Overview and Introduction to Property Law A.

Heavily influenced by economics

Property is almost entirely state law, 50 different systems of property; almost entirely common
law

Property: one of the two oldest branches of law [criminal was the other branch]
You can sell, rent/lease, control access, alter/improve
None of these rights are absolute
Property Law bundle of rights
Becoming a Property Owner Through First Possession B.
Acquisition by Discovery/Conquest (first in time, first in right rule) 1.
Who is the owner?
Discovery 1.
Capture "there was nobody before you, you attained the property 1st" 2.
Creation 3.
Becoming a property owner
Johnson v. M'Intosh
Facts: Plaintiff claims title to land that he got from Indian chiefs in 1773 and in 1775. The Indian chiefs
were working under the proper authority of their tribes when they sold their lands to the plaintiff.
Issue: Do the U.S. courts recognize Indians sale of titles of land to private individuals?
Holding: No
Rationale: The Europeans conquered the land from the Indians and Indians were only given the
occupancy rights and they were never given the right to sell their land. According to the court, absolute
property rights cannot be shared by 2 different entities. Therefore, England originally enjoyed the
absolute property rights to the lands in question and the Indians only enjoyed the occupancy rights to the
land. After the Revolutionary War, England transferred these absolute rights to the United States.
Therefore, the Indian chiefs did not enjoy the right to sell the land to private individuals.
Johnson v. M'Intosh: Whether this title can be recognized in the courts of the U.S.?
Ejection: action brought by Johnson
Conquest vs Discovery
Best trespass defense is "I own this land" (thats what M'Intosh said)
The original cause of action started as a property/ejectment action
Johnson v. M'Intosh is a conquest case
Conquest: you're taking over the legal rights by force, must be a legal prior recognizable interest
Discovery: no previous legal rights
Johnson(what does he have going for him?)
Basis belief that he's owner of land because he traced his title to tribal grant
M'Intosh's grant came from the U.S. government
Your title is only as good as the title was to the person who gave it to you
Chronologically, Johnson's title came first
"First in time, first in right"
Whose title was legitimate?
"first in time, first in right"
Currently the occupant of the land (may help because presumably using it)
Procedurally correct (proper party made the conveyance and did it the right way: chiefs were
authorized)

If you have the right to occupy, you have the right to convey
Bought from people who were actual occupants of the land and they were there legally
The legal right of tribe to occupy was legally recognized
He was a purchaser from the occupant (tribe)
What does Johnson have going for him?
M'Intosh (what does he have going for him?)
Chain of title: he is the last person in this chain, prior was the U.S. government, prior was England, then
Introduction to the Fundamentals of Property
Fri day, January 01, 2010
3:31 PM
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Anyone who had title prior to Euro had no claim
According to treaty he has title
Chain of title: he is the last person in this chain, prior was the U.S. government, prior was England, then
maybe another Euro

Virginia Statute: 1779, tribal governments had no title to begin with

Custom/Property Usage: the custom that was in place was one of occupancy, principles of abstract
justice werent considered

Economic Efficiency: had Johnson won, the U.S. government wouldnt have been able to give property,
so ruling for M'Intosh is the efficient outcome to allow U.S. to purchase land

Conquest v. Discovery
Johnson v. M'Intosh is a conquest case
Conquest: you're taking over the legal rights by force, must be a legal prior recognizable interest
Discovery: no previous legal rights
Johnson v. M'Intosh: Whether this title can be recognized in the Court's of the U.S.?
Holding: Johnson didnt exhibit a title which can be sustained in the court's of the U.S.
Exclusion of all other Europeansgave to the nation making the discovery the sole right of
acquiring the soil from the natives and establishing settlements upon it

Rights of inhabitants weren't disregarded but impaired/diminished: 1. right to complete

sovreignty and 2. power to dispose of the soil

Principle: Discovery gave title to the government by whose subjects, or by whose authority, it was
made, against all other European governments, which title might be consumated by possession
Grants conveyed title to the grantees- subject only to the Indian right to occupancy
Principle: Discovery gave exclusive right to those who made it
Great Britain relinquished all claim to the government and territorial rights of the U.S.
Indian right to occupancy 1.
Exclusive power to extinguish that right 2.
The powers of the government and the right to soil passed to the U.S. rights subject to:
Treaty:
It is not fair for the court's of this country to question the validity of the rule, or to sustain one which in
incompatible with it

The indian inhabitants are to be considered merely as occupants deemed incapable of transferring the
absolute title to others

Notes
Locke: this obligation was imposed by the law of nature and bound all men
Whatever he removes out of the state that nature has provided, he has mixed his labor with
and that makes it his property

Law of acession: when one person adds to the property of another (lockwood pg 15)
Pierson v. Post
Locke's Labor Theory: the labor of his body and the work of his hands are properly his
Original Possession: taking possession of unowned things is the only possible way to acquire ownership
Question: What acts amount to occupancy, applied to acquiring right to wild animals, what do you
have to do to get ownership?
Facts:Post (P) was hunting a fox using his hounds. Pierson (D), in plain sight of P did kill and take away
the fox. P brought suit for recovery of lost property.
Issue: Does pursuit alone give one the rights to that property?
Holding: No.
Rule: Pursuit alone vest no property rights to the pursuer
Reasoning: Pursuit of a wild animal does not result in property rights to that animal because the law
requires actual possession of the animal with its freedom restricted before it will grant rights to the
pursuer.
Law of Capture: how to own something that everyone knows is out there and make it your own
Constructive Possession: Any wild animal on private property belongs to the landowner
If this was private property Pierson and Post would have been trespassers
Post's Claim
Where was the fox? It was on a public beach, which belonged to nobody
He was in pursuit of the fox at the time and Pierson knew
Formal effort to track down the fox
Sport: hunters in area have agreed that you dont interfere when someone is in pursuit of an animal
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Sport: hunters in area have agreed that you dont interfere when someone is in pursuit of an animal
(local rule)

Reasonable possibility that he would've caught the fox

Incentive for hunting, established rule, if someone can take fox away at the last minute, why bother. No
incentive to put in effort of pursuit to eliminate foxes

The court said Post never had possession of the fox

Pierson killed the fox and thats more definitive of ownership than pursuit
Pierson's Argument
Rule: you take the fox if you occupy/take the fox
He killed the fox
The rule would reduce litigation because you'd have multiple people chasing but only one kills
We want the rule that will reward the elimination of foxes
This is an objective rest because most of the time it will be one person
Test (pg 20)
Pierson looked at ancient sources which said pursuit wasnt enough, capture was necesarry
Rule: Depriving an animal of life/liberty [kill, wound, trap] will allow you to own something that was
previously a wild animal
Occupancy: actual possession, corporal possession
Puffendorf: mere pursuit gave Post no legal right to the fox, but that he became the property of Pierson,
who intercepted and killed him

Wounding may be deemed possession of him because pursuer manifests the intention of
appropriating the animal for use

Points of this case

Barbeyrac: actual bodily seizure is not, in all cases necessarry to constitute possession of wild animals
Any claim of ownership that the tribes had werent valid
Maintained right of occupancy, there was right to occupy
Everyone before you had to have right to title in order for yours to be valid
If it was a conquest case, the argument would've been different
This case disregards the "first in time, first in right" rule
Discovery of oil reserves a.
When you take something that previously existed, and you're the 1st person to capture
something previously unowned (law of wild animals)
b.
May come into play:
Ghen v. Rich
Discovery Law: doesnt really have a place in modern law
Post is a feud between sportsman and dealt with leisurely hunting but Rich dealt with an industry
Whaler: Ghen, shot the wale 1.
Not a main party because he doesnt have possession of the whale anymore. Rich possesses
it and Ghen wants it back

Finder: Ellis, auctioned the whale, gave no notice 2.

Buyer: Rich 3.
Three parties in this case:
Facts: Ghen shot whale 4/9/1880; found by Ellis on 12th; auctioned off by Ellis (who not according to
custom, did not send a call to Provincetown); sold to Rich, who shipped off the blubber and tried the oil;
15th libellant hears of the whale and goes to claim it, neither respondent nor Ellis knew the whale was
killed by Ghen, but by the way the animal was killed, they could tell it was killed by a whale hunter.
Issue(s): Under property law, does the shooting of a whale by traditional means equate to possession of
the animal's remains as the shooter's property, when the animal itself is left with the anchor from the ship
which shot it, but is still sold to a third party?
Holding: Yes. Both common law tradition and previous case law show that acquisition in the fishing
industry is determined by who kills the fish is the possessor of the fish.
If such a traditional law were to be overturned, it would make the fishing industry very uncertain as
to the ability to lay claim for one's work and subsequent quarry. The fact that the rule has worked
well is shown by the extent in which the industry has grown up under it, and the fact no one
disputes the rule either is important.
Court's Rationale/Reasoning: The court had federal precedent to this effect, which showed the hunter
who kills and lays appropriate claim to the animal is the rightful owner of the animal with possession
(Bartlett v. Budd). In another case, historical tradition regarding the job itself lent to a decision for a
hunter (Swift v. Gifford). That case also held that this was fishing, and thus is only limited to fishing.
Rule: In fishing only, the taker must make an act of appropriation that is possible in the nature of
the case. If the fisherman does all that is possible to do to make the animal his own, that would
seem to be sufficient.
Which is a better economic rule?
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Which is a better economic rule?
"You kill you keep"
In Post, they discounted the value of effort
This is different (Ghen) because capture wasnt practical
Ghen: buy and staff the boat, find, pursue, harpoon whale
Post: walking on beach, chasing fox
Disparity in effort
Court decided in favor of Ghen because he did everything he could've to get physical possession of it. It
was a better decision in terms of economics

Keeble v. Hickergill
Prevention of capture case
Plaintiff owns duck decoy to lure ducks into it, defendant drove ducks away (we don't know whether he
was on plaintiff's land)

If the defendant isn't on plaintiff's property, but shooting, he's interrupting the plaintiff's business
Court says it's a productive activity to sell ducks, therefore it's a business
Facts: PL owns a plot of land, on which he maintains his duck hunting business. DF thrice used gunshots
to scare ducks fro the land and is alleged to have disrupted PL's business. DF knew he was effecting
business when he fired the shots.
Issue(s): Under property law, does a person owe damages to land owner when he knowingly and
intentionally uses physical means to scare chattels off his land, when the person also knows that such
action will result in decreased business and threat to land owner's livelihood?
Holding: Yes. If a stranger hinders and obstructs a land owner from engaging in their business practice
through some deliberate action, then there is a cause of action which imports damage.
Court's Rationale/Reasoning: The use of making a decoy to lure foul from one piece of land is
lawful. The use of the property to that use is profitable to PL, as is the skill and profession by which he
uses that skill. Being that doing such action is not against the law, when someone intentionally hinders
the use of the land is liable. That is to say they are liable if they have no cause to be involved in such
practice. If DF were to have his own land adjacent to PL, and were to use his own gun fire to scare off
ducks onto his own land, then there would be no malice, as there DF would be trying to do business for
himself. Here the action is not for the latter example, it is for the former. Thus, a cause of action for PL,
as well as liability to DF exists.
Rule: Where a violent or malicious act is done to a man's occupation, profession, or way of
getting a livelihood, there an action lies in all cases.
How would plaintiff say he has enough of an ownership interest?
While duck is on his property, he has constructive possession
Nuisance, so can force plaintiff to shut down
Could kill ducks before they entered plaintiff's property before plaintiff owned them
Build a better decoy pond, put plaintiff out of business
If on my property and shooting gun, that's legal because plaintiff's right to trap ducks is
equal to defendant's right to shoot gun on his own property

In order for court to fins for plaintiff, must find that plaintiff had enough of a property
interest instead of scaring them off

Defendant's Argument
Does presence in decoy give enough of an ownership interest?
Ultimately, Keeble wins because he had a property interest in the ducks (pg 28 second paragraph)
Combining Rules
Constructive possession is just as good as real possession
Rule 1: If you're a property owner, you have constructive possession of every wild animal on your
property
Time and effort invested in domesticating animal
Once domesticated by you, you have actual possession and if it's no longer wild it wants to
com back

Domesticated Animal Test: a domesticated animal has the desire to return

Distinction between wild and domesticated animal
Rule 2: Once you domesticate an animal it's yours even if it is lured away
Rule 3: No rights for trespassers
Belongs to no one
Property of one who captures
If you capture the fugitive resource, its yours because you lured it into your dominion
Fugitive Resources: something underground that moves (oil, gas)
East Coast Riperian rights: "you own the property, you have access to the H20, do what A.
2 Systems
Surface water
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All landowners whose property is adjacent to a body of water have the right to make
reasonable use of it. If there is not enough water to satisfy all users, allotments are
generally fixed in proportion to frontage on the water source. These rights cannot be
sold or transferred other than with the adjoining land, and water cannot be
transferred out of the watershed
1)
East Coast Riperian rights: "you own the property, you have access to the H20, do what
you want."
A.
Water rights are unconnected to land ownership, and can be sold or mortgaged like
other property. The first person to use a quantity of water from a water source for a
beneficial use has the right to continue to use that quantity of water for that purpose.
Subsequent users can use the remaining water for their own beneficial purposes
provided that they do not impinge on the rights of previous users.
1)
West prior appropriation; "first come, first serve" B.
Acquisition by Creation (Introduction to Intellectual Property) 3.
Lots of ways in which you can become the original owner:
U.S. Constitution Article I 8
Justified this by saying that it allowed people to build on ideas- it would result in better
products

Another justification was that it would discourage monopoly, there would be more products
at lower prices

No chilling effect: you can create your own product

Less litigation because we aren't trying to navigate between what's mine and what's yours
Providing a good to the public
Under common law you were free to steal ideas, but not chattels (for example, a book)
U.S. Constitution Article I 8
The Constitution gave to Congress the power to regulate inventors
The difficult choice is what his a science, art, what comes within the scope of intellectual
property.

Time duration: what does "limited times" mean?

Author/Inventor: how do you define those terms
Three (3) Branches of Intellectual Property
Copyright 1.
Trademark 2.
Patent 3.
What's the difficult policy choice?
Music/art, time depends on when it was created. For things created after 1978, there is a
copyright for 70 years after the death of the author or creator, subject to a right in others to make
fair use of the materials (relatively brief questions in book reviews) or 95 years if its a corporation
1.
The subjects of copyrights must be original (though not novel); they must be independent
creations
2.
Twain: Advocate for copyright.. He said it wasnt fair if intellectual property expired at your death
because your family wouldnt get anything.
3.
Once it enters into the public domain, you're allowed to copy/use 4.
What does copyright prevent?
Exclusive Rights: you can control its use
You can control the profits on the product
Others cannot build from it
No parodies (i.e.: using a song but changing the words)
Fair Use Exception: exclusive right doesnt mean complete.
Fair copying
How long, ratio of what youve copied from the total work,
infringing on the market (copying the most important parts of
book)

Strong public policy encouraging protection, education policy argument

Educational fair
Fair use is a doctrine in copyright law that allows limited use of copyrighted material
without requiring permission from the rights holders, such as for commentary,
criticism, news reporting, research, teaching or scholarship.
Exception:
Once you have the copyright (which you dont have to formally apply for) you have exclusive
protection for a certain period
Copyright: Protects the expression of ideas (not the ideas themselves) I.
When we protect intellectual property we harm better products but you create:
An incentive for production: do the work, research to create the work, it encourages such conduct
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An incentive for production: do the work, research to create the work, it encourages such conduct
Profits are based on who deserves it
Inventions and processes
"what is useful, what is practical"
Have to apply for a patent
Novel: you're the first to come up with this idea
Unobvious: things that dont already exist (stairs, for example)
Useful:
When you apply for a patent, you must prove three things:
Once we give you a right, we give you a monopoly
Patent: granted for novel, useful, and non-obvious processes or products. II.
Why these limitations?
Because we dont need incentives to encourage the invention of things that already exist, or that are
obvious
A.
We dont want incentives to encourage the invention of things that are useless) B.
Once issued, patents last for a period of 20 years from the date of the original application.
Patents are non-renewable
When they expire the process or product in question enters the public domain, where it can be
exploited by anyone

Trademarks: words and symbols indicating the source of a product or service. Owners of marks are
protected against use of similar marks by others when such use would result in confusion
III.
Protects commercial identity (words, symbols, slogans), things that suggest your company
Trademarks are an aid to customers in that they make it easier that verify that what they are buying is
the product they have come to like or trust

Trademarks are an aid to businesses because they provide a way of advertising products, services and
reputation

State law: register within the state

Federal law:
Once you get a trademark you have exclusive right
Generic means that the term you're using describes products of the like
Trademarks are lost when they're abandoned
You should object on the record to people using the term for products that aren't yours
Quasi Intellectual Property
Right of publicity, privacy
International News Service v. Associated Press
Becoming generic is good because you've beat your competitors (associating your product as THE
PRODUCT)

Question Presented: Whether INS may lawfully be restrained from appropriating news taken from
bulletins issued by AP or any of it's members, or from newspapers published by them, for the purpose of
selling it to INS clients
Facts: Plaintiff (AP) and Defendants (INS) are both involved in the news collection business. The
collected news are distributed by the parties to newspapers around the county. Both plaintiff and
defendant are in direct competition. The defendants were involved in collecting news posted by the
plaintiffs on bulletin boards and newspapers and then reproducing these news as their own work.
Issue: Can the plaintiff exclude the defendant from copying news that the plaintiffs have already
published?
Holding: Yes
Rationale: When considering whether plaintiffs have property rights in the news published, we need to
consider plaintiffs rights vis--vis the defendant, and not vis--vis the public. The defendant is a
competitor of the plaintiffs and it is using he plaintiffs news stories for its own profit. Plaintiff put in a lot
of labor to produce these news stories and the defendant is trying to reap what it has not sown. Such
practice is unfair and it also results in losses to the plaintiffs that can take away the incentive to produce
such hot stories. Therefore, the defendants are not allowed to steal plaintiffs stories for a certain
amount of time. This time should be set so that the defendant will not be able to enjoy the benefits of
plaintiffs labor.
INS' Arguments
But on the other hand, describing a story is "creative" so is an interview. You can't copyright
The news isn't copyrighted, so they haven't stole it
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a fact but can words and style
Aside from their labor, AP is trying to protect their creativity
What did the Court say?
This is quasi-property: the energy, time, labor and effort is protectable
Cheney Bros. v. Doris Silk Corp
Facts: Cheney Bros. makes silk products with designs, which usually stay in store stock for the remainder
of a particular sales season. It's unknown which ones are more popular at the time of production or
release. Nonetheless, DF copied, and sold at a reduced rate to PL's, one of PL's designs.
Issue(s): Under property law, does one business's reprinting or copying of another product which is then
sold at a cheaper price, affect business in such a way that it is so inequitable as to warrant a remedy?
Holding: No. There is no general law or common law rule which governs that one person's chattel may
be copied and sold as another's own product.
Court's Rationale/Reasoning: The court finds Cheney wants to receive just "a little" equitable relief
here, however there is no such thing as "a little." There is either full relief or none at all. This is a case
where there is no relief available.
PL relies on INS v. AP, which does deal with subject -matter which was recreated, but that case was not a
be-all doctrine for the copying of goods (besides INS dealt with fair business practice, not damages). To
make such a doctrine for all goods would be to expand Congressional power far beyond what this court
feels the U.S. Supreme Court intended to when it decided INS. "TO exclude others from the enjoyment of
a chattel is one thing; to prevent any imitation of it, to set up a monopoly in the plan of its structure, gives
the author a power of his fellows vastly greater, a power which the Constitution allows only Congress to
make." There may some kind of equitable remedy available through legislation of the copyright law, but
that is not urged here.
If you want to assert patent or copyright protection, you must trace it back to legislation
Smith v. Chanel
Holding: defendant (Cheney) won because the plaintiff had no recognized right at common law or
under copyright statutes. The plaintiff's chattels were protected, not protection from imitation.
Rule: A man's property is limited to the chattels which embody his invention. Others may imitate
these at their pleasure. . . .
Facts: Appellant used same formula as appellee and sold it at a drastically lower price, claiming it was
the same as Chanel #5.
Issue(s): Under property law, may a company recreate and subsequently sell a product and make
reference to that same product?
Holding: Yes. A perfume company could claim in ads that its product was the equivalent of the more
expensive Chanel No. 5.
Court's Rationale/Reasoning: Since appellee's perfume was unpatented, appellants had the right to
copy it. There was strong public interest in their doing so, for imitation is the life blood of competition. It
is true that it costs a lot for Chanel to produce its brand of perfume, and that on its face that another
company is essentially getting a free ride in being able to reproduce its materials. However, "appellees
are not entitled to monopolize the public's desire for the unpatented product, even though they
themselves created at great effort and expense." This is essentially serving a public interest as a
company can sell similar goods at comparable prices.
Rule: In the absence of such a monopoly as a patent confers, any persons may reproduce the
articles, if they can, and may sell them under the representation that they are the same article, if
they exclude the notion that they are the plaintiff's goods.
Question Presented: Whether someone can claim that their product is equivalent to another?
Why does Chanel object?
Taking a free ride on Chanel's good will, getting a market advantage you don't deserve
Piggybacking
Would destroy the market share
Why didn't the defendant (Smith) get in trouble?
Court said it was a good way to foster competition; they weren't claiming to be Chanel
They were creating a fair market price
Principal: Labor, effort and money doesn't give you the copyright. There must be another interest (for
example, a creative interest)
Nichols v. Universal Pictures
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The Court held that copyright protection cannot be extended to the characteristics of stock characters in
a story, whether it be a book, play, or film.
"her copyright did not cover everything that might be drawn from her play; its content went to some
extent into the public domain." In this case, there was no infringement, as the ideas that are copied are
really universal concepts and stock characters.
Plaintiff (author) and defendant (movie maker).
What did the court say?
Plaintiff claimed the defendant took his story (copied play into a movie) "I wrote it, so you can't make it
into a movie with he same plot"

Characters were different 1.

Theme was general (you can't get an intellectual property interest in this general plot) 2.
You can't say this movie was stolen because
"Plaintiff's copyright did not cover everything that might be drawn from her play; its content went to
some extent into the public domain."

Diamond v. Chakrabarty
Facts of the Case:After genetically engineering a bacterium capable of breaking down crude oil, Ananda
Chakrabarty sought to patent his creation under Title 35 U.S.C. Section 101, providing patents for people who
invent or discover "any" new and useful "manufacture" or "composition of matter." On appeal from an
application rejection by a patent examiner the Patent Office Board of Appeals affirmed, stating that living things
are not patentable under Section 101. When this decision was reversed by the Court of Customs and Patent
Appeals, Diamond appealed and the Supreme Court granted certiorari.
Question: Is the creation of a live, human-made organism patentable under Title 35 U.S.C. Section 101?
Conclusion: Yes. the Court explained that while natural laws, physical phenomena, abstract ideas, or newly
discovered minerals are not patentable, a live artificially-engineered microorganism is. The creation of a
bacterium that is not found anywhere in nature, constitutes a patentable "manufacture" or "composition of
matter" under Section 101. Moreover, the bacterium's man-made ability to break down crude oil makes it very
useful.
Question Presented: Whether a micro-organism constitutes a "manufacture" or "composition of matter"
within the meaning of the statute
Arguments saying no:
It doesnt fit under the definition of manufacture
Don't want to encourage genetic engineering
If you find something no one knew existed and you used it in a product, then you can patent that
"the plaintiff created a non-naturally occurring manufacture or composition of matter
Moore v. California
Holding: you can get a patent on an organism as long as you created it and didn't discover it as an
existing organism, as long as you created it and didn't discover it as an existing organism
Brief Fact Summary: Doctors operating on Moore's spleen removed some cancerous cells that later were
capable of producing proteins that impacted the immune system. The cells ended up having a tremendous
amount of commercial value. Moore claimed a conversion cause of action in that the doctors deprived him of
his use of the cells. That claimed failed, but Moore won on a breach of fiduciary duty to disclose, because
the doctors didn't tell him what they intended to do with his cells.
Rule of Law and Holding: Labor and ingenuity, such as the manipulation of a cell line, can spawn property
rights.
Dr. took cells from patient and used to get a patent
What did the court say?
The patient had no property (intellectual or other property) interest in himself. The dr. got to keep the
cells.

White v. Samsung
Plaintiff sued to get an ad depicting her off of the air
What did the Court say?
The plaintiff had a property right in her likeness and since the robot was so much like her (to link image
to the robot's in people's mind) they violated her right to publicity

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"false representation in advertising"
MGM v. Grokster
to the robot's in people's mind) they violated her right to publicity
(the person being sued is the one who created the file sharing product, not the people who
use it)
Question Presented: Under what circumstances is the distributor of a product, capable of both lawful
and unlawful us, is liable for acts of copyright infringement by third parties using the product?
Question: Were companies that distributed file-sharing software, and encouraged and profited from direct copyright
infringement using such software, liable for the infringement?
Arguments why the creator should be liable
Conclusion: Yes. the Court held that companies that distributed software, and promoted that software to infringe
copyrights, were liable for the resulting acts of infringement. The Court argued that although the Copyright Act did not
expressly make anyone liable for another's infringement, secondary liability doctrines applied here. The software in
this case was used so widely to infringe copyrights that it would have been immensely difficult to deal with each
individual infringer. The "only practical alternative" was to go against the software distributor for secondary liability.
Here the software companies were liable for encouraging and profiting from direct infringement.
Product induced infringement
The creator didn't do anything to separate legal from illegal issues
Would be hard to go after the users, by going after the defendant its easier to shut down
Studies showed that the primary use of the software was for infringement purposes
Becoming a Property Owner Through Subsequent Possession C.
General Policy Considerations
What are property rules trying to accomplish?
Predictability: for the finder, original owner, landowner, future buyers 1.
Can have a system where you get rewards for returning found property
Saying finder has better title rights over anyone but the true owner (Good faith effort to return)
Return property to true owner: (Give incentive) 2.
Penalize carelessness: if you go too long without protecting your property rights, you're penalized 3.
Incentives for productive use: property is wasted if we dont know for sure who owns its and leave it
untitled, it isn't being used productively
4.
Need to separate what is "theft" and "finding"
Need a definition to deter theft
Armory v. Delamirie
Rule that makes it clear what is meant by lost property to deter theft 5.
Holding: boy's property rights are good against anyone but the owner. The master, who gives credit to
his apprentice, is liable for his neglect. (page 96)
Issue: Does , in finding the jewel, have sufficient property right in it to keep it from the ?
Holding: Yes. A finder obtains exclusive property rights of his find against all others except
the rightful owner.
Reasoning: Although unstated, I believe the reasoning to be that if the finder was not
protected by the right to exclude others from taking his find, simply because it was previously
unowned, that there would be no incentive to the discoverer to bring the found item to a
socially useful purpose.
Facts:
Boy found jewel, brought it to the goldsmith. The goldsmith refused to give it back to him.
He'd have superior rights
Jeweler can't say "I bought it from the boy" because he bought it from a defective title
Never be the one holding the chattel because the true owner has superior right
Hannah v. Peel
Hypo: If the true owner saw the stone in the goldsmith's window, what are his rights?
Issue: Who has superior title to the brooch?
Rule: NEW(ish) RULE! A landowner owns everything attached to or under the land, but not
necessarily stuff lying on the surface of the land even though the stuff isnt possessed by someone
else.
Analysis: The court pours over the authorities, doing a lot of analogizing and distinguishing. The court
first considers the rule of Armory v. Delamire, then the more controversial Bridges v. Hawkesworth. The
Property Page 9
first considers the rule of Armory v. Delamire, then the more controversial Bridges v. Hawkesworth. The
latter case says that the finders keepers except to the true owner rule applies no matter where the
item is found. But then there is a third case that seems to be in conflict. InSouth Staffordshire Water
Co. v. Sharman, some rings were found embedded in some mud at the bottom of a pool (c.f. Lord of the
Rings), and it was ruled that the finder didnt get them because they were a part of the real estate, as it
were.
The court eventually comes to the rule above, and thus finds for the plaintiff.
Conclusion: The soldier gets the value of the brooch.
Hannah found the brooch, he was legally on the premises of the house when he found it. He decided to
tell the commanding officer of the finding and handed it over

Question Presented:
Finder of a lost article has good title against all the world except for the true owner
The possessor of land is entitled as against the finder to all chattels found on the land
Bridges v. Hawkesworth: the finder of an item is entitled to the item against all but the owner
Sharman: the possessor of land is generally entitled as against finder, to chattels found on the land
Elwes: the plaintiff being in possession of the chattel, property in chattel was invested in him
McAvoy: the property was mislaid, so plaintiff had no right to claim it (pocketbook)
Abandoned Property
Who has the right to go through your trash, do you have privacy rights? 1.
Behavior (or things said)
Locations (dump, trash)
Value (maybe you can tell by the value)
How do you know something is abandoned? 2.
Constitutional issue expectation of privacy
When the true owner relinquishes their title, the finder of the abandoned property has ownership rights
The rule for abandoned property also does not give the trespasser any rights
Abandoned Shipwreck Act: the U.S. asserts title to any abandoned shipwreck embedded in
submerged lands of a state and simultaneously transfers its title to the state in which the wreck is
located

Shipwrecks: a ship lost at sea and settled on the ocean floor remained the owner's property - unless title
to the vessel had been abandoned- but anyone subsequently reducing the ship or its cargo to possession
was entitled to a salvage award

Antiques: governed by international law

Lost vs. abandoned vs. misplaced
Common law doesnt require the finder to return lost property
Statutesissues
Rules
If you lost property, your title is good as everyone but the owner 1.
Buried or attached things to property, belong to the landowner 2.
No rights to trespassers 3.
If you find something in the course of your employment, it belongs to the employer 4.
If property is misplaced, the owner is likely to look for it, so keep the mislaid item in the hands of
the owner where the item was lost

Adverse Possession
The dominant concern of the law of finders- to protect true owners- drops out in the case of
abandoned property because the true owner has renounced any claim. But the interests of
the owner of the place of the find remain.

Abandoned property: items voluntarily and intentionally relinquished with no intent to reclaim
Misplaced property is different from lost property (McAvoy) 5.
Deals with what rights does a finder of land (that doesnt belong to them) have
Trespass has a statute of limitations, if within that period there is a full right to bring a lawsuit
The owner has no legal right to get the person off of the land, because the statute of
limitations has run out. Thats where adverse possessioncomes in.
What if a lawsuit isn't brought for trespass and the statute of limitations has run?
It is said that if you trespass, but do it long enough; you become the new owner of the property
What justifies this doctrine?
Adverse possession begins with trespass (physically come onto the property- tort)
It rewards expectations, your expectations that you own this property
Rewards productive use
Transaction costs: its a great way to clarify title (clarify defects)
But you may say its your right not to care for your property
Penalizes those who abandon property
Oliver Holmes: the foundation of the acquisition of rights by lapse of time is to be looked for in the
position of the person who gains them, not in that of the loser. He suggested an economic explanation

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position of the person who gains them, not in that of the loser. He suggested an economic explanation

The running of the statute of limitations not only bars an action by the erstwhile owner but also
vests a new title, created by operation of law, in the adverse possessor

Once acquired, this new title relates back to the date of the event that started the statute of
limitations running, and the law acts as though the adverse possessor were the owner from that
date

4 Common Law Requirements

The requirements for someone to take property through adverse possession
Powell: adverse possession functions as a means of "transferring" ownership
Exclusive, actual physical possession (actual entry giving exclusive possession) 1.
Actual entry means you have to physically enter property
Exclusive : only you're on the property
If you fence an area off, then thats exclusive possession
The exclusive requirement is important because you may not be acting as a true owner, you
may just be taking a shortcut (you can get an easement)

If possession is not exclusive, the trespasser may qualify for a prescriptive easement but not
for adverse possession. The clock for the passage of adverse possession begins to tick from
the date of entry

"The trespasser must make an actual entry giving exclusive possession"

Casenote: Van Valkenburg v. Lutz illustrates the difference between a claim for adverse possession,
which results in ownership, and a claim for a prescriptive easement which results in the right to use a
right-of-way over the property of another
Casenote: Van Valkenburg v. Lutz required substantial enclosure, cultivation, and improvement in order
to satisfy the requirement of actual possession and "open and notorious" use. The presence of a shack,
shed and gardens were insufficient.
Open & Notorious possession for use 2.
Open and notorious means acting in the same way a true owner does
Wants to protect the true owner
Use the land boldly and openly
"The possession must be open and notorious so as to give the true owner ample and adequate notice
of the trespass"
Casenote: Van Valkenburg v. Lutz required substantial enclosure, cultivation, and improvement in order
to satisfy the requirement of actual possession and "open and notorious" use. The presence of a shack,
shed and gardens were insufficient.
Casenote: Manillo v. Goski held that in the case of a minor encroachment (15 inches over a property
line), the "open and notorious" requirement might be satisfied. In that circumstance, while the
trespasser's presence on the property is obvious, the fact that he does not own that piece of property
might not be.
Casenote: Howard v. Kunto: held that the use of property for summer use only does not breach the
"continuity" or "open and notorious" requirements if that is the way in which the true owner would
reasonably use the property.
Constant (continuous) use for the statutory period 3.
# of years is set by statute
Our discussions of tacking and disabilities are also relevant for the way in which "continuity" is
assessed and the "statutory period" is calculated

Statutory period use to be longer

" The possession must be continuous for the statutory period"
Casenote: Howard v. Kunto: held that the use of property for summer use only does not breach the
"continuity" or "open and notorious" requirements if that is the way in which the true owner would
reasonably use the property.
Adverse and under claim of right 4.
Require good faith (i.e., the trespasser honestly believed that he owned the land) A.
Require bad faith (i.e., the trespasser knew the land was not his); or B.
Deem state of mind to be irrelevant C.
This requirement may be interpreted in one of three ways:
Adverse: your ownership is without permission of owner, you're claiming this right
" The possession must be adverse under claim of right"
Casenote: Van Valkenburg v. Lutz: majority claimed that Lutz' title was not adverse because they knew
that they did not own the property they sought to acquire via adverse possession. The Van Valkenburg
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that they did not own the property they sought to acquire via adverse possession. The Van Valkenburg
dissent said that the Lutz' intention to occupy the land as their own was sufficient to meet the
requirement of adverse interest.
Casenote: Manillo v. Goski: weighed the advantages of the "Main Rule" 9requiring bad faith) and the
"Connecticut Rule" (deeming state of mind irrelevant) and adopted the Connecticut Rule because such a
rule would not reward dishonesty, and it would recognize that the mere occupation of land one does
not own is a "hostile" act regardless of one's state of mind.
In addition to these 4 essential requirements, jurisdictions might require one or both of the following
additions requirements.
Because that's what true owners do
Some states impose this by statute
If nobody is paying taxes, then the state can foreclose the property (prevents property from being
foreclosed)

This may alert people of adverse possessors

So the state can profit
In some jurisdictions, you have to pay property taxes during the period of possession (if you're in
adverse possession)
5.
Some jurisdictions require that the adverse possessor take under color of title. 6.
It is good evidence of good faith A.
It may result in a shorter statute of limitations B.
There is actual entry onto part of the property. i.
Adverse possession requirements are met for the piece of property onto which actual entry
is made.
ii.
The true owner (and/or any prior adverse possessors) are not occupying the property at the
same time.
iii.
Most importantly, one who has color of title will have constructive adverse possession of the
entire property described in the writing, and not merely which he actually possesses, as long as:
C.
This requires a writing that purports to convey title to the property described in that writing. Even if a
jurisdiction does not require the adverse possessor to take under color of title, it is a significant
advantage to the adverse possessor if he takes this away because
A claim founded on a written document
These jurisdictions want to back away from adverse possession
Problem #1 (page 130)
O owns/possesses 100 acres, est. 1975
A entered the back 40 acres under an invalid deed (improved, occupied for period required)
1st Result: A would get the land she lived upon because the statute of limitations ran out (met the
requirements of adverse possession) and O gets to stay
2nd Result: O is the true owner. A satisfied the statute of limitations
Hypo: Z gives A an invalid deed.
A sues x & y to quiet title to lots 1 and 2: A gets to keep lot 1 because he physically entered it. He
doesnt get lot 2 because he didnt physically enter it. However, some jurisdictions would think of
lot 1 and 2 as one whole piece of land
Color of title: refers to a claim founded on a written instrument (a deed, a will) or a judgment or decree
that is for some reason defective or invalid. A 6th amendment requirement in states who say, the only
people who can use adverse possession are those who have a document that purports to give property
to you

Technical Clarifications
Adverse possession NEVER runs against the government(local or federal) BUT the government
can acquire property through adverse possession.
A.
Procedure for Adverse Possession Actions: An adverse possession argument is typically made by
an adverse possessor either as a defense to a trespass action OR as an action to quiet title in
himself. If a claimant for adverse possession is successful, the effective date of his ownership will
be retroactive to the date of the initial entry. This means that the adverse possessor will also
become retroactively liable for all past taxes, torts etc., during the period of possession. Once one
becomes the legal owner via adverse possession, the land cannot be transferred to another except
by a writing in compliance with the Statute of Frauds (one cannot orally disclaim an interest in real
estate).
B.
Casenote: The Van Valkenburg v. Lutz dissent sad that the Lutz' concession that the Van
Valkenburg's owned the land was irrelevant because they made that concession after they
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Valkenburg's owned the land was irrelevant because they made that concession after they
(the Lutz') had satisfied the requirements for adverse possession. Thus, the dissent said the
concession should have no effect because once the title was acquired via adverse
possession it could not be disclaimed or conceded with a formal writing in compliance with
the Statute of Frauds.
Tacking
Tacking: Multiple adverse possessors may "tack" their time in possession as long as they have
privity(a "reasonable connection") with each other. Thus, if the adverse possession period is 10
years and trespasser A has satisfied the requirements for adverse possession for 3 years, and then
sells his interest to trespasser B, trespasser B may tack his years of possession onto those of A and
may bring this action to quiet title after 7 years. If A and B were not in privity, however, they may
not tack.
C.
Privity: voluntary transfer that creates a reasonable relationship
Rule: You can tack your years of possession to your predecessor, as long as you have privity.
Casenote: Howard v. Kunto: allowed constructive adverse possessors to "tack" their periods
of possession to that of their predecessors because the successive owners had privity with
each other (i.e., a reasonable legal connection)
Issues in this case: (1) "open and notorious" requirement (2) tacking
Answer: if true owner would only be there during the summer, then this element is
satisfied.

Open and notorious: is it adequate to put me on notice if I'm only there during the summer?
Privity: voluntary transfer that creates a reasonable relationship
Tacking: Rule: You can tack your years of possession to your predecessor, as long as you
have privity.

Problems on pg 142
O still owns, because there is no privity with A or B 1.
O can eject because he is the true owner. A can eject B because of "first in time" 2.
A owns. Transfers among true owners dont hurt the adverse possessor. The clock doesnt start
over when title is transferred.
3.
dont have to wait until 2013 4.
Legal Disabilities
Under the age of majority i.
Mentally incompetent ii.
Imprisoned iii.
The statute gave an additional 10 years after the disability was removed
If you weren't disabled in the date of the trespass No extension of time
ONLY THE TRUE OWNER CAN BRING THE CAUSE OF ACTION
In order to have an extension of time, the disability must exist on the date that the trespasser
entered the property.

Disabilities that arise later are irrelevant, and the heirs of a disabled true owner may not tack their
disabilities onto his.

All disabilities are removed either when they are cured or at the death of the true owner,
whichever comes first. Mechanics of such statutes vary from state to state.

Justification: tries to balance the interest of the true owner and the adverse possessor when the
true owner has a disability

The theory behind adverse possession is that it begins with trespass and you acquire title through
adverse possession when the statute of limitations runs

Legal Disabilities: Many states have statutes that protect true owners who are under legal disabilities.
These statutes allow such disabled true owners additional time to bring a cause of action against a
trespasser. Legal disabilities that will allow for such an extension include circumstances in which the true
owner is:
D.
State of Mind Views (3): Apply to "hostile and under claim of right"
Once there is an entry against the true owner, she has a cause of action
Objective standard: state of mind is irrelevant
Halpern v. Lacy: one must enter upon the land claiming in good faith the right to do so. To enter
upon the land without any honest claim of right to do so is but a trespass and can never ripen into
prescriptive title.

Good faith standard: the required state of mind is "I thought I owned it"
Aggressive trespass standard: the required state of mind is "I thought I didnt own it, but I intended to
make it mine"

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make it mine"
Problem with state of mind rationale
Encourages trespassing
Its hard to tell a person's state of mind and it is hard to prove.
May cause people to commit perjury
Most jurisdictions say state of mind doesnt matter, just whether there's permission
Two (2) ways in which adverse possession cases come about
The plaintiff is bringing suit to have him declared the owner
Bring this action in rem, but the court will give notice to all interested parties (whoever had the
last title) so they may come forward to claim property

Burden of Proof: shows 4 factors

Quiet Title Action: when adverse possessor is the plaintiff. I.
Defense to Trespass II.
If I trespass, you sue me, I can use adverse possession as a defense
Downside: you have to pay property taxes dating back to the date of trespass
True owner may sue you from money they paid on property while you possessed it
You're liable for all torts that happened from the date of your trespass
If I win a quiet title or the defense comes through, your title begins on the date you trespassed
Hypo: If the true owner says "you're my guest" then there's no adverse possession.
Casenote: Gorski:
(2) What is "open and notorious"? Goes to the 2nd requirement of adverse possession
Plaintiff alleged trespass
Defendant counter-claimed, saying it was adverse possession
Is the 1st element of adverse possession met?Yes, because the defendant physically built
something on the defendant's property.
Is the 3rd element (continuous) of adverse possession met ?Yes.
What were the neighbors thinking when they built the steps?They thought they owned the land
they built the steps on, they were under the impression that they owned it.
Arguments
Traditional view Adverse possession requires hostility
Landowner's argument: plaintiff's can't claim adverse possession because they were mistaken
Defendant's argument: the act of building the steps on property that they didnt own was hostile
Counter-argument: the encroachment was small
Argument that building the steps was "open and notorious" everyone can see them
Tests the Court looked at:
Adversary means bad faith Maine Rule 1.
Mere act of intrusion is hostileConnecticut Rule 2.
What did the Court decide?
State of mind is irrelevant, so they went with the Connecticut rule
Case was remanded to see if there was notice
If they found it wasnt adverse possession, what happens?
Issues: (1) state of mind question, what is intent? Goes to the 4th requirement of adverse possession
Courts resolve it equitably (benefit vs. cost)
Other courts will say "forced sale" when benefit/burden is disproportionate
Fixtures
If there's no cost, or its relatively small, property is returned.
A thing is deemed to be affixed to real property when it is attached to it by roots, imbedded in it, permanently
resting upon it, or permanently attached to what is thus permanent, as by means of cement, plaster, nails,
bolts, or screws.
Hypo: I own land, but you build $750k worth of things on it. No adverse possession found, who keeps
the fixtures?
Argument for person who built on it
Enhanced the property value
Ive been harmed because I spend $750k
You're being unjustly enriched
Property Page 14
You're being unjustly enriched
Some jurisdictions say the landowner has to compensate the builder
Argument for landowner
You took a risk by building on land you didn't own, so you shouldn't expect to be compensated
Where will I find $750k to pay you
This is unfair because this is not how I wanted my land to be used
Chattels
A chattel is anything other than real estate
Why is adverse possession not popular when it comes to chattels?
Because it might reward thievery
Gifts (of personal property [chattels]
General Rule: Adverse possession doesnt apply to chattels. Mostly only real estate.
When do disputes about gifts come up?
After the donor dies
May say the gift wasnt intended
When the donor changes his/her mind
Sometimes things begin as bailments; but are retained for so long that the person in possession
thinks that they own it

Bailment: you give someone the legal right to possess your property but it isn't permenant
Example: I give you a plane ticket as a graduation gift
Example: engagement rings, in some jurisdictions, are conditional gifts.
Conditional gifts: I give you something on a condition
Requirements for a gift to be valid
The intent on the part of the donor to make the present transfer A.
Was it possible, practical?
Actual delivery: **best way to deliver** 1)
handing over a key or some object that will open up access to the subject
matter of the gift

Where it plainly appears that it was the intention of the donor to make
the gift, and where the things intended to be given are not present, or,
where present, are incapable of manual delivery from their size or weight

But where articles are present and a capable of manual delivery, this
must be had

Constructive delivery: 2)
handing over something symbolic of the property given; a symbol of the
gift itself

Example: handing over a written instrument declaring a gift of the subject

matter

Very wary of symbolic delivery because it may be hard to prove

Symbolic delivery: 3)
Delivery of the gift to the donee (3 kinds) B.
Traditional Rule of Gifts: if an object can be handed over, it must be.
Acceptance by the donee: assumed if valuable C.
Inter vivos gifts: To make a valid inter vivos gift, there must be: 1.
The intention to make the gift need not be announced by the donor in express
terms, but may be inferred from the facts attending the delivery- that is, what the
donor said and did

But it must always clearly appear that he knew what he was doing, and that he
intended a gift

Intent: must intend to make the gift (for purposes of giving someone possession) A.
Actual *best*
Constructive (Example: delivery of a key to a locked house)
NO SYMBOLIC DELIVERY BECAUSE WE DONT WANT ANY CONFUSION
Delivery: have to have the best possible delivery B.
Acceptance by the donee C.
Death: person must die within a reasonable amount of time D.
Gifts Causa Mortis: gifts made in contemplation and in expectation of immediate approaching
death. There must be:
2.
Property Page 15
Is there a time period? If the person survives, the gifts are revoked
Problems on pg 158
Gift Analysis
Death: person must die within a reasonable amount of time D.
Inter Vivos OR Causa Mortis
Intent 1. Intent 1.
Delivery 2. Delivery 2.
4. Death
Acceptance 3. Acceptance 3.
Yes, there was intent. Yes, there was delivery (daughter was in possession, ring was left on the sink). 1.
Acceptance? Yes
Can O change her mind? No, because the gift has been given. If it wasnt valid (O was drunk) then you
can ask for the gift back.

Once you establish the intent, deliverydaughter created a bailment, so it belongs to the daughter. 2.
Not a gift, it was a promise without consideration. Not a causa morits because it wasnt made in
anticipation of death.
3.
Newman v. Post
Rule of Law and Holding: To constitute a donatio causa mortis there must be an intention to give a gift and
delivery of the gift. Intent may be inferred from the delivery. Constructive delivery is persmissible when the
subjects of the gift are not present, but when the objects are present, manual delivery is required.
Question #2 pg 165
What result?
Delivery means delivery, he has to give it to her.
Intent is clear, but wasnt delivered.
Gifts Causa Mortis
A gift causa mortis, that is, 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, although some courts may hold that revocation occurs only if
the donor elects to revoke upon recovering.

If they weren't competent, intent may be hard to prove

In these cases the donor is ill, so there must be some form of capacity to exhibit intent.
To prevent fraud
If it isn't capable of constructive delivery, it can't be given
Greun v. Gruen(inter vivo)
Some property can's be passed as a gift causa mortis
But they are generally interpreted strictly
The modern trend is to enforce the decedent's intent even if there is evidence of some failure to
comply with the wills act formalities, so long as there is clear and convincing evidence of donative
intent.

Issues: Can a valid inter vivos gift of a chattel be given in which the donor reserves life estate in the
chattel? >Yes.
Holding: P established a gift was made. Declaratory judgment plus costs granted to P.
Rationale: A valid inter vivos gift requires intent (from donot), delivery, and acceptance. Valid
evidence of inter vivos gifts can be made of a remainder, in which the donor becomes a life tenant
of the chattel (or real estate, as the case may be). Gift is effective on the transfer of the interest, and
not specifically on the physical delivery. Law presumes acceptance.
Gruen v. Gruen: introduces the concept of a life estate (in Victor), and a remainder (in Micheal/son).
Each of these estates is a separate interest in the same property, entitling first the life tenant to
possession and then, after his death, the remainderman.

Son fighting step mom; if the painting is in deceased dad's estate; then stepmom would get it. If
not, son gets it.

There were two letters to the son from the dad. What did the father intend?He didn't want the
son to receive, in his possession, the painting, on his 21st birthday.

Actual delivery? No
Symbolic? Maybe
Constructive? No
She would say there was no delivery
Stepmom's Argument (that dad retained possession)
Facts
Property Page 16
Constructive? No
Also fails as a will
Intent: there was no present donative intentso fails as a gift
When the son listed his assets, during the divorce, he didn't list the paintingso it could
mean that he didn't think it was his, or he didn't accept it, or deliberately didn't disclose it

As of 21st birthday dad intended to split titleDad has possession while he is

alive; son got remainder interest.

Life estate right to possess/ have title while you're alive

Dad can use/exploit his interest while he's alive.
If son believes the painting will be harmed, he could protect his interest
by stopping whatever the dad is doing to harm his interest.

Unlikely to be enforced because there was no consideration. It was

just a gratituous promise.

"You can have half"That is splitting ownership

This case is different because the dad granted title to the son.
What if dad said "I promise you the painting"?
Ownership and possession is differed until death
Dad can still dispose of it; because a will can be revoked
A will is only effective upon death
**** Showing someone a will isn't a promise, so if he tells his son
"you get the painting" but dad doesn't own it, then son cant get it.
What if he showed the son a will that says "im giving you this painting"
You can use it as collateral
If you own a future interest, you can use it as collateral, BUT how
much you can use it as collateral depends

Exception: Cant force dad to give it to him before death. In

other words, can't force someone to give you the remainder
interest before it is due.
You can do anything with his future interest that you can do if you
had possession (i.e. sell it, give it away)

What can you do if you get remainder interest?

Note: dont need consent to sell your interest in property (i.e. a painting).
***if you don't intend to give present interest, then you don't have to deliver
The dad had present intent to give the son a gift. So the dad split the title for the
painting.

Distinction: court said the son didn't receive possession of the painting but got a future
interest.

Why does stepmom lose?

Questions on page 172
Possible Argument by Son: No need for dad to deliver the painting because it was hanging in
the living room of the son's legal residence.
Thats a delivery issue, because a letter is symbolic delivery. Dad should have traveled and
delivered the painting, so symbolic delivery is likely to not be sufficient.
A.
If Victor Gruen had wanted to give Micheal the complete ownership of the painting and not reserve a
life estate, could he have done so by a letter sent to Micheal at Harvard?
1.
Carefully distinguish a will from what Victor has done here. He wrote: "I give you the Klimt
painting, reserving possession for my life." this gives Micheal a present ownership interest in
the painting, with possession postponed until Victor's death.
i.
It would not, the letter is will. It shows no intention to give Micheal any rights now, but only when
Victor dies. As a will, the instrument is not valid unless properly executed as a will with witnesses.
A.
Suppose that Victor Gruen had typed and signed a letter to Micheal: "I give you the Klimt painting when
I die." Would this be a valid lifetime gift?
2.
Stepmom had an interest because she could claim an elective share, so she'd have rights to
painting if it was still in the dad's estate.
A.
Unit II: Systems of Estates
Should Victor's widow, the stepmom, have had any rights to the painting? 3.
Historically, land was very important
The system, at the time, was suspicious of spreading property among too many people
Terms
Spouse
Descendants (kids)
Heirs: group of people that state statute says will inherit your property if you died "intestate" (without a
will). Heirs are persons who survive the descedent and are designated as intestate successors under the
state's statute of descent. No one is a heir of the living; a living person has no heirs (yet!). Hence, if there
is a conveyance to "the heirs of A, a living person", we don't know who will take until A dies and A's heirs
are ascertained.

Property Page 17
Descendants (kids)
Parents
Siblings (and their kids)
Grandparents (and their kids)
Note: some jurisdictions say that if none of the above can be found, your property will go to step
children.
Modern Approach: most distant is someone you share a grand-parent with
Note: everyone gets equal shares, goes to blood relatives
Escheats: ( if you don't have a will and can't find heirs) your property will escheat to the state in which
you are domiciled. (domiciled at the time of your death). If a person died intestate without any heirs,
the person's property escheats.

In your will, you must provide for your surviving spouse

But, you can also leave stuff to whoever you want and change the percentages from the intestacy
system

Will: a formal document that allows you to opt out of the intestacy system.
Elective share: minimum to which your surviving spouse is entitled
If the will isn't valid, then you're subject to the intestate system
What is the difference between a beneficiary and a heir?
Beneficiaries: people who receive property from your will
Requirements: Adult, non-felon, resident of state A.
Executor: represents estate once you dieyou pick this person
Administrator: appointed by the court
Jobs/Responsibilities of an Executor/Administrator
Collect everything the descedent owned, marshalling assets and collecting it
Distribute assets (they are paid a fee, a portion of the value of the estate)
Guardian/Custodian
Protect the interest of the living
Ideally the same person is the guardian of the person and property
Sometimes, it isnt so, therefore, you can aplit it and say one person will guard the child and
the other will guard the property

Blood relatives i)
Siblings as guardians rather than grandparents because former may live
longer
ii)
Strong presumptions: A.
Test: What is in the best interest of the child?
***if they don't accept the responsibility then the court appoints a guardian
(Will distributes property AND names of guardians/custodians)
Three types of Heirs
Responsible for the person or property of someone who is still alive
Ancestors: people from who you directly descend from. By statute, parents usually take as heirs if the
decedent leaves no issue.
1.
Difference between issue and children?
Issue: people descended from you (kids/grandkids). Issue does not refer to children only, but includes
further descendants. If any child of the decedant before the decedent, leaving children who survive the
decedent, such child's share goes to his or her children by right of representation
2.
Issueeveryone below you
Childrenone generation below you
Collateral: siblings and their children, basically all of your other relatives (not ancestor or issue). All
persons related by blood to the decedent who are neither descendants nor ancestors are collateral kin.
If a decedent leaves no spouse, no issue and no parents, the decedent's brothers and sisters (and their
descendants by representation) take in all jurisdictions
3.
Present Possesory Estates
Fee Simple Absolute A.
The tenant's holding his fee
The fee simple is as close to absolute ownership as our law recognizes. It is the largest estate in terms of
duration. It may endure forever.

The words "and his heirs" indicated that A's interest in the land was inheritable by his heirs, but
such words didnt give A's prospective heirs any interest in the land. A's son would inherit the land
from A IF A still owned the land at his death, but A's son had no interest during A's lifetime.

At early common law, a fee simple was created by the grantor conveying the land "to A and his or her
heirs"

Fee Simple Absolute

** Best present possesory estate
Property Page 18
** Best present possesory estate
" to A" words of purchase, identifying A as the grantee
"and his heirs" words of limitation indicating that A takes a fee simple.
To give property under fee simple absolutein will, you must mention "A AND HIS HEIRS". You say
this to make sure that A can pass the property on to his heirs.

THERES NO FUTURE INTEREST IN THIS TYPE OF ESTATE

Definition: when you're alive, you can do anything with the property and nobody can tell you what to
do (not even your heirs). You also have absolute control after your death.

Once you give it to someone in fee simple absolute, you're giving up complete absolute control.
The person you give it to is free to sell it, so the property may not be handled in the manner you
like

It might escheat to the state if the person you give it to doesnt make a will leaving it to anyone
Involuntarily, the property can be seized by creditors
What is the only reason you wouldnt give property under Fee Simple Absolute?
Problems on page 183 (in notebook)
Problems on page 185
B had no ability to give this property away, so the will is void. So A would get 1/2. A(1) gets nothing
because the parent is alive to take it. Other 1/2 would have gone to B, so his half is divided among his
three children. (Property is divided evenly). If A & B died, it would be divided equally among the kids.
(Chart in notebook)

If it were the 1800's B(2) would've gotten it all because he was the oldest son (youngest brothers &
daughters don't get anything).

It goes to the heirs of A, if A has heirs. But depends on whether A has heirs just because A dies intestate
without issue, doesnt mean there isn't any heirs.

Once you give away fee simple absolute, its gone.

Fee Tail B.
Fee tail or entail is an obsolescent estate at common law. It describes an estate of inheritance inreal
property which cannot be sold, devised by will, or otherwise alienated by the owner, but which
passes by operation of lawto the owner's heirs upon his death.

The purpose of an entail was to keep the land of a family intact in the main line of succession. The heir
to an entailed estate could not sell the land, nor usually bequeath it to, for example, an illegitimate
child. The complications arising from entails were an important factor in the life of many of the upper
classes, especially from about the late 17th to the early 19th centuries, leaving many individuals wealthy
in land but still heavily in debt.

The crucial difference between the words of conveyance and the words that created afee simple,
"to A and his heirs," is that the heirs "in tail" must be the children begotten by the landowner. It
was also possible to have "fee tail male," which only sons could inherit, and "fee tail female,"
which only daughters could inherit; and "fee tail special," which had a further condition of
inheritance, usually restricting succession to certain "heirs of the body" and excluding others. Land
subject to these conditions was said to beentailedor in tail. The restrictions themselves
were entailments.
To create a fee tail, you have to say " TO A & THE HEIRS OF HIS BODY".
The fee tail descends to A's lineal descendants ("heirs of the body") generation after generation, and it
expires when the original tenant in fee tail, A and all of A's descendant's are dead. When A's bloodline
runs out, and the fee tail ends the land will revert to the grantor or grantor's heirs by way of reversion,
or, if specified in the instrument, will go the some other branch of the family.

Why would you prefer a fee tail over a fee simple absolute?
You can lease out your interest in the property to someone else
You cannot sell it, the only people who can have it is you & others in your bloodline (pro: prevents
land from being sold)

Once bloodline runs out, it goes to the grantor. Therefore, it is not given to the state.
Creditors cannot take it because they are not in your bloodline.
Protects property from careless heirs
Could create a fee tail in only male or female heirs
Problems with Fee Tail
Every fee tail has a reversion or remainder after it
Its inefficient: when you wanted to move, you couldnt sell the property. People abandoned such
property.

You can be taxed, even if you're not using it.

Creditors couldnt take the land from people who owed debt, having a lot of property can be misleading
about your credit.

You're liable for what happens on property, even if you dont live there
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about your credit.
You're liable for what happens on property, even if you dont live there
Provided guaranteed inheritances, so kids grew disobedient
Example: heirs of someone who died 100 years ago.
Most jurisdictions have eliminated fee tail,except for 4:
Maine 1.
Rhode Island, 2.
Delaware 3.
Disentail: while alive, they ca convey the property from fee tail to fee simple to themselves.
So it wont stay in the blood line.
i.
Massachusettes 4.
As you go through multiple generations, it keeps getting divided, so it gets difficult to find heirs.
Life Estate C.
Splitting interest between someone to own property until they die, then the interest goes to someone
else.
What rights do you have?
Alife estate is a concept used in common lawand statutory lawto designate the ownership of land for
the duration of a person's life. In legal terms it is an estate inreal property that ends at death. The
owner of a life estate is called a "life tenant".

Although the ownership of a life estate is of limited duration because it ends at the death of the person
who is the "measuring life", the owner has the right to enjoy the benefits of ownership of the property,
including income derived from rent or other uses of the property, during his or her possession.

Because a life estate ceases to exist at the death of the measuring person's life, this temporary
ownership agreement cannot be left to heirs (intestate)or devisees (testate), and the life estate cannot
normally be inherited

A land owner of an estate cannot give a "greater interest" in the estate than he or she owns. That is, a
life estate owner cannot give complete and indefinite ownership ( fee simple) to another person because
the life tenant's ownership in the property ends when the person who is the measuring life dies.

Limitations
For instance, if Bob conveyed to Ashley for the life of Ashley, and Ashley conveys a life estate to
another person, Brenda, for Brenda's life [an embedded life estate], then Brenda's life estate
interest would last only until whoever dies first, Brenda or Ashley. Then Brenda's interest conveys
to the remainder interest or reverts to the original grantee. Once Ashley dies, however, whoever
possesses the land loses it (with the land likely reverting to its original grantor). This is a life estate
"pur autre vie," or the life of another. Such a life estate can also be conveyed originally, such as "to
A until B dies."

A land owner of an estate cannot give a "greater interest" in the estate than he or she owns. That is, a
life estate owner cannot give complete and indefinite ownership ( fee simple) to another person because
the life tenant's ownership in the property ends when the person who is the measuring life dies.

The law of waste becomes relevant whenever two or more persons have rights t posses the
property at the same time or consecutively.

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.

Affirmative waste: arises from voluntary acts and injurious acts that have more than trivial
effects. Liability arises from injurious acts that have more than trivial effects. Generally,
injurious has meant acts that substantially reduce the value of the property in question

Permissive waste: arises from failure to act. Permissive waste is essentially a question of
negligence- failure to take reasonable care of the property

In this regard, the law of waste is designed to avoid just that- uses of property that fail to
maximize the property's value

Another limitation on a life estate is the legal doctrine of waste, which prohibits life tenants from
damaging or devaluing the land, as their ownership is technically only temporary.

Remaindermen: takes property when life tenant dies.

Grantor reversion
3rd party remaindermen
What's the one thing you can convey?
Possessory rights for your entire life, but no control over what happens at your death
Can lease or give away use of property while alive, but upon death, that lease is terminated.
Advantages of giving someone a life estate?
Limits the damage someone can do because at death, their interest is over. Original owner can decide
what happens upon death of who has life estate. (daughter for life, remainder to son)

Way of ensuring remainder goes to your kids

Creditors can get life estate of person who has it, but goes to someone else upon death of the person
who owed money.

Property Page 20
who owed money.
Tensions between life tenant and remainder
Waste: when the person wastes the property
Rule: life tenant can't waste/decrease value of property
Contingent remainder: A remainder is contingent if one or more of the following is true: (1)
it is given to an unascertained or unborn person, (2) it is made contingent upon the
occurrence of some event other than the natural termination of the preceding estates. For
example, if we assume that B is alive, and O conveys "to A for life, then to the heirs of B...",
then the remainder is contingent because the heirs of B cannot be ascertained until B dies.
No living person can have actual heirs, only heirs apparent.

Baker v. Wheedon
What if we don't know who the remaindermen is (i.e. unborn kids)?Someone has to be hired to
represent unborn kids.

Can life tenant sell property? Only with the consent of the remainderman
Illustrates a problem that comes up between life estates and remaindermen
Discussion
Weedon intended to (1) primary goal was to make sure his wife was provided for- gave her a life estate
in his farm (his most valuable asset) (2) second goal was to not give his daughter the property.

He made it clear that it wasnt an inadvertent disinheritance

He created alternate contingent remainders: A pair of remainders that have opposite conditions
precedent.

He gave remainder land to wife's kids (if she had any). If she didnt have kids went to his grandkids.
NOT HIS DAUGHTERS

Gave notice to the grandchildren

Who else didnt get notice? You assume that as long as someone is alive, they'll have kids.
Should have been a guardian appointed for Anna's issue. Also one for Anna, in case she was
incompetent. Also, a guardian for any future grandchildren. But court assumed all the
parties interests were represented

Who didnt get notice?The estate of Mr. Weedon should have been a party because until Anna
dies, his estate should have been a party

Then Anna (wife) was running out of money so she wanted to sell the property. The state wanted to
build an overpass, so they needed to purchase "right of way" to her property

Arguments
Court: Agree to a partial sale. In equity we have the ability to order a sale & if we do, only to the
smallest extent necesarry.

Grandkids didnt want to sell because they thought the value of the property would go up. They used
the waste theoryThe holder of a present estate subject to a future interest can not do anything, or
fail to do anything, which will reduce the quantity or quality of the estate which the holder of the future
interest will enjoy when the present estate ends. This duty can be modified by a valid agreement
between the parties, which agreement may either increaseor decreasethe duties owed by the holder of
the present estate to the holder of the future estate.

Property Page 21
smallest extent necesarry.
If the property is sold, how much does the life tenant and the remainder get?
Calculation: Value of property X interest rate for life tenant's life expectancy = Life Estate (goes to
tenant)

Hypo
If landlord has a life tenant; landlord dies; make sure remainderman signs lease. Else they're out of luck
Adverse possession can still occur when someone has interest in property
Name person as trustee, that person is the legal owner. Can give land in other person's interest.
To prevent tensionTrust
An estate of freehold is an estate in lands or other real property, held by a free tenure, for
the life of the tenant or that of some other person; or for some uncertain period.

FREEHOLD: An interest in land which permits the owner to enjoy possession of real estate
during his life without interference from others.
Note: The fee simple, the fee tail and the life estate are freehold estates.
The chief significance of this is that the freeholder had seisen
Seisen possession, of a particular kind and with particular consequences
Livery of seisinis an archaic legal ceremony to convey property. The common law in those
jurisdictions once provided that a valid conveyance of afee interest in land required the physical
transfer by the transferor to the transferee, in the presence of witnesses, of a piece of the ground
(often, in the literal sense of a hand-to-hand passing of an amount of soil), a twig, key, or other
symbol.

A freehold estate could be created or transferred only by a ceremonial known as a feoffment with
livery of seisin

Leasehold Estate (to be covered later) D.

Aleasehold estate is an ownership interest in land in which a lessee or atenant holds real property by
some form of title from alessor or landlord.

Leaseholdis a form of property tenure where one party buys the right to occupy land or a building for a
given length of time. As lease is a legal estate, leasehold estate can be bought and sold on the open
market.

A present interest to use and enjoy during your tenancy

Defeasible Estate E.
Allows you to attach strings to the property
***Not a fee simple absolute, but is a fee simple
Adefeasible estate is created when a grantor transfers land conditionally. Upon the happening of the
event or condition stated by the grantor, the transfer may be void or at least subject to annulment.
(An estate not subject to such conditions is called an indefeasible estate.)

Historically, the common law has frowned on the use of defeasible estates as it interferes with the
owners' enjoyment of their property and as such has made it difficult to create a valid future interest.
Unless a defeasible estate is clearly intended, modern courts will construe the language against this type
of estate. Three types of defeasible estates are the fee simple determinable, fee simple subject to an
executory limitation or interest, and the fee simple subject to a condition subsequent.
Because a defeasible estate always grants less than a full fee simple, a defeasible estate will always
create one or more future interests.

Significant restriction on sale

Effects of Fee Simple Defeasible
Fee Simple Defeasible: one that may last forever or may come to an end upon the happening of an
event in the future

Partial Restraint on Alienation: limiting to a certain pool of people, also a retraint on use and
enjoyment

Restriction on alienation
Restriction on sale
Dead Hand Control: control things when you're dead
Cloud on Title: when we dont know who owns the property
Who? Who is enforcing proper use of the land?
How? How do you tell it is being enforced?
What? What constitutes a violation?
How do you value the property? Defeasible fees pose a big issue in regards to this
Enforcement:
Two Types of Defeasible Fees
Fee Simple Determinable 1.
FSSCS: Fee Simple Subject to Condition Subsequent 2.
Property Page 22
Habendum Clause
Habendum Clause is a very common clause stated on deeds used to transfer ownership rights on
property. The clause defines:
(a) the nature of the estate granted to a person
(b) the extent of the interest transferred and the rights, and
(c)obligations on the property.
What the clause implies
The clause is written in the language - "To have and to hold the property herein granted to the party
of the second part, the heirs and successors and assigns of the party of the second part, forever."
The statement implies that the owner of real property or the grantor also known as the "party of the
first part" in the deed is transferring the property-title to the grantee or "the party of the second
part."
Why the clause is included in a deed
The clause is included in the deed in order to clarify that the grantor has transferred absolute title or
ownership rights on the property to the grantee. This implies that the grantee receives title which is
free of any lien or judgment.
For instance, in case of transfer of life estate, a grantee holds ownership rights on property and can
use it only for his lifetime. Upon his death, the ownership rights are transferred back to the grantor.
With such a title, the grantee holds ownership rights only for his/her lifetime and cannot pass on the
rights to his heirs or beneficiaries. In order to clarify that the property transfer is free from such
restrictions, a Habendum Clause is used.
How Habendum Clause differs from other Clause in a deed
The Clause supplements the Granting Clause which is also a part of the deed. Unlike a Habendum
Clause, the Granting Clause contains the words of the transfer of property to the grantee. These
clauses help to determine the duration of the estate or other rights offered by the transfer in addition
to the general rights of the parties involved in the transfer. In certain states like New York, a deed
without a Habendum Clause creates an unmarketable title. Thus, both the Habendum and Granting
Clauses make up a well drafted deed used to convey interest or title in the property.
Fee Simple Determinable ("as long as", "while", "during", "until") F.
The fee simple may continue forever, but if the land ceases to be used for school
purposes, the fee simple will come to an end and the fee simple will revert back to O, the
grantor.

A fee simple determinable is sometimes called a fee simple on a special limitation,

indicating that the fee simple will expire by this limitation if it occurs

A fee simple determinable is created by language connoting that the transferor is

conveying a fee simple only until an event happens.

Example: O conveys Blackacre "to the Hartford School Board, its successors and assigns, so long as
the premises are used for school purposes.

Fee Simple Determinable: a fee simple so limited that it will end automatically when a stated event
happens.

Uses words of duration, temporal limitation"as long as", "while", "during", "until"
possibility of reverter: AUTOMATIC FORFEITURE
Executory Interest
BREACH OF FSD POSIBILITY OF REVERTER GRANTOR GETS LAND BACK
BREACH OF FSD 3RD PARTY (land doesn't go back to grantor)
Note: when person who breached stops owning the land, if he remains on it, he
is trespassing.
FSD & Adverse Possession: date of entry begins on the day FSD was breached. If
the S.O.L. runs, trespasser may get the property through adverse possession.
FSD BreachFee Simple AbsoluteConvey to B
When condition isnt adhered to, or in other words, is breached, the property goes back to the grantor,
its an automatic forfeiture.

FSSCS: Fee Simple Subject to Condition Subsequent ("but if", "unless", "may", "provided
that") (use this when you want to retain some discretion)
I.
Right of entry refers to one's right to take or resume possession of land, or the right of a person to
go onto another's real property without committingtrespass. It also refers to agrantor's power to
retake real estate from agrantee in the case of a fee simple subject to condition subsequent.

A fee simple subject to a condition subsequent is created when the words of a grant support the
conclusion that the grantor intends to convey a fee simple absolute but has attached a condition to
the grant so that if a specified future event happens the grantor will get its fee simple absolute back,
provided that the grantor retains a right of entry. The fee simple subject to condition subsequent
does not end automatically upon the happening of the condition. The future interest is called a
"right of reentry" or "right of entry."******
The right of entry is not automatic, but rather must be exercised to terminate the fee simple subject
to condition subsequent. To exercise right of entry, the holder must take substantial steps to

Property Page 23
One of the languages used to create a fee simple subject to condition subsequent and a right of
entry is "to A, but if A sells alcohol on the land, then grantor has the right of reentry."

Common uses include language such as "may", "but if", "however", or "provided that..."
to condition subsequent. To exercise right of entry, the holder must take substantial steps to
recover possessionandtitle, for example, by filing a lawsuit. Physical entry is not required, but the
holder must do more than just proclaim an intent to take back.

Does not automatically terminate but may be cut short or divested at the transferor's election when a
stated condition happens.

Language used "but if", "unless"

Latch period
Ownership period is only adverse when its asserted that grantor doesn't own property anymore
FSSCS Breached Latch period ran out Adverse Possession
Key difference between FSD & FSSCS
Use this when you want to retain some discretion: i.e. "I have time to think about whether I want to
take property back"

Is it automatic or not? FSD is automatic, but FSSCS isnt.

What if restriction is void & its striked out, then left with fee simple absolute (FSSCS)
Mahrenholz
Rule of Law
A grantor will retain a possibility of reverter where the grantor intends to have mandatory return of a fee
simple determinable estate and where the grantor specifically limits the use of the estate for an exclusive
purpose.
Issue(s)
Whether the language "for school purpose only; otherwise to revert to Grantors" created a fee simple
determinable estate followed by a possibility of reverter.
Holding and Reasoning
Yes.
First, the court noted that the parties agree that the initial deed created a fee simple estate that was
defeasible in some way.

Second, because the land was being used for school purposes when Jacqmain transferred his interest to
Mahrenholz the court affirmed the trial court's findings that Mahrenholz acquired no interest in the school
property from Jacqmain.

So, the issue before the court was narrowed to determine whether Harry Hutton could have conveyed any
interest in the school property to Mahrenholz. Both possible future interests that Harry Hutton may have
retained are neither alienable nor devisable, they are only inheritable.

Because Harry Hutton had not acted legally to retake the school grounds before his purported conveyance
to Mahrenholz, Harry could only have conveyed the interest if the County Board's activities satisfied a
cessation of school purposes, his conveyance to Mahrenholz was legally valid, and if he had inherited a
possibility of reverter.

The court held that the Huttons conveyed a possibility of reverter since their use of the word 'only' was a
limitation on the County Board's use of the land, thus it was not a full grant subject to a condition.

Moreover, the court ruled that 'otherwise to revert to Grantors' showed intent to trigger a mandatory return
and not a permissive right of reentry.

The court reversed and remanded to determine whether Harry's conveyance to Mahrenholz was legally
sufficient to pass his possibility of reverter, whether Harry's subsequent disclaimer in favor of the County
Board terminated the Mahrenholz's interest, and whether the grounds are in fact no longer used for school
purposes.

Mountain Brow/Toscano
Facts: Respondents maintain the language created a fee simple subject to a condition subsequent and
is valid and enforceable. Appellant claims the restricted language amounts to an absolute restraint on its
power of alienation and is void. They add since the purpose for which the land must be used is not
precisely defined, it may be used by appellant for any purpose and hence the restriction is not on the land
use but who uses it (reversion clause only takes place if land is sold or transferred).
Issue(s): Under property law (of equity), does the language of a deed describe the creation of a fee
simple when it reads, "Said property is restricted for the use & benefit of the second party, only; and in
the event the same fails to be used by the second party or in the event of a sale or transfer by the second
party of all or any part of said lot, the same is to revert to the first parties herein, their successors, heirs or
assigns."?
Distinction between Alienation and Land Use (as stated in Toscano)
Holding: Yes. The grantor cannot place a restraint on alienation because it is an essential stick in the
bundle, however a restriction on the use of the land is NOT a restraint on alienation even if that is its
effect; Lodge 82 may sell their land to whomever they like, but only they can use it; distinction by the
way, is restriction on land use and alienation.
Restrictions on Transfer: Rule Against Restraints on Alienation [111-112]
Any total or absolute restraint on alienation of a fee simple is null and void. For
example, if O conveys land to A, but if A ever attempts to sell the land, then to B, a
court would find the restraint void; thus, A owns fee simple absolute and B has no
interest. Partial restraints on alienation of a fee simple may be allowed if reasonable in
nature, purpose, and duration.
Land Use
Property Page 24
Land Use
The term "use" as applied to real property can be construed to mean a right which a person
has to use or enjoy the property of another according to his necessities.
Cy Pres Doctrine
The court will allow a different purpose for the property, when the intended use is no longer practical
The term can be translated (from old Norman French to English) as "as near as possible" or "as near as
may be.

When the original objective of the settlor or the testator became impossible, impracticable, or illegal to
perform, the cy-prs doctrine allows the court to amend the terms of the charitable trust as closely as
possible to the original intention of the testator or settlor, to prevent the trust from failing.

Court's Rationale/Reasoning: A clause which prohibits appellant from selling or transferring the land
under penalty of forfeiture is an absolute restraint against alienation and is void (common law). So, court
first looks to the language of the deed to ascertain if there is a void clause. They determine the language
of the common law does not permit alienation, but as long as there is language in a deed which exercises
the power to demand how the land is used, that part of the deed is okay.
So, did the use condition create a defeasible fee as respondents maintain or is it also a restraint against
alienation, which is what appellant alleges. This is a fraternal lodge, of which the decedent was an active
member until his death. The term "use" as to applied to real property could mean a "right which a person
has to use or enjoy the property of another according to his necessities." The court puts these thoughts
together and decides the deed says it is to be used for fraternal purposes only, that the land was
conveyed upon this condition.
Thus, the Habendum clause portion which referred to the land use, when construed as a whole and in
light of the surrounding circumstances, created a fee subject to a condition subsequent with title to revert
back to the grantors, their successors or assigns if the land ceases to be used for lodge purposes. So, in
order to avoid even more confusion, the court rewrote part of the clause to read "subject to the condition
that said property is restricted for the use and benefit of the second party only;..." the penalty is the land
reverts back to Toscano heirs.
Rule: The object in construing a deed is to ascertain the intention of the grantor from the words which
have been employed and from surrounding circumstances.
Future Interests
There are five basic types of future interests.
Three of themthe reversion, the possibility of reverter, and the right of entrycan only be created
in a transferor.

The remaining twothe remainder and the executory interestmay be created only in a
Creation of Interests [179]
The remainder or executory interest in real property can arise only through express
language in a valid deed or will, not through implication.
transferee.
Interests Retained by the Transferor I.
Right of Entry: The right of entry arises when a transferor creates a fee simple subject to a
condition subsequent (e.g., O conveys to L, but if L fails to use the property as an orphanage,
then O may enter and retake possession).
A.
Before the transferors future interest becomes possessory, his rights are quite limited. He can bring suit
if the possessor commits waste and, in some states, can also share in eminent domain proceeds if the
property is condemned.

Analysis: If A never drinks after the grant (and never sells the property), then Blackacre will
belong to A at A's death, and be distributed according to the rules of probate. If A does drink
after the grant, then A's rights in Blackacre end, although A is still in possession of Blackacre.

Language used: Conditional. Examples include "on condition", "if used for", and "provided
that".

Alienation: A's interest is vested. This interest is never subject to the rule against
perpetuities. A's interest cannot be transferred inter vivos ("between living people"); can
only be transferred by will or by intestate succession upon death of the grantor.

Example: "O grants Blackacre to A, on condition that A refrains from drinking alcohol."
This type of future interest follows a fee simple subject to a condition subsequent. A grantor has the
power of termination when an estate may return to the grantor if a condition is violated and the grantor
decides to reclaim the estate. This type of grant may occur when the grantor wants the option of
deciding the severity of the violation.
A grantor has the power of termination when an estate may return to the
grantor if a condition is violated andthe grantor decides to reclaim the estate.
This type of grant may occur when the grantor wants the option of deciding the
A.
What are the characteristics of this interest? 1.
This type of future interest follows afee simple subject to a condition subsequent. To see why, consider
that in order to retain Blackacre, A must continue to perform under the terms of the grant (by not
drinking). If A fails to 'not drink', that condition will trigger the subsequent loss of A's rights in Blackacre.
Property Page 25
severity of the violation.
Conditional. Examples include "on condition", "if used for", and "provided that". A.
What wording can/must be used to create the interest? 2.
Fee Simple Subject to Condition Subsequent (FSSCS) A.
What are the present interests that this future interest can/must follow? 3.
Under what conditions can/must the interest become possessory? 4.
Analysis: If A never drinks after the grant (and never sells the property),
then Blackacre will belong to A at A's death, and be distributed according
to the rules of probate.

"O grants Blackacre to A, on condition that A refrains from drinking alcohol."

What control, if any, does the grantee have over the estate at his/her death? 5.
A's interest is vested. This interest is never subject to the rule against
perpetuities. A's interest cannot be transferredinter vivos ("between living
people"); can only be transferred by will or by intestate succession upon death
of the grantor.
A.
What are the implications, if any, of the Rule Against Perpetuities for the interest? 6.
Possibility of Revertor: When a transferor creates a fee simple determinable, the future
interest retained is a possibility of reverter. For example, if O conveys land to L for so long as
used as an orphanage, O retains a possibility of reverter.
B.
****Can only follow a Fee Simple Determinable (FSD)
Analysis: If A never drinks after the grant (and never sells the property), then Blackacre will
belong to A at A's death, and be distributed according to the rules of probate. If A does drink
after the grant, then the property returns to O.

Language used: Durational. Examples include "for as long as", "while", and "during".
Alienation: A's interest is freely transferable.
Example: "O grants Blackacre to A, as long as A refrains from drinking alcohol."
There is a possibility of reverter when an estate will return to the grantor if a condition is violated. The
possibility of reverter can only follow a Fee Simple Determinable
What are the characteristics of this interest? 1.
Durational. Examples include "for as long as", "while", and "during". A.
What wording can/must be used to create the interest? 2.
Fee Simple Determinable A.
What are the present interests that this future interest can/must follow? 3.
Under what conditions can/must the interest become possessory? 4.
Freely transferable A.
What control, if any, does the grantee have over the estate at his/her death? 5.
What are the implications, if any, of the Rule Against Perpetuities for the interest? 6.
Reversion: When an owner conveys a vested estate smaller than the estate he owns, he retains
a future interest called a reversion. For instance, if O holds fee simple absolute, but
C.
conveys merely a life estate to A, O retains a reversion.
A reversion occurs when a grantedestate is absolutely vested in the grantor.
Analysis (O): A is guaranteed to die (eventually), at which point Blackacre returns to O. This
future interest is absolutely (indefeasibly) vested in O.

Analysis (A): A has alife estate.

Alienation: O can alienate her future interest. A can alienate his rights in the property, but
only to the extent that those rights were granted him (i.e., as a life estate). So A can sell
Blackacre to B, but once A dies it returns to O. Notice that B has no control over this kind of
vesting.

Example: "O grants Blackacre to A for life."

****Reversion is not subject to the rule against perpetuities, because O's future interest is
absolutely vested
What are the characteristics of this interest? 1.
What wording can/must be used to create the interest? 2.
What are the present interests that this future interest can/must follow? 3.
When a granted estate is absolutely vested in the grantor A.
Under what conditions can/must the interest become possessory? 4.
Freely transferable A.
What control, if any, does the grantee have over the estate at his/her death? 5.
What are the implications, if any, of the Rule Against Perpetuities for the interest? 6.
This type of future interest can only follow the fee simple determinable. The vesting of the future
interest is determinable at the time of the grant, because reverter is automatic if the condition is
broken.
Property Page 26
Reversion is not subject to the rule against perpetuities, because O's future
interest is absolutely vested
A.
What are the implications, if any, of the Rule Against Perpetuities for the interest? 6.
Interests Created In A Transferee (Vested remainder, contingent remainder, exec. Int) II.
A remainder is a future interest created in a transferee that is capable of becoming
possessory upon the natural termination of a prior estate created by the same instrument.
For example, if A conveys to B for life, and then to C, Cs interest is capable of
becoming possessory when the prior estate (Bs life estate) naturally terminates; C holds
a remainder.
Vested Remainder: All three vested remainders are (a) created in a living,
ascertainable person and (b) not subject to any condition precedent except
the natural termination of the prior estate.
A.
Analysis (A): A has alife estate.
Analysis (B): B has a vested remainder, because Blackacre will vest in B after A dies, with no
further conditions.

Alienation: B may divest his (absolutely) vested remainder, which is not subject to the rule
against perpetuities. A is subject to the rules regarding divestiture of a life estate, as noted
above.

Example: "O grants Blackacre to A for life, then to B".

Answer: B's heirs. The terms "and his heirs" are assumed to be part of the conveyance.
Example(2): "O grants Blackacre to A for life, then to B". and B dies before A. Who takes
possession?

Avested remainder is created when property is granted to both a direct grantee and a named third
party, and is not subject to a condition precedent to the third party taking possession.
What are the characteristics of this interest? 1)
"vested in my sister" A.
for example, if A conveys to B for life, and then to C, C (or Cs successor) will
clearly be entitled to possession upon Bs death.
B.
She just has to wait for the life estate to run out C.
This person is definitely getting the property, no conditions D.
Dont always have to name the person E.
What wording can/must be used to create the interest? 2)
What are the present interests that this future interest can/must follow? 3)
The indefeasibly vested remainder is certain to become a possessory estate; for
example, if A conveys to B for life, and then to C, C (or Cs successor) will
clearly be entitled to possession upon Bs death.

Under what conditions can/must the interest become possessory? 4)

What control, if any, does the grantee have over the estate at his/her death? 5)
What are the implications, if any, of the Rule Against Perpetuities for the interest? 6)
Vested in a Known Person 1.
Means there is one person now who satisfies the conditions but there may be
additional people who may join
A.
The people might have to share B.
What are the characteristics of this interest? 1)
Analysis: The class of B's children can't be determined until after B dies, so
any children who are unborn at the time of the grant have a remainder
contingent upon B having offspring. Children of B are fully vested as soon
as they are born, provided A is still alive. B's children who are born have
vested remainder subject to open, because the conveyance was given to a
class of persons (B's Children) and B could still have more children. If A
dies before B, then the class is closed, and only those children alive at A's
death will have an interest.
i)
"O grants Blackacre to A for life, then to B's children". A.
What wording can/must be used to create the interest? 2)
What are the present interests that this future interest can/must follow? 3)
the vested remainder subject to open is held by one or more ascertainable
members of a class that may be enlarged by the future addition of presently
unascertainable persons.
A.
Under what conditions can/must the interest become possessory? 4)
What control, if any, does the grantee have over the estate at his/her death? 5)
What are the implications, if any, of the Rule Against Perpetuities for the interest? 6)
Vested Subject to Open (or "Subject to Partial Divestment") 2.
Property Page 27
What are the characteristics of this interest? 1)
to B for life, then to C, but if C ever smokes a cigar, then to D) A.
What wording can/must be used to create the interest? 2)
What are the present interests that this future interest can/must follow? 3)
the vested remainder subject to divestment is certain to become possessory
unless some specified event occurs (e.g, to B for life, then to C, but if C ever
smokes a cigar, then to D).

Under what conditions can/must the interest become possessory? 4)

What control, if any, does the grantee have over the estate at his/her death? 5)
What are the implications, if any, of the Rule Against Perpetuities for the interest? 6)
Vested Subject to Divestment 3.
Contingent Remainder (remainders apply to Life Estates, Fee Tail and Lease
Hold)
B.
The contingent remainder, in contrast, is either (a) created in an unascertainable person
For example, suppose A conveys to B for life, and then to C if C graduates from law school. Cs
remainder is contingent because she must first satisfy a condition precedent (graduating from law
school) before she is eligible to take possession following Bs death.

or (b) subject to a condition precedent.

when the property can't vest because the beneficiary is unknown (for example, if the beneficiary is
a class subject to open), or

when the property can't vest because the (known) beneficiary is subject to a condition precedent
which has not yet occurred.

Acontingent remainder is created when a remainder cannot fully vest at the time of granting. This
normally occurs in two situations:

(a) created in an unascertainable person or (b) subject to a condition precedent.

What are the characteristics of this interest? 1.
"to my brother for life, remainder to his only daughter"
It is contingent because a condition has to be satisfied
What wording can/must be used to create the interest? 2.
What are the present interests that this future interest can/must follow? 3.
Under what conditions can/must the interest become possessory? 4.
What control, if any, does the grantee have over the estate at his/her death? 5.
the Rule Against Perpetuities;
the Doctrine of Worthier Title;
the Rule in Shelleys Case; and
the destructibility of contingent remainders.
The common law recognized four doctrines designed to restrict contingent
future interests held by transferees:

What are the implications, if any, of the Rule Against Perpetuities for the interest? 6.
Executory Interests FSD, FSSCS, 3rd Party C.
Anexecutory interest is a future interest, held by a third party transferee (i.e. someone other than the
grantee), which either cuts off another's interest or begins after the natural termination of a preceding
estate. An executory interest vests upon any condition subsequent except the natural termination of the
original grantee's rights. In other words, an executory interest is any future interest held by a third party
that isn't a remainder.

Executory interests usually arise when a grantor gives property to one person, provided that they use it
a certain way. If the person fails to use it properly, the property transfers to a third party.

There are two different types of executory interests: shiftingandspringing. Executory limitations
transferring ownership from the grantor to a third party are called springing executory interests, and
those that transfer from the grantee to a third party are called shifting executory interests.

An executory interest is a future interest created in a transferee that must cut short or
divest another estate or interest in order to become a possessory estate. For example, if
A conveys property to A, but if B returns from France, then to B, A has a form of fee
simple that may potentially endure forever; in order to become a possessory estate, Bs
interest must cut short As fee simple, so B has an executory interest.
The remainder or executory interest in real property can arise only through express
language in a valid deed or will, not through implication.
Remainders and executory interests may be freely transferred in most states. However,
some states still insist that contingent remainders and executory interests cannot be
transferred by an inter vivos conveyance.
Property Page 28
transferred by an inter vivos conveyance.
Consequences of the Distinction Between Remainders and Executory Interests [178-179]
At common law, the distinction was important. For example, the Rule in Shelleys Case
applied to remainders, but not to executory interests.
Shifting (one that divests the transferee) 1.
A shifting executory interest cuts short someone other than the grantor.
here, B has a shifting executory interest, and A has a fee simple subject to this shifting executory
interest.

A shifting executory interest may be premised on any event, irrespective of whether that event is
under the control of one party or the other, or if it is an external event under the control of
neither party.

For example, if O conveys property "To A, but if B returns from Florida within the next year, to B";
For example, a conveyance "To A, but if the property is ever used as a commercial dairy, to B" would
leave A in control of the condition; so long as A does not use the property in the proscribed manner it
will remain hers.

if B is able to fulfill the condition, B will get the property irrespective of what A does. Finally, the
interest may shift based on a wholly external event, for example, "To A, but if the Chicago Cubs
win the World Series, to B".

Conversely, a conveyance "To A, but if the B receives a law degree, to B" places B entirely in control of
the dispensation of the property;

A has a life estate.

B has an executory interest, because his interest does not vest unless A's life estate
terminates due to the 'unnatural' condition subsequent. The interest is shifting, because if A
drinks, then the property "shifts" from one grantee to another. If A never drinks on the
property, then A will retain ownership, and on A's death the property will go to O, or the
heirs of O

Example: "O grants Blackacre to A for life, but if A ever drinks alcohol, then Blackacre immediately
goes to B."

If the conveyance to A is for a limited time, or for the life of A, then the condition triggering the
executory interest must occur within that time, or the property will return to the grantor.

What are the characteristics of this interest? A.

What wording can/must be used to create the interest? B.
What are the present interests that this future interest can/must follow? C.
Under what conditions can/must the interest become possessory? D.
What control, if any, does the grantee have over the estate at his/her death? E.
What are the implications, if any, of the Rule Against Perpetuities for the
interest?
F.
Springing (one that divests the transferor). 2.
A springing executory interest cuts short the grantor of the property. For example, if O conveys property
To A, if and when he marries; here, A has a springing executory interest, and O has a fee
simple subject to this springing executory interest.
Suppose B is 15 years old.
Analysis (O): O has areversion(see above), since A might die before B reaches 25.
Analysis (A): A has a life estate.
Analysis (B): B has an executory interest, because his interest does not vest until he reaches 25, a
condition that is unrelated to the expiration of A's interest. If A lives until B is 25, B's interest will
vest absolutely. If not, the interest is springing, because when B reaches 25 possession of
Blackacre will "spring" from the grantor O, who will have taken possession when A died.

Example: "O grants Blackacre to A for life, then to B if B reaches the age of 25 years."
What are the characteristics of this interest? A.
What wording can/must be used to create the interest? B.
What are the present interests that this future interest can/must follow? C.
Under what conditions can/must the interest become possessory? D.
What control, if any, does the grantee have over the estate at his/her death? E.
What are the implications, if any, of the Rule Against Perpetuities for the
interest?
F.
Property Page 29
interest?
Limitations on the creation of executory interests
The grantor never retains an ultimate future interest when there is an executory condition present. If
the executory condition is never met, the original grantee retains the interest, while if the condition is
met, the interest transfers to a third party. However, the grantor may have a future possessory interest.

Executory interests are subject to the rule against perpetuities, which disqualifies any interest that can
vest more than twenty-one years after the death of some person who was living at the time the interest
was created.

Thus, a property can not be conveyed "to A and her heirs, but if alcohol is consumed on the
property, to B and his heirs". Because A's heirs may hew to the condition for generations, causing
a violation centuries after the condition was set down and creating chaos in efforts to shift title to
the appropriate heirs of B.

Third party beneficiaries of executory interests cannot alienate them, since the interests are
contingent upon a condition subsequent, so the interest is not guaranteed to vest.

However, if all of the potential vesting beneficiaries are named, the rule will never be violated.
The Rule Against Perpetuities: At Common Law [183-194]
[A] The Rule in Context
The common law version of the Rule is: No interest is good unless it must vest, if at all,
not later than twenty-one years after some life in being at the creation of the interest. To
comply with the Rule, it must be logically provable that within the specified period a
covered contingent interest will either vest (that is, change into a vested interest or
present estate) or forever fail to vest (that is, never vest after the period ends), based only
Allows people who are making gifts of property to control it
"if I own it, I control it / my control should end at a certain point" Strikes a balance between
these two views

Executory Interests A.
Vested Subject to Open B.
Contingent Remainders C.
The Rule Against Perpetuities applies to:
When does the rule apply?
If you can guarantee that the gift will vest, then the gift is valid.
If you cannot guarantee that the gift will vest, then gift is void.
If there is a perpetuity issue in the will, then its stricken from the will.
on facts existing when the future interest becomes effective.
[B] Application of the Rule
For example, assume O conveys to A for life, then to the first child of A to reach age
30.
Assume that A is alive when the conveyance takes effect, but that A has never had
children.
A potential unborn child (As first child to reach age 30) receives a contingent
remainder under this language, which is a type of interest subject to the Rule.
For instance, A might have a child, B, one year after the conveyance; suppose O and A then die.
Twenty-nine years later, if B survives, her contingent remainder will vest by becoming a present
estate.

Bs interest is deemed invalid under the Ruleat the time of Os conveyancebecause such
vestingwould come too late (more than 21 years after O and A, the lives in being, died).

It cannot be logically proven that this interest is valid.

The Rule Against Perpetuities: Modern Reforms (3)
(1) adopting a wait and see approach (that is, waiting until the end of the relevant period to see
if the interest in fact vested or forever failed to vest); and/or
(2) permitting reformation to validate the interest if consistent with the transferors intent.
Most states have modified the common law Rule by:
The Doctrine of Worthier Title
Provides that where there is an intervivos conveyance of land/ by a grantor to a person/ with a
limitation/ over to the grantor's own heirs/ either by way of remainder/ or executory interest/ no future
interest in the heirs is created; rather, a reversion is retained by the grantor

Traditionally, if an owner transferred real property to one party, and by the same instrument transferred
the following remainder or executory interest to the owners heirs, then, under this doctrine, the owner
received a reversion and the heirs received nothing. Today the doctrine is virtually obsolete in the
United States.

Property Page 30
United States.
"remainder to the heirs of O" contingent remainder because they have to meet this condx
Under this rule, that remainder creates a reversion to O
O conveys BlackAcre " to A for life, remainder to the heirs of O"
Who gets hurt? O has a legal interest and can sell the property. But if you're worried about creditors,
you dont want the property getting back to you.

The Rule in Shelleys Case + merger

(1) created a life estate or fee tail in real property in one
person and
(2) also created a remainder in fee simple in that persons heirs, and
(3) the estate and remainder were both legal or both equitable
Under this rule, if a deed or will:
then the future interest belonged to that person, not the persons heirs. This rule has been abolished
in all but two states.
Contingent remainder in heirs
Life estate to a person, then remainder to their heirs
Combine, gives Fee Simple Absolute to A while he's alive so he can voluntarily sell it
Can get around this rule: "to A for life, remainder to A's issues"
Shelley's case only applies when you say "to his heirs"
Under TRISC, this becomes a fee simple absolute in A
"to A for life, remainder to the heirs of A"
Applies to one situationLife estate + contingent remainder
The Destructibility Doctrine (eliminated on the theory that it goes against the intentions of the donor)
At common law, a legal contingent remainder in real property was extinguished if it failed to vest when
the preceding freehold estate ended. Today almost all states have abandoned this doctrine.

O conveys BlackAcre "to A for life, then to B and her heirs if B reaches 21." if at A's death B is
under the age of 21, B's remainder is destroyed. O now has the right of possession.

This doctrine eliminates gaps

**Contingencies must be satisfied prior to the expiration of the prior estate
Example 19 (page 242)
A remainder in land is destroyed if it does not vest at or before the termination of the preceeding
freehold estate

Contingent remainders could also be destroyed in another way. English courts held that the life estate
could be terminated before the life tenant's death by forfeiture or merger. The life tenant therefore had
the power to destroy contingent remainders whenever he wished.

The doctrine of merger provides that if the life estate and the next vested estate in fee simple come into
the hands of one person, the lesser estate is merged into the larger

O conveys WhiteAcre "to A for life, then to B and her heirs if B survives A." A conveys his life
estate to O; the life estate merges into the reversion, destroying B's contingent remainder.

Symphony Space v. Pergola

Example 20
The courts extended the doctrine to situations where the life estate was followed by a contingent
remainder and a reversion.

Cause of action/remedy sought: Symphony is seeking declaratory judgment against Pergola for
Pergola's exercising of an option that violated the Rule against Perpetuities.
Issue(s): Under property law, are options to purchase commercial property exempt from the prohibition
against remote vesting embodied in NY's RAP?
Holding: No. The court said because an exception for commercial options finds no support in NY law, all
commercial option agreements are not exempt from the statutory RAP.
Rule: The statutory RAP measures exclusively by the passage of time, while the common law rule
evaluates the reasonableness of the restraint based on its duration, purpose and designated method for
fixing the purchase price (latter method is used to consider the option agreement).
Did court avoid issues?: The doctrine of separability states that the court in Symphony Space could have
treated each potential vesting period as a separate option, so instead of one option with four
possibilities, there could have been four separate options. Note that inSymphony Space the court had
the authority to simply strike out the offending clause of the option.
Dicta: The court will not use the "wait and see" doctrine, as the option could have vested after
expiration of the 21-year RAP, as it offends the rule.
Common Law Co-Ownership 275-291
Concurrent Interests
Property Page 31
Concurrent Interests
Circumstances when you own property in fee simple absolute at the same time with someone else
Three [3] Types of Concurrent Interests
Concurrent Interests: Allow you to own property with someone at the same time
Tenancy in Common I.
This is the default if you dont specify otherwise
Note: If you dont want the co-owner to get the property, go with this interest because you can
control what happens to the property at your death

NO SURVIVORSHIP RIGHTS PASSES BY WILL OR INTESTACY

You can sell it
Under a tenancy in common, creditors can access your share in life and at your death
DONT NEED CONSENT of the co-owner
This interest is freely alienable in life
There can be UNEVEN SHARES [disproportionate shares]
Each tenant has FULL POSSESSORY RIGHTS
*** AVAILABLE TO UMARRIED PERSONS
Any owner can own under a tenancy in common
Joint Tenancy II.
Example: "if A dies, B gets the entire property"
SURVIVORSHIP RIGHTS NO CONTROL AT YOUR DEATH
CAN'T WILL AWAY A JOINT TENANCY
Example: husband and wife own a piece of property. When one dies, other owns clean
title to the property.

Joint tenancy NOT SUBJECT TO PROBATE

Exception: creditor's have full rights when the person in debt is living
CREDITORS OUT OF LUCK
Rationale: Artificial entities can't be outlived
Note: Tenant's must be NATURAL PEOPLE
Example: A, B and C are joint tenants. When A severe's his interest, it does not affect B and
C's. Now B and C still have a joint tenancy, split 50/50.

Note: When a tenant severe's his interest, it does not affect the other owner's interest
DON'T NEED CO-OWNER'S CONSENT TO SEVERE THE JOINT TENANCY, and may SEVERE JOINT TENANCY
WHILE YOU'RE ALIVE

Time: all tenants must acquire the interest at the same time A.
Title: the same document has to give tenants the interest B.
Interest: all tenants must have equal shares/identical interests C.
Possession: each tenant must have right to possession of the whole D.
Note: If the property is re-conveyed it DOES NOT BECOME A JOINT TENANCY AGAIN
***If one unity is severed, the joint tenancy turns into a tenancy in common.
4 unities must exist to create a Joint Tenancy
Tenancy in Entirety III.
Note: must be married at the time when the title is acquired.
ONLY HUSBAND AND WIFE CAN HAVE THIS
NEED CONSENT OF THE SPOUSE TO CONVEY THIS INTEREST
If both of the joint tenants die in the same accident, the property is NOT split in half
If you murder the other joint tenant, can you inherit the property? If you get a criminal
penalty ,then you forfeit your right to surviviorship. However, you can keep your share of
the property, you just dont get the other joint tenant's share.

Problems on page 278

Exceptions:
Under tenancy in entirety, ONLY JOINT CREDITORS of both spouses HAVE ACCESS TO THE PROPERTY
D became a tenant in common, C gets 2/3 as a joint tenant. B and H are out of luck. It doesnt matter if
there is a will, you can't control a property in joint tenancy after death.

A and B are joint tenants, C owns half.

Problems on page 288
B now owns the entire thing, B can also revoke the 10 year lease because now A has no interest in the
building, so now C is out of luck

Problem on page 289

Note: the estate can still enforce the agreement
Joint tenancy was severed once the house was sold, so after the death of W, H has the whole thing. Died
still owning as a joint tenant.

Property Page 32
Riddle v. Harmon
Rule: one joint tenant may unilaterally sever the joint tenancy without the use of an intermediary
device.

Rejected the rationale of the Clark case because it rests on a common law notion whose reason for
existence vanished about the time that grant deed and title companies replaced colorful dirt clod
ceremonies as the way to transfer title to real property.

Harms v. Sprague
Rule: a mortgage given by one joint tenant of his interest in the property does not sever joint tenancy;
the other joint tenant's right of survivorship is operative upon the death of the joint tenant who
mortgaged his interest, therefore the surviving joint tenant becomes the sole owner of the estate in its
entirety.

View: a mortgage was a conveyance of a legal estate vesting title to the property in the
mortgage. Therefore a joint tenancy may be severed by one of the joint tenants mortgaging
his interest to a stranger.

Title Theory: Traditional view of mortgage theories

View: joint tenancy is not severed when one joint tenant executes a mortgage on his
interest in the property, since the unity of title has been preserved.

5 Rules
Lien Theory
Theories of Mortgages
Note: Any contract the party signs, governs.
Contractual agreements between the parties trump all of the variables 1.
Duty of care A.
Duty of Loyalty B.
Exception: They cannot commit waste, and they don't have the following obligations:
Co-owners are not fiduciaries to each other 2.
Exception: when there is an ouster [when other tenant is prevented from entering the
property] then you can claim adverse possession.
Rationale: it cannot be adverse if you're a co-owner A.
You cannot adversely possess from your co-owners unless there is an ouster 3.
Exception: But if there's a 3rd party paying rent, co-tenants must share profits equally
(based on fractional ownership) Unless, there is a contract between the parties which
specifies otherwise.
Rationale: You dont have to pay rent because you also own the property
Rent Rule: There is no obligation to pay rent to your co-owners even if you are in full possession 4.
Property tax i.
Note: these two types of expenses are given priority because you have to pay these to
keep the property, therefore you can force the co-tenants to pay.
Mortgage ii.
Contribution: at the time the expense comes up, you can force the co-tenant to contribute only
for two expenses
A.
Sale i.
Note: you get credit for repairs made when the property is sold and you might also be
able to account for income.
Accounting: an action for an accounting settles debts among each other ii.
Credit: you get credit for the money you put in when there is a: B.
Exception: you may get money at the sale of the property
Risk: you take the risk of a decline in value.
Improvements: these are optional, so you're not entitled to credit or contribution for
improvements.
C.
Expenses: Two Types of Transactions: 5.
What is the difference between repairs and improvements?
Repairs are necessary and you're guaranteed to get the money you spent. Also, because it is a credit you
dont have to wait until the property is sold to get money.
Expenses
Property tax i)
Mortgage ii)
Contribution I.
Sale i)
Credit II.
Property Page 33
Accounting ii)
Repairs iii)
Partitions
Improvements III.
Partition in Sale: land is sold and the proceeds are split 1.
Partition in Kind: physical partition of the property itself 2.
Delfino v. Vealencis
Two Types of Partitions
may practically be physically divided ,and
the interests of all the owners would be promoted if a partition in kind was ordered
Rule: A partition in kind was ordered because the property in this case:
Is the partition in kind impossible or impractical?
Does the partition by sale promote the interest of both of the parties?
Partition by Sale Inquiry:
Note: anyone who owns a small fraction of the property may bring a partition action
Spiller v. Mackereth
As long as access is not denied to the co-tenants, any activity of possession and occupancy of the
building was consistent with rights of ownership

***unless there has been an ouster, the co-tenant in possession does not have to pay a
proportionate share of the rental value to the co-tenants out of possession

If there is an ouster, you get half of the fair market value

If there is a 3rd party tenant, co-tenants split the rent proceeds
Rule: Tenants in common are seized per my et per tout. Each has an equal right to occupy and unless the
one in actual possession denies the other the right to enter, or agrees to pay rent, nothing can be
claimed for such occupation

Contract
Ouster
Swartzbaugh v. Sampson
Exceptions:
Both co-tenants entitled to equal possession so they dont have to pay rent
Issue(s): Under CA property law, can one joint tenant who has not joined in the leases executed by her
cotenant and another maintain an action to cancel the leases where the lessee is in exclusive possession
of the leased property?
Holding: No. The leases from Swartzbaugh to Sampson are not null and void but valid and existing
contracts giving to Sampson the same right to the possession of the leased property that Swartzbaugh
had. It follows they cannot be canceled by PL in this action.
Court's Rationale/Reasoning: This would be the first time CA had decided something like this. An
estate in joint tenancy can be severed by destroying one or more of the necessary unities, either by
operation of law, by death, by voluntary or certain involuntary acts of the joint tenants, or by certain
acts or omissions of one joint tenant w/o consent of the other.
Ordinarily one joint tenant cannot maintain an action against their cotenant for rent for occupancy of
the property or for profits derived from their own labor. But, one joint tenant may compel the tenant in
possession to account for rents collected from third parties. The general rule of law coming from these
cases is that neither a joint tenant nor a tenant in common can do any act to the prejudice of his
cotenants in their estate.
A joint tenant has the right, during the existence of their estate, to convey mortgage of subject to a
mechanic's lien an equal share of the joint property, so long as the interest they are conveying is their
own, and no more.
Rule: The act of one joint tenant without express or implied authority from or the consent of his
cotenant cannot bind or prejudicially affect the rights of the latter.
A lessee in possession of real property under a lease cannot dispute his landlord's title nor can he hold
adversely to him while holding under the lease.
An adverse possessor must claim the property in fee and a lessee holding under a lease cannot avail
himself of the claim of adverse possession.
Joint Tenancy and other property Bank Accounts
Situations where the property held as a joint tenancy is a bank account.
What kind of language confers this type of joint tenancy relationship?
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Situations where the property held as a joint tenancy is a bank account.
True joint tenancy: with the right of survivorship, both tenants have possession of the
account. When one co-tenant dies, the money in the account goes to the surviving co-
tenant. Either person on the account can take money out.

Agency: this is a convenience account. When the account holder dies, the other person on
the account doesnt get the money.

Payable on Death Account: there is no present conveyance (access to the account). But
upon death, the person who is on the account receives the money. There is a contract with
the bank. This avoids probate.

Marital Property
"joint tenancy with rights of survivorship"
What kind of language confers this type of joint tenancy relationship?
Two Approaches
Rests on the notion that husband and wife are a marital partnership and should share their
acquests equally

Pros: good for dividing the property upon divorce

This has less effect on the division of property at the death of a spouse
Community Property: used in continental Europe. Also used by 8-10 states and has significant tax
benefits.
I.
Common Law Property: this is used by the rest of the states. California is the biggest one. II.
What does the Common Law Property System mean during marriage?
Upon marriage, the property became the husband's property and was subject to his creditors.
Old law [state law]: women/ men had equal rights to own property when they weren't married
Married Women's Property Act: Gave couples 4 options
Married Women's Property Acts: these statutes removed the disabilities of coverture and gave a
married woman, like a single woman, control over all of her property. Such property was her separate
property, immune from her husband's debts. The wife also gained control of all of her earnings outside
of the home.

Purpose of the MWPA: Prompted by a desire to protect a wife's property from her creditors, as well as
to give her legal autonomy. But did not give the wife FULL AUTONOMY.

Can own property as tenancy in common a.

Can own property as joint tenancy b.
Tenancy in entirety need consent to convey your interest i.
Tenancy in entiretyNeed the 5th unity of marriage: true of voluntary and involuntary
transfers
ii.
Tenancy in entiretyCreditors cannot get the land iii.
Can own property in tenancy in the entirety c.
Continue to own property: no restriction on husband/wife keeping property solely on husband or wife's
name.

Sawada v. Endo
An estate by the entirety is not subject to the claims of the creditors of one of the
spouses during their joint lives.
Rule: An estate by the entirety is not subject to the claims of the creditors of one of the spouses during
their joint lives. Therefore, the conveyance of marital property by both tenants in entirety is not in fraud
in their action with creditors.
Rationale: MWPA gave the woman rights to property in a marriage. Neither husband nor wife has a
separate divisible interest in the property held by the entirety that can be conveyed or reached by
execution. The indivisibility of the estate, except by joint action of the spouses, is an indispensable
feature of the tenancy by the entirety. MD case law held that a lien on property which was from a
tenancy by the entirety was the equivalent of conversion into joint tenancy or tenancy in common, if the
debt was only against one partner.
Hawaii was a Group III jurisdiction: An attempted conveyance by either spouse is wholly void, and the
estate may not be subjected to the separate debts of one spouse.
What is the creditor is the federal government, do they get to override the tenancy in entirety?
Yes if its a tax liability. If it is a tax question, then federal law rules.
What about bankruptcy? It varies, its still an open question.
Principle #1: if guilty party is using the property to commit a crime, then they lose the property
Principle #2: protection of an innocent owner; if the owner is innocent they won't lose the
property

Forfeiture: Most provisions

Property Page 35
property
U.S. v. 1500
Put the federal government in the husband's shoes. The wife still had all her property rights, but
the husband was substituted with the government.**But kept husband as measuring life for
survivorship

Purpose of the statute: to forfeit the guilty spouse's interest and to protect that of the innocent
spouse.

Rule: 21 USC 881: real property that is used, or intended to be used, in any manner or part, to commit a
drug crime punishable by more than 1 year prison, shall be subject to forfeiture, except that no property
SHALL be forfeited when there is another tenant that did not know about or consent to the drug crime.
U.S. v. Lee
The court rules against the government, distinguishing 1500 on the ground that the home had not been
used for the husband's criminal activity. Therefore, the government could not execute a forfeiture
against the home because it was not being used for the criminal activity.
[Entirely state law]
[Property law = state law]
Termination of Marriage by Divorce
Old System: kept assets in the name of whoever owned/acquired it. The wealthier spouse paid alimony.
New System: principle of equitable distribution
Equitable vs. Equal
Equal: 50/50 split
Equitable: more of a subjective balance to see what's actually fair
"What's Equitable" Analysis
What is equitable? 1.
What assets are subject to division? 2.
When a marriage ends in divorce
They must be objectively fair and without coercion
After full disclosure
Note: Both usually cannot be proven
Courts are differential to contracts signed before marriage
Does away with alimony as a permanent support. Alimony is only used as a source of income until
the ex-spouse gets back on their feet

Factors: age, skill, earning capacity etc..

Departure from equal distribution to equitable distribution
Divorce (Modern Rules)
Things earned DURING the marriage
Some states WILL NOT divide this type of property, especially if the marriage was short
Pre-marital property
Some states say if you inherited it during the marriage-- it's divisible
Other states say if you inherited it during the marriage -- it's not divisible
Inheritances
Non-real estate property
In Re Marriage of Graham
What property is subject to division?
Rule: For an item to be classified as property, it must embrace "everything that has an exchangeable
value or which goes to make up wealth or estate." (Black's Law Dictionary)
Rationale:
The underlying purpose of the Act itself is to provide an equitable solution for problems associated with
the division of property at the dissolution of marriage.

The court looks to the word "property," to see how it was meant to be interpreted in the statute. The
court determines the legislature had a broad meaning in mind, but some limit must be put on the
word. So, they look it up. After determining the rule that property is anything that has an exchangeable
value or which goes to make up wealth or estate, the court looks to apply the facts here.

A degree is not something which, according to the court, can be exchanged for money, is not able to be
Property Page 36
A degree is not something which, according to the court, can be exchanged for money, is not able to be
purchased with money, there is no exchange value, it is personal to the holder, it terminates on the
death of the holder and is not inheritable, cannot be assigned, sold, conveyed or pledged. It is also an
advanced degree which takes lots of time and hard work to acquire, things which are not exchangeable
either.

There would be an equitable remedy for petitioner if she were to seek relief in the form of alimony by
showing need, but that is not the case here. In such a situation, petitioner would be able to receive
money based on the future income of the ex-husband. Here, there are no assets which were acquired,
and thus there is nothing to split from the proceeds of the marriage upon dissolution.

Issue with this remedy: may not have receipts, issues of employment
Elkus v. Elkus
RemedyReimbursement: pay you back for what you invested in your ex-spouse's earning of the
degree. But will not look forward.

NJ: Agrees with the court but they have more sympathy for people in the plaintiff/wife's position.
Rule: to the extent that the defendant's contributions and efforts led to an increase in the value of the
plaintiff's career, this appreciation was a product of the marital partnership, and, therefore, marital
property subject to equitable distribution.
Rationale: Medical licenses have been held to enhance the earning capacity of their holders, so as to
enable the other spouse who made a direct or indirect contribution to their acquisition, to share the
value as part of an equitable distribution. Really, anything in which the other partner has something to
do with in terms of contributing to the other's success deserves a share ("joint expenditures, as per
Domestic Relations Law). DF had a direct effect by working with PL as her voice coach, photographer,
traveling with her, sacrificing his career for hers. Thus, he is entitled to an equitable share of the
tenancy in the entirety. These are contributions to the career or career potential, as she stands to make
a lot more money in the future.
Additionally, PL's earnings increased 275 fold from the time of their marriage. She was hired by the
Opera at the time they were married, but her career was just budding at that time. Since then it has
really taken off, thanks in some part to her husband, and he should not go free of
compensation. Further, DF mainly took care of the kids, coached PL, critiqued PL, and is entitled to the
appreciation in her value as a performer.
What happens when marriage ends in death?
Inheritances covered by state law in which decedent was domiciled at the time of death.
Exception: if there is a contract
If there is no formal divorce, these rules apply
This only applied to real estate
Got tricky if the widow wasnt the mom of the eldest son-- because now she has 1/3
Old Rule: gave all of your property to the eldest son, the wife got a life estate in 1/3 of the property
1/3 interest in all of your spouse's real estate
Applies equally to husband and wife
New Rule: Dower
Mimicks what they think people would do if there was a will
The surviving spouse will usually get everything
Now: if you die without a will, intestacy statutes govern
Its not very generous because it assumes that there is a reason you didnt leave
anything to your spouse

The elective share ordinarily applies only to property that the decedent spouse
owns at death.

The elective share usually doesnt apply to property held by the decedent and
another in joint tenancy nor to life insurance proceeds.

The elective share can be defeated by lifetime gifts of property

Complications: How do you get around leaving your spouse something through
elective share? Go into a joint tenancy with someone else, and deplete your
assets through this joint tenancy. OR get a life insurance policy and dont name
your spouse as a beneficiary

Elective share: minimum amount you must leave to your spouse. The surviving spouse
can renounce the will and elect to take a statutory share, which is usually 1/2 or 1/3 or
some other fractional share

The value of the property is credited against the elective share-share amount
Looks at the wealth of the surviving spouse
Has a sliding scale based on the length of the marriage
Uniform Probate Code: the surviving spouse is entitled to keep any property that the
will devised to him or her.

If the will doesnt give the surviving spouse anything

If you die with a will
Property Page 37
Has a sliding scale based on the length of the marriage
Community Property Continued
Example: Lottery winnings
Exceptions [3]
It does not matter who earned or acquired it
Anything you inherit during your marriage stays separate 1.
Gifts are separate property 2.
Through an agreement, you can keep the property separate 3.
Rationale for the Exceptions
Some property is personal
Anything earned by the couple during marriage is "community"
In the community property states, none of them have "tenancy in entirety"
Neither spouse acting alone can change the property, both husband and wife have to agree
Divorce: property is either divided equally or equitably
Rationale: you've shared everything 50/50
Death: no elective share for surviving spouse (decedent spouse has 1/2 control over the property,
surviving spouse keeps the other 1/2)

Survivor has no claim over pre-marital property

There is debate about earnings on this property
Pre-marital property is kept separate
Big tax break
Rules on Migrating/Movement
As a general rule, there is a big tax advantage in holding property as a community
Won't change unless there is an agreement
If you move to a state that doesn't acknowledge community property, it is okay, the classification
won't change

Note: inheritance rights are governed by the law of the state you're domiciled in at the time of
your death

Changes to Family Law that may affect property

Property is classified when acquired 1.
Very few states recognize common law marriage, so you cannot claim property under this status
Two Part Test in finding a Common Law Marriage
Couple intended to be husband and wife (interior/state of mind) 1.
Exception: Doesn't apply to unnamed co-habitants because there was no intent to
hold yourselves out as husband and wife
Connection between being married and having property
States will honor express contracts
Implied contracts are different
Domestic partnerships is a question of statutory law
Goodridge v. Department of Health
Must represent themselves as husband and wife (exterior) 2.
A number of legal and economic benefits, including property rights are tied to marriage
"barring an individual from the protections, benefits, and obligations of civil marriage solely because
that person would marry a person of the same sex violates the Massachusetts constitution.

Landlord/Tenant Law
Local law for the most part
Big connection to contract law
A lease is both a conveyance and a contract
A lease transfers a possessory interest in land and creates property rights, it also contains a
number of promises

A lease is a contract between the parties governing your behavior and relationship with one
another

What is a lease?
Property Page 38
Once you have a lease, landlord/tenant law kicks in
another
It matters because leases give rise to the landlord-tenant relationship, which carries with it certain
incidents- certain rights and duties and liabilities and remedies- that do not attach to other
relationships

Why does it matter whether an arrangement amounts to a lease?

Landlords typically use form leases-- standardized documents offered to all tenants on a
take-it-or-leave-it basis with no negotiation over terms

Types of Leases [4]

The written lease can be a long document. Unlike a deed, by which all of the seller's interest is
conveyed to the buyer forever, a lease contemplates a continuing relationship between landlord
and tenant. Thus, deeds are commonly brief, whereas leases can be wordy and full of clauses to
handle various contingencies.

Deed vs. Lease

Term of Years (Most formal lease) I.
What do you agree to under this lease?
You agree to a fixed period of time. A 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. This type of lease has a definite start and end date. The
period can be one day, two months, five years, or 3,000 years. There is no limit on the number of years
permitted.
What kind of notice is needed to terminate a "Term of Years"?
It can be terminable upon the happening of some event or condition. BUT because a term of years
states from the outset when it will terminate, no notice of termination is necessary.
Does death impact the "Term of Years" lease?
No, death will not terminate a "Term of Years" lease. If the tenant or the landlord dies, their estates are
liable.
REMEMBER THERE IS NO DURATION LIMIT ON A "TERM OF YEARS" LEASE
Periodic Tenancies (slightly more informal) II.
How long do periodic tenancies last?
Note: month to month duration is the most common
When do you have to give notice of termination?
A periodic tenancy is a lease for a period of some fixed duration that continues for succeeding periods
until either the landlord or tenant gives notice of termination.
Example: if T is a year-to-year tenant beginning January 1 2000, L must receive notice
of termination before July 1, 2000, or T can be held over for another period- until
January 1, 2002.
What happens if the landlord/tenant dies?
Half a year's [6 months] notice is required to terminate a year-to-year tenancy. For any periodic tenancy
of less than a year, notice of termination must be given equal to the length of the period not to exceed 6
months. The notice must terminate the tenancy on the final day of the period, not in the middle of the
tenancy.
Note: most leases are "Periodic" or "Term of Years"
There is no effect. You must finish the current term
How long does it last?
As long as both parties desire
What kind of notice is needed to terminate?
None
What happens if the landlord or tenant dies?
The lease is terminated
Garner v. Gerrish
Tenancy at Will Lease (least formal) III.
Property Page 39
Issue(s): Under NY property law, does a lease which grants the tenant the right to terminate the
agreement at a date of his choice create a determinable life tenancy on behalf of the tenant or does it
merely establish a tenancy at will?
Holding: The lease expressly and unambiguously grants to the tenant the right to terminate, and does
not reserve to the landlord a similar right.
Court's Rationale/Reasoning: At common law, the right for the landlord to terminate the lease would
clearly have been implied. Livery of seisin was still required for a life tenancy, because it created a fee
interest. If there was no livery, then a tenancy at will was created, hence the landlord could terminate at
will also.
Rejected this common law rule, preferring to literally interpret the terms written in the lease, which made
mention only of the tenants rights to terminate the lease. Hence, a life tenancy terminable at the will of the
tenant was created. This is what is expressly and unambiguously written in the lease.
Rule: When a person leases property to the other with the terminology "...as long as" is indicative of a
determinable life tenancy, and can only be terminated at the will of the grantee or at the grantee's death.
The Tenancy at Sufferance: Holdovers
New term: periodic tenancy or renewal for original term, but no more than one year.
Crechale & Polles Inc. v. Smith
Here, the landlord must choose either to evict or enter into a new term
The tenancy at sufferance arises when a tenant remains in possession (holds over) after termination of
the tenancy. Common law rules give the landlord confronted with a holdover essentially two options --
evictions (plus damages), or consent (express or implied) to the creation of a new tenancy.
Issue(s): Under MS property law, did the holdover create a renewal of the lease when PL cashed the first
rent check appellee sent in to him?
Holding: Yes. Acts as such manifested an acceptance of the month to month agreement.
Court's Rationale/Reasoning: PL was not responsible for the rent as a holdover tenant. When DF
remained in the premises after the lease expired, PL had a choice to treat him as either a trespasser and
evict him, or treat him as a tenant. After having elected not to accept DF as tenants, PL can not at a later
date, after failing to pursue his remedy of eviction, change his election and hold them for a new term. His
election once exercised is binding on the tenant and the landlord.
Possible effects: Landlords will be bound by their first election in dealing with tenants who remain after
their lease expires.
Selection of Tenants (Herein of Unlawful Discrimination)
Rule: Once a landlord elects to treat a tenant as a trespasser and refuses to extend a lease on a month
to month basis, fails to pursue his remedy of ejecting the tenant, and accepts monthly checks for rent
due, he in effect agrees to the extension of the lease on a month to month basis. Had one of two options:
eviction or acceptance & create new tenancy.
14th Amendment: prohibits state action thats discriminating. It was narrow (race, national
origin). ONLY APPLIES TO STATE ACTION.

Civil Rights Act of 1866: bared discrimination in leases, personal property etc it doesnt
include exceptions and ONLY APPLIES TO DISCRIMINATION BASED ON RACE

Also note the two antecedents to the Fair Housing Act:

Landlords once free to discriminate as they wished in selecting tenants, are today constrained in a
number of respects. Perhaps the most significant constraints are imposed by the Federal Fair Housing
Act, 42 U.S.C.A 3601-3619, 3631 originally enacted in 1968 and amended several times since.
Fair Housing Act Analysis (3 parts)
What are the exemptions? 1.
OCCUPATION IS NOT A PROTECTED CLASS a.
What are the protected classes? 2.
Who bears the burden of proof? a.
What are the exemptions? 1.
What are the prohibited acts? 3.
Senior housing, when there are residents 62+, as long as there is
one person over 55 years in 80% of the units---exempt
i)
Housing for elders may exclude families with children. For example,
housing may be designated for people ages 62 years or older only. Also
housing that serves people age 55 and older, where 80% of the housing
ii)
Housing for "seniors": "seniors" = 55+. The purpose of this exemption is that due to familial
status. Familial status prohibits discrimination on those who have children under the age of 18
years.
A.
Property Page 40
is occupied by at least one person who is 55 or older, is exempt
Note: the exemption doesnt apply if you use a realtor or past
advertisements
Single Family Housing: A private individual owner who does not own more than three single family
houses, if the owner does not use the services of a broker, and if the owner does not use
discriminatory advertising, and if the owner has not participated in three or more rental or sales
transactions in a one year period;
B.
Religious Housing: A religious organization may give preference to persons of the same religion
(unless restricted on account of race, color or national origin) in non-commercial transactions;
C.
Private Clubs: A private club may provide lodgings for members in non-commercial transactions; D.
Owner Occupied Dwelling: rooms or units in dwellings containing living quarters occupied or intended
to be occupied by no more than four families living independently of each other; An owner who owns
four units or less and lives in one unit
E.
Note: None of these exemptions apply to advertising. In addition, the Fair Housing Act does
not protect juvenile offenders, sex offenders, persons who illegally use controlled
substances, and persons with disabilities who pose a significant danger to others.
Who are the protected classes? 2.
(a) To refuse to sell or rent after the making of a bona fide offer, or to refuse to negotiate for the sale or rental of, or
otherwise make unavailable or deny, a dwelling to any person because of race, color, religion, sex, familial status, or
national origin.
(b) To discriminate against any person in the terms, conditions, or privileges of sale or rental of a dwelling, or in the
provision of services or facilities in connection therewith, because of race, color, religion, sex, familial status, or
national origin.
(c) To make, print, or publish, or cause to be made, printed, or published any notice, statement, or advertisement,
with respect to the sale or rental of a dwelling that indicates any preference, limitation, or discrimination based on
race, color, religion, sex, handicap, familial status, or national origin, or an intention to make any such preference,
limitation, or discrimination.
(d) To represent to any person because of race, color, religion, sex, handicap, familial status, or national origin that
any dwelling is not available for inspection, sale, or rental when such dwelling is in fact so available.
What are the prohibited acts? 3.
Note: Argue that the prohibited act occurred because of one of these reasons
(a) To refuse to sell or rent after the making of a bona fide offer, or to refuse to negotiate for the sale or rental
of, or otherwise make unavailable or deny, a dwelling to any person because of race, color, religion, sex,
familial status, or national origin.
(b) To discriminate against any person in the terms, conditions, or privileges of sale or rental of a dwelling, or
in the provision of services or facilities in connection therewith, because of race, color, religion, sex, familial
status, or national origin.
(c) To make, print, or publish, or cause to be made, printed, or published any notice, statement, or
advertisement, with respect to the sale or rental of a dwelling that indicates any preference, limitation, or
discrimination based on race, color, religion, sex, handicap, familial status, or national origin, or an intention to
make any such preference, limitation, or discrimination.
(d) To represent to any person because of race, color, religion, sex, handicap, familial status, or national origin
that any dwelling is not available for inspection, sale, or rental when such dwelling is in fact so available.
(e) For profit, to induce or attempt to induce any person to sell or rent any dwelling by representations
regarding the entry or prospective entry into the neighborhood of a person or persons of a particular race,
color, religion, sex, handicap, familial status, or national origin.
(A) that buyer or renter,
(B) a person residing in or intending to reside in that dwelling after it is so sold,
rented, or made available; or
(C) any person associated with that buyer or renter.
(1) To discriminate in the sale or rental, or to otherwise make unavailable or deny, a dwelling to
any buyer or renter because of a handicap of--
(A) that person; or
(2) To discriminate against any person in the terms, conditions, or privileges of sale or rental of a
dwelling, or in the provision of services or facilities in connection with such dwelling, because of a
handicap of--
(f)
As made applicable by section 803 of this title and except as exempted by sections 803(b) and 807 of this title, it shall
be unlawful--
Property Page 41
(B) a person residing in or intending to reside in that dwelling after it is so sold,
rented, or made available; or
(C) any person associated with that person.
(A) a refusal to permit, at the expense of the handicapped person, reasonable
modifications of existing premises occupied or to be occupied by such person if
such modifications may be necessary to afford such person full enjoyment of the
premises, except that, in the case of a rental, the landlord may where it is
reasonable to do so condition permission for a modification on the renter agreeing
to restore the interior of the premises to the condition that existed before the
modification, reasonable wear and tear excepted.
(B) a refusal to make reasonable accommodations in rules, policies, practices, or
services, when such accommodations may be necessary to afford such person
equal opportunity to use and enjoy a dwelling; or
(i) the public use and common use portions of such dwellings are readily
accessible to and usable by handicapped persons;
(ii) all the doors designed to allow passage into and within all premises
within such dwellings are sufficiently wide to allow passage by handicapped
persons in wheelchairs; and
(I) an accessible route into and through the dwelling;
(II) light switches, electrical outlets, thermostats, and other
environmental controls in accessible locations;
(III) reinforcements in bathroom walls to allow later installation of grab
bars; and
(IV) usable kitchens and bathrooms such that an individual in a
wheelchair can maneuver about the space.
(iii) all premises within such dwellings contain the following features of
adaptive design:
(C) in connection with the design and construction of covered multifamily dwellings
for first occupancy after the date that is 30 months after the date of enactment of
the Fair Housing Amendments Act of 1988, a failure to design and construct those
dwelling in such a manner that--
(3) For purposes of this subsection, discrimination includes--
How to Argue an FHA Case?
Plaintiff has the prima facie burden
Must prove that a prohibited act occurred
Must prove that the act was based on one of the discriminations
Who bears the burden of proof?
Defend with a bona fide alternate reason, say the act occurred because of a legitimate reason
Plaintiff then has to show that what the defendant asserted was a pre-text
How does the defendant respond?
Delivery of Possession
Not: discrimination based on employment doesnt apply. But if people in that employment are
immigrants-- thats a problem

When the prior tenant doesnt leave, who has to get them off the land?
[2] Rules
Note: the courts which hold that there is such an implied covenant do not extend the period
beyond the day when the lessee's term begins. If after that day a stranger trespasses upon the
property and wrongfully obtains or withholds possession of it from the lessee, his remedy is
against the stranger and not against the lessor
a.
Believes that the person with the greater knowledge of the first tenant should resolve the issue,
the landlord owns the property so they have the right to evict
b.
Avoids "wait and see" by the landlord by forcing them to make sure he rents to one person
at a time

When does the right to evict kick in? When the lease ends c.
This rule awards expectations because I expect that the premises will be ready and puts that
responsibility on the landlord
d.
English Rule: (landlord) implies a covenant requiring the lessor to put the lessee in possession 1.
What does the landlord owe you? Legal possession-- BUT the tenant has the obligation to evict a.
Justification: the wrongdoer is the holdover tenant, the landlord is not responsible for wrongdoing
of another person
b.
Tenant will be the one with greater incentive, tenant physically present c.
Hannan v. Dusch
American Rule: recognizes that the lessee's legal right to possession, but implies no such duty upon the
lessor as against wrongdoers, are irreconcilable
2.
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Issue(s): Under VA property law, is landlord, who w/o any express covenant as to delivery of possession
leases property to a tenant, required to oust trespassers and wrongdoers so as to have it open for entry
by the tenant at the beginning of the term (is there an implied covenant to deliver possession)?
Holding: No, such a covenant is not implied in a lease, because the lessee has a statutory remedy.
Court's Rationale/Reasoning: English rule v. American rule
English rule - absent any stipulations, every lease has an implied covenant that the landlord shall open
the premises for the entry of the tenant, on the day the lease term begins.
American Rule - Recognizes lessee's legal right to possession, but does not imply a duty on the lessor.
Here, we have the American rule, and state provides PL with a statute to remedy the situation. PL's cause
of action was against the holdover tenant. PL chose not to utilize this remedy.
Rule: A taking of both the American and English rules: there is a statutory method for lessees who did not
have delivery expressly stated in their agreement. There is an implied covenant in such cases on the part
of the landlord to assure to the tenant the legal right of possession -- that at the beginning of the tenant's
term there is no legal obstacle to the right of possession.
Note: The majority rule in America is the English rule.
Subleases and Assignments
Landlords dont like subleases and assignments because it puts the landlord in a position that they did
not negotiate. Tenants like subleases and assignments because they dont have to enter into a new
landlord relationship if they can't finish their lease.
Sublease: contemplates the original tenant coming back. In a sublease, the lessee is said to have
retained a reversion; the right to possession goes back to (reverts) to hi mat the end of the period
designated in the transfer.

Note: the landlord and tenant are never consecutive

LL x T x T1 x T x LL x Sublease
Assignment: does not contemplate that the original tenant is coming back. An 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. If the lessee transfers anything less than his entire interest, a sublease
results.

LL x T x T1 x LL x Assignment
Another approach to the sublease-assignment problem: consider the intention of the parties. The actual
words used- sublease or assignment- are not conclusive, though they may be persuasive

What happens if the primary lease between the landlord and the original tenant is
prematurely terminated?
Two Relationships When You Sign a Rental Lease
It depends. If the landlord exercises a power to forfeit the primary lease because of some breach by the
original tenant, then the landlord is entitled to possession as against sublessees and assignees. But if the
original tenant merely gives up the primary lease voluntarily- surrenders it, the rghts of possession of
sublessees and assignees may remain in tact. In the case of a sublease, for example, surrender by the
original tenant 9the sublessor) leaves the sublessee holding of the landlord. They are in privity of estate.
Recognizes that its a transfer of land
Conveyance of land: privity of estate A.
Contract B.
Privity of Estate Obligations
Obligation to pay rent runs with the land A.
Obligations connected with the use of the land B.
Example: agreement to walk your dog (not connected to the land)
Things that aren't connected to use of the land cannot be enforced
If yes privity of estate
Ask yourself: Is this obligation tied to the use of the land?
Privity of Contract
As a general rule, LL/T1, T1/T2, NOT T2/LL
Anything connected to the agreement
Who is in privity of contract?
Assignment transfers away everything you have, once made, all connected by privity of estate
LL can sue T1 because they're in privity of contract and estate
LL can sue T2 because theyre in privity of estate
Difference between assignment
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Assignments are better for the land
Cant enforce contractual obligations against T2 practical issue
If T1 is assigning the lease, is he going to leave contact info? Theoretically, this is a downside
for the landlord, he may not be able to find T1

Subleases
(chart in notes)
Who is in privity of estate?
LL/T1, T1/T2, T1/LL
Because there is a point where possession with the landlord is concurrent
The landlord is only in a relationship with T1
LL complains against T1, who breaches the contract and T2 becomes a trespasser
Most jurisdictions say there are tort obligations
T2 has rights that flow from T1
In a sublease, cant go after T2 for rent, but in assignments you can go after T1 & T2
Ernst v. Conditt
No legal relationship between LL and T2
Issue(s): Under TN property law, did DF's interest in the land constitute a sublease or an assignment?
Holding: No. This was an assignment and not a sublease, hence DF was liable to PL.
Court's Rationale/Reasoning: PL claims this was a sublet, as the use of the words in the amendment
to the lease states, and hence Rodgers remains personally liable to the PL for the debt
If the transfer is a sublease, no privity of estate exists, hence DF could not be liable to PL, but if
assignment, privity exists between PL and DF and DF would be liable directly and primarily for the
amount of the judgment.
2 tests for assignment v. sublease: 1- assignment arises when the lessee transfers his entire interest
under the lease. If the lessee transfers anything less, a sublease is created and lessee retained a
reversion. 2 - Intention of the parties - the actual words used are persuasive but not conclusive.
Here, the lessee Rodgers transferred his entire interest to DF and the words sublease must be read in
light of the surrounding circumstances. The fact that Rodgers remained liable was not sufficient to
establish that he had a reversionary interest in the property. The assignment of the lease means that
Rodgers' privity of estate was broken, but his privity of contract remains intact and enforceable.
Conditt was saying he was only a subtenant and so there was no privity of estate between him and the LL
and so even if there was a duty of service (to pay rent), he did not owe it to the LL because he was just a
subtenant. Since this is an action at law and not equity, all the requirements for a covenant need to be
satisfied.
The court said what interest was transferred is the important thing because the labels are just shorthand
terms to indicate whether the entire interest was being transferred or not and here they misused the label.
There are certain limits that are placed on a LL (certain things that a LL cannot do even though he has
fee simple). This can be limited by the exercise of the state's police power. With fee simple, landowner
cannot remove lateral support from adjoining landowners.
Rule: Leases must clearly and unambiguously have intended a sublease.
Kendall v. Ernest Pestana
Issue(s): Under CA property law, can the lessor arbitrarily refuse a proposed assignment, no matter how
appropriate the assignment or unreasonable the lessor is being, when a lease contains such an approval
clause?
Holding: No. Policies against restraints on alienation and the implied contractual duty of good faith and
fair dealing show that there is no commercially reasonable objection to the assignee or the proposed use.
Court's Rationale/Reasoning: The law favors free alienability, and in California, leasehold interests are
freely alienable. Contractual restrictions on alienability of leaseholds are permitted, because the lessor
has a reversionary interest, and can derive income from it, and should be allowed to protect these
interests.
1 - Based on conveyance of a lease - Unreasonable restraints on alienation can be caused
by the arbitrary withholding of consent, and modern society requires reasonable alienation of
commercial space.
2 - Based on contract of the lease, good faith and fair dealing should be inherent in any
contract. When a contract gives one party a discretionary power over the other party, a duty
is imposed to exercise the discretion in good faith.
Rejects the four policy arguments of the majority rule:
1 - Lessor having exercised a personal choice need look no further than his
lessee, the one he chose for his own land. This is undermined already by the
Such a clause is to protect the landowner in his ownership and operation of the property, not
for economic protection. It is not reasonable to deny consent in order to charge higher rent.
Majority of jurisdictions hold that where a lease contains an approval clause, the lessor may arbitrarily
refuse to approve a proposed assignee. Minority, but growing view is that consent may be withheld only
where the lessor has a commercially reasonable objection to the assignment, even absent provisions that
the assignment will not be unreasonably withheld. Minority view adopted because:
Property Page 44
lessee, the one he chose for his own land. This is undermined already by the
duty to mitigate damages and find another T for a T who abandoned. There are
also numerous reasonable reasons to withhold consent, and the original lessee
is also still the guarantor of the assignee.
2 - Lessee could have bargained for a reasonableness clause, if they didn't,
tough, it shouldn't be rewritten by the court. The language though is not clear and
unambiguous, and it can be inferred the parties intended reasonableness, just as
likely as if they didn't.
3 - Stare decisis - however, the majority viewpoint is far from universal, and times
change.
4 - the lessor, not the lessee, is entitled to any benefit from increased property
values. This would give the lessor more than he bargained for. Lessors can build
rent increases into a lease. Lessee takes a risk he could be paying too much for
the property, if chose wisely and got value, he should be able to enjoy it.
Besides, lessor will get the increased value when the lease expires.
Possible Effects: Greater clarity in the drafting of provisions within a lease.
How do you define "commercially justifiable?"
Rule: Minority rule: where a commercial lease provides for assignment only with the acceptance of the
prior lessor, such consent may be withheld only where the lessor has a commercially reasonable
objection to the assignee or the proposed use
If you find an issue with the person's credit
If income is the basis
Two reasons that always pass this test
The court said that a moral opposition is not a commercially justifiable reason
What if the moral judgment was not a commercially justifiable reason?
Contract principles: if you reserve a right, must do it in good faith
The Tenant Who Defaults
The Tenant in Possession I.
Berg v. Wiley
(the modern view on self-help)
Whether something is 'commercially justifiable" is subjective
The Court's reasoning here involves a commercial lease, but the court's reasoning would appear to apply
to all leases, residential and commercial alike.
Issue(s): Under MN property law, was the LL entitled to self help, i.e., could he retake the premises
without judicial process, as stated in the lease, or was LL wrong in locking out PL?
Facts
11-11-70: DF enters into 5 year lease with DF brother, who runs a pool hall bar type place. Lease to
begin 12-1-70.
-
Early 1971: DF takes assignment from brother, and on 5-1-71 opened a Family Affair Restaurant. -
6-73 & 7-73: DF claims PL is in violation of the lease for making changes to the building structure without
permission, by the unsanitary conditions of the kitchen.
-
6-29-73: Dated letter from DF ordering PL to repair 8 items and comply with the Minnesota Dept. of -
Health, or DF would retake the premises on 7-13-73, as section 7 of the lease provides. PL continued to
operate the restaurant without making the repairs. PL and DF had several petty squabbles.
-
7-13-73: At close of business, PL put sign in window "Closed for Remodeling". Earlier that day DF had
attempted to change the locks and was ordered away by PL.
-
7-16-73: DF enters the premises without PL's knowledge and changes the locks at the advice of his
attorney. PL returns and is unable to enter
-
7-27-73: PL brings this suit. -
8-1-73: DF re-lets to another tenant, who was originally a party to this suit, but was dismissed at the close
of PL's case.
-
Holding: Yes. Under the new rule, DF should have sought judicial help in barring PL from premises.
Court's Rationale/Reasoning:
1-The LL is legally entitled to possession (i.e. a tenant holds over or the tenant breaches a lease
containing a re-entry clause)
2- the LL's means of reentry are peaceable.
Common Law rule: LL may rightfully use self-help to retake possession if two conditions are met.
Property Page 45
containing a re-entry clause)
2- the LL's means of reentry are peaceable.
Lower court held LL reentry was not peaceable - he picked a lock, under circumstances likely to provoke
a breach of the peace. LL had a statute to provide remedy in 3 to 10 days.
Modern trend departs completely from the common law rule, stating that self -help is never available to
dispossess a tenant in possession, and has not abandoned or surrendered the premises. Even under
common law rule, judgment would have been affirmed for Berg. Now that LL's only means to dispossess
a tenant are via judicial channels, DF would have surely lost.
Hence, because LL failed to resort to judicial remedies, his lockout of tenant was wrongful as a matter of
law.
Possible effects: Self-help no longer allowed, Tenants rights to possession strengthened and clauses
regarding the retaking of the property for breach of the lease now require judicial intervention.
Rule: LL's are no longer allowed to retake the premises without judicial process.
Policy: it has long been the policy of our law to discourage landlords from taking the law into their own
hands, and our decisions and statutory law have looked with disfavor upon any use of self -help to
dispossess a tenant in circumstances which are likely to result in breaches of the peace

"we conclude, as did the trial court, that because Wiley failed to resort to judicial remedies against
Berg's holding possession adversely to Wiley's claim of breach of the lease, his lockout of Berg was
wrongful as a matter of law."

A Note on Self-Help
"To make clear our departure from the common-law rule for the benefit of future landlords and tenants,
we hold that, subsequent to our decision in this case, the only lawful means to dispossess a tenant who
has not abandoned nor voluntarily surrendered but who claims possession adversely to a landlord's
claim of breach of a written lease is by resort to the judicial process

At one time, self help was a very important remedy for the landlord who sought to recover possession of
leased premises, because the only alternative was cumbersome, time consuming, common law
procedure called ejectment

The time and expense associated with ejectment ill -served the landlord's needs; self help, on the other
hand, was problematic from the viewpoint of landlords, tenants, and society generally.

A response to this mix of shortcomings began to develop in the 19th century- legislative provision for
summary proceedings (sometimes called forcible entry and detainer statutes)

Summary proceedings are intended to be just what the name implies- a quick and efficient means by
which to recover possession (and in some jurisdictions, rent) after termination of a tenancy.

The Tenant Who Has Abandoned Possession II.

Somer v. Kridel
Cause of action/remedy sought: The following is an action at law for damages.
Facts: Case 1: DF entered into a two year lease with PL, never took possession and bailed out a couple
of days into the lease by a letter to PL, who did not respond. A third party was ready, willing and able to
take possession of and lease that same apt., but PL refused. PL did not show apt. to anyone from 5-1-72
until 8-1-73, and took in a new T 9-1-73. PL brought this suit 8-72, prior to re-letting.
Case 2: PL Riverview entered into lease with DF 12/27/72 for two years from 2-1-73 till 1-31-75. DF paid
rent through 1-31-74, and vacated in 2-74. PL filed complaint for back rent 10-31-74 for rent from 2-74
through 10-31-74.
Issue(s): Under NJ property law, is a landlord bound to mitigate damages much like standard contract
law, by making reasonable efforts to re-let an apartment wrongfully vacated by a tenant when the tenant
also defaults?
Holding: Yes. LL's do have an obligation to make a reasonable effort to mitigate damages when a tenant
abandons.
Court's Rationale/Reasoning: The tenant here received a present possessory estate. The LL had the
future interest.
What was the traditional rule when the tenant abandoned? The LL had no duty to mitigate. As soon as
the tenant abandoned, he was in debt to the LL. Now a modern modification was rather than make the
entire rent due and owing upon entering the lease, the rent is spread out over the term (typically payable
monthly).
An acceleration clause takes away delayed payments, so the amount is payable all immediately. It was
due and owing to the LL immediately so the LL was able to enforce the lease. The LL might not want to
take possession, because then he would be in the position of accepting surrender. LL was still entitled to
rent.
Property Page 46
rent.
LL's in this case relied on the traditional doctrine and sued for the entire rent.
The court said that an ordinary residential lease (particularly where it is for an apt) is more of a lease for
goods and service than a lease for land and so should be treated more like a K and so the K doctrine of
mitigation applies to it. LL thus had the obligation of showing that he mitigated before he could recover
damages. LL had an inventory of apts so he could establish he was a lost volume seller, but LL here had
to show that they were not unique to do so.
"We therefore find that plaintiff could have avoided the damages which eventually accrued, and
that the defendant was relieved of his duty to continue paying rent"

In assessing whether the landlord has satisfactorily carried his burden, the trial court shall
consider, among other factors, whether the landlord, either personally or through an
agency, offered or showed the apartment to any prospective tenants, or advertised it in
local newspapers.

Additionally the tenant may attempt to rebut such evidence by showing that he proffered
suitable tenants who were rejected.

However, there is no standard formula for measuring whether the landlord has utilized
satisfactory efforts in attempting to mitigate damages, and each case must be jusged upon
its own facts.

The tenant cannot by his own wrongdoing impose a duty on the landlord
The tenant has "purchased" an interest in real estate (and, presumably, is stuck with
it)

The landlord should not be forced into a personal relationship with a new tenant he
does not wish to accept

The landlord should not be required to seek out new tenants "continually"
Various justifications are given for the rule, forsaken in the Sommer case, that a landlord is
under no obligation to mitigate the damages in the event of abandonment by the tenant:

"modern notions of fairness and equity"

Considerations of efficiency are also pertinent
A mitigation requirement thus returns the property to productive use rather than
allowing it to remain idle

"if the landlord is encouraged to let the property remain unoccupied, the
possibility of physical damage to the property through accident or vandalism is
increased"

The court in Sommer held that the landlord must treat abandoned premises as
part of his "vacant stock"; presumably, then, the landlord must make at least
the same effort to rent the abandoned premises as he makes to rent other
vacant units

It helps prevent property damage

Justifications for the "duty to mitigate" rule
Under the intent test, one considers whether the landlord's actions are
inconsistent with or repugnant to continuation of the original lease. The
length of the new tenancy, whether alterations have been made, the new
rent, and similar factors will be suggestive but not conclusive.

Suppose, then, that tenant abandons- an implied offer of surrender. What acts
of the landlord might be regarded as an acceptance? The answer to this
question is generally said to turn on the intent of the landlord in retaking
possession, without regard to whether the tenant is on notice that any reletting
is on the tenant's account

Surrender may, of course, come about explicitly- tenant expressly offers landlord
expressly accepts.

"Surrender" is a term of art, one that connotes quite neatly a tenant's offer to end a
tenancy- "here, I give up". Surrender terminates a lease, provided, of course, that the
landlord accepts the tenant's offer. If he does- if the surrender is effected- this "extinguishes
the lessee's liability for future rent, but not for accrued rent or for past breaches of other
covenants"

Landlord's Remedies and Security Devices

The landlord shall be required to carry the burden of proving that he used reasonable diligence in
attempting to re-let the premises

Rule: LL's must make a reasonable attempt to mitigate their losses when a T surrenders or abandons
their leased property.
Doctrine of Anticipatory Breach: in some jurisdiction, this remedy is available by statute. Absent
such a statute, it appears that the anticipatory breach remedy is generally unavailable, at least as
to failure to pay rent. In the case of a tenant's abandonment, however, repudiation is clearcut,
and here anticipatory breach will apply if the jurisdiction in question extends that contract
doctrine to leases.
a.
Rent and damages: if the tenant is in possession, the landlord may also terminate the lease and recover
possession.
1.
Security deposits: the purpose of such deposits is to protect the landlord in the event a tenant a.
Security Devices: 2.
Property Page 47
In practice the landlord has an incentive to imagine all sorts of reasons
why he should retain the deposit, and with money in hand, he has
leverage that permits abuse. This has led to some reform. As a result, the
landlord must submit an itemized list of deductions from a deposit;
penalties are levied for violations.

Central Concern of Security Deposits

Security deposits: the purpose of such deposits is to protect the landlord in the event a tenant
defaults in rent, damages the premises, or otherwise breaches the lease. But there is some
evidence that things get bent in practice. In principle, the landlord is obliged to return to the
tenant, upon termination of the lease, the deposit, less any amounts necessary to compensate for
defaults by the tenant.
a.
"Advance rent": this has been successful, a number of jurisdictions permit the landlord
to retain such a deposit on termination for default, sometimes relying on the theory
that rent is nonapportionable.

A liquidated damages clause is not ideal from the landlord's standpoint.

With such a clause, once default has occurred the tenant has little
incentive to minimize damages. If the landlord attempts to guard against
this shortcoming, with a provision allowing him to hold the tenant for
damages over and above the deposit, the likelihood is that the liquidated
damages will be regarded as a penalty

"Liquidated damages": a deposit may also be characterized as liquidated damages.

This technique might be tolerated when the amount in question is reasonable and
especially when actual damages are difficult to determine.

"Rent acceleration": a provision that upon the tenant's default, all rent for the entire
term is due and payable. Rent acceleration is accepted by a majority of courts. If rent
is accelerated, the landlord usually cannot take possession as well.

Other techniques: landlords have tried various ways, with some success, to avoid the legal
strictures on security deposits. Thus, a lease might characterize a payment as "consideration" or a
"bonus" for execution of the lease.
b.
Duties, Rights, and Remedies (Especially regarding the condition of
the leased premises)
5 Things the Landlord Owes the Tenant
Landlord's Duties; Tenant's Rights and Remedies I.
Health Code
Specific things promised in the lease
Tort obligations
Quiet enjoyment
Express: an express agreement or the use of words which it could be implied was required
Implied: is not implied simply from the relationship of landlord and tenant
Warranty of habitability
The tenant might wish to vacate, or stay but pay less (or no) rent 1.
The tenant (or an invitee of the tenant) might be injured by allegedly defective premises and
claim damages against the landlord in torts
2.
Quiet Enjoyment and Constructive Eviction A.
Disputes between landlords and tenant regarding the condition of the premises arise in essentially two
ways.
Old Rule: couldnt withhold rent if the premises wasnt as promised. You would have to continue to pay
rent and sue later.
Theory Behind Quiet Enjoyment
New Rule: if the landlord doesnt give you the right to quiet enjoyment, you dont have to pay rent.
Anytime you sign a lease, you have a right to quiet enjoyment. If it is breached, it is a constructive
eviction. Part of acting like you are evicted is not paying rent.
Reste Realty Corp. v. Cooper
Facts:
5-13-58 DF leased from PL's predecessor in title commercial office space. -
DF found that due to an improperly graded driveway which ran along side the building, the space
became flooded every time it rained. Donnigan, an officer in the corporate owner and resident
-
Property Page 48
manager, would clean up the water each time it rained, and was aware of the flooding. Donnigan
corrected the problem, and 4-59 DF and PL enter into a new 5 year lease.
Donnigan told Wittman, ultimately his executor, about the flooding and how to correct it. -
3-30-61: Donnigan dies. The flooding starts again, but now no one responds to DF's complaints -
Big meeting gets flooded 12-20-61, and DF forced to flee to a nearby inn. -
12-21-61 DF asks that it be cleaned up, it doesn't get done. -
12-30-61 DF notifies LL and vacates the premises. -
1-19-62 PL acquires the building -
3-31-64 Second lease would have expired. -
11-31-64 PL institutes this action. -
Issue(s): Under NJ property law, did the flooding violate the express covenant in the leases of quiet
enjoyment such that it would constitute constructive eviction, and if so was DF's covenant to pay
rent dependent on the quiet enjoyment covenant?
Holding: Yes. This was a constructive eviction which relieved DF of the liability for the rent claimed
under the lease.
Court's Rationale/Reasoning: Lease stated DF accepted the place in its present condition. DF
relied on the promise that the problem had been corrected in singing the new lease. This latent
defect was external, based on the driveway and the foundation, and not a part of the premises.
PL's breached the express (though it could be an implied) Covenant of Quiet Enjoyment. Trial court
found sufficient evidence that DF's departure from the premises was justifiable.
PL contends that by remaining so long, DF gave up her right to constructive eviction. A reasonable
time depends on the circumstances. Tenants vacate at their own peril, and hence should be given
some latitude. The trial court here found the vacating occurred within a reasonable time.
Possible effects: Covenants of Quiet enjoyment will be implied in commercial leases, and LL's
duty to maintain the usability of the premises is increased.
Rule: Constructive eviction: serves as a substitute for dependency of covenants; Actions of a
landlord that so materially disturb or impair a tenant's enjoyment of the leased premises that the
tenant is effectively forced to move out and terminate the lease without liability for any further rent.
Doctrine of Constructive Eviction
The obligation to pay rent was dependent upon the tenant's having possession undisturbed by the
landlord (or someone claiming through the landlord). If one could characterize a shortcoming in the
leased premises as an unlawful disturbance by the landlord- as a breach of the covenant of quiet
enjoyment implied in all leases- and if the disturbance was so substantial as to amount to eviction, and if
the tenant thereafter abandoned the premises, then it was as though the tenant had been evicted (the
eviction was constructive). And once evicted, of course, the tenant was relieved of the obligation to pay
rent
Under this rule, any act or omission of the landlord or of anyone who acts under authority or legal right
from the landlord, or of someone having superior title to that of the landlord, which renders the
premises substantially unsuitable for the purpose 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
and constitutes a constructive eviction of the tenant.
Example: "if its occurrence follows regularly upon rainstorms and is sufficiently serious in
extent to amount to a substantial interference with use and enjoyment of the premises for
the purpose of the lease, the test for constructive eviction has been met."
The general rule is, of course, that a tenant's right to claim a constructive eviction will be lost if he does
not vacate the premises within a reasonable time after the right comes into existence.
Purpose of the Doctrine of Constructive Eviction
Questions to Ask
The remedy of constructive eviction probably evolved from a desire by the courts to relieve the tenant
from the harsh burden imposed by common law rules which applied principles of caveat emptor to the
letting, rejected an implied warranty of habitability and ordinarily treated undertakings of the landlord
in a lease an independent covenants.
Does your jurisdiction recognize quiet enjoyment? 1.
What constitutes a breach? 2.
Did you behave as if you were constructively evicted (did you leave)? 3.
Property Page 49
Constructive Eviction Analysis
If it is the acts of another tenant, you can make claim that the landlord is liable a.
Acts of omission by a landlord or anyone who acts under the landlord 1.
Must be breached substantially by the landlord 2.
Is it unsuitable for the purposes of which it was leased? 3.
Implied Warranty of Habitability A.
Unlike Quiet Enjoyment, to make this claim-- you dont have to leave
Not every jurisdiction has this
Residences only
Not for casual leases
If your jurisdiction Implied Warranty of Habitability, it can't be waived
Downsides
Show that the place is not habitable because of health reasons and point to a regulation
But violation of a code does present a prima facie case
However, you DONT need a Code to tell you that it is unsafe
The focus has to be on health and safety
The Implied Warranty of Habitability is very different from Quiet Enjoyment.
[A] Nature of Implied Warranty
The Implied Warranty of Habitability: New Common Law [247-254]
In the 1970s, courts began to recognize a new tool in the fight against substandard rental
housing: the implied warranty of habitability. Under this doctrine, each residential lease
is deemed to contain an implied warranty that the landlord will deliver the premises in
habitable condition and maintain them in that condition during the lease term. See, e.g.,
Hilder v. St. Peter, 478 A.2d 202 (Vt. 1984). For example, broken windows, leaky roofs,
[B] Remedies
or rodent infestation normally render a rented dwelling uninhabitable.
In general, the tenant must notify the landlord of the defect and allow a reasonable time
for repairs to be completed. If the landlord fails to act, the tenant may remain in
possession and also: (1) withhold rent; (2) sue for damages; or, in some jurisdictions, (3)
repair the defects and deduct the cost from rent due the landlord. Alternatively, the
tenant may terminate the lease and sue for damages.
Implied Warranty of Habitability: What Can You Get?
Hidler: "damages shall be the difference between the value of the
dwelling as warranted and the value of the dwelling as it exists in its
defective condition"

Some other jurisdictions say "damages are the difference between the
agreed rent and the fair rental value of the premises as they were during
their occupancy in the unsafe, unsanitary or unfit condition"

There is considerable disagreement about how to calculate the rent reductions

or damages:

Typically, a tenant remains in possession but withholds rent. The landlord sues for
possession and back rent, whereupon the tenant asserts breach of the warranty as a
defense. Virtually all jurisdictions permit tenant to raise the defense in a summary eviction
action. If the tenant is successful ,rent is reduced partially or totally (depending on the
degree of the breach), and the tenant may retain possession if he pays whatever reduced
amount is determined. The practical result is usually the same-- the tenant may withhold
rent, retain possession, and have the agreed rent reduced by virtue of the landlord's breach

Back Rent: in full or in part. Juries are usually sympathetic to the tenants.
Note on Remedies: A tenant has the right to assert breach of implied warranty of habitability as a
defense justifying rent withholding, retention of possession and rent abatement. Or breach of implied
warranty of habitability can be asserted to stay in possession, pay rent, and bring an affirmative cause of
action for damages-- presumably measured on one of the bases (depending on the jurisdiction)
described above. In any of the cases, special and consequential damages should also be recoverable.
Property damages
Time/effort that you invested in dealing with the situation
Repairs that you took the initiative to take care of
Compensatory Damages: pay you for what was destroyed
Property Page 50
Repairs that you took the initiative to take care of
Injunctive Relief: by and large, tenant have ignored this remedy. Under this remedy you get whatever it
is that you specifically want. This does not happen to often because the tenant may be forced to stay on
the premises, and therefore this makes it an unfavorable form of relief.

Hilder v. St. Peter

Punitive Damages: (rare) This happens when something is really bad and someone gets sued time after
time.

Rule: We now hold expressly that in the rental of any residential dwelling unit an implied warranty exists
in the lease, whether oral or written, that the landlord will deliver over and maintain, throughout the
period of the tenancy, premises that are safe, clean and fit for human habitation
Rule: we hold that when the landlord is notified of the defect but fails to repair it within a reasonable
amount of time, and the tenant subsequently repairs the defect, the tenant may deduct the expense of
the repair from future rent.
"a willful and wanton or fraudulent breach may be shown "by conduct manifesting personal
ill will, or carried out under circumstances of insult or oppression, or even by conduct
manifesting.a reckless or wanton disregard of *one's+ rights."

There are cases in which the breach is of such a willful and wanton or fraudulent nature as to
make appropriate the award of exemplary damages

Rule: in addition to general damages, we hold that punitive damages may be available to a tenant in the
appropriate case.
Additionally, the implied warranty of habitability covers all latent and patent defects in the essential
facilities of the residential unit. "Essential facilities" are "facilities vital to he use of the premises for the
residential purposes"

A substantial violation of an applicable housing code shall constitute prima facie

evidence that there has been a breach of the warranty of habitability.

One or two minor violations standing alone which do not affect "the health or
safety of the tenant, shall be considered de minimis and not a breach of the
warranty. In addition the landlord will not be liable for defects caused by the
tenant

Analysis the courts may first look to any relevant local or municipal housing Code;
they may also make reference to the minimum housing Code standards
In determining whether there has been a breach of the implied warranty of
habitability, courts should inquire whether the claimed defect has an impact on
the safety or the health of the tenant

The tenant must first show that he or she notified the landlord "of the
deficiency or defect not known to the landlord and [allowed] a reasonable
time for its correction"
1.
In order to bring a cause of action for breach of an implied warranty of
habitability

However, these Codes and standards merely provide a starting point. Not all towns
and municipalities have housing codes, where there are codes, the particular problem
complained of may not be addressed.

The landlord had notice of the previously unknown defect and

failed, within a reasonable time, to repair it, and
1.
The defect, affecting habitability, existed during the time for which
rent was withheld
2.
The tenant must show that
A remedy available to the tenant when there has been a breach of the implied
warranty of habitability is to withhold the payment of future rent.

A tenant who enters into a lease agreement with the knowledge of any defect in the essential facilities
cannot be said to have assumed the risk thereby losing the protection of the warranty. Nor can this
implied warranty of habitability be waived by any written provision in the lease or by oral agreement.

**Under our holding, when a landlord breaches the implied warranty of habitability, the tenant
may withhold future rent, and may also seek damages in the amount of rent previously paid.
*****The doctrine of constructive eviction, wherein the tenant must abandon in order to escape liability
for rent, is no longer viable. When, as in the instant case, the tenant seeks, not to escape rent liability,
but to receive compensatory damages in the amount of rent already paid, abandonment is similarly
unnecessary.
Note: The implied warranty of habitability does not render pointless the doctrine of quiet enjoyment,
constructive eviction and illegal leases.
Property Page 51
The warranty commonly does not apply across the board to all residential leases; single-family
residences might be excluded, for example, or agricultural leases, or long-term leases.

Generally speaking, an "adequate standard of habitability" has to be met, and a breach occurs
when the leased premises are "uninhabitable" in the eyes of a reasonable person. Housing Code
provisions and their violation are compelling but usually not conclusive

THE OBJECTIVE IS SAFE AND HEALTHY HOUSING; SUBSTANTIAL COMPLIANCE IS REQUIRED

The answer depends considerably on the language of the agreement in
question. A covenant that excepts "fair wear and tear" amounts to no ore
than a common law duty. Slightly different wording (say "to keep in good
repair) might be found t enlarge the tenant's obligations.
Transfers of Land
In what respects might a commercial tenant's duty to repair be altered by a
covenant in the lease?

The implied warranty of habitability--which essentially negates the tenant's duty to repair--
is based in part on this view, but bear in mind that the warranty does not apply across the
board to all residential leases, and seldom extends to commercial leases

It is a common view today that the tenant's implied duty to repair no longer makes sense, the
argument being that landlords, not tenants, are generally in the best position to maintain the
property

constructive eviction and illegal leases.

Generally speaking, free and voluntary exchange permits resources, land included, to move to higher
valued uses. But free, here, means unfettered, not costless.
The Land Transaction
Introduction to Buying and Selling Real Estate
The Statute of Frauds requires that all documents dealing with real property be in writing. The
purpose of this was to protect against fraud.

If the real estate transaction is not in writing it is not enforceable

The Statute of Frauds is a binding principle of law that has been adopted in all jurisdictions
Real Estate transactions
Assess how much you can afford to pay
Contact a bank or financial institution to pre-qualify for a loan
Start your search for property
The commission for the broker will typically be paid for by the seller
Consult a broker with access to the Multiple Listing Service
Real estate transaction steps:
May hire an attorney to do this, but in some states, the broker can do this
Once you find a piece of property you want to buy, begin negotiating a purchase and sale agreement
The contract will set forth the legal description of the property, its price, provision for an earnest
money deposit, and the date for the closing or settlement (the transfer of title)

Real estate contracts are almost always executory, meaning that title is not transferred
immediately upon signing the agreement, because both buyers and seller must do certain things
during the time between the contract and closing

The agreement will be done in terms of a form contract

The title search is conducted by either the attorney or a title company
The buyer will need to obtain a title search to satisfy herself and her lender that the seller can convey
good title to the property

Most contracts of sale also contain a mortgage contingency, which provides that if the purchaser cannot
obtain a mortgage loan within a given time, she can rescind the contract and get back her deposit

A second contingency found in many contracts is a clause allowing the buyer to obtain an inspection of
the property and rescind the contract if the cost of remedying the problem exceeds some threshold

The buyers will also typically have an inspector visit the property and apply for a mortgage loan
The title company or the lawyer who does the search will also provide an abstract of title that will
list any encumberances ( such as existing mortgages, liens, rights of way) as well as a listing of the
preceding owners of the property.

Assuming that the title abstract turns up nothing troubling, the transaction moves forward
After the contract has been signed by both parties, either the buyer or the seller will order the title
search

If all of the other contingencies are satisfied, the byer and the seller proceed to the closing and transfer
of title

Pay off any existing loans of the property

Pay the real estate brokers their commission
Pay the legal fees and other fees (such as title insurance)
And pockets the remaining proceeds
The lender provides the proceeds of the loan to the seller, who uses that money and the additional
funds paid by the buyers to

Property Page 52
Brokers
Real estate brokers are often hired by sellers of the property to attract prospective buyers and facilitate
real estate transactions. Real estate brokers are licensed by the state and typically receive a commission,
usually ranging from 6-8% of the actual purchase price, as compensation for their services. Most sellers
enlist brokers to help sell their property. In a listing agreement, the seller authorizes the broker to locate
a buyer on the seller's behalf.
If you're interested in a real estate transaction the 1st step is to get a broker
Who pays? The seller pays because there is a shift taking place.
The broker you go to as a buyer, works for the seller and has a fiduciary duty to the seller
The buyer is the one who brings in the broker
Then make an exclusive listing agreement with the broker
Note: the ultimate duty of the broker is to sell the property at the highest price/market price
Brokers' Duties in the Traditional Brokerage Agreement
listing brokers contract with the seller to sell the property
Selling brokers introduces the buyer to the seller's property
In the traditional regime, real estate brokers represent sellers
Selling brokers have a more indirect relationship with the seller, and receive their compensation
by splitting the listing broker's commission.

Commonly, a prospective buyer initiates the relationship with a selling broker, who then
introduces the buyer to sellers and to listing brokers

By entering into a listing contract with the listing broker, the seller empowers the broker to serve as the
seller's agent in selling the property.

In a traditional brokerage relationship, a listing broker's sole duties owe to the seller, and so too for a
selling broker, whose legal relationship is that of a subagent.

Brokers owe heir principals certain fiduciary duties and are expected to adhere to high ethical and
professional standards.

Specifically, brokers owe their principals the fiduciary duties of loyalty and good faith
While brokers have to deal fairly with both sellers and buyers, they must work entirely on behalf of their
principals (in this case, sellers).

Sellers normally want to sell their property for the highest price the market will bear, so the duties
of listing and selling brokers, in particular, the duty of loyalty and good faith, includes an
obligation to maximize the sale price

Selling brokers even have the duty to report to the seller any information that the buyer shares
with the selling broker.

Further, part of a broker's duty is to follow the principal's directives

Since the listing and selling broker are both the seller's agents, the buyer lacks representation in
the deal.

Alternatives and Supplements to Traditional Brokerage Agreements

The central problem in the traditional residential brokerage arrangement derives from sub-agency.
Buyers' Brokers owe fiduciary duties to prospective buyers/purchasers i.
Buyers' Brokers perform a wide range of services-- arrowing property searches to
particular areas and price ranges, reviewing past sales and records,
ii.
Prospective buyers/purchasers seldom compensate buyers' brokers directly. Instead
buyers' brokers typically share the commission (co-agency agreement) earned by the
listing agent when the property is purchased.
iii.
Since buyers' brokers are not in privity with the listing broker or seller, listing agents
are not compelled to share their commissions with buyers' brokers
iv.
Buyer's Brokers: a relatively recent but increasingly common practice n residential real estate
transactions is for prospective buyers to hire their own agents (buyer's brokers) to help conduct
their search for real estate
A.
Dual agency can be risky for both buyers and sellers because the broker cannot be
exclusively loyal to one party.
i.
the dual agent reveals her dual agency to both the buyer and seller early
on,
a.
and that both parties approve the arrangement. b.
In spite of this danger, many states permit dual agency on the condition that: ii.
Dual Agents: Brokers' duties become complicated if both the buyer and seller in a transaction hire
the same person. A broker in this situation is referred to as a dual agent who owes both the buyer
and seller the same duty of loyalty and good faith.
B.
The majority of states adhere to the traditional view of broker duties to sellers, but its shortcomings
have led to alternative arrangements

The purpose of this disclosure requirement is to make sure that the buyers understand whether
their broker represents them, or represents the seller.

It may also have the effect of encouraging buyers to use buyer's brokers
Disclosure requirements: the law in some states requires brokers to disclose to buyers, in writing, that
they are the seller's agent and not the buyer's

Property Page 53
their broker represents them, or represents the seller.
It may also have the effect of encouraging buyers to use buyer's brokers
The broker's duty to disclose defects are confined to any defects that could be discovered
from a "diligent visual inspection"

Some state legislatures require owners to disclose defects

Brokers have a duty to diligently inspect the property for any hidden defects of which buyer or
broker were unaware, and disclose any such defects to the buyer. Easton

In many states, brokers must also disclose to the buyer any material defects known by the broker and
unknown to the buyer.

****There is no MLS-type database for commercial properties

Brokers must submit listings to MLS, which are then disseminated either on the internet or in hard
copy to other brokers.

It provides an efficient way for prospective buyers to scan the market

The MLS provides maximum exposure for the sellers and is the chief method through which
a listing agent markets a property

Courts have held that it is a per se violation of anti -trust laws for brokers to agree to
fix commission rates

Brokers are prohibited from fixing commission rates

Access to MLS is generally limited to MLS members--but the court has held that an MLS that
denied access to nonmember brokers was an illegal restraint of trade

Types of Listings
MLS is advantageous to both buyers and sellers
Multiple Listing Services: a "facility of cooperation" that allows brokers and appraisers to share
residential listing information, for a fee, on one main database

A listing agreement, or listing, is an employment contract between a real estate broker and seller. The
contracts are usually in writing. If the broker satisfies the obligations set forth in the listing, the seller
pays the broker a commission, usually a percentage of the price at which the property was sold.
A broker earns a commission only if she is the first to procure an offer from a ready, willing, and
able buyer who either matches the terms set forth in the listing or includes terms acceptable to
the seller.

Open listings typically do not have set termination dates

Open Listing: this is the least protective listing that a broker can secure, because the seller retains the
right to sell the property herself or use a different broker without paying the open listing broker a
commission.
A.
Brokers prefer exclusive agency listings to open listings because they do not have to compete
with other brokers during the period of the exclusive listing.

Exclusive agency listings also may appeal to owners, because an owner can avoid paying the
exclusive agent a commission if the owner directly sells the property herself.

Exclusive-Agency Listing: this listing agreement permits only one broker, the exclusive agent, to sell the
property for a specified period of time. The exclusive agent earns a commission for the sale of the
property if she secures a buyer, or even if a separate broker secures a buyer.
B.
The vast majority of listing agreements for residential properties are exclusive rights to sell
Exclusive-right-to-sell Listing: This is the most protective listing that a broker can secure. Under an
exclusive-right-to-sell listing, the owner must pay that broker if ANY buyer purchases the property
during the specified duration of the listing, no matter who found the purchaser.
C.
Note: Traditionally, brokers have been prohibited from drafting legal documents, offering legal advice,
or carrying out property closings.
A "ready, willing, and able" purchaser is typically construed to mean someone who expresses a
desire to buy the property by making and offer for the specified asking price (or some other price
that the owner finds acceptable) and has sufficient assets to proceed with the successful purchase
of the property.

The traditional rule advantages brokers because the broker is entitled to earn a commission even
if the sale fails to close

Under the traditional rule, the broker is entitled to a commission if the seller defaults and also if
the buyer defaults

However, similar to the majority approach, the minority view holds that the broker is still
entitled to a commission if the seller, through her own, frustrating conduct, does not act in
good faith and backs out of the agreement before closing

The custom in the industry is that brokers are not actually paid their commissions until
closing, reflecting the reality that most sellers pay the broker with proceeds from the sale of
the property

The Contract of Sale

A minority view holds that a broker is not entitled to a commission until the property sale closes
When is commission due? The traditional rule is that a broker earns a commission upon bringing to the
seller, a buyer who is ready, willing, and able.
Property Page 54
The Statute of Frauds 1.
The Statute of Frauds sought to make people more secure in their property and their contracts by
making deceitful claims unenforceable.

Sections 1-3 provided that, exept for leases for less than three years, no interest in land could be
created or transferred except by an instrument in writing by the party to be bound thereby
A.
Section 4 provided that no action shall be brought " upon any contract or sale of landsor any
interest in or concerning themunless the agreement upon which such action shall be brought or
some memo or note thereof shall be in writing and signed by the party to be charged therewith
B.
Two provisions are particularly important to the law of real estate
Most law relating to the Statute of Frauds is judge-made law, not statutory
Some have relaxed the requirements, giving effect to oral agreements under circumstances
when fraud seems unlikely or unfairness results

The courts have treated the Statute of Frauds as a principle rather than a statute
Signed by the party to be bound
Describe the real estate
When no price has been agreed upon, a court may imply an agreement to pay a
reasonable price

State the price

To satisfy the Statute of Frauds a memo of sale must, at a minimum, must be:
But the agreement is not enforceable unless the parties refer to the price and indicate the method
they intend to use on fixing it

A contract for sale at "fair market value" is enforceable

Exceptions to the Statute of Frauds 2.
Uniform Land Transactions Act the parties may enter into a binding contract without having agreed on
the price.

Acts held to constitute part performance vary from jurisdiction to jurisdiction, depending on
the court and its views on the doctrine of part performance
i.
Part Performance: The doctrine of part performance originated in equity in suits for specific
performance and in most jurisdictions does not apply to actions at law for damages. Part
performance allows the specific enforcement of oral agreements when particular acts have been
performed by one of the parties to the agreement.
A.
Theories of Part Performance
One view is that the acts of the parties substantially satisfy the evidentiary
requirements of the statute. Thus, if the acts make sense only as having been
performed pursuant to the oral contract, (unequivocally referable to a contract of
sale) they constitute part performance. "Such acts" include the buyer taking
possession and paying all or part of the purchase price or making valuable
improvements
i.
It 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
buyer's taking of possession alone is sufficient to set the court in motion
ii.
Estoppel 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.
i.
Estoppel, has long been recognized as a defense. ii.
Hickey v. Green
Estoppel: Estoppel applies when unconscionable injury would result from denying enforcement of
the oral contract after one party has been induced by the other seriously to change his position in
reliance on the contract.
B.
Facts: Green listed her lot S and Hickey offered to buy it, Green accepted, and the two entered an
oral agreement, with consideration to be a $500 check. Hickeys told Greens they wanted to buy
their property to build on it. Check given to Mrs. Green, but the payee line was blank b/c of
uncertainty as to whom to fill the check out. Hickeys advertised their home for sale, and entered
into an agreement with another party, receiving a $500 check as well. Later that month, Green tells
Hickey she's selling to someone else; a higher price was offered and denied.
Issue(s): Under MA property law, does an oral agreement bar enforcement of the SOF when one
party has relied to its detriment on the property by selling its own house?
Holding: Yes. An exception to the SOF is equitable estoppel; under common law fairness, the
agreement must be enforced to prevent an innocent and injured party from being injured.
Court's Rationale/Reasoning: After noting MA law, Green's conduct was seen as pretty obvious:
she took a better offer after knowing the original buyer wanted to buy and build, and was selling its
old place in order to do so. Thus, there was detrimental reliance on the part of the Hickeys, and a
balance of the equities shows (1) there never was any intent to memorialize the sale by a written
Courts have created 2 principal exceptions:
Property Page 55
balance of the equities shows (1) there never was any intent to memorialize the sale by a written
agreement, as the down payment was expected in check as discussed, (2) there was no
contemplation by Green between buyers, meaning there was no possibility the Hickeys could
misunderstand the circumstances, (3) Hickeys would be severely injured if the agreement were not
enforced b/c they already sold their home to a subsequent purchaser.
Rule: Rule of estoppel as an exception to SOF: A contract for the transfer of an interest in
land may be specifically enforced notwithstanding failure to comply with the SOF if it is
established that the party seeking enforcement, in reasonable reliance on the contract, and
on the continuing assent of the party against whom enforcement is sought, has so changed
his position that injustice can be avoided only by specific performance. (restatement
second)
Case in Notes: Walker v. Ireton: The delivery of a check is not sufficient part performance to
remove the defense of the Statute of Frauds. The sale of the farm, here, did not constitute sufficient
reliance on the oral contract because it was not within the contemplation and understanding of the
parties and not foreseeable by the seller.
"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 a record."

Emails by their quick and casual nature tend to lack in many instances the cautionary and
memorializing functions that a traditional signed writing serves under the Statute of Frauds.

Marketable Title
Note: "E-Sign Act" provides that "a signature, contract or other recordmay not be denied legal
effect, validity, or enforceability solely because it is in electronic form."
If the seller cannot convey a "marketable title", the buyer is entitled to rescind the contract
An implied condition of a contract of sale of land is that the seller must convey to the buyer a
"marketable title".

"Marketable title' is "a title not subject to such reasonable doubt as would create a just apprehension of
its validity in the 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

In general, marketable title is title free from reasonable doubt, but not from every
doubt. For example, title is unmarketable if the seller does not own the estate he purports
to be selling or if his title is subject to any lien, easement, or other encumbrance.
Contracts for Sale Continued.
Caveat Emptor Fraud Misrepresentation Statutory Disclosure General Disclosure Warranty
Contract: A document that starts the land transfer. These contracts have to be in writing (Statute of
Frauds)
Substantive Side of Contracts
Real Estate Contracts : the purpose of these contracts is to get you to closing, and to exchange money
and the deed.
What Obligations do the Parties Take on in Regards to the Condition of the Property?
The doctrine of caveat emptor requires that a buyer act prudently to assess the fitness
and value of his purchase and operates to bar the purchaser who fails to exercise due
care from seeking the equitable remedy of recission

Caveat Emptor: "take the property as is". (Old Rule)

This is state law
The new rules impose greater obligations on the seller. As a general rule, UNLESS YOU'RE THE
BUILDERNo warranties

Moving Away from Caveat Emptor

Note: Generally, an "as is" clause in a sales contract will be upheld if the defects are reasonably
discoverable and there is no fraud. But if there is a fraudulent representation or concealment of
information by the seller, the buyer is not bound by the "as is" clause.
Move #1
Fraud is "actively telling the buyer a lie"
(this was not a big move)
Fraud: applied laws of fraud to real estate transactions.
Move #2
Property Page 56
Move #2
"affirmative misrepresentation": false impression when answering a question
Therefore, there is liability for giving false impressions about the premises
There has to be misrepresentation about a "material" element
Misrepresentation: When there is something the seller knows, but the buyer doesnt and the seller does
not disclose the information.

Move #3
Example: Telling the potential buyer whether there is lead on the premises
If you do not disclose honestly, then you have violated the statute
Statutory Disclosure Requirement: Affirmatively requires you to make certain disclosures
Move #4
Some states say there is a duty to affirmatively disclose all relevant material facts.
Requires the seller to let the buyer know relevant information
Two [2] Materiality Tests
General Disclosure: Do I generally have a duty to make a disclosure of a material fact?
Objective Test: "Whether a reasonable person would attach importance to it in deciding to buy?" 1.
Subjective Test: "Whether the defect affects the value or desirability of the property to the buyer?" 2.
Note: Most jurisdictions go with the objective test because it is easier to apply and holds the buyer liable
for a general failure to disclose.
Stambovsky v. Ackley (The Duty to Disclose Defects)
Note: 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 subject transaction, nondisclosure constitutes a basis
for rescission as a matter of equity.
Facts: DF had publicized the fact that the house was haunted over the nine years she lived there. DF
failed to disclose this fact to PL upon entering into the contract for sale of the home. DF claims the
contract merger and as-is clause bars return of the deposit, and Caveat Emptor (Let the buyer beware).
Issue(s): Under NY property law, did the seller's actions in causing the house's reputation severely impair
the value of the contract, such that DF had a duty to inform the PL?
Holding: Yes, DF informed the public at large and owed at least as much to DF. Court modified
judgment, reinstating the first cause of the action for PL rescission.
Court's Rationale/Reasoning: Moved by the spirit of equity...New York adheres to Caveat Emptor and
imposes no duty upon the vendor to disclose, unless there is a fiduciary relationship, or some conduct on
the part of the seller which constitutes active concealment.
The home's reputation could not be ascertained upon reasonable inspection of the premises.
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, nondisclosure constitutes a basis for rescission as a matter of equity.
They entered into a K "as is." This means that there are no warranties and no
representations. Purchaser is obligated to buy once he signs in an "as-is" K so he has a duty to inspect it
before he buys it.
1) a fiduciary duty arising from a confidential relationship and
2) active concealment.
Rule: There were 2 requirements for disclosure:
The court makes its own requirement and says there is a defect which the buyer could not have known of
( a latent defect). A latent defect known to the seller (particularly one the seller created) must be
disclosed to the buyer if the buyer could not discover it with due diligence.
Analysis When There is a Defect (Objective)
Condition which has been created by the seller A.
Materially impairs the value of the contract B.
Peculiarly within the seller's knowledge or unlikely to be discovered C.
Example: If the roof collapses a year after the sale, the seller does not owe the buyer
anything as long as the buyer was not lied to.
Not giving warranty for the condition of the property
What happens when someone discloses everything they know, the sale goes through & then a
defect shows up?
Property Page 57
anything as long as the buyer was not lied to.
Implied Warranty of Quality
A warranty may be imposed if you buy from a **builder** and not a layperson.
At common law, the builder who constructed a new home and then sold it to a buyer had
no liability for defects, even if the home was negligently built. Today, however, most
jurisdictions hold thatas a matter of lawan implied warranty accompanies the sale of
a new home by a builder, developer, or other merchant of housing. The warranty
provides that the house has been constructed in a workmanlike manner and is fit for
human habitation.
Lempke v. Dagenais
Issue(s): Under NH property law, does there needs to be privity of K for a subsequent purchaser to sue a
contractor for latent defects which cause solely economic harm?
Holding: No. Privity of K is not needed for a subsequent purchaser to sue a builder of contractor under
an implied warranty theory for latent defects which manifest themselves within a reasonable time after
purchase and which causes economic harm.
Court's Rationale/Reasoning: The court first looked at the Ellis v. Morris case in which they denied
subsequent purchasers recovery in tort and under implied warranty for economic loss. The court found
that the practice of denying the recovery to subsequent purchasers in tort stood, so did away with that
claim and only considered the implied warranty issue.
Then to see which law governed, the court looked at courts that found implied warranty based on tort,
then those that found that implied warranty is based in contract, and then others that said there is a hybrid
of tort and contract. Then the court said there are other courts which find that implied warranty exists
independently and the imposition of it is a matter of public policy
("implied warranties are not created by an agreement between the parties but are impose by law on the
basis of public policy"). Then the court looked at numerous jurisdictions which found that privity was
unnecessary.
The court said to require privity would defeat the purpose of an implied warranty of good workmanship
and leave the innocent homeowners without a remedy.
1) latent defects will not manifest themselves for a considerable period of time after the house
has been sold to a subsequent unsuspecting buyer.
The court then outlined numerous practical and policy reasons for its holding that there did not need to be
privity. They were:
2) Society is changing and an ordinary buyer is not in a position to discover hidden defects
3) Subsequent purchaser has little opportunity to inspect and little experience and knowledge
about construction
4) The builder is obliged to construct the home in a workmanlike manner and the extension to a
subsequent purchaser will not take him by surprise.
5) Inserting a first purchaser as to bar recovery might encourage "sham first sales so as to
insulate builders from liability."
The court then looked at economic policy in that the builder has superior knowledge and experience in
the construction of houses and so is better positioned that the purchaser to evaluate and guard against
financial risks posed by latent defects.
The court then looked at the issue of economic loss and found that there should be no distinction
between economic loss and personal injury because a person should not have to have personal injury in
order to recover.
Rule: The court outlined limitations as to privity:
1) no privity necessary only when there are latent defects which manifest themselves after
purchase and were not discoverable by inspection before purchase and
2) They are discovered in a reasonable period of time and
3) The customary standard for workmen (that they use customary skill and care) is met
4) The burden of proof is on the P to show that the defects were caused by the D
5) The D (builder) has defenses such as wear & tear or that previous owners made substantial
changes.
Note:
Patent Defect: a defect that you can see with the naked eye
Latent Defect: something that is hidden, that you can't see with the naked eye.
Warranty of Fitness for a Particular Purpose
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Warranty of Fitness for a Particular Purpose
***The buyer must give explicit notification
Doctrine of Merger
Obligation on the seller, if the buyer discloses that he wants the home for a specific purpose, to let the
buyer know if the house is or isn't fit for the particular purpose it is being sought for,
The buyer can no longer sue the seller on promises in the contract of sale not contained in
the deed, but must sue the seller on the warranties, if any, contained in the deed.

An old doctrine says that when a buyer accepts a deed, the buyer is deemed to be satisfied that all of
the contractual obligations have been met. Thus, the contract merges into the deed, and the deed is
deemed the final act of the parties expressing the terms of their agreement.

The merger doctrine principally applies to questions to title or quantity of land

The usual way of avoiding the doctrine is to say the particular obligation of the seller is an
independent or collateral obligation

The merger doctrine is now in disfavor and is becoming riddled with exceptions when the buyer does
not intend to discharge the seller's contractual obligations by acceptance of the deed.

The seller and buyer may bargain about what contract warranties survive the closing, and so provide in
the contract.

But a provision that no warranties survive closing is not valid if the seller has misrepresented a material
fact or committed fraud

Remedies for the Breach of the Sales Contract

Damages A.
Retention of the deposit (sellers) or restitution of the deposit (buyers) B.
This is the most common remedy when the buyer wants the property i.
Specific performance of the contract C.
In the event that the contract for sale is breached, three remedies are available to the non-defaulting
party (buyer or seller)
Note: Generally, the winner may elect which remedy he or she prefers
Kutzin v. Pirnie
Brief Fact Summary
Plaintiffs entered into a contract to sell their house to the defendants. Defendants agreed to purchase
the house and executed a purchase agreement. Defendants paid 10% of the purchase price at the time
they executed the agreement. The defendants did not execute the agreement.
Rule of Law and Holding
Whenever the breaching buyer proves that the deposit exceeds the seller's actual damages suffered as a
result of the breach, the buyer may recover the difference.

In other words, defaulting buyers are entitled to restitution of the deposit money in excess of damages
incurred (minority view)

The general rule, as Kutzin mentioned, holds that when a buyer breaches a contract to purchase land,
the seller may elect to retain the down payment, because of 'the difficulty of estimating actual damages
and the general acceptance of the traditional 10% down payment as a reasonable amount", even if the
sales contract has no liquidated damages provision.

Notes
Damages and timing: The general rule for a party seeking damages for breach of a contract to convey
real estate is the difference between the contract price and the fair market value at the time of the
breach

Behind this general rule is the thought that each piece of real estate is unique, making
damages an inadequate remedy.

Specific performance: this is a judicial order that a breached contract be fulfilled as originally agreed,
this is very common in contracts for the sale of land

Half of jurisdictions in the U.S. follow the Floreau Rule "limit the buyer's recovery to his
down payment + interest and reasonable expenses incurred in investigating the title; only if
the seller has acted in bad faith or has assumed the risk of a failure to secure title, will he be
liable for ordinary contract damages.

Deeds
Seller's breach of title defect: There is a breach if the seller in a real estate contract is unable to convey
marketable title as stipulated in the agreement

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Deeds
The deed is the basic document used to transfer an estate or other interest in land during
the owners lifetime. One who transfers title by deed is a grantor; one who receives title
is a grantee.
In feudal England, a fee simple in land was transferred through an elaborate ritual called
feoffment with livery of seisin. The 1536 Statute of Uses permitted the conveyance of a
fee simple by means of a written instrument, and finally the 1677 Statute of Frauds
mandated that every conveyance of an interest in land be in writing.
Types of Deeds
General Warranty Deed A.
The general warranty deed contains six specific covenants of title that warrant against
For example, the covenant against encumbrances warrants that there are no mortgages,
easements, liens or other encumbrances on the property at the time the deed is delivered.
i.
any defect in the grantors title. The general warranty deed warrants title against all defects in title,
whether they arose before or after the grantor took title
Special Warranty Deed B.
The special warranty deed contains warranties only against the grantor's own acts but not the acts of
others. Thus, if the defect is a mortgage on the land executed by the grantor's predecessors in
ownership, the grantor is not liable. Usually contains the six title covenants found in the general
warranty deed, but applies them only to defects caused by the acts or omissions of the
For example, suppose A, having no title whatever to a parcel of land, purports to i.
convey title to B, and B in turn conveys to C using a special warranty deed; because the
title defect was caused by A, not B, B is not liable to C.
grantor.
Quitclaim Deed C.
This type of deed merely conveys whatever right, title, or interest the grantor may have in the
land.
I.
Requirements for Valid Deed
Essential Deed Components
The quitclaim deed contains no warranties of any kind. It merely conveys whatever the title grantor has,
if any, and if the grantee of a quitclaim deed takes nothing by the deed, the grantee cannot sue the
grantor. By its use, the grantor does not warrant that she owns the property orif she has any title
that her title is good.
in writing
Signed by the grantor
identify the grantor and grantee
"consideration": it is customary to state in a deed that some consideration was paid by the
grantee, in order to raise a presumption that the grantee is a bona fide purchaser entitled to
the protection of the recording acts against prior unrecorded instruments.

"grant" "convey" "give"

Covenants
Because of privacy issues and sometimes the price might change
Note: very rarely do you see the purchase price in the deed
contain words of conveyance
Lot #
Address
Whatever is proper in your jurisdiction
Description of the property: a deed must contain a description of the parcel of land conveyed by
describing its boundaries

Acknowledgement: notary
grantor must deliver the deed to the grantee, and the grantee must accept.
Delivery
A deed is not effective until it is delivered.
In general, a deed must be:
Delivery of a Deed 2 Requirements
Intent A.
Physical Delivery B.
manifest by words or actions an intent that the deed be immediately effective to transfer 1.
In order to deliver a deed, the grantor must
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manifest by words or actions an intent that the deed be immediately effective to transfer 1.
In order to deliver a deed, the grantor must
The typical grantor delivers a deed through the act of physically handing it to the grantee, with
words indicating the required intent.

Yet, as an early English judge observed, As a deed may be delivered to a party without words, so
an interest in land to the grantee.
Acceptance
may a deed be delivered by words without any act of delivery.
In theory, the grantee must accept the deed in order to for the conveyance to be effective.
However, the law presumes that a grantee will accept a beneficial conveyance, so the
Interpretation of Deeds
issue rarely arises.
The central rule in deed interpretation is to follow the intent of the grantor and the
grantee. If ambiguity remains, extrinsic evidence (e.g., statements and conduct of the
Recordation of Deeds
parties) will be considered.
Virtually all deeds are recorded, meaning that the information contained in the deed is
entered into the public land records maintained by the appropriate local government
agency, usually a recorders office. Recordation is not required in order for a deed to be
valid. Yet the prudent grantee will immediately record in order to protect his title against
Effect of Forgery
later claimants.
A forged deed is completely void. It conveys nothing to the grantee or any subsequent
grantee in the chain of title, including any bona fide purchaser. The grantor whose signature is forged to
a deed prevails over all persons, including subsequent bona fide purchasers from the grantee who do
not know the deed is forged.
On the other hand, most courts hold that a deed procured by fraud is voidable by the grantor in an
action against the grantee, but a subsequent bona fide purchaser from the grantee who is unaware of
the fraud prevails over the grantor.
As between two innocent persons, one of whom must suffer by the act of the fraudulent third party,
the law generally places the loss on the person who could have prevented the loss to the other
Effect of Fraud
The court held that a deed procured by fraud, unlike a forged deed, is effectual to pass title to a bona
fide purchaser.
A deed induced by the grantees fraud (fraud in the inducement) is voidable in an action
brought by the true owner against the grantee, but not against a bona fide purchaser from
that grantee. However, when fraud prevents the grantor from knowing that he is
executing a deed at all (fraud in the inception), the deed is void for all purposes, just like
Six [6] Things Are Presented to the Buyer Under Special and General Deeds
Present Covenants: Covenants that are phrased in the present tense
a forged deed.
Seisen: the grantor warrants that he owns the estate that he purports to convey 1.
Example: a trustee may have legal title but be forbidden by the trust instrument to convey
it.
A.
Right to Convey: the grantor warrant that he has the right to convey the property. In most
instances this covenant serves the same purpose as seisen, but it is possible for a person who has
seisen not to have the right to convey
2.
Encumbrances: The grantor warrants that there are no encumbrances on the property.
Encumbrances include, among other items, mortgages, liens, easements and covenants
3.
Future Covenants: Covenants that are phrased in the future tense
A present covenant is broken at the time the deed is delivered. Either the grantor owns the property at
that time, or he does not. Either there are existing encumbrances at the time or there are none.
A future covenant promises that the grantor will do some future act, such as defending against claims of
third parties or compensating the grantee for loss by virtue of failure of title. A future covenant is not
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General: The 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.
1.
Quiet Enjoyment: The grantor warrants that the grantee will not be disturbed in possession and
enjoyment of the property by assertion of superior title. This covenant is, for all practical
purposes, identical with the covenant of general warranty and is often omitted from general
warranty deeds.
2.
Further Assurances: the grantor promises that he will excuse any other documents required to
perfect the title conveyed.
3.
third parties or compensating the grantee for loss by virtue of failure of title. A future covenant is not
breached until the grantee or his successor is evicted from the property, buys up the paramount claim,
or is otherwise damaged.
Brown v. Lober
Facts: In 1947, the owner of 80 acres of land conveyed that amount to William and Faith Bost, reserving
2/3
rd
's interest in the mineral rights. 10 yrs later (1957), the Bosts conveyed the 80 acres to Brown and
his wife by a general warranty deed with no exceptions. In 1974, the Browns contracted with a coal co to
sell the mineral rights for $6K. Upon finding out that the Browns had only 1/3 of the mineral rights, the
parties had to renegotiate the K for the payment of $2K. The prior grantor never attempted to exercise
his mineral rights. The 10 yr SOL prevented a suit on the present covenants, so the Browns sued the
Bosts' executors (because the Bosts had died) seeking $4K in damages for breach of the covenant of
quiet enjoyment.
PL's argued that since they as covenantees were unable to sell their interest in land because they found
out that they did not own what the warranty deed purported to convey and thus had suffered constructive
eviction entitling them to bring a suit for breach of the covenant of constructive eviction.
Constructive eviction is the inability of a purchaser to obtain possession because of paramount
outstanding title; such an eviction usually constitutes a breach of the covenants of warranty and
quiet enjoyment. For the PL's to allege breach of covenant of quiet enjoyment (which is a future
covenant), he had to have been evicted from the property (that is why they came up with constructive
eviction).
Issue(s): Under IL property law, did the Plaintiffs present facts which showed that there was constructive
eviction on the part of the DF's which would create a breach of the covenant of quiet enjoyment?
Holding: No. The mere fact that the PL had to modify its K with the coal company was not enough to
constitute the constructive eviction necessary for a breach of the covenant of enjoyment.
Court's Rationale/Reasoning: The court looked at the case of Scott v. Kirkendall (although that case
dealt with surface rights while this dealt with subsurface mineral rights) where the court held that the mere
existence of a paramount (overridi ng) title, does not constitute a breach of the covenant of quiet
enjoyment when there has been no assertion of adverse title and the land has always been vacant.
The court said although the PL's had possession of the surface area, they could not be said to possess
the subsurface mineral area (because to do so required removing minerals from the ground or doing
some act which show the community that the interest is in that person's exclusive use and enjoyment.
The court concluded further that the subsurface area was vacant since no one had tried to remove
minerals from it and that the PL's had in no way been prevented from enjoying the property by anyone
with a better right and PL's at any time could have taken peaceable possession of it.
There could be no constructive eviction and thus no breach of the covenant quiet enjoyment until one
holding superior title interfered with the PL's right of possession (for instance by beginning to mine the
coal).
Court does not wish to expand the protection afforded by this covenant, especially since the PL had a
remedy in the present covenants, that of seisin (the grantor warrants that he owns the estate he purports
to convey), which grantor clearly violated when grantor delivered the deed to P. For covenant of seisin
(which is a covenant of title), if at the time of conveyance the grantor did not own the land, the
covenant is broken immediately and in order to recover no eviction or ouster needs to be proven.
It is PL's oversight that he did not secure a title opinion before the statute of limitations had run.
- PL's contention that having to modify the contract selling the mineral rights to the third party was
not sufficient to constitute the constructive eviction necessary to a breach of the covenant of quiet
enjoyment.
- CAUSE OF ACTION IS PREMATURE (ripeness issue?)
Rule: The mere existence of a paramount (overriding) title, does not constitute a breach of the
covenant of quiet enjoyment when there has been no assertion of adverse title and the land has
always been vacant.
Frimberger v. Anzellotti
Facts: In 1978, DF's brother subdivided property into 2, intending to build homes on each. Subject
property abuts a tidal march land and was subject to statutory regulations. Brother built a bulkhead and
filled the parcel adjacent to the wet lands, then built the home. In 2/84 brother conveyed to DF by quit
Property Page 62
claim deed. In 12/85 DF conveyed to PL by warranty deed.
In 1986, PL decided to repair the bulkhead (partition/dividing wall) and filled area, and hired an engineer,
who ordered a survey of the tidal wetlands property. DEP officials and engineers found a violation, and
ordered a second survey. Second survey found that the bulkhead and possibly the corner of the house
violated the statute, and directed PL to submit an application to DEP demonstrating the necessity of the
bulkhead.
Issue(s): Under CT property law, does the latent violation of a land use statute or regulation, existing on
the land at the time of conveyance, constitute an encumbrance such that it breaches the grantee's
covenant against encumbrances?
Holding: No, this statute violation is not a violation of the covenant. Judgment reversed, and remanded
with instructions to enter judgment for D on those issues.
Court's Rationale/Reasoning: Latent violations of a restrictive land use statute of ordinances a case of
first impressions in this jurisdiction; however, the weight of case law states such a violation does not
affect marketability (marketable title is title which can be sold at a fair price to a reasonable purchaser or
mortgaged to a person of reasonable prudence as a security for the loan of money) and should not rise to
the level of an encumbrance.
For the title to be unmarketable, the defect must present a real and substantial probability of litigation or
loss at the time of the conveyance. Also, no encumbrance, no misrepresentation (and in this case DF
made no representation at all) was made. In other words, because the warranty of a covenant against
encumbrances was not violated, no misrepresentation was made.
Looked to Fahmie case, in which a nine foot sewer pipe was used against code. Court held that to
expand the concept of an encumbrance to include statute violations existing at the time of conveyance
would create uncertainty and confusion in the law of conveyancing and title insurance, because neither a
title search or inspection of the property would disclose the violation. DF did not know of the violation.
Similar facts to this case.
DEP advised PL of the violations in 1986, and suggested PL file an application. PL has not. DEP has
never tried to compel compliance or require PL to abate the violation or restore the wetlands. Hence any
damages are speculative. PL initiated the DEP action. Prior to it, no litigation or loss was imminent. Even
though DEP could still impose fines or restrict land use until it complies, this restriction still would not be
an encumbrance.
PL could have required an A-2 survey prior to closing, or placed language into the deed to protect
himself. He didn't - what a schmuck - he was a lawyer and a waterfront land developer. He knew of the
wetlands requirement.
Rule: Latent violations of a restrictive land use statute of ordinances a case of first impressions in
this jurisdiction; however, the weight of case law states such a violation does not affect
marketability (marketable title is title which can be sold at a fair price to a reasonable purchaser or
mortgaged to a person of reasonable prudence as a security for the loan of money) and should
not rise to the level of an encumbrance.
For the title to be unmarketable, the defect must present a real and substantial probability of
litigation or loss at the time of the conveyance.
If you have an administrative remedy and you have not used it, it will be hard to win in court
because the complaint is speculative; plaintiff has not proven that he has suffered a loss
Latent violations of state or municipal land use regulations do not constitute an encumbrance (as
related to a deed warranty) IF ALL THE FOLLOWING ARE TRUE: (1) Violations "do not appear on the
land records," (2) Violations "are unknown to the seller of the property," (3) "The agency charged
with enforcement has taken no official action to compel compliance at the time the deed was
executed," and (4) Violations "have not ripened into an interest that can be recorded on the land
records."
What damages do you get of a covenant is breached? Seisen: return of the purchase price or the
difference between what I own and what I told you I owned.
Rosengrant v. Rosengrant (Intent)
Facts: Harold and Mildred Rosengrant were a retired couple who lived on a farm in OK. They had no
children but 6 nieces and nephews by Harold's dead brother. Jay, one of the nephews lived close to the
couple and helped them with their chores. Mildred was diagnosed with cancer in 1971 and Jay's wife
went to Mexico with the couple for treatments. Before going on the trip, Mildred called Jay and asked him
to meet with her and Harold at the bank. Jay was introduced to the banker (Vanlandengham) who
presented the couple with a deed to their farm which he had prepared according to their instructions.
Jay accepted the deed and then handed it back to the banker who told him he would put it into an
envelope and keep it in the vault (he handed it back because they felt this was the way to make it
legal. In 1976, Harold discovered that he had lung cancer and in 1977 put $10K into 2 certificates of
deposit in joint tenancy with Jay. When Harold died, Jay & his wife went to the bank for the contents of
the safety deposit box and the envelope containing the deed, which Jay recorded the next day.
Issue(s): Under OK property law, was there was legal delivery of title from Harold & Mildred to Jay?
Holding: There was no legal delivery to Jay so the title was void. There was only a symbolic delivery.
Court's Rationale/Reasoning: On the envelope of the deed it said that it was to be given to either the
grantor or the grantee which shows that Harold was free to retrieve the deed as he wanted before his
Property Page 63
grantor or the grantee which shows that Harold was free to retrieve the deed as he wanted before his
death. There were 2 conditions that needed to be satisfied before the grant could take effect and those
were 1) that both parties died and 2) that the deed was recorded.
His actions also show that he intended to reserve a right of retrieval. He continued to farm the land, use
and control the property and pay taxes on it and claim it as his homestead until he died. This shows that
he was trying to use the deed as a will and under OK law this cannot be done.
Legal delivery is not just a symbolic gesture. The true intent of the parties is evidenced on the envelope.
Rule: Grantor's intent at the time the deed was delivered is the most important factor in transfers
of title. Where a grantor delivers a deed under which he reserves a right of retrieval and attaches
to that delivery the condition that the deed is to become operative only after the death of the
grantors and further continues to use the property as if no transfer had occurred, grantor's
actions are nothing more than an attempt to employ the deed as if it were a will.
Sweeney v. Sweeney
Facts: Maurice had town clerk draw a deed of his East Hampton property to John, and a deed from John
back to himself. Maurice made him deed it back to him so that he would be protected if John died before
him. He recorded the deed from himself to John, not the other. Later, Maurice gave the deeds to John.
John kept both deeds, and gave the unrecorded deed to his attorney when he instituted this action, but
the deed was destroyed by fire at the attorney's office. After the deeds were written, Maurice continued to
establish full dominion, and occupied, the property. In April, 1937, Maurice made a written lease to Myers
of a portion of the premises and then in June 1938, made a written lease to Franke and Esther Fricke for
20 years. The 1
st
lease was lost but the 2
nd
was recorded. DF (John) never collected any money from
the tenants or paid any fixed charges or repairs before his brother's death.
Issue(s): Under CT Property law, did DF's execution of the deed constitute a delivery, such that DF no
longer held title?
Holding: Yes, this was a delivery. Further, this could not have been a conditional delivery, because it was
given directly to a grantor, not a third party as required. Hence, court found error and ordered a new trial.
Court's Rationale/Reasoning: There was in fact a delivery, unless DF's contentions defeat this result.
The deed having in effect actually delivered to Maurice, the execution of the attestation clause was prima
facie evidence that the deed was delivered. Hence there is a rebuttable presumption that the grantee
assented because the deed was beneficial to him.
DF offered nothing to rebut the deliver. In fact, the purpose of the delivery stated by DF was in case he
died before Maurice, Maurice would get the land back, and this could not occur without a delivery. Hence,
there was a delivery.
DF also claims, if there was a delivery, it was on a condition which was not and can not be fulfilled. This
claim is not good because the delivery was to the grantee. A conditional delivery (delivery must be
made to a 3
rd
person and not the grantee)requires that the deed be placed in a third person, not a party
to the deed, until the event occurs, at which time the deed would be delivered to grantee. Even though
this may defeat the grantee's intent in the case at bar, it guards against false claims, fraud and fabrication
of evidence.
Rule: A conditional delivery (delivery must be made to a 3
rd
person and not the grantee) requires
that the deed be placed in a third person, not a party to the deed, until the event occurs, at which
time the deed would be delivered to grantee. Even though this may defeat the grantee's intent in
the case at bar, it guards against false claims, fraud and fabrication of evidence.
Introduction to Title Insurance
Delivery + Execution = Valid Deed [ Recording system kicks in when a 3rd party is involved]
If something is recorded, that binds subsequent purchasers
The system our country has developed to assure purchasers of land that they have
good title to the land purchased. At the heart of the system is the public records office,
where all instruments affecting land titles are recorded.
In a few localities, title registration is available. Under title registration, the state
registers title and issues a title certificate to the owner, which is reissued to each new
purchaser of the property.
Private insurance companies sell title insurance to purchasers for a premium. Title
insurance companies serve as backup to the recording system.
Title insurance on property does not run with the land: it is a contractual obligation that
does not cover subsequent buyers General Rule
Title insurance tends to only cover things found in the record
Governmental regulations are excluded, not covered by title insurance
Title insurance does not cover survey errors.
The Recording System A.
Statutes provide for land title records to be maintained by the county recorder in each county.
The land title records include copies of documents filed with the recorder and indexes to these
Property Page 64
The land title records include copies of documents filed with the recorder and indexes to these
copied documents

A deed is valid and good against the grantor upon delivery without recordation
It establishes a system of public recordation of land titles
The recording system preserves in a secure place, important documents that, in
private hands, may be easily misplaced

The recording system serves other functions

The recording acts do not affect the validity of a deed or other instrument
In order to increase the reliability of the public records, statutes typically require that a deed be
acknowledged before a notary public or other public official before it is entitled to recordation

Wills, affadavits of heriship of an intestate are entitled to be recorded

Generally, any kind of instrument creating or affecting an interest can be recorded
Recording acts also have the function of protecting purchasers for value and lien creditors
against prior unrecorded instruments

Under the recording acts, a subsequent bona fide purchaser is protected against prior
unrecorded interests

**But 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.

Example: O mortgages BlackAcre to A. O subsequently conveys BlackAcre to B who does not

know of the mortgage. At common law, B takes the land subject to A's mortgage. (In equity, the
doctrine of bona fide purchaser would protect B against A's mortgage if A's mortgage were purely
equitable and not a legal interest. Equity refused to enforce prior hidden equitable interests
against bona fide purchasers of the legal title).

Thus, a purchaser of property will want to search the records to make sure that there are
no adverse prior recorded claims, and a purchaser records his deed in order to prevent a
subsequent purchaser from a previous owner from prevailing over him

The recording acts in general have adopted and broadened the equitable doctrine of bona fide
purchaser

The Indexes B.
Tract index: Public tract indexes, indexing documents by a parcel identification
number assigned to the particular tract, do not exist in most states. The primary
obstacle to establishing public tract indexes was the fact that early deeds in easter
states described land by the metes and bounds
1.
In the grantor index all instruments are indexed alphabetically and
chronologically under the grantor's surname

In the grantee index all instruments are indexed under the grantees
surname

Usually, many volumes compose both indexes

These volumes covering different time spans result from periodic
consolidation by the recorder

There may also be separate grantor and grantee indexes for each type
of instrument-- one index for deeds, one for mortgages, one for
wills.etc

The index is a helpful method of locating the instrument among the

many volumes in the recorder's office

The reference in the index to the document sets forth its essentials
Grantor-grantee index: Under this system separate indexes are kept for grantors
and grantees
2.
There are two types of indexes currently used in the United States:
Judgment liens and federal tax liens become liens on all the debtor's land located in the
county where the lien is filed. Such liens are filed in the index under the name of the
debtor

Types of Recording Acts

The virtue of a race statute for the title searcher is that it limits inquiry into matters off
the record. The question of "who knew what" is irrelevant.

Transfer of title is more efficient where off-record inquiries are eliminated

Under a Race statute, as between successive purchasers of BlackAcre, the person who
wins the race to record prevails. Whether a subsequent purchaser has actual knowledge
of the prior purchaser's claim is irrelevant.

A Notice Statute protects a subsequent purchaser against prior unrecorded

instruments even though the subsequent purchaser fails to record

The virtue of a notice statute is its fairness between two conflicting claimants
Notice statutes are less efficient than race statutes
Test: "Did you know anything that would give a reasonable person reason to
Wants to reward "good faith"
Notice Statute: In addition to protecting only subsequent purchasers without notice, a
notice statute differs from a race statute in another respect. A race statute protects a
subsequent purchaser only if the subsequent purchaser records first.

Types of Recording Acts

Property Page 65
Test: "Did you know anything that would give a reasonable person reason to
inquire?"

Is without notice of the prior instrument, and 1.

Records before the prior instrument is recorded 2.
The virtues of a race-notice statute is that it tends to eliminate lawsuits turning on
extrinsic evidence about which deed was delivered first.

It has also been suggested that a race-notice statute is preferable because, by

punishing non-recording, it provides motivation to record, making the public records
complete.

Race-Notice Statute: Under the race-notice statute, a subsequent purchaser is protected

against prior unrecorded instruments only if the subsequent purchaser

***The only subsequent purchasers that can use rules are those that act in good
faithRecording Acts
Chain of Title
Chain of title refers to the recorded sequence of transactions by which title has passed from a
sovereign to the present claimant.

It also means, the period of time for which records must be searched and the documents that
must be examined within that time period

The standard title search required against each owner: from the date of execution of the deed
granting title to the owner to the date of recordation of the first deed by such owner conveying
title to someone else

Persons Protected by the Recording System

By judicial construction, the recording statutes have been held, almost universally, not to protect
donees and devisees, even in race jurisdictions. As a result, it is sometimes necessary for a
court to decide whether a person is a purchaser (protected) or donee (not protected)

An examination of the cases leads to the conclusion that there is some disagreement as to how
much a grantee must pay to be deemed a purchaser. Most courts require more than a nominal
value, such as a "substantial" amount, or an amount "not grossly inadequate"

Creditors
A number of recording statutes protect "creditors" against unrecorded deeds and mortgages.
Courts have interpreted these statutes to protect only creditors who have established a lien,
such as by attachment or judgment, and not all creditors. Merely lending money to the record
owner does not give priority over unrecorded instruments.

It may even be held that a quitclaim deed in the chain of title puts all subsequent
purchasers on inquiry notice

In a large majority of jurisdictions, a quitclaim deed is treated the same as a warranty deed
for purpose of giving notice.

Quitclaim Deeds: In some jurisdictions, a purchaser by quitclaim deed cannot claim the position
of a bona fide purchaser without notice. This rests upon the idea that a refusal of the grantor to
warrant title should create a string suspicion that the title is defective

Inquiry Notice
Actual notice arises where one is personally aware of a conflicting interest in real
property, often due to another's possession of the property

Record Notice: consists of notice one has based on properly recoded

instruments
1.
Inquiry Notice: based on facts that would cause a reasonable person to make
inquiry into the possible existence of an interest in real property
2.
Consecutive Notice [2 types]: notice that the law deems you to have regardless of
your actual knowledge

There are three kinds of notice a person may have with respect to a prior claim:
Marketable Title Acts
Their primary purpose is to limit title searches to a reasonable period, typically 30-40 years.
The acts provide that if a person has an unbroken chain of title from the present back to
his "root of title" then he has the sort of title in favor of which their extinguishment figure
will operate

His "root of title" is the most recent transaction in his chain of title that has been on record
at least 40 years

"no purchase" or other transaction affecting the land need occur to trigger the
extinguishment of old defects and interests

The act doesnt require a person seeking their benefits to be a bona fide purchaser
The seek to extinguish old title defects automatically within the passage of time
The essential idea is: when one person has a record title to land for a designated period of time,
inconsistent claims or interests are extinguished.

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Some of the acts take the form of a statute of limitations barring a claim not recorded
within a designated time period

Others declare that the record owner with a clear title going back for the designated period
has marketable record title that is free and clear of adverse claims.

Thus, except for the interests excepted from the statute, title searched may be safely
limited to the number of years specified in the statute.

Under a marketable title act, all claimants of interests in land, to be safe, must file a notice
of claim every 30-40 years after the recording of their instruments of acquisition.

inconsistent claims or interests are extinguished.

Things to Keep in Mind
In most jurisdictions, most recorders of deeds have sovereign immunity
The misspeller is liable
Misspeller not liable and purchaser must look up variations of spellings
Who is liable if a name is misspelled in either index? Jurisdictions are split:
Under this you say "I convey all property I own to you, in clean title"
This is rare
Mother Hubbard Deed: executed by someone who owned a lot of property
Attorney can be sued for malpractice is they mess up the deed
Dominant estate can use easement
If acquiring an easement, make sure its recorded under who gave it away and who
received it

Servient estate is burdened by the easement

Easement: two properties affected
Land Use Controls
Can affect the value and marketability of the land
Rule: "first in time, first in right"
What if there was no recording?
Private (Servitudes)
Every easement has a servient estate
Types of Easements [4]
The property that is burdened is called the "servient estate"
For example, if A owns an easement that allows her to travel over land
Positive Easement: an affirmative easement is a non-possessory right to use land
in the possession of another.
1.
Basically the right to come onto the servient estate
The law favors positive easements
owned by B, A holds an affirmative easement.
Air flow
Light
Hurting structural support
Stop flow of artificial quarters
A negative easement is the right of the dominant owner to stop the servient
owner from doing something on the servient land

A negative easement entitles an owner to prevent another owner from doing a

particular act on the second owners land.

Negative Easement: (4 types) " A is given the right to enforce a restriction on the
use of B's land"
2.
Appurtenant easements are usually transferable: the easement transfers
along with the dominant tenement to successive owners. However,
appurtenant easement can be made personal to the easement owner only
and not transferable to others.

An easement appurtenant benefits the easement holder in his capacity as

owner of the dominant tenement. (belongs to the property owner of the
dominant estate)

Gives easement owners the right to make some specific use of land that they
do not own.

If it is unclear which type of easement is intended by the parties, the law

construes in favor of an easement appurtenant

Easement Appurtenant: require both a dominant tenement (or estate) and a

servient tenement. The easement attached to and benefits the dominant tenement.
3.
An easement in gross benefits the holder in a personal sense, whether or not
Easement in Gross: Gives easement owners the right to make some specific use
of land that they do not own. The easement in gross gives the right to some person
without regard to ownership of land
4.
Easements: when you grant someone the right to use your property (this is a property
right) "A is given the right to enter upon B's land"
A.
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An easement in gross benefits the holder in a personal sense, whether or not
he owns particular land.
May be alienable or inalienable
Easements in gross 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

Creation of Easements [4]

without regard to ownership of land
Creation of an easement generally requires a written instrument signed by the party to be
bound thereby
An easement, being an interest in land, is within the Statute of Frauds
Written Grant: Easements are created through a written grant, which should identify
the length of time of the easement. If a length of time is not specified, it is assumed that
the easement lasts forever (so you must be specific!)
1.
Open/notorious 1.
Has to be done without the consent of the owner to be a prescriptive grant
adverse and under a claim of right, and 2.
"exclusive" use means you were able to use the land without permission, but you
dont have to be the only one using the property

**backup plan for adverse possession

If you cannot use this theory because you have permission to use, then argue under
"estoppel"

continuous and exclusive, uninterrupted for the statutory period 3.

Prescriptive Easement: In order for a prescriptive easement to arise, the claimants use
must generally be:
2.
Note: Prescriptive easements are similar to adverse possession. But, adverse possession
involves a statute of limitations running on the right to bring an action to recover possession of
land; the statute operates to extinguish the remedy of the previous owner, leaving the adverse
possessor in indefeasible possession. The result is that the adverse possessor has a new title
based on his possession.
A statute of limitations upon the recovery of possession does not cover actions concerning
easements, which involve use and not possession of land. Prescription rests upon the idea that
rights can be acquired simply by the passage of time.
To secure a prescriptive easement under the lost-grant theory, the claimant must show
that the use was not permissive AND the owner did not object (acquiesce).

Lost-Grant Theory: Under this theory, the owner of land is presumed to consent or acquiesce in
the use: after all, the owner (or his predecessor) is thought to have granted the easement. On
the other hand, if the use is made with the permission of the owner, the use is not adverse.
The landowner must be put on notice, by the kind and extent of use, that an adverse right
is being claimed by the general public, not by individuals.

Where a public road is being claimed, the same requirements generally apply as are
applied to a private prescriptive easement/

It may be used where the landowner evidences an intent to dedicate, and the state
accepts by maintaining the land used by the public.

Or implied dedication theory may be used as a substitute for prescription.

Theory of Implied Dedication: also used for public easements, rather than prescription.
This theory seeks a substitute for a grant in an implied dedication.

Public-Prescriptive Easement: a public-prescriptive easement can be obtained by long,

continuous use by the public under claim of right.
Ordinarily, a license is revocable. A license that becomes irrevocable, however, becomes
the functional equivalent of an easement.

Estoppel: Estoppel is when someone changed their position or made an investment

because they thought they had an easement
3.
a license 1.
the licensees expenditure of substantial money or labor in good faith reliance; and 2.
the licensors knowledge or reasonable expectation 3.
Three elements are necessary to create an irrevocable license:

that reliance will occur.
This privilege to use the land resembles an easement, BUT A LICENSE IS REVOCABLE
WHEREAS AN EASEMENT IS NOT REVOCABLE

A license coupled with an interest cannot be revoked. A license coupled with 1.

There are two exceptions to the rule that a license is revocable:
Note: An easement must be distinguished from a license. A license is an oral or written
permission given by the occupant of land allwoing the licensee to so some act that otherwise
would be a trespass.
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For example, O grants A the right to take Timber from BlackAcre, owned
by O. A has an interest and an irrevocable license to enter the land and
take timber.

A license coupled with an interest cannot be revoked. A license coupled with

an interest is one that is incidental to ownership of a chattel in the licensor's
land
1.
The second exception is a license that becomes irrevocable under the rules of
estoppel.
2.
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 use is to continue

If the dominant owner secures another way out from the landlocked
parcel, the easement by necessity ceases.

The condemnation is a judicial proceeding, and the landowner

must pay damages to the owner of the land where the
easement is sought (it does not matter how the land-locking
occurred)

Condemnation gets you a FSD or FSSCS; own, but not in

perpetuity; politically more favorable

Land-locking and Easements by Necessity: statutes gave an owner

of landlocked land the right to condemn an easement across
neighboring land upon showing the requisite necessity. [condemnation]

Easement by necessity only lasts as long as the necessity does

Public Policy for Easement by Necessity: no land be made inaccessible
Necessity: An easement is implied when the court finds the claimed
easement in necessary to the enjoyment of the claimant's land and that the
necessity arose when the claimed dominant parcel was servered from the
claimed servient parcel.

The existing use is often described as a "quasi easement"

The easement is implied to protect the probable expectation of the
grantor and grantee that the existing use will continue after the transfer

severance of title to land held in common ownership 1.

an existing, apparent, and continuous use when severance occurs, and 2.
reasonable necessity for the use at time of severance. 3.
Three elements are required for an easement implied from prior existing use:
Apparent & Continuous (or permanent) use of a portion of the tract existing
when the tract is divided.

Implied Use: Easements are implied in two basic situations: 4.

Note: If the dominant tenement and the servient tenement come into the same
ownership, the easement is extinguished altogether. It will not be revived by a
severence of the united title into the former dominant and servient tenements.
Law: (real covenants) 1.
Equity: (equitable servitudes) 2.
Easements
Real covenants
Equitable servitudes
Note: Primary modern forms of servitudes:
Covenants A.
Public
Trespass 1.
Nuisance 2.
Judicial A.
Legislative (Zoning) B.
Takings (Changing title to property)
Eminent Domain A.
Regulatory Takings: when there is a regulation that devalues the property but you
remain the owner
B.
Deed 1.
Mortgage (a mortgage has two parts) To borrow money from the lender, the 2.
For closing, you need 2 documents
Property Page 69
This creates personal liability
To secure the note, you must secure a mortgage on the property
you are buying

If you fail to pay your note or do not otherwise perform your

obligations, the lender, either at private sale or under judicial
supervision, can have the property sold and apply the proceeds of
the sale to the amount due on the note

Note: a contractual obligation to pay back the money you borrowed A.

The mortgagor's interest in the property is known as "equity"
Buyer mortgagor i.
Lender mortgagee ii.
Mortgage: a document that authorizes the bank to take the property if you
dont pay the money back
B.
Mortgage (a mortgage has two parts) To borrow money from the lender, the
borrowe must give the lender a note and a mortgage:
2.
Mortgage (3 theories)
The condition subsequent is that you paid the mortgage exactly according to the
terms of the deed.

Title Theory: (classic view) The lender (bank) owns the property in fee simple subject to
condition subsequent, when you pay the mortgage off the bank loses title.
1.
Foreclosure: If the borrower (the mortgagor) fails to make the payments required by
Strict foreclosure: a proceeding in which the mortgagor was order to pay within a
given period or be forever barred

Foreclosure sale: directed an officer of the court to sell the land at a public sale and
pay the debt to the lender from the proceeds and any exceeding debt to the
borrower.

If foreclosure is through a judicial proceeding, the sale price is ordinarily not

challengeable (unless it shocks the conscience of the court) and the amount realized
is applied to the debt. (this is a more prudent route)

If the foreclosure is through private sale, courts may scrutinize the sale more closely
to assure that the mortgagee acted fairly, and may deny a deficiency judgment when
there are sufficient grounds to set the sale aside

Notwithstanding any agreement to the contrary, the mortgagor can transfer his
interest in the land by sale, mortgage or otherwise. The transfer, will not shake
off the mortgage. The land remainds subject to the mortgage in the hands of
the transferee.

In many instances where a borrower cannot pay its debt, it can frequently avoid
foreclosure by tendering its deed to the lender in lieu of foreclosure.

the note or otherwise defaults on the obligation, the lender (the mortgagee) may (through
a legal proceeding) cause the secured property to be sold and apply the sales proceeds to
satisfy the unpaid debt.
Lien Theory: After closing, the home buyer has title but the bank has a lien, which
means that the bank can bring a foreclosure action & they have first dibbs on the
proceeds.
2.
In a deed of trust, the trustee is given the power to sell the land without going to
court if the borrower defaults

This method of foreclosure is quicker and less costly than judicial foreclosure
Deed of Trust Theory: Under a 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 too secure
payment of the debt to the lender.
3.
Willard v. First Church of Christ
Issue(s): Under CA property law, may a grantor, in deeding real property to one person,
effectively reserve an interest in the property to another?
Holding: Yes. In this case, such a reservation vests the interest in the third party.
Court's Rationale/Reasoning: The trial court went by the common law rule that "one cannot
'reserve' an interest in property to a stranger to the title." However, the court notes that times
are changing, and now they want to give effect to the intent of the grantor. The court adds this
rule frustrates the grantor's intent, and b/c it produces an inequitable result b/c original grantee
presumably paid a smaller price for title to the property. Here, McGuigan testified she
discounted the land to Peterson.
There was also no evidence of any reliance by the insurance title company. No evidence of a
policy issued, thus no showing of alliance to an insurance company. And Willard couldn't say
he had no knowledge of the easement, as the land was being used as such while he was in the
negotiating process, and after Willard acquired title.
Rule: You can create an easement for the benefit of a 3rd party, BUT IT MUST BE
RECORDED.
Property Page 70
RECORDED.
Holbrook v. Taylor (Estoppel)
Issue(s): Under KY property law, may appellee raise the claims of estoppel and prescription to
an easement when the land in question was used as such for various purposes on and off again
since 1944?
Holding: Yes. When the land owner or previous landowners granted permission to adjoining
landowners in the use of an easement on the land, and watched while the current party spent
substantial money in reliance on this representation, the original landowner is estopped from
Court's Rationale/Reasoning: Issue of estoppel. In applying the rule, the court looked at past
case law, which revealed the same underlying premise: that if a party used the land and
improved on the land, and to their detriment, the other party was estopped from disallowing the
other party from using the land. Yet here the appellee is also arguing the fact the same tract of
land has been used by previous adjacent landowners as an easement and therefore the court
should prescribe the land to them as well.
The court looked to the intent of the party as part of the prescription claim. Here, the land was
granted permission by appellant since 1944 to be used as an easement, which gave the
appellees to feel as if they had license to be on the land as well. They acquired an interest by
improving on the land by building the $500 worth on the ingress/egress road. This building was
done in reliance on the road being property of both parties (mentioned above). Furthermore,
there was no dispute as to who could and could no use the roadway until the fall of 1970. In
sum, appellants agreed tacitly (w/o consent) to allow the use of the easement, and thus should
not be denied now.
Rule: When a person has a license which includes the right to erect structures and acquire
interest in the land in the nature of an easement by making improvements thereon, the licensor
may not revoke the license and restore his premises to their former condition after the licensee
has exercised the privilege given by the license and erected the improvements at considerable
expense....
Van Sandt v. Royster (Implied Use: Prior Existing Use)
Synopsis of Rule of Law. An easement is implied to protect the probable expectations of the
grantor and grantee that a prior existing use will continue after the transfer. Thus, where the grantee
is aware of a reasonably necessary use of the grantees property for the comfortable enjoyment of
the grantors property an easement by implication is created.
The court held that parties were assumed to intend the continuance of uses that were in a
considerable degree necessary to the continued usefulness of the land, especially those
necessary uses that had so altered the premises as to make them apparent upon reasonably
prudent investigation. The court found that the existence of plumbing fixtures and lines in the
landowner's house made the easement apparent although it was not visible.
Miller v. Lutheran Conference & Camp Association
Issue(s): Under PA property law, does the assignee of a easement in real property have the
right to further assign rights in another assignee who takes to those same rights? How to deal
with the concern that the division of the easement might create an excessive burden on the
servient estate?
Holding: No. The assignee cannot divide the assignment in an easement in gross; instead he
must share them. So, Rufus and the church had to share the land alike. One cannot convey a
share in the common right.
Court's Rationale/Reasoning: They said a person could gain title by prescription of certain
rights. The fact that no one raised an objection to the Miller's bathing in the water for the
statutory period gave them title by prescription to those rights.
The court, after looking through much of the case for the rule to follow, then looked to the intent
of the parties in the original conveyance. It was never Frank's intent to grant, or Rufus' to
receive, a separate right to subdivide and sublicense the activities on the lake. It was however
their intent to share in the business together (3/4 and 1/4 interest). They were, as Mountjoy
Doctrine said, "as one stock."
Thus, Frank acquired title to the boating and fishing privileges by grant and he and Rufus got
rights to the bathing by prescription. Frank made a valid assignment of 1/4 interest to Rufus,
but they cannot be used and licenses under that assignment without the agreement of both
Frank and Rufus (acting as one stock).
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Frank and Rufus (acting as one stock).
The court applied the "one-stock" rule: must use the easement as one person, either one
can veto the other's use.

On this view, the benefit of an easement in gross may be divided and utilized
independently by it holders, assuming that this is not contrary to the intent of the
original parties and that division would not place an unreasonable burden on the
servient estate.

The only easements in gross that are not assignable, under modern cases, are
recreational easements (easements for hunting, fishing, boating and camping). The
courts concluded that recreational easements are intended to be personal and on the
fear of burdening the servient land beyond the original contemplation of the parties.

Courts today have abandoned this rule. Today, easements in gross may be divided unless
contrary to the intent of the parties creating the easement or unless the division
unreasonably increases the burden on the servient estate.

Rule: If an assignee decides to assign his rights further, he "must assign his whole interest to
one, two, or more; but then if there be two or more, they could make no division of it, but work
together with one stock."
Note:
Easement Appurtenant Always assignable
Scope of Easements
Brown v. Voss
Must use the easement, here, as one entity (you cannot split the interests)
Easement in Gross Assignable when its commercial AND we believe it is what the
parties intended

Issue(s): Under WA property law, what extent, if any, does the holder of a private road
easement have to traverse the servient estate to reach not the original dominant estate, but a
subsequently acquired parcel when those two combined parcels are used in such a way that
there is no increase in the burden on the servient estate?
Holding: None generally. However, here PL's never abused their rights to the easement, so
although as a matter of law they are incorrect to contend they should be allowed to use the
easement for both tracts of land, the injunctive relief is too bold a step to take in the eyes of this
court as equitable relief.
Court's Rationale/Reasoning: In finding that PL was indeed incorrect in his application of the
law, the court found there to be no abuse of the general rights associated with the easement as
granted in the original agreement. PL's had already spent some $11K on their project to build
their home, and it would be inequitable to stop them now, which would also incidentally landlock
their property. The equities simply do not balance in DF's favor here, and they are not entitled
to injunctive relief. (plus, DF already got $1 in damages previously.
Rule: As a general rule, an easement appurtenant to one parcel of land may not be extended
by the owner of the dominant estate to other parcels owned by him, whether adjoining or distinct
tracts, to which the easement is not appurtenant. (The easement is only for the lot that is
assigned to).
The holder of an easement or profit is entitled to use the servient estate in a manner that is
reasonably necessary for the convenient enjoyment of the servitude. The manner,
frequency, and intensity of the use may change over time to take advantage of
developments in technology and to accommodate normal development of the dominant
estate or enterprise benefited by the servitude. Unless authorized by terms of the
servitude, the holder is not entitled to cause unreasonable damage to the servient estate
or interfere unreasonably with its enjoyment.

Note: Suppose the owner of the dominant tenement wants to subdivide her land into 100
subdivision tracts? Will each tract have the right to use the easement over the servient estate?
A private easement of way does not usually permit the easement owner to install on the
easement aboveground or underground utilities, such as electrical lines and sewer pipes. Most
courts hold such uses are not reasonably foreseeable by the parties.
But, the Restatement grants the servient owner the right to change the location of an
easement, at his expense, if the change does not significantly lessen the utility of the
easement, increase the burdens on the owner of the easement in its use and enjoyment,
or frustrate the purpose for which the easement was created.

The established rule is that the location of an easement, once fixed by the parties, cannot be
changed by the servient owner without permission of the dominant owner.
A prescriptive easement is not as broad in scope as an easement created by grant, by
implication or by necessity. Although the uses of a prescriptive easement are not confined to the
actual uses made during the prescriptive period, the uses made of a prescriptive easement
must be consistent with the general kind of use by which the easement was created and with
Property Page 72
what the servient owner might reasonably expect to lose by failing to interrupt the adverse use.
Preseault v. U.S.
Termination of Easements
[Ending an Easement Through Abandonment]
Issue(s): Under Federal property law of the Rails-to-Trails Act and by order of the Interstate Commerce
Commission (ICC), does the conversion of a long, unused railroad right -of-way to a public recreational
hiking and biking trail constitute a taking of the property of the owners of the underlying fee simple?
(a) did the RR acquire fee simple estates when it acquired the crossing land?
(b) if RR did indeed acquire easements, what were the terms of the easement (RR use limited or
also for public nature trails)?
(c) even if the grants of the RR's easements were broad enough to encompass nature trails, has
these easements terminated prior to the alleged taking so that the property owners at that time held
fee simples encumbered by the easements (was that the power PL's acquired upon conveyance
from a previous buyer)?
Holding: Yes. The RR only acquired easements upon the original conveyances, and the terms of those
easements were for the use of the railway, not for public trails. These easements also ended at the time
the railroad was ended in 1975, and further conveyance from the ICC to the state and subsequently the
city was unauthorized under the 5th amendment without just compensation.
Purchase the land outright 1.
Condemnation 2.
Here, you get a right to use but not to own i.
This is the cheapest way because you dont own it ii.
Use the condemnation power to force purchase of the easement 3.
Note: Eminent domain assumes that the land would be used for public use. Eminent domain is used to
acquire property in 3 ways:
Rule: "The scope of an easement may be...adjusted in the face of changing time (tempora motondo) to
serve the original purpose, so long as the change is consistent with the terms of the original grant (can't
convey more interest in property than you have)."
Typically, the grant under which such rights of way are created does not specify a termination date. The
usual way in which an easement ends is by abandonment, which causes the easement to be
extinguished as a matter of law. (VT law recognizes not only the ceasing of the use of the property, but
an actual manifestation of intent to cease using the property for such a purpose)
How to Terminate an Easement [4 Ways]
If the duration of an easement is limited in some way, it ends through expiration at
the end of the stated period.

Similarly, an easement created to end upon the occurrence of some event

(sometimes called a defeasible easement) expires automatically, if and when the
stated event occurs

Written Release: (best way to terminate an easement): Because easements are

interests in property, subject to the Statute of Frauds, normally a release requires
writing. A written release has all the formalities of a written easement.
1.
An easement may also be terminated through estoppel if the servient owner
reasonably relies upon a statement or representation by the easement owner.

Merger: An easement ends by merger if the easement owner later becomes the owner
of the servient estate.
2.
Prevent Use: Open/Notorious under claim of use preventing use 3.
To end an easement through abandonment, you must do an affirmative act that
indicates an intent to abandon (non-use is not sufficient)

Easement Analysis
Abandonment: Normally, mere non-use by the easement owner does not constitute
abandonment (but in several states a prescriptive easement ends by abandonment
upon non-use for the statutory period of time)
4.
OR
Look at what the parties intended
Say the use is similary to what was originally contemplated
Its a question of the scope of the easement
Was the easement abandoned?
Property Page 73
Conservation Easements
This is a negative easement. It was developed to preserve scenic and historic areas
and open space.
An owner of land can give a public body or a private charitable organization a
conservation easement, preventing the servient owner from building on the land except
as specified in the grant.
The value of the conservation easement is deductible as a charitable gift on income tax
returns.
Conservation easements are:
perpetual in duration A.
Transferable B.
Can be in gross C.
Two interesting variations on the conservation easement are:
Faade Preservation Easement: a device for preventing the faade of a house
registered on the national Register of Historic Places from being altered
A.
Under a plan in S.C. the owners of historic homes donate to the Historic
Charleston Foundation an easement that restricts the owner, present or
future, from using it as a vacation home.

The Foundation is authorized to take action against any owner who fails to
comply with the restriction.

Covenants
Primary Residence Easement: this easement was a reaction to the growing popularity
of vacation homes whose owners leave the property vacant for most of the year-- "drive
by neighbors".
B.
Historical Background
American courts did not define privity of estate to include only a landlord-tenant
relationship. They permitted, under varying circumstances, covenants to run in favor of
and against successor owners. The developed the American real covenant, a promise
respecting the use of land that runs with the land at law.
(Horizontal Privity)
A B
Privity between original parties
Promisee; Promisor;
Benefit to WhiteAcre Burden on BlackAcre

Pri vi ty between promisee Pri vi ty between promisor
And assignee (Vertical Privity) and assignee (Vertical Privity)

D C
Suppose that B, owner of BlackAcre, has promised A, owner of WhiteAcre, that BlackAcre shall
not be used for industrial purposes. B sells BalckAcre to C and A sells WhiteAcre to D. C
constructs a factory on BlackAcre.
If A before any assignment sues B, then A is suing on the contract. There is privity of
contract between A and B, and the law of contracts govern. The question whether a
covenant runs only arises when a person who is not a party to the covenant is suing or
being sued.
The benefit end, usually held by A 1.
The burden end, usually held by B 2.
Note: There are two ends of the covenant
If A conveys WhiteAcre to D, and B still owns BlackAcre and constructs the factory, and
D sues B, D MUST ALLEGE THAT THE BENEFIT RUNS TO D. The burden remains
with B, the original promisor.
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with B, the original promisor.
If B conveys WhiteAcre to C, who constructs the factory, and A still owning WhiteAcre,
sues C, A must allege that the burden runs to C.
If, as in the diagram above, both WhiteAcre and BlackAcre are conveyed to D and C
respectively,and D sues C, D must allege that both the burden and the benefit run.
Horizontal privity is required for the burden of a covenant to run at law
Horizontal privity is not required for the benefit to run
The policy of the Restatement was to put various obstacles in the way of the
burden running at law, but to permit the benefit to run freely

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

Horizontal Privity: privity of estate between the original covenanting parties 1.
The traditional doctrine requires vertical privity for both the burden of a real
covenant to run

The burden and the benefit run with estates in land, NOT the land itself.
The vertical privity requirement implies that the covenant is enforceable by
and against remote parties only if those parties have succeeded to the
original parties' estate in the land in question

Hence, the burden of a real covenant does not run to, that is, is not
enforceable at law against an adverse possessor because an adverse
possessor does not succeed to the original owner's estate but takes a
new title by operation of law.

Real Covenants (You get $$ damages)

On the burden side, the covenant is enforceable only against someone who
has succeeded to the same estate as that of the original promisor

Vertical Privity: privity of estate between one of the covenanting parties and a
successor in interest
2.
There are two types of privity of estate above:
Requirements:
Intent: intent that the covenant run with the land 1.
Valid Contract: the contract has to be incompliance with the Statute of Frauds 2.
Touch & Concern the Land: Must affect the land, if you can show that it enhances
property value
3.
Landlord-Tenant
Concerns pre-existing obligations
Consecutive Owners
Horizontal Privity: this is the relationship between the original covenanting partied A.
Can be broken by adverse possession
Vertical Privity: this is the relationship between the covenanting parties and the
successor in interest
B.
Privity: 4.
Note:
Burden = Horizontal + Vertical Privity (you need both to assert a "burden")
Benefit = Vertical Privity (you need vertical privity to assert a "benefit")
Only the two parties to the original contract can have horizontal privity
Equitable Covenants
(injunctions or specific performance as damages)
Requirements: Notice that there is no privity requirement in equitable covenants
Intent: intent that the covenant run with the land 1.
Valid Contract: the contract has to be incompliance with the Statute of Frauds 2.
Touch & Concern the Land: Must affect the land, if you can show that it enhances
property value
3.
Record notice A.
Actual notice B.
Inquiry/constructi ve notice C.
Notice: If there is notice, then you are bound (Sanburn). The types of notice are: 4.
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Tulk v. Moxhay
Facts: PL conveyed land by deed to grantee, with the provision that the land be used
for a garden and pleasure ground (for a reasonable fee). After several mesne
conveyances, land came by deed (bargain and sale) to DF, who took with knowledge of
the provision, but the provision was not in the deed itself.
Issue(s): Under English property law, does a covenant that ran with the land to the
original grantee and then transferred through variable conveyances to a successive
grantee remain intact, when the one who took with notice of the original covenant, built
on the said land?
Holding: No. This particular covenant did not run with the land, and thus there is no
way to enforce the original provision in the deed. A promise to maintain a privately-
owned park in an open state, uncovered by buildings, was enforceable in equity against
a successor-even though the promise could not have been enforced as a real covenant.
Court's Rationale/Reasoning: An equitable servitude, enforceable by an injunction in
this case, is a covenant respecting the use of land enforceable against successor
owners or possessors, regardless of its enforceability at law. Equity requires that the
parties intend the promise to run, that a subsequent purchaser have actual or
constructive notice of the covenant, and that the covenant touch and concern the
land. Horizontal or vertical privity are not essential in equity for the burden to run. The
benefit runs to all assignees, and possibly to adverse possessors. (this reasoning is
taken from the book)
Rule: The court has jurisdiction to enforce a K between the owner of land and his
neighbor purchasing part of it, that the latter shall either use or abstain from using the
land purchased in a particular way.
Note: an equitable servitude, enforceable by an injunction as in Tulk is a covenant
respecting the use of land enforceable against successor owners or possessors in
equity regardless of its enforceability at law.
Equity requires that the parties intend the promise to run, that a subsequent purchaser
have actual or constructive notice of the covenant, and that the covenant touch and
concern the land.
Horizontal privity is not important in equity. Also, vertical privity is not required for the
burden to run. All subsequent owners and possessors are bound by servitude, just as
they are bound by an easement. The benefit runs to all assignees. It may also run to
adverse possessors, but this question has not been litigated.
Creation of Covenants
A real covenant must be created by a written insturment signed by the covenantor. It is
an interest in land within the meaning of the Statute of Frauds. If the deed creating a
real covenant is signed by the grantor only, and it contains a promise by the grantee,
the promise is enforceable against the grantee. The grantee is bound by the act of
accepting such a deed. A real covenant cannot arise by estoppel, implication, or
prescription, as can an easement.
Similarly, an equitable servitude is an interest in land. But, unlike a real covenant, it may
be implied in equity under certain limited circumstances. An equitable servitude, which
arises out of a promise, cannot be obtained by prescription.
Sanborn v. McLean
Facts: McLeans owned land adjoining land between two streets, on which they wanted
to build a gas station. The land which they want to build was part of an exclusive
neighborhood, and the deed had a provision stating the land was to be used to build
residences only. DF's insist that there are no restrictions that appear in the chain of
title. PL's claim a station would be a nuisance per se, and look to the neighborhood
covenant where it is express that the subdivision was planned for residential use only,
save the lots fronting Woodward and Hamilton Blvd. McLeans' home fronts
Collingwood.
Issue(s): Under MI property law, may an owner be enjoined from building a gas station
on its land when an opposing co-covenantor with the land claims a restriction (negative
reciprocal easement) that runs with the land?
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reciprocal easement) that runs with the land?
Holding: Yes. If the owner of two or more lots, so situated as to bear the relation, sells
one with restrictions of benefit to the land retained, the servitude becomes mutual, and ,
during the period of restraint, the owner of the lots or lots retained can do nothing
forbidden to the owner of the lot sold. For want of a better descriptive term this is styled
a reciprocal negative easement.
Court's Rationale/Reasoning: If a reciprocal negative easement attached to DF's lot it
began by the common owner and neighboring lots by way of sale of other lots with
restrictions beneficial at that time to it. So the court looked to see what lots if any were
sold with restrictions with the common owner before the sale of DF's lots. But only
sales on Collingwood.
So they looked to the original deed in the neighborhood, which said nothing but
residences. The next person in the chain of title conveyed the same restrictions, and so
on. The deed can be enforced provided DF's had actual/constructi ve notice. Looking to
the deeds surrounding the lot, as well as the original lot, it was clear to the court there
were acts taken which would provide constructive notice (additionally there was written
notice in some of the deeds as well) to only provide residential properties on the
land. This means, that despite his having been told by his grantor that the land had no
restrictions, he had a duty to check the record. If everyone else around him was going
residential, he should have known as well to conform to those standards set by his
neighboring landowners.
If the building built on the lot can be used for residential purposes, then it can remain on
the land.
Rule: A negative reciprocal easement runs with the land sold by virtue of express
fastening and abides with the land retained until loosened by expiration of its period of
service or by events working its destruction. It is not personal to owners but operative
upon use of the land by any owner having actual or constructive notice. Benefits and
burdens carry to subsequent landowners to its affirmative or negative mandates,
originates with the original owner, and is never retroactive, as the very nature of their
origin forbids.
Note: A majority of courts imply negative restrictions from a general plan, as was done
in Sanborn.
Validity and Enforcement of Covenants
Intent that the benefit and/or burden of the covenant run to successors of the
original parties
1.
Notice on the part of purchasers of the original promisor 2.
That the covenant touch and concern the land 3.
Note: In addition, vertical privity may be required in some jurisdictions for the
benefit (but not the burden) of a covenant to run in equity.
Equity imposes three requirements
Neponsit v. Emigrant Bank
(vertical privity & touch/concern requirement)
Issue(s): Under NY property law, may DF landowners have their property foreclosed
upon by PL's assignee for failure to pay a yearly service charge on their land as set for
in the original conveyance of the land?
Holding: Yes. The covenant touches & concerns the land, runs with the land, and
there is privity, and so there is a covenant which has been passed down to grantee who
had the duty to pay but did not. "In substance, if not form, the covenant is a restrictive
covenant which touches and concerns the DF's land, and in substance, if not in form,
there is privity of estate between PL and DF...."
Court's Rationale/Reasoning: English law it and NY law combine to hold that the
burden of a covenant which requires the covenantor to so an affirmative act, even on
his own land, for the benefit of the owner of a "dominant estate," does not run with his
land so as to change the burden of performance on a subsequent grantee.
For the covenant to "touch and concern," it must affect legal relations -- the advantages
& burdens -- of the parties to the covenant, as owner of particular parcels of land and
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& burdens -- of the parties to the covenant, as owner of particular parcels of land and
not merely as members of the community in general, such as taxpayers or owners of
other land. The distinction between covenants which run with the land and covenants
which are personal, must depend upon the effect of the covenant on the legal rights
which otherwise would flow from ownership of land and which are connected with the
land.
So even as the covenant is partially to pay for lands which are not touching the
covenant, the land on which the lien is paid is also part of the lands touching the
covenant. So it touches and concerns.
As to privity, it is based upon a distinction between the corporate property owners
association and the property owners for whose benefit the association was
created. Enforcement of technical principles is necessary to enforce the equitable
associated with privity (Tulk v. Moxhay). Here, the association is acting as an
instrument of the assignor property owners corporation.. The common rights of all the
residents were preserved through such an organization.
Rule: "Essential elements of a real covenant: (1) must appear grantor & grantee
intended that the covenant should run with the land; (2) covenant touches or concerns
the land which it runs; (3) privity of estate between the promisee or party claiming the
right to enforce it, and the the promisor or party who rests under the burden of the
covenant."
Today it is well settled that homeowner associations have standing to enforce
development covenants if they have been granted enforcement power.

Touch and Concern: Affirmative Covenants

Note: The Neponsit court managed to hold that the Property Owners Association had
standing by concluding that "in substance, if not in form, there is privity of estate
between the plaintiff and the defendant." Neponsit Realty Company had established the
Property Owners' Association as the agent to represent the property owners whose
property was reciprocally benefitted and burdened by the covenant.
Courts are reluctant to issue orders to perform a series of acts
requiring continuing judicial supervision
1.
Enforcing an affirmative covenant, which requires the covenantor to
maintain property or pay money, may impose a large personal
liability on a successor.
2.
An affirmative obligation, unlimited in time, resembles a feudal
service or perpetual rent
3.
Some courts have viewed affirmative covenants as clogs on titles. 4.
On the other hand, courts have been wary of enforcing affirmative covenants
against successors for four reasons:

Covenants restricting the use of land have almost always been held to touch and
concern land. These negative covenants directly affect the uses to which the land can
be put and substantially affect its value.

Touch and Concern: Covenants to Pay Money

Most of the cases in which courts find a covenant does not touch or concern land
involve monetary obligations and tying arrangements. Although the results are not
always predictable, almost all cases approve monetary obligations in a common interest
community. In Streams Sports Club, the court held that the covenant touched and
concerned the land because the owners had the right to enjoy the club facilities.
Caullett v. Stanley
Facts: Following collapse of negotiations directed towards agreement on the
construction by DF of a dwelling on the transferred premises, the parent suit was
instituted. There was a covenant which said DF's could build the structure on the land,
which binds the purchasers, their heirs, executors, administrators and assigns.
Trial court held the covenant to be stricken from the deed as it was unenforceable, and
based on that the DF's had no claim, right, or interest in and to the lands by the clause
in question, or by the covenant, and the clause was stricken (as above) so as to be
declared null, void and of no further force and effect.
DF urges that the recital comprises an ordinary property restriction, entered into for the
benefit of the grantor and his retained lands. PL maintains the clause is too vague to be
capable of enforcement and amounts to no more than a personal covenant which in no
way affects or burdens the realty and has no place in an instrument establishing and
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way affects or burdens the realty and has no place in an instrument establishing and
delimiting the title to same.
Issue(s): Under NJ law, does the recital constitute an enforceable covenant restricting
the use of plaintiff's land?
Holding: No. Approaching from a direction which is compatible with the constructional
principles set forth in the rule, it is clear that the deed item in question is incapable of
enforcement and and is therefore not restrictive of PL's title. This clause is too personal
in nature to restrict the use of the land by PL's. An intention to dispense broader land
use benefits, in the form of a neighborhood scheme, cannot here be found, as in effect
conceded by DF and as expressly stated in the parties' deed.
Court's Rationale/Reasoning: Nothing mentions what kind of building, how much it
costs, or how long the restriction runs. Even if the clause is sufficiently definite to DF, it
still cannot be said to be an equitable servitude or a covenant running with the land.
The provision does not touch and concern the subject property. To constitute a real
rather than a personal covenant, the promise must exercise direct influence on the
occupation, use, or enjoyment of the premises. It cannot be a use incidental to the
performance of a promise. There must be a reasonable limitation or proscription to the
land (like limiting land to residential purposes), but this provision is not similar.
This provision seems more like a scheme for DF to make a profit twice on the land he
is attempting to sell, and in such an event there is no clean hands, and without clean
hands, one cannot come into the court of equity and claim relief as innocent and
injured. PL, on the other hand, is innocent and stands to be considerably injured if it
should not be permitted to build what it wants by who it wants on property it now owns
by bargain and sale.
Rule: While restrictive covenants are to be considered realistically in the light of the
circumstances under which they were created...counter considerations, favoring the free
transferability of land, have produced the rule that incursions on the use of property will
not be enforced unless their meaning is clear and free from doubt. Thus, if the
covenants or restrictions are vague or ambiguous, they should not be construed to
impair the alienability of the subject property.
When the burden is placed upon the land, and the benefit is personal to one of the
parties and does not extend to his or other lands, the burden is generally held not to run
with the law at law. Nor can the covenant be enforced as an equitable servitude where
the benefit is in gross and neither affects retained land of the grantor nor is part of a
neighborhood scheme of similar restrictions (Tulk v. Moxhay).
Defeasible Fees as Land Use Control Devices
Defeasible fees (fee simple, determinable fees, FSSCS 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 a servitud is damages, injunction, or enforcement of a lien.
Hill v. Community of Damien
Facts: AP uses property as a group home for AIDS-stricken people, and contends that
use of the home as such is not a violation of the neighborhood covenant, and failure to
allow them their right would be a violation of their rights under the Federal Fair Housing
Act of 1988 (FHA). APE's argue the use of the home violates a restrictive covenant.
Community leased the residence 12/92 located in a subdivision, for use as a group
home for 4 individuals w/AIDS. ALL 4 were unrelated; each needed some in-home
nursing care.
The restrictive covenant entered into by AP's says no lot shall be used for no purpose
other than as a single-family residence, nor shall any other bldg be used for anything
other than incidental to a single-family residence. The use for other purposes, but not
restricted to "...rooming houses..." is expressly prohibited.
Issue(s): Under NM property law, should the interpretation of a restrictive covenant that
says, "no lot shall ever be used for any purpose other than single family residence
purposes," be strictly interpreted by the court to mean only the traditional family, when
the residence is used as a group home for people with AIDS?
Holding: No. The home is not used for anything other than a single-family home under
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Holding: No. The home is not used for anything other than a single-family home under
the provisions of the covenant, and forcing them out would be illegal under the FHA.
Court's Rationale/Reasoning: Court looked to the trial court's reasoning under the
covenant, and found their determination was that they thought the term "single family
residence" was contrary to the use of the AP's home; it felt that the group home was
used more like an apartment, quasi-health care facility, or a rooming house. This is
incorrect as a matter of law.
Group home had a traditional family structure, with all residents acting as normal
residents did with a disable family member. Health-care workers didn't live there and
they weren't affiliated with the Community in any way. Community group was there to
help, but not run its business out of the home. SC & OK Supreme Courts came to the
same decision as this court: purpose of group home is to create a family atmosphere.
Family argument by Hill: these residents are not a family by definition. But neighbors
fail to check the covenant to see how family is used in it; the term "family" is not
unambiguously stated, and as rule 1 states, any ambiguity is read to favor the
appellant. The city's definition of family considers a family "any group of 5 or less
unrelated people living in the same dwelling. There is also strong public policy in favor
of removing barriers preventing individuals w/disabilities from living in group homes in
residential settings and against restrictive meanings of "families." This is urged by
Federal as well as State gov't.
Traffic argument is unconvincing. Court quickly rushed through, and said covenant has
no restrictions to this, and besides, the traffic could conceivably be the same with a
married family of four there as well.
The FHA argument is also compelling for appellant. A restriction does indeed violate
the Act, as the statute describes discrimination in this context as denying or make
unavailable to any person of handicap who intends to reside in a place after it is sold,
rented or made available. The court was not impressed with their discriminatory intent
argument, but was with the disparate impact, in which it said that the neighbor's conduct
actually or predictably resulted in discrimination or has that effect. Limiting a covenant
to able-bodied people creates a disparate effect (different in every way) to a normal
living environment.
Finally, if the neighbors denied access or a refusal to accommodate to the
neighborhood through its covenant, it should be forced to accommodate (not just
applicable to handicapped people).
Rule:
(1) if the language is unclear or ambiguous, the court will resolve the restrictive
covenant in favor of the free enjoyment of the property and against restrictions.
(2) the court will not read restrictions on the use and enjoyment of the land into the
covenant by implication.
(3) the court must interpret the covenant reasonably, but strictly, so as not to create an
illogical, unnatural, or strained construction.
(4) the court must give words in the restrictive covenant their ordinary and intended
meaning
Shelley v. Kramer
Relevant Facts: 2 cases amalgamated together with similar facts. One from Missouri,
the other Michigan. 30 out of 39 owners of a section of St. Louis, signed an agreement,
stating for 50 yrs., no part of the properties would be occupied by any person not of the
Caucasian race, which was duly recorded. The district described included 57 parcels of
land where the owners held 47. Shelly, petitioners, pursuant to a contract for sale
exchanged valuable consideration for a warranty deed from Fitzgerald. Trial ct found
the petitioners had no actual knowledge of the restrictive covenant at the time of the
purchase.
Legal Issue(s): Whether the 14
th
Amendment, E. P. Cl., prohibits judicial enforcement
by state courts of restrictive covenants in real property transactions based on race?
Courts Holding: Yes
Law or Rule(s):No State shall make or enforce any law which shall abridge the
privileges or immunities of citizens of the U. S.; nor deprive any person life, liberty, or
property w/o due process of law; nor deny any person the equal protection of the law.
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property w/o due process of law; nor deny any person the equal protection of the law.
Court Rationale: 14
th
erects no shield against merely private conduct. Restrictive
covenants standing alone cannot be regarded as a violation of any rights guaranteed to
petitioners. The States have not abstained from action, they have made available to
such individuals the full coercive power of the states government to deny to petitioners,
on the basis of race or color, the enjoyment of property rights. The action of state
courts and of judicial officers in their official capacities is to be regarded as action of the
State w/i the meaning of the 14
th
. The judicial actions in each state bears the clear and
unmistakable license under authority of the State to restrict property interests on the
basis of color or race. Such discrimination has occurred in these cases is clear.
Notes
A covenant with a racially discriminatory effect may violate the FHA, enacted as Title
VIII of the Civil Rights Act of 1968. this act makes it unlawful to refuse to sell or rent or
otherwise make unavailable a dwelling to any person because of race, color, religion,
sex, national origin, familial status, or handicap

The constitutional prohibition of discriminatory state action is very much alive when the
claim does not come within the purview of the legislation

A deed containing a restrictive covenant against a particular race or religion or ethnic

group violates the FHA, which prohibits printing or publishing of any statement
indicating a racial, religious or ethnic preference with respect to the buyer of a dwelling

The federal government has expressed a clear policy in favor of removing barriers
preventing individuals with physical and mental disabilities from living in group
homes in residential settings and against restrictive definitions of "families" that
serve to exclude congregate living arrangements for the disabled.

The legislative history of the amended FHA reflects the national policy of
deinstitutionalizing disabled individuals and integrating them into mainstream of
society

The FHA's protections of handicapped people extend to those with AIDS

Both the federal and state governments have expressed a strong policy
encouraging locating group homes in single-family residential areas and treating
them as if they constituted traditional families.

Restatement Changes
Third Restatement of Property (Servitudes)
FHA Public Policy:
An equitable servitude is a promise concerning the use of land that (1) benefits and burdens the original
parties to the promise and their successors and (2) is enforceable by injunction.
Horizontal Privity Requirement: The Restatement (Third) repudiates the first
Restatement and takes the position that horizontal privity of estate is not required for a
covenant to run at law to successors
1.
It treats negative covenants the same as easements, meaning that all owners and
possessors of burdened land are bound by negative covenants regardless of the
extent of their interest or the manner in which they obtained their interest.
A.
Likewise, all owners and possessors of benefitted land are entitled to enforce the
covenant
B.
The Restatement views affirmative covenants differently. It sets out separate rules
for lessees, life tenants, and adverse possessors, and it distinguishes between
benefits and burdens.
C.
Section 5.2 discards the vertical privity requirement for both the burden and the benefit.
Rather, as to real covenants and equitable covenants it distinguishes between negative
(or restrictive promises) and affirmative ones.
2.
On the burden side, the only affirmative covenants that bind lesees are those that
can more reasonably be performed by a person in possession than by the holder
of the reversion
A.
Section 5.3 (as to lessees) provides that the benefit of covenants to repair, maintain, or
render services to the property run to lessees.so also do benefits that the lessee may
enjoy without diminishing the benefit's value to the lessor and without materially
increasing the burden of performance on the person obligated to perform the covenant
3.
Section 5.4: Both the benefits and burdens of affirmative covenants run to legal life
tenants. However, the life tenant's liability for performance of an affirmative covenant is
limited to the value of the life estate.
4.
Those circumstances are that the covenant as to repair, maintain, or render
services to the property, or that the benefit is one that can be enjoyed by the
person in possession without diminishing the benefit's value to the owner of the
A.
Section 5.2: Adverse possesors who have not yet gained title are liable on affirmative
covenants burdening the property, but the benefits of affirmative covenants run to
adverse possessors who have not yet gained title to property only under limited
circumstances.
5.
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person in possession without diminishing the benefit's value to the owner of the
property and without materially increasing the burden of performance on the party
obligated to perform the covenant. All the appurtenant benefits and burdens of
servitudes burdening the land when adverse possession began run to adverse
possessors who have acquired title.
The property theory also supports the holding that, if the government condemns
the burdened land, the government must pay the benefited owner damages for
loss of the servitude.
A.
Once the original promisor conveys the land, you cannot sue the original promisor
regarding the covenant and the original promisor can no longer sue on the
covenant.
B.
Property Theory of Equitable Servitudes: Although an equitable servitude started out as
a promise enforced in equity, in the course of time it turned into an interest in land.
Unlike a real covenant, which attaches to an estate in land, an equitable servitude
burdens the land itself and not the estate.
6.
The Restatement drops the terms "real covenant" and "equitable servitude" and
refers to these as "covenants running with the land"
A.
Classification of Servitudes: It does not matter whether a covenant is characterized as a
real covenant or an equitable servitude. The Restatement takes the position that there
is, and ought to be, no difference in the rules applicable to real covenants and equitable
servitudes.
7.
Creation of Servitudes in Favor of Third Parties: The benefit of a servitude, including
both easements and covenants may be created in a third party. No privity of estate is
necessary. But vertical privity for plaintiffs other than homeowner associations to obtain
injuctive relief against violations of restrictive covenants has not disappeared.
8.
Abolishing the "Touch and Concern" Requirement: The Restatement supersedes the
"touch and concern" requirement with a default rule that a covenant is valid.
9.
Hence, the Restatement reformulates the inquiry so that the appropriate question
about the validity of a servitude at the time of its creation is whether the servitude
violates public policy.
A.
Establishing Public Policy Standards for Permissive Servitudes: The purpose of
replacing the old touc hand concern rule with the new rule is to encourage courts to
articulate more specifically why they find a particular covenant objectionable at its
inception.
10.
(2) A servitude that lacks a rational justification is invalid.
Standards for Restraints on Alienation: (1) An otherwise valid servitude is valid even if it
directly restrains alienation by limiting the use that can be made of property, by reducing
the amount realizable by the owner on sale or other transfer of the property.
11.
Special Termination Rule for Servitudes in Gross: If it has become impossible or
impracticable to locate the beneficiaries of a servitude held in gross, a court may
modify or terminate the servitude with the consent of those beneficiaries who can
be located, subject to suitable provisions for protection of the interests of those
who have not been located.
A.
In Gross Benefits: Benefits in gross are freely permitted and the burden will run when
the benefit is in gross.
12.
New Requirements for Modification and Termination of Servitudes: 7.10 13.
(1) When a change has taken place since the creation of a servitude that makes it impossible as
a practical matter to accomplish the purpose for which the servitude was created, a court may
modify the servitude to permit the purpose to be accomplished. If modification is not practicable,
or would not be effective, a court may terminate the servitude. Compensation for resulting harm
to the beneficiaries may be awarded as a condition of modifying or terminating the servitude.
(2) If the purpose of a servitude can be accomplished, but because of changed conditions the
servient estate is no longer suitable for uses permitted by the servitude, a court may modify the
servitude to permit other uses under conditions designed to preserve the benefits of the original
servitude.
(3) The rules stated in 7.11 govern modification or termination of conservation servitudes held
by public bodies and conservation organizations, which are not subject to this section.
7.12 Modification And Termination Of Certain Affirmative Covenants
(1) A covenant to pay money or provide services terminates after a reasonable time if the
instrument that created the covenant does not specify the total sum due or a definite termination
point. This subsection does not apply to an obligation to pay for services or facilities
concurrently provided to the burdened estate.
(2) A covenant to pay money or provide services in exchange for services or facilities provided
to the burdened estate may be modified or terminated if the obligation becomes excessive in
relation to the cost of providing the services or facilities or to the value received by the burdened
estate; provided, however, that modification based on a decrease in value to the burdened
estate should take account of any investment made by the covenantee in reasonable reliance
on continued validity of the covenant obligation. This subsection does not apply if the servient
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on continued validity of the covenant obligation. This subsection does not apply if the servient
owner is obliged to pay only for services or facilities actually used and the servient owner may
practicably obtain the services or facilities from other sources.
(3) The rules stated in (1) and (2) above do not apply to obligations to a common-interest
community or to obligations imposed pursuant to a conservation servitude.
A direct restraint is valid if "reasonable". Direct restraints clearly interfere with the
operation of the free market economy. Common types of direct restraints include
prohibitions on transfer without the consent of the association, rights of first refusal,
and requirements that transfers be made only to person meeting certain eligibility
requirements.
A.
An indirect restraint is invalid only if it "lacks rational justification". Indorect
restraints include use restrictions or other restrictions (such as pet, paint color, or
planting restrictions) that limit the potential market for the property.
B.
Contrasts Between Direct & Indirect Restraints on Alienation: 13.
Termination of Covenants Continued
Covenants, like easements can be terminated in a number of ways, including:
expiration, release, abandonment, merge estoppel, prescription, and condemnation. In
addition, they may be modified or terminated even without unanimous consent.
Note: An easement and a covenant are terminated in different ways
Written release a.
Merger of the dominant and servient estate b.
Affirmative act that expresses an intention not to be bound c.
Openly and notoriously preventing use d.
Terminating a Covenant
Terminating an EASEMENT:
Note: If the parties who want to terminate the covenant are not parties to the
original contract, they must get the signatures/approval of the successors and
original parties.
Western Land Co. v. Truskolaski
Written Consent: the parties agree that they don't want to be bound A.
Rule: Even though nearby avenues may become heavily traveled thorough-fares,
restrictive covenants are still enforceable if the single-family residential character of the
neighborhood has not been adversely affected, and the purpose of the restrictions has
not been thwarted.
Note: Zoning laws may be broader than the covenant-- just because the zoning law
changes, you do not have to change the covenant. The covenant and the zoning law
can't conflict, but zoning laws may be more restrictive.
Rick v. West
Rule: Restriction that is not outmoded and affords a real benefit to the person seeking
enforcement may be enforced and no pecuniary damages should be given in lieu of
enforcement.
Common Interest Communities
Here, any requirement of horizontal or vertical privity is met because the
original purchasers are all in privity with the developer and subsequent
purchasers are in privity with the original purchasers

Any requirement that a covenant touch and concern the land is usually
satisfied

Negative convenants restricting use are almost always held to touch and
concern, as are affirmative covenants to pay dues to a homeowners
association (Neponsit)

The distinctive feature of a common interest community is the obligation that binds the
owners of individual lots or units to contribute to the support of common property, or
other facilities, or to support the activities of an association, whether or not the owner
uses the common property or facilities, or agrees to join the association.
Condominiums A.
Each unit or interior space in a condominium is owned separately in fee simple by an
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Each unit or interior space in a condominium is owned separately in fee simple by an
individual owner.

The exterior walls, the land beneath, the hallways, and other common areas are owned
by the unit owners as tenants in common. (tenant in common common areas)

Because each unit is owned separately, each owner obtains mortgage financing by a
separate mortgage on the owner's individual unit

The failure of one unit owner to pay mortgage interest or taxes does not jeopardize the
other unit owners

Real estate taxes are assessed separately.

It is easier to overturn a bylaw, as opposed to a declaration of a condominium
Declaration of a Condominium: This is a publicly filed document, that creates a
condominium development under relevant state law, which describes what you own and
relevant procedures for the operation of the condominium.

Co-ops B.
The title to the land and the building is held by a corporation
The residents own all the shares of stock in the corporation and control it through an
elected board of directors

Each resident has a long-term renewable lease of an apartment unit

Residents = owners of the cooperative corporation + tenant of the corporation
The cooperative property is subject to one blanket mortgage
The investment of one person depends on the financial stability of others
If one cooperator fails to pay his share of the mortgage interest or taxes, the other
cooperators must make it up or the entire property may be foreclosed

Nahrstedt v. Lakeside Village Condominium

Rule: CA Legislature in Civil Code section 1354, has required that courts enforce the
covenants, conditions, and restrictions contained in the recorded declaration of a common
interest development "unless unreasonable."
(so the restriction does not depend on the behavior of the property owner, but the restriction
must be uniformly enforced in the condo development to which it was intended to apply unless
PL owner can show that the burdens the rule imposes on affected properties so substantially
outweighs the benefits of the restriction that it should not be enforced against any owner)
Mulligan v. Panther Valley Property Owners Assn.
Rule: Court applied a reasonableness test rather than NY's business judgment test b/c the
changes were made by a vote of the members rather than by the board of directors.
Public Land Use Controls
Nuisance i.
Trespass ii.
Judicial: [tort] The court tells you that you can or cant do something A.
Legislative: Law of zoning B.
Eminent Domain
Two Types:
Public Land Use Controls are imposed by law.
Regulating Property: The government may leave property in the hands of its owners but
regulate its use

Eminent Domain: The government takes property from its owners and reallocating it to
government preferred uses.

The language limits not only the government's right literally to take property
through the power of eminent domain, but its freedom to regulate property as
well.

The presumption of the 5th Amendment is that property can be taken for
public use if just compensation is given

How do we determine what "just compensation" is?

5th Amendment: "nor shall private property be taken for "public use" without
"just compensation"
There are constraints to the government's power of eminent domain.
General Rule: "Just compensation" is fair market value for what a property similar to
yours is worth. [there is no case law on this]

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It does not account for improvements, purchase price, or sentimental
value

Holdouts
What does "public use" mean?
"Fair market value": may be different from the amount you would sell your
property for

yours is worth. [there is no case law on this]

Government identification of the property's use 1.
Instead the property is bought on the open market a.
If the property is bought on the open market, then eminent domain isnt
involved
b.
Purchase the property without using condemnation 2.
Everyone who has an interest in the property is given notice a.
If condemnation is used to acquire the property, eminent domain comes into play. 3.
The government bears the burden of establishing that the property will be utilized for
"public use"
4.
"Public Use"
1st Generation: Public Ownership: If the public owned it, then that was an easy case. A.
2nd Generation: Private Ownership/Public Use: Transferring from one private owner
to another, but the public uses the property [ example: railroads] [ every member of the
public can use the property]
B.
Hawaii: Congress has the power to determine whether an instance of
redevelopment of lands is proper under eminent domain. As long as the
project is serving the public interest, the project is deemed
satisfactory. The "public use" requirement is coterminous (coextensive in
scope and duration) with the scope of the sovereign's police powers.
i.
Berman: A "public purpose" is present if you have a unified plan to
address "blight" within a neighborhood, if you have a unified plan to attack
this problem within a neighborhood, you make take property within the
neighborhood, even a property that does not contribute to the problem.
ii.
Cases:
3rd Generation: Private Ownership/Public Purpose: Situations where not every
member of the public can use the property
C.
Kelo v. City of New London
The city's taking of private property to sell for private development qualified as a "public use"
within the meaning of the takings clause. The city was not taking the land simply to benefit a
certain group of private individuals, but was following an economic development plan.
Such justifications for land takings, the majority argued, should be given deference. The takings
here qualified as "public use" despite the fact that the land was not going to be used by the
public. The Fifth Amendment did not require "literal" public use, the majority said, but the
"broader and more natural interpretation of public use as 'public purpose.'"
Legitimate Purpose A.
Rational Means to an End B.
Test:
Note: The states may create higher standard for the taking of property
Judicial Land Use Controls: The Law of Nuisance
The law of nuisance is part torts and part property-- Torts because nuisance liability
arises from negligent or otherwise wrongful activity, and property because the liability is
for interference with the use and enjoyment of land.
Guiding Principle: "One should use one's own property in such a way as not to
injure the property of another."
Public Land Use Controls
Judicial Legislative
Public Nuisance Private Nuisance
Trespass Nuisance
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Judicial Land Use: A judicial decision that something done on the land isn't permissible.
Thus trespass = physical entry + onto property + by person -
Note: it is hard to prove damages in regards to trespass -
Trespass : Requires physical entry/invasion of/onto property by a person or something
under the control of the person
A.
Here, the victim is someone who has their use and
enjoyment of their property violated

Private nuisance actions are brought by a private party

ONLY THE OWNER OF THE INTEREST IN LAND CAN
BEING SUIT

Private Nuisance: A private nuisance exists when one makes an

improper use of his own property and in that way injures the land the
land or some incorporeal right of one's neighbor.
i.
A private person can sue only if they can show a
"special injury or damage of a kind different from
that suffered by other members of the public"

Public nuisance actions are brought by a government

official, or someone who represents the public

"Whether the conduct in question significantly

interferes with public health, safety, peace, comfort
or convenience.

Circumstances that bear on "public nuisance

unreasonableness" are

Public Nuisance: A harm to the general public. An unreasonable

interference with a right common to the general public.
ii.
Nuisance: Covers a wider variety of actions that trespass. Nuisance law recognizes
that there are uses which are incompatible with each other and it retroactively says that
a legal action is not permissible. There are two types of nuisance:
B.
"Public Nuisance" Protects public rights
Nuisance Analysis
"Private Nuisance" Protects rights in the use and enjoyment of land
Note: The difference between public and private nuisance lies in the interests protected:
Nuisance liability arises when the interference is:
Substantial: (subjective) it occurs more than once A.
And either B.
Unintentional: A person is liable for unintentional invasion
when he conduct is negligent, reckless or ultrahazardous
I.
Note: It's never a defense to say that something is a
legal action!

Private Intentional & Unreasonable Nuisance:

Liability arises when the person whose conduct is in
question acts for the purpose of causing it*, or
knows that it is resulting from his conduct*, or knows
that it is substantially certain to result from his
conduct*.

Intentional & Unreasonable: A person is liable for intentional

and unreasonable invasion, when his conduct is unreasonable
under the circumstances of the particular case
II.
What about coming to the nuisance?
Here, you ask "who was there first?".
If the person committing the nuisance was there first, then the court's are less
sympathetic.

If the complainer is there first, then the court's look at "reasonableness"

Morgan v. High Penn
Liability in terms of "unreasonableness" is based on traditional tort
Question Presented: What does it mean to say that something is "intentional and
unreasonable?"
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categories-- negligence, recklessness, abnormally dangerous activities-- all of
which embody in some degree the concept of "unreasonableness".

Must consider "whether the gravity o the harm outweighs the utility of the
actor's conduct"

Rule of Law: A private nuisance exists in a legal sense when one makes an improper
use of his own property and in that way injures the land or some incorporeal right of
one's neighbor. A person who intentionally creates or maintains a private nuisance is
liable for the resulting injury to others regardless of the degree of care or skill exercised
by him to avoid such injury.
**No malice, intent to harm or intent to circumvent the law is needed for nuisance
liability.
*A person is subject to liability when his conduct is negligent, reckless or ultrahazardous
Estancias Dallas Corp. v. Schultz
Rule of Law and Holding
Even if a jury finds facts constituting a nuisance, it was held that there should be a balancing of
equities in order to determine if an injunction should be granted. If the court finds that the injury
to the complainant is slight in comparison to the injury caused the defendant and the public by
enjoining the nuisance, relief will ordinarily be refused.
It has been pointed out that the cases in which a nuisance is permitted to exist under this
doctrine are based on the stern rule of necessity rather than on the right of the author of the
nuisance to work a hurt, or injury to his neighbor. The necessity of others may compel the
injured party to seek relief by way of an action at law for damages rather than by a suit in equity
to abate the nuisance.
Boomer v. Atlantic Cement Co.
Rule of Law and Holding: Where the benefit of an injunction against a nuisance is greatly
outweighed by its costs, a court may allow payment of permanent damages to the plaintiff in lieu
of injunctive relief.
Note: an injunction can be given in the form of something less drastic than completely shutting a
business down.
Remedies you can get
Injunction only 1.
Monetary damages/ no injunction 2.
Permanent damages 3.
Aesthetic Nuisances
Note: You cannot get nuisance damages for fear of decline in the value of your
property.
Yes, aesthetic nuisances [such as painting you house an ugly color] can be the basis for
a lawsuit, however cases dealing with the aforementioned example rarely win. Most
courts hold that unsightliness alone does not constitute a nuisance (unless of course,
spite is the only motive).
"Tasteless decoration is merely an aesthetic annoyance"
Legislative Zoning & Wrapping Up Public Land Use Control
Could rely solely on nuisance and trespass for land use controls because the
violation HAD to occur and nuisance/trespass actions are unpredictable.

Nuisance and trespass were mechanisms by which courts disallow legal uses of
property.
The Legislature uses zoning plans to fill in the gaps that nuisance/trespass leave
The American dream has always included a single-family home in a natural setting, a
place for comfortable family life, a haven from the crowded city.
Zoning
Structures I.
Mechanisms II.
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Flexibility III.
Structures of Zoning I.
Infrastructure: Things you have to plan for (parking, landfill)
Use: Zoning restricts the use of property (Example: only apartments allowed)
Structure: What the buildings will look like 9density, space, height)
Note: Challenges to zoning laws are made by people who challenge use and
structure. "Use" gets challenged more often.
Types of Zoning II.
The height, spacing, and location of buildings were controlled, justifiably, as a means to provide
light and air, to help avoid and control the dangers of fire, to prevent overcrowding, and to
exclude offensive industries from areas which people lived.
Zoning is an exercise of the police power-- essentially, the power of government to
protect health, safety, welfare and morals. Generally speaking, the police power is held
to reside in the state, but in the case of zoning all states have adopted enabling acts
that delegate zoning authority to local governments
Central Idea of Eucledian Zoning: Hiearchy is the idea behind this model
Efficient
Flexible
Increases the value of some zones
Mixed use
Benefits of Eucledian Housing:
Cumulative/Eucledian Zoning: Districts are graded from highest to lowest A.
Less conflict and nuisance
predictability
Benefits of Exclusive Zoning:
Exclusive Zoning: Unlike Eucledian zoning, there is no cumulation. Zones are
restricted to one use.
B.
Mechanisms of Zoning III.
Zoning laws are local regulations, but the authority is coming from the state
A "comprehensive plan" is a statement of the local
government's objectives and standards for
development.
a.
A comprehensive plan designed to lessen congestion in the
streets
1.
Recite traditional police powers that gives it authority for
zoning, to articulate a legitimate state interest
2.
Planning Commission: comes up with zoning plans a.
Board of Adjustment: grant variances b.
2 Bodies: 3.
Village of Euclid v. Ambler Realty Co.
Uniform Standard Act: The state gives direction to local entities. The Act requires:
Issue(s): Under federal law, does the ordinance establishing the zoning violate the fourteenth
amendment (i.e., is the ordinance invalid in that it violates the constitutional protection to the
right of property in the appellee) when there are attempted regulations under the guise of the
police power, which are unreasonable and confiscatory?
Holding: No. The ordinance must be for the benefit of the public welfare. This is to be
determined not by an abstract consideration of the building considered apart but considered in
connection with the circumstances and the locality.
Rule: The court gives deference to police powers and the deterrence of nuisance
Notes
Eucledian Zoning: Districts are graded from "highest" (single family residences) to "lowest"
(worst kind of industry). Under Eucledian zoning, the uses permitted in each district IS

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In some jurisdictions there is a combo of both "exclusive" and "Eucledian" zoning
(worst kind of industry). Under Eucledian zoning, the uses permitted in each district IS
cumulative; higher uses are permitted in areas zoned for lowers uses but not vice versa.

Commercially zoned property usually sells at a higher price than residentially zoned property
The argument that government regulation of land can constitute a compensable taking if it
"goes too far" was accepted by the Court in Pennsylvania Coal Co.

The Court in Euclid concerned itself solely with whether the police power could be exercised to
zone property without depriving the plaintiff of (substantive) due process of law

The Non-Conforming Use C.

PA Northwestern Distributors, Inc. v. Zoning Hearing Board
Health a.
Safety b.
Property Interest c.
Rule of Law: Any amoritization is a "per se" taking. But, a reasonable amoritization provision is
valid if it considers certain factors :
In effect, the plaintiff may have a monopoly on his "adult bookstore" business because, since
the ordinance was enacted after he opened the store, no one else can open an adult bookstore.

The right to maintain a non-conforming use runs with the land; it survives a change of
ownership. But if the buyer sells the "adult bookstore" and the subsequent buyer opens a
"flower shop", the subsequent buyer cannot open an "adult bookstore" on the property.

The non conforming use can be expanded to meet natural changes in the industry.
Doctrines That Come into Play
Compensation a.
The state has to pay for expenses related to the removal of
the business
b.
Estoppel: Used to prevent the government from enforcing a permit against someone.
Estoppel here requires:

Achieving Flexibility in Zoning D.

Variances and Special Exceptions I.
Variance: Something you apply for and is given on a case-by-case basis. The applicant
bears the burden of proof to show:
A.
Example: Nothing else can be done with the land
Unecessarry hardship will occur if the variance is not granted i.
Example: The value of the home built on the land will be worth the
same as the houses that are incompliance with the zoning laws
Commons v. Westwood Zoning Board of Adjustment
If the variance is granted, there wont be an adverse impact on the goal of the
zoning regulations
ii.
Rule of Law: "Undue hardship" involves the underlying notion that no effective use can
be made of the property in the event the variance is denied. When the regulation
renders the property unusable for any purpose, the analysis calls for further inquiries
which may lead to a conclusion that the property owner would suffer an undue hardship.
Plaintiff has to be given the opportunity to show undue hardship.
It can peacefully co-exist i.
Heavily moderated ii.
Special Exception: This is a an exception built into/permitted by the zoning statute.
Special exceptions recognize that there may be uses contrary to the literal meaning of
the statute, but can still be in harmony with the general purpose of the statute if:
B.
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Heavily moderated ii.
Special exceptions determines prospectively that certain uses are not inconsistent
with the zoning regulations. If challenges, the defendant must show that the use
fits the terms of the exception-- before the business exists.
Note: If there is an exception in the statute, you dont have to apply for a variance.
Notes
Such conditions may relates to fences and landscaping
In granting a variance, zoning boards may impose reasonable conditions related to the
use of the property that minimize the adverse impact of the use upon neighbors

Zoning boards may not condition a variance upon use of the property by the original
applicants only, as this has no relation to ameliorating the effects of the proposed land
use and is unrelated to the legitimate purposes of zoning.

The burden of proof is greater for a use variance than for an area variance
Notes
The Commons case involved a so-called area variance, having to do with setback
requirements and the like, as opposed to a use variance relaxing restrictions on
permissible uses in a particular area

Spot Zoning is invalid where some or all of the following factors are present:
A small parcel of land is singled out for special and privileged treatment A.
The singling out is not in the public interest but only for the benefit of the
landowner
B.
The action is not in accord with a comprehensive plan C.
Spot Zoning: Spot zoning is a provision in a general zoning plan which benefits a
single parcel of land by creating an allowed use for that parcel that is not allowed for the
surrounding properties in the area.

Mixed Use
Allows you to give residents a particular desired use for the land that
cannot be obtained by a variance or exception

Justifications for Spot Zoning:

Exaction: quid pro quo for a zoning benefit. This is when you allow someone to get a
zoning benefit (variance) and in exchange they owe you something (build a parking lot)

Contract and Conditional Zoning:

Conditional Rezoning: is typically used to describe a situation where the property
owner agrees unilaterally to use the land in a specified manner

Contract Rezoning: refers to a bilateral agreements between the owner and the
zoning authority, perhaps with the owner covenanting to restrict the use of the
property in exchange for the authority's promise to rezone.

The local government creates (but does not pin down) a use district by an
ordinance that specifies standards and criteria to govern the uses permitted in
the zone
1.
Later on, the zone is brought to earth, attached to a particular area through a
zoning amendment
2.
Floating Zones: A Floating Zone achieves flexibility by defining a zone but reserving a
decision about its location for the future. It involves 2 steps:

Residences in a cluster zone are typically relieved from observing the usual
frontage or setback regulations and side-or-rear yard requirements

A central idea of the concept is to provide some of the amenities of a rural

environment in an otherwise urban setting

Cluster zones involve are variations

Cluster Zones: Cluster zoning is a flexibility device whereby a developer is permitted to
construct dwellings in a pattern not in literal compliance with the area restrictions of a
zoning ordinance

PUD's involve area and use variations

PUD's: Planned unit developments generally contemplate a mix of residential,
commercial and sometimes industrial uses.

How Clusters and PUD's are made:

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Through special excpetions issued by a board of adjustment
Subdivision controls administered by a planning board
Aesthethic Regulation
Through floating zones created by the local legislative body (*most common
approach**)

How Clusters and PUD's are made:

Here, there must be a nexus between the statute and health/safety
1st Generation Aesthetic Statutes: If the zoning law is disguised as a health/safety law,
then regulating aesthetics may be permissible.

2nd Generation Aesthetic Statutes: You can regulate aesthetics if there is an interest in
preserving property values in the area.

We are here
3rd Generation Aesthetic Statutes: Aesthetics alone can be the justification for the
zoning law

A private community can impose aesthetic regulations because that would

constitute a private covenant imposed by the homeowners association which
you agree to when you move into the neighborhood. (Court give a lot of
deference to private covenants regulating aesthetics)

Modern Trend: Entire neighborhoods are designated as "historic", so the

residents must keep the aesthetics of their houses consistent with the
historical era (very controversial)

Historic Preservation: In the past historic zoning was used on buildings

Zoning & Religion: In exclusive zoning areas, houses of worship are an
exception and therefore permitted in single-family zones

Keep in Mind:
Dispersal Theory: When the county does not want one area of town dominated by a
certain type of business-- Example: a ton of adult bookstores on Main Street

Justification: We want people to walk around and avoid certain businesses if

they so desire

Concentration Theory: When a county wants certain kinds of businesses in one area
Stoyanoff v. Berkeley
Concentration and Dispersal Theory are both permissible under the 1st Amendment
Rule of Law: In the matter of enacting zoning ordinances and the procedures for determining
whether any certain proposed structure or use is in compliance with or offends the basic
ordinance, it is well settled that courts will not substitute their judgments for the city's legislative
body, if the result is not oppressive, arbitrary or unreasonable and does not infringe upon a valid
preexisting nonconforming use.
Notes
The courts viewed zoning under the police powers as a form of nuisance control
Perhaps a majority of jurisdictions follow Berman and accept aesthetics as a legitimate
police power goal in itself

Aesthetic considerations are an important factor in historic zoning and historic preservation
legislation, and in these contexts the courts have felt less inhibition in admitting the
legitimacy of aesthetic objectives

Anderson v. City of Issaquah

Naturally, they held that the police power can be exercised to further public health, safety, and
general welfare, but not for purely aesthetic purposes.

Rule of Law: Aesthetic standards are an appropriate component of land use governance.
Whenever a community adopts such standards they can and must be drafted to give clear
guidance to all parties concerned.
Notes
Anderson involved a dispute dealing with an architectural control committee established by
private covenants.

Cases have held that specific standards are not necessary when architectural
approval is required by a private covenant. The architectural committee only has to
act reasonably and in good faith.

Private Restrictive Covenants: Private architectural restrictions are governed by a different

standard than public restrictions.

First Amendment Concerns: It is a common view of commentators that design regulation,

because it implicates expressive values, should at least be subject to close scrutiny.

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because it implicates expressive values, should at least be subject to close scrutiny.
City of Ladue v. Gilleo
Rule of law: Although acknowledging Ladue's police power to minimize visual clutter
associated with signs, the Court ruled that the law "almost completely foreclosed a venerable
means of communication that is both unique and important." The Court held a "special respect"
for an individual's right to convey messages from her home.
Regulations Dealing with Household Composition
This is when there is a statute that either
Likely to be upheld for safety/welfare reasons
Regulates the number of people that can live in a dwelling A.
Less likely to be upheld
Regulates the relationship between people who live in a single family home B.
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