Popular in Property Law
Popular in Law
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Date Created: 10/09/15
Four general categories of fundamental legal arguments that often pop up in disputes over property seek to promote 1 2 3 4 Efficiency forces you to use the land for some reason or purpose Maximizing total welfare Greater overall utility Law and Economics See Keeble v Hickeringill FairnessJustice If you invest your time and hardwork into something then it seems fair for it to become your property Locke 3 Labor Theory Haslem v Lockwood Appeals to notions of fairness justice or equity CustomNature this is how people intuitively sort themselves out anyways There was a state of nature in which no one had any stuff then they mixed their labor with it and it became their property Pierson v Post Livingston dissent should have consulted other hunters Ghen v Rich argument Recognize the prelegal expectations or customs of a particular community or that may fir with various natural forces Proof promotes certainty Physical proof that you were actually there and did something Minimizes litigationjudicial economy Easier to prove than firstintime Ghen 12 Rich external proof added to property metal Ex pierson 12 post easier to determine who the fox belongs to when it s in their hands FIRST POSSESSION ACQUISITION BY DISCOVERY CAPTURE AND CREATION 1 Original possession is 9 10th the law Possession is not a given fact but a legal conclusion It is circular and we can argue for it not from it Possession in a sense is the conclusion Firstin Time Principle The principle that he who first takes possession to unclaimed property takes title Care about who discovered the land first Indians ability to transfer title is pretty much gone because they were not the correct type of firstin time First discoverers have a right to do whatever they want with the land The notion that being there first somehow justifies ownership rights Chain of discovery and conquest are used because US gov t is not the absolute first in time 0 Why does being rst in time make sense A way to resolve disputes about property 1 Cohen Idea Notion that maybe possession in itself is pretty good and firstintime is kind of arbitrary But maybe there s something connecting the two If firstintime helps us get to possession then we should use it Possession is more important because it s a settled expectation 2 Epstein Idea Since people have so much and different kinds of property first in time if it s intuitive makes the most sense because common ownership or shared property is a mess Epstein looks at the way the world is right now thinks we shouldn t disturb looking at the past to see who was there first Something fundamentally good about the status quo in regards to property Acquisition by Discovery discovery gave title to the government by whose subjects or whose authority it was made against all other European governments which title might be consummated by possession Entails the sighting or finding of unknown or uncharted territory It is frequently accompanied by a landing and the symbolic taking of possession 0 Res Nullius 0r Terra Nullius a thing or territory belonging to no one only a hitherto unknown territory can be discovered Title by Conquest is acquired and maintained by force The taking of possession of enemy territory through force followed by the formal annexation of the defeated territory by the conqueror What is Title right of ownership that will be legally recognized good enough to transfer property Chain of title sequence of transactions transfers of property that are going to be recognized as good Various chains and links between the transfer of title over time Absolute Title perfect title unencumbered title the right to sell the land When First in Time Fails Johnson v Macintosh This is a really famous case by Justice Marshall and is probably his worst opinion This case is considered to be in the AntiCanon cases that are so bad they are universally recognized to be wrong Facts M Intosh acquired title to land under grant from the US Johnson acquired title to the same land by purchase from the Painkeshaw Indians Issue Is title by grant from a discovering nation superior to title obtained by purchase from those that the nation conquered Rule Discovery of land in American by a European power gives absolute title subject only to the Indian right of occupancy In this case US Gov t discoverers of the land Christian people have a right to title and Indians don t count because it has something to do with religion and civilized people Right of PossessionOccupancy Indians still have this They have the right to use the land as they see fit until the real owner decides to do something else with it US can t sue them for backrent They aren t illegally squatting on the land Doesn t count as real possession Limited Transfer Right Indians can only sell the land to the US govt Monopsony can only sell to one person which pretty much makes it worth nothing NOTES Locke s Labor Theory so what if someone possesses something first Locke reasoned that the obligation was imposed by the law of nature and bound all men fast long before mere human conventions had been thought of All men have a property to their own person so his labor is properly his When he mixes his labor with and joins it to something else he thereby makes it his property Thus the Europeans would have owned the land because they worked it This follows one of the goals of property which is to encourage the efficient and productive use of land Ejectment an action to recover the possession of land Prior Possession by savage populations was commonly thought not to matter LAW OF ACCESSION That person who labors has a greater right to the land Deals with situations when one person adds value to the property of another by labor alone Murky area of the law The final product is often awarded to the owner of the original material 3 0 Haslem v Lockwood labor theory case P raked manure from a public street into heaps intending it to carry it away the next day Before he could do so the D found the heaps and hauled them off in his cart Court held for the P As abandoned property by the horses it belonged to the first occupant the P who had changed its original condition and greatly enhance its value by his labor 0 D argues that P then abandoned the manure by leaving it overnight If it s abandonment then anyone can just take it away However court determines that P did not abandon the manure because it was for a reasonable time Seems fair and efficient according to the labor theory which court is trying to promote 0 Ex original owner owns wood Accessioner takes wood and creates furniture It is now worth more than the original wood much more valuable So who should it belong to Unclear area of law If the accessioner 1M that the property was originally the owners and takes it intentionallv and willfullv then it may have to be returned to the owner 0 Efficiency value of his labor all be better off Rather have valuable tables than scrummy trees Fairness not as easy to prove in this situation FIRST POSSESSION The Rule Of Capture seeks primarily to promote certainty discourage litigation encourage easy administration by courts and deter con ict specifically with regard to wild animals and natural or fugitive resources In applying the rule of capture courts often look to the theory of First in Time to determine the party who occupies the animal for a bright line rule making it easier to predict ownership Gives future litigants notice and something to go off of Promotes a standard Fugitive resources like wild animals oil and gas groundwater and the like tend to be over consumed another consequence is overinvestment in capture technology Page 52 Also look to Eli v Texan Drilling C0 Pierson v Post does a person obtain possession of a wild animal by chasing it Post spent more time and effort chasing the fox with his hounds and horses while Pierson came in at the last minute and killed the fox and took it off Court rules in favor of Pierson even though he spent much less time and effort Ferae naturae wild animalbeast Property in such animals is acquired by occupancy only 0 What s the core of the argument for Pierson Mere act of hunting alone does not give you a property rightpossession What s the best wav to show possession The actual body of the fox Boils down to Proof and what s easier for the court to decide Want to pick the rule that will get more people out of court 0 A hunter must either trap or mortallv wound a wild animal to acquire title to it or occupy it Thus the court rejects the labor theory 0 Dissent argument Custom sporting activity has its own set of rules and court should have asked sportsman how they would have resolved the issue 0 Also Efficiency argument Dissent believed that by giving the fox to the guy who chased it all day it would encourage others to do so too We ll all be better off with the killing of the fox who was a pest If they just give it to the guy who swooped in then less will be likely to go to the trouble of chasing it Ghen v Rich men go out in boats and kill whales leaving a mark with iron unlike Post with no mark and wait for it to wash up on shore Custom rule iron holds the whale Beach bums can t just take the whale Promotes efficiency because whaling is an important industry and helps the community If there s less hiccups with possession things will move more efficiently 0 Argument for Custom Courts should at least consider adopting the rule of custom when accessible because it re ects the parties prelegal expectations Additionally if rules of custom are enforced parties may be less likely to bring a case to court because they may know the answer themselves 0 Under the labor theory there is a benefit to rewarding people for doing their jobs and adhering to custom hunting whales as a result they will continue to have incentive for their labor How much incentive would they have to work hard if the court ruled against them Use of custom and labor theorv prevents the industry from suffering and encourage useful economic activity and efficiency in the long run Rule of Capture and Fugitive Resources Fugitive resources are those resources that wander from place to place often collecting in reservoirs including water oil and natural gas These reservoirs usually underlie many acres of land owned by many different people Generally of these owners whoever first captures the resources has ownership see rst in time In a common pool situation an owner may take the fugitive resources without the consent of the owners of those lands However this immunity does not extend to the negligent waste or destruction of oil and gas like in Eli v Texan Elli v Texan Drilling Company Texon was drilling on the land next to the Elliffs During drilling a well blew out caught fire causing wells on the P s land to blow out This caused large quantities of gas and oil to drain from under P s land and escape into the air Also claim damages for cattle that were killed by the explosion 5 0 Court uses analogy between wild animal and gas the law of capture Texon argues that oil moves around like wild animals so whoever has possession of it has ownership of it They may have been negligent but the Elliffs didn t have property right in the oil because they hadn t captured it pierson 12 post approach Elliffs claim some kind of vested right in the oil below their property relative rights similar to Keeble v Hickeringill 0 Under law of capture there is m liability for reasonable and legitimate drainage from the common pool of mineral As long as two competitors are not recklessnegligent they can pump from beneath both of their lands until it runs dry They just cannot cause the other persons land to collapse or cause damage The immunity does not extend to negligent waste or destruction of oil and gas Reason Texon lost negligent behavior 0 Ef ciency Argument bad behavior we are trying to discourage no wasting of resources irresponsible drilling If there are no damages imposed on Texon and no rights given to the Elliffs then the court would be encouraging reckless and irresponsible behavior by oil companies Same argument in 661916 v Hickeringill CONSTRUCTIVE POSSESSION The doctrine of ratione sole asserts that an owner of land owns the wild animals on that land The owner is then said to have constructive possession over the animals in other words the owner of the land has dominion and control over the animals even though there is no physical possession 0 For example a trespasser who captures a wild animal on the land of another might still have no rights to the animal as against the landowner even though the landowner never had actual physical possession or control and even though the trespasser does What does constructive possession mean Even more of a legal conclusion than possession A subset of possession A way to apply or argue for the concept of possession even though we might not think we have the usual kind of facts that would lead us to possession Extends possession to the limit Courts will also follow the Rule Of Increase which is seen as a bright line rule when addressing possession over animal offspring Pretty clear and usually applied consistent This rule adheres to the law of nature and states that the offspring of an animal follows the mother Accession is much murkier Usually has to do with livestock limitednarrow rule 0 Ex F owns a doe who takes up with neighbor s buck Neighbor feeds the doe and doe eventually bears a fawn Who gets the offspring F Owner of the mother gets the animal 0 Ex T captures a wild animal on O s land and takes it back and confines it in a cage T2 trespasses on T s land and takes away the animal Courts wants to discourage trespassing so T would not be deemed to have possession 0 Ex F has a herd of deer Deer roam onto open government grazing land during the day but return to her land in the evening Hunter shoots deer during hunting season F sues H for return of carcass The Rule Of Return a kind of constructive possession since the animals return to F s land she would win The hunter would have to return the animal to F 0 Efficiency broad arguments that we ll all be better off law and economics 0 Ease of proofJudicial Economy It is easier to prove the mother than the father We can tell that F s doe is the one who is the mother What helps minimize litigation and will get people out of court 0 Custom offspring have to be nursed by their mothers Mammal mothers are usually more caring than the fathers O FairnessJusticeEquity look to why F had the doe in the first place Maybe she was a doe breeder Also if you gave it to the neighbor it would be an unfair windfall since he didn t do anything to bring it about Keeble v Hickeringill P had a property right in the ducks that were on his property Keeble had a decoy duck pond for capturing and making a profit Hickeringill shoots off guns and scares away the ducks D hindering P in his trade or livelihood is liable to an action Shows why efficiency is a good argument to apply persuasive Action not specifically brought for the ducks but for the disturbance 0 This case is an example of the fundamental type of argument that is based on prioritizing rules that will tend to create overall utility or promote ef ciency Related to Keeble we also introduced the notion of constructive possession 0 Rule of Pierson v Post doesn t apply because the ducks definitely aren t dead Ef ciency argument something malicious about what Hickeringill is doing He could just create his own decoy pond and compete which is lawful But Hickeringill is leaving everyone worse off because there are now less ducks to eat Court wants to get the most efficient result LAW amp ECONOMICS Externalities a tool for making the four fundamental arguments Externalities exist whenever some person say X makes a decision about how to use resources without taking full account of the effects of the decision X ignores some of the effects some of the costs or benefits that would result from a particular activity because they fall on others They are external to X As a 7 consequence resources tend to be misused or misallocated Those costs or benefits that arise out of your action that fall on other people and which you fail to consider 0 Ex X runs a factory with a lot of exhaust Residents move in around the factory with lots of pollution and lights ashing at night Brings neighbor s property value down Factory owner doesn t worry about this because his activity has benefits for him There are costs of his behavior that he doesn t have to face so he won t take them into account This is a negative externality 0 Not all externalities are negative B makes improvements to his house which could improve the neighborhood and increase surrounding house prices 0 Ex X s activity benefits him 50 and costs A 100 A can offer X 5199 to change his activity It would be worth it for X and still be a good deal for A Transaction costs time spent of negotiating and money on lawyers the costs of arranging an offer or deal between parties can be a lot and frustrate the deal 0 How transaction costs and externalities are fundamentally related If transaction costs are too great and keep X and A from bargaining then they can t get around the externality The external effects of using resources are unlikely to be fully considered through bargaining when transaction costs are high which increases the likelihood that those resources will be misused 0 Coase Theorem assume away the transaction cost We can all bargain without cost We can figure out what the right result is Helps us see how some extemalities can be known and avoided Lets us see the amount of transaction costs in the real world COMMONS V ANTICOMMONS Theories of Property Right Development Common Property property that anyone could capture Problem overconsumption and overinvestment in overconsumption It s a free fall ex fishing as much as you can in a pond that belongs to everyone Eventually there will be no more fish Overinvestment how to consume as much as you can as quickly as you can But this may not be efficient and isn t really fair The Tragedy of the Commons page 53 You don t have enough individual property rights AntiCommons excludes multiple people from property Example wilderness preserve There are too many people that have the right to exclude Anticommons leads to underconsumption Ex in Soviet Union each storefront was individually owned But the property was divided up between the physical store front the stuff inside the store More people have the power to exclude more people If you want to change anything about the store you have to talk to all the different owners It is not easy for all the different people to get together and make a decision Utilitarian Theory of Property dominant view today property is just an artifact a human invention a means of organization Primary function of property rights is to promote the ef cient use of resources Property systems are a means of distributing and redistributing the wealth of a society Nourishes individuality and healthy diversity 0 Free transferability contributes to efficiency by facilitating the movement of resources from lower to higher valued uses letting property owner A sell to buyer B at a price that makes both parties better off 0 Related point private property is essential to political freedom Evolutionary Game Theory is that individual selfinterest led early human ancestors and many nonhuman animal species before them to respect the possessions of each other such that a convention of deference to possession developed naturally as in natural selection even though no individual or group ever intended such a uniform practice in the first place FIRST POSSESSION Property in one s ideas and expressions general principles of IP The assertion is that if you create something if in that sense you are first in time then something is most certainly yours Copying and the Common Law General Rule In the absence of some recognized right at common law or under the statutes a man s property is limited to the chattels which embody his invention Others may imitate these at their pleasure Cheney Brothers Intellectual Property grants limited monopolies over protected material to promote creative activity the point of the limits is to advance competition 0 Patents can be granted for processes of products that are novel useful and nonobvious O No patent will be issued for the discovery of a new plant or mineral although it might for the invention of one Patents last for 20 years from the date or original application 0 Copyrights protect the expression of ideas in books and articles music artistic works and so forth Protection begins as soon as the work in question is set down in a tangible medium and lasts until 70 years after the death of the author or creator 0 Facts narrated by an author are not protected by copyright because the facts did not originate with the author Compilations of facts are protected 9 0 Why do we need stuff like the copyright act Otherwise judges would just make up laws and people wouldn t know what they could and could not do Helps provide more bright line rules and standards Trademarks are words and symbols indicating the source of a product or service helps consumers identify and clears up confusion Intellectual Property Rights Cases International News Service 12 Associated Press dicta Facts INS copied news that AP gathered Issue Is there a property interest in freshly printed news that allows the creator to prevent others from copying it RLle Where a company has expended resources in creating news and information the creator can exclude others from copying it until its commercial value as news has passed away Newly printed news is protected from copying The property right is not in the stories but in the business of collecting news It is their own compilation and creation The news is guasi property INS is misappropriating AP s quasi property in the news because they have interfered with the normal operation of complainant s legitimate business If the court let INS do this then AP would lose money and the news would get worse There would be no e iciency and the community at large would be worse off Cheney Brothers 12 Doris Silk Corp Facts Doris copied Cheney s fabric pattern and undercut the price All such designs have a short life and are not able to be patented Issue Is there a generic common law patent protection which lasts for the commercial life of a creation No Rule Unless the common law or the patent or copyright statutes give protection from appropriation a person s property interest is limited to the chattels which embody his creations Argument for ef ciency if the court ruled for the Cheney brothers it would result in everyone who has an original idea having an automatic monopoly This is not beneficial for society as a whole and does not allow for market competition 10 Distinguished from INS v AP Judge says that since Cheney didn t have any copyright protection or fall under statutory provision there is no remedyprotection Learned Hand is making INS v AP case specific it should not be applied to everything it s just about the news so it is not binding Smith v Chanel Inc Smith advertised their perfume as being the equivalent of the more expensive channel number 5 RLle Chanel was not patented so Smith had the right to copy it Imitation is the lifeblood of competition It gives price competition and is better for the public at large because if the products are basically the same then consumers would be able to get cheaper perfume Same idea from Cheney brothers with a different argument overall efficiency A large expenditure of money does not itself create legally protectable rights FIRST POSSESSION Broad deep strong consensus that property rights in yourself cannot be violated ex slavery You never want to argue efficiency in these cases why slavery was inefficient There are some things that we just won t commodify Moore v Regents of the University of California D removed P s spleen to save his life D s knew that the P s blood products could have great commercial uses unrelated to his medical research D s took his cells without his knowledge of what they were for and developed and patented a cell line and licensed them for commercial development P claimed Conversion def wrongful exercise of ownership rights over the personal property of another TO establish conversion P must establish an actual interference with his ownership or right of possession If P has neither title nor possession he may not maintain an action for conversion The court found nothing to support the claim that a person retains a sufficient interest in excised cells to suppose a cause of action for conversion No conversion D s only liable for breach of physician s disclosure If conversion was found then sue in Trover There was no previously established property rights in one s cells The court gives three reasons why conversion liability should not be extended to encompass the facts of this case 11 1 Policy considerations would impose liability on all those who work with cells not protect innocent 3rd parties They don t want to impede on the social usefulness of P s cells Ef ciency Argument End product actually ends with something not unique to his cells it was their labor that created the product Locke Labor Theory If the court extends conversion they think it will limit organizations production and research which could help society as a whole 2 Defer to the Legislative Resolutions Calif Stat law limits patient s control over excised cells and 3 Not necessary to protect patients rights courts want to enforce physician s disclosure obligations without hindering the socially useful practices of innocent researchers Arabian Concurrence Can you sell yourself Moral dilemma Thinks it should be left to the legislature to decide not the judiciary Have to balance the rights of individuals with the good of society Yes and No you can sell sperm but not organs Both have beneficial uses However selling organs can create a black market effect and create dangerous side effects Mosk Dissent there was a right of conversion The parties did not have equal bargaining power these were the doctors that saved his life He relied upon them for treatment Brings up the economic exploitation of the body 0 the rights to possess property to use the property to exclude others from the property and to dispose of the property by sale of gift A way to think about property Maybe we could say Moore has some rights in his cells without treating it the same as ones right to their computer Thinks you can give someone part of the bundle without all of it the property right to his cells without the right to sell his cells which degrades human dignity You can give an organ away but you can t sell it gift notion 0 Majority thinks Moore can t have a right to his cells as property because it would commodify his body But there should be more emphasis on the right to exclude Moore s right to exclude others from using his cells without his permission ALIENABLE V INALIENABLE PROPERTY Inalienable can t sell or give away no right to transfer Yourself slaverypeonage prescription drugs the right to practice a profession you have to do it yourself you can t sell your elected office judgeshipgovernorship you can t give away your vote 12 0 Market inalienable in between you can t sell this stuff but you may be able to give it away transfer Ex some body parts hunting game children Trade of ivory prohibited but you may be able to inherit these heirlooms from ancestors no selling but tansferable 0 Alienable Things that you could sell or give away Ex laptops cars pets 0 Only Market Alienable you can sell it but you can t give it or transfer it Ex corpus trust If you re a trustee you have property rights in the trust You may be able to sell things in the trust if you could get a good price for the trustees but you can t give away the corpus to the trust because the trustees have a right to be protected SUBSEQUENT POSSESSION THE RIGHT TO EXCLUDE The right to include and exclude is needed and together are the necessary and sufficient conditions of transferability Notion of property as a relationship among people that entitles so called owners to include or exclude use or possession of the owned property by other people The right to include permit Includes selling an item to another The right to exclude deny gt The law of trespass protects the right to exclude This is arguablv the most important property right in the bundle of rights The right of property according to Blackstone that sole and despotic dominion which one man claims and exercises over the external things of the world in total exclusion of the right of any other individual in the universe J acque and Shack both have very different views as to the right to exclude Not necessarily inconsistent with each other but totally different viewpoints on how far the right to exclude extends and its relation to the bundle of sticks Jacque v Steenberg Homes Inc Facts J acque would not allow Steenberg to cross his property while delivering a mobile home Steenberg trespassed intentionally anyways so J acque sued 13 Issue whether punitive damages may be awarded in an intentional trespass case when the P is only entitled to nominal damages because there is no actual harm to their property Rule YES Damages 1 nominal and 100000 punitive Reasoning to support award the purpose of the punitive damages in a case with no actual damages is deterrence Court rules that the landowner s right to exclude is one of the most essential sticks in the bundle of rights that is characterized as property If there was no award it would compromise those rights The public has to have confidence in the legal system The court believes that they are trying to protect the interests of the individual landowner State v Shack m D s entered private property owned by P to medically aid a migrant farmworker housed there The owner asked them to leave but they refused and were charged with trespass ISSJZ Does trespass on real property include the right to bar access to governmental services available to migrant workers m NO Trespass doesn t include a situation where representatives of recognized charitable groups enter private land in other to provide government aid to those workers who need it Property rights serve human values the wellbeing of the people that live there is more important than one person s property right Notes a person s right to his real property is not absolute Necessity private or public may justify entry upon the lands of another Ex ambulance or a fire truck allowed to come on your land no matter what Limitations on the right to exclude Civil rights legislation forbidding various forms of discrimination Rent controls and other limitations on a landlord s right to evict tenants The law of adverse possession Bodies of doctrine granting public rights of access to private beaches Legislation protecting homeowners who have defaulted on mortgage payments The justification for these limitations may be summed up in a single underlying moral principle Relignce Interest Alexander View in property law on both the private and public sides there is a social obligation norm imposing on all individuals a duty to promote the capabilities essential to human ourishing meaning as to property owners a duty sometimes to share their surplus resources with the needs Epstein View it is not sufficient to condemn all systems of absolute rights on the ground that they sometimes leave some people out in the cold 14 SUBSEQUENT POSSESSION ACQUISITION OF PROPERTY BY FIND sic Rule behind Acauisition bv Find The title of finder is good against the whole word but the true owner In general the prior possessor prevails over a subsequent possessor In the more common disputes between a prior wrongful possessor and a honest subsequent one courts regularly prefer the latter in quiet defiance of the hornbook rule Replevin In an action of replevin there is a lawsuit to obtain return of goods not damages This action is one of personal property It is equivalent to an action for possession or ejectment in real property cases Acquisition bv Find Cases Armory v Delamirie m chimney sweep with a heart of gold found a ring took it to a goldsmith to find out how much it was who then took the jewel out of the ring and wouldn t give it back ISSJZ Does a finder of an object have a right of ownership that the court will recognize against someone goldsmith other than the rightful owner YES 0 Rule The nder of lost property has a title superior to all but the true owner D must return the jewel of pay the max amount the jewel could have been worth 0 Notes A finder of property does not acquire an absolute title the true owner still has absolute title 0 Certainty Argument easy to see who had it first 0 Bailments when you give someone possession of something for a period of time after which they will give it back when you check your coat 0 Trover the P here sued D in trover Trover is a common law action for money damages resulting from the D s conversion to his own use of the chattel owned or possessed by the P What about situations where you know the finder is dishonest 0 Anderson v Gouldberg P trespassed on land of 3rd party cut trees and hauled them off to the mill where the D took them P is like chimney sweep and D is like the goldsmith Who wins The trespassing lumberj ack P because he did the work and cut down the trees the D definitely doesn t have any claim 15 Hannah v Peel m D owned the house but didn t occupy it P was a soldier housed there who found a brooch He gave it to the police to find the rightful owner and was given a receipt The rightful owner was never found and the police gave the D the brooch who sold it P sued claiming return of the brooch or its value Issi If a landowner has never lived on a parcel of land does a finder of property on that land have superior title to the landowner YES Rule the nder of a lost article is entitled to it as against all persons except the real owner A property owner does not necessarily have title to all that is found on his property It is fairly clear from the authorities that a man possesses everything which is attached to or under his land But a man does not necessarily possess a thing which is lying unattached on the surface of his land even though the thing is not possessed by someone else Judge doesn t make a decision on finders but because he thinks Hannah is meritorious and commendable he gives him the brooch Peel lost because he did not have prior possession m he didn t have prior possession because he lost Circular reasoning Possession is uid and a legal construct it s something you argue for not from Possession is not a given fact You have to argue towards possession and it cannot be assumed it has to be earned Equitable Arguments for Finders Possession is eleven points in the law Lawyers conceive of property as referring to relationships among people with respect to things not to relationships between a person and a thing The rule of prior possession is said to be explicitly invoked only in support of honest claimants Sanctitv of the home the occupier of a house will invariably possess any lost article on the premises Trespassers if the discoverer is a trespasser such trespasser can have no claim to possession of such property even if it might otherwise be considered lost SUBSEQUENT POSSESSION ADVERSE POSSESSION OF REAL PROPERTY 16 AP is one of the foremost present day compromises of the right to exclude in the law it is a real limitation on someone rights to exclude 0 It functions as a method of transferring interests in land without the consent of the prior owner and even in spite of the dissent of such owners It rests upon social judgments that there should be a restricted duration for the assertion of aging claims and that the passage of a reasonable time period should assure security to a person claiming to be an owner 0 The Purpose of AP to automatically quiet all titles which are openly and consistently asserted to provide proof of meritorious titles and correct errors in conveyancing If original owner did not make use of the land and establish their right to the property for long enough then the court will not recognize the owner s property rights either 0 What s the difference between a squatter and an adverse possessor Time 0 Arguments for AP 0 Fairness We have limited resources so if someone is not using those resources then it is only fair to let others have a chance at them 0 Judicial economy easy for courts to see who has actually used and worked the land Options left open to Original Owners can either file an 0 Ejectment actual owner wakes up and tries to get the AP off their land 0 Quiet Title An action to quiet title is a lawsuit filed to establish ownership of real property land and buildings affixed to land The plaintiff in a quiet title action seeks a court order that prevents the respondent from making any subsequent claim to the property Two General Elements that must be met for any adverse possession claim 1 Statute of Limitations Element often around 10 years must be spent on the land Once the limitations period is passed the wrongful possessor effectively gets title to the land 17 Potential for variation across jurisdictions in both the amount of time specified by the statute of limitations If the AP abandons the property leaves with no intention to retum before the statute has run the statute stops and new entry is required and the process begins anew 2 if these elements happen for the statutory period then the AP has a legal right to the land 1 There must be an entry an Actual Entry a This entry creates cause of action for trespass and thereby triggers the statute beginning the statute of limitations Also helps stake out what it is the adverse possessor might end up claiming b Some case law suggest the idea that entry shows an interloper who at least is working the property making it productive and by these means earning some rights 2 That entry must be by acts open and notorious a Entry must be sufficiently open and notorious that they would put reasonably attentive property owners on notice that someone is on their property Aimed at constructive notice not actual notice If the adverse possessor s acts would be noticed by an ordinary person then the owner is regarded as knowing what should have been known objective reasonable true owner standard b You must be able to show that the owner was dormant or sleeping upon his rights This is the sleeping principle which penalizes the negligent and dormant owner for sleeping upon his rights c However in the case of minor encroachments the owner of the land must have actual knowledge thereof in order for the adverse claimant to satisfy the notoriety requirement i Owners shouldn t have to do a property survey to realize that you re there EX if you only came on the property at night and erased every sign that you were ever there 3 That entry must be continuous for the statutory period a Generalization use of property in the manner than an average true owner would use it under the circumstances Objective reasonable true owner standard 18 b Entry must be continuous but not literally constant So AP allowed to come and go in the ordinary course given the nature of the property in question Allowed to stay summers only at summer homes a Ewing v Burnet rich guy turned the land of a sick person into a gravel pit Pays taxes for it who else would pay taxes but a true owner Lets some people dig in the pit and brings action of trespass against people that dig there without his permission Acting as the gatekeeper He does not live on the property i What about continuity Using the land as an average owner would because a gravel pit is not made for living 4 That entry must be adverse or hostile a But what does that mean Adversity implies possessors wrongfully seeking something not theirs claim of right implies possessors thinking something is theirs A good way to approach the idea is to look at the state of mind required of the adverse possessor Existing doctrine re ect three views 1 The Objective Standard State of mind is irrelevant Nome Standard most jurisdictions follow Just matters that you do what a reasonable owner would do i Statute of limitations begins to run as soon as the true owner is dispossessed by someone taking possession inconsistent with not subordinate to his title 2 The GoodFaith Standard The required state of mind is I thought I m ii This is the type of standard that wins the most this is what courts want to follow and try to award these kinds of possessors 3 The Aggressive Trespass Standard called bad faith standard The required state of mind is I thought I didn t own it but I intended to make it mine iii This is the minority approach courts don t like to follow it because it doesn t seem fair iv One way of dealing with the aggressive adverse possessor it to award title but only if the adverse possessor agrees to pay fair market value to the dispossessed former owner 19 V Adds utility of the property but is a hard thing to prove or succeed on To enter upon the land without any honest claim of right to do so is but trespass and can never ripen into prescriptive title When there is defect of title thought vou owned it but didn t Color Of Title Not an element of AP Refers to a claim founded on a written instrument a deed or will or a judgment or decree that is for some reason defective and invalid It purports to provide title to the property which is defective or invalid for some reason EX as when the grantor does not own the land conveyed by deed or is incompetent to convey It is not required for adverse possession but may confer various advantages to a wouldbe adverse possessor What can color of title do 1 If you re adversely possessing just part of a property but have color of title then you might be able to claim the whole entire property Constructive Possession 2 It can also reduce the statute of limitationsnumber of years you have to be there 35 years 3 Puts you in a favorable position as to frame of mind helps establish good faith Adverse Possession and Boundary Case Examples Name 2000 v F agerstrom Fagerstrom family entered the property built a cabin and made improvements to the land camper trailer picnic area outhouse reindeer shelter They were present on the property every other weekend and a few times a week They cleaned the property and others believed they owned it 0 Original Owner Losing Argument AP used the land in a traditional native Alaskan way This can t be adverse or hostile because in the traditional system they didn t take ownership of the land but were only stewards of the property Do the Fagerstroms meet the AP elements 1 Entry Yes 2 Open amp Notorious The use was notorious because if the landowner had checked on the land he would have noticed that someone was using his property 3 Continuous The land must be used during the statutory period in the way an average owner of similar property would use it When the land in question is rural a lesser exercise of dominion and control may be reasonable 20 4 AdverseHostile The use was hostile because the possessors acted as if they owned the land without asking permission for its use Hostile has nothing to do with intent or belief Obiectivelv reasonable what they did do with the propertydoesn t matter what they thought about the property Exception However the Fagerstroms did not use the southerly portion of the land in a way that would provide notice to the owner of their dominion and control so they did not obtain adverse possession of that portion of the property Mannillov v Gorski D entered into possession of premises under an agreement to purchase Son made changes to the house concrete steps Some of the changes encroached on P s land by 15 inches D claims adverse possession but P claims AP does not apply because possession was not hostile in nature because D did not intend to encroach upon the land Issi Were the D s actions hostile YES 0 Hostile Issue What standard does the court think they have to start with Aggressive trespass standard Maine Doctrine which they criticize for public policy reasons They don t have to have actual knowledge of trespass Makes people less secure and won t trust others from taking over Then the court looks to the obiectivelv reasonable standard state of mind doesn t matter The standard most jurisdictions follow 0 Rule A mistaken belief that the possessor has title to the land involved exhibits the required hostile possession Misc Doctrines Relating to AP The Doctrine of Agreed Boundaries provides that if there is uncertainty between neighbors as to the true boundary line an oral agreement to settle the matter is enforceable if the neighbors subsequently accept the line for long periods of time The Doctrine of Acquiescence provides that long acquiescence though perhaps shorter than the statute of limitations is evidence of an agreement between the parties fixing the boundary line AP related Doctrine Of Estoppel comes into play when one neighbor makes representations about the location of a common boundary and the other neighbor then changes her position in reliance on the representations of conduct Two elements of estoppel to be met for your claim 21 Example Adverse possessor represents to the actual owner that they don t have color of title over the whole property and only AP part of the property Owner doesn t bring ejectment while adverse possessor actually has color of title so has claim to the whole property not just part of it Owner relied on the word of the AP to his detriment TACKING AND PRIVITY Howard v Kunto everyone is over one lot They have good legal title to the land that is one lot over everyone is on the wrong property probably done about 20 years ago Continuous it s a summer house Meant to be used for seasonal useconforms to the average user Tacking applies to the statute of limitations issue If you take from an AP can you add your years to the previous AP years Yes tacking is appropriate if you re laying claim to land that you got through privity You are basically adding on the previous owner s time of possession o Privity chain of succession can be between a landlord and tenant In property it s some relationship between two people that the law is going to recognize This case recognizes the relationship in the Kunto case and adds the previous AP s time to theirs The requirement of privity is no more than judicial recognition of the need for some reasonable connection between successive occupants of real property so as to raise their claim of right above the status of the wrongdoer or the trespasser DISABILITIES Disabilities specific kinds of facts that can stop the statute of limitations element A disability is immaterial unless it existed at the time when the cause of action accrued There are very few things that will pause the stop watch They are 1 2 3 Age of minority Of unsound mind or Imprisoned After 21 years from the time the action accrues these people may bring such action within 10 years after such disability is removed Basically means no tacking Generally we don t allow tacking with disabilities If you re under 18 then reach the legal age of majority and then go to prison the next day the statute of limitations begins because you can t stack imprisonment on top of minority 22 SUBSEQUENT POSSESSION ADVERSE POSSESSION OF CHATTELS Chattels Personal Property ie anything but land O Kee e v Snyder D purchased paintings that O Keefe claimed were stolen a long time ago She didn t tell anyone and made no effort to track the painting through official channels She later reported the theft to the art dealer association when she became famous She wants them back from the purchaser Snyder Replevin give me my stuff back 0 Snyder claims that so much time has passed statute of limitations that O Keefe s cause of action is barred Court uses the for O Kee e AP of chattels The discovery rule provides that a cause of action will not accrue statute of limitations will not begin until the injured party original owner discovers or by exercise of reasonable diligence and intelligence should have discovered facts which form the basis of a cause of action including the identity of the possessor of the paintings Court looks to these 1 Whether the Plaintiff used due diligence to recover the paintings at the time of the alleged theft 2 Whether at the time of the alleged theft there was an effective method of for the Plaintiff to alert the art world of the theft there was not there was tons of art oating around that people didn t know who it belonged to and 3 Whether registering the painting with an art organization would have put a reasonably prudent purchaser of art on constructive notice that someone other the possessor was the true owner In cases dealing with adverse possession of chattels the spot light is on the trueoriginal owner Usually when dealing with the elements of adverse possession of real property the spotlight is on the adverse possessor and what they do or don t do Different Standard than the Discovery Rule The Guggenheim Rule even more beneficial for original owners statute of limitations doesn t begin to run until the original owner makes a demand for its return and the newer owner refuses Much cleaner bright line rule Don t have to ask all the questions of the O Keeffe case REAL PROPERTY RECORDING amp CONTRACT People put a heavy emphasis on the alienability and easy transferexchange of property Relates to our autonomy as people our inherent rights to do what we want with our property the 23 subjective value of our property and the all over efficiency of the economymarket don t have to pay 3rd parties or fees perhaps if it s easier to transfer What does the US do with multiple subsequent possessors Original Owner O and two subsequent possessors A and B who both think it s their property What if O sells his land twice real property US keeps track of titles and record them You immediately record that deedtitle If you re A and report your title then B should have constructive notice that the land belongs to A Multiple purchasers can be cleared up through recorded titles This only applies to real property because there is not usually title recorded for personal items chattel 0 Only a problem if A doesn t record in a timely fashion A purchaseampsale real estate contract is 1 Designed to smoke out problems before closing before title changes hands 2 Executorv Contract title isn t transferred at signing there are still things left to do in the contract and fulfill before the transfer 3 Involving many people possibly attorneys realtors buyer and seller How their various responsibilities interact with the legal doctrines involved in these deals Most important clause in the contract 0 Inspection Clause when buyer can inspect property before closing so they can check up on everything and also imposes some requirements on the buyer It is their job to check it out Most executory part of the contract P 523 Licari v Blackwelder In this case the broker hired another broker and they worked together to buy the house for less than it was worth representing that they would live there themselves but just turned around and immediately sold it to other people for 45000 more 0 Fiduciary Duty they re required to represent their clients best interest at all times Four elements 1 Fidelity 2 good faith and 3 can t act antagonistically to their interest You have to be entirely 4 transparent and honest You are under an obligation to make a full fair and prompt disclosure to employers of all the facts within your knowledge 0 Brokers by entering into a contract with a listing broker the seller empowers the broker to serve as the seller s agent in selling the property Brokers owe their principals a fiduciary duty to act loyally for the principal s benefit in all matters connected with the agency relationship REAL ESTATE TRANSACTIONS STATUTE OF FRAUDS 24 There is inconsistency in the statute of frauds across the US jurisdictions as well as what s required Why Restatements have two functions 1 Descriptive ALI American Law Institute is trying to tell everyone the way the law is trying to sum up across different jurisdictions in a general way the state of the law and 2 Prescriptive don t just try to describe it as it is but push it to be the way the authors think it should be Push the world to a place where they think it will be better These two goals can be in tension Not binding until a court in a jurisdiction adopts them so as they are they are persuasive Statute of Frauds The primary goal is to make people more secure in their property and their contracts by making deceitful claims unenforceable Purpose Some contracts need to be more formal written than an oral agreement of a handshake because then it is easier to tell who has ownership who s in the right or what the terms were efficiency argument If some problem occurs and it s not in writing it could be really hard to decide what to do depending on what you re contracting for Courts usually treat the statute of frauds as a principle rather than a statute So much law related to it is judge made not statutory 1 Be Signed The general requirement is rather broad in that even an electronicsignature will be sufficient to establish a signature Electronic Signature is defined as an electronic sound symbol or process attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record 2 Describe the Real Estate 3 State the Price If no price was agreed upon then the court can imply an agreement to pay a reasonable price However the agreement is not enforceable unless the parties refers to a price and indicate a method they intend to use in fixing it A general indication in a contract for sale at fair market price is enforceable 4 Additional Element in Some States In some states the written memorandum must also contain all the material or essential terms of the agreement to be enforceable However it is usually thought that no accurate simple summary of material terms is possible given extensive litigation 25 Equitable Exceptions to the Statute of Frauds 1 Part Performance allows the specific enforcement of oral agreements when particular acts have been performed by one of the parties to the agreement Vary by jurisdiction but look to establish an equitable solution for the parties a It is a doctrine used to prevent injurious reliance on the contract Usually applies to specific performance not a suit for damages Two elements 1 provision of the purchase price and 2 either taking possession or something similar to that like making improvements b There are two theories in determining whether there has been part performance of an oral agreement The first theory addresses whether the acts make sense only as having been performed pursuant to the oral contract ex buyer taking possession AND paying all or part of the purchase price The second theory focuses on the idea that the statute of frauds is a doctrine used to prevent injurious reliance on the contract if the plaintiff shows that he would suffer irreparable injury if the contract were not enforced then the buyers taking possession alone is sufficient Where money damages would be inadequate compensation a court will compel a breaking party to perform specifically what he has agreed to do and grant specific performance of the contract see Hickey v Green 2 Estoppel applies when unconscionable injury would result from denying enforcement of the oral contract after one party has been induced by the other to seriously change his position in reliance on the contract a Generally need two things 1 misrepresentations and 2 detrimental reliance based on what the other person said which resulted in unfaimessharm b May also apply when unjust enrichment would result if a party who has received the benefits of the other s performance were allowed to rely upon the statute see Walker v Ireton Whv do we have these exceptions to the statute of frauds Fairness Also elements of both exceptions involve good evidentiary standards the court could see that the person made improvements to the property or sold their property in reliance The more detrimental the reliance the more likely the estoppel claim will work Evidentiary symbol to the court of belief Examples of how estoppel and part performance work in practice 26 Hickey v Green Ps entered into oral contact to buy D s lot for 15000 D represented that she wanted to sell the house but never signed so no statute of frauds In detrimental reliance the Ps sold their own house which they told D they were going to do D changed her mind for a better offer Ps want specific performance under the theory of part performance 0 Issue Whether a party s part performance in reliance on an oral contract to purchase real property make the contract enforceable Yes Walker v Ireton same facts as hickev V green but the would be buyer did not tell the would be seller that he was selling his farm So the representations don t seem as bad This key fact causes the would be buyer not to win no estoppel because it didn t constitute sufficient reliance 0 The exception of estoppel was not granted because the act of selling the farm must be within the contemplation and understanding of the parties or be foreseeable to the seller The seller must have induced the other party to sell his farm to his detriment REAL ESTATE TRANSACTIONS MARKETABLE TITLE An implied condition of a contract of sale of land is that the seller must convey to the buyer a marketable title It is a title not subject to such reasonable doubt as would create a just apprehension of its validity in mind of a reasonable prudent and intelligent person one which such persons guided by competent legal advice would be willing to take and for which they would be willing to pay fair value A title which 1 Free from encumbrances and anv reasonable doubt as to its validitv and 2 Such as a reasonablv intelligent person the hypothetical buyer who is well informed as to facts and their legal bearings and ready and willing to perform his contract 3 Would be willing to accept in exercise of ordinary business prudence it is what reasonableness consists of business judgment call Difference between marketability of title and marketability of land 0 Title Legal right to ability to transfer to sell and buy nothing to do with quality of property You can have a perfectly marketable title even though the land is riddled with problems No title examples would be no deed to the land or a fake deed and is trying to sell it to you 0 Land Problems with the property that make it worth less than you paid for it quality of the property is less than you thought misrepresentations 27 REAL ESTATE TRANSACTIONS DUTY TO DISCLOSE Dutv to Disclose defects to the land Three views 1 2 3 Caveat Emptor buyer has the most interest in looking for defects of the property because it ll be his soon and it s his duty to inspect Buyer Beware Also encourages more transactions because the seller doesn t have to worry as much or be as cautious Is a more bright lined rule Courts are moving away from this Johnson Risk is on the buyer except for these situations a Traditional exceptions to caveat ethor i Fraudulent misrepresentation seller explicitly lies to buyer about defect ii Active concealment don t affirmatively lie but conceal damage or aws Affirmative misrepresentation don t outright lie but make a statement inconsistent with the truth iii Partial disclosure making things seem better than they are like claiming the bathroom leaks a little when it really pours and violating confidential fiduciary duties iv Latent Material Known duty to disclose latent stuff that you can t see just by looking at the property and material defects that are known Material Known duty to disclose all known material facts not latent Often use standard disclosure forms Why The realtors are pushing for use of these so they won t be held as liable Merger if anything is left unfulfilled by the time of closing not the deed those duties have been fulfilled Nowadays has been riddled with exceptions Whatever obligation made at contract time that hadn t been fulfilled by closing is gone It was an independent obligation 0 How to get around merger that there was a duty that went unfulfilled Argue that whatever you want to enforce was a collateral obligation that should be fulfilled 0 Example in Stambovksy Duty to Disclose Case Examples 28 Stambovsky v Ackley The seller should have some duty to disclose problems to the buyer if the problems are significant As a matter of law the house is haunted because the owner went around and was in national publications claiming and representing the house as haunted Buyer sued for rescission of the contract and won RLle Where a condition which has been created by the seller materially impairs the value of the contract and is peculiarly within the knowledge of the seller or unlikely to be discovered by a prudent purchaser exercising due care with respect to the sale nondisclosure constitutes a basis for rescission as a matter of equity Latent defect exists because this isn t something that the buyer could have known by looking at the house and he wasn t a local Physical defects that the buyer could see by themselves wouldn t be covered and would fall under caveat emptor In this case none of the traditional exceptions to caveat emptor apply so the court creates a new category for the plaintiff because this deal was so unfair Equitable excentjon to caveat emptor The two reasons the court used an exception to caveat emptor 1 Misrepresentation by the seller situation created in which the buyer is unlikely to even inquire and 2 Equity because it s fair 0 Equity will suffer no wrong to be without a remedy maxim of fairness D tries to invoke the merger clause of sale As is The court disagrees and says Even an express disclaimer will not be given effect where the facts are peculiarly within the knowledge of the party invoking it Johnson v Davis J ohnsons represented that there was no problems with the roof but the Davis soon found out after they paid the deposit that there was This falls under an exception to caveat empto active misrepresentation They want rescission of the contract under the theory that latent material and known defects must be disclosed Rule that the seller had a duty to disclose a known latent material fact Material means direct and significant effect on the value of the house either 12 obiective how much the defect impairs the value of the house or 2 subiective value how much the value of the property is reduced to the individual buVer I How do you prove an objective value Kind of evidence from realtors builders I For subjective Ask the buyer what did this house mean to you and what did it cost you 29 Court claims the general tendency now is to restrict the doctrine of caveat ethor because they are not in tune with the times and do not promote the notion of fair dealing justice and equity The law is heading towards having to disclose known material defects not only latent But this is dicta in this case REAL ESTATE TRANSACTIONS Who Bears Loss EQUITABLE CONVERSION Equitable Conversion if there is a specificallv enforceable contract for the sale of land equity regards as done that which ought to be done The buyer is viewed in equity as the owner from the date of the contract thus having the equitable title the seller has a claim for money secured by a vendor s lien on the land The seller is also said to hold the legal title as trustee for the buyer Traditional Rule So if something bad happens to the property before closing after sale of contract who bears the risk of that loss Buyer bears the risk of loss even though they haven t closed Many people think this majority rule is not fair 0 Pro Efficiency argument More Modern Approaches 0 Minoritv Approach Massachusetts rule the risk of loss is on the seller if the loss is substantial and the terms of the contract show that the building constituted an important part of the subject matter of the contract If the loss is not substantial either party can enforce the contract though an abatement in purchase price may be given Uniform vendor and purchaser act if either title or possession have been transferred to the buyer then the risk of loss is on the buyer but not otherwise Kind of the middle ground Arguably not as efficient because possession can be ambiguous Argument for efficiency of more modern approaches before closing seller would still be insured so should bear the risk of loss as compared to the buyer Movement awav from the old rule REAL ESTATE TRANSACTIONS DEEDS Three TVDes of Deeds 30 1 General Warranty Deeds warrants title against defects in title whether they arose before or after the grantor took title 2 Special Warranty Deeds contains warranties only against the grantor s own acts but not the acts of others Anything that happened on your watch 3 Quitclaim Deeds contains no warranties of any kind The one you d least want to have if you were the buyer Merely conveys whatever title the grantor has What does a deed need to have in it 0 Description of tractland 0 Consideration something exchanged between the parties not a necessarv element but is customarily in there makes you a bona fide purchaser 0 Why is specific consideration not specified in deeds A way to fudge how much you paid for it Good and valuable consideration is often good enough 0 Signature statute of frauds 0 Words of grant transferring language 0 Names of the grantor and the grantee so we can keep the chain of title Who gave property to whom 0 Get it notarized seals have pretty much been done away with Different Tvpes of Warranties in a General Warranty Deed Can be either present of future 0 Present Covenant broken by the grantor if ever at the time the deed is delivered Either the grantor owns the property at that time Q he does not Deals with the grantor s present ability to convey the property 0 Covenant of Seisin the grantor warrants that he owns the estate that he purports to convey Means quiet enjoyment settled possession Possession of freehold estate in land black s law dictionary 0 Right to Convey grantor warrants that he has the right to convey the property 0 Right against encumbrances grantor warrants that there are no encumbrances on the property Encumbrances include mortgages liens easements and covenants 31 0 Future Covenants promises that the grantor will do some future act This is not breached until the grantee or his successor is evicted from the property buys up the paramount claim or is otherwise damaged 0 Covenant of General Warranty grantor warrants that he will defend against lawful claims and will compensate the grantee for any loss that the grantee may sustain by assertion of superior title 0 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 0 Covenant of Future Assurances the grantor promises that he will excuse any other documents required to perfect the title conveyed REAL ESTATE TRANSACTIONS MORTGAGES Since it s unrealistic for people to pay all cash at once for a house people need mortgages We want to encourage people to own property because we think it s really important Buyer goes to the bank and lender puts up the rest of the money Buyer owes and pays back over a period of time If you put in less money up front then you are more of a risk to the bank 0 The mortgagor s those who borrowed interest in the propertV is known as the equity Lender is known as the mortgagee 0 Deed of Trust the borrower conveys title to the land to a person who is usually a third person but may be the lender to hold in trust to secure payments of the debt to the lender The trustee is given the power to sell the land without going to court if the borrower defaults Background Housing prices and market was going up up up then the balloon popped People taking out third mortgages and further encumbrancing their property Borrowers were unable to continue to make their monthly payments which were adjustable low initially that increased over time Short term incentives to sign people up for loans they wouldn t be able to finish Lenders were now scared to loan money the financial market crashed and people couldn t get loans to buy houses Even people with good credit scores couldn t buy homes It was worse some places than others California and Florida were really bad and Texas was better People tend to buy more property and vacation homes in cal and or It s worse in places where people like to travel or have a second home 0 Why is property still so much more expensive in LA than the national median Land use regulation how much land is available to develop zoning laws property taxes national resources interest rates on loans 32 Strict Foreclosure a proceeding in which the mortgagor was ordered to pay within a given period or forever be barred Equity working to protect the lender in this case Buyer loses the right to the property if they don t pay their loan Gives lenders more ability to foreclose Later equity barred the right of redemption by a judicial proceeding determining the amount of the debt and ordering a foreclosure sale Commonwealth v Fremont Investment Fremont was a bank chartered by California who made 14578 loans in Massachusetts About half where were deemed subprime loans to people that don t meet their quality buyer standards like the amount of loan relative to amount of down payment debt to income and credit scores These people are riskier borrowers The borrowers could afford interest rates up front but couldn t afford it as it continues and increases 0 Why did the bank give out loans to people who weren t able to continue making payments Incentives to push loans through cause brokers got a cut The people signed up for the loans because they wanted property and probably didn t bother to read the terms 0 Fremont is trying to foreclose on these loans and Attorney General is trying to get an injunction Did the subprime loans by Fremont constitute unfair and deceptive acts in violation of Mass law Yes Fremont knew or should have known that these were doomed for foreclosure unless house value and prices kept going up and up Fremont was well aware of what would adversely affect the borrowers history 0 Negative impact on all when banks make poor loan decisions Fremont borrowers and those in the surrounding community would all be hurt Mass Court tries to make it much harder for Fremont to foreclose the borrowers would be hurt if they get thrown out of their homes and the neighborhood house prices near to these vacant houses went way down MORTGAGE SUBSTITUTE INSTALLMENT LAND CONTRACT An Installment Land Sale Contract or a contract for a deed is an arrangement whereby the purchaser takes possession and the seller contracts to convey title to the purchaser when the purchaser has paid the purchase price in regular installments over a fixed period of time usually used for lot priced housing and vacation lots unbuilt vacation property These are usually less expensive 0 Instead of going through standard picture with a normal lender the seller helps the buyer and there are installment payments made to transfer title over time There is E 3rd party lender 33 0 ie the seller provides nancing to the buyer to purchase the property for an agreed upon price and the buyer repays the loan in installments 0 How to secure both the buyer and the seller when you don t have a lending institution involved 0 Seller retains legal title to the property 0 While buyer takes possession of it for most purposes other than legal ownership When full purchase is made the seller is obligated to convey legal title of the property to the buyer REAL ESTATE TRANSACTIONS THE RECORDING SYSTEM also see page 23 How The Recording System Functions 1 It establishes a system of public recordation of land titles 2 It preserves in a secure place important documents that in private hands may be easily lost or misplaced and 3 It has the function of protecting purchasers for value and lien creditors against prior unrecorded interests Remember the common law rule of prior in time prior in effect continues to control unless a person can qualify for protection under the applicable recording act Two tvpes of indexes currently used in the US for recording purposes 1 Tract Index indexing documents by a parcel identification number assigned to a particular tract does not exist in most states 2 Grantorgrantee Index most common method of indexing Indexes are kept for grantors and grantees In the grantor index all instruments are indexed alphabetically and 34 chronologically under the grantor s surname In the grantee index all instruments are indexed under the grantee s surname Title Insurance guarantees that the insurance company has searched the public records and insures against any defects in the public records unless such defects are specifically excepted from coverage in the policy like government regulations and zoning ordinances 0 Basically like a background check you get them to run for you which makes sure the land is all clear and unencumbered Types of Recording Acts How to determine who is the BONA FIDE PURCHASER 1 Race Statute between successive purchasers the person who wins the race to record prevails Whether a subsequent purchaser has actual knowledge of the prior purchaser s claim is irrelevant This limits inquiry into matters off the record Transfer of title is more efficient where offrecord inquiries are eliminated 0 Ex 0 sells to A and then to B and then leaves Who gets the property Whoever recorded rst Even if A bought the property first if B recorded first then B would win Minority approach 2 Notice Statute if a subsequent purchaser had m of a prior unrecorded instrument the purchaser could not prevail over the prior grantee for such would work a fraud on the prior guarantee Texas is a notice statute state Even if B records rst B is only protected if B didn t have m that A bought the property 0 The race statute protects a subsequent purchaser only if the subsequent purchaser records first the notice statute protects a subsequent purchaser against prior unrecorded instruments even though the subsequent purchaser fails to record 0 Why did the law move away from the race statute towards the notice statute Equity it didn t seem fair for a purchaser B to prevail if they had notice that the title belonged to A 0 For notice statute we need to know Whether the recorder hild noti of any other buyer Different types of notice I 1 Actual notice they actually knew the property was already purchased Arises where one is personally aware of a con icting interesting real property often due to another s possession of the property I 2 Constructive noti they should have known like through public record should have checked 0 Inquiry notice If they had reason to suspect there might not have been a clear title they had reason to inquire and figure out why 35 Is based on facts that would cause a reasonable person to make inquiry into the possible existence of an interest in real property 0 Record Notice consists of notice one has based on properly recorded instruments 3 RaceNotice Statute a subsequent purchaser is protected against prior unrecorded instruments only if the subsequent purchaser 1 is without notice of the prior instrument and 2 the subsequent purchaser records before the prior instrument is recorded 0 What s the problem the racenotice statute is trying to resolve Doesn t want to deal with extrinsic evidence from notice acts Actual and Inquiry notice is hard to prove The subsequent purchaser B is the best one situated to say whether they had notice but they re a selfinterested witness who wants the property for themselves Subjective actual notice is really hard see what was going on in B s head 0 General Rule B is protected only if B did not have notice m if B recorded before A combination rule The Shelter Rule 1 O conveys to A and A doesn t record 2 Then 0 conveys to B but B has no notice of A so B records B is a subsequent bona fide purchaser with no notice so B is protected 3 Then A records 4 C comes in and is thinking about purchasing from B C can buy from B and prevail over A even though C should have record notice or actual notice 0 To make sure B is protected B has to be able to convey property to whoever he wants ie C If B cannot choose to convey or sell his property then it is worth nothing 0 Exception to the Shelter Rule there is one buyer who would not be protected under the shelter rule the return of 0 Risk of collusion of O and B taking advantage of A There is no way the system will protect 0 There is no utility or efficiency created Notice Cases Daniels v Anderson m P had a right of first refusal for the land Zografos bought the land with no notice of P Zografos had paid 23 of the purchase price before he found out about P who sued for specific performance of his option of first refusal Issue Should Zografos be considered a subsequent bona fide purchaser No 0 A bona fide purchaser takes title to real property without notice of the interests of others In this case at the time Zografos finished payments he already had notice So once the 36 buyer has notice they pay the consideration at his or her peril and they are not protected as a bona fide purchaser the harshold rule 0 Partial payments are not allowed to make the buyer a bona fide purchaser Also the old rule restricts transactions and precludes alienability which the courts do not like So the court decides to relax the old rule trying to be equitable and applied the pro tanto rule Pro Tanto Rule protects buyers to the extent of payment made prior to receiving notice Zografos 23 There are 3 ways to apply pro tanto 1 The most common method is to award the land to the holder of the outstanding interest and award the buyer the payments that he made or a Court uses the 1st point Zografos has to reimburse the D for the full purchase price and property taxes paid on the property and the D will convey the land to P 2 Award the buyer fractional interest in the land proportional to the amount paid prior to notice or 3 Allow the buyer to complete the purchase but to pay the remaining installments to the holder of the outstanding interest Waiver they did not bring up an argument on the trial court level so they waived it for the appellate level Can t bring it up now Lewis v Superior Court Before P s obtain title Fontana Films filed a lis pendens a notice of lawsuit affecting title to property However it wasn t indexed until the day after the P s obtained title The P s didn t find out about the lis pendens until they were served about a year later 0 1St Fontana Argument claimed that Ps are not bona fide purchasers because by the time Ps made their 2rld payment the lis pendens had already been filed Pavment Value Rule where you only become a bona fide purchaser if you pay in full oldharsh rule comes from the Davis opinion 0 How does the court get away from Davis They limit it to its facts Construe the holding narrowly so it s restricted to that case They pretty much threw precedent out the window 0 How did the court get away with not following the old rule Look to equitable considerations and didn t think it was in sync with the times Fairness based on the fact that the Ps would be detrimentally affected if the property was given to Fontana They sunk 1 million into the property making improvements over the past year What do they mean when they mention the modern market That we 37 shouldn t penalize buyers who pay in this format two big chunks The unfairness argument is much stronger 0 2nd Fontana Argument Fontana also claims that since they filed the lis pendens before Ps 1St payment and obtaining title they should have been on notice Court disagrees The date that Fontana filed doesn t mean anything until the lis pendens is indexed Constructive Notice Cases Alexander v Andrews limits or inconsistency of equity Husband and wife own property as tenants in common Wife dies and conveyed half interest to the son Father conveys his half interest to the daughter But then the father changed it to the son because he said he would take care of him and bury him Son gives father 1000 for consideration and fulfills his promise Son records deed before daughter did Son is a protected subsequent purchaser only to the amount that he paid 1000 Court deems the son had constructive notice of her claim before he took care of the father so he was limited to the 1000 Harper v Paradise m Maude Harper was conveyed the deed and the remaining interest was to go to her children after she died The deed was lost for over 30 years and found in 1957 In 1928 the Harpers recorded another deed which conveyed the land to Maude In 1933 Maude used the land to secure a loan from Thornton When the loan went into default Thornton foreclosed The chain of property goes from Thornton to the Ds Paradise as current owners decades have passed Harpers sued to quiet title 0 Issue Whether Ds were on constructive notice as to the rights of the Ps Yes they were on constructive notice that another missing deed existed and they had a duty to inquire of the interests in the missing deed 0 The paradise s claim is 1 that they should get it by adverse possession doesn t work and 2 because since the kids were heirs the 1st deed and 2nd deed should be treated the same Court thinks that the language of the 2rld deed should have alerted the Paradises to the 1St deed which they chose not to check out 0 Fee Simple stretches on for infinity The best thing you could have In this case Maude has something less than fee simple she gets the property for the rest of her life life estate Waldor Ins and Bonding v Eglin National Bank Facts Waldorff had interest in part of a condominium unit He had paid the final amount due on the purchase price of the unit However 38 the bank brought a foreclosure action against the owner and Waldorff because the owner of the condominium units executed mortgages with the bank which included Waldorff s property 0 Issiz Was there constructive notice by the bank of Waldorff s interest in the unit Yes The bank had a duty to inquire because Waldorff was physically occupying the premises which counts as constructive notice Bank is not a bona fide purchaser because they had inquiry notice 0 RULE Actual possession is constructive notice to the world When possession is open visible and exclusive it will put a duty to inquire on those wishing to acquire interest in the property in this case the bank 0 What does the bank argue There are a bunch of units and multiple people living there so they would have to check every single one and do background checks on every unit They argue they would never get anything done because it would take so long THE RIGHT TO DISPOSE ACQUISITION BY GIFT OF PERSONAL PROPERTY The law has long required that to make a gift of personal property the donor must transfer possession to the donee with the manifested intention to make a gift to the donee 1 The donor s intention to make a gift to the donee 2 The actual transfer of possession from donor to donee 3 Acceptance by the donee is also required but seldom at issue Courts presume acceptance upon delivery unless a donee expressly refuses a gift Revocability Where 0 has made a complete gift to A ie there was intent delivery and acceptance 0 cannot change her mind the next day and require A to return the gift 39 1 Intent may be shown by oral evidence and 2 Delivery requires objective acts If manual delivery is not practicable because of the size or weight of the object or its inaccessibility constructive or symbolic delivery may be permitted Actual Delivery physically handing someone something Easy to transfer and see Constructive Delivery is handing over a key or some object that will open up access to the subject matter of the gift ex a key to a house Here the intent element must be concrete and undisputed expanded in Scherer Symbolic Delivery is handing over something symbolic of the property given What if it doesn t have a key like a big kitchen table Usually just a written document like a letter explaining what you re giving Traditional Rule of Delivery When something can be handed over it has to be handed over Why do we care about delivery Because the courts want donors to realize what they re giving away and that it is permanent Courts want to make sure that the person really really meant to give something over Something that was yours is no more wrench of delivery Also it is easier to solve disputes by looking at who has the gift in their hands proof argument Case Examples of Gift Engagement Rings the traditional rule is that the donor cannot recover the ring if the donor is at fault Scherer v Hyland the woman donor endorses the check in black and put it on a table in her apartment which she shared with the donee along with a note giving the check to the donee and then committed suicide Deliverv was impossible in a way 0 Under the traditional rule constructive delivery would not be present here But the court said they would nd constructive delivery adequate when the intent of the donor was concrete and undisputed really really clear Hacks Case brother put four 5000 bonds in a safe deposit box which he gave to his sister at dinner for her to have when he dies sister makes him write a note He adds lots of stuff to the box over the years jewelry and more bonds Court rules the sister only receives the original four bonds given to her at the restaurant 40 0 Dominion and Control If donor has dominion and control over the property including funds due to gift by check there is no gift until property is transferred and the donee has dominion and control 0 The brother never really relinquished dominion and control over the items in the box He hadn t completely fulfilled the requirements of delivery He still had full access to the box so he hadn t relinquished control Gift Causa Mortis insist more on the elements of gifts being fulfilled helps evidence We can t get more information on what the deceased really wanted Also wills and trusts are avenues to give things away when you die A causa mortis is an attempt to evade the kinds of requirements in wills and trusts 0 Def a gift made in contemplation of and in expectation of immediate approaching death is a substitute for a will If the donor lives the gift is revoked The trend is now to follow the donor s intent even if compliance is not complete Newman v Bast Facts after giving the keys to much of the furniture in the house to Newman the decedent pointed to the furniture and said to Newman that he was giving it all to her In one of the pieces of furniture was a life insurance policy D is the administrator of the estate who sold all the furniture Newman is arguing that she should get the proceeds because those were her gifts Court only grants her some articles not the life insurance Bray doesn t like this result 0 BIG ISSUE Delivery Decedent couldn t get out of bed which is why he gave her the key 0 Bureau and Furniture capable of being unlocked by the keys were gifts to the P and she became the owner However since she was his fiance you could see that the keys would be a more representative gift of everything the court does not agree They considered her only as a housekeeper and gave her only what the keys opened 0 Piano he was going to buy her a new one Called it Ms Julia s piano But it wasn t part of her house and the insurance was in his name So they don t give it to her 0 Life Insurance Policv she doesn t get it because it s deliverable He could have easily said he was giving her the life insurance policy Basically decedent would have had to have actually gotten the policy out of the bureau and handed it to P to constitute actual delivery Intervivos Gift a gift made during the lifetime of the donor requires intent of donor actual or constructive delivery and acceptance by donee A donor is allowed to retain a life estate in a 41 gift and have constructive delivery when it would be nonsensical to actually deliver the gift to the donee and then immediately take it back for the remainder of the donor s lifetime Gruen v Gruen Facts the elder Gruen gave his son a painting but reserved a life estate for himself Gruen Jr has never had possession of the painting 0 Issue Whether a valid inter vivos gift may be made where the donor reserves a life estate in the chattel and the donee has never taken physical possession YES 0 Only constructive delivery was needed as actual delivery of the painting to the son would have defeated the donor s intent to retain a life estate in the painting and acceptance is deemed presumed as it is a benefit to the donee 0 Gruen introduces the concepts of a life estate and a remainder two separate estates representing different interest in the same property entitling first the life tenant to possession and then after his death the holder of the remainder sometimes called the remainderman Fairness Argument A close examination of the cases leaves the reader with the sense that ad hoc considerations of fairness and justice or propriety do much of the work in leading judges to decisions POSSESSORY ESTATES THE RIGHT TO DISPOSE Fee Simple amp Life Esti WHO DOES PROPERTY GO TO 0 Heirs can only be heirs once the decedent has died If you have heirs then you don t have a will If you die with a will testate if you die without a will intestate Devisees Giving of people real property by a will 0 EX all of Anne s heirs gathered at her house for lunch why wrong They re not heirs unless she s dead 42 0 Escheat if someone dies without any heirs then the property escheats goes to the state This is the bad outcome that people don t want to happen 0 Issues children or their children ancestors parents collaterals kin if no issue or ancestors categories of people who get your stuff if you die intestate These are categories of potential heirs look for issues then ancestors if none then collateral if 110116 0 Problem 0 conveys land to A and her heirs If A dies intestate will the land escheat to the state No A was given a conveyed a fee simple by common law to A Nowadays and her heirs isn t really required Fee simple is usually presumed 0 Problem 1 on page 196 when B dies how much of 0 s estate does he have a right to None he was an heir apparent because 0 wasn t dead yet The spouse of B who B left everything to is not an heir with a right to the property either So once 0 dies after B the property would be divided in half 12 to A and 12 given to B1 B2 and B3 best kind of ownership vou own it forever This is the closest to unlimited ownership as out law recognizes It is the largest estate in terms of duration An estate of indefinite or potentially infinite duration 0 Statutes and judicial decisions now provide that a grantor is presumed in the absence of words indicating otherwise to transfer the grantor s entire estate A grant to O to A without more conveys fee simple to A 0 If a person dies intestate without a will the decedent s real property descends to his or her heirs Heirs are persons who survive the decedent and are designated as intestate successors under the state s statute of descent The fee simple which is defined as an estate capable of being inherited by whoever turns out to be the heirs of the see simple owner can have no limitations put on its inheritability FEE SIMPLE NOT subject to future interest holders Conveyor retains nothing Example quotto A and his heirs The Right to Dispose Fee Simple FUTURE INTEREST BACK TO GRANTOR 43 LEASHOLD ESTATE Subject to future Is there a condition interes t hOIderS on the conveyance Conveyor retains a Is it for a number of A a FEE SIMPLE DETERMINABLE Conveyor retains a quotpossibility of reverter Example quotso long as until quotwhile used forquot Isitfor life Subject to future interest holders TE ls la there dlira rinnal TIEBREAKER If the language is ambiguous and the court cannot decide between a FSD and a FSSC the court will defer to a FSSC Is there conditional discretionary language gtr FEE SIMPLE SUBJECT TO CONDITION SUBSEQUENT Conveyor retains a right of entry but conveyee has a laches defense if the conveyor takes too long to assert the right Example quotbut ifquot quoton condition Provided it is the person s property for the life of the person There are two important consequences 1 It means that the grantor of a life estate could control who takes the property at the life tenant s death and 2 As land and stocks and bonds came to be viewed as income producing capital trust management for the life tenant developed Private trusts related to life estates help manage the property for life tenants and other related estate holder and the extent of property in such trusts You re first piece of advice to people even if you don t remember anything else is to put interest in a trust A trust splits the legal and equitable rights between the lawyer and the trustee 44 0 Example A has a life estate that last for the duration of A s life A can transfer his life estate to B in which case B has a life estate pur autre vie an estate that is measured by A s lifespan not B s So if B dies during A s lifetime then the estate would pass to B s heirs or deVisees until A dies It s a life estate that s been transferred measured by someone else s life than the holder s life 0 Example of language to convey 0 gives Blackacre to A for life then back to O This is explicit reversion Usually a comes with a life estate 1 If it said 0 gives Blackacre to A for life then it would be an implicit reversion 0 How do you determine value of life estates compared to some other future interest in fee simple Discount the value of the future estate by all the time that will pass Ex 10 year old with a life interest and 70 year old life interest 10 year old is worth much more 0 Present value of life estates is often a big part of the value of the property Should put the property in a trust and keep people out of court What about land that s been in the family for a long time Might not have any price reference and the property might be worth more to family members emotional than strangers Numerus Clausus Principle concept which limits the number of types of right that the court will acknowledge as having the character of property It is based on the need for a stable framework of forms by which to express the ongoing development of property rules on response to competing social and political goals 0 Two justifications for the Numerus Clausus principle 1 Heller if we allow too much fractioning of property not consistent with set property law then the property will be of less value and 2 Merrill amp Smith if we allow people to do whatever they want with property then the transaction cost for transferring property will be very high and there will be less alienation of property RESTRAINT ON ALIENATION White v Brown Decedent the testatrix someone who died with a will passed the property to the P to have the home to live in and not to be sold D claims P was only given a life interest leaving the remainder to the D But the court did not find that the decedent intended to only give a life estate So P was granted a fee simple in the property 0 Rules of construction favor passing of property in fee simple except for clear eVidence of the will of the deceased conveying only a life interest 0 Court unless the words and context of the will clearly eVidences only an intention to carry a life estate the will should be construed as passing the home in fee simple 45 0 The decedent was trying to establish a restraint of alienation Courts don t really like this The court declared the restraint on alienation decedent not allowing P to sell the house was void because it was contrary to public policy So P is allowed to sell the house Why do Courts Object to Restraints on Alienation 1 Restraints make property unmarketable The land may be made unavailable for its highest and best use 2 Restraints tend to perpetuate the concentration of wealth by making it impossible for the owner to sell the property and consume the proceeds of sale 3 Restraints discourage improvements on land An owner is unlikely to sink their own money into land that he cannot sell 4 Restraints prevent the owner s creditors from reaching the property working hardship on creditors who rely on the owner s enjoyment of the property in extending credit If they can t lose their property they have no incentive to pay There are 3 tvpes of restraints on alienation 1 Disabling Restraint withholds from the grantee the power of transferring his interest Like in White v Brown run into a wall anytime you try to sell it This is the most restrictive a Ex 0 conveys land to A and his heirs but any transfer hereafter in any manner of an interest in the land shall be null and void 2 Forfeiture Restraint provides that if the grantee attempts to transfer his interest it is forfeited to another person There s only one way out a Ex 0 conveys land to A and his heirs but if A attempts to transfer the property by any means whatsoever then to B and her heirs 3 Promissory Restraint provides that the grantee promises not to transfer his interest A promissory restraint if valid is enforceable by the contract remedies of damages or injunction This is the least restrictive a Ex 0 conveys land to A and his heirs and A promises for himself his heir and successors in interest that the land will not be transferred by any means Distinction between absolute and partial restraint The restatement provides that an absolute restraint on a fee simple is m But with respect to partial restraints on a fee simple the restatement is more tolerant than courts Restatement provides that a partial restraint ie limiting conveyance to certain persons or putting a time limit on the restraint is valid if under all the circumstances of the case the restraint is found to be reasonable in purpose effect and duration 46 This is an example of the restatement being prescriptive they think the law ought to move in this direction Baker v Weedon future interest holders grandkids and life tenant Weedon want to do different things with the property Life tenant wants to sell because the land is appreciating and it can no longer be farmed to provide income Future interest holder think the land will be worth more in the future so they don t want to sell 0 Court looks to two factors when trying to determine whether the life tenant can sell the land 1 The prevention of waste of the property and 2 Whether the sale is in the best interests of all the parties including the life tenant and the remaindermen 0 The future interest holders win Because the land was still increasing in value it would not be in the best interest of all parties to sell The court remanded the case because they felt bad for Anna Weedon Court says if the parties can t split up the land in a way to provide for both parties then the court will order a sale It is better for the parties to argue and solve the problem amongst themselves rather than to bring it back to court They are in the best place to bargain encouraged by the courts THE LAW OF WASTE The Law of Waste an abuse or destructive use of property by one in rightful possession It can become relevant whenever two or more persons A and B have rights to possess property at the same time or consecutively as in Baker v Weedon The central idea of the waste concept is that A should not be able to use the property in a manner that unreasonably interferes with the expectations of B It is designed to avoid use of property that fails to maximize the property s value The precise application of the waste doctrine turns on O 1 the nature of the property interests of the competing parties 47 O 2 the conduct in question and O 3 the remedy What kind of conduct amounts to waste There are three general types of waste 1 Af rmative Waste Arising from voluntary acts liability results from injurious acts that have more than trivial effects acts that substantially reduce the value of the property in question Ex Burning down the trees just to watch them burn Exceptions 1 minerals can be extracted even though doing so reduces the value of the property for holders of future interests if39 the minerals were being extracted when the future interests were created 2 Trees can be cut if clearing the land is regarded as good husbandry 3 Not limited to exception 1 and 2 can include situations like this 2 Permissive Waste Arising from a failure to act liability is a question of negligence failure to take reasonable care or maintain the property Ex it deteriorates or catches fire 3 Ameliorative Waste traditional View Uses by the tenant that increase rather than decrease the market value of the land Actions by the tenant gave rise to liability on the theory that the fee holder was entitled to take possession of the land in substantially the same condition as it was when first transferred to the tenant Thus any material alterations were waste Ex person cuts down all the trees affirmative waste but she uses the wood to replace the roof of the house and increases the value of the property 0 Posner thinks you should focus more on whether it s an improvement or it hurts the value of the land We shouldn t discourage improvement because it leads to less alienation This is the general law today We have been moving away from ameliorative waste Waste Cases Woodrick v Wood Although they wanted to destroy the rotting barn on the property ameliorative waste it does not constitute waste because it is actually an improvement on the property Knocking down the barn enhanced the value of the property But the other property holder may have had a sentimental reason for wanting the barn to remain on the land 48 0 But the court did something weird had them pay the other interest holder for the value of the barn they wanted to knock down The court deems that it s not waste but then still gives the value of the barn We don t know why Melms v Pabst Brewing Co modern View held that life tenants may make substantial alterations or even demolish structures when conditions change provided the market value of the remainder or reversion as the case may be is not diminished by these actions DEFEASIBLE ESTATES and FEE SIMPLES See Chgrt on P2 4A The fee simple the fee tail and the life estate are all and at common law the freeholder had Seisin page 30 Seisin was possession of a particular kind and with peculiar consequences Seisin was endowed by the medieval mind with a real existence illustrating the philosophical tendency during that period to reify abstract ideas are nonfreehold possessory estates they Leasehold tenants do not have seisin When a lease is involved the landlord holds seisin and the tenant merely has possession more on page 80 0 EX if 0 conveys Blackacre to A for a term of vears not for life then A has a leaseholder estate It is a placeholder any estate may be made to be defeasible meaning it will terminate prior to its natural end point upon the occurrence of some specified future event pg 2225 0 EX a life estate ends naturally at the death of the life tenant whereas a defeasible life estate might end earlier than that so long as the property is used only for residential purposes 0 Their primary purpose is land use control to a lesser extent they are used to control behavior not related to any particular use of land If conditions put on the land occur then the holder loses the fee and it goes back to the grantor They are the most common defeasible freehold estates There are three types 1 is a fee simple so limited that it will end automatically when a stated event happens It is created by language connoting that the transferor is conveying a fee simple only until an event happens EX so long as the premises are used for school purposes while 9 6 used for until 49 a Every fee simple determinable is accompanied by a future interest In the ordinary case the future interest is retained by the transferor or his heirs and called may be expressly retained or arise by operation of law This is not the same thing as reversion b In this case the statute of limitations begins to run the minute the condition or stated event occurs Then you can deal with adverse possession if you need to Equitable Doctrine of Laches statute of limitations that if you ve been dealing with something for long enough then you can t bring a suit against it look at page 78 2 isafeesimp1ethatdoes 3 not automatically terminate but may be cut short or divested at the transferor s election when a stated condition happens The essential difference between this one and the fee simple determinable is that the fee simple subject to condition subsequent MAY be cut short if a stated thing happens but it is not automatically terminated when the stated event happens a The clause beginning with 1Ltif states a condition subsequent or other words indicating that the estate may be cut short at the transferor s election Like provided however that when the premises And on condition that if the premises b Ex 0 coveys land to the school board its successors and assigns but E the premises are not used for school purposes the grantor has a right to reenter and retake the premises c also known as the power of termination is the future interest retained by the transferor to divest a fee simple subject to condition consequent It may be expressly retained or it may be implied if the words of the instrument are reasonably susceptible to the interpretation that this type of forfeiture estate was contemplated by the parties is the estate created when a grantor transfers a defeasible fee simple either a determinable fee or a fee simple subject to condition subsequent and in the same instrument creates a future interest in a third party rather than in himself ie the possibility of reverter or the right of entry passes to a third party not back to the grantor of the property a The future interest in the third party is called the executory interest 50 b Ex If 0 conveys land to the school board but if it ceases to use the land as a school to the city library Modern trend the possibility of reverter and the right of entry are transferable inter vivos Restatement Position the new restatement draft abolishes the distinctions among the 3 types of defeasible fees the fee simple determinable fee simple subject to a condition consequent and fee simple subject to an executory limitation o It replaced them with a single estate the fee simple defeasible defined as a present interest that terminates upon the happening of a stated event that might or might not occur Substantial Compliance should courts adopt a substantial compliance approach in determining whether a use of land complies with a limitation or a condition Condition V Covenant A condition is much more onerous than a covenant If a condition is breached the land is or may be forfeited to the holder of the future interest A covenant is a promise by the grantee that a specified act will or will not be performed If a covenant is breached the promisee may be due for an injunction or damages Mountain Brow Lodge Oddfellows v Toscano land was left to the lodge for their use and benefit but in the event that the land failed to be used by the lodge or in the event of the sale or transfer the land was to revert to the grantor his successors heirs or assigns 0 1 point restraint on alienation and restrictions on use it can only be used for an oddfellows lodge so its worth less but this is not a restraint on alienation it is a restriction on use So the court did not strike it down 0 2 point Court deemed that the language created a fee simple subject to a condition subseguent with title to revert to the grantors if the land ceased to be used by the lodge 0 Why In ascertaining the language of a deed when the language is unclear the intent of the grantor and the surrounding circumstances should be taken into consideration Consequences of FSSCS are less harsh than the FSD the clock doesn t start running right away FSSCS has a right of reentry and there are more options for the future interest holder 0 Dissent the substance not the form should be controlling Looks at the effect or substance of the restriction such that a restriction on use might fail as in effect an unreasonable restraint on alienation What things should we look to when determining whether something is a restriction on use Discouraging people from making charitable contributions like if they wanted to convert the oddfellows lodge to a school for mentally disabled children Material affects and marketability the effect on the of buyers or how much people will pay for 51 the land the oddfellows lodge use is very restrictive and makes the land worth less to potential buyers only oddfellows would want to buy it We also don t want to discourage other people from making improvements on the land What about the difference between the lodge and the school The school might do better in regards to improvements because more people might make use of the school and it would benefit the community more than the lodge We also want to look to the effects of other lands Factors that courts might consider when attempting to measure the effect or substance of a restriction on use to determine whether it should fail as an unreasonable restraint on alienation First the remedy involved Second the effect of the use restriction on alienation Third the potential benefits or harms of the restriction to other land Fourth the extent to which the restriction on use discourages potentially valuable improvements on the property Fifth the potential impact of enforcing or voiding the restriction on gifts to charity Cy Pres try to reform the gift as close as we can to what we think the charitable donors intention would have been 0 Ex giver of the oddfellows lodge but there is no longer such a thing as the oddfellows organization so what should they use the land for Look to what the purpose of the lodge was or what kind of charitable organizations they dealt with like education FUTURE INTERESTS A future interest is not merely expectancy but gives legal rights to its owner It is a presently existing property interest protected by the court as such Although a future interest does not entitle its owner to present possession it is a presently existing interest that may become possessory in the future Future interest recognized by our legal system are 1 Interests retained bv the transferor known as 0 If 0 a fee simple owner granted the land to A for life the land would revert come back to O at A s death O s right to future possession is called a reversion It is the interest left in an owner when he carves out of his estate a lesser estate and does not provide who is to take the property when the lesser estate expires 52 0 It is the interest remaining in the grantor or in the successor in interest of a testator who transfers a vested estate of a lesser quantum than that of the vested estate which he has 0 All reversion are retained interests which remain vested in the transferor There is no such thing as the possibility of reversion and you should never use that phrase O A reversion is transferable during life and descendible and devisable at death 0 Arises when an owner carves out of his estate a determinable estate of the same quantum Can be retained when a life tenant conveys his life estate to another determinable on the happening of an event but usually deal with carving a fee simple determinable out of a fee simple absolute O A possibility of reverted is a future interest remaining in the transferor or his heirs when a fee simple determinable is created EX 0 conveys Blackacre to Hartford school board so long as used for school purposes 0 has possibility of reverter o power of termination 0 When an owner transfers an estate subject to condition subsequent and retains the power to cut short or terminate the estate the transferor has the right of entry 0 Ex 0 conveys land to Hartford school board but if it ceases to use the land for school purposes 0 has the right to reenter and retake the premises 2 Future Interest created in a transferee known as 0 A remainder is vested if it is given to an ascertained person and if it is not subject to a condition precedent It is ready to become possessory whenever and however all preceding estates expire There are 3 types of vested remainder 1 Indefeasibly Vested means that the remainder is certain of becoming possessory in the future and cannot be divested More automatically not really a condition a O conveys Blackacre to A for 20 years leasehold estate and then to B Indefeasibly vested remainder in fee simple 53 2 Vested Remainder Subject to Open it s uncertain how many people they will have to share with a O conveys Blackacre to A for life life estate then to B s children B has one child C which has vested subject to open real legal interest which will be transferred when A dies It s subject to open because it depends on how many other kids B has so C might have to share with other kids This is also called a class gift 3 Vested Remainder Subject to Divestment will not be tested on the difference between this and contingent remainder It it s between these two then always choose contingent 0 Where an instrument is ambiguous the courts construe it in favor of a vested remainder The law has a preference for vested remainders over contingent 0 A remainder is contingent if it is given to an unascertained person OR it is made contingent upon some event occurring other than the natural termination of the preceding estates A remainder can also be contingent because it is subject to a condition precedent Contingent remainders permit the transferor to let future events determine the question of who gets the land Gave difficulty to judges because it left uncertain the succession to land titles 0 Ex 0 conveys Blackacre to A for life then to B s children But at the time of the conveyance B doesn t have any children A has a life estate and B s children have a contingent remainder in the clouds When there are no ascertained persons 0 Ex 0 conveys blackacre to A for life then to B and her heirs if B survives A This is contingent because there is a condition precedent A dying is not a condition precedent that would be a vested remainder A condition precedent would be B surviving A I What happens if B doesn t survive A so the condition precedent isn t met If the contingent remainder doesn t become possessory because the condition precedent isn t satisfied then 0 has a reversion in fee simple No one has a future interest anymore 0 O conveys blackacre to A for life then to B and her heirs if B survives Am and if B does not survive A to C and her heirs A has a life estate condition precedent if B survives A 2nd condition precedent if B does not survive A Here O s reversion is only technical because one of the two precedents has to happen So O s reversion will never become possessory 54 I Why is there still a reversion in O that the law will recognize even though it will never become possessory Because 0 can solve the problem of waste if it arises If A is doing something bad or wasteful with the land who can sue B and C won t have a great incentive but 0 would 0 Was developed to do what the remainder cannot do divest or cut short the preceding interest in another transferee Remainders follow the natural end of the preceding estate ex 0 conveys land to A for life and then to B A has a life estate and B has a remainder B had an indefeasibly vested remainder because we know that A is going to die The main difference between vested remainders and executory interests is the natural end remainders wait for things to end in their own time and only become possessory if at all at the end of the estate 0 It is a future interest in a transferee that must in order to become possessory I Divest or cut short some interest in another transferee Shifting executory interest Divest the transferor in the future Springing Executory Interest Will not tested on the difference between shifting and springing 0 Ex T devises 10000 to Don Little if and when he survives his wife This is an executory interest because it doesn t wait patiently Reason 0 really didn t like the wife and wanted to make sure she didn t get the money shifting What is a Remainder A future interest that waits politely until the termination of the preceding possessory estate at which time the remainder moves into possession if it is then vested A remainder is a future interest that is capable of becoming possessory at the termination of the prior estate It is not required that the future interest be certain of future possession only that it be possible for the interest to become possessory when the prior estate ends if the first future interest created is a contingent remainder in fee simple the second future interest in a transferee will also be contingent remainder If the first future interest created is a vested remainder in fee simple the second interest in a transferee will be a divesting executory interest 55 THE RIGHT TO DISPOSE LIFE ESTATE Future Interest Created in Another Partv Does the previous interest end naturally and the future interest holder wait patientlv Is there someone alive the interest is CERTAIN to go In Is it subject to a condition precedent ie more births EXECUTORY INTERESTLIMITATION IN FEE SIMPLE Another party can divest the interest of another CONTINGENT REMAINDER IN FEE SIMPLE SUBJECT TO CONDITION PRECEDENT VESTED REMAINDER IN FEE SIMPLE SUBJECT TO OPEN VESTED REMAINDER IN FEE SIMPLE 56 THE RISE OF USE The Rise of Use when the chancellor thought persons should be required to perform their moral duties the chancellor would step in and protect a transferee regardless of what his legal rights might be Hence there developed in equity a protected interest known as use meaning benefit 0 Feoffment to uses whenever one party had the duty to hold for the benefit of the other 0 A common method of creating a use was the bargain and sale deed Statute of Uses 1535 If any person or persons were seised to the use of any other persons or persons the legal estate seisin would be taken away from the feoffee to uses and given to the cestui que use One effect of the statute was to eXDand legal future interests by converting what were shifting uses and springing uses in equity before 1536 into legal shifting executory interests and springing executory interests See page 53 Statute of uses permitted the creation of a new estate A fee simple subject to an executory interest limitation upon the happening of a stated event is automatically divested by an executory interest in a transferee Such a fee simple can be created either in possession or in remainder Page 48 COOWNERSHIPCONCURRENT INTERESTS CoOwnership when two or more people have concurrent rights of present or future possession Both parties have common law concurrent interests Communal Property ie concurrent owners encourages inefficient use of common property resources 1 Tenancy in Common The tenants have separate but undivided interest in the property that are descendible and may be conveyed by deed or will There are no survivorship rights between tenants in common Each tenant in common owns an undivided share of the whole 57 Example A and B are tenants in common If A conveys his interest to C B and C are tenants in common If B dies intestate B s heir is a tenant in common with C Problems of Tenancy in Common Coordination and exclusion among concurrent owners 2 Joint Tenancy Joint tenant together are regarded as a single owner common law fiction Each owns the undivided whole of the property Each tenant is seised per my et per tout by share of the moiety and by the whole There is a Right of Survivorship cannot pass interest by will because the interest ceases at death When one joint tenant dies nothing passes to the surviving joint tenant or tenants Rather the estate simply continues in survivors freed from the participation of the decedent whose interest is extinguished Basically in joint tenancy the last to die wins Intent the intent to create a joint tenancy must be explicitly stated If these four unities do not exist then a joint tenancy is not created a tenancy in common is created instead 1 Time the interest of each joint tenant must be acquired or vest at the same time 2 Title all joint tenants must acquire title by the same instrument or by a joint adverse possession A joint tenancy can never arise by intestate succession or other act of law 3 Interest all must have equal undivided shares and identical interests measured by duration a What does an undivided interest in the property mean Each party can t exclude the other even if they wanted to Forces people to share and work things out 4 Possession each must have a right to possession of the whole After a joint tenancy is created however one joint tenant can voluntarily give exclusive possession to the other joint tenant a The unity of possession is essential to a tenancy in common as well none of the other three unities are 58 Joint tenancies used to be favored in feudal times and common law because they did not like the division of land into smaller pieces did not want to split or fraction property rights Modern Law there has been a tendency to relax the four requirements But it s really really strict about intent The law does not like joint tenancies today but prefers tenancy in common You can destroy joint tenancy by selling your interest in the joint property which turns it into a tenancy in common Use a Straw Man third party agrees to a sale of the land who will then sell it back to you This turns the joint tenancy into a tenancy in common Need to make sure the 3rd party is trustworthy When you sever a joint tenancy it becomes a tenancy in common What happens if people can t get along anvmore Partition the land is sold and the proceeds are divided up among the interest holders The law swoops in like a parent and splits things up 0 Partition in Kind split property in half and give each party half favored O Delfino v Vealencis 0 Partition by Sale sell everything and split the proceeds 0 Against Ark Land Co v Harper partition by sale can work hardship on owners unwilling to sell because they have emotional attachments to the land Money alone cannot compensate for the sentimental losses that sale would entail O m Johnson v Hendrickson moves away from tradition Partition by sale is authorized if physical partition in kind cannot be made without great prejudice to the owners For example if the land when divided into parcels becomes worth substantially less than when it was owned by one person Avoiding Probate is the judicial supervision of the administration of the decedent s property that passes to others at the decedent s death It is costly and property can be tied up in probate for months or even years A joint tenancy avoids probate because no interest passes on the joint tenant s death However when a joint tenant dies their share of the jointly held property is subject to federal estate taxation 3 Tenancy by the Entirety won t be tested on The same as joint tenancy in that the four unities are required plus a fifth element the unity of marriage Husband and wife are considered to hold as one person at common law Husband and wife must convey together Neither the husband not wife acting alone has the right to judicial partition of property Divorce terminates and absent some agreement to the contrary the 59 parties usually become tenants in common The surviving tenant has the 39ght of survivorship Both are seised of the entirety Tenancv Case Example Delfino v Vealencis both parties were tenants in common of land D had a house and business on the property trash business P had a 99144 share of the land and brought suit to partition the property by sale because they wanted to create a residential subdivision The D moved for a partition by kind instead 0 Issue Does a partition by sale promote the best interest of the parties when there is a statutory preference for partitions in kind the old rule No The D is entitled to a partition of the property in kind 0 The court must look to the interests of all the parties involved not just the economic gain to one tenant They look to whether the property can be physically divided A partition by sale would force the D to surrender her home and perhaps would jeopardize her livelihood because she wouldn t have her business anymore It is these kind of circumstances which causes the law to preference partition in kind 0 D would receive some money but that s not what she wants so it s not in her best interest Her family home and trash business would be completely destroyed if partition by sale was allowed Notes Case Example A and B are heirs to their father and both want his rocking chair Partition in kind doesn t really work because they can t physically share it Partition by sale also is hard because the chair has sentimental value Think back to gift intent delivery and acceptance have to be satisfied What about gifts right before death Causa Mortis scrutinize the elements very closely The court claimed they would be cotenants and each one of them would get the chair for 6 months and then switch Riddle v Harmon can a joint tenant unilaterally sever the joint tenancy with a conveyance of property to herself as a tenant in common she wanted to dispose of her 12 of the property through her will Yes 0 She didn t use a straw man but just conveyed it to herself She was the grantor and the grantee this has not traditionally been allowed Appellate court gets away from the old rules She took a big risk by not using a straw man 0 Rule An undisputable right of each joint tenant is the power to convey his or her separate estate by way of gift or otherwise without the knowledge or consent of the other and thereby terminate the joint tenancy 60 Quote from Holmes It is revolting to have no better reason for a rule of law than that it was laid down in the time of Henry IV It is still more revolting if the grounds upon which it was laid down have vanished long since and the rule simply persists from blind limitation of the past 0 This is a nice case for breaking away from tradition Harms v Sprague we have joint tenants brothers and one of them makes an outside mortgage Issue Does this mortgage survive the death of the mortgager as a lien on the property No the property remains a joint tenancy property because the four unities are not severed and the mortgage does not survive the death of the mortgagor and become a lien on the property The property right of a joint tenant is extinguished upon death which activates the right of survivorship and allows the surviving joint tenant to become the sole owner of the property Because the mortgage was not recorded as a lien on the property it ceased to exist because when the mortgaging joint tenant died his property interest which the mortgage attached ceased to exist How does the lien theory get the court to come to this conclusion A lien doesn t sever unity of title A mortgage is less than a full transfer of title so it doesn t sever the joint tenancy Ef ciency Argument even if the mortgagers like a big bank lose a transaction they are still likely to continue because they are better off If small mortgagers like a couple lose this much then they d be unlikely to even make this deal in the future The big bank is the cheapest cost avoider They can fix this problem the most cheaply in the future the bank would never make this mistake again and not loan to joint tenants HYPO What would happen if the court had come out the other way and joint tenancy was severed Then the surviving brother and the mortgage note holder would become tenants in common If it s not a joint tenancy then it ll probably be a tenancy in common There are no survivorship rights Why is this arguably unfair to the surviving brother He was completely unaware of the mortgagelack of knowledge COMMON OWNERSHIP OUSTER This is what happens when cotenants are fighting but before we get to partition occurs when one cotenant is trying to establish absolute dominion and control Def there is ouster only when the cotenant in possession refuses to allow another cotenant to share the possession after the latter has made the demand for possession 61 Ouster can apply to two distinct fact situations 1 The beginnings of the running of the statute of limitations for adverse possession 0 EX 1 when two people own property and one decides to not let the other in and claims absolute control over the property This is when the adverse possession idea starts But cotenants can t fulfill hostility so they use ouster instead 2 The liability of an occupying cotenant for rent to other cotenants 0 EX 2 if you re keeping someone out you re enjoying their share of the property The excluded cotenant might want his share of the money ie rent 0 Majority Rule Unless there has been an ouster ie the excluded has asked for possession the cotenant in possession does not have to Day a proportionate share of the rental value to the cotenants out of possession Case Example Swartzbaugh v Sampson m Swartzbaughs were married and joint tenants Sampson negotiated to lease a portion of the land for a boxing pavilion Mrs Swartzbaugh objected and Sampson knew she would not agree Mr Swartzbaugh and Sampson signed the lease and Sampson erected and operated the boxing pavilion Mrs Swartzbaugh initiated this action to cancel the lease 0 ISSJ Can one joint tenant who has not joined in the lease Mrs executed by her cotenant Mr and another Sampson maintain an action to cancel the lease where the lessee is in exclusive possession of the leased property No Mrs Swartzbaugh cannot cancel the lease 0 Rule The act of one joint tenant without express or implied authority from or with the consent of his cotenant cannot bind or prejudicially affect the rights of the latter 0 Exception a joint tenant may by lease or license confer upon another the right to occupy and use the property of the cotenancy as fully as the lessorlicensor might have done 0 Mrs Swartzbaugh is terrified of adverse possession prescription because the lease could possibly be for 10 years Court assures her that a lease cannot avail the lessee of the claim of adverse possession 0 Bray recommended to attempt to get ouster and then make Sampson pay her rent Go down there with friends and sit in the seats during the matches with pickets He would still have to pay rent to Mr Swartzbaugh and her as well 62 COMMON OWNERSHIP MARITAL INTERESTS Two different worlds common law property and community property 0 At common law upon divorce property of the spouses remained the property of the spouse holding the title very disadvantageous for women Property held by the spouses as tenants in common or as joint tenants remained in such coownership Because the unity of marriage was severed by divorcee property held in tenancy by the entirety was converted into a tenancy in common Traditionalistic View 0 Community property is where spouses share assets equally regardless of who earned it Reform in early 1800s 0 Rule of Equitable Distribution where property is divided by the court in its discretion on equitable principles Marital property is described as all property acquired during marriage by whatever means Has heavily in uenced common law as well The Community Property System The fundamental idea of community property is that earnings of each spouse during marriage should be owned equally in undivided shared bv both spouses Basic assumption that both husband and wide contribute equally to the material success of the marriage and thus each should own an equal share of property acquired during the marriage by their joint efforts 0 Community Property can only exist between husband and wife whereas tenancy in common or a joint tenancy can exist between any two person or more 0 Neither spouse acting alone can convey his or her undivided onehalf share of community property except to the other spouse 0 Each spouse has the power to dispose by will of onehalf the community property at death There is no survivorship feature as with joint tenancy 0 Community property can be conveyed to a third person only as an undivided whole with the consent of both spouses 0 If one of the parties has property before marriage that she keeps separate from the marriage property then that s usually her own like an inheritance Comingling property can be really dangerous when community property is mixed with separate property like when property is acquired before marriage but part of the purchase price is paid after marriage states follow one of three theories 0 Inception of Right Rule the character of the property is determined at the time the wife signed the contract of purchase the house is her separate property 63 0 Time of Vesting Rule title does not pass to the wife until all the installments are paid and hence the house is community property 0 Pro Rata Apportionment the community payments buy in a pro rata share of the title Case Example p 391 WC fields was a famous actor who made a lot of money after he was married community property He bestowed gifts on girlfriends without his wife s knowledge totaling about 482450 She wanted to collect at least half of it as community property after he died She sued the executor of his estate because she knew the women would not be able to pay the judgment Would she win Yes 0 Analogize between community property and fiduciary duty to the community property should have been both of theirs but he sent it outside the community In Texas the nonowning spouse would be reimbursed for the time toil and effort that the spouse used in enhancing the separate estate They would look at the salary she got paid over the land 5 years the value of the party s work So if all her work has been plowed back into the business then the nonowning party would be entitled to a part of that 0 California court cares about the fruits of the labor ending value of business whereas the Texas court just looks at the cost of the labor You would rather be the receiving party in California and the business owner in Texas Rights of Common Law Marriage had to hold yourselves out as married not just the same as cohabitating Marvin v Marvin a contract for property division between a common law married couple could be implied by the conduct of the parties even though there wasn t an actual contract Ex if one person has been unjustly enriched at another s expense PRIVATE LAND USE CONTROLS SERVITUDES GENERALLY In the law of servitudes someone has a use right like an easement for access being allowed to walk across a patch of land is not the same as owning it This is not the same as cotenants that each own an equal share of the property This is like a contract that runs with the land looks like contracts but are more than that Servitudes generally are land arrangements arising out of private agreements involving usually two or more parcels of land in an attempt to increase the total value of all the parcels involved Usually the effect of the agreement is to burden one parcel of land for the benefit of another parcel Burdens and benefits are usually reciprocal 64 These agreements create interest in land binding and benefiting not only the parties to the agreement in question but also their successors These interests are commonly called as a class servitudes 1 A is given the right to enter upon B s land easement a Def gave a neighbor the right to enter or perform an act of the servient land 2 A is given the right to enter upon B s land and remove something attached to the land pro t 3 A is given the right to enforce a restriction on the use of B s land Negative EasementReal CovenantEquitable Servitude a These were really disfavored in common law that s why we have three names for the same thing because people kept trying to come up with exceptions b Def Negative Easement easements forbidding one landowner from doing something on his land that might harm a neighbor This is the right of the dominant owner to stop the servient owner from doing something on the servient land 4 A is given the right to require B to perform some act on B s land Real Covenant or Equitable Servitude 5 A is given the right to require B to pay money for the upkeep of specified facilities Real Covenant or Equitable Servitude a Today as people are living in communities where they have to pay money for upkeep it is more common and less unfavored than it used to be at common law Fundamental Tensions The courts attempt to Achieve fairness between the two parties Respect the intent expressed in the easement Acknowledge the interdependence of some land owners 65 Keep property easily marketable without unnecessary encumbrances Historically members of a community had pro ts 3 prendre rights to take things off the land things that were thought of as part of the land for example timber minerals wild game and fish Profits were the common wealth TYPES OF EASEMENTS Easements An easement is an agreement that allows a nonowner to enter upon and use a piece of property The right to use should not be confused with the right to possess Adverse possession is about ownership prescriptive easement is about An easement can be in fee simple or for life or for a term of years An easement being an interest in land falls within the statute of frauds and as a result generally requires a written instrument signed by the party to be bound There are usual exceptions to the SoF rule including fraud part performance and estoppel which are also accompanied by unique exceptions under the certain circumstances in which an easement is created by implication of by prescription Affirmative v Negative Easements Af rmativePositive Easements An easement that gives a party the right to enter or perform an act on land Negative Easements An easement forbidding one landowner from doing something on his land that might harm another Dead hand concerns a means to control wealth over multiple generations ADDurtenant v In Gross Both affirmative and negative types of easements give easement owners the right to make some specific use or in the case of a negative easement restrict some particular use of land that they do not own Easements Appurtenant runstied with the land on both sides Gives the right to whomever owns a parcel of land that the easement benefits Benefits the easement owner in the use of land belonging to that owner If it is unclear which type of easement is intended by the parties the law construes in favor of easement appurtenant 66 Requires both a dominant tenement estate and a servient tenement The easement attaches to and benefits the dominant tenement 0 Dominant tenement the land which benefited from the easement appurtenant O Servient tenement the land which does not benefit but allows it They are usually transferable The easement transfers along with the dominant tenement to successive owners Can be made personal to the easement owner only and not transferable to others Easements in Gross only tied to one side terminates with the owner does not run with land Gives the right to some person without regard to ownership of land Benefits the easement owner personally rather than in connection with use of land which that person owns Because it does not benefit any land it involves no dominant estate only a servient estate May be alienable or inalienable They are sometimes said to be personal but they are personal only in the sense that they do not attach to any parcel of land owned by the easement owner not in the sense that they may not be transferred to another person 0 Ex a bunch of people are given the right to traipse across the land to go to the swimming hole However if the person allowed sells his property the right to walk across does not go to the new person THIRD PARTY Reservation is a provision in a deed creating some new servitude which did not exist before as an independent interest This was made possible under the regrant theory that explains that a reservation is not a reservation at all which would technically be void but actually a regrant of an easement by the grantee to the grantor Ex 0 conveys land to A reserving a 20 ft wide easement of way along the south boundary of the land The easement did not exist prior to the conveyance by 0 Exception on the other hand is a provision in a deed that excludes from the grant some preexisting servitude of the land Ex after the above conveyance A conveys land to B except for the easement previously reserved by O 67 Willard v First Church of Christ Scientist can a grantor in deeding real property to one person reserve an interest in that property for a third person YES In Willard the court stated that an easement can be reserved in favor of a 3rd party but also stated that an easement cannot be excepted in favor of a 3rd party This overturns the common law rule Court looks closely as to what is fair the original grantee has likely paid a reduced price on the property in exchange for a certain use of the property to continue and the main objective should be carrying out the intention of the grantor The decision involves a balancing of equitable and policy considerations TYPES OF EASEMENTS LICENSESEASEMENT BY ESTOPPEL License is oral or written permission given by the occupant of land allowing the licensee to do some act that otherwise would be a trespass Super common plumbers guests theater tickets The privilege to use the land resembles as easement but a license is revocable whereas an easement is not Exceptions to the revocation rule 1 A license coupled with an interest cannot be revoked and 2 A license that becomes irrevocable under the rules of estoppel A license that cannot be revoked is treated as an easement How long does a license made irrevocable bV estoppel last The license remains irrevocable to the extent reasonably necessary to realize upon the expenditures New approach The irrevocable license is treated the same as any other easement unless the parties reasonably expected that the license would remain irrevocable to the extent reasonably necessary to realize upon the expenditures Estoppel denotes that one person is prevented from claiming a particular right because another person was entitled to rely on such conduct and has acted on that reliance 0 This refers to an easement that is created when the conduct of the owner of land leads another to reasonably believe that he or she has an interest in the land so that he or she acts or does not act in reliance on that belief 68 0 The person who attempts to create an easement by estoppel must show that a representation was communicated to the promisee the representation was believed and there was reliance upon such a communication Case Examples Holbrook v Taylor Taylor used a road the Holbrook s created to gain access to a public road during the year by permission of the Holbrook s The Taylors repaired and made considerable improvements to the road and claim use of the road by estoppel Issue Whether the Taylors had a license by estoppel regarding the road Yes Rule an easement cannot be revoked after the easement user has erected improvements on the land at consideration expense while relying on the easement General Rule for License Where a license is not a bare right of entry but includes the right to erect structures and acquire an interest in the land in the nature of an easement by the construction of improvements the licensor may not revoke the license after the licensee has erected improvements at considerable expense Henry v Dalton opposite the license general rule revocation is at the option of the licensor so it doesn t matter what had been expended Interest of the land should be evidenced by the deed Prevalent thinking in Texas TYPES OF EASEMENTS EASEMENT BY IMPLICATION easements are implied in two basic situations 1 Implied PEU prior existing use 2 Necessity Elsement Implied from 23 Prior Existin2 Use 1 One original Owner 2 Relevant necessity existed at the time of severance 3 There was a prior existing use that was apparent continuous and permanent 4 Necessity varies by jurisdiction 69 Some jurisdictions require reasonable necessity majority rule Van Sandt Some jurisdictions reasonable necessity if the easement would benefit the grantee but strict necessity if the benefit would benefitwould be reserved by the grantor Texas No statute of frauds requirement If the dominant tenement and the servient tenement come into the same ownership the easement is extinguished altogether The easement is implied on the basis of an apparent and continuous or permanent use of a portion of the tract existing when the tract is divided Often described as a quasieasement Implied to protect the probably expectations of the grantor and grantee that the existing use will continue after the transfer Van Sandt v Royster Facts Van Sandt claimed he never granted an easement for a sewer drain which connected his house to two others and ooded his basement He brought action to enjoin the others from using and maintaining the sewer drain that ran through and across his property 0 Issue Is there an apparent easement even though the sewer drain pipe is not readily visible YES An easement need not be visible to be apparent 0 w the implication of an easement will depend on the circumstances under which the conveyance of land was made including the extent to which the manner of prior use was or might have been known to the parties each party will be assumed to know about msonablv necessarv uses which are apparent upon reasonably prudent investigation an easement may be implied for a grantor or grantee on the basis of necessity alone 0 Van Sandt purchased the property upon careful inspection and knew that the property had modern plumbing so he was charged with notice of the sewer There should have been reasonable expectations concerning the prior existing use In this case the previous common owner of all the lots made use of part of his land for the benefit of another part creating a quasieasement which creates an easement by implied reservation upon severance of the servient estate from the dominant one Bailey the common owner installed the plumbing for the benefit of all three lots MISC implied right of relatives of a deceased person to cross private property for the purposes of accessing the cemetery where the decedent is buried The graveyard right is basically an implied easement in gross Elsement Implied bv Necessity 1 One original owner 70 2 The easement is a necessity not a mere convenience and The easement has to be strictly necessary Othen Standard However the weight of authority today holds that only reasonable necessity is required for an implied easement 3 The necessity existed at the time of the severance of the two estates This is usually the outcome determinative factor Necessity is an important circumstance in implying an easement on the basis of an existing use because it probably affects the intention of the parties as to whether the existing use is to continue Time Frame An easement by necessity only endures as long as it is necessary If the dominant owner secures another way out from the landlocked parcel the easement by necessity ceases Othen v Rosier Facts Othen used a roadway on Rosier s property to access the public highway but Rosier later built a levee which made the road impassible for Othen Court deemed Othen did not have easement by necessity 0 RLle An easement can be created by implied reservation only when it is shown that there was unity of ownership between the alleged dominant and servient estates that the easement is a necessity and not a mere convenience and that the necessity existed at the time the two estates were severed 0 An easement bv Drescription can only be acquired is the use of the easement was adverse 0 In this case there was one original owner but the easement wasn t strictlv necessarv at the time the property was severed not currently So Othen cannot claim easement by necessity There has to be a strict need to create an easement somewhere TYPES OF EASEMENTS EASEMENT BY PRESCRIPTION History endowed with great power of imagination for the purpose of supporting ancient uses the judges invented the fiction of the lost grant The fiction of the lost grant applied if a use was shown to have existed for 20 years it was presumed that a grant of an easement had been made and that the grant had been lost The presumption of grant could not be rebutted by evidence that no grant had in fact been made Eventually courts applied by analogy the statute of limitations requirement to adverse possession 71 Historically courts set the same period for prescriptive easements as adverse possession and generally required the same manner of use required for adverse possession 1 There must be entry an actual entry The entry creates a cause of action for trespass and triggers the statute 2 That entry must be open and notorious Entry must be sufficiently open and notorious that they would put reasonably attentive property owners on notice that someone is on their property The test of notoriety is objective Exclusive exclusivity does not require a showing that only claimant made use of the way but that the claimant s right to use the land does not depend upon a like right in others This is how prescriptive easements differ from adverse possession 3 That entry must be continuous for the statutory period Generalization use of property in the manner that an average true owner would use it under the circumstances Entry must be continuous but not literally constant 4 That entry must be adverse or hostile If the owner of the land doesn t oppose to you coming on their land then it s not adverse Just opening up a gate is probably not hostile In order to prevent a Prescriptive Easement In a jurisdiction not following the fiction of the lost grant to prevent a prescriptive easement from being acquired the owner must effectively interrupt and stop the adverse use In some jurisdictions a written notice is enough In others sometimes a fence is not enough Golf Course Ex Hilton lives near a golf course and golf balls keep coming onto his property so some people come onto his property to retrieve them If this continues will the golf course acquire a prescriptive easement over Hilton s property Yes What could Hilton have done to prevent this He should have specifically told them that they were allowed to then it s permissive and they can t establish adverse and hostile elements Gives them a license 72 Public Prescriptive Easements In most states a public prescriptive easement can be obtained by long continuous use by the public under a claim of right Landowner must be put on notice by the kind and extent of use and that the public in general is claiming use Usually a greater burden placed on the claimant here Beaches are different Beach access is usually presumed to be with permission of the owner and use of the public is a customary right TERMINATION OF EASEMENTS Can be terminated a number of ways 1 Easement owner may agree to release the easement normally requires a writing 2 If the duration of the easement is limited in some way then it can end through expiration 0 An easement created to end upon the occurrence of some even sometimes called a defeasible estate expires automatically if and when the stated event occurs 3 An easement ends by merger if the easement owner later becomes the owner of the servient estate 4 Or an easement may be terminated by prescription if the servient owner wrongfully and physically prevents the easement from being used for the prescriptive period 5 May end through estoppel if the servient owner reasonably relies upon a statement or representation by the easement owner and detrimentally relies on it 6 Easement may end by abandonment but mere non use by the easement owner does not constitute abandonment 7 Easement may be terminated by condemnation if the gov exercises its eminent domain power to take title to a fee interest in the servient estate for a purpose that is inconsistent with continued existence of the easement Preseault v United States railroad case land used to be a railroad but now they want to turn it into a public trail P s who have a fee simple interest want to stop this from happening 0 When a railroad for its purposes acquires an estate in land for laying track and operating railroad equipment the estate acquired in not more than that needed for the purpose and that typically means an easement 73 0 Issue Was the easement limited to railroad purposes only or was it broad enough to encompass future use as a public recreational trail Limited the court could not find that the scope of the easement would encompass a public trail 0 Had the easement been terminated by abandonment by the railroad Yes nonuse does not extinguish an easement by itself something more is needed Two things must occur for the property to be abandoned 1 An act by the owner that clearly shows that he or she has given up rights to the property and 2 An intention that demonstrates that the owner has relinquished control over it Removal of the tracks and equipment was inconsistent with future existence and no attempts were made to reconstruct The limited collecting of licensing fees are not enough to defeat the abandonment Some clear action must be taken to indicate that the owner no longer wants his or her property Any act is sufficient as long as the property is left free and open to anyone who comes along to claim it Negative Easements and Conservative Easements Historv of Negative Easements three labels for the same functional thing look at page 63 There were three reasons why English courts constrained negative easements from expanding 1 England was without an effective system of public records of lad titles and the purchaser of land was bound by its servitudes regardless of notice The purchaser could protect himself by viewing the land but negative easements were not so easy to discover as affirmative easements To expand the list of neg easements would increase the risk to the purchaser in an unfair manner 74 2 The traditional negative easement could arise by prescription in England If new types of negative easement could arise by prescription the servient owner s rights to change the land would be unduly restricted Judicial recognition of this would cloud the conditions in which neighbors can see to enforce negative easements on each other 3 The final objection was essentially conceptual English judges had a hard time deciding whether negative obligations should be analyzed as easements or covenants A negative easement resembles an obligation of the servient owner A negative right seems more naturally acquired by a covenant that is by a promise At common law only four traditional types of negative easements restrictions were recognized The right to stop your neighbor from 1 an easement not to block windows 2 and easement not to block the ow of air through a defined channel 3 an easement of support for a building 4 an easement not to interfere with the ow of an artificial stream Modern Trend in New TVDes of Negative Easements The American courts have been willing to recognize other negative easements than the common law views from your property a solar easement but generally treat them now as equitable servitudes Courts created equitable servitudes as a way to address negative easements under a different set of rules Conservation Easements negative easements recognized and created largely by statute They are the most important today Preserves scenic and historic areas and open space An owner of land can give a public body or a private charitable organizations a conservation easement preventing the servient owner from building on the land except as specified in the grant Conservation easements are written to be permanent on their face 0 Who holds these easements Benefit is to the public Positive extemality broad Held by local private land trusts 0 How do you get compensated for giving your land to the local land trust Tax exemptions or deductions based on how much the land was worth if it had been sold lost development rights Appraisals matter because they can affect how much you can deduct of which the local trust has no interest in COVENANTS RUNNING WITH THE LAND EQUITABLE SERVITUDES AND REAL COVENANTS The traditional difference between real covenants and equitable servitudes relates to the availability of remedies The remedy for breach of a real covenant is damages in a suit at 75 law the remedy for breach of an equitable servitude is an injunction or enforcement of a consensual lien which secures a promise to pay money in a suit in equity 0 If an injunction is granted the plaintiff if they want can sell the injunction to the defendant By fixing the selling price of the injunction the plaintiff can make their own determination of the amount of damages Whereas if the plaintiff sues for damages the jury determines the amount 0 The restatement takes the position that there is and ought to be in the rules applicable to real covenants and equitable servitudes dropping the titles altogether and calling them covenants running with the land An equitable servitude is a covenant regarding the use of land that is enforceable in equity against subsequent possessors even if the covenant itself is not enforceable at law An equitable servitude can be implied in equity under certain limited circumstances but cannot be obtained by prescription 1 The parties intend the promise to run 2 That an actual subsequent purchaser have actual or constructive notice of the covenant Sanborn v Lean and 3 That the servitudecovenant touch and concern land definition below An equitable servitude is a exible alternative to real covenants All subsequent owners and possessors are bound by the servitude Without a requirement of privity Although an equitable servitude started out as a promise enforced by equity in the course of time it turned into an interest in land Unlike a real covenant which attached to an estate in land an equitable servitude burdens the land itself much like an easement In essence an equitable servitude is a negative easement Real Covenants A real covenant benefits and burdens the original parties to the agreement as well as their subsequent purchasers runs with the land A positive covenant is a covenant where either party agrees to do something and a restrictive covenant is a covenant where either party agrees not to do something These bargains between neighboring property owners can operate to allocate resources efficiently by arranging land uses so as to minimize con icts 0 A and B agree not to use their land for factory purposes but rather as residential land To make this happen some sort of property rights is needed that is enforceable by and against subsequent purchasers of the land 76 0 Examples no building shall be painted a uorescent color no motor vehicles are allowed on the property no fishing or hunting on the property Why would you want a real covenant rather than a contract People kept trying to get past the limited amount of negative easements in common law Helps people to minimize the external and con icting effects transactional costs A mere contract right alone is usually not sufficient because promises are generally not enforceable against a person who was not a party to the contract The question of whether a covenant runs arises only when a person who is not a party to the covenant is suing or being sued American Real Covenant a promise respecting the use of land that runs with the land at law A real covenant can be a negative promise a promise not to do an act or an affirmative promise a promise to do an act A covenant is not enforceable against an assignee who has no notice of it 1 Statute of Frauds has to be written down and signed by covenantor and comply with SOF 2 Intent for the covenant to run with the land 3 Privity and 0 Vertical Privitv if A or B sells then they are in vertical privity to whoever they sell to A to D B to C 0 Horizontal Privitv between the original covenanting parties A to B Horizontal is much less important now and is not required for a covenant to run at law to successors not on exam 0 Ex B owner of blackacre has promised A the owner of Whiteacre that Blackacre shall not be used for any industrial purposes Horizontal Privity B sells Blackacre to C and A sells Whiteacre to D Vertical Privity C constructs a factory on Blackacre D sues C for damages 4 Touch and Concern means that for the covenant to be enforceable it had to touch and concern the propertyland 0 OLD RULE Only covenants which compel the covenantor to submit to some restriction on the use of his property touch and concern the land Does the restriction prevent something you re doing with the land itself If not then it doesn t touch and concern 77 0 Modern TampC replaced with broader overall general balancing test unconscionable without rational justification that violates public policy Economic reasons can have an impact on this whereas before they could not If the people bound by a covenant equitable servitude today had intent and notice then the court would likely uphold it 0 Why has it evolved Because the 5th categorv of servitudes A is given the right to require B to pay money for the upkeep of specific facilities would not fall under the old rule People paying for upkeep Covenants Running with the Land Case Examples Tulk v M oxhay in England P sold Leicester Square with restriction that it be maintained and not built on affirmative and negative restriction The buyer then later sold it to Moxhay who knew about the covenant but the covenant wasn t in his deed doesn t comply with the SoF not in writing and he wanted to build on it Issue Can a covenant restricting a property to a specific use be enforced against a subsequent purchaser YES because Moxhay had notice of the covenant even though it didn t meet the other elements of a real covenant Court discarded all negative easement restrictions before Revolutionary looks at equity and throws out old rules enforceable by an injunction is a covenant respecting the use of land enforceable against successor owners or possessors in equity regardless of its enforceability at law Sanborn v McLean D wants to build a gas station but there is an implied negative easement think equitable servitude Even though the restriction was not in the chain of title the D is bound by the title of neighboring lots in the subdivision meant to be for residential purposes No compliance with 80F and no privity so not a real covenant Equitable Servitude is a exible alternative Purchaser was still bound by the title of the neighboring lots The easement is not personal to the owners but runs with the land sold and is enforceable on any owner having actual or constructive notice D had constructive notice because of the nature of the residential neighborhood He was under a duty to inquire about restrictions on the neighborhood If he had he would have found out about the limit of the lots DEFEASIBLE FEES AS LAND USE CONTROL DEVICES DISCRIMINATORY COVENANTS 78 Defeasible fees determinable fee fee simple subject to condition subsequent and fee simple subject to executory limitation may be employed to control land use A defeasible fee differs from a servitude in that the remedy for its breach is forfeiture whereas the remedy for breach of servitude is damages injunction or enforcement of a lien Discriminatory Covenants even after Shelley racially restrictive covenants continue to have an important role in perpetuating residential segregation in urban areas Shelley v Kraemer Facts a black couple Shelley was buying a house while unaware of a racially based restrictive covenant on that street the white homeowner tried to stop them 0 Rule Judicial enforcement of a restrictive covenant based on race constitutes discriminatory state action and is thus forbidden by the equal protection clause of the 14th amendment of the US constitution 0 Exception the covenant itself does not violate the 14th am just the state action So as long as the covenant were put into effect through voluntary action it remains constitutional 0 Arguments not on constitutional grounds that the court didn t really consider 0 Restraint on alienation cutting off part of the population from being buyers 0 Touch and Concern Element means that for the covenant to be enforceable it had to touch and concern the propertyland I Ex not selling to blacks does not specifically touch and concern or effect the land Racially restrictive covenants usually did not touch and concern the land Uses the old rule for touch amp concern This opinion is limited to racially restrictive covenants OR other constitutional right limiting covenants religion race etc Shelley v Kraemer doesn t make it clear whether state action is unconstitutional when it goes outside race discrimination to cover other groups Fair Housing Act after Shelley In addition to the 14th am a covenant that has a racially discriminatory effects violates the federal FHA so it may be unenforceable and illegal in and of itself The act makes it unlawful to refuse to sell or rent or otherwise make unavailable a dwelling to any person on the basis of race color religion sex national origin familial status or handicap The fair housing act today is the most significant restraint on people s ability to discriminate in a housing context A lot of states have their own housing acts and statutes Fair housing act as opposed to the civil rights act is not just based on racial 79 discrimination FHA is much broader But usually only applies to dwellings ie a residence to which you are planning to return The act makes it unlawful to print or publish any statement like a deed that indicates a racial religious or ethnic preference with respect to the purchaser of the dwelling Most of the discriminatory covenants are now settled under this act avoiding constitutional holdings Civil Rights Act of 1968 provided for equal housing opportunities regardless of race creed or national origin Housing Discrimination Examples Ex Shelters for people with mental illnesses if only for one night are not covered Ex Mrs Murphy put an ad in paper For rent furnished basement apartment in private white home 0 quotMrs Murphv squot Exemption provides that if a dwelling has four or fewer rental units and the owner lives in one of those units that home is exempt from the FHA So she has an exemption to be racist under the fair housing act because it is a single family home 0 However the exemption does not aDDlv to rental advertising Advertising has a negative effective force in a much more public way than Mrs Murphy s private racism Even though she has an exemption under the FHA she definitely violated the civil rights act However she could always claim she denied the black couple the lease for some other reason hard to prove racist reasons Ex Rent only to people speaking Polish German or Swedish Yes violative Preference for certain national origins However if renter did not want to rent to a German person and didn t advertise it then it would be okay If there was no ad it would be very hard to prove that she was being discriminatory in a certain way However she would still be violating the civil rights act Refusal to rent to unmarried couples and sexualorientation discrimination is not covered by the act Restrictive Covenants against Group Homes p881 Covenants restricting property to residential use only or singlefamily use have been subject to considerable litigation What about when a private corporation that assists mentally impaired persons purchases a house 80 0 Questions look to interpretations does this fall within the singlefamily language Look to whether the restrictive term violates the Fair Housing Act What about people who want to develop property for a group The homes are limited to people related by blood marriage or adoption Texas case Shaver v Hunter TERMINATION OF COVENANTS SAME AS TERMINATION OF EASEMENTS page 71 3 more conditions 1 Unclean hands the court will refuse to enjoin a violation of a servitude that the plaintiff previously violated 2 Equitable Doctrine of Laches which involves an unreasonable delay by the plaintiff to enforce a servitude against the defendant causing prejudice to the defendant laches does not extinguish the servitude but only bars enforcement Bars relief when delay works injury prejudice or disadvantage to the defendant 3 Change of conditions when the landarea has so radically changed that the original purpose of the covenant cannot be fulfilled or the purpose of the covenant has been nullified Termination of Covenant Case Examples Western Land Co v Truskolaski P wanted to construct a shopping center on land within a subdivision There was a restrictive covenant which specifically said the land was for single family dwellings and prohibited stores P claims the restrictive covenant should be terminated because the subdivision had so radically changed in recent years as to nullify its purpose change of conditions 0 Court determined that the object and purpose of the restriction had not been thwarted and had not been rendered unenforceable Subdivision owners still put real and substantial value on the restrictive covenant Rick v West West owner of land with covenant restricting land to single family dwellings refused to release the covenant when the P developer wanted to build a hospital facility on the remaining lots 0 Court ruled that there was not a substantial change of conditions so the covenant was enforceable D has a right to rely on the restriction and it has benefit to her Even though there s just one person left with the benefit 0 RULE Restrictive covenants will be enforced unless the attitude of the complaining owner in standing on his covenant is unconscionable or oppressive It s just not fair to change the rules on people who bargained back then 81 Pocono Springs Civic Association v MacKenzie D was attempting to abandon the land because they were not able to put a sewer system on the land so they couldn t develop it They want to abandon title because they want to stop paying fees on the land 0 Court said that possession is presumed with whoever has record title and the D still have record title so they can t just walk away Why is this a defensible rule Don t want to let a bunch of land become abandoned or be dangerous to others who go on the land Termination by the Condemnation if the gov condemns an existing easement or condemns the servient land so as to destroy an existing easement the government must pay compensation to the easement owner If the gov uses the land in violation of a restrictive covenant the gov can be held to damages COMMON INTEREST COMMUNITIES Homeowner s Association is a corporation formed by a real estate developer for the purpose of marketing managing and selling of homes and lots in a residential subdivision Membership in the homeowners association by a residential buyer is typically a condition of purchase a buyer isn39t given an option to reject it Most homeowner associations are incorporated Condominiums each unit or interior space in a condominium is owned separately in fee simple by an individual owner Exterior walls the land beneath the hallways and common areas are owned by the unit owners as tenants in common Cooperatives more discretion on who gets in The title to the land and building is held by a corporation the residents own all the shares of stock in the corporation and control it though an elected board of directors 40 West 67th Street Corp v Pullman D moved into a coop and began to complain about his upstairs neighbors Coops checked out the upstairs couple s apartment and said none of that stuff was there There was even an altercation in the elevator and the D tried to sue everybody Coop decided to evict him for obiectionable conduct Coop meeting of shareholders had a super majority and terminated his lease 0 Whether the business judgment rule can allow deference to be given to board members decisions or if evidence must be presented to the court on the matter Deference given to board member decisions 0 Standard of Review is a common law doctrine by which courts exercise restraint and defer to good faith decisions made by boards of directors in business settings a rule of reason 0 Alternative to the business judgment rule very broad reasonability analysis which is much more searching More community decisions will be overturned with this standard 82 0 Court says the B R applies to coops judgment as long as they think they were acting in good faith with discretion If the coop can defend their decision in good faith thinking of the interest of the community then it will be upheld LANDLORDTENANT LAW LEASEHOLD ESTATES Leaseholds or tenancies have roots that run deep into feudal times and have been fairly static over the years in terms of their formal characteristics 1 The Term of Years is an estate that lasts for some fixed period of time or for a period computable by a formula that results in fixing calendar dates for beginning and ending once the term is created or becomes possessory 0 The term can be one day to 3000 years At common law there was no limit on the number of years permitted but some American state statues limit the duration of terms of years 0 Because a term of years states from the outset when it will terminate no notice of termination is necessary to bring the estate to an end 2 The Periodic Tenancy is a lease for a period of some fixed duration that continues for succeeding periods until either the landlord of tenant gives notice of termination 0 Term example month to mont or year to year 0 If notice is not given then the period is automatically extended for another period 0 Under common law 6 months notice is required to terminate a yeartoyear tenancy 0 The death of the landlord or tenant has no effect on the duration of a term of years or periodic tenancy but it does on the tenancy at will 3 The Tenancy at Will is a tenancy with no fixed period that endures so long as both landlord and tenant desire continues as long as they both want it to 0 If the lease provides that it can be terminated by one party it is necessarily at the will of the other as well if a tenancy at will has been created 0 Note however that a unilateral power to terminate a lease can be included on a term of years or periodic tenancy 83 0 The tenancy at will ends when one of the parties terminates it at will at any time or at the death of one of the parties Usually requires 30 days to terminate Determinable Life Tenancy Case Garner v Gerrish Gerrish is the tenant who has the option to back out at will But the landlord dies and the next person doesn t think the lease specifically says that 0 Issue Whether a lease grants the tenant the right to terminate the agreement at a date of his choice creates a tenancy at will or a determinable life tenancy on behalf of the tenant 0 The court deems that it was onesided tenant had the right to terminate but landlord did not have that right Here the court recognized that the terms of the agreement clearly indicate that the two original parties agreed that Gerrish would have a determinable life tenancy So the court wanted to ensure the intent of the grantor was satisfied 0 Rule If a lessee has the option of terminating a lease when he pleases and the lessor landlord did not have that right a determinable life estate will be created The Tenancv at Sufferance Holdovers tenancy at sufferance arises when a tenant remains in possession holds over after termination of the tenancy The landlord has two options then 1 Evict plus damages or 2 Consent express or implied to the creation of a new tenancy Most holdovers give rise to a periodic tenancy in the balance it results in term The tenancy resulting from holding over is usually subject to the same terms or conditions as those in the original lease unless the parties agree otherwise or unless some terms or condition is regarded as inconsistent with the new situation 0 EX tenant stays after a period of 1 year and then pays the monthly rent and the landlord accepts Holding over gives rise to a periodic tenancy If you ve been paying month to month for your year lease then your periodic tenancy is monthtomonth California approach Some states convert it to a bilateral tenancy at will 0 How do these situations arise how do we get holdovers Other transactions might cause problems lack of housing between moves transaction costs The Lease leases give rise to the landlord tenant relationship which carries with it certain rights and liabilities and remedies that do not attach to other relationships A lease is both a conveyance and a contract A lease transfers a possessory interest in land so it is a conveyance that creates property rights 84 LANDLORD TENANT LAW SUBLEASES AND ASSIGNMENTS IN LEASES Assignment arises when the lessee transfers his entire interest under the lease when that is he transfers the right to possession for the duration of the term Sublease when the lessee transfers anything less than his entire interest it creates a sublease The lessee is said to have retained a reversion the right to possession goes back reverts to him at the end of the period designated in the transfer Also when determining whether something is an assignment or a sublease look to the intention of the parties Privitv in Leases Leases typically give rise to both privity of contract and privity of estate Privity denotes a voluntary transactional relationship between two or more people Whether oral or in writing the lease between the landlord and the original tenant amounts to a conveyance of a right of possession from the former to the latter and that conveyance creates between the landlord and the tenant the privity of estate If the lease also contains promises by one party to the other those promises create what is called privity of contract Kendall v Ernest Pestana Inc can a lessor unreasonably and arbitrarily withhold his consent for a sublease that was given by someone else No 0 TraditionalOld Rule not used the lessor may arbitrarily refuse to approve a proposed assignee no matter how suitable the assignee appears to be and no matter how unreasonable the lessor s objections 0 Minority Rule Rule the Court uses A growing minority of jurisdictions now hold that where a lease provides for assignment only with the prior consent on the lessor such consent may be withheld only where the lessor has a commercially reasonable objection to the assignment 0 Why enforce the minority rule It s efficient fits in with real estate s current practice fairness A leasehold is freelv alienable though contractual restrictions on the alienability of leasehold interest are permitted A lease is a contract and every contract has a duty of good faith and fair 85 dealing Denying consent solely on the basis of personal taste convenience or sensibility is not commercially reasonable In this case the lessor was just trying to get more rent and trying to extort beyond the bounds of efficiency HYPO L religious group leases space in a building to T for 3 years After 1 year T wishes to transfer to T1 abortion and birth control group L refuses consent on the sole ground that they are fundamentally opposed to the aims and activities on T1 0 Can L landlord refuse No deals with commercial responsibility not one group s beliefs or sensibilities LANDLORD TENANT LAW DEFAULT SELFHELP SUMMARY PROCEEDINGS What can the landlord do when the possessortenant has defaulted like through failing to pay the rent or abandoning the premises prior to the end of the tenancy Berg v Wiley D leased land to Berg for use as a restaurant She was not supposed to make any changes to the building structure without D s approval But she remodeled the restaurant without approval so D changed the locks to the restaurant Selfhelp 0 Held because the tenant did not abandon or surrender the premises the court found that D s reentry was forcible and wrongful as a matter of law 0 Rule The only lawful means to dispossess a tenant who has neither abandoned nor voluntarily surrendered but who claims possession of the property is by resort to judicial process 0 Common Law Rule that a landlord may rightfully use selfhelp to retake leased premises from a tenant provided that 1 The landlord is legally entitled to possession and 2 The landlord s means of reentry are peaceable However the modern growing trend is that This view is founded on the premise that the potential for violent breach of peace inheres in any situation where a landlord attempts by his own means to dispossess a tenant Landlords don t like this because there are fewer options available and possible burdensome litigation can result What can landlords do if thev can t selfhelp Summary Proceedings intended to be a quick and efficient means by which to recover possession after termination of tenancy Allows landlords to bring actions against tenants when situations like Berg v Wiley happen Give landlords an option to deal with bad tenants more 86 quickly and not go through regular litigation But is still more timeconsuming and expensive than changing the locks But many tenants are not represented by counsel while landlords are 0 Justification for summary proceedings still better than selfhelp when taken in consideration of all the costs of possible violence more lawsuits and medical bills 0 Arguments for selfhelp with selfhelp bad tenants bore the cost in summary proceedings good tenants can bear the costs because the landlords have to spend money and then they raise prices Also summary proceedings are probably less efficient than selfhelp 0 Bargaining in the shadow of the law informs how landlords and tenants interact before summary proceedings Usually a tenant has to disclose when they re been in previous summary proceedings So the landlord will threaten bad tenants with taking them to summary proceedings which will make it harder for them to rent other places later LANDLORD TENANT LAW ABANDONMENT SURRENDER amp MITIGATION Abandonment leaving the rented property longterm intent and unequivocal action like moving out all your stuff See page 71 also Surrender Giving up all legal right to the property Asking for permission to leave perhaps through payment or letter If the landlord accepts either explicith or implicith then he can t bring an action When the landlord accepts the tenant s offer the surrender terminates the lease and extinguishes the lessee s liability for future rent but not for accrued rent or for past breaches of other covenants Sommer v Kridel m D signed a twoyear lease owned by P but prior to obtaining keys his engagement fell through and he attempted to terminate the lease by letter giving up his security deposit and 1st month s rent P never responded to the letter and did not attempt to relet the apartment until months later Someone else wanted to rent but he didn t show them the apartment P sued D for full amount due under the lease 0 Issue Whether a landlord seeking damages from a defaulting tenant has a duty to mitigate damages by making reasonable efforts to relet an apartment wrongfully vacated by a tenant Yes 0 The Old Rule landlord has no duty to mitigate Abandonment is an invitation to vandalism and the law should not encourage such conduct by putting a duty of mitigation on the landlord 87 The New Rule in favor of the mitigation requirement reasonable diligence in reletting apartments Court s reasoning for the new rule Modern notion of basic fairness and equity Landlord is in more of a spot to rent the apartment out than the tenant who no longer lives there Austin Hill Country Realty Case notes duty to mitigate in Texas landlord uses objectively reasonable efforts to fill the premises But the replacement tenant must be suitable under the circumstances doesn t just have to be anyone LANDLORD TENANT LAW CONSTRUCTIVE EVICTION amp IW of HABITABILITY Quiet Eniovment A right to the undisturbed use and beneficial enjoyment of real property by the tenant or landowner Reminiscent of seisin see page 30 Active eviction when you get thrown out of the property through act of landlord is when the landlord does or fails to do something that they should or should not do The property becomes so lousy that the tenant can t be there anymore The obligation to pay rent was dependent upon the tenant s having possession undisturbed by the landlord If one could characterize a shortcoming in the leased premises as an unlawful disturbance by the landlord and if the disturbance was amp substantial as to amount to eviction and if the tenant thereafter abandoned the premises then it was as though the tenant had been evicted Any act of the landlord which renders the premises substantially unsuitable for the purposes for which they are leased or which seriously interferes with the beneficial enjoyment of the premises is a breach of the covenant of quiet enjoyment In order to bring suit for a remedy based on constructive eviction a tenant must leave the apartment and seek shelter somewhere else Seems like a really high burden Tenants right to claim constructive eviction will be lost if he does not vacate the premises within a reasonable time after the right comes into existence Reasonableness is determined by facts and circumstances of particular case CL being gradually relaxed You can also sue for being partiallv constrictivelv evicted whenever part of the business is ooded but you can still run the business in the other part When does the landlord bear the cost of defects When he s fixing up the place to get ready to relet it When he can t find a new tenant They spend more costs when they re looking for tenants But when they already have a tenant usually the tenant bears the burden of fixing costs 88 Constructive Eviction Case Example Reste Realty Corp v Cooper Landlord paid no attention to tenant s request when water was running off the driveway into the office space he was renting Tenant sent a notice of vacation and the Landlord sued to recover rent for the remaining term of the lease 0 Did the tenant have a right to the remedy of constructive eviction Yes There was an implied covenant of quiet enjoyment modern rule This kind of ooding counts as a substantial enough breach to provide the tenant a remedy They have a reasonable amount of time to leave the leased property does not render pointless the doctrine of quiet enjoyment and constructive eviction Generally adequate standard of habitability must be met and a breach occurs when the leased premises are uninhabitable in the eyes of a reasonable person The objective is safe and healthy housing substantial compliance is required 0 Main difference between IWH and Constrictive Eviction habitability is available when a person can t meet constructive eviction because they can t vacate the premises Also IWH does not apply to commercial leases and land like in Reste Realty o Implied warranty of suitability exists for commercial property Some baseline of suitability for commercial purposes Might be waivable right Harder to prove IWH Case Example Hilder v St Peter Tenant s apartment residential not commercial was broken and unhealthy and she fixed most of the stuff on her own So she sued the landlord for her rent and security deposit back This was a cheap apartment in lousy condition and the tenant doesn t have any other place to go so there s no constructive eviction 0 Court gave the tenant her rent security deposit and the money she used to fix up the place back because the landlords breached the implied warranty of habitability According to the IWH the landlord must deliver premises that are safe clean and t for human habitation 0 NonWaivable Right A tenant cannot waive IWH and live in squalor for cheaper rent How do we prove a violation of IWH usually look to violations of building or housing codes Retaliatory Eviction not allowed by landlords There is a rebuttable presumption of retaliatory purpose if the landlord seeks to terminate a tenancy increase rent or decrease services within 89 some given period after a good faith complaint or other action by the tenant based on the conditions of the premises LANDLORD TENANT LAW AFFORDABLE HOUSING and RESIDENTIAL CONTROLS Chicago Board of Realtors v City of Chicago Plaintiffs property owners challenged the constitutionality of an enacted ordinance that essentially codified the implied warranty of habitability and established new landlord responsibilities and tenant rights like using local banks for deposits and interest tenants can hold onto their rent in the landlord violates the lease if tenant makes repairs then they can subtract from the rent they pay and doesn t let landlords charge over 10 for late fees 0 Landlord s arguments Landlords did not want the new ordinance because the initial costs of the new standards would be on the landlords This could have the effect of depleting landlord resources and leaving them with little capital to use on the quality of housing 0 Why the new ordinance has a negative impact according to Posner and Easterbrook 0 They think that as you decrease landlord profits and the appeal of a specific market supply with decrease there Tenants overall will be hurt usually the poorer and newer tenants Will discourage new rental property from being built and rental property will be turned in for sale property These criticisms apply to rent control and eviction control as well 0 Also if the standard of housing keeps rising then the Implied Warranty of Habitability is lower When the market is constrained tenants have less options and get stuck in lousy living situations If IWH is inferred then being a landlord is much less financially attractive and tenants will have less options 0 However landlords lost because the ordinance was reasonable in light of its specific and suf ciently reasonable stated purpose to promote the public health safety and 90 welfare Property and personhood can be bound together argument can be made in the rental aspect as well A lot of these provisions are meant to protect tenants in place THE LAW OF NUISANCE Nuisance The intersection between torts and property Common law of neighbors seeks to fix disputes between people living close by Guiding principle Sic utere tuo ut alienum non laedas one should use one s own property in such a way as to not injure the property of others In general Nuisance is conduct that causes 1 substantial harm and 2 unreasonable interference to the use and enjoyment of one s land Two approaches to determining if there is a nuisanceliability 1 Threshold Test looks at whether someone s interference with your property is amp substantial and amp significant that it marks the point of liability Is the harm negative enough There is a lot of inconsistency here This approach cares a lot more about fairness and overlooks the argument of efficiency 0 Jost case example whether power plants economic or social importance dwarfed the claim of a small farmer is of no consequence in this lawsuit Court just looks at the harm being caused instead of comparing whether the social benefits of the relevant conduct outweigh its cost courts analyze whether the level of interference with the plaintiff s land by the defendant s conduct crosses some threshold that marks the point of liability 0 This is contrary to the restatement position that the court is to consider whether the gravity of the harm outweighs the utility of the actor s conduct 2 Balancing Approach from the restatement 2rld of torts and Morgan case Invasion and interference of someone s property rises to the level of nuisance if the harm caused is a Substantial or is b Either intentional and unreasonable or the unintentional result of negligence reckless or abnormally dangerous activity 91 What constitutes substantial invasion and interference People having to change their lives the value they place on the land can be lots of things so just look at the fact pattern An invasion of another s interest in the use and enjoyment of their land is intentional when the businesses conduct in question acts for the purpose of causing it and knows that it is resulting from his conduct or knows that it is substantially certain to result from his conduct In determining whether the interference is unreasonable the court will look to the level of interference that results from the conduct Balancing Approach Case Example Morgan v High Perm Oil Co D s business oil refinery fumes and gases intentionally and unreasonably went onto the P s property 0 Court applies the balancing test look at the activity and everything around it compare the good jobs and oil with the bad harm to neighbors and noxious fumes 0 Court looks to the D s intentionality knows that there are fumes which when taken very broadly can merge into negligence Should the actor have known what they were doing and does the harm outweigh the good If yes then they were negligent We can tell negligence through the balancing test 0 Nuisance per se Nuisance at law is an act occupation or structure which is a nuisance at all times under any circumstances When an operation or business is conducted lawfully it cannot be a nuisance per se or at law The refinery is a lawful enterprise and therefore is not a nuisance per se 0 Nuisances per accidens Nuisance in fact are those which become nuisances by reason of their location or manner in which they are constructed maintained or operated May be created or maintained without the presence of negligence there has been interference which the refinery intentionally produces Halfwav Houses Apprehension about criminal activity is one worry declining property values another Some courts have found these sufficient for nuisance liability others not Light and Air may be a nuisance if the gravity of the harm to the plaintiff outweighs the utility of the defendant s conduct 92 Spite and Spam court commonly find nuisance liability in instances where a landowner builds a structure of no use whatsoever other than to vex a neighbor Plain Old Uglv Aesthetic Nuisance most courts hold that unsightliness alone does not constitute a nuisance unless it is done out of spite Page 93 Stoyano case NUISANCE REMEDIES 1 Damages Courts can be bad at this but it s better than an injunction if the parties hate each other Better if the user wants to leave anyways a Boomer v Atlantic Cement m court found that a cement plant constituted a nuisance to neighbors neighbors wanted an injunction Lower court said an injunction would be too harsh on the plant jobs product stops but this court granted the injunction with conditions that the injunction would be vacated upon the payment of permanent damages similar to the cement company buying an easement right Court could have chosen between i Permanent damages one time award damages all together at once comprehensive All the damages you could imagine to date and going forward or 0 future people who move into the area wouldn t get an award usually Permanent damages can be really hard to estimate Also what if the neighbors get this huge lump sum and then just move somewhere else The money was supposed to be for their living next to the nuisance fairness argument ii Temporary damages damages that already happened up to trial Would open the door for future damages and litigation because it gives rise to multiple damage awards Cement factory would still be running and the same injuries would be occurring continuously 93 iii 0 m if we award permanent damages cement co has to pay a huge lump sum right away which is not a great incentive for the company to fix the problems Temporary provide an incentive for co to fix things and try to make their process less harmful and nuisance like Court chose to go with permanent damages because it seemed reasonable that if the D had to pay permanent damages they would have an incentive to make technological advancements in order to eliminate nuisance and it would deter judicial repetitiveness and keep people out of court Simple clean and easy to administer 2 Injunctive Relief essentially determines what happens with the land The P can sell the injunction to the D market solutions a Estancias Dallas Corp v Schultz D s apartment compleX s air conditioning tower is very close to the P s residence and interferes with their enjoyment of their property Apartment did not want injunctive relief granted because they wanted to run the AC and not install new which would cost 150000 P s house was only originally worth 25000 i ii iii iv By Balancing the Eguities the court determined that an injunction was a better choice than damages The court compares the injury which may result to the D and to the public if an injunction is granted as well as the harm to the P if the injunction is denied RLle an injunction will be denied as a remedy for nuisance only if the necessity of others compels an injured party to seek damages in an action at law and not because the party causing the nuisance has the right to work a hurt or injury to their neighbor Granting an injunction puts the P s in a much better bargaining position The apartment complex would have to buy the injunction from the P s probably at a much higher price than the property is actually worth This is not efficient and does not promote iudicial economv However if the court had granted damages then the old people would have lost their house fairness argument 3 No Relief or Nominal Damages court balances equities and determines the landowners are not entitled to relief 4 Reverse Damages a Spur Industries v Del E Webb Development people came and moved to the nuisance feedlot was there first When the equities are weighed the new 94 subdivision is worth more than the feedlot but we feel bad for the feedlot because they were there first So the court gave them reverse damages neighbors who moved next to them have to pay them in order to get them to move somewhere else The feedlot only has to be shut down if they get paid owner is indemnified for a reasonable amount of the cost of moving or shutting down i RLle An otherwise lawful activity can become a nuisance because others have entered the area of activity and thus be enjoined If the party requesting the injunction is the one that creates the need for the injunction that party can be required to provide compensation for the cost of moving or shutting down the activity Private Nuisance impairment of a person s use and enjoyment of his land regardless of how many people are injured Only the owner of the land or of an interest in land can file suit Public Nuisance It is an unreasonable interference with a right common to the general public interference with public health safety peace comfort or convenience Any member of the public can sue Must affect a considerable number of people or an entire community or neighborhood LAND USE ZONING What is zoning and why do we have it It is a regulating device of landuse planning used by local government Designates certain areas of land for certain purposes Response to insufficiencies in nuisance and law of servitudes Meant to make things more ef cient Zoning is a kind of preventive law Class and race based motives critics 0 Whv was nuisance not enough Because they do not prevent nuisances from arising but merely gave damages or an injunction after the fact in an expensive lawsuit by one neighbor against another The result is that people had to wait for problems to arise before they could fix them Village of Euclid v Amber Realty C0 Facts Amber challenged the zoning ordinance of the village because he claimed it devalued his land which fell into different zones some residential and some industrial Claimed it was an unconstitutional restriction on his use of his land 0 Rule Court deemed the village ordinance to be constitutional Zoning ordinances are a valid exercise of the police power where city s ability to zone comes from and thus do not violate the constitutional protection of property rights 0 Why did the village need zoning Zone to prevent fires protect children prevent and manage traffic public safety decrease noise Justice says sometimes apartments are 95 parasites These public concerns are the usual justifications used today on an as applied basis Notes 0 Constitutional Limits must be related to the public health safety morals or general welfare 0 Nuisance law when the court gets nervous it returns to nuisance law 0 Legislative deference unless the zoning plan is arbitrary or unreasonable it cannot be declared unconstitutional O Elasticity the constitution must expand or contract to meet new and different conditions It is elastic not in the meaning but in the application of the principles Euclidian Zoning Districts are graded from highest single family homes to lowest worst kind of industry Under this system the uses permitted in each district are cumulative meaning that any use permitted in a higheruse district is permissible in a lower use zone So a house could be built in an industrial zone but a factory could not be built in a residential zone Some see it as an over licensing of segregation by class Protects the value of the land Authority Underlying Zoning Zoning is an exercise of the police power the power of the government to protect health safety welfare and morals Standard State Zoning Enabling Act empowers municipalities to regulate and restrict in accordance with a comprehensive plan This power must be given through statute to the municipalities from the states You must attack the application as unreasonable Economics the usual justification for zoning is that it solves the problems of externalities in environments where bargaining servitudes or judicial determinations nuisance law are not sufficient If zoning minimizes negative extemalities or provides positive amenities it will make the property more desirable and therefore increase the prices The Houston Wav is different because there is no formalized zoning regulations in the city The city relies heavily on nuisance in order to curb unwanted property use ZONING FOR AESTHETIC PURPOSE State ex rel Stoyano v Berkeley Stoyanoff wanted to build a highly modernistic and unusual house which the architectural board said did not conform to proper architectural standards in appearance and design found in the neighborhood 96 0 What s the proof offered to suggest that homes like this different style will be corrosive to the general welfare of the neighborhood Rely on professionals Trained architects are deciding what fits and what doesn t Also call realtors and have them say what they think will lower property values In light of the overall character of the neighborhood that different house could lower propertv values 0 Why have courts been reluctant to nd ugly houses a nuisance Extremely subjective in two ways 1 each person could have a different view of the houses ugliness and 2 what the economic impact of the ugliness is lST AMENDMENT PROTECTION City ofLadue v Gilleo during the time of the gulf war D had a war protest sign on her lawn City passed an ordinance prohibiting homeowners from displaying any signs on property with some exceptions 0 City claims safety hazard looking at the sign while you re driving control traffic 0 Court decides that the city s ordinance was unconstitutional Says the city could control the appearance of signs but not the content of signs D s right to free political speech cannot be impaired The ordinance was more than just a time place and manner restriction since the speech could not be switched to an alternate medium Further residents selfinterest in property values will probably prevent the danger of unlimited proliferation of signs TAKINGS Eminent Domain is the power of the government to force transfers of property from owners to itself Taking is a method of eminent domain Rationale eminent domain is an inherent attribute of sovereignty necessary to the very existence of government What is condemnation The usual procedure by which the government exercises its power of eminent domain Condemnation of easement pg 79 Taking The government s actual or effective acquisition of private property either by ousting the owner and claiming the title or by destroying the property or severely impairing its utility There are one should ask when confronted with a potential taking a potential gov action that violates the Fifth Amendment s takings clause Nor shall private property be taken for public use without just compensation Those three questions are 1 Has there been a taking With respect to the 1st question there are that we could apply 97 1 Permanent physical occupations or invasions are takings Loretta 2 Nuisancecontrol regulation is not a taking Hadacheck 3 Government action that deprives a landowner of all economically feasible beneficial or productive use of the property or government action that amounts to a 100 diminution in the value of the property is a taking Lucas 2 If so is it for a public use or purpose 3 If so has there been iust compensation The compensation requirement serves the dual purpose of offering a substantial measure of protection to private entitlements while disciplining the power of the state which would otherwise over expand unless made to pay for the resources that it consumes Also compensation is framed in terms of fairness I However even with compensation based on market value homeowners are not all the time fully compensated because of relocation costs sentimental attachments or the special suitability of the land for the homeowners needs known as uncompensated increment Question 2 Public Use 610 v City of New London E It has long been accepted that the sovereign may not take the property of A for the sole purpose of transferring it to another private party B even if A is paid just compensation however a state may transfer property from one private party to another if future use by the public is the purpose of the taking Case turns on the issue of whether or not the taking of the P s houses for the furtherance of the city s development plan serves a public purpose Court rules yes Courts are pretty deferential to legislatures when the taking serves a rational public use How is it public use when they re giving the land to a private corporation Court says the economic depression the city is trying to deal with looks like the blight in Berman they are trying to fix some social ills which was construed as a public purpose 0 Court relies on Berman urban renewal project allowed in a blighted area of DC M idki fee title was taken from holders and transferred to lessees in order to reduce the concentration of land ownership purpose of eliminating the social and economic evils of a land oligopoly qualified as a valid public use 98 O Connor s Dissent if the city has an idea of a better use of your property they can take it Anytime the city wants to upgrade motel 6 to a Ritz Carlton they can do it States have taken measures after the Kelo case to make this Violative of their state constitutions or regulations But there is an huge exception if the local government is taking care of blight then it s still okay to take the property Per se rule 1 thsical Occupation and Regulatory Takings action or restriction is like a taking Loretto v Teleprompter Manhattan CATV Corp RULE A permanent physical occupation of another s property is a taking aside from nuisance control government action In this case a cable installation which occupied parts of the appellants roof and the side of the building Dissent hard to tell when a taking ends and a regulatory taking begins What about sprinklers that are required to be put in the building Not a taking me government in question is depicted as a nuisancecontrol measure then there is no taking notwithstanding the loss worked by the regulation The idea is that when the public helps itself to good at private expense but not when the public simply requires one of its members to stop making a nuisance of himself Purpose and effect were to control a public harm The nuisance approach assumes that if the harm from the nuisance is great enough no compensation should be necessary Per se rule 2 Hadacheck v Sebastian nuisance control regulations are never takings Brickmaker case purchased clay land outside city limits which then became a residential area over time City tries to use land use regulation against him If the city s land use controls are aimed at nuisance then it is never a taking Reminds us of reasoning in Euclid Per se rule 3 Lucas v South Carolina Coastal Council The court has a new categorical rule land use regulations that prohibit all economic uses of property are takings and the exception to it unless the prohibited uses are common law nuisances Total deprivation of beneficial use is the equivalent of a physical appropriation 0 Owner of two lots on the beach was told that he can t build on them because gov is worried about beach erosion Argues that his property now has absolutely no economic value or use Court agrees Rationale there hasn t been explicit exercise of eminent domain but the effect is the same 99 O Dissent the majority is launching a missile to kill a mouse This rule is not going to apply very often because there is rarely a 100 diminution in value of property should be applied to determine whether a regulatory taking has occurred 1 and 2 are most important 1 Evaluate the economic impact of the potential takinggovernment action 2 Evaluate the extent of the government s actionsregulation s interference with distinct reasonable investmentbased expectations of the property owner RIBEs 3 Evaluate the character and purpose of the regulation If someone is being singled out detrimentally then it cuts to their advantage Penn Central Transportation v City of New York Penn station wanted to construct a multistory office on top of the existing terminal City denied them because the building was designated as a historic landmark Diminution in property value alone does not establish a taking 0 Holmes s famous statement of the general rule of takings law While property may be regulated to a certain extent if regulation goes too far it will be recognized as a taking How far is too far Use the balancing test to tell 0 BALANCING TEST ANALYSIS There is a big economic impact 1 here lots of money lost but the court rules there is no taking because 2 the preservation was reasonably related to a public interest Also Penn Central can still conduct business because they are a train station and that was their original investmentbased expectation The restriction does not interfere with the present use of the terminal 3 Penn central is not being singled out because the regulation applies to all historic landmarks and other train stations 100
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