PRESENT POSSESSORY INTEREST ACQUISITION BY CAPTURE If you are first in time to have actual possession or constructive possession then you own it. Actual Possession: If I immediately possess or occupy it, I own it. ♦ Pierson v. Post 1805: On wild territory, Post chases fox with hounds in sight of Pierson; Pierson shoots fox and carries it off. Rule: Mere pursuit without mortal wounding animal or depriving it of its liberty is not possession or occupancy. Pierson wins, against fox hunting culture, which would have awarded the fox to the first pursuer. POLICY: To promote certainty. If I do all that is possible to establish possession, then it is mine. ♦ Ghen v. Rich 1881: Ghen killed whale with bomb-lance that contained his identifying mark; three days later another found whale ashore and sold its oil to Rich. Rule: In line with whaling custom, the person who kills first with the bomb-lance gets the whale. POLICY: To promote certainty and the killing of whales. ♦ Animus revertandi: If animal has tendency to return, then it is not wild. ♦ Rule of Increase: The owner of the mother gets its increase. Constructive Possession: If it is on or under my land, then I own it. ♦ RATIONE SOLI: Wild animals on my property belong to me. ♦ Keeble v. Hickeringill 1707: Defendant comes near Plaintiff’s resort/duck pond and fired several rifle shots to scare ducks away. Keeble owns ducks because he owns land under them. For Plaintiff. ♦ Rule of capture applied to oil, gas, and water: * If you own the land, you own stuff directly under your land. * Everyone over a pool of oil, though it traverses boundaries, can drill as much as possible. * Slant drilling is a trespass. * Where water is scarce, prior appropriation applies to ground water; first driller has sole water rights. ACQUISITION BY CREATION COPYCATS PRESENT POSSESSORY INTEREST WHERE UPHOLDING SOLE PROPRIETARY RIGHTS OF CREATOR SERVES A BENEFICIAL SOCIAL FUNCTION, COPYING IS NOT OKAY. OTHERWISE, WHEN NO LEGAL RESTRICTION PROHIBITS COPYING, CREATOR RETAINS NO PROPRIETARY RIGHTS BEYOND THE CHATTEL OF HIS INVENTION, MAKING COPYING OKAY. COPYING IS BAD. In market economy, granting individuals exclusive rights to a property can be an effective way to allocate scarce resources. Creator should gain exclusive property rights to creation when copying would destroy his industry. ♦ International News Service v. Associated Press 1918: INS was stealing AP publications and republishing them as their own in Western cities. Rule: There is no property interest in the news between both publishing companies and the public; but because they were competitors, a quasi-property right did exist in AP against INS. For AP. ♦ Virtual Works v. Volkswagen of America 2001: Plaintiff registered domain name vw.net with knowledge that it might be confused with that of Volkswagen. Plaintiff eventually offered to sell the sight to VW and threatened to auction it off to highest bidder. Rule: Though Virtual Works was first in time, statutory regulations against such bad faith capture dictated possession to VW. POLICY: To prevent expropriation of protected marks and to abate consumer confusion. ♦ “Right of Publicity”—Property interest in name, likeness, or other aspects of identity for the purpose of guarding against appropriation by one person of another’s self. Proprietary interest is inheritable upon death. COPYING IS GOOD. When resources are not scarce and without some legislative provision, a creator’s property is limited to the chattel which embodies his invention, not extended to the idea behind the invention. Copying promotes some social benefit. ♦ Cheney Bros. v. Doris Silk Corp. 1929: Defendant copied one of Plaintiff’s popular silk designs and sold them at a lower price. Designs were not able to be copyrighted because they lasted only in seasons. Rule: Because there was no legal provision for protection of designs, there was no enforceable protection. For Defendant. ♦ Smith v. Chanel 1968: Plaintiff made copy of Chanel No.5 and marketed it as a cheaper alternative with the Chanel trademark. Rule: A large expenditure of money does not in itself create legally protectable rights. POLICY: Copier serves an important public interest by offering comparable goods at lower prices. CREATION FROM OTHERS’ ABANDONED PROPERTY: PRESENT POSSESSORY INTEREST Moore v. Regents of University of CA 1990: Plaintiff sues for conversion of a cell line taken from his leukemia-ridden spleen and bodily fluids which were used by the hospital to develop a patented distinct cell line of the disease that was worth millions. H: no recovery for conversion. RULE: No property interest is maintained in abandoned cells. POLICY: Extending reach of proprietary rights of patient over his excised cells and tissue would place crippling liability on bio-med companies, hindering publicly beneficial research. DISSENT: Plaintiff should have retained at least partial proprietary rights to at least do with his own cells what the defendants did. ACQUISITION BY GIFT Without all elements of promise, it is enforceable: ♦ INTENTION TO MAKE GIFT NOW ♦ DELIVERY OF GIFT COMMON LAW RULE: If it can be handed over, it must be. If object is not practicable for manual delivery. Policy: Delivery forces a break on behavior of giftor. ▪ CONSTRUCTIVE DELIVERY—handing over a key that will open up the subject matter of the gift. ---Newman v. Bost 1898: On death bed, decedent gave keys to furniture items to Plaintiff. Executor sells furniture and insurance policy locked in one of pieces. Rule: In gifts causa mortis, delivery must be construed strictly, allowing variance only for constructive delivery, when things to be given are not present or too difficult to deliver because of weight or size. Articles in bureau were not Plaintiffs because no specific intent expressed about gift of policy and no delivery when possible. Constructive delivery of all furniture opened by keys made valid gift of those pieces, but not contents. ▪ SYMBOLIC DELIVERY—handing over something symbolic of property given; usually a writing of gift. ---Gruen v. Gruen 1986: In 1963, father sends letter to son at Harvard, indicating he would like to give him an irrevocable remainder interest in painting in New York. Rule: Testamentary gift entails intent to transfer possession after death; unlike this gift, which was PRESENT POSSESSORY INTEREST an inter vivos gift, transferring present property interest to son. Father’s usage of painting not inconsistent with retention of life estate. Delivery by writing only practicable form for gift of remainder. ♦ ACCEPTANCE Presumed in most cases, only at issue when person does not accept and claims there is no gift. MISCELLANEOUS → Inter vivos gifts are irrevocable; causa mortis gifts are revocable, if giftor lives. → Statute of Frauds requires inter vivos gifts of real property and testamentary gifts to be in writing. E—EXCLUSIVE ENTRY: Clock starts on AP when owner has notice of trespass. After SOL passes, AP gets title from date of original trespass. C—CONTINUOUS: usage as ordinarily marks conduct of owners in holding, managing, and caring for property of like nature. → INTERRUPTION: If adverse possessor abandons property or true owner interrupts possession by ejectment before statute has run, the statute stops and new entry is required. If adverse possessor leaves under threat of force and not abandonment, most courts will not restart clock, but rather add time removed because of threat to statute of limitations. H—HOSTILE: 1. Claim of right—opposed to true claim of owner; trespasser, not in subordinate title of true owner. 2. Intent Majority—mental state does not matter; as long as you are trespassing, you are hostile. Minority #1—Good faith standard: “I thought I owned it.” PRESENT POSSESSORY INTEREST Minority #1A—Good faith standard and color of title. Minority #2—Aggressive trespass standard: “I thought I didn’t own it, but I intended to make it mine.” (Jurisdiction may require payment of fair market value to owner.) O—OPEN AND NOTORIOUS Marengo Cave Co. v. Ross 1937: A and B live over cave, A discovers entrance to cave and creates business selling access to cave. B sues to deny access to his portion of cave; A claims adverse possession. Rule: Because A’s possession was not open and notorious (B did not have actual knowledge of possession), no AP. BORDER ENCROACHMENTS Traditional standard: would a reasonable person have recognized encroachment? Manillo v. Gorski 1969: Concrete platform with steps and walkways encroach on Plaintiff’s land by 15 inches. Rule: If encroachment over several feet, only notice is required. If under several feet, true owner must have had actual knowledge. REMEDY: Normal remedy in ejectment is removal of item in trespass, but courts may make exception if it would require great expense to remove item and just require forced sale of land encroached upon. COLOR OF TITLE A claim founded on a written instrument, judgment, or decree that is for some reason defective or invalid. Advantage to AP under color of title in most jurisdictions: Shorter statute of limitations and control of one part of property is constructive possession of whole, as long as whole lot is owned by one person or lot it whole parcel. SQUATTERS Squatters are not adverse possessors, because you cannot adverse possess against the government. TACKING Combining use, possession, or time with that of another in order to satisfy statutory time period for gaining title; only works when successive claimants are in privity with one another. PRESENT POSSESSORY INTEREST Privity can be met by deed of predecessor or voluntary transfer of one AP to another. Howard v. Kunto 1970: Beach house case where everyone living on wrong lot. Issues: continuous possession and tacking. Continuous possession met by summer use of beach property, ordinary to use of similar properties. Plaintiff allowed to tack prior adverse possession of previous owner of beach house in policy to “not upset long periods of occupancy of those who in good faith received an erroneous deed description.” DISABILITIES Statute of limitations extended ten years after disability removed if disability on part of true owner existed at time cause of action accrued (began). In determining end of statute of limitations in disability cases, figure two dates: date which statue of limitations would have normally ended and date disability ends + 10 years—true owner gets the longer period. ADVERSE POSSESSION OF CHATTELS Key problem in establish ECHO requirement for chattel is open and notorious. Solutions: ♦ DISCOVERY RULE A cause of action will not accrue until the injured party discovers, or by exercise of reasonable diligence and intelligence should have discovered, facts which form the basis of a cause of action—that (1) the item is missing and (2) who has missing item. Burden of proof shifted to owner to show AP was hidden, despite due diligence to uncover it. Tacking with privity allowed, but should reflect on difficulty afforded true owner in finding property. O’Keiffe v. Snyder 1980: Plaintiff had three paintings stolen in 1946, did not report stolen paintings until 1972. Four years later she demanded recovery of paintings from man who had bought the paintings in good faith. VOID TITLE: Until SOL ends, a thief has only void title, and cannot convey good title. VOIDABLE TITLE: If true owner intends to sell item to another party who presents payment in the form of a bounced check, the check bouncer has voidable title (to owner). Voidable title can be converted to bona fide title, when good faith buyer purchases item from possessor with voidable title. ♦ NEW YORK RULE PRESENT POSSESSORY INTEREST Until demand by true owner is made of good faith possessor of stolen art, the good faith possession is not wrongful. Statute of limitations does not start until owner makes demand for chattel and good faith possessor refuses. EQUITABLE DOCTRINE OF LACHES: Applied when owner’s negligence (undue delay in asserting privilege) prejudices possessor. STATUTORY APPROACH TO AP OF CHATTEL Native American Graves Protection and Repatriation Act of 1990: Museums must return Native American artifacts to direct lineal descendant of original owner unless they can show such owner or owner’s tribe voluntarily ceded right to item to museum. No AP b/c AP cannot begin with voluntary transfer. In order to ease transactions involving bailments, ownership is presumed with possession. * If finding is within scope of employment, then item found goes to employer. LOST ITEMS Prior possessor prevails over subsequent possessor, even if prior possessor gained title wrongfully: to discourage unlawful seizure and the hiding of found items. ♦ THE FINDER HAS PROPERTY RIGHTS AGAINST ALL BUT RIGHTFUL OWNER. Armory v. Delamirie 1722: Chimney sweep boy found jewel, took it to jeweler to have it evaluated (bailment); jeweler kept the stones. Rule: Action for trover (forced sale) granted, jeweler pays boy value of jewel at best quality. If owner returns for jewel, he must sue the boy—action is usually barred against current possessor if finder has recovered from him. Hannah v. Peel 1945: Soldier, staying in requisitioned home of defendant, found brooch covered in dust and cobwebs in window sill. Rule: Because Defendant was never in physical possession of the estate, and he had no knowledge of the brooch until notice by finder, soldier gets brooch. In contrast to other case law pointing to fact that owner of land possesses all on and in land, whether or not he is aware of its presence. Policy: to award honest corporal. MISLAID ITEMS An item is mislaid if it was placed somewhere intentionally and accidentally neglected—evidence in location of where item is found or in mere absence of positive evidence of abandonment. ♦ IF ITEM IS MISLAID, IT GOES TO THE OWNER OF THE SITE, IF IT IS LIKELY THE TRUE OWNER WILL RETURN TO SITE FOR ITEM. PRESENT POSSESSORY INTEREST McAvoy v. Medina 1866: Plaintiff found pocketbook on counter of barber shop. Rule: Neither party has rightful possession, but shopkeeper has duty for safekeeping—must make reasonable efforts to find owner. If owner doesn’t return after reasonable efforts, shopkeeper—not finder—gets pocketbook. Terry: Box of cash found in ceiling of motel is mislaid, goes to owner of motel. Benjamin: Cash found in airplane wing is mislaid, belongs to owner of plane, not hangar. ABANDONED ITEMS Abandoned items defined by positive evidence that they are not merely mislaid. When interest of true owner excluded, often land owner will get property over the finder, to discourage trespassers. In re seizure: Cash found in gas tank of DEA-seized car is abandoned by dealer, goes to owner of car, finder and owner of site. True Owner Finder Owner of Location Lost Wins over finder and owner of location Wins unless found as part of employment, in trespass, or embedded in soil of another land Wins if finder trespasses, finds as part of employment for land owner, or if item is embedded in his soil. PRESENT POSSESSORY INTEREST Why divide interest over time? Tax advantages (Gruen); minors cannot manage property alone; charitable gifts in remainder so giftor gets credit in life. ♦ FEE SIMPLE ABSOLUTE: “To A” or “To A and her heirs.” WORDS OF LIMITATION—“and his heirs”—defines estate granted to A with no interest to heirs until their inheritance, if designated; length is forever. owner. Mislaid Wins over Finder and owner of location. Owner of location wins over finder. Abandoned N/A Wins unless found in part of employment, in trespassing, or if embedded in soil of another land owner. Wins if finder trespasses, finds as part of employment for land owner, or if item is embedded in his soil. PRESENT POSSESSORY INTEREST WORDS OF PURCHASE—“To A”—interest granted to A in land by instrument. INHERITANCE—ORDER OF PREFERENCE: (1) SPOUSE (2) ISSUE: KIDS AND THEIR KIDS (3) PARENTS, IF NO KIDS. HEIRS: PERSONS WHO SURVIVE THE DECEDENT AND ARE DESIGNATED AS INTESTATE SUCCESSORS UNDER STATE’S STATUTE OF DESCENT. DO NOT EXIST UNTIL SOMEONE DIES. ISSUE: CHILDREN AND THEIR CHILDREN ANCESTORS: PARENTS COLLATERALS: ALL PERSONS RELATED BY BLOOD WHO ARE NEITHER DESCENDANTS OR ANCESTORS—BROTHERS AND SISTERS. ESCHEAT: DECEDENT WITH NO HEIRS; PROPERTY GOES TO STATE. PRESENT POSSESSORY INTEREST ♦ FEE TAIL: “To A and heirs of his body.” Possessory interest descends to A’s issue, generation after generation. When blood line runs out, land is reverted to grantor’s heirs by way of reversion or, if specified, to another branch of family (executory interest). EXCEPTION TO BIG RULE: In minority states, fee tail can be converted to FSA (disentailed) by conveying fee tail in life to another. Example: O conveys Whiteacre “To A and the heirs of her body, and if A dies without issue to B and his heirs.” Majority rule: No fee tail has been created. Majority #1: A has FSA; B has nothing. Majority #2: A has FSEL; B has EI. Minority rule: Fee tail has been created. Minority: A has FT; B has remainder. ♦ LIFE ESTATE: “To A for life.” Every life estate is followed by either a remainder, which must be created explicitly, or a reversion, which can be implied. RESTRAINTS ON ALIENATION: CONDITION—imposed by grantor in defeasible fees; if broken, land it forfeited. COVENANT—condition promised by grantee to grantor; if broken, then injunction or damages. Objections to restraints on alienation: restraints make property unmarketable, perpetuate concentrations of wealth, discourage improvements on land, and prevent owner’s creditors from accessing property. Types: → DISABLING RESTRAINT—withholds from grantee power to transfer interest. → FORFEITURE RESTRAINT—if grantee attempts to transfer, forfeited to another. → PROMISSORY RESTRAINT—grantee promises no transfer, enforceable contract. ▪ Absolute restraint on FS is void. (Partial) forfeiture restraint on LE is valid. --White v. Brown 1977: Decedent left will leaving home to plaintiff “to live in and not to be sold.” Question, does plaintiff have FSA or life estate. Rule: a will shall convey all interest testator had, PRESENT POSSESSORY INTEREST unless contrary intent is expressed in word/context. Assent: “no sale”—illegal restriction on alienation of FSA. Dissent: “no sale”—legal restriction available only on life estate with reversion implied to grantor or heirs intestacy. LAW OF WASTE: → AFFIRMATIVE WASTE—voluntary acts of life tenant which reduce value of property. Life tenant can make large alterations on land, as long as value of land is not diminished. EXCEPTION: “open mines doctrine”—If mines open are open when grant created LE, then LE tenant can drill. If life tenant finds mine, he cannot drill. → PERMISSIVE WASTE—life tenants failure to take reasonable care of property; life tenant may be forced to pay damages or forfeit interest. EXAMPLE: Life tenant must pay interest on mortgage on land, while remaindermen pay principal. If tenant does not pay, can forfeit interest. → AMELIORATIVE WASTE—At common law, if you increase value of property. --Baker v. Weedon 1972: Weedon brought claim to chancery court for immediate sale of property, a farm which had greatly increased in value because interstate bypass was being built on land. Remaindermen oppose sale because of continuing potential for increase. Rule: Court will order sale if deterioration/waste and whether sale is “necessary for best interest of all parties.” H: Sale of whole not justified. ♦ FEE SIMPLE DETERMINABLE: “so long as,” “while,” or “until.” Fee simple limited so that it will end automatically when stated event occurs. O retains possibility of reverter. Clock on adverse possession starts the moment defeasing condition/event occurs. ♦ FEE SIMPLE SUBJECT TO CONDITION SUBSEQUENT: “but it,” “provided that.” Fee simple that does not automatically terminate, but may be cut short or devised at transferor’s election when stated condition happens. O retains right of entry. Clock of adverse possession starts: (Majority view) when condition subsequent occurs or (Minority view) when right of entry is asserted and refused—doctrine of laches may require re-entry in reasonable time. IF LANGUAGE PRESENTS TOSS UP BETWEEN FSD AND FSCS, THEN CHOOSE FSCS. ♦ DEFEASIBLE LIFE ESTATE PRESENT POSSESSORY INTEREST Most common prior to 1940 for forfeiture upon remarriage, to provide for spouse until they can remarry. ♦ FEE SIMPLE SUBECT TO AN EXECUTORY INTEREST FS, that upon happening of future stated event, is automatically divested by an executory interest: IN THE TRANSFEREE. FOLLOWED BY EXECUTORY INTEREST—like possibility of reverter/reversion except it is created in transferee rather than transferor and his heirs; contingent on condition precedent, like contingent remainder—but used when following a determinable fee because remainder cannot follow a vested fee simple. CONDITION ON USE RULE: A condition attached to defeasible fee is an illegal indirect restraint on alienation, if it: ▪ materially affects marketability adversely, or ▪ expressly limits alienation to an impermissibly small number of persons. Falls City v. RR: City conveys land to RR, as long as site used for RR divisional headquarters. When HQ moves, city wants land back. Rule: reverter provision invalid as restraint on alienation Cast v. Bank: FSCS on condition that son or grandchild occupy farm as residence for 25 years invalid because restricts who can live on property—indirectly affecting who can buy farm. EXCEPTION: Conditions which would otherwise be considered illegal, may be acceptable if they are imposed for publicly beneficial purpose. Mountain Brow Lodge v. Toscano 1968: Gift deed gives Plaintiff property “for use and benefit of second party, only” with possibility of reverter to grantor if property used or transferred to another party. Rule: Clause “in event of sale” is absolute restraint against alienation and void. Because restriction PRESENT POSSESSORY INTEREST on use was condition limiting land use and not covenant restraining alienability of fee simple, it is valid. POLICY: Majority—alienability will be restricted if for good purpose. RULE: no use restrictions allowed which are designed in spite, malice, or with intent to break up families or discourage marriage. RULE: when defeasible condition is foreseeable at the time use is precluded by eminent domain: Majority: grantee takes whole value of property. Minority: grantor gets difference between value of unrestricted fee and restricted— value determined by likelihood of reverter. WHEN POSSIBILITY OF REVERTER IS TOO REMOTE AND SPECULATIVE, GRANTEE IS JUST SEEN TO HAVE FSA; IF PERFORMANCE WAS IMPOSSIBLE, THEN RESTRICTION INVALIDATED; AND IT IS VERY DIFFICULT TO DETERMINE VALUE OF REVERTER. Ink v. City of Canton 1965: Grantor conveys tract of land to city for use and purpose of public park only. Gov. takes most of land to build freeway. Rule: Because probability of reverter was so small (Who wants to buy land restricted for use as park?), amount if any, by which value of land for any use exceeds its value for specific use, should got to grantor. City must use money gained from sale for parks. City of Palm Springs v. Living Desert Reserve: When condemnor owns present possessory interest in land, the action of condemnation itself is imminent violation. Restatement rule on dividing property in case of eminent domain applies only when a paramount authority, not grantee, interrupts use. IN TRANSFEROR ♦ REVERSION If O, owning a fee simple, creates a fee tail, life estate, or a term of years, and does not at the same time convey a vested remainder, then O retains a reversion. ♦ POSSIBILITY OF REVERTER May only be retained by transferor of his heirs; may be transferred inter vivos or by will. ♦ RIGHT OF ENTRY May only be retained by transferor of his heirs; may be transferred inter vivos or by will. IN TRANSFEREE ♦ REMAINDERS Transfer occurs either at expiration of precedent estate. VESTED REMAINDER: now ready to become possessory. PRESENT POSSESSORY INTEREST NO REVERSION! Given to an ascertained person Not subject to condition precedent. Types: 1. Vested remainder in FSA 2. Vested remainder subject to open—not all members of class of future interest are determined. 3. Vested remainder subject to complete divestment—remainder can be taken away entirely; FOLLOWED BY EXECUTORY INTEREST. CONTINGENT REMAINDER: not now ready to become possessory. ALWAYS HAS REVERSION! IF FOLLOWED BY ANOTHER FUTURE INTEREST, SECOND FUTURE INTEREST IS AN ALTERNATIVE CONTIGENT REMAINDER! Given to an unascertained person Contingent upon some event occurring (condition precedent). Types: 1. Contingent remainder; 2. Alternative contingent remainder. Unlike vested remaindermen, contingent remaindermen cannot sue for waste. ♦ EXECUTORY INTEREST: must be created EXPRESSLY in transferee NOT GRANTOR. Future interest in transferee that must divest or cut short some interest in another transferee or the transferor. CONCURRENT INTEREST More than one person has present possessory interest ♦ TENANCY IN COMMON Tenants have separate but undivided interests and are seised to whole. Interests are descendible and conveyable. No survivorship rights between tenants. A grant to two or more people is assumed to be a tenancy in common, unless grantors intent for joint tenancy is express. Interests can be unequal. ♦ JOINT TENANCY (MUST BE CREATED EXPRESSLY) Tenants have right of survivorship Tenants have undivided shares of the whole and are seised to whole. PRESENT POSSESSORY INTEREST At death of cotenant, government assumes equal shares for taxation at death, but will tax according to each tenant’s share, if surviving tenant can prove contributions. Survivorship—when one tenant dies, his interest vanishes; estate continues in cotenants. To create and maintain a joint tenancy, four unities must be present to all tenants: 1. TIME—interest of each tenant must vest at the same time. 2. TITLE—interest of each tenant must be acquired by same instrument or by joint adverse possession; never by intestate succession or law. 3. INTEREST—each tenant must have an equal undivided share and identical interest measured by duration. 4. POSSESSION—each tenant must have right to possession of whole, but one can give right of exclusive possession to another tenant. If four unities are severed after creation, joint tenancy becomes a tenancy in common. Severance can occur only by expression of intent to sever in: Mutual agreement AND action on agreement among joint tenants to convert, Conveyance of one joint tenant to a third party, or Judicial partition of property into separately owned parts. ♦ TENANCY BY THE ENTIRETY (AVAILABLE IN 35 STATES, NOT COMM. PROPS.) 1. Tenancy exhibits four unities above plus unity of marriage. 2. Surviving tenant has right of survivorship 3. Only conveyance by both in mutual agreement will sever survivorship rights 4. Neither party can unilaterally convey or seek judicial partition 5. Divorce ends tenancy by entirety and converts it into a tenancy in common. SPECIAL RULES FOR JOINT TENANCY CREATION Common law rule: Joint tenancy cannot be created in self and another because unity of time and title would not exist. Modern rule: Joint tenancy may be created by conveyance of owner of property to himself and others without the use of a strawman1. SEVERANCE Common law and Majority: NEED STRAW: One tenant cannot unilaterally sever a joint tenancy and retain interest in tenancy in common without use of a straw. 1 Anyone but a minor can be a strawman. PRESENT POSSESSORY INTEREST Minority: NO STRAW NEEDED: One tenant can unilaterally sever a joint tenancy and retain interest in tenancy in common without use of a straw, but deed must be recorded. Riddle v. Harmon 1980: Before her death, wife granted to herself an undivided one-half interest in property, terminating joint tenancy, and prepared will disposing of interest. Rule: Minority—no straw needed; legal ritual should not be maintained, for sake of efficiency. ☼ MORTGAGE Majority: LIEN THEORY—a lien on a joint tenant’s interest will not sever JT, unless lien goes unpaid and there is a conveyance of title at expiration of redemption period; mortgagor keeps title and mortgagee is given a lien or encumbrance on property. Minority: TITLE THEORY—mortgage does sever JT, mortgagee is conveyed title which exists between him and mortgagor, who has right to redeem title once lien is paid. Split in jurisdiction exists over whether or not a lien survives death of granting tenant. Harms v. Sprague 1984: Joint tenant cosigned note with Defendant on his interest in JT, unbeknownst to fellow tenant. Cosigner dies and leaves all property to Defendant before mortgage is recorded. Rule: By lien theory, mortgage did not sever JT; so at death of cosigner, his interest and lien vanished. Divestment by will had no effect on property in joint tenancy, because it ceased to exist. If A gives lien on interest, while B is alive, A can lien only attaches to half interest in property. If B dies, lien survives with A and attaches to whole property. ☼ LEASE Lease or term of years to a third party does not sever JT. In addition, conveyance of right to exclusive possession or rent between tenants does not sever JT. SURVIVING Uniform Simultaneous Death Act—if A and B die in common disaster, one-half of property is distributed as if A had survived and one-half as if B had survived. CA requires clear and convincing evidence of survival of one party in close calls. Uniform Probate Code—if one joint tenant murders another, murder severs JT and converts it into a tenancy in common. BANK ACCOUNTS PRESENT POSSESSORY INTEREST Majority: presume grantor intended JOINT TENANCY account with survivorship rights. Can be overcome by clear and convincing evidence presented affirmatively by party disputing JT account. During life of parties, joint account belongs to each in proportion to net contribution. Creditors of either party are entitled to presumption that debtor contributed 100% of account; either party can then dispute assumption. ♦ JOINT TENANCY ACCOUNT Present gift of ½ of money with survivorship rights to whole sum on deposit. A can withdraw ½ of money in account while O is alive. ♦ PAYABLE ON DEATH ACCOUNT Created to A with only survivorship rights. Testate conveyance, prohibited in many states by Statute of Frauds. If A withdraws without O’s permission, O can get money withdrawn back. ♦ CONVENIENCE ACCOUNT Created with power to draw on account to pay bills in life but no survivorship Not preferred by banks, because creates power of attny in grantee which only lasts until grantor’s death. ☼ SAFE DEPOSIT BOXES—are not presumed to be held in joint tenancy; contents are owned either by person who put them inside or by delivery of gift. PARTITION EQUITABLE ACTION OF PARTITION, available to tenants in common or joint tenants in the case of disagreement over termination of co-tenancy, divides tenancy into estates held in severalty, with no joined interest. Partition in kind—preferred method; physical partition of property. Partition by sale—forced sale of property and division of proceeds. Majority: For partition by sale, burden of proof on party desiring sale to evidence: 1. Physical attributes of land are such that division is impracticable 2. Economic interests of owners better promoted by sale. In partition action for personal property, courts will split time of use or possession between parties to encourage them to make agreements and concessions. PRESENT POSSESSORY INTEREST Delfino v. Vealencis 1980: D and V own property as tenants in common; V lives on property and runs garbage business on lot; D seeks to partition by sale so property can be used as residential development. V seeks partition in kind to protect home and business. Rule: court orders partition in kind because because partition by sale would not serve “homestead” interests of V. Johnson v. Hendrickson 1946: children of grantor bring action for partition by sale against step-dad who lived on property with 1/3 interest; step-dad asked for partition in kind because he lived on homestead there. Court orders sale of property, because the required partition (into more than four sections) would seriously devalue property. No weight given to homestead interest. RESPONSIBILITIES OF COTENANCY ♦ MAJORITY: Cotenant in exclusive possession is not liable to pay proportionate share of rental value of his use or occupation of property to cotenants, unless there is: (1) agreement to pay rent or (2) an ouster of cotenant. MINORITY: Presumption that tenant in exclusive possession must pay cotenant rent. OUSTER—DEMAND by cotenant for entry or use of property and DENIAL by occupier. Majority: Demand to vacate or pay rent does not make a cotenant liable to pay rent. Minority: Demand and continued occupancy afterwards does make cotenant liable. Spiller v. Mackereth 1976: S and M—tenants in common; S entered building and began using it as warehouse, M writes letter demanding S to either vacate ½ of building or pay ½ rental fee of occupied property. Rule: no ouster, because letter demanding rent did not indicate S had denied access to M. ♦ Each joint tenant or tenant in common, during existence of joint estate, may convey, mortgage, subject to a mechanic’s lien, or lease binding only his share or property. Swartzbaugh v. Sampson 1936: Defendant sought lease of fraction of land for boxing pavilion held by Plaintiff and her husband as joint tenants; Husband agreed, plaintiff disagreed; wife sues to have lease terminated. Rule: leases executed by husband were valid and not voidable by Plaintiff. Remedies available to wife, beyond evicting lessee: a. Partition—partition entire 60 acres; husband and wife split land with no guarantee that boxing pavilion will end up on husband’s land, so lessee may lose lease if ends up on wife’s land, b. Ouster—try to enter on lessee; if lessee resisted, then wife could recover ½ of the fair market value of rent for property, or c. Accounting—affirms lease and sues husband for ½ rents or income from property. Though, she cannot bring actions in both ouster and accounting. PRESENT POSSESSORY INTEREST ♦ RECOVERING COSTS OR PROFITS Types of payments: 1. Taxes, mortgage payments, or other charges which if not paid, risk loss of property. Tenant paying more than his share is entitled to contribution from other cotenants up to amount of value of their shares, accounting, or partition. Exception: If paying tenant has had sole possession of property and fair market value of his use meets or exceeds the maintenance costs, then he is not entitled to contribution from other tenants. 2. Necessary Repairs No affirmative right to contribution by other cotenants without agreement; Credit for in accounting or partition. 3. Improvements No affirmative right to contribution or accounting; Credit in partition action. Options: A. If partition in kind, improved portion is awarded to improving cotenant. B. Partition in kind and owelty.2 C. Property sold, and added value, if any, given to improver. 4. Rents and Profits Affirmative right to accounting for profits from land which are in excess of tenant’s share, in absence of prior agreement; Based on actual receipts, not fair market value. Minority: Extraction of minerals or cutting timber is waste, so if one cotenant seeks injunction against extraction, it must be stopped, even if majority of tenants support it. MARITAL INTERESTS ♦ COMMON LAW 2 Owelty—payment by noncontributing cotenants to improver for increased value of their share due to improvement. PRESENT POSSESSORY INTEREST Property acquired during marriage is owned separately, can be unilaterally conveyed, and can be devised as long as property is not held in joint tenancy or tenancy by entirety. Married Woman’s Property Act—reversed common law provision enabling only the husband to convey property by providing that no conveyance, encumberance, lease, or mortgage of property could be made without wife’s consent. Is interest of one spouse in tenancy by entirety subject to levy by individual creditors? Group II—Minority: Spouse’ interest can be sold or levied upon for separate debts, subject to other spouse’s contingent right of survivorship. Creditor gets LE in CR contingent on whether debtor survives spouse. Group III—Majority: An attempted conveyance by either spouse is void; estate may not be subject to individual debts. Group IV—Minority: Contingent right of survivorship is separately alienable by each spouse and attachable by creditors. Creditor gets CR contingent if debtor survives spouse with no right of present possessory right. Sawada v. Endo 1977: Plaintiff injured in car collision at fault of Defendant; before complaint filed, Defendant, who did not have insurance, and his wife conveyed property which they held by tenancy in entirety to sons. Rule: Group III and MWPA—Because neither spouse can convey interest, neither interest can be subject to claims of individual creditors during their joint lives—so conveyance was not in fraud of judgment. ♦ COMMUNITY PROPERTY Property acquired during marriage (excluding by gift, devise, or descent) is owned by community, cannot be unilaterally conveyed, but is devisable as long as property is not held in joint tenancy. None of community property states recognize tenancy by entirety. Tenancy in common and joint tenancy are permitted as separate property, but husband and wife cannot simultaneously hold community property and cotenancy. Community property unlike tenancy in common and joint tenancy: 1. CP can exist only between husband and wife, PRESENT POSSESSORY INTEREST 2. Neither spouse, acting alone can convey their share of CP except to spouse, 3. Neither spouse can convert CP without consent of other, 4. Each spouse has power to dispose by will of ½ CP at death with no survivorship. ☼ TAX ADVANTAGE Stepped up tax basis on property at death = value of property at decedent’s death. In community property, both halves are stepped up with taxable income only that earned above value of property at death. In cotenancy, only ½ of property gets stepped up bases, other is taxable along with income above value of property at death. LEASEHOLD ESTATES ♦ TERM OF YEARS Fixed period of time or period computable by formula. Only terminable earlier than the number of years upon the happening of some event or condition. No notice of termination necessary, because both parties are responsible to the estate for the pre-agreed number of years. ♦ PERIODIC TENANCY Fixed duration that continues for succeeding periods until either party gives notice of termination (month to month, year to year, etc.) Notice must terminate tenancy on the final day of the term. If no notice of termination is given, the tenancy is automatically extended for another term: COMMON LAW: Year to year, 6 months notice. Less than a year, notice must be given within a period of time equal to the term, not to exceed 6 months. MAJORITY: Notice need only be given within 30 days of the end of the term, regardless of its length. Fundamentals First Possession ♦ TENANCY AT WILL No fixed period. Tenancy endures as long as both parties desire. Ends either when one party terminates it or when one party dies. Notice of termination is required, but varies by statute. ☼ ½ TENANCY AT WILL ≈ DETERMINABLE LIFE ESTATE TENANCY To T “for as long as T desires to stay on the land.” Ends at T’s will or at his death. Exception: ½ tenancy at will is help up in most courts it tenant has the power. If land owner has the power courts split. (Note 1, p. 450) Majority—Lease giving the tenant sole power to terminate tenancy is enforceable. Minority—If the tenant is given unilateral power to terminate, so must the landlord. Garner v. Gerrish 1984: Decedent rented house to Defendant set to run until the date of Gerrish’s choice. Estate argues that the tenancy ended with the death of the landlord. Rule: Contract law—the lease expressly granted the Defendant the sole right of termination, so Gerrish can stay. ♦ TENANCY AT SUFFERANCE Arises when a tenant remains in possession after the termination of tenancy. Options for the landlord (2): 1. Treat the tenant as a trespasser and evict, or 2. Consent, expressly or by implication, to the creation of a new tenancy. That new term cannot exceed a year b. Once you have chosen one of the other you cannot switch. c. If the landlord does not pick either of the two options you have a periodic tenancy. What is the period 1. Some courts say it is they way the rent is computed (i.e. if it is month to month it is month to month; if it is money then it is money) 2. Other courts say it is up to one year Fundamentals First Possession Majority—Consent to a holdover creates a periodic tenancy; with the same unit term as the previous tenancy, not to exceed one year. The new tenancy is usually subject to the same terms and conditions within the original lease. Crechale and Polles, Inc. v. Smith 1974: Near end of five year lease, Defendant sought a month to month extension while his new home was being completed. Landlord denied any oral agreement about a holdover extension, but accepted a check for the additional month. Rule: Once a landlord elects to treat a tenant as a trespasser but fails to eject him and accepts a check—he agrees to a month to month tenancy. POLICY: COURTS PREFER TO NOT FORCE A PERIODIC TENANCY IN A HOLDOVER. Note Cases: Guy who left office equipment in building after the end of lease does not have holdover to periodic tenancy because the presence of the equipment did not obstruct the landlord’s use of the property. If a tenant did leave equipment it might be a holdover. Woman who stayed over two days because she was ill and her doctor has ordered her to not move. Court found no hold over because the tenant did not stay on the premises by her own will. THE LEASE Questions to ask to determine if a lease exists: ◦ Do you have an exclusive right of possession? Leases transfer a right to possession to a particular space with a right to exclude for a particular amount of time. ◦ Is the lease assignable? Leases are generally assignable. ◦ Can the lease be terminated at any time? If so, it is probably a license, not a lease. ◦ If the lease is for longer than a year, is it in writing? SELECTION OF TENANT General rule: In the sale or rental of property, one cannot discriminate on the basis of race, religion, national origin, sex, handicap, or familial status. Otherwise, a landlord can discriminate on any other basis not prohibited by statute. Fundamentals First Possession CIVIL RIGHTS ACT OF 1866 Prohibits private and public discrimination on the basis of race in the purchase, lease, sale, holding, or conveyance of property. (CRA only covers race**) Exception(s): You cannot discriminate when it is a room in your house. You cannot discriminate or place preference in an add. [Ads are never exempt under FHA]. FHA standard of review for discrimination in ads: whether or not the ad would suggest to an ordinary reader that a particular race was preferred or dispreferred. (What would a common person read the ad as) Under FHA, landlord could avoid liability for discrimination if he could show that his disparate action was taken in pursuit of a bona fide government or business purpose with not less discriminatory path available. Soules v. HUD 1992: Single mom brings action against landlord who she claimed denied her rental of apartment in discrimination on basis of familial status. Rule: FHA 3604. H: For landlord. Although Plaintiff was within a protected group, qualified for the housing and was denied, the landlord was motivated by permissible considerations—she did not like the Plaintiff’s attitude and she had not intent to discriminate against her class (offered to rent to other single moms). • It is okay to discriminate in the sale or rental of housing unless the law says that you cannot. o It is unlawful to: Refuse to rent or sell Unlawful to discriminate on terms, conditions of facilities Make statements ads or notices that make preferences or notices. Say that housing is not available when it is o 3603 exemptions (does not apply to adds) [renting whole house] if a sale or rental of single family house by the owner, do not own more than three houses, do not use a broker, then you can discriminate. Still cannot advertise and discriminate [part of house] Ms. Murphy exemption which is owner occupied renting out room or unit but it has to four families or fewer. o How is civil rights act different? it bars are racial exemptions. In some ways it is narrower because it only covers race and does not cover ads. Note: you have to make sure that if the D had reason it was not pretext. Or she did not go through the motions and use a different excuse that is just pretext. It is okay to limit the number of people not okay to fluctuate depending upon age (i.e. one unit has 4 adults but 2 adults and 2 children not rented to violation) Refusing to rent based on marital status is okay (not in CA) Fundamentals First Possession FHA does not prohibit discrimination based upon sexual preference (CA does) Cannot make different terms of privileges based on sex. You cannot discriminate against a person who has AIDS or you think they have AIDS since they are gay. You do not need to rent to people whose condition offers a direct threat (i.e. a mental person who makes threats) You do have to show that the threat is reasonable FHA will allow roommate to look for another roommate who is a certain gender but you are not supposed to advertise it. DELIVERY OF POSSESSION MAJORITY: English Rule—In absence of stipulation to the contrary, an implied covenant exists on the part of the landlord that premises will be open to entry by the tenant at the time fixed by the lease for the beginning of the term. • You can sue for damages and trespass. You can kill the lease or say that you still want the lease and oust the old tenant. MINORITY: American Rule—The landlord is not bound to put the tenant into actual possession, but is bound to put him in legal possession. When new tenant fails to take actual possession because a former tenant holds over, his remedy is against the holdover and not the landlord. Tenant, without actual possession, is not obligated to pay rent for time during which he was kept out of possession and may sue for rescission of the lease. Hannan v. Dusch 1930: Plaintiff leased real estate from Defendant to begin 1/1; when he arrived, someone else was living there. Rule: American rule. Landlord has no liability. DEFAULTING TENANT ♦ TENANT HAS ABANDONED ▪ Landlord Retaking Possession UNIVERSAL: If tenant has abandoned, landlord has clear right to retake possession. Fundamentals First Possession MAJORITY: If tenant has not abandoned, but has violated a lease which contains a clause enabling the landlord to reenter and take possession, the landlord may rightfully use self-help to retake premises if: He is legally entitled to possession, and His means of re-entry are either: 1. Peaceable, or 2. With force that is reasonably necessary. MINORITY: If tenant has not abandoned but has violated lease, landlord must resort to judicial process only—even if the lease contained a clause allowing reenttry Berg v. Wiley 1978: Tenant violated lease by remodeling restaurant without permission of landlord. Lease contained a provision allowing the landlord to retake the premises if the lessee were to fail to meet its conditions. Tenant closed restaurant for remodeling and sent away her employees. Landlord changed locks denying tenant access. Rule: Court held that premises had not been abandoned and that the landlord’s re-entry was not accomplished in a peaceable manner. (The only reason there was not a fight when he changed the locks, was because the Plaintiff was not around.) ▪ Landlord Mitigating Damage OLD RULE: Landlord under no duty to mitigate damage caused by defaulting tenant. Policy—Tenant had estate; no business of landlord when tenant chooses to abandon. MAJORITY: Landlord has duty to mitigate damages by keeping abandoned apartment in stock of available apartments so that it can be rented again. • New Rule: A landlord has to use reasonable diligence in renting the apartment. He just has to treat it like the other apartments (it is in his stock). Burden of proving reasonable diligence in attempting to re-let premises: 1. Majority: Tenant has burden to show L did not mitigate; L is presumed to have mitigated. 2. Minority: Landlord has burden to show that he mitigated; L is presumed to have not mitigated. Proof of mitigation: ad in paper, using realtor—do what is normal to other appt. ▪ Surrender Fundamentals First Possession Elements: 1. Tenant offers to end tenancy. 2. If L accepts offer, lease is terminated. Intent test of Landlord in implied surrender: Landlord’s actions inconsistent with or repugnant to continuation of original lease (not just putting ad in paper). WHEN SURRENDER IS NOT CLEAR, FIGURE VALUE OF RENT OWED TWO WAYS: → After surrender, tenant is no longer liable for future rent but is liable for accrued rent. → If no surrender, tenant continues to be liable for rent until the end of lease. If the next tenant is paying less than the abandoned tenant, than abandoned tenant must pay the difference until his lease ends. Consequences of failure to mitigate: Recover no rent subsequent to abandonment, or Recover difference between agreed rent and amount of loss that could have been avoided. a. If the LL had used due diligence what could he have collected – what the lease was for. How can LL protect himself Security deposits or calling them advanced rents Liquidated damages: if you move out early were are fixing what the damages are. Rent acceleration or a clause that says if you terminate early you will have the pay the entirely of the lease. LANDLORD’S REMEDIES ♦ RENT AND DAMAGES 1. When tenant in possession fails to pay rent or breaches lease duty, L may sue for back rent and damages or terminate lease and recover possession. Fundamentals First Possession 2. Doctrine of Anticipatory Breach—When tenant abandons, L may recover back rent, other damages, and the present value of amount of unpaid rent which exceeds amount of subsequent lease for balance of term. ♦ SECURITY DEPOSITS Most often characterized as advance rent or liquidated damage; but if bear no relation to actual damages, court will hold as an illegal penalty. COVENANT OF QUIET ENJOYMENT: ALL LEASES Ensures tenant’s beneficial use and possession of property without interference by landlord; can be waived as to particular defects at time lease is formed. ♦ DOCTRINE OF CONSTRUCTIVE EVICTION History: Early common law: Because provisions of lease were independent, L’s breach gave tenant a cause of action for damages but not right to suspend rent payments or terminate tenancy. Exception: Tenant’s obligation to pay ended when landlord disturbed his possession. Elements: Wrongful act or omission by landlord in breach of express promise in lease or covenant of quiet enjoyment = constructive eviction, when conduct: ▪ Renders the property substantially unsuitable for purpose it was leased, or ▪ Seriously interferes with the beneficial enjoyment of premises. → Interference need not be permanent but must be regular and serious. → Right is waived if tenant does not leave within a reasonable time. [LL have to maintain common areas] Reste Realty v. Cooper 1969: Commercial property floods due to defect in driveway (common area); L argues that tenant did not leave in reasonable time and defect was not permanent; Rule: condition of road was permanent defect, and tenant left within 10 days of worst flooding. TOTAL ACTUAL EVICTION TOTAL CONSTRUCTIVE EVICTION NO DUTY TO PAY RENT PARTIAL ACTUAL EVICTION MAJORITY: NO DUTY TO PAY RENT FOR ANY OF PREMISES Fundamentals First Possession MINORITY: TENANT PAYS RENT FOR PORTION STILL USING PARTIAL CONSTRUCTIVE EVICTION TENANT STILL LIABLE FOR RENT AND CAN SUE FOR DAMAGES FOR RENT PAID FOR PORTION NOT USABLE. • DAMAGES INCLUDED CONSEQUENTIAL DAMAGES (I.E. PARTIAL RENT, HAVING TO RENT OTHER FACILITY, ETC.) • There is only a breech if there is a covenant. Courts imply warranty even at tenancy at will. • ♦ REMEDY ◦ IF HE STAYS, can sue for DAMAGES equal to difference between value of property with breach and value without breach. ◦ IF HE LEAVES, he is RELIEVED OF LIABILITY FOR FUTURE RENT and entitled to recover DAMAGES (loss to possessions or costs in finding new facilities). IMPLIED WARRANTY OF HABITABILITY: RESIDENTIAL LEASES ONLY Ensures premises are safe, clean, and habitable; cannot be waived—no assumption of the risk on the part of tenant in relation to patent/latent defects. Steps for tenant in asserting IWH: 1. Tenant discovers serious defect which interferes with safety or health, → Check first to see if there is code violation. 2. Notify landlord, and 3. Give landlord reasonable time for repair. 4. Move out and seek rescission and damages or 5. Stay and pursue reformation or specific performance and damages. ♦ REMEDY DAMAGE: Discomfort/annoyance, punitive, rent reduction (Value of dwelling as warranted – Value as is; if equal, then IWH is waived.) RESCISSION: Tenant moves out and lease ends. REFORMATION: Alter lease by withholding rent or “repair and deduct.” You are not paying here. This makes the LL sue the tenant. Puts shoe on other foot. Fundamentals First Possession SPECIFIC PERFORMANCE – YOU HAVE TO COMPLY WITH WARRANTY IN THE LEASE OR MAKES THE PREMIESES HABITABLE. Hilder v. St. Peter 1984: Defendant failed to repair apartment despite repeated requests; sewage in basement, window broken, plaster falling in back room. Rule: violation of IWH, tenant stayed and paid rent, court refunded all rent paid as damages—estimated Fair Market Value to be zero. Differences Between CQE and IWH -Tenant can withhold rent until fixed by the LL -You cannot waive remedies under IWH -IWH is only for residential leases. -You can waive CQE -You can’t withhold rent under CQE nut you can under IWH -Can get more damages under IWH -Cannot repair and deduct under CQE ILLEGAL LEASE DOCTRINE When landlord violates code provisions, of which he had actual or constructive knowledge, that existed before the lease was made, the lease is illegal. Tenant under illegal lease is a tenant at sufferance; landlord entitled to receive reasonable value of premises in their condition. RETALIATORY EVICTION Majority—Forbid retaliatory evictions by landlords against tenants asserting their rights (Example: IWH). You cannot kick someone out for saying that the apartment sucks. Rebuttable presumption of retaliatory purpose if landlord seeks to terminate, increase rent, or decrease service within given time period after a good-faith complaint by tenant about condition of premises. LANDLORD’S TORT LIABILITY Majority: Tort liability can be contracted around and is limited to specific exceptions to the common law rule that landlord has no duty to provide suitable premises; Exceptions: 1. Duty to maintain common area 2. Duty to disclose latent defect Fundamentals First Possession 3. “Public use exception”: duty to disclose latent defects at start of lease when landlord knows tenant is going to open property to use of public. 4. Duty to keep furnished apartments habitable. and 5. Duty to undertake promised repairs. If there is an illegal action against a tenant, if the LL has taken reasonable steps to prevent the action then he is not liable. However if he has not then he could be found liable. Ii.e. doorman or locks on front door in a high risk crime area] Minority (CA): Tort liability cannot be contracted around; a general standard of care of negligence liability imposed on landlord. TENANT’S DUTIES ♦ WASTE: REPAIR Residential Commercial COMMON LAW: Tenant has duty to repair. MAJORITY: Tenant has no duty to repair, but must notify landlord of problem to avoid permissive waste. Tenant has duty to repair. SPLIT: Some courts require tenant to rebuild, but some only require repair. *BASIC RULE IS THAT THE SHORTER THE LEASE OR THE RENTAL PERIOD, THE LL IS MORE ENTITLED TO ASSUME HE WILL GET THE PREMISES BACK IN THE SAME CONDITION THAT HE GAVE IT IN. LAW OF FIXTURE: A FIXTURE IS SOMETHING THAT IT ATTACHED TO THE PREMISES. TENAT CANNOT REMOVE EVEN IF HE INSTALLED (LOOK TO SEE IF TAKING IT OUT WOULD CAUSE DAMAGE) TENAT STILL CANNOT COMMIT PERMISSIVE WATSE. YOU HAVE TO INFORM LL IT IS HAPPENING. ♦ DAMAGED PREMISES Residential Commercial No duty to pay rent for damaged premises; landlord may seek negligence damages, if damage was IF RENTING PART OF PREMISES and that part is destroyed, tenant does not have to pay. Fundamentals First Possession tenant’s fault. EXCEPTION: If destruction was tenant’s fault, then tenant must keep paying. Third Party – the tenant will still have to pay rent if damage by a third party. IF RENTING WHOLE PREMISES and the whole is destroyed, tenant must still pay rent for the land. TRUST TRUSTEE has legal ownership of property and, if necessary to fill out purposes of trust, the legal fee simple in property. Net income of trust paid to beneficiaries and upon its termination, trust assets handed over to remaindermen. Swanson v. Swanson 1999: “remaining assets of trust shall be divided into nine shares, one for each of SURVIVING children or for THEN SURVIVING issue of deceased child.” Rule: First surviving is ambiguous adjective which is construed to refer to testator; second surviving interpreted as more clearly pointing to end of life estate. If remainderman does not meet all divesting conditions in conveyance, then his interest can be transferred to heirs. RULE: Vested remainders are preferred; courts will construe conditions to be subsequent and remainders to be vested in all cases of doubt. RULE: Ambiguous words of survivorship are to be construed to refer to death of testator or earliest point possible and not as condition precedent in order to vest remainders. Fundamentals First Possession