PART II. PROPERTY GENERAL

- Johnson v. M’Intosh: Concept of first possession: o First purchase/first possession irrelevant

- Ownership rights: o 1) exclusive right to useo 2) exclude others from using ito 3) manipulateo 4) exclusive right to manipulateo 5) alienation of property (transfer or sell)o 6) exclusive right to alienationo 7) partial

Apportion by time: Sell right to possession (rent) Natural resources rights (minerals/water) License (hunting) Easement (right to cross/roads) Servitudes (restrict use of land; neighbors agree to not build to block view) Fee simple: all interest in land

- Pierson v. Post: Concept of first to actually captureo Purpose of certaintyo Parallel to fugitive resources

- Ghen v. Rich: Legal reasoning based on custom

II. ACQUIRING PROPERTY:1. Acquiring Property by FIND

- *Finder is exception to general rule: O owns everything above and below land and has exclusive right to use

- *Property interests are relative: relationships of people relative to thingsa) Lost property:- Rule : Finder prevails against everyone else except O [OR prior possessor]

o Armory v. Delarmirie: boy found a ring and gave in into a goldsmith to get money for it and goldsmith took it claiming boy had no further rights to the ring than the boy did b/c it didn’t belong to the boy)

o Reasons: 1) Discourage theft or forceful takings 2) Promotes getting item back to true owner 3) Eliminates paperwork/easier (Proof of prior possessor) 4) Bailment: one person lends/trusts a piece of prop to another for limited

purposeo Remedy issue:

Maximum value of item Burden of proof on D to show otherwise

Actual value of item: minus probability that true owner will reclaim stone? Courts reluctant to use this b/c too uncertain

Most people say this is law: 3rd party subrogated rights to O, if he (goldsmith) had to pay the prior finder (chimney sweep, and then he used it all so in insolvent) and O comes back then 3rd party must pay O as well

Solved with replevin- Other finder rules on lost property:

o Rule : Location of where the found property is irrelevant Hannah v. Peel: Soldier found a brooch wedged in a above a window sill in a

home which was leased by O to the army to house soldiers Locus: Private home but occupied by army Location: Window ledge Winner: Finder Rationale: Follows Bridges (location of property irrelevant)

Bridges: Traveller was leaving a shop when he found a parcel with banknotes and handed it over to the firm asking him to keep it until the owner of the banknotes appeared

Locus: Shop Location: Floor Winner: Finder Rationale: Location of the property is irrelevant

o Rule : If property was attached to or under the land, then to the owner of the locus South Staffordshire: D was cleaning out a pool of water owned by P on P’s land

when he found a ring Locus: Pool on private property Location: Embedded in mud Winner: Owner of locus Rationale: 1) Because the property was attached to the land or under the

land and 2) finder was employee or agent of another (the owner of the locus) therefore does not find it for himself

Elwes v. Briggs Gas Co: Lessor (Elwes) leased the land to the gas company for 99 years for all minerals and gas in land and lessee found a prehistoric boat while digging for gasholder

Locus: Private property w 99 year lease Location: Embedded in soil Winner: Owner of locus Reasoning: Unclear

b) Mislaid property:o Rule: Mislaid prop (something you intentionally put somewhere and leave) owner of

locus Vs. Rule: Lost prop (something you don’t intentionally do something with)

findero McAvoy v. Medina: A barbershop owner’s customer found a wallet sitting on the

counter, which presumably another customer left behind. He gave it over to the barbershop owner to locate/advertise the O of the wallet

(Follows Bridges): Location where found doesn’t matter b/c item is mislaid property. Goes to the owner of locus

c) Abandoned property:o Rule : Goes to finder, not owner of locus

o Abandonment is determined at time O does something with the prop (mindset/intent of O needs to be determined)

d) Treasure trove:o Rule: Goes to findero O leaves property behind with intention of coming back for it

e) Employees: (mix of factors) Cases focus on type of relationship with employee

o E.g.: Chamber maid finding money in hotel: court decided not to focus on whether it was abandoned misplaced or location of money focus was on relationship between employee/employer doesn’t go to maid b/c she was employee

o E.g.: Decorator came into hotel to redecorate and found money go based on employee/employer money goes to decorator based on theory that she wasn’t an employee and an independent contractor basis

o E.g.: Floor of restroom and cleaning and found money on ship went with the abandoned/lost property distinction

2. Acquiring Property by ADVERSE POSSESSION Theories why:

o 1) Earning theory (Holmes)o 2) Sleeping theoryo 3) Clearing up land titles

AP law is combination of statutes and case law AP cannot run against gov’t property Requirements:

o 1) Actual entry giving exclusive possession: AP cannot be sharing with O Meaning of exclusive possession can be determined by statute

Lutz: Per NY state statute possession meant 1) enclosed or 2) improved/cultivated

o 2) Open and notorious: (objective standard, based on O’s acts and AP’s acts) acts must sufficiently put reasonably attentive O on notice that someone is on their property

Or sufficient that the O had actual notice, but actual notice is not required for open and notorious

Exception (Manillo): De minimus encroachment situations, O has to have actual notice (only fair to O since it would be hard to know if AP is encroaching w/o getting land surveyed constantly)

Solution to unintentional encroachment is to just have AP pay for the FMV of the land

o 3) Continuous for the statutory period Rule of nature of use: AP has to be using the property in the true nature that

the average O would be using it Howard v. Kunto: The AP was using the property as a summer home

and therefore was not there continuously, but the court found that the nature of the home was one where the O would be using it as a vacation home as well so therefore would not be there continuously

*May present problems for open and notorious requirement b/c if non-continuous occupation it may not be open and notorious enough

Rule of tacking : can use time period of predecessor to meet statute of limitations if there is privity (ie: relationship of voluntary transfer between parties)

Examples of tacking and 2 potential APs: [Variation] An AP Blackacre in 2000; 2007 B comes and occupies

land kicks A out (10 yr SOL); in 2010 does B get Blackacre no B doesn’t get to tack b/c it was not voluntary

o *A may have a cause of action against B- similar to rule of finders, A is a prior possessor (not that he is an owner) then he can have a cause of action against B b/c he was occupying it first.

o If A comes back onto land: (split in jdx) A has to start over when he comes back A can add on to his prior time

[Variation] B comes along and then A allows him to come onto his property and then A leaves voluntarily; does he get to tack? No b/c A does not voluntarily give the land to B

[Variation] A orally gives B land, but not written counts to tack? Not sure no cases on this (land needs to be transferred written)

*Sale of property by O does not stop SOL from running on an AP Reason: O sells to B his interests in the property, which comes with

AP; B takes property subject to rights of AP *Death of O does not stop SOL unless O’s interest is a life estate

o 4) Adverse and under claim of right: Mental intent of the AP (whether mistake or hostile depends on the jdx)

3 conflicting rules : 1) State of mind is irrelevant (objective/CA), so long as AP doesn’t

think he’s there with owner’s permission 2) Good faith possessor (minority): thought I owned it

o Connecticut doctrine : only good faith AP winso Manillo v. Gorski: Gorski bought a piece of land adjacent to

Manillo and built a set of stairs that encroached onto Manillo’s land about 15 inches. Manillo claims that encroachment was not AP b/c Gorski had mistaken belief that he was building on his own land therefore not open.

Court applies Connecticut doctrine and holds for AP (Gorski)

3) Aggressive trespass (minority): I thought I did not own it but intended to take it anyway

o Maine doctrine : mistaken encroacher loses and hostile person wins

Rewards bad behavior and punishes those acting in good faith

o Van Valkenburgh v. Lutz: Lutz began developing a land that was later owned by Van Valkenburgh by growing a garden on it, storing some stuff on it, building a pathway through it and building a one bedroom shed on it.

Issue here: Lutz for part of property thought he was building on his own property (the shed) and for rest he knew he was not; court said he has to be mistaken AND has to hostile (both cannot go together though)

o 5) Payment of taxes (Western states) Statute –based requirement: AP must pay taxes on prop duration of

possession B/c taxes cannot be paid for only a portion of the land (must be taxes paid

for all or non), for western states hardly impossible to get encroachment situation

Doctrinal exceptions: (encroachment) AP’s argument that although he hasn’t been paying taxes explicitly on the part he was adversely possessing, his current taxes paid include encroachment area

1) Visual Assessment Theory: tax assessor assesses land and property line looks like where the AP’s boundary is, so has been paying taxes

2) Recent Purchase Of Prop: taxes are based on FMV so AP can argue that the price he paid included the encroached area, therefore value of tax includes the encroached area

3. Acquiring Property by COLOR OF TITLE Adverse possession through faulty deed

o Must be that an objective person believe that the deed is valid Requirements:

o 1) Actual entry giving exclusive possession Constructive possession rule : AP who enters on faulty deed gets constructive

possession of all that the writing describes, even if he only occupied a small part

Exceptions to constructive possession: 1) If AP is possession part of land via faulty deed with O occupying

land, AP does not get entire parcel of O’s land 2) If AP gets a deed to two contiguous parcels with both Os not

present, if AP occupies one parcel he does not get the other parcel too

o Reason: no actual entry into other parcel other O would not have had a cause of action against AP

3) Deed is valid for part of parcel and AP enters the part he actually owns, AP does not get constructive possession

o Reason: no actual entry on other half other O would not have cause of action against AP

o 2) Open and notorious [Traditional requirement: occupy entire property] Constructive deed: if you have a deed that gives you right to entire parcel,

open and notorious is satisfied even if you occupy only a small portiono 3) Continuous for statutory periodo 4) Color of titleo 5) Payment of taxes (western states)

4. Disabilities Exception (statutory):

disability must exist when AP entered statute will say how many years the AP will get after disability removed Steps:

o 1) When would statute run if no disability?o 2) Was O under disability when A entered?o 3) When was disability removed? (add the statutory period)o 4) Which date is longer? (under reg statutory period or with disability)

*this is for the benefit of the O *Disabilities do not tack onto predecessors’ disabilities *A second disability in an O does not count if it occurred after the AP entered. The only

disability that counts is the one that the O was under when A entered.

III. ESTATES1. Types of Estates:

Fee Simple: Own land in perpetuityo “To A” or “To A and his heirs”

Fee Tail: Ownership limited to O’s heirs (limitation to sell or mortgage generations down)o “To A and heirs of his body”

Life Estate: Possessory interest during lifetimeo “To A for life”o Reversion: property goes back to grantor if none specified

Fee simple – Fee tail – Life estate – Leasehold 2. Rules of construction

1) Presumption of fee simple unless language states lesser estate 2) Presumption of all property 3) Apt language presumption: if grantor uses one word to describe something and then

another word, likely has different meaningo White v. Brown: “To Evelyn White to have my home to live in and not to be sold”

Heirs wanted to interpret as a life estate and Evelyn White to interpret as fee simple w restraint on alienation

Court held: restraint on alienation stricken and is a fee simple; uses rules of construction

4) Restraint on alienation is voido Use restrictions = restraint on alienation?

Mountain Brown Lodge v. Toscano: Restraint on use was deemed the same as restraint on alienation b/c the lodge could only be used for lodge or fraternal purposes

Effect vs. form view: Fomal approach (Toscano); Effect: if nominal restriction on land then it may be unreasonable restraint on land

CA rule: use restrictions are not the same as restraint on alienation, so they are allowed

3. Defeasible Fees: (fee simple) Types:

o [Fee Simple absolute (non defeasible)]o Fee Simple determinable: automatic reversion when condition is breached

“so long as” “while” “during” “until” + don’t have to go to court and litigate

– don’t want to end up with property you don’t know about (potential APs or personal injury liability)

Future interest in reversion: possibility of revertero Fee Simple subject to condition subsequent: reversion upon grantor’s election to

file suit to retake property “but if… can re-enter” “on condition that” Words of re-entry to be clear Future interest in reversion: right of entry

o Fee Simple subject to executory limitation: condition subsequent but to someone else instead of grantor

4. Future Interests: Future interest retained by grantor

o Reversion: right to future possession when O carves out of his estate a lesser estate (O’s future interest in life estate)

o Possibility of reverter (fee simple determinable)o Right of Entry (fee simple subject to condition subsequent)

Future interest retained by transfereeo Remainder: future interest that waits politely until termination of preceding

possessory estate (doesn’t have to be certain just possible) (always with life estate)1. Vested: 1) Holder must be an ascertained person AND 2) Remainder becoming possessory is not subject to condition precedent

o Vested (regular/indefeasibly) Ex: “To A for life, then to B and her heirs”

o Vested subject to total divestment Condition subsequent does not have to happen but if it

does, then divested If a 3rd party follows the third party is always a shifting

executory interesto Vested subject to partial divestment (subject to open)

Requirements: 1) Ascertained person 2) Possibility for more members to come into existence Ex: To A for life, and then to A’s children and their heirs”

A has one child B2. Contingent Remainder: 1) Interest is in an unascertained person OR 2) Possession is subject to condition precedent Ex: “to A for life, then to the heirs of B” B is alive (heirs cannot be

ascertained until B dies) Ex: “to A for life, then to B and her heirs if B survives A” Contingent remainder always follows contingent remainder

Vested subject to total divestment vs. Contingent remaindero Ex: “to A for life, then to B and her heirs, but if B does not survive A

to C and his heirs” B does not have contingent remainder; B has vested

remainder in fee simple subject to divestment (C has shifting executory interest)

Executory Interest: future interest in a transferee that can take effect only by divesting another interest (always with fee simple)

1) Shifting: divests to transferee 2) Springing: divests a grantor E.g.: to B one year from today E.g.: to A for life, then to A’s children 1 year after A dies

IV. CONCURRENT INTEREST Tenancy in Common:

o Each have an undivided partial interest in the property. o Either one of them can leave their share of in will to someone else or intestate heirso Co-tenant has no right of survivorship

Ex: A, B & C are in a tenancy in common. B dies and H is his heir. A during his life sells to D H, D & C are now tenants in common

Joint Tenancy: o Each owns the undivided whole of the propertyo Right of survivorship: one tenants interest vanishes when he dies

Ex: A, B & C are in a joint tenancy (33/33/33). A sells his interest to D. After, B dies but wills his interest to H D has 1/3 interest and C has 2/3 interest in a tenancy in common

A selling to D severed his interest with respect to B & C (1/3 vs. 2/3) and B is still a joint tenant with C. B dying and willing to H is invalid and B’s interest vanishes, leaving C with 2/3

o Sale of one’s interest during his lifetime turns the it into a tenancy in commono Rule of 4 unities : not meeting one of these unities makes it a tenancy in common (TTIP)

Time: interest of each joint tenant acquired or vested at same time Title: joint tenants acquire title by same instrument or by joint AP

Joint tenants can never give rise by intestate succession Interest: all have equal and undivided share and identical interest measured by

duration (50/50, 33/33/33) Possession: each must have right to possession of whole

o Severance of Joint Tenancy: (effective severance creates a tenancy in common) Old method: Sever by Strawman : property passes through S then S conveys to other

tenant you wanted to create a tenancy in common with CA: no longer have use of strawman can convey yourself and someone into

joint tenancy In jdx that no longer have strawmen, still require formal deeding property to

one’s self Modern rule: Sever based on intent (deed)/unilateral sever : Riddle v. Harmon:

(CA)W&H in a joint tenancy and wife in a deed granted herself an undivided ½ interest in the land and document provided it would terminate joint tenancy w her husband. Court upheld this as severance (could’ve been done with strawman anyway)

But must still use formal deed to show intent Options/variations on severing joint tenancy:

Hypo: H&W in a joint tenancy and H is having an affair with S so deeds his property to himself without W knowing and then wills it to S. First time

wife finds out that she’s a tenant in common with S. Because she cannot stop him, W can:

o will to someone else, sell it, or make some disposition of her part Hypo: H&W in a joint tenancy. Say if W dies first she does not want H to

get all of the property. W can draft a deed and keep it hidden and then a will that deeds the land to her son, whom she tells that if she dies for him to fetch a deed she has hidden. If W dies first, son will get the deed and be tenant in common w/ H. If H dies first she can keep it a secret and get the whole property

Situation of Simultaneous death : Dilemma Ex: H&W are joint tenants. H has everything (except prop b/c joint

tenancy) willed to A. W has everything willed to B. Both are in an accident and H dies 20 minutes before W. When H dies, entire property belongs to W and 20 minutes later when W dies entire property goes to B.

Uniform Simultaneous Death Act:o Old version: unless evidence to contrary, dispose of property half and

halfo New version: use half and half approach unless clear and convincing

evidence that one person survived the other by 120 hours CA Statute on severance :

Signed severance deed must be executed within 3 days of death of tenant as long as it is recorded before 7 days after death

o Registered with the county registero Avoids a tenant creating a severance document and then destroying it

if he is only survivor Joint tenancy is not irrevocable b/c either party can change it

*Potential alternative: joint life estates with remainders to the survivors (so no secret of severance) b/c even if a tenant sells it the person the estate is sold to will only have it for the life time of the original tenant

Sever by mortgage : Rule : Mortgage does not sever the property Harms v. Sprague: Harms brothers (John and William) joint tenants on

property. John mortgaged his interest in their home for security on loan that Simmonses (lender) gave to Sprague. John then died. Sprague did not pay Simmonses and Simmonses looking to collect on the promissory note and mortgage from William

o Issue 1) did John mortgaging his part of property sever the property? No

Title theory of mortgage (old theory): when mortgage is given it transfers to lender title to the lender temporarily so this would break a joint tenancy

Modern rule : mortgage is a lien on property and lender does not have title on property and does not sever joint tenancy

Public policy reason to follow modern theory: what if someone mortgaged and didn’t intend to actually sever; vs. deed is different b/c it is explicit about your intention to sever tenancy

o Issue 2) Since William now owns the entire property b/c mortgage didn’t sever, do Simmonses get whole property? No

Rule in this case: Mortgage dies with the person b/c person only mortgaged his share of interest in the property which disspeared when he died

Modern Rule: Jdxs are split on Harms v. Sprague and whether mortgage dies with the tenant

Sever by Lease Rule : Lease does not sever tenancy Ex: H&W are joint tenants and H leases out land to T. If H dies then T has

no rights since H’s interest vanishes when he dies which includes the agreement between H and T.

Joint Accountso Courts will hear evidence that bank accounts are not joint for example about depositor’s

intent (unlike property where if the deed says its joint, then joint)o Interpretation as:

True Joint tenanct account : amount is intended to belong half to co-tenant with right of survivorship

Survivorship account (Payable on death acct) (after one of tenants passes away the other gets it) OR

Convenience account (during one of the tenants lifetime, another person can have access to it as backup)

Ex: “… so that in case I am sick you can go and get the money for me” o Majority rule: surviving tenant takes sum remaining on deposit unless clear and convincing

evidence that convenience account was intended Burden of proof on person challenging surviving joint tenant

o Medicaid example: Bank acct w A&B, A puts all the money in and B applies for Medicaid and gov’t says B doesn’t qualify b/c there is a bank acct with B’s name on it

Solution: If B can show all money came from A then they will approve application even though B can withdrawn money from this acct

o Creditor default: majority rule on types of debts: creditor can only reach % of assets in a joint tenancy that the person puts into the account

V. RELATIONS AMONG CONCURRENT OWNERSA. Partition Rule : Any tenant always has a right to partition (partition applies in both joint tenancy and

tenancy in common and any type of estate) Partition in kind: Land is physically partitioned between the two parties

o Difficulty: becomes hard when there is different geography and access to where partition is hard to make equal for both parties

o Appraiser comes to value each part of the land Partition by sale (majority of courts do this): Sale of land and proceeds from sale get divided

up according to ownershipo Downside of partition by sale: loss of sentimental valueo Delfino v. Vealencis: Tenants in common and one of them runs a trash collection

business. P brings action for partition by sale court held that partition in kind is more appropriate in this situation b/c of one of the tenant’s business and home being related to the property

Rule in Delfino : Start with partition in kind. Only resort to partition by sale if: 1) physical aspect of land makes it impracticable AND 2) interest of owners is not met

Johnson v. Hendrickson: one party wanted a partition a certain way so they could create a contiguous farm land but court said that is not a reason to favor in your way when determining partition in kind vs. by sale

B. Sharing benefits and burdens of co-owners Co-tenant that is paying more than his share of taxes mortgage payments and other

necessary carrying charges has right to contribution from other co-tenants Rents and profits: cotenant must account for and give appropriate rents to other tenant Repairs/Improvements:

o Necessary repairs Some jdx: provide contribution if repairing cotenant gives notice to other

cotenant Most jdx: no right to contribution from other cotenant absent an

agreemento Improvements: no contribution owed to other tenant

When partitioned the one who improved property can get that part of land otherwise tenant can get owelty: contribution by other tenant

Co-tenant possession:o Majority Rule : Co-tenants has equal rights to use the entire property as they

want unless there is ouster Ouster: one co-tenant denies access to another tenant

Ouster triggers reasonable rental value Spiller v. Mackereth: Spiller and Mackereth were tenants in common and

leased out space to businesses, but later vacant and Spiller occupied space. Mackareth stated he had to “pay me or leave.” Court found that Spiller did not owe Mackereth rent.

*vs. if Mackareth had stated “let me into the space” and if Spiller had denied him access

Problem with this rule: what constitutes denial of access? Use of land in a way that is incompatible with the use of other tenant? Physical lock out?

o Minority Rule : There does not need to be ouster and no demand for entry. If one uses property then he is obligated to pay the tenant out of possession their reasonable portion of rental value

This rule is clearer than majority b/c it avoids litigation about what constitutes denial of access, which can become unclear

3rd party leases:o Rule (in all jdx) : Co-tenants can lease property but only to the extent of his

share; co-tenant cannot cancel that lease Swartzbaugh v. Sampson: Swartzbaughs (H&W) were in joint tenancy

and H leased part of land to Sampson who opened a boxing pavillion w/o W’s approval. W wanted to cancel the K. Court said H had same right to possession and lease cannot be canceled.

Potential remedies: 1) Get ouster and collect share of reasonable rental value of

property leased

o Get herself ousted by Sampson, but potential for mutual ouster (if she knocks down his pavilion then he would have ouster on her)

2) Sue for the share of rents that the co-tenant collects from the lesee. Co tenant responsible for accounting for amounts received

3) Partition against H: partition the part where the boxing pavilion was but then she loses survivorship rights

4) Partition against Sampson (leasehold part): may be able to partition where the boxing pavilion was

Partition by sale

VI. LEASES Movement of leases from conveyances to contracts

A. Types 1) Term of years lease: lease is over at a set time

o No notice to terminate tenancy needed 2) Periodic tenancy: no end date and automatically renews for the period in perpetuity

unless tenant or landlord gives notice in advanceo C/L rule : notice equal to the period (ex: month to month= 30 days notice)o Unspecified period rule : usually determined how often rent is due, but most

courts find month to month b/c rent is usually due month to montho CA statute : Residential prop and T has lived there for more than a year (even

with month to month) LL has to give 60 day notice but T can give 30 day notice Hold over tenant: eviction of consent (implied or express) to new tenancy

o Diff jdx have diff rules for determining what type of lease the new tenancy isB. Delivery of Possession

English rule: (some jdx) there is implied covenant to deliver vacant possession American rule: (most jdx) no implied covenant to deliver vacant possession

o Tenant can only bring action against tenant residing in the property and not the LL

o All LL owes is legal right to possession to the T (Analogized to a trespasser in a person’s home) Under this rule the lease is seen as a minisale

o LL still has to do something to give right to possession: ie: old lease has to terminate before new lease begins

LL gives previous T notice to vacate but is too short a notice and new T shows up even under American rule LL is in violation b/c new tenant does not have right to possession and old tenant is still in possession

o Hannan v. Dusch: New tenant signed lease and was about to move in but found the old tenant still residing in the property. Court held for LL b/c no implied covenant on LL’s behalf to get rid of trespassers

C. Assignments and subleases Assignment : T conveys entire remaining interest in the lease (temporal) Sublease : T conveys less than entire remaining interest in lease

o Another analysis is to look at party’s intention but courts rarely use thiso Ernest v. Conditt: Ernest leased land to Rogers who assigned to Conditt. LL

sued Conditt for nonpayment of rent and damages to property and Conditt claimed that he was a sublet so not liable for damages and Rogers was liable.

Court found despite wording in the lease which called “subletting” Conditt was still an assignee b/c the entire remaining interest was conveyed.

Obligations of rent payment :o Privity of estate : Solely looking at whose interest abuts whose (do not look at

lease terms b/c even without a promise to pay T’s privity of estate means he owes rent per property law)

T L Assignee takes privity of estate and therefore liable for rent under this

theory Sublessee’s interest does not abut the LL’s so no rent owed under this

theoryo Privity of K : Affirmative promise from tenant to pay rent and this has to be in

the lease Verbage: “T promises/covenants to pay” (important that it is an action

verb) Vs. “LL conveys X to T for ___ years and for $____” (no affirmative

promise here) Under express promise to pay from T to LL, T is liable for rent, even if

he assigns to T1, *UNLESS LL releases him from his obligation for rent

Consent by LL to sublease or assign to T1 is NOT a release. LL must affirmatively agree to release

How to make T1 in privity of K to LL: 1) T1 can make affirmative promise directly to LL and not to T

o 2 ppl can be in privity of K w LLo Ernest v. Conditt: Conditt (T1) had agreement which LL

and T both signed so in essence had a K with LL. Conditt likely in privity of K w LL

2) 3 rd party beneficiary K (majority rule) o use 3rd party beneficiary theory which makes the LL the

3rd party beneficiary of an agreement between T1 and T (where T1 expressly covenants to pay rent to T)

o B/c LL is 3rd party beneficiary, LL can sue T1 for breach o Hypo: 3 year lease between LL and T. T subleases 2nd year to T1 for “period

of 1 year.” Neither T nor T1 pay rent: LL v. T

Privity of K: No express language for promise of rent Privity of Estate: T’s right abuts LLs so owes rent

LL v. T1 Privity of K: no express promise to LL to pay rent Privity of estate: T1 is a sublease so interest does not abut the

LLs *Variation: suppose instrument of transfer btwn T and T1 was

express covenant by which T1 “agrees to pay the rents”o Privity of K btwn T and T1

NOT privity of K btwn LL and T1o 3rd party beneficiary theory: LL is 3rd party beneficiary

btwn T and T1 so LL can sue under privity of K

Consent to sublease and assignments : (commercial leases)o C/L rule: LL approval clauses are upheld by courto Minority rule: (modern rule) LL can only withhold approval if there is

commercially reasonable objection to assignment Reasons for switch

Dislike of restraints on alienation K reason: courts intend to impose duty of good faith and fair

dealing Kendall v. Pestana: Prior tenant seeking approval from LL to assign

commercial space to another tenant which the LL withheld saying he has the right to arbitrarily deny permission. Court held: LL cannot arbitrarily deny permission

o Kendall Standards for commercially reasonable objection: 1) New T is not financially stable 2) Suitability of use 3) Legality 4) New T needs to alter premises at cost to LL 5) LL’s desired mix of tenants

o CA Legislation post-Kendall Legislation adopts Kendall but makes it clear how LLs can draft Ks

around it 1) Lease can absolutely prohibit assignment/sublease

o Forces tenant to come to LL to negotiate (for ex, T pay higher rent for LL to waive the clause)

2) Express standard for consento LL can put any standard for rejection as long as it is not a

constitutionally protected righto If standard is not specified then Kendall standard will be

usedD. Tenant Default

Evictions and Lockouts : o Old Majority Rule :

1) Legally entitled to possession a) breach by T AND b) LL has right to reenter

2) LL has to act in a peaceable manner Diff jdx have diff standards for peaceful; if no violence then

peaceful; if potential for violence then not peaceful Berg v. Wiley: Tenant was running a restaurant (leased space from

LL) which was going to be closed to undergo repairs b/c of health code violations. Put a sign that she was temporarily closing. LL went in without her knowledge and changed locks. Court held that situation could have turned non peaceable b/c if tenant came back there could have been an altercation; also held, that from here on only peaceable manner is through court proceedings

o Modern Rule: Only peaceable manner to evict someone is through court proceedings

o CA Statute: Unlawful Detainer

Purpose of statute to give LL an efficient legal way to proceed with eviction

LL files complaint T has 5 days to respond LL gets default judgment if T does not respond takes judgment to marhsall’s office and orders writ of possession and gives notice to tenant that they have a certain number of days to move out tenant moves out; if tenant does NOT move out marshall forcibly takes tenant out

o T’s options upon being served: 1) unlawful detainer just limits tenants to issue of whether T is in breach

(not about habitability) 2) file motion to quash that T has not been served properly (buys about

5 days of time) 3) file demurrer (motion to dismiss) that LL did not plead complaint

properly (buys a few days)o T’s options upon marshall showing up to T’s residence:

1) T can have another person in the apt and hand marshall an Arrietta claim: states that this person also in possession and person wasn’t served

Option: legislature determined this could create abuse so at beginning of unlawful detainer in addition to serving notice to quit he can also serve document that says any interested parties must come forward and T has 10 days to respond instead of 5

2) T can file bankruptcy: wait for marshall to show up and T presents bankruptcy filing through automatic stay: says any attempt by debter to collect are stopped in bankruptcy proceedings

Tenant voluntary move-out o Old law (some jdx still follow) : seeing leases as conveyances, T did not have

right to renege (seem analogous to the sale of house) o Modern Rule: LL must take reasonable steps to mitigate damages if T ends

lease early “Reasonable” is determined on case by case basis

Generally: LL has to advertise reasonably or use whatever means he leased to the prior tenant that defaulted

Kridell v. Sommer: Sommer signed 2 year lease but then his engagement fell through and his future in laws were to pay for rent. Informed LL he would not be moving in and forfeited first months rent and security deposit. LL did not attempt to rent apt and sued T for full 2 years of rent. Held: LL had duty to take reasonable measures to mitigate damages.

o Variations: LL w/ multiple vacancies:

If LL re-markets the defaulted unit along with other vacancies and prospective T wants one of the other vacancies, T is still on the hook for the defaulted unit

Leases for different prices: If LL leases the unit for less then T is liable for difference in

rents *LL does not have to drop rent to mitigate

T is liable for LLs cost in advertising etc Lost volume seller: L would arg that he has multiple units that are

constantly vacant and fungible (all the same) so he cannot be made whole by mitigation b/c he would have sold 2 units

Courts RE: No lost volume seller arg b/c land is unique no matter how much they look alike

o Burden of proof on LL in most jdx: (diff than K) reasonable efforts to mitigate burden of proof is on LL

B/c LL knows more about what he did to mitigate damages Behooves LL to attempt to mitigate If LL cannot show he took reasonable steps he collects nothing OR other jdx say LL can recover difference btwn agreed rent and

amount lost that could have reasonably have been avoided by renting to someone else

E. Security Deposits CA Statute on security deposits:

o Establishes amount: around 2-3 times rent depending on furnished or unfurnishedo Can be used for: 1) late rent 2) repair or damages exclusive of normal wear and

tear 3) cleaning of premises upon termination of tenancy to return the unit to same level of cleanliness it was at inception of tenancy

o Provides for right to pre-inspection walk through (T may waive): provides T opportunity to make repairs and clean himself

o LL must return deposit within 21 days including itemized list of deductions and copies of charges in curred

Bad faith retention of security deposit, court will award 2xs the amount of security deposit

F. Habitability Old rule : Caveat Lessee (“Let the lessee beware”); responsibility was on T to maintain

premises and concept stems from agrarian England where land served different purposeo Covenant of quiet enjoyment: (early on a way around the law of caveat lessee):

implied covenant Based on Constructive eviction: If T cannot use premises for what he

anticipated or purposes that it had been leased then going to pretend that this amounts to eviction by LL constructive eviction

If LL evicted the T then LL ended his obligation and allowed tenant out of lease, therefore T does not have to pay rent to LL

Requirement of constructive eviction is T had to move out Modern Rule : Implied Warranty of Habitability (limit applies does not apply to all

residential leases; may exclude single family residences, agricultural leases, or commercial leases)

o Law implies duty on LLo T cannot waive implied warranty of habitability

Most courts: even if T knew what he was getting into and voluntarily and purposely waived implied warranty of habitability in return for lower rent, LL still owes duty to T

Other courts: T can waive if he voluntarily and purposely understands the condition of the apartment he takes

o Most jdx rule : LL has to deliver and maintain a rental that is safe, clean and fit for human habitation; assessment is fact-driven

Covers latent and patent defects (hidden and obvious) Has to be essential facilities

Ex: plumbing, heating, not amenities Ex: essential factor of heating may not be so during summer in LA

Remedies: (onus will almost always be on LL b/c LL will sue saying T did not pay full rent or all of rent. T raises implied warranty of habitability as a defense)o Contract type remedies: Risk of these remedies is that if LL is NOT in breach,

then T is in breach for not paying rent 1) Terminate lease and get rent abatement (if in a term of years lease; if

mo to mo just give notice) Implied warranty of habitability is T’s defense to breaking lease

2) Stay and withhold rent and get any rent abatement Some courts require T withhold rent in escrow account (this looks

better for the tenant) 3) Stay and pay rent and then sue for rent abatement (safest method for

tenant) (affirmative cause of action) Hilder v. St. Peter: Tenant living in poor conditions, plaster

falling, plumbing doesn’t work, window broken, leaks, sewage leaking. Clear case of breach of warranty of habitability. Tenant stayed term of lease and paid rent and then sued after she moved out for rent abatement

4) Repair damages and deduct cost from rento Tort type remedies

5) Annoyance and discomfort Not easily calculable Ex: fear and anxiety from not bein able to use bedroom or plaster

falling off the ceiling 6) Punitive damages

Rule: clear fraud, malice or oppression or disregard for safety of others

Hilder court goes further and says anytime there is breach of implied warranty of habitability then there is punitive damages (pro-tenant rule)

o Rent abatement : rent refund Applies to period of time where paying full rent and apt was not habitable Attaches to any damages Policy reason for court to refund entire rent back even if the apt was not

worth $0: discourage slumlords 1) Value as warranted – value in defective condition

Warranted is soft number (it is not necessarily agreed rent) CA rule : uses value of apt if it had been properly maintained –

value of apt in defective condition Ultimately if court wants to give T all rent back it can calculate it

to come out this, but no rule or case holding on formula 2) Rental amount – value of apt in unfit condition (some jdx)

Allows for substandard housing as long as Ll doesn’t charge more than its worth

Allows for waiver of implied warranty of habitability This goes against the first rememdy’s policy but allows for

substandard housingo Arg supporting this: people in low income areas need

housing and types of housing they can afford 3) Percentage dimunition approach

Calculates amount of rent T paid and how much of apt seemed to be uninhabitable

o Retaliatory eviction All states have passed statutes forbidding this: LL cannot terminate

tenancy after a T has requested a repair in order to avoid implied warranty of habitability

PART IILAND TRANSACTIONS

I. K OF SALETitle, inspection and loan are stated in the K and if any are breached K for sale is invalidA. Title- Title: the interest in the property and who owns them- Types of title as set forth in a K for sale by the parties:

o 1) Marketable title (default/standard): 2 standards 1) presence of any private restriction makes title unmarketable 2) title is unmarketable if violation of private restriction and violation of

public restriction Lohmeyer v. Bower: K specified a marketable title standard free

and clear of all encumbrances except special taxes subject to all restrictions and easements. The house violated a public zoning restriction, was w/in 3 feet of prop line and violation of private easement of house being 1 story. Held: mere presence of restriction makes title unmarketable but Lohmeyer cannot use this to back out of K since he agreed to subject to all restrictions and easements. But under second rule, title is ummarketable if violation of the restriction, P can prevail

Chain of title: if in a chain of title there is minor misspelling of a last name, courts will use “marketable” title as a way to cleanse title defects

Easements that are good for the property (ex: utilities) Majority rule: Does not matter whether or not it depreciates

value, very existence of utility easement makes it unmarketable Minority rule: If restriction is known to buyer then it doesn’t

make it unmarketableo 2) Clear title: Seller ensure clear title

Gives buyer the opportunity to back out of anything is discovered on the title

Fee simple, no covenants, no liens and no interests in other partieso 3) Encumbrances of record: Seller conveys title with any encumbrances on title

o 4) Insurable title: Standard is if title insurance company agrees to insure title Title insurance will insure against things that are not on record but

doesn’t cover things that are recorded o 5) CA: Requires seller to show all restrictions on title and buyer has a short

period to approve or decline. K can also provide that buyer has to remove contingency

- Title defect: any interest owned by someone other than owner (good or bad)- Types of restrictions

o 1) Private restrictions o 2) Public restrictions

B. Inspection for defects of the property- 2 aspects

o 1) buyers ability to hire inspector (CA standard) Must Ks will provide buyer certain amount of time to hire inspector and

if buyer finds something “reasonable” that he thinks is a problem, then buyer can ask seller to fix it and if seller does not fix then buyer may back out

Results in negotiation btwn seller and buyer Ex: seller lowers price or refuses to fix

o 2) buyer purchases land and while in escrow he does not want to buy because of defects

These are issues apart form what the seller is obligated under the K to disclose defects

Buyer does not sue under K but under seller’s duty to disclose- Obligation of sellers to disclose to buyer of existing defect

o Old rule: Caveat emptor: let the buyer beware Rationale: buyer was in an equally good position to figure out any

defects in the prop *Under this rule, buyer cannot make affirmative misrepresentation or

actively conceal problem (Fraud) Ex: Seller knowns the roof leaks but sells house in summer and nothing

is mentioned of the roof. Vs. buyer asking seller does the roof leak and replying NO (this is fraud)

Stambovsky v. Ackley Exception: Estoppel argument- seller created an image of house

being haunted. Everyone knew house was haunted except buyer so wouldn’t be fair to use caveat emptor b/c seller created condition

o Modern rule: Seller has duty to disclose defects that are: 1) material: (no bright line rule): must affect in a serious way 2) seller knows about: this standard is not as far as the seller has to be a

guarantor or that it has to do an inspection to disclose all defects prudent seller would do this anyway to avoid litigation

3) latent (not obvious): if defect is obvious to the buyer, then no liability for seller to say anything

Johnson v. Davis: P was sold a house by the Ds who affirmatively represented the roof was sound. Issue was whether

seller has duty to disclose latent material defects to buyer. Held: where seller knows of fact materially affecting value of property not readily observable and not known to buyer, seller has duty to disclose

o “As Is” clauses: Buyer sells at an agreed lower price to take property as is Jdxs split: some will enforce clauses Others (CA): the only thing you can waive in “as is” clauses are damages

you know abouto Disclosure Statement (CA): statutory disclosure form that requires sellers to

answer the questions regarding condition of prop This is a separate duty so buyer may sue under

1) C/L failure to disclose and 2) Failing to comply w/ statute and not filling out form

- 3 causes of actions for physical defectso 1) duty to disclose of buyer o 2) K’l breach for failing to fix a reasonable defect discovered by inspectoro 3) Disclosure statement (CA): failing to comply w statute and not filling out

form properly

II. THE DEED- Effective transfer of land requires:

o 1) Written deedo 2) Delivery

A. Deeds Generally- Once deal closes seller gets money and buyer is going to get deed- Deed: contains certain promises that seller is making to the buyer with respect ot the

state and title of propertyo Places obligations on sellero Describes who the grantor/grantee/description of property

“seller is granting… to buyer”o Statute of frauds- transfer must be in writing

- Deed hypo: Dad gives gift deed to daughter and she puts it in a safebox but doesn’t record it. Dad falls on hard times and asks daughter for prop back. She says ok and tears the deed. Who owns prop? Daughter. Daughter owns it b/c dad transferred it to her by deed. For her to give it back she would have to use another written instrument to convey it back

- Deed vs. Contract:o Standards of title in the K are concerned w/ state of title before buyer is bound to

the K (escrow) vs. deed is concerned with title after the K was signed- 3 types of assurances (post escrow):

o Deed warranties: provides a cause of action if any of the warranties are breachedo Title Insurance:o Recording Acts:

B. Types of Deeds- 1) Quitclaim deed: Whatever interest the grantor has is conveyed to the buyer

o No liability or no warranties made by sellero CA language: “grantor quitclaims to X Blackacre”

o Ie: Buyer beware deedo Reason for use

Ex: O has AP and wants to sell his property to someone. He’s unsure of what his rights are but quitclaim grants the land to a seller that will probably pay much less for the property

Ex: Encourages charitable giving. Buyer cannot turn around and sue for not giving something that was promised

- 2) Special warranty deed: Grantor promises that he has done nothing to cloud titleo Title usually has some kind of defect but doesn’t mean it’s bad, promise is that

grantor did not create cloud on title (easement or restriction could have been from previous sale)

o CA language: “grantor grants deed” (same as special warranty deed)o If grantor did something to cloud title (ex: gave an easement to land), he can list

exceptions to the deed to protect himself Grantor is only liable if he did not include it in the deed

- 3) General warranty deed: provides there are no defects on the property regardless of who put them on there (not routinely used in CA)

o Gives most protection to the granteeo Grantor can still list ‘exceptions’ on deedo List of warranties in general warranty deed are usually set out routinely or by

statute Present warranties:

1) Covenant of seisin: grantor warrants that he owns the estate 2) Covenant against encumbrances: overlaps with covenant of

seisin b/c if there is an encumbrance grantor does not have a fee simple

Present warranties are breached when seller transfers title. SOL starts running when the deal closes

Future warranties: 1) Quiet enjoyment covenant: Grantor will be liable and defend

property against a 3rd party that tries to take portion of propertyo Promises that no 3rd party w/ greater title will come and

claim property otherwise grantor will pay for ito Ex: mortgage on property, when mortgagee comes in after

closing. Mortgager has superior title and wants to exercise superior title, this covenant holds grantor liable

Brown v. Lober: O sold land to Bosts but O retained 2/3 of mineral rights to the land. Bosts then sold land to Brown under general warranty deed. Company that wanted to mine the area discovered Brown only owned 1/3 mineral rights. Brown then sued for breach of warranty under quiet enjoyment. Held: no violation of quiet enjoyment yet b/c Brown has not come back to try to claim right to 2/3 of the minerals

o Damages for present covenants: Restitutionary type measurement of damages

Measure of damage: grantee gets purchase price back

Ex: A sells to B under general warranty deed for $100,000 but A does not own the property, C does. C tells B he is true O and at that point property has gone up $200,000

Under covenant, B only gets $100,000o Damages for future covenants: future warranties run to future grantees

Ex: O conveys to A under general warranty deed and then A sells to B. C really owns Blackacre. When C ousts B, that is when future warranties are breached and B can hold O liable, B has cause of action against O

*Ex: [Same as above] except C doesn’t show up so no breach of future covenant, but B does title search before SOL runs and discovers O does not own land

This is a breach of covenant of seisin from O to A (breach at the time of conveyance), so B has no cause of action

o Minority view gives B a cause of action (aka: Chose in action): If B can establish that A’s cause of action against O somehow flows to B

Conveyance from A to B, a chose in action was impliedly assigned

Majority view is NOC. Delivery- Delivery requires intent

o Intent of grantor to actually and presently convey some sort of interest in the property (even if possession is postponed for sometime later)

Son and Father Hypo: Parent owns land and wanted it to go to son and son’s wife so drew up deed from himself to son and son’s wife as grantees. Father not sure whether to give him the property now or in a trust. They agree that the father will give to his son and the son’s lawyer will determine best way of transfer. Son and son’s wife takes the deed to be recorded instead of taking it to a lawyer and now record title is in son’s name. Son and wife get divorced and wife claims prop is half hers. Issue is was deed validly transferred. NO, b/c no present intent of grantor to give grantee an interest now

Issues w/ delivery almost always arise out of gratuitous transfer of land. Sale typically establishes intent to current transfer

Issue when grantor is trying to use a deed as a will- Delivery Under Conditions

o Oral conditions: Majority rule : If deed says “grantor to grantee” and there is oral

condition, oral condition does not count grantee gets the land regardless of grantor’s intent

Sweeny v. Sweeny: Maurice tried to deed his land to John, and wanted it to go to him after he dies (and not his wife). Two deeds were executed: one deeding the prop from Maurice to John and the second from John to Maurice. Second one disappeared in a fire and Maurice died. So the wife is now arguing that the second John Maurice deed was delivered and valid and therefore prop is hers. John arguing that it was not delivered. John argued that

an oral condition was on the deed. Held. Delivery based on intent and actions of parties. Deed was intended to protect Maurice. Not his intent that John was to own the land. Oral conditions are not valid b/c it was not given to a third party and so condition is erased.

Other options for John and Maurice:o 1) Joint tenancy via strawman

Problem is that John now has interest and can do whatever he wants w/ property

o 2) (assuming wife could not reach property in a trust) create a revocable trust w/ property and convey to trust and spell out rights: Maurice has full right for life and then on death goes to John

o 3) Give to John and in John’s will to give property to Maurice

Problem: John will have rights to property in Maurice’s life

o 4) Life estates: John deeds a life estate to Maurice and keeps reversion OR Maurice deeding life estate w/ remainder to John

Minority rule : Court holds that no oral conditions are allowed therefore the entire deed is invalid

Small minority rule: Court considers the condition and upholds the condition

Chillemi v. Chillemi- facts are pretty compelling to uphold the condition

*Party can still in writing place a condition on the deed and it will be valid, but no parol

o Conditional Delivery w/ Third party: Grantor wants to convey to grantee. Grantor gives to 3rd party and tells

3rd party condition and says to him if condition happens then deliver deed. If it doesn’t, don’t deliver.

Valid form of delivery (ie: escrow) Rule: delivery to 3rd party must be irrevocable (ie: grantor cannot get the

property back) Rosengrant v. Rosengrant: grantor attempted to deliver a deed by

“handing it over” to a 3rd party and on the envelope with his name on it. Held: envelope suggests that he could have retrived it back from the bank and therefore did not deliver the deed b/c he still reserved a right in retrieval.

o Conditions on delivery Written condition: Deed is validly delivered when condition is met

ex: To John when he graduates from law school Majority rule: future condition cannot be the grantor’s death Can also do: A grants Blackacre to B w/ reserved life estate in A.

Deed is deemed delivered and future remainder interest in land is transferred now to B

Oral condition:

Majority rule: deed is given effect and oral condition ignored (Sweeny)

Minority: uphold condition (Chillemi) Oral condition of grantor’s death:

Majority rule: Follow Sweeney rule and uphold delivery (immediately) and ignore condition (so grantee gets it immediate before grantor dies

Minority rule: refuse to give deed effect on grounds that deed is testamentary. Title stays in grantor even after dies and heirs get land not grantee

III. LAND FINANCEA. Mortgage lending generally- Unsecured debt: Normal obligation that someone owes, like borrowing money from a

friend or not paying a dentisto Judgment in a suit for nonpayment, court can go after your asset, property or

garnish wages. If debtor has nothing, P gets nothing- Secured debt: (real estate requires this)

o Creditor gets legal right to collect debt out of specific piece of propertyo Lender has security interest in piece of property that is being bought (aka: bank

has lien on property)o Default Lender will foreclose (sale) to pay off debt

- Customs that have developed over the yearso 1) Appraisal: lender ensures that they are paid everything back that they are

owedo 2) Down paymento Borrower signs two documents:

1) Promissory note (IOU): sets forth amount of loan and schedule of payment

2) For secured loans: requires a mortgage (ie: deed of trust)- borrower is agreeing to set up property as security for loan

Lender will ensure no prior liens on property so that he will be the first lienholder

Foreclosure on property the security holders are paid off in order of their liens so title search is always done to make sure title is clear and lender is first lienholder

- History of lending: (not on test)B. Foreclosure- 2 ways in CA a lender may foreclose

o 1. Judicial foreclosure: Mortgage is used (2-party transaction) and court intervenes

Lender files lawsuit against borrower alleging note hasn’t been paid, a mortgage and deed of trust. Court determines note was not repaid judgment for sale sheriff sends notices to borrower and property is sold

o 2. Private sale: deed of trust is used (3-party transaction) borrower is trustor, lender is beneficiary, title insurance company is trustee [majority of foreclosures]

Borrower transfers title to trustee therefore borrower is still owner of property, which means he can sell property. If borrower does not pay on time, trustee will conduct sale under deed of trust in private sale

Trustee conducts sale Lender may still go to court if it wishes, but this is faster and cheaper

- Foreclosure in CA example:o Payment remainder $100,000o 1) Work out: lender and borrower try to work something out before foreclosure

process Today, harder b/c lenders are bundling these in w/ securities and selling

them, so hard for lender to know who to go to work the deal out with *Option for borrower is to file for bankruptcy—property will be sold but

not under foreclosureo 2) Reinstate: borrower can reinstate if payment is worked outo 3) Default: lender calls title co, the trustee (statutory process)

1. Trustee files notice of default and serves borrower (sets clock running) New statute in CA: pushing back the date for filing notice of

default so lenders are forced to try and collect money 2. 3 month wait (borrower has 3 months to pay) 3. Trustee can record a notice of sale: establishes date of foreclosure sale

and has to be within 21 days after recording notice of sale (typically trustees will give a month)

o 4) Reinstatement rights: Up to 5 days before the day of sale, borrower has right to reinstate loan if he comes up w past due payment and fees associated w/ payment

Statutorily required and cannot be waived w/ lending documents) If money is paid, foreclosure stops and returns to regular loan

o 5) Foreclosure sale: auction where property is sold Detailed procedures for how sale is supposed to work includes:

Open sale, times of normal times of the day, normal business hours, accessible to public (ensures fairness)

Purchase of foreclosed prop wipes out lien Conducted by auction to highest bidder No statutory rule of how much property has to sell for b/c assumption

market is working Bidders must come w/ cash or cashiers check Bank is owner of foreclosed property

Statutory rule: any other bidder has to have cash equivalent but lender can make credit bid up to amount owed result: bank owns most foreclosed properties

Hypo: if bids are all under market value then bank will make credit bid b/c bank is better off taking the asset back and owning property than giving it to the highest bidder

Hypo: Prop worth $90,000. Lender is owed $100,000. Bidding goes up to $89,000. Lender probably won’t do credit bid b/c won’t be worth it for the bank to re-sell

How money in foreclosure sale gets distributed (Ex)

$110,000 purchase price on property: Buyer made $10,000 down payment and $100,000 loan. Prop goes up in value to $150,000

o Sale at $150,000 (buyer has $50,000 equity)o 1. Bank gets paid off first (holder of first lien) $100,000o 2. Borrower gets remaining $50,000

Variation on hypo: borrower got second loano $100,000 first lendero $20,000 second lendero $30,000 borrowero *Hypo is unlikely to happen

CA legislation on lender collection Anti-deficiency legislation (CA statute 726(a)): banks only have

one form of action to collect a debt which is foreclosure. This gives lender only one option which is the diff between fair market value of prop and amount loaned

o Borrower can waive thiso If bank is still deficient $10,000 after sale he cannot bring

another action b/c of this 1-action rule 580(d) No lender can get deficiency amount if he foreclosed

under power of sale in private sale 580(b) Lender can’t get deficiency judgment under 2 cases

o 1) when the seller is making loan for prop no deficiency judgment

o 2) when loan is for primary place of residency and borrower is living there lender can’t get deficiency judgment (limit to 4-unit apartment bldg.)

o When borrower refinances then you lose protection of the statute. New loan is not protected under 580(b)

Statutory right of redemption (Judicial foreclosure) borrower has 1 year to pay back the money

o Buyers are reluctant to buy in this instance b/c not secure in the purchase b/c borrower has one year to pay back

C. Subprime MortgagesIV. TITLE ASSURANCE

A. The Recording System- Indices: Documents in a way where people can find them and put certified copy in

books- Recording Acts: statutes regarding grantor, grantee and third parties- Bona Fide Purchasers (BFPs) for value: People who pay money to get interest in

property w/o knowing that someone else has an interesto Hypo: O has a deed recorded, O conveys to A but A did not record however is

still owner of Blackacre. O then sells Blackacre to B and B records deedo C/L rule and old fall back rule : A is rightful owner b/c A was prior possessor

when O conveyed to B B has cause of action against O Effect of old rule: no one would buy property b/c there may be a prior

owner holding onto a deed

o Recording system rule : B is a bona fide purchaser- he paid money w/o knowledge of A and so B wins b/c he paid money and had no notice of A

Constructive notice : If A recorded in such a way that B would find him if he did the type of title search that he should have

Recording acts recognize ownership in O and conveyance to B as valid A still has cause of action against O Recording acts do not apply to donees only actual purchasers

B. Standard Title Search- Start with name of person selling you the property and go up the chain in the grantee

index then switch over to grantor index and continue until present dayo Grantor index: will list any mortgages, liens or other owners/parties w/ interest

(ppl that don’t match up with the grantee index)- How far back you must go depends on the jdx- Problems with Grantor/grantee index

o Idem sonans for constructive notice Orr v. Byers: Orr had a lien on Elliott’s property and recorded the lien

under Eliot and Eliott (both wrong). Orr’s arg is that the lien gave subsequent purchaser notice of its lien b/c it sounds the same, so buyer should’ve looked under diff spellings of Elliott. Issue of whether a misspelled name gives constructive notice under the doctrine of idem sonans. Held: misspelling under idem sonans does not give constructive notice.

Elizabeth Taylor hypo: E owns WA under “Taylor” when she bought it. She then gives a mortgage to Burnett and records it under “Fisher” (b/c she got married to Eddie Fisher and changed her last name). Then she gets divorced, changes her last name back to Taylor and then sells WA to Sandler. Sandler looking in the indices would not not find the Fisher mortgage b/c he is looking in the grantor index under “Taylor” and the mortgage was recorded under “Fisher”

o Rules: If totally different last name no notice (Elizabeth Taylor hypo) CA majority rule: misspelling no notice

Exceptions: constructive notice if it is a common diminutive name that everyone knows (ex: Bill instead of William or Betty instead of Elizabeth)

Missed middle initial constructive notice Hyphenated names no constructive notice If county recorder makes a mistake:

Ex: Jones convey’s to Smithe and recorder makes a mistake and records the deed under “Smith” in the grantee index. Title searcher would not find something under “Smithe” b/c filed under “Smith”

Split authorityo One rule: subsequent purchaser does not get titleo CA: Goes to subsequent purchaser b/c no way for him to

know to search under that nameC. Types of Recording Acts- [Absent recording acts, rule is first in time]

- Issue of notice is only relevant to subsequent purchaser to defeat first in time rule- 3 kinds of recording acts in the US

for below: O is seller and A is first purchaser and B is subsequent purchasero 1) Race statute : (only used in 2 jdx: NC and LA) Whoever records first in a way

that will connect you to the chain of title and that someone can find him Ex: Between A and B, whoever records first

o 2) Notice statute : (most states use this) Subsequent purchaser unless he had notice of prior conveyance (BA)

3 Types of Notices : 1. Constructive: notice from if the purchaser had done a proper

title search 2. Actual: has actual notice that other person has title 3. Inquiry: A set of circumstances that a reasonable person would

make inquiry into possible existence of another interest in property

o i. Inquiry notice from records : may be nothing in records to give a tip, but something else in the records

Harper v. Paradise: Susan’s heirs gave Maude a substitute deed in fee simple (original was lost) which was recorded in 1928 and referred to the lost deed (a life estate w/ remainder to Maude’s heirs). Maude later mortgaged the property to Thornton who sold to Paradise. Paradise and Harper contest which deed is valid Held: Although Paradise did not have actual notice, he should have been on inquiry notice b/c the second deed referenced an original deed to Maude that it was substituting and even though the first 1922 deed was not recorded until after Paradise’s bought from Thornton.

o ii. Inquiry notice from possession of property : someone is possessing it that isn’t consistent with the record title

Waldorf Insurance v. Eglin National Bank: Choctow is developing a condo and took out a second mortgage on the prop. Default and bank is wanting to foreclose on unit 111 which is occupied by Waldorff. Waldorff and Choctow had an agreement that he would have the unit for unpaid debt owed to Waldorff by Choctow. No recorded notice of this, so Bank is trying to prove that they were a BFP b/c no notice. Held: Bank had inquiry notice via possession. Anyone in possession of property that someone is purchasing is on inquiry notice

*Had the court interpreted Waldorf as owning the unit only after the bank received mortgage then bank would have prevailed. But court here saw Waldorf’s occupation as ownership of the unit.

o Inquiry notice in leases: Tenant often will record a “memorandum of

lease” in lieu of a longer lease contract, in case the O sells the property to someone else during his lease term

Recorded memo of lease puts future purchaser on notice to inquire about tenant’s interest in property aside from lease term

Additional rights ex: promise from O to be the only restaurant in the bldg, or prepaid rent

Use estoppel certificate: Sent to tenants and gives them time to come forward with any interest in the property, if tenant does not respond, inquiry notice is satsified

Jdxs split: some say purchaser does have inquiry notice on leases

Does not matter whether B recorded or not Ex: A and B don’t record B wins

B should record b/c O can always sell to C and C would be subsequent purchaser incentive to record immediately

Ex: A and B don’t record. A later records (under race statute A wins). Under notice statute B wins b/c B was not on notice of A at time of purchase b/c A didn’t record

Shelter rule : Applies to notice and race notice jdxs When conducting title search, the party prevails if the person he

purchased the property from would’ve won, even if party had notice.

Ie: if subsequent purchaser cannot win under the recording acts look to the prior purchaser and if he can win under the recording acts then subsequent purchaser wins under shelter rule

Ex: O conveys to A who doesn’t record. O then conveys to B who doesn’t record. A then records, then B records. Then B conveys to C. In C v. A, C still beats A even though C would’ve seen the OA conveyance in a title search b/c it was recorded before BC. Via Shelter Rule: the current purchaser looks to person he bought from and if that person had won then he wins.

Ex: O conveys to A and then to B (none recorded) in a small town. Everyone knows about conveyances (ie: A and B have notice about O’s sales). Court says B beats A in notice jdx b/c CA

would have shelter rule. (notice b/c small town)o 3) Race-notice statute (CA):

Requirements: 1) no notice of prior purchaser AND 2) be first to record *Failure to meet one of these default to first in time rule

Ex: O conveys to A then B (none record and B has no actual/constructive notice of A). A then records, B then records. Under race statute: A wins

b/c A recorded first. Under notice statute, B wins b/c B at the time of his purchase had no notice of A’s deed. Under race notice statute, B loses and first in time goes to A since B did not record first.

Zimmer Rule: Creates 3rd requirement: 3) Prior conveyance must be recorded If the person ahead of you did not record, then you do not get the

benefit of the recording acts (Policy is to clear up title so there are no gaps and forces the subsequent purchaser to get the prior purchaser to record his deed)

Jdxs: Half use race-notice rules, half use Zimmer rule Shelter rule gives shelter to a subsequent purchaser under both 1) notice

and 2) first to recordo Wild Deed rule : Applies to all rules (specifically race and race notice)

Wild deeds are not considered recorded Wild deed: deed that is recorded but hasn’t been indexed in a way that

can be found by anyone searching up the chain of title So if a subsequent purchaser would be defeated in a race or

race/notice jdx b/c the purchaser in the wild deed recorded first, he would be the BFP b/c there was no way for him to find the deed searching up the chain of title.

Every jdx applies Wild Deed ruleo Extended title search (some jdx)

Some jdxs require that anything that is filed is a form of constructive notice

Title searcher must search all deeds for each grantor (expensive form of title search) in the grantor index until the last purchaser instead of switching names

o Lost, fraud, stolen deeds 1) Forged deed: subsequent purchaser loses

A makes fake deed from O to himself. A then sells to B and now B and O are in litigation as to who owns it. O will win b/c the property was being sold from under O.

2) Stolen deed: subsequent purchaser loses A steals O’s deed from a safe deposit box and records and then

sells to B 3) Fraudulently obtained deed: subsequent purchaser wins

A knocks on O’s door saying hes going to fix his roof and brings out a K which conveys the property to himself. O signs w/o knowing and then A sells to B. O was negligent and therefore somewhat his fault

D. Title Insurance- 1) What is title insurance

o Policy lasts as long as purchaser owns propertyo Policy does not ensure good title. Determines the state of title and then insures

that the state of title isn’t different than what it is.o Predominate by ALTA (American Title Insurers)

- 2) Schedule B: all things that are excepted from coverageo If any thing discovered about title not within schedule B then insurance pays this

Ex: If a document was not properly filed or indexed right and a BFP wins, title insurance will cover against this type of loss

o Exclusions: encroachments, title liens, anything that would be enclosed in an accurate survey of land

ATLA exemptions: Gov’t zoning regulations Defects, liens, encumbrances, adverse claims and other matters

thato Are known to insured claimanto No loss or damage to insuredo If getting property as a gift, no coverage b/c claimant is

not BFP Defects arising after purchase of policy

o Notice: insurance policy will dovetail with recording acts and state if buyer has notice of prior purchaser, excluded from coverage

o If purchaser of title insurance gets into dispute w/ prior purchaser and ends up winning based on recording acts (no notice), insurance policy will pay for attorneys fees for insurance holder to litigate it

- 3) Other types of protection:o Homeowner’s policyo Deed warranties

Cause of action against the seller Ex: covenant of seisin or covenant against encumbrances Advantages:

Future warranties run to subsequent purchasers whereas title insurance runs with the buyer of title insurance

Covers mortgage on property, whereas insurance will list mortgages as exceptions

Pros and cons of title insurance: Guaranteed solvent Pays for attorneys fees if it litigation w/ interest in land Insurance co decides whether to litigate or settle

- 4) Negligence cause of action against insurance coo Rogge v. Chelsea Insurance: Majority rule: Title co was not hired to perform

title search and so no duty to tell buyer of any defects. Held: Remanded b/c there may be possibility that insurance co took on assumption of duty

o CA follows Rogge- 5) Issues covered under policy

o 1) Marketability of title: marketability of land vs. marketability of title Economic marketability (value) of the land does not make title defective

o 2) Encumbrance of title: Has to be current encumbrance recorded against the property not future potential

o Lick Mill Creek Apt v. Chicago Title Insurance Co.: Ps bought land for which they purchased title insurance under ATLA and later discovered that land had hazardous wate that would cost for removal and clean up. Ps claim that insurance ensures property was marketable. Held: marketable title does not encompass property’s market value.

SERVITUDESI. EASEMENTS

A. Types- Teminology:

o Servient tenement: land that is burdened by easemento Dominant tenement: land that gets the benefit

- 1) Grant (normal)o Easment is written in a deedo Subject to:

Statute of frauds (must be in writing) Recording acts: recording puts buyer on notice

o Easement can be determinable (until someone does something), or life estate or fee simple

o Easement can go to 3rd party Old C/L: easement must be between grantor/grantee Willard v. First Church of Christ (CA): Ps Willard bought land from

Petersen who bought the land from McGuigan who conveyed the land to Petersen w/ an easement for the church parking on Sundays. When Willard bought from Petersen deed did not have easement recorded. C/L rule was you could not create an easement for a 3rd party. Held: rejected C/L rule and easement for 3rd party is proper and construe a conveyance with the intent of grantor

3 options the church could’ve taken to avoid litigation 1) Make Church grantor: O grants to Church, Church sells to

Petersen and reserves an easement 2) 2 deeds instead of 1: O conveys easement to church and have

them record it, then grant land to Petersen 3) O to Petersen and then have Petersen give easement to Church

in his deed to Willardo Interpretation of easement:

1) Easement appurtenant: (default) Typical dominant tenement that has an easement, for example that has a path running through another property.

2) Easement in gross: easements that are personal to a particular owner of land at time easement is created (no dominate tenement b/c the particular owner of the land gets benefit, not land)

Variation on Willard: What if church outgrows bldg and sells church to Lutherans and then moves down the street. Who gets to park on lot 20?

o B/c McGuigin said for benefit of “church” and not “Christian Scientist” probably interpret as easement appurtenant. If she intended just for the Christian Scientist then easement in gross

B. Implied easements - 1. Licenses that become irrevocable

o License: (not really interest in land) usually temporary and not subject to Statute of Frauds so can be written or oral

o 2 types of irrevocable licenses 1) License coupled w/ interest:

When profit interest is given (ex: apples or timber from the land), matching license must be given and cannot be revoked, so person can get on the land

2) Estoppel Requirements:

o 1) Communication: From one party to anothero 2) Reliance: Reliance, such as someone spending money

to build a home Gibbs case: Constructing something on servient

land Restatement: reliance can be on either servient or

dominate lando 3) Prejudice: How much will the property be hurt?

Courts consider degree of prejudice if license is allowed to be revoked

Holbrook v. Taylor: Taylor gives license to Holbrook to go to his prop to remove coal. Then later Holbrook is using the road to build a house and Taylor tries to revoke license. Holbrook uses two arguments 1) easement by prescription and 2) estoppel. Held: no easement by prescription b/c the use was by permission, but easement by estoppel, b/c he had permission to repair roadway, and they widened it and put grave on it and spent money maintaining it and they were building the house w/ Taylor’s knowledge and tacit approval.

o Jdx’l split Some courts will not find easement from irrevocable license b/c it reeks

havoc on land titles. Someone can own land or have right to land that is not evidenced in writing and then issue will appear with later BFP

o Oral easement: split jdx Some courts: okay to have oral easement

Restatement: must show reliance and prejudice (requirements above)

Other courts: someone having an easement on servient land is on inquiry notice b/c when looking at land it would be obvious

- 2. Prior existing use o Elements:

1) Common ownership of land: Original land must be owned by same person

2) Quasi-easement: Use of land that would be an easement if land were occupied or owned by diff people

Cannot have easement across your own property 3) When land was separated, parties intended for use to continue

Factors of intent:o 1. Necessity (necessity determined during time the lots

were severed off and sold)

i. Implied grant of easement: Based on a reasonable standard the owner of the property when she granted away the dominant tenement intended to use the easement when she retained the servient land

ii. Implied reservation: If owner stayed on the dominate land and sold the servient land, then implied that she reserved a right to herself the easement

*Issue here if she conveys a deed warranty w/ her easement on it

1. Some/English courts rule: Strict necessity (the only way the dominate land has is through the reservation). Totally impossible standard

2. Modern trend rule (Van Sandt court): Reasonable necessity determined by asking how reasonable was the reservation, how much inconvenience, expense, difficulty. How reasonable is it for the person to get another way around?

o 2. Knowledge (Actual knowledge or should’ve known) If you have knowledge then probably highly

suggestive that intent existedo 3. Purchase price: If someone is paying full market value

as if its unencumbered, may reflect no intento 4. Type of deed: If general warranty was conveyed and

there was an implied reservation, then doesn’t make sense that grantor would use general warranty

o Subsequent purchasers protected under recording acts (once an implied easement by prior use is established)

Easement by prior existing use is not recorded so under recording acts, subsequent purchaser is not bound

Split jdx: Half apply recording acts, half don’t 1) No, subsequent purchaser loses and is bound by the easement

b/c recording acts only apply to interests evidenced in writing and do not apply to unwritten things; First in time default

2) (Van Sandt) Yes, recording acts do apply to this kind of easement.

o But could be bound by actual or inquiry notice stillo When Jones bought the property he saw that there was

plumbing and sewage inquiryo Van Sandt v. Royster: Bailey owns three lots and conveys 19 to P and lot 20 and

4 to Ds. Lot 4’s and 20’s sewage line cuts across 19 and 20 into main sewage line. Held: implied easement popped onto the land and satisfied parties intent requirement b/c although it was an implied reservation, Jones was aware of the lateral sewer installed and it was necessary for comfortable enjoyment of the grantor’s property. Also they purchased it w/ notice of the sewage line.

Other cause of action options for Van Sandt against Bailey: 1) Future warranties: quiet enjoyment is breached when flooding

occurred 2) Present warranty: Chose in action- when Jones sold to Van

Sandt he had cause of action against Bailey, so if this chose in action is assigned along w/ land to subsequent purchaser, then Van Sandt has action

o Majority rule: Cannot be assignedo Minority rule: Yes, assigned

- 3. Necessity : o An easement that pops onto a land that used to be one whole parcel and then is

separated and O retains one of the lands for landlocked parcel to get to the roado Requirements:

1) Unity of interest between dominate and servient parcel (ie: property must have been owned by same person at one point)

*If you happen to buy a landlocked parcel then you can’t get implied easement

2) Strict necessity or landlocked parcel (vast majority rule) Not reasonable necessity or expensive, there has to be no way for

the person to get out Ex case: X has access to another road but it went down a cliff and

would’ve been expensive to go down. Held: not strict necessity and can still go down the cliff

NY ex case: landlocked land has a river. Held: if you have a navigable waterway then its not necessity

Minority view: if not reasonable or expensive, can get necessity, but very uncommon

3) Must be created at time of severance of two parcels Othen v. Rosier: Hill had created a path that cut through part of

Rosier’s land to the main road. Othen later purchased prop from Hill. Argued that he had easement by necessity and easement by prescription. Held: no easement by prescription b/c not adverse and not by necessity b/c Othen couldn’t show that it couldn’t have gotten out of its land at the time of severance w/o the easement b/c it could have used the other area still owend by Hill at the time (ie: not landlocked at time of severance)

o *Easement by necessity terminates when necessity ends- 4. Prescription :

o Long and continued use of pathway or road or sewer creates easement by prescription

o Courts are not consistent with requirementso Requirements:

1) Not permissive: if use was permissive then cannot get prescription. But does not require adverse or hostile, just w/o consent

When is act permissive?o If O sees crossing but says nothing, some courts say is

permissive Definitely permissive, if someone gives a license

Definitely not permissive, if O never sees person crossing Unsuccessful barriers, sign of adverse and non permissive.

o If owner wants to stop someone w/ barriers must be certain they work otherwise risk giving someone an easement by prescription

Easements can be granted even w/o having a defined place o Ex: easement for hunting

Fiction of the lost grant (English courts): recognized easement by prescription

o If someone was using land for long period of time and no written record of recognized crossing there must have been a written agreement allowing someone to cross land and document lost.

o This fiction sometimes creeps into US courts *Exclusive use is not a requirement

2) Open and notorious- enough for owner to discover had he looked 3) Continuous and for the statutory period

Continous can be satisfied even if it is just on a yearly or monthly basis as long as its for a regular purpose

Ex: stream going through O’s land and factory from further up stream dumps tomato peels yearly into the river. Held: this is continuous b/c canning co has been doing this every year once a year

4) Exclusivity of possession- Majority- prescriptive use does not have to be exclusive Minority- prescriptive use must be exclusive

o Scope of easement by prescription: very strict Easement for walking, only limited to walking

C. Public Easement- Traditional rules:

o Some courts say public can get easement over road but not over recreational area (ex: forrest)

o Other courts say you can get easement over recreational land CA rule of “implied dedication”: Landowner cannot lose rights to land

by easement by prescription unless its located w/in 1000 yards of the ocean

Ownership extends to the high tide line Private prop owners are vigilant about beach prop b/c public can

get easement CA Statute: allows landowner to open to public and file with the county

recorder that land is upon until landowner choses to revoke it landowner does not have to worry about easement by prescription

CA Statute: can restrict to diff times for public (has to be reasonable times)

o CA Coastal Commission (gov’tl body voted in by initative)- jdx over coastal areas

CACC used to give permits to build in exchange for owners to give easements to public—no longer allowed after lawsuit claiming it was extortion

All prior easements were not invalidated after this thoughD. Scope of easement- Rule: easement cannot be used for a purpose that is extended from original purpose

o Brown v. Voss: Easement going through servient land created to give access to dominant tenement. P also owed a parcel beyond the dominant tenement Parcel C so argued that the easement was not given for access to that parcel, only the dominant tenement. Held: use to parcel C exceeded scope of easement.

Penn Bowling case Remedy issue:

Majority discusses a balancing factor for fairness and holds that award through damages is more fair

Dissent: no balancing, if intentional trespass injunction is appropriate

- “Reasonable” testo Ex: If a road easement was used for horses and now cars want to go up it, apply

reasonable testo Ex: if dominate tenement is split into a lot of lots

Some hold: dominate tenement split into 60 sites is beyond scope; Others held split into 26 smaller lots was too much as well

*Note: not a Brown v. Voss situation b/c easement trying to extend to non-dominate tenement

o Restatement test “Normal Development” testo Ex: Normal easement for ingress and egress and owner of dominate tenement

now wants to build house and needs electrical wires and poles along side of easement—court will likely not allow this

Variation: what if electricity is put underground? Split courts: General rule cannot do this, easement is for

ingress/egress and wires underground goes beyond thiso Other courts: logic is whatever can be brought in by

trucks through ingres/egress easement can be allowed by buring underground (works for water but not electricity)

o Ex: Old utility poles and owners give utility co easement. Cable co now wants to wire their cables along the original poles

Court held cable co could use utility co’s easement under argument of “normal development”

Problem w/ argument is that easement was granted to utility and cable wires is not utility co’s “normal development” but another entity using this easement

- Relocating Easements:o Servient land can’t block easement

Ex: O of servient land wants to build house on easement and wants easement to go around the house, O cannot relocate easement

o Restatement (not adopted): applies “reasonable test”- servient tenement allowed to relocate easement if reasonable

o Parties can always negotiate on their own to relocate easement

- Termination of easement:o Natural expiration

Term of years easement Easement by necessity: terminates when necessity ends

o 1) Signed release: A party pays to get the easement backo 2) Estoppel: O of servient land is told by O of dominate land that easement is

not needed and he relies on this information. Then dominate land changes his mind. Courts will say the dominate tenement is estopped from using easement

o 3) Prescription: O of dominate tenement stops the use of easement for statutory period and for ex, crops grow over the easement. Servient tenement can get AP over this area so basically easement ends

E. Negative Easement- Negative easement: right for someone not to use their land in a certain way- English courts never adopted this b/c

o 1) No recording acts, but at least w/ positive easements there was visible sign of easement

o 2) Easement by prescription would not work with a negative easement. Cannot be prevented from doing something that you are not doing

- US rule: adopted English approach, but some courts allow: negative easements = covenants

II. COVENANTSA. Covenants generally

- Covenants as providing a cause of action for future owners (transfer’s K law to Prop law)

- Must determine if covenants “run with the land”- a promise that runs with the land whether the purchaser wants it to or not (easements always run w/ the land)

- Burden side: the side whose land is burdened with the covenant- Benefit side: the side whose land gets the benefit of the covenant- Reciprocal promises and both lands are burdened and benefitted

B. Real Covenants (Damages)- Requirements:

o 1) Covenant enforceable between original covenanting partieso 2) Original parties intended that covenant run w/ the land

Language of successorship Wording usually “B and heirs and successors promise not to…”

o 3) Covenant touch and concern land Covenant has to do w/ land use Rare case that doesn’t touch and concern land: about paying fees or

maintaining lando 4) Horizontal privity between original parties (Burden side only)

England: For burden to run w/ the land, the relationship has to be LL/Tenant

US (majority): LL/Tenant relationship will qualify but any transfer of interest in land between horizontal parties will qualify

Benefit- NO horizontal privity (between covenanting parties) is required

Burden- Horizontal privity (between covenanting parties) is required

Ex: sale of land, grantor/grantee relationship Ex not horizontal privity: 2 neighbors that make covenants

o *a way around this: use strawman and convey land to get in privity

Restatement: should not need horizontal privity, even on the burden sideo 5) Vertical privity between original K’ing parties and successors

Burden side: successor must have same estate in land Ex: B had fee simple fee simpe to C

Benefit side: as long as some interest runs to person, does not have to be the same interest

- Issue of recording: Apply regular recording acts separatelyo Possibility of recorded/constructive noticeo Only burden side must be recordedo Apply donee/purchaser rules of recording acts

C. Equitable Servitudes (Injunction)- No privity required for parties seeking injunction

o Tulk v. Moxhay- Requirements: (no writing or privity required)

o 1) Intent to bind successorso 2) Touches and concerns the lando 3) Notice: party sought to be enjoined has notice

D. Terminating Covenants- 1) By agreement/consent: Pay the person who has the benefit to move- 2) W/o consent:

o Changed Condition Doctrine: where change in circumstances so that benefit of covenant is no longer achievable

Western Land v. Truskolaski: Subdivision was created for residential purposes only but over the years the area around the subdivision became increasingly commercial and roads more congested and wider to accommodate for traffic. Held: residential covenant still remains on the subdivisions b/c the changes outside has not affected the value for residents within the subdivision

Does not matter whether circumstances outside the subdivision have changed or not, the circumstances must have changed w/in to terminate

Rick v. West: West bought a parcel of a subdivision and Rick wants to sell the other parts for a hospital. The covenant was for a residential area and West was the only hold out. Held: for West and covenant remains w/ the land. The person who bought the benefit has the right to uphold it. Test for whether covenant is terminated is if it has no purpose anymore.

Can P just violate the covenant and be willing to pay remedy to West?

o Majority rule: this isn’t balancing of the harm to one parcel vs harm to another harm. Person with a covenant has a right to injunction so remedy would not be appropriate

E. Common Interest Communities

- Form of land ownership where purchasers agree to be bound by set of rules and restrictions, via home owner associations and votes

- Horizontal and vertical privities exist b/c original purchasers are in privity w/ developer AND subsequent purchasers are in privity w/ original owners

- CC&Rs (covenants, conditions and restrictions), enforced by HOAo Some statutes state that CC&Rs run w/ the lando CC&Rs can be placed on the land at the beginning w/ the developer or later by

HOA voting to impose additional restrictions- Condominiums:

o Ea owner has a fee simple in their unit but tenant in common in other areaso Ea owner responsible for financing for own unito Restrictions are enforceable unless unreasonable

Nahrstedt: P argued that a pet restriction in her condo’s CC&Rs was unreasonable b/c her cat stayed indoors. Ct of app was using a case by case standard and said b/c no one was bothered by her cats the rule was unreasonable. SC Held: CC&R was not unreasonable b/c cases cannot be taken case by case and the burden has to substantially outweigh the benefits of that restriction, and if that’s the case then it doesn’t apply to anyone. Restrictions that were put on the condo from the start will be given more deference b/c ppl bought it relying on them when they bought the property.

- Cooperativeso Individual owners do not own each separate unit. Building is owned by a

corporation and each owner is a shareholder of the corporation, therefore each tenant is landowner and tenant

o Mortgage is taken out on the entire building so if one defaults everyone else makes up for it

o Creates extensive screening for new ownersF. Zoning

- Statutes passed by gov’t entities to regulate land use- Constitutionality of zoning: zoning drops the value of property and Ps challenging the

constitutionality of gov’ts imposing zoning laws based on due process. o Euclid case: Ps testified that zoning laws made their property value drop by ¾

value. SC upheld zoning law - Commercial signs, cities enforcing zoning have to pay for the teardown