Notice of Tenant Not to Renew Team Lease

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Notice of Tenant Not to Renew Team Lease Powered By Docstoc
					Nancy Donovan
                                            PROPERTY II
                                      Prof. Rohan Spring 2001

I. LANDLORD-TENANT
LL/Tenant law- ―highly archaic‖
     LL does NOT have a duty to mitigate damages
     Highly technical  DEFECTIVE NOTICE = NO NOTICE
             1 month requiredFebruary is not good enough. Also can‘t say 58 days notice till
                March 1, would have to give new notice.
     For mail always send registered, return receipt and regular mail. If LL knows there‘s
       trouble won‘t accept, so send both.
             Usually two forms stipulated: (i) LL at address, and (ii) LL‘s atty at address.
             Clause: pyts will argue notice given when mailed or when received, registered or
                US, Fed Ex or fax. Conform to lease.
     Law heavily weighted to the LL, modern trend is shifting toward protecting tenant. HWR,
       leases usually are stacked in favor of the LL.
             Many illegal things put in the lease: (i) most people don‘t know it‘s unenforceable,
                (ii) think that what‘s written is true, and (iii) would have to hire a lawyer to contest.
                So 95% effective, even though illegal.
     Law of LL/Tenant- sociology pro-tenant. More lenient on residential side than commercial.
       HWR, documents slanted 90/10 in favor of the LL who wrote, so the cts can only go so far.

Two laws apply:
   1. Law of Contracts (status significant)
   2. Law of Status- special relationship between LL & T, some duty owed.

LEASES- terms and clauses:
Lease treated as conveyance of owner‘s rights to tenant  act as owner. Transfer of rights.
Tenant‘s space  LL shouldn‘t enter.
 Suppose condemnation- eg. of leaseholds during the war, occupancy rights for the duration
   (don‘t know how long). Whose space did they take? LL or T? Who has to deal with the gvmt?
   It‘s the T‘s space, but the LL‘s building. Space given in the lease to the tenant, right sold to in
   the lease so it is T‘s problem. T can‘t use the space, would have to relocate and get a new
   lease; if the war ends stuck with two.
 Whose problem if old T hasn‘t moved out? Classical answer- it‘s the new tenant‘s rights being
   invaded, can‘t move in, his problem. Absent express clause then no agreement in possession
   on the law day. Lease gives right of possession and LL‘s authority. LL collects rent from
   somebody, new tenant would have to go to court, his problem. In this day in age- commercial
   tenant can‘t afford to live with that.
    Amended for residential tenant- if silent on the subject, then he can get out of the lease if
         can‘t get in on the law day or rent forgiveness. ―If lease silent‖ is the way most legislature
         written  LL will amend the operative docs, so no guarantee into possession on the law
         day. Dead letter statute since now lease just stipulates that if not in possession on time
         can just abate rent until possession. Not very good if given up old apt, legal right to
         possession + an abatement, but no actual right.
       Commercial tenant- will normally provide that           Real Property Law § 223-a. Remedies of
        if not in possession in 30 days (time limit could       lessee when possession not delivered. In
                                                                the absence of an express provision to the
        also be 10 days – 2 weeks), then can tear up            contrary, there shall be an implied in every
        the lease (+ no pay for that month). He will            lease of real prop a condition that the lessor will
        usually overlap leases for double protection in         deliver possession at the beginning of the term.
                                                                In the event of breach of such implied condition
        case he can‘t get into the new space. Good              the lessee shall have the right to rescind the
        advice not to sever ties with the old building.         lease an recover the consideration paid. Such
        Anticipating difficulty b/c just tearing up the lease   right shall not be deemed inconsistent with an
                                                                right of action to recover damages.
        won‘t do any good, need somewhere to operate.

 Commercial leases: usually 10 years (since business not a success overnight + need time to
  amortize the fixtures, improvements, etc –time to recoup that money) + 5 year options. So
  the LL can capitalize on T‘s success and double the rent. First half of the 10TH year-
  notification if option to be exercised and then comparison of current rents on similar properties
  in year 10 to guide the mediators or arbitrators on what to pay from year 11.
   Problem: Comparable space? By year 10, tenant has turned empty warehouse into the
       Taj Mahal. Which is guiding? New rents could be based on own improvements, should
       modify clause for condition in year one when received from LL as comparable.

 Rent Acceleration Clause: A standard lease usually contains a clause providing that rent for
  the balance of the term shall become payable in full on the tenant‘s default in payment of rent
  or some other obligation. Most cts uphold reasoning that since the parties may contract for
  payment in advance of rent for the entire term, they have the right to contract that the entire
  term become payable on the happening of a contingency.
 Permitted for the acceleration of rents due for a summer season rental. If the tenant defaults
  then it is hard to get the same rent  nothing unconscionable—liable for the whole summer.
  LL keeps all of the rent if default b/c of the nature of the rental. Paid in advance  default, no
  C of A to get it back.
       COMPARE—different than mortgage acceleration clause. If default or miss payments
            bank can sent notice that they accelerate the entire mortgage principle (eg—
            Woolworth‘s secretary waiting for boss before dealing with default notice). BUT the
            bank has already fully performed, you have their money until the end or until default.
            Only getting back what they gave, not unconscionable, but they usually don‘t do, bad
            publicity, will normally carry for months before.
 Acceleration on future rents on commercial leases has been sustained by the courts, have to
  be insane to allow the client to sign. After tenant pays the building could burn down 
  ―lunacy,‖ but allowed.
   o Fifty States Management Corp v. Pioneer Auto Parts, 1979 (22-1) Absent some element
       of fraud, exploitive overreaching or unconscionable conduct on the pt of the LL to exploit a
       technical breach, there is no warrant for a ct to refuse enforcement of the agreement of
       the parties.  could point to no circumstance that would justify relieving it of the
       consequences of its bargain and subsequent default.
   o Clause is a bargained for device that seeks to ensure performance of a material element
       of the obligation of the tenant and fixes the damages for breach.




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 Most store leases are valuable b/c tenant has put in improvements. If tenant gets in trouble
  with LL and is thrown out  forfeit improvements, not unconscionable.
 If heavy improvements. Usually fight it out in negotiation stage as to who gets what in the end.
  Eg- if Citibank doesn‘t want to renew- wants 20-ton safe back or the option to leave. The LL
  wants option to keep or make take out. Loggerheads.
 Statutory provisions override lease. Eg- if tenant dies, by statutory provision out of lease (not
  so at C/L), no matter what lease says cut off from liability if provide viable sub-tenant and the
  LL unreasonably withholds consent (see Assignments and Sublets, infra). If the LL reasonably
  refuses his consent, the lease shall continue subject to further request. Estate remains liable
  for the performance of tenant‘s obligations under an assignment or sublease. Real Property
  Law § 236. Assignment of lease of deceased tenant.
 If in lease- tenant can‘t claim rent reduction even if he has a claim at law  layman may
  believe.

 Exculpatory Clause: LL may try to relieve himself from liability for personal injury. The modern
  trend b/c of the disparity in bargaining power between LL and tenant in modern times with a
  housing shortage and where the tenant has no practical choice but to take the lease as
  offered, several modern courts have held that exculpatory clauses in residential leases are
  against public policy and void.

 Purpose Clause: No locus poenitentiae (time to repent), violation of the purpose clause is ipso
  facto a major breach of the lease. No notice requirement, the first letter can be the one
  terminating the lease, motive of LL irrelevant.
   Purpose clause only favors the LL and no one else, other tenants in the shopping center
       can‘t complain, no right to be free from competition and the LL may waive the purpose
       clause- nothing other tenants can do, UNLESS they negotiated and got an exclusive
       clause
 Valid clause in real estate contracts that seller allowed to stay as check clears, 1 week, after
  that harpooned for $ 500/a day. Must watch out for that clause. [??]
 Reflected in leases from statute that if leasehold premises are suddenly destroyed, made
  uninhabitable, and not tenant‘s fault then right to vacate unless otherwise agreed.
 Obligation to vouch for guests.
 If casualty not your fault then rent abatement and no restart until get back in. Sounds almost
  too charitable. Further, the LL will notify w/in 30 days if elects to repair. If not lease is at an
  end. If LL does decide to repair, will notify and the tenant must stand ready to jump back in.
  HWR, no time limit for when will be finished with repairs.
   In commercial lease the tenant‘s atty will want 30 days notification either way and repairs
       must be finished in X months. If casualty in last two years, right to walk away.
   Tenant will get insurance for own personal property and liability. The lease remains static,
       can‘t change the rent.
 Subordination Clause: Lease subordinate to mortgages- that is the law. Clause also
  subordinate to future mortgages, means that will voluntarily step aside and agree to waive
  superior status for later mortgages. Then the lender can wipe out leases in the mortgage
  foreclosure. The bank can pick and choose tenants, foreclosing bank in the driver‘s seat.
 If the LL going down financially may as commercial tenant to prepay rent at a discount (up front
  $ for two years = four years) and LL will give receipt. When the bank goes to foreclose the
  tenant will say has paid for four years. To prevent, when new mortgage given, clause that LL


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  can‘t accept prepaid rent or $ to shorten or eradicate the lease. Right given up in the
  mortgage, the lessee is still bound to pay, if in advance no good. The bank can send a letter to
  the tenants to this effect and require the tenants to pay again if this occurs.
 No major modification thru minor document  can‘t sneak in an amendment to a lease thru
  the house rules. If the co-op can‘t get the vote to change the proprietary documents than can‘t
  change method for tax assessment.

LITIGATION AND REMEDIES:
 LL & T Court: When you get to the top of the calendar you must be at the courthouse ready to
    go when they call you, could be losing money –b/c of the workings of the calendar might not be
    worth it due to economics (+ emotional tendency for the tenant).
     ―Ready Reserve‖- top 100 on the calendar, must be ready to jump into court on ½ days
         notice. You, your client, witnesses all must sit there, can‘t stay at the phone. Only excuse
         is at trial somewhere else.
 Lease says if LL has to sue  tenant pays legal bills.
     If the LL wins then the tenant pays the LL‘s reasonable attorney‘s fees.
     By statute if the LL puts in that clause the statue reads in a parallel right for the tenant
         (applies to co-ops as well), ie- that if the tenant wins the LL must pay legal fees.
     Anomalous that only the LL is mentioned, tenant wouldn‘t know that can get too.
 If tenant takes off, LL can refurbish and charge tenant  acting as tenant‘s agent to relet the
    place. Default in the middle of the lease and the LL can sue tenant every month, each a new
    C of A and can get legal fees. As long as the LL doesn‘t wait longer than 6 years (S of L for
    contract action).
 LL & T‘s covenants independent of each other. Tenant has a duty to pay rent even if LL has
    breach duty. If T withholds or deducts  in default. Even if T has a good case against the LL,
    has not empowered LL to go to court for T not paying rent.
     Correct procedure- don‘t give LL ammunition. Pay rent! Notify LL of problem, then fix and
         sue, but pay rent.
 LL‘s legal position need not be the same as motive. Eg- tenant in breach for storing garbage in
    apt, LL‘s motive it to get apt for daughter. Legal pretext exists no matter what motive.
 Alteration to front of store. Lease says will not w/o prior written consent of LL. If LL looking for
    a way to get rid of tenant, even if good alteration done, can be taken to court for an eviction b/c
    violated lease. Argument that it is an improvement is irrelevant.
 In many case LL lying in wait to get rid of rent control tenant. Eg- RC only exists for primary
    residence, LL investigate tenant to try and throw out. Eg- LL may have co-oped building with a
    non-eviction plan. 30 non-buyers are RC/RS tenants. LL looking for tenant to make a mistake
    to throw out, one hell of a motive. There have been cases where the tenant improves the
    property, but it is prohibited by the lease. The LL is happy that tenant spent own money, but
    looking for a way to break the lease so take to court so that he can sell. Tremendous pressure
    to find pretext. True motive irrelevant.
     Purpose Clause: MJR breach of lease. LL allowed to forfeit and doesn‘t have to give
         tenant a chance to cure, doesn‘t have to warn. If tenant goes to ct and purpose clause
         found to be violated- he‘s had it, lease is up. Get offending products out immediately b/c
         could forfeit lease.
          Yellowstone Injunction (see infra): If notified in default as tenant, immediately go the ct
              against forfeiture of the lease while the case is tried (b/c lease said up in days, but



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              case can‘t be tried in days). Need injunction to provide for the status quo. Must go
              immediately, before it is too late, till tenant becomes the ex-tenant.
         Note: Normally tenant has no right as a 3rd pty beneficiary to sue on the purpose
              clause. The LL doesn‘t have to enforce it, even though tenant now has competition,
              would have to have exclusivity clause –direct right to sue. Problem if lease says that
              tenant will be the only Italian restaurant and LL rents to a pizza parlor not quite the
              same, would have to litigate. Drafting an exclusive clause can be hard to do.
     MINOR breach- late payment of rent. Time to cure it or to ct, notice of forfeit.
   Order to Show Cause Motions: immediate, ex parte, if an urgent action, asking for relief, give
    reasons, frequently used in LL/T (see Yellowstone Injunction, infra).
   Recent legislation- tenant could try to mitigate own damages by finding a respectable assignee
    and if the LL does not consent then the lease is at an end.
   The lease could say: LL could leave empty or have option to mitigate damages. HWR, tenant
    not off the hook if LL finds one. Tenant will have to pay the difference. If the new tenant
    defaults then the old tenant is responsible for all. In current market most likely can find another
    to pay more.
   For a store the lease is the most valuable asset  if the company closes after year three of a
    ten year lease, will keep the lease and sublet.

 Bankruptcy: LL wants the lease to be up if the tenant goes bankrupt and not to be a creditor
  b/c creditor/wholesalers usually get a % on the dollar. The LL doesn‘t want to be dragged in
  and the space kept for .15 on the dollar. Although clause used to be valid, no held to be
  against public policy. Congress realized too good for the LL.
   Lease kept as an asset of the bankruptcy ct, rent paid, trustee assigned in bankruptcy. If
      it‘s a good lease the LL will be notified that it will be kept as a valuable asset- LL will be
      paid rent and lease will be sold to someone else. Bkrptcy ct‘s option, trustee decides
      whether to keep or not. If it is a bad lease (bad neighborhood, too expensive, etc) will sent
      LL notice of termination.
       Eg- Bradlee‘s  valuable provision to debtor/tenant. Windfall for bankruptcy trustee
            rather than LL.
   If disgruntled customer, etc. pushes you into bankruptcy, typically will say bankruptcy
      irrelevant if dismissed within 30 days.
   If tenant is not paying rent, LL can declare lease is at an end and sue. HWR, if tenant‘s
      atty‘s file for bankruptcy  automatic stay in the proceedings, state and nationwide until
      judge decides what to do. Tenant could get organized and come back out, keeping lease.
      Reorganization- the fact that in bankruptcy doesn‘t mean that commercial life is over.

 Condemnation: LL would put in lease that if condemned that the lease automatically comes to
  an end. Everyone gets paid out of the condemnation award, which it‘s the FMV of the
  property. Suppose tenant has a cheap lease with years to go  adversely affected by
  condemnation, loss of bargain. HWR, clause valid, lease is up just as if the last day, tenant
  can‘t claim loss of bargain since no years left, so LL will get entire award.
   Tenant still entitled to fixture award, even though no claim in condemnation. If heavy-duty
      fixtures condemnation authority must pay current value - depreciation (otherwise tenant
      would get nothing).




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      Tenant doesn‘t get paid for removable fixtures, those that can be taken out w/o being
       turned into junk.
   Many programs will pay a relocation/moving allowance. Separate matter, statutes
       stipulate.
   Sliding scale provision- split award btw years remaining LL & T.
   Hypo- worry about part of a parking lot being condemned if tenant is a shopping mall 
       clause to reduce rent if parking lot turned into a postage stamp and if 80% gone then can
       tear up lease, otherwise reduce rent by %.
   If government project must have an environmental impact study and hearings before
       condemning to allow the public to complain. Fighting condemnation is practically
       impossible, they usually dovetail the condemnation and the environmental impact hearing
       together.
        Can go ahead even with a problem with the study, doesn‘t say if downside won‘t do.
   NY Condemnation law- like federal the owner is allowed to be heard concerning how much
       the property is worth. In addition to the appraisal that is made, offer must be for full FMV,
       the owner has a right to sue for more.
        Can ask for additional items- for example, the taxes that have been paid for the year in
            addition to the FMV of the property, in order to be made whole. Statute so provides,
            but you have to ask for it.
 If renting out an illegal apt (attic, basement, etc) lower court case law says that if LL caught
  and it is brought to the cts attn, then the illegal tenant should pay no more rent and also can‘t
  be evicted  very problematical.
 In Manhattan illegal loft conversions- given a commercial lease, all a sham b/c in truth
  occupying as a residence.
   Now must make to conform to residential standards, rewire, elevator, etc. A 1 million
       dollar bldg could need 5 million in improvements- LL could get into deep trouble.

Abandonment By Tenant
 In NY, when a  abandons the premises prior to the expiration date of the lease, the LL has
   three options: (i) it could do nothing and collect the full rent due under the lease, (ii) it could
   accept the LL‘s surrender, reenter the premises and relet them for is own account thereby
   releasing the tenant from further liability for rent, or (iii) it could notify the tenant that it was
   entering and releting the premises for the tenant‘s benefit. If the LL relets the premises for the
   benefit of the tenant, the rent collected would be apportioned first to pay the LL‘s expenses in
   reentering and reletting and then to pay the tenant‘s obligation.
    Holy Properties Limited v. Kenneth Cole, 1995 (22-1) reaffirms the common law rule
        that a LL has NO duty to mitigate damages. Once the tenant abandoned the premises
        prior to the expiration of the lease, the LL was within its rights under NY law to do nothing
        and collect the full rent due under the lease.
    Most states have gone the other way. The LL can‘t leave the premises vacant and sue for
        rent as it comes due. NY would need legislation to change.
 Acceptance of a surrender: If the tenant vacates without paying rent and the LL lets the boy
   scouts in for a few days  the lease is terminated. The LL by agreeing has retaken dominion
   and the tenant is liable only for rent accrued and for damages caused by the abandonment. If
   LL doesn‘t accept then the tenant must continue to pay rent and the LL doesn‘t have to
   mitigate.


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 The LL may bring an action for an ejectment to recover possession of the premises. HWR,
  such action does not take precedence over other civil litigation and may not come to trial for
  some time. As a result a suit in ejectment is rarely bought.
 Summary Proceeding. Where the LL can recover quickly and at low cost. If clause in lease
  that it will end automatically (conditional limitation)  if up then no have to go for plenary
  lawsuit for ejectment can go for summary proceeding to throw tenant out. Lease can be short
  circuited (eg—property for 10 years or until condemned), as if the last day of the lease  ex-
  tenant, lease terminated.
 Forcible Entry and Detainer—Self-Help. Randall-Smith, Inc. v. 43rd St. Estates Corp., 1966
  (22-11) If the record leaves no doubt that  was forcibly ejected from a portion of the
  leasehold without justification and over strenuous objection, then treble damages are
  appropriate.
  o  entitled to treble damages for the difference btw rent received under the lease and rental
       value, not the full rental value, the damages recoverable for withholding possession are
       the value of such use and occupation under the lease.
  o The day of self-help is gone. Even when entering the tenant‘s apt in an emergency always
       bring another. The best thing to do when kicking someone out is to get a court order, don‘t
       use self-help. Liable for treble damages for forcible ejectment.
 Real Property Law § 223-b. Retaliation by the LL against the tenant. If a tenant reports
  the LL for violation of the housing code, the LL might try to evict the tenant or might refuse to
  renew the lease at the end of the leasehold term. A LL acting under retaliatory motivation,
  can‘t evict the tenant and may be subject to a civil action for damages or other appropriate
  relief..

Refusal to Renew Lease
 When notice is required to be given by a certain date, is insufficient and ineffectual if not
   received within the time specified.
 To safeguard against loss in the mail. Fight it out in negotiations whether notice upon receipt or
   when mailed. Also usually provide for double notice (two addresses), plus the tenant would
   usually send registered return receipt.
 HWR equitable exception, since the LL actually received notice before it took any steps to find
   another tenant or to lease the space, held for the tenant applying the principle that a tenant
   should be relieved of its default when its failure to give the requisite timely notice of renewal of
   its lease has neither harmed nor prejudiced the LL and was not due to bad faith (Sy Jack
   Realty Co. v. Pergament Syosset Corp., 1971, 24-1).
   o Dissent: Not an ―excusable fault,‖ this is a business not a little old lady, should have
         denied, notice not sufficient unless received within the time specified.
   o Tenant was lucky to win, would not have with dual notice requirement.
 LL can refuse to renew provided it‘s not retaliatory or discriminatory.

SECURITY DEPOSITS:
 Commercial lease will usually provide for three months security, can be very high with a long
   term lease  negotiate that security deposit will be paid over several months. OR- won‘t give
   cash, but give security (stocks, bonds, etc) equal to the deposit. If they go down, will give




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    more so haven‘t tied up all that cash. Provisio that the LL will take direction when to sell X and
    buy Y.
   Many residential LL‘s forfeit security even if model tenant  they stall and figure tenant won‘t
    come looking for it or won‘t have enough money to hire a lawyer.
   By NY statue LL has no obligation to deposit rent security money in an interest bearing
    account. The LL is obligated to pay interest only if any accrues on the security. Under
    General Obligations Law § 7-105, upon a conveyance the LL must either: (i) turn over the
    security to his grantee and notify tenants of name and address of grantee, (ii) return security to
    tenant, (iii) retain security and notify tenant (State v. Parkchester Apts Co., 1970, 21-1)
   General Obligations Law § 7-103. Whenever money shall be deposited on a contract for the
    rental of real property as security for performance of the K such money, with interest accruing
    thereon, if any, shall be held in trust and shall not be mingled with the personal moneys of the
    person receiving the same, but may be disposed of as provided in § 7-105.
   Courts treat deposits on residential property as a trust fund, but that doesn‘t mean ipso facto
    that every deposit is a trust fund. If no statute to pinpoint then just a simple K btw A and B, if
    you never come back for it fine, if you do then get it back with no interest.
     Eg--Title Co. could take deposit and have not trust obligation, they will make interest which
         is none of your business. When you come back with suitable proof that it‘s your $-- it‘s
         given back, but that doesn‘t make it a trust fund.
          No time limit (compare parcels become abandoned property and bank accounts are
             turned over the state- statutory time limit), but title co. hopes forgotten.
   Can‘t treat the 3 months security as the last three months rent. It is meant as a trust against
    damages after the tenant leaves. Can‘t do unless the LL willing to agree to.
   LL no right to forfeit per se. Subject to a rule of reason not $ 3000 for $ 50 in damage.

SALE OF PREMISES BY LL
 Bank of NY v. Hirschfeld, 1975 (23-1) Covenant in the lease provided that in the event of any
   sale of said land and building it shall be deemed and construed without further agreement
   between the parties or their successors in interest that the purchaser of the building has
   assumed and agreed to carry out any and all covenants and obligations of the LL hereunder.
   o New owner charged with notice of covenant and obligations, including the responsibility to
       provide 10 free parking spaces (although old owner was the one who owned the parking
       lot). Because the new owner took title to the premises ―subject to‖ the existing bank lease,
       without taking exception to terms, they affirmatively assumed the contractual liability of the
       original LL to carry out the covenants and terms of the lease.
   o Additional covenant entirely relieved the original LL of all covenants and obligations.
   o New owner acquired the building by a deed in lieu of foreclosure. Common in commercial
       real estate. More likely no personal responsibility the more expensive the bldg, the bigger
       the transaction since the owner is not personally liable on the mortgage the banks only
       option is to foreclose. Frequently the debtor will say take the property  deed in lieu of
       foreclosure.
        After environmental contamination, if in chain of title, liable for the clean up too.
            Anybody thereafter with or without knowledge so the bank would be liable along with if
            deed in lieu of foreclosure. Mortgages are only liens, so not in the chain of title if
            forecloses, so for a long time stopped taking deed in lieu. Environmental laws have
            been changed so that being an innocent owner is a defense so likely to accept again.



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 In the absence of an affirmative assumption, a grantee is not liable on any covenants or
  agreements by which the grantor may have bound himself, unless, of course the covenant runs
  with the land. A brokerage agreement, for a commission on lease renewal, is not a covenant
  running with the land. But remitted to see whether  assumed obligations. ―Stinks‖ b/c can‘t
  hold old liable or probably not the new LL, who gets a windfall –the benefit of a renewal without
  brokers commission (Longley-Jones Associates v. Ircon Realty Co, 1985 (23-4).
       o Risk of having a peripheral promise.

NOVATION
Definition—the substitution of a party for one of the original parties to a K with the consent of the
remaining party. The result is that the old K is extinguished, and a new K, with the same content
but with at least one different party, is created.
     If not, then the lessee remains liable on the lease, but even with consent to
         assignment/sublease is not a complete novation. The only way that the tenant can escape
         is by a release by the LL. The mere fact that the LL consents to the assignment and
         accepts rent from the assignee is not an implied release of the original tenant.

ASSIGNMENTS & SUBLETS:
                                                                     Real Property Law § 226-b. Unless a greater
 LL will try to hold tenant back, frequently opposed to.            right to assign is conferred by the lease, a
   Eg- office building with 50 tenants. If tenant looking            tenant renting a residence may not assign his
   for assignee could be competing with LL who has                   lease without the written consent of the LL,
                                                                     which consent may be unconditionally w/held
   other empties. LL has vested in T not getting. Tenant             w/o cause provided that the LL shall release
   has to hold out for in a commercial lease.                        the tenant from the lease upon request of
 Assignment- transfer of tenant‘s interest in the property,         tenant upon 30 days notice if the LL unr‘ably
   all of the space for all of the time, the entire balance of the w/holds of the tenant. Ifrelease shall be the sole
                                                                               consent which
                                                                     remedy                    the LL r‘ably withholds
   lease.                                                            consent, there shall be no assignment and
 Sublet- if part of the property is involved, part of the space tenant shall not be released
   (for any amt of time) or all of the space for part of the time.
 If co-op or condo plan floated on your sublease- only the tenant is entitled to option to buy.
   Subtenant can‘t grab it, can‘t pre-empt the tenants right to buy.
 Peripheral clause in the lease- if lease assigned, but clause not inherent in the LL/T
   relationship (eg- monthly fee for flyers), the lease will also say that whatever the tenant is
   supposed to do and doesn‘t then the LL can do and add it to the next months rent, which is the
   primary obligation of the tenant and anybody occupying the space must pay.

 Archaic rule: if lease says tenant can sublet or assign but only with prior consent of the LL, the
  LL doesn‘t have to act reasonably, he can arbitrarily withhold consent. Clause would have to
  be modified, “consent will not be unreasonably withheld.” Rider- ―any consent will not be
  unreasonably withheld‖.
   The courts do not read a rule of reason in commercial deals, without the clause LL can
      unreasonably withhold consent.
   If the LL refuses to consent and no rider, the LL is allowed to change mind and later deal
      with the proposed that the tenant brought around. Not held to be fraud upon close
      inspection when the LL refused and had old tenants buy out their lease (release from
      obligation so no pecuniary loss) (Dress Shirt Sales v. Martinique Assoc, 1963, 23-5).




                                                        9
      No matter what clause says, tenant is still bound by purpose clause, which is read into
       the assignment or sublease clause. Eg- will use premises only for a paint store, then
       assignment/sublet can only be for the same purpose. LL could waive, but there are still
       problems if alterations needed.
   Assume even if tenant has found a good assignee, but structural changes are need to the
       premises- tenant is stuck- hidden problem. Not unreasonably withheld, same purpose, but
       no structural alterations. Consent to suitability of assignee, doesn‘t mean even one
       alteration. Even if assignee says will pay- irrelevant.
        In a commercial lease even with the consent rider that doesn‘t mean the LL has to
            consent to any alterations.
        Could negotiate rider: consent + new tenant need not comply with purpose clause;
            PROVIDED that: (i) assignee not conduct more dangerous use under fire or liability
            policy (so as not to increase insurance premiums) and (ii) the assignee will not be in
            competition with other existing leases.
             Usually only able to be negotiated by a tenant with clout, eg- Blockbuster.
             As long as not more dangerous and not in competition could have clause that can
                 switch if business not profitable.
 Prohibitions are strictly construed: If can‘t sublet – can assign and vice versa. A LL may insist
  that the lease contain a covenant against transfers by the tenant, but since it puts a restraint on
  the transfer of land it is strictly construed.
 Absent a prohibition in the lease, a tenant may freely transfer his interest. It may be assigned
  or sublet without the LL‘s consent.

 Percentage Leases: most require a fixed monthly rent plus a percentage of sales. Would think
  that they would be non-assignable since the LL is a hidden partner and wouldn‘t want an
  assignee with a low-yield.
   The Court of Appeals went the other way- mere fact that a %-lease without more will not
       make lease non-assignable.
   Likely would put prohibition in lease against assignment without LL‘s consent in %-high
       powered lease.
   Most states would have gone the other way- who is tenant to assign to another when LL is
       expecting a certain %? Tenant can‘t substitute another in what is basically a partnership
       agreement.

 Net-Net Lease: Single occupier building commercial lease. Tenant pays all expenses (taxes,
  insurance, utilities, garbage removal, etc) LL has no worries. Now tenant gives notice that
  doesn‘t need anymore, LL doesn‘t have to let out of the lease. Tenant could offer money, but
  what does the next 7 years hold- LL might not want to risk, would rather have tenant on the
  lease. Self-help- tenant could extricate himself by assignment or sublet.
   Net lease if all repairs are tenants obligation (with tax escalation clause), all repairs and all
      taxes  net net. It depends on what burdens of the LL are placed on the tenant.
   Tenant would want to look to see if implication that LL is only collecting 100% of taxes, not
      more from other tenants in the mall. If not running the risk that the LL is collecting more..
   Insurance: typically paid by tenant and payable to LL. LL is named as insured, so if the
      place explodes the money goes to the LL, who decides whether to rebuild or not, could
      pocket the insurance money and tell tenant that lease is up.



                                                 10
          Who‘s the one most likely to burn it down? The tenant, negligently. He‘s the only one
           there. So the tenant negligently burns it down, the insurance company pays the LL
           then sues the tenant. Irrelevant that he paid the premium.
          DO: put in lease- insurance policy to name LL & T as insured. Ins co. can‘t subrogate
           against own insured. OR tenant will pay, but insurance co. will waive subrogation
           against the tenant.
          Note: LL wouldn‘t waive subrogation in the lease, if ever does without the ins co.‘s
           consent then it voids the policy. Have to involve the ins co, get it in writing from them,
           never waive it solely in the lease.

 When dealing with a small corporation and the LL won‘t allow assignment or sublet, can get
  around by selling their stock. If consent can be arbitrarily withheld then this is a backhanded
  assignment to sell stock to successor. Unless clause in lease that sale of more than ½ of
  stock is an assignment subject to the consent of the LL, then sale of stock is enforceable. If
  not then corporate tenant is free as tenant to sell same corporation to new stockholder (so
  invariably put in for a corporate tenant).

 The heart of a sale of a business is the sale of the lease  Most people want to buy on
  time/credit. Tenant must make sure he has a good period of time left on the lease before he
  sells. Advise to tenant go to LL prematurely and get a new lease so that will have something
  to sell. Purchaser will want to buy the name, fixtures and goodwill and not with all cash.
   Typical case where business being sold, but not paying all at once, pay over remaining
       time on the lease (eg- 30% down, 70% on credit). If he goes down, gets arrested how do
       you get back in? The original tenant needs security.
   STEPS FOR SALE OF A BUSINESS ON CREDIT: SET UP
       1. Outgoing tenant assigns the lease to incoming tenant (+ lien on fixtures and inventory)
       2. Incoming tenant assigns lease back to outgoing tenant as security for unpaid
            installments on purchase price (OUT & BACK)
       3. Outgoing tenant gives sublease to incoming tenant to put new tenant in possession.
            Safety valve so if anything goes wrong, put assignment in force and take back control
            and possession (RECAPTURE)
   4. When all installments of purchase price have been paid, parties tear up the second
       assignment and sublease, leaving only the first assignment in effect.
   Case where LL tried to say that agree to an assignment OR a sublease, not both. Ct said
       that was nonsense, this is just a security device, it‘s basically and assignment, so must
       agree to if said wouldn‘t unreasonably withhold consent (Fabulous Stationers Inc. v.
       Regency Joint Venture, 1974, 23-4).
   Seller also takes a lien out on the fixtures, b/c don‘t was the buyer selling. Recorded in the
       Clerks‘ Office—notice that prior tenant has lien.
   Bulk Sales Law Filing—under the bulk sales law, file in County Clerks‘ Office, so that the
       buyer has agreed only to sell inventory in the ordinary course of business. Bulk sale buyer
       does get perfect title, responsible for the full price.
   After paid off the file document to release bulk sale filing and lien on fixtures.
             Problem  if original tenant bought fixture on credit (see Personal Property on
                Credit, infra). Say $ 30,000 worth all on credit. In recording office ag address
                where will be used, even if the owner of the building ag the address. If default


                                                11
                 repo man can repossess if the proper documents are filed, unless taking out the
                 fixtures will wreck the building  then can‘t repossess. Usually they can be taken
                 out. If filed then buyer is on notice that fixtures do not belong to the seller. If seller
                 went to the bank to remortgage, the bank sends an inspector around and the
                 mortgage can‘t be taken against the fixtures if the proper documents filed. Must
                 file to: (i) be able to repossess, (ii) to prevent the new BFP from wiping out or a
                 new bank mortgage.

 By statute if tenant dies then out of lease if that is what the estate wants  if the LL doesn‘t
  accept a good assignee then the lease is terminated. If the LL approves then the
  sublet/assignment is in effect, but estate is still liable as grantor. Not let grantor off the hook.
 In NY, if want the lease terminated and the LL doesn‘t approve of respectable assignee then
  the lease is at an end.

Assignment
With an assignment the LL can sue the assignee/new tenant on privity of estate—the LL and the
assignee are liable to each other on the covenants in the lease that run with the land (basic
promises –LL can hold assignee for the rent for the period of time in possession, but assignee not
liable in futuro for remaining time on the lease. A peripheral clause would be that anything that is
supposed to be done by tenant and not can be done by LL and added on to rent, catch up with that
way—the same thing can be done with a tax increase, it can become due as additional rent.
Miscellaneous promises converted into rent obligation which is binding). LL and original tenant are
still bound by privity of contract.
 Assumption Agreement: If assignment and assumption agreement, and the assignee agrees
      further to carry out all terms of the lease, it‘s not just a bare assignment. Without it the
      assignor would be able to be impleaded if the LL sues the assignee, and it still might not be
      enough (LL could sue as 3rd pty beneficiary).
       If the LL sues the assignee over the lease or the purpose clause the original tenant could
           still get dragged back in b/c still liable on the lease.
       If the assignee wins, the original tenant has spent $ to defend alongside assignee, even
           though nothing wrong in the end, but old tenant still dragged back in and has no recourse
           against the assignee.
       Hold Harmless Agreement: If the outgoing tenant is ever dragged back in the new tenant
           will pay legal fees, even if the tenant wins—still entitled to reimbursement if rightly or
           wrongly dragged back in.
       By a novation (see supra) the assignee and the LL are in privity of estate and privity of
           contract and the original tenant is out of the picture.
 Sublet
Normally will tenant will sublet and attach the original lease—that the sublessee will not violate the
main lease. Sublessee and LL are strangers at law, not in privity of estate, so that the sublessee
can‘t sue or be sued by the LL. Absent something in the contract, no C of A.
       Theory—tenant remains in privity of estate and privity of contract and remains liable for all
           rent and all other covenants in the lease.




                                                   12
RENT CONTROL/RENT STABILIZATION
 Rent stabilization problem: rates set by board and different rate of change with a one or two
   year lease, if buying/moving in and later sue the LL the only way to prove what the rent is is to
   get all the leases and what was awarded by the board. Massive job.
 If buying always get a representation from the seller as to what the legal rent is b/c treble
   damages are awarded if overcharging, even if new LL didn‘t know still personally liable.
 As apts become vacant out of RC  RS. Tenant can‘t will or assign away RC, but can have
   nephew, etc move in. Can‘t throw out member of family and take away RC status. Tag team
   could go on forever, only out of RC if voluntary.
 If buying a building that appears to be four large apts, it could have been six last year. Even if
   the apts combined the bldg is still RC if it started out that way, must have constant awareness.
 If converted to a co-op could be illegal rent increase if raise rents and also illegal to diminish
   services

POSSESSION:
 If lease signed- doesn‘t mean tenant has to occupy. HWR, others around could tell if no one
   there  insurance co. will cancel insurance b/c in the policy must be occupied, who‘s next to
   cancel- mortgage b/c must keep the place insured.
    LL now put in many leases that tenant agrees to stay in possession until the end of the
       lease to avoid empty scenario. If tenant assigned then always someone in there and then
       don‘t have this problem.
    If can‘t find assignment or LL won‘t allow, under modified lease tenant must stay in
       possession. The courts have upheld b/c if tenant moves out then irreparable harm is done
       to the LL. Mandatory injunction to make tenant move back in (damages aren‘t computable
       since they are a row of dominoes).
    Eg- World Trade Center up. Citibank says to hell with LL and gives up facility on Wall St
        looks like Gore HQ. And will hurt LL who tries to sell or rent. The empty space looks
       lousy, prospective tenants might not want to be in building. So put in lease that tenant
       must remain in possession and agree in advance to a mandatory injunction.
    Like purpose clause or not paying rent  the LL doesn‘t have to give notice.


 Duty to Relinquish Possession: The mere holding over by a tenant whose term is longer than
  one month does not allow the LL to create a holdover tenancy without his accepting of rent
  from the holding over tenant. If no holdover tenancy created the LL‘s remedy is limited to
  removal of the tenant and damages, both incidental and for use and occupation. An action for
  nonpayment of rent, based on a notice purporting to fix a rent, never agreed upon by tenant
  and never paid by tenant, does not lie, there being no tenancy in fact or at law obligating the
  tenant for such rent (Jaraslow v. Legigh Valley RR Co., 1969, 21-25).
   The common law rule relating to the creation of a holdover tenancy was the if the tenant
      held over for even one day the LL had the option to hold the tenant for another term or
      could elect to evict. Amended that if the tenant doesn‘t get out can hold month to month.
   Risk of leaving personal property behind: (i) the LL could say that you‘re not out and you‘re
      held over, or (ii) LL could say that you‘ve left a nice present, forfeit personal property to LL.
   If LL sent a letter offering higher rent and signify acceptance by holding over the statute
      says that it can‘t be done. Once held over, unless agreement reached it‘s month to month.
      Can‘t send threatening letter in advance.



                                                  13
        Options: (i) summary proceedings, (ii) keep month to month at old rent, or (iii) new
         agreement after holdover.
        Note: if held over into Feb. 1 and month to month if want to leave and send letter, would
         still be in one more month b/c 30 days notice needed. The 28 days of Feb. would be
         defective notice. Would have to give another on March 1 for April 1. So as a practical
         matter the LL could hold you over for 2 months.
        Tenant at sufferance  wrongfully holds over after termination of tenancy. One step
         above a trespasser.

DANNAN MERGER CLAUSE:
Used in many different settings – Dannan Realty Case K for            ―The Purchaser has examined the premises
sale of lease.                                                        agreed to be sold and is familiar with the
                                                                      physical condition thereof. The Seller has not
 It is a specific disclaimer of representation, which                made and does not make any representations
    destroyed ‘s allegations that the agreement was                  as the physical condition, rents, leases,
    executed in reliance upon contrary oral representations,          expenses, operation or any other matter or
    sufficient to estop a party form claiming that he entered         thing affecting or related to the aforesaid
                                                                      premises, except as herein specifically set
    into the K b/c of fraudulent representations.                     forth, and the Purchaser hereby expressly
 A C of A for fraud (or innocent serious misrepresentation)          acknowledges that no such representations
    is usually ruled out by the presence of a Dannan Merger           have been made, and the Purchaser further
    clause. A general disclaimer might be too vague  if              acknowledges that is has inspected the
    very general too generic a ct might not enforce b/c could         premises and agrees to take the premises as
                                                                      is…It is understood and agreed that all
    be used as a shield for fraud.                                    understandings and agreements heretofore had
 If the clause is in a K that no representation about a              btw the ptys are merged into this K. . .‖
    specific thing--  dead if signs it, later can‘t say someone
    told him differently as long as VERY SPECIFIC (eg- no
    representation about rent rolls, then should get warranty that rents are the legal rents). If in K
    should clue  in to check it out thoroughly before signing.
     Some things are not actionable if not talked about, if  didn‘t ask then too bad. But if 
         asked and they lied usually grounds for fraud. Or innocent but serious misrepresentations
         are usually grounds for rescission. Problematical when Dannan clause involved.
     2d Dept. takes it at face value and even allowed active concealment to be covered by
         Dannan clause.
     Ist Dept. more liberal in favor of buyer and allowed rescission for a flea infested building
         even though it was an obvious condition that the buyer should have noticed. If  conceals
         at all the 1st Dept will grant rescission.
 It is possible to make an end run by bringing suit against the broker or salesperson, if any who
    made or repeated the false representations, UNLESS the clause states that neither the owner
    nor the broker made any representations other than those expressly set forth in the K.
     To insulate themselves brokers will have a checklist for the seller to go through, cut off
         from liability b/c did ask questions and entitled to rely upon, some protection.
 Generally agree that intentional active concealment is not covered by (eg- out and out fraud
    concealing flood lines with paneling). Clause is intended to take up old-age problems, the
    owner should be able to sell and walk away.
 Normal case- nothing said as to the physical condition of the building. Buyer can bring in
    engineer to inspect, reasonable opportunity to become acquainted with the building (HWR, in 1
    week can‘t become an expert on the building – normally no C of A ag inspector).


                                                    14
 Different aspect of—normally scheduled to close in a few weeks and if it doesn‘t happen then
   forfeits deposit.

Also note: K merges into deed
     At the closing, anything in the contract merges in the deed and disappears and for all
        practical purposes failure of consideration and breach of K theories of relief may be
        unavailing.
     UNLESS say that this paragraph survives the closing of title. Need language in contract
        that the obligation survives
     If affirmative concealment, intentional  action in fraud, merging into deed no longer
        protects, HWR, still have to worry about the Dannan clause [??]

DUTY TO MAKE REPAIRS AND MAINTAIN PREMISES
Landlord: The parties can by agreement put the duty to repair on the LL. But even where there is
such an agreement, the LL‘s covenant to repair is deemed independent of the tenant‘s covenant to
pay rent. Hence, if the LL fails to repair, the breach does not excuse the tenant from rent
payments.
 If defect in property—normally give the LL plenty of notice. Tenant frustrated if fixed himself,
    normal tendency is to reduce the rent. HWR, LL will come back and serve w/ notice of
    eviction. Louse up a good C of A by deducting rent. Should have paid rent under protest and
    sued in small claims court  don‘t arm the LL with a CoA.
     If can avoid don‘t want to sue the LL, will hate tenant for it. Value in goodwill, LL won‘t
         renew the lease if doesn‘t have to. Eg- in order to sell usually have to have 10-20 years
         left on lease. So in a commercial lease the tenant wouldn‘t want to sue b/c there will come
         a point where tenant will need the LL‘s help (normally the best thing is to try to get the
         lease renewed without telling the LL).
 As to commercial property, in the absence of proof of fraud or of a covenant by the LL, a LL
    does not represent that the premises are tenantable or usable for the intended use, nor absent
    an express agreement on his part to do so, is the LL required to make any repairs to the
    leased premises (Refrigeration for Science Inc. v. Deacon Realty Corp, 1972, 20-31).
 A LL‘s obligation to make repair in any case rests solely on express covenant. Usually will be
    to make major structural repairs, which are changes as to affect a vital and substantial portion
    of the erection… a change as would affect the very reality itself, extraordinary in scope and
    effect, or unusual in expenditure, or repairs to the roof. Where there is no express covenant
    there is no obligation to comply with municipal orders (Id.).

 Implied Warranty of Habitability
   Legislatively created duty, don‘t have to move out to claim breach of (compare with
      Constructive Eviction, infra).
   Not based on fault of LL
       Amended: As long as not caused by strike, but can still get rent reduction if the LL
          saved a fortune, reduction based on the amount LL saved (otherwise LL would have
          incentive never to settle the strike).
   Can sue for damages, rent reduction or move out.
   Waiver of the LL‘s obligations under the implied warranty of habitability is not permitted.



                                                15
       Usually covenant to pay rent independent of problems with the property, can‘t be
        deducted. IWH clouds  for health impairing violations the tenant can pay rent into court
        or withhold. Few things allow. Best bet is to pay in full with note that under protest, then
        sue the LL. Problem if rent deducted LL will sue for non-payment, ejectment, or summary
        proceedings. Should sue, not withhold, so don‘t give LL opportunity. Classically the
        obligation to pay rent is independent of other pts of the lease.

Tenant: The tenant may expressly covenant to make repairs and maintain the premises.
 First National Stores, Inc. v. Yellowstone Shopping Center, Inc., 1968 (21-17) held it was
   tenant‘s obligation to install the sprinkler system in the basement of the supermarket.
     Lessor‘s agreement to make repairs which were required by government were held to be
        those that affected retail establishments generally.
     Lessee responsible for repairs specific to the nature of the business, need for system
        arose primarily b/c the manner in which the tenant used the premises  tenant‘s
        obligation.
     Lessee generally not allowed to do something to increase the fire insurance (b/c LL could
        lose mortgage).
     Conditional limit in lease, until…, for as long as…, until X…, then lease is up. If violation
        then 10 days notice that lease is up. But tenant thought it had a good legal argument with
        the sprinkler system being the LL‘s duty to make repairs required by governmental
        authority.
     Problem if tenant wants to litigate the issue  both feet on banana peel if doesn‘t prove in
        days then the lease is up. When given one of these notices they don‘t have to give tenant
        locus poenitentiae.
     Tenant must run into court for an order to show cause, expedited motion  Yellowstone
        Injunction to protect the lease. Say wrongfully sent notice, not enough time to litigate,
        need immediate relief, temporary restraining order to stop eviction proceedings to get LL
        into court, done to preserve the status quo, hope for injunction as ultimate remedy.
     Tenant lost on the merits in this case, didn‘t go in until time was up, now the ex-tenant (a
        plenary ejectment wouldn‘t have to be brought). Must go before 10 days is up, or it‘s just
        as if the lease expired, can‘t go in complaining when it‘s up. It‘s too late to be heard.
     Judge will sign the order to show cause, temporary injunction. See tenant in a month,
        gotten breathing period from temp restraining order, then can come back and argue.
     Even allowed to be used for co-ops.
     One run-around: lowest level of ct given jurisd over leases and terminations, local town ct
        has jurisd over LL/ten. Those cts usually don‘t have equity jurisd, no right to issue
        injunctions, but if small lease (eg-- $ 300/mo) is told by the Supreme Ct to go back down,
        immediately appeal since can‘t get complete relief needed. Resist—ask for a rehearing if
        not to the App Ct.

EVICTION
Constructive
Usual remedy a C/L (compare with Implied Warranty of Habitability, supra).
 Where through fault of LL (some act or failure to act), there occurs substantial interference with
   the tenant‘s use and enjoyment of the leases premises (impossible to stay), the tenant may
   terminate the lease, vacate the premises, and be excused from further rent liability.


                                                16
       If no heat and wait until July to move out, theory of constructive eviction won‘t work. The
        tenant MUST move out promptly. Where the tenant remains in possession of the demised
        premises there can be no constructive eviction.
       Must be LL’s fault. Can be exception clauses (eg—elimination of water rights, or entire city
        could have problem).
       If claim constructive eviction- key questions in discovery—where living now? Extremely
        difficult to prove, interrogate the hell out of you. The best testimony would be from other
        tenant‘s, but they wouldn‘t want to testify.
       LL‘s Duty to Protect Quiet Enjoyment of Tenants: EG- LL rents building next door to
        prostitutes- where tenant has leased premises for a lawful purpose, and has been driven
        there from by the conduct of persons occupying adjacent premises for immoral purposes,
        which the LL owns and controls, and which he knowingly permits to be occupied for such
        purposes. Where the lessor, by an illegal act, materially disturbs the possession of his
        tenant, which he should protect and defend, the latter may abandon the leased premises
        (Milheim v. Baxter, 1909, 20-29).
         [unrealistic today, LL couldn‘t do anything, can‘t be regarded at fault for not controlling
              it, going on next door, doesn‘t have to control. Would be different today if drugs were
              involved  then the LL had better do something b/c drug laws allow a forfeiture of the
              property]
         LL would be responsible for negligently hiring a dangerous criminal as the super, but
              normally wouldn‘t get involved with prostitutes.
         Recent cases—held the LL responsible for other tenants‘ acts if the LL has the legal
              ability to correct the conditions and fails to do so b/c in better position to stop the
              conduct. Eg—In lease that LL can terminate lease of bar if the noise disturbs the other
              tenants. Since the LL can control the noise by terminating the lease then the noise is
              a constructive eviction. Also if LL rents to a dry cleaners in the downstairs that makes
              tenant sick, then LL responsible for violation of the health code.
               Unless expressed to the contrary, a lease contains, of necessity, an implied
                   covenant for the quiet enjoyment of the leased premises.
               A failure to ventilate, which substantially reduced the tenant‘s beneficial use of the
                   premises could be a constructive eviction, but the tenant would have to abandon
                   the premises. A constructive eviction exists where the LL‘s wrongful acts
                   substantially and materially deprive the tenant of the beneficial use and
                   enjoyment of the premises. BUT the tenant must abandon possession in order to
                   claim. (Barash v. Pennsylvania Terminal Real Estate Corp, 1970, 22-34)
                     It would be inequitable for the tenant to claim substantial interference with
                         beneficial enjoyment of his property and remain in possession without
                         payment of rent.

Actual
An actual eviction occurs only when the LL wrongfully ousts the tenant from physical possession of
the leased premises. There must be a physical expulsion from the entire premises.
 In the case of an actual eviction, even where the tenant is only partially evicted, liability for all
     rent is suspended although the tenant remains in possession of the portion of the premises
     from which he was not evicted b/c the LL is not allowed to apportion his own wrong.



                                                  17
 Of course, the tenant would have to be deprived of something to which he was entitled to
  under the lease.
 Partial- where the tenant is ousted form a portion of the premises.

TENANT’S DUTY NOT TO DISTURB OTHER TENANTS
 Absent a covenant in a lease, there is no common law duty of a tenant not to make noise or
   otherwise disturb other tenants. The only duty of the tenant in this respect is not commit a
   nuisance. All possessors of land have a duty not to commit a nuisance. It is common, HWR,
   for residential apt leases to provide a covenant by the tenant that he will not substantially
   interfere with the enjoyment by other tenants of their apts. Covenants of this type tend to be
   judicially construed by a rule of reason. The amt of noise and disturbances permitted depends
   upon the particular context. Even if the covenant does not have a rule of reason written into it,
   but is a covenant to make ―no noise or disturbance,‖ a court will likely interpret it to mean ―no
   unreasonable noise or disturbance.‖ This construction if effect makes the ct and not the LL the
   arbiter of the ‘s conduct.
 Louisiana Leasing Co. v. Sokolow, 1965 (21-13) the old couple couldn‘t have known, but the
   right result b/c noise is expected from young children. It would be different if it were a rock
   band upstairs, but must put up with ordinary noise.
    Neither pty mentioned criminal statute that the LL can‘t refuse to rent to families with
        children. Civil and criminal duty to rent and not to cancel lease b/c person has a child. If
        the LL must put up with renting then the corollary is that the tenant has to put up with too.

CO-OP TENANT
 A tenant even though has paid for stock  glorified tenant in weaker position than ordinary
   tenant (eg- RC/RS tenant protected by the court, will clobber LL if suspect leaning on).
 Lease says co-op tenant has to abide by the house rules, by-laws.
 Animal when you‘re not supposed to substantial breach of the lease or if tenant must give the
   keys. Cts will give the little old lady time to repent or move out, cts will ordinarily say to T,
   you‘ve violated you‘re lease—get out.
 Typical co-op lease will say if you do any of these things will forfeit lease, HWR, since
   ownership is of two things (stock & lease) co-op board not allowed to forfeit both  as per
   language, must have auction to sell, take out damages, etc. You‘ll get nothing for violation, will
   not bring full value. Even auction purchaser must go thru board approval, if turned down, no
   recourse but to sell again.
 NIXON CASE (see L. Rev article)-- trying to buy into condo, on right of first refusal little or no
   reserve fund. Nixon gave in when Secret Service not allowed to be in hallways.
 If passed in will, gift to immediate family doesn‘t need boards approval, subject to what the
   lease says
 Defects in property no defense to non-payment of rent. Co-op board can move to forfeit lease
   or a condo board can file a lien and start the next day to foreclose. Not allowed to deduct from
   maintenance payments.
 Pay in full, then sue.




                                                 18
WASTE
Three types:
    1. Beneficial Waste- A change that increases the value of the premises. Old rule, the tenant
        was liable for substantial changes, even if increased the value, without authorization. The
        LL was entitled to get the premises back in the same condition that they were leased. Now
        by statue, if tenant with more than 5 yrs left on lease or a life-tenant with more than 5 yrs
        life expectancy then unless the prevailing documents say no, then can change the
        structure as long as the economic value is not diminished. A life estate doc is probably
        silent, but would get ‗completion insurance.‘ A long-term lease probably says that can‘t do.
    2. Permissive Waste- In the absence of a duty on the part of the LL to repair (impose by
        statute, IWH, or express covenant), the tenant has a duty to make ordinary repairs to keep
        the property in the same condition as the commencement of the term, ordinary wear and
        tear excepted. The tenant does not have to make substantial repairs, but he must protect
        the premises from damage, usually by the elements. He must treat the premises in such a
        way that no substantial injury is done to them during his tenancy. Sometimes the tenant‘s
        duty to repair is referred to as ‗liability for permissive or involuntary waste.‘ The tenant is
        obligated to take minor steps that will prevent major damage (even if didn‘t cause, eg—
        brick thru window).
    3. Active Waste- If a tenant seriously and substantially damages the premises by an
        affirmative act, the tenant is liable to the LL (by statute the LL may maintain an action to
        recover possession). This is sometimes known as voluntary or affirmative waste. The
        damage must be substantial, and with effects well beyond the tenant‘s term. Attaching a
        wooden closet to a wall or putting a decorative frame around a window is not waste
        (Rumiche Corp. v. Eisenreich, 1976, 21-20).

II. CONVEYANCING

BROKERS & BINDERS
A real estate broker is an agent who, for a commission, is employed by a principal to negotiate the
sale, purchase, lease or exchange of real property btw his principle and a third party.
 Rule against recovery for an unlicensed broker is strictly applied.
 Broker under a duty to follow instructions and act within the scope of his authority, could be
    personally liable if deviation and the principal will not be bound. Agent of the seller.
     Because of the likelihood of confusion, the buyer signs a form acknowledging that the
        broker represents the seller, not the buyer. Required by statute.
     ―Buyer‘s Broker‖ – says for a smaller commission (eg—2%) will tell buyer the truth about
        the property interested in, work the seller over to lower the price, since seller being
        charged no commission should come down on the price (assuming no exclusive agency or
        sales contract)
 A brokerage contract with an owner can be oral! The statue of frauds does not apply to a
    contract to pay compensation to a duly licensed real estate broker. Major exception, could
    lead the vendor to being liable to several different real estate brokers on multiple contracts for
    employment.



                                                  19
 The buyer has no contract for sale unless it is in writing signed by the seller or the seller‘s
  agent (must have agency in writing signed by the owner).
 HWR, a binder is a full-fledged real estate contract if it contains the few key terms mandated
  by the S of F (ID parties, property, and price), the broker may tell the buyer it is only good for
  so long, but that is untrue (broker will do anything to get buyer to sign). If the buyer signs he is
  bound to the seller, even if the seller hasn‘t signed.
   Binder satisfies the S of F. Names, location, price complete memorandum of real estate
       K. Buyer stuck even if no deposit, down payment.
   The law implies all cash, when typical K says that buyer is to get commitment from lending
       institution!
   The law implies closing at a reasonable time, when it is normally a matter of subjective
       needs (usually when school is out is controlling)!
   The law will imply transfer of possession upon closing.
   The law will imply that the purchaser is entitled to ―marketable title,‖ but not necessarily an
       ―insurable title‖
   The law may imply that the seller will give and the buyer will accept, the deed that is
       customarily used in the community in question. As a consequence, the law may imply that
       the buyer must accept a bargain and sale deed with a covenant against grantor’s acts (the
       type of deed used in the downstate area). This gives the buyer less protection than a Full
       Covenant and Warranty Deed. Conversely, the law may conclude that the parties have
       impliedly agreed to use a FC & W deed, thereby imposing potential future liability on the
       seller to both the immediate buyer and to purchasers on resale for years to come. Few, if
       any sellers, would knowingly agree to give such a deed, especially when the buyer is
       purchasing title insurance.
   The law implies all of this to a binder to make it a real estate contract.
 If the seller has signed something and changes mind the buyer can retaliate for specific
  performance if he backs out.
 Commission is normally 6%
 The traditional rule is that the broker is entitled to commission when he brings around a buyer
  ready, willing and able to buy on the terms and for the priced set by the seller in the brokerage
  contract. Rule in NY, if parties haven‘t expressly agreed otherwise.
   This probably doesn‘t conform to the seller‘s expectations, who would think that the
       commission wouldn‘t be earned until a successful closing.
   An unforeseen, subsequent event like the failure of a seller to produce a marketable title
       that prevents a successful closing from taking place does not eliminate the vendor‘s
       obligation to pay the broker‘s commission. HWR, if the purchaser withdraws before the
       contract is signed, the broker is not entitled to a commission
   NJ broker only earns commission when, as and if successful closing.
   If the sale falls thru b/c of the seller‘s fault then broker is owed a commission.
   Put in binder that when, as and if successful sale – will protect the seller in most cases
       (eg—if unmarketable title and buyer backs out). HWR, if seller backs out still owe b/c
       subjectively stopped the closing  not safeguarded by the clause).
 Normally the broker has the seller sign a form to protect himself in case the buyer later sues for
  defects in the house.
 If binder subject to approval that could be given or withheld at personal discretion  put in
  clause if don‘t want reasonableness to be an issue ‗at his discretion.‘



                                                 20
 Don‘t take the property off the market since the binder could fall through (mortgage could fall
  thru, etc). Big gap until real estate contract, but bound. A lot of time is needed to make
  inspections, get a mortgage commitment. Normally 2-3 weeks, leave on the market. In the
  meantime can make contracts subject to the first falling thru.
 Risk to the Buyer’s Down Payment. Weighted in favor of the seller (buyer can forfeit deposit,
  eg), benefit form the law of damages. Remedy of choice for the seller when the buyer backs
  out without authorization (title co. could provide legal excuse). Would only sue as seller for
  specific performance if something wrong with the property. Last resort for damages, diff btw
  higher price sold and market value, since in most cases selling for what the market will bear 
  no proven damages.
 Occasionally, if insufficient binder (eg) specific performance could be sought on the theory of
  part performance.
   What acts are sufficient to take the contract out of the S of F and make enforceable?
       Constructive trust doctrine: If  and  bound by confidential relationship than to avoid
           fraud or overreaching by parties that are suppose to trust each other. Constructive
           trust overrides and don‘t even need part performance. Violation of confidential
           relationship can‘t be claimed by businesspersons dealing at arms length.
       Not part performance:  entered into possession and planted a garden, but made no
           substantial repairs on the premises, and did nothing that amounted to sufficiently part
           performance to take the case out of the statute of frauds. The purchase of household
           furniture was under separate agreement (Palumbo v. James, 1929, 14-11).
           o Seller can‘t claim part performance of the buyer. If the party who resist
                enforcement of the contract chooses not to stand on what he has done under it,
                the other party can‘t be aided by it (NB—old case, could be different if the property
                has been changed by buyer so as to lessen it value).
       Not part performance: (i) can‘t use writings not by the pty resisting enforcement,
           silence is not part performance, or (ii) periodic payments of cash is not sufficient.
       Acts of unequivocal reference to a contract: performance which alone wouldn‘t be
           without being incident to ownership.
           o Wilson v. La Van, 1968 (14-12) the court finds that the mortgage and tax
                payments that the  made (like rent for use of land), along with improvements
                (derived livelihood from farming so might have done as lessee), could have been
                equally as consisted with a LL/tenant arrangement as to an agreement to convey.
                So the  failed to establish part performance sufficient to overcome defense of the
                S of F.
           o Jargon rule, hard to find. NY is very tough, varies considerably from state to state
                ( would be entitled to reimbursement for any improvement made in reliance upon
                the oral contract which enhanced the value of the property).

Types of Brokerage Agreements
   1. Mere Listing—the owner retains the right to sell and to hire other brokers in the absence of
       an express provision to the contrary. ―Open listing‖ = free for all. The broker who first
       produces a buyer ready, willing and able is entitled to the commission. If the owner sells
       himself then owes nothing.
   2. Exclusive Sale Contract—only the named broker can sell the property during the specified
       period of the contract. Even if the owner sells it himself, the broker receives a commission.


                                                 21
    3. Exclusive Agency—agreement under which the particular broker is employed and no
       other. The owner till has the right to sell the property and owe nothing. Many states
       require a termination date.
        Multiple Listing System—where individual brokers pool their exclusive listings. The
           commission would be divided btw the broker who obtained the listing and the broker
           who brought about the sale.

 What if in month 7 a buyer from month 5 comes back and the brokerage agreement was for
  only 6 months? If no fraud involved then can sell to that buyer and not owe the broker a
  commission, provided no collusion.
   HWR, brokers will typically put clause in contract that if sold in second six months to
      someone that the broker brought around then agree to pay commission anyway. Even
      though didn‘t talk into, not ―procuring cause.‖
   Could end up owing two commissions, the first from contract and the second broker who
      talked the buyer into it. Usually would then stop the closing unless the brokers resolve it
      between themselves.

 What must the seller tell the buyer? Normally with rescission, an intentional fraudulent
  concealment would be required.
  o Ghost case: Even in state applying caveat emptor if the buyer had opportunity to inspect
     there are exceptions. Where a seller publicized her house locally as inhabited by
     poltergeist, it has been held that an out of town buyer who did not know of the reputation
     can rescind the contract of sale. The seller created the situation, and a physical inspection
     by the buyer was highly unlikely to reveal the poltergeist.
  o NY statute: broker doesn‘t have to reveal that someone was murdered, suicide, or that
     someone died of infectious disease. Not concealment to keep quiet about these things. If
     the house isn‘t damaged it is irrelevant, if the condition is not impaired (but a sane person
     wouldn‘t want to buy—plus makes it tougher to sell later).
          Same with Megan‘s Law, it is public information, but if buyer asked and was lied to
             then that is concealment/fraud and the buyer could get rescission.

REAL ESTATE CONTRACTS
 Usually need copies for the buyer, seller, attys (2), bank and title ins. co.
 Seller‘s atty will prepare from seller‘s old title policy  listing all the defects and covenants.
   So as not to give the buyer an excuse not to close, subject to the following things, ab initio put
   it in the agreement that buyer agrees to imperfections, then the buyer can‘t use as a pretext to
   get out of the K. Provide that title marketable/insurable minus these things.
 Although it would make sense for the seller to sign it first and send it to the buyer to complete
   the transaction. Not done b/c the S of F, if the pty signs against whom would be charged, the
   buyer could sit on it, free option, enforceable  always sent out unsigned and the buyer signs
   if first.
 If the contract said the mortgage would be agreed upon in the future  K not enforceable, not
   agreement on an essential term. Looks innocuous, but kills the K. It there is a sentence in
   there about it the law no longer implies a term. No ―K to agree‖ – any key term left out for
   future will kill the K.




                                                 22
 Problems today in drafting mortgage clause  20 years ago they all looked the same. Not
  there are dozens of kinds, static or variable, etc. More difficult to draft.
 Mortgage Financing Considerations. When the term ―conventional mortgage‖ is used in a
  clause, there should also be set forth the term of the mortgage and at what interest rate the
  mortgage shall be. Omitting the terms of the mortgage renders a contract unenforceable. The
  court concludes that the term standing alone, without a designation of the interest rate or
  length of the term of the mortgage is so ambiguous that there can‘t be any meeting of the
  minds btw the buyer and the seller as to an essential part of the transaction  the seller has
  no enforceable K and the s are entitled to the return of their deposit (Neiss v. Franze, 1979,
  14-32).
  o Purchaser agrees to use diligent efforts to obtain a mortgage commitment from a bank.
  o The seller can‘t step in (after the buyer can‘t obtain a mortgage from a bank) over the
      objection of the buyer and offer and bind buyer to seller‘s mortgage. Seller would be more
      likely to foreclose than a bank. Buyer‘s choice: don‘t take seller‘s mortgage!!

MORTGAGE
 The seller could transfer his interest to a new buyer who assumes the mortgage and becomes
  personally liable for it. The lender could then sue the new buyer or the original borrower on
  debt (with the new buyer being primarily liable). Problem b/c the original mortgagor could be
  called back in, equivalent of a bare assignment (original could then sue the new buyer). A fool
  to do, and banks didn‘t like a cheap mortgage being passed on. It would be crazy to allow
  someone to take over your mortgage, unless novation. And most of the time wouldn‘t be able
  to use b/c too small vis a vis the face value and the amount of the sale.
 Due-on-sale clause. The entire mortgage is due on sale of the interest. The lender can
  accelerate the due date if the land is sold, requiring payment at that time. It requires the lender
  to consent to assign the mortgage, protecting itself from and assignment to an unsafe credit
  risk and it permits the lender to force the new buyer to refinance at a prevailing higher rate of
  interest.
 Mortgage recording tax. The old one is left of record and assigned and so on and so on, sold
  again. After about 10-15 then file consolidation agreement. Lien never left the building.
  Mortgage recording tax on the extra amount, only tax the difference. Purchaser buys and
  leaves mortgage of record and takes an assignment, when resold then will sell old mortgage.
 Bank with a mortgage is typically entitled to get paid first. Statute says that if there is a
  casualty loss and you get your $, can notify the bank that you need to rebuild and bank can‘t
  take in the $ in reduction or eradicate the mortgage (only applies in residential).
 Mortgage acceleration clause  if miss payments the bank can accelerate and collect the
  entire mortgage. Seems like a forfeiture, but it‘s not b/c the bank gave you its money in the
  first place.

At Closing
 If dealing with a mortgage at closing will normally want to close in the morning b/c since the
    seller wouldn‘t know if a check from the ABC mortgage co. is good  time to get certified
    check.
 Normally tell buyer to get the money in the bank 10 days in advance, so that all will be cleared
    before the closing certified check.




                                                 23
 Buyer‘s attorney would tell the buyer to get a certified check made payable to the buyer b/c if
  the closing falls thru then would have one hell of a time getting undone if it were in the seller‘s
  name. Keep in buyer‘s name so can redeposit if necessary.
 HWR, check endorsed over to seller can‘t be used for the next closing. Seller in second
  transaction will want a fresh check, so contract may say that the seller can stay on a week after
  closing so the check will be deposited with time to clear. Usually discussion of how much per
  day. Common where seller stays on per diem and penalty clause to make sure gets out.
 Accommodation endorsement: the atty could guarantee by endorsing the back.
 Never allow the buyer to get in early. Seeing the place warts and all, will want $ off
  (blackmail), if injured then seller liable, most allow is moving truck in the driveway.
 Seller‘s attorney would tell the seller not to pay any big bills before the closing b/c would have
  no proof that they were paid. Options: (i) pay in person, or (ii) deduct from price.
 NY rule: if the original closing date has passed the other party can make time of the essence,
  which can be done unilaterally (normally would never want to be in situation where time is of
  the essence  if not there then forfeit, but no choice if miss the original closing date).
  Exacerbates the buyer‘s risk of forfeiture of down payment.
 Typically at the new purchaser‘s bank, atty‘s office, title man comes. Official description that
  title co will insure, ptys hand over satisfaction letter from the bank, use new to pay off old.
 The gap between from when the documents are not of record is covered by the title co that
  assumes the risk.

RISK OF LOSS
 Under the principle of equitable conversion (the buyer owns the land and the seller owns the
   cash), the purchaser is regarded as the owner from the moment of a valid enforceable contract
   for sale is executed. Traditionally, this has resulted in the purchaser bearing the cost of any
   injury to the premises suffered btw the date of the contract and closing of title, including, but
   not limited to, loss of the property through condemnation.
 Not tied to the presence or absence of insurance that is payable to the seller (buyer could go
   out and get at the moment of the K, but usually that doesn‘t occur). So if the property burns
   down the seller could collect twice, once from insurance co. and once from buyer.
 Most states follow the C/L rule. Risk of loss on the buyer from the moment of the K.
 To ameliorate  Uniform Vendor and Purchaser Risk Act. If the K is silent of risk of loss the
   statute kicks in. Keeps the risk of loss on the seller until the buyer gets: title OR possession.
    Dangerous situation: lease with the option to buy. If the tenant exercise option has K to
        buy and is in possession  tenant carries risk of loss.
         If K silent and buyer begs to get into possession early  buyer has risk of loss.
    If K say that it is silent on the risk of loss and there is no substitute provision than the
        statute applies.
    Frequently K states that risk of loss of fire is on the seller  implies that all other risk of
        loss is on the buyer. Buyer should strike ―on fire‖ or strike entire sentence so that the
        statue applies.
    If insubstantial damage, either side may still get specific performance. If risk of loss is on
        the seller than the buyer can get specific performance with an abatement of the purchase
        price for damage to the property.




                                                 24
        If substantial damage, the seller can‘t get specific performance from the buyer. HWR,
         purchaser could enforce with a major abatement (could get amount of seller‘s insurance
         recovery).
        Risk of Loss doesn‘t cover if theft by the seller‘s atty, even if R of L on the buyer, the
         seller‘s atty is his agent and responsible for.
        For eminent domain the lease usually provides for a scale down abatement if eminent
         domain.

UNMARKETABLE TITLE VERSUS CURABLE DEFECTS
 Marketable title. A marketable title is a title reasonably free from doubt, one which a prudent
  purchaser would accept. Although perfect title is not required, the title must be such that there
  is no reasonable probability that the buyer would be subject to a lawsuit.
 Order a title search before obtaining a mortgage commitment b/c wasting time if title no good,
  but no order title insurance until mortgage commitment b/c wouldn‘t want to pay for work done
  if the deal falls thru [??]
 Almost anything makes title unmarketable if incurable. Won‘t force buyer to take title that could
  get him into a lawsuit.
 In average K—implied entitled to marketable title, except to the degree that you agree to take
  less.
 A covenant renders the title unmarketable. Even if the zoning law says the same thing—
  irrelevant b/c the public law could change.
 Title co. wants affidavit that seller and spouse haven‘t been known by any other name in last
  10 years. Because a jmt against one is a lien on any land now owned.
 Buyer after examination must give the seller notice and opportunity to cure the defect.
 K may say that the buyer waives all the defects if doesn‘t give the seller two weeks notice
  before the closing.
 Prospective seller may, believing his title to be marketable despite the fact that it rests on
  adverse possession or is otherwise imperfect of record, choose to enter into a K of sale,
  hoping to convince purchaser, or if necessary, a ct that his estimate of the marketability of title
  is justified. Available only where the K of sale does not require the vendor to give a valid title
  of record, but provides for a less stringent requirement such a marketability or insurability
  (Conklin v. Davi, 1978, 14-25).
  o Well settled in NJ that title resting in adverse possession, if clearly established, will be held
       to be marketable.
 Where a defect is curable the buyer must notify the seller in a timely fashion to cure. If the
  buyer defaults and doesn‘t close: (i) forfeits deposit, (ii) could be specific performance, or (iii)
  liable for loss of bargain if seller sold property for less money.

TITLE INSURANCE
 Insurable title. The law does not imply that entitled to insurable title. Always put that in. It
    means that a reputable title co will insure without exception.
 There is a degree of proof needed for certain types of defects (eg—mechanics lien makes title
    unmarketable, but not uninsurable – not shown on public records).
 Title co. may insure free and clear even with reasonable defect that makes not marketable.
    Title co. could: (i) pay out to cure the defect, or (ii) indemnity letter from old title co that missed
    to new title co so that new co can issue clear title and old co will be responsible if there is a



                                                    25
    problem with that defect. Usually would not pay off b/c chance that defect will never be
    claimed.
   Title co. sets own standards, can agree amongst themselves. Give each other hold harmless
    letters so that the new title co won‘t care about the mechanics‘ lien they might have missed.
    All depends on if will give a clean policy
   Banks will insist on insurable title or won‘t give mortgage.
   Normally order from the same co as the seller‘s. The seller‘s title co has already done the title
    search and has records on file, new title co would have to start from scratch.
   After search, seller‘s atty releases survey. The old one could still be good, have architect look
    over it, save $. HWR, seller wouldn‘t surrender survey until mortgage commitment b/c may
    never get it back.
   Pay premium once and good for as long as you own the property.
   Some states simply rely on the opinion letter of an atty for the bank that atty went to the
    recording office and checked it out, until all hell broke lose with Indian land claims. Institutional
    lenders quickly learned that title insurance was sine qua non.
   Rider that policy will go up with inflation. You can get it increased later, but co. wary, holder
    may know that something is up that they don‘t (eg—Indians circling). They will sell, but
    demand affidavit that there are no claims that you know of. Suspicious, but will give it to you.
   Property purchased from or through a decedent’s estate. By statute, a BFP from an
    administrator or an intestate distributee is not protected for two years following the death of a
    property owner, if a hitherto unknown comes to light that confers title on a third party. S of L
    never runs against actual devisee, if the will had been fraudulently concealed or destroyed.
    Title insurance to the rescue.
   Problems due to easement by prescription. These rights may be present and enforceable,
    although the recording office contains no hint of their existence. Although such situations may
    not give rise to a malpractice action against the purchaser‘s broker or counsel, they are usually
    fully compensable under the title insurance policy.
   Note: Title insurance does not eliminate all risks associated with acquiring real property.
    Thus, for example, the title co. typically will not ensure against anything that a view will
    disclose, the rights of third parties in possession, and the impact of public law (such as RC or
    environmental regulations). It should also be noted that the outer limit of the insurance
    company‘s liability is fixed by the face amount of the policy. In other words, the carrier cannot
    be held for more than the face of the policy on a theory that the company was negligent in
    conducting its title search.

BUYERS’ PROTECTION
(1) In K, (2) from fraud, (3) atty‘s liability, (4) from warranties in deed, (5) title insurance (only real
protection).
 K of Purchase. Normally have a K remedy if something goes wrong. The problem is that the
     contract merges with the deed. K evaporates at closing. EXCPEPTION—where things remain
     to be done after closing or paragraph that states it ―survives after closing.‖ Eg—items to be
     repaired that haven‘t been done.
 Fraud. Limited by the Dannan merger clause, practically eradicates.
 Atty‘s liability. Atty checking title would only be liable in malpractice, and lots of things aren‘t
     (not Indian land claims, forgery, illegal Sunday foreclosure in 1847 ) and 2/3 year SoL, by the




                                                    26
   time the problem shows up it has expired  remedy against atty is not a good safety device
   for the purchase of property.
Warranties in the Deed
 FC & W Deed. Of limited value since most won‘t give. Custom and usage to give bargain and
   sale deed with warranty on this grantor’s acts, b/c title insurance, they are being paid to take
   care of it, don‘t give them a C of A against the grantor.
    Bargain and sale deed is polite quitclaim deed (giving deed in my interest, not saying that I
        have any, no covenants, no warranties). Some states infer from quitclaim that can‘t be a
        BFP, but NY no inferences against, only impeached if radical difference in price.
    By statute don‘t imply any covenants and warranties in deed. Bargain and sale has one
        that the grantor warrants that didn‘t do anything to mar title.
    Other problem with FC & W, even if the grantor is found and is not jmt proof still under the
        law of deeds, most could get under FC & W is the amount of actual damage—OR what the
         received when he sold the property—whichever is less.
         Three present covenants: (i) seisen (I own it), (ii) right to convey, (iii) against
             encumbrances. They are breached when deed given, or never.
         Three future covenants: (i) future warranty, (ii) quiet enjoyment, (iii) further assurances
             (help defend, give docs if needed later). Limited value since only good in futuro. Only
             when the true owner/claimant shows up, the S of L runs from that point.

 Ripeness of Claim  say title co missed old $ 50K mortgage, wouldn‘t give $ 50 K as remedy,
  since the private lender may never show up. 6 year S of L if no payment made. True claim,
  but not ripe. Obviously wouldn‘t pay yourself – could be usurious or paid off and satisfaction
  unrecorded. Plead in the alternative – that lien no good and want stricken and that is good and
  want $ from the seller for breach of FC & W.
 If encumbrances is other than $ lien, can get paid immediately b/c ripe. Damages would be
  difference in value with – without. But most can get from  is actual damages or what he
  received when he sold the property.
 If suing on covenant of seisen  damages for 40% of property belonging to someone else.
  Sue the grantor for 40% of $ back, but the  will say willing to pay, but must give the 40% back
  with it. If wait instead title could ripen from adverse possession.
 Any deed strong enough to pass C of A against prior owner, even though not against
  immediate seller. As long as C of A existed when the prior owner gave the FC & W. Defect
  must have existed before FC & W to be liable.
 FC & W only thing that short circuits the C of A against prior grantor is if somewhere down the
  line somebody took subject to defects, then that insulates everybody up above (idiot who
  would give FC & W later would be liable).
 In FC & W deed if lawsuit  imply that get atty‘s fees if win. Abused so not only get atty‘s fees
  if lawsuit involves the true claimant. All in one lawsuit. Suppose only know of defect thru title
  ins and the claimant hasn‘t shown up. Wouldn‘t be able to get legal fees track down
  claimant join in suit, in alt that interest is no good. Old owner in suit and if claimant has good
  claim then can get atty fees. If claim no good than have it stricken of record. Ripen claim by
  joining grantor and 3rd pty and plead in the alternative. If ct rules that claim is good then get
  legal fees and damages. If the claim is no good, don‘t get atty fees b/c the grantor is right, but
  stricken from the record (win one way or the other).



                                                 27
 If title insurance  quitclaim deed  no contingent liability. Title insurance dies. If resold at a
  profit and gave FC & W can still be sued  title ins still there since contingent liability remains
  (still need title ins so can implead).

 Corrective deed if ministerial defect, normally will give corrective deed.
 Replacement deed  given to protect true ownership, don‘t perpetuate an erroneous land
  record just to punish for past misdeeds. Wrongs done to creditors in respect to property at
  some time prior can‘t be raised (Seagirt Realty Corp. v. Chazanof, 1963, 15-15 – ―dead wrong,
  but the law.‖)
 Stamps on deed. Prima facie evidence of what paid for the property for purposes of taxation,
  condemnation. In NY, however subject they are to manipulation they are still used (compare in
  Conn have to state the true price).

Delivery of Deeds
In general, a deed is not effective to transfer an interest in land until it has been delivered to the
grantor. Delivery requires words or conduct of the grantor that show intent to make the deed
operative and to pass an interest immediately to the grantee. The usual method of delivery is
handing over the deed from the grantor to the grantee, but handing over a deed without concurrent
intent is not an effective delivery. The crucial issue is intent (physical transfer would be compelling
evidence).
 Where deeds are formally executed and delivered, these presumptions can be overcome only
    by evidence that no delivery was in fact intended. Physical possession of a duty executed
    deed is not conclusive proof that it was legally delivered, this is so under some circum‘s even
    where there has been a manual delivery (Sweeney v. Sweeney, 1940, 15-12).
 Oral condition: Where the grantor hands over to the grantee a deed absolute on its face, with
    a contemporaneous oral understanding that the deed shall not take effect until some condition
    is performed, the general rule is that delivery is valid and the oral condition is void.
 Delivery to a third party: Although generally a deed delivered directly to a grantee with oral
    conditions attached, a deed can be delivered in escrow with oral conditions attached. Eg—
    don‘t transmit until the check clears (can‘t put it in the deed b/c would make it forever
    unmarketable).

III. THE ROLE OF THE RECORDING ACT
Recordation is not essential to the validity of a deed as btw grantor and grantee. HWR, if a grantee
does not record the instrument, he may loose out against other purchasers from his grantor.
Recordation gives notice to the world that title to the property has been conveyed, and thus to put
subsequent purchasers on guard.
 Designed to protect BFP‘s from unrecorded claims. Prior to these acts, the common law rule
     gave effect to conveyances in accordance with time of execution, prior in time is prior in right.
     In order to upset priority (and leapfrog over someone ahead) the BFP must fall squarely within
     the requirements of the Recording Act.
 The person who is first wouldn‘t need the recording act, the subsequent BFP needs the
     recording act to cut off, the person who is first‘s only Achilles heel is if doesn‘t record in time.
     Being a grantee or and inheritor must be first (can‘t rely on Act b/c not purchaser).
 Go by the time clock no matter what.




                                                   28
FOUR TYPES OF RECORDING ACTS
   1. Race Statute. As between successive grantees of the same land, priority is determined
      solely by who records first, whoever wins the race to the recording office. Very few states
      have.
   2. Notice Statute. If no actual or constructive notice of prior claim, a BFP who pays valuable
      consideration is protected. Achilles heel—someone could buy right after and BFP wiped
      out because hasn‘t been recorded. To prevent close in the recording office.
   3. Period of Grace. If you buy without notice, with no worry from behind, and period of grace
      for 30 days given to get to the recording office. Terrible in practice b/c even if close in the
      recording office could still be buying in someone else‘s period of grace. So must close in
      escrow, hold the $ for 30 days so don‘t lose the property, a lot of trouble.
   4. Race-Notice Statute. (should be Notice-Race) Must pass money without notice and also
      win the race to the recording office. Must satisfy both elements.

TO BE A BFP
 The term purchaser normally includes one who, in exchange for present consideration,
   acquires his interest from the record owner. The requirement of consideration is not satisfied
   by a nominal amount (but doesn‘t have to equal market value), or by a recital of value
   received, or by a bare promise to pay. Not a purchaser  don‘t win if not a purchaser (eg—
   deed as graduation present or inherited). Not out to protect donees, won‘t upset priorities for
   some one who didn‘t pay consideration.
    Under the Recording Act marriage is valid consideration, but love and affection are not;
       past debt is not consideration, but purchaser if mortgage rewritten, debt rearranged.
    In NY, a judgment creditor may be, but only if bought at public sale to satisfy judgment
       (another who would purchase at execution sale is BFP too), only then could wipe out prior
       purchaser with an unrecorded deed. To be a purchaser must rely on the Recording Act.
    Non-BFP can create a BFP (eg—if defrauder sells, protected as long as not part of the
       original fraud). Or an inheritor can create a BFP.
 To satisfy good faith must give valuable consideration without notice (actual or constructive).
    A subsequent grantee must have no actual notice of the prior instrument.
    If an instrument is recorded the purchaser would be deemed to have constructive notice,
       and not a BFP, whether the purchaser actually knows or not.
    Inquiry notice may be found where the purchaser was aware of facts or circumstances
       which should have induced further investigations, which if pursued would have produced
       actual notice. When the facts impose a duty to investigate, the purchaser is charged with
       notice of what a proper investigation would have discovered, whether the investigation
       was, or was not, made.
    Reference in recorded documents to unrecorded documents may be notice if enough
       information is provided to go find what subject to. If too bland won‘t be notice, purchaser
       has to be able to find before its considered constructive notice.
    Charged with knowledge for whatever an inspection will disclose. Possession is notice.
       Chargeable with knowledge of rights to tenants in possession (a lease of less than one
       year doesn‘t have to be in writing and only if for more than three must it be recorded).
       Must inquire of occupants who are there.




                                                 29
WHAT IS RECORDABLE?
Practically every kind of deed, mortgage, contract to convey, or other judgment instrument creating
or affecting an interest in land can be recorded. A jmt or decree affecting title to property can also
be recorded. And, even before a jmt, where a pending lawsuit may affect title to property, any
party to the action can record a lis pendens, a notice of pending action, which will effectively put
third parties on notice of all claims pending in the lawsuit and they take subject to.
 Lis pendens—would probably have to pay a bond for to back up the other side‘s damages. If
     merely sued and lost wouldn‘t own damages.
               If file a lis pendens and then lose in the trial court, if filing for an appeal must not
                   let it expire. Since bonded like an injunction if lose and don‘t bond then the BFP
                   can continue without being disqualified, his knowledge of the pending appeal is
                   not legally sufficient and in the absence of a valid notice of pendency, the owners
                   ability to transfer clear title remains unimpaired (if hadn‘t gone for lis pendens and
                   purchaser found out would have been actual knowledge). Because jmt in trial court
                   conclusive, while appeal may shadow, rights are completely enforceable in the
                   absence of a judicially issued stay pending appeal.
 To be recorded must be acknowledged. If not acknowledged will not radiate out constructive
     notice to the rest of the world. Would still be actual notice if the title co found or purchase read
     it.
 Could record K of purchase so that someone can‘t come by with cash and usurp. But the
     seller probably won‘t allow. Since 5-10% fail the title would become unmarketable with it, title
     co. would forever ask where that buyer is. It would have to be stricken of record with a lawsuit.
     So seller would acknowledge for purpose of recordation, but the signatures of both parties
     would satisfy the S of F. If foolish enough to put on record but in that but its own terms if
     expunged w/in a certain amount of days, so it dies a natural death and later search would not
     show that it is item of record.
 Vendee‘s lien  any payment made on the property can get to put subsequent purchasers on
     notice.
 The one case where there is less protection from recording, if lease for more than three years
     recorded (must be or risk cut off), the outside world can take at fact value and if it has been
     altered by verbal agree then tenant could be harmed.

MECHANICS OF RECORDING
 First deed is brought to the Recording Office and copied, fee paid, then it has to be indexed.
 Indexing volume and page number on the deed books where the copy can be found  by two
  types historically by the grantor and by the grantee. Must go all the way back to make sure
  that the person who sold it owned it and must go all the way forward to make sure that it wasn‘t
  sold twice.
            Looking at the grantee index to see if the seller was the previous grantee.
            Checking the grantor index to make sure that none marred title.
 NY also has an index by section block and lot. All the instruments are indexed on a page that
  deals only with the lot to which the instruments relate. This greatly simplifies searched, for all
  of the entries dealing with a specific parcel of land are kept together, rather than being found
  under the names of the many grantors and grantees who have previously owned the property.
  ―Lots Effected‖



                                                   30
 In New York, the indexes are by statute a part of the record of instruments. Since only a
  properly indexed instrument imparts sufficient constructive notice to a subsequent purchaser,
  the BFP is protected. As a practical matter, until the instrument has been properly file AND
  indexed, there is no reasonable way to locate it. Further, the grantee of the prior instrument
  could have prevented the harm by seeing to it that the instrument was properly recorded, he
  could have checked (even though an unusual duty). Accordingly, under the rule as to two
  innocent persons, the one who could prevent the loss to another loses, the grantee, rather than
  the subsequent BFP, should bear the loss.
          o NY also has statute that deemed recorded when delivered so that cases go both
              ways.
          o Usually on the back of document, record and return to, so know to go and look if
              doesn‘t come back. Getting into negligence if atty for the buyer. But if deed
              comes back still don‘t know if it has been indexed.

 For multiple deeds from a common grantor only responsible for deeds in direct chain of title
  (but the title co will check everything if a title search is ordered and will tell purchaser
  everything of record, so won‘t be able to say don‘t know about  actual knowledge).
  Singsong, but with the ease of the section block and lot index should be chargeable with
  knowledge.

 Estoppel by Deed. Where a grantor purports to convey an estate in property that he does not
  own, if the grantor subsequently gains title, the title passes by operation of law to the grantee
  under the earlier deed. By executing a deed without a title, the grantor is impliedly to have
  covenanted that, when he obtains title, he will immediately convey it to the grantee.
 The New York position is that the Recording Act did not impliedly abolish estoppel by deed.
  Chargeable with assuming could have sold property before owned it. So if check all the way
  back and all the way forward would know that by estoppel by deed grantor had nothing to
  convey the second time after he actually acquired the deed. It would go to his first grantee
  over a subsequent purchaser.

 The recording office is 4-6 months behind – the title co undertakes that risk.

TORRENS SYSTEM
―Land Court Title‖ Bring a lawsuit against the whole world and serve anyone who is in the recording
office to get title. Not widely used  too cumbersome, limited recovery. Not good against Native
Americans b/c it is state law and is preempted by federal law. So switched over to title insurance.

IV. COVENANTS, EASEMENTS & RESTRICTIONS

Requirements for enforceability of equitable servitude: (i) in writing, (ii) touch and concern the land,
and (iii) the parties must have intended burden and benefit to run with the land.
     With the merger of law and equity no longer matters whether it runs with the land at law or
          at equity. Main remedy is injunction and can get ancillary damages (couldn‘t do before
          merger.




                                                  31
     Originally at law had to originate in a conveyance. Cts have now held that landowners
      who agree with a covenant running with the land and create it on their own to prevent
      something coming in that they don‘t want can have a mutual agreement to restrict the land.
     Restrictions that run with the land, once in place, put people in direct chain of title on
      notice.
     Any covenant will render title unmarketable, even if the zoning says the same thing. Cts
      usually reluctant to make entire blocks unmarketable (eg—sewer payment covenant didn‘t
      make unmarketable b/c city could do the same thing).

RUNNING WITH THE LAND
 Negative Covenants—Covenants not to do a physical act ipso facto touch and concern the
   land. Easy to comply with just do nothing.
 Affirmative Covenants—if an affirmative covenant imposes a substantial burden on the
   property and fetters the land in perpetuity by making it unattractive to buy, a court may find that
   is does not touch and concern. Can be enforced in contract against immediate grantee, but
   not allowed to subsequently run with the land. Disfavored in the law b/c of the fear that this
   type of obligation imposes and undue restriction on alienation or an onerous burden in
   perpetuity.
    Enforceable if: (i) intent to run with land, (ii) privity of estate, (iii) touch and concern.
    In Nicholson (covenant to supply heat) the court should not have allowed to run with land
       b/c burdensome, but since it did, it should at least have only enforced it the party seeking
       enforcement paid the actual cost or allowed the supplier to pay for a heating plan for them.
       o Enforced b/c said wouldn‘t go on forever, one of the buildings would eventually no
            longer exist.
    Eagle Enterprises should have been decided the other way too. Agreed to pay, said in
       deed. When the  got his own well didn‘t want to pay anymore for seasonal water supply
       (should have been analogous to condo statute that have to pay for all fees, regardless of
       use). It wasn‘t against public policy, it ran with the land, and it was agreed to  should
       have been enforced.
    Few exceptions  where the parties have a continuing relationship it can be enforced
       (Eg- perpetually repair RR overpass over farm, upkeep of a retaining wall, etc).
    Covenants to pay money  if the money is marked for property improvements it will run
       with the land.
 Once they run with the land, can‘t be defeated by merely leaving out of deed, anyone in direct
   chain of title is bound. The only way to stop is to buy off everyone who benefits from it,
   missing just one person keeps the covenant in effect.
 Will not enforce indirect constraint on alienation: can‘t have right to buy back at original price.
   But a right of first refusal is valid.
    A covenant to forever maintain a house and never alter, may be enforced as a valid K btw
       the parties, but will not run with the land.
 Discriminatory covenant  unenforceable, bad PR to have in chain of title, could leave out of
   deed as a public policy gesture or put in clause that recognize, but disavow and will never seek
   to enforce, window dressing to protect grantee.
 The benefit and the burden can be personal yet will still run with the land.




                                                 32
TOUCH AND CONCERN
For the burden to run with the land, it must touch and concern the burdened land and for the
benefit to run as well. Difficult to generalize. If functions to permit courts to stop covenant from
running with the land with the social utility of the covenant is outweighed by the fettering of the
burdened property.
 A covenant should be held to touch or concern the land, to run with the land, if it affects the
    legal relations-- the advantages and the burdens—of the parties of the covenant as owners of
    particular parcels of land and not merely as members of the community in general.
 Generally not a problem with negative restrictions (no pig farm, no tavern) b/c innately
    concerns the land.
 Problem arises with affirmative covenant b/c they may not always concern land and can
    impose a burden.

COMMON PLAN OR SCHEME
In the case of a restricted residential subdivision, may courts will imply a negative restriction on a
lot even though there is no writing creating the servitude upon the land. This is done through an
observed common plan or scheme. A gas station that wanted to move into a residential
neighborhood would be have notice of the prior covenant in the other deeds, having been put on
inquiry from view of the premises.
 This allows the purchaser to enforce the restrictions. If not belatedly done than when the
     developer sold the last one there would be no one who could enforce it.
 To enforce a covenant must own benefited land. Without the common plan or scheme when
     the last house sold the covenant would evaporate, even if there were parallel covenants on all
     the properties, since no mention of who beneficiary is. The courts looking back say that the
     common plan or scheme intended everyone to be a beneficiary so that anybody can sue, but
     must be inside the development, those outside can‘t enforce (even if across the street).
 If the developer is putting them in unilaterally, with no bargaining and has not promised to,
     doesn‘t have to continue (NY rule). The builder usually reserves the right to stop at any time
     and sell off the rest.
 Evidence of a general plan includes a recorded plat with restrictions, the developer exhibiting
     to buyers a map of the entire tract on which the restrictions appear, oral representations of the
     developer with respect to restrictions to be imposed on the remaining land, and statements
     made in sales brochures or advertising. If, on the basis of this general plan, the purchasers
     buy in reliance with the expectation of being able to enforce subsequently created ones then
     the developer is estopped from denying representations (won‘t allow what amount to consumer
     fraud in White, allowing renderings to satisfy the S of F as long as no BFPs; but compare that
     the covenant not to compete that was not enforced b/c didn‘t get it in writing in Dunbar
     Camps).

DEFENSE TO ENFORCEMENT: CHANGE OF NEIGHBORHOOD DOCTRINE
That the character of the neighborhood has so changed that it is impossible any longer to secure in
substantial degree the benefits of the restrictive covenant. If this is shown, equity will refuse to
enforce the covenant. Can say that it is outmoded, crazy and strike it of record OR can come in
and defend belatedly.




                                                 33
ZONING
 NY allows a HOA to bring a lawsuit against variance, holds that it has enough standing in
   zoning cases to do so. Historically, they wouldn‘t have standing b/c they don‘t own the land
   (unless it owns a club house).
 Zoning law allows you to aggregate contiguous lots that you owned to build higher. If you
   have a long-term lease you can add the lot you have to the one you own to build higher.
 The fact that you have a covenant doesn‘t prevent you from applying for a change in zone. But
   the change in zoning doesn‘t ipso facto terminate the covenant, but can then go to court and
   say that it has died a natural death and try to have it stricken.
 Zoning is not an objection to title. Take subject to zoning and title is marketable.
 If property is being used for a particular purpose and the zoning law changes you get an
   automatic non-conforming use. If ever more than 51% destroyed than must conform to zoning
   law (if the property is only ¼ destroyed, but the market value is 2/3 destroyed then which do
   we use, physical destruction or market value?)
 Zoning law is a matter of public policy and not title.
 Zoning laws may prescribe the # of parking spaces necessary for certain stores.
 Case in which town passed an ordinance that auto repair shops could only operate from 9-5 M-
   F and when challenged by the new owner, the ct upheld.

RIGHT OF RE-ENTRY
 Real Property Lay § 345
 Statute passed that in order to keep restriction (condition subsequent or limitation) must be
   recorded with in 27-30 years and every 10 years thereafter.
 NY applied retroactively and gave people three years to record old. When they weren‘t people
   though they could resell the land in fee b/c it died a natural death. Later when the original
   beneficiaries wanted to enforce the reentry the court said that statute couldn‘t apply
   retroactively, it can only apply in futuro.
 From Sept. 1, 1958 onwards: (i) record right of reentry btw 27-30 years, (ii) renew every 10, (iii)
   to exercise must go to court before hand (no self help), (iv) party retaining the right must show
   that there is a reason for besides just forfeiture, and (v) the right is subject to that change of
   neighborhood doctrine (but unlike covenant with a right have to go to court before any violation
   b/c if wait till after the title is already on its way back).
 Courts strictly construe a right of reentry and will find a covenant whenever possible and then
   will strictly construe the covenant.

EASEMENTS
 At C/L there is an easement of light and air on the front of your property that faces the street,
   but not on the other three sides (eg—el train compensation if in built in front, but if a building
   put up directly beside then can‘t get compensated).
 In a condo since all people own common areas, board can‘t grant an easement, but can give a
   license b/c they control the use of the land.
 By statute you have a right to go on your neighbors property to repair your own. If the
   neighbor won‘t let you, you can go to court for a decree, but you are liable for any damage you
   cause, have to put up a bond.
 Easements are normally not exclusive.
 By Grant: most common. Difficult to draft. Typically reserve the right to relocate anywhere on
   property that doesn‘t greatly disturb the right of person holding the easement. Normally spell


                                                 34
  out what permitted. Can evolve (eg—from delivery by horse and buggy to car). Can be
  overburdened.
 In Gross: if an easement doesn‘t benefit its owner of the use and enjoyment of the land, but
  merely gives him the right to use the servient land, the easement is in gross (eg—billboard on
  land). There is only burdened property and no benefited.
 By Prescription: 10 years, open, notorious, adverse, and continuous. Cannot get as a member
  of the general public. So as not to have the land dedicated to the public, close off a portion
  once a year. Doesn‘t have to be in writing. Can‘t get to pollute. You can buy an easement of
  light and air, but you do not get an E by P at C/L for light and air. Seasonal use would
  probably be good enough. Can use tacking. No abandonment, don‘t lose (E by P or by grant)
  by not using it (unless another pty takes for 10 years)
 By Implication: Only applied in very narrow circumstances indicating that the parties intended
  one and that it is necessary (eg—landlocked property, granted b/c lack of access = necessity).
  By statute where the developer deeds out property and there are roads and wires in place out
  of a common owner, the property owners get an easement to continue to use the roads, etc.
  o An easement can be implied over a land granted or reserved when a tract of land is
       divided into two or more parcels. If an easement is implied in favor of the grantee, the
       easement is created by implied grant, and if an easement is implied in favor of the grantor,
       it is by implied reservation.
        Some states would never allow in implied reservation (violates S of F, RA, Parol
             Evidence, FC & W, gives the grantee less than deed called for).
        NY will allow one when it is strictly necessary/grave necessity (would still owe
             damages for breach of FC & W). More needed for an implied reservation than an
             implied grant, which only needs slight necessity.

LICENSES
 Licenses by their very nature are revocable but if you terminate a license early for reasons
   other than default you must pay damages.

RIGHT TO SUPPORT
 Lateral & subjacent support  your property is being supported on all four sides and from
   below. Some states say that when you put up a major building on your property you no longer
   have that right of lateral and subjacent support b/c you are putting undue pressure on the land.
 In NY you don‘t lose the right to lateral and subjacent support.
 If the neighbor excavates and your property is leaning  must ask would land have subsided
   even without your building on it, in its natural state) if yes the neighbor is still liable even in the
   absence of negligence (if it slips b/c of the weight of the building then not liable in the absence
   of negligence).
 If you excavate more than 10 feet down, must shore it up, or absolutely liable.
 Party Wall  buildings that share a common wall are built that way and don‘t necessarily have
   an express easement. So when the boundaries are described as ―part of the way thru the
   party wall‖ even though this wall may be all on one person‘s property.
 You can‘t put holes, doors in the party wall. You can extend it up or outwards unilaterally.
    Case: one apt on one side of the pty wall burns down, leaving the other party with an
       exterior wall. The other party tore down everything including the party wall so the first guy
       didn‘t have anything to attach to. The ct said the first guy only had the right to reattach to



                                                   35
        the party wall if it was still there when he came to build. Absent a written agreement about
        the party wall the first guy had no right to it.

RIGHTS IN WATER
 The federal government controls all navigable waterways and oceanfront so anytime you want
   to put up a pier you must get permission from the government.
 Gov‘t owns/controls up to the high water mark.
 If it is non-navigable then it is under state and local control.
 C/L states only allow r‘able use of how much water can be taken out of streams and lakes
   other states follow a prior use doctrine, in dry arid states, water rights are determined by
   priority of appropriation.
 Can reroute water on property as long as it enters and leaves at the same place.
 Can‘t channel it into a pipe for own use or dump on people below.
 Where flooding is a problem the banks will look at flood plane maps and typically need to know
   elevation before will give a mortgage.
 By NY statue, property fronting on a lake that is used for recreation by public than immune
   from liability if anything happens on the property for enumerated activities.
   o Ice Boat Racing Case. Only what listed is what is covered.
 EPA Regs—if you purchase property on a lake reservoir and there are no sewers you must
   use a septic tank. you may own the land and not be able to build on it if there is a law
   prohibiting within so many feet of lake.
 Inland Wetland Statute—look out for if any water on property. By law can‘t fill them in, must
   find out what covered, might not be allowed to build.

Public Trust Doctrine
Current litigation that public facilities should apply to everyone, not just residents, should be made
available.

V. MISCELLANEOUS

BUILDERS TERMS
To protect consumer from say to developer glad to wait for the money while old house being torn
down and garden apts being built, since there is no guarantee, if so stable the builder should offer
stock or a mortgage on his own house or personal property.

PERSONAL PROPERTY ON CREDIT
By Macy‘s etc. They will file:
   1. Conditional Sales Contract. Eg—on $ 2,000 TV, $ 400 down, $ 1600 financing over 2
       years, interest rate, coupon book, when send in the last, then conditional sale evaporates
       and title to the buyer. Prior to that the buyer only had possession. Macy‘s gives release
       on lien, anyone btw that time is one notice that Macy‘s has title.
   2. Chattel Mortgage. Same type of document, buyer gets title ab initio subject to Macy‘s lien.
       Off when paid.

 After Acquired Personal Property Clause. When buying the Plaza, fixtures in all the room, etc.
  Damage will occur, things will be replaced, revolving personal property. Ergo the Plaza
  mortgage attaches to: (i) the land and building, (ii) the fixtures and (iii) personal property used


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    in conjunction now on the property or at anytime thereafter brought onto property (since
    constantly revolving).
    o So a supplier who is selling to Trump on credit has to worry if the property gets to the
        Plaza before the seller files the conditional sales clause, then would be secondary to the
        mortgage, so makes sure that filed in the Recording Office against Plaza address before it
        gets there (eg—while at the factory) so the bank‘s mortgage doesn‘t attach first.

INSURANCE
The insurance co has a right to deduct for depreciation so as not to overcompensate for run down
houses.
 80 % Co-insurance clause  you must insure up to 80 % of value and if you don‘t you
   become co-insurer and make up the difference.




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Description: Notice of Tenant Not to Renew Team Lease document sample