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					                                                                                           Prop Outline
                                                                                        (Pritchett Fall 2006)

PERSPECTIVES ON PROP AND SOCIETY .................................................................................................................................................... 3

A. LOCKE: LABOR THEORY. ............................................................................................................................................................................... 3
B. RADIN: PERSONHOOD THEORY .................................................................................................................................................................... 3
C. RAWLS: DISTRIBUTIVE JUSTICE ................................................................................................................................................................... 4
D. UTILITARIANISM (POSNER): ......................................................................................................................................................................... 4
E. COASE THEOREM............................................................................................................................................................................................ 4
I. 3 TYPES OF ENTITLEMENTS .............................................................................................................................................................................. 4
G. ELLICKSON – SOCIAL NORMS ......................................................................................................................................................................... 4
H. HARDIN – TRAGEDY OF COMMONS ................................................................................................................................................................ 4

ACQUISITION OF PROP .................................................................................................................................................................................... 5

ACQUISITION OF LAND (HISTORICAL) ...................................................................................................................................................................... 5
        Pierson v. Post ......................................................................................................................................................................................... 5
WATER RIGHTS 2 TYPES: ..................................................................................................................................................................................... 5
RIPARIAN RIGHTS, STND (CL) NEXT TO A STREAM. .......................................................................................................................................... 5
          Evans v. Merriweather .......................................................................................................................................................................... 6
PRIOR APPROPRIATION RULE (ARID STATES) ......................................................................................................................................................... 6
          Coffin v. Left Hand Ditch Company ..................................................................................................................................................... 6
INTERLLECTUAL PROP……………………………………………………………………………………………………………………….7
ADVERSE POSSESSION: ................................................................................................................................................................................... 6
          Manillo v. Gorski, ................................................................................................................................................................................. 7
          PHILOSOPHICAL PERSPECTIVES ON AD POSSESSION ............................................................................................................................. 7

ESTATES IN LAND/PRESENT INTERESTS – (DEEDS OR WILLS) .......................................................................................................... 7

PRESENT INTERESTS: 4 POSSESSORY ESTATES IN LAND (CLASSIFIED BY DURATION)  FEE SIMPLE .................................................................. 7
(1) Kinds of waste – affirmative, permissive, ameliorating ............................................................................................................................ 9
          Brokaw v. Fairchild- mansion .............................................................................................................................................................. 9
          Policy Implications – Future & Present Interest Distinctions are being phased out ............................................................................ 9

CONCURRENT INTERESTS: JT, TIC, & TEN. BY ENTIRETY .................................................................................................................. 9

TENANCY IN COMMON – ......................................................................................................................................................................................... 9
         Delfino v. Vealencias.......................................................................................................................................................................... 10
JOINT TENANCY – ................................................................................................................................................................................................. 10
         People v Nogar ................................................................................................................................................................................... 11
COMPARISON TABLE: TIC, JT, T-BY-E...................................................................................................................................................................... 11
          Black Families and Partition Article: Sanders Estate .................................................................................................................... 11
MARITAL PROPERTY LAWS HAVE ∆ED — WOMEN NOW HAVE RIGHTS ....................................................................................................... 11
          In re Marriage of Graham ................................................................................................................................................................ 11
          O‘Brien v O‘Brien ............................................................................................................................................................................. 12

LIMITATIONS ON PROP USE/RIGHTS (COASE, CALABRESI & MELAMED) ................................................................................... 12

COASE THEOREM ................................................................................................................................................................................................... 12
CALABRESI & MELAMED: LEAST COST AVOIDER ................................................................................................................................................ 12
WAYS ENTITLEMENTS PROTECTED: PROP, LIAB, INALIENABLE RULES ................................................................................................................ 13
NUISANCE LAW (RSTMT) (SEE COASE, CALABRESI) ...................................................................................................................................... 13
REASONS FOR SRICT LIAB —DAMAGE ON POLLUTER REGARDLESS OF FAULT.................................................................................................... 14
TRESPASS LAW ................................................................................................................................................................................................. 14
           Pile v. Pedrick .................................................................................................................................................................................. 14
           Geragosian v. Union Realty Co. ...................................................................................................................................................... 15
ELLICKSON & SHASTA COUNTY: SOCIAL NORMS AS PROP INSTITUTIONS ....................................................................................................... 15
           Schild v. Rubin ................................................................................................................................................................................. 15
BALANCING RIGHTS OF INDIVIDUAL PROP OWNERS V. SOCIETY: ......................................................................................................................... 15
           State v. Shack ................................................................................................................................................................................. 16

REAL ESTATE TRANSACTIONS/K FOR SALE OF LAND ....................................................................................................................... 16

                                                                                                                                                                                                     1
STAGE 1: K FOR SALE OF LAND ............................................................................................................................................................................ 16
CAVEAT EMPTOR: Buyer Beware ..................................................................................................................................................................... 17
STAGE 2: ESTABLISHING GOOD TITLE – DOC EVIDENCING INTEREST IN LAND MAY BE RECORDED................................................................. 17
MARKETABLE TITLE – FREE FROM DOUBT ............................................................................................................................................................. 17
            Exs of System Defects ―City Lags in Deed Handling‖ (Article) ................................................................................................. 18
STAGE 3: DELIVERY OF DEED............................................................................................................................................................................... 18
TYPES OF DEEDS .................................................................................................................................................................................................... 19
TYPES OF MORTGAGES: ......................................................................................................................................................................................... 19
POLICY ISSUES IN REAL ESTATE: ........................................................................................................................................................................... 19
WHO SHOULD BEAR BURDENS OF PROBS W/ PROP/TITLE? .................................................................................................................................... 19

LANDLORD/TENANT LAW............................................................................................................................................................................. 20

TYPES OF LEASEHOLDS (4 TYPES) .......................................................................................................................................................................... 20
BARGAINING POWER. ............................................................................................................................................................................................. 20
LL RIGHTS & REMEDIES........................................................................................................................................................................................ 20
TENANT RIGHTS AND REMEDIES............................................................................................................................................................................ 22
             Javins v. First National Realty Corp ............................................................................................................................................ 23
CALABRESI & MELAMED ON WARRANTY OF HABITABILITY .................................................................................................................................. 23
IMPLIED COVENANT OF HABITABILITY: ............................................................................................................................................................... 23
MEYERS: CRITICISMS OF WARRANTY OF HABITABILITY........................................................................................................................................ 24
POLICY ARGS IN FAVOR OF CODES (AGAINST MEYERS): ....................................................................................................................................... 24
RIGHTS AGAINST DISCRIMINATION........................................................................................................................................................................ 25
            Starrett City v. US (HUD). ............................................................................................................................................................. 25

SERVITUDE LAW ............................................................................................................................................................................................... 25

EASEMENTS HOLDER RIGHT TO USE/RESTRICT USE OF ANOTHER‘S LAND..................................................................................................... 25
              Reese v. Borghi . ............................................................................................................................................................................ 26
REAL COVENANTS – RUN W/LAND, INDIVIDUALS CAN AGREE TO ANYTHING ............................................................................................... 27
Shelley v. Kramer restrictive covenant bars ―ownership‖ of non Caucasians. ...................................................................................................... 28
EQUITABLE SERVITUDES PASSES W/ LAND, BINDS PARTIES W/O ALL REQUIREMENTS OF A COVENANT .................................................................. 28

COMMON INTEREST COMMUNITIES ........................................................................................................................................................ 30

JUDICIAL ROLE IN OVERSEEING HOMEOWNER ASS‘NS (MODELS) ........................................................................................................................ 31

ZONING: RELATIONSHIP BTWN SOCIETY AND INDIVIDUAL PROP RIGHTS? ............................................................................. 35

4 BASIC MECHANISMS FOR LAND USE REGULATION BY LOCAL GOV‘TS: ............................................................................................................... 35
4 ENTITIES TO ADOPT AND IMPLEMENT LAND REGULATIONS ................................................................................................................................. 35
EUCLIDEAN ZONING SYSTEM ................................................................................................................................................................................ 35
5 PERSPECTIVES ON ZONING:................................................................................................................................................................................. 36
EXCLUSIONARY ZONING: ZURICH AND FERNLEY CLASS EXCLUSIONS) ..................................................................................................... 38
                Fernley v. Board of Supervisors of Schuylkill Twp (85). ........................................................................................................ 40
                Mt. Laurel, NJ Cases ................................................................................................................................................................. 40
GROWTH CONTROLS SOME COMMUNITIES WANT TO RESTRICT OR STOP ALL RESIDENTIAL AND COMMERCIAL DEVELOPMENT...................... 40

TAKINGS ............................................................................................................................................................................................................. 42

EXACTIONS ........................................................................................................................................................................................................ 42
EMINENT DOMAIN GOV‘T POWER TO CONDEMN PROP AND PAY FAIR MARKET VALUE................................................................................ 44
               Hawaii Housing Authority v. Midkiff, O‘Conner ‗84,. ............................................................................................................. 44
               Poletown Neighborhood Council v. City of Detroit, Mich SP Detroit GM ............................................................................... 44
               Kelo v. City of New London. ...................................................................................................................................................... 44
REGULATIONS OF USE  NON TAKINGS .................................................................................................................................................. 45
SAX – ―THOUGHTS ON DECLINE OF PRIVATE PROP‖ SOCIETY SHIFTING TOWARDS REG PRIVATE PROP RIGHTS.................................................. 45
2 WAYS TO LOOK AT TAKINGS AND COMPENSATION – WHO DETERMINES WHAT PROP IS? ....................................................................................... 46




                                                                                                                                                                                                        2
Themes:
   I.        ideas of prop
   II.       CL principles of prop (adverse possession, estate law, concurrent interests )
   III.      Contractual relationships over prop – aspects that can be organized by contractual agreement btwn parties (easements, servitudes)
   IV.       Political Institutions – gov‘t institutions that regulate prop ownership and use.

WHAT IS PROPERTY?
  A. Prop is a Bundle of Rights:
         1. right to use, transfer, exclude others from occupying or using ―thing‖, alter, possess, enjoy fruits
         Prob w/ ―bundle of rights‖ concept is that none of them essential. Ex: Wetlands owner can‘t build, can‘t alter historical
         buildings.
              Absolute – right to use not necessary absolute, still can‘t throw it out window
              Sufficient – right to use doesn‘t mean total ownership, can‘t paint house orange in CIC, easement
  B. What does ―prop‖ do?
     Prop rights: 1) rules which allocate scarce resources, 2) structure relationships btwn people over things.
     ―Prop‖ is rhetoric: a language used to decide when and if people have rights in relation to others and things.
  C. 4 Institutions that regulate prop:
         1. background legal principles – judge made CL
         2. social norms – way society organizes itself (outside court), i.e. lobsters, Ellikson cows in CA
                    i. ―self help‖
         3. private contractual relationships – private K relationship contrary to law (will)
         4. political instructions – EPA zoning regulations
     Popov v. Hayashi Barry Bonds: Who owns baseball? -- They have to share it.
          One idea: Mr. Hayashi – strong clear possession, labor makes it yours – Locke
          Another Idea: Popov (Pierson v. Post) hunting rules, you‘ve done something to bring it under your control

PERSPECTIVES ON PROP AND SOCIETY
      A. Locke: Labor Theory. Prop created when you mix your labor w/prop and remove it from nature.
                      i. personal prop (prop over own body)
                     ii. labor created prop (house) – becomes yours when removed from nature
                             1. 1st to posses and alter prop has ownership
                    iii. Only allowed as you can use w/o spoiling – this is unrealistic.
                             1. Self limiting – if you can‘t consume it can‘t be yours
            b) Philosophy – want productive use of land
            c) Criticisms: Does Locke‘s theory apply today ?
                      i. People don‘t have control over their bodies – can‘t sell kidney, drug and alcohol abuse are illegal.
                     ii. People hoard resources and take more than they can use.
                    iii. Competing parties for reasoning
                    iv. Capitalism – don‘t always own what you work on (in factory), reality is there‘s exploitation
      B. Radin: Personhood theory Idea – prop is part of individual, defines your person
                      i. We are defined by our possessions, not really a person unless you have prop to justify your existence.
                     ii. Ongoing relationships w/ people are part of our existence.
                    iii. Types – importance (prop valued based on worth to person, diff to each person)
                             1. Personal Prop: bound up w/a person., specific emotional value – wedding ring
                             2. Fungible Prop: prop which is held purely instrumentally – ex. Dollar bill – replacing it w/ something
                                  of equal value (4 quarters) would make no difference to owner.
                    iv. *** There is a continuum: not every object has same meaning to every person. Wedding ring has personal
                         importance to bride, but a fungible importance to a jeweler.
                     v. We form communities and they have relationships w/ prop b/c individuals have a relationship to prop
            b) Philosophy/implications
                      i. Resources help you achieve self development
                     ii. Since objects so integral to person, when prop gets taken it ∆es who you are
                             1. imminent domain not respectful of personhood
            c) Criticisms/limitations
                      i. Imminent domain – gov‘t doesn‘t respect
                     ii. Encourages people to value prop over people
                    iii. Would cause people to misrepresent/lie about value of prop
                    iv. Makes prop sacred




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C. Rawls: Distributive Justice
        a) Idea/Theory – in an ideal state everyone in society should have basic needs filed
                  i. How lucky people are in ―natural lottery of talents‖ shouldn‘t matter
                 ii. What would people behind a veil of ignorance do
                           1. distribution would be to max advantage of lowest social class
                           2. NOT talking about actually redistributing, but about ∆ing how we set stnds of distribution.
                iii. People are risk averse
        b) Philosophy – prop not essential to political and econ system, just a means to social equality
        c) Wilson Critique:
                  i. People are NOT risk adverse. People take risks all time and society rewards them for that. They are willing
                     to take risks b/c they think its fair that rewards be proportional to effort  American dream.
                 ii. Those who work hardest get ahead – Rawls discourages hard work
                iii. Society: Once people become settled and ―evolve‖ socially, become more competitive
D. Utilitarianism (Posner): Max aggregate welfare – not about individual, size of entire pie
        a) Posner's Econ Analysis of law: Elements: 1) universality 2) exclusivity 3) transferability
                  i. Free-market competition is source of max aggregate wealth
                 ii. To maximize wealth: Free market will lead to efficient allocation of resources = protection of individual prop
                     rights is crucial.
                iii. People look out for their own interests – they will work to improve their prop and benefit society as a whole
        b) Implications
                  i. Need to protect prop interests: w/o incentives of private prop rights, people would not take risks or improve
                     prop b/c they would not receive benefits.
        c) Probs w/ utilitarianism:
                  i. Prop interests on a continuum
                 ii. Worry about Tyranny of majority
                iii. does not consider social minorities and realistic aspect of who will benefit from ―growing pie‖
E. Coase Theorem Idea – Externality inefficiencies would be solved if transaction costs eliminated (essentially, absent
   transaction costs, market will work out prob)
                  i. i.e. least cost solution should always be adopted, no matter which party will be required to implement
                 ii. In absence of entitlement – should be allocated to parties that would have bargained for them
        b) Criticisms
                  i. what happens when entitlements are not clearly allocated?
                 ii. least cost avoider should always bear onus of fixing solution
                iii. Positive Transaction Costs Model
                           1. 4 types of transaction costs inhibit Coase
                                    a. Negotiation and Litigation – time and $$ to enforce agreement
                                    b. Free-riders (tragedy of commons – if no one contributes to negotiation costs, negotiations
                                         may not take place)
                                    c. Hold-outs (opportunism on part of class) – party may try to get more than their share, if last
                                         person got 10, then I want 11
                                    d. Opportunism (hold-out on part of adverse party) – one party threatens to hold out longer,
                                         may threaten to pollute even more if don‘t give in – entitlement does matter
F. Calabresi & Melamed Entitlements should be allocated to person where entitlement creates highest net social benefit (i.e.
   there may be costs, but person could bear those costs and still have highest social benefit)
                  i. 3 types of entitlements
                           1. Prop rule – no limits on transference
                           2. Liab rule – transfer only for a pre-specified ex∆ value
                           3. Inalienability rule – not transferable at all
        b) Philosophy
                  i. Means costs of creating entitlement should be put on party that can most cheaply avoid them (i.e. if
                     entitlement is clean air, costs should be put on person w/ $15 air filter rather than $100 CFS)
G. Ellickson – social norms effect on prop law
        a) Social norms, rather than laws, often provide rules of conduct people follow.
                  i. Some contexts: even shape operation of formal legal rules and institutions
                 ii. Other times: operate significantly apart from legal rules and institutions (in shadow of law).
H. Hardin – Tragedy of commons - public prop rights not always necessary for efficient allocation of resources -- like Ellikson
   own solutions to probs
        a) Oysters – Would work better if treated more like private prop b/c people would internalize costs and maintain beds they
            owed. Whereas now they get over fished.
                  i. When its common prop people can just use it at will w/o thought to sustainability.
        b) Lobsters – work b/c there is communal ownership due to self policing
                  i. probs for younger members or newcomers
                 ii. form of monopoly – can lead to over harvesting, Px setting , barriers to competition, doesn‘t promote innovation
                iii. challenge to Posner which says society fails w/o private prop.

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                 c)   Pritchett‘s Pick up basketball ex: winner stays on, loser leaves Court, norms
                            i. No one owns court, entrepreneurial rules
                           ii. Dominant person – best shooter, most charismatic, resolves disputes.
                                   1. Or have a shoot out to determine a dispute
                          iii. Possible to govern prop use w/o private rights or laws.

ACQUISITION OF PROP
Acquisition of Land (historical)
   A) GR: Rule of Discovery: Whoever gets there 1st entitled to land. Conquest gives title—prop confers and rests upon power
   B) In American Context: Discovery of America gave title to a European gov‘t when its subjects made discovery. Title then passed to
        states of US. Native Americans did not have prior possession since they didn‘t settle or control their land.

     Johnson v. McIntosh, 69 - 2 parties claiming same land. Johnson bought land from Tribe, McIntosh from U.S. land grant.
     Held: U.S. gov‘t had right to transfer, Indians did not.
     Reasoning: (Marshall) title by discovery rule
           Acquired land by conquest, civilized inhabitants get to keep own land
           Lockean Principle of productive use—Indians didn‘t own b/c they weren‘t using it productively
     Rule: Conquest gave right to take land by eminent domain; have to compensate other party. Indians were being ―paid‖ by
     receiving other plots of land and being civilized thru Christianity.
           Marshall sets out a utilitarian philosophy—efficient system that allows title to be transferred frequently to benefit whole
     Policy Note—had Marshall ruled other way, he would‘ve been ignored. He ruled this way in part to protect reputation of US SP—
     Cts integrity was at stake.
     Flaws in Reasoning—Individuals and states purchased land from Indians all the time. Lots of econ relationships btwn Indians and
     settlers but Marshall ignored b/c he needed to establish an efficient system of land ownership which was crucial to future growth of
     country

    Pierson v. Post – Wild Animals, 94-99
    Facts: Post, w/hounds, pursued a fox. Pierson saw Post pursuing fox and killed fox.
    Issue  What acts amnt to occupancy, applied to acquiring right to wild animals?
    Held: Pursuit not enough b/c it would cause confusion/inconsistency.
         For capture, must possess, mortally wound, or entrap – have clear control. Judge also looks at certainty.
    Philosophical Justifications:
         Locke‘s– Post has put work into it 1st. B/c he added his labor he deserves some protection. If you don‘t protect people like
            Post than there is no incentive to hunting.
         Utilitarian –Pierson wins – gets rid of foxes which would improve society

H20 RIGHTS 2 types: riparian rights (Evans v. Merriweather) and prior appropriation (Left hand ditch co.)

        RIPARIAN RIGHTS, STANDARD (common-law) rights of landowners next to a stream/body of h20.
        a. English Rule (natural flow) requires that riparians use h20 but w/o hurting rights of other riparian owners.
                  i. Natural users can use all of h20, only when its used for commercial purposes that it can‘t be depleted.
                 ii. Natural v. unnatural uses (natural comes first)
        b. American Rule (aka Reasonable Use Doctrine), a riparian owner can take h20 for all reasonable uses as long as it doesn‘t
           unreasonably interfere w/other‘s riparian rights.
        c. Under some riparian juris, Natural Flow Rule: owners can use an unlimited amnt of h20 for natural uses, but can only use it for
           artificial use if it doesn‘t substantially diminish h20course.
        d. Riparian right ―run w/the land‖ can never be transferred to a nonriparian owner
                           1. Discourages proper use of land, No advantage is gained by priority of use
        e. Law in all states except 17 (in West)
           i. Natural flow v. Reasonable Use
           ii. Natural flow (English) – each h20front owner entitled to flow of streams in their natural condition
           iii. Reasonable Use (America) – Entitled to use only amnt of h20 that she can put to beneficial use
                 1. Can only sue if beneficial use has been interfered w/
           iv. Natural v. Artificial
           v. Natural – Owner has absolute right to all h20 for natural uses, no matter affect on downstream users
                 1. Drinking, bathing, raising farm animals, irrigation for small areas of farmland (but not large-scale)
                 2. Use not considered reasonable if pollutes h20 source
           vi. Artificial – May not take h20 for artificial use until natural uses of other riparian owners fulfilled
                 1. If h20 is available after natural uses, each owner‘s rights to take h20 for artificial use is equal




                                                                                                                                      5
       Evans v. Merriweather, 103-106 – both own land, use h20 for mills, drought and Evens makes dam to keep all h20
       Facts: Merri can‘t run his mill and sues. Does Evans have right to divert H20 away from Merri
       Ruling: Evans must pay damages to Merri for diverting stream.
                Types of use: Necessary – survival, Unnecessary – gain, prosperity
                Use of h20 for manu is not essential, STANDARD


    Prior Appropriation RULE (arid states) 1st person to make beneficial use (only amnt needed for that purpose) of H20 has rights.
     1st come, 1st serve (some states require a permit)
     Rationale  H20 valuable commodity in dry states. Investors need to know h20-related projects, which require large capital, will
        have their h20 rights protected – Riparian ownership NOT required

       Coffin v. Left Hand Ditch Company, 106 – 1st appropriation used, riparian not avail b/c left hand not close to h20
       Facts: Coffin lives near creek and uses h20 for irrigation. Left Hand had built a dam to divert h20 for his own use. Coffin tore
       out Lefts hand‘s dam and took h20 for his own land.
       Rule : first appropriator of h20 from natural stream 4 beneficial purpose (Left) has prior right; right NOT dependant upon
       closeness – Protects people who have invested in prop and are using h20 to irrigate.
       Held: Encourage people to invest in obtaining h20. RULE, encourages development of h20 uses and is predictable.
         Efficient: permits transfer of prior appropriation right to user who puts a higher value on it; transaction costs low.
             Riparian right applies only when someone has actually been using h20. When Coffin bought land he didn‘t buy h20
                 rights, h20 was already being used by Left Hand.
       Philosophical: Locke – put value into h20 by using it & make it ―your prop‖ in terms of prop. rights. Utilitarian – efficient
       allocation of resources.
             This is static – prevents later people from coming in w/ a more innovative way. (Statutes later ∆ed)

INTELLECTUAL PROPERTY
      INS v. AP (stealing news, Supp.)
      a. GR is news is not prop b/c it is facts/history but has some elements of prop b/c parties treat it like such - thus is quasi-prop
                  i. Has ex∆ value, is product of someone‘s labor (Locke), depends upon freshness and reliability
      b. Rule: Added value creates a prop right
      c. Holmes‘ dissent: Prop is a creation of law – since no law in this case, no prop –
                  i. disagrees w/ Locke, says prop not inherent, rather a human creation
      d. Brandeis‘ dissent: Once prop is communicated, loses value of excludability – so no longer prop (see Bundle of Sticks,
            Utilitarianism). Competition isn‘t unfair b/c profits are unearned.
      Miller v. Universal City Studios, Inc. - College student kidnapped, reporter copyrighted book, Hollywood producer reads it makes
      movie w/o agreement
      Hold: Act of researching is not protected under copyright law. Facts themselves not copyrightable. Expression of facts –
      copyrightable
      If allowed to copyright facts/research then future people would have to reinvent the wheel every time they wanted to write a history
      book b/c we normally build on the work of others

         Brenner v. Manson – researcher applies for patent on steroid discovered w/possible potentional
         Hold: Until usefulness has been shown no patent should be granted. Patent is not a hunting license, not a reward for search, is
         compensation for successful conclusion. Must show specific utility.
         Can only patent that which is useful if not would put an unfair burden, monopoly, on future research and cause a field not get fully
         developed/investigated, block full areas of scientific research
         White v. Samsung Electronics – Vanna White sues Samsung for ad using her ―likeness‖ in a robot
         Right of publicity beyond name and likeness, to any appropriation of white‘s ID – anything that evokes her personality.
         Person has the exclusive right to use her name, likeness, signature and voice for commercial purposes – commercial speech less
         protected than other speech
         Dissent: Under fed copyright law parodies are allowed, this was a parody more of show than White

ADVERSE POSSESSION: -- can gain title to land w/o payment
    If w/in # of yrs specified in state statute of limitations, owner doesn‘t take legal action to eject possessor, owner barred from bringing
     ejection and adverse possessor has title to land.
               o Effects: Bars owner‘s claim to possession, extinguishes old title of owner and creates a new title by operation of law.
               o definite period w/in which claims must be asserted so that risk of making illegal claims after evid necessary to defeat
                   them has been lost is prevented and security of title is promoted
               o Purposes: Clear title (after time period runs out, no way anyone can challenge your title);
                         Utilitarian, - encourages giving land to whoever‘s actively using it.




                                                                                                                                      6
    Requirements: Actual, Hostile w/claim of right, Open and Notorious, Continuous, Exclusive
    1) Actual: must show that adverse possessor actually
         a) possessed land
         b) was making productive use of land, and
         c) type and scope of use was consistent w/ particular characteristics of land.
              i) Exception: Under constructive possession doctrine, an adverse possessor who holds ―color of title‖ gains title to all land
                    described in deed, not just land he actually possesses. Valid when person making claim was not aware that doc was invalid.
    2) Hostile w/ a claim of right: must be purposely taking land. (not a mistake)
         a) Possessor must possess land w/o express or implied permission of true owner.
         b) Note that permission will be presumed in many circumstances, e.g. where a possession began w/ true owner‘s permission.
              i) Does mistake constitute hostility?
                    (1) Objective Test: State of mind irrelevant, actions of possessor matter.
                        (a) A person can be an adverse possessor even though he is not actually claiming title against true owner if his actions
                             look like it and he is occupying w/o owner‘s permission.
                        (b) Whether intended to take land is irrelevant! Only have to look to see whether acts were contrary to those of prop
                             owner. Ex. Connecticut DoctrineYes—Gorski wins
    3) Open and Notorious: must use land openly, w/o attempt to hide or disguise use; manner that makes it clear you are claiming a right
         to land in a way that constitutes reasonable notice to (actual) owner so they can defend their rights.
    4) Exclusive: Cannot share w/owner or public genly. (However, 2 or more persons acting in concert and sharing only among themselves
         can acquire title by adverse possession.)
    5) Continuous: for whole statutory period, use consistent w/that type of prop. (Use doesn‘t necessarily have to be constant—must use
         land as an ―ordinary person‖)
         a) Temp absence in course of normal use does not end a claim for adverse possession
              i) In CA statute of limitations is 5 yrs for adverse possession
         b) Tacking: Successive occupiers may ―tack‖ their periods of possession together so long as there has been some privity btwn
              them and interest has been conveyed (e.g. sale or transfer by will or inheritance).
         c) Tolling: statute of limitations is tolled (extended) if true owner is incapacitated (or in military service, etc.) when claimant
              first takes possession: Under CL--Disabilities that occurred after occupier took possession did not toll period.
     Under CL there‘s no adverse possession for gov‘t owned land
     Doctrine of Dedication—allows state to claim title to private roadway thru either:
                        o Owner may explicitly dedicate road to gov‘t
                        o Ct. may say it‘s a dedication if public has used road openly and continuously for statutory period
         Doctrine of Agreed Boundaries—owners uncertain about boundary lines and agree upon certain boundaries. Owner estopped from
         later asserting correct boundary if both owners adhered to boundary line for a specified period or one owner detrimentally
         relied on agreed boundary.
     Manillo v. Gorski, SP NJ – D puts in steps that encroach on Ps land 15 inches (20 yrs pass), P says not Ad Possession b/c not hostile
     (steps were mistake)
     Boarder zones considered open and notorious for purposes of adverse possession only when true owner actually knows about
     encroachment.
     Conn doctrine (objective test) Ct used, innocent mistake enough, intention doesn‘t matter  Gorski (encroacher should) win
            But encroacher here still doesn‘t win b/c possession was not open and notorious— Manillo didn‘t know of encroachment.
     Maine Doctrine (subjective test) Adverse possessor must have a good faith belief that he has title  None — Gorski would Loose.
                     o If possessor mistaken as to boundary and would not have occupied or claimed land if he had known mistake, has
                         no intention to claim title and adversity is missing. Need to show you intended to take prop.
                     o Criticism of Doctrine: If actual intent is determinative, intentional wrongdoer awarded/good neighbor not.
                         Also hard to administer since it‘s based on a subjective test of what was actually in possessor‘s mind.

    Philosophical Perspectives on Ad Possession
        For Ad Possession: Lockian (adding value), Utilitarian (making efficient use), Personhood (AP uses land in way meaningful to
        them; OG owner doesn‘t care)

ESTATES IN LAND/PRESENT INTERESTS – FROM DEEDS OR WILLS
   Rights and responsibilities of present owners versus future owners
   Estates in Land – prop right may be present or future interest – depends on whether holder entitled to present or future use of resource
        1. Prop rights are either a (A) estate or (B) a non-possessory interest (easement)
  Estates may be divided into freehold (fee simple and life estates) and non freehold estates.
        Present Interests: 4 possessory estates in land (Classified by duration)  fee simple, fee tail, life estate, and leasehold.
            - fee simple, fee tail, and life estate are free hold estates, leasehold is not
        1. Fee Simple: Estate has potential of enduring forever. Resembles absolute ownership and holder commonly called owner of land.
            It‘s INHERITABLE.
        Fee = potentially infinite duration
        Simple = no limitations on its inheritability
        Absolute = cannot be divested, nor will it end on happening of any event
            A) Fee Simple Absolute: Absolute ownership of potentially infinite duration w/ no limitations on its inheritability.
                                                                                                                                     7
        No one else besides grantee has any present or future interest. Even if it says ―to A and his heirs‖ and A has one kid, kid has
         no right since he may not necessarily be an heir! Ex: Scarlett conveys Tara ―to Rhett and his heirs.‖
     Duration: Forever, Future Interests in Grantors of 3rd Party: NONE
    **Note: Cts will gen try to find a fee simple absolute rather than a defeasible fee.
    B) Fee Simple Defeasible: Interest ends on happening of some event, and owner of fee simple then loses, or may loose, prop.
         Fee simple is subject to a condition that could terminate present interest.
Types of Defeasible:
(1) Fee Simple Determinable: Fee simple estate so limited it will automatically end when some specified event happens. Is
    potential to last forever (fee simple), but potential to automatically end.
          - Ct. does not like fee simple determinable b/c it reverts back automatically—probatic.
     Automatic termination when event occurs, estate automatically ends and fee simple automatically reverts to grantor.
     Words to Look For: ―so long as,‖ ―until,‖ and ―while.‖ ―during‖ (words that denote duration)
     Transferability: May be transferred or inherited as long as stated event has not happened. But, fee simple remains subject to
         limitation no matter who holds it.
     Future Interests: grantor has a future interest called a possibility of reverter.
               o Ex: Scarlett conveys Tara ―to Rhett as long as he uses land for farming purposes.‖ words ―so long…purposes‖ are
                    words of limitation. If Rhett doesn‘t use land for farming, estate automatically reverts back to Scarlett.
(2) Fee Simple Subject to a Condition Subsequent: Fee simple that does not automatically terminate but may be cut short at
    grantor‘s election when a stated condition happens.
     NO automatic termination When condition occurs, estate does NOT automatically end.
     grantor merely has power to reenter and terminate estate. estate continues in grantee until grantor exercises her power of
         reentry and terminates estate.
     Words to Look For: ―but if X event happens..,‖ ―upon condition that if X event happens…,‖ or ―to A, provided however,
         that if X event happens…,‖ grantor retains a right of entry. (i.e. provided that—I give prop to Nick provided that he goes to
         law school)
     Duration: Until happening of named event and reentry by grantor.
     Transferability: This estate may be transferred or inherited UNTIL transferor is entitled to and does exercise right of entry.
     Future Interest: grantor retains power of termination. Note that law does not require that a right of entry be expressly
         retained by grantor.
     Ex: Scarlett conveys Tara ―to Rhett, but if he ever uses land to sell liquor, grantor has a right to reenter premises.‖ words ―but
         if…premises‖ are words of condition.
         ** Note: Fee simple determinables and fee simple subject to condition subsequent are very similar and often language can be
            classified either way.
         **If Ct. has a choice, fee on condition subsequent is preferred, since forfeiture is optional at grantor‘s election and not
            automatic.
(3) Fee Simple Subject to An Executory Limitation: On happening of a stated event, fee simple is automatically divested in favor
    of a third person (not grantor).
     Future Interest: Forfeiture interest is in another grantee, not grantor. other grantee‘s future interests is an executory
         interest
     Ex: Scarlett conveys Tara ―to Rhett, but if w/in next 20 yrs Tara doesn‘t use for farming purposes, then to Ashley.‖
     Like FSD, once event occurs prop automatically goes to third party grantee
    Rules of Construction – Cts uncomfortable w/ defeasible fees. – have adopted rules of construction to restrict defeasance.
    (1) is language precatory ? : grantor wishes, grantor wants – such language is unenforceable
    (2) is it clearly a condition? – if not and simply a covenant, then remedy is damages and not adherence to command
2. Life Estate: Estate will end at death of owner. It is created by granting prop ―to A for life.‖ (Life estates may be made
    defeasible)
A) Types
    (1) For life of Grantee: Estate measured by grantee‘s life.
         Ex. Scarlett conveys Tara ―to Rhett for life.‖ Rhett gets estate in land for so long as he lives. On Rhett‘s death, land reverts to
         Scarlett, grantor.
    (2) Pur Autre Vie: Estate measured by life of someone other than owner of life estate. Comes to an end when measuring life
         ends.
    - Two Ways to Create:
          Scarlett coveys Tara to ―Rhett for life of Ashley.‖ Ashley is measuring life and estate will end on his death. If Rhett dies
               B4 Ashley, life estate pur autre vie descends to Rhett‘s heirs. OR
          Rhett, a life tenant, conveys her life estate to Ashley. Ashley has a life estate pur autre vie. Rhett remains measuring life.
                    o Life estate creates relationship btwn grantor and grantee and person w/ future interest (i.e. remainder or
                         reversion) Means you can‘t waste prop—can‘t use prop in a way that would damage interests of remainders or
                         reversion.
B) Construction probs: If not clear whether estate conveyed is a fee simple, life estate, or leasehold estate, case will depend on its
    own facts and probable intent of grantor.
C) Waste: Conduct by life tenant that permanently impairs value of land or interests of person holding title or having some
    subsequent estate in land – CL remedy: action charging life tenant damages.

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              (1) Kinds of waste – affirmative, permissive, ameliorating
                  a. Affirmative waste: Tenant actively causes perm injury by destroying (i.e. intentional or neg exploitation of prop)
                  b. Permissive waste: When land allowed to fall into disrepair/tenant fails to take reasonable measures to protect from
                        elements. (includes failing to pay taxes) i.e. lets prop become run down
                  c. Ameliorating waste: Principal use of land ∆ed—usually by tearing down a building—but ∆ increases value of land.
                        Actionable if Ct. finds that: A) grantor intended to pass land w/specific buildings to holder of remainder and B)
                        building can reasonably be used for purposes built.
      Brokaw v. Fairchild – Brokaw leaves mansion on 5th Ave to son as life estate who wants to build apartment building
      Issue: Whether ∆es to a prop which increase its value but ∆ its essential nature constitute waste
      Held: Cannot tear down b/c grantor intended to pass it on to others later and house can still reasonably be used as mansion (area
      still residential.) Ct. focuses on use by grantor of ―my residence.‖
             Melms v. Pabst Brewing, where doctrine of ∆ed circumstances was a defense for waste (land had no value as a house
                 anymore, b/c entirely surrounded by industrial buildings.)
      Rule: Tenant has no right to exercise an act of ownership. Demolishing building would be an act of ownership.
                 Tearing down house would ∆ essential character of plot of land. From private residence to commercial residence.

        3.   Leasehold estate: Lasts for fixed calendar period, period to period until landlord/tenant give notice to terminate

    Interests in Land overview…
        Present v. Future interests (whether holder entitled to present or future use of resource.)
             - Present: fee simple, life estates
             - Future: reversion, possibility of reverter, power of termination, remainder and executory interest.
        ―Estate‖ v. non-possessory interests (land v. rights involving land)
             - Nonpossessory interests: easements, real covenants and equitable servitudes.
    Policy Implications – Law is moving away from future and present interest probs: Distinctions are being phased out
    Args for letting people impose conditions on their grants of prop:
         W/o conditions land/resources could go to waste.
         Not allowing them to impose conditions → waste—want productive land use and therefore need to give complete control of
             land.
         Locke— It‘s my prop and I can do whatever I want w/it. Certain rights that should be preserved.
   Args for imposing conditions:
         Conditions protect resources: Land so valuable want it to influence people after you‘re dead.
                  o But are anti-utilitarian—doesn‘t really increase aggregate welfare
         Keep prop w/in family
         When protecting prop rights helps people get out of poverty
    Args Against imposing conditions:
     More efficient to allow resources to move freely –Utilitarian perspective
     Policy towards redistribution—trend towards more openness (i.e. redistribution is being promoted by high estate tax)
    Barnes Museum article – conflict btwn what grantor wanted and best under current situation
     Push to move Barnes museum to area w/other museums, Enable it to make more $, take better care of art, make art more accessible to
        people
             o Args: 1) Barnes was clear in his will he wanted art to remain where it is now (Brokav deferred to will), v.
     2) Currently wasteful, not full utility, ∆ed Circumstances: school can‘t afford upkeep.
             o Clear that its against intent of Barnes‘ will to move his stuff, but that Ct. will eventually say yes, move it

CONCURRENT INTERESTS 3 TYPES: JT, TIC, & TENANCY BY ENTIRETY
     Philosophical View: communal ownership inherently inefficient and does not maximize productive use of prop (Posner)
     Tenancy In Common – remember Right of First Refusal, Major Decision clause in agreement, Division of Responsibilities
     Each co-tenant is owner of a separate and distinct share of prop, which has not been divided among co-tenants. Each owner has a
     separate undivided interest in whole prop and right to possess and use entire prop, subject to rights of other co-tenants.
     MAIN DIFFERENCE btwn TIC and JT is that upon death of a TIC prop goes to their heirs
     A) Creation: Express or operation of law
         (1) Expressly in a grant or will (ex. ―to A and B.‖)
         (2) By operation of Law (ex. several people inherit a particular piece of prop)
              ** If unclear whether a TIC or JT has been created, Cts will presume a TIC
     B) Termination: only means of terminating transferring all of interest into single person OR by ―partitioning‖ prop.
         - death of a co-tenant does NOT terminate tenancy since decedent‘s interest passes to his heirs. (NO right of survivorship)
     C) Alienability: A tenant can sell, give, devise, or otherwise dispose of her undivided share in same way as if she were sole
         owner of prop. In other words, can act on her own.




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Rights of Co-Tenants : Possession (Ouster), Partition, Contribution, Fiduciary Obligation, Accounting
1) Possession: Each Co-Tenant has right to:
     a) possess and use entire prop.
     b) Right to sell, lease or mortgage his interest
     c) Limitations: Co-tenants not in possession (but not ousted—decide not to live there) may NOT force co-tenant in possession to
          pay rent during occupation. Also cannot receive compensation for profits from prop from occupant‘s own labors.
     d) Ouster: Act by one co-tenant that deprives another co-tenant of right to possession. Could happen even if access denied is to
          just part of prop since each co-T has right to possess whole prop.
          i) Remedy ousted guy may seek an injunction as well as damages in a civil suit or as part of an action for partition; rent.
2) Partition: Judicial procedure to end TIC or JT when co-tenants no longer agree on mgmt of prop. -- Judicial right, enforceable by
     Ct. (though waivable) (not available for tenancy by entirety).
     a) In Kind: Physical division of prop into separate tracts if feasible. Each owns her tract alone in fee simple. If separate tracts not
          equal in value, Ct. will require one tenant to make a cash payment to others to equalize values.
               Partition in Kind: Lockian, utilitarian, & Radian.
     b) By Sale: Ct. will order prop sold and sale proceeds divided equally among co-tenants.
     c) By Appraisal: permitting one co-tenant to buy out others at appraisal Px
               (1) **In principle, law favors in kind, but in practice, Cts often partition concurrently held prop by sale.
Delfino v. Vealencias, parties own prop as TICs, V has house and trash removal biz, Delfino wants to put in residential units
Issue: What kind of partition? Delfino wants sale/appraisal while V wants in kind to keep hers
Held: Partition in kind is feasible here and sale of one‘s prop w/o consent is extreme. Need to consider interests of all tenants, not
just econ gain of Delfino. Consider that one has been in actual and exclusive possession of portion of prop for a long time.
          although prop can divided and sold law prefers partition in kind.
Partition in Kind: Lockian, utilitarian, & Radian.


3) Contribution: A co-tenant may demand contribution from other co-tenants for certain expenditures which he made—taxes,
   mortgage, insurance, and repairs. – Ex. If snow storm collapses porch roof.
   a) Limitations: If co-tenant is in sole possession and seeks contribution for expenditures, claim will be offset by value of his
        occupancy. Also, no compensation for managing prop or improving (though they may get more in partition as a result).
4) Fiduciary: imposes higher stnd of good faith and reasonable care w/each other if they receive their interest in same will or grant,
   or at same time by inheritance. Restricts freedom of co-tenants in acquiring common prop—must give other co-Ts reasonable
   opportunity to acquire their proportional share.
5) Accounting:
   (1) Rents: co-tenant out of possession may demand his share of net rents collected from 3rd parties who‘ve leased prop.
   (2) Depletion (claim waste): When one co-tenant is engaged in a productive activity that by its very nature devalues or injures
        land (ex. cutting timber), a co-tenant out of possession may make a claim of waste.

Joint Tenancy – Each co-tenant owns undivided share of prop. Right of survivorship (surviving co-tenant has right to whole estate).
        A) Upon death of one JT, other becomes owner of entire parcel.
            - eliminate risk that upon death of a co-tenant, irresponsible heirs would take land by inheritance.
        B) Creation: 4 Unities
            (1) Unity of Interest: interest of each JT must be identical (in type, amnt, and duration of estate.) Shares of each JT
                 must be equal—one JT cannot be given a 1/3 share and another a 2/3 share for ex.
            (2) Unity of Title: All JTs must acquire title by same deed or will or by a joint adverse possession.
            (3) Unity of Time: interest of each JT must be vested at same time.
            (4) Unity of Possession: Each JT must have equal rights of access to and use of all portions of land.
            **These 4 requisites are so that JTs are regarded as one entity. Each owns undivided whole, when one dies, nothing
            passes to surviving JT. Rather, estate continues. JTs are supposed to act as one person.
        C) Poor Man‘s Will: JT is known as this b/c it allows you to avoid probate and figuring out your interest.
        D) Termination: When a JT is severed, it becomes a TIC. This can happen in following ways:
            (1) Agreement of all JTs
            (2) Simultaneous Death of co-tenants
            (3) Divorce: in most states terminates JT
            (4) Unilateral Act of 1Tenant: If A, a JT w/ B and C, conveys her interest to D, D holds as a TIC w/B and C, although B
                 and C remain JTs to each other.
            (5) Involuntary Conveyance: One guy doesn‘t pay off a loan and takes a lien using house, creditor becomes a TIC w/other
                 former JT and JT is severed.
            (6) Leases and Life Estates (Mortgages): Mixed Rules! Some states hold…
                 a. JT is not severed (―lien theory‖ –majority theory (no severance), but lease or life estate terminates by death of
                     JT/lessor and interest accrues to surviving JTs.
                 b. Lease or life estate partially severs underlying estate. lessee is a TIC.
                 c. Interest is conditionally severed. JT/lessor becomes a TIC w/remaining co-tenants. If life estate/lease ends B4
                     any OG co-tenants die, JT is revived.


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     People v Nogar – husband and wife JTs, divorce, mortgage w/ husband‘ parents
     Facts: Husband and wife JTs, divorce, Husband takes out mortgage from parents w/o wife‘s consent. Husband dies and prop
     condemned. Parents want half of condemnation payment b/c they hold interest for Husband‘s half.
     Hold: California Ct. - mortgage did not sever JT.
          ―Lien Theory‖ = mortgage created lien on his prop interest which was terminated at his death (when his interest ended).
              Parents could have severed JT if they enforced lien b4 death, but took losing gamble by waiting
          In CA mortgage doesn‘t transfer prop to mortgagee – only get a lien (legal right) but not control over prop. Means
              Husband didn‘t transfer any prop interests to his parents when he took mortgage, means JT was not severed.
          Decision creates incentive to enforce claims in a timely manner.
     Broader implications—(anti-econ) if you are a creditor you are going to be unlikely to lend to a JT. Creditor will make sure that
     both parties sign mortgage.
     Probs: JT assumes that JTs act as one person—in this case if husband went out to get mortgage, then if you take one person theory,
     mortgage should bind both parties. Illustrates that people act on their own—so Cts need to decide when JTs were not acting as one.


                                                      Comparison Table: TIC, JT, T-by-E
                       TIC                                    JT                                      Tenancy by Entirety
     characteristics   Each tenant - separate undivided       Own a single unified interest.          JT + Marriage (4 married couples)
                       interest
     Shares            Shares can be different sizes.         Each has an equal interest in whole
     Rights            Possess and enjoy entire prop          Possess and enjoy entire prop (same)
     Survivorship      No right of survivorship. Death -      Survivor has entire interest in prop    Right of survivorship for spouse
                       share goes to heirs
     Creation          Document, will or Court.               Requires 4 unities – interest, title,   Requires 4 unites
                       Requires only unity of possession      time, possession
     Severance/        By partition                           Conveyance of one JT to 3rd party.      Only if both agree
     Termination                                              And others see above
     Other             Default                                Poor man‘s will                         Eliminated in majority of states

    Black Families and Partition Article: Sanders Estate
     Prob: w/o a will, land gets distributed evenly over decedents. Creates situation where 100 people own one piece of land. Since JT
        says if one person wants to sell Ct. can force a partition. Large developers come in and take advantage of descendants lack of legal
        knowledge, illiteracy and get a few descendants to sell and then force a partition. Most often descendants can‘t raise money to buy
        whole thing so developer gets to.
     Lawyer misrepresented to clients what he was going to do for them, said he was trying to sort out title, in fact trying to partition.
        Violated ethical rule 1.4 – did not give enough info to his clients to allow them to make an informed decision.
     Conflict of interests: Lawyer got 20% of sale as legal fees
     Solutions: file for partition in kind over sale. Legal assistance, statutory period, Min % for decision making/petition filing.
        Permission of other co-tenants to sell. Limit right of sale to family members. Fed program providing low interest loans, wills, ∆ing
        estate law
     (Cts are moving away from JT towards TIC b/c JT provides legal probs— TIC more efficient means of ownership)

MARITAL PROPERTY Laws have ∆ed — women now have rights
        B4: Law favored men – complete control over prop. Husband & wife one person – wife had no legal existence. Upon marriage
            wife lost ability to ctrl her own prop. Husband had sole possession of lands – wife regained ctrl upon death or divorce. Wife‘s
            personal prop became husbands. Community prop System established in last 30 yrs
        Two competing systems: 1) CL of marital prop and 2) Statutory law (Comm. prop) of marital prop. States have one or
            other.
  In re Marriage of Graham (SC of CO, ‘78 Wife supported husband while he got MBA, contributed 70% of fin support he did
  housework
  Question: Is MBA marital prop subject to division upon divorce. Parties didn‘t have any marital assets.
  Held—MBA not prop. b/c lacks usual characteristics of prop (i.e. can‘t be assigned, transferred, sold, conveyed and isn‘t acquired
  w/money — sticks in a bundle approach). No prop interest cause not prop. Ct. thinks that wife can recover by seeking other
  maintenance charges (alimony)—where value she invested into degree would be considered. Personhood, utilitarian
  Dissent—MBA is an investment and wife entitled to reap benefits. Getting screwed b/c couple didn‘t acquire other prop except degree.
  It doesn‘t matter whether its prop or not, need to look at whether she invested in his career and whether she should recover for
  investment.

       Degree is an intellectual achievement that may potentially assist in future acquisition of prop
                      Probs: should human ability be considered prop and practical difficulty of appraising value of an education.



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   O‘Brien v O‘Brien (SC. of NY, ‗85) Wife works while husband full med student, contributes all earnings, 2 months after degree divorce
   Held—Ct: degree is prop, gave wife % of husband‘s future earnings over his life. In NY spouses have an equitable claim in
   contributions made to career or career potential of a spouse (i.e. degree). Lockean, distributive justice
        Ct. said marriage is econ partnership so when marriage dissolved both parties entitled to share of contributions made.
        Spouse contributes substantial income and sacrifices personal educational career and childbearing opportunities to support
            other‘s educational goals. Degree was product of parties joint efforts thus subject to division.
   Probs—estimate of money owed wife based on fact that husband was a surgical resident, if he ∆es into another area he‘ll be forced to go
   back to Ct. to get amnt ∆ed. Amnt of money given may force him to stay in surgery so he‘ll be able to pay judgment

    CA – doesn‘t matter whether prop or not, contributions should be compensated – treated as a loan that is repaid w/interest but payment
    not of future earning potential, like in NY.
     NY & CO = CL prop states while CA = community prop state

LIMITATIONS ON PROP USE/RIGHTS (COASE, CALABRESI & MELAMED)
How law should allocate rights amongst prop owners.
        1. Blackstone: Prop rights are bundle of rights consist of: free use, enjoyment, & disposal of all acquisitions w/o any control or
        diminution. Origin of prop found in nature. (very Lockean, very anti-utilitarian)
        a) Pritchett says  Not true, Law places limitations on prop rights all of time - right to exclude most basic entitlement in bundle
        b) Cohen: essence of private prop is right to exclude others.
   Coase Theorem
    Efficient allocation of resources will result if transaction costs—costs of negotiating—are zero. Market determines whether
      activity will continue, not initial allocation of prop rights.
             o When bargaining over externalities, people can solve their own probs— if no trans costs → no prob allocating resources and
                  dealing w/ externalities.
             o But Externalities (when one person’s use of their prop and has a neg impact on another person’s use of their own prop)
                  prevent market from achieving an efficient allocation of resources.
             o In perfect world (no trans costs) doesn‘t matter what law says b/c people reach most efficient solution on their own.
                  - Ex: Custom Bikes emitting fumes neighbors doesn‘t like. Solutions available: 1) fume control ($100), 2) relocate factory
                        ($250), 3) air control ($150).
                  - What if Bikes is entitled to emit fumes? Residents would pool resources and give Bikes $100 to install fume control.
                        (cheapest solution but requires cooperation)
                  - What if neighborhood entitled not to have fumes? Bikes would pay for fume control. Same result either way.
    Probs w/Theorem in Real life? Types of transaction costs:
        (1) Negotiation & Litigation Costs: Time and effort hammering out agreement and enforcing it. Potential to outweigh benefits of
             agreement.
        (2) Free-Rider Prob: People wait until someone else initiates a lawsuit. Increased burden to parties willing to bring lawsuit will
             outweigh benefit from lawsuit.
        (3) Hold-Out Prob: Each neighbor has incentive to hold out for an exorbitant Px that combined together, is more money than
             polluter is willing to pay. If enough people hold-out then it might be cheaper to go w/another option that in reality isn‘t most
             efficient.
        (4) Opportunism: A party attempts to extract a higher Px for entitlement by threatening behavior that would reduce adversary‘s
             wealth,
   Solution under Coase— Entitlements (i.e. right to prevent pollution/to pollute) should be allocated to party that would have
   bargained for them in absence of transaction costs.
                   Bike Ex: entitlement given to neighbors. They care about issue and will force Bikes to negotiate. If entitlement given to
                        Bikes, they would not have an incentive to negotiate b/c they aren‘t affected by pollution.
                   Solution may be probatic b/c company would care about pollution if it cost them money.
    Calabresi & Melamed: Least Cost Avoider Principle
             1. Entitlements should be given to Least Cost Avoider.
                 o Should be allocated so that party who could solve prob at lowest cost addresses prob.
             2. State needs to decide who to give entitlement to, manner to protect entitlements and whether individual allowed to
                  sell/trade.
                            o Bike Ex: Co. is least cost avoider (i.e. deal w/ prob for $100K) means residents get entitlement but Co., b/c
                                 they are least cost avoider, would deal w/ prob.
  Entitlement: Winner? Prop Rule                                     Liab Rule                               Inalienable Rule
   Prop Owner                 Can get injunction or Co. can       Pay Damages to residents.               No pollution, even if prop owners
                              buy out residents.                  (ex. Boomer— Co. can pollute but        don‘t care (can't be sold right to
                                                                  have to pay resident‘s damages.)        pollute)
   Encroaching Neighbor       Co. can pollute OR residents can    Damages from prop owners to Co.         Can pollute in any manner;
   (Polluter)                 buy Co. out (Moffat - Ct: Co.       to stop pollution (pay cost to change   entitlement can‘t be sold and
                              has right to pollute, to stop it    polluting system)                       encroacher has right to pollute (can‘t
                              residents have to buy Co. out)                                              be taken away); Can‘t sell body
                                                                                                          parts

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Ways Entitlements Protected: Prop, Liability, Inalienable Rules
       1) Prop Rule (private prop rules, least state intervention): To remove entitlement from owner, have to buy prop in voluntary
       transaction at Px owner will accept. (Person who wishes to remove entitlement must buy it)
                 - Weaknesses: Econ efficiency; cost of neg may be so great that even though transfer of entitlement would benefit all
                      concerned, transfer will not occur. Hold out and freeloader probs are likely to occur.
       2) Liab Rule (moderate state intervention): If someone destroys prop, they pay damages as ordered by Ct. External objective stnd
       of value used to facilitate transfer of entitlement from holder to nuisance.
                 Advantage: Hold out and free rider probs eliminated when Ct. decides Px. Works when it‘s too hard for people to work out
                 things on their own.
                 Weakness: Hard to actually determine worth of land to buyer and seller.
       3) Inalienable Rule: Entitlement can‘t be bought or sold at any Px (not transferable, stronger intervention). Rarely used—only
       for fundamental and essential things (i.e. people can‘t sell organs).
        Note: most good have mixed entitlements
                 o Ex: House may be protected by prop rule in situations where someone wants to buy it, by liab rule when gov‘t takes it
                      thru eminent domain, and alienability rule when owner is drunk or incompetent.
       Justifications for Rules Setting Entitlements – Considerations for Setting Entitlements (deciding who shall have right to do
       something.
                           1. Entitlements granted on all 3, not just econ efficiency
                 ii. Econ Efficiency: Dictates entitlements which favors knowledgeable choices btwn social benefits & social costs of
                      obtaining them and btwn social costs of avoiding them. In absence of certainty as to whether benefit is worth cost to
                      society, cost should be put on party best able to make cost-benefit analysis (best able to avoid costs).
                iii. Distributional Goals: Distribution of wealth itself and distribution of certain specific goods may (should) affect choice
                      of entitlements.
                iv. Other Justice Considerations
       Coase Criticism of Coase Relies entirely on econ efficiency.
        How much you value a right depends upon your resources.
        If you have less $, your value in living in less polluted neighborhood LESS b/c you can‘t pay any MORE for it.
        His basic assumption is everyone puts same value on entitlement -- isn‘t true—some people value houses more than others
            (Radin‘s personhood argument) and people w/less $ will prob value luxuries less.
       From Prop Rule  Liab Rule (Benefits of liab rules vs. society itself deciding who should receive entitlement?)
        Collective determination of value often desirable (cheaper/more efficient than establishing value by negotiation)
        Beneficial transfer would often come about when shift from prop to liab rule.
        If society can decide MV of each tract of land collectively & impose it, holdout and freeloader prob gone.
        Ex: Getting park thru Eminent Domain…
                 o Park costs $8 mil., worth $10 mil. to buyers/residents who want park.
                 o Sellers value entitlements at < $10 mil.
                 o Sellers‘ incentive to hide true valuation (hold-out) is impediment to collective determination of value
                 o Buyers‘ incentive similar, many will claim no value to free-load
                 o Collective valuation: no need for market to block freeloaders and hold outs
                 o Objective value often better than market alternatives for both sides to minimize uncertainty
        LIAB RULE OFTEN BEST CHOICE  Facilitates efficiency and distributive results diff to achieve under prop rule

NUISANCE LAW (Rstmt) (see Coase, Calabresi)
      Nuisances are;
      A. substantial invasions of another‘s use of prop – Some Cts: doesn‘t include aesthetic impairment w/o tangible physical ∆es or
          easily measured econ harm (building casting shade on pool)
      B. intentional and unreasonable
                i. Intentional: if undertaken to cause harm in Q or substantially certain to cause harm
               ii. Unreasonable: if gravity of harm to P outweighs utility of actors conduct
                        1. Gravity of harm
                                  a. Extent/character of harm involved
                                  b. Social value law attaches to type of use/enjoyment invaded
                                  c. suitability of particular use for enjoyment invaded to character of locality
                                  d. burden on person harmed of avoiding harm
                        2. Utility of D‘s conduct
                                  a. Social value law attaches to primary purpose of conduct
                                  b. Suitability of conduct to character of locality
                                  c. Whether it‘s impracticable to prevent/avoid invasion
                                  d. Whether it‘s impracticable to maintain activity if required to bear cost of compensating for
                                     invasion
      C. unintentional and otherwise actionable: under rules controlling liab for neg/reckless conduct or abnormally dangerous
          conditions or activities

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    Reasons for SRICT LIAB — imposes damages on polluter regardless of fault.
            o Discourages polluters from operating beyond where marginal social harm > marginal social utility.
            o Reflecting pollution costs in product Px – commodities would be under-Px‘d relative to ones that cause no pollution.
            o Give polluter incentive to develop technologies w/greater pollution control at lower costs.
            o Loss spreading—damage awards based on SL can spread entire cost of pollution among consumers of product
            o SL, enforced thru injunctive relief, protects individuals from exposure to unhealthy living conditions.
            o Reducing Judicial burden—avoids transaction costs in determining liab under a neg
     Reasons Against SL—
            o P can more cheaply reduce pollution damages—requiring D to compensate P reduces P‘s incentive to avoid harm
            o External benefits from polluting activity—benefits from polluting activities (i.e. employment/taxes) to local community.
            o Moral objections to SL—moral objections against SL strongest when P came to nuisance. (i.e. Moffat)
            o Transaction costs of imposing SL — involves substantial costs for Cts and litigants.
     Trend is to apply SL in cases involving releases of toxic pollutants.
            o Move towards Rstmt 2nd of Torts §826
                      An intentional invasion of another‘s interest in use and enjoyment of land is unreasonable if:
                                Gravity of harm outweighs utility of actor‘s conduct OR
                                Harm serious and fin burden of compensating others would not make continuation of conduct
                                   feasible.
         Washack v Moffat Fumes from D‘s coal breaker damaged paint on P‘s house. Ds committed not neg, no known method of
         preventing emissions. Ds had no reason to anticipate emission results. Fumes also made neighborhood smell bad.
         Held: D‘s not liable for pollution. Ct. says not a nuisance b/c it wasn‘t intentional or unreasonable
         Reasoning--Under Rstmt of Torts, invader only liable if it‘s intentional, unreasonable, and ultra hazardous. D‘s didn‘t
         intended for result and never happened B4. Also P moved into house after mine in operation—unfair to have D shut down
         b/c they were there 1st.
               What is a reasonable danger ∆es w/time — this would be unreasonable today.
               Prop rule used by Ct.
         Dissent—Emissions constitute a nuisance. Burden should be on D to prove use of his land is not injuring others.

          Boomer v Atlantic Cement Co. D‘s cement plant is source of air pollution in neighborhood. Air pollution growing
          societal prob but econ considerations to shutting down plant. P seeking an injunction.
          Held— No injunction issued if econ cost of injunction > cost of nuisance – but perm damages enforced
          Ct: P entitled PV of all future damages, but no injunction. P‘s can come back to Ct. to get more damages as long as D
          pollutes. Try to make damages high enough to give company incentive to find technological solution to prob.
               Reasoning—Injunction would cause too much econ harm to town—econ consequences > nuisance. Decides
                    residents have entitlement.
               Liab Rule used by Ct.

        Herculaneum article – people must leave town b/c of lead poisoning. Co. purchasing homes from families w/small children
        Case goes in more than 1 box. Residents want to be bought out.

TRESPASS LAW (see Radin – people‘s prop inherent and can‘t be taken away)
    Blackstone -right to exclude is most basic entitlement in bundle of rights -- Trespass is direct violation of this right
    Exceptions to right to exclude — ownership of prop not complete control (Shack, Pruneyard, Schild)
    Trespass: Actionable invasion of possessor‘s exclusive possession of land (ex. shortcut across neighbor‘s land, entering w/o
      permission)
          o Requisite Showing for Trespass: intentional unprivileged physical intrusion.
    Nuisance: Indirect violation, interferes w/possessor‘s use and enjoyment of land (ex. noise, odors, etc).

    Pile v. Pedrick -- D built a wall that encroached 1.5 inches on P‘s land.
    Hold: P‘s have 3 choices — Accept as party wall, accept as a permanent trespass & get damages, Enjoin D to tear down wall from
    their side. P‘s chose tear down piece of wall that crossed over.
          This is prop rule — lots of power to prop owner. Ct: If D wanted to trespass, it needed to buy out other prop owner,
              basically if you build on someone else‘s prop, you have to tear it down.




                                                                                                                                  14
Geragosian v. Union Realty Co. D builds theater that infringes on P‘s land (drain and overhang). Cost to move, $4300, but D‘s land is
worth only $2800, so doesn‘t make sense to make D remove encroachments.
Held: Injunction for P – D has to remove overhang and do something about drain.
Reasoning: Need permission B4 you trespass. Policy position intended to prevent trespassing in future.
     Prop Rule: If parties agreed ‗buy out‘ OK, but injunction b/c prop owner wants it.
     Sanctity of prop, Efficiency not served b/c transaction costs — prop worth less than trespassing items.
     Ct: GR is landowner entitled to injunction for removal of trespassing structures—exception; only in extraordinary
         circumstances.
     Radin‘s Personhood argument— although decision to remove encroachments is not efficient—it‘s P‘s prop and he has a
         right to protect it.


Raab v. Casper Casper‘s buil cabin and home Raab‘s land. When D‘s started building, Raab warned it was on his land, Caspers
continued to build thinking it was their land but made no effort to survey.
Held: Trial Ct. Good Faith Improver Statute; D could keep land and pay damages for it (liab rule);
Appeals Ct. said Ct. needed to take into account neg on part of D in not checking boundaries after P‘s complaint.
      Liab rule since P can‘t tear down Ds prop, but can get monetary compensation for D‘s taking.
      Ct. also uses Good Faith Improver Rule—If one improves land in good faith and under mistaken belief that he is
           landowner--degree of neg should be taken into acct in determining good faith and shaping relief.
           a. Guards against unjust enrichment—landowner could take prop w/ house on it.
           b. Prevents Waste—build house and then have to tear it down (utilitarian argument)
Legislature wants prop to be used productively so want to support people that do something w/ prop. Don‘t want to benefit people
that just leave prop idle.
Ct: moving statute towards rights of OG prop owner, concerned w/ sanctity of prop rights—whereas legislator is trying to soften
trespass law (in favor of trespasser).


Ellickson & Shasta County: Social Norms as Prop Institutions
      Social norms, not laws, often provide rules of conduct. In some contexts, processes shape formal legal rules, other times they
          operate in the shadow of law.
          A) How Social Norms Influence Prop Law:
              o Affects propensity of members of society to use formal legal recourse.
              o Operate w/in families, organizations, etc. to control social behavior and allocate prop interests directly.
              o May form basis for informal institutions to allocate resources and enforce prop interests (ex. Lobsters).
          B) Ex: Shasta County: There are diff cattle rules on closed and open ranges.
               Open range If you want to protect against trespass, build fence. (Trespassers have right)
               Closed range Strict liab for trespassing animals. (Landowner has right)
               Ellickson‘s Hypothesis Welfare-maximizing norms will emerge repeat relationships (interdependence, reliance on
                   each other reinforce compliance).
              (1) People actually don‘t know much about the cattle laws
              (2) Role of Social Norms: People keep a mental accounting of inter-neighbor debts—
                   (3) (Remedies Used, in order) self-help retaliation, report to local authorities, informal claims for compensation
                        w/o help of attorneys, and attorney assisted claims for compensation.
     Ellickson‘s Analysis: Coase Theory assumes everyone knows law/would want to know their rights and then negotiate in shadow of
     law but Reality in Shasta is law irrelevant. When law contradicts society, society‘s rules win.
              Social norms determine: how people act & what they do. Sometimes
                       o social norms shape people‘s actions much more than law and law doesn‘t always shape behavior.
                                 Pritchett disagrees Elik implies things work themselves out w/o law, but over time society changes.
     Inadequacy of Social Norms Alone:
Schild v. Rubin – basketball lawyers – both want injunctions
Hold: No injunction granted b/c didn‘t meet requisite stnd for willful harassment. People who live in organized communities must
suffer some annoyance from their neighbors as part of reasonable use of their prop.
ImplicationWhile Elik hypothesized that welfare-maximizing norms will tend to emerge in governance of repeat relationships, we
see an utter breakdown of norms in this case.
                    o Also shows contrast btwn one system that works very well outside law v. one that doesn‘t work w/in law.

 Balancing Rights of Individual Prop Owners v. Society: Central theme of Prop Law: When does state, thru legislature or Cts, have
 right to restrict rights of prop owners for good of society?




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      State v. Shack Workers for gov‘t orgs entered farm to help migrant farm workers . Farm owner filed complaint for trespass.
      Hold: Gov‘t workers allowed to enter since welfare of tenants outweighs prop rights of owner. Gen owners can exclude, but
      prop rights not more than welfare of persons owner permits to live there. Migrants part of disadvantaged group and Ct. says they
      need help.
                o Right to healthcare/legal aid is necessary and vital service, outweighs prop right to exclude.
                o Societal v Private Interests—when societal interests conflict w/private interest, societal interests win.
      Probs w/ Decision:
      Conservative  Slippery Slope: If you let these people in you have allow others who may really infringe on prop owner‘s rights.
      Liberal  Sets no clear stnd. saying when possessory rights infringed. Ct. should have come out and said that disadvantaged
      people‘s rights greater than prop owner‘s rights always. Case only carves a small exception of who can come on land.


      Constitutional provisions permitting free speech on private prop v. owner‘s prop rights?
          5th Amend: Protects against taking w/o just compensation; 14th: against deprivation of prop w/o due process of law
                   o Fed freedom of speech rights cannot be exercised on private prop (Lloyd, inside Pruneyard).
                   o State Constitutions that grant rights do not violate prop owner‘s 5th and 14th amend prop rights. (Pruneyard).
                   o
  Prune Yard v. Robins D is large shopping center w/policy keeping people from publicly expressive activities. High school kids sets up
  table and are kicked off. File case to enjoin D from denying them access. CA Constitution: people have freedom of speech, laws can‘t
  restrain this right.
  Hold: Kids allowed. Case diff from Lloyd (allows mall to stop protestors from protesting if they have other avenues) b/c that case
  involved fed constitution, state constitution did not supply the right.
        Not a taking b/c does not impair value of shopping center, Ct. allows Mall to set limitations to how people petition
        Ct: Would be a taking if right to exclude was essential to econ value, or forces some people alone to bear burden when should
            be on public as a whole, then it‘s a taking.
        Considerations for whether regulatory action constitutes a taking: 1) character of gov‘t action 2) Econ impact, and 3) Its
            interference w/ reasonable investment-backed expectations
        Case shifts burden to mall. Mall has right to exclude protestors must prove that infringement is really a big deal

Stnd for Regulatory Taking: Reg taking illegal if it forces some people alone to bear burden that should be borne by public as a whole.

REAL ESTATE TRANSACTIONS/K FOR SALE OF LAND
   Real estate transactions are Ks  people can contract to whatever they want, w/in limitations (regulation of private transfers)
   Sale of land 3 stages:
    One Buyer/seller execute a K for sale of prop
    Two  Escrow Period: Buyer: investigate validity of seller‘s title, inspect prop, and secure financing. Seller: clear defects in title
    Three Closing: Seller delivers deed to prop and buyer pays purchase Px. Buyer records deed.
    Occasionally a 4th Stage: Lender holding a security interest in prop forecloses to satisfy debt on which landowner/borrower
       defaulted.
   Stage 1: K for Sale of Land
    Written K Required Statute of Frauds requires writing, signed w/essential terms.
       (1) Kind of Writing: (1) needs to satisfy SofF, (2) can be formal K or an informal memo in writing, (3) signed by both parties.
       (2) Meeting of Minds: sufficient to constitute a K (Younge v. Huysmans- below).
       (3) Essential Terms: ID parties, prop description, Px and manner of payment, IF agreed upon. Parol evidence admissible to clear
            up ambiguities.
       (4) Rights & Obligations: should include other rights and obligations.
             RIGHTS:money in event of rescission, rights if damaged or destroyed during escrow period, to personal prop on land
            o OBLIGATIONS: Circumstances under which K automatically terminated, method of dispute resolution, executed w/in one
                 yr.
   Part Performance: Enforcement of oral K allowed when: buyer took possession and paid substantial amnt or substantial
   improvements.
   Equitable Estoppel: If reasonably and detrimentally relied on oral K or would be unjustly enriched, SofF will be overlooked.

        Estate of Younge v. Huysmans H submitted written P&S agreement to Bank w/check. Bank sent confirmation letter, they
        recorded and put house for sale. Bank drafted agreement but when they recorded letter, asked it be revoked, said deal was
        off. Bank sold to Cuccis who built a house. H alleged letter from bank constituted a binding K and bank breached, demanded
        spec performance.




                                                                                                                                    16
       Issue: Did writings btwn parties constitute a meeting of minds sufficient to create a K?
       Hold: Parties entered into binding contract. Bank explicitly accepted H‘s offer, was reasonable evid of K. H‘s sold their
       house and bank taking prop off market after agreement. However, laches prevent spec performance when inequitable
       result. H‘s waited too long to bring action, Cuccis already made open and visible improvements to prop. Unfair to
       Cuccis to require SP.
            Letter had: parties, Px, prop but not essential terms and conditions—up to Ct. to decide what‘s essential
            Gen: there‘s no sale in real estate until K signed—most Cts would say no K but would use other means (i.e.
                equitable estoppel) to punish bank

CAVEAT EMPTOR: Buyer Beware
      Old Rule: seller did not have to disclose defects unless fraudulently concealed, buyer had opportunity to inspect accepted prop ―as
       is.‖
    New Rule: Now caveat emptor NOT a complete bar to recovery.
                 a. Covenants of Title: Grantor liab from competing claims to title, not physical defects.
                 b. Implied Warranty of Fitness: in many states for new houses.
                 c. Tort of Misrepresentation: Buyer must show material misrep and detrimental reliance.
                 d. Failure to Disclose Material Facts: Some Cts: no relief for buyer if he should have discovered defect.
   Breach & Remedies:
    (a) Timing — When is it a Breach?
        Anticipatory Breach Gen Not allowed: EXCEPT when one party repudiated K, but harmed party must demonstrate
            willingness and ability to tender performance.
        Enforceable in Equity: K enforceable in equity if late party tenders performance in reasonable time.
            o Neither can bring action until she has performed her side of bargain (Dependent Promisis).
    Exception If K specifies time is of essence: In breach if fails perform at specified time.
       (b) Remedies:
            (1) Rescission and restitution: Refund of $ if seller in breach and return of prop if buyer took possession.
            (2) Damages: Buyer‘s breach benefit of bargain at time of breach, incidental damages (out of pocket expenses), and
                 consequential damages (foreseeable ex. interest).
                       Some states: damages for seller breach are the same.
            (3) Specific Performance: Land is unique, makes $$ damages inadequate. Therefore, buyer has right to spec performance if
                 seller breaches K. Spec performance is equitable remedy.
                  Defense to SP  If D would suffer undue hardship, or ∆ed circumstances so SP inequitable, SP denied.
                      Ex: Estate of Younge: H made no attempt to enforce agreement for 2 yrs until C purchased prop and made
                      improvements.
   Stage 2: Establishing Good Title – Doc evidencing interest in land may be recorded.
    Requirements: 1) take deed to register office, ask them to record. 2) Search title to make sure seller actually owns it
       2 Types of Recording Systems:
                 1. By Prop/Tract (good, centralized system): Look up prop, chain of title is listed
                 2. Chain of Title (complicated): Chronological conveyances past to present. Lots of chances for mistake/ fraud
       Marketable Title – free from doubt
            o Implied Warranty: Real estate Ks warranty that seller will deliver marketable title to buyer at close of escrow
            o Stnd for Marketable title: free from reasonable doubt; unmarketable if exposes party to litigation.
                       Breach Ex‘s: Gap in chain of title, Prop violates a zoning ordinance, Neighbor‘s building encroaches on prop, prop
                           encumbered (by a lien, lease, covenant, or easement) and not disclosed – (Note, easement doesn‘t make title
                           unmarketable)
       Marketable Title Statutes: At min, title search should exceed statute of limits for ad possession. Statutes:
            (1) Eliminate old reversionary interests AND/OR
            (2) Declare certain future interests invalid after time unless periodically re-recorded AND/OR
            (3) Requiring search to only go back to ―root title‖—most recently recorded transaction at least 40 yrs old AND for same
                 type of interest (ex. fee simple) held by person claiming benefit of act.
                      1. Exceptions: 1. Title is subject to claims of ad possession after root title. 2. Title is subject to observable easement,
                           even if granted B4 root title. 3. LL‘s reversionary interest not cut off by statute. 4. Claims arising B4 root title can be
                           preserved by filing notice of preservation B4 title search.
       Risk of Loss During Escrow (3 approaches): Warranty of marketable title of no use during escrow period.
            1. Doctrine of Equitable Conversion: After parties execute valid K, buyer holds equitable title, can use spec perform to
                 enforce K.
                  Equitable title—risk of loss during escrow on buyer so long as not caused by seller neg.
            2. Minority of states: Risk of loss on seller: IF damaged portion important part of K and damage significant. Buyer‘s
                 equitable title irrelevanct as to risk of loss.
            3. Some states: Uniform Vendor and Purchaser Risk Act:
                  If neither legal title nor possession transferred, (Risk on seller)
                  If EITHER legal title or possession transferred (risk on buyer).


                                                                                                                                           17
   Recording Title: Americans do NOT have a single, unitary recording system. This is not very efficient.
    Purpose of Recording Acts: protect subsequent purchasers, but not subsequent donees, (heirs and devisees)
         Protection only against recordable docs – not prior interests by ad possession
         Offer means to resolve disputes btwn grantees w/competing claims – does not affect liab under tort law.
    Types of Recording Acts: Tells who has right to prop.
        (1) Race Statutes: (Rule) Whoever recorded prop, Regardless.
               Probs— Assumes perfect knowledge of law/Not fair—even if 2nd buyer has complete notice, he can still take it from 1st
        (2) Notice Statutes: (Stnd) If subsequent party had no notice of prior claim (bona fide) and gave consideration for interest
              (purchaser for value), gets prop, even if 1st recorded 1st.
                       o Protects 2nd purchaser—up to 1st buyer to make people aware that he owns it.
                       o Constructive Notice — i.e. if someone‘s on land. Not formal notice but sufficient
        (3) Race-Notice System: (Stnd) Subsequent BFP for value only has superior title if also records instrument 1st.
                       o Gen trend towards a race-notice statute
Miller v. Green - Green sold prop 1st to Miller, current tenant, then Hines. M had worked land but Hines recorded 1st. Race-Notice System.
Held: Miller wins— work and equipment on prop was sufficient to give Hines constructive notice that Miller had title.
     Ct: Miller‘s presence on land required at least an inquiry into his claims to it.
     Hines couldn‘t have had notice (which Ct. thinks he did)
     Ct. said Miller‘s possession was open, visible, exclusive, and unambiguous — Hines had obligation to inquire about Miller‘s rights
     FYI: under a gen warranty deed—Hines has a claim against seller Green b/c guaranteeing that she has title to prop and can transfer it.
         If it was a quiet claim deed, Hines would be out of luck b/c Green is only promising to sell whatever interest she has.


   Exs of System Defects ―City Lags in Deed Handling‖ (Article)
       Philly Deed Office (city has race-notice statute) Back log in recording deeds from time they are received. City could be earning
       interests on checks sitting in boxes, if seller sells prop again soon after subsequent purchaser would win under notice statute, and
       wrong people could be billed for h20 and sewer charges.
                  Taking long to record deed messes up system b/c 2nd can‘t get an accurate title search
                  Under notice statute—deters race to Ct. house
                  Under a race-notice statute—if going to recorder of deeds constitutes notice then this is a prob b/c office backlogged
                  Date stamp by office: fine in long run but clouds title in short run (unclear who owns prop making transfer more
                     difficult).
                  NY vs Philly—
                           NY: more demand for a responsive system, Limited housing means system needs efficiency, Cost more to file
                           Philly: recorder of deeds is elected - hires people w/political connections not who can do job
       ―Report Details Major Housing Scam‖ (Article) Man sold houses that didn‘t belong to him by drawing up fraudulent deeds
       transferring abandoned homes to him, recording deeds, and writing 2nd deed transferring land from him to a new buyer. Took
       advantage of poor people/immigrants who wouldn‘t have known about recorder of deeds office.
                 o Probs: Anyone can take deed to recorders office, office doesn‘t investigate person, can get info for any prop.
                     Requirements for notaries aren‘t stringent enough.
                  Notary could have prevented sale—they are supposed to verify your ID—City relies on notary to prevent probs
                           Gov‘t is relying on private sector
                           Possible responses to prob—professionalize system (i.e. make it a real business) or ∆ laws making it harder to
                               become a notary (i.e. professionalize private or gov‘t sector)
                  Counter Arg—properties were abandoned—which provided opportunity—Man was serving public purpose putting prop
                     to good use.

   Stage 3: Delivery of Deed
   Covenants of Title - Promise that title free from defects and can be conveyed.
        Under Caveat Cmptor, after delivery grantee only protected from title defects—competing claim to land—by covenants of
            title. Usually, there are 6 types of covenants of title, though free to modify covenants.
            (1) Present covenants, Promise that: only OG grantee, not his successors, can rely on since they don‘t run w/ land.
                  a. Seisin: has title and possession
                  b. Right to convey: right to transfer prop
                  c. Freedom from encumbrances: land is free from undisclosed encumbrances such as mortgage, a lease, a real
                      covenant, and equitable servitude, an easement, a lien, or outstanding taxes.
            (2) Future covenants: runs w/ land, may invoke them against any prior grantor who made covenant.
                  a. Warranty: promisor to defend from any lawful 3rd party claims
                  b. Quiet enjoyment: No 3rd party will assert lawful title to prop.
                  c. Further Assurances: Will take necessary steps to perfect title. (usually omitted in U.S.)




                                                                                                                                  18
       Types of Deeds
               Gen Warranty Deed: Contains 6 covenants above. Against defects arising B4 as well as during time grantor had title.
               Special Warranty Deed: Contains usual covenants above but cover only defects arising during grantor‘s tenure.
           Guarantees only that he has done nothing to make title defective.
                   Ex. Spec Warranty deed included covenant of freedom from encumbrances, grantor liable only if she placed an
                     encumbrance on prop. Not liable if easement already existed when grantor herself received title.
            Quitclaim Deed: Warrants nothing. merely transfers whatever interest he has, if any. Grantee has no rights against grantor
                for defects of title.
Breach and Remedies
       Breach: Present Covenants: breached, only at moment of transfer
                Future Covenants: breached, after conveyance when a 3rd party makes a claim to prop.
       Remedies:
           (1) Damages: Breach of covenant of title gives rise to claim of damages, NOT spec performance. Damages capped at an
                amnt equal to consideration received for prop when sold. (Protects grantor from increases in prop value)
                 Title Totally Failed: purchase Px + consequential damages
                 Title Failed for Part of Prop: damages in proportion to failed part.
                 Breach Freedom from Encumbrances: Amnt depends on whether encumbrance can be removed.
                                 Yes, damages = cost of removing.
                                 No, damages diff btwn value of prop at transfer w/ and w/o encumbrance.
           (2) Estoppel by Deed: NOT remedy for breach.. If grantor subsequently acquires title passes directly to grantee.
       Stage 4: Foreclosure of Security Interests Not a necessary stage
                Lender requires security interest in prop. If borrower defaults, lender has recourse against secured prop to satisfy debt.
       Types of Mortgages:
           (1) Lien: Mortgagor right to take prop if you don‘t pay
                 Rights of Redemption (some states have eliminated) Legislature wants to protect owners (many time farmers) so it
                     allows them to purchase prop back after it is taken by a mortgage company.
                          Inefficient b/c for yr that you have right of redemption mortgage co. can‘t sell prop to someone else.
           (2) Deed of Trust: Borrower conveys title to trustee who holds prop in trust until debt is repaid.
           (3) Diff b/w Two: essential difference b/w a mortgage and a deed of trust relates to power to sell land on default. If there is a
                deed of trust, trustee can sell land at a public sale w/o having to use judicial foreclosure automatically. Also, borrower can bid
                on prop—typically in CL borrower can‘t bid.
       Foreclosure – for failure to pay loan Prop sold at public auction, proceeds pay amnt borrowed. Surplus, goes to buyer.
        Lender may also foreclose if debtor failed to insure prop, pay taxes, maintain prop in good repair.
                Types of foreclosure:
                1. Judicial Foreclosure: Lender must file lawsuit against debtor. Ct: orders prop sold at a public auction.
                         B4 auction buyer hasequitable redemption can stop proceedings by paying balance, interest, penalties, costs
                2. Power of Sale Foreclosure: Avoids costs/hassles of judicial proceeding. Lender may hold public sale almost
                     immediately after borrower defaults w/o lawsuit. Power can be given in K.
       Right of Redemption Statutes: ½ of states have them – entitle borrow to redeem prop after foreclosure sale
        Borrowers may remain in possession of prop during redemption period.
        Note: Prob b/c guy who buys land at sale left hanging, could lose his claim if OG borrower comes after it later.
       A) Deficiency Judgment: Lender may seek diff btwn amnt owed and net amnt realized in foreclosure sale.
        May be required to satisfy w/personal assets
       B) Anti-Deficiency Statutes: Protect borrowers b/c unfair for prop owners to lose prop in foreclosure, then lost more b/c value of
           prop dropped from gen econ conditions.
            Statutes vary widely in scope and in gen mortgagors cannot waive in initial mortgage agreement.
                         a. Criticisms: costly, inefficient, and inequitable. Result in mortgagors (as a class) paying more for their
                               mortgages to cover these deficiencies.
                         b. Praise: promote efficiency.
       Policy Issues in Real Estate:
       Who should bear burdens of Probs w/ Prop/Title?
       (1) Args for Buyer: Caveat emptor
             Coase Buyer brings in title inspector and if something wrong w/title, he can sue inspector. No matter what system
                 adopted, same result
       (2) Args for Seller: Calebrasi seller is least cost avoider. He knows about prob is in a better position to fix probs or disclose
           defects.
             Law moving in this direction slowly.
       (3) Args for Builder: Large building companies, so they inspect whereas we want single used home sellers to be relieved once K
           sealed.




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LANDLORD/TENANT LAW
   Leaseholds give lessee full and exclusive possession.
  Types of Leaseholds (4 types)
     A) Term of Yrs Tenancy: definite period of time w/ beginning and ending date.
           Created by express agreement.
           Ends automatically on last day; neither party need give notice of termination.
     B) Periodic Tenancy: Renewed automatically at end of each lease period unless 1 party gives timely written notice of termination.
           Failure to give timely notice binds parties for another term.
           Created by express agreement OR implied based on conduct of parties.
           Implied when Tenant holds past expiration and landlord accepted rental payments rather than evicting.
     C) Tenancy At Will: Terminable by LL or T at any time, death of either party, new lease to a 3 rd party, or conveyance of fee.
           Express agreement OR when no lease but T took possession w/landlord‘s permission.
           If Employer provides residence for employee: needs to be determined whether employee was tenant or lessee.
                   o Test Lease if employee had exclusive possession of premises against world, including owner.
     D) Occupancy At Sufferance: T once in rightful possession, remains in possession after his possessory rights have ended
           Occupant not true trespasser b/c he didn‘t enter prop wrongfully.
           This is a temporary situation.
           LL‘s remedy hold occupant at sufferance for another term OR evict and collect reasonable rental for period.
  Types of Termination
     A) Mutual Agreement: consent to early termination of lease.
           There will be a re-conveyance of leasehold to LL so must comply w/statute of frauds if remaining more than 1 yr.
     B) Destruction of Premises: destruction of building thru no fault of tenant terminates lease.
     C) Eminent Domain:
          Gov‘t Takes Entire Parcel  Lease terminated: LL and T split ―just compensation‖ award.
          Gov‘t takes only part  T‘s obligation to pay full rent remains intact, even though can use only remaining portion.
     D) Death: Terminates tenancy at will but doesn‘t terminate other leases.
     E) Substantial Breach of a Material Covenant:
            Breach of covenant to pay rent: basis for LL to terminate.
            Other important covenants (ex. Repair) are not basis for recession.
  Bargaining Power distribution depends on local market conditions, economy, interest rates, sophistication of parties, etc.
      Book: LL‘s have more bargaining power in negotiating leases and law tends to protect LLs > tenants. They also say law tends to
          protect Ts more than it used to.
      Form Doc: Form leases are a result of complex, frequently occurring relationships b/w LLs and Ts. Form leases are especially
          common in residential leaseholds. It is almost always LL who offers it.
     A) Advantages to LL:
           Many form leases are one sided and beneficial to LLs.
           Prospective T may face obstacles when attempting to negotiate terms of a form lease. Exs: tight housing market, other
              prospective Ts lined up who don‘t care, lease may be offered on a ―take it or leave it‖ basis, T who insists on negotiating runs
              risk of having no housing.
           Ts often don‘t know that they can ∆ official-looking printed forms which usually has no space for modification.
           Some leases are written in ―legalese‖ not readily understood by many Ts.
     B) Advantages to Ts:
           State statutes, local ordinances, and case law define tenant rights.
           Many of these rights can not be bargained away so it is pointless to put them in lease.
           Rights that can‘t be Bargained Away:
          (1) T is protected against retaliatory eviction since there is a statutory right to lease a renewal except upon showing of good
              cause.
          (2) LL‘s have gen duty of ―reasonable care” to disclose defects.
          (3) LL‘s right to w/draw from rental market, while not entirely eliminated, has been severely restricted in some states and cities
              by laws that make it difficult to convert rental units to condos.
          (4) Discrimination is barred.
  LL Rights & Remedies
     Tenant Duties:
          (1) Duty to fulfill express obligations in lease
          (2) Implied duties not to commit waste or maintain a nuisance
          (3) Duty to vacate premises at end of lease term
     Remedies for Tenant‘s Breach & Holding Over
     1. NO Forcible Entry & Forcible Detainer:
              a. LL‘s may NOT use self-help to seize T‘s belongings, cut off utilities, ∆ locks, or retake premises.
     2. Unlawful Detainer: Summary proceeding for eviction.
          Process:
          (1) LL serves notice: to Tenant demanding that T either perform an affirmative covenant (such as pay rent) or quit premises;
              notice is not required if action is brought after expiration of lease or if it is not possible to cure breach.
          (2) Lease is considered terminated: either when tenant vacates premises or when LL files an unlawful detainer action.
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        (3) Trial date is set: T may raise a # of affirmative defenses but may not file a cross-complaint if he remains in possession.
        (4) Affirmative Defenses for Tenant: T didn‘t breach, eviction notice was defective, LL waived breach, LL violated local rent
             control, T owed no rent b/c of breach of warranty of habitability, etc.
        (5) Eviction: If LL gets judgment for possession, LL can then get sheriff to evict T upon a few days notice to T. Although T may
             appeal, judgment normally isn‘t stayed pending appeal.
        (6) Damages: Unlawful detainer statutes often exclude damages claims and parties are supposed to pursue such claims in a
             separate civil action. Usually, LL may recover past rent due, value of T‘s use of prop during holdover period, and in some
             states, an additional penalty.
    3. Holdover for Another Term: If T has held over after expiration of lease, LL may
        1) Terminate lease and regain possession thru unlawful detainer or
        2) hold tenant for a new lease under same conditions as OG lease.
    Remedies for Tenant‘s Abandonment: T abandoned when she left premises and has not paid rent due.
    (1) Accept Surrender: LL can terminate lease and T‘s liability (except already due rent) by treating abandonment as an offer of
        surrender and accepting surrender.
         Ct. will find surrender when LL uses prop in a manner that is inconsistent w/ T‘s right to possession (i.e. rents it to someone
             new)
    (2) Periodic Suits for Rent: LL can sue for rent as it becomes due (ex. each month) or wait until lease expires and then sue for entire
        amnt of unpaid rent. Most juriss treat lease as a contract and require LL to mitigate damages by making reasonable efforts to re-
        let premises.

Sommer v. Kridel ‘72 Kridel enters lease w/ Sommer for apt for 2 yrs, paid 1st month‘s rent and security deposit. Later writes letter
informing S he needs out of lease. S did not show apt until over a yr later (despite requests), then rented to someone else under same
terms. S sues for recovery of rent during yr.
Held: Landlord must mitigate damages when recovering from a defaulting tenant. Has burden of proving he used reasonable
diligence in attempting to re-let. By not responding to letter, S accepts abandonment of premises.
Note: In prop law duty to mitigate higher than in gen K law. Landlord

Riverview Realty Cases 2 yr lease. D occupied apart short time paying rent until he leaves. LL files complaint seeking back rent.
LL has duty to mitigate rent if tenant abandons. Must to jury to decide if LL exercised reasonable diligence.
Traditional Rude: lease not treated like K, transfer of prop interest - owner transfers control to tenant, no continuing relationship so
no duty to mitigate
Modern rule: leases were K w/duty to mitigate
     Warranty of habitability (Covenant to repair, Warranty of fitness)
NOTE: Duty to Mitigate (Stnd) For prop law, duty is higher than in gen K law. LL has to pro-actively try to find replacement
Tenant.
                       o Factors to consider to determine whether LL mitigated – advertised/show apart?
                       o Rationale: LL more equipped to evaluate prospective tenant.
              Utilitarian argument: using resources most efficiently requires mitigation. People need apartments. Use prop
                  productively (econ efficient)
              Increase costs: LL‘s now bear extra costs which they pass on to Ts. So T‘s will have an increased rent—everybody
                  will pay a little more.

―Study Accuses Philadelphia Housing Ct. of Bias Against Tenants‖—Article
  Benefits of Housing Cts: More efficient, specialized knowledge, forums dedicated to these disputes, Time efficiency (immediate
     solutions)
 Who LL/T Ct. favors? Reality: System benefits party w/most political, social and econ power
          o LL is a repeat player/more familiar w/ systemmore likely to use it to his advantage
          o Most LL‘s are small and need $, so a specialized Ct. expedites case
          o LL (more money) so a specialized Ct. could better protect T‘s interests
          o Rights are made clear, and faster process means rent doesn‘t accumulate  Benefits T
          o Ct. sensitive to fact that T needs protection
  Who benefits depends on location:
             Philadelphia housing Ct. – favors LLs
               Tenants hardly ever win, given minimal time to argue their side
               In most eviction disputes, tenants evicted
               Lot of cases, tenants evidence not considered
               Ignored tenants‘ rights to live in habitable residences
               Tenant‘s loosing cases they weren‘t supposed to be—didn‘t know rights and judge‘s didn‘t help
               Tenants steered towards mediated agreements w/o being warned that they are giving up their right to appeal
               Judges elected – need $$ to pay for campaigns –landlords give money  bias
           New York housing Ct. –favors tenants (but ∆ing) – B4
               Take longer to adjudicate, tenant could stay longer in aptT‘s delayed w/o having to pay rent
               Tenant allowed to hold rent until adjudication ended – now law requiring rent to be put in escrow pending outcome

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            Judges previously been pro-tenant
            Judges gen‘ly appointed
            NY has high % of ―renters‖ w/more money, power than tenants in other cities
           Attempts to rectify situation
            More judges, Oversaw judicial selection process, Enacted escrow period
   Why 2 systems so different?
            T‘s more savvy in NY—more money
            Philly judges elected (controlled by powerful LLs) in NY judges are appointed
            More people own homes in Philly than rent opposite true of NY
            Housing scarce in NY—responded by capturing political system
            Tenants large voting block in NY—influence over system
   Main Point: Social, Political, & Econ context matters in shaping law— in how it‘s written and implemented.
       o law similar in Philly & NY but its implemented differently.
        Tenant-favored v. landlord-favored system?
            Tenant-favored : Tenants have less bargaining power so balances things out. Depends on geography – housing shortage
                places should favor tenants
            Landlord-favored: depends on whether LL large or small (not all LL‘s have more bargaining power) Most small w/1 or
                2 apartments in a single house. Too much tenant-focus cause probs, housing surplus should favor landlords

Tenant Rights and Remedies Covenant to Deliver Possession, Quiet Enjoyment, Cannot be physically evicted, Habitable premises
1. Covenant to Deliver Possession
       a. American Rule: new T only needs to be in ―legal possession‖ at beginning of lease. LL has fulfilled this obligation if he has
           legal authority to lease premises and has given no one else permission to occupy premises (i.e. if there is a trespasser, L has
           no obligation to remove trespasser) L just has to be able to legally transfer possession—doesn‘t have to put you on prop.
                 i. Breach Occurs only if either LL, someone w/ paramnt title, or someone w/ LL‘s consent is in possession when T
                    is first entitled to possession.
       b. English Rule: Actual possession. (majority in US—moving towards English Rule)
                 i. Breach whenever anyone else is in possession at beginning of T‘s lease.
                ii. Advantages over American: LL is in best position to evict holdovers and trespassers and deliver actual possession.
       c. Remedy: When LL doesn‘t deliver w/in reasonable time, T may terminate lease & recover consequential damages.
                 i. Alternative Remedy: T may stand on lease but not pay until leasehold is physically delivered and recover
                    damages as diff. btw agreed rent and rental value during lease term and consequential damages.
2. Covenant of Quiet Enjoyment
       a. Covenant that neither LL, someone w/ paramnt title, nor someone acting w/ LL‘s consent will disrupt T‘s possession of
           premises.
       b. Quiet enjoyment does NOT cover disruptive behavior of 3rd parties, such as neighbors. Increasingly, however, Ct.s have
           been willing to modify gen rule by making LL responsible for activities of other Ts.
       c. Should law impose this obligation on all leases or just on some?
       d. Genly law doesn‘t require quiet leases cause we don‘t want LL and law to be involved in T‘s life.
       e. Calabresi & Melamed: who is better suited to bear this burden/cost. Who is better suited to receive entitlement. Social
           context is important (elderly v students)
3. Actual Eviction: LL can not physically oust T from entire premises.
                 i. Remedy: T can affirm lease, cease payment of rent (until possession is restored), and recover consequential
                    damages. OR T can terminate lease and sue for gen damages.
                ii. Constructive Eviction—When there is substantial interference w/ right to quiet enjoyment that is caused by LL/w/in
                    his duties.
4. Tenant‘s Right to Habitable Premises
       a. CL: did not give T‘s right to habitable premises under doctrine of caveat lessee (―let lessee beware‖). T was supposed to
           inspect premises B4 signing. Historically there was no covenant of habitability. What you leased is what you got.
       b. Lease in gen focused on land and structures/buildings on land were irrelevant
       c. Law began to ∆ in 1800s when cities started to develop w/ lots of people living in closed spaces
       d. Gov‘t started to provide for min stnd to prevent poor living conditions (fires, deaths) Housing Codes
       e. Housing Codes:
                 i. Primary reason for development of implied covenant of habitability housing codes were insufficient.
                ii. Enforcement: Admin agencies have range of options from civil penalties, injunctive relief, and criminal penalties.
                    Yet, studies have shown housing agencies to be genly ineffective in ensuring a min quality of housing for low-
                    income renters (corruption, lack of resources, etc.)
               iii. Buildings were overlooked, not enforcing codes, paternalistic system more concerned about immigrants keeping
                    livestock then fact that buildings were run down, volunteer system failed
               iv. Probs w/ Housing Codes:
                          (1) Admin: Many of people in charge are clueless b/c they were hired for political reasons. Housing
                               departments are understaffed and under-funded.



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                               (2) Lack of Incentive: Housing code people are supposed to order LL to comply and if not, he can be
                                    prosecuted. However, DA often doesn‘t care about these cases and Ts don‘t put much pressure b/c they are
                                    poor and unorganized. Penalties for violating codes are small
                               (3) Vacating: If violations are reported, units will be vacated and LL may decide it‘s not worth it to bring unit
                                    up to code (Meyers).
                               (4) Abuse: Ts may use this as a means to harass and threaten LL. Will be used by middle class Ts so protect
                                    people who can really protect themselves.
                               (5) Capture: Lobbying groups have lots of push and shape rules. LLs may join together. Also, inspectors often
                                    are prior LLs or may want employment w/ LL after, so they‘ll rule in their favor. Incentive to look other
                                    way.
                               (6) Money: Lack of funding.
                      v. **All of these probs help to explain why Ct.s have come up w/ principle of tenant‘s right to habitable premises.
  Javins v. First National Realty Corp Ps rent. LL filed action seeking possession saying renters defaulted on rent for April. Tenants
  admit they did not pay but allege violations of DC housing code and argue violations suspend obligation to pay rent.
  Warranty of habitability adopted.
  Held: A warranty of habitability, measured by stnds in Housing Codes, is implied by operation of law into leases covered by regulation.
  Breach warranty gives rise to breach of K remedies.
  Reasoning: Old rule (no warranty of habitability) based on diff relationship to prop. Ts not interested in land, want suitable home
       Ts aren‘t able to make repairs, more mobile—in apt for short lease period, dwellings more technologically difficult to repair, Ts
           don‘t have access to all areas that might need repair
                 Develops a social/econ rational for ∆ing law
  Why should LL bear responsibility:
       greater opportunity and incentive, maintain propmaking it useful in future, authority to repair, skills or can contact people can
           make repairs, Have money to make repairs
  Note: Case suggests that Ts have prop right since LL MUST fix prob and can demand homes are maintained.


  Calabresi & Melamed on Warranty of Habitability
    Kind of like a liability rule since Ts are receiving reduction as result of LL not complying w/ codes. City enforces code if its violated
        and then damages declared by Ct. are paid to tenant.
    But a stronger case for inalienable right—can‘t contract around housing codes. Tenants are entitled to warranties and they can‘t be
        traded away. Judge says warranties are implied in all contracts, can‘t negotiate right for a lower rent.
    Pritchett: Observe that judge is imposing incentives on LL b/c they‘ll have to pay damages if they don‘t maintain buildings. Judge is
        creating a private remedy to deal w/ prob of un-enforced codes.
    Legislature might be better suited but it would require stricter fines and more involvement/inspections
    Although it might be more efficient than a private COA

Implied covenant of Habitability: Growing # of Cts hold there is an implied covenant of initial habitability and fitness in
        leases of urban dwelling. Breach occurs when defect has a substantial impact on health or safety
        (minor violations don‘t suffice as breach) and only after LL has had a reasonable opportunity to cure defect.
                  a. Rationales:
                      1. Modern urban Ts don‘t have time, access or motivation to inspect premises and put them in habitable condition
                          (usually don‘t stay for very long, and certainly don‘t have access to walls and wires.
                      2. LL knows more about defects
                      3. Housing codes ineffectively enforced. Will be more effectively enforced if Ts can sue when they are not.
                  b. Remedies: Ts can use self-help to obtain remedies w/o facing eviction for nonpayment.
                          **implied warranty of habitability and covenant to pay rent = mutually dependent
                          1. Rent Application Statutes: T can use some of rent $ to make repairs if residence is substantially untenable and
                               can deduct repair costs from rent
                               c) In many states, limited by # of times a T can invoke it annually or amnt of rent a T can spend on repairs.
                               d) Coase If there was a building-wide prob, you‘d have free-rider issue.
                               e) Tenant - Prob if you are a tenant – hard to manage, what if repair is more than rent ? Many repairs are not
                                    ones that can be accomplished by one tenant. LL can try and prove you spent too much on repairs.
                               f) Land lord – gives tenant a lot more discretion. Tenant might not fix it way you want.
                          2. Rent Abatement: T stops paying rent. When LL files unlawful detainer,. T puts back-rent in escrow pending
                               judgment. If LL wins, he‘ll get money. If not, judgment for T, reduced rent, and LL will be denied possession.
                               Ct. reduces rent by % of defects or by difference in rent value and market value of building now
                               g) Advantages Easy for T to do.
                               h) Weakness If idea of warranty is to get housing to a habitable level, then this seems to undermine intent.
                               Tenant
                                        a. LL could decide not to fix it. Does not mend defect.
                                        b. High risk – if you were wrong you can be evicted or you have to pay remainder
                                        c. Favors LL.

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                        LL – Gives you flexibility about weighing costs
                 3.     Rent w/holding: W/hold rent until LL corrects health-threatening defects or otherwise makes premises
                        habitable. Once LL fixes prob, you have to start paying rent again and pay back rent too.
                        i) Weakness Somewhat probatic b/c some may think that you shouldn‘t have to pay full rent to live in
                             substnd condition.
                        j) Tenant: Encourages LL to make repairs
                                      k) However, you may have lived in inhabitable apt. for a possible long time, and wills till
                                           eventually have to pay full value.
                        l) Landlord – get back all money at end, regardless of when it is fixed.
         Which is better for Tenant?
                             m) Abatement and W/holding requires LL‘s involvement whereas w/ Application Tenant can just fix
                                 probs on their own
                             n) Under Application LL could just have Tenant fix it on his own, but it may be a disadvantage cause he
                                 gets less rent
                             o) Under Application T may make a bigger mess when trying to fix prob.
         If you are Landlord:
                             p) Abatement lets LL get out of fixing prob if they want to take lower rent
                             q) W/ W/holding LL can delay, finally fix prob and then collect on back rent
                             r) Abatement requires more Ct. intervention
 s) Frameworks:
              t) Rawls: Warranty allows for everyone to get a min level of shelter. Min shelter w/ certain conditions is essential.
              u) Radin: Prop essential to personhood, particularly one‘s own home. No problem with large Co‘s bearing costs but
                   would have a different approach to small LL who just rents out a room.
Efficacy of Warranty of Habitability: Critiques: does not achieve goal of ensuring decent housing for poor, enforcement might do
low-income tenants more harm than good
    Meyers: Criticisms of Warranty of Habitability
         o Meyer‘s Hypothesis Housing codes will actually hurt low income Ts. Warranty of Habitability leads to removal of
              housing which decreases housing availability in market
         o 3 Categories of housing
         (1) Homes that don‘t comply but CAN be brought up to code: can be recovered by higher rent.
              Means low income people will either move out, or have less disposable income...which hurts them, and which is
              paternalistic (telling Ts, in effect, that they need to spend more of their income on rent than on other things.)
         (2) Homes that don‘t comply but CAN be brought up to code. Rents won‘t cover repairs but still will be a positive
              return on sunk capital.
              LLs will make repairs and at 1st, will help low income Ts. However, incentive to keep repairing eliminated and prop will
              shift into category 3. Thus, it will hurt low income Ts in long run. Will decrease this type of housing.
              Pritchett → Isn‘t true b/c new homes always need to be up to code anyway
         (3) Homes that don‘t comply for which costs of repair result in a neg return. Repair makes prop unprofitable so LL
              won‘t make repairs.
              LL‘s will w/draw properties from market if Ct. forces them to make repairs; hurting Ts as a class. Leads to decrease in
              housing supply. Might become abandoned or gov‘t might take it over and manage. In long run gov‘t won‘t be able to
              maintain, costs will be too high.
    Reasons we‘d be better off w/o warranty: arg we are better w/housing codes and letting market decide—Cts shouldn‘t
    interfere
                        (1) Problem: Scenarios would still apply, housing codes have same effect
               letting market work efficiently would be bad for society cause letting people live in substnd housing cause they can‘t
                   afford something better isn‘t good
               but if choice were no housing or bad housing—people would choose bad housing - Homelessness – most people
                   would be willing to live in substnd housing when faced w/ homelessness as an alternative.
     Pritchett on Meyer:
               It‘s a powerful argument that should be taken into consideration in policy decisions
               He‘s prob right but we can find societal reasons for warranty of habitability
               Just b/c its inefficient isn‘t only reason not to intervene
Policy Args In favor of Codes (Against Meyers):
    1. People shouldn‘t be able to live in substandard home. This protects children b/c it forces parents to live in an up to par
         home, even if they wouldn‘t have initially chosen to do so.
    2. Code has been used in some neighborhoods in a positive way to improve housing markets. By forcing LLs to get their
         apartments up to par, new re-done apartments may attract a wealthier clientele and result in an improvement of
         neighborhood.
    ***Important Q: What should society‘s role be?
v) We‘ve decided that homes should meet min stnds. Subsequently, could argue that we should subsidize landlords who need to
    make these improvements as well as Ts who want to be able to live in homes that comply. Social probs like drugs may be reduced
    by giving people better housing.

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Rights Against Discrimination
        Fair Housing Act of ‗68 (last important Civil Rights Act) prohibits discrimination in sale or leasing of housing on basis of race,
        color, religion, sex, handicap, familial status, or national origin.
                 Limited Exceptionssingle family home sold by owner, religious orgs, private clubs, and housing for elderly
                 w) Ques about whether Act intended to also to promote integration. Most believe there is.
        x) Disproportionate Effects on Race: Unlawful practices under Fair Housing Act include not only those motivated by racially
            discriminatory purpose, but also those that disproportionately affect racial minorities and lessen their housing opportunities.
        y) Policies of racial ceiling quotas on rentals to prevent white flight and maintain an integrated apt. complex violate act. (Starrett
            City).

        Asbury: Ash wanted to rent townhouse, B said no children and no townhouses available. Ash showed exceptions had been made for
        others and townhouses available to rent
        Ct: To prove violation of the FHA P must:
        McDonnell-Douglass Test: To get Prima Facie Case: member protected class (e.g. racial minority) applied, was qualified,
        denied opportunity to inspect/rent, was available for others (need $ to investigate)
                 → Burden shifts to D to prove that refusal to rent motivated by legitimate reason (need $ to investigate)
                 Then → P's burden to show reasons not the real reasons. (requires $ to investigate)

   Starrett City v. US NY State Housing Authority wanted Starrett to maintain racial balance and conditioned giving S money on
   meeting this stnd. S designed racial quota system to meet need fearing racial tipping and white flight. Starrett was subsidized by US
   Dept of Housing & Urban Development.
   Reasons, preventing white flight, racial tipping, integration. Gov‘t involved in program, should get diff stnd from regular private actor.
   Rule: Racial discrimination comes under strict scrutiny review. Must have compelling state interest.
   Reasoning: FH Act not relevant: Act supposed to prevent discrimination/promote integration.
         While quotas promote integration, contravene anti-discrimination policy, dual goals in conflict, Base decision on 14th A.
                 1. Quota Rules only OK when: 1) Temporary, trying to remedy something specific 2) quotas based on history of racial
                     discrimination w/in entity seeking to employ them, 3) allow access to minority groups (programs designed to
                     maintain integration by limiting minority participation, ceiling quotas, are of doubtful validity)
   Held: Quota system violates law – 1) Practices not temporary; no end in sight, 2) No prior discrimination w/in D‘s complex prior to
   enacting plan 3) Ceiling, not better access, used here 4) white flight doesn‘t justify use of non-temporary quotas.
       B. Dissent: Congress wanted to promote integration, this is an integrated community
                 1. S trying to balance conflicting interests of neighborhood, Compelling interest requirement is met here.
       C. Boils down to: Interpretation of Congressional Intent
                 1. Majority: Plain meaning of words. What statute says.
                 2. Dissent: Congress‘ intent. We want to help implement Congress‘ intent.
   Every access quota is also a ceiling quota for another group –meaningless distinction
SERVITUDE LAW
       Public values inherent in these adjudications. Private transactions w/public implications. Landowners agreements w/neighbors
       respecting use of parcels of land. Agreements can be divided into 2 broad categories:
       1. Easements: rights arising from a grant of right by one landowner to another (i.e. right to use a pathway)
       2. Covenants & Equitable Servitudes: rights arising from a promise respecting use of land by one landowner to another. More
            flexible—can involve any affirmative duty having to do w/ land (i.e. to h20, plants etc)
    Both are nonposessory rights in land (give one party right to use or restrict use of another‘s land).
    Run w/ Land: Pass to successive owners and occupiers w/o need expressly to assign.
    Pros efficient land use b/c allow investor to purchase only degree of control needed to max investment, rather than entire fee.
    Cons Freeze use and distort development patterns, impose burdens that become unreasonable and depress land values, ↑
       transaction costs and free rider problems prevent most efficient land use, and servitudes can clog title and diminish
       marketability of land.
    Allow people to break up prop—sell a stick in bundle even though you are not giving/transferring rest of sticks—promotes efficient
       use of prop.
   Servitudes: Easements, Profits a prendre, Real Covenants – provisions in agreements that prevent/require people to do things to their
   land, Equitable Servitudes – promises btwn neighbors that bind future owners

EASEMENTS Gives holder right to use/restrict use of another person‘s land.
        Owner of servient tenement (land burdened by easement) may NOT revoke easement at will OR interfere w/ holder‘s use of
            prop.
        Easement holder may protect rights from interference by a 3rd party.
        Easements don‘t necessarily create exclusive rights and servient possessor as well as 3rd parties can use.
   Classification: 2 axes Affirmative/Negative and Appurtenant/In Gross
   (1) Affirmative OR Negative
       Affirmative: Right to use another‘s land. (Ex. a right of way)
       Negative: Right to prevent servient possessor from using his own land. (Ex. Enjoin B from erecting a building that blocks light from
       A‘s land) only for light, air, lateral support, and flow of an artificial stream.

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(2) Appurtenant OR In Gross
    Appurtenant: give holder use of another tract of land attached to land benefited (dominant tenement) and passes w/land to
    subsequent owners (Can‘t be separated from land) Ex. Allowing landowner to pass thru another‘s land to get to  public road.
    In Gross: Does NOT benefit owner in use and enjoyment of his own land, but merely gives him right to use servient land.
    Personal to holder/independent of his possession of any land. Ex. Easements to erect billboards/utility lines.

Green v. Lupo -- Lupo bought prop from Green by land K (buy land but title held by seller until mortgage paid off. Green got
easement for access to road in ex∆ for releasing title. Green built a mobile home complex and residents ride motorcycles on road.
Easement appurtenant or easement in gross.
Held: Easement appurtenant (runs w/land). (Presumed when easement ambiguous). Agreement specifies names of grantees, seems
personal, but b/c specified ―for egress and ingress‖, appears to be go w/land = ambiguous.
Ct: b/c purpose of easement was access to land, and b/c unclear, presume easement is appurtenant. L have right to pose restrictions on
easement, but b/c it‘s appurtenant, cannot restrict it to just two of them.
Ct: If OG parties‘ intent ambiguous, most states have preference for easements appurtenant over gross, so long as holder‘s land
benefited by easement.
Rationale: Easement appurtenant increases value of dominant land by more than it decreases value of servient land. Appurtenant
easement makes land more marketable, easement in gross actually decreases total value of land. (Note Isn‘t always true, look at
specifics of case Ex. L‘s land harmed from motorcyclists above).

    Repairs of Servient Tenements: owner of tenement has no duty to maintain or repair easement. Duty w/dominant possessor.
     Creation of Easements
    (1) Express Easement: must satisfy Statute of Frauds, requires a written instrument signed by grantor.
     If grantor gives oral permission grantee has a license to use land.
     Express Creation: Easements may be created by grant OR reservation.
    - Grant: A conveyed right-of-way across A‘s land to B.
    - Reservation: A conveyed fee simple to B, but expressly reserved right of way for himself.
     Scope: Determined by terms of grant. In gen, owner of an easement can‘t materially increase or create a new burden on servient
         tenement.
    2) Easements by Operation of Law: 2 Kinds – Implication and Necessity
    A) Easement by Implication: Exception to SofF. Gen limited based on apparent use at time servient and dominant tenement
    separated
             Ex. A owns tract of land and irrigated N half, built drainage ditch to drain irrigation h20 that ran from N half to S half. A
                 later sold N half to B keeping S half for herself. Grant was silent about an easement to drain used irrigation h20 across
                 A‘s S half. B has a drainage easement even if contract is silent (assuming it meets 4 criterion below).
             4 Criterion for Easement by Implication:
                      1. Single ownership (of 2 parcels of land)
                      2. Permanent or continuous pre-subdivision use across allegedly servient tenement
                      3. use was apparent upon reasonable inspection.
                           - Exception: Underground sewer pipes and utility lines, Cts emphasize that if an adequate inspection of utility
                             and sewer connections would reveal underground lines, ―apparent‖ criterion is satisfied.
                      4. Easement is reasonably necessary
             Scope: Limited to prior use of ―quasi-easement‖ and foreseeable ∆es in use of dominant tenement.
                      - Fristoe v Drapeau (CA 1950)—implied easement-road OGly created for access to orchard. Yrs later dominant
                           prop was turned into a residential area—Ct. held that servient owner was not entitled to an injunction barring
                           residential traffic. ―Consideration must be given not only to actual uses being made at time of severance, but
                           also to such uses as facts and circumstances show were w/in reasonable contemplation of parties at time
                           easement was created.‖ Test—is use reasonably contemplated by parties.
    B) Easement by Necessity: Land is subdivided and one of parcels is landlocked from public road.
               Requirements:
              1. Single Ownership of 2 parcels at time of conveyance giving rise to necessity
              2. Easement is necessary (std adopted by many states takes into account cost of using or building alternate routes)
             - Scope: Depends on a Ct.‘s assessment of what is necessary to permit owner of dominant T to use her land.
     Reese v. Borghi Reese‘s had 5 parcels of land w/nonexclusive perpetual easement and right of way appurtenant along a road.
    Sold most parcels and became landlocked. Reese claims he had understanding w/ Borghi that he could continue to use
    pathway to access road, seeks easement. Claims he‘d used land as a walkway for yrs and intended to use it after sale.
    HELD: Easement by necessity. Public policy issue if there is developed land, should have access or land would be
    devalued.
          Necessity – easement must be; by single owner and absolutely necessary




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     (3) Easements by Prescription/Adverse Possession Easement could be acquired by prescription, adverse use, developed based on
    public policy ground of maximizing use of underutilized land — analogy to law of adverse possession.
     Requirements:
             (1)     Open and Notorious Use (can‘t have easement w/o visible signs)
             (2)     Adverse Under a Claim of Right (not by permission)
             (3)     Continuous and Uninterrupted (tacking and tolling follow adverse possession rules)
             (4)     Actual
          Scope: determined by adverse use that led to creation of easement

  Finley v. Botto: P and D neighbors, a walkway btwn 2 owned by D. P‘s tenants use walkway to reach a laundry room. D erects a
  fence on walkway, making it inaccessible to P‘s tenants. P claims easement by prescription.
  Held: NO easement by prescription. P‘s use of path NOT open and notorious; was a neighborly move by D to allow use. Use
  permissive not adverse.


REAL COVENANTS – Run w/land, Individuals can agree to anything
 Real Covenant = covenant connected to land in legally significant way, enforceable by damages. Creates rights in personam.
Types of Covenants
     Affirmative real covenant vs. affirmative easement
            o Affirm real covenant: promise to do an affirmative act. Ex. pay rent on lease
            o Affirm easement: right to use another‘s land. No promise to do anything
     Negative real covenants vs. negative easements
            o Neg real cov: One landowner agreed to refrain from an action on his land otherwise legally allowed to do.
                     Ex. Covenant not to make excessive noise late at night
            o Neg easements: gen limited to air, light, support, and flow of an artificial stream. Everything else = real covenant.
     Other diffs btwn easements and covenants
            o Rights Created:
                     Easement creates rights in rem, against anyone who interferes w/holder‘s rights (community or public)
                     Real covenant creates rights in personam, solely against covenanter and successors
            o Whose Rights/Obligations?
                     Easements: any possessor of servient tenement must honor easement.
                     Real covenants: burdens pass only to successor
Elements of a Real Covenant
            1. Burden (to run w/ an estate in land)
                    a. Writing
                    b. Intent – OG parties must have intended to bind their successors to covenant
                    c. Vertical Privity – Covenanter ‗s successor must have succeeded to same land interest covenanter had. Must
                         have been relationship btwn grantor and grantee – i.e. transfer land. Same relationship to land, i.e. Owner –
                         owner.
                    d. Horizontal Privity – covenanter and convenantee must share a land interest – sometimes can only be created
                         by transferring an interest . LL – tenant Must have relationship
                    e. Touch and Concern – covenant must have to do w/ land – cutting grass. Cannot covenant someone into going
                         to law school.
                    f. Notice – not always – must inform successor of covenant
            2. Benefit: Writing, Intent, Vertical privity, Notice, Touch and concern
 Remedy for Breach Damages only. If seeking injunctive relief, must be an equitable servitude.
        o Defense: Doctrine of ∆d conditions may be used as a defense to a claim for damages and even to terminate a real covenant.
     Termination
        (1) Fixed Point: May be expressly designed to terminate at a fixed point or upon some condition
        (2) Formal release
        (3) Waiver: Covenanter may waive his right to enforce covenant
        (4) Expiration: In some states, real covenants automatically expire after a statutorily fixed period of time unless renewed.

Eagle Enterprises Orchard Hill sold Baums prop w/express covenant that B had to buy h20 from them. B sold to Gross, Gross
refused to buy h20 from OH.
Is covenant enforceable for successors? Does it Touch and Concern land?
Held: Covenant did NOT touch and concern land since it did not substantially affect ownership interests of landowners. Could
get h20 elsewhere or thru well. Initial agreement was a K, not covenant.
At time of conveyance, covenant did touch and concern land – so ∆ed circumstances?
Test for Touch & Concern: Did covenant substantially effect ownership interests of land owners?




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    Covenant‘s Policy Issues: Covenants supposed to allow people to control & restrict land use. Gen, law supports people making private
    contractual agreements.
     But Biggest problem w/covenants when inappropriate w/regard to other public policy. Enforceability not desirable.

  Shelley v. Kramer Shelly, black, bought prop from Fitzgeralds but there was a restrictive covenant in neighborhood, that bars ―ownership
  and occupancy‖ of non Caucasians.
  Issue: Does enforcing covenant violates 14th amend
  Held: restrictive covenant itself did not violate 14th Amend since it was private K and Civil Rights cases ruled 14th only covered public
  (gov‘t) actions, not private parties.
      1. Ct: if covenants had been publicly created, would have violated 14 th. But Ct. still ruled for Shelley b/c party is seeking judicial
           enforcement in Ct, therefore became state action (Cts couldn‘t enforce b/c their involvement would be unconstitutional).
                o Using gov‘tal agency to violate 14th amend
                o Parties can enter restrictive agreements under Shelley can‘t go to Ct. to enforce them later ∆ed by Fair Housing Act—
                     saying discrimination by private entities is illegal too
  Weaknesses of Decision:
                1. Slippery Slope: Now, any time Ct. acts, it can be considered a gov‘t action under 14th.
                2. No stnd set for covenant law.
                3. Bad impact on K law—valid K but will not enforce it.
                4. Doesn‘t protect against discrimination. Only protects affirmative action. For ex, if Shelly had tried to buy prop and
                     owner said ―no, I don‘t sell to blacks b/c of covenant,‖ Shelly would have no cause of action.
  Touch & Concern in Shelley: Does restrictive covenant in Shelley touch and concern land?
                5. ―Yes‖ could claim that allowing blacks going to decrease prop values.
                6. ―No‖ touch and concern is in relation to prop itself (Ex.. gardening, etc.)
                No horizontal privity—no relationship, just neighbors.

Equitable Servitudes passes w/ land but binds parties w/o all requirements of a covenant
    More powerful way of enforcing responsibilities w/o a lot of requirements
    Default Covenant
    Equitable servitudes have less requirements: must touch and concern land and people buying prop have notice
   Historical Development:
    As land use intensified in England, it was seen that benefits could be gained from running covenants.
    Tulk v. Moxhay: (1848, England): Tulk sold Square in London to Elms, who promised for himself, his heirs and assigns not to build
        on it. Elms conveyed Square to Moxhay, who had notice of covenant. Moxhay proposed to build on Square and Tulk sued for an
        injunction. Injunction was granted.
    Reasoning: It would be inequitable that a covenant should be unenforceable against a subsequent purchaser where purchaser acquired
        land w/ knowledge of restriction. D Purchaser prob supposed himself bound by covenant and prob paid less for land than he would
        have had to pay for unburdened land.
   Elements of Equitable Servitudes – Need touch & concern and Notice, remedy injunction (no damages)
         (1) Burden: requirements to run w/ land
              Touch and concern
              No Intent required
              Notice to subsequent purchaser –does not run unless purchaser had knowledge when he acquired possession
                        No notice required if person was a donee, heir, or devisee (prop was divided)
              No Privity Requirement – anyone w/a possessory interest in land is bound , ex. Short term tenant is still bound
        4) Privity - Usually not required, but may be relevant when 3rd party trying to enforce benefit. (See below for more)
        (4) Remedy: Injunctive Relief is normal remedy.
              However, if covenant is to pay money, Cts usually will not order payment instead will impose a lien on covenanter‘s prop,
                  thus limiting his liab to value of prop.
                       o Remember: If seeking damages, it must be a real covenant, not an equitable servitude.
        Creation of Equitable Servitudes
         Statute of Frauds: requires a writing signed by promisor (since it is an interest in land).
                  o Exception Negative equitable servitudes may be implied from gen development plan of a residential subdivision.
        - Ex. Developer marketing 50 lots. Sells of 30 lots by deeds containing covenants that each grantee will use his land only for
             equitable purposes. Then developer sells of 2 corner lots to gas companies by deeds containing no covenants.
             - If (1) developer had a gen plan of an exclusively residential subdivision, AND (2) gas companies had notice of covenants in
                  30 prior deeds, Ct. will imply a covenant in deeds to gasoline companies restricting their lots to residential purposes only.
        Enforcement To be enforced by a successor to promisee or against a successor to promisor, following requirements must be met:
        (1) Intent: Contracting parties intend that servitude be enforceable by and against assignees. Ct. looks to purpose of covenant and
             surrounding circumstances.
        (2) Touch and Concern: To run w/ burdened land, covenant must touch and concern burdened land. Likewise, for benefit to run w/
             benefited land, covenant must touch and concern benefited land.
        (3) Privity: relevant in equity only when person trying to enforce benefit doesn‘t own land once owned by OG promisee. In
             some states, such a person cannot enforce benefit.

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           (a) Abnormal States: Privity of estate survives in a few states as a requirement for enforcing an equitable servitude (NY is one
                of them). Person seeking to enforce covenant must trace his title to OG promisee.
        - All purchasers in a subdivision can enforce a restriction imposed by developer, b/c they can trace title from developer. But a 3rd
           party who did not buy any land from person imposing restriction cannot enforce restriction.
        -   (B) Other States (MAJORITY – Privity Irrelevant) Any third-party beneficiary can enforce a covenant in law or in equity if
           contracting parties so intend. Follows modern contract law, which puts no restrictions on kinds of third-party beneficiaries who
           can enforce contracts. In these juris, privity of estate is irrelevant in enforcing equitable servitudes.
        Equitable servitude is an expansion of covenant law. Mostly in conjunction w/ homeowners assns.

    Neponsit Prop Owners v Emigrant Industrial Savings Bank, ‘38 (NY) Homeowners assn sues bank for not paying fees to assn.
    Nenposit conveyed plot to Deyner by deed containing Covenant: providing that owner of prop pay $4/lot annual charge to assn for
    upkeep of common prop on tract, intentionally listing ―heirs, successors, and assigns‖. Says ―shall run w/land until 1940 and can
    make a lien on prop if grantee defaults.
    Bank brought action to foreclose lien upon Deyers land owned by Bank. Bank didn‘t want to pay a $4 annual fee arguing covenant
    wasn‘t valid and didn‘t run w/land. (privity required in order for servitude to run w/ land).
    Real covenant that should really be an Equitable Servitude
    Did covenant run w/ land? Intent (had intent)
        2. Touch & Concern‘s land— Affirmative covenant to pay for use in connection w/land.
                           o Test based on EFFECT of covenant rather than technicalities (legal realist approach)
                                     Payment of maintenance interest restricts/affects owner‘s legal rights  if payment not made
                                        affects prop value of land.
                                     Everyone benefits from maintenance of road, public land.
        3. Privity of Estate (only type of privity in NY)
                            Is there vertical privity btwn Neposit and Assn?
                            Assn is a Representative of Owners and functions as a medium thru which they enjoy prop rights. Assn is
                               a ―convenient instrument‖ = YES there is privity
    HELD: T&C: if covenant imposes burden upon interest in land which increases value of a diff. interest in same/related land →
    T&Cs land. Covenant increases values, alters land rights and thus it T&Cs. Privity: met b/c ass‘n represents rights of prop owners.
    Pritchett: Really no horizontal privity since ass‘n created later. Ass‘n didn‘t inherit land from grantor, simply given right from
    grantor. NO horizontal privity w/ Assn and Deyer
                            To get around this, Ct. takes broad understanding of what homeowners ass‘ns are.
                            Ct. trying to impose obligation to pay on anyone who comes into chain of interest, under traditional
                               covenant law, they wouldn‘t be.
             o Covenant law after this case? Has turned covenant into Equitable Servitude.
                            Equitable servitude- intent, touch and concern, notice
                            Bank had notice – mortgage so has deed
    Neposit Would conflicts w/Eagle which said no obligation.
                  1. Neponsit applies to owners ass‘ns, Eagle → ∆ed circumstances.


NY (Privity) Rationale v. Majority (No Privity): Following restrictions u didn‘t agree to
        Purpose of privity Rationale: 3rd parties shouldn‘t be able to impose restrictions.
        Args Against Privity lessens impact of covenants on land use.
                 Notice Issue: If buyer knew restrictions it had notice and was able to factor covenant into Px it was willing to pay for
                    land.
                           If covenant burdensome + notice, person won‘t buy prop.
                           Therefore, privity shouldn‘t exist b/c its not needed if there is notice.
        Args against Covenants:
                 Gen you should be able to alienate land freely and if burdened w/many covenants, harder to do this.
                 Land easier to sell in future if it doesn‘t have lots of covenants.
   Equitable Servitude v. Real Covenant
    principle differences b/w an equitable servitude (enforceable in equity) and a real covenant (enforceable in law) are:
       (1) Remedy(Crucial): If a promisee seeks
                Damages must go into law and attempt to enforce promise as a real covenant
                Injunction promisee must go into equity and ask for enforcement of an equitable servitude.
       (2) Creation:
            Real Covenant must be in writing
            Equitable Servitude usually, must be in writing BUT negative equitable servitudes may be implied.
       (3) Privity of Estate: None for ES, some for RC
                - No privity for ES: Horizontal and vertical privity NOT required for equitable servitude (suit in equity).
                    - In enforcing Ct enforcing interest in land analogous to an easement, enforceable against any person who interferes
                          w/it.
                - Sometimes privity for RC: When a person other than OG promisee is enforcing benefit, Some states: such person must
                    show that he acquired title to his land from promisee, either B4 or after OG covenant was made.
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        (4) Touch and Concern and Notice: Both RC & ES require that it T&C‘s land. Both require notice of covenant to enforce against
            subsequent purchaser.
***Crucial diff b/w real covenants and equitable servitudes is remedy sought.
    - Money damages: must use real covenant analysis.
    - If injunction: consider whether requirements for enforcement as an equitable servitude have been met.
                     - A single promise can create both a real covenant and an equitable servitude!
Role of Neighborhood ∆ – Doctrine of ∆ed Conditions Common defense to equitable enforcement of a servitude is character of
neighborhood has so ∆ed, impossible any longer to secure in substantial benefits of restrictive covenants.
     If this is shown, equity will refuse to enforce covenant.
        (1) Requirements to Use Defense: Most Ct.s require that either (a) ∆ outside subdivision must be so pervasive as to make all lots in
            subdivision unsuitable for permitted uses or (b) substantial ∆ must have occurred w/I subdivision itself.
        (2) Probs w/ Defense: Probs applying doctrine of ∆d circumstances w/ regard to area of restrictive covenants/ negative equitable
            servitudes b/c purpose of restrictive covenants is to avoid ∆ to begin w/! Also, probs in letting Ct. interfere.

    Bolotin v. Rindge (’64) P owns corner lot of a tract of land. Action for declaratory relief and quiet title against restrictions limiting use
    to single family homes
                  o Character of area has ∆ed since ‗23
                  o P expert (commercial building would have no adverse effect), D expert says would make residences less desirable as
                       homes, more traffic, etc), decrease prop values.
    Should restriction be upheld despite ∆ed circumstances? Conditions ∆ed so much as to obviate restriction?
                  o Prec: Brokaw v. Fairchild – Ct. did not allow Brokaw to tear down house to built apt building on 5th ave.
    Ct: Stnds for burden on P to show changed circumstances
                  o Bolotin must show residential development is impossible and covenant no longer benefited other landowners.
    Reasoning: Ct. can declare deed restrictions unenforceable when ∆ed circumstances that render enforcement inequitable w/o benefit
    to owners, but if OG purpose can still be recognized it will be enforced.

        Constitutional Issues:
        Ct.s Refuse to enforce restrictions that violate constitutional protections or public policy concerns. Shelly v. Kramer

COMMON INTEREST COMMUNITIES
     CIC‘s are Organized efforts of enforcing servitude law – Private arrangements to promote public values. Way of dealing w/probs
     of modern communities. Provide services that gov‘t usually provides. Trend – movement towards curbing control of CICs over
     owners
     How binding are decisions made by ass‘n on whole community? Tension is over what should be regulated?
      Prop Types Included: condos, co-ops, and subdivisions w/ homeowners ass‘ns enforcing covenants.
     o Relationships: All run by private gov‘ts (boards) that enforce and make rules, assess charges, and make repairs and
         improvements.
      What they do: Use covenants, conditions & restrictions to create quasi-democratic structure to manage community.
      Why they exist: To tailor living environment to a targeted audience, i.e. retirees, vacationers, or young families and protect
         prop values.
      Attempt by private individuals to control their surroundings by entering into contractual relations
      Private way of dealing w/ externalities (private means to pursue public means)
  Condos: Individual ownership of units organized w/common areas and mutual rights and obligations in common areas.
   Essential Features:
     (1) Unit Ownership: Each unit owned separately in fee simple, boundaries of a unit defined by interior surfaces of perimeter walls.
     (2) Common Areas: Includes walls, staircases, swimming pools, etc. common area is owned by all owners of units as TICs.
              a) No right to partition: Unlike ordinary TIC, condo owner has no right to partition common areas.
              b) Easement for entrance and support: Nonexclusive easement for entrance and exit and support, thru common areas, is
                   appurtenant to each unit.
     (3) Financing: Each unit owner may finance purchase of her unit independently of all other owners in project. failure of one unit
         owner to make payments permits mortgagee to foreclose on that unit. other unit owners are not affected.
     (A) Creation of a Condo
         (1) Declaration of condo or master deed: Stating that owner is creating a condo. Declaration may contain details of
              organization, or these may be set forth in separate bylaws signed by each unit owner at time of purchase of individual unit.
              Declaration and bylaws attempt to solve in advance probs that may arise from condo ownership. Among matters dealt w/are
              following:
              a) Owner‘s ass‘n: All owners of units are members of condo ass‘n.
              b) Management: board can manage condo or, more commonly, a professional manager is employed.
              c) Owner‘s fraction: Owner‘s proportionate interest in common areas, including her share of common expense and interest
                   in whole project upon its destruction.
         (2) Rules of Conduct: test of validity of these rules is ―reasonableness,‖
              a) Restriction in OG docs very strong presumption of validity (assent basis).
                   - Usually strike OG covenants ONLY if are arbitrary or violate public policy or a constitutional right.

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                     -     Rationale: Buyers voluntarily agree to be governed by these terms when they buy in and are entitled to rely on
                           enforceability of restrictions in an originating doc.
                           - Ex. Hidden Harbor v. Basso, 844 (but see Portola Hills, 851)
                 b) Restrictions subsequently adopted must be reasonable: less deferential review to subsequent bylaw ∆ that it gives to a
                      covenant in declaration.
                      Reasoning; reliance interest of buyers is not so strong w/respect to subsequent ∆es. Here, Cts may balance importance of
                      new rule‘s objective w/ importance of individual interest infringed upon.
                 (3) Deeds to individual units
        (B) Condo v. Coop:
            (1) Financing: Coop‘s gen financed thru blanket mortgage, leased by shareholders; Condo Owner‘s typically finance their
                 ownership interest individually.
            (2) Ramifications of Building Being Destroyed: Coop: Corp recovers insurance proceeds and decides whether to rebuild.
                 Residents influence this decision thru shareholder voting rights. Condo: Owners typically have more control in deciding
                 whether destroyed building will be rebuilt and more direct access to insurance proceeds.
        Co-ops (mostly a NY thing—for expensive apt buildings)
         Typical Form: A corporation holds legal title to an apartment building.
            o Shares of stock sold to persons who will occupy Apts; amnt of stock required to live there depends on value of apt. (i.e. size,
                 location, etc.).
            o In addition to owning stock in corporation, occupants receive leases from corporation.
         Resident Rights: Note that residents do NOT hold actual title to their apartment; just hold exclusive use and lease renewal rights
            for as long as they retain their stock in corporation.
         Operation: Corporation operates under a charter and set of bylaws governing use of dwelling units and common areas, sharing
            of costs to finance and maintain building, limitations on transferability of interests, and structure, procedures, and voting rules
            governing management of corporation.
     Planned Unit Development & Subdivisions w/Mandatory Membership in Homeowner Ass‘ns
         Typical Form: CICs have also been developed to structure communities of single family homes and groupings of mixed housing
            forms. Homeowners here own BOTH dwelling unit and land on which it is built.
         Role of Ass‘n: Ass‘ns of planned unit developments (PUDs) have a quasi-democratic decision-making structure, responsibility
            to manage common areas, power to assess homeowners for costs of operating ass‘n, and authority to enforce covenants,
            conditions, and restrictions governing CIC.
            A) Declaration developer records declaration of covenants, conditions, and restrictions which provides for establishment of a
                 homeowner ass‘n and rules governing its decision-making process, responsibilities, and powers.
                 - Incorporates covenants, conditions, and restrictions into deeds of all properties sold in development.
    Ex Declaration for ―Blackacre Community Ass‘n‖
    1. Occupancy restrictions – single family housing. No group homes.
    2. Aesthetics – maintenance, architectural restrictions, cannot build w/o board approval.
            a. Encourages repair and workers to gouge Pxs.
            b. They can come in and remove things they don‘t like.
    3. Governance – quasi –democratic: one vote per each lot only
    4. Funding – assessments . No limit on amt of assessment.
            a. Annual assessment
            b. Complicated process of disputes
    5. Enforcement – individuals can‘t enforce against each other, only board can .

APPROPRIATE RELATIONSHIP BTWN INDIVIDUALS AND GOV‘T OVER PROP RIGHTS?
   Judicial Role in Overseeing Homeowner Ass‘ns (models)
    Disputes: Ct.s sometimes are called upon to review decision-making processes and substantive decisions of homeowner ass‘ns, and,
       if valid, enforce their restrictions.
    Models of Judicial Review: NOTE: In reality, judges actually use an ad hoc approach. Prob is Ct.s don‘t really have stnds of
       review. text book has made up these 5 models as ways of thinking about Ct. law.

Models for interpretation: Contract Model, Local Gov‘t, Admin, Corp gov‘t, Trust
   Contract/Consent Model: What you agree to is what you should be held too.
             Rationale: Prop Owners in CICs purchase their interests w/ knowledge of covenants, conditions, and restrictions by which
                they will be governed. Thus, they voluntarily agree to be governed by terms and conditions of community. People can
                contract away whatever they like, as long as there‘s consent to OG covenant.
             Existing Covenants: To extent that an ass‘n merely implements covenants, owner‘s prior assent to terms is genly binding.
             Subsequent Amends: (model gets messier) Don‘t have clear assent but deemed to have consented to amends by agreeing in
                OG doc to be governed
   - Unanimous vote amend would be valid.
   - Non-unanimous ―participatory consent‖ suggests that members of a democratically governed ass‘n consent to particular decisions
        reached by participating in decision making process, even if their own views don‘t‘ prevail.



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                Ct.‘s Role: Not a decision of reasonableness—Ct. should just see if HOA has overstepped its bounds of power as laid out in
                 covenants. Decision should be based on voluntary restrictions of CIC and thus exclusively on agreements creating and
                 implementing CIC (declaration). Ct. should ensure that ass‘n has scrupulously implemented such agreements and has
                 followed its own procedures. Defer judgment to ass‘n w/ regard to any questions w/in its discretion.
                Prob People don‘t usually read contracts carefully. At some point Ct.s won‘t enforce contracts cause its unconscionable or
                 unreasonable—so even w/ this model Ct.s may not enforce a restriction if its too crazy

          Winston Towers 200 Ass‘n v. Saverio, 854 -- D had a dog registered w/Ass‘n (according to policy. Afterwards, new rule
          amend didn‘t allow new pets. D‘s dogs had puppies, violated bylaw.
          Held: For Saverio. Retroactive regulation lacks consent, Dog and its offspring are same thing – owner can‘t control it
          having puppies, bought into building expecting he could have dogs, then rule ∆d
          Model: Not clear, maybe admin b/c of language.


Local Gov‘t. Model: Perform many muni functions—provide basic services, regulate land use, and tax residents and use democratic processes
to
       make legislative decisions—stnd of review should be equal to a gov‘t stnd.
        Review: Residents of CICs should receive same constitutional protections against ass‘n as residents of any publicly constituted
            gov‘t. (external std set by society) if it would be illegal for a local gov. to restrict such activity then it is illegal for HOA
        Ct.s Role: Should review decisions of ass‘ns not only on basis of ass‘ns‘ own internal values, but on basis of values that are
            widely shared thruout rest of polity.
   - Ass‘ns can‘t do anything that local gov‘ts can‘t do.
   - Ex. local govt. can‘t say ―no pets,‖ so ass‘n can‘t.
    Probs: Ass‘ns are more voluntary and population much smaller than w/ local gov‘ts. Wield a much smaller set of
       regulatory/enforcement powers & have no authority to redistribute wealth.

  Portola Hills Community Ass‘n v. James, 851 D wants to install satellite dish in his yard, Board said ―no‖ b/c in pre-existing covenant
  there was a total ban of dishes.
  Held: Ruled for D (could have dish) b/c didn‘t bother anyone – Ct. looked at actual facts & public policy. Noted dish didn‘t have effect on
  aesthetic features of CIC and not visible. Ct. said broader total ban against dishes illegal.
       - Ct. first looked at reasonableness of restriction (admin model). – not reasonable.
       - Local gov‘t model – dish gave more access to global community
       - Balanced Pub Policy concerns w/whether ban could promote any legitimate goal of ass‘n (LG model)
  Model: Either admin or local gov‘t or contract model.
  Provision was in OG doc, Ct. trying to find a way around = must give public policy concern. Satellite television like a utility and should
  have access to it. Cts should intervene to protect broader public policy concerns when Ass‘n policies go against them.
  People should have a choice of services and utilities. Don‘t want to support a monopoly.


Administration Model: Designate responsibility to admin. Agencies, should be deferential to way they carry out those responsibilities.
    MIDDLE GROUND model concerning intervention of Cts.
    Views ass‘ns as admin agencies that have been delegated constrained authority to administer a regulatory framework.
    Looks at whether or not HOA is acting in a reasonable manner
    Must apply decisions in consistent manner
    Powers of Ass‘n: Agencies have legislative powers to promulgate, interpret, and amend rules and adjudicatory power to enforce rules.
    Ct.s: Need to balance need to allow agencies latitude to administer a broad range of functions effectively & need to ensure agency
       adheres to legislative mandate and reasonableness.
                      Need to make sure there is notice, opportunity to be heard, concise statement of reasons for decision, and decide
                          whether ass‘n‘s decisions are w/in its delegated authority.

   Hidden Harbor Estates Inc. v. Norman, 842 Ass‘n adopts new rule that no alcohol permitted in common areas of club house. Rule
   approved by condo owners 2 to 1. Tenant brought suit to prohibit enforcement on basis hadn‘t been probs at events in clubhouse B4.
   Held: Reasonable rule, Norman loses
   Reasoning: If rule is reasonable, ass‘n can adopt it. Many orgs. limit alcohol. Not arbitrary—could find Ex‘s of this happening, Each
   unit owner must give up degree of freedom of choice.
   Model: admin model, local gov‘t, and contract model.
        Contract model—―entering into these institutions means you give up some freedom/rights you would normally have in society‖—
        ―condo owners are a sub-society more restrictive then society outside condo‖ People enter these agreements, agree to rules, should
        then be enforced.
        Admin assn – designate assn to reasonably protect and provide for happiness, health and welfare of community residence. Don‘t
        know enough information. How representative of community is board that voted?
        Local gov‘t other gov‘ts can restrict drinking in public, so ass‘n can.


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     Hidden Harbor Estates Inc. v. Basso, 844 D wanted to build shallow well on his prop, but Board refused request b/c it would
     threaten salinity, stain sidewalks, and proliferate more Wells by other unit owners. D drilled well anyway.
     Held: Basso wins.
     Reasoning: When rule is in declaration, restrictions need not be reasonable and there will be an assumption of validity.
     (Contract/Consent Model) for OG restrictions
     For Subsequent Amendments: Apply reasonableness test. Must be related to health, wellness and happiness. = Admin Model
                              o Distinction btwn declaration restrictions that you sign and later enacted regulations is declaration didn‘t
                                  say anything about building of wells, this was a board restriction, must apply reasonableness.
                              o HOA didn‘t prove well would have impact they claim
     Model: Admin type model for ass‘ns‘ restrictions, contract model for OG declaration restrictions.
     Could argue that ass‘n job is to worry about long term stability of community.


   Corporate Model (VERY LAX stnd): focus is on fiduciary duties – no fraud, self dealing, etc.
          CICs are like corporations and should be reviewed on that level.
          Powers of Ass‘n: Boards have wide discretion to make decisions; so long as board exercises its authority according to proper
               procedures and in good faith, judgment will usually be upheld. (known as ―business judgment rule‖)
          Ct.s: Make sure ass‘n adheres to governing rules, acts w/in its delegated authority, and that board members have a fiduciary
               duty to members of CIC.
          Probs: Most corporations are profit-oriented, risk taking... and business judgment rule is a rule designed to insulate directors from
               liability. Not clear that rule should apply to challenge validity of a decision or regulation adopted by non-profit residential ass‘ns
               that typically do not engage in risk-taking activities.
   Trust model: trustees are representatives of individual owners and therefore they should not do things that are not in homeowners
    interests.
                CIC is a trust whereby ass‘n acts as a trustee w/ fiduciary duties of impartiality, loyalty, reasonable care, and info reporting.
                Ct.s: Less deferential to ass‘n than corporate board model b/c it does not apply ―business judgment rule.
                Prob: Trusts are normally reserved for persons unable to make their own decisions, such as kids. Furthermore, trust
                    beneficiaries are less able than homeowners to exercise an exit option if they are unhappy w/ trust management.
         Pritchett: Models 4 and 5 are pretty worthless, Strict Mode = much judicial intervention.
    - Ellickson: people tend to have informal means of working things out on their own. Don‘t need ass‘ns. structures of HOA‘s may be
         inefficient in a way b/c they infringe on abilities of people to deal w/ stuff themselves.
    - Prob w/ Approach: These ass‘ns are genly formed in new areas in south and southwest, where people don‘t have established rules yet.
    Which Framework better in gen?
    - Contract Model: (advantages) strict enforcement, people get what they contracted for, allows people to live how they want, little role
         for Ct.s (disadvantages) people don‘t read agreements, won‘t let people contract for certain things
    - Admin Agency: (advantages) some deference to HOA but if either process or regulation is unreasonable then its invalidated.
         Benefits homeowners if process or regulation is radically crazy. (Disadvantages) allows for Ct.s to impose their own views,
         reasonableness as a std is vague, leads to litigation; why apply community std to a community that doesn‘t want that std.
    - Local Gov‘t: (advantages) certain things that people should be allowed to do—can‘t be regulated by HOA (disadvantage) leaves little
         that HOA can control; you already have a local gov‘t & people enter into these HOA‘s cause they don‘t like local gov‘t.
    Restrictions on Transfer: often imposed on transfer of a condo unit. Usually prohibits transfer of unit w/o consent of ass‘n.
          These restrictions run into following problems:
         (1) Restraint on Alienation: In a condo, unit owner owns a fee simple. Direct restraints on transferring a fee simple have usually
               been held void, and Q arises whether a restrain on a condo unit will be governed by same rule as is usually applied to a fee
               simple.
         -      Ct.s have been more tolerant of restraints on a condo unit, b/c of interdependent ownership.
         - Rule appears to be that a restraint is valid if it is a reasonable means of accomplishing valid objectives.
         (2) Illegal Racial Discrimination:
         - Fair Housing Act prohibits discrimination in sale or rental of housing on grounds of race, ethnic origin, religion, sex, family
               status, or handicap.
         - Civil Rights Act of 1866 bars racial discrimination in sale/rental of prop.
         - If it can be shown that condo ass‘n or homeowners ass‘n is using restrictions on transfer and screening procedures w/ intent or
               effect of illegally discriminating, ass‘n can be enjoined from doing so and may be liable in damages
         (3) State Action Doctrine
         - In Laguna Royale v. Darger, ,P‘s claimed that ass‘n had violated their constitutional rights when they wouldn‘t let them transfer
               their interest in condo.
         - Issue Whether actions of Ass‘ns constitute state action so as to bring into play constitutional guarantees. 14 th A. guarantees due
               process and EPC, but these apply only to states & private actors can‘t violate 14 th.
         A) Judicial Enforcement Theory: In Shelley v. Kramer, Sct. refused to enforce a racially restrictive covenant on ground that state
               action — exercise of judicial authority to enforce deed restriction—would contravene fed constitutional protections.
         - Suggests that any covenant or restriction in a CIC declaration—indeed, any private agreement—is state action and subject to fed.
               Const. law.



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         B) Public Function Theory: In Marsh v. Alabama, S.Ct held that a private company for town—which provided police and other
            traditional gov‘tal services—was functional equivalent of a muniity, and therefore could not restrict liberty of press/religion of
            residents or others inside town boundaries.

US SC has not yet directly addressed whether fed constitutional law is applicable to residential ass‘ns.
       Judicial Review: 80% of time Ct. denies enforcing restricting.
        Reasonableness (admin and local gov‘t ) Ct.‘s determining what reasonable, not neighbors.
        Probs w/ contract – people don‘t read contracts very closely
        Are there some circumstances that are un∆able? BILL OF RIGHTS (882) Pets, Children, Privacy , Religious freedom, Speech ,
            Alienation
        Doctrine of unconscionability – unconscionable contract (unequal party)
        Laguna Royale v. Darger, 856 – right to sell in non-negotiable
        Ct.s have done an ad hoc response – case by case
        Constitutional issue – shelly v. Kramer – Ct. action = state action
                 o Taking – have to be able to sell – gov‘t has to be taking it. If gov‘t is enforcing an HOA restriction by taking, then it is a
                     gov‘t action.
                 o Local gov‘t – hold HOA to higher level of stnd, once you violate them, there is a state action, therefore gov‘t
                     intervention.
                           But whole point of HOA‘s is that they are not gov‘t
                           Ct.s have been saying is that these things are like small gov‘ts
       3rd party mediator to avoid Ct.s? Do you have to abide by decision of mediator ? doesn‘t prevent people from suing?
       Another approach would be to strengthen gov‘t to deal w/ externalities
            1. servitudes
            2. public responses = ZONING – adds many limitations

Future of CIC Governance
          Some potential probs that may emerge w/ CICs….
          Duration: As ass‘ns age, restrictions may be poorly adapted to ∆ing econ conditions, ∆ing values and preferences, etc.
    - While some judicial doctrines (ex. ∆d circumstances) and ass‘n rules (amending restrictions) permit some flexibility, it may be quite
         expensive, time-consuming, or impossible to ∆ restrictions in practice.
     Individual Rights: B/c of state action prob, most constitutional restrictions do not apply to homeowner ass‘ns. Although a
         ―reasonableness‖ stnd of judicial review might invalidate restrictions that violate norms of EOC or due process, expense of
         adjudication and uncertainty of stnd as well as Ct.s‘ practice of deferring to many ass‘n decisions, leave many restrictions
         untouched.
         1. French‘s Hypothetical Home Owner Ass‘n Bill of Rights: (p 881)
              o Rights Included: Free speech, religious & holiday symbols, no rules about Household composition, no restrictions w/in prop
                   unless health issue, pets allowed unless prohibited at sale of first lot, no ∆es to detriment over owner‘s objection
              o Implications:
                   (1) Certain fundamental rights everyone has that ass‘ns can‘t ∆.
                   (2) List could be problematic if you read it as having a negative pregnant whatever rights aren‘t in list you don‘t get.
          Goals: Limit litigation. Prop values Too many restrictions, prop values will go down and it will be harder to sell.
         2. Additional CIC Issues Should Fees that are Paid to Home Owner‘s Ass‘ns be Tax Exempt?
              A) Yes. Rationale: (1) Efficiency advantages to allowing comm freedom. (2) CICs experimental gov‘t. Want to reward people
                   for trying new things, may provide models for how we can do things in future. (3) Truly common services should be
                   provided by gov‘t anyway. (However, in practice may be hard to separate how much of dues is going to what).
              B) No. Rationale: (1) Not everyone benefits of public schools but have to pay anyway. (Analogy to CICs). (2) Many times
                   services aren‘t totally replacing city ones, but supplementing them. (Ex. they have security guys but still rely on police, etc.)
*** It all comes down to what your notion of gov‘t is and what you think gov‘t is for.
     Legal Implications / Complaints and Concerns (of private org for society)
         (1) Due Process Concerns: Private home owner ass‘n may be able to do things gov‘t can‘t do that can harm private citizens.
         (2) No Checks & Balances for Home Owner Ass‘ns.
         (3) Lack of recourse for handling situation.
         (4) May not always be one person/one vote policy. There are many restrictions on who gets power to vote.
         (5) Equal Protection Issues--People who don‘t want to live in these CIC‘s don‘t get = protection of law w/in development. Members
              treated better.
         (6) CIC is short circuiting political system (Response could be that political system doesn‘t work now)
         (7) Free Speech issues
     Chief Complaint: CICs limit availability of services to only those people who own prop. This violates our notion of fairness. Seems
         like certain things should be available for everyone, not just prop owners.
     Its easy to say that people should be able to contract to get services, but is it really fair to suggest that this ability should be limited to
         people who own prop? CICs only provide benefits to people who own prop, so in some sense they are an attack on our principle of
         representative gov‘t


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ZONING: WHAT IS APPROPRIATE RELATIONSHIP BTWN SOCIETY AND INDIVIDUAL PROP RIGHTS?
    Public response to same issues that provoke people to create CIC‘s – increase prop value and create a while distinction community
    Public/private issues
    acceptance that private markets don‘t always work and gov‘t must intervene to organize society and take away some prop rights for
        broader good.
   Variance = excuses developer from some provision of zoning code - usually if compliance would impose undue burden
   4 Basic Mechanisms for Land Use Regulation by local gov‘ts:
                 1) Zoning ordinances – Means of land regulation via enactment of statutes designed to protect health, safety, morals, or
                       welfare of public. Based on state‘s police power
                       (i) May be amended and are subject to ―variances‖ and ―conditional use permits‖
                       (ii) Can give exceptions to certain owners
                 2) Gen Plans – developed and used by local planning commissions. They specify juris‘s goals for future development,
                       including distribution of population density and infrastructure
                 3) Subdivision Controls – establish specific criteria for location and design of streets, major utility lines, and other public
                       infrastructure, and they frequently require dedications of land or payments for off-site improvements like roads, parks
                       and schools
                 4) Building Codes – dictate building methods, structural elements, min habitability stnds and aesthetic elements. May also
                       restrict owner‘s right to ∆ designated historic buildings
        4 entities to adopt and implement land regulations
        o Legislature (elected): officials , city council, board of supervisors, town committee – adopts and making amends to Zoning
        o Planning Commission (appointed) – proposes amends to zoning, has hearings about ∆es
        o Building department (appointed) – reviews, grants or denies building permits
        o Board of zoning – rules on applications for vacancies and appeals from building dept decisions.
        History – NYC – districts – certain things are or are not allowed in districts.
                  Zoning is a popular response to these kinds of public concerns
                  Herbert Hoover – zoning ass‘ns would create wholesome communities.
        o At what level do we have this regulation? State? Local? Fed?
                  Debate btwn Madison and Tocqueville – centralized v. local gov't.
                  Appropriate institutions?
        o In gen, zoning is determined at local level
   Euclidean zoning system
        o Stnd State Zoning Enabling Act – published by US Dept of Commerce in 1922
                  Muni could regulate land use to promote health, safety, morals, or gen welfare of community.
                  Enumerated muni land use powers included authority to restrict height and # of stories of structures, population density,
                       and location and use of buildings
                  Barred Muni from exercising their land use authority thru case by case decision making
                  Rather, it required Muni to adopt land use regulations and establish districts into which different classes of uses would be
                       segregated
                  Today every major city has zoning enabling acts
   Village of Euclid v. Ambler Realty Co. (US S.Ct. ‗26) Euclid set up 6 zoning districts w/diff levels of restrictions on types of
   developments allowed in each zone. P‘s land partly zoned for residential use only, not industrial, He contends this decreased his prop
   value and therefore violated 14th amend b/c deprived him of prop w/o due process of law and denied him equal protection of law.
   Zones Values: Industrial $10,000 , Residential $2,500 – Zoning reduces value of his land.
   Is zoning amend constitutional?
   Rule: Amend XIV – nor shall any state deny anyone of life liberty or prop w/o due process nor shall any person be denied equal
   protection under law?
   Analysis: Not actually taking his land ―w/o due process of law‖ - zoning was a legal enactment of law → was due process.
   But was deprived of prop interest: use curtailed, harder for him to transfer, limited right to sell  ―taking‖.
   Held: decision for Village, zoning laws validly based on police powers. Ordinance can only unconstitutional when provisions
   clearly arbitrary and unreasonable, having no substantial relation to public health, safety, morals or gen welfare
   Police power: gov‘t has power to restrict individual liberty for ―advancement of health and welfare of community‖.
         Traffic, fires, security, Confusion, disorder
         Police power is a vague things, depends on context, size of city, etc. Similar to traffic regulations, nuisances. Building codes
                                  Strict scrutiny v. rational basis  if gov‘t has rational basis for intervening, Ct. will allow it to
                                     stand.
                                  In gen, law of zoning, Ct. takes a deferential attitude towards zoning.
   PRO‘S OF ZONING: segregation of residential/industrial buildings makes it easier to organize fire rescue, increase safety/security of
   home life, protect street accidents, reduce traffic noise, favorable environment in which to rear children, etc.
   Criticism: These regulations protect rich people who live in nice areas. Doesn‘t restrict poor areas, pushes people to worse areas.
   Judicial restraint: Legislature has decided that zoning is good, not for Ct. to go against legislative decision, give broad
   decretion




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5 Perspectives on Zoning:
    Mandelker, Zoning Dilemma (ZONING IS NEEDED)
     Economists say we don‘t need zoning laws b/c private owners will efficiently allocate land – market will result in an organized society
        similar to zoning ordinances
             o However, individual entrepreneur will only consider their own opportunity costs and gains, will not consider externalities that
                  his developments will affect on others
     Zoning ordinance based on separation of land use incompatibilities must intervene to prevent externalities which private market
        cannot prevent. Zoning ordinances correct for externalities which private market need not consider.
     Zoning involves matters of taste and preference rather than an observable physical effect. – upward pressures on these more favored
        uses are assumed to visit harmful externalities which legal system should control.
             o implicit hierarchical model of residential development in which single family developments is favored
     Mandelker‘s main pt is that zoning is needed b/c it deals w/externalities. such as environmental concerns, that require gov‘t
        intervention.
     Other legal structures, like nuisance law, can be used to replace zoning, but b/c of following reasons it has flaws: 1) free-rider complex
        makes it hard to find a willing P to bring a nuisance action; 2) suits cost money; 3) nuisances only solve large issues; 4) nuisance only
        allows damages for current use of land, it doesn‘t cover future uses. Zoning laws are broad and subjective and are based on aesthetics.

    Karkkainen, Zoning: A Reply to Critics (ZONING PROTECTS CHARACTER OF COMMUNITY) should be upheld
     Prop rights: Specified rights, Inchoate rights, Restricted (Schools), Private, Private –quasi (restaurants), Parks
     There exists neighborhood commons – collective resources – rights of urban dweller to rights in individual dwelling and inchoate
       rights in a neighborhood commons (prob is that people have diff ideas of beauty)
     Purchaser of residential prop in an urban neighborhood buys not only a particular parcel of real estate, but also a share in
       neighborhood commons
     Highly subjective and may not widely be shared by those who have never lived in neighborhood so they add little to market value of
       prop
     Resources are non-fungible and irreplaceable
     Like one‘s home, one‘s neighborhood may be centrally bound up in one‘s definition of self and sense of his or her place in world.
     DISCUSSION:
            o doesn‘t market value include these intangibles? Assume that when you bought house you assumed that neighborhood would
                 remain same and zoning laws help assure this consistency.
            o Is zoning more democratic? Allowing constituents to voice what they want? However, democratic process is limited to
                 current residents and not future residents
            o If quasi-commons is subjective, and personal to individual preferences

    Epstein, A Conceptual Approach to Zoning: What‘s Wrong W/ Euclid (ZONING TOO SHORT SIGHTED)
     Zoning is problematic
             o Zoning boards do not think of effects on wider community
             o Slows future growth
             o People like diversity of mixed use – walk to store
             o Protects insiders – privileged over people who might want to move there.
        Ct. gave a presumption of deference to zoning laws, creating a very powerful system of public planning
     But some of risks might be prevented by application of stricter scrutiny
     We don‘t need gov‘t to deal w/ this…can deal w/ it privately w/ nuisance law and suits of that nature
     Zoning process misunderstands way in which individuals wish to integrate and coordinate their activities
     Although there is some local disadvantage to having just one deviation from that particular patter of uses, there is a huge overall
        advantage
     Entitlement to make land use decisions should rest w/ individual prop owner
     Return to Laissez Faire: Nuisance law, servitude law, and takings doctrine are adequate in most if not all circumstances where zoning
        is used (Issue: Servitude – agreement thru covenants  extremely difficult to enforce)

    Ellickson Zoning inefficient – nuisance law better (give people a choice, fine or get rid of violation)
              o Paying fines might be better, developer can chose if they would rather pay fine or not develop there
              o Costs of development are too high – prevents future growth.
              o Better to use servitudes or CIC‘s
     There is a need for some land regulations (i.e. negotiating for covenants by individual prop owners all time too much transaction
         costs)
     Would be more efficient and equitable to enforce muni land use regulations thru a system of judicially determined nuisance damages
         and adminly assessed fines for violations of regulations
     There should be few mandatory land use stnds and he would not permit injunctive relief in nuisance cases except in unusual cases
         (that threaten personal safety or individual liberty)
              o Zoning is an ex of specific deterrence systems which impair efficiency of resource allocation to b/c they require compliance
                   w/ a stnd even when prevention costs involved exceed resulting reduction in nuisance costs.

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            o    Detailed mandatory zoning stnds inevitably impair efficient urban growth and discriminate others
            o    Consensual systems of internalization are good mechanisms for handling external costs, particularly in area where much of
                 land is still undeveloped
        (Issue: Pervasive but individually trivial harms caused by noxious land uses cannot be efficiently internalized thru nuisance suits)
    Fischel –Aspects of Zoning Reform – Not about efficiency, about allocating rights of entitlement, doesn‘t matter how we zone, we‘ll
    always get to efficient outcome
             o Zoning Redistributes prop rights to community
                       Increased prop costs, Decreases muni costs, Not always best/most productive use of land
             o Zoning is in response to market failure
                       its an attempt to redistribute prop rights or ―entitlements‖ from those who own undeveloped land to other
                           community residents
                       establishment of control over landowners‘ prop for enjoyment of those who have political control of community
             o Benefits of zoning: limit on increased costs, lower tax rates, enjoyment of open land, preservation of values, and prevention
                 of environmental disamenities
                       Benefits are those perceived by existing residents who comprise community not potential occupants
                       To extent that any degree of restriction of development is enforceable, total benefits will be reflected in value of
                           existing housing
             o Negative – good for people who live there, not good for others who want to live in community (may be used to exclude)
             o Coase Theorem
                       People concerned about externalities will bargain for them, zoning eliminates bargaining
                       Says bargaining is more efficient that zoning
                       Initial entitlement in restriction (zoning) does not have to be at maximum benefit point
                       Prob not one of laissez faire vs. planning but involves two questions: Of various initial entitlements in land use
                           restrictions
                                  Which is most equitable and
                                  Which is most likely to lead to maximum benefit point?
                       There are a # of transaction costs that will not go away even under best system
             o Trading of these entitlements DOES go on
                       Landowners who wish to develop their land may be willing to pay for various community services and
                           infrastructures
                       Developers may donate land to public use
                       community may attempt to ex∆ them w/ landowners for other benefits
             o Efficiency (Utilitarian argument) vs. Entitlement (Locke)

SCOPE OF POLICE POWER Zoning for Aesthetics
      Euclid –muni could regulate private land use (w/in due process
               Aesthetics became acceptable reason for zoning soon after – aesthetics considerations no longer matter of lux
          o Signs – courts routinely hold signs w/in police power
                    Sometimes challenged under 1st amend or 14th (equal protection)
      City of Ladue v. Gilleo, pg 922 Ordinance does not allow sings, woman puts up anti-war sign, told to take down, sues alleging Free
      Speech violation
      Held: Violation of almost ALL signs violates 1 st amend b/c over inclusive, can also violate if under inclusive

                                    Pritchett & Class Discussion: Pros and Cons of Zoning
                                       Pros                                                              Cons
      1. Increase collective bargaining power                               1. Exclusion – class, econ diversity, type of zoning diversity
       Resources – not everyone can live in CIC                            (walk to store)
       Professionalism – looks systematically at how to org comm
      2. Preserve Community Character                                       2. Static – Doesn‘t reflect ∆ing circumstances.
      3. Guarantee – of what will surround you.                             3. Higher costs cause lower prop values
       Predictability = promotes econ growth
       Prob w/nuisance law                                                 4. Who decides? Whose interests protected? Are these
                W/o injunctive relief, damages may not help you            boards truly democratic, who participates in these boards?
      Not everyone can afford to sue                                        Open to corruption – variances
      Pre-emptive – w/a nuisance, have to wait until someone does           5. Subjective
      something wrong
      Prevents freeloaders – i.e. apt building paying same taxes as a       6. Denies prop rights
      single family home, even though they use road/parking more
      4. Efficiency – had to get a suit to remove oil rig from next to your 7. Affects neighboring communities – spillover effects (ex:
      home.                                                                 Camden – didn‘t have zoning so now have all refineries and
                                                                            sewage plants)
      5. lower costs                                                        8. Unequal effects on groups
      6. higher prop values

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SCOPE OF POLICE POWER
A) Zoning for Aesthetics
    Euclid – held muni could regulate private land use (w/in due                   Growth and Progress, Open space, Agriculture – in
    process                                                                         urban places, there are restrictions on agriculture
    Real World Zoning:                                                             Lot size
    Zoning implicates every aspect of community life.                              Apartments – zoning laws against apts.
    Community thru zoning boards can regulate aspects of                           Occupancy – familial status
    economy and social life.                                                              Restrictions against ―non related people‖ -
                                                                                               preventing groups of students
            Class, Racial, Architectural preservation, Health,                    Disabled groups – asylums, group homes, elderly 
             Traffic, Transportation, Separation of land uses                       Ct. rules that it was discriminatory to zone against a
            Class inclusion – some communities require you to                      specific home
             provide lower income housing, Parks, Access to                        Sex/adult businesses – can you zone out all adult
             services, Commerce, Convenience, Lower costs.                          facilities – Supreme Ct. held

    EXCLUSIONARY ZONING: Zurich and Fernley cases below. (all zoning is exclusionary but this refers to class exclusions), 974
    Large lot requirements, large min ft. requirements, prohibitions on apts., expensive bldg. stnds
          Zoning can be used to purposefully exclude various groups from community or from certain districts. Even where there is
              no intent to exclude these persons, zoning ordinance may in fact result in exclusion.
          Suburban Zoning & planning policies often deliberately exclude low and moderate income families (disproportionate
              impact on racial minorities)
          Goal of exclusionary zoning: keep out residential developments low-income families that increase demand for public
              services (ex. public schools) but that do not generate a corresponding increase in prop tax revenue.
                   Keeps tax rates low -- since poor people pay lower taxes but still need services and reform impose burdens on
                        gov‘t; wealthy people require less services—but this results in class/racial segregation and exclusive communities
                   Efficient for those included in that it lowers costs of gov‘t & increases revenues as high as it can.
                   Avoid ―slippery slope‖ issue – if you allow one apt. building, easier for more to come in
          Reasons causing Exclusionary Zoning: Ellickson
                   Constraints on Muni fiscal choices
                             Mandatory free education for children
                             Requirement of uniform prop taxes
          Techniques of exclusionary zoning:
                  o Large-lot zoning and min square footage requirements
                  o Prohibitions on apartment buildings, mobile homes and multi-bedroom apartments
                  o Expensive architectural or building stnds
                   Over zoning for nonresidential uses
          Probs: Forces cities to bear all or most of cost of services provided
                   Usually regional (suburbs), pushes groups out of entire area and into cities
                   Result – fed gov‘t has to support poor in cities and suburbs not paying their share
          US SP has said that constitution does not prohibit exclusionary zoning but that doesn‘t preclude state‘s from prohibiting
              exclusionary zoning
          Cts often face difficult probs in trying to address claims that muni policies are improperly exclusionary
                   1- little textual basis in state statutes or constitutions to establish a muni obligation to refrain from exclusionary
                        zoning
                             state zoning enabling acts often require zoning ordinances to advance ―gen welfare‖ but most Cts read this
                                 phrase to mean gen welfare w/in excluding juris, not welfare of outsiders
                   2- Cts face serious practical probs in adjudicating exclusionary zoning claims
                             it is difficult to decide when a set of policies, taken together, are improperly exclusionary
                             there are no clear criteria to define exclusionary zoning and to some extent all zoning is exclusionary
          PA supreme Ct. has struck down many ordinances that they found to violate due process, i.e. justifications for land use
              restrictions were not w/ in state‘s police power → ordinances do not have substantial relationship to public welfare
                             Nat’l Land & Investment Co. (Held 4-arce lost min unconstitutional)
                             Appeal of Kit-Mar Builders, Inc. (Held 2/3-arcre lot mins invalid)
                             Appeal of Girsch (Held zoning ordinance excluding apt. buildings invalid)
             Zurich and Fernley – haven‘t had much impact b/c words fair and share not clear and provide a lot of wiggle room
    Negative Consequences of Zoning:
    1) Sprawl – if you limit housing and there is a housing demand, then it has to expand. Alternative is higher density zoning.
    2) Labor supply issues – no low wage workers
    3) Concentration of low income families
    4) Uneven public services – based on tax revenue
    5) Sense of community – commerce, institutions.
    6) Spillover effects.

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Questions Zoning Raises:
Religion: local gov‘t cannot impose zoning ordinances that place undue burden on churches for placement
         Significance – first federal zoning regulation, was it really even a prob?
Right to Travel (constitutional): move around country, does zoning prevent people from moving?
Equal Treatment under Law: Penn treated better than Allison‘s neighbor
Definitions of Family:
         State v. Baker, pg 941
         Facts: Zoning ordinance said occupation in certain areas shall be limited to one family (no more than 4 unrelated people)
                  City Arg: Rule imposed b/c concerned about density (traffic), health, crime
         Hold: Under state constitution of NJ provision was unconstitutional
                  Over-inclusive and under-inclusive – much be a goal and relation btwn what is curtailed and what is being avoided
                            5 unrelated people could cause no probs, while ―regular‖ family could be nuisance
                  Cannot make decisions based solely on family states
         Dissent: Decision threatens family, line needs to be drawn somewhere, hurts home values; Family should have preference, it
         is an important institution
         Broader Issues: Probs with Zoning Ordinance (Family Definition): makes assumptions/judgments of what people act like

        City of Cleburne v. Cleburne Living Center, pg. 951 (1985) US SP
        Facts: Zoning ordinance excluded certain types of group homes, allowed homes for insane but denied for ―retarded adults‖
        saying that neighborhood kids would make fun of them and neighborhood fears. Living Center claimed violation of equal
        protection
        Hold: rejects city‘s justification for denial, was negative attitude not a justifiable exclusion and not applied equally to all
        group homes

Exclusion of Multi Family Housing (Fair Share):
Surrick v Zoning Hearing Board (1977) pg 984 Only 1% of town zoned for multi-family housing – although some multi-family
houses were allowed, ordinance amnted to de facto exclusion of this particular use.
Issue: Does zoning violate police powers of Zoning Board under PA constitution by unconstitutionally excluding multi-family
dwellings
In gen Cts deferential to local gov‘t but ordinance must bear a substantial relationship to health, safety, morals and gen welfare
of community (Euclid).
Rule: Fair Share Test (Standard) requires that each community provide its fair share of housing in region. Notion that each
subdivision needs to help deal w/housing needs around it, can‘t isolate itself.
         Factors to consider:
              1) Is this logical place for development? (proximity to large metro area)
              2) Is present level of development already too high?
              3) Does zoning have an exclusionary purpose? Weigh available undeveloped land v expected growth, to see if
                   you‘ve sustained your fair share of pop growth/migration burden (std not a rule)
Note: Focus is primarily on exclusionary impact, not motive. Stnd, not rule
    Creates a duty of zoning boards to investigate effect of their regulations – even if there‘s no intent to discriminate, their
    practices can be found unfair if they have an unfair impact on certain groups of people.
    Zoning is presumably valid, burden on P to show there‘s a prob
Held: Town has not provided its fair share of land for development,
Prob: Township board: hard for them to do much planning now b/c stnd doesn‘t set a real clear rule.
                          1) Town: will need to see where public sees town going, see how they fit into that development, in order to
                             prepare to meet stnd.
                          2) Developer: Will need to undertake many of same investigations as muni will.
                          3) Future residents: Will need to plan future homes based on these investigations.
PROB W/ ANALYSIS: ―fair share‖ is a subjective stnd, hard to draw a distinctive line.
      If you are an advisor to board, you will apply 3-part test and try to pass burden on to neighboring community; you will say
         that just a little more than 1% is enough to meet burden…
      Township may just say no apt buildings → this is how you get from Surrick to Fernley.




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Total Exclusion of Multi-Family Housing
Fernley v. Board of Supervisors of Schuylkill Twp., (1985) pg 989 Developer wanted to built multi-family dwellings in an area
zoned for single and two-family dwellings only. There was a total ban on multi-family dwellings.
Does fair share analysis need to be employed to assess exclusionary impact of zoning totally prohibiting a basic type of housing?
HELD: Zoning ordinance impermissibly exclusionary b/c totally prohibits construction of multi-family dwellings – fair share
analysis inapplicable since there‘s a total ban. Approval for developer‘s plan not automatic, must be predicated on suitability of
proposed site and various health and safety considerations.
REASONING: Presumption of Constitutionality in any zoning ordinance. P has burden of proving invalidity (proves total prohibition
of a legitimate use), burden shifts to township to show ordinance reasonable to promote public health, safety and gen welfare.
RULES: Constitutionality of a zoning ordinance which totally excludes a legitimate use is regarded w/circumspection and,
therefore, such ordinance must bear a more substantial relationship to a stated public purpose than a regwhich merely confines
use to a certain area w/in muni.
Fair share test – applies to effect of partial bans by zoning that amnts to a de facto (effectual) exclusion of a particular use as
opposed to those that provide for a de jure (intentional) exclusion. – fair share does NOT apply when zoning regulation totally
excludes a basic form of housing.
De facto zoning cases (partially exclusionary): turn on question of whether provision for a particular use in ordinance reasonably
accommodates immediate and projected demand for that use.
Law in most states: a lot of deference to townships…
Why advise a town to engage in exclusionary zoning?
      Zoning for single family creates higher prop taxes, Apts. lower prop value: decreasing revenue and higher costs
      Relationship btwn tax and service costs: Apt will pay more costs for particular piece of land, but demand a lot more services
      Future development: developers would gen prefer to come to places where there are single family homes


Mt. Laurel, NJ Cases
Area wasn‘t developed but developers were coming their way, so put zoning ordinances in to fight off expansion (bigger lot sizes, to
keep certain types of housing and African Americans out).
Case #1: NCAA sued for racial and econ discrimination; Zoning preventing affordable housing struck down b/c unconstitutional.
Legislature passes a law requiring that each township had to have fair-share of affordable housing.
Case #2: Affordable housing still wasn‘t built so Ct created an admin system allowing magistrates to monitor townships to
ensure affordable housing built
Case #3: Ps weren‘t satisfied w/state‘s intervention. So Ct allowed legislature to create an admin system not run by magistrates.
Results: Affordable housing finally built in Mt. Laurel.

Appropriate judicial role in these cases? Tension btwn individual and community values and society values
Criticisms:
    1. value judgments are subjective
    2. Ct. functions – these decisions are based on empirical evidence, are Cts capable of evaluating?
    3. consistency – are Cts equipped to think about these things systematically? Will they be consistent across state?
    4. Prop values and expectations of homebuyers.
Positive Aspects:
    1. State Issues: Ct.s apply gen principles as opposed to local concerns
    2. Ct. evaluates complicated evidence all time. Ct.s may be better equipped than legislature.

GROWTH CONTROLS Some communities want to restrict or stop all residential and commercial development
   Reasons: Preserve certain resources
        o Prevent over-taxing infrastructure
        o Exact from developers benefits to which they are not entitled under subdivision laws
        o Existing physical and financial resources of community are inadequate to furnish essential services and facilities
            which an increase in population required – public welfare
   Methods used: Provided tax incentives to slow pace of development
        o Issued Bonds
        o Imposed Moratoria on or limited # or timing of building permits
        o Established ―greenbelt‖ zones in which no developments is permitted
   Probs: Unlike zoning, growth controls seem ad hoc, and don‘t come as a democratic process
        o Legal issues: are these fair? Violation of equal protection clause.
        o Should different stnds be applied to growth control, zoning, and takings?




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Ass‘niated Home Builders of Greater Eastbay, Inc., v. City of Livermore, pg 959 (‗76 SP of CA) -- Ordinance enacted preventing
issuance of building permits until overcrowding in schools, sewage pollution, and h20-rationing probs were solved.
RULE: If a restriction significantly affects residents of surrounding communities, constitutionality of restriction must be
measured by its impact upon welfare of enacting community AND welfare of surrounding region. Ordinance carries
presumption of Constitutionality  P has to prove their case
REASONING: Under Euclid, states have a lot of power; but in current case‘s ordinance significantly affects interests of non-residents
not represented in city‘s legislative body. Must decide whether ordinance is unreasonable.
TEST to determine whether a challenged restriction reasonably relates to regional welfare:
     a. quality of services/effect and duration….forecast probable effect and duration of restriction
     b. balance competing interests- community…ID competing interests affected by restriction
     c. determine whether reasonably benefits public welfare…does ordinance, in light of its probable impact, represents a
         reasonable accommodation of competing interests
HELD: P has not met burden of proof in disproving reasonable relation. Remanded.
DISSENT: Elitist concept designed to exclude future residents – no timetable for how long moratorium will last and current residents
have no incentive to conserve resources for future growth.
 Dissent‘s proposed Stnds Test:
     a. any absolute prohibition on housing development is presumptively invalid
     b. local regulations, based on parochialism, that limit population densities in growing suburban areas may be found invalid
         unless community absorbing a reasonable share of region‘s population pressures (fair share)

Ellickson, Suburban Growth Controls: An Econ and Legal Analysis
      Effects (assuming non-elasticity)
             o On present owners - Benefits those living in muniity already – keeps their house Pxs constant or increases them,
                landlords prevent competition
             o On suppliers of new housing - Costs largely felt by landowners who own tracts of undeveloped land
             o On Housing consumers - Pxs raised on new and used housing. Reduction in surplus to
                      1) current tenants,
                      2) new households moving in, (people that want to buy)
                      3) tenants that can‘t afford rent increases, and
                      4) potential immigrants who have decided not to buy or rent there b/c of Px increase or antigrowth policies
                      Believes 1,2 are hurt most – current tenants have higher prop interest
                      3,4 not hurt as much
             o Extraterritorial effects – more attractive, demand for housing in surrounding areas is enhanced, Pxs for old and new
                housing is also increased
      Legal Approach - Proposed Rules
             o Landowners should never be absolutely privileged to proceed w/ their developments— a suburb must be entitled to
                force restrictions (sometimes cushioned by compensation) on landowners or else it will not be able to implement
                efficient antigrowth programs
                      SUBNORMAL land uses - gov‘t should be able to stop w/o paying compensation to land owners
                                when a gov‘t prohibits subnormal land uses, a landowner should be required to prove that
                                    prohibition is grossly inefficient in order to recover for any diminution in value of his land.
                      ABOVE NORMAL - if regulation or gov‘t stopping substantially affects value of a person‘s land that
                          person should receive compensation
                                unless suburb can affirmatively prove that its restriction is both fair to that landowner and efficient
             o Township defines what ―normal‖ is
             o hierarchy – uses of land that are better than others – single family considered best  considered normal
      Law of Development Restrictions – Quotas, Moratoria, and Reg. of Area, Bulk and Use
             o Construction quotas –under recommended system- b/c construction quotas prohibit normal land uses, a landowner
                who sought damages in a state Ct. would only have to show that program substantially diminished his land value
             o Development Moratoria – when a developer challenges a moratorium on building permits, most Ct.s succumb to
                fallacy that dispute must be governed by a prop rule. They choose btwn either mandating that developer be given go
                ahead he seeks or denying him relief all together.
                      In gen, Ct.s have been much too tolerant of moratorium measures
                      B/c moratoria usually prevent landowners from pursuing normal land use activities, they are always suspect
                          from standpoint of horizontal equity
                      In addition, many moratoria appear to be inefficient
      Nuisances - gov‘t can regulate nuisance like behavior w/o paying
             o Nuisances are market regulation
             o PRITCHETT: Why aren‘t nuisances enough for sub normal
                      Difficult to frame law to prevent nuisances
                      Subjective
                      Limits power of local gov‘t - prevents from limiting things that aren‘t nuisances.

                                                                                                                                  41
TAKINGS
    fed, state, and local gov‘ts have power of eminent domain (i.e., power to take title to prop against owner‘s will).
    5th Amend limits power of eminent domain to taking prop for public use if given just compensation.
    No taking when  if state merely REGULATES prop use (zoning regulations, environmental protections, landmark
        preservation) consistent w/ state‘s police power.
    Stnds for Takings
            1. must substantially advance legitimate state interest
            2. must be a tight means-end fit, > rationally related to a conceivable public purpose (Nolan – beach & psychological
                 barrier NO GO)
            3. Must be rough proportionality b/w burden of exaction & public benefit of ―give-back‖ (Dolan – bike path benefits
                 do NOT outweigh public burdens of traffic, etc)
            4. If regulation deprives landowner of all econally viable use, = taking
            5. If gov‘t makes or authorizes permanent physical occupation = taking (Lucas – applies to both (4) & (5); base
                 analysis on nuisance law & these two limitations)
            6. more drastic diminution in value of owner‘s prop, more likely = taking…prob most important stnd to consider.
                 (Penn Central – reduced value substantially but allowed transferable development rights to offset burden to prop
                 owners).
What is a taking? Gov‘t doesn‘t formally condemn, but action harms prop owner may be a taking. 2 rules for determining:
        1) Taking title: If gov‘t formally exercises power of eminent domain, bringing a condemnation proceeding and taking title
            to land, gov‘t has taken prop and must pay for it.
        2) Taking Possession: If gov‘t takes permanent possession of prop, w/o taking title, this is a constitutional taking which
            must be paid for. i.e. If govt. physically invades prop permanently, it has taken away all econally beneficial use.

EXACTIONS
    Exaction (Conditional use zoning which genly applies to developers). Condition imposed on a prop owner when he
     applies for a building permit. condition doesn‘t benefit owner, but benefits city.
    Stnd: There must be an essential nexus btwn legitimate state interest and permit exacted by city. (Nolan).
    Even if there is logical nexus for its exaction, city must also show that permit conditions imposed on individual owner bear a
     ―rough proportionality‖ to negative impact of development on public. (Dolan).
    Main Purpose Shift cost of public infrastructure onto developer
    Other purposes:
     (1) induce a more efficient use of infrastructure
     (2) serve to mitigate negative effects a development may have on a neighborhood
         - In serving this purpose, exactions encourage efficiency by forcing developer and its customers to internalize full
              costs of harms that development causes.
     (3) Serve as growth enablers: in areas that are growing so rapidly that gov‘t cannot provide public facilities fast enough,
         exactions allow growth that might otherwise be stalled by growth control measures. Or, in areas in which a particular
         development, or growth in gen, is controversial; a local gov‘t that favors a project may use exactions to counter or ―buy
         off‖ opposition.
     (4) May be used either to redistribute wealth from developer or its customers to others or to prevent developer from
         appropriating wealth created by activities of local gov‘t.
         - Community may impose exactions as a means of capturing part of developer‘s profit or in order to inflate Px of
              existing housing and thereby allow current residents to profit at expense of newcomers.
    Kinds of Exactions: Dedications, Subdvision requirements, impact fee, linkage programs
     (1) Dedications: Conditional permit that requires dedications of public infrastructure, such as streets, parks, sewers, storm
         drains, and schools.
         - Ct.s have upheld these against Constitutional challenge on grounds that development caused need for improvements
              and that improvements would specially benefit subdivision.
         - Won‘t be upheld if relationship b/w development and exaction is too tenuous (need rough proportionality)
         - Some state legislatures authorize muniities to assess fees in lieu of subdivision dedications.
     (2) Sub division requirements
     (3) Impact Fee: Building will have impact on services so builder must pay for decline in services that is going to result from
         building.
         - These fees are imposed on all kinds of developments, not just those requiring subdivision approvals. They are used
              to help finance a range of muni facilities that may be requires as a result of development, such as construction or
              expansion of h20 and sewerage facilities.
         - State Ct.s have genly upheld impact fees so long as there is an adequate relation b/w fee and additional burden
              imposed on public facilities.
     (4) Linkage programs: If you cause one prob, you must try to solve another. These programs presume that new commercial
         development will either displace existing private land uses or create new demand for particular land uses—normally low
         and moderate income housing—that market will not supply.


                                                                                                                             42
             Ex. In San Francisco, if you want to build, you have to give a payment to gov‘t to develop housing for poor. So, if you
             are a developer, you either need to build affordable housing or pay gov‘t money so that it can develop its affordable
             housing program.
                  A) Challenges to Exactions
                      - Landowners have challenged exactions as violating constitutional prohibitions on takings.
                      - ALSO – can only use them if people want to live in area = housing shortage (Manhattan)

Requirements of Exactions: Nexus, Rough proportionality
        (1) Nexus Requirement
   Nolan v. CA Coastal Commission Nolan wanted to build addition to home right on coast Coastal Commission said they‘d
   grant permit as long as owner would build bridge from public road to beach. Comm argued that would be a psychological
   barrier to public if they couldn‘t see beach.
   Held: this was a taking, had to pay Nolan if they wanted easement. (didn‘t meet essential nexus requirement). Doesn‘t cure
   prob that zoning regulation designed to protect.
   RULE: condition/regulation has to have an essential nexus to prob that gov‘t is trying to regulate. Exaction must be
   substantially related to specific public need or burden that owner‘s building creates/to which it contributes. Reg needs to
   ameliorate harm that is caused.
   State interest must trump purpose of development: So long as Commission could‘ve exercised police power to forbid
   construction of house altogether, imposition of condition also constitutional.
                        right to exclude is one of most important prop rights
   2 issues Ct. sees: Nolan is bearing a burden that should be born by public and Commission is supposed to be regulating
   view but now they are controlling access
   NOTE: To survive a constitutional challenge after Nolan, an exaction must mitigate specific adverse impacts caused by
   development.

         (2) Rough Proportionality Requirement
   Dolan v City of Tigard (US SP 1994) City reg said certain amnt of land needed to be left open and developers had to design
   prop in a way that would limit flood damage. Dolan wanted to expand already existing prop, but city said that she had to
   dedicate flood plain and for a bike pathway to city.
   RULE: Even if condition satisfies essential nexus there must be rough proportionality btwn harm caused and reg. Gov‘t
   must prove reg is specifically related to harm they are trying to prevent.
                       Doctrine of unconstitutional conditions: Gov‘t can impose conditions but can‘t be unreasonable
   Reasoning: Nexus exists btwn fear of flooding and flood plain and traffic issues and bike pathway; but then rough
   proportionality test (no precise mathematical calculation), city must make some individualized determination that required
   dedication is related both in nature & extent to impact of proposed development.
         City is allowed to put moratoria. (tell her she can‘t expand). But can‘t tell her she can build but must dedicate bike
            path  this is why he is trying to distinguish from zoning.
   Held: Exaction = unconstitutional. Fails proportionality test
   Dissent: (Stevens) Majority has shifted burden of proof onto gov‘t, which must now prove what it‘s doing makes sense.
         Troubled by Ct.s intervention in this area – local gov‘ts need flexibility to respond to ∆ing land use. (Not clear that
            Dolan is worse off )
         Harsh requirement for city planners. City must now prove nexus and proportionality.
                 o City is going to have to use stats, costly, time consuming. Force city to do more than they used to have to do.
   Renquist trying to promote? Better city planning will result from increased stnd, make sure exaction related to impacts of her
   development, No limit to what they can take
   NOTES: Implication of this case is that zoning will have to be an exact fit for ordinance and zoning board is going to
   have to prove its case., Dolan and Nolan represent a return to substantive due process.
   Ct. never declares a taking (in Nolan or Dolan) (b/c not under 5th amend, not taking b/c compensation was provided in form
   of a building/expansion permit) – just says what gov’t wants to do unconstitutional
   Takings Clause ―nor shall private prop be taken for public use without just compensation‖
   Prob: sometimes same reg may not be a taking – Ct. balances harm to society v extent of regulation. Harm may vary in diff
   situations. Euclid was a severe reg that devalued prop, yet it wasn‘t a taking, so here they couldn‘t declare a taking either (cause
   these arguably not as severe)

    B) Vikki Been: Exit as a Constraint on Land Use Exactions
     PURPOSE of EXACTIONS: Exactions serve important and legitimate purpose of creating incentives for developers to
       take efficient level of precaution against harm and by forcing developers to consider all costs in determining development.
     exactions play important role as damages for injuries that developments cause to public.
            o nuisance law- sometimes it may be most efficient to allow a land use that would constitute a nuisance (but serves
                 important other goals of community), and impose damages upon user in order to force it to internalize costs of
                 activity.

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        Exactions give developers motivation to be more careful and efficient in planning their buildings, to limit as much as
        possible their detrimental impacts on community in first place.
       Been recognizes that there are probs w/ land use exactions: 1) gov‘t may be tempted to distribute wealth by extracting more
        money from developer than is needed to and 2) gov‘t may be tempted to over-regulate, in order to get more exactions. may
        prevent development that would ultimately have been socially beneficial.
       competition controls cities imposing exactions:  make Nolan test unnecessary
            o From other communities (developer can always go somewhere else)
            o From own electorate (voters may want development in their city, to increase wealth, jobs, etc.)
            o From higher levels of gov‘t (states that don‘t want businesses moving out of their state may force a community to
                 play nice)
       From private sector (developer may just decide to spend money on some other commercial venture, e.g. industrial buildings,
        which typically are subject to fewer exactions; and a community which wants and needs housing developments will be
        sensitive to this.)
       Sometimes it‘s just more efficient to use an exaction for a purpose unrelated to development at hand.
            o E.g. in situations where either remedy for harm isn‘t worth its benefit to society, or there IS no practical way of
                 remedying harm,
       And overreaching judicial power…Giving judges power to 2nd-guess legis judgments for public good (vague stnd.)
       City gov‘t a better position to run tests, calculate costs of development, and make long-term city planning decisions.

EMINENT DOMAIN gov‘t power to condemn prop and pay fair market value
    Gen, whatever purpose legislature believes to be a public good can be used to justify eminent domain.
    Whether in fact provision will accomplish objective not question. Constitutional requirement satisfied if legislature could
       have believed act would promote its objectives. Midkiff.(Hawaii)
    Determination of public purpose is primarily a legislative function, subject to review by Cts when abused, legislative should
       not be reversed except where determination palpable and manifestly arbitrary or incorrect. (Poletown).
   Policy ED cannot be used to force an individual to bear a burden better collectively imposed.
    ED prevents hold outs and oligopolies.
    Radin concerned w/way assessment of land is made, w/o regard to personhood value placed on land.
    60 minutes article (Lakewood): std not fair. Mayor justified taking b/c it was needed to increase tax revenue and help city
       survive.
Frameworks
    Utilitarian: gov‘t decides what benefits aggregate public – tries to correct market failures (hold outs, Hawaii/Midkiff prob)
    Econ Argument for ED: public benefits from increased revenue from development.
    But in Poletown, plant still shut down. If it really was a market failure plant wouldn‘t have failed. Plant didn‘t supply a long
       term public benefit and therefore land shouldn‘t have been taken.
    Radin: there should be a higher std (of public interest) when taking someone‘s home for ED. Std lower for commercial prop.
       Would have said Lakewood and Poletown were not ok for ED. Hawaii was ok.
    But what about people w/ family business? Radin might still say ok cause there‘s a personhood interest. But no legal basis for
       a different std btwn commercial and personal prop.
    Law is moving towards Radin

  Hawaii Housing Authority v. Midkiff, O‘Conner 1984, Supp A lot of land owned by few landowners (oligopoly) and gov‘t
  created Housing Authority that took land from few land owners and distributed to other private owners.
  Hold: Prop can be forcibly conveyed to private parties to achieve legis good of public. Rational exercise of ED power, w/in
  police power (regulate for health safety and welfare of public like removing slums in cited Burman in DC). If legis determines
  that taking is public purpose then it is a public use. Gov‘t takes land but owner‘s still get paid.
  If purpose is legitimate and means aren‘t irrational, legislator‘s purpose can‘t be questioned by Cts.


  Poletown Neighborhood Council v. City of Detroit, Mich SP Detroit takes land from prop owners to give to GM, claim it is a
  public benefit (jobs) b/c don‘t want company to leave and high unemployment
  Rule: Saving jobs is a public benefit that doesn‘t violate public use clause even though land is going to private co. A private
  company can be benefited for public good in interests of public, as defined by legislature.


  Kelo v. City of New London New London wants to tear down neighborhood of h20 front houses to redo h20 front and allow
  Phizer to expand in hopes of encouraging econ growth in city. City did not try to negotiate/bargain w/homeowners, went directly
  to Emin Domain.
  Can you use ED to convey private land to another private entity for public purpose?
  Held: City can take houses. Econ development is a ―public good‖
  Dissents: O‘Connor: Contradiction w/ her opinion in Mitkiff; Says that in Mitkiff, Land use was adversely affecting public,


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  getting rid of bad land use provided public good. Therefore future use of land did not matter.
        Public use in getting rid of land monopoly. What if Hawaii had given it to 10 publicly well connected people?
        Prob in her reasoning, if future use doesn‘t matter, then Hawaii could have taken land and given it to one person
        O‘Connor distinguishes, says in Mitkiff getting rid of bad use
  Thomas: Literal interpretation of 5th Amend, specifically, ―For public use‖
                 o He cares about what framers meant when they wrote it.
                 o Public use should be narrowly construed – if public isn‘t going to use prop then taking is illegal under 5th
                     amend – public has to use it directly Actual use
  Berman v. Parker – city had designated an area of southwest DC as ―blighted‖
        Ct. determined that specific non-blighted houses don‘t matter if whole area is blighted
        Blight is a probatic term – no legal definition – could be any car w/o two garages.
                 o Area in New London could have been designated as blighted, New London decided not to call it blighted b/c
                     they were able to get more money by not describing it that way.
  Now public use is determined by laws of state they live in.
  History: Framers prob intended a pretty strong gov‘t control over prop. Pretty broad interpretation of clause – Thomas
  would prob disagree
  Gov‘t defines just compensation – hard to tell if they define it justly.
  Backlash from opinion: So strong that governor put a stay on taking. Eminent domain is a state power.

REGULATIONS OF USE  NON TAKINGS
Penn Central Transportation Co. v. City of NY, ‗78 US SP – Train station landmark, want to build skyscraper , Grand Central
declared a historic landmark. Wanted build on top of station but historic commission denies says owners permitted by zoning laws
allowed to transfer development rights to other parcels.
Rule: have to view prop as a whole when talking about taking (taking some sticks isn‘t taking prop rights), then can still use prop for
primary purpose. CAN NOT INTERFERE WITH INVEST BACKED ECON ESPECTATIONS. Balancing test (econ.
expectations v. needs of society)
  1) econ impact (diminution of value), 2) character of invasion, 3) reasonableness of interest, 4) gen welfare
Hold (Brennan): NOT a taking, reasons
      didn‘t take all sticks or all econ benefit… allowed to transfer their development rights
      still reasonable return on place… operates train station (doesn‘t interfere w/ primary expectations)
      Compares to zoning, i.e. restrictions on prop rights okay, if necessary for public welfare.
Dissent(Rehnquist): prop is a bundle, taking one stick is a taking, should be paid
      Zoning is diff– ↓ in value balanced by ↑ in neighboring benefit (bal. of interest)  here, only imposed burden on certain
         individual prop.
      Only times when not taking are nuisance or hazardous to health, safety welfare of community or where there‘s average
         reciprocity (neighborhood zoning)
Continuum of protection from ―no protection‖ to ―full protection‖  Ct. balances many diff factors to determine what kind of
protection to give (Brennan closer to no protection in prop rights, Rehnquist closer to full protection of prop).
Cases so fact dependent and judges have to bal interests based on facts  stnd not a rule. Ad hoc.
Brennan stnd: only a taking if it takes all sticks (complete taking or no taking)
Rehnquist: prop all inclusive; once you take some sticks it‘s a taking
Conflicts w/Nolan – when considered landmark preservation not a taking, coastal areas are taking
Prob: in order to protect communal rights, we infringe on private prop rights

SAX – ―Some Thoughts on Decline of Private Prop‖ – Prop should be taken, Society shifting towards reg private prop rights!
        Needs of society ∆, therefore changes way we define prop ∆es
        Penn Central ex. – Private rights caused Grand Central to be built but now leading to its destruction.
        Allocation of Prop Resources: private owners should allocate to socially desirable uses – isn‘t happening.
        Why private ownership of Grand Central Station did not lead to correct allocation:
              o Distinguish btwn exclusive consumption benefits (private prop) and nonexclusive consumption benefits
                  (public goods)
              o Private prop doesn‘t protect gems like Grand Cent b/c:
                       Where exclusive consumer benefits people value prop. accurately and bid for it. (will protect it cause
                           you get benefit)
                       W/non-exclusive consumption benefits public doesn‘t protect. Hard to group people together
                           (Coase/free rider, smallness of individual interest, imperfect knowledge, differential values to a large #
                           of people and difficulty of pricing)
                       Need gov‘t to protect benefits -- Restrict prop rights to protect commons (i.e. growth controls,
                           habitability).
        Place‘s we don‘t let private market work? Low income housing, Wildlife preservation, Wetlands protection, Min
          Stnds – Warranties, etc., Growth controls, H20 resources

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            Relates to low-income housing justifications & Rawlsian
            Even though aggregate benefit significant, transaction costs prevent banding together to value/protect/buy prop.
            We‘ve always had publicly valuable goods, i.e. things w/nonexclusive consumption benefits…why such a big deal now?
             → Increasing development; natural and historical resources more rare, endangered.
             ―Public privileges, long enjoyed, are becoming public rights.‖
            Coase Analysis: Why exclusive prop wouldn‘t work. People could pay not to build but significant transaction costs;
             free-riders, negotiation costs, holdout by Penn Station
            Law represent growing distrust of development, not happy w/private prop system so we‘re regulating them

Lucas v. South Carolina Coastal Council ‗86, P purchased two beachfront lots intending to build single-family homes on them like
neighboring properties. ‗88, Beachfront Mgmt Act barred development of new homes → Rendered prop useless/valueless.
Issue: Whether Act‘s diminution of econ value lot was a taking of private prop under 5th and 14th Amends requiring ―just
compensation.‖ – Applies when prop has NO value left
SCALIA‘S ARG: Takings (gotta pay when) 1) actual/physical invasion (Laretto-Cable Box) 2) denies all econ beneficial use
      5th Amend violated when land-use regulation ―does not substantially advance legitimate state interests or denies owner
         econ’ly viable use of his land‖ – Taking b/c it denies all econ beneficial use.
      Land-use reg not a taking if it substantially advances legitimate state interests (based principles of reg of
         nuisance/trespass)
Flaw: zoning can do this. Many cases allow taking for aesthetics, etc. Unless: gov‘t could have regulated under nuisance
      Struggles to reconcile his goal to find a taking when Euclid goes other way.
      No argument that what Lucas wanted to do was a nuisance, since no nuisance, it was a taking and city must pay.
Constit‘l concerns: notion that State may later elim all econ valuable use inconsistent w/historical compact recorded in Takings
Clause that has become part of our const‘l culture.
HELD: D must ID background principles of nuisance and prop law that prohibit uses he now intends in circumstances in which prop
is presently found. Only on this showing can State fairly claim that, in proscribing all such beneficial uses, Beachfront Mgmt Act not a
taking.
           No Compensation                                         Compensation -- any physical taking
                                                     Denial of Econ benefit
           If background CL principles, taking allowed and         If NO background CL principle, State can still allow
           does not require compensation                           taking, but must provide compensation
                 nuisance law                                           no CL principles
                 CL

2 ways to look at takings and compensation – who determines what prop is?
     Sax/Brennan view
              o Society function – society has interest in regulating prop. No prop w/o society. Society can distribute prop rights as
                  it chooses
              o When society ∆es, understanding of prop rights ∆es
     Scalia/Rehnquist view
              o State has burden of proving interest in wanting to ∆ prop rights justified
              o Gov‘t can only intervene for nuisance – if other prop owners could restrict him from using it.
              o Prop is sacrosanct; only regulated in limited circumstances
3 gov‘t takings Emin domain, Reg takings, Physical invasion – Gov takes some of your prop, Larreto (cable box), when fed gov‘t
requires you to have physical invasion then they must compensate




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