outline
TRANSCRIPT
Possession / Acquisition of TitleI Acquisition by Capture
A Ferae Naturae = Wild Animals
1 Definitiona Animals deemed wild by common law
i Domestic animals do not count
b Must be fugacious
i capable of running away into its natural habitat
ii can move / flee
c Once ferae naturae, always ferae naturae
d Res nullius = a thing belonging to no one → what ferae naturae are in their natural state
B Acquisition of Title of ferae naturae1 General Rule: Possession
a Property rights ensue when someone has bodily possession of the thing (through manucaption). idea of dominion and control
i When the thing hasn’t been owned previously, the first person to manucapt it owns it.
First in time, first in right
2 Constructive Possession
a You will with certainty have bodily possession
i Mortally wounded
ii Trapped
iii Maybe in really close pursuit, but maybe not
b Must have pursuit & deprivation of natural liberty (is capture practically inevitable).
3 Custom and Usage
a could also depend on the custom of the particular type of hunting
i minority justice in Pierson v. Post thought so (everyone knows that pursuer gets it).
ii Custom of killing whale with marked harpoon was enough in Glen v. Rich, though the whale washed up on shore far away and someone else found it (“the iron takes the whale”).
b Not trespassing
i Ratione soli = by reason of the soil; if an animal is on your land, you have a form of (constructive) possession of it.
A landowner doesn’t own all the wild animals on his property, but a trespasser coming on the land and killing a wild animal forfeits the title to the landowner (prevents the trespasser from profiting by the trespass).
KEEBLE wrongly cited in PIERSON for “constructive possession” of duck pond.
Tort liability: Interfering with your hunting ability on your own land, if hunting is your livelihood, (KEEBLE) may be considered an interference with trade (not property rights). If it was intentional (and thus not with the goal of capture), it’s likely actionable; if in the vein of fair competition, it’s less so. Differentiate from P v. P b/c Post was only hunting for pleasure.
1
Keeble made disturbance to ones livelihood a tort or cause of action
ii Public lands (res publius = belonging to everyone)
Negates ratione soli issue; if the person is on public land, there’s no concern that he was trespassing (if there are no restrictions on the use of that public land). Can take valid title of animals on public lands.
Ex. Pierson v. Post
4 Title cutoff of ferae naturae
a General Rule: An escape of ferae naturae into its own natural liberty (not habitat or environment) cuts off the chain of property rights
5 Exception
a indication of ownership—something to give people notice that someone owns the animal
i physical
ex. a collar on a raccoon.
ii circumstances
the fact that an animal is not in its natural habitat can be indicia of ownership
ex. gorilla on Newbury Street (but still liable at tort)
Individual knowledge
If you know it belongs to someone else
If you have special knowledge of the animal, you will be held to a higher standard of finding indicia of ownership
a. Ex. fox breeder sees a type of fox that comes from Europe in the US
b Animus rivertendi
i Property rights are retained if it is proven that the animal, though it escaped, was in the habit of coming back to the owner, and therefore intended to return/revert back to where he escaped from.
Ex. comes back every night for dinner
c Custom can sometime play a role (constructive knowledge)
d Owner pursuit (when does it actually escape)?
6 Oil and Gas
a Traditional, ancient right of real property: A person owns his property de coelis ad infernum (from heaven all the way down to hell) now up to 500 feet above ground.
i Grand ballroom of touristy cave lies directly beneath farm owner’s land. Farm owners prevail, get paid rent for use of their land for a tourist attraction.
b Courts applied ferae naturae doctrine to oil/gas for lack of better way to describe rights.
i Like ferae naturae, oil is always on the run, but once you grab it, it’s yours.
ii Because oil is transitory resource, no one can claim ratione soli, as the oil could be coming from another’s property instead.
iii First to have possession of oil owned it, even if oil reserve extends under someone else’s land
not a trespass (not a physical entering onto the land).
2
Kuwait example: Piped seawater down into old oil wells, which forced up oil from Iraq. Would be a trespass because Kuwait did enough with the water such that it was their instrumentality, which then physically entered the land.
c Most courts have codified the idea of indicia of ownership into their gas/oil regulations.
i Often, gas has been treated for safety, etc. and can be determined as belonging to an entity (prevents saucy intruders).
d Reinjection into the ground isn’t an escape (court in Lonestar throws out FN analogy).
i Since you know how much you took out, you know more about the lyme field. It is now under control because we know about it. (argument may or may not work)
ii If it’s marked (indicia of ownership – gas has no natural smell, but must smell for safety)
iii Animus revertendi—gas come back every time lonestar opened it’s pipe
iv Also: Most people fighting to get to this oil would know what they’re doing; they should know they’re taking someone else’s gas.
Murchison should have known it was previously owned (experts in that field like fox breeder)
e Some courts won’t apply ferae naturae to oil
i Merchison Judge calls analogy of ferae naturae an ugly one and throws it out. What does this imply for initial capture and oil property rights?
f Tragedy of the commons
i ferae naturae doctrine led to great waste of the resources, so various government agencies stepped in to regulate the industry.
If you’re over the pool of oil, you pay to have the government pump and reap profits. Hopefully rate of pumping decided by scientists instead of lobbyists.
Tension between short term property ownership instincts and long term public interest.
ii Public nuisance and public trust doctrines also might apply to help reduce the frivolous use.
Public nuisance = offends the decency, morals, welfare, etc., of the public.
Public trust = air, water, sea coasts, wildlife are owned by all, so the public still owns an interest in land even though it’s, on paper, owned by another.
iii Ferae naturae law for oil incentivizes quick drilling. Bad policy for conservation.
Drake’s folly: Drake struck oil and started barreling it (first man to market oil). Drake’s neighbors start doing the same thing. Drake thinks his oil is being stolen. Majority of oil is under neighbor’s property. Neighbor’s claim is ratione soli. Drake’s claim could have been discovery but we don’t know how much he discovered. Oil’s not static it’s fugacious (can flee-move). Ferae naturae could be argued because you can’t control it until manucaption. → get as much out as you can as fast as you can.
II Acquisition by Discovery A Discovery = becoming the first person aware of the existence of this thing/land (no one has a prior claim).
1 Don’t have to know what the thing is to “discover” it.
B Rule: He must perceive it, desire to establish possession, show an unambiguous intent to possess, demonstrated by an act.
3
1 Kayaker is paddling 201 miles offshore (in international waters). Sees large blob of floating goo, turns out to be ambergris (whale vomit, very valuable). Kayaker puts hand on it, and owns it by discovery. Property rights consummated by possession. If she falls asleep and the ambergris is snatched by a saucy intruder, it is still hers.
2 The clearer it is that he has intent to possess the better his case.
C Requires cognition of the item (“discovery”) plus an action, such as reaching out to take the amber in the middle of the lake or standing on the new island.
D Probably something in addition to discovery is necessary to initiate full property rights in new lands.
1 The law rewards changing the natural state of things with one’s labor Adding labor to land one discovered likely would be enough to initiate property rights.
2 If an island in international water, putting indicia of ownership (flag), exploring it, improving it, and defending it will help
a Guy kayaking watches a volcanic island form in international waters. He then kayaks around it. He is the first to discover it. What should he do to ensure his property rights?
i mark it (put up a flag)
ii put labor into it (change it)
iii he must defend it
b Courts will defend your personal property but with real property in the law of nations, courts may not step in until you have defended it. Force is part of what you should be prepared reasonably to apply.
E Discovery of America
1 European law: states not discovered by Europeans can still be “discovered”
2 Europeans can have full title, which the U.S. gained through conquest and purchase.
3 Indians have right to occupancy.
i A good lawyer may have argued that there was no valid conquest of the Indians b/c there was no “indicia of conquest.” The Indians had no concept of land ownership, so they couldn’t have known that they were fighting for their land.
4 Occupancy extinguished by: (1) Purchase (2) Conquest (3) Gift (4) Abandonment
III Acquisition by Creation – Person owns one’s body, so owns the property created by the efforts of their body/mind (by extension).
A Property in one’s person
1 Often language that there can be no property rights in human bodies language is too reminiscent of slavery to be palatable. Thus, the Moore ruling that “cut out” = “cutoff.”
2 Can argue it’s undignified and inappropriate to treat body parts as property.
3 But can also argue that doctors can treat cells, etc., like property, add labor to them, and greatly increase their economic worth (MOORE V. REGENTS OF UNIV. OF CA).
a Spleen removed
b If patient didn’t own spleen then who? → must be him
c Spleen is used to create cells
4
i Law of Increases: if you own mother, you own child thereof—possible argument for Moore
Moore’s best arg would be administrative process since it’s a state university → gov’t
ii Accession is best argument for Regents of University of CA (only liability would be value of nasty spleen – but maybe Moore could make argument that spleen had intrinsic value?**.
Also, pharmaceutical companies would have NO liability. BFP w/ cutoff.
B Property in one’s persona (kind of an exception).
1 Person has control over the commercial use of his/her identity. More important than competition.
2 Vanna White v. Samsung
C Accession1 Accession = wrongfully (knowing or unknowing) taking an item and then changing its
nature/”platonic essence” to improve its market value.
2 The wrongful actor then obtains title to the item (easier to prove if NOT wrongful).
a Bona fide purchasers from accessors thus receive good title and aren’t liable to the true owner even for damages.
b Wrongful actor is liable, BUT only for value of goods/raw materials at time of taking
i Replevin is not an option – Duh.
c Policy: Court recognizing that someone has invested labor and thoughtfulness to change the raw materials to something that’s different in kind. The value has increased enough that it’s fair to cut off the title.
3 A certain amount of change is required to cut off title less for innocent actors, more for intentional accessors.
a Ex. Own a house with walnut trees. Someone cuts them down. Trees were emblements or fixtures on real property. Truck drives to Chicago, where trees are worth twice as much. In Chicago, trees are cut into boards. Boards are ruffed into chairs and a table. If it was an innocent taking, that would be an accession cut off. An innocent taker can get accession cut of when turned into rough chair and is owner but owes tree owner the value of the raw material. A wrongful taker would still get ownership via accession but not until chair and table were finished. Still owe tree owner value of materials and they could still go to jail.
D Intellectual Property – we want to reward & incentivize creation, but competition is lifeblood.
1 T. Jefferson: “He who lights his candle at mine receives light without darkening mine.”
a Idea is that it’s a good thing to have competition/free flow of ideas provides motivation to improve the invention to keep distinguishing yourself in marketplace.
b But one also should be able to reap what he sows; it’s in the private interest to keep a monopoly on your ideas.
i → need sufficient return to recoup R&D expenses, thus ensuring the incentive to innovate.
c Want to protect inventors so they keep inventing, but want to have the benefits of competition, too.
i Also, Jefferson signed the first patent act. Tension between spreading ideas and protecting money-making potential.
2 Some ideas are purely free and exist in the public domain because they are obvious.
5
a One way of putting it: Ideas and facts exist in the public domain, but initial expressions of ideas can be copyrighted.
3 Types of protected property (protection = limiting the use of the creations)
a Patents on mechanistic products
i Protect new, useful, non-obvious inventions/discoveries applications of ideas.
ii Trade secrets are subsidiary to this but not protected per se.
iii Granted by specific application; may run out after a given period.
b Trademarks/service marks
i Names or images that mark/identify a particular company or product line.
ii Aim is to avoid misrepresentation and harm to the reputation of the holder of the trademark.
c Copyrights (apply to expressions of ideas)
i Concept of labor that changes an idea to initiate a separate copyright.
ii (Occurs automatically once a person authors a work).
4 A balance must be struck between the value of individual ingenuity and inventiveness and the value of the benefits of competition.
a Want to allow people to perfect others’ starting ideas (providing better and cheaper products to consumers through competition), but also want people to be able to reap only what they sow.
5 Between two companies in competition, there may exist quasi property.
a It would be unfair competition, then, for one company to take and use the other’s work, even though the work itself exists in the public domain and can be freely used by those not in competition with the companies. (INS V. AP).
b But this doctrine was somewhat limited to the newspaper industry. Even if AP were decided oppositely, people would still pay for AP’s news. They would not lose all value for their service (just maybe a little bit). It is very necessary for a market economy (both in lowering prices and improving product designs) to allow imitation.
i Delicate balance – the people are better off with imitation as long as the freedom to imitate does not destroy the incentive for people to create/invent.
6 First sale doctrine: In theory, if a company has received the money for the first sale of the item, then they don’t have exclusivity anymore (unless, of course, the idea is protected). (CHENEY BROS.) ?
a Courts generally let the protection statutes apply, and where they do not apply automatically, it’s not up to the courts to decide what the appropriate policy is.
E Cultural property
1 (There is a recognition that, sometimes, claims can be made for national ownership or preservation of works of art or works of cultural/ historic heritage, like antiquities).
2 The nation might be the true owner if the nation owned the thing or it was acquired on behalf of the nation by explorers.
IV Transfer of Possession (Not Full Title)A Finders (as applied to personal property that is owned by someone, but lost)
1 Relativity of title:
a Ownership is usually shown by manifestation of title (documents, etc); possession is shown by physical possession and intent to exclude others.
6
b True owner wins over everyone, but often cannot be found.
c Claim is between multiple non-true owners – usually finder and third-party possessor.
d Party that has best claim keeps possession and finder’s rights, but not full title.
2 General Rule: “Finders keepers” The first to find a thing has property rights to the thing against the whole world except that true original owner. (Armory v. Delamiri, Hannah v. Peel)
a What constitutes a find?
i Not clear.
ii Must have cognition of the thing (know what it is?).
iii Physical control – helps if manucapted it. Also, intent to assume dominion.
iv Do not necessarily have to know what the thing is.
b Finder’s rights (apply against all but TOO even if their action is illegal to the TOO).
i Finder does not have full title though, has “finder’s rights”—good against all but true owner.
Exceptions (finder is employee (agent of company), finder is trespasser (finds lost property on land), finder is on land for limited purpose, found w/in private home (distinguish w/ H v. Peel b/c Peel didn’t live there at the time).
ii Finder’s rights can be sold, but what they sell is only the finder’s rights (which are still pretty good).
Hypothetically, if finder is going to receive damages for the thing found, should be something less than full title value, since true original owner can return to claim.
iii A true owner can seek replevin against the buyer OR the finder
c Finders are NOT bailees, so they do not have to compensate the true owner if they sell the finder’s rights.
d Tort liability is very minimal for finders
i Some courts say no tort liability for finders.
ii Others say only if gross negligence.
3 Exceptions:
a Attached to land owner of the locus in quo (OLQ).
i If thing is firmly affixed/attached to the real property, title goes to the OLQ.
Related: private houses that someone lives in (arguably person has constructive possession over everything in the house.)
b Mislaid property owner of locus in quo.
i If the thing has been mislaid (not lost but intentionally placed there and then later forgotten) title goes to the OLQ (e.g., woman leaves purse at barbershop).
Court assumes that if an item is mislaid, the owner may eventually return for it, and the owner of the locus in quo has the best chance of returning it to the true owner.
c Exception that negates these exceptions: Treasure trove finder
i If an item is, mislaid or affixed to the land, and it’s money, jewels, or another readily negotiable valuable, it goes to the finder.
What counts as treasure trove: Something consciously mislaid/buried and recognized as so inherently valuable that it’s very tempting to deal with it secretly.
7
ii This negates BOTH the mislaid and the attached exception but still doesn’t cut off the true owner.
This rule is thought to encourage honesty and prevent finders from selling items quickly instead of making a valid attempt to find the true owner.
Applies even if the finder is trespassing.
d Shipwrecks:
i Usually defined by statutes if in water within territory of a state.
ii May have to be returned to state.
4 Trespass:
a Usually, trespassers still valid finders. Applies the same rules. Otherwise, trespassers would be covert and never mention their finds → True Owner would have a smaller chance of getting it
b Gross trespassers, though, like thieves, courts are more reluctant to award, so might change the rules.
B Bailments: an implied transfer of less than full title (a right to possession)
1 Bailments—a transfer by Bailor to Bailee of some property where the bailee has the rights to it that the bailor’s terms grant. Creation of bailment requires physical control plus intent to possess.
a Creates a contractual-type relationship (though doesn’t have to be an express contract)
b Bailee has legal custodial/possessory rights of the bailed item, which is based on an implied contract.
c Terms of implied contract may be affected by the circumstances.
2 Examples
a. Whenever you rent something to someone
b. Whenever you loan it to someone
c. For most consumer bailments, it is against public policy for the bailor/consumer to have to wave negligent liability of the bailee
i. Ex. Coat check.
3 Bailee liable for:
a Intentional damage.
b Negligent damage.
i If thing is damaged/lost, negligence on the part of the bailee is presumed, but it is a rebuttable presumption.
c Misdelivery to the TOO.
i Strict liability, cannot be rebutted.
d Bailee not responsible for hidden items that he doesn’t know about (coat pocket).
i Might be an argument that if the bailor didn’t tell the bailee the thing was particularly valuable (Abe Lincoln’s gun), his standard of care with it would be less. Which might rebut bailee’s negligence.
4 Bailee’s rights:
a Bailee can do anything with the item during that time period, so long as it wasn’t expressly prohibited and it’s reasonable.
8
b Bailee’s rights are extended for a reasonable time under the circumstances or however long is expressly stated.
i You cannot revoke a bailment before terms are up.
bailor dies while bailee has possession of a car for 4 weeks → bailee keeps right to possession for the 4 weeks. If it is a bailment until it is revoked, the head of the estate can revoke (but not before terms are up).
c Right to sue third person (Car crash that is not bailee’s fault)
i If someone else damages the thing, the bailee can recover for full damages on the TOO’s behalf, even though he doesn’t have full title (and even if they don’t have to pay the bailor back?).
ii If bailee recovers for less than the actual value because of negligent prosecution, the TOO can sue the bailee for negligent prosecution (not the person originally prosecuted).
V Transfer of TitleA Bona Fide Purchaser
1 General Rule: A BFP gets only what the seller had to sell. A Non-BFP gets nothing.
a If seller didn’t have full title, then bona fide purchaser does not have full title.
b For BFP to exist, must be good faith belief of title and valuable consideration. BFP must have no “inquiry notice” (low price, where it’s bought, person looking over shoulder, etc).
i As between two innocents, true owner get’s title
2 Exceptions to the general rule: Ways BFP’s can get full title from a seller than did not have full title, if there is a cutoff (SEE BELOW (list of cutoffs) FOR INCOMPLETE BFP RULE):
a Accession:
i Seller has changed the platonic nature of the thing in question.
ii Person who does the accession still liable to pay damages for the raw materials to the TOO, but BFP gets full title (due to cutoff).
b Confusion: (e.g. one person’s grain gets mixed in with another’s; BFP gets full title)
c Indicia of Ownership (estoppel):
i Owner somehow gives the seller the apparent authority to sell the full title, or the apparent full title of ownership. BFP gets full title.
George Tracy truck example
George Tracy, piano mover has a truck that says George Tracy, piano mover (which actually belongs to owner of business). Offers to sell his truck for $500. Guy bought the truck for $500 from Tracy (w/ indiscia that he was buying from TO). O’Connor (the one who really owned the truck) wanted to keep Tracy’s reputation. BFP cries indicia of ownership. O’Connor is not innocent and is estopped from denying that he gave indicia to Tracy, which provided a type of security for the sale to the BFP.
d Entrustment: (UCC created exception to encourage commerce)
i If a BFP, through the ordinary course of business, buys a good from a store that ordinarily buys and sells such things, and the good has been entrusted to by the TOO to the store, BFP gets full title, and TOO’s rights are cutoff.
Might mean taking an item in for repair to a store that normally sells those items too.
9
Note: Entrusting only transfers the rights of the entrustor to the store (so if the entrustor was bailee for the TOO, the BFP would only get the bailee’s rights, and the TOO could sue the BFP for replevin.)
ii Again, any tipoff to the BFP that there’s something abnormal with the sale negates the exception. (not a BFP)
iii TOO can sue the store for damages, but can’t sue the BFP for replevin.
e Fraud (voidable title):
i Requires intent to misrepresent to the person to his detriment.
ii But if the person who obtains the item by fraudulently inducing the TOO to sell then sells it to a BFP, the owner can’t reclaim title but can sue the seller for damage.
f Foreseeable specific negligence of the TO? (Plater invention)
i Leave house for a week with lights on and front door open. Stereo is stolen. Did not want it stolen but could foresee the problem that occurred. If there is an act by the true owner of specific foreseeability of theft and sale to a bona fide purchaser, Plater would argue that BFP should get it because true owner is not innocent—no longer between two innocents.
See O’Keefe. AP of chattels should run against the TO if bought by a BFP b/c O’Keefe could have avoided BFP’s suffering by phone call (she is not completely innocent). This is an argument in favor of the minority rule for AP of chattels in case of a BFP.
B ADVERSE POSSESSION OF LAND
1 Adverse possession = a way to cutoff a true owner’s title based on the statute of limitations to bring a claim for ejectment/trespass.
2 Goal is to encourage landowners to carefully monitor their property, also to clear up confusion of titles.
3 After statute of limitations, adverse possession has ripened, true owner’s title is cutoff, and AP gets a new title, free from any claims against the land held against the previous owner.
a Note: To get good marketable title, he must file a suit to quiet title and then record.
4 AP gets only the property rights that the TOO had (e.g. if fee simple determinable, then gets free simple determinable.)—See Mitch’s outline for LE, FS analysis
5 Adverse possessor gets title to only portion of land he used, unless color of title issue.
6 Elements: POCEAN
a Possession :
i Test: is the adverse possessor using the land in a manner as if it were the true owner (as others in the community do)?
Must make a claim of full title possession (dominion and control).
A snapshot of what is proper use of the land is taken at the time the adverse possession begins (AP doesn’t have to keep up with the Jones’).
b Open :
i Test: what would the true owner have seen on the property had he visited?
ii Can be actual (owner knew AP was there) or constructive (owner should have known that AP was there if he had been a responsible landowner and inspected the property).
TO has the obligation to “walk his own land,” so even if you are on a remote corner of property, you’re still using it openly if the TOO shoulda seen you (hired a range runner).
10
c Continuous :
i Test: What would a true owner do? How continuously would he possess the land (specifically within context – summer house, hunting cabin, etc)?
ii Isn’t broken broken if AP has someone else on land with his permission.
iii All elements of adverse possession must be continuous. If one is interrupted, then it is not continuous, and starts over.
d Exclusive :
i Test: Is the AP possessing the land in a way that excludes other possessors like a true owner would (except those he permits to enter the land)?
e Adverse :
i Test: Is the AP possessing the land in opposition to the true owner.
ii Just has to be adverse in fact, not adverse intent (done maliciously).
Policy Reason: if adverse intent is required, you wouldn’t be able to fix border disputes.
iii If true owner gives AP permission to be on land, then AP is no longer on land adversely.
f Notorious:
i Same as open.
g For the statutory period.
7 Adverse possession under Color of Title (faulty title) – sometimes called Constructive AP.
a AP has an instrument (e.g. title, will) that covers the property, which turns out to be false through no fault of her own, and AP has no reason to believe it is wrong (relied upon in good faith). HOWARD V. KUNTO
b If adverse possession ripens, AP gets title to everything that is in the faulty title, even if she only possessing a portion of it.
c True owner has constructive notice if he had inspected land, would have found AP, and would have realized that she had a faulty title.
i If TO “pops the bubble” of total AP by OPENLY coming onto the land so the AP can say “why are you on my land,” AP is knocked back down to only the part of the land that they actually adversely possessed. If TO sneaks on at night, it doesn’t pop the bubble.
d Does not apply to any portion of the faulty title that covers another person’s land, in which the AP is not possessing, since that person had no reason to know constructive notice and had no reason to know AP was there with a faulty title.
8 Tacking:
a One AP can pass along his wrongful possessory rights to another person , who becomes an AP, so long as there is privity (it is a legal linkage/transfer: conveys by contract, will, intestate succession, etc.). Vertical privity of estate = a voluntary transfer of the land.
b Adverse possession remains continuous even though passed to another person.
c AP chain is broken though if one AP leaves and another AP comes after with no privity.
d Tacking is valid for subsequent APs & for subsequent TOOs.
9 Generally, adverse possession does not apply to government land.
10 Adverse possessor CAN throw out a trespasser. (between two people without a title, the AP wins, relativity of possession.)
11
a In early San Francisco, an AP builds a fence across a spit of land and puts cows on it. 3 years later, someone else comes onto property and tries to build a house. Cow man sues to eject and wins because at this time, in this place, and in this context, grazing cows are enough to POCEAN and to assert a claim of right against any other wrongdoer.
i Would have to wait until statute ran to win against TOO.
11 If TOO ejects AP before adverse possession ripens, he has a right to recover mesne profits, usually for the last 6 years, but if AP ripens, TOO forfeits that right. And AP forfeits any fixtures he added to the property.
12 Generally, once adverse possession has ripened, for purposes of retroactive tort actions, there is an estoppel/cutoff. No mesne profits after it ripens.
13 To oust adverse possessor, TOO has to break POCEAN by:
a Filing suit
b Knocking down house (criminal law not suspended, but ouster would be valid)
c Get AP to accept permission
14 Defense of TOO after statute of limitations has run on AP:
a It wasn’t POCEAN
b It was government land, TOO leases (can’t AP against government)
c Disability
15 TOLLING OF THE STATUTE OF LIMITATIONS
a AP cannot cut through
i A life estate (AP doesn’t ripen while the land is owned as a LE).
ii Subsurface rights (If the rights are owned by someone else and the AP made no attempt to possess it, the AP doesn’t get AP of the resources).
iii Easements--???**
iv Disabilities
v Government-owned land
b A disability (insanity, being a minor, being in jail) can extend the timeframe during which a TO can bring an AP claim if the TO is disabled at the time the AP begins.
i The only relevant disability is that which exists against the TO at the time the AP begins; disabilities cannot be tacked to each other.
c The owner has 21 years OR 10 years after the termination of the disability (whichever is longer) to bring the action for ejectment/trespass.
i But this doesn’t blindly add 10 years to the term required for AP; if AP ripens in 21 years, and the TO gets well 2 years into the AP claim, the 10-year tolling has no effect.
ii Where the statute comes into play: If the TO gets well 4 years after the AP claim should have ripened, the TO has 10 years after to oust the AP means AP takes a total of 35 years to ripen.
iii When a TO has multiple disabilities (such as being insane and in jail) at the time the AP begins to accrue, he can choose which one would benefit him more.
d The tolling of the statute of limitations extends to whoever stands in the TO’s shoes.
12
i Example: TO is insane. He dies, cutting off the insanity. His heir still can take advantage of the tolling before bringing an ejectment action.
C ADVERSE POSESSION OF PERSONAL PROPERTY 1 AP often ripens in 6 years, often the same as prescriptive easement, never longer than that for real
property (statute of limitations on replevin).
2 AP of personal property requires the same elements as those for AP of land, but most at issue is likely to be the requirement of openness.
a In theory, the land is always at the same place, so a TO can always go to it and determine if AP are occupying the land.
b With chattel, the TO might not know where to find the personal property.
c Majority Rule : statute doesn’t start running until you know who has the goods and you request them back.
i No affirmative burden to discover where the thing is.
ii Policy : Do not want to reward theft. Also, in case of BFP it is hard to prove BFP.
3 Other theory: SOL is tolled as soon as goods are stolen, unless TO can show that she used due diligence in attempting to discover the location (a vague concept) of the property. (O’KEEFE).
a This is the minority NJ rule statute runs against TO if willfully ignorant of where the goods were AND could have had notice through exercising due diligence (Plater seems to like this).
Argument in favor of minority rule in O’Keefe case is that BFP should get it b/c she was not an innocent (she could have stopped the BFP’s suffering by simply picking up a phone).
D Prescriptive Easement (not a transfer of title)1 Easement = Right of use of land for a particular purpose, not ownership or title.
a Most easements are granted (such as when a person buys a house, he’s granted the right to use the road to get there), but some are prescriptive (like AP gained access through regular usage).
b Gives the right only to use as the possessor previously did, in the same quantity and character of the prior regular usage (e.g. easement to mine gold, but only at the same rate and through the same process he did previously).
2 Elements of prescriptive easement:
a Use (not possession)
b Open
c Continuous/Regular (used as regularly as a person would use a right-of-way)
d Does NOT have to be exclusive
e Adverse (in fact)
f Time is usually significantly less than what is required for AP (half or less # of years).
3 The permission of the TOO to use the property, whether formal or informal, defeats a prescriptive easement.
4 Once granted a prescriptive easement, the AP can sell it and pass it down forever.
5 Granting of a prescriptive easement blocks the right of the TOO to recover mesne profits.
13
E Gifts (aka gratuitous transfers)1 Gift = transfer of property from one person to another without payment.
a The law is extremely suspicious of gratuitous transfers, which may be motivated by the most subjective of human intentions and later often are very difficult to prove took place.
2 Inter Vivos:
a The majority of gifts, basically all gifts not made in the anticipation of death.
b Gift inter vivos = giftmaker must have DONATIVE INTENT to give title in the present moment, not in the future, not conditional, and not revocable.
c Requirements to make an i.v. gift:
i Donative Intent (to make the gratuitous transfer of title)
In the present, cannot be in the future (e.g. “I will give”)
Cannot hand someone something and say it’s a gift as of tomorrow—futurity destroys gift because it becomes a promise even though physical possession was transferred
Unconditional—must be unconditional; otherwise, void ab initio
Irrevocable (any hint of either conditionality or revocability invalidates the gift from the beginning (void ab initio). E.g., “I give you this, unless I change my mind.”
Distinguish from trusts, which can be revocable.
ii Delivery:
Must be a separate act from the intent to validate the gift. (GRUEN V. GRUEN)
Can be constructive (e.g. certificate, branding cows, keys to car) or symbolic (part of the whole, e.g. branch from a tree), but does not have to be the best type of delivery possible under the circumstances. BUT, usually only good if actual delivery is impracticable.
Gruen case only turns out the way it does b/c right to remainder in the painting is an intangible interest. Thus, constructive delivery is ok. Plater doesn’t make this distinction though…
a. Plater, however, does seem to think that delivery may not be completely good in this case b/c instrument says “I wish to give you” (vague).
Can be anything which can be represented to the court as a conscious symbolism for the act of giving.
Possession does not have to be maintained after delivery, just title.
Agent can deliver in place of the TO. BUT agency dies w/ the principal (Innes v. Potter – soft-nosed court. Calls it a trust (in which agency lives on in the trustee).
Maybe make yourself a trustee of the thing (or escrow if it’s a deed) and then the court will appoint you a successor when you die.
Soft-nosed court may be more lenient for delivery in context of a family.
Ex. Man dying tells little two year old he gives her his gold and says “geraniums” as he dies. It turns out gold is buried under geraniums. Telling her this is enough. It is constructive delivery.
iii Acceptance:
Acceptance is implied if the gift is something of value that normal person would want.
Can be rebutted.
14
d It’s possible to transfer title in a gift but retain possession of the item as a bailee or life estate holder.
i Still must have some form of delivery so that title passes, even though donor will then retain possession.
ii Not conditional, because donee has full title of the thing.
3 Causa Mortis Gifts:
a Causa mortis gift = gift given in reasonable anticipation of imminent death.
i If given in a reasonable anticipation of imminent death, the gift is presumed to be causa mortis (absent evidence to the contrary).
Assumption can be rebutted by clear intent for the gift to be irrevocable, thereby making it an inter vivos gift.
Ex. Multiple choice question where the answer is that it was a causa mortis gift and therefore not effective (automatically revocable):
a. A hands her watch to B, saying, “Because I may die when I go for my heart transplant next week, I give this to you. If I recover and I want it back, I will come over early in March and get it from you; otherwise it’s yours to keep forever.” A recovers a month later, but never takes back the watch. Three years later A dies of an unrelated illness.
ii Often termed the poor man’s will.
iii Some states do not allow causa mortis gifts if made in anticipation of suicide.
b Automatically revocable.
i Donor can revoke anytime before his death.
ii If the person recovers and does not die at the end of the episode, the gift is automatically revoked.
iii Doesn’t necessarily have to die of what he thought he was going to, as long as within the same episode.
iv Recovery, and then subsequent death by another method, still revokes the gift.
Plater’s argument: The purpose of this type of gift is to protect people who don’t have time to make a valid will. If it’s only shortly after a recovery and the person dies another way, the person still didn’t have time to make a will. Recovery definition shouldn’t apply here.
v Gift really only confirmed at the death of the donor.
vi Subsequent sale by the donee to a BFP does not prevent donor’s revocation.
vii Any act that expresses implied or express revocation revokes the gift.
E.g. subsequent will, subsequent gift of same item.
c Can include real property or personal property (probably a writing of some sort would work as delivery for real property, if that’s the best the donor could do.)??
4 Gift and Agents:
a Gift is effective upon receipt by donee’s agent.
b Gift not effective yet if only delivered to agent of donor. If donor dies before his agent delivers the gift, the gift is invalid because the agency was extinguished.
c Agency dies when principal dies.
15
d Agent / Trustee distinguished for gifts
i Ex. I give my gift to tom; john please deliver it
ii I die before john delivers → no gift because agency dies with primary
iii If I say, John you are my trustee, please give it to tom and I die before delivery, it’s a gift
Must make it very clear he is a trustee
F Trusts1 Creation: (1) Thing (2) Delivery (3) Trustee (can be self) (4) Beneficiary (5) Terms (6) Intent to
create a trust (Say “I am transferring legal right… etc” or say “I am setting up a trust”).
2 How a trust works
a The settlor/trustor (person who originally owned the corpus res [the body of the thing]) owns full title.
b He declares that he transfers his title to the trustee, who gets legal title.
i This means he owns the corpus res for the benefit of the beneficiaries, who immediately have acquired equitable title.
ii You cannot make a mandatory trust to benefit a non-human but an honorary trust could do it if trustee wants and attorney general allows it.
3 Ownership is split between trustee (legal title) and beneficiaries (equitable title)
a Trustee is bound by terms.
b If trustee dies or is unwilling, court can appoint a new trustee.
c Trustee has fiduciary relationship to the beneficiaries.
d Beneficiaries can sue trustee for mismanagement.
e Any beneficiary or the Secretary of State can call for accounting at any time.
4 Trust can be made inter vivos or through a will, creates a super agency that survives death.
a Inter vivos one’s don’t have to report to the court every year
b Testamentary trusts have to report to the court every year
5 Trust is presumed irrevocable, but can be revocable if expressly stated in terms.
6 Trust does not die at death of trustee, court appoints a new trustee.
7 Creator can make self the trustee and make trust revocable, thereby giving a gift while still retaining the right of revocability. Really an exception to IV requirement of irrevocability.
a e.g. A is dying and wants to avoid probate. He creates a trust and makes himself a trustee bound to give a watch to B. This is a constructive delivery to the trustee; it’s valid even after A dies and before he gives the watch to B because the court will appoint a new trustee.
8 C’y pres doctrine: If not possible to carry out terms of trust, then should reform terms so that the trustor’s intent is maintained as closely as possible, but without violating trustor’s intent.
a If trust’s terms are impossible to fulfill, the beneficiaries/trustee can go to court to seek an action that would allow to adhere to the purpose of the trust as closely as possible, even if the express terms aren’t fulfilled.
9 Since trusts are an equitable mechanism, courts balance all the interests, including the public interest.
16
10 You cannot mingle your own finances with the trust. You can invest, but you cannot invest in anything risky. You have very high duty.
11 Spendthrift trusts A trust that will pay a beneficiary income but will not cover his debts. (prevents creditors from access to the trust)
G Wills1 Wills are no good until you’re dead. While you’re alive, you can do whatever you want with your
property. Property at the moment of your death (snapshot – but can include things that you may still have legal title to (illegally transferred, etc)) will be doled out to beneficiaries under last valid will.
2 To make a will you must
a Know who you are
b Know what your assets are
c Know whom you’d like to favor (who your loved ones are).
d Have a logical design naming how assets are distributed (my farm to Joe).
i Delusions that affect the above will invalidate the will, but others are okay.
Pendarvis sees beeves in the trees. Does not invalidate will b/c does not affect the 4 reqs.
3 Codicil – adding on to a will (this does not actually negate the will if explicitly done).
4 Fraud on widow’s share (helps spouse claim fair share of marital assets if willed away).
VI Cutoffs to a Chain of TitleA Once a person has a property right, that chain of title continues on forever, through
various links, unless it is cut off.1 A cutoff DOES NOT preclude liability in torts, contracts, etc.
B Adverse Possession1 See above under transfer of title.
C Prescriptive Easement—(Not a Cutoff)1 See above under transfer of title
D ABANDONMENT:1 TOO voluntarily abandons title to his property forever.
2 Requires:
a Intent to abandon, coupled with
b Act that expresses the intent.
3 After abandonment, owelty applies the first person to come along can have title of the property.
4 Abandonment of land must be done in writing.
E ACCESSION 1 See above under transfer of title
F OTHERS:
1 Escape of ferae naturae
17
a See above under Ferae Naturae
2 Confiscation
a Government can confiscate property that was used for illegal purposes, cutting off title, even if TO was not the person who used it for the illegal act
b Ex. Police bust a guy who is picking up a prostitute in his wife’s car. Police took car. This was a deodand—something which is used in a crime becomes only god’s → involuntary abandonment
3 Destruction
4 Treason
5 Conquest (if indigenous)
6 Confusion: mixing of property with another’s property, so that they are no longer distinguishable.
7 Bona fide purchaser with cutoff exception—see above for details
a Bona fide purchaser does not usually cutoff title but does under the following exceptions:
i Accession
ii Confusion
iii Indicia of ownership / apparent authority
iv Entrustment (UCC 2-403(2))
v Fraud (or bounced check)
vi Foreseeable specific negligence (maybe—Plater’s argument)
8 The law of partial bona fide purchasers with an exceptional cutoff (incomplete BFP):
a Plater (assuming he is a watch dealer) has bailment of Garvey’s watch. He asks Matt (who is BFP) if he wants to buy the watch for $100. Matt only has $40. Matt gives $40 to Plater, takes possession of the watch, and offers to pay $60 tomorrow. Garvey storms in and says “That’s my watch!” The $60 payment tomorrow would not be in good faith since Matt now knows the watch is not Plater’s to sell. If Matt had paid $100 up front, Garvey’s rights are cut off.
i Damages:
Equitable remedy: If something can be cut 60/40, do that. Here, no good.
Garvey has $60 worth of interest in watch, Matt has $40 worth of interest in the watch. One buys the other out.
ii If watch FMV = $1000, Matt only has a $40 (4%) share (FMV – not a 40% share)
Actually , Matt may have no rights b/c he might be on inquiry notice that watch was not transferred in good faith (way below market value/no longer innocent). Added by me**.
iii If watch FMV = $35, Garvey’s rights are cut off (complete FMV has been paid).
Estates in LandI. Fee Simple Absolute
A. There is no such thing as absolute property rights → Fee Simple is the closest you can get, but it is still very short of absolute rights
1. Owner is privileged do almost anything he wants with the land (cannot create a nuisance, harm others, interfere with the property rights of others [including the public trust lands], violate laws, make certain
18
exclusions, etc.). Property rights are not absolute. Necessity, private or public, may justify entry upon the lands of another. (State v. Shack). No right to exclude public works etc.
B. Created: “To A” or “To A and his heirs”
1. Heirs don’t actually have anything. A living person does not have any heirs.
C. Characteristics:
1. Absolute ownership of potentially infinite duration
2. Divisible (free to divide up)
3. Descendible (free to pass to heirs or in will)
4. Alienable (free to sell for give away – White v. Brown)
D. No future interest.
E. Right to exclude (Jacque v. Steenberg – person delivers mobile home by driving through prop).
1. Property owners must have right to exclude others from the property.
2. Even if no actual damages when someone trespasses, court can impose punitive damages to deter others from trespassing and to protect the property owner’s rights.
F. Exception to the right to exclude:
1. Cannot exclude those who are there to protect the government rights.
2. Other limitations to right of exclusion include firefighters/police officers with probable cause, discrimination because of civil rights.
a) Potentially cannot exclude those coming on the land with the direct purpose of helping the well-being of people on the land (like volunteers assisting migrant workers). (STATE V. SHACK)
(i) Prevents a landowner from controlling the destiny of the people working for him.
b) Public accommodations like restaurants cannot discriminatorily exclude others.
(i) There’s a right of access of the public to these areas.
II. Life EstateA. Create: “To A for life.” OR “To A for the life of B” (life estate pur autre vie)
1. Must be measured in explicit life-time terms, and never in terms of year.
B. Characteristics:
1. NOT descendible if measured by A’s life.
2. Alienable, but can only sell life estate- worth much less than the full estate.
C. Future Interest:
1. Yes. If held by O reversion. If held by third partyremainder/executory interest(?).
D. Rights of the Life Estator:
1. Life tenant is entitled to all ordinary uses and profits of the land (estover).
a) E.g. Cannot open a coal mine on the property unless it was previously already being used as a coal mine. BUT can cut down trees and things like that, but only for OWN reasonable use.
2. Can lease, but any lease would necessarily end at the end of life estator’s life.
19
3. Can sell, but any sale would revert to the future interest holders at the end of the life estator’s life.
4. Can sue to recover harms to the life tenancy, but limited to harm to life estator’s use of property. (Whereas bailee can sue to recover the value of the whole bailed item.)
5. Watch out for fact pattern in which justice may require extending extra rights to LE holder (Baker v. Weedon). Interests of ALL parties must be taken into account.
E. Cannot commit WASTE: Life tenant must not do anything to harm the future interest. 3 Kinds:
1. Intentional Waste: overt conduct that causes a decrease in value. Synonymous with destruction.
2. Negligent Waste: decrease in value due to life tenant’s negligence.
3. Permissive Waste: similar to negligent waste. Occurs when land is allowed to fall in disrepair.
a) Life tenant simply must maintain premises in reasonably good repair.
4. Ameliorative Waste: acts that enhance the property’s value (not actually waste unless it is shown that the acts substantially changed the principle use of the land).
F. Remaindermen = those who own the remainder of the property, after the present possessor (life tenant).
1. Where there are future interests related to a piece of land, the present possessor’s rights as to that land are limited because the present possessor does not have full title.
III. Concurrent OwnershipA. Tenancy in Common
1. Created:
a) By deed, will, or operation of law.
b) Only unity of possession needed.
2. Characteristics:
a) Each cotenant owns an undivided fractional part of the whole, and each has a right to possess the whole (they may determine any suitable possessory agreement on their own).
(i) If they disagree regarding possession, any tenant may file for judicial partition.
b) Each interest is descendible, divisible, and alienable.
c) Although there is a presumption for equal shares, TIC can share unequal interests in the TIC.
(i) TIC can also have different types of estates (LE, etc).
d) No survivorship rights. At death of each tenant, his share passes by will or otherwise.
e) Common law presumption for tenancy in common today, unless otherwise stated.
f) A commodity that each owner can buy and sell.
B. Joint Tenancy (with rights of survivorship):1. Tenants together are regarded as a single owner; each owns the undivided whole
a) Created only when expressly stated; presumption is tenancy in common. “To A & B as joint tenants with right of survivorship, and not as tenants in common.”
2. Creation
a) Only be deed or will; intestate succession is presumed TIC.
20
b) Must have Four Unities:
(i) Time- must take interest at the same time.
(ii) Title- must take interest by the same title (must be conveyed to both)
(iii) Interest- each must have identical, equal interests.
However, if different sums were paid to buy the parcel, then at partition by sale (equitable action) the court may divide the sale proceeds proportionally to amounts paid.
(iv) Possession-each must have identical rights to possess the whole (which are waivable).
3. Characteristics:
a) Right of survivorship
(i) When one joint tenant dies, nothing passes to the surviving tenant. Rather, the estate simply continues in the survivor, freed from the interest of the decedent (which extinguishes at his death).
Exception: if one JT murders the other, it is treated as severance and becomes TIC.
Where it’s unknown who died first, 1/2 is divided as if the first survived and the other half as if the second survived.
(ii) Joint tenancies are thus attractive because they avoid probate.
b) Joint tenants interests:
(i) ARE Alienable (but will sever unless all convey together)
(ii) NOT Divisible
(iii) NOT Descendible (because of right of survivorship)
4. Severing a joint tenancy:
a) Sale:
(i) Either can freely sell his interest, and the transfer results in a severance of the joint tenancy and a creation of a tenancy in common with the old and new owner (unless there are multiple owners, in which case they still remain in a joint tenancy among each other and together in a tenancy in common with the person who sold).
b) Conveyance to one’s self severs as well
The severed party becomes a tenant in common
c) Partition: dividing up to separate interests (see below)
d) Any act destroying one of the four unities.
(i) Mortgage? Lease? Depends on how you look at it (split of title issue), but modern law is trending toward a mortgage or lease NOT terminating the unity of interest.
C. Tenancy by the entirety:1. Created:
a) in a presumption state, when land is conveyed to two people who are husband and wife at the time of conveyance without specific wording to the contrary
b) Husband and wife take property as a fictitious single person with the right of survivorship.
c) Must have all same four unities as joint tenancy, plus fifth unity of person.
2. Characteristics:
21
a) Highly protected form of co-ownership.
b) Individual undivided interests cannot be transferred without the consent of both spouses. cannot be severed unilaterally.
c) Creditors of only one spouse cannot touch the property.
Plater: The creditors can wait to see if the one who owes them money survives the other spouse, and then seize the property.
3. Severance:
a) Automatic upon divorce because it destroys the unity of person. Cotenants become tenants in common or, in some states, joint tenants.
b) Can also be done if they convey (or partition) together
D. RELATIONS AMONG CONCURRENT OWNERS
1. Ouster—Illegal
2. If one tenant excludes the others from the possession or enjoyment of the whole or any part of the land, his conduct is an ouster, regardless of how much each contributed to the purchase price.
(i) Then, adverse possession begins running on the ousted cotenants.
(ii) Ouster must be pretty clear; conduct of the ousting cotenant must give adequate (not necessarily actual) notice of the adverse claim to the others.
Cotenants are assumed to be possessing for the benefit of all the others.
(iii) A request by one tenant to enter and then a denial of entry is an ouster.
b) Sole possession of the land by one tenant, without more, is not an ouster.
(i) There must be a repudiation of the rights of cotenants and a claim of sole ownership. A tenant can assume possession by a cotenant isn’t hostile to his interests.
3. Partition—SOUNDS IN EQUITY—make equitable arguments
a) A joint tenancy must be severed before it can be partitioned.
b) Can covey to a friend and have friend convey back to sever (or convey to self).
c) Partition in kind = physical split of the property, adhering to the balance of equities.
(i) Preferred in most jurisdictions (Delfino v. Valencis). Sold only if physical partition would result in great prejudice to an owner, or if a physical partition is nearly impossible (many owners).
d) Partition by sale = property is sold, and the proceeds are split according to the shares.
(i) Forced sale by the court, if in the best interest of all. Proceeds divided up proportionally. Used if land doesn’t lend itself to any easy or ready physical division. Burden of parties to demonstrate that partition in kind would not benefit all the most.
(ii) This used to be the presumption, and allowed black families in the south to lose their property rights.
e) Sneaky trick: JT/S tenant wants to profit to the max. He executes a secret deed severing his share into tenancy in common. If he dies first, his executrix produces the deed and his heirs get his share. If someone else dies first, he burns the deed and takes his larger share of JT/S.
4. Use of the land
a) Leases and sales
22
(i) Each cotenant (except in a tenancy by the entirety) has the power to sell, mortgage, or lease the undivided fractional interest. If the cotenants can’t agree, partition.
b) Rents and profits
(i) From third parties’ possession of land: Must be split between the joint owners
This includes any profits made from letting others use the property, including if it’s a business (e.g. casino or theater).
Where the occupying tenant depletes the land (such as by using natural resources), that tenant must split the profits with the others.
(ii) A possessing cotenant does not have to pay rent or a share of the profits to the other cotenants for his non-depleting use of the land (such as growing soybeans; aspect of the possessing cotenant using his labor on the land here).
Does not include profits that one cotenant receives by use of his own labor, if it does not involve letting others pay to use the land (e.g. crops, dry cleaners).
c) Carrying costs
(i) Taxes
There is no enforceable duty for all cotenants to split the costs of taxes
Someone better pay them, or the property will be seized
Only good way to get money out of your cotenants is to partition (or if JT/S, sever and then partition) and argue that your expenditures should be credited to your share.
(ii) Repairs to the property
Necessary repairs to the property will be credited to the cotenant who paid for them in any partition action.
Necessary repairs = to keep the property in the same condition it was in.
Not necessarily; unclear; Plater says no.
Repairing cotenant enjoys a right to contribution for necessary repairs provided that she has told the other cotenants of the need for the repairs
(iii) Mortgage interest payments.
Each must pay fair share
d) Cost of improvements
(i) “One tenant’s improvement could be another’s nightmare.”
(ii) During the life of the cotenancy, there is no right to contribution for “improvements.”
(iii) But, at partition, the improver gets a credit equal to any increase in value caused by her efforts.
Where the property is sold instead of physically divided, the improver might receive the part of the proceeds attributable to the improvements, over and above the share otherwise due him. (shaky ground here)
(iv) Improver bears full liability for any decrease in value caused by her efforts to improve.
e) Waste:
(i) Cotenant must not commit waste: intentional, negligent, ameliorative???? Really?
(ii) Cotenant can bring an action for waste during the life of the cotenancy, doesn’t have to wait until partition.
23
f) Scenario—Accounting for benefits, recovering costs in co-ownership pg 309
3 children grow up. 2 leave and one stays on the farm for 25 years and fixes it up and works and lives on farm. You’ve made 85,000 in crops over last 25 years.
One of the co-tenants comes back and wants to move in and wants share of profits. Has right to stay. No right to past crops profit. But if they want to farm they get to. At partition, her investment into the common property would be taken into account in equitable division. She can build barn but cannot demand they pay. She should get the barn credited at partition. If she rents a bedroom to a third party, that must be divided.
If she builds a casino on farm and people come, she cannot share the loss, but must share the profits (it’s not like a crop but is like a rental). After 25years she claims adverse possession but looses because it is not adverse unless she has committed an ouster more than 21 years ago.
E. Joint tenancy bank accounts—not sure if we covered this1. Common option because then the property passes on death without a will.
2. Considerable misunderstanding possible between what the depositor intended and what a joint bank account can mean.
a) Some depositors might create the account to allow another to conduct his business with it—a convenience account.
b) Some depositors might create the account with the intention that it is payable on death to the other cotenant, but not usable during life.
c) Banks usually just offer all-purpose joint accounts to mitigate their liability.
F. Marital Property Rights1. Married Women’s Property Acts
2. Dower = 1/3 share in life estate of real property that was owned in heritable fee simple at some time during the marriage (even if it was owned and later sold during the marriage so long as both spouses didn’t sign the sale). Free and clear of all debts (so could be more than forced share).
a) In a dower state, you would need to check and see if spouses had signed property sales if you are doing a title search from scratch
b) divorce ends the right of dower
c) now only in 5 states
d) it applies to husband as well
e) it is terminated upon divorce
f) a 1/3 life estate can be converted into cash
g) Clawback: Real property owned during that was sold w/o wife’s signature can be clawed back.
3. Elective share
a) Created by statute, not common law
b) Gives 1/3 fs in all property (personal and real), but is subject to debt
4. Forced share = by statute; typically 1/2 or 1/3 of the entire estate, including land and money, (if there are no children probably 1/2) after debts. (If kids, probably about 1/3).—percentage depends upon statute
a) common law system
b) an option? regardless of what the will says
24
5. Fraud on the widow’s share: gifts made intending to defraud wife—constructed trust where recipients of gifts became trustees of trust with wife as beneficiary of 1/3 and terms of trust were to convey 1/3.
a) If husband gives gifts away intending to defraud wife, the gifts will be put into an involuntary constructive trust. Wife is 1/3rd beneficiary trust.
6. See Tenancy by the Entirety and Joint Tenancy above
7. By Will
a) Subject to debts
8. Homestead Exemption: in most states where you get to keep part of land up to a certain value (not including value of fixtures though fixtures are included in protection)
a) Most states allow the spouse to choose where the $20,000 of land goes, so can choose the property under the house to take the house as well.
9. Community Property
a) see 2L outlines and Gilberts. Don’t think we covered it
b) minority system where each spouse owns half of all property acquired by the couple during marriage (Gilberts says earnings)
c) More common system is that each owns what they acquire separately
G. Divorce 1. Property acquired during the marriage is distributed equitably. Presumption toward equal
distribution.
2. Property can be redistributed from the title holder to the other spouse, on the assumption that the marriage formed a kind of partnership (like community property systems here).
a) Must consider:
(i) Need
(ii) Status of living (maintenance)
(iii) Contribution
(iv) Length of marriage
Shorter marriages less likely to result in much redistribution.
3. Alimony
a) Rehabilitative one who has more money than the other pays the other for awhile (goal is eventual financial independence of the parties).
b) Maintenance spouse receives money from the other because she won’t, even with job training, be able to work to survive at a reasonable level.
c) Reimbursement not a common arrangement; reimbursement over time for what a spouse contributed to a marriage, such as support for a graduate degree.
4. Prenuptial agreements—unless coercive, trumps all
a) Not enforced if it wasn’t executed voluntarily, the agreement is unconscionable (such as because the party didn’t have adequate notice of the other’s financial assets).
5. What is considered marital property
a) Most states: Property has to be tangible and have an actual value.
25
b) Exceptions in some states
(i) Graduate degrees, even though made through the marriage, aren’t property.
Some states: Spouse with the graduate degree obtained during marriage might have to reimburse the other.
Wife wants back her share of increased earning capacity from the MBA that he paid for. Court says this is not marital property. In NY, case would go other way.
An education (NY considers property, other states consider it for equitable distribution)
(ii) Celebrity status is a marital asset, even though that asset is based on an estimated value.
(iii) Goodwill of business that involved contributions by both spouses.
(iv) A few states: The contribution of one spouse to another to the career or career potential of the other can be a factor in equitable distribution of the property
Landlord-TenantI Leasehold Estates
A Basic Definition1 A temporary transfer of possession of real property for either a determinate or an indeterminate
period which will revert to the original owner when it ends
B 4 LEASEHOLD INTERESTS:1 Tenancy for Years (or for a fixed period):
a Lease for a fixed, determined period of time
i Period can be any length of time.
b When termination date is known from the start, is a tenancy for years.
c No notice is necessary to terminate, terminates on own at end of term (and not earlier).
d Term of years greater than one year must be in writing (statute of frauds).
e Alienable on both sides unless there’s a provision to the contrary.
i Tenant can assign lease; landlord can sell property/reversion to another.
f Heritable- does not end at the death of either party.
2 Periodic Tenancy or Period to Period:
a Ex. month to month
b Continues for successive or continuous intervals, until landlord OR tenant give proper notice of termination. (e.g. “To T for month to month”)
c Notice must be given to terminate a periodic tenancy (or to raise rent):
i At common law, notice must be given at a time equal to the length of the period of the lease before the party wishes the tenancy to end (and must state that it ends on the proper last day of a period).
ii Exception: if tenancy is from year to year or greater, only 6 months notice is required.
iii landlord can raise rent or throw you out, must give notice a full period ahead of time unless year to year, then half a year ahead of time and it must fall at the day you pay rent (the start of the financial month)
26
iv Mailbox rule does not apply in property—month requirement doesn’t start until letter is received
d Presumption in most jurisdictions that an ambiguous lease is a periodic tenancy.
3 Tenancy at Will:
a Tenancy for no fixed period or duration. (e.g. “To T for as long as L or T desires.”)
b Not assignable
c May be terminated by either party at any time, at least theoretically (if only terminable by the tenant – life estate determinable (subject to payment of rent) – Garner v. Gerrish).
i if not paying regularly or at all
ii mutual consent to the tenancy and continues thereafter
iii it can be ended by either party by expressing intent or death of landlord, or sale of property, or death of tenant (death does not terminate other leases)
Do not have to give formal notice of termination
In some states, by statute, a reasonable demand to vacate or quit premises is typically required.
d tenant only gets a reasonable period of time to move out (3 days maybe)
e if tenant begins paying rent regularly, it gets converted to a tenancy from period to period because courts don’t like tenancies at will.
4 Tenancy at Sufferance (holdover):
a Created when T has wrongfully held over past the expiration of the lease.
b No right to renew, no right to demand change in rental price.
i Landlord owes you less care because you are there illegally, but still owes some because you entered legally
c Permits the landlord to recover rent from the holdover tenant.
d Short-lived: lasts only until landlord either evicts tenant or elects to hold tenant to a new term.
e If landlord accepts payments of rent, it can be an implied acceptance to the creation of a new periodic tenancy, usually for whatever interval the rent it paid for.
f Not a trespasser but a tenant in sufferance until after eviction process, when they become a trespasser.
C The lease1 Both a contract and a conveyance. so draws on contract law and property law.
a Since it contemplates a continuing relationship between parties, may be quite lengthy.
2 Some leases are required to be recorded with the government.
3 Typical provisions in a lease
a Specifies rent to be paid and how often.
b Specifies what services the landlord will provide and what the tenant is responsible for.
c Defines what happens in case of accidental destruction of the property, etc.
d Tenant might agree to use the land for a specified purpose and not to sublet or assign.
e Tenant agrees to surrender the premises in good condition, apart from wear and tear.
27
II Old common law tenant landlord relations
Rights Duties
Tenant -right to present possession
-to defend
-to exclude
-not to be evicted unless waste (treason against landlord)
-to quiet enjoyment
-To pay rent
-not to waste the reversion (the value?)
Landlord -To receive rent
-To enter at reasonable times for inspection for waste
-To give right to present possession
- not to breach quiet enjoyment—if you do, they can stop paying rent—it’s an eviction
-probably to disclose deadly latent defects
A. RIGHTS OF THE TENANT/CORRESPONDING LANDLORD DUTIES1. Essence of landlord duties: to assure the tenant a right to possession and then leave the tenant
alone. not much!
2. Tenant right: Right to present possession
a. Can exclude others.
b. Corresponding landlord duty: To give the tenant the right to present possession.
i. This means the landlord must have legal title to the property.
ii. Depending on statutes, not necessarily actual possession (though this is the trend).
3. Tenant right: Right to defend
a. Against nuisances, breaking and entering, etc.
b. Corresponding landlord duty: NO duty to defend the property or disclose defects.
i. This means caveat emptor applied in a big way to tenants.
4. Tenant right: Right not to be evicted
a. Unless the tenant does something that violates the lease.
5. Tenant right: Right to quiet enjoyment from the landlord
a. Only active commissions of the landlord or his agents—such as running a pack of horses through the tenant’s field.
b. Corresponding landlord duty: Not to violate tenant’s right to quiet enjoyment.
i. Warrants that tenant’s possession is free from interference by the landlord , third persons acting under his authority, or his instrumentality.
Something active; not simply the landlord’s omission (pre-Javins?)
ii. Implied promise inherent in the tenancy itself, so not a contractual right.
6. Tenant DOES NOT have a right to habitable premises.
28
a. Landlord had NO duty to repair the premises/ensure it was habitable at all times.
i. Exception: Courts were willing to say that short-term, furnished leases had a warranty of habitability.
What spurred this: short-term resort rental housing that tenants wouldn’t get to walk before agreeing to rent.
Most residential leases are longer, but not long-term; still didn’t apply to them.
b. Landlord TORT DUTIES CHECK THESE
i. To disclose latent defects known to him
But doing so puts the burden of fixing them on the TENANT, unless the tenant pretty literally had no time to have the defect fixed.
ii. Not to repair negligently
Only if the landlord chooses to repair. Landlord thus has no incentive to repair.
iii. To maintain common areas?
iv. Public use
If you rent premises knowing it’ll be used for commercial, public use and you know about a latent or evident defect, you’re liable.
B. RIGHTS OF THE LANDLORD/CORRESPONDING TENANT DUTIES1. Landlord right: Right to receive feudal duties so long as the estate exists.
a. Had to be paid even absent a contract because implicit in the creation of a tenancy. (?)
b. Corresponding tenant duty: To pay feudal incidents (rent)
i. Originally, the tenant’s estate was in the land, not the building, so even if it burned down, rent still had to be paid.
2. Landlord rights: Right to reversion & right to inspect reasonably
a. Landlord can check to ensure the reversion isn’t being wasted.
b. Corresponding tenant duty: Not to waste the reversion. CHECK THIS SECTION.
i. Voluntary (affirmative) waste tenant liable
Person intentionally or negligently damages the premises. Includes substantially altering or exploiting the property.
ii. Permissive waste tenant liable
Tenant neglects a duty imposed with respect to the property, such as the duty to make minor repairs.
Not really much of an issue now because of landlord’s warranty of habitability.
iii. Ameliorative waste An affirmative defense to a charge of voluntary waste; tenant still liable if it substantially changes the character of the property in a way the parties could not have foreseen.
Still has damages or changed the character of the premises, but has done so in a way that increases the value of the thing. There’s a good argument that the tenant shouldn’t be liable (a form of voluntary waste).
More alteration probably will be permitted the longer the lease.
What is actually ameliorative is a matter of judgment.
29
You are liable if you have changed the fundamental nature of the property (turning house into bar)
C. COMMON LAW REMEDIES CHECK THIS SECTION FOR MORE!
1. Landlord remedies
a. Eviction: Landlord could evict the tenant without having to justify his actions.
b. Damages for waste on the reversion.
2. Tenant remedies
a. Eviction: If a tenant was wrongfully evicted, the tenant didn’t have to pay rent and may sue to recover possession, or he may treat the lease as terminated and sue for damages for breach of the covenant of quiet enjoyment.
i. Actual deprivation of the possession of the whole of the property
ii. Partial deprivation of possession of part of the property; don’t have to pay rent for that portion of the property.
b. Constructive eviction added in early 19th century
i. Landlord by conduct of omission (now) or commission (then) failed to perform a duty, substantially depriving the tenant of the beneficial use and enjoyment of the premises.
Doesn’t matter that there’s been no ouster; the landlord’s conduct is deemed to be equivalent to depriving the tenant of physical possession.
ii. Tenant must: (1) give notice to the landlord, (2) provide the landlord reasonable opportunity to correct the problem, and (3) if not corrected, surrender possession of the property within a reasonable time.
Note: to initiate this remedy, the tenant had to leave the property!
iii. Doesn’t apply to tenancies at will; either party could end the lease at any time.
III Relations Between Landlords and Tenants: Modern LawA Tenant’s right to habitable premises
1 Evolution to an implied warranty of habitability
a Field Codes included a provision that the landlord had to render the premises fit for occupation throughout the term of the lease but this could be contracted around.
b Leases started to be viewed more like contracts.
c Some cities started to create housing codes. Yet these didn’t really help because only the city could enforce them. no remedy specifically for tenants to enforce.
d Just before JAVINS Brown v. Southall
i The premises had housing code violations before the lease was signed, so the whole lease was void. Tenant didn’t have to pay any rent.
e Just before JAVINS Edwards v. Habib
i Habib had evicted Edwards because she complained and tipped off the city that the building was in violation of the housing code. He said he kicked her out in order to fix the property.
ii Retaliatory eviction
An eviction within 6 months of a tenant’s complaint is presumed to be retaliatory. Landlord has no right to evict because of the complaint; this would violate the tenant’s First Amendment right to petition the government for redress.
30
A rebuttable presumption that places the burden of proving otherwise on the landlord. Difficult to prove in practice, so landlord bears the loss in doubtful cases.
F JAVINS (1970): Creation of an implied warranty of habitability
i Lower court (in SAUNDERS) had rejected the idea of an implied warranty because they thought the legislature, not the judiciary, should create citizen remedies.
Also: If comes from the judiciary, you’ll get many definitions of habitability, eliminating the predictability of duties for the landlords.
ii New, pervasive idea at the time: Maybe the best enforcer of regulations/codes are those being protected by them.
2 Warranty of habitability defined
a There’s an implied warranty of habitability in every lease that cannot be waived, even expressly. It’s not implied from the intent of the parties; it’s implied from the nature of modern housing itself, even absent a code.
i Tenants no longer have to claim constructive eviction.
ii Extent of the warranty isn’t the same in every jurisdiction.
iii Bases/reasoning for this holding:
Traditionally, what was important in a lease was the land itself. Now, the structure is most important because it’s home, shelter, etc.
Trend toward interpreting leases as contracts, and UCC, etc. give implied warranties of fitness for purpose/usability.
Landlord-tenant relationship is closer to commodities situation, not feudal situation. Tenant doesn’t invest enough in the building to make it reasonable for him to repair it.
Implied warranty though housing codes.
b Tenant’s duty to pay rent is dependent on the landlord’s performance of his duties.
c Limitation: Only applies to residential leases.
i No implied warranty on commercial leases; same policy justifications for making a warranty in residential leases don’t apply here.
d Not adopted in all jurisdictions.
3 Determining whether habitability has been violated
a Look to the housing code.
i Any substantial violation is prima facie evidence that there’s been a breach.
ii Housing codes regulate such things as: structural elements (walls, roofs, etc.); facilities (toilets, sinks, stoves, outlets, etc.); services (heat, water, electricity, etc.); and number of occupants per dwelling or bedroom.
b Overall standard (even in absence of a code): Does the defect have a substantial impact on the health and/or safety of the tenant?
i A few minor violations will not be determined to be a breach de minimus non curat lex (“of little things the law will not take notice”)
4 Why is this better than the remedy of constructive eviction?
a You’d have to leave the property to take advantage of a constructive eviction.
31
b Under constructive eviction, there’s no guarantee you’d win; you might, so you wouldn’t have to pay. But if you lost, you had to pay for the old place as well as your new place.
5 Setting a claim for a violation in motion
a Notice to landlord
i Written notice is best.
b Declaratory judgment
i Tenant would bring this as a preemptive strike against the landlord.
ii Instead of waiting for the landlord to initiate summary proceedings for eviction because of rent withholding, etc., the tenant can go to court asking that the court declare the landlord has breached the implied warranty of habitability.
iii Then, the tenant could seek a remedy from the court (likely repairs absent egregious circumstances).
If the repairs are then not completed in a reasonable time, they’re violations.
iv Or, the tenant could get the same remedies he’d have under summary process: rent abatement, etc.
v May or may not be better for the landlord to go first; going first allows one to choose the court, the exact timing, and the framing of the issues.
c Summary eviction process very specific notice requirements
i L first serves T with a notice to quit, which terminates the tenancy.
ii L then initiates a summary process action to recover possession by serving a summons and a complaint (which states the reason for eviction and the amount of rent due).
iii L sets an entry date, by which he must file papers with the court.
iv T then has time to file an answer, raising the defense of a breach of the warranty, and also raising any counterclaims (which are only permissive).
v Pretrial motions
vi Discovery (interrogatories, requests for admissions, and requests for documents)
vii Trial and entry of judgment
viii Appeal
ix If L wins, execution, notice of eviction, and actual eviction by sheriff.
d Mediation (by consent of both the L and the T)
i Different from arbitration because the decision here is reached based on cooperation and isn’t binding until the parties come to an actual agreement.
6 Tenant’s remedies for a breach
a Tenant does not have to abandon the premises to get some remedy.
b Constructive eviction – substantial interference w/ use and enjoyment (objective).
i Tenant’s right to terminate the lease is said to rest on the implied agreement of the landlord to maintain the premises—upon which the tenant’s promise to pay rent is dependent. The failure of the landlord to perform excuses the tenant from doing so.
Tenant ceases to be liable for future rent (but still pays for the time there).
ii Tenant must leave the premises to get this remedy.
32
c Rent withholding
i Landlord must have notice of the defects (plus a reasonable time to fix), and the defects must exist while rent is being withheld.
ii Tenant withholds rent, so the landlord brings an eviction action. The tenant then can assert a breach of the warranty as a defense.
iii The amount to withhold is difficult to configure should be based on some rough comparison to other similar apartments.
Should be able to present the landlord/court with at least some basis for the percentage of the rent withheld.
A potential method of calculation: The cost of fixing the problem, prorated over several months.
iv Safer to pay the amount withheld into an escrow account in case the T loses.
d Rent abatement
i If a tenant asserts a breach of the warranty as a defense in a summary proceeding, he may get rent abatement. A tenant is liable only for the fair market value of the premises in its uninhabitable condition.
e Damages
i Compensatory = awarded for all the annoyances, discomfort, suffering, actual moving costs, etc., that the tenant experienced during the lease.
ii Punitive = potentially awarded where the landlord has wantonly or willfully disregarded the tenant’s health and safety.
f Injunction or specific performance
i Tenant could seek a court order requiring the L to fix the problem.
g Repair and deduct
i T pays to have the premises repaired and then deduct the amount paid from rent.
h Housing code remedies
i Anything specifically provided for in the housing code.
i Landlord’s tort liability
i Primarily for any sort of negligence, including in how repairs are done, treatment of common areas, failure to disclose latent defects, etc.
j Consumer protection laws
i Some states might provide that breaching the warranty is an unfair or deceptive trade practice in the sale of goods or services to consumers, entitling the T to damages. (triple the damages in Mass.)
B Additional duties and remedies of the landlord1 Duty concerning common areas
a Entry ways, hallways, stairways, elevators, and other areas available to all the tenants or tenants and their guests.
b Landlord must exercise reasonable care to maintain the common areas in a reasonably safe condition.
2 What does a landlord do when a tenant breaches some duty?
33
a Can seek to recover possession from the tenant
i Self-help physically barring the tenant from entering. Not allowed much anymore.
ii Summary process allows for relatively quick judicial proceedings for landlords to evict tenants (see above)
b Can seek back rent and potentially future rent
3 What does a landlord do when a tenant stops paying rent and moves out too early?
a Accept the tenant’s surrender of the lease
i Surrender = a premature ending of the relationship by mutual agreement; tenant gives up the premises, and the landlord accepts. L is free to lease the property to someone else; still can sue the tenant for damages incurred during the lease.
b Re-lease the premises on the tenant’s account
i L doesn’t accept the T’s surrender but attempts to re-lease the premises. T still liable for rent for the rest of the lease term, reduced by the amount the next T pays.
c Sue for damages
i Based on the T’s anticipatory breach of the whole lease; technically, all rent cannot be due at once. But if the L demonstrates the T will never pay again, he can get damages for the whole rest of the lease term. Yet:
d But: Duty to mitigate damages
i When a tenant leaves in the middle of a lease, the landlord has a duty to mitigate the damages. He doesn’t have to attempt to re-lease the premises; rather, if he doesn’t make reasonable efforts, the amount he recovers is reduced by the amount of damages he could have avoided.
ii General rule: If T walks out, L has a duty to mitigate, but the T owes the net loss every month of the course of the rest of the lease.
If he can find no one, the tenant is liable for the whole remainder of the lease.
If he finds someone but only at less rent, the T is liable for the months of vacancy as well as the difference between the rent T1 paid and T2 is paying.
If he finds someone at a higher rent, the T still is liable for the vacant months.
e But: Doctrine of commercial frustration CHECK THIS
i Doctrine: Purpose for which the lease has been made has been frustrated by circumstances outside the T’s control and beyond the reasonable foreseeability of the L or the T—and mitigation by the tenant is unreasonable.
ii Allows a commercial T to get out of liability to the L for the remainder of the lease, should something happen to make the business basically bankrupt.
iii Mitigation by the T means if he can reinvent his business—and doing so is reasonable—he should do so (court would be less hesitant to release him from liability on the lease).
iv Doctrine applied with hesitancy, as the mere existence of the lease isn’t proclaiming or securing the continuation of the business.
C Transfers by landlord or tenant1 Landlord’s interest
a Landlord can freely sell his interest in the property at any time (it’s a reversion).
34
i Agreements with tenants transfer as well; tenant doesn’t have to agree to the new landlord.
b Transfers of land usually are recorded at the registry of deeds, so if the landlord doesn’t know there’s an interest clouding the title, that interest can be cut off.
i But the landlord is on constructive notice for what he would have seen had he walked the land prior to purchase.
Even if the property is leased to someone the landlord was unaware of because it wasn’t recorded, the landlord can’t break the lease (unless buy out of the contract, etc.)
ii Very unlikely there would be no constructive notice, since the lessee is a store that’s operating on L1’s premises.
2 Tenant’s right to assign or subleta Many leases prohibit a sublease or assignment without the L’s permission.
i Commercial leases: The L can only have a commercially reasonable objection to the sublessor or assignee focused on that particular piece of property.
ii Many courts say the landlord can reject a residential assignment or sublessor arbitrarily because he has substantial interests in controlling to whom his property is leased.
b If nothing in the lease prohibits assignment or subleases, the lessee may do so freely, reaping all the profits.
c Sublease = something less than what the original tenant has, so when it comes to an end, it reverts back to the original lessee.
i Implication: L has both privity of contract and privity of estate with the original T; L has nothing with the sublessor.
ii If the sublessor fails to pay rent, L would sue T (might add “and any who hold on behalf of him”), who remains liable to the L for rent. (T would implead sublessor).
d Assignment = all of what the original tenant has (both physical space and time)
i Implication: L has privity of estate with assignee; privity of contract stays with the original tenant. (Landlord can sue either for rent, as both are liable).
e Dumpor’s Rule: If you give permission once, you waive having to do it again when it next applies.
i Give permission for an assignment once, give permission for it always.
ii Reason for this is to have fewer restrictions on an ownership interest; promotes free flow of business.
D (Termination of a tenancy)1 May end by mere lapse of time (tenancy for a fixed period).
2 May end by one party giving the other proper notice (period-to-period tenancy).
3 In the lease, the landlord may have the power to terminate because of various breaches by the tenant.
4 Tenant can terminate for a constructive eviction.
5 Tenant could surrender the premises (but is sueable).
E Fixtures1 When lessees leave, they take their personal property (generally everything but what was there when
they assumed possession).
2 Exception: If the personal property has become a fixture.
35
a Fixture = an item that is attached in a fundamental physical way to the property so that it becomes part of the real estate. Automatically goes to the landlord.
b Once something is a fixture, it stays a fixture, even with a provision to the contrary in the lease.
3 Certain things are irrebuttably presumed fixtures: furnaces, etc.
a Even if the tenant puts it in and there’s an agreement that it’s his, it’s still a fixture.
4 Can’t make something a fixture that isn’t (e.g., lawn chairs).
5 Exception for trade fixtures on commercial tenants who were known to be commercial tenants
a Can rip out those fixtures if they leave only reasonable damage.
F Rent Control
1 The government can impose rent ceilings.
2 BOWLES V. WILLINGHAM—not unconstitutional
a If you don’t like it, don’t rent out your apartment. No compensation.
Modern Land TransactionsI Contracts for Sale of Land
A Title in land can be transferred by:
1 Deed
2 Will
3 Intestate
B Contract for the sale of land, must include:
1 Names of buyer and seller
2 Consideration- price to be paid.
3 Description of property- location, sometimes a name is sufficient if distinguishable and recognizable in community.
4 Signature of party against whom enforcement is sought.
5 Don’t have to have a time of conveyance- jury can supply a reasonable time.
a “Time is of the essence”:
i Phrase that, if included, means that day that is stipulated has to be the closing date.
ii If not included, court will allow date to be changed for good reason.
iii Even if phrase is included, though, if seller dies, court will probably extend.
6 Must be a valid contract: offer, acceptance, and consideration.
7 Statute of Frauds: All contracts for the sale of land must be in writing:
a Exception: There can be a valid oral contract for the sale of land, but must convince in equity that it is the equivalent of a written contract, and there was reliance upon it. (Hickey v. Green)
b Doctrine of part performancesatisfied by presence of any 2 of the following 3:
i B takes possession of the land.
36
ii B remits all or part of the purchase price.
iii B makes substantial improvements to the premises.
8 Self-created failure of financing: If obtaining financing is a condition of the sale, buyer has the duty to seek financing diligently.
C Equitable Conversion:
1 From the moment the contract for the sale of land is executed, legal and equitable title in the property are split (assuming contract is valid).
2 Legal Title:
a Remains with the seller.
b Converts to personal property for the seller (monetary interest).
3 Equitable Title:
a Vests in the buyer, even though deed has not been conveyed yet.
b Buyer has the enforceable title on the land.
c Becomes the buyer’s real property.
4 If seller dies before closing date:
a Does not void contract.
b Seller’s estate will transfer title.
c Heir of personal property gets the proceeds of the sale.
d Even if contract is broken after the seller dies, the heir of the personal property inherits the property because a snapshot is taken at the seller’s death.
5 If buyer dies before closing date:
a Takers of real property can demand conveyance
b Takers of personal property have to pay for it
6 Common law required the one with the equitable title (buyer) to insure the property, but most states have passed the Uniform Risk of Loss Act, which makes the burden of insurance stay with the right of present possession (seller) until closing. (Not in most states, but Plater makes it seem like it’s all of them)
D Installment Sales Contract:
1 Seller, himself, finances the sale for the buyer (usually when the buyer doesn’t qualify for a loan).
2 Buyer pays in installments, and has right to present possession.
a Equitable conversion occurs at sale date/move in and then closing doesn’t occur until buyer has paid all of installments.
3 But, if buyer misses a payment, he is essentially evicted and house belongs to the seller, and loses everything that he put in. All payments thus far are considered mitigated damages, he gets nothing back.
4 Plater: Although you could argue that an installment contract is functionally a mortgage.
5 Who has legal title? Seller?
II Marketable Title/ Duty to Disclose
A 2 implied promises of the land contract that end the day of conveyance.
37
B Remember, real estate agents always represent the seller’s best interests and cannot do anything that would damage the seller’s interest (i.e. allow buyer to walk land and discover puddle of purple toxic waste). This is changing now, but is still worth being aware of.
C Implied Promise of Marketability:
1 An implied promise that on the day of conveyance (not the day contract was executed) the title to the land is marketable, in other words, it is sellable by the buyer, free from encumbrances, and clear from any defects. Buyer can walk if there is a cloud on the title.
2 Marketable title: title that is reasonably free from doubt that a reasonable prudent purchaser would accept it when guided by competent legal advice. Does not have to be a perfect title.
D What constitutes a defect in the title (not land – toxic waste doesn’t count) such that violates the implied warranty of marketability? (cloud on title):
1 A problem with the title such that a reasonable attorney assessing it beforehand would advise against purchasing the property (that there is no reasonable probability that the buyer will be subject to a lawsuit). Not any defect constitutes a violation of the implied warranty of marketability.
i Marketable title is based on the circumstances and expectations of the legal community. No clouds per se.
2 Violation of a statute or other public regulation.
a But usually only if such violation is eminently enforceable.
b E.g. Toxic waste in the land, existing zoning violations (not restrictions)
c Public regulatory violations easier to get out of because of judicial respect for property rights.
d Note: environmental problems are merely defects on the premises, not on the title, unless the EPA files a lien against the property to enforce its determination of a violation.
3 Violation of private restriction/encumbrance: violation of covenant, trespassing (house built on neighbors land).
a Create a bigger cloud on title then public regulatory violation.
4 Outstanding mortgage on land (unless proceeds from sale can wipe out)
5 Unrecorded easement
a Easements that decrease the value of your property (easement for neighbors)
b NOT easements that are visible or known to the buyer (easement for power company to service)
6 Action by the seller that diminishes the salability of the property by the buyer, may create cloud on title. (more based on contract law, bad faith.)
7 A self-created hardship by the buyer does not count as a cloud on the title. (e.g. the reporting of an EPA violation.)
E 3 circumstances that render title unmarketable (bar/bri):
1 Adverse possession: According to the majority rule, seller must be able to provide good title, meaning that if even a portion of the title resides in adverse possession, title is unmarketable.
2 Encumbrances:
a Marketable title means an unencumbered fee simple.
b Servitudes and mortgages render title unmarketable, unless the buyer has waived them (which the buyer does in most circumstances).
3 Zoning: Title is unmarketable if the property violates a zoning ordinance, if not PENCU
38
F Remedy for breach of implied warranty of marketability:
1 Before conveyance:
a Based on the implied warranty of marketability, therefore treated as breach of contract.
b Buyer can walk, rescission of contract for sale of land.
c One-way promise though, if buyer still wants to purchase the land, the seller can’t rescind the contract on these grounds.
2 After conveyance: different analysis.
a Based on the express warranties contained in the deed.
b Usually money damages.
c Sometimes court will allow rescission/specific performance, post closing.
G Duty to Disclose (Defects in the premises):
1 If buyer can show bad faith/fraud/affirmative misrepresentation or concealment of defects, he is likely to be able to get out of the contract. (Based more on contract law, not property.) If an affirmative misrepresentation, it is considered fraud and the buyer can walk.
2 Most states now recognize a duty to disclose for latent defects known to the seller that the buyer is not likely to find. Now misrepresentation by silence being recognized as grounds for rescission, if duty to disclose in jurisdiction. (Haunted house case)
3 Must be a significant defect though, one that might have affected the buyer’s decision of whether or not to buy the property.
4 Some states extend duty to disclose defects beyond the premises. E.g. There is a hidden chemical plant two blocks away.
5 Moving away from buyer beware to seller declare.
6 If defects are visible or recorded, however, the buyer is taken to know about them.
III The Deed- (closing, step 2 of land transaction)
A Deed- the instrument that passes legal title from the seller to the buyer.
B Includes :
1 Grantee-grantor.
2 Signature of grantor.
3 Description of what’s being granted.
4 Usually some price to make the grantee a bona fide purchaser, but not the full purchase price. No price is necessary.
5 Express warranties.
C Do not need to record a deed in order to make it effective:
1 Recording is for the rest of the world, not the two parties involved in the transfer.
2 But statutory rules may require recording in order to protect against future claims to the land.
D Deed has one moment of dynamic life conveyance on the day of closing.
1 Returning the deed back to the grantor has no effect.
2 Destroying the deed has no effect, so long as you can prove that it existed.
39
3 Deed conveys what the grantor has.
4 Can’t alter the deed by replacing a name, have to make a new deed.
E Once the buyer takes the deed, all prior contract claims are off, and if there is a subsequent problem with the title, any protection the buyer has comes from the deed, not from the implied warranty of marketability.
1 Merger by deed: All promises in the contract merge into the deed after the closing has occurred. Essentially means that any further claims are through the deed, not contract.
2 Means the buyer shouldn’t take the deed until he is sure there are no clouds on the title/ problems with the property.
F Unlike IV gifts, land transfers allow conditionality and futurity. Within a deed can make a future interest fee simple defeasible or use an escrow agent.
G Must be LED: Lawfully executed and delivered:
1 Lawfully executed: must be in writing, signed by the grantor, and comporting with all statutory prerequisites.
2 Lawfully delivered:
a Could be satisfied when grantor physically or manually transfers deed to grantee.
b BUT does not require actual physical transfer of the instrument.
c Standard of delivery is a legal standard:
i Did grantor have the present intent to be immediately bound, irrespective of whether or not the deed itself has been literally handed over—has present intent to part with legal control.
H Types of deeds:
1 General warranty deed- warrants title against all defects in title, whether they arose before or after the grantor took. Includes the 6 express warranties. After closing, violation = damages, not usually getting out of the contract.
2 Special warranty deed- warrants only against the grantor’s own acts but not acts of others that may cloud the title; promises to defend title if there’s a problem attributable to the grantor’s acts.
3 Quitclaim deed- warrants nothing. Includes the implied warranty of marketable title at the time of the contract unless there’s an explicit statement that the deed is quitclaim and there’s no implied warranty.
I Delivery of the Deed (usually not a problem):
1 Elements:
a Intent to convey: Physical delivery creates a rebuttable presumption that there was intent to convey.
b Acceptance (implied).
c Ritual transfer of something.
d Doesn’t have to be consideration if it’s a gift.
2 Conditional delivery:
a Conditionality doesn’t destroy conveyance of land, but unless you preserve the conditions by giving the deed to an escrow, preserving the conditions in a habendum clause, or creating a trust, the conditions evaporate upon delivery of the deed.
b Conditions are off if only the grantor and grantee are involved in the exchange.
40
c Giving the deed to an escrow agent allows the grantor to put conditions on the deed.
3 Giving deed to a third party (escrow or trust):
a Escrow agent is the agent of both the grantor and the grantee, so the grantor can’t get the deed back from the agent.
b When agent delivers deed, grantee’s title relates back to date deed was given to agent.
c Without a statement of revocability, escrow is binding.
J Void deeds:
1 Void deed: Any deed that is forged, fraudulent, or otherwise does not comport with the requirements of a deed. (includes a deed that was not conveyed properly, or one that there was never intent to convey by the grantor.)
2 If there is a void deed in the chain of title, subsequent bona fide purchasers that rely on it are not protected as bona fide purchasers even if they had no notice.
i But could argue that equity should allow a subsequent bfp to cutoff title if the actual owner was aware of the void deed and did nothing to give notice to subsequent grantees that it was such.
3 But if deed appears valid, grantee likely will be able to get a mortgage or sell the property. Thus the original grantor fighting this deed should attach something to the deed at the Registry of Deeds to indicate a declaratory judgment action is pending.
4 The longer a grantor waits and knows the “grantee” has indicia of title, maybe the less likely he’ll be able to get it back and prevent mortgages, etc.
i A bank could argue it relied on the record (which doesn’t completely protect it) AND that the true owner was negligent in allowing this delay.
K Constructive Trust: If someone commits fraud in order to have a deed conveyed to him, it creates a constructive trust.
1 Original owner retains equitable title.
2 The frauder is constructively the trustee, and has to return the property to the owner immediately.
L 6 Express Warranties: All included in a general warranty deed NOT special warranty deed. Don’t allow for rescission, simply provide money damages.
1 Present Warranties:
a Covenant of Seisin: grantor warrants that he owns the estate, broken if there is an adverse possessor.
b Covenant of right to convey: similar to seisin, but someone may own property, but not have right to convey. (e.g. because of trust.)
c Covenant against encumbrances: grantor warrants that there are no encumbrances on land. (e.g. mortgages, liens, easements, and covenants.)
d General:
i Are broken, if ever, when the deed is delivered. Therefore, SOL begins running on the day of conveyance.
ii Can only be claimed by B, the first buyer.
iii When B sells to C, that is the end of the warranty from A.
iv In some states, C can buy B’s right to bring a law suit. (chose in action)
41
2 Future Warranties:
a Covenant of general warranty: grantor warrants that he will defend against any lawful claims to the land, and he will compensate the grantee for any loss that the grantee may sustain by assertion of superior title.
b Covenant of quiet enjoyment: grantor warrants that the grantee will not be disturbed in possession and enjoyment of the property by assertion of superior title. (basically identical to general warranty)
c Covenant of further assurances: grantor promises that he will execute any other documents required to perfect the title conveyed.
d General:
i To get the benefit of these warranties, the encumbrance has to have done something active to hurt the buyer (e.g. dispossessed him, forced him to pay, ejected him, etc.)
ii Statute of limitations begins on the day the buyer is burdened.
iii Successor grantees can sue on future warranties, but they won’t be able to recoup the growth in value on the property, limited by the original purchase price.
IVMortgages:
A Buyer conveys a mortgage deed to the lender, which grants the property to the lender if any of the stated conditions are violated:
1 Conditions include making payments on time, and also certain upkeep of the property.
2 Technically, any violation of the mortgage would automatically grant the lender ownership in the property, but equity requires the lender to go through a process of foreclosing the equity of redemption.
B Mortgage Deed-
1 Buyer is the mortgagor/grantor, lender is the mortgagee/grantee.
2 Recorded the instant the buyer records her title to the property (so that way it comes up when someone does a title search). Mortgage deed shadows the main deed.
3 Incorporates all the provisions of the mortgage contract.
4 Looks like a springing executory interest—bank has priority over everyone who may be trying to get at the buyer. EI springs into the present so that bank gets back a fee simple absolute when the buyer defaults.
C Right of redemption:
1 Originally, if the borrower didn’t make a payment on the agreed date, the land reverted to the lender.
2 Equity intervened, so borrowers have the right of redemption.
3 Foreclosure on the mortgage is essentially foreclosing the equity of redemption so that the borrower can no longer redeem the property.
D Constructive Mortgage: Installment sales contract is treated as a constructive mortgage b/c it would be unfair to allow person to make all kinds of payments and then be kicked out w/o anything to show for it (like an equitable estoppel).
E Foreclosures:
1 Bar the equity of redemption and pay off the remaining debt.
42
2 Often first involve a period where the lender works with the borrower, giving him more time, and incorporating a sense of fairness.
3 4 types of foreclosures:
a Foreclosure by deed without court:
i Owner automatically kicked out.
ii Requires only showing the deed to the police, and evicting the current owner.
iii Lender owns land, and all debt is wiped away.
iv Typically not done if land is worth a lot more than the debt.
b Foreclosure by deed in court:
i In court proceeding, lender must demonstrate to the court that it has been equitable—given notice, time, etc.
ii Court issues a declaratory judgment saying that the mortgage deed is a valid deed for the property.
c Foreclosure by sale by statute:
i Do not have to go to court, but have to follow certain statutory procedures designed to give an equitable proceeding.
ii Subject to equity just as if it were in a court.
iii If lender sells the property for less than the remainder of the debt, it can seek a deficiency judgment. A deficiency judgment is unsecured and requires a separate lawsuit.
iv If lender sells the property for more than the remainder of the debt, it must give excess to the mortgagor, less costs associated with the sale.
d Foreclosure by sale by court:
i Same as sale by statute, except the court orders the sale.
4 Bank has to DO equity to GET equity:
a In foreclosure by sale, bank must get a fair price, though doesn’t have to be fair market value.
b Bank can’t just try to sell for the amount of remaining debt, unless this is a fair price for the land.
c Bank needs to work with the borrower and try to compromise before foreclosing.
F Second mortgages:
1 Lender receives a mortgage deed on property which is already mortgaged.
2 If borrower defaults on loan, lender only gets money from house after the lender for the first mortgage is paid.
3 Usually come at higher interest because the lender is taking more of a risk.
4 Defaulting on second mortgages:
a If borrower defaults on second mortgage, but not on first, owner of second mortgage can’t foreclose against the property, because the owner of the first mortgage has priority.
b But the owner of the second mortgage can allow someone to buy the equity the borrower has built up. (Buys everything left after the first mortgage.) ???
G Marshalling:
1 An equitable doctrine used when a borrower defaults on a mortgage loan which requires selling the property which will have the least impact first.
43
2 Typical situation:
a A subdivider obtains a mortgage for an entire subdivision (umbrella mortgage).
b Purchasers of the individual parcels obtain mortgages for the property, but such mortgages are considered second mortgages since the land is already mortgaged by the subdivider.
c Subdivider defaults on loan, so lender of umbrella mortgage seeks to foreclose on the property.
3 In equity of marshalling, land has to be sold in order that minimizes impact:
a Unsold parcels sold first.
b Then parcels sold last sold, in reverse chronological order.
c Protects the first people to buy.
4 Also, if lender has mortgage on two pieces of property, and one of them has a second mortgage, equity requires the lender to first foreclose on the property without the second mortgage, so as to minimize the impact on the owner of the second mortgage.
V Title Assurance:
A If something is DULY recorded, it WILL come up in a title search.
B Common Law:
1 First in time, first in right.
2 Whoever receives a valid deed for the property first, is the owner, regardless of whether or not the deed was recorded.
3 BUT, a grantee only receives what the grantor had to grant. If grantor had previously granted the property to someone else, any subsequent grantee will receive nothing, even if the prior deed was not recorded.
4 Common law rule leaves a subsequent bona fide purchaser with nothing, unless there is a statutory cutoff.
B Notice Statute Jurisdiction: SEE NOTES page 55
1 Purchaser of property has a valid claim to the land so long as she did not have actual or constructive notice of any other claims to the land.
2 Constructive notice- what the purchaser would have found had she done a careful title search in the registry of deeds. (Includes mortgage deeds, legal controversies over title, easements, future interests, etc.) Also includes inquiry notice- held liable for whatever an inspection of the land would reveal.
3 2 requirements in order for a grantee to retain title (bona fide purchaser requirements):
a Purchaser for consideration. (no such thing as a bona fide donee.)
i If a donee records, she is protected against subsequent bfp’s because they aren’t bf at that point.
ii If a donee is challenging a bfp’s unrecorded deed, she is not protected.
b No actual or constructive notice of any prior conveyances.
C Race Jurisdiction
1 Whoever records first, wins
2 Encourages sketchy dealing, but also encourages vigilant recording
D Race-Notice Statute Jurisdiction: SEE NOTES page 55
44
1 Same as Notice Statute, but second purchaser has to duly record in order to have valid title.
2 Until the subsequent purchaser records, the common law prevails, and the property belongs to the first purchaser, even if he has not recorded his deed.
3 If two purchasers, and second purchaser had no notice, but first purchaser records first, cuts off second purchaser’s claim to the property.
4 3 requirements in order for a subsequent grantee to retain title:
a Purchaser for consideration (bfp).
b No actual or constructive notice (bfp).
c Duly records title before any previous grantees record.
E Duly Record:
1 Requires that the grantee not only records his deed, but does a full title search to make certain that there is a complete record of conveyances (chain of title), and that all previous owners duly recorded.
2 Deed must be linked to the chain of title (the sequence of recording instruments capable of giving record notice to subsequent takers.)
3 Wild Deed: if a deed entered on the record (a to b) has a grantor unconnected to the chain of title (O to A missing link) the deed is a wild deed, meaning it is incapable of giving record notice of its existence—it’s a nullity that the court will refuse to honor.
4 E.g. B has not duly recorded if he records his deed, because the grantor, A, never recorded his deed from O. If someone does a title search, they will not find B’s deed, since no deed from O to A was recorded, and on the record, O still has title to the property.
5 Plater: duly means visibly, so as to turn up and be seen in a proper deed-in to deed-out title search (searching up the chain, then back down again, looking at all index notations only within the time window of each name).
F Common Scenario:
1 O conveys Blackacre to A, later O conveys same parcel to B, O skips town.
2 In battle between A who got there first and B who got there last who wins?
a 2 bright-line tests:
i If B is a bona fide purchaser, and we are in a notice jurisdiction, B wins, regardless of whether or not she records before A does. (Mom and Dad lose lake house)
ii If B is a bona fide purchaser and we are in a race notice jurisdiction, B wins, IF she records properly before A does.
G Duty of checking the title:
1 Thorough title search:
a Check the grantee index from the current owner all the way back in time, then reverse and check the grantor index back to the current owner.
b Some jurisdictions require checking all the way back to the Native Americans.
c Others require checking back to a certain date.
2 Walking the land- see if there are any obvious clouds on the title, such as easements, possible adverse possessors, etc. (inquiry notice)
H Analyzing who gets the property when there are multiple/conflicting conveyances:
45
1 First, what would the common law rule of first in time, first in right reveal?
2 Second, is there a statutory cutoff?
I Estoppel by Deed:
1 Where a grantor purports to convey land he does not own, and he subsequently acquires title, the grantor is estopped from denying he had title for the first sale so as to make it invalid.
2 Example: A to B, who records. A actually doesn’t have title, but he later acquires it. A records the deed from O to A.
a In the eyes of the law, A owns the property because the first deed was invalid.
b But, this isn’t fair, so equity applies estoppel by deed.
c B gets a declaratory judgment that he owns the property and records it.
d If A tries to sell to C, who doesn’t know about B because that hasn’t been settled or recorded, C is a BFP who cuts off B. B has to put something on the title that will show up in the title search.
J Title insurance:
1 An insurer comes to the opinion that the title is valid, and gives the insured an agreement to indemnify the purchaser if the insurer is mistaken and damages occur as a result.
2 Doesn’t include defects revealed by an inspection of the premises, claims of possession not shown on the records, and government regulations affecting use not shown on records.
3 Only covers amount you paid for the land, not the value of improvements.
PRIVATE LAND LAW/ SERVITUDES
I. Title conditionsA. Attached to title, in habendum clause
B. I convey to you and your successors so long as…
C. Defeasible fees
D. Nuclear bomb of private land controls
1. If violated, title evaporates
II. EasementsA. Defined: the grant of a non-possessory property interest, that entitles its holder to some form of use or
enjoyment of another’s land—the servient tenement.
1. The servient owner can use the easement as long as it doesn’t reasonably interfere w/ DT.
B. Affirmative or Negative:
1. Affirmative: the right to go onto and do something on servient land.
a) Most easements are affirmative.
b) E.g.: The privilege to lay utility lines on another’s land, or the easement giving its holder a right of way across another’s land (the most common easement).
2. Negative: entitles its holder to compel the servient owner to refrain from doing something that would otherwise be permissible.
a) Traditionally only recognized in 4 categories:
46
(i) L- Light
(ii) A- Air
(iii) S- Support
(iv) S- Stream water from an artificial flow.
b) !!Negative easements can only be created expressly in a signed writing, signed by the grantor. There is no natural or automatic right to a negative easement!!
C. Appurtenant or In Gross:
1. Appurtenant (presumed)
a) Attached to the land of the holder, and benefits the holder in his physical use or enjoyment of his property.
b) Requires 2 pieces of land:
(i) Dominant tenement- land whose owner is benefited from the easement.
(ii) Servient tenement- land whose owner is burdened by the easement.
c) Common law presumption that an easement is appurtenant, unless clear intent otherwise.
2. In Gross:
a) Not attached to any parcel of land, but gives its holder a personal or commercial gain that is not related to his use or enjoyment of his land.
b) Requires only 1 piece of land:
(i) Servient tenement- the land whose owner is burdened.
(ii) No dominant tenement.
c) E.g.: right to fish in another’s lake, right to place billboard on another’s land.
D. Transferability (check on this – Look at Willard case):
1. Appurtenant easements transfer automatically with the dominant tenement, regardless of whether it is even mentioned in the conveyance.
2. Easement in gross is not transferable unless it is for commercial purposes.
E. Creation of Affirmative Easements- 4 ways:
CREATION of Easements TERMINATION of Easements
By Grant
for longer than 1 yr need to be in writing
By Reservation
reserved over land granted by grantor or for bene of 3rd party
By Prescription – same as adverse possession
By Estoppel – if you relied on the owner’s permission, to your detriment, they can be estopped from denying you had an easement
By Implied Dedication
public easement, public uses your land as if it
By it’s own Terms
By Conveyance back, Release, or Merger
By Counter-Prescription (AP)
By Abandonment (act + intent + writing)
By Statute
By Destruction of the Servient estate
By Irreparable Violation of Terms
By End of Estoppel Fairness
By the Ends of the Necessity – if created by strict necessity
By unremediable surcharge on the easement
47
were public
appearance is of dedicating to public and public using it as such implies easement
By Implication:
implication based on intent : based on prior use or commonsense
implication based on public policy : if you have a landlocked parcel, strong presumption against isolated parcels
people open it up too much use and it cant’ be undone, easement terminated
1. Prescription:
a) Just like adverse possession.
b) Requires:
(i) Open and notorious use.
(ii) Continuous use for statutory period.
(iii) Actual use.
(iv) Adverse/hostile, without servient owner’s permission.
c) Can Tack – just like AP
2. Implication: (EXCEPTION to statute of frauds)
a) Easements implied out of private intent of parties with a prior use:
(i) Occurs at moment of subdivision, but dominant tenement owner must get court declaratory judgment to secure title.
(ii) When previous use of that land implied that the easement would be granted or reserved.
(iii) A owns lot 1 and 2, and uses lot 1 to get to 2. A sells lot 2 to B.
(iv) 2 elements:
Previous use had been apparent.
The parties expected that the use would survive division, because it is reasonably necessary to the dominant land’s use and enjoyment.
Do not have to pay if implied.
b) Easement implied out of private intent without a prior use:
(i) Occurs at moment of subdivision, but dominant tenement owner must get court declaratory judgment to secure title.
(ii) Land-locked setting.
(iii) Easement of right of way will be implied by necessity if grantor conveys a portion of his land with no way out, except over some part of grantor’s remaining land. (or by reservation, when grantor forgets to leave a way for him to get to his own land)
c) Implied out of public policy—Necessity
(i) Strict landlocked necessity
(ii) Usually because of act of God or human error, owner of land B no longer has means of getting to land.
48
(iii) Strictest necessity- no other way!
(iv) If not given a right of way over land A, B will be landlocked.
(v) Public policy against land-locked land grants B an implied easement over A’s land.
(vi) Not based by the intention of the parties.
(vii) TERMINATES when necessity ends
(viii) MUST PAY the servient tenant
(IX) MATTHEWS V. BAY HEAD IMPROVEMENT ASSN.: Publics right to beaches required easement for public on associations land. DID NOT have to pay.
3. Conveyance by Grant:
a) Easiest way to create an easement.
b) For an easement to endure for more than one year, must be in a writing that complies with the formal elements of a deed (Statute of Frauds).
4. Reservation: A conveys lot 1 to B, but reserves easement for himself or for someone else on lot 1.
5. Estoppel-- if you relied on the owner’s permission, to your detriment, they can be estopped from denying you had an easement
6. Divisibility
a) Funnel developments buy an easement across one lakeside property to funnel thousands of people that live in the development to the lake. Dividing an easement too much invites environmental lawsuits about health of lake. Burden on easement is too much.
F. Termination of Easements:
1. By express terms of grant:
a) Expiration- within the express terms of the grand.
b) Violation of conditions on a defeasible easement.
2. Merger: servient and dominant estates merge under one owner.
3. Express release- in writing, owner of easement gives it back to servient land owner.
4. Misuse (overburdening, etc).
5. Necessity goes away for an easement implied by public policy.
6. Abandonment- must have intent to abandon.
7. Prescription to someone else…?
8. If based on estoppel, lasts only as long as reliance fairness test lasts, might be amortized.
9. Destruction of the servient tenement.
10. By statute- sometimes require re-recording every X years.
III. Licenses:
1. Permission to use land that is revocable by nature (basically a revocable easement)
2. Licenses becoming easements:
a) If a licensee in exercising his license and in reasonable reliance upon representations made by the licensor as to the duration of the license, has made expenditures of capital or labor so that it is inequitable for the license to be discontinued, the license becomes irrevocable, and thus an easement.
49
b) Based on estoppel.
c) The easement, however, may terminate when it is no longer relied upon, or the owner has realized his expenditures.
3. If violated, you get contract damages
IV. CovenantsA. Definition: a promise to do or not to do something related to land. More modest than an easement, and
begins as a contractual limitation regarding land. All covenants (except the covenant of quiet enjoyment) run from contract law, not estate law.
B. Restrictive or Affirmative:
1. Restrictive/Negative covenant: a promise to refrain from doing something related to land. (e.g. I promise not to build for commercial purposes on my land.)
2. Affirmative covenant: a promise to do something related to land. (e.g. I promise to maintain our fence, water our common garden, pay an association fee.)
C. Creation: typically created expressly in writing.
1. Should create flex provision so you can modify as time goes on. If no flex provision, the covenant cannot be modified.
a) Old Ms. Jones bought a condo which had a flex covenant. She moved in with Boo-Boo, her dog. Later, a no-pets covenant gets added. Boo-Boo has to go because Ms. Jones was on constructive notices that the covenant could be changed because of it’s flexiness.
D. Running with Land—the point of covenants is to shape the use of the land forever. Between original covenanting parties, contract law rules. Between subsequent owners, however, property law rules. This is where privity of estate comes in.
1. Successor to the Original Promise can be Sued Only for Equitable Remedies and not for $$ Damages UNLESS there was both Horizontal Privity of Contract and Privity of Estate at the Time of Covenanting
a) Benefit runs even w/o privity of estate, so anyone with standing can get specific performance
b) Burden of being sued for $$ does not run if there was no privity of estate at the time covenant made
c) No horizontal privity, then only person who can be sued for $$ is the original promisor
d) Remember: If covenant runs with the land at law, it runs with the title – an alien chain of title (AP) is likely not bound by a covenant
(i) Although, if the adverse possessor had enforced the covenant against someone else, they would be equitably estopped from denying that it exists AND
(ii) There is a strong argument for the neighbors that they were not on notice that the AP was cutting off their covenant rights
e) GOVERNMENT EMINENT DOMAIN—Government must pay people who have rights based on covenant, easement, and FSA.
2. Scenario: A promises B that A will not build for commercial purposes on A’s property. A then sells to A1 and B sells to B1. Question of whether A’s promise to B is binding on A1, and whether B1 has the right to sue A1.
3. In order for burden of a covenant to run to successors, must have 5 requirements: WITHN
a) CONSIDERATION (usually return promise from neighbor)
50
b) W- writing- original promise between A and B must have been in writing.
c) I- intent- original parties A and B must have intended that the covenant would run. “Me, my successors, and assigns” (Courts very liberal in finding intent.)
d) T- touch and concern the land- promise must effect the parties’ legal relations as land owners, and not simply as members of the community at large. Must have oomph, not be purely personal.
e) H- horizontal and vertical privity- both needed for the burden to run.
(i) Vertical Privity: You’re linked by your title to the people who made the original covenant. Exception = 3d party beneficiary.
IF yes, any successor can sue any successor who is violating terms of covenant for injunctive relief (compliance with covenant)
(ii) Horizontal Privity: Covenantors must have had privity of estate at the time the covenant was made. (Covenant on master deed, share a flagpole, etc)
IF yes, any successory can sue any successor who is violating terms of covenant for money damages and injunctive relief
f) N- notice- A1 must have had some notice of the promise when he took the land.
(i) Burden always requires notice. At least inquiry notice even in implied equitable covenants.
4. In order for the benefit of the covenant to run to successors of the land that benefited from it, must have 4 requirements: WITV
a) W- writing.
b) I- intent.
c) T- touch and concern the land.
d) V- vertical privity. (horizontal privity not required in order for benefit of covenant to run with land.)
5. Touch and Concern the Land:
a) Bar/bri: effects the parties’ legal relations as land owners, not simply as members of the community at large. Covenant must diminish other party’s rights in connection with enjoyment of land (page 81-2 examples)
b) Plater test: effects the value of the land of the promisee, has sufficient oomph.
c) Sufficient: residential only, paying a fee to keep up the community, Spanish tile roofs if in Southwest.
d) Insufficient- color restrictions.
6. Horizontal Privity:
a) Refers to the nexus between the original promising parties A and B.
b) Requires that A and B be in succession of estate.
(i) Grantor-grantee.
(ii) Landlord-tenant
(iii) Debtor-creditor
(iv) Or shared some servitude other than the covenant now at issue (flagpole)
c) Absence of horizontal privity is why many burdens will not run with the land (at law).
7. Vertical Privity:
51
a) Refers to the nexus between A and her successor A1.
b) Simply requires some non-hostile nexus between A and A1, such as contract, divise, or descent.
c) Usually, only time that vertical privity will be absent is if A1 acquired interest through adverse possession.
d) Exception: 3d party beneficiaries.
8. EXAMPLE:
a) A, B, and C are neighbors. They want to make a covenant that no one will make fences in the front yard. They come together and make a covenant. They record the covenant on their titles.
b) Two years later, A, B, and C deed to D, E, and F. There is vertical privity between all grantors and grantees.
(i) IF A, B, and C have a common interest in land independent of the covenant (like common ownership in a private park) they have horizontal privity and subsequent purchasers can sue one another for money damages AND injunctive relief if the covenant is breached)
(ii) If A, B, and C have no common interest in land apart from the covenant, they have no horizontal privity of estate and subsequent purchasers can sue for $ only injunction).
9. 3 rd Party Beneficiaries – if a covenant is made and intended to benefit a 3rd party, that party can sue to enforce the covenant (but they cannot be sued)
E. Termination of a covenant:
1. By its own express terms.
a) This covenant is valid for 50 years
2. Illegal/statute-
a) Statute passed that makes it illegal (although if law is repealed, a question of whether covenant is reinstated)
b) Statute that requires regular recording.
c) Conflicts with zoning ordinance.
d) Note: If a new statute terminates an existing covenant, check for regulatory taking. (although should hedge language because regulatory takings pertain to property rights, and covenants are contractual rights.)
3. Unconstitutional- Plater- only for restrictive covenant based on race, creed, color, or national origin. (note: only applies to covenants, not easements)
A) MOLOKAI case
4. Obsolescence/Change of surrounding conditions:
a) Covenant now fails to fulfill function.
b) Can’t get tricked, must look to actual function of covenant. Even if surrounding circumstances change, look to why the covenant was established in the first place.
c) Look at ALL LOTS in the subdivision. If only the ones on the edges are affected, not enough.
D) WESTERN LAND CO. V. TRUSKOLASKI
5. Waiver- novation:
a) Everyone that the covenant applies to must agree, 100%.
b) Unless there is a flex provision, which may make it by majority vote.
6. Flex covenants, whose terms were agreed to from the beginning
52
a) Provision that allows for change / voting mechanism.
7. Unreasonableness.
8. Eminent Domain.
9. Rezoning (public-private conflict): but only if the zone contradicts the covenant such that it is impossible to comply by both, in which case the public law of zoning trumps.
10. Latches: equitable estoppel for the passage of time. Equity will not allow you to enforce an equitable remedy if you have unfairly waited too long to try to enforce. But can still enforce for money damages, assuming that there was horizontal privity. (Sit on porch and watch crystal burger joint go up. Sue when complete)
11. Adverse possession?
a) YES: Ripened adverse possession creates an alien chain of title that erases mortgage contracts and also cuts off covenant
b) NO: The interest of other holders invokes equity—you can’t just cut off people’s covenant rights. Unless you have adversely blocked an easement, your AP does not cutoff the easement. If an easement needs 8-10 years of notice, surely erasing a covenant also requires notice.
F. Scope of Covenants
1. Covenants generally do not terminate when they ruin the value of the property, unless they’re totally unreasonable (i.e. racially discriminatory, etc.) or enforcement would violate public policy, statutes or individual rights
2. Even with radically changed circumstances, as long as the covenant still serves its purpose, it will be enforced
3. Reasonableness of a covenant is examined in reference to entire community, not one particular tenant
4. Merger does not extinguish covenants the way it does with easements
V. Equitable Servitude:A. Definition: a promise that equity will enforce against successors (accompanied by injunctive relief).
B. For Plater’s sake, the same thing as a covenant, just a matter of remedies.
C. 4 elements required in order for an equitable servitude: WITN(es). Duh its just WITHN without the horizontal privity requirement!
1. Writing- generally, but not always, the original promise was in writing.
2. Intent- the original parties intended that the promise would be enforceable by and against assignees.
3. Touch and Concern- the promise affects the parties as landowners.
4. Notice- the assignees of the burdened land had notice of the promise.
5. (ES): remember that within the realm of equitable servitudes, and privity is NOT required to bind successors. Not necessary to consider vertical and horizontal privity.
D. In sum, means that it is easier to enforce a covenant in equity (injunctive relief) since there are no privity requirements, but must also remember that equitable doctrines apply and the principle of latches could bar an equitable remedy if it would not be fair.
VI. Negative reciprocal covenants/ Implied equitable servitude/ common scheme doctrine:
A. Recognized in the vast majority of states (but not MA).
53
B. Common paradigm: A subdivides land into 50 lots, sells lots 1-45 through deed that contain covenants that restrict use to residential purposes. A then sells one of the remaining lots to commercial entity B on deed containing no such covenant (whether inadvertent or by conscious design). B seeks to build commercially. Can B be enjoined from doing so?
C. Court will imply an equitable servitude/ negative reciprocal covenant if 2 elements are met:
1. When the sales began, subdivider had a general scheme of residential development, which included the defendant lot now in question.
2. B had notice of the promise contained in the prior deed (either actual or constructive).
a) Can be met if it is obvious to one who visited the property that all of the other lots conformed to a common scheme (Inquiry Notice).
D. In a sense, the subdivider made an implied reciprocal negative promise to those who bought the parcels with covenants. Could also include a variety of other implied promises, including an implied promise to keep part of the land free from development if it is in the plat.
E. Note: only enforceable in equity, not for money damages!!
VII. Nuisance:
A. 3 grounds for nuisance liability:
1. Abnormally dangerous activities (strict liability)
2. Negligence
3. Intentional.
B. Private Nuisance: Protects the rights of use and enjoyment of the land
1. Use of one person’s property so as to harm the use of another person’s property.
a) (ESTANCIAS DALLAS CORP. V. SCHULTZ)
(i) Granted injunction even though the equities did not seem to balance in favor of the plaintiff. However, the court said this was not unfair b/c it was likely that they would bargain for money based on the injunction (i.e., plaintiffs would “sell” the injunction for what it was truly worth to them).
B) SPUR—STINKY COW POOP
(i) Weird remedy – injunction w/ indemnity. Because Spur came to the nuisance, equity will not force an injunction. Court enjoins DEW only if Spur pays money (indemnifies DEW against their losses from injunction).
2. Cannot bring a private nuisance action if plaintiff came to the harm (self-created hardship) (coming to nuisance). (So file as a public nuisance.)
3. Negligence : Is defendant unreasonable? Balance of utilities BEFORE liability
a) Plaintiff must prove:
(i) Harm or serious risk of harm (Private: to P’s use of land. Public: to public health, safety, morals, rights of passage).
Any type of harm is considered, but small harms will have BIG trouble in balancing utilities to establish liability).
(ii) Causation—that defendant caused the harm
(iii) The defendant’s actions were unreasonable (balance of utilities/equities).
(iv) If these 3 are satisfied → liability
54
b) Remedy
(i) Monetary or equitable order (equitable order requires FUTHER balance of utilities).
c) Defenses
(i) Assumption of the risk
(ii) State of the art—using the best technology available
(iii) State of the Industry—using what the industry uses
(iv) Balance of Utilities—balance the utility of the cause of the nuisance against the harm of the utility
Argument that it is reasonable to make the stink because society needs it
Boomer’s Cement Factory could make this argument
Affirmative Defense or used to mitigate damages
4. Intentional : Is plaintiff reasonable? Balance of Utilities AFTER liability
a) intentional culpability
(i) must prove
harm—unreasonable harm (extent, character, social value of use invaded, the burden of avoiding the harm, etc.)
causation
intent—civil intention
purpose of causing harm
or substantial certainty that someone will be harmed
(ii) Remedy
Compensatory damages or equitable injunction, determined by balance of utility
5. Plaintiff needs to frame claim as Intentional Tort
a) Easier to show Pltf suffered unreasonable harm (intentional tort) than Def acted unreasonable (neglig)
b) Pltf does not have to overcome “balance of utilities” test as in negligence, only applies to damages
(i) In intentional tort, the “balance of utilities” defense only works for injunctive damages (keeping them from getting shut down), not as a defense against civil intent
c) If nuisance creator is on notice b/c neighbor has complained, they are now acting with intent (substantial certainty)
6. Defendant needs to frame claim as Negligence
a) A lot of defenses in negligence are difficult to disprove (balance of utilities, burden of prevention, assumption of risk)
b) In intentional tort, the “balance of utilities” defense only works for injunctive damages (keeping them from getting shut down), not as a defense against civil intent
C. Public Nuisance: An unreasonable interference with a right common to the general public
1. Suing on behalf of the public
a) Applies to any action taken by a party that disrupts the public morals, health, safety, welfare, freedom of travel, or free access to water (peace, comfort, convenience?).
55
2. If you want to sue as an individual, need to show “special injury” that you have a different injury in kind, not just in degree
a) Bodily injury is always different in kind because each of our bodies is different
b) Citizens can also get standing by statute, or by demonstrating that public officials are unjustifiably not enforcing.
3. Mostly brought for intentional nuisances and almost always for injunctions.
4. Arguing that the nuisance is public, allows you to raise the ante in the balance of utilities.
a) Prescriptive easement = no defense because AP can’t run against the gov’t—Toni Ann’s, I’m not sure, but sounds good
D. Notes on Nuisance
1. Halfway houses – not usually considered nuisances
2. Doesn’t protect abnormally sensitive uses, just ordinary ones
3. “Spite fences” are usually nuisances
4. Ugliness is not normally a nuisance
5. Blocking sunlight or air? Maybe. Do they need it for a special use? (solar panels).
6. Trespass vs. Nuisance.
a) Trespass – if intent then you win.
(i) Pollution can be trespass (physical particles) – but MUST be intentional.
b) Nuisance – if intent then balancing process (but balancing only comes after liability in intentional nuisance).
Public Land ControlsIf there is a conflict between private law and public law, public law trumps.
Also, Government is not bound by its OWN regulations.
II Eminent DomainA Police Power:
1 The power of every sovereign state to regulate private property, persons, and rights for:
a Health,
b Safety, and
c Welfare.
2 Every state government has this power, but the federal government does not.
B Eminent Domain: the power to take away private property for public use.
1 An accepted right of the government so long as the owner of the property is paid just compensation.
2 In the past, ED cases were decided with an overwhelming presumption of validity as long as the government was willing to pay.
a This is changing.
56
b Plater in TN—Taking from a private entity to sell at a profit to other private entity is legal on its face. Farmers have no defense except that the same agency had condemned 250 acres of land previously for similar purposes and only developed 14 of them. Rebuts presumption of validity.
3 If you are inside the take line, you get fair market value (and no relocation costs)
4 If only a tiny part of your land is inside the take line, you have to be paid FMV for the taken part plus the decrease in value of the whole land
a This means the government usually just takes the whole thing so as to avoid having to pay for the entire parcel. Avoiding “empty taking” by taking whole parcel is a PPP.
5 If you are outside the take line, no matter how close or affected you are, you get NOTHING.
a Unless you can prove nuisance that is a taking (easement) and file inverse condemnation.
C 5 elements of eminent domain condemnation: 4 substantive and 1 procedural.1 Authority:
a Was the government agency that is condemning the land granted the authority by the state?
b Look to the statute which grants the authority, and make sure that the agency has fulfilled whatever criteria necessary.
2 Proper Public Purpose:
a Purpose must be in promoting health, safety, or welfare.
i Ex. something that benefits the economy
b If a poison purpose found, will fail this test.
i Ex. keeping an AIDS hospice out
ii Race discrimination, corruption
c Also balance public harms (i.e. public has a right to clean water, trumps private right to dump cyanide in river)
3 Reasonable Relation to the PPP: rational nexus between means and ends
a The specific condemnation must be reasonably related to accomplishing the proper public purpose.
i If party alleges irrationality, burden of proof is on government to allege rational relation.
b Rational basis test: whether a rational official could have thought that this action served the purpose.
c Public harms: environmentalism, tort claims
d Must allege that decision was arbitrary, capricious (impulsive), an abusive of discretion, or otherwise contrary to law to fight this.
4 Not Excessive Burden on individual property rights.
a For eminent domain condemnation, this is any easy hurdle since the government is paying for the land.
b Also must look at public burdens (i.e. interstate commerce, environment)
5 Procedural Due Process:
a Matthews v. Eldrige Balancing Test: Private interests, Public interests, Risk of error.
57
i Bowles v. Willingham: A good attorney would have argued that the risk of error by using less process is huge! The people have no way of knowing how the $90 dollar figure was chosen.
b Sufficient advance notice.
c Opportunity to be heard.
d Given time to challenge the decision on authority, purpose, etc.
e Given access to the information and process that was used in the decision, so that the challenger can effectively challenge the decision.
f Agency followed its own administrative procedures.
D Heightened Scrutiny – when gov’t is taking to convey to private third party
1 ED of private land to public and then right back to private must be necessary to the purpose of the project as it was designed
2 Private entity must remain accountable to the public (i.e. private restrictive covenants that they must stick to the plan)
3 Property must fit the act of taking
4 KELO V. NEW LONDON—New London proves their case under heightened scrutiny.
E Effect of Condemnation:
1 Government takes title.
2 Wipes out all covenants and easements on the land.
3 BUT must pay the owners of the easements, and those who have the benefits of the covenants. (Current trend says government has to pay beneficiaries of easements, though analytically this is a contract right, not a property right.)
F Consequential Damages:
1 Not awarded on the basis of a decrease in land value because government took land around yours, if none of your land was taken.
2 BUT, if government takes even one inch of your land, then they have to pay for the decrease in value of the entire parcel.
3 Therefore, government usually just ends up taking the entire parcel to avoid an effectively empty purchase (taking one sq. foot, but paying for decrease in value to entire parcel) court says that taking the whole land just to avoid empty purchases on consequential damages is a PPP.
G Defending against an eminent domain action (usually #3 – Not RR/A&C):
1 No rational basis that the action has a reasonable relation to the PPP.
a E.g.: Record shows that the agency has not developed land previously condemned for future economic development.
b Decision was arbitrary or capricious (not according to a specific plan; identical land that would impose less burden elsewhere; etc.).
2 Poison purpose.
3 Administrative agency rules not followed.
4 If private to private transfer- then argue that there has to be a heightened test as to PPP and Reasonable Relation. (Kelo)
58
III Inverse Condemnation—asking court to recognize that gov’t is taking a property interest and force gov’t to condemn and pay.
A Defined:
1 An action of the government results in a taking, even though the government didn’t institute the procedures and declare it as such.
2 The legal action is then initiated by the property owner against the government.
3 Can be either a physical taking or a regulatory taking.
4 If use would ripen into a prescriptive easement, the government must pay. If planes are coming into your private airspace, even conservative judges will make them pay. The true cost of the easement is the harm it inflicts on the land. You get value of easement + consequential damages to servient estate.
5 Or a piece of land (might ripen into adverse possession), they must pay.
6 Ex. THORNBURG V. PORT OF PORTLAND
B Remedy: Only allows for recovery of money damages (cannot enjoin the government). Paying for the land, and, if not the entire parcel, then the consequential damages to the rest of the parcel. Government does not have the choice of avoiding the regulation.
C Process (pay attention to this when arguing inverse condemnation):
1 Property owner alleges that government could have taken the land through eminent domain.
a Must establish first 3 elements: authority, (PPP, reasonable relation). Don’t really have to prove this b/c what is the point? If you have already proven that they’re taking something, then who cares.
2 Because the government could have taken the land but didn’t, but is affecting/using the land as if it did, property owner alleges that he needs just compensation and procedural due process.
3 Plaintiff sues government to force the government to sue him in imminent domain
a Ex. Causby v. Government → Government v. Causby’s land → compensable cause of action
D Cause for inverse condemnation:
1 Government is actually trespassing on/using your land, but you cannot sue the state because of sovereign immunity.
2 State action is causing a considerable and unreasonable nuisance (which would ripen into a PE). (THORNBURG)
a If government action can turn into a prescriptive easement (either for use/right of way OR noise disturbance) then have a stronger argument for inverse condemnation.
b Since energy is matter, can consider noise to be “trespassing”.
IVRegulatory Takings: LOOK FOR THE BOX—overall testA Defined: A state/agency regulation unreasonably diminishes the value of private
property, such that government has to pay for the loss or forgo the regulation.
B Governmental regulations have a presumption of validity and constitutionality. The public harms that are being avoided are sufficient to justify the private loss. Must weigh between public and private benefits. It is the burden of the property owner to prove not that the agency made the wrong decision, but that a rational agency could not have come to that decision.
59
1 Tort—nuisance. You don’t have a right to commit a tort against the public, and your rights don’t count against the government (Keystone Bituminous). Tilts balance towards public. (Cyanide Factory).
a He says he has a right to make a profit on his land, but people will die for it—government must protect against tort-like activities.
2 Public trust—public already owns a property right to do x, and a regulation saying you can’t do x is unconstitutional.
3 Judiciary leans towards private property owner—presumption of validity is shaky.
C Challenged on the same 5 elements of eminent domain:
1 Ways in which the entire regulation could be invalid on its face:
a Lack of authority
b No PPP/poison purpose
c Regulation not rationally related to achieving a proper public purpose. Could a rational official/legislature have thought that this regulation could properly address this PPP?
2 Ways in which the regulation could be invalid only as applied to P:
a Means not rationally related to the purpose as concerning this particular property.
i Ex. High ground within a regulated “flood” zone that will never flood.
But reverse: That high ground is isolated, people could be marooned, etc.
DOOLEY V. FAIRFIELD
SEE CLASS NOTES FOR GOOD ANALYSIS
FLOOD, RATIONAL BASIS, SAFETY, HAZARD
b (#4) Excessive burden on individual property rights. Main fighting point, but don’t swoop.
i Key question: Does the governmental regulation “go too far?” When does the burden on the property owner become so great that compensation is required?
THIS IS CLARIFIED BELOW IN THE BOX
Easier to prove as to P than as to all.
Common sense, constitutional fairness (Holmes): Diminution in property rights. If relatively too great, then unconstitutional.
Rehnquist & Scalia look only at regulated portion of the parcel (put your nose on the blackboard – Penn Coal)
Everyone else says you have to look at the parcel as a whole and IBE (Keystone Bituminous and beyond).
BOWLES V. WILLINGHAM (TOTALLY PUNTED ON #4 ANALYSIS).
D Remedy if regulatory taking established—government has the choice between:
1 Waiving the regulation as applied to that particular parcel OR
2 Paying for the decrease in value (eminent domain damages)
a Exceptions requiring NO compensation
i Conflagration (dynamite houses in front of fire)
ii Diseased cattle (take and kill)
60
iii Oil (Japanese are coming to Manilla, government blows up oil tanks in advance)
E Threshold questions before can challenge an administrative decision in court:
1 Standing.
2 Justiciability/Reviewability: decision was arbitrary, capricious, and/or abusive.
3 Exhausted agency remedies (discretionary).
4 Ripeness (discretionary).
F Evolution of Case Law: at what point has the government gone too far and committed and unconstitutional taking?
1 PA Coal: First case where private party successfully overthrew a regulation.
a Court: police power must have its limits. One factor in determining where the limit lies is decrease in property value because of the regulation.
b Court looked at the regulated portion of the parcel (the easement for subjacent support) and found there was no reasonable remaining use, so there was a taking.
c Dissent: Brandeis says you have to look at the whole parcel.
2 Penn Central: Developers wanted to make a skyscraper over Grand Central Station, but couldn’t because of historic landmark regulation.
a Court: constitutional based on balancing test.
b Balance 3 factors
i Diminution in property value.
ii Investment-backed expectations.
iii Character of governmental actions.
Free benefit?
3 Lucas:
a Scalia’s “Categorical Rule”: If it can be shown that because of the regulation, the property has no remaining economic use, then it’s a regulatory taking.
i Exception: If government can show that the property never had the property right anyway (i.e. the regulation is merely duplicating property or tort law already established) or the state is protecting what would otherwise be a common law nuisance (Cyanide Dumping).
4 Palazzolo:
a Court: conceptual severance (idea that the regulated parcel can be evaluated separately from the whole parcel) is wrong. Look at the whole parcel to evaluate diminution.
b A property owner can attack a regulation he knew about when he purchased the land—but in weighing the degree of harm, that’s going to weigh in the investment-backed expectations.
c O’Connor: Lucas is only good for when property value is reduced to almost nothing, but otherwise, Penn Central analysis is controlling.
G Overall Test for Unconstitutional Taking (#4) (after checking for authority, PPP, RR):
1 What diminution of the property has occurred as a result of the regulation?
a Analysis:
i Looking at remaining economic value, even though there may not be any remaining use of the property, it might still be worth something.
61
Regulation is valid if there reasonable remaining economic use.
The constitution does not protect your wishes (gas station in a residential neighborhood) but does protect your rights, AS LONG AS the land still has value.
ii Baseline: look at the whole property, not just the regulated portion. Plater: look at all the property involved in the investment-backed expectations, all property purchased at the same time.
iii Time Baseline: Also maybe consider the whole stretch of time the person has gotten use out of it. (e.g. most coal already gone – this would weigh against the private owner)
b If no substantial diminution of property, that’s the end of the inquiry, no taking.
c If there’s a total wipeout of value, then Lucas categorical rule applies: automatic taking.
2 If somewhere between total wipeout and no substantial diminution, then Penn Central triad analysis applies, balancing:
a Extent of diminution.
b Investment backed expectations.
c Character of the government regulation.
i Basically making the key inquiry- balancing public purpose and private harm.
3 If court determines that it is a regulatory taking (balance in favor of private harm) then government can choose to:
a Lift regulation, OR
b Pay compensation for the taking by paying him the for diminution in value. (note: since this may be almost the entire value of the property, the government may choose to take the entire title to the property to avoid an empty purchase).
Tests:If physical appropriation of land, then
Almost always deserves compensation (bright line test) The few takings that allow physical appropriation without compensation—conflagration
(dynamite houses in front of fire, no compensation), diseased cattle (take diseased cows and kill, no compensation), oil (Japanese are coming to Manilla, government blows up in advance, no compensation)
← If not physical appropriation Reasonable remaining use/value (Parcel as a whole w/ investment backed expectations). Weigh public harm prevented by regulation in this and other cases. No right to create nuisance, but
it’s a balance. Character of governmental actions has more gravity if it saving lives, etc.
H Fault- Eastern Enterprise:
1 Can maybe argue that a regulation that takes from an innocent party is unconstitutional.
2 Argue that no reasonable agency would require payment from someone when they are not at fault.
3 Possibly a constitutional requirement for fault?
V Exactions:A Exaction= concessions like parks, roads, easements, etc. that the government requests
from a private property owner in return for granting a special permit to build where, because of zoning or other regulations, the property owner isn’t automatically entitled to build what he wants to.
62
a First you have to determine whether the regulation (w/o the exactions) would be unconstitutional. Then you can do a causal nexus/proportionality test for the exaction.
B Question is not whether the individual has suffered too much harm (if so, void ab initio) but whether having conditional approval is an extortionate taking.
1 Could the government have said NO constitutionally?
a If not, then regulatory taking?
b If so, then are the exactions pure extortion, or reasonably related and proportional to their PPP?
C Dolan case
1 Amount of exaction roughly proportional to need created by exaction (i.e. we need x amount of park space to compensate for x amount of concrete paving for ground water runoff)
2 Expanding hardware store allowed to duck exactions because city didn’t show rough proportionality – of store to bikepath (never before required)
3 If an adjudicative exaction, the burden is on the city to prove it is proportional.
D Requirements in order for an exaction to be valid:
1 Agency must be able to deny the requested permit/use without it being considered a regulatory taking.
a If not, then the exaction is invalid.
b Must go through 5 point checklist.
2 Must be some rational causal nexus (linkage) between what the government is requiring and the requested development. (Nolan)
3 The need for the exaction created by the new development, must be roughly proportional to the burden being placed on the property owner. (Question: does the need for the exaction have to be a need created because of the additional burdens associated with the use that is otherwise prohibited?)
4 Can also have a flex exaction: If the property causes harm in the future, board will sit down and make them pay.
E Severability idea: If a court strikes down the exaction, does the permit still go through?
1 Safer for the city to say in regards to the permit, “no, unless you make exaction X” as opposed to, “yes, and make exaction X,” because if exaction is struck down, what’s left is a denial of the permit.
a Must look to intention of government: would the permit still have been granted even if the exaction clause would have been removed?
VIZoning: Watch out for zoning/regulation to reduce land values in anticipation of ED action.
A Zoning: deal with overall land planning. No longer the most significant land use control. Whether your clients can or cannot build something will end up decided not by zoning, but by other things (ADA, EPA, etc).
1 The authority to zone:
63
a Court determined that zoning is within the police power of the state, harmonizing use promotes health, safety, welfare (mostly welfare).
b State legislatures pass laws enabling town to zone within their boundaries. (Standard State Zoning Enabling Act.)
c Rational Relationship: If there’s a comprehensive plan, then the drawing of a particular line doesn’t need to be super rational in and of itself.
d Unreasonable private burden: if there’s a reasonable remaining use of the land, the zoning regulation has not gone too far. This is a battle between counsel on both sides.
e Procedural Due Process: must be notice to all affected (What does affected mean? 500 feet? Further?)
2 Euclidian zoning:
a Theory of governance of the land where every community is its own fortress, established as within power of state in Village of Euclid v. Ambler Realty Co.
i Originally, Euclid lost. Attorney appeals before decision comes out. Judges were living in exclusive communities and the attorney argued that, without zoning, anyone could put apartments in their communities. 2 judges change their minds and let him win the case.
Zoning in America is the product of class warfare.
b A method of zoning where a city assigns every part of the city as a particular zone, allowing a certain type of use. (Everything is zoned, can’t have a “holding zone” in order to be considered Euclidian.)
c Court determined that the zoning had a reasonable relation to a PPP (and thus not arbitrary) as long as there was a comprehensive plan for zoning the community.
i If no plan, may run into a problem when attempting to rezone, because vulnerable to attack that the rezoning is arbitrary and capricious.
ii Smaller communities can consider the zoning map to also be the comprehensive plan, but this is vulnerable to spot zoning attack if the zoning is amended.
d Now communities have extensive comprehensive plans that include much (if not all) text to allow more flexibility in changing the zoning.
3 Ways of getting around zoning:
a Special exception:
i Usually requires a hearing where neighbors can be heard.
ii Administrative agency makes a decision.
iii Usually requires the type of use be delegated eligible for a special exception in the particular zone. Argument against: if not in plan – A&C. Argument for: Even if not in plan, SE by nature are used to fit into the intended use of the zone anyway.
b Variances:
i Allows property owners not to adhere to certain zoning requirements where doing so would create an unconstitutional hardship.
ii Usually granted by a clerk, even though it involves a very complicated constitutional analysis (authority comes from zoning ordinance – if zone has authority/PDP, clerk decisions do too).
64
iii For this reason, they are often granted by the clerk, only to be struck down if they are appealed to the top.
iv No procedure, just you and the clerk/zoning board. Easier to get than a special exception.
v Has become favored where it was supposed to be a last resort.
vi Prevents zoning ordinance from being unconstitutional regulatory taking—attorneys exploit this and threaten zoning board with personal liability for unconstitutional taking, and lots of variances get granted this way
c Amendment/Rezoning:
i A legislative method.
ii Usually done by the town council or by popular vote.
iii Danger of spot zoning: can’t just create zones around a few pieces of property; spot zoning usually not rationally related to the comprehensive plan. Watch also for a poison purpose.
iv Important to keep an informal or formal record of the amendment process, since the decision is likely to be judicially challenged.
4 PUDs: Planned Unit Development zoned district (contract zone – much like a special exception)
a A means of non-Euclidian zoning, in which the exact uses for plots are not laid out. Basically every use is a special exception.
b Floating PUDs: in the text of the zoning ordinance, but not put on the map. Super flexible.
c Fixed PUDs: an actual zone on the map that is not zoned for any particular use.
d Can encourage mixed use of land
e Acquiring a PUD:
i Much like obtaining a special exception. Contract-like process.
ii Go through a hearing process requesting a certain use for the land.
iii Property owner negotiates and enters into a contractual obligation with the city that he will build on the land in a certain way, and possibly with other restrictions (exactions).
iv Those requirements and uses then run with the land.
5 Challenging Zoning:
a First, is there some rational basis for the zoning (#3) or is it arbitrary & capricious?
i If there is a comprehensive plan that relates to the zoning, then probably rational.
ii Are there findings/research/expert testimony on the record for deciding how to zone.
b Second, does the zoning substantially diminish the value of your property?
i If so, challenge as a regulatory taking, excessive burden on individual rights.
ii Court will try to presume that as long as there is a reasonable remaining economic use, then the zoning is okay, but still challenge using a Penn Central triad analysis if there is a reasonable remaining economic use.
B PENCU’s and Amortization:
1 PENCU: prior existing, non-conforming use.
65
a When zoning laws are passed, many existing property uses in the zoning area are not in compliance with the zoning requirements.
b In most states, the property is grandfathered, and the rights of the PENCU run with the title.
c Title bearer of property can continue to use as he had before with certain exceptions:
i If property is destroyed, cannot rebuild.
ii Cannot perform super-maintenance on the property (e.g. getting a new roof that costs 40% of the property value), but instead, must let it fall apart.
iii Some jurisdictions require you to get a special exception if you want to expand the PENCU.
iv Generally can grow and expand with the natural flow of business, with possibly some standards and restrictions set within the zoning ordinance.
C Exclusionary Zoning:
1 Low-income persons/ families:
a Issue with local zoning: If zoning is left to private parties and towns rather than states, then land use will be determined without concern for its effect on surrounding communities.
B MOUNT LAUREL:
i Stands for the holding that in determining whether zoning is fulfilling a PPP, must consider more than just the individual town- must consider region or even state (b/c authority to zone in the first place is a state power).
ii Since zoning is governed by the state, must consider the health, safety, welfare of citizens outside of the town.
iii In establishing zoning, must include mixed uses that allow the possibility for low-income residents and families.
2 Racial Exclusions: always struck down, violates the 14th amendment.
3 Disabled people:
a FHA makes it illegal to “discriminate in the sale or rental, or to otherwise make unavailable or deny, a dwelling to any buyer or renter because of a handicap of…a person residing in or intending to reside in that dwelling after it is sold, rented, or made available.”
i Exception: Person who owns 4 or more units and lives in one.
b 3 distinct claims for violation under this:
i Discriminatory intent: party need only show that the exclusion of a group protected by the FHA was in some part the basis for the policy decision.
ii Disparate impact: party needs to prove that the conduct actually or predictably results in discrimination or has a discriminatory effect. (emphasis on results, not intent.)
iii Reasonable accommodation: defined to include changing some rule that is generally applicable so as to make its burden less onerous on the handicapped individual.
Member of protected group can claim that because of government regulations, she cannot find a place to live.
Not a reasonable accommodation if it would require a fundamental alteration in the nature of a program or if it would impose undue financial burdens on D.
4 Growth Control:
66
a In attempt to limit growth in a community and ease demand on city infrastructure, many cities try to implement regulations to make it more difficult for people to move in.
b Unacceptable means of growth control:
i Absolute cap on number or residents: limiting to a certain number doesn’t have a reasonable relationship to health, safety, welfare. (Boca Raton)
ii Moratorium on growth until city provides sufficient schools and infrastructure. (Livermore)
Idea is okay, but just need to have relevant criteria on the record explaining why such regulations are needed.
c Acceptable means of growth control:
i A point system for approval of building permits, based on criteria with a rational basis- such as seriously overcrowded schools. (Ramapo)
ii Having a cap of a certain number of units every year, and granting those units on the basis of a point system grounded on rational criteria- sound design, environment concerns, etc. (Petaluma)
D Homelessness:
1 Do people have a right to have a place where they can sleep and keep their things?
2 Ways of dealing with the symptoms of homelessness:
a Pottinger:
i Homeless sued Miami because there’d been a pattern of conduct where the homeless were arrested for basic “life-sustaining” activities like eating, sleeping, and bathing in public. Police also burned their property upon arrest, and no criminal charges were usually filed.
ii Argued that this was a violation of both substantive and procedural due process, a violation of the 4th amendment protection against search and seizure, cruel and unusual punishment under the 8th amendment, and a violation of the constitutional right to travel.
iii Court:
Police must follow their own regulations for dealing with confiscated property.
Can’t arrest people for things that are necessary outgrowths of their status as homeless persons living in Miami.
Required safe zones in parks where homeless people will not be hassled for any of the usual problems.
b Thomas:
i Cop invades homeless person’s “box” and finds evidence of a crime.
ii Person claims box was home, and therefore an invalid search.
iii Court says could be considered a home if:
Had expectation of privacy, and
Society thinks it is a reasonable expectation of privacy.
c Mooney:
i Argues that part of bridge is his property.
ii Court doesn’t recognize as his quasi-home.
67