient tenement cannot benefit a non-dominant tenement (1) R: increases the burden on the servient tenement (2) Ex. If the driveway ends on parcel B (dominant estate), can you walk to parcel C – NO! A benefit is still conferred on parcel C. b. Scope of Use – document controls; when drafting, be specific (1) activities permitted - absent specific language, we will allow activity to change consistent with the times in that neighborhood

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(a) Access easement can be used to provide access for any quantity if document doesn’t specify (b) You can’t run utility lines along an easement that is merely for access. (c) Access is defined according to the time, place, and manner of today, not the intent when the easement was created (d) Don’t use purpose language. (2) exclusive/nonexclusive (3) activities required; maintenance (4) Whether owner of servient tenement can relocate easement. 5. Termination a. By its own terms b. Merger – when the easement and the fee come into the same party, the interests merge and the easement terminates so long as there is no intervening estate c. Excess use d. Non-use (abandonment) - An easement will not terminate merely for non-use, something more is required. There must be an affirmative act of some kind evidencing abandonment in order for the easement to terminate.

6. Language - fee simple encumbered by a non-exclusive affirmative easement appurtenant in which the dominant estate is lot 4 and has the benefit of a non-exclusive affirmative easement appurtenant in lot 19

III. Real Covenants - promises respecting the use of the land which run with the land; contract law laid on to property law A. General Rule – If dispute is between the original promisor and promisee, contract law controls. B. Requirements for Enforceability: Question: Is it fair to burden someone with a promise they did not make?

1. Must comply with Statute of Frauds

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2. Parties must intend for promise to run with the land a. best evidence are words “his heirs, successors, and assigns” 3. Promise must “touch” and “concern” a. For the benefit to run, only the benefit has to touch and concern b. For the burden to run, both the benefit and the burden much touch and concern the property c. Touch and Concern: (1) An affirmative covenant to pay money, when the proceeds are used in a way that directly affects the property or adjoining property, touches and concerns.

4. Must have requisite privity of estate a. Horizontal privity – relationship btw the original parties to the promise b. Vertical privity – relationship btw one of the parties to the promise and his successor c. For the benefit to run: (1) no horizontal privity required (2) some vertical privity – partial identity of interest or some portion of the same rights between party and successor; very little required (ex. contract is sufficient) d. For the burden to run: (1) must have horizontal privity (landlord-tenant or grantor-grantee) – covenant must come into being at the time the property is transfered (2) must have vertical privity – complete identity of interests (includes AP) e. For successor to A vs. successor to B, you have answer both does the benefit run and does the burden run C. Types – affirmative real covenant or restrictive real covenant

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D. Scope 1. look at language of document 2. when drafting, define all term 3. for undefined/ambiguous terms, court will look at local ordinance definitions or public policy E. Termination 1. By its own terms 2. By statute – in some jurisdictions, RCs can last for only a limited period then they expire 3. Merger - when all of the parties holding all of the benefits come into ownership of all of the burdened properties, the RC is considered lifted; however, so long as there is one party holding the benefit, the RC will not be abandoned 4. Abandonment or waiver - requires a pattern and practice of showing disregard for the covenant; known to the neighborhood and the neighborhood didn’t care; isolated instances of non-compliance do not amount to waiver a. AP can run against an RC, but waiver period is usually runs faster 5. Changed conditions – most common argument a. Every jurisdiction recognizes changed conditions as a basis for non-enforcement of a RC, but it is very rarely done. Usually only applied when compliance with RC is no longer possible (ex. every house must have its own septic tank, but septic tanks are outlawed). R: Freedom of contract prevails.

6. Zoning regulations do not modify or terminate RCs unless they make compliance with the servitude illegal. When zoning and RC are in conflict, whichever was there first will usually prevail.

F. Enforcement 1. Injunction

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2. Damages – (modern trend in a few courts) Court recognizes person benefiting from RCs property right, but allows the more economic option to win out and requires damages. a. Problem: people should be able to assert their own value of their property and not have a judge or jury determine it for them + freedom of contract

IV. Equitable Servitudes A. Defective Real Covenant + Notice of Promise = Equitable servitude (court has discretion) 1. Inquiry notice – purchaser would have found out about the covenant by looking up deeds in neighborhood a. Most jurisdictions allow burden to run if inquiry notice was present b. Some jurisdictions refuse to recognize the burden running via inquiry notice; they require actual notice to the purchaser.

V. Community Associations (Common Interest Communities) A. General 1. New mechanism for making residential life homogeneous 2. Profound shift away from state and local government law. People look to community to provide needs and services (ex. trash collection, library) a. Redefines common good = people in my community; not responsible for those outside my gates 3. Voluntary subordination of individual control over property to association

B. Types 1. Condo – fee simple ownership of cube of space to the walls; walls are common property with neighbor 2. Co-ops – legal title in units vested in corporation; when you buy a unit, you are really buying a share of stock or interest in the corporation 3. PUDS (planned unit development) – single developer develops a new community and negotiates with local government to change the general zoning guidelines; can be any kind of structure

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4. Timeshare – calendar divided condo structure

C. Homeowners Associations 1. CC&R (Covenants, Conditions, and Restrictions) a. creates a homeowner’s association and gives it the authority to enforce requirements of CC&R and to establish new regulations b. sets forth basic things required or prohibited c. creates horizontal privity running with the land

2. Common Areas – responsibility of homeowners association, but property owners have a right to them a. either held as fee by HA or as TIC btw owners 3. Costs a. can go up involuntarily b/c of democratic rule b. allocated per square footage of lot, per square footage of house, per value of home, or per capita

4. What can be regulated? a. RC that violates state or federal constitution is not allowed (public policy) b. Otherwise most anything is allowed, so long as RC is reasonable as applied to the entire community (Nahrstedt) (1) Court will not look at reasonableness of the facts of a particular situation. 5. Who decides? Board of Directors of Association – usually elected based upon payment of the costs of the community association (not one person, one vote) VI. Nuisances – interference with use or enjoyment of property 1. Historically: trespass = nuisance = strict liability (injunction)

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2. Today (from 19th C): Nuisance is based on negligence (reasonableness; balancing equities)  loss of predictability a. A nuisance is an activity which is: (1) Substantial, AND (2) Intentional and unreasonable under the circumstances, OR Unintentional and negligent, reckless, or inherently dangerous 3. Nuisance Per Se – an activity made illegal by law; public harm stopped in the name of the police power (ex. zoning); no compensation a. vs. Nuisance Per Accidens – unreasonable conduct 4. Private Nuisance vs. Public Nuisance a. Private – harm suffered by finite, specific group; more likely to get remedy b. Public – harm suffered by public at large; most likely no remedy b/c all suffer and benefit equally; social issue better left to legislature 5. Factors to consider in “balancing the equities” (no brightline test) a. First in time b. Cheapest cost avoider – who can move easier c. Natural rights – this is my property and I can do what I want with it d. Number of people harmed vs. benefited e. Economic impact of injunction (private and public) f. Private vs. Public – if public, leave to legislature g. Fault – bought land at lower price, knew what you were getting into h. Social value of activities i. Social & Cultural judgments about P and D j. Violation of law? k. Technology to avoid conflict

6. Remedies a. First decide who is harmed b. Next, select remedy, i.e. if P harmed, chose 1 or 2

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Homeowner (P) (1) Injunction

Polluter (D) (3) No Injunction

(2) Damages to Homeowner

(4) Injunction & Damages to Polluter

c. Coase Theorem: In a situation of zero transaction costs and a perfectly competitive market, it makes no difference where you assign the entitlement. Whichever activity is more valuable will buy out the other activity regardless of how the judge rules; unless one party holds out.

e. Option 2 is essentially licensing a continuing wrong, so long as you pay for it. Reduces the incentive for D to improve their practices to make them less detrimental to the environment once they have paid. f. To settle damages (option 2) company could acquire an affirmative easement appurtenant to discharge smoke across the servient tenement’s property. RC probably won’t work b/c there is no horizontal privity.

VII. HYPO: A lives on hill and wants to sell tract of land below, but restrict buyer so that anything buyer builds will not obstruct A’s view of the valley. Discuss Options: 1. 2. 3. 4. 5. Real Covenant Negative Easement FSD/FSCS Don’t sell air rights Landlord/Tenant relationship

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PUBLIC LAND USE CONTROLS I. Zoning A. General 1. History – emerged in 20th Century as a way to deal with inadequacies of private land use controls in resolving controversies 2. RC vs. Zoning a. greater regulation allowed through RCs (only limit is Constitution-rare and FHA); zoning limited b/c it must be based on police power b. only zoning can be used for land that is already developed; for RC to run with land, one person has to own all the land to begin with

B. Requirements 1. Zoning must be based on the police power (i.e. promote health, safety & welfare) or prevent nuisance. a. State power is plenary; reserved by states when Constitution was adopted b. Enabling Statute – state delegates to local governments the power to exercise zoning within the limits of the enabling statute. c. Permissible objectives include: (1) avoid conflict – density requirements, lot size, setbacks (2) keep taxes down 2. A zoning ordinance on its face (not as applied in a particular situation) will be sustained if it is: a. comprehensive – must apply to entire community, not one neighborhood; benefits and burdens shared widely (reciprocity of benefits) b. flexible in dealing with: 1. Pre-existing nonconforming use

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a. Majority rule – government can prevent the continuance of a preexisting non-conforming use by phasing out within a reasonable period of time b. Minority rule - A zoning ordinance cannot cause the cessation of a pre-existing nonconforming use. (1) Zoning can provide that if you abandon, re-sell, devise, expand, or repair property, you have lost right to nonconforming use. (2) Also, neighbors could still argue nuisance and have nonconforming use shut down that way w/o compensation. c. May be able to argue taking 2. Variances; 2 independent tests for determining whether to grant variance (not balanced against each other) a. Undue Hardship - Magnitude of hardship suffered by P if variance not granted – the greater the magnitude of the variance being sought, the greater this has to be b. Impact - Magnitude of detrimental impact on community from granting variance – if amount of variance is very small, it will likely be granted unless this is huge c. Use variance more difficult than area variance b/c it goes to the heart of zoning compatible and incompatible uses d. A variance and a rezoning usually are a permanent part of the zoning. However, you can do conditional variances, ex. you can put handicap ramp on house so long as there is a need. 3. Special use permits – acknowledges that use variances are not tolerated; city says you can used it in this way, inconsistent with zoning, so long as you meet these 28 requirements c. prospective

C. Types 1. cumulative zoning – all uses, etc. from lower zoning districts allowed in higher zoning districts (ex. zone 3 allows uses under zones 3, 2, and 1)

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a. not used much anymore; increased conflicts b/c housing could still be next to industry 2. exclusive zoning – only uses for a particular zone allowed in that zone D. Limitations – generally, there is incredible legislative deference to zoning ordinances 1. Aesthetic Zoning a. Most jurisdictions are less likely to permit zoning on aesthetic grounds. b. Missouri – permissible if there is another hook, i.e. zoning helps promote general welfare by maintaining property values 2. Constitutional Conflicts – 1st Amendment (association, privacy, speech) a. City of Ladue v. Gilleo - Woman wanted to put “No War in the Gulf” sign in front yard, but signs were prohibited in city ordinance unless they were for sale signs. Ordinance is unconstitutional.

3. FHA a. Single family restriction is not the same as an occupancy restriction (# people/area), which is exempted from FHA. 4. Exclusionary Zoning – to avoid conflict a. Creates externalities – when one community is allowed to exclude, other communities bear the burden b. Exclusion based on income (1) Equal Protection Clause/14th Amendment - housing is not a fundamental right; poor is not a suspect class (2) NAACP v. Township of Mt. Laurel – Court held zoning ordinance unconstitutional under NJ Constitution. Zoning essentially prevented low income people from living in community with large minimum lot and house area requirements and only 1 bedroom apartments. City’s justification was to decrease density and therefore reduce local taxes. Court holds that the ordinance is not in the general welfare of all of the state’s citizens (not just Mt. Laurel)

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(a) Very rare decision; usually great legislative deference c. Possibility of Inclusionary Zoning – fair share zoning; provides that every community in city set aside and provide it’s share of low income housing 5. Generally, a moratorium will be constitutional so long as it is limited in scope and duration.

E. Rezoning/Zoning Amendments 1. Level of Judicial Scrutiny – Jurisdictions split a. Administrative (quasi-judicial) Decision – high scrutiny; impose burden on local government to justify actions (1) Argument for: dispute btw two property owners, action singles out one piece of property, particular application of the law b. Legislative Act – judicial deference to political process; rational basis review

2. Granting v. Denying Rezoning - Decisions denying rezoning tend to have greater deference then decisions that grant rezoning (b/c granting is changing rules in the middle of the game) 3. Spot Zoning - descriptive term/conclusion that says this zoning doesn’t meet legislative deference test; zoning which singles out a particular tract of land for special treatment that lacks any rational basis 4. Referenda Control – Who should decide? a. Disadvantages – only people who will vote are those with an interest, not efficient, voters not fully educated on issue, not consistent with comprehensive plan b. Usually not one person, one vote; limited to property owners, including corporations, or by property taxes

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II. Eminent Domain A. Source 1. U.S. Constitution - 5th A. “…nor shall private property be taken for public use without just compensation” 2. GA Const. 1983 “…private property shall not be taken or damaged for public purposes without just and adequate compensation being first paid.”

B. General 1. Any interest in property can be acquired by eminent domain (POR, lease, easement, etc.). If government wants everything, then it must acquire all of the interest in the property. a. Compensation – property is appraised as FSA, that amount is paid into court, then it is up to the interest holders to fight it out b. contingent remainders have a guardian represented to protect their interest c. real covenant – most jurisdictions do not treat the holding of a benefit of a real covenant as a compensable property interest when the burdened property is taken d. Government can also condemn any single interest in property C. Adequacy of Compensation – where the battle is always fought 1. Objective determination – not what property is worth to owner; decision made by jury after hearing appraisals re: what property is worth on open market 2. Business is more difficult then residential – how do you value good will; how do you evaluate business loses 3. If federal government takes ½ of your property they must pay for the half they take. If the other ½ declines in value b/c of the taking of the other half, you bear the loss. a. GA Const. allows money for loss in value to the other 1/2 not taken; however, it only applies if there is first a taking 4. Consequential benefits - if other ½ of property goes up in value, owner is not required to pay government

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D. Timing of Payment 1. GA – government has to pay before they take property (a) quick take compensation – only for transportation in GA; gov’t files petition in court and pays fair market value into court (after appraisal) then you have a few days (30) to get off property; if you don’t like price, you can challenge, but you have to get off immediately 2. Federal government can take before paying

E. Public Use v. Public Purpose 1. Federal - The public use requirement is coterminous with the scope of a sovereign’s police power; government does not have to own a property interest; government can take from A and give to B is it sees a public benefit to it; court will give great deference to legislature. (Midkiff) a. Two Views of Midkiff (1) Midkiff only means complete judicial deference to a legislative decision. (2) Midkiff requires compensation more often then it used to b/c police power and eminent domain may overlap more. Police power may require compensation. b. What is to prevent radical redistribution of wealth? Government still has to pay 2. GA – Public purposes means government has to retain an ownership interest of some kind in the property, i.e. can’t take from A and give to B

F. Is There a Taking? At what point do we move from Zoning and Nuisance to Eminent Domain? 1. Zoning – if comprehensive, prospective, and flexible, it is not a taking 2. Permanent physical occupation by another party, either the government or a third-party, is a taking. (Loretto) a. Applies regardless of quantity of property or diminution in value

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3. Nuisance – if property is regulated b/c it is a nuisance, or existing harm, it is not a taking. (Hadacheck) a. Compare with Spur which found nuisance, but required P to pay D to move (distinction – Spur was a private action, i.e. not for public good) b. Compare with PA Northwestern which was merely a violation of a zoning ordinance, not an existing harm. c. Private fault (nuisance) vs. Public Benefit (i.e. sacrificing one person for the public good – taking, ex. 1/10th of 1% bear the burden) 4. Diminution in Value – at some point, when regulation causes diminution in value that reaches a certain magnitude or destroys all investment-backed expectation, it becomes a taking 5. Conceptual Severance (Diminution in rights) – if government regulation has destroyed all of your rights, it is a taking (unless nuisance); if rights remain, it is not a taking a. Ex. Transferable development right b. S.C. – you don’t automatically lose if you buy property knowing about a regulation that takes away all of your rights (Palazzolo) (1) Problem - allows a corporation to sell the façade of their building to another company after a regulation is passed preventing altering façade, allows the newly created corporation to argue taking b/c all of their rights have been taken

6. Penn Coal a. Holmes – taking; government is interfering with contractual bargain btw two private parties; it is not the function of the state to reallocate property rights already bargained for b. Brandeis dissent – police power, i.e. no taking; this is a public nuisance, not just A and B 7. Social Gains – Private Loss Balancing Test - Do social gains outweigh the private loses from regulation? If so, no compensation required (test of efficiency)

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G. Relevant Factors - All factors will come into play. Ultimately, you must balance eminent domain, zoning, and nuisance. 1. Clear harm stopped/prevented – police power 2. Few parties affected, harm or benefit – private nuisance (Holmes; Penn Coal) 3. Large number of people burdened & benefited – police power or zoning 4. Large number benefited, few burdened; no clear harm – eminent domain 5. Few benefited; large number burdened – political decision 6. Prohibition of specific future activity 7. Prohibition of specific existing activity 8. Prohibition of all uses 9. Rights and values remaining after regulation (one of most important tests); if yes, no taking 10. Priority in time 11. Cultural values (utility of activity) 12. Cultural change – how has culture changed recently

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WATER USE

I. Rules A. Natural Flow/Riparian Rights – in 17th Century, riparian owners can use as much water as they want all long as they don’t disturb the natural flow of the water (right is attached to the land, i.e. cannot be transferred to non-riparian owner) 1. Owner cannot deplete quantity of water even though no one is harmed B. Prior Appropriation – gives absolute priority to time, first user gets to continue to use that amount 1. Applies to non-riparian owners as well; other owners cannot bring suit unless they are actually harmed C. Equitable Apportionment/Reasonable Use – balancing of costs and benefits, inquiry into efficiency, which uses are desirable 1. Ex. loses to NM are outweighed by the benefits of Colorado, and NM was not using the water efficiently II. History A. Circa 1700 Natural Flow = Prior Appropriation (no difference b/c no one is taking that much, no industry) B. Circa 1850 Natural Flow is not the same as Prior Appropriation 1. States adopted Prior Appropriation as incentive for companies to industrialize; at low level of development, prior appropriation is pro-developmental C. Circa 1950 Prior Appropriation becomes static - once area is developed, prior appropriation is anti-development  Reasonable use 1. R: Property rights change over time as society around you changes, so there is not much credence to 1st in time. What promotes development now is different than what promoted development 100 years ago. 2. Some states and federal common law adopted equitable apportionment. Some states still follow prior appropriation. D. Reasonable use is mush less certain, so companies take a big risk in investing a lot of money when they are using water, b/c those rights can be taken away.

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