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Property – Outline
I. Introduction (2) A. Where Do Property Rights Come From? 1. First Possession a. First in time wins b. Capture – must actually capture animal 2. Subsequent Possession a. Finding – prior possessor wins, if he has physical control b. Adverse possession – actual entry, open & notorious possession, adverse & under claim of right, continuous & uninterrupted possession B. What is Property? 1. Land and Tangible Things – relational rights, bundle of rights, space vs. time 2. Water Rights – ground water (capture), surface water (beneficial or nuisance), streams (riparian or appropriation) 3. Intellectual Property – purpose, source, duration, scope II. Freehold Estates in Land (6) A. Estates in Land 1. Possessory – fee simple presumed, fee tail, life estate 2. Future a. Transferor – reversion, possibility of reverter / right of reentry b. Transferee – remainder (vested, contingent), executory interest B. Concurrent Ownership 1. Tenancy in Common (law favors) – no right of survivorship 2. Joint Tenancy – right of survivorship – four unities: time, title, interest, possession 3. Tenancy by Entirety – must be married (“to H and W as joint tenants”) – presumption C. Marital Property – divided at divorce, death = elective share (with augmented estate), community property III. Leaseholds (12) A. Nature – term of years, periodic tenancy, tenancy at will, tenancy at sufferance B. Possession – L must deliver actual possession (“American rule” = minority – opposite) C. Transfer – assignment (transferring entire interest – assignee in privity), sublease (less than entire interest) D. Defaulting – generally, no self-help – surrender = acceptance of abandonment E. Condition – constructive eviction = substantial + vacate + fault of L IV. Conveyances (15) A. Marketable Title – title that is reasonably free from doubt, so prudent purchaser would accept B. Disclosure – if seller creates condition that impairs value and is peculiarly within his knowledge, nondisclosure is basis for rescission C. Warranties of Quality – house must be free from defects & constructed in workmanlike manner D. Warranties of Title – seisin, right to convey, against encumbrances, general, further assurances E. Delivery – grantor must show intent to make deed operative & pass an interest immediately to grantee F. Recording – race, notice, race-notice V. Private Land Use Controls (20) A. Nuisance – invasion that is: intentional and unreasonable OR unintentional result of negligence, etc B. Easements – entitles person to use – express, implication (existing use or necessity), estoppel, prescription C. Covenants – runs with land at law – promise to do (or not do) something relating to land D. Equitable servitudes – runs with land at equity VI. Government Land Use Controls (25) A. Zoning – nonconforming use, spot zoning, variance, special exception B. Constitutional Constraints 1. Public use = public purpose 2. Taking = taking title or possession, extracting benefit, destruction of all economic value, exaction
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I. Introduction A. Where Do Property Rights Come From? 1. First Possession a. First in Time i. Discovery (P, title from Indians; D, title from U.S. P loses – Johnson, p. 3) ii. Discovery – establishes claim against other Europeans (entails right to purchase or conquer) iii. Conquest – establishes claim of Great Britain over Indians iv. Indians have right of occupancy b. Capture i. Rule – if wild animals are captured, they belong to captor (Post pursues fox, Pierson kills it, Pierson wins – Pierson, p. 19) ii. Rationale – competition, ease of administration (evidentiary), but leads to over capture iii. Mortally wounded or trapped – counts as captured (a) Keep competition fair (b) Need reasonable precautions against escape iv. Competitor can interfere, but not someone who doesn’t want to kill the animal v. Custom may dictate different result, if it facilitates killing (original killer of whale gets profits, subject to finder’s fee – Ghen, p. 26) (a) Whaling customs: (1) Fast-fish / loose-fish – whale must be fastened to boat (2) Iron-holds-the-whale – owner of weapon in the whale owns it (3) Split the baby (b) Private norms usually enforce themselves (c) Norms might be best economic choice vi. Tamed wild animals belong to captor when they roam at large vii. If wild animal escapes, captor loses possession, animal subject to capture by another viii. Limitations – game laws limit capture – police power prevents conduct harmful to public 2. Subsequent Possession a. Finding i. TO never loses title to property ii. Prior possessor wins (chimney sweep wins over jeweler – Armory, p. 108) (a) Protects owner (b) Entrusting goods to another is efficient (c) Prior possess expect to prevail (d) Rewards honesty (e) Rewards labor in returning useful item to society iii. Prior possessor wins, even if acquired by theft or trespass iv. Possessor must acquire physical control over the object and have intent to assume dominion (a) But sometimes “constructive possession” is sufficient v. Finder vs. owner of premises (a) Finder is trespasser – owner prevails (b) Finder is employee – can’t keep it – “acting for” employer, “contractual duty” to report (c) Finder is on premises for a limited purpose – owner only gave permission for that purpose (d) Under the soil – given to owner (except for treasure trove – courts vary) (e) Found in private home – given to owner – constructive prior possession (1) BUT, if owner hasn’t moved in, not in prior possession (Hannah, p. 111) vi. Public place (a) Lost – goes to the finder (b) Mislaid – goes to owner of premises (TO left pocket book, owner of premises cares for it – McAvoy, p. 118) (1) Facilitates return to TO
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vii. Abandoned property – awarded to finder (TO no longer claims any right to it) b. Adverse Possession i. Statute of limitation for bringing cause of action for recovery of land or chattels ii. Purpose: protects title, bars stale claims, rewards productive use, protects reliance interest, quiets title iii. Elements (a) Actual entry giving exclusive possession – triggers cause of action (1) Constructive possession of part may trigger also (2) Exclusive possession required (claim as mine, not sharing) (b) Open and notorious possession – gives notice to owner (1) Constructive notice – official notice (2) Inquiry notice – what a reasonable person presumably knows (3) Actual knowledge – what reasonable people probably know (c) Adverse and under claim of right – without owner’s consent (1) Objective (majority) – look to actions of possessor (2) Subjective – possessor must have bona fide belief that he has title (i) Mistaken belief counts in some jurisdictions (3) Color of title – satisfies proof of adversity (but majority doesn’t require) (4) Boundary disputes: (i) Objective (majority) – look to actions Caveat – if encroachment requires survey to notice, that might not be open and notorious – require actual knowledge (Manillo, p. 147) (ii) Minority – mistaken possession doesn’t satisfy adversity (“Maine doctrine”) But: action in ejectment lies regardless of intent, wrongdoer wins, encourages honest neighbor to lie, objective is cheaper (iii) Agreement on boundaries (orally agreed – way of locating boundaries, acquiescence, estoppel) (iv) Mistaken improver CL – property owner gets it OR maybe builder takes it down If in good faith, court may give mistaken neighbor equitable relief (A pay damages to B, B may pay for the building) (d) Continuous, uninterrupted possession (1) Requires degree of occupancy that average owner would make of that type of property (i) (use of summer home only during summer is continuous – Howard, p. 153) (2) Abandonment – intentional relinquishment, without intent to return – resets the clock (3) Tacking – allowed, if predecessors in interest are in privity of estate (Howard) (i) Possessor must voluntarily transfer to subsequent possessor either estate in land or physical possession (ii) If A ousted and gets back in, can tack onto previous possession (but don’t include gap) (iii) Mistake about deed – ok, as long as you think you’re correct (4) If owner reenters land to regain possession, interruption occurred – clock stops iv. Extent of land acquired (a) Without color of title: only what possessor occupied or controlled (b) With color of title: entire property described in the instrument (constructive adverse poss.) v. Interests not affected (anyone who has no cause of action): future interests, liens, easements, equitable servitudes vi. Chattels (a) Generally the same for real property, but period of limitations is shorter (b) Discovery rule – statute runs when you have discovered elements OR through due diligence you could’ve discovered them (O’Keefe, p. 163) (1) Conduct of owner is controlling
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(2) Statute doesn’t run as long as owner uses due diligence (3) Requires reporting of stolen art (c) New York rule – statute begins running when you know who has the goods and make a demand for return that is rejected (Lubell) (1) Makes it difficult to acquire title to stolen goods (2) Puts burden on purchasers – can make inquiries about ownership B. What is Property? 1. Land and Tangible Things a. Nature of Property – relational rights, substance, Blackstone (absolute, exclusive, good against world) b. Disaggregating Property Rights – property is a bundle of rights (possess, use, exclude, transfer) c. Dividing Property – space vs. time d. Public vs. Private i. Why is some property public and some private? (a) Establishes a realm of private control (b) Property can be seen as an extension of my personhood ii. Why is the commons tragic? (a) Decisional problem – what to use property for (b) Shirking problem – someone else will make up for my laziness iii. Can property be too divided? (a) Spatial – acreage too small for economic use (b) Temporal – too many interest holders retards alienability and development (c) Functional – separation of attributes undermines value 2. Water Rights a. Percolating ground water i. English – applied rule of capture (deemed to be part of soil) ii. Followed in many Eastern states iii. Neighbor can sink a well and dry up other’s land or cause subsidence (unless with negligence or malicious intent) iv. Reasonable use limits amount that can be pumped – generally used on own land (Village of Brady Lake, p. 16) b. Surface water i. Capture (beneficial) (a) Can capture water and use for anything – but not unnecessarily harm lower owners ii. Expelling (nuisance) (a) Common enemy (1) Any owner has right to fend off the water – change drainage or build a dam (2) Interference with neighbors must be reasonable, or at least not negligent (b) Natural servitude (1) Half the states (2) Lower lands are servient to natural flow – owners can’t change the flow to injure others c. Streams and lakes i. Riparian (a) All land under a unit title contiguous to a body of water, provided the land is in the watershed (b) Reciprocity among owners – every owner has equal rights to stream – use right (c) Internal lot owners, connected by man made canal are not riparian (Thompson, p. 5) (d) Natural flow doctrine (England) – each owner gets the natural flow, without material diminution in quantity or quality (e) American – each owner entitled to reasonable use of water (1) If downstream owner isn’t harmed, he can’t enjoin upstream owner’s use (2) Domestic use preferred (drinking, bathing, small farm, personal garden) (3) Commercial use permitted, if there is enough for domestic wants of all
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(4) Some courts allow use on nonriparian land (5) Court should intervene to achieve efficiency, because private parties have transaction costs ii. Appropriation (a) Prevalent in 19 western states – now statutory (governed by administration system of permits) (b) Developed in 1847-8 (Mormons in Utah, gold rush in CA) (1) Even if miners owned riparian land, they couldn’t divert it for mining (c) Rights limited to “beneficial use” of water (specified at time of appropriating) (d) This creates a “water right” that can be severed from land sold to another for other land (e) Senior appropriators trump juniors, but must minimize harm to juniors (Yust, p. 14) (f) A few eastern states use permit systems, where water is scarce relative to demand iii. Must not infringe on public rights (boating, swimming, fishing) in public waters 3. Intellectual Property a. Distinctive i. Purpose (a) We can’t share land easily, but we can share ideas & expressions (b) Inventor should have a stake in his creation AND need economic incentives to create/distribute ii. Source (a) Copyright and patent – statutory; trademark – statutory & CL (b) Statute = more defined character, legislation product of political influence iii. Duration – copyright and patent are fixed periods; trademark is potentially unlimited iv. Only certain things can be copyrighted, patented, or be a trademark v. Character and scope (a) IP has some characteristics: exclusive, robustly protected, good against all (b) But scope is different (1) Property rights to a copy of Moby Dick vs. a copyright of the expression (2) Inventor has right to use, make, sell, import vi. Not quite monopoly rights (monopoly = controlling the market) – but fully exclusionary b. Copyrights i. Protects creative expression in specified types of works that are fixed in tangible medium ii. No right to protection for ideas or facts iii. Right automatically attaches at creation in tangible medium iv. Specific rights: reproduce, make derivative works, distribute, perform, display v. Until 1976, used CL for unpublished, statutory for published – now there is no distinction vi. Duration – for natural owners = life plus 70 years vii. Limitations: first sale doctrine, fair use privilege viii. Literary works – largest category, with controversial aspects – includes computer code ix. Questions: (a) Why is creativity required? (b) Should protection extend to derivative works? (c) Should copyrights be required to be registered? – must register to obtain statutory damages (d) What are constitutional limits on the scope? – as long as Congress doesn’t say “forever” c. Patents i. Nature – protects against someone else inventing the same thing (copyright only protects against copying, not duplicate creation) ii. Utility patent (a) Scope: any process, machine, article of manufacture, composition of matter, or improvement (b) No protection for mere discovery (but Court allows patent of lab-created bacteria – Diamon, p. 16) (c) Patent secured by grant from PTO – explains what the thing is, how to make & use, claims (d) Generally exclusive of other comparable forms of protection (e) Specific rights: exclude others from making, using, selling, importing invention
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(f) Scope determined by claims made in application (g) Duration: 20 years (utility) (h) Limitations: first sale doctrine iii. Moral utility doctrine (a) Story (19th C) claimed patented object must not be immoral or illegal (b) Certain courts picked up on it (gambling machines rejected) (c) Other courts used this to limit genetic research & cloning (d) Current controversy – chimeras iv. Patent scope expanded (a) Business methods can now be patented (b) Amazon.com – tried to patent their “one click checkout” method (c) Computer programs patentable also (describe the program and what it does) v. Questions: (a) Any limits? – patent doesn’t give you the right to sell or use, just exclude others (b) Utility? – don’t even get into this any more (c) Novelty – must be disclosed to the public in some way, enough information to enable someone to invent it (d) Non-obviousness – anyone that is familiar with the art would know how to do it d. Trademarks i. Justification? (a) Protections for reputation of a product – keeps people from free-riding on my investment (b) Product or service identifier (c) Protects a particular manner of commerce (d) Trademarks encourage product differentiation ii. Classification of marks: generic, descriptive (and geographic), suggestive, fanciful (a) Why distinguish? – all are supposed to measure distinctiveness (b) Generic aren’t protected at all – simply the genus of the actual product (1) But if you are so good & market so well, you can lose your mark – generocide (2) Protect yourself by calling it “Kleenex facial tissue” (c) Descriptive – protectable, only upon a showing of secondary meaning (d) Fanciful marks are distinctive precisely because they are arbitrary iii. What can be used? – words, images, logos, shapes, product design, colors iv. Securing the mark – use in commerce (first in time), registration requires either use or intent to use (a) Can protect without registration, but provides national notice (b) Must be used with something v. Duration: indefinite, but lost through abandonment vi. Infringement: confusion or dilution (a) To protect consumers from confusion & protect merchant from losing customers by deceit (b) Dilution doesn’t matter if consumers are confused – concerned if mark loses its strength (c) Kind-of like generocide vii. What is basis for initial interest confusion when there is no confusion at the point of sale? II. Freehold Estates in Land A. Estates in Land 1. Possessory a. Fee simple (law presumes) i. Absolute (“to A and his heirs”) – potentially infinite duration, no limitations on inheritability, cannot be divested (a) CL – need to say “and his heirs” to indicate fee simple (b) Modern law – deed/will is presumed to pass the largest estate the grantor owned (c) Heirs = people who succeed to the real property of intestate decedent (d) Devisees and legatees = people who take under a will
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ii. (Defeasible) (a) Determinable – automatically ends when a specified event happens (land must be used for a public park – Ink, p. 257) (1) Creation – “so long as,” “until,” “while,” etc OR states that the land will revert upon happening of certain event (2) Words in the grant must limit the duration of the estate (3) Transferable, but still subject to limitation (4) Grantor retains future interest – possibility of reverter (b) Subject to condition subsequent – may be divested at the grantor’s election, when stated condition happens (grantor can’t restrain alienability, but can mandate land be used for lodge – Mountain Brow Lodge, p. 251) (1) Grantor must act to retake the property, ending grantee’s estate (2) Creates a fee simple, then sets forth condition (3) Creation – “but if X,” “upon condition,” “provided, however,” etc (4) Transferable, but still subject to condition (5) Grantor retains right of reentry – might be implied (6) Preferred over “determinable” – courts prefer to avoid forfeiture (c) Subject to an executory limitation – on happening of state event, automatically divested in favor of third person (1) Third party’s interest = executory interest b. Fee tail (“to A and the heirs of his body”) i. Invented to keep land within the family ii. Lasts only as long as grantee or any descendants survive AND is inheritable only by grantee’s descendants iii. Tenant practically has only a life estate iv. Cannot be devised by will v. If grantee’s descendants run out, property returns to original grantor vi. Types – fee tail male, fee tail special vii. Grantor – retains reversion in fee simple to become possessory upon expiration of fee tail c. Life estate i. Types (a) For life of grantee (b) Pur autre vie (for the life of another) (1) Creation: expressly (“to B for the life of A”) OR when A transfers his life estate to B (c) In a class (“to the children of A for their lives, remainder to B”) (1) Estate remains in surviving class members until all die, then remainder takes (d) Defeasible types ii. Ambiguity – look to intent of grantor (a) “To my wife, W, to be used as she shall see fit” – fee simple (don’t specify remainder – White, p. 221) iii. Transferable, but can’t transfer more than exists in possessor iv. Waste (a) Affirmative (voluntary) – when life tenant actively causes injury (b) Permissive (involuntary) – when land is allowed to fall into disrepair (c) Ameliorating – when principal use of land is substantially changed, but change increases value v. Court will generally not order sale of land for benefit of life tenant, if all parties can’t agree (a) BUT, equity may intervene and order sale of property, if necessary for best interest of all parties (property won’t support life tenant, but remaindermen want to hold out for more money – court forces sale – Baker, p. 230) 2. Future Interests a. Transferor
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i. Reversion (a) Estate left over when grantor conveys vested estate of lesser quantum than he has (b) “O to A for life” – O has reversion (c) All reversions are vested – alienable, accelerates into possession upon termination of preceding estate, not subject to Rule Against Perpetuities (d) Alienable ii. Possibility of reverter (a) Arises when grantor carves out of her estate a determinable estate of same quantum (b) “O to A and his heirs so long as liquor is not sold on the premises” – O has possibility of reverter (c) Usually created when grantor conveys fee simple determinable (d) Alienability (1) At CL, not viewed as an existing interest – not alienable (2) Modern – now viewed as property interest – alienable iii. Right of reentry (a) When grantor retains the power to cut short or terminate an estate subject to condition subsequent (b) “O to city, but if land ceases to be used as a park, to O and his heirs” = fee simple subject to condition subsequent, with right of reentry (c) Alienability – descendible and devisable, but maybe not transferable inter vivos b. Transferee i. Remainder (a) Three characteristics (1) Must have preceding estate (must be by express grant) (2) Must follow fee tail, life estate, or term of years (3) Must be capable of becoming possessory on natural termination of preceding estate (b) Vested – created in ascertained person AND not subject to condition precedent (1) Indefeasibly vested – certain to acquire estate AND certain to be entitled to retain the estate permanently (2) Vested subject to open – vested in class of persons, at least one of whom is qualified to take possession, but more members may come into class (3) Vested subject to divestment – vested subject to divestment of condition subsequent or vested subject to divestment by inherent limitation of estate in remainder (c) Contingent – either created in unascertained person OR subject to condition precedent (1) If O creates contingent remainder in fee simple, there is a reversion in O (2) Law disfavors this, if ambiguous – go with vested remainder subject to divestment ii. Executory interest (a) If no preceding estate – must be executory (b) If follows a fee simple – must be executory (c) If does not follow natural termination of preceding estate – must be executory (d) Springing – springs out of grantor at time subsequent to granting of interest, divesting grantor (e) Shifting – divests a preceding estate in another grantee, prior to natural termination (f) Fee simple determinable – future interest in grantee = plain c. Rules Destroying Future Interests (mostly abolished) i. Destruction of contingent remainder (virtually obsolete) (a) Requires someone in position to take Blackacre at termination of antecedent estate ii. Rule in Shelley’s Case (3-4 states retain) (a) “O to A for life, remainder to A’s heirs” (b) Remainder to heirs merges with A’s life estate – creates fee simple in A (c) Don’t care what grantor intended – promotes alienability (d) Rule didn’t apply – “remainder to children”
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iii. Doctrine of worthier title (still applied in some states, at least as interpretative presumption) (a) Inter vivos grant by O to A for life “remainder to O’s heirs” (b) Grant to O’s heirs treated as reversion to O – O’s heirs get it by descent, not purchase (c) Parallel to Rule in Shelley’s Case – for reversion interests (d) If it is a reversion to O, he can defeat the heirs by willing to others iv. Rule Against Perpetuities (a) Rule – no interest is good unless it must vest, if at all, not later than 21 years after some life in being at creation of the interest (b) Purpose – removes uncertainty about who has interests, promotes alienability, prevents “dead hand” control of property (c) Must know whether the particular interest will vest or not (d) Must pick a measuring life – will inform us about vesting as a matter of logical necessity (e) Decide at time of grant (f) All members of a class must vest or not within period (g) Modern reforms: (1) Some states have abolished completely (2) Some states have created trusts – promotes alienability (3) Most states have adopted “wait and see” (4) Under USRAP, this allows for waiting period of 90 years from time of grant (5) Rule has become unimportant outside a few states B. Concurrent Ownership 1. Tenancy in Common (now, law favors) a. No right of survivorship b. “to A and B” c. Tenant’s interest passes to heirs at death 2. Joint Tenancy (originally, law favored) a. HAS right of survivorship b. Must expressly indicate – “to A and B as joint tenants with right of survivorship” c. Tenant’s interest is extinguished at death d. Four unities required: i. Time ii. Title (a) “H to H and W as joint tenants” – violates unities of time and title (b) CL rule – can’t convey to yourself – H is conveying half interest to W (c) Modern – this will work iii. Interest – interest must be equal in an estate of one duration iv. Possession – must have right to possession of whole e. Severance (converts to tenancy in common, destroying right of survivorship) i. Conveyance by joint tenant – severs (a) Contract to convey – severs, but not if signed by all tenants (b) Conveyance to self – not permitted under CL, but some courts allow (wife conveyed herself a one-half interest – court upheld severance – Riddle, p. 345) (1) California requires recording the conveyance (i) Provides constructive notice (ii) Keeps people from executing secret deeds ii. Mortgage by joint tenant (a) Title theory – mortgagee (lender) gets legal title; mortgagor retains equity of redemption – unity of interest destroyed – severed (1) Criticism – joint tenant intended her interest to pass to surviving tenant, subject to mortgage (b) Lien theory – mortgagee gets security interest; mortgagor retains legal title – joint tenancy ok
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(1) Courts differ whether mortgage survives joint tenant’s death (2) Illinois – mortgage is extinguished at joint tenant’s death (Harms, p. 350) iii. Lease by joint tenant (a) CL – lease severs (destroys unity of interest) (b) Modern – lease does not sever (but courts split – does lease survive tenant’s death?) (Swartzbaugh) iv. Agreement (a) Cotenants give one tenant exclusive possession – does not sever (b) Cotenants can agree to hold as tenants in common – does sever v. Murder of one tenant by another – severs vi. Simultaneous death – severs f. Joint back accounts i. Presumption – by signing joint tenancy card, O intends to give survivorship rights to A ii. Majority – during the lifetime of parties, they own the proportion of what they deposit iii. Can be a will substitute – many courts hold invalid – no gift made during life – doesn’t conform to Statute of Wills 3. Tenancy by the Entirety a. Law in about 20 states b. Only creatable within marriage c. Joint tenancy, with a 5th unity (marriage) d. Survivorship interest can’t be unilaterally destroyed e. Few states allow unilateral conveyance, subject to survivorship interest (ex: mortgage) i. BUT most states forbid this – would include leases (VA included here) f. Creation: i. CL – presumed that grant “to H and W as joint tenants / tenants in common” – tenancy by entirety ii. Modern – most still presume that grant to H and W creates tenancy by entirety – but rebuttable (a) Recent VA case – any grant to married couple that includes survivorship interest = tenancy by entirety g. Married Women’s Property Act – forbids either spouse to convey separately i. Creditors of one spouse can’t reach property because neither spouse acting alone can transfer interest (husband tried to protect property by giving to son – court invalidated conveyance – Sawada, p. 385) h. Contingent right of survivorship is separately alienable by one spouse and reachable by creditors during marriage (govt. seized husband’s survivorship interest, due to drugs, but only gets land if H survives W – 1500 Lincoln Avenue, p. 392) 4. Relations among current owners a. Partition i. Any tenant in common or joint tenant can bring suit in partition ii. Court either physically divides or sells the property iii. Not available to tenants by the entirety iv. Partition in kind (a) Preferred, if possible (b) Each party gets a portion in fee simple (c) If separate tracts aren’t equal in value, one tenant will make a cash owelty payment to equalize (d) (court favored physical partition, letting tenant remain in residence and keep business, but required owelty payment for garbage nuisance – Delfino, p. 359) v. Partition sale – usually done for houses, commercial property, etc vi. Co-tenants can agree not to partition, if for a reasonable purpose and reasonable length of time b. Possession by one co-tenant i. Accounting for reasonable rental value by co-tenant in possession (a) Majority – if B isn’t ousted by A, A can use and occupy without paying B
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(1) B can’t recover rental value, unless B has been ousted by A, A agreed to pay, or A stands in fiduciary relationship to B (2) (one co-tenant used a building, but didn’t oust other – court wouldn’t demand vacate or paying rental value – Spiller, p. 369) (b) Minority – A must account to B for B’s share of reasonable rental value ii. Accounting for rents received from third party – must be shared c. Repairs / improvements – if A makes repairs or improvements, he is not entitled to contribution from B i. But this will be taken into account in partition or accounting for rents received d. If A pays taxes, interest on mortgage (etc.), he is entitled to contribution from B, to the extent B benefits e. Exploiting natural resources i. Co-tenant is accountable for profits derived from use of land that permanently reduces value f. Co-tenant can acquire title by adverse possession, but must give clear notice of repudiation of common title g. If husband leases part of joint property, wife has little recourse – maybe bring a waste action (Swartzbaugh, p. 373) C. Marital Property 1. Divorce a. CL – husband had to pay alimony to wife, unless wife had forfeited her right to support b. Modern – states have sought to divide property equally 2. Death a. CL i. Wife had dower in all freehold land 1) which her husband is seised during marriage and 2) which is inheritable by issue born of the marriage (a) Dower = life estate in 1/3 of each parcel (b) Inchoate until death of spouse ii. Husband had curtesy, when wife died (a) Only if issue were born of marriage (b) Husband received life estate in all of his wife’s lands (not just 1/3, like in dower) b. Modern – elective share i. Gives surviving spouse an elective share in decedent’s property owned at death ii. Survivor chooses between will OR forced share iii. Secret transfers before marriage (in contemplation of marriage) may be deemed fraudulent, subject to surviving spouse’s share iv. At first, husband could give away all property on death bed – wife got nothing v. Uniform Probate Code – creates augmented estate – when property is given away, without consideration, but retains “life interest” – comes back into estate upon death (a) Ex: payable-on-death account, life insurance, revocable trust, joint tenancy 3. Community Property a. Theory – both spouses contribute equally to financial success of marriage – equally entitled to earnings b. Consists of earnings of spouses during marriage and property acquired through earnings c. Property owned by either spouse before marriage or acquired during marriage by gift, descent, or devise – separate d. H and W can agree to transmute property – back and forth between individual and community e. Vested – nothing but an agreement will change the marital interest – not defeated by divorce or death f. Presumption in favor of community property (e.g. commingled funds) g. Management i. Either spouse, acting alone, can manage the property (sell, lease, invest, etc) ii. Each spouse is fiduciary in managing – must use good faith, liable to other spouse for breach iii. Real property – both spouses must consent to sell – but either spouse can transfer chattels iv. Business interest – single spouse has sole management and control
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v. Gifts – differ (reasonable, not in “fraud,” or even no discretion) h. Divorce – usually divided equally i. Migrating couples i. Property rights in earnings are determined by state of domicile when property is earned ii. Property doesn’t transmute by moving to a different type of state iii. Some states allow quasi-community property – property that was separate in another is treated as community, if it would’ve been in this state – protects divorced or widowed spouse III. Leaseholds A. Nature of Leaseholds 1. Mixture of property and contract 2. But IS an estate in land – lease document is really a deed – but also a contract (describes L-T relationship) 3. Doesn’t make much difference: a. Treated as contract, parties are interdependent – breach by one party releases the other b. Treated as property, parties are dependent 4. Biggest controversy – leases are typically form contracts of adhesion a. Offered on take-it-or-leave-it-basis b. If you don’t read it, you’re better off with a standard form (it has been overseen by other people) c. But there isn’t much bargaining ability d. Most people don’t think that you can negotiate over your lease OR that it wouldn’t be worthwhile e. But might be more important to shop for right kind of L, rather than lease terms 5. CL – until T enters, he has no estate in land, only an interesse termini (contract right to enter) a. Property rights begin when T takes possession b. Before possession, he has only contract rights 6. Types: a. Term of years i. Lasts for some fixed period of time ii. Can be “term of years determinable” – if subject to condition subsequent or some event iii. Expires at end of stated period without either party giving notice b. Periodic tenancy i. Fixed duration that continues for succeeding periods until L or T gives notice of termination ii. Creation: (a) Express agreement (b) Agreement only as to rent period (1) Majority – if annual rent specified, estate is year to year (even if rent paid monthly) (2) Minority – if rent paid monthly, estate is month to month – usually only applied to dwellings (3) Matters for notice! – yearly = 6 months, monthly = 1 month (c) Tenant for term of years, holds over = periodic tenancy for another term iii. Notice: (a) Equal to period, but only 6 months for year-to-year (b) End tenancy on last day of period (c) Given so that other party has full notice period c. Tenancy at will i. No stated duration – endures as long as both L and T desire – either can terminate at any time ii. If no certain duration, but one party can terminate, courts split (a) Some imply power of termination in other party – tenancy at will (b) Others – if tenancy continues as long as tenant wills, tenant has life estate determinable (L leases property for unspecified term to G, G can terminate at will – life estate, terminable at will of G – Garner, p. 447) iii. Notice (a) CL – neither party had to give any notice
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(b) Modern – usually 30 days’ notice (c) Can’t be assigned – this terminates tenancy at will d. Tenancy at sufferance i. Holdover T ii. Lasts only until L evicts T or elects to hold T to another term iii. Rationale – deterrence to holding over iv. Excuses (a) CL – no excuses (b) Modern – gives T relief if forced to hold over – L can’t hold T to another term, if T goes ASAP v. Length of new term (a) Some – the way rent is reserved in original lease (b) Others – length of original term or period (c) Max length = 1 year (d) Restatement – measured by way rent computed, max 1 year (e) But if L cashes check for rent, this signals acceptance of period for which rent was paid (Crechale & Polles, Inc., p. 451) vi. Majority – holding over gives rise to periodic tenancy – others = term of years B. Possession 1. Legal right to possession a. L must transfer to T at beginning of tenancy b. If another person has paramount title and is legally entitled to possession, L is in default 2. Actual possession a. “English rule” (majority) i. L must also deliver actual possession ii. If previous T holds over and L doesn’t remove him within reasonable time, L is in default iii. Rationale – T bargains for use of the property, L is least cost avoider iv. Remedies – T can terminate lease & get damages, T can affirm lease & refuse to pay rent for period & get damages b. “American rule” (minority) (Hannan, p. 478) i. L has no duty to deliver actual possession ii. Rationale – lease conveys a leasehold, T has right to evict holdover, L shouldn’t be held liable for holdover’s tort, L isn’t required to evict trespassers after T takes possession iii. Remedies – T can sue holdover & get damages, or treat holdover T as T for another term and collect rent iv. Makes more sense for longer leases, especially commercial (lessee might be stronger) 3. Lease might require duty of occupancy by T a. Normally for commercial leases – rent amount might be tied to earnings from use b. Might be implied for security reasons C. Transfer of Lease Interest 1. Assignment a. Transferring the entire leasehold interests b. Assignee comes into privity of estate with L (can sue or be sued) c. Rent obligation may depend upon privity of estate 2. Sublease a. Transferring less than the entire remaining estate b. Sublessee is not in privity of estate with L (can not sue or be sued) c. CL – look for T retaining reversion 3. Right of reentry retained by T a. CL = assignment b. Modern = sublease
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c. Minority = intention of parties controls (dispositive = whether all interest has been transferred – assignment – Ernst, p. 482) 4. Duty to pay rent a. L can sue any person who is in privity of contract or who has come into privity of estate b. Assignee becomes personally liable for rent i. But original T also remains liable (because of original contract with L), unless L extinguishes lease (novation) c. If T subleases, sublessee is not personally liable to L for rent 5. Covenants against assignment or sublease a. Valid, but strictly construed (“not to assign” does not prevent sublease) b. Old view – L may arbitrarily refuse to accept a new T c. Minority – L’s denial of consent must be reasonable (court suspected that L is being opportunistic, trying to take advantage of higher rents – obligation of good faith dealing – Kendall, p. 490) i. Objective test = reasonably prudent person ii. Commercial property – must demonstrate a commercial reason, other than pure opportunism iii. No state court (as of 1990) has adopted this for residential property D. Defaulting Tenants 1. Self-help a. CL allowed use of force by L, but not since 1381 b. A few states still allow use of reasonable force c. Some jurisdictions only allow L to enter by peaceable means d. Many states prohibit self-help – must use statutory remedy (L erred in using self-help to enter premises – should’ve used summary procedure, preserves the peace – Berg, p. 500) 2. Surrender = acceptance of abandonment a. If surrender, lease is terminated (no further rental payment due) b. If abandonment, lease still good 3. Three options for L after abandonment a. Ignore and treat lease as still good i. Old property idea – I conveyed the land to you for a term, and I don’t care what you do ii. Older view – L doesn’t have duty to mitigate damages iii. Majority – L has duty to mitigate damages (public policy against waste, for residential cases – Sommer, p. 509) (a) But what does this require? – reasonable efforts (b) Lost volume problem – what happens when a vacant unit is returned to inventory? iv. L can only claim rent as it comes due b. Accept abandonment = surrender i. CL – no damages for anticipatory repudiation – must keep lease alive ii. Some states – if T makes clear he will not pay rent, L can get damages iii. Smart for a rising market c. Repossess and re-let on T’s account i. If new rental rate is less, L can make T liable for loss ii. Must announce that L is re-letting on T’s account iii. Way of mitigating damages 4. Acceleration clause a. If rent is late, rent for balance of lease term is immediately due & possession shall end b. Most courts allow c. Majority – can’t take possession AND receive accelerated rent i. This is a penalty ii. L taking possession would be a surrender, which is inconsistent with obligation to pay future rents E. Condition of Premises 1. Covenant of quiet enjoyment is always implied in every lease – comes from title warranty
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2. Actual eviction a. If T is physically evicted from entire lease premises, rental obligation ceases b. Partial eviction – rent obligation abates until possession is restored, but can stay on premises c. Partial eviction by paramount title – T may terminate, recover damages, or receive proportionate rent abatement i. T would have notice of third party’s claim – knows he may be ousted 3. Constructive eviction, requires: a. Substantial interference i. Consider: purposes, foreseeability, potential duration, nature & degree of harm, means to abate ii. Example: water flooding office building, preventing use during rains = constructive eviction (Reste Realty Corp., p. 522) iii. Breaching covenant not to compete = constructive eviction b. Tenant must vacate premises i. Shows that the condition is really bad – but court might disagree ii. If you want to withhold rent, you must leave iii. Editors suggest you should be able to get damages without vacating c. Fault of landlord i. Assumption – there is something that L can do, but hasn’t done ii. But L generally is not responsible for acts of another T (a) L has a duty not to permit a nuisance AND to control common areas (b) Although modern trend holds L liable, if he has legal means to stop it 4. Supplemented by habitability warranties – limited to residential cases IV. Conveyances A. Contracts for the Sale of Land 1. Relationships a. Brokers are licensed by the state b. Buyer usually goes to cooperating broker-agent – subagent of the seller c. Now, some agents work as “buyer-broker” – must make clear to listing broker-agent that he works solely for the buyer 2. Form contract a. Property to be conveyed (but watch out for personal property – chandeliers, carpets, etc) b. Price term + financing term c. Earnest money (puts something at stake for buyer – for residential, if deal doesn’t go through, seller doesn’t keep it) d. Title i. Promise to convey “marketable” title ii. Warranty deed – general, special, or quit title iii. At closing, promise to convey merges with title e. Disclosure i. CL was caveat emptor ii. Modern – many states require seller to deliver disclosure form f. Warranty of operating systems (heating, electric, etc) g. Inspection (buyer can have professional inspector come in) h. Risk of losses (fire, etc) – CL = buyer 3. Statute of Frauds a. Requires written contract: name of buyer & seller, description of property, agreed upon terms (price) and conditions – generally signed by both b. Writings must show a meeting of the minds c. Parol evidence is admissible to clear up ambiguities d. If price is agreed upon, it must be included (failure to put in agreed upon price makes contract unenforceable)
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e. “subject to financing” – may be held void for vagueness f. Part performance i. Court of equity can specifically enforce oral contract for sale of interest in land ii. If buyer pays purchase price, enters into possession, and makes improvements – contract enforceable iii. Acts must unequivocally reference a contract iv. Some states enforce contract if buyer takes possession under circumstances referable to contract (English rule) v. Other states (and Restatement of Contracts) adopts – injurious reliance (Hickey, p. 575) B. Marketable Title 1. Every contract for sale of property has implied contract of marketable title (default rule) 2. Promise merges into deed itself at closing, such that any further action on title depends upon nature of title 3. Quitclaim! – if buyer discovers defects after closing, he is stuck, but can rescind contract before closing 4. Definition: title that is reasonably free from doubt, one which a prudent purchaser would accept a. Seller can show good record title, searching back an appropriate time b. Unless title “of record” is called for, many states allow marketable title based on adverse possession i. Must be clearly proven ii. Seller must offer buyer written evidence or other proof that buyer can use to defend suits challenging title (Conklin, p. 584) 5. Defects a. Defects in record chain b. Private encumbrances i. Mortgage is not encumbrance if seller pays off at closing ii. Easements (a) Lessens value = unmarketable (b) Benefits property – majority = unmarketable, minority = ok iii. Covenants – unmarketable, unless property is for specific use that is allowed iv. A waiver of an encumbrance in contract of sale is not a waiver of a violation of the encumbrance (Lohmeyer, p. 580) c. Zoning restrictions are not encumbrance, but violation of zoning IS 6. Remedies a. Normal remedy for breach of contract = damages b. Contract for sale of land = specific performance c. Property law gives specific performance to buyer and seller d. Standard rationale – mutuality of remedy – symmetry of treatment e. Today’s explanation – damages aren’t satisfactory – seller might have difficulty in ascertaining market damages – specific performance lets seller avoid calculation costs C. Disclosure and Warranties of Quality 1. Disclosure a. Rule – if seller creates condition which materially impairs the value and is peculiarly within knowledge of seller or unlikely to be discovered by prudent purchaser – nondisclosure creates basis for rescission i. Buyer can rescind contract, since seller advertised ghosts to others and did not disclose to buyer (Stambovsky, p. 590) ii. Affirmative misrepresentation is never ok (seller misrepresented that roof did not leak – Johnson, p. 595) iii. But don’t require people to disclose bargaining chips iv. Most cases don’t require disclosure of psychological things v. Some cases require disclosure for nearby hazardous waste vi. Some states require seller to give disclosure statement b. Why disclose? i. Economizes on information costs – efficiency – protects property right in information (a) Disclose casually acquired information
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(b) But protect investment in actively seeking information (no disclosure) c. Why not? i. Party is entitled to trade on his information 2. Warranties of Quality a. CL – builder had no liability to buyer – caveat emptor b. Modern – almost all jurisdiction imply warranty of habitability – house must be free from defects and constructed in workmanlike manner c. Rationale: i. Builder has greater ability to prevent defects ii. Home buyer relies on builder’s skill iii. Unequal bargaining power iv. Importance to society of soundly constructed housing d. Tort or contract? i. Hybrid, mixed with public policy ii. Tort: imposed by public policy, runs to all subsequent purchasers, can’t be waived, statute of limitation runs from discovery of defect iii. Contract: arises from bargain, must have privity of contract with builder, can be disclaimed, clock runs from conveyance e. Remote purchasers should be able to recover, regardless of class of injury (Lempke, p. 602) f. Subsequent purchasers? – half courts say no g. Waivability – few cases – it can be waived, if disclaimer is clear D. Deeds and Titles 1. Warranties of Title a. 5 types in warranty deeds: i. Seisin – possessory title ii. Right to convey – normally having title gives you right to sell also iii. Against encumbrances – restrictive covenants, mortgage, lien, etc iv. General warranty – covenant of quiet enjoyment v. Further assurances – grantor promises to execute other documents required to perfect title b. Present covenant i. Breached, if at all, at time of conveyance ii. Does not run with the land (but some courts imply assignment of claims under these) iii. Statute of limitations runs at conveyance c. Future covenant i. Covenants to do something in the future ii. Limitations don’t start running until there is a breach iii. Future owners can sue original owner iv. Breach? – mere existence of superior title is not breach – grantee has no cause of action if not disturbed (P tries to convey mineral rights, which in reality only had 1/3 of – should’ve used covenant of seisin, not quiet enjoyment – Brown, p. 617) d. Merger i. Contract covenants (marketable title, etc) are dissolved at closing – look to deed warranties ii. Covenant of marketability folds into general warranty e. Damages i. Remedy – always damages ii. Further assurances – can be specifically enforced iii. Damages for breach limited to out of pocket loss (capped at actual purchase price) 2. Delivery a. Rule – grantor must use words or conduct that show intent to make deed operative and pass an interest immediately to grantee
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b. Presumptions (delivery presumed if) deed is handed to grantee, deed is acknowledged by grantor before notary, or deed is recorded (but no presumption if grantor retains deed) c. Difficult line between present delivery of future interest vs. testamentary interests d. Cancellation of delivery is ineffective (grantor handing deed back does nothing) e. Conditional delivery i. Written condition – two interpretations (a) No delivery – deed is not effective at all until condition happens (b) Grantor might intend deed to be effective now, but passing only interest subject to a condition precedent ii. Oral conditions are void (O delivers A deed absolute, but specifies oral condition – A owns the land, oral condition is void – Sweeney, p. 633) E. Finance 1. Lender asks for mortgage or trust deed a. Same functional difference b. Trust deed – legal transfer of title to third person – has power of sale c. Courts were reluctant to allow mortgages that had power of sale 2. Lien theory vs. title theory a. Title – mortgagee gets legal title b. Lien – mortgagee only has a lien to secure the debt 3. Transfer of mortgagor’s interest a. Lender can restrict (but not very common) b. Due on sale clauses – common i. Requires payment of entire mortgage on sale of property ii. Lender can wipe out loan or raise interest iii. Many states held them invalid (as restrain on alienability), but federal law allows them now c. Selling property doesn’t affect O’s obligations to lender i. Might pay off loan as part of transfer – but some don’t allow this – some provide enforceable penalty ii. Transfer “subject to” the loan – A has no obligation to lender, but lender can foreclose iii. Buyer can “assume” the loan – A now has personal obligation to pay, along with O – lender can sue A (third party beneficiary) or O (original contract) 4. Default a. Typical contract accelerates payments upon default b. Courts are reluctant to apply principles of anticipatory repudiation here, in absence of accelerated payment clause c. Today, single default accelerates all payments – ensures it is a material breach d. Then if mortgagor doesn’t pay entire amount, lender can sue on complete default 5. Foreclosure a. Strict: mortgagee allowed to take property on default (only 2-3 states allow) b. Judicial foreclosure by public sale – conventional method, but costly c. Private power of sale (allowed by some mortgages AND trust deeds) i. But some lenders still seek judicial foreclosure – don’t want judicial scrutiny on private sale ii. Court may hold that private foreclosure sale must use commercially reasonable methods for producing fair price (mortgagee was only bidder at sale, then quickly resold at much higher price – Murphy, p. 648) 6. Redemption a. Equity – mortgagor, successors in interest, or junior lien holders – can redeem (pay off mortgage) before foreclosure sale b. Statutory – mortgagor, et al. can redeem after sale (typically up to a year) i. Redemption is at purchase price, not loan amount ii. Motivates buyers at sale to keep prices up
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7. Anti-deficiency protection – legislative measures restrict right of mortgagees to seek deficiency judgment against borrower 8. Alternative to foreclosure – deed may be taken in full settlement F. The Recording System 1. Exception to first in time rule – O to A, O to B – B records first – B wins 2. Purpose a. Not required to transfer title b. Designed to protect bona fide purchasers c. Applies only for instruments required by statute to be recorded (not included: implied servitudes, adverse possession, oral conveyances) d. Creates constructive notice as to existence and content of instruments e. Except in “race” statutes, person with actual knowledge or inquiry notice of prior transfer can’t be a bona fide purchaser 3. Types a. Race (two states) i. Rule – first to record wins ii. Rationale – rewards diligence, eliminates need for extrinsic evidence b. Notice (half the states) i. Courts construed race statutes to apply only to subsequent purchaser for valuable consideration without notice ii. Rule – subsequent bona fide purchaser prevails over prior grantee, if he has no actual or constructive notice of prior claim at time of conveyance iii. Rationale – protects innocent (even if they don’t record) c. Race-notice i. Rule – protects subsequent bona fide purchaser without notice of prior claim, if he records before prior grantee ii. Must take without notice AND record first iii. Rationale – rewards diligence and protects innocence 4. Searching a. Buyer searches grantee index to trace how his grantor acquired title b. Trace title sequence to some reasonably distant time c. Then switch to grantor index and search each grantor’s name until that grantor transfers title to another, then switch to that other person’s name in the grantor index d. One you find a full deed out in fee simple, you are done with that grantor 5. Chain of Title Problems a. Wild deed i. Previous owner grants to X (not recorded), who grants to Y (recorded) then owner grants to A ii. Most courts – A prevails – other deeds aren’t “duly” recorded b. Late recorded deed i. A B C D ii. But B first deeded to X – but X recorded after deed to C iii. X would only show up in grantor index after BC, but you wouldn’t search that far iv. Courts divided – but most say this is like wild deed – not discoverable in normal search c. After acquired title i. A deeds to B before he acquires title (maybe A thought he had deed, but didn’t) ii. No reason to search A in grantor index before recorded deed iii. Most courts – no notice 6. Inquiry notice a. Purchaser is required by law to make reasonable inquiries, under certain circumstances b. Quitclaim deed – some courts require inquiry concerning possible unrecorded prior conveyances c. Possession:
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i. Majority – subsequent purchaser is charged with knowledge of whatever an inspection of property would disclose (a) (bank was charged with inquiry notice of installment sale agreement on condo units by reason of occupancy – Waldorff, p. 717) ii. Minority (a) Some – B must make inquiry of A only if B actually knows A is in possession (b) Others – if A’s possession is consistent with record title, B doesn’t have to inquire d. Neighborhood – buyers might have constructive notice of restrictions in subdivision – might be put on inquiry notice due to appearance of neighborhood (Sanborn) e. Unrecorded instruments – if a recorded instrument expressly refers to unrecorded instrument, most states obligate purchaser to inquire about the instrument (subsequent purchasers were charged with notice of prior deed, when recorded deed claimed to memorialize it – Harper, p. 713) 7. Reforms a. Marketable Title Acts i. Extinguish old claims – sort-of like statute of limitations ii. If person can trace unbroken chain of title back to certain date, all claims that trace to transactions before that date are extinguished iii. Obligation to make sure your title is re-recorded every 30-40 years iv. Not common – doesn’t do much b. Curative Title Act i. Designed to extinguish certain defects – will be cured after passage of time ii. Doesn’t help serious inefficiencies, just things like mis-indexed deeds c. Title Registration (a.k.a Torren’s Title System) i. Ownership is first registered – everything that affects that property is made part of the record ii. Based on tract index system iii. No claim is good unless it is part of the certificate iv. Seldom used – half dozen states allow, but don’t mandate v. Title insurance companies opposed vi. Up front expense of clearing title in beginning (quiet title action) G. Title Insurance 1. Two policies: owner’s, mortgage 2. Title insurer looks at title abstract and excludes everything in the record 3. Insures against risk of defects not found in the record 4. Premium paid all at once in one payment 5. Majority – when doing title search, insurer has duty to disclose information to PH (situation especially heinous since II had previous titles in its own plant – Walker Rogge, p. 731) 6. Policy doesn’t insure against hazardous wastes being found on the property (claim is really about marketability of land – title is fine – Lick Mill Creek, p. 738) V. Private Land Use Controls A. Nuisance Law 1. Overlap between nuisance and other torts 2. Public vs. private – public = low grade misdemeanor 3. Nuisance vs. trespass a. Trespass always involves physical invasion, while nuisance doesn’t require it b. Nuisance – must show that equities balance in P’s favor c. Remedies more flexible for nuisance 4. Restatement (Second) Torts: a. Nuisance is an “invasion” of another’s interest in land that is i. Intentional and unreasonable OR ii. Unintentional result of negligence, reckless, or abnormally dangerous activity b. Invasions is “unreasonable” if
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i. Gravity of harm outweighs utility of actor’s conduct OR ii. Harm caused by conduct is serious and financial burden of compensating harm would not make continuation feasible 5. Court might award permanent damages, rather than injunction, due to utility of actor (cement plant had to pay, but didn’t get shut down – Boomer, p. 759) 6. Coming to the nuisance is not a defense, but it should be considered by court (feed lot operator entitled to cost of moving paid by residential developer – Spur, p. 766) 7. Property rule vs. liability rule? a. Liability – undermines Blackstone notion of absolute property rights B. Easements 1. Intro a. Grant of interest in land that entitles person to use land possessed by another b. Affirmative – easement owner can go onto the land (servient land) and do an act c. Negative – easement owner can prevent owner of servient land from doing something d. Appurtenant – attached to land – benefits owner in use of another tract of land (runs with land) e. In gross – unattached to land f. Favored – easement appurtenant (rationale: intent, land value increased) g. Profit – right to take something off another person’s land h. License – permission to go on land belonging to licensor i. If ambiguous between easement in gross & license (right to install & maintain laundry machines) – courts construe as license ii. May be irrevocable (get license, invest into property, turns into easement – property owner gives oral license, licensee begins construction of house – courts create easement – Holbrook, p. 791) 2. Creation a. Express grant i. Must usually satisfy Statute of Frauds ii. Oral grant of easement = license iii. Ambiguity – grant of limited use or limited purpose, of identified space without clearly marked boundaries = easement iv. Presume easement in fee simple b. Reservation i. In favor of grantor (a) CL – couldn’t be reserved – developed regrant theory – deed regranted easement to O ii. In favor of third party (a) CL (majority) – easement can’t be reserved for third party (1) Solution: O conveys Blackacre to church, church conveys to A, reserving easement in itself (2) BUT covenant can be created to benefit third party (b) Minority – easement may be reserved in favor of third party (allows conveyance to A, reserving easement to church for parking – Willard, p. 785) c. Implication i. Existing use (a) If, prior to (A) division, (B) use exists on servient part that is (C) necessary for enjoyment of dominant part, and parties (D) intended to continue, easement implied (b) Easement in gross is not implied – must benefit dominant tenement (c) Quasi-easement must exist – but must be apparent (underground sewer connection is apparent, because inspection could reveal – Van Sandt, p. 796) (d) Prior use (continuous) – evidentiary significance, bearing intent & necessity – also gives notice (e) Separation – easement must be created by a transaction (f) Necessity – evidentiary rule – gives rise to inference of intent ii. Necessity
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(a) Implied if owner of tract divides it into two lots, depriving one lot of access to public road (b) Two views: public policy requires way of access OR parties intended to create easement (c) Implied only over landlocking parcel, if it is necessary at time of separation (owner of landlocked land did not get implied easement, because it was not necessary at time of original separation – Othen, p. 802) (d) No existing use required (e) Some states (20+) allow landlocked owners to purchase “way of necessity” d. Estoppel (license, invested in, turns into easement – Holbrook) e. Prescription i. Easement could be acquired by adverse use for requisite period (a) England – fiction of the lost grant – you had been granted the easement, but the deed was lost (b) America – translates into adverse possession – 20 year period (c) Does it matter which theory you use? – not clear ii. Elements (a) Open and notorious use (no attempt to conceal) (b) Adverse and under claim of right (not with permission of owner) – presumption that use is permissive (c) Continuous and uninterrupted (normal use, with no entry or protest by owner) iii. Protect yourself – be clear that use is permissive! 3. Public easements a. Rule of custom – customary right of access for public i. CL – custom is inherently public ii. U.S. – uncertain – some courts have adopted to declare rights-of-way to the beach b. Public prescription c. Dedication by owners – somewhat fictional – we know how to do zoning exactions expressly d. Public trust i. Public always owns navigable waters + wet sand ii. Doctrine – certain public lands are not only public, but held in trust for public use iii. (court required right-of-way to access dry sand beach, under public trust – Matthews, p. 816) 4. Scope a. Rule – depends upon intent of parties i. How created? (express or implication – can be increased, but reluctant for prescriptive) ii. Foreseeable changes? iii. Change needed to achieve purpose today and preserve usefulness? iv. Increase in burden reasonable? b. Remedy, if easement exceeded – that is trespass, which is enjoinable i. BUT O might be given damages, if injunction would be inequitable (servient owner misled dominant owner, who sought to build house & extend express easement to non-dominant parcel – Court used liability rule against builder – Brown, p. 833) (like Boomer) c. Appurtenant easement cannot be used to benefit non-dominant land d. If dominant estate subdivided, each lot has right to use appurtenant easements (but no greater burden on servient estate) 5. Transfer a. Easement appurtenant – attached to the land, even through adverse possession – but owners can “detach” by agreement b. Easement in gross – might be hard to locate who it transfers to i. CL – can’t transfer, unless it has economic purpose ii. Today – benefit of commercial easement in gross is assignable, noncommercial easement in gross is assignable, if parties intended iii. Restatement of Servitudes – all easements in gross transferable, unless contrary to intent 6. Termination
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a. Unity of title – if title to easement & title to servient tenement come into same hands – extinguished b. Act of dominant owner i. Release – must be written – but if servient owner expends money in reliance on oral release, dominant owner is estopped to plead Statute of Frauds ii. Nonuse – does not extinguish iii. Abandonment – extinguished if owner acts in a way to indicate unequivocal intent to abandon (railroad removing tracks and switches indicates abandonment – Preseault, p. 843) iv. Alteration of dominant tenement – if easement created for particular purpose & alteration of dominant tenement makes that impossible v. Necessity – terminates when necessity ends c. Act of servient owner i. Destruction of servient tenement – if building destroyed by fire or act of God, easement in structure lost ii. Prescription – servient owner can interfere with easement C. Covenants / Equitable Servitudes 1. Real covenants a. Runs with the land at law – enforceable by successor owners of both land i. Personal liability only – award of money damages b. Creation – writing required – grantee bound by accepting deed c. Requirements for burden to run: intent, privity of estate, touch and concern, notice d. Requirements for benefit to run: intent, privity of estate (?), touch and concern e. Intent i. Look to language of deed or contract – if unclear, look at surrounding circumstances ii. Presumption – matters that affect land valuation are presumed to run iii. Spencer’s Case – required “assigns” to be used, if the covenant concerns something not in being yet (a) Abolished in majority of states f. Privity of estate i. Horizontal privity – look to original parties (a) Burden (1) Original parties to the covenant must be in privity of estate (2) English – only privity if L-T relationship (leases, NO fee owners) (3) Mutual interest (few states) – both parties must have an interest in the property – covenant must be coupled with easement (4) Successive relationship (majority) – covenant was in conveyance of an interest in land (5) Restatement – either mutual relationship or successive relationship (6) Minority – not required (b) Benefit (1) Not required – benefits don’t encumber land values ii. Vertical privity (a) Burden – requires succession to an estate of same duration as owned by original promisor (Restatement § 535) (b) Benefit – runs to any interest in the land (c) Restatement of Servitudes (1) Negative covenants – run to successors – they are interests in land (2) Affirmative covenants – run to persons who succeed to estate of same duration as original parties g. Touch and concern i. Relation between benefit and burden such that performance of promise has some reasonable prospect of promoting land utilization as a whole (Restatement § 537) ii. Negative covenants – touch and concern
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iii. Affirmative – usually ok, unless it imposes a substantial burden on property which receives no benefit & fetters land in perpetuity iv. Covenant to pay money touch and concern v. Restatement of Servitudes – “supersedes” with reasonableness vi. Rationale? (a) Intuition – covenants ought to be physical – but no one thinks about easement model any more (b) Just enforce promise as written – Restatement 3 (c) Limiting degree over time to which we will enforce idiosyncratic promises (d) Weed out mistakes by people who don’t think about long term effects (e) Way to get rid of covenants over time vii. If benefit of covenant doesn’t touch and concern land (in gross), majority will not let it run (a) Old CL rule – burden can’t run unless benefit runs – reciprocally affect land h. Notice i. But if you don’t give value, can be bound without notice 2. Equitable servitudes a. Enforceable at equity – remedy = injunction i. Originated from Tulk v. Moxhay in England – prevents unjust enrichment b. Requirements i. Writing usually required, but may arise from implication ii. Burden – no privity iii. Benefit – no privity required, in most states iv. Touch and concern v. Notice c. Creation i. Usually must be done in writing ii. Negative servitude implied from general plan (a) Rule – developer must have general plan of subdivision AND subsequent purchaser must have notice (subsequent purchaser of residential lot not allowed commercial use, since court implied equitable servitude from developer’s neighborhood plan, evidenced from current look of area – Sanborn, p. 870) (b) Courts infer that purchaser bought in reliance on general plan and in expectation of being able to enforce subsequent servitudes like the ones on their lots (c) Plan must exist from time developer sells the first burdened lot (d) If developer sells several unburdened lots, then burdens the rest with general plan, courts might not see a general plan d. Enforcement by or against assignees i. Intent of parties required ii. Privity of estate (a) Few states – person seeking enforcement must trace his title to original promisee (Neponsit, p. 875) (b) Most states – third-party beneficiary can enforce, if parties so intend iii. Touch and concern (a) (LOOK UP above equitable servitudes!!) e. Scope i. Interpreted to carry out intention of the parties ii. Single-family dwelling (a) Group homes – functional approach – would the home function like traditional family house in structure and atmosphere? (group home for AIDS patients counts as “single family” – Hill, p. 893) (1) Watch out for FHA! (b) Commercial use – look for increased traffic or change in character of neighborhood
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iii. Residential use only implied? (a) Some courts imply from “no dwelling house…” – residential restriction (b) Others don’t iv. Architectural controls – usually ok, even if vague – but control committee must act reasonably and in good faith v. Exclusion of churches and schools – ok f. Termination i. Merger (like easements) if title to benefited and burdened lands come into same hands, extinguished ii. Equitable defenses to enforcement (a) Estoppel – benefited party can lead reasonable person to believe covenant was abandoned (b) Relative hardship (c) Change of conditions, requires: (1) Change outside subdivision must make all lots suitable for permitted uses (2) Substantial change must have occurred within subdivision itself iii. Abandonment (a) Affirmative covenant can not be abandoned (b) But if covenant is not enforced, might be waived (nonuse = non-enforcement) D. Covenants and Communities 1. Condos – each individual unit is owned in fee simple; common areas are owned as tenants in common 2. Rules of conduct a. Specified in originating document and by membership association b. Presumption of validity for original rules – all owners know about them AND rely on them in purchase c. Strike down rules if arbitrary, violate public policy, or unconstitutional d. Reasonableness standard i. Some courts look at particular situation ii. Other courts require looking at common interest development as a whole (woman not allowed to have indoor cats, even though allegedly no nuisance to neighbors – Nahrstedt, p. 927) VI. Government Land Use Controls A. Zoning 1. Theory a. Began around turn of century – first comprehensive in 1916 (NY) b. Zoning is nuisance law made predictable by declaring in advance what uses are harmful and prohibited in various zones c. Modern zoning regulates uses to achieve public benefits or maximize property values d. Separates uses from highest to lowest – uses are cumulative e. Density controls are applied to limit number of people using the land 2. Source of power a. Standard Zoning Enabling Act – created by Dept of Commerce b. Zoning is always a local police power – delegated by the state legislature c. If delegated authority is too vague, that is room for challenge d. Ways to control: i. Political – “voice” option – voting ii. Political-economic – “exit” – shopping option iii. Legal – “voice” – your lawyer’s voice e. Zoning is a valid use of the police power, which normally isn’t a taking (Euclid, p. 960) f. But an ordinance might be invalid as applied to a particular lot (Nectow) 3. Constitutional limitations – arguments against zoning a. Ultra vires – action is not authorized by, or violates express provision of, enabling act b. Improper delegation – not guided by governing standards c. Procedural DP – action was taken without notice and hearing d. Substantive DP – rational basis, fundamental right, under state – arbitrary
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e. Equal protection – rational basis, suspect class f. Taking 4. Nonconforming use a. Use in existence when zoning ordinance is passed b. Permitted to remain, but may be limited or terminated c. Limits – may prohibit expanding the use OR not allow rebuilding (VA: can’t expand, can’t restart) d. Amortization i. Majority – valid – but must be reasonable as applied to each nonconforming use ii. Minority – unconstitutional – per se taking of property without compensation (PA Northwestern Distributors, Inc., p. 974) e. Vested right i. If person invests a substantial sum in reliance on building permit, govt. is estopped from imposing changed ordinance ii. Property law rule – but not quite like a taking – remedy = enjoin enforcement, not compensation 5. Administration of zoning ordinance a. Comprehensive plan i. VA requires – not all states do ii. Planning commission sets forth some vision iii. Designed to avoid ad hoc regulation b. Amendment of ordinance i. Local legislative body can amend zoning ordinance – but doesn’t have to follow zoning commission ii. Spot zoning (a) Amendment not in accordance with comprehensive plan – unlawful (Rochester, p. 999) (b) Size or number of lots rezoned is important, but not controlling (c) But what is added by this? – another way of saying no arbitrary and capricious zoning iii. Amendments generally presumed valid (a) To sustain piecemeal change of ordinance, proponent must show strong evidence of mistake in the original ordinance or substantial change in conditions (b) Other courts – proponent must show a public need for change c. Variances i. Board of adjustment has authority to grant variances ii. Standards (a) Practical difficult or unnecessary hardship (b) Hardship must be due to unique circumstances (else, proper remedy would be map change) (c) Hardship must not be self-created (d) Must have something to do with use of the land – benefits can be enjoyed by all owners (e) Use vs. bulk (1) Some states (VA) never give variance for use (2) Others require higher standard of proof of no reasonable return (3) Limits scope of variances iii. Runs with the land iv. Conditions imposed must be reasonable, relate to proposed use, be aimed at minimizing adverse impact v. Variance proper when ordinance requires too much setback, imposed on narrow lot (Westwood Zoning Board, p. 985) d. Special Exceptions i. A.K.A. – special use, conditional use ii. Occasion for this is provided for in the ordinance itself iii. Used for things that are ok in the area if they are situated in certain fashion or limited in number iv. Majority – upholds provisions for special exceptions without clear standards v. If board is given almost political discretion, unlawful delegation (Cope, p. 994)
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e. Discretionary zoning i. Contract / conditional zoning (a) Involves bargain where developer wants to build in deviation of existing classification – in return, developer offers benefits to offset costs (b) Could be challenged as spot zoning (c) VA – expressly allows by statute (d) Distinguish – permissible exactions / deviations from map VS. bribes – VA statute: (1) Rezoning itself must give rise to conditions (2) Condition must have reasonable relationship to rezoning (3) Must be in conformance with comprehensive plan (4) No cash contribution (5) No mandatory dedicator of property for parks, etc (6) No payment for offsite improvements ii. Cluster zoning – allows putting houses closer together, but leaving other open space iii. Floating zones (a) Planners have idea for use district, but don’t know where to put it (b) Define the district in comprehensive plan, but don’t put it on the map (c) When developer comes forward with plan, district is placed (d) Criticisms – not permitted by enabling act, deny equal protection (arbitrary discretion) f. Exclusionary zoning i. Nontraditional families (a) If definition bears rational relationship to objective of preserving “family values” and quiet seclusion, passes U.S. Const. (b) Several states – occupancy restrictions based on relationships violate state const. – no relationship with goal of controlling density (c) Excluding group homes (1) If people with handicaps, violates FHA (Hill) (2) Capping number of people is ok (3) Can’t restrict based on composition of household (4) (see City of Edmonds) (5) Can’t require special permit for group homes (d) Excluding nontraditional family – cannot redefine family in strange way that doesn’t meet rational basis (Court invalidated ordinance that prohibited grandmother from living with two grandsons who weren’t siblings – Moore) ii. Low-income persons (a) Authorities try to zone out low and moderate income housing (b) Establishes really low density areas (large lots, etc) (c) Validity (1) Rational relationship – older – controls ok if they were preventing overcrowding, etc (2) Enabling act violation – newly developed city must provide for all types of housing (3) Fair share – each community must provide its fair share of housing needs (zoning regulations didn’t provide for low and moderate income housing, violating state const. requirements of substantive DP and EP – Mount Laurel) (4) VA SC – it’s all unconstitutional (d) Growth controls – ok, if not exclusionary – growth is put on timetable B. Constitutional Constraints 1. What is public use? a. Use or purpose? i. Earlier, courts held that public must have right to use condemned property ii. Now, courts hold that condemnation must benefit the public iii. What is a public purpose?
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(a) Is it relevant who owns title? (b) Is it relevant that benefits aren’t uniformly distributed? iv. Tests: (a) Ends (1) Public goods theory (2) Public vs. “private” (sort-of like motive – see how goods are distributed) (b) Process theory – was it generated by legitimate democratic process? (c) Means test + anti rent-seeking (1) Is there an alternative to coercive power of state? – make govt. go to the market (2) But this won’t filter out many takings (3) Put a check on the ultimate bad use (condemning Oakland Raiders) (4) But this goes back to public good question b. Very broad i. Includes transferring ownership from one private person to another ii. Govt. can condemn land to resell to private corporation for building industrial plant and providing jobs (Poletown, p. 1108) iii. Govt. can condemn land to break up ownership oligarchy and establish free market (Midkiff, p. 1098) iv. If power is rationally related to conceivable public purpose, legislature may take property c. Ways to approach: i. Minimal rationality, scrutiny – legislature does what it wants (Midkiff) (a) Marries public use with DP (b) Anything goes ii. Tougher standard (look at ends) (a) Could define set of ends for which govt. can act (b) Another way – what are things that govt. traditionally does? (c) Must describe what public benefits you expect iii. Legitimate means (a) Why did govt. need to take the property? – it can always buy it (b) Could govt. have accomplished the means through the market? 2. What is a taking? a. Taking title b. Taking possession (permanent physical invasion) i. Possession is the valuable part – functional equivalent of depriving owner of title ii. Power of owner to exclude is fundamental iii. Invasion includes moving soil, water, or physical bodies onto property iv. Invasion by third parties – statute authorizing private cable companies to install cables in apartment buildings is physical invasion & a taking (Loretto, p. 1117) v. Occupancy by tenants – if city prohibits demolition of housing and requires owners to lease units at controlled rents for indefinite period – taking c. Regulatory takings i. Harm test (a) If regulation prevents a harm, it is exercise of police power & ok; but if it extracts a benefit, it is a taking (court upheld prohibition on brickyard in residential area as prohibiting nuisance – Hadachek, p. 1132) (b) But harm is in the eye of the beholder ii. Severe economic loss (a) If diminution in value goes too far, it will be a taking – (Pennsylvania Coal, p. 1140) (b) But what “property” do we look at? (c) Maybe Mahon was ok, because subsurface rights were severed from surface rights (1) Penn Central isn’t ok because surface and air rights were held by the same owner
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(d) Investment-backed expectations – as long as you have a fair rate of return, no taking (Penn Central) iii. Reciprocity test (a) Regulations that involve reciprocal advantages & disadvantages are not a taking (Penn Coal) (b) If landowner obtains no advantage from the regulation, it is more likely to be held a taking (c) Penn Central, Rehnquist dissent – Penn is being singled out because it has a good building iv. Destruction of all economic value (a) If regulation denies all economically beneficial uses, it is a taking, unless state can justify its actions as preventing a CL nuisance (Lucas, p. 1171) (b) This is even more egregious insult than trivial invasion – but both treat you as non-owner (c) Reciprocity of advantage – depriving all use shows how disproportionate burden is (d) Legislature can invent property rights, but can’t remodel them to deprive all economically viable use (e) Regulations don’t become part of “background principles” by passage of title – (Palazzolo, p. 1193) v. Exactions (a) Must be logically related to specific public need or burden that the owner’s building creates or contributes – must be “essential nexus” between state interest and permit – (SC invalidated exaction for public beach access – Nollan, p. 1199) (b) City must also show that permit conditions bear a “rough proportionality” to negative impact of development on public (Dolan, p. 1207) vi. Remedies (a) Injunction (b) Damages – bring inverse condemnation action – if it is a taking, govt. must pay interim damages from time regulation was passed (First English) 3. Baseline principles a. Govt. shouldn’t help itself to your property – but it does so through income taxes, regulations, etc b. Utilitarian – MH problem – if govt. doesn’t have to compensate when it destroys property, it will destroy a lot & be selective in taking property (take from poor people who don’t have a voice) c. Reciprocity of advantage – make sure benefits and burdens are evenly distributed – why we don’t have a strict DP clause – look at long term effects i. If it’s truly random, you could buy private insurance against takings d. Presumably want compensation to induce takings (and benefit victims) i. It eliminates political opposition to valuable public works ii. Regulatory legislation regularly has provisions to buy off special interests iii. We should want compensation to prevent means of blocking valuable public works