Index:

1) Acquisition by Capture (18-29)…………………………………………………2) Academic Perspectives on the Domain of Property. (36-55)……………………3) The Right to Include, the Right to Exclude (88-96)……………………………4) Principles of Intellectual Property (56-84)……………………………………..5) Property in One’s Persona………………………………………………………6) The Theory and Elements of Adverse Possession. (116-141)………………...7) The Mechanics of Adverse Possession, Disabilities, Future Interests & A.P., After a

Successful A.P.(142-50)8) The Fee Simple (191-198)……………………………………………………..9) The Life Estate (208-10)10) Seisen, Leasehold Estates, Defeasible Estate (221-225)11) Future Interests (253-264)12) Modern Executory Interests, Shifting Executory Interest, Springing Executory Interest

(268-274)13) The Rule Against Perpetuities (285-292)14) Common Law Concurrent Interests (319-335) (337-8)15) Partition/ Sharing Benefits and Burdens of Co-ownership (345-67)16) Marital Interests, Alimony, Dower and Curtesy in text at 385, Elective Share17) Rights of Domestic Partners (395-418)18) Common Interest Communities (896-924)19) Leasehold Estate: term of years, periodic tenancy, tenancy at will (421-38)20) The Tenant Who Has Abandoned Possession, Quiet Enjoyment, Constructive Eviction

(467-492)21) Landlord’s Tort Liability (504-508)22) Transfers of Land (517-530)23) The Contract of Sale: The Statute of Frauds, Marketable Title, The Duty to Disclose

Defects, Implied Warranty of Quality (541-553)24) Remedies for Breach of the Sales Contract (572-585)25) The Deed: Warranties of Title, Delivery (585-606)26) Mortgages and the Mortgage Market (616-40) 27) Title Assurance: Recording System, Indexes (645-51)28) Chain of Title Problems , Persons Protected by the Recording System, Inquiry Notice

(667-693) 29) Marketable title Acts –(701-704)30) Title Insurance- (714-715, 721)31) The Implied Warranty of Habitability (493-503)32) The problem of Decent Affordable Housing (508-515)33) Land Use Controls, Nuisance, Lateral and Subjacent Support, Remedies. Nuisance Law

and Environmental Concerns: (729-761).34) The law of servitudes, easements (appurtenant or in gross), license v. easement, Implied

Easements v. Quasi easement. Necessity and Prescriptive (763-792) 35) Scope of Easements (819-830)36) Termination of Easements, Negative Easements, Conservation easements, Covenants

running with the land, Horizontal and Vertical Privity (831-853)37) Equitable Servitudes (854-859)38) Validity and Enforcement of Covenants, Touch and Concern the land, Discriminatory

Covenants, (864-881)39) Termination of Covenants, 6 ways, modification and termination of Servitudes because

of changed conditions, (882- 896)

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40) The law zoning, the comprehensive plan, the economics of zoning, the nonconforming use, Variances and Special Exceptions, (941-962)

41) Zoning Amendments and the Spot Zoning Problem (962-978)42) Protection of Religious Establishments and Uses (1000-10)43) Environmental Protection, Controls on Household Composition, Exclusionary zoning

(1010-1060)44) Eminent Domain, Public Use, Just Compensation (1060-1080)45) Physical Occupations and Regulatory Takings (1080 – 1158)

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I. Acquisition by Capture (18-29)

Pierson v. Post: First occupancy v. labor. In order to obtain title to a ferae naturae (wild animal) a person must take it. The “first to kill and capture” is the superior rule of law. Had Post mortally wounded the animal, it would have been sufficient to show possession since this would have deprived the animal of its natural liberty. However, the plaintiff was only able to show pursuit and therefore acquired no property interest in the animal.

Ghen v. Rich: The court can look to custom and usage within an industry to determine the rule of law regarding the ownership of property. The party who harpoons the whale is the owner even if it is later discovered on the shore by another. Unless it is sustained, the whaling industry must necessarily cease, for no person would engage in it if the fruits of his labor could be appropriated by a chance finder.

Academic Perspectives on the Domain of Property.

Demsetz, Toward a Theory of Property Rights. The emergence of new property rights takes place in response to the desires of the interacting persons for adjustment to new benefit-cost possibilities. Property rights develop to internalize externalities when the gains of internalization become larger than the cost of internalization. Uses the fur trade and the establishment of private hunting lands as an example.

Coase Theorem Regardless of ass. of entitlement, with no transaction costs same end result will occur With positive transaction costs, placement of entitlement matters Negotiations can result in maximum joint benefit to the parties Flaws - not all are rational economic actors, difficulties in valuing outcomes, animosity

can prevent good faith negotiationso Holdout problem and bilateral monopolies

Radin, Property and Personhood. The more closely connected with personhood, the stronger the entitlement. There is a continuum that ranges from a thing indispensable to someone’s being to a thing wholly interchangeable with money. But there is a point when too much personhood takes away the elements of humanity; this is “fetishism.” Fetishism prevents others from consuming and takes away from the society as a whole.

III. The Rights to Include, The Right to Exclude (88-96)

Jacque v. Steenberg Homes, Inc.: A private landowner has the right to exclude others from his land. This right however has no practical meaning if the State will not enforce it. Without punitive damages, D has a financial incentive to trespass again. Punitive damages, by removing the profit from illegal activity, can help to deter such conduct. In order to effectively do this, punitive damages must be in excess of the profit created by the misconduct

State v. Shack: A man’s right in his real property is not absolute. Necessity, private or public, may justify entry upon the lands of another without trespass. For example, EMT’s trying to give medical attention to someone hurt on your property, no permission.

IV. Principles of Intellectual Property (56-84)

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International News Service v. Associated Press: "Quasi-property rights" may be invoked to protect against unfair competition by competitors, even when the commodity in question is not "owned" by anyone (like the news). Underlying facts and information is in no way protected, however, we have to protect the news industry to give incentive for papers to get the “hot” new stories

Cheney Brothers v. Doris Silk Corp.: "In the absence of some recognized right at the common law or under Statute, a man's property is limited to the chattels which embody his invention. Others may imitate these at their pleasure." We all build on previous ideas, necessary for progress. Consumer benefits, however, the original creator is harmed

Smith v. Chanel, Inc.: 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. This is essentially serving a public interest as a company can sell similar goods at comparable prices.

V. Property in One’s Persona (66-84).

White v. Samsung Inc. Although the billboard did not use Vanna White's name or likeness, the Court found that it was reminiscent enough to constitute an infringement. White has an economically valuable resources, she as a performer is associated with a commercially valuable franchise (Wheel of Fortune).

Moore v. Regents of U. of California: A claim for conversion does not lie for the use of a plaintiff’s bodily tissue in medical research without his knowledge or consent.Under the duty to obtain informed consent, a doctor must disclose his intent in using a patient for research and economic gain.

VI. The Theory and Elements of Adverse Possession (116-141)“Sometimes it is said that, if a man neglects to enforce his rights, he cannot complain if, after a while, the law follows his example.” “The running of the statute of limitations not only bars an action by the previous owner but also vests a new title, created by operation of law, in the adverse possessor.”

Claim of Right: State of mind required by AP takes 3 different views. 1) State of Mind is irrelevant. 2) the required state of mind is, “I thought I owned it.” 3) The required state of mind is, “I thought I didn’t own it, but I intended to make it mine.” These have been called, respectively, “the objective standard, the good-faith standard, and the aggressive trespass standard

Adverse possession requires that there be (1) an entry that is (2) open and notorious, (3) continuous for the statutory period, and (4) adverse under a claim of right.2) O&N= Sleeping principal. Can’t penalize owner for sleeping on his rights if AP’s entry were not reasonably observable, cant blame for being dormant.

Van Valkenburgh v. Lutz: (Claim of Title) To acquire title to real property by adverse possession not founded upon a written instrument, it must be shown by clear and convincing proof that for at least 15 years there was an "actual" occupation under a claim of title, for it is only the premises so actually occupied "and no others" that are deemed to have been held

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adversely. Two ways that someone could obtain land through adverse possession: 1) by enclosing the land or 2) by cultivating or improving the land.

Claim of Title- One way of expressing the requirement of hostility or claim of right on the part of an adverse possessor.Color of Title- A claim founded on a written instrument (a deed, a will) or a judgment or decree that is for some reason defective or invalid (as when the grantor does not own the land conveyed by deed or in incompetent to convey, or the deed is improperly executed.)Adverse possession extends to only the property actually possessed. However, an adverse possessor can acquire title to an entire parcel of land even if she possessed only part of it if: 1) she actually possessed part of the parcel, and 2) she entered onto that part based on a deed or a judgment that appeared to convey title to the entire parcel (i.e. gave her color of title to the entire parcel).

Example: Paul has a deed that appears to convey title to a five-acre parcel to him. However, the deed is defective and does not actually convey title to him. Paul lives on one acre but does not use the other four. At the end of the limitations period, Paul will acquire title by adverse possession to all five acres. The boundaries described in Paul’s deed effectively serve as a substitute for a fence built by Paul.

Manillo v. Gorski: Any entry and possession for the required time which is exclusive, continuous, uninterrupted, visible, and notorious, even though under mistaken claim of title is sufficient to support a claim of title by adverse possession. There is no presumption of actual knowledge by the true owner when the encroachment is of a small area along a common boundary and is not clearly and self-evidently apparent to the naked eye. However, 15 inches seems to meet the open and notorious requirement, their property was small enough that 15 inches is significant.

The Mechanics of Adverse Possession, Disabilities, Future Interests & A.P., After Successful A.P.(142-50)

Typically, the clock starts ticking as soon as adverse possessor takes control of property. Must be continuous by the same owner. If owner sells to someone else, a new clock begins to tick from 0. That is, unless, the law allows the two parties to tack on the time from the first occupancy to the second.

Howard v. Kunto: Tacking of possession by subsequent occupants is permitted if the land is occupied under a mistake of fact provided the occupants are in privity. (for privity to exist, the predecessor must have voluntarily conveyed her possessory interest to the next possessor. e.g. between members of a family, between an employer and employees, or between others who have entered into a contract together). If the evidence shows that the deed to X was intended by the parties to convey not only the described land but also the (unknowingly) adversely possessed strip, X us allowed to “tack” that strip onto the land described by the deed.

A party may prevail on a claim of adverse possession if physical use of the property was limited to summer occupancy. (Continuity in context, i.e., if it is a summer home, a person is not required to be there all year round. What an ordinary true owner would use the land for)

Disabilities: In every state the statute of limitations is extended if specified disabilities are present. Disability provisions differ, but the following example is typical:

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An action to recover the title to or possession of real property shall be brought within twenty-one years (or what ever the statutory period is) (10 years in the following examples) after the cause thereof accrued, but if a person entitled to bring such action, at the time the cause thereof accrues, is within the age of minority, of unsound mind, or imprisoned, such person, after the expiration of twenty-one years from the time the cause of action accrues, may bring such action within ten years after such disability is removed.

Particularly note two matters: A disability is immaterial unless it existed at the time when the cause of action accrued. And after the words “such person” you should insert, “or anyone claiming from, by, or under such person.”

Example: 10 year statute of limitations: Paul wrongfully took possession in 1990, while Olga was mentally impaired. Olga recovered her mental health in 1993. Paul could not acquire title by adverse possession until 2003

Example: Paul wrongfully took possession in 1990, when Olga was twelve years old and mentally impaired. The age of majority is eighteen. Olga recovered from her mental health in 1993. However, Paul cannot acquire title by adverse possession until 2006, which is ten years after Olga reaches majority. If Olga remained mentally impaired until she was twenty years old (1998), Paul would have to wait until 2008. Whenever two disabilities exist when the adverse possession begins, both must be eliminated before the limitations period beings to run.

Example: Paul wrongfully took possession in 1990, and Olga was imprisoned in 1993. Paul acquired title in 2000, because subsequently occurring disabilities do not toll the statute of limitations.

Example: Paul wrongfully took possession in 1990, and Olga died in 1993, leaving a fifteen-year old daughter, Diana, as her heir. Paul acquired title in 2000. Diana’s infancy was not a disability of the person who had the cause of action when it first accrued.

Future Interests & A.P.: The holder of a future interest is not entitled to bring an ejectment action against a wrongful possessor because the future interest gives no presently possessory right. Therefore, the statute of limitations does not begin to run against the future interest holder until that interest becomes possessory

Example: In 1989, Olga died, leaving her land to her husband for life and then to her daughter. In 1990, Paul wrongfully began possessing the land. In 2000, if Olga’s husband is still alive, Paul gained only a life estate measured by the husband’s life. Paul does not acquire the entire fee by adverse possession until he is there for at least ten years after the death of Olga’s husband. Olga’s daughter did not have the right to possess the property and bring an ejectment action against Paul until her father died.

Example: In 1980 Olga rented her property to Tom for a 20 year term, ending in 2000. Paul wrongfully entered in 1985 and ousted Tom. In 1995, Paul adversely possessed Tom’s tenancy. For Paul to adversely possess Olga’s title, he must possess for ten years after her reversion becomes possessory at the lease’s termination, including for nonpayment of rent.

After a Successful A.P.

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After one has met all the requirements for adverse possession and maintained it for the statutory period, the person is not only freed from liability for previous adverse possession, but also from the requirements of adverse possession, such as exclusive and continuous possession. The property is hers and she may do with it as she pleases. A quite title decree will be necessary for the former adverse possessor to have marketable title. New owner will then want to record title.

The Fee Simple (191-198)

Fee Simple Absolute: The largest package of ownership rights; it is INDEFINITE in time.

The Fee Simple: The estate provides the greatest ownership interest. The owner can dispose of the property as he or she pleases, and it will descend to the owner’s heirs at death or according to the terms of the owner’s will. The estate can be unconditional (fee simple absolute) or can be subject to a condition (Defeasible).

Creation of a Fee Simple: At common law words indicating that the land was inheritable, such as to A “and his heirs,” were necessary to create a fee simple. Today, this has been abolished in every jurisdiction and replaced by a statutory presumption in favor of the fee simple estate.

The Life Estate (208-210)

Life Estate- Intent to convey only a life estate must be clear to overcome the modern presumption in favor of fee simple. Therefore words such as “to Bob for his life” must be used to create a life estate. A life estate also is created if the estate necessarily will terminate when the measuring life dies. Therefore, “to Bob for so long as he farms the land” creates a life estate (a defeasible life estate), because the longest it can last is while Bob is alive.

Seisin, Leasehold Estates, Defeasible Estate (221-225)

The fee simple, fee tail and life estate are called freehold estate. The tenancy for years and the periodic tenancy are non-freehold estates. The need for distinguishing the two comes from the common law concept of seisin.

Seisen: The holder of a freehold estate had seisin whereas the holder of a non-freehold estate had possession but not seisin. Today seisin equates most closely with the title to property (right to convey).

Example: The freeholder (landlord) was still regarded as seised of the land even after he had granted a term of years and given up physical possession to the leasing tenant. When a lease is involved, the landlord holds seisin; the tenant merely has possession. THIS DISTINCTION IS OF LITTLE IMPORTANCE TODAY. IT IS USUALLY NOT NECESSARY TO DISTINGUISH SEISIN FROM POSSESSION.

Leasehold Estates: Are nonfreehold possessory estates: Term of years, the periodic tenancy, and the tenancy at will. Term of years (most common) lasts for a specified period of time.Periodic tenancy lasts for a certain time. Unless terminated before the end of the term, it repeats for another like term. May be any length of time, such as year, month, or week.

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Defeasible Estates- Estate may be Defeasible, meaning it will terminate, prior to its natural end point, upon the occurrence of a specified future event. Primary purpose of defeasible fees is land use control.

3 TYPES OF DEFEASIBLE FEE SIMPLE:1) The fee simple determinable- Grantor retains future interest (revert). Conveyance must use words of time, such as “so long as,” “until,” or “during.” Estate only lasts as long as the condition described in it does not occur. Once the condition occurs, the estate automatically terminates.

Ex. “To Bob and his heirs so long as the land is farmed.” The moment the land is no longer farmed, the estate terminates.2) Estate Subject to a Condition Subsequent- Grantor retains future interest. Use words such as “upon the condition that,” “provided that,” or “but if.” Like determinable estates, these estates can end when the condition occurs. Unlike determinable, termination is at the election of the owner of the future interest, NOT AUTOMATIC.The future interest retained by the transferor to divest a fee simple subsequent is called a right of entry (power of termination)

Ex. “To Bob for life, but if the land is used for a farm, the grantor may re-enter and repossess.” Bob has a life estate subject to a condition subsequent. 3) Estate Subject to Executory Limitation- Is the estate created when a grantor transfers a defeasible fee simple, either a determinable fee or a fee simple subject to a condition subsequent, and in the same instrument creates a future interest in a third party rather than in himself. The future interest in the third party is called an Executory interest. To John coveys property to Bob as long as the land is used for farming, then to Bill.

Future Interests (253-264)Five future interest

1) Reversion - If future interest is neither a possibility of reverter nor a power of termination, it is a reversion. It exists when the grantor has NOT conveyed all her interest in the land. Ex. Ann conveys “to Bob for life.” Ann has a revision following Bob’s life estate. If Ann conveys the reversion to Cathy, it is still called a reversion.

2) Possibility of reverter- Person who conveys in fee simple determinable land will get the land back automatically when the condition is breached. For example, Ann owned land in a fee simple absolute. She conveyed it “to Bob and his heirs so long as the land is used as a farm.” Bob has a fee simple determinable, and Ann has a possibility of reverter. Ann will get the land back automatically when it is no longer used as a farm.

3) Power of termination (right of re-entry)- If a grantor conveys an estate subject to condition subsequent, he retains a power of termination. Always go together. The owner of a power of termination can recover the land if the condition subsequent is breached. However, it is NOT AUTOMATIC and the owner may elect not to exercise it and thereby waive it. Until the power of termination is exercised, the grantee retains estate.

4) Remainder - A future interest that waits politely until the termination of the preceding possessory estate, at which time the remainder moves into possession if it is then vested. Two part test (1) the interest must be capable of becoming possessory as soon as the prior possessory estate terminates; and (2) it cannot divest a prior interest. If either element of the test is violated, the future interest is an executory interest. A.Ex. “To Ann for life, remainder to Bob.” Bobs interest will become possessory as soon as the prior possessory terminates. A.Ex2. “To Ann for life, then to Bob 6 months after her death.” Bobs interest cannot become possessory as soon as Ann’s life estate ends therefore, he has an executory interest.

Remainder cannot divest or cut short the preceding interest. SEE NEXT PAGE.

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5) Executory interest - Developed to do what a remainder cannot do: divest or cut short the preceding interest. An executory interest is a future interest in a transferee that can take effect only by divesting another interest. The difference between taking possession as soon as the prior estate ends and divesting the prior estate is the essential difference between a remainder and an executory interest.

Types of Remainders- Two general types: Vested and contingent.

Vested: A remainder is vested if (1) it is given to an ascertained person and (2) it is not subject to a condition precedent (other than the natural termination of the preceding estates.) = it is created in an ascertained person and is ready to become possessory whenever and however all preceding estate expire.

Contingent: (1) it is given to an unascertained person or (2) it is made contingent upon some event occurring other than the natural termination of the preceding estates. In the latter situation the remainder is said to be subject to a condition precedent. In either situation (owner unascertained or subject to a condition precedent) the remainder is not now ready to become possessory upon the expiration of the preceding estate.

Example: O conveys “to A for life, then to the heirs of B.” B is alive. The remainder is contingent because the heirs of B cannot be ascertained until B dies. No living person has heirs, only heirs apparent. If B’s heirs apparent do not survive B, they will not be B’s heirs. The words “heirs of B” refer only to persons who survive B and are designated as B’s intestate successors by the applicable statute of intestate succession.

A remainder that is contingent because it is subject to a condition precedent:

Example: O conveys “to A for life, then to B and her heirs if B survives A.” The language if B survives A subjects B’s remainder to a condition precedent. B can take possession only if B survives A.

Example: O conveys “to A for life, then to B and her heirs if B survives A, and if B does not survive A, to C and his heirs.” The language if B survives A subjects B’s remainder to the condition precedent of B surviving A, and the language and if B does not survive A subjects C’s remainder to the opposite condition precedent. Here we have an alternative contingent remainders in B and C. If the remainder in B vests, the remainder in C cannot, and vice versa.

A Contingent Remainder cannot become possessory so long as it remains contingent. Hence where there is a conveyance:

“to A for life, then to B, but if B dies under the age of 21, to C.” B, holding a vested remainder, is entitled to possession at A’s death, even though B is under 21. If B is under 21, B’s possessory estate remains subject to divestment (take away) until B reaches 21. If, on the other hand, the conveyance had read “to A for life, then to B if B reaches 21,” B would not be entitled to possession at A’s death prior to B reaching 21.

Contingent Remainders are subject to the Rule Against Perpetuities, whereas vested remainders are not. See below for more on RAP.

Indefeasibly Vested- Meaning that the remainder is certain to become possessory in the future and cannot be divested. Thus:Example: O conveys “to A for life, then to B and her heirs” B has an indefeasibly vested remainder certain to become possessory upon termination of the life estate. If B dies during A’s

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life, on B’s death B’s remainder passes to B’s devisees, or, if B dies without a will, passes to B’s heirs, or, if B dies without a will and without heirs, escheats to the state. B or B’s successor in interest is certain to take possession upon A’s death.(In this example B has a vested remainder in fee simple absolute.)

A remainder may be vested but not certain of becoming possessory. It can be vested subject to being divested if an event happens.Example: O conveys “to A for life, then to B and her heirs, but if B does not survive A to C and his heirs.” Note carefully: B does NOT have a contingent remainder. B has a vested remainder in fee simple subject to divestment. C has a shifting executory interest which can become possessory only by divesting B’s remainder.

A remainder created in a class of persons (such as in A’s children) is vested if one member of the class is ascertained, and there is no condition precedent. The remainder is vested subject to open or vested subject to partial divestment if later-born children are entitled to share in the gift. Thus:

Example: O conveys “to A for life, then to A’s children and their heirs.” A has one child, B. The remainder is vested in B subject to open to let in later-born children. B’s exact share cannot be known until A dies. If A has no child at the time of the conveyance, the remainder is contingent because no taker is ascertained.

XII. Modern Executory Interests, Shifting Executory Interest, Springing Executory Interest (268-274)Shifting executory interest and springing executory interest

Shifting when executory interest would end it would go to a third party,Springing

Does it come from grantor = springing. If it comes from another party it is shifting

An executory interest is a future interest in a transferee that must, in order to become possessory,1) divest or cut short some interest in another transferee (this is known as a shifting

executory interest), or2) divest the transferor in the future (this is known as a springing executory interest).

Prior to 1536 common law courts laid down two rules based upon their ideas of estates and of conveyancing. The first of these was that no future interest could be created in favor of a transferee if the interest could operate to cut short a freehold estate. Thus:

Prior to the Statue of Uses (1536), O conveys Whiteacre, a small tract of land, “to my eldest son A and his heirs, but if A inherits Blackacre (the family manor), then Whiteacre is to go to my second son B and his heirs.” Under this conveyance, A takes a fee simple absolute and B takes nothing. O cannot shift title and thus is prevented from planning in this manner for contingent remainders.

The reason for the rule was that O could not create a right of entry in a stranger, which a shifting interest resembled.

The second rule was that no freehold estate could be created to spring up in the future. This was a rule against interests springing out of the grantor at some future date. Thus:

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Prior to the Statue of Uses, O conveys “to A and her heirs when A marries B.” Under this conveyance, A takes nothing; O is left with fee simple.

The reason for this rule? A freehold estate could not be created unless a feoffment with livery of seisin took place on the land. In the last example, A could not take seisin at the time of the conveyance because O did not intend it to pass to A until A married. So A took nothing.

The rule did not prevent the creation of a remainder to commence in the future, provided there was a freehold estate in a transferee to support it. Thus in a grant “to A for life, then to B and her heirs,” livery of seisin to A was sufficient to create A’s freehold life estate and also to sustain B’s remainder. A held seisin for his life, and on A’s death seisin immediately passed to B according to the terms of the original grant.

XIII. The Rule Against Perpetuities (285-292)

o   No interest is good unless it must vest, if at all, not later than 21 years after some life in being at the creation of the interest

Applies to o Contingent Remainders

o Executory Interests

o Class giftsnot vested in anyone until the class is closed

Examples

O conveys Blackacre to the 1st child of A who becomes a lawyero Void because A could have a child, then die, and it is not certain that the child

will become a lawyer in the 21 years after A’s death

o

O to A for life, then to his widow for life, then to A's issue

o Void. A’s widow may not be born at the time of the transfer. She might outlive A by more than 21 years. When she dies the only validating life is A, because she was not alive at the time of the transfer. The gift to the issue does not vest until the death of the widow, but this could be over 21 years after A (the only validating life) died. The possibility of this happening makes the entire conveyance void.

to A until the war ends, then to B.

o Void. War might not end

  Perpetuity Reform

  Statutory repairs Nobody older than 65 capable of giving birth

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  Immediate reformation: read transfers in light of creator’s intent

  Wait and Seeif it actually vests w/in time period it is valid, if not it fails

  USRAP (Uniform Statutory Rule Against Perpetuities)

         If interest hasn’t vested within 90 years it is void

         Adopted by 20 states

Rule Against Perpetuities: Basically allows people to control the use of property for one generation into the future plus the next generation up to the traditional age of majority.

“No interest is good unless it must vest, if at all, not later than 21 years after some life in being at the creation of the interest.”

Why ? Avoid dead-hand control. These are the only people that a testator can really have any knowledge of or benevolence towards.

Interests NOT affected by RAPo Any present possessory interests in third parties such as a life estate, term of

years, fee simple absolute, fee simple subject to a condition subsequent, fee simple determinable or fee simple subject to an executory limitation.

o Any future interest held by third persons IF the interests are vested immediately upon creation (e.g. vested remainders).

o Interests that are retained by the grantor.

RAP applies only to contingent interests: o Contingent remainders.o Executory interests (both shifting + springing)o Executory interests are subject to RAP unless the present and future estate holder

are charities. o Vested remainders subject to open.

1. ALL members of the class must pass the RAP or no member’s interest can be good.

b. Remember, RAP is a rule against interest vesting (in interest) too remotely, and more precisely against interests possibly vesting too remotely.

Vesting means elimination of the “suspense” element. Three types: 1) Contingent remainder : ascertain the identity of the taker + satisfy all conditions

precedent. 2) Executory interest: the taking of possession (the cutting short of the prior interest actually

happens). 3) Remainder subject to open : closing of the class.

FIND THE VALIDATING LIFE. Life in being: someone who is alive at the creation of interest. Validating life: a life in being who must accomplish the act, or in whose life (or no longer than 21 years after that person’s life ends) the event will occur or forever be unable to occur.

1. If there is a validating life, the contingent remainder or executory interest will be good2. Look at the parties + find the youngest person. 3. A validating life can be a third party that has no interest whatsoever in the conveyance.

So O to A for life, then to the children of B and then the life in being is C, a baby just born in the hospital.

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Must know when the interests were conveyed. With a gift, interests are created at the point of sale, delivery of the gift. In a will, interests are created when the testator dies.

THINK: Everyone who is alive at the time of the conveyance immediately dies in a car crash at the conveyance. Then in 21 years, will we know whether the condition is satisfied or not? If not, then there is a violation of RAP.

ELIMINATE INVALID INTERESTS

Example: O to A so long as used for residential purposes, and then to B. 1. A has fee simple subject to executory limitations. The building can be used as a

residential estate for potentially forever so B’s interest is invalid. 2. In applying RAP, we cut out the interest in B (“then to B”). So we are left with a series of

interests that makes sense.Example: O to A but if property is used for non-residential, then to B.

1. Same intent of the grantor but different language. B’s interest is still invalid for same reasons above.

2. Courts will strike all language so what’s left is a fee simple absolute to A. 3. NOTE: Both examples have the same intent, but in the first, there is a possibility of :

reverter, whereas in the second, there is a fee simple absolute.

Rule: Destructibility of contingent remainders – if you have a contingent remainder + the interest preceding it ends + the interest does NOT immediately vest, then the interest is void.

1. Reversion overrides the contingent remainder. 2. Only applies in a few states. 3. Example: O to A for life, then to B if B marries C.

So if A passes away and B has not married C, then the interest is void. Odd Situations: Unborn Widow”: A gift is made to A for life + then to A’s widow for life, then to A’s children then living.

1. What happens if A + his present wife get divorced, and then A marries a woman who was born after the creation of the interest?

2. Thus, since A’s new wife is an NOT a relevant life-in-being + may live longer than 21 years after the death of A, the only life in being, the interest in A’s children may not vest w/in 21 years. Thus, interest violates the RAP.

3. Interest would become: “to A for life + then to A’s widow for life.” 4. Most states now get around this rule by assuming the widow is meant to be the person A

was married to at the time of the conveyance. 5. Fertile Octogenarians: There is a conclusive presumption that any person, regardless of

age or physical conditions, is capable of having children.

Example: O conveys to my wife A for life, then to my grandchildren who reach age 21. What happens if A has another child D, who then produces a grandchild E. No

life-in-being at the time of the conveyance.Endless will contest: To A for life, then to B as soon as A’s will is probated.

Theoretically, the will could be subject to a will contest that can go on more than 21 years after everyone who is alive at the moment. Most jurisdictions have done away with this by assuming that most of the wills contested will be resolved in a little while.

Reforms: A growing number of states have abolished the common-law RAP.

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Alternatives: Wait + See for the common-law RAP period: One would “wait + see” whether the

interest vests remotely or not. Problem: waiting period could be awhile; must follow all the lives in being, which is a lot

of work. Massachusetts approach: Look at the state of events at the moment immediately

preceding the end of the life estate. This reform did not catch on. Also doesn’t eliminate odd situations like the “unborn widow.” Alternatives: abolish the “fertile octogenarian” problem: cannot have a child if you are

younger than 13 + older than 65; get rid of unborn widow problem. Used in Illinois. Oklahoma + Texas approach – two parts: Reform as to construe the interest as w/in the rule while also effectuating the intent of the

grantor as closely as possible. Satisfy RAP + grantor’s intent.

Wait + See for the common-law period of 90 years: Like wait + see but allows for a 90-year alternative period. One does not have to wait more than 90 years to find out. Interpretation + Implication: Insert a perpetuities savings clause or otherwise reform an interest (by changing 25 years to 21 years).

Perpetuities savings clause: a clause that refers specifically to the possibility of invalidation under the RAP + specifies a back-up plan.

Appoint the assets which the challenged interest purports to dispose of in such manner as will most closely approximate, w/in permissible limits, the intention of the person who has executed the instrument purporting to create such an interest.

Uniform Statutory Rule Against Perpetuities (USRAP): No interest may be held void on account of RAP until 90 years have passed from its creation; at that time, the court looks to see whether the interest actually vested beyond the Perpetuities period. If so, the court invalidates it; but if the interest vested w/in 90 years, it’s valid. Adopted in 24 states + Washington, DC.

Perpetual Trust. Adopted by 20 states. However, some states still actively apply the RAP. RAP can apply to an option that is NOT part of a lease or other property interest (options

“in gross”). Under the majority rule, an option in gross will be unenforceable if by its terms it could be exercised beyond the end of the RAP period, even though the optionee paid real money for it in the belief that it would be exercisable; this is true EVEN IF the optionee attempts to exercise before the end of the RAP period.

Symphony Space, Inc. v. Pergola Properties, Inc. (New York, 1996) – Broadwest conveys a building to P for a below-market price to receive in return an option to repurchase the building for $1. The option clause says the option may be exercised at any time, w/ closing to take place in any of the years 1987, 1993, 1998, and 2003. Broadwest’s successor D tries to exercise the option in 1985 (w/ closing to occur in 1987) but the court rules that the option is subject to RAP + that the option is invalid.

There is NO “commercial transactions” exception to the general rule that options fall w/n the RAP.

The “option as part of a lease” exception also doesn’t apply here b/c although the transaction does include a lease, the lease exception only applies when the entire property subject to the option is being leased, which is not the case here.

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Note that when the parties to a transaction are corporations + no measuring lives are stated in the instruments, the perpetuities period is simply 21 years. Thus, since the option by its terms could be exercised in 2003, which is more than 21 years after its creation, the option is VOID.

This court also declines to adopt the “wait + see” approach.

Common Law Concurrent Interests (319-35 and 345-67)Tenants in Common- have separate but undivided interests in the property; the interest of each is descendible and may be conveyed by deed or will. No survivorship rights between tenants in common. Ex. T devises Blackacre “to A and B.” A and B are tenants in common. If A conveys his interest to C, B and C are tenants in common. If B then dies intestate, B’s heir is a tenant in common with C. Each tenant owns and undivided share of the whole.

Joint Tenancy- Unlike tenants in common, joint tenants have the right of survivorship, the outstanding characteristic of joint tenancy. The common law regards the joint tenants together as a single owner. In theory, each owns the undivided whole of the property; this being so, when one joint tenant dies nothing passes to the surviving joint tenant or tenants. Rather the estate simply continues in survivors freed from the participation of the decedent whose interest is extinguished. A joint tenant cannot pass her interest in a joint tenancy by will.

If a creditor acts during a joint tenant’s life, the creditor can seize and sell the joint tenant’s interest in property, severing the joint tenancy. If the creditor waits until after the joint tenant’s death, the decedent joint tenant’s interest has disappeared and there is nothing the creditor can seize.

Since the original notion was that all joint tenants were seised together as one owner, the common law insisted that their interests be equal in all respects. In particular, four “unities” were essential to a joint tenancy -1) time, 2) title, 3) interest, and 4) possession.

1) Time: The interest of each joint tenant must be acquired or vest at the same time. For two or more owners to be joint tenants or tenants by the entirety, each must have received its interest in the property at the same time. Tenancy in common does not require the unity of time.

Negative example: Owen conveyed an undivided half interest in Blackacre to Ann in 2008. In 2009, Owen conveyed the other undivided half interest to Bob. Ann and Bob can only be tenants in common because they acquired their interests at different times. Unity of time is not satisfied.

2) Title: All joint tenants must acquire title by the same instrument or by a joint adverse possession. A joint tenancy can never arise by intestate succession or other act of law. No joint tenancy or tenancy by the entirety can exist unless both owners receive title from the same source. Tenancy in common does not have this requirement

Example: Ann owns Blackacre and conveys an undivided half interest in it to Bob. They could only be tenants in common. Neither the unity of time nor the unity of title is satisfied, because Bob’s title came from Ann, and Ann’s title came from her grantor an earlier time. Ann could create a joint tenancy by using a straw person or by conveying to herself and to Bob.

3) Interest: All must have equal undivided shares and identical interests measured by duration. Joint tenancy and tenancy by the entirety require that each owner has an equal interest in the land. If one has a greater interest, only a tenancy in common exists.

Example: Owen conveyed an undivided one-third interest to Ann and an undivided two-thirds interest to Bob. Ann and Bob can only be tenants in common because the unity of interest is not satisfied.

4) Possession: Joint tenancy, tenancy by the entirety, and tenancy in common all require that each tenant has an equal right to possess the whole of the property. This is the significance of the term “undivided ownership.” If separate (divided) rights to geographic segments are given, there is separate ownership of different parts, rather than concurrent ownership. The parties are neighbors, not co-owners. If possession is given to one but postponed for the others, there is a division of the estates into possessory and future interests, rather than concurrent ownership, and again the rights are “divided.”

Example: O conveys to B for life and then in equal undivided shares to Ann and Bob. Ann and Bob may be tenants by the entirety, joint tenants, or tenants in common. Although neither has a present right to possess, their right to possess in the future is equal between them. B is not a cotenant of any sort with Ann and Bob.

Riddle v. Harmon- An indisputable right of each joint tenant is the power to convey his or her separate estate by way of gift or otherwise without the knowledge or consent of the other and thereby terminate the joint tenancy. The court discussed the old rule of requiring an intermediary “straw man” to sever a joint tenancy as archaic and cumbersome. The court ruled that a universal right of each joint tenant is the power to destroy the right of survivorship by

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conveyance of his or her joint tenancy interest to another person. If that other person is the joint tenant himself, so be it.Harms v. Sprague-adopted the lien theory of mortgages. This theory rests on the premise that a mortgage, unrecorded is similar to a judgment lien or another type of lien, which merely establishes an interest but not a transfer of the title. Therefore, if the mortgage is treated as a lien, it does not sever any of the four unities, which need to be present to hold property in joint tenancy.Tenancy by the Entirety- Can be created only in husband and wife. Requires the 4 “unities” plus a fifth—marriage. Have the right of survivorship but cannot defeat the right of survivorship of the other by a conveyance to a third party. Only a conveyance by husband and wife together can do so. Divorce terminates the tenancy by the entirety because it terminates the marriage, which is a requisite for a tenancy by the entirety.

Partition/ Sharing Benefits and Burdens of Co-ownership 345 - 367Ouster- The act of forcing one out of possession or occupancy of material property to which one is entitled; illegal or wrongful dispossession. describes one of two factual situations: (1) the beginning of the running of the statute of limitations for adverse possession, and (2) the liability of an occupying cotenant for rent to other cotenants

Spiller v. Mackereth - Absent an agreement to pay rent or an ouster of a cotenant, a cotenant in possession is not liable to his cotenants for the value of his use and occupation of the property. Absent an agreement, for a party to prove ouster and obligate the cotenant occupying the property to pay rent, the non-occupying tenants must demonstrate that the non-occupying cotenants were refused use and enjoyment of the land after a demand on the occupying cotenant. In the instant case, we find that a mere letter requesting rent or to vacate is an insufficient showing of ouster because each cotenant has a right to occupy the entire property and requesting rent is not asserting their right to use and enjoy the land.

Swartzbaugh v. Sampson - 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.

XVI. Marital Interests, Migrating Couples, Alimony, The Modern Elective Share (359)

Some states allow all property to be divided regardless of when it was acquiredMost states only divvy up martial property, property acquired during marriage p. 371

“Rehabilitative Alimony” Life long obligation has shifted alimony changed to a transitional thing not life long, not necessarily man to woman… non wage earning spouse

Sawada v. Endo- Only context in which couples get protection from creidtors. Can’t get the common property. The tenancy by the entirety is not subject to the claims of his or her creditors. The conveyance was not fraudulent and cannot be set aside.The interest of a husband or a wife in an estate by the entireties is not subject to the claims of his or her individual creditors during the joint lives of the spouses.Creditors are not entitled to special consideration, if the debt arose after the creation of the tenancy by the entireties, the creditor presumably had notice of the characteristics of the estate

Marital property is generally considered to be all property acquired by a couple during their marriage or earned by either spouse during their marriage. It is all property owned by the marital estate. Generally, gifts or inheritances to either spouse along with any money or property earned prior to the marriage are the separate property of that spouse unless it is somehow "converted" into marital property.

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The Modern Elective Share: The surviving spuse is not entitled only to support, as dower and curtesy provided, but to an ownership share in the decedent spouse’s propterty. This is a from of deferred community property; one spouse does not receive a property interest in the other spouse’s property during marriage, but only at the other spouse’s death.

All common law property states except for Georgia have elective-share statutes. Under the conventional type of elective-share statute, the surviving spouse can renounce the will, if any, and elect to make a statutory share, which is usually one-half or one-third or some other fractional share. By contrast, under the Uniform Probate Code the surviving spouse is entitled to keep any property that the will devised to him or her. The value of such property is credited against the elective-share amount. States retaining dower give the surviving spouse the right to elect dower or a statutory forced share; the statutory share is usually larger.

The elective share ordinarily only applies only to property that the decedent spouse owns at death. Usually does NOT 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, but a word of caution. Courts and statutes in many states permit the surviving spouse to set aside gifts made with the intent to defeat the elective share, or transfers when the donor spouse retained control (for example, a revocable trust). Law varies from state to state.

Example: H dies in a state that gives the surviving spouse an elective share of one-half of the decedent’s property passing by will or intestacy. During his life H took out a life insurance policy in the fact amount of $60,000 payable to W. H and W also bought a house, worth $60,000 at H’s death, and took title as joint tenants.(survivorship*). H dies owning Blackacre worth $90,000, stocks and bonds worth $20,000, and a $10,000 savings account. H’s will bequeaths all his estate to his daughter by a first marriage, D. How is H’s estate distributed (page 387).

Life insuranceW $60,000 DHouse W $60,000 W.

In re Marriage of Graham- does a master's degree in business administration constitute marital property which is subject to equitable division by the court when there is a divorce proceeding? No. The underlying purpose of the Uniform Dissolution of Marriage Act itself is to provide an equitable solution for problems associated with the division of property at the dissolution of marriage. 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 purchased with money, there is no exchange value, it is personal to the holder and not inheritable ends at death.  It is also an advanced degree which takes lots of time and hard work to acquire, things which are not exchangeable either. If petitioner were to apply for relief, she could mention to the court that she contributed financially as a spouse to the education of the other spouse from whom the maintenance is sought. 

Domestic Relations Law defines marital property as property acquired during the marriage "regardless of the form in which title is held." 

Equitable Distribution Law deemed marital property as the effect of an "economic partnership." 50/50

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It is the nature and extent of the contribution by the spouse seeking equitable distribution, rather than the nature of the career, whether licensed or unlicensed or otherwise, that should determine the status of the enterprise of marital property.

Elkus v. Elkus- To the extent that a supporting spouse’s efforts (direct and concrete) not just financial support and far beyond child care- led to an increase in value of spouse’s career, he or she is entitled to a share in equitable distribution. Things of value acquired during marriage are marital property even though they may fall outside the scope of traditional property concepts. The statute does not mandate that the thing in question be transferable, assignable, or salable. The enhanced skills of an artist such as the Plaintiff, albeit growing from an innate talent, may be valued as marital property subject to equitable distribution. The nature and extent of the contribution by the spouse seeking equitable distribution, rather than the nature of the career, should determine whether it is marital property.

***Graham and Elkus is just an example of two different courts reviewing similar cases and coming to different conclusions.

The Community Property System- In certain states, the fundamental idea of community property is that earnings of each spouse during marriage should be owned equally in undivided shares by both spouses. The basic assumption is that both husband and wife contribute equally to the material success of the marriage, and thus each should own an equal share of the property acquired during the marriage by their joint efforts.

Example: If the husband earns $1,000, one-half belongs to the wife. If the husband subsequently buys 10 shares of stock with the money, taking title in his name alone, the stock is marital property, and the wife owns one half of it.

Community property includes earnings during marriage and the rents, profits, and fuits of earnings. Whatever is bought with earnings is community property.

All property that is not community is separate . Separate property is acquired before marriage or during marriage by gift, devise, or descent.

Transmute: In most states the husband and wife can freely change (“transmute”) the character of their property by written agreement and, in some states, by oral agreement. They can convert community property into separate property, or vice versa.

Community Property v. Common Law Concurrent Interests

Husband and Wife- Community property can exist only between husband and wife, whereas a tenancy in common or a joint tenancy can exist between any two or more people.

Conveyance of share- unlike tenants in common or joint tenants, neither spouse acting alone can convey his or her undivided one-half share of community property. Cant change community property into separate property without consent of other spouse.

At death- each spouse has the power to dispose by will one-half the community property at death. There is no survivorship feature, as with joint tenancy.

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Sale after death- at the death of one spouse, the entire community property receives a “stepped-up” tax basis for federal income tax purposes. There is a considerable tax advantage in holding property as a community property rather than in a common law concurrent ownership form.

Liabilities- Community property cannot be seized to satisfy the separate debts of either spouse, such as debts incurred before marriage. For those claims, a creditor must look solely to the debtor spouse’s separate property.

Migrating Couples: Whether property is characterized in accord with the community property system or in accord with the common law property system depends upon the domicile of the spouses when the property is acquired.

Example: The wife earns $1,000 and buys a horse with it. If the parties are domiciled in New York, the horse belongs to the wife alone. If domiciled in Texas, the horse is community property. Once the property has been initially characterized, the ownership does not change when the parties change their domicile unless both parties consent to the change in ownership. If, after the wife earns the $1,000, the spouses move from New York to Texas, the horse remains the wife’s separate property. On the other hand, if the parties had been domiciled in Texas when the wife earned the money, and then had moved from Texas to New York, the horse would remain community property unless the parties agreed to change the ownership to another form. Common law property states generally recognize community property when it is brought into the sate from a community property state.

Page 394 if you need to know about Uniform Disposition of Community Property Rights at Death.

XVII. Rights of Domestic Partners (395-418)

Treat married people very differently than people who have been cohabiting for 40 years, Tax benefits, health benefits, intestacy issues (inheritance, joint tenancy) end of life decisions, open to the tenancy by the entirety, community property, alimony, pension, homestead exemption, workers compensation, presumptions in intent in ambiguity, ability to bring a wrongful death action.

Varnum v. Brien The Court stated that the equal protection clause of the Iowa Constitution requires that laws treat alike all those who are similarly situated with respect to the purposes of the law, and concluded that homosexual persons are similarly situated compared to heterosexual persons for purposes of Iowa's marriage laws. After having examined the governmental objectives proffered by the county (maintaining traditional marriage, promotion of an optimal environment to raise children, promotion of procreation, promotion of stability in opposite-sex relationships and conservation of resources) under intermediate scrutiny, the Court concluded that: For some groups, our faith in the ordinary legislative political process may be worthy of doubt. the Iowa Supreme Court unanimously upheld the District Court’s holding that there was no important government interest in denying citizens marriage licenses based on their sexual orientation.

Common Interest Communities (896-924)

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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. Homeowners association in addition has power to raise funds reasonably necessary to carry out its functions. Power to levy assessments is enforceable by fines and a lien on the individual property.

Condominiums- 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 the other common areas are owned by the unit owners as tenants in common. Because each unit is owned separately, each owner obtains mortgage financing by a separate mortgage on the owner’s individual unit and real estate taxes are assessed or allocated to each unit separately. Monthly charge to maintain common facilites and insure against casualty and liability.

Cooperatives- in a housing cooperative, the title to the land and building is held by a corporation; the residents own all the shares of stock in the corporation and control it through an elected board of directs. Each resident also has a long-term renewable lease of an apartment unit. Hence, residents are both owners of the cooperative corporation by virtue of stock ownership, and tenants of the corporation. Usually subject to one blanket mortgage securing the money lender for the money borrowed to buy the land and erect the building. 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 upon. Have a strong incentive to screen applicants to ensure that they can carry their share of the collective mortgage. Can deny someone for any reason without giving reason as long it does not violate the law.

But because the rules of a common interest community and the powers of the homeowners association can adversely affect the interest of individual members, courts have been called upon to determine whether individual members shall be protected from imposition by those who control the association. The emerging issue is by what standards the common interest communities’ rules and regulations should be judged.

Nahrstedt v. Lakeside Village Condo Association, Inc. Court decides not to look at the issue of whether these particular cats would be a nuisance, but the validity of the restriction against animals. Is the harm caused by the restriction so disproportionate to the benefit produced by its enforcement that the restriction “ought not be enforced.” Restrictions should be enforced unless they are wholly arbitrary, violate a fundamental public policy, or impose a burden on the use of a affected land that far outweighs any benefit. Pet restriction is not against all animals, just dogs and/or cats. Since the restriction was not unreasonable, it is enforceable.

Mulligan v. Panther Valley Propert Owners Assn. Homeowners association passed a vote restricting their gated community from any tier-3 sex offenders (those who were at the highest risk of repeating).  Challenged on basis of being violation of public policy. Despite the record's deficiency to decide the question, it was PL's burden to establish such a record, the association was entitled to judgment. Other communities have passed tier-3 restrictions, even though this court does not know how many have, and under what scope they have passed such amendments.  Based on those findings, it is not possible to tell if there is a discriminatory effect to such a rule, and therefore unable to tell if it is against public policy.

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Gated communities- Some common interest communities provide what are usually deemed municipal services. These include policing, garbage disposal, street cleaning, enforcing traffic regulations against non-homeowners.

XIX. Leasehold Estate (421-438)

The Term of Years- 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. The period can be one day, two months, five years, or 3000 years. These are all terms of years.

The Periodic Tenancy- A lease for a period of some fixed duration that continues for succeeding periods until either the landlord or tenant gives notice of termination. Examples: “to A from month to month”; “to B from year to year.” Half a year’s notice is required to terminate a year-to-year tenancy. If less than a year, notice of termination must be given equal to the length of the period, but not to exceed six months.

The Tenancy at Will- A tenancy of no fixed period that endures so long as both landlord and tenant desire. Unilateral power of termination.

Garner v. Gerrish- 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? The lease expressly and unambiguously grants to the tenant the right to terminate, and does not reserve to the landlord a similar right. 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: 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- eviction (plus damages), or consent (express or implied) to the creation of a new tenancy. The tenancy resulting from the holding over is usually subject to the same terms and conditions as those in the original lease.

The Tenant Who Has Abandoned Possession, Quiet Enjoyment, Constructive Eviction (467-492)

Sommer v. Kridel- the Defendant attempted to terminate the lease by letter to the Plaintiff prior to occupying the unit. The Plaintiff did not respond to letter and had not attempt to re-let the apartment until months later. Plaintiff sued the Defendant for the full amount due under the two-year lease. Court ruled that a landlord does have an obligation to make a reasonable effort to mitigate damages in this situation for the following reasons:General rule going forward: Application of the contract rule requiring mitigation of damages to a residential lease is justified as a matter of basic fairness. If the landlord has other vacant apartments besides the one which the tenant abandoned, he has a duty to make reasonable efforts to attempt to re-let the apartment and treat it as one of the vacant stock. Reasonable if advertised apartment and showed it to prospective tenants. In this case there was a 3rd party ready, willing and able to move into the apartment she was told it was already leased to Kridel.

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Security deposits- Purpose of such a deposit is to protect the landlord in the event a tenant defaults in rent, damages the premises, or otherwise breaches the lease. Limits are placed on amount (e.g., 2 months rent)

Disputes between landlord and tenant regarding the condition of the premises arise in essentially two ways. First, the tenant might wish to vacate, or to stay but pay less (or no) rent. Second, the tenant (or an invitee of the tenant) might be injured by allegedly defective premises and claim damages against the landlord in torts.

Covenant of quiet enjoyment: Any act of the landlord or of anyone who acts under authority of the landlord, which renders the premises substantially unsuitable for the purposes for which they are leased, or which seriously interferes with the beneficial enjoyment of the premises is a breach of the covenant of quiet enjoyment.

Constructive eviction occurs when an act by the landlord render the premises substantially unsuitable for the purposes for which they are lease and seriously interferes with the beneficial enjoyment of the property.

At common law, tenants had a duty to repair, not landlords.  Although this rule is largely defunct now on the grounds that the landlord is in the best position to make repairs and the implied warranty of habitability, there is no benefit to EB in assigning this duty unequivocally to himself.

his clause needs a provision for damage to the premises that is the result of the Tenant or Tenant's invitees.  At least under a property theory, the Tenant (T) has a duty to pay rent even after the premises are destroyed, and in some jurisdictions that duty obtains even under a contract theory if the destruction is the result of T.  In the event of damage (not destruction) caused by T, EB needs to be able to extract damages from the tenant, not "promptly repair" them at his own expense.  Also, the problem of moral hazard.  

Reste Realty Corp. v. Cooper- Periodic flooding of tenant’s office space after landlord promised to fix the problem and tenants repeated requests for relief, constituted a constructive eviction. Ordinarily a covenant of quiet enjoyment is implied in a lease and when it is breached substantially by the landlord, courts have applied the doctrine of constructive eviction as a remedy to the tenant. Tenants right to claim constructive eviction will be lost if he does not vacate the premises within a reasonable time after the right comes into existence. Reasonableness is determined by facts and circumstances of particular case. Have to vacate premises.

Landlord’s Tort Liability (504-508)Under the common law, the landlord had no duties to the tenant to protect the tenant or the tenant's licensees and invitees, except in the following situations:

1. Failure to disclose latent defects of which the landlord knows or has reason to know. Note that the landlord has no duty to repair, just to disclose.

2. For a short term lease (3 months or less) of a furnished dwelling, the tenants are treated as invitees, and the landlord is liable for defects even if the landlord neither knows nor should know of them.

3. Common areas under landlord's control (e.g. hallways in an apartment building), if the landlord failed to use reasonable care in maintaining them.

4. Injury resulting from landlord's negligent repairs – even if the landlord used all due care.

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5. Public use, if the following three factors exist: 1. Landlord knows or should know that the tenant makes public use of the

land (e.g. the land is rented for use as a restaurant or a store);2. Landlord knows or should know that there is a defect; and3. Landlord knows or should know that the tenant will not fix the defect.

Duties of tenant

o Under the common law, the tenant has two duties to the landlord. These are to pay rent when it is due, and to avoid waste of the property.

o A tenant is liable to third party invitees for negligent failure to correct a dangerous condition on the premise – even if the landlord was contractually liable.

XXIII. The Contract of Sale: The Statute of Frauds, Marketable Title, The Duty to Disclose Defects, Implied Warranty of Quality (541-573)

The Statute of Frauds- Sought to make people more secure in their property and their contracts by making deceitful claims unenforceable. Except for leases less than 3 years, no interest in land could be created or transferred except by an instrument in writing signed by the party to be bound thereby. The writing must include at least the parties’ names, a property description, the purchase price, words that demonstrate intent to buy and sell, the terms of the sale, and the signatures of the parties to be charged.

Exceptions to the Statute of Frauds- Two principal exceptions (1) part performance and (2) estoppel.

Part performance allows the specific enforcement of oral agreements when particular acts have been performed by one of the parties to the agreement. Acts held to constitute part performance include: (1) the buyer has paid all or part of the price; (2) the seller has delivered possession to the buyer; (3) the seller has delivered possession, and the buyer has paid all or part of the price; and (4) the seller has delivered possession, and the buyer has made improvements to the property. In all these situations, the parties’ actions tend to prove that a contract was made, because they probably would not have been undertaken otherwise.

Estoppel - detrimental reliance- 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. Like person sold their current home in order to raise money to pay for the house the other party orally agreed to lease them.

Hickey v. Green- The Plaintiffs gave the Defendant a deposit of 500 dollars that was accepted for a $15,000 home. In reliance on their arrangements, the Plaintiffs sold their house. A few days later, the Defendant told the Plaintiffs that she no longer intended to sell her property to them and she was selling her property to another buyer for 16,000 dollars. The Plaintiffs told the Defendant that they had already sold their house and offered 16,000, but the offer was refused. Court held that the reliance of the Plaintiffs on their oral contract with the Defendant created an enforceable contract for the sale of real property.

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Marketable Title- A seller has a marketable title if it is free of any encumbrance and free of any doubt. Thus, a title is unmarketable if (a) the seller lacks all or part of the claimed title, (b) the title is subject to an encumbrance, or (c) a reasonable possibility exists that (a) or (b) is true. For this reason, if the buyer has agreed to acquire title subject to an encumbrance, such as a utility easement, the contract should so specify. If seller does not specify and is not able to convey a marketable title, the buyer is entitled to rescind the contract.

Lohmeyer v. Bower- house was in violation of a city ordinance requiring a minimum space between lot divisions. Further, the lot was in violation of a restriction in the deed requiring two story structures to be placed on the lot. Plaintiff brought this to the attention of the Defendants who offered to buy and convey sufficient adjacent property to rid the lot of the ordinance violation. The Plaintiff refused and brought suit to rescind the contract. A marketable title to real estate is one, which is free from reasonable doubt and a title is doubtful and unmarketable if it exposes the party holding it to the hazard of litigation. The defect which the purchaser complains must be of a substantial character and one from which he may suffer injury. Plaintiff was correct in basing his case on current violations and not restrictions contained in the deed

Equitable Conversion the parties have entered into a binding contract for the sale of land, the buyer becomes the "equitable owner" before the delivery of the deed. The doctrine of equitable conversion is used to make a buyer the equitable owner of title to the property at the time that they sign a contract binding them to purchase the land at a later date. The buyer is deemed the equitable owner after the contract is signed, but prior to the closing. For example, if a house on the property burns down after the contract has been signed, but before the deed is conveyed, the buyer will nevertheless have to pay the agreed-upon purchase price for the land. Equitable conversion may also be found when a deed is given as security for the payment of money, though deeds are given to secure the performance of other obligations as well. Parties may avoid application of the doctrine of equitable conversion by providing for how to allocate the risk of loss for damage to the property prior to the closing.

Risk of Loss- Between the time a contract is made and the time it is fully performed, goods identified to the contract may be lost, stolen, damaged, or destroyed. Risk of loss law determines whether the buyer or seller is financially responsible for the loss. The Uniform Commercial Code, which has been adopted in some form by nearly all states, allocates the risk of loss based on which party has control of the goods, which party is more likely to insure the goods, and whether a party has breached the contract.

The Duty to Disclose Defects- If a seller knows of a condition that is unlikely to be discovered by a careful and prudent buyer and impairs the value of the contract, nondisclosure of this condition represents a basis for rescission under equity.

In each jurisdiction requiring disclosure, the defect must be “material” to be actionable. One of two tests of materiality is applied: (1) An objective test of whether a reasonable person would attach importance to it in deciding to by, or (2) a subjective test of whether the defect “affects the value or desirability of the property to the buyer.”

A visible easement (such as a telephone wire hanging in your backyard) is not a violation of the covenant against encumbrances unless it alters your legal interests and affects title. If it does, it needed to be included in the deed otherwise it is a breach of the covenant against encumbrances.

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Either way, with something so obvious, it could be argued that you were on constructive notice of the easement and you should have done some research about what effect it will have on the land.

Stambovsky v. Ackley- Ackley deliberately publicized that her house was haunted. Having informed the public at large that the house was haunted, she owed no less a duty to the buyer. Ackley was estopped from denying the existence of ghosts and poltergeists and as a matter of law, the house was haunted. Although NY follows the caveat emptor (buyer beware) rule and the buyer is required to inspect the house for any defects, in this case the buyer probably would not have been able to discover that the house was haunted had he inspected it. Since Ackley knew about the poltergeist problem but did not disclose it, and Stambovsky had no other way to discover it, he was awarded rescission of the contract for sale. The court held that the caveat emptor doctrine only acts against those who do not exercise their rights and who fail to take due care.

In cases where a person is unlikely to discover a defeat even after searching closely, many jurisdictions have moved away from the common law rule of caveat emptor and more towards a duty to disclose the defect. If the defect is not disclosed and purchaser learns of it when it is too late, courts “within the bounds of the narrow exception to the doctrine of caveat emptor, will allow the remedy of rescission.

Johnson v. Davis- The Defendants knew that the roof leaked, but affirmatively represented to the Plaintiffs there was no problems with the roof. After the Plaintiffs paid the deposit, they discovered water gushing into their new home after a heavy rain. The trial court held that the affirmative representation that the roof was fine was a false representation entitling the Plaintiffs to rescission. Court’s discussion primarily focused on the modern judicial trend of restricting the doctrine of caveat emptor (buyer beware). The reason for this restriction was that current notions of fair dealing and justice make it wrong to shield a seller who takes advantage of a buyer’s ignorance. Sometimes not saying something in certain circumstances is almost as bad as actively misrepresenting.

New Residential Construction Off-Site Conditions Disclosure- Immunizes sellers of new homes from liability for nondisclosure of off-site conditions, (such as a landfill nearby suspected of containing toxic waste), provided they give buyers notice that lists of these conditions are available in the municipal clerk’s office.

Merger- When buyer accepts a deed, the buyer is deemed to be satisfied that all 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. 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. Now in disfavor, riddled with exceptions. The seller and buyer may bargain about what contract warranties survives the closing, and so provide in the contract.

Implied Warranty of Quality

Lempke v. Dagenais Plaintiffs’ predecessors in title contracted with the Defendant to build a garage. Six months later, the property was bought by the Plaintiffs. Shortly thereafter, the Plaintiffs noticed structural problems with the garage. Plaintiffs brought suit for breach of the implied warranty of workmanlike quality and negligence against the Defendant. Held there is no privity requiremen t in suits by subsequent purchasers against a builder or contractor for a breach of an implied warranty of good workmanship for latent defects. The implied warranty of

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workmanlike quality exists independently and is imposed by law as a matter of public policy. Therefore, implied warranties are not created by agreement and thus no privity of contract is required. Limited to suits concerning latent defects which become manifest after the subsequent owner’s purchase and which were not discoverable had a reasonable inspection of the structure been made and can only be brought within a reasonable period of time.

XXIV. Remedies for Breach of the Sales Contract (572-585).Three remedies are available to the non defaulting party, whether the buyer or the seller:

(1) damages, (2) retention of the deposit (sellers) or restitution of the deposit (buyers), or (3) specific performance of the contract. Generally the winner may elect which remedy he or she prefers.

Jones v. Lee- Several weeks after signing the purchase agreement and making down payment, Buyers informed Sellers they were unable to consummate the agreement because of financial reasons. Sellers rejected the proposed termination agreement but were forced to relist the property for sale. Sellers ultimately sold the property to another purchaser for $ 540,000, $ 70,000 below the contract price originally agreed upon by the defaulting Buyers. Sellers filed suit against Buyers, seeking damages for breach of the real estate purchase agreement. The awarded compensatory and special damages (awarded when breaching party knew or should have anticipated from the facts and circumstances that the damages would probably be incurred) In addition court also awarded in punitive damages (because Lee frightened but did not intimidate Sellers into agreeing to termination of the contract.)

Kutzin v. Pirnie- Defendants paid 10% of the purchase price at the time they executed the agreement. The defendants did not execute the agreement. 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. Held that the Plaintiff cannot retain the entire deposit as damages. The Defendants are entitled to restitution of their deposit less the amount of the injury to the Plainttiffs caused by Defendant’s breach. To allow retention of the entire deposit would unjustly enrich the Plaintiffs and would penalize the Defendant’s contrary to the policy behind our law of contracts

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. In bad markets, some courts have allowed damages to be calculated on the date the property is re-sold.

The common law rule for buyer’s damages upon breach by seller is also based on the value of a property at the time of breach minus the contract price.

Kutzin is the minority view The general rule is 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.

Buyers have a parallel remedy for breach by the seller: restitution of their deposit money.

Specific Performance a judicial order that a breached contract be fulfilled as originally agreed. Common in the case of contracts for the sale of land. Must prove that money damages would be an inadequate remedy. Land is so unique and people get their hearts set on a specific piece of land.

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Seller’s breach due to 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. Limits the buyer’s recovery to his down payment plus interest and a 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 be liable for ordinary contract damages.

Time-of-the-essence clauses Unless parties expressly provide that “time is of the essence.” A court will give the parties reasonable time for performance, and either party can fix the time for performance by giving notice to the other, provided the notice leaves a reasonable time for rendering performance.

XXV. The Deed: Warranties of Title, Delivery (585-606)Currently in U.S. there are three types of deeds: general warranty deed, special warranty deed, and quitclaim deed.

General warranty deed warrants title against all defects in title, whether they arose before or after the grantor took title. Six express warranties discussed below.

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.

The special warranty deed is not nearly as protective of the buyer as is the general warranty deed. The grantor of a special warranty deed conveys the property with two warranties: The grantor warrants that they have received title. the grantor warrants, unless noted specifically in the deed, that the property was not encumbered during their period of ownership.

Say for example, there are ordinances limiting what colors owners may paint the exterior of their homes, grantors will want to make sure they include something in the deed saying, although this special warranty deed assures that the grantors had not “done or suffered anything whereby the said property has been encumbered in any way”, they should also include “except as noted in the public record.”

This gives constructive notice to the purchasers that they should check the public records. They cannot sue the grantors when they find out they cant paint their house purple, even though the special warranty deed said the land was not encumbered in any way. Local zoning ordinances are exceptions and must be acknowledged as such in the deed to avoid liability.

The grantor of the special warranty deed, in effect, only warrants the title against their own actions or omissions. They warrant nothing prior to their taking title. If specifically stated in the deed, other warranties can be conveyed. Special warranty deeds are frequently used by executors and trustees.

Quitclaim deed contains no warranties of any kind. It merely conveys whatever title the grantor has, if any, and if the grantee of a quitclaim deed takes nothing by the deed, the grantee cannot sue the grantor. When you want to give land to your family without making a big dealGeneral warranty deed contains six express warranties: 1-3 Present 4-6 Future**

1) A covenant of seisin- The grantor warrants that he owns the estate that he purports to convey.

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2) Covenant of right to convey- The grantor warrants that he has the right to convey the property. In most instances this covenant serves the same purpose as the covenant of seisin, but it is possible for a person who has seisin not to have the right to convey (e.g., a trustee may have legal title but be forbidden by the trust instrument to convey it).

3) Covenant against encumbrances- The grantor warrants that there are no encumbrances on the property. Encumbrances include, among other items, mortgages, liens, easements, and covenants.

4) A covenant of general warranty- 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.

5) A covenant of 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.

6) A covenant of further assurances- The grantor promises that he will execute any other documents required to perfect the title conveyed.

Distinction between present (1,2,3) and future (4,5,6) is this: A present covenant is broken, if ever, 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 that 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 breached until the grantee or his successor is evicted from the property, buys up the paramount claim, or is otherwise damaged.

Brown v. Lober- Sold mineral rights but found out that they only owned 1/3 of those rights and that the previous owner maintained 2/3s ownership. To have a breach of the covenant of quiet enjoyment, Plaintiffs would have to demonstrate that someone holding a paramount title interfered with Plaintiffs’ right to possession. Possession of the surface area does not carry possession of mineral rights. To possess the mineral estate, one must undertake the actual removal thereof from the ground or do such other act that will apprise the community that such interest is in the exclusive use and enjoyment of the claiming party. Until one holding a paramount title interferes with Plaintiffs’ right of possession, there can be no constructive eviction and no breach of the covenant of quiet enjoyment.

Frimberger v. Anzellotti- Latent violations of land use regulations that are not on land records, unknown to the seller and which no enforcement action has been taken against, do not constitute a breach of the warranty against encumbrances. The Plaintiff has not met the burden of proving innocent misrepresentation since the Defendant had made no representation to the Plaintiff regarding the tidal wetlands. The court also ruled that the proper way for a party to be protected is to include protective language in the land purchase contract and insist on appropriate provisions in the deed.

XXVI. Mortgages and the Mortgage Market (616-40) To borrow money from the lender, the borrower must give the lender a note and a mortgage. Assume lender will lend BOB $150,000 toward the purchase of the house costing $200,000. BOB will execute a promissory note that creates personal liability. However, in a case of default the lender will want to be able to reach, with priority over other creditors of the borrowers, some specific property. To secure the note the lender will require BOB to execute a mortgage on the

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property they are buying. BOB is the mortgagor, the lender is the mortgagee. If BOB fails to pay his note or does not otherwise perform his obligations, the lender, either at private sale or under judicial supervision, depending on the jurisdiction, can have the property sold (“foreclose the mortgage”) and apply the proceeds of sale to the amount due on the note.

Congress established the Federal National Mortgage Association (Fannie Mae) in 1938 and the Federal Home Loan Mortgage Corporation (Freddie Mac) in 1970. The government sponsored enterprises were created to establish a secondary market in which mortgages could be bought and sold much like stocks, thereby evening out credit flows across the nation. In the 1980s Fannie Mae and Freddie Mac were instrumental in creating mortgage-backed securities (MBS). Hundreds of mortgage loans were purchased and pooled together; securities representing the pool were issued to investors, who received payments of principal and interest as they were made by homeowners. The securities, typically guaranteed by Fannie Mae and Freddie Mac, appealed to many investors who would otherwise have found home mortgage loans unattractive investments, thereby increasing the supply of capital and reducing interest rates.

The growth of an efficient secondary mortgage market was accompanied by a change in the type of mortgage loans offered to borrowers. For years, the only type of mortgage offered was a fully amortizing fixed interest rate mortgage. Borrowers make a constant payment each month that includes both a component for interest and one for principal. The amount of each payment stays the same for the life of the loan—typically 15-30 years

In the 1980s, when interest rates on home mortgage loans went up to 16% and more, financial institutions began to experiment with adjustable rate loans. Such loans feature an initial below-market interest rate that gradually increases according to an index based on debt issued by the Federal Reserve Bank. Typically, an adjustable rate mortgage loan can go up or down by a limited amount each year and has a lifetime cap.

At one time, you either qualified for a loan or did not and if they did were given a standard fixed rate or adjustable rate loan at a set interest rate. But by 2005, risk-based lending was in full wing and seemingly no matter how risky one’s profile, a mortgage loan of some sort could be obtained.

The increasingly risky segment of the mortgage market is often characterized as the subprime market of the Alt-A market. The prime market provides loans to people with high credit scores, fairly typical loan-to-value ratios of 80-90%. The subprime mortgage made loans available to people with low credit scores and sometimes unverifiable income. Sometime borrowers were allowed to borrow 100% or more of the value of the properties they were purchasing. With the economic slowdown and recession led to an unprecedented wave of mortgage default and foreclosure.

Equity of Redemption In early common law, if a borrower could not pay back their loan on the exact day agreed upon, with no exceptions, the lender had the fee simple absolute title to the land, and the borrower had no legal remedy to compel the lender to accept a late payment even if the land’s value greatly exceeded the unpaid debt amount.

To provide relief against this potentially harsh result, the court of equity gave a delinquent borrower the right to obtain a decree that permitted him to pay late and thereby “redeem” himself from his default. It is fair to the lender because they receive interest for the period of delay, and the borrower can avoid a forfeiture when the land’s value exceeds the debt.

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These early foreclosure decrees (“strict foreclosure”) made the lender’s title to the land absolute if the borrower did not redeem in time. Although extra time helped borrowers, they still could be penalized if the property’s value exceeded the unpaid debt amount.

To avoid unjust enrichment of the lender, the court of equity began to permit redemption by the borrower even after strict foreclosure, sometimes years after it occurred. Therefore, lenders began including a clause in the mortgage that authorized them to sell the land and to keep sufficient proceeds to repay the debt (foreclose), rather than rely on strict foreclosure.

Today, many states permit mortgagees to conduct foreclosure sales without first filing a judicial foreclosure action. These sales, known as nonjudicial foreclosures (power of sale foreclosures, private sales, or foreclosures by advertisement), generally require language in the mortgage permitting use of this remedy (a “power of sale” clause). The sales usually are subject to significant state regulation, such as required notices to the borrower and to others who will lose their interest in the land and required publication of information regarding sale.

Anti-deficiency Laws: If a foreclosure sale fails to produce sufficient funds to satisfy the debt, the mortgagee may seek a judgment for the balance (the “deficiency”). However, because the mortgagee usually is the only bidder at its foreclosure sale, the availability of deficiency action may induce the mortgagee to bid less than the land’s value and then get a judgment against the mortgagor for a large deficiency. There are now laws that protect purchasers,

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 realied is applied to the debt. The mortgagee is entitled to a defiiecny judgment for the difference, collectible out of the general assets of the borrower. When the foreclosure is by private sale, however, 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 t set the sale aside.

Murphy v. Fin. Dev. Corp. Good faith and due diligence A mortgagee must exert every reasonable effort to obtain a fair and reasonable price under the circumstances, even to the extent, if necessary, of adjourning the sale or of establishing an upset price below which he will not accept any offer.  Fair price is determined on a case-by-case basis, but a "shock the conscience" test is applied.  Bad faith requires an intentional disregard of duty or a purpose to injure. Say they should have done more to get a higher bid. Consider weather, advertise better, etc.

Two main standards for invalidating a foreclosure sale based on price.1) Many courts state that inadequacy of the sale price is an insufficient ground unless it

is so gross as to shock the conscience of the court, warranting an inference of fraud or imposition

2) Another significant group of courts require that, in the absence of some other defect in the foreclosure process, the price must be “grossly inadequate” before a sale may be invalidated.

Sub Prime Mortgage Crisis

Commonwealth v. Fremont Investment & Loan Lending institutions that make subprime loans that are in compliance with banking specific laws and regulations, may still be considered "unfair and deceptive practices". Additionally, where "loans [are] made to borrowers on terms that showed they would be unable to pay and therefore

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were likely to lead to default [are] unsafe and unsound, and probably unfair," and the lender shall not be allowed to collect on foreclosure without the court's approval.

Title Assurance: Recodring System, Indexes (645-51)

Today in every American state, statutes provide for land title records to be maintained by the county recorder in each county.

The recording acts generally do not affect the validity of a deed or other instrument. A deed is valid and good against the grantor upon delivery without recordation. However, recording a deed puts the rest of the world on notice.

First, it establishes a system of public recordation of land titles. Anyone can ascertain who owns land in the county by searching the records

Second, the recording system preserves in a secure place important documents that, in private hands, may be easily lost or misplaced.

Under the recording acts, a subsequent bona fide purchaser is protected against prior unrecorded interests. Must search the records in order to prevent a subsequent purchaser from a previous owner from prevailing over him.

Indexes: Two types of indexes currently used in the U.S.(1) tract index- Public tract indexes, indexing documents by a parcel identification number

assigned to a particular tract, do not exist in most states.(2) Grantor-grantee index. (most common, separate indexes are kept for grantors and

grantees. 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 grantee’s surname. Thus a deed from Able to Baker will be indexed under Able’s name in the grantor indez and under Baker’s name in the grantee index.

Chain of Title Problems , Persons Protected by the Recording System, Inquiry Notice (667-693)

Types of Recording Acts:Race statute: (earliest type of recording act) 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, which is often difficult to ascertain and harder to prove, is not relevant. Only exist today in LA and NC. A few other states have race statutes applicable to mortgages, but notice or race-notice statutes for deeds.Example: O, owner of Blackacre, conveys Blackacre to A, who does not record the deed. O subsequently conveys Blackacre to B for a valuable consideration. B actually knows of the deed to A. B records the deed from O to B. Under a race statute, B prevails over A, and B owns Blackacre.

Notice statute: Early in 19th century some courts held that if a subsequent purchaser had notice of a prior unrecorded instrument, the purchaser could not prevail over the prior grantee, for such would work a fraud on the prior grantee. Notice statutes provide that an unrecorded instrument is invalid against a subsequent purchaser without notice of it. The question of whether the subsequent purchaser has notice depends on facts not on record, notice statutes are less efficient than race statutes.

A race statute protects a subsequent purchaser only if the subsequent purchaser records first. A notice statute protects a subsequent purchaser against prior unrecorded instruments even though the subsequent purchaser fails to record.

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Example: O, owner of Blackacre, conveys Blackacre to A, who does not record the deed. O subsequently conveys Blackacre to B for a valuable consideration. B has no knowledge of A’s deed. Under a notice statute, B prevails over A even though B does not record the deed from O to B

Race-Notice Statute: Under a race-notice statute a subsequent purchaser is protected against prior unrecorded instruments only if the subsequent purchaser (1) is without notice of the prior instrument and (2) records before the prior instrument is recorded. This method incorporates features of both a notice statute and race statute.

Example: O, owner of Blackacre, conveys Blackacre to A, who does not record the deed. O subsequently conveys Blackacre to B, who does not know of A’s deed. Then A records. Then B records. A prevails over B because, even though B had no notice of A’s deed, B did not record before A did.

The lawyer or other agent in charge of closing a transaction is liable in negligence to the grantee for failure to record a deed promptly if the grantee suffers as a result. The lawyer may be liable to the buyer even though he is the lawyer for the seller. Recent cases have held that lawyers performing title work are liable to reasonably foreseeable persons who detrimentally rely on the lawyer’s title work.

The actual copying by the recorder of a document into the records does not nevessarily mean that the document is “recorded” within the terms of the recording act. If it is not authorized, it may not be “recorded” within the terms of the recording act. If it is not authorized, it may not be “recorded” so as to give constructive notice. Almost without exception, statutes require that, in order for an instrument to enter the records, it must be acknowledged before a notary public or other official.

Messersmith v. Smith: The recording of an instrument affecting the title to real estate that does not meet the statutory requirements of the recording laws, does not give constructive notice. A deed must be acknowledged. To constitute acknowledgment, the grantor must appear before the officer for the purpose of acknowledging the instrument and make an admission to the officer of the fact that he had executed such instrument.

Chain of Title Problems : The phrase “chain of title” refers generally to the recorded sequence of transactions by which title has passed from a sovereign to the present claimant. It also has a more technical meaning: the period of time for which records must be searched and the documents that must be examined within that period of time.

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. Some jurisdictions require a more extended search, and in these jurisdictions the chain of title is defined to include the documents that may be found in the extended search.

Thus the meaning of chain of title varies from jurisdiction to jurisdiction; it includes the series of recorded documents that, in the particular jurisdiction, give constructive notice to a subsequent purchaser.

Example: O conveys to A, who does not record. A conveys to B, who records the A-to-B deed. O conveys to C, a purchaser for value who has no actual knowledge of the deeds from O to A and

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from A to B. C Records. Who prevails, B or C? The issue is this: Is the A-to-B deed properly “recorded” so as to give constructive notice to the world?

Board of Education of Minneapolis v. Hughes: Defendant was the subsequent purchaser in good faith and is protected by the recording of his deed before the prior deed was recorded. A deed that does not name a grantee is a nullity and wholly inoperative as a conveyance until the name of the grantee is legally inserted. Therefore, Defendant’s deed was legally inoperative until his name was inserted.When the grantor receives and retains the consideration for the property and delivers the deed to the purchaser, authority to insert one’s own name as the grantee is presumed.The deed of the first grantee must be recorded before the deed to a subsequent grantee is recorded.

Guillette v. Daly Dry Wall, Inc. There are two lots located in a subdivision in controversy. One has a recorded deed containing references to a plan and restrictions that are applicable to every lot in the subdivision. The second later deed from the same grantor did not refer to the restrictions, but did refer to the plan. Plaintiffs brought suit to enjoin the Defendant from constructing an apartment building on their lot, citing to the restrictions contained in their deed. The trial court found for the Plaintiffs and Defendant appealed. Defendant is bound by the restrictions imposed by the common grantor to the subdivision. When a grantor binds his land by writing, reciprocity of restriction between grantor and the grantee can be enforced. A subsequent purchaser from the common grantor, acquires title subject to the restrictions in the deed to the earlier purchaser. Because the grantor properly recorded these restrictions and plan, each grantee could enforce the restrictions against others in the common plan, which in this case was the subdivision.

Persons Protected by the Recording System:

Daniels v. Anderson: When does a person become a bona fide purchaser? Plaintiff contracted to buy two lots from Jacula, with a right of first refusal for an additional adjacent lot. When Plaintiff received his deed, it did not mention the right of first refusal. In 1985, Zografos, with no knowledge of Plaintiff’s right of first refusal, contracted with Jacula to buy the adjacent lot to Plaintiff’s property. After paying 2/3 of the purchase price, Plaintiff’s wife informed Defendant that Plaintiff possessed a right of first refusal to the land. Defendant made third payment anyway. Plaintiff sued for specific performance of his option of first refusal. The trial court found for the Plaintiff ruling that the Defendant had actual notice of the option when he took title. The appellate court affirmed and the Defendant appealed. A buyer, who prior to the payment of any consideration receives notice of an outstanding interest, pays the consideration at his or her peril and is not protected as a bona fide purchaser. The pro tanto rule protects buyers to the extent of payment made prior to receiving notice, but no further

Lewis v. Superior Court: The Plaintiffs contracted to buy land and paid significant amounts in furtherance of this contract. The Defendants recorded their lis pendens, a notice of lawsuit affecting title, one day after title to the property vested with Plaintiffs. Plaintiffs sued to clear title. If a purchaser has already received title by the time a lien is recorded and was not on constructive notice at the time he received title, he is thus a subsequent bona fide purchaser for value and is protected by the recording system. The court was able to maneuver around case precedent, which would have directed an opposite result in this case, by citing to this specific reliance and modern trends to protect buyers who had not fully paid for the property, but had put down payment.

Inquiry Notice

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Three kinds of notice a person may have with respect to a prior claim1) Actual Where one is personally aware of a conflicting interest in real property,

often due to another’s possession of the property.2) Record notice one has based on properly recorded instruments3) Inquiry Based on facts that would cause a reasonable person to make inquiry into

the possible existence of an interest in real property.

Harper v. Paradise The court found for the Plaintiffs because the Defendants had constructive notice of another party that may have had an interest in the land. Since the deed from which their interest originated mentioned there had been a lost deed, they were now under a duty to inquire as to the interests in the lost deed. Because they did not, the court found for the Plaintiffs.

Marketable Title Acts (701-704)Marketable title acts limit title searches to a reasonable period, typically the last 30 or 40 years. When one person has a record title to land for a designated period of time, inconsistent claims or interests are extinguished. 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 feature will operate. His “root of title” is the most recent transaction in his chain of title that has been of record at least 40 years.

O, owner of Blackacre, gives X a 99 year lease, which is recorded in that same year. In 1890 O conveys to A, the deed that recites that it is subject to the recorded lease to X. In 1920 A conveys to B with no mention of the lease. In 1941, B conveys to C, the deed making no mention of the lease. All these deeds were recorded when executed. Under a 40 year marketable title act, C’s title to Blackacre would be free and clear of the 99 year lease as of 1960, when the 1920 deed from A to B had been of record for 40 years. Constructive notice or actual notice is irrelevant. X still needed to file a notice of claim and record every 40 years.

To ensure that his leasehold is preserved from extinction, X must file a notice of claim under the act every forty years after the date of his lease. Otherwise, he runs the risk that some recorded transaction will fail to refer to his lease and thus, 40 years later, become a root of title that will cut off his rights.

Marketable title acts except certain interests, which do not have to be re-recorded. These exceptions may include mineral rights, easements, interests of persons in possession, claims of the federal government, or other interests. These exemptions defeat the act’s objective of limiting title search because the title examiner must check back beyond the set period of years to be sure not interest excepted exists on record.

Some states, without general marketable title statutes, require the periodic re-recordation of certain types of interests in order to preserve them.. If not re-recorded, the interests expire. Usual re-recordation period is 30 years. May included possibilities of reverter and rights of entry, easements, covenants, and mineral interests. Title Insurance (714-15, 721).Title insurance is the opinion of the insurer concerning the validity of title, backed by an agreement to make that opinion good if it should prove to be mistaken and loss results as a consequence.

Title insurance guarantees that the insurance company has searched the public records and insures against any defects in the public records, unless such defects are specifically excepted from coverage in the policy. Excludes losses arising from government regulations affecting the use,

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occupancy, or enjoyment of land (for example, zoning ordinaces, subdivision regulations, and building codes), unless a notice of enforcement or violation is recorded in the public records.

Title insurance is bought by one premium paid at the time the policy is issued. Title insurance creates liability to the insured only and does not run with the land to subsequent purchasers.

The Implied Warranty of Habitability (493-503)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. This warranty of habitability is implied in tenancies for a specific period or at will. Additionally, the implied warranty of habitability covers all latent and patent defects in the essential facilities of the residential unit. Essential facilities are those vital to the use of the premises for residential purposes (plumbing, etc.) This means that a tenant who enters into a lease agreement with 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.

Only a small number of jurisdictions have adopted the warranty. Generally speaking, an “adequate standard of habitability has to ne met, and a breach occurs when the leased premises are “uninhabitable” in the eyes of a reasonable person. Housing code provision and their violation are compelling but usually not conclusive.

To bring this claim, the tenant must show that he first notified the landlord and gave the landlord a reasonable time to correct the defect. Plaintiff is entitled to either withhold rent or seek damages in the amount of rent previously paid.

Hilder v. St. Peter The court went through the history of landlord tenant law and noted that in today’s modern society, the landlord is more familiar with the complex operations associated with apartment building maintenance and repair, while the tenant is at a disadvantage in bargaining power. The court also noted that punitive damages are appropriate in cases where the landlord’s behavior is willful and wanton or fraudulent.

I. The problem of Decent Affordable Housing (508-515)Come back!

Land Use Controls, Nuisance, Lateral and Subjacent Support, Remedies, NUISANCE LAW AND ENVIRONMENTAL CONCERNS : (729-761).

Nuisance liability arises from negligent or otherwise wrongful activity that interferes with the use and enjoyment of land of another. One should use one’s own property in such a way as not to injure the property of another.

An interference with use and enjoyment of land, in order to give rise to liability, must be substantial; it must also be either intentional and unreasonable or the uintentiaonal result of negligent, reckless, or abnormally dangerous activity. Restatement (Second) of Torts.

Nuisance generally involve some interference with the physical senses, such as smoke, dust, odor, noise, light, or heat, that harm a normal person’s use of his property. A person who intentionally

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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.

To determine whether the challenged activity is a nuisance, courts generally balance the parties’ respective interests by comparing the gravity of the plaintiff’s harm with the utility of the defendant’s conduct. When evaluating the gravity of the harm, the Restatemnt (Second) of Torts includes the harm’s extent and character, the harmed activity’s social value and suitability to the locale, and the plaintiff’s ability to avoid the harm.

IF the injury is slight = Damages…..If the injury is major = Injunction

Factors in determining the utility of the defendant’s conduct include its social value and suitability to the locale and the impracticability of preventing the plaintiff’s harm.

Priority of use is not a complete defense but may be treated as a fact. Thus, it might be relevant that the plaintiff “came to the nuisance” such as by building a home in an industrial area.

Most courts hold that unsightliness alone does not make a nuisance unless of course, spit is the only motive. Still, a junkyard in a residential area might be a nuisance if unreadnably operated and unduly offensive.

Malice may convert and otherwise legitimate activity into a nuisance. For example, if a landowner builds a tall fence solely for the purpose of interfering with the flow of light and air to the neighbor’s property, that “spite fence” constitutes a nuisance.

Balancing of equity gravity of the harm v. the social utilityVery similar circumstances within these cases but with different outcomes the court needs to consider context details and equities are taken into account

Morgan v. High Penn Oil Co.The Plaintiffs, Mr. and Mrs. Morgan (Plaintiffs) sued for an injunction and damages due to nauseating fumes and gases emanating from the Defendant’s, High Penn Oil Co. (Defendant), oil refinery business that was less than a mile from Plaintiff’s residence. Evidence shows that the company intentionally and unreasonably caused noxious gases and odors to escape onto the plaintiffs land to such a degree as to impair in a substantial manner the plaintiffs’ use and enjoyment of their land. Can establish the existence of an actionable private nuisance entitleing plaintiffs to reocover temporary damges from defendant. Also entitled to mandatory or prohibitory injunctive relief to prevent the Oil Company from continuing the nuisance.

Estancias Dallas Corp. v. Schultz: The trial court did not abuse its discretion in balancing the equities in favor of the Plaintiff and granting the injunction. Even when there is a jury finding that the noise emitted solely from the defendant’s air conditioning equipment constitutues a nuisance, there should be a balancing of the equities in order to determine if an injunction should be granted. The court will consider any injury, which may result to the Defendant and the public by granting the injunction, as well as the injury to be sustained by the Plaintiff if the injunction is denied. With nuisance, severeally lowers value of neighboring property, but if defendant were to install individual AC systems, it would cost $150,00-200,000. “there is no evidence before us to indicate the ‘necessity of others compels the injured party to seek relief by way of an action at

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law for damages rather than by a suit in equity to abate the nuisance. Plaintiffs were entitled to a permanent injunction.

Boomer v. Atlantic Cement Co. Neighbors of cement plant claim damages and an injunction due to dirt, smoke, and vibrations interfering with their property rights. This court balances the equities between the two parties, refusing to close down a large cement plant even though it creates a nuisance, but allowing neighbors to recover present and future damages created by the nuisance. One alternative would be to issue an injunction, but postpone it until a future date, allowing Defendant the opportunity to develop technical advances to eliminate the nuisance. However, the rate of research is beyond the control of the Defendant and a court would be hard pressed based on equitable principles to close this plant based on if it is unable to develop such technology. Boomer case: rather than compensate for the harm to date we can try to tally up all of the harm that will be caused and write one big check. Argument against this is that you are giving factory the opportunity to buy the right to pollute.

* There is a growing public concern for the control of air pollution. The threshold question in this case is if the Court should resolve the litigation between the parties now, or attempt to use this private litigation to define broad public objectives. This court finds that an effective policy for the elimination of air pollution is beyond the scope of this court’s jurisdiction.

Public v. Private Nuisance: A nuisance is public, rather than private, when it affects a significant portion of the community, rather than just a few neighbors. Difference is in the interests protected: public nuisance protects public rights; private nuisance protets rights in the use and enjoyment of land. Public nuisance is generally something that poses a danger to the public health such as any condition which creates a breeding place for flies, rodents, mosquitoes, and other disease transmitting creatures.

Spur Industires, Inc. v. Del E Webb Development Co. Developer sued to permanently enjoin a cattle feedlot operation that was in close proximity to a residential development it was creating. Feed lots were there first however, developer later establishes a community not far away and then complains about the flies and odor that the feed lots produced. Have to protect the operator of a lawful, albeit noxious, business from the result of a knowing and willful encroachment by others near his business. Can’t move to a farm town and then complain about the smell. Developer has, with foreseeability, brought into a previously agricultural or industrial area the population which makes necessary the granting of an injunction against a lawful business and for which the business has no adequate relief. However, in this case the owner of the feedlots can seek indemnification (compensation) from the individual successful in claiming the nuisance for the cost of having to shut down or move. Abate the activity if the plaintiff pays damages.

Nuisance Law and Environmental Concerns:

Nuisance litigation is expensive, cumbersome, and somewhat fortuitous (continuing and multiple causes, widespread effects and multiple victims, and scientifically complex issues as to cause, effect, and remedy. Potential plaintiffs, each usually bearing only a small part of the social costs of a large problem, have weak incentives to bring expensive lawsuits that promise limited rewards and difficult problems of proof; judges find it difficult to competently deal with issues that require such scientific expertise and are even less able to devise and oversee an ongoing program of technological controls; judges also lack the (political) competence to make the large-scale value judgments implicit in far-reaching environmental controls—judgments better left to

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more politically accountable governmental branches. Judges are reluctant to use nuisance suits as the means for an ambitious program of environmental control. See Boomer case above.

To date, virtually all legislative-administrative efforts to control environmental problems—at any level of government—have taken the form of regulation. A regulatory program (sometimes called in the trade a program of command and control) typically proceeds by prohibiting certain activites, requiring installation of prescribed technologies, and setting standards limiting emissions from pollution sources. Once established, the measures are backed up by civil and criminal sanctions.

Also incentive systems that induce rather than control. Marketable rights in particular, for example, found in the acid rain provisions of the 1990 amendments to the federal Clean air Act, which set up a system of pollution allowances that can be banked and traded by sources of sulfer dioxide (primarily power plants). (cap and trade).

Lateral and Subjacent SupportLateral support imposes a duty on neighboring land to provide the support that the subject parcel would need and receive under natural conditions; ordinarily, then there is no right to support of structures on the land. A cause of action for interference with the right to lateral support does not arise until subsidence actually occurs or is threatened, and then it it runs against the excavator

Lateral and subjacent support, in the law of property, describes the right a landowner has to have that land physically supported in its natural state by both adjoining land and underground structures. If a neighbor's excavation or excessive extraction of underground liquid deposits (i.e. crude oil or aquifers) causes subsidence (e.g. causing the landowner's land to cave in), the neighbor will be subject to strict liability in a tort action. The neighbor will also be strictly liable for damage to buildings on the landowner's property if the landowner can show that the weight of the buildings did not contribute to the collapse of the land. If the landowner is unable to make such a showing, the neighbor must be shown to have been negligent in order for the landowner to recover damages.

If the landowner owns everything beneath the ground on his property, he may convey to another party the rights to mineral deposits under the land, and other things requiring excavation, such as easements for buried conduits or for water wells. However, such a conveyance requires the recipient to prevent any damage to the surface of the land caused by the excavation, unless the conveyance itself grants express authority for the surface land to be damaged "as reasonably necessary" for the recipient to exercise his extraction rights.

Plaintiffs were not required to recover damages for a temporary nuisance, that is, for the time when the nuisance began until the date of the trial, in order to secure permanent injunction.

The law of servitudes, easements (appurtenant or in gross), license v. easement, Implied Easements v. Quasi easement. Necessity and Prescriptive (763-792)

Traditional servitude law draws a dichotomy (separation) between two major types: easements and covenants. Covenants are further divided into another dichotomy: covenants enforceable at law (called “real covenants”) and covenants enforceable in equity (“equitable servitudes”). These labels can be misleading because there is considerable functional overlap among interests bearing different labels. There are five types of servitudes

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1) A is given the right to enter upon B’s land (Easement)2) A is given the right to enter upon B’s land and remove something attached to the land

(Profit) 3) A is given the right to enforce a restriction on the use of B’s land (Negative

Easement, or a real covenant, or an equitable servitude depending on several factors, including the remedy that A seeks in the even the restriction is breached).

4) A is given the right to require B to perform some act on B’s land5) A is given the right to require B to pay money for the upkeep of specified facilities

(A’s interest in 4 & 5 may be treated as a real covenant or an equitable servitude, depending again on the remedy that is sought).

The primary modern forms of servitudes—easements, real covenants, and equitable servitudes—are largely products of the 19th century. IN the days of common fidleds there was little need for defining rights of way; people wandered where they wished through the unfenced countryside, causing little injury. But enclosures pushed the law of profits a prendre –rights to take off the land things that were thought of as “part” of the land (for example, timber, minerals, wild game, and fish) off center stage and, together with the Industrial Revolution, brought about a need for the development of new, systematic body of law dealing with easements of way as well as with other servitudes regulating interdependent land uses. Better farmers needed to control access to their cows and farms.

Affirmative easements granted by a servient owner, gave a neighbor the right to enter or perform an act on the servient land. Began with the right to place clothes on lines over neighboring land, the right to nail fruit trees on a neighbor’s wall, and the rights to water cattle at a pond and take water for domestic purposes.

Negative easements forbidding one landowner from doing something on his land that might harm a neighbor.

Appurtenant Easements v. In Gross Easements: Both types of easements give easement owners the right to make some specific use (or in the case of a negative easement, restrict some particular use) of land that they do not own.

An easement appurtenant benefits whoever owns the parcel of land that the easement benefits regardless of which owner actually secured the easement. It runs with the land .

Run with the land (and thus transferable) if (1) Intended to run, (2) are in writing and (3) buyer has notice (either actual, inquiry or constructive) of easement

But an easement in gross benefits the individual easement owner personally rather than in connection with use of land which that person owns. When that person sells the parcel of land, the easement does not carry over. Commercial easements in gross, however, such as rights given utility companies to install pipelines and power lines, are a more substantial property interest and are assignable

If it is unclear which type of easement is intended by the parties, the law construes in favor of an easement appurtenant (attached to the land).

Affirmative Easements: Created by grant or reservations of rights through grant. Require writing, words manifesting intent, description of land, signature.

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Easement by Necessity – Parcels must originally be under common ownership, after split one is landlocked or otherwise unable to leave or connect to utilities. Courts presume that the buyer and seller of the landlocked lot must have intended to create an access easement, otherwise the lot would be virtually unusable.

Some courts interpret “necessity” very strictly In Schwab v. Timmons, (refusing to recognize an easement by necessity when allegedly

“landlocked” parcel had access to a public road on foot, down a steep cliff; the fact that the cost of building a road over the cliff would be $700,000 was deemed irrelevant.)

Others have granted necessity where access to the land exists but is claimed to be inadequate, difficult or costly.

Can be extinguished when necessity is removed Necessity must be present at time of severance from common owner (CONTINUED) Example: Dita and Steve own neighboring lost, both of which adjoin a public road. The

portion of the road adjacent to Dita’s lot was closed permanently, and she has no other access to a public road. She cannot get a way by necessity across Steve’s land.

Impeaching your own grant – if you find yourself in a situation where you need an EBN as a result of your own action (giving away land to landlock yourself) you cannot claim necessity

Easement by Implication (Quasi-Easement) – Two elements are the same as for easements by necessity – the same person must have owned the dominant and servient estates, and a parcel split must have created the need for the easement. The other two elements are (1) apparent and continuous use of the easement before the parcel split, and (2) the easement’s reasonable necessity for use of the dominant estate. (If there is only one way to get to a house on land, and the land is split, the means of getting to the house will be retained as an easement by implication)

Requires additional burden from EBN, requiring proof it was historically used in this manner

Easement by Estoppel – Courts will look to oral agreements that one party relies on to undertake substantial improvements without objection, court will uphold by estoppel

Reliance on agreement creates effectively an irrevocable licenseSee Holbrook v. Taylor (Kentucky 1976) Easement over road leads people to build house. Can’t revoke access to road after the house has been built.

Prescriptive Easement – Creation of an easement through process similar to adverse possession: Requires:

Adverse – majority presume adverse, some require AU to prove, minority presume adverse once open and notorious is met

Open and Notorious Continuous Regular Use Exclusive (does not require a showing that only the claimant made use of the way, but

that the claimant’s right to use the land does not depend upon a like right in others.

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(“Actual” is missing. Must use as a granted easement-holder would use. No need to show use as an owner would use.)

To prevent a prescriptive easement from being acquired, the owner must effectively interrupt or stop the adverse use. It is not enough to send a letter your neighbor telling them to stop crossing your land.

Scope of Easement: Examples of someone trying to change the scope of the easement, Max has a right of way over Steve’s property. She now seeks to 1) drive rather than walk across the property, 2) cross at night instead of during the day, 3) cross twice a day instead of once, or 4) permit friends and family to use the right of way to visit her. See tab in text.

Preseault v. United States. “When the easements were granted to the Preseaults’ predecessors specifically for transportation of goods and persons via railroad, could it be said that the parties contemplated that a century later the easements would be used for recreational hiking and biking trails…we think not” INTENT.

Willard v. First Church of Christ, Scientist : This case involves a dispute, in which, a church utilized a lot for parking, and this use was reserved in the deed, however, when it was conveyed to a subsequent purchaser, it did not contain the express reservation. Subsequent purchaser sued to quiet title, and although many courts would not rule this way, court said it will not be bound by the feudal forms of conveyancing, but instead will recognize, as its primary objective in construing a conveyance, to try to give effect to the intent of the grantor. This is a holding that grants are to be interpreted in a similar fashion to contracts and not according to rigid feudal standards. The court will look to the intent of the grantor in determining whether a conveyance contains an easement to a third party.

Licenses: An easement must be distinguished from a license. A license is oral or written permission given by the occupant of land allowing the licensee to do some act that otherwise would be a trespass. Includes things like a plumber fixing a drain, a guest coming for dinner, the purchaser of a theater ticket all have a license. This privilege to use the land resembles and easement, but a license is revocable whereas an easement is not. 2 ec

Brown v. Voss: Court found that there was no increase in burden on the servient estate since it was being used for the same purpose, and the Plaintiffs acted reasonably in the development of the property, the trial court acted within its discretion to deny the injunction, even though it was technically a misuse of the easement to access parcel B expressly. Termination of Easements, Negative Easements, Conservation easements, Covenants running with the land, Horizontal and Vertical Privity (831-853)

Termination of an easement.1) The easement owner may agree to release the easement. Because easements are

interests in property, subject to the Statute of Frauds, normally a release requires it to be in writing.

2) If the duration of an easement is limited in some way, it ends through expiration at the end of the stated period.

3) 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

4) Easements by necessity end when the necessity that gave rise to it ends.

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5) And easement ends by merger if the easement owner later becomes the owner of the servient estate.

6) An easement may end through estoppel if the servient owner reasonably relies upon a statement or representation by the easement owner.

7) An easement may terminate by 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.

8) An easement may terminate by condemnation if the government exercises its eminent domain power to take title to a fee interest in the servient estate for a purpose that is inconsistent with continued existence of the easement

9) An easement may be terminated by prescription. If the servient owner wrongfully and physically prevents the easement from being used for the prescriptive period, the easement is terminated.

Negative Easements: Prior to Queen Victoria, English courts only recognized four types of negative easements: The right to stop your neighbor from (1) blocking your windows, (2) interfering with air flowing to your land in a defined channel, (3) removing the support of your building (usually by excavating or removing a supporting wall), and (4) interfering with the flow of water in an artificial stream.

America recognizes those four negative easements but is wary of adding new ones. Have added some however, and they include view easements, solar easements, and conservation easements

Conservation Easements: servitudes that restrict future development of land. The most common type of restriction prohibits subdivision + commercial development

but permits agricultural + residential uses. Classified as negative covenants in gross. They prohibit the servient landowner from engaging in certain kinds of activities. The power to enforce the restriction is typically given to a unit of local government or

charitable land trust. Probably does NOT run w/ the land at CL. Perpetual conservation easement – designed to give peace of mind to current landowners

worried about the future of “beloved property.” Concerns re: abuse b/c of tax breaks + dead hand control; deprive public of any input into

development of conservation policy. So called “sham easements” (conservation easements of questionable public value).

Covenants Running with the Land (LOOK ON NEXT PAGE, MORE IMPORTANT)In early 19th century, landowners turned to the law of contracts. They sought judicial recognition of a contract right respecting land use enforceable not only against the promisor landowner, but against his successors in title as well.

If A wants to maximize value of his land where he has developed single family homes, he will be willing to pay B, owner of the neighboring lot, money to promise to not build a factory (or the like) which would produce smoke and make A’s property less appealing and less valuable. Such bargains are less likely to be made if only the original promisor is bound and only the original promise benefitted. The promise wants assuances that he and his successors in interest will be protected against the original promisor and his successors in interest.

However, in old England, a promise was not enforceable against a person who was not a party to the contract. Only a person that is a party to a contract can sue on it. ONE EXCEPTION, where

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there is privity of estate, the contract is enforceable by and against assignees. IN ENGLAND, there is only privity of estate between a landlord and a tenant and that most covenants in leases would run with the land. They would be enforceable by and against a successor landlord or a successor tenant.

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. They developed the American real covenant, a promise respecting the use of land that runs with the land at law.

Covenants:Promises regarding use of landRestrictions need not be included in future deeds to be considered upheld post-conveyanceAffirmative easements requiring an owner take certain actions are disfavored, but are upheld in certain situationsEquitable Servitudes – Enforceable by injunctive relief NOT enforceable to assignee w/o notice

Requirements to run with the land – (1) Purchaser had notice, (2) intent of orig. parties to have it run with the land, and (3) covenant touches and concerns land

Omits privity requirement from real covenants (RCs burden estate in land, ESs burden land itself, like an easement)

First seen in Tolk v. Moxhay (England 1848) which provided covenants that T&C land and were intended to be binding could be enforced if purchaser had notice of covenant (regardless of lack of privity)

.Real Covenants – Remedy is damages NOT enforceable against an assignee who has no noticeRequirements to run with the land – (1) In writing, (2) purchaser on notice of covenant at time of purchase, (3) intent of orig. parties to have it run with land, (4) orig parties in horizontal privity of estate (now any grantor/grantee relationship will suffice) and future parties in vertical privity with orig parties (For burden to run must acquire entire interest, for benefit to run can acquire only a portion of previous interest), and (5) covenants touches and concerns land

a. Requirementsi. Writing – statute of frauds requires writing, but oral representations can

be upheld under estoppel if one party relied on statement and would be inequitable

ii. “Touches and Concerns Land” traditionally meant it was related to the use of the land

1. Substantive Requirement2. Usually satisfied if it restricts use of servient land and is of use to

dominant estate3. Modern views – (1) “reasonableness” test and (2) alters legal

relations between partiesa. In general, covenants will be allowed to run with the

land unless it is unreasonable, either because they wrongfully infringe on independent liberty interests or

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inhibit alienability or utility without compensating benefits

4. Anticompetitive and HOA dues covenants (Neponsit Property OA v. Emigrant Ind. Savings Bank) are held to touch and concern land

a. Payment of HOA fees increase values of the land, alter legal relations between parties

b. If covenant affects “benefits and burdens” of the parties, it T&Cs

c. In order for all to enjoy common areas, all must pay, thus it T&Cs land

5. While a promise to spend money on property affected by covenants benefiting the burdened lots is akin to an affirmative covenant, it T&C the land because it alters the legally enforceable advantages and burdens of the parties as owners of interests in land (Neponsit)

iii. Notice1. Can be actual or constructive / record (if the covenant was

recorded and could be found in title search which is expected) or inquiry (If layout or other characteristics of the neighborhood suggest there might be Common Plan from original grantor, buyer has burden of inquiring as the existence of potential covenants (Sanborn v. McLean (Mich. 1925) is extreme example), but generally inquiry notice would only be expected for affirmative easements)

2. Most courts require buyers to search all grants from the grantor’s time as owner of the land to see if he has previously granted a portion of it with some covenant regarding the currently granted land

3. Constructive notice can occur if developer / grantor has created general plan to restrict use as in subdivision but has left out specific notice in the deed

a. Should look at iv. Intent to Run with the Land

1. Can be signified expressly or by words that it is enforceable by “his heirs and assigns” / “successors”

2. Can be presumed in absence of express intent by looking at purpose of covenant, whether it would be useless if not allowed to run with the land, if those of that type typically do run

v. Privity Requirements1. Horizontal privity (trad. landlord-tenant, now any grantor-

grantee relationship) required for burden to run, vertical privity between subsequent transferees for benefit and burden to run

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2. Originally meant to ensure burdens and benefits went to those intended, also provides a means of extinguishing the covenant if the chain of privity breaks

3. Ensures that burdens on one property interest are offset by benefits to another property interest

4. Third Party Beneficiaries – not in privity yet benefit from existence of covenant

a. Can they enforce covenant? Most courts require showing they were “intended beneficiary” of the restriction (also taken by 3rd ROP(S)

b. Intent can be shown through explicit reference, if 3rd party is part of common scheme, or (most difficult) through some other proof

c. Exception (for benefit to run) - covenant made for benefit of a third party, it cannot be enforced by the beneficiary unless he can show that he acquired title to his land from the original covenantee, either before or after the covenant was made. In these jurisdictions, privity of estate is required in equity for enforcement of the benefit by the third-party beneficiary

To ask whether there’s “horizontal privity” is simply to ask about the relationship between the two original parties, A and B. It has nothing to do with the relationship between A and X or B and Y. In England, only landlords and tenants were in horizontal privity. In most U.S. states, there is “horizontal privity” between A and B if, and only if, the promise by A to B or vice versa was made in connection with a conveyance of the land from A to B or B to A. In other words, there is horizontal privity only if the promise occurred when one of the parties subdivided a plot of land and sold part of it to someone else. There is no horizontal privity if A and B are just two nearby neighbors, each of whom bought there property separately, and they just decide one day to enter into a land use agreement.

To ask whether there is “vertical privity” is simply to ask whether the successor (X or Y above) succeeded to the other’s entire interest. It has nothing to do with the relationship between A and B. If X just gets a life estate or a term of years from A, then there is no vertical privity between A and X. (That might prevent the burden of the covenant from running with the land; it would almost certainly not prevent the benefit from running).

Equitable Servitudes (854-859)An equitable servitude, enforceable by an injunction, is a covenant respecting the use of land enforceable against successor owners or possessors in equity regardless of its enforceability at law. Equity requires that (1) the parties intend the promise to run, (2) that a subsequent purchaser have actual or constructive notice of the covenant, and (3) that the covenant touch and concern the land. Horizontal privity is of no importance in equity. Nor is vertical privity required for the burden to run. All subsequent owners and possessors are bound by the servitude, just as they are bound by an easement. The benefit runs to all assignees.

In some jurisdictions, a covenant made for the benefit of a third-party beneficiary cannot be enforced by the beneficiary unless he can show that he acquired title to his land from the original

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covenatntee, either before or after the covenant was made. In these jurisdictions, privity of estate may be required in equity for enforcement of the benefit by the third party beneficiaries.

The 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 “sinks its tentacles into the soil” burdening the land itself and not the estate. In this respect it is like an easement.

Validity and Enforcement of Covenants, Touch and Concern the land, Discriminatory Covenants, (864-881)Equity Imposes Three Requirements: 1) Intent that the benefit and/or the burden of the covenant run to sucessors of the original parties, 2) Notice on the part of purchasers of the original promisor, and 3) that the covenant Touch and Concern land. In addition, vertical privity may be required in some jurisdictions for the benefit (but not the burden) of a covenant to run in equity.

Courts will enforce a covenant against future owners only if it “touches and concerns” the land. IN one case, the court stated that the covenant “must affect the nature, quality, or value” of the land or its use. Another commonly cited standard is that a covenant must increase or decrease the promisor’s or promisee’s legal relation concerning the land. The promise must make ownership more or less valuable.

Example: Ann covenanted with Bob that she would not sell liquor on her land. She made this promise because Bob has moral objections to alcohol. The covenant’s burden touches and concerns Ann’s land because it deprives her of an otherwise available use. But the covenant’s benefit does not necessarily touch and concern another parcel of land.

Example: Ann covenanted to water Bob’s lawn everyday. The covenant touches and concerns Bob’s land because it benefits the land, rather than Bob as an individual. The owner of the benefited land is the only person interested in enforcing the covenant. But the covenant’s burden does not touch Ann’s land, because Ann can perform this covenant regardless of whether she owns any property.

Discriminatory Covenants: Restrictive covenants that seek to exclude persons of designated race or color from the ownership or occupancy of real property. Courts hold that the restrictive agreements standing alone cannot be regarded as violative of any rights guaranteed to petitioners by the 14th Amendment (equal protection). So long as the purposes of those agreements are effectuated by voluntary adherence to their terms, it is ok. However, it is illegal for them to be enforced. Shelly v. Kreamer.

Termination of Covenants, 6 ways, modification and termination of Servitudes because of changed conditions, (882- 896)

A. Termination of Covenants a. By the terms of the covenant : Many covenants by their terms continue for a

specific number of years or until the occurrence of some event. b. Merger : Once a common owner acquires the benefited property + the burdened

property, the covenant or servitude terminates through merger. i. The covenant disappears even if a common owner subsequently sells part

of the property. c. Release : Owners of the benefited property can grant a written release to the

owner of the burdened estate.

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d. Estoppel : If the defendant has relied upon the plaintiff’s conduct making it inequitable to allow the plaintiff to enforce the servitude.

e. Unclean Hands : Courts will not allow a landowner to violate a covenant + at the same time to enjoin another landowner from violating the same covenant.

f. Acquiescence : There is a pattern of violation that has occurred that enforcing the covenant in this one instance would serve no purpose.

g. Abandonment : Occurs when such a high number of landowners in an area violate the common covenant that b/t their unclean hands + acquiescence, the covenant becomes unenforceable by any benefited landowners.

i. The violations usually have to have caused such a substantial change in the neighborhood that the original purpose of the covenants has been subverted.

ii. Peckham v. Milroy (Washington, 2001) – A covenant is abandoned when it has been “habitually + substantially violated.”

h. Laches : Occurs when a person having a right to enforce a covenant waits so long to bring suit to enjoin a violation that the breaching D is unduly harmed by the delay itself.

i. Requires showing of an unreasonable delay by P and that there has been damage done to D b/c of the unreasonable delay.

ii. Latches only prohibits the enforcement against the D for a specific breach; it does NOT terminate a covenant.

iii.i. Changed Conditions : Covenants can be terminated if the conditions in the

neighborhood have so changed that the covenant no longer serves its intended purpose.

i. The majority of courts only consider changes occurring w/in the subdivision. Conditions on land outside the neighborhood are irrelevant even when the external conditions make some “border” lots poorly suited for their allowed uses.

ii. Bolotin v. Rindge (California, 1964) – If the original purpose of the covenant can still be realized, it will be enforced even though the unrestricted use of the property would be more profitable to it owner. Thus, even though the property would be more valuable if it were used for a commercial use, the circumstances are not so changed that the property cannot be used for residential purposes, which is what the covenant intended.

The law zoning, the comprehensive plan, the economics of zoning, the nonconforming use, Variances and Special Exceptions, (941-962)

B. ZONING The Standard State Zoning Enabling Act:

Act empowers municipalities to “regulate and restrict the height, number of stroeis, and size of buildings and other structures, the percentage of lot that may be occupied, the size of yards, courts, and other open spaces, the density of population, and the location and use of buildings, structures, and land for trade, industry, residence or other purposes.

The regulations must be “made in accordance with a comprehensive plan Comprehensive plan is a statement of the local government’s objectives and standards for

development. Idea is to anticipate chance and promote harmonious development.

Economics of Zoning

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Often justify zoning by saying that it helps internalize the externalities of development where bargaining (servitudes) or judicial determination (nuisance law) are not sufficient.

Some communities seek to use zoning as a way to raise property values by creating scarcity. Raises price of land and price of housing

Definition: The regulation of land uses through a general regime permitting + forbidding particular uses of land in certain locations.

Originally targeted nuisances but now commonly zoning makes fine distinctions among uses + often restricts height, bulk area, + exterior design.

States can delegate the police power in the area of zoning to local gov’ts (zoning ordinance).

o Permits are commonly required for subdivisions, site plans + building projects. o Board of Zoning Appeals : where people can appeal zoning decisions. o Will hear requests for variances (allow for relaxation of zoning requirements in

cases of undue hardship) + special exceptions (permit uses only if conditions specified in the ordinance are met). See further explanation BELOW

Why?i. Predictability + ensures property values of certain homes.

ii. “Garden cities” – segregation + promotion of single-family homes as a good thing.

Constitutionality of Zoning: The authority to engage in zoning must come from the state (10th Amendment). The ordinance must find their justification in some aspect of the police power, which is

asserted for the public welfare. Thus, a lot of times we have to look to whether the power exists to forbid the erection of

a building of a particular kind or for a particular use by considering it in connection w/ the circumstances + the locality.

Village of Euclid v Ambler Realty Co. (U.S. Supreme Court, 1926) – Village divided land into classes of use districts, height districts + area districts (“cumulative zoning”). The restrictions on appellee’s land restrict land use for residential purposes + says that this is a violation of constitutional rights (the Due Process Clause and the Equal Protection Clause – not depriving people of life, liberty or property). The harm that A suffered was a substantial loss of its land’s value + the loss of the right to use its land for otherwise legal purposes.

Substantive due process: can the federal or state gov’t restrict individual rights through the law or action at issue? This is the Rational Basis Test.

The law must advance the public health, safety, morals or general welfare; i.e. need a legitimate state interest.

The law will be upheld if the means chosen to achieve the legitimate state interest is rationally related to the legitimate state interest. The provision cannot be arbitrary + capricious.

The burden is placed on the challenging party to prove beyond a reasonable doubt that the relationship w/ reasonableness is not maintained.

If the judge can conceive of a rational basis, then this is sufficient. We do not want to question the legislature’s decision-making.

In Euclid, the court focuses mainly on nuisance law + the benefits to only allowing residential neighborhoods (apartment houses as nuisances).

The Nonconforming Use:

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A lawful nonconforming use establishes in the property owner. Appellant’s adult book store does not and cannot meet the place restrictions set forth in the ordinance in that it is not located within an area designated for adult commercial enterprises.

Amortization (any commercial enterprise which would constitute a pre-existing use and which would be in conflict with the requirements set forth in this amendment has 90 day from the date the ordinance becomes effective to come into compliance.

This is ruled unconstitutional because you cannot force someone who is operating a lawful establishment out unless it is a nuisance, it is abandoned, or it is extinguished by eminent domain. Taking of appellant’s property (making him move even though he was there before the ordinance) without just compensation, would violate the constitution.

Zoning Board of Adjustment may, “in appropriate cases and subject to appropriate conditions and safeguards, make special exceptions to the terms of the ordinance in harmony with its general purpose and intent.”

Variance: Two conditions must be met. First, the variance must be necessary to avoid imposing undue hardship on the owner of

the land in questiono Undue hardship “involves the underlying notion that no effective use can be

made of the property in the event that a variance is denied.” To show hardship, must make reasonable effort to comply with ordiance Owners hardship must not have been self-inflicted

Second, the grant of the variance must not substantially impinge upon the public good and the intent and purpose of the zoning plan and ordinace.

o This requires paying attention to the manner in and extent to which the variance will impact upon the character of the area.

Special Exceptions:An exception is a use permitted by the ordinance in a district in which it is not necessarily incompatible, but where it might cause harm if not watched. Excpetions are authorized under conditions which will insure their compatibility with surrounding uses.Example of when a special exception would be granted (Town of Brunswick, ME).

1) the other requirements of the ordinace were met2) the use “will not adversely affect the health, safety, or general welfare of the public,” 3) the use “will not tend to defeat the purpose of this ordinance…or of the

comprehensive plan for the development 4) the use “will not tend to devaluate or alter the essential characteristic of the

surrounding property.Hospitals in residential districts are one example, because of the excessive area they occupy, and because of the potential traffic and other problems which may affect the a residential neighborhood. Zoning Amendments and the Spot Zoning Problem (962-978)

Invalid Spot Zoning:“Zoning changes, typically limited to small plots of land, which establish a use classification inconsistent with surrounding uses and create an island of nonconforming use within a larger zoned district, and which dramatically reduce the value for uses specified in the zoning ordinance of either the rezoned plot or abutting property. Spot Zoning is invalid where some or all of the following factors are present:

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1) A small parcel or land is singled out for special and privileged treatment.2) The singling out is not in the public interest but only for the benefit of the landowner3) The action is not in accord with a comprehensive plan.

The problem with spot zoning is that it might bring undue pressure to bear on the political process, whether by way of bribes or more subtle influences.

Protection of Religious Establishments and Uses (1000-10)

The Religious Land Use Institutionalized Persons Act (RLUIPA) When the law infringes upon an individual’s fundamental constitutional right of free

exercise of religion, the burden on the state increases dramatically. The state must prove that the state’s interest outweighs the individual’s fundamental

right; usually requires a showing of a compelling state interest. Substantial burden = requires that a regulation completely prevents someone from

engaging in religiously mandated activity or requires participating in an activity banned by the person’s religion.

Sherbert – delay, uncertainty + expense but still results in denial. This is the most lenient definition of a substantial burden b/c the church just needs to show delay, uncertainty + expense in making the church.

Sts. Constantine and Helen Greek Orthodox Church, Inc. v. City of New Berlin (2005) – If a land-use decision imposes a substantial burden on religious exercise, + the decision maker cannot justify it, the inference arises that hostility to religion, or more likely to a particular sect, influenced the decision. Court here sticks to Sherbert decision in only requiring delay, uncertainty + expense.

Environmental Protection, Controls on Household Composition, Exclusionary zoning (1010-1060) Environmental Protection:

In 1969, Congress passed the National Environmental Policy Act (NEPA), which requires federal agencies to submit reports on the potential environmental impacts for their actions. Since then states have enacted their own policy acts called States Environmental Policy Acts (SEPAs) which similarly require state and local government agencies to complete environmental impact statements or reports before taking or allowing actions that will affect the environment.

Wide ranging effects on zoning. In states with SEPAs, before a rezoning or conditional use permit can be granted, an environemtnal impact report must be filed and the ageny in charge must determine whether the project should be approved and, if so, what needs to be done to ensure that the impact on the environment will be within acceptable limits.

What is the “environment”?While some states restrict their notion of environemtal analysis to the impact of the natural surroundings, others have adopted a broader approach.

For example, NY’s environmental review statute, SEQRA, defines “environment” comprehensively to include “existing patterns of population concentration, distribution, or growth, and existing community or neighborhood character.

Fisher v. Guiliani (NY 2001)

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Transferable Development Rights (TDRs) are a land-use planning tool that often used to allow historic or landmarked buildings to sell their air-space rights to nearby or contiguous buildings.

Example: If theater building is only 8 stories and the zoning allows for you to be up to 40 stories, you own the air space above building and can sell these development rights to any building within the Theater Sub-district. The transfer is limited to a 20% increase in the base Floor-to-Area ration (FAR) of the receiving site, inclusive of, or in combination with, all other as-of-right zoning incentives.

These theater buildings have been given permission by gov’t to sell this right of development and the Gov’t has created a market. If you get in early, and buy these rights, you will be taller than the buildings around you and you will have a view that no one else can get. It is essentially a government created monopoly.

Department of City Planning (DCP) will do the mandatory City Environmental Quality Review (CEQR). If it is determined that the proposed action may have significant effect on the environment, the agency must then issue a positive declaration and an Environmental Impact Statement must be prepared before the proposed zoning may be adopted. If on the other hand, it is determined that the action will have no significant impact, the agency issues a negative declaration and no environmental impact statement need be prepared.

Look at the effect on density, traffic, transit and air quality for at least 10 years.

Controls on Household Composition:

Village of Belle Terre v. Boraas: Village of Belle Terre has restricted land use to one-family dwellings excluding lodging houses, boarding houses, fraternity houses, or multiple-dwelling houses.

College kids from Stony Brook filed suit claiming that not allowing six college students to live there because they were not “family” as defined by the ordinance, violated the constitutional rights of equal protection and freedom of association.

In the Euclid v. Ambler Realty Co. the main thrust of the case in the mind of the Court was in the exlusion of industries and apartments, and as respects that it commented on the desire to keep residential areas free of “disturbing noises”; “increased traffic”; the hazard of “moving and parked automobiles”; the “depriving children of the privilege of quiet and open spaces for play, enjoyed by those in more favored localities.” The ordinance was sanctioned because the validity of the legislative classification was “fairly debatable” and therefore could not be said to be wholly arbitrary.

Using that rational, the S.Ct. stated that “a quiet place where yards are wide, people few, and motor vehicles restricted are legitimate guidelines in a land use project addressed to family needs. This goal is a permissible one within Berman v. Parker. The police power is not confined to elimination of filth, stench, and unhealthy places. It is ample to lay out zones where family values, youth values, and the blessings of quiet seclusion and clean air make the area of sanctuary for people.

SEEMS LIKE BULLSHIT, it sounds like they are restricting who can live there not how many people can live there. If you wont allow 5 unrelated college friends to live there, why would you allow an 8 person family to leave there?

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*Obviously remember that this right to exclude certain types of people, such as non-family oriented roommates, could never be validly interpreted to exclude black people from acquiring property in a white residential area.

City of Edmonds v. Oxford House, Inc.

The Fair Housing Act (FHA) prohibits discrimination in housing against, inter alios, persons with handicaps. However, any reasonable local, state, or federal restrictions regarding the maximum number of occupants permitted to occupy a dwelling is entirely exmept from the FHA. Can restrict the number of people, but not who lives there.

Discrimination (Fair Housing Act) U.S. Department of Housing and Urban Development, Discrimination in

Metropolitan Housing Markets: National Results from Phase I of HDS2000 Page 432 Discrimination in the Sale or Rental Housing and Other Prohibited

Practices 434 “Taboo, troublesome, and safe words” for real estate advertisements. Such

expressions as able-bodied, bachelor, near churches, couples only, empty nestersExlusionary Zoning:Zoning can be an exercise in separation.

However, an ordinance based on a suspect class (race, color, religion, or national origin) will be struck down as unconstitutional on equal protection or substantive due process ground, or illegal on a statutory basis.

o Even subtle racial discrimination provisions + ordinances may be invalidated as unconstitutional if the aggrieved person proves the city acted w/ a discriminatory purpose.

o But a mere discriminatory impact or effect does not warrant constitutional relief. Most local gov’ts try to offer the highest quality of life + governmental services at the

lowest cost to the citizen taxpayers; usually want a mix of a high property tax basis + low need for public services.

o Thus would want to increase residential lots, making moving to the community viable only for people of moderate or high incomes. However, socioeconomic class is NOT a suspect class.

Southern Burlington County N.A.A.C.P. v. Township of Mount Laurel (New Jersey, 1975) – A group of poor black + Hispanics sued the township on the grounds that the system of land use regulation unlawfully excluded low + moderate income families. Ordinance was mainly for tax purposes + to increase tax base while decreasing the need for public services. Court concludes that every municipality must (through its land use regulations) make realistically possible an appropriate variety + choice of housing. It cannot foreclose the opportunity of the classes of people mentioned for low + moderate income housing and in its regulations must affirmatively afford that opportunity.

Court focuses on the idea that a zoning regulation is for the general welfare. “Welfare” encompasses all citizens + areas of the region, not just those w/in the

township’s boundaries. Court also focuses on the New Jersey constitution, which has elevated housing to almost

a fundamental right.

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Thus, we have a suspect class (poor people) + a right that is not considered in the U.S. Constitution, which gives the court more leeway in a stricter view when applying police power.

“Builder’s remedy” – which allowed a successful builder-plaintiff to proceed with a development at a higher density than would otherwise be permitted if a sufficient portion of the project was dedicated to providing affordable housing. The builder's remedy was contrary to the concept of municipal "home rule" but also carried the potential of significant population growth. Typically at that time builders were permitted to build four market-rate units for each "affordable" unit provided.

Mt. Laurel II – New Jersey legislation can set-up a Council on Affordable Housing that would decide what a municipality’s fair share of low + moderate income housing would be, would pass on whether measures satisfy this obligation + would approve regional agreements.

Need more affirmative steps like constructing certain amounts for low-income housing + creation of zoned parts for mobile homes.

Eminent Domain, Regulatory Taking, Public Use, Just Compensation (1060-1080)

Eminent domain is the power of government to force transfers of property from owners to itself. Fifth Amendment says that property may only be taken from an owner for a “public use.” The government is required to pay just compensation to the owners.

May never take the property of A for the sole purpose of transferring it to another private party B, even though A is paid just compensation. However, government may take land from one private party and give it to another if future “use by the public” is the purpose of the taking. The taking of private property for a railroad with common-carrier duties is a good example.

3 categories of takings that had been held to satisfy the the public use requirement.1) transfers of private property to public ownership, as for a road.2) transfers to private parties such as common carriers, railroads and the like, who make

the property available for public use.3) Transfers to private parties as part of a program to serve a public purpose such as

economic development

There is no exact test to determine whether something is or is not a public use.

When the government condemns your property and physically takes it away from you, there is no question that a “taking” has occurred through eminent domain. However, it is sometimes unclear whether a taking has occurred in consequence of some government activity or regulation. Loretto v. Teleprompter Manhattan CATV Corp.NY Executive Law requires that landlords allow cable television facilities upon the property. P is the owner of a building that has cable lines and boxes on the exterior and roof. ISSUE Does a minor but permanent physical occupation of an owner’s property authorized by government constitute a “taking” of property for which just compensation is due? HOLDING: a physical occupation of cable installation on roof and side of building constitutes a ‘taking.’ Supreme Court said that a permanent physical occupation is a taking without regard to public interests and it doesn’t matter if there is minimal economic impact on the owner. There is a difference between a temporary occupation (not a taking) and a permanent one (taking). Property rights have been described as the rights “to possess, use and dispose of it” and that the gov’t permanently occupies physical property, it effectively destroys each of these rights

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DISSENT: Blackmun: Takings claims are properly evaluated under a multifactor balancing test and not a strict physical and permanent occupation standardA takings inquiry must also ask whether the extent of the government’s interference is so severe as to constitute a compensable taking in light of the owner’s alternative uses for the property

Hadacheck v. Sebastian The city passed an ordinance that made it illegal to manufacture bricks in the city. P owned the land and was using it for brick making bc of the special clay and it was originally outside city. Land is worth $800,000 as a brick kiln and $60,000 as a residential lot. ISSUE: Is an ordinance restricting the use of one’s land that greatly reduces its value a taking? HOLDING: The ordinance restricting brick manufacturing is not a taking. KEY REASONING: There is no prohibition of the removal of the brick clay, only a prohibition within the area to the manufacture of the clay into bricks The ordinance did not completely deny P to the use of his land. He could excavate the clay and then transport it to another area where manufacture was permitted RULING: In favor of D – holding that the ordinance was fine and P was not to be compensated

Pennsylvania Coal Co. v. MahonPrivate owner had only acquired surface rights and not the right to supporting property underneath the land. The Kohler Act went beyond a regulation and became a taking. The Court considered the magnitude of diminution of the value of property and found that when a diminution reaches a certain point the government must compensate for it. The Pennsylvania Coal Co. could not exercise the only valuable right it possessed which was to mine the property for profit. The Court acknowledged that the public may have use for the support, and an interest in their safety, however, the subsurface rights to a property could not be taken for the public without just compensation.

DISSENT: Believes that this restriction was to protect the public health, safety or morals from dangers and this is not a taking and thus P deserves no compensation Gov’t merely prevents the owner from making a use which interferes with paramount rights of public. Purpose of a restriction does not cease to be public, bc incidentally some private person may thereby receive gratuitously valuable special benefits Where the police power is exercised, not to confer benefits upon property owners, but to protect the public from detriment and danger, there is no room for considering reciprocity of advantage. The test says that when governmental regulation of a use that is not a nuisance works too great a burden on property owners, it cannot go forth without compensation (diminution-in-value test)

Penn Central Transportation Company v. City of New York:The question presented is whether a city may, as part of a comprehensive program to preserve historic landmarks and historic districts, place restrictions on the development of individual historic landmarks .” The Appellants contended that a taking had resulted by the diminished value of the terminal as the result of the Landmarks Law. The Court pointed out that other precedent cases held that diminished value as the result of rezoning did not amount to a taking. Also had the ability to Transfer Developmental Rights to mitigate loss. (even they would have made much more money if they could build the building themselves). The Court concluded that the interference with Appellants’ property was not such that the interference amounted to a taking

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requiring just compensation. The Court also held that the impact of the regulation on Appellants’ parcel was insufficient to require the government to institute eminent domain proceedings.

1978 Penn Central: when justice and fairness when public injuries should be compensated by the gov’t rather than a few individualsNo set formula for determining this but a few considerations

Economic impact: DiminutionHow much does it interfere with distinct investment backed expectationsCharacter of the Gov’t action

Lucas v. South Carolina Coastal CouncilP purchased two lots ($975k) on the coast and the state subsequently passed Beachfront Management Act in 1988 that barred P from building anything on the property rendering it economically useless. ISSUE: Is the gov’t required to pay compensation for land that it renders economically useless by means of coastal conservation legislative?HOLDING: When the gov’t deprives an owner of real property of 100% of its economic value for a public purpose, it must be compensated unless what is being taken away was not part of the property rights to being with.

2 categorical situations where a case-specific analysis is not required to constitute a taking: Physical occupation of one’s real property Denial of all economic value of one’s real property (this case)

When the owner of real property has been called upon to sacrifice all economically beneficial uses in the name of the common good, he has suffered a taking“Harmful and noxious uses” analysis progressed into more contemporary statement that “land use regulation does not effect a taking if it ‘substantially advances legitimate state interests’”The only way a gov’t need not compensate when taking all of one’s economic value in his land is if the regulation takes away something that was not part of the property owner’s title to begin with “Total Taking” inquiry requires analysis of:

The degree of harm to public lands and resources, or adjacent property, posed by P’s proposed activities

The social value of P’s activities and their suitability to the locality in question The relative ease with which the alleged harm can be avoided through measures taken by

P and the gov’t

RULING: Reverses SC Supreme Court – the government’s actions constituted a taking and require compensation under the 5th Amendment

DISSENT: (Blackmun)There is no way that P lost all of the value in his property bc he can still picnic, camp, or live in a moveable trailer on the propertyIf the state legislature is correct that the prohibition on building in front of the setback line prevents serious harm, then, the act is constitutional Never before did the Court decide a taking based on whether the residential property owner lost all value in the land. It depends on whether the gov’t interest was sufficient to prohibit the activity, given the significant private cost Courts should rely on what the legislative judgments say constitute a harm in that scenario

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The common-law nuisance doctrine will not be any more objective in determining what constitutes a harm as would the state courts and legislatures DISSENT: (Stevens)The majority’s new rule is wholly arbitrary. Landowner who loses 95% gets nothing but a landowner who loses 100% gets everything compensated. 2 possible effects this new categorical rule will have:

Courts will alter the definition of the ‘denominator’ in the takings fraction, rendering the new rule meaningless; or

Investors will manipulate the relevant property interests, giving the new rule sweeping effect

Under Mugler, a State’s decision to prohibit or to regulate certain uses of property is not a compensable taking just bc the particular uses were previously lawful A ‘set formula’ has never been created and should not be used in ‘takings’ jurisprudence The legislative act does not only burden P but anyone else who lives along the coast in both developed and undeveloped property

PALAZZOLO v. RHODE ISLAND (p. 1152)Supreme Court of the U.S., 2001PREVIOUS RULINGS: Trial court and RI SC rejected P’s taking claimFACTS:P owns a waterfront parcel where almost all of his property is designated as coastal wetlands RICRMC (council) rejected P’s development proposals and P sued stating that the gov’t took his property without just compensation in violation of the Takings Clause (5 th) and Due Process Clause (14th)The property was owned by SGI and P was sole shareholder. SGI failed to pay taxes and the property transferred over to P after the legislative enactments had been enacted ISSUE:

1- Did the legislative restrictions placed on P’s property render his land valueless?2- Does the passing of title after a legislative enactment has passed bar a takings claim?

HOLDING: 1- No, bc P still has a $200,000 portion (3.15 mil total) left 2- No. the passing of title does not make an unconstitutional enactment constitutional

KEY REASONING:State court erred in stating that P could not assert a takings claim bc he received title to the property after the act went into effect. Future generations have a right to challenge unreasonable limitations on the use and value of land $200,000 is a small amount of the land’s total value but it does not render it totally valueless and thus, there is no takings claim under LucasRULING: remanded to state court to determine whether a taking had occurred under Penn Central test

The DeedForgery and Fraud

A forged deed is void. 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.

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On the other hand, most courts hold that a deed secured 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. The grantor, having introduced the deed into the stream of commerce, made it possible for a subsequent innocent purchaser to suffer loss. 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.

Example: O sought to buy certain mineral interests from A, “a totally illiterate 87-year-old widow.” A agreed to sell O the mineral rights in 2 of 15 acres that she owned, but, unkown to her, the deed prepared by O and that A signed by her mark conveyed to him a much larger interest. O recorded his deed and promptly conveyed his interest to L, who recorded. Oil was then found under the land. The court held that a deed obtained by fraud, unlike a forged deed, is capable to pass title to a bona fide purchaser. It remanded the case to determine if L was a bona fide purchaser. If so, L would prevail.

§§§§§§Pacing is important Organization and clarity outline before you start writing Read instructions carefully Document review section, refer to specific line numbers Open ended question.Economics, camparitive institutions, different cultures, Think about the consequences and deeper implications of the issues.

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