Property Outline – Law School


Property Outline

Fall 2003, Wiggins

 

Themes, Trends, Tension in LAW OF PROPERTY

• Jurisprudence

• JD tensions center around what should the law look like in its context and structure?

tension b/tw rules (doctrines that are clear and predictable so results are clear and predictable) vs. standards (justice and fairness)

law (application of doctrine, precedent, statute) vs. norms (a competing system: industry norms as a source of authority; norms can be cultural and conflict w/ law)

leg action (statutes: prospective (future) development of rules authored by elected officials)vs. judicial action (common law that seeks to remedy situations already existing (after); judges are unelected)

• judicial restraint

formalism v. instrumentalism (law as instrument of public policy)

• Policy

utilitarian (instrumental reason of economics (incentives)) v. moral view (relationships, fair play, creation – we should respect rights of the creator) of property law

stability (history) vs. change (adapt to fit contemporary circumstances, law should not be rooted in history but flexible)

market alienability vs. intent

free market vs. public interest

private ownership (market discipline and greater opportunity for efficiency norms to be maximized) vs. communal ownership (public values and non-market norms, empirical – may be more efficient)

• Doctrine

• formalism vs. intent

• property (language of status) vs. contract (language of bargain)

• Trends

• movement for social justice and civil rights

• FHA, CRA, ADA – all constrain rights of property owners – good for public

• population growth – made our cities

• changed dynamics of bargaining b/tw L and T

• advent of technology

• internet, travel, medicine

• direct democracy and public advocacy

• away f/closed group of decision makers out to the public

• zoning

• globalization

• int’l treaties on intellectual property

• trade

• int’l treaties on scientific research

• in marital/community property

• feminism and role of women in society

 

ACQUISITION OF PROPERTY

 

Theories of Acquisition

    1. First in Time
      1. Rule of Capture: 1st possessor wins. AKA rule of capture, policies: reward labor and security of resources.
      2. Occupancy
        1. Origin: scarcity
      3. Policy Bases: easy to prove so avoid conflict; objective; intuitive; promotes security and peace; follows usage and custom.
      4. Criticism: Not always ethical; conceivably limitless.
    2. Labor Theory: John Locke theorized anything taken out of natural state mixed w/one’s labor belongs to him
      1. Policy Base: Private property exists to reward labor, society benefits f/active use

2. Law of Accession

      1. Ethnocentric
      2. Two Bases:
        1. Moral Base: immoral not to award title to property created/improved by owner
        2. Utility Base: rejects moral base, promote productive behavior
      3. Criticism: subjective and requires bias social context
    1. Economic Theory/Cohen Essay
      1. Strictly Utilitarian
      2. Efficiency
      3. Internalizing Cost
      4. 4 Theories: advantages/disadvantages
        1. occupancy, labor, economic theory, personality/human freedom
    2. Personality Theory
      1. Privacy, Liberty, Autonomy, Power to Exclude, Independence f/ Community, Bending to Common Good
    3. Policies of Acquisition
      1. Certainty, Security, Reliance, Justice and Morality, Domestication and Capture of Animals and Resources, Most Efficient Use of Real/Personal Property

8.25.03

Doctrines of Acquisition

I. Acquisition by Discovery:

1. First in time prevails

    1. Johnson v. M’Intosh(land f/Indians):double conveyance

Discovery ruleover 1st in time rule. No Indian title b/c Labor Theory

2. Thus property both confers and rests on power. Power over persons, not only things.

3. Rose Excerpt p. 19: legal conclusion of possession being contingent on other factors

4. Title by Conquest

5. Native American Right of Occupancy

res nullius or terra nullius = thing or territory belonging to no one

8.29.03

II. Acquisition by Capture

1. Follows directly f/1st in time and supported by labor theory.

2. Policies: rewarding labor and security of resources.

3. Capture of Wild Animals: belong to their captors. But capture or mortal wounding is required; mere chasing is not enough. Pierson (Δ) v. Post (Π)(fox case)

      1. Problem of Overcapture
      2. Wounded or Trapped Animal: capture must involve mortally wounded or trapped.

8.29.03

4. Custom: gen’l rule is physical possession. But, in certain trades custom is better, may have diff result.

      1. Factors: Court will give possession by custom if: 1) small, specialized industry; 2) custom is undisputed in community; 3) custom rules entire industry; and 4) necessary for survival of industry. Ghen v. Rich (whaling)

5. Interference by Non-Competitor: (malicious) disrupts efficient use of resources and must be stopped. Keeble v. Hickeringill (duck pond)

Ratione Soli (not relied on in Keeble): landowner may have constructive possession until wild animal leaves.

constructive possession = depicts a state of affairs that actually exists when actually it does not. Legal fiction.

animus revertende: Captured wild animals w/ habit of return belong to captors even when roam.

      1. Wild Animals w/ No Habit of Return: if escapes, owner loses possession and is subject to capture by another
      2. Statutory Limits on Capture of Wild Animals: b/c overkill/ inefficiency so now conservation.

6. Fugitive Resources: rule of capture applies to fugitive resources such as oil and gas. Like wild animals, if fugitive resource “escapes” f/beneath property of one landowner, adjacent landowner may capture and put to beneficial use.

      1. Water: fugitive resource, has several rules regarding its capture:
        1. Rule of Absolute Ownership: English applied: water as part of soil and landowner could w/draw freely w/o regard to effect on neighbors.
        2. Rule of Reasonable Use: Americans developed: water could be extracted as long as not wasted in that it harms neighbors. Today, water rights are controlled by legislation.

9.03.03

III. Acquisition by Creation: to reward labor

1. Accession

2. Property in One’s Persona

3. Right to Exclude (and exclusive possession) as essence of Private Property

a. Limited to not endanger well-being of others

b. Consider reasonable expectations of parties/balance interests of parties

Jacques v. Steenberg Homes, Inc (mobile home delivered over land)

trespass = direct force, usually strict liability

trespass on the case = indirect force, usually negligence

State v. Shack(migrant farm worker)

      1. Intellectual Property: created by and existing only in the mind. Includes copyrights, patents, and trademarks and ideas in persona.
        1. Common Law:absent a recognized property right, one’s property is limited to chattels that embody his invention, others may imitate at their pleasure.
        2. CheneyBros. v. Doris Silk (fabric designs copied)
        3. International News Service v. Associated Press

9.05.03

      1. Property In One’s Person/Rights in Body Parts:
        1. Moore v. Regents of the University of California(cell line) 1990

conversion = wrongful exercise of ownership over property rights of another. (personal, not real property)

      1. Bundle of Rights: right to possess, sell, use, exclude, transfer.

9.08.03

Subsequent Possession

IV. Acquisition by Find

trover (similar to trespass) = common law action for $ damages resulting f/ Δ’s conversion to own use of a chattel owned or possessed by Π. Π waives right to obtain return chattel and insists Δ be subjected to a forced purchase of chattel. If Δ loses, he pays $ damages to Π

replevin (similar to ejectment) = action to recover possession of tangible personal property withheld for another.

bailment = rightful possession of goods by a person (bailee) who is not owner (bailor). Voluntary when bailor gives possession to bailee. Found goods: involuntary bailment f/bailor’s perspective and voluntary f/bailee’s perspective.

    1. Retention of Title: owner of property does not lose title by losing property. Owner’s right persists even though article was lost or mislaid.
      1. Finder’s Rights:finder has rights superior to whole world but TO (by prior possession)
        1. Armory v. Delamirie(sweeper/ring)
    2. Relativity of Title:
      1. Prior Possession and /ThievesTrespassers:prior possessor wins
      2. Possession:physical controlandintent to assume dominion over it.
        1. Constructive Possession
      3. Finders vs. Owner of Private Premises: Owner of premises claims to be in actual or constructive possession.
        1. Hanna v. Peel: (brooch & absentee owner)
    1. Objects Found in a Public Place – Mislaid, Lost or Abandoned Property: finder acquires no rights in mislaid property (goes to property owner); entitled to possession of lost property against all but TO; entitled to keep abandoned property.
      1. Lost –Mislaid Distinction:
        1. Lost: property that owner accidentally, involuntarily, unconsciously and casually lost.
        2. Mislaid: property intentionally placed somewhere, left and forgotten.
          1. McAvoy v. Medina(wallet left in shop)
      2. Abandoned Property: items intentionally/voluntarily left w/no intent to reclaim — goes to finder.
      3. treasure trove = any money or coin, or bullion hidden in earth w/intent to reclaim.

English common law: went to king; abandoned treasure went to finder.

Modern American law – usually awarded to finder and not state or owner of premises (not all states follow this rule)

9.10.03

V. Acquisition by Adverse Possession

ejectment = prior possessor sues to recover possession f/ another who is in possession of land.

1. Reliance Theory:Protect Title

2. Sleeping Theory: Bar Stale Claims

3. Earning Policy:Reward Productive Use of Land. Like labor theory.

4. Attachment Theory:Honor Expectations

5. Quiet Title Policy:certainty of ownership and transferability of property

C. Requirements of AP: 4 Basic Elements of APR must show:

1. ACTUAL ENTRY GIVING EXCLUSIVE POSSESSION: requires an actual physical occupation.

a. to trigger COA, start SOL against TO. Shows intent of APR.

b. Some states require cultivation or improvement of land to show actual entry.

c. Serves to delineate extent of APR’s Claim

d. Exclusive Possession

2. OPEN AND NOTORIOUS:to reasonably inform TO

i. Actual or constructive notice

      1. Rationale:invokes sleeping theory
          1. Van Valkenburgh v. Lutz(improvements, D admitted that land belonged to P)

3. ADVERSE AND UNDER A CLAIM OF RIGHT: APR must hold adversely to all world, including TO and under a claim of right. Claim directly against TO, W/O owner’s consent.

Earning Policy (consistent w/objective, good faith and aggressive trespasser standards)

a. Hostility: means possession is w/o owner’s consent or permission – it is subordinate to TO.

b. Constructive AP Under Color of Title

c. Boundary Disputes

i. Objective Test: (majority view) APR’s mistake is not determinative; possessor is holding under claim of right if actions appear to community to be claim of ownership and he is not holding w/permission of TO.

doctrine of agreed boundaries = if uncertainty b/tw neighbors as to true boundary line, oral agreement to settle matter is enforceable if subsequent conduct by parties confirms agreement.

doctrine of acquiescence = long acquiescence is evidence of agreement b/tw parties fixing boundary line

doctrine of estoppel = applies when one neighbor makes representations about location of a common boundary, and other neighbor relies on representations. Neighbor can be estopped f/ making claims contrary to original assertions

ii. Maine Doctrine:minority of states hold if possessor is mistaken about boundary and would not have occupied land if he had known, APR has no intention to claim title — no adversity.

iii. New Jersey Test: NJ joined majority of states applying objective test w/one qualification: when encroachment of an adjoining owner is of small area and fact of intrusion is not clearly and self-evidently apparent to naked eye but requires on-site survey for certain disclosure, encroachment is not open and notorious.

ad coelum doctrine = to whom soil belongs, he also owns to sky and its depths

d. Mistaken Improver: APR MAY erect improvements that encroach on property of another w/ mistaken belief that they built only on own property.

i. Common Law: TO had right to force mistaken improver to remove encroachment or it may become property of TO.

ii. Modern View:good faith improver encroaching on a neighbor’s lot can pay damages to TO or force sale of land encroached on for FMV, others allow TO to accept damages or sale. iii. Intentional Encroachments: encroacher must remove improvement if TO so demands.

9.12.03

iv. Manillo v. Gorski: encroachment of 15” and claim of title to strip by AP.

4. CONTINUOUS, UNINTERRUPTED POSSESSION:

• reflects Sleeping Theory and Earning Policy

also Attachment Theory (Holmes)

        1. Seasonal Use
        2. Abandonment
        3. Tacking by Successive APR: only ifprivity of estate b/tw APRs.
            1. Technical View: Some courts have held that privity is satisfied only if deed required covers actual lot possessed.
            2. Written Instrument Required: SOF requires written instrument of transfer of land. Oral transfers are not allowed and will not satisfy privity requirement.
          1. Oustercannot tack
          2. Reentry of ousted APR can toll his AP.
          3. Abandonment: Tacking not permitted.
          4. Tacking on Owner’s Side: SOL runs against owner and all of his successors in interest. Thus, if owner transfers property to another, APR’s possession is transferred as well and runs against new owner. This also requires privity.
        4. Howard v. Kunto: (summer home) WA App. 1970

5. Court could adopt any of 3 standards of AP (states of mind):

i. Objective Test: state of mind of APR is irrelevant. Once there is entry against TO, she has COA. Irrelevant whether APR thought she had a true interest in land.

(a) Majority view: must look like claims of ownership and beAPR even though not actually claiming title against TO. Important thing is that he is occupying land w/o permission of TO. Permission negates claim of right.

ii. Subjective Test (good faith standard): claim of right means APR must have bona fide or good faith belief that he has rightful title.

(a) “I took it, but I thought I owned it.” possession is not adverse. APR is mere trespasser.

iii. Aggressive Trespasser Standard: minority of states require aggressive trespasser standard: APR must enter land to hold it for himself unless TO shows up w/in statutory period.

(a) “I knew it wasn’t mine, but I took it.”must be adverse f/ start.

6. Extent of Land Acquired by AP:

      1. w/o COT: claim extends only to land as she actually occupied
      2. w/ COT: On theory that APR intends to control all land described in instrument, APR is in constructive AP of part of tract she does not actually possess.

7. Interests Not Affected by AP:

      1. Future Interests: SOL does not run against remainder existing at time of entry by APR, b/c holder of remainder has no COA against APR. But, even if APR enters after transfer, he may still keep SOL f/being interrupted by remainderman taking possession if he puts remainderman on actual notice that he is claiming AP. But, if APR enters prior to transfer, AP runs against TO and all of his successors in interest.

Innocent improvements – improvements on land belong to TO. Improvements done in good faith by APR are usually assessed at market value, which is given to APR.

      1. Government Land: A/P does not run against gov’t.

Remaindermen cannot file suit to evict an APR b/c SOL does not begin to run against a FI holder until her interest becomes possessory

9.15.03

VI. AP of Chattels

2. three different rules governing AP of chattels

a. Theft Rule: COA accrues against TO at time of theft. Least friendly to TO and most friendly to bona fide purchaser of stolen goods.

b. Discovery Rule: consider:

1. Due diligence of TO in recovery attempts

2. Whether there was an effective method to give notice to world of theft – when did owner know, or should have known about her COA

3. could constructive notice be given? Was a method where reasonably prudent purchaser of art would be on constructive notice that seller was not TO?

majority of courts: SOL does not begin to run against TO of stolen goods as long as owner uses due diligence in looking for them.

Burden Shifting: Unlike AP of land, conduct of owner, not possessor is controlling.

COA: accrues when TO discovers, or reasonably should have discovered thru due diligence where stolen goods are/basis of COA. (date of injury vs. date of discovery of injury)

O’Keefe v. Snyder (NJ p.153 1980)

c. Demand Rule: -year SOL. Most friendly to TO, least friendly to bona fide purchaser.

i. 3rd Party BF Purchaser: not wrongful.

ii. Thief: in NY, SOL runs in favor of thief at time of theft b/c thief’s possession is considered wrongful f/start.

iv. Burden on Buyer: NY rule put risk of buying stolen goods on buyer

Guggenheim Found v. Lubbell

9.17.03

VII. Acquisition by Gift

B. Definition and Requirements:

Definition:voluntary transfer of property w/o consideration. (present transfer of property interest)

3 Requirements: 1) intent; 2) delivery; and 3) acceptance (assumed when gift is of substantial value).

C. Types of Gifts:

1. Gift Inter Vivos (GIV): made during donor’s life when no imminent death of donor. (Ordinary gift)

Irrevocable

Delivery must divest donor of dominion and control over property.

2. Gift Causa Mortis (GCM): gift made in contemplation of donor’s imminent death.

Strictly Enforced: may be more strict w/GCM b/c danger of fraudulent claims since donor is dead

1) Will Substitute: donor simply delivers objects to donee before death

2) Redelivery: if donee is already in possession of property, must be redelivery but not for GIV.

Revocable: auto revoked if donor does not die f/anticipated peril.

D. Requirements for a Valid Gift

1. Intent:objective act

Promise Compared: promise to give property in future is not a gift.

2. Delivery:best delivery under circumstances.

a. Ritual:wrench of delivery.

Alternative Methods of Delivery

        1. Constructive Delivery: delivery impracticable (usually key or paper w/ combo)
        2. Symbolic Delivery:instrument in writing.

Gruen v. Gruen(painting f/father)

Newman v. Bost (housekeeper /bureau/ insurance policy)

 

PART II: SYSTEM OF ESTATES

I. Possessory Estates

A. Fee Simple

I. Fee Simple Absolute

      1. Words of Purchase and Words of Limitation:WOP identify person in whom estate is created. WOL describe type of estate created.
        1. Ex: O conveys Blackacre “to A and her heirs.” Words “to A” are WOP identifying A as taker. Words “and her heirs” are WOL indicating FS.
      2. Creation of a Fee Simple: At common law, (“and his heirs”). Any other language, i.e., “to A in fee simple” created a LE.
        1. Heirs Have no Present Interest
        2. Modern Law: deed/will presumed to pass largest estate grantor or testator owned.
      3. Transferability: If no will, inherited by owner’s heirs.
        1. Heirs:not synonym for children.
        2. Next of Kin: synonymous w/heirs
        3. Typical Statute:
          1. Spouse: takes 1/2, other 1/2 goes to issue, or if no issue, to decedent’s parents or if no parents to spouse.
          2. Issue: includes children, grandchildren, great grandchildren and all further descendents. Synonymous w/ “descendants.”
          3. Children: spouse takes 1/2, and children divide 1/2. If no spouse, children take all in equal shares.
          4. Representation: If child predeceases decedent, leaving issue, issue represent child and take child’s portion by right of representation. This is called per stirpes distribution.
          5. Grandchildren: do not take if their parents are alive. Generally, grandchildren share only under principle of representation.
          6. Adopted Children: treated as child of adoptive parents and, in some states, as a child of natural parents as well.
          7. Nonmarital Children: Child born out of wedlock was filius nullius, child of no one, and could inherit f/ neither mother nor father at common law. Today, inherits f/ mother and, if paternity is established, f/ father.
          8. Parents: If issue, parents do not take. If spouse and no issue, parents take 1/2 and spouse 1/2. If no spouse and no issue, parents take all.
          9. Collateral Relatives: all blood kin except ancestors and descendants. If no spouse, issue, or parent, collateral relatives take.
          10. Escheat: If FS owner dies w/o a will and w/o heirs, FS escheats to state.
        4. Devisee and Legatee Defined: If will, persons who are devised land are devisees. Those bequeathed personal property are legatees. Difference is that heirs take when decedent leaves no will and devisees and legatees take under will.

2. Defeasible Fee: on happening of some event, owner of FS may lose property — it is not absolute. FS b/c have potential for infinite duration but no certainty. Defeasible fees are most commonly encountered in deeds restricting use of land, but can be used for other purposes.

      1. Determinable Fee:auto ends when specified event happens. Sometimes called f/s on a special limitation
        1. Ex: “to School Board so long as premises are used for school purposes.” When event happens, FS auto reverts back to O.
        2. Creation: FS only until stated event happens, such as “to A so long as”, “to A until,” “to A while,” or language saying on happening of stated event, land is to revert to grantor.
          1. Words of Motive or Purpose:do not create a determinable fee. Must use words limiting temporal duration of estate. Ex, words like “for the purpose of,” or “to be used for” do not create a determinable fee, but create FSA.
        3. Transferability: may be transferred or inherited, as long as stated event has not happened. But, FS remains subject to limitation no matter who holds it.
        4. Correlative FI: retained in transferor/his heirs and is Possibility of Reverter (distinguishing feature of determinable fee). POR may be expressly retained or arise by operation of law.
      2. FS Subject to Condition Subsequent: does not auto end but may be cut short (divested) at grantor’s election/ power of option when stated condition happens.
        1. Creation: created by 1st giving grantee an unconditional FS and then providing that FS may be divested by grantor or her heirs if a specified condition happens. For instance, “to A, but if X event happens. . .grantor has a right to reenter premises.” grantor retains ROE. Also “provided, however;” “on condition that”. If O does not choose to exercise ROE when liquor is sold, FS continues in A.
        2. Correlative FI:ROE/Power of Termination retained by grantor/heirs. Can be expressly retained or reasonably implied. But some courts will not imply ROE to not aid in forfeiture.
        3. Distinguished f/ Determinable Fee: If court has choice, FS SCS is preferred b/c forfeiture is optional at grantor’s election and not auto. General policy: avoid forfeiture.
          1. Mahrenholtz v. County Board of School Trustees (school purposes)
      3. FS Subject to an Executory Limitation: FS on stated condition, is auto divested3rd person
        1. Ex: O conveys Blackacre “to School Board, but if w/in next 20 years Blackacre is not used for school purposes, then to A.” A‘s FI is executory interest.
      4. Legal Consequences of Classification:
        1. Transferability of FI: At common law these FIs were inheritable but not transferable. Today, FIs are real property interests inheritable and devisable by will but some states still hold they are not transferable I/V.
        2. AP: SOL starts running on POR as soon as determinable fee ends. W/ROE, theoretically SOL should not begin running until grantor attempts to exercise right and is rebuffed giving rise to COA. But, in many states SOL begins to run on ROE when condition occurs.
        3. Covenants Distinguished: Conditions imposed by grantor in creating defeasible fees are diff f/ covenants (promises) made by a grantee. A condition is much more onerous than covenant.
      5. Restraints On Marriage: violations of public policy.
        1. Limitation – Condition Distinction: Conveyance by O “to A and her heirs so long as she remains unmarried” (FS Det) is not against public policy since O intended to give A support only until A’s husband supported her. But, conveyance by O “to A and her heirs, but if she marries to B…” is viewed as penalty on marriage.
      6. Eminent Domain and Condemnation
        1. Majority Rule: entire condemnation award belongs to A unless FS Det would expire (apart f/ condemnation proceeding) w/in reasonably short period.
        2. Minority Rule: sets value of determinable fee as diff b/tw FMV of FS for all uses and value of land for uses permitted. Diff b/tw value of determinable fee and FMV is value of POR.
          1. Ink v. City of Canton (for park uses)

II. The Fee Tail: 1) lasts as long as grantee or any of his descendants survives; 2) inheritable only by grantee’s descendants. Will cease if 1st FT tenant has no lineal descendants to succeed in possession.

      1. Creation: At common law, “to A and the heirs of his body.” At expiration, land reverts to grantor or grantor’s heirs or, if specified in instrument, will go to some other branch of family. Every f/t has remainder or reversion after it.
      2. Characteristics: FT originally had 2 important characteristics:
        1. During Tenant’s Life: tenant in FT could alienate his possessory interest, which ended upon his death, but could not effect rights of his issue to succeed to land upon his death.
        2. On Tenant’s Death: FT can be inherited only by issue (lineal descendants) of original grantee, and not by collateral kin. FT cannot be divested by will.
      3. Types of FT: grantor could tailor FT more specifically. Ex: FT male, FT female, FT special inheritable only by issue of grantee and specific spouse.
      4. FIs Following FT:
        1. Reversion: O conveys BA “to A and the heirs of his body.” A has FT; grantor has reversion.
        2. Remainder: O conveys WA “to A and the heirs of his body, and if A dies w/o issue, to B and her heirs.” A has FT; B has vested remainder in FS to become possessory on expiration of FT.
      5. Disentailing: Today FT can bar the entail by converted into FS by deed (straw) executed during life, but cannot bar the entail by will.
        1. 1485 – method developed to “bar the entail.” By bringing collusive lawsuit known as common recovery, f/t tenant in possession could obtain court decree awarding him f/s, cutting off all rights of his issue and extinguishing any reversion or remainder. 400 years later, common recovery was abolished and f/t tenant could disentail by conveying f/s by deed to another. Only f/t tenant in possession could disentail
      6. Statutes Under Modern Law: FT exists in only Delaware, Maine, Mass, RI. But, in these states, FT tenant can at any time disentail and convey FSA by deed as explained above.
        1. FT Abolished in Most States: except 4 mentioned. If FT is conveyed by transfer stating “to A and the heirs of his body” in states that have abolished it:
          1. LE: A few states hold A has LE or, what amounts to same thing, an unbarrable FT for A’s life, w/remainder in FS to A’s heirs. This is minority view.
          2. FS: large majority of states hold A has FS, but states split on subsidiary point.
            1. FSA: 1/2 of states provide that A has FSA b/c A could disentail and convey FS anyway so law treats A as having done so. Any gift over (remainder) on A’s death w/o issue is void.
            2. FS w/A Strange Condition: other 1/2 of states say that A has FS, but any remainder to become possessory on failure of issue is given effect ifA leaves no descendants at his death.
            3. Ex: O conveys BA “to A and the heirs of his body, and if A dies w/o issue, to B and her heirs.” In 1/2 of states, A takes FSA, and A’s issue and B take nothing. In other 1/2, A takes FS, and A’s issue take nothing, but B takes FI that will become possessory if at A’s death no issue of A are alive. If A leaves issue at his death, B’s interest then disappears (or, using the technical word “fails”).

III. Life Estate: very common today, particularly LEs in trust.

        1. 2 Types of Life Estates
          1. For Life of Grantee: usually measured by grantee’s life. On A’s death, land reverts back to grantor.
          2. Pur Autre Vie: Where estate is measured by life of someone other than owner of LE. It is created by conveyance by O “to A for the life of B.” The estate still end on A’s death. If B dies before A, LE pur autre vie descends to B’s heirs. Also, this estate can arise if A, a life tenant, conveys her LE to B. B has LE pur autre vie and A is the measuring life.
            1. A conveys BA “to B for the life of C.”. If B dies before C, property does not revert back to A.
          3. In a Class: LE can be created in a class such as “to the children of A for their lives, remainder to B.”
          4. Defeasible LEs: Like FS, LE can be created so as to be Det., SCS or subject to an executory limitation.
            1. A conveys BA “to B for so long as he may choose to live on the property.” B has LE Det. on his deciding to live elsewhere.
        2. Construction Problems: If unclear what estate is created, courts must use facts and intent of grantor to determine.
          1. Ex: “To my wife, W, so long as she remains unmarried.” Does this create FS Det or a LE Det? Majority view:FS Det, even though FS cannot be forfeited after W’s death.
          2. Ex: “To my wife, W, to be used as she shall see fit, for her maintenance and support.” Does this give W a FS or LE w/ power to consume the principle? Majority view:FS: “for her maintenance and support” merely state reason or motive for gift.

White v. Brown (holographic will: written by grantor in own hand and not witnessed)

          1. Held:At CL, presumption that testator conveyed only LE. If ambiguity, then statutory presumption, will disposes entire estate — FS.
        1. Apt Rule of Construction
        2. Traditional Rule of Construction: must be read in entirety to discern intent.

Tools to Discern Intent

              1. text
              2. rules of construction
              3. Statutory presumptions.
              4. Context and nature of property.
                1. Relationship of the parties.
                2. Sophistication of the testator.
                3. Nature of the property.
                4. Moral/fairness claims.
        1. Alienability of LE: free to transfer, lease, encumber or alienate estate I/V. Transferee gets no more than life tenant had – estate ends at expiration of measuring life.
        2. Limited Utility of Legal LE: legal LE is of limited utility b/c inflexible way of providing for successive ownership.
          1. Hassles: if one remainder is a minor, or dies leaving minor heir, consent cannot be given w/o lawsuit and appointment of guardian ad litem to represent minor.
          2. Equitable Life Estate: trust is better b/c more flexible
            1. Life Tenant as Trustee
            2. Someone Else As Trustee
            3. Creation: O can devise BA “to X in trust for H for life, remainder to O’s children.”
            4. Legal LE Should Be Avoided

 

Fee Simple Absolute

Fee Tail

Life Estate

Alienable

Yes

No

Yes

Inheritable

Yes

Yes

No

Deviseable

Yes

No

No

 

        1. Waste:concurrent or consecutively (present and future interests) ownership. Law of waste meant to avoid uses of property that fail to maximize property’s value.
          1. Definition: Waste is conduct by life tenant that permanently impairs value of land or interest of person holding title or having some subsequent estate in land.
          2. Rationale:
            1. Land Should Pass Unimpaired
            2. Fairness
          3. Types of Waste:
            1. Affirmative (Voluntary) Waste:actively causes permanent injury.
            2. Permissive (Involuntary) Waste:negligence
            3. Ameliorating Waste:use of land is substantially changed, but the change increases value of land.
          4. Remedies For Waste: remaindermen may enjoin threatened waste by life tenant or recover damages. If ultimate future owner of land is not now ascertained, damages may be impounded by court pending determination of ultimate takers.
        2. Sale of Property by a Court
          1. Ifremaindermen are ascertained, adult and competent, can consent to sale and general rule: a court will not give life tenant relief in this case. The parties can bargain among themselves about sale and division
            1. Equitable Intervention: order sale of property if sale is necessary for best interests of all parties.
          2. If remaindermen cannot legally consent to sale, b/c one or more is unascertained, under age, or incompetent court may order sale if sale is in best interests of remaindermen.
          3. Statutes: many states authorize court to sell FS in land under specified conditions, upon petition of life tenant. These statutes reflect trend to loosen restrictions on legal LE, and to permit life tenant to have land sold and have proceeds held in trust.
          4. Proceeds Divided: If LE then life tenant gets portion of value attributable to her life expectancy.
          5. Limited Sale: Courts must balance interests of all parties involved in order to find out best interests of parties. Courts normally view judicial sale as drastic remedy.
          6. Partition: when concurrent ownership, conflicts are resolved by partition sale.

Baker v. Weedon: (wife w/no kids and estranged grandkids)

          1. LE cannot sell FS unless all other persons w/interest give consent.If court orders sale, destroys remainder interest.
          2. Intergenerational (Problem 1 w/LE) Equity

Valuation (Problem 2 w/ LE): Judicial valuations highly speculative.

Problem 3 w/ LE: subjectivity of life tenant’s reasonable needs

Problem 4 w/ LE:JD problem/cost of subsequent monitoring

          1. Again the Value of a Trust: more flexible than legal LE w/ remainder.

seisin = possession

Chief significance of freehold estates at common law was that freeholder had seisin. Before 1536, freehold estate could be created or transferred only by ceremony: feoffment w/ livery of seisin. Seisin was transferred by symbolic act such as handing over clod of dirt.

      1. Leasehold Estates: nonfreehold possessory estates. Leases originally were regarded as personal contracts b/tw lessor and lessee outside tenurial system; leases were personal property.
    1. Rule Against Restraints on Alienation:

Restatement 2d of Property – an absolute restraint on f/s is void. A partial restraint (e.g., limiting conveyance to certain persons or time limit on restraint) is valid if, under all circumstances of case, restraint is reasonable in purpose, effect, or duration. A forfeiture restraint is valid.

        1. Direct/total Restraints:
          1. Forfeiture Restraint: if grantee attempts to transfer interest, it is forfeited to another. (but, forfeiture restraints may be upheld in proper cases – e.g., restraints that limit permissible ransferees)
          2. Disabling Restraint:withholds f/grantee power of transferring interest.

In general, a restraint on right of a life tenant to transfer his estate will be upheld – unless imposed by disabling rather than promissory or forfeiture restraints

          1. Promissory Restraint: a grantee promises not to transfer interest. If valid, it is enforceable by contract remedies of damage or injunction.
        1. Restraints on FS:
          1. Total Restraints:Any total restraint on FS is void. In preceding examples, grantee has FSA.
          2. Partial Restraints: restrict power to transfer to specific persons, or by specific method, or until specific time. Older view: partial restraints on alienation are to be treated like total restraints and void. But, some exceptions:
            1. Restraints on Use of Property: makes property less alienable but have almost always been upheld.

Partial restraints on fee interest qualified as to time are invalid (most courts)

          1. Mountain Brow Lodge v. Toscano (use restraint okay)

habendum clause = clause defining extent of ownership in thing granted to be held and enjoyed by grantee.

          1. Falls City v. Missouri Pacific Railway(use restraint not okay if negatively affects marketability)
          2. Policy of Marketability: If use restriction has large impact on marketability, court will hold as void. But, if use restriction has small impact on marketability, restriction will be upheld.
            1. Charity Factor: Courts uphold gifts to charity to encourage such gifts, but charity must not overstep role as charity (profits, politics)

Present Estate

Examples

Duration

Correlative Future Interest

Correlative Future Interest in Third Party

Fee Simple Absolute

To A and his heirs”

Forever

None

None

Fee Simple Determinable

To A and his heirs so long as . . .” “until . . .” while . . .”

As long as condition is met, then automatically reverts to grantor

Possibility of Reverter

See Fee Simple Subject to an Executory Interest, below

Fee Simple Subject to Condition Subsequent

To A and his heirs, but it . . .” “upon condition that . . .” “provided however . . .”

Until happening of named event and reentry by the grantor – no automatic forfeiture

Right of Entry

See Fee Simple Subject to an Executory Interest, below

Fee Simple Subject to an Executory Interest

To A and his heirs for so long as . . . , and if not . . . , to B”

To A and his heirs but if . . . to B”

As long as condition is met, then to third party

Until happening of event

See Fee Simple Determinable above

See Fee Simple Subject to a Condition Subsequent above

Executory Interest

Executory Interest

Fee Tail

To A and the heirs of his body”

Until A and his line die out

Reversion

None (but remainder is possible)

Life Estate (may be defeasible)

To A for life” or “To A for the life of B”

To A for life, then to B”

To A for life, but if . . ., to B”

Until the end of the measuring life

Until the end of the measuring life

Until the end of the measuring life or the happening of the named event

Reversion

None

Reversion

None (but see below)

Remainder

Executory Interest

 

Future Interests: Chapter 4

  1. Introduction:
    1. Defined: FI is nonpossessorypresently existing interest that may become possessory in future.
    2. FIs Retained In Grantor (or by will to his heirs):
      1. Alienability: All FIs retained by grantor are inheritable, devisable and alienable.

Reversion:

      1. May or may not be expressly retained
      2. Quantum of Estate: reversion arises when grantor transfers vested estate of lesser quantum than she has.
        1. Hierarchy of Estates:

 

Fee Simple

Fee Tail

Life Estate

Leasehold Estate

.

        1. Tip: Often, reversion is not expressly retained; must look for it. When you read grant, check to see if O has conveyed all she had. If not – if she conveyed only a lesser estate – reversion in O exists.
    1. All Reversions Are Vested Interests: alienable, deviseable, inheritable – reachable by creditors
      1. Significance: significance of a reversion being vested is that it is alienable, accelerates into possession upon termination of preceding estate.
      2. Relation to Remainder: Reversions follow contingent remainders.

 

Possibility of Reverter:

      1. Definition: POR arises when grantor carves out of her estate a determinable estate of same quantum. POR is FI remaining in grantor when FS Det is created. All FS (absolute, Det, SCS or EI) are of same quantum.
        1. Ex: O conveys Blackacre “to A and his heirs so long as liquor is not sold on the premises.” A has a determinable fee; O has a POR.
        2. Tip: Note that as w/ reversion, POR may not be expressly retained. If you see a grant of a FS Det, know that grantor has a POR unless grant transfers property to a 3rd party upon occurrence of specified event.
        3. Created Only In Grantor: analogous FI created in a grantee is EI.
      2. Alienability: has changed in modern times:
        1. Common Law: POR could not be transferred I/V b/c not an existing interest. But, was inheritable by heirs.
        2. Modern Law: In most JDs, POR is alienable, inheritable, and deviseable b/c now property interest.
        3. Releasable: although inalienable to a stranger at common law, was releasable to owner of determinable fee. A release made land marketable.
      3. Termination: discussed below in connection w/ROE.

Right of Entry:

      1. Definition: When a grantor creates an estate SCS and retains power to cut short or terminate estate, grantor has ROE. ROE is sometimes called “a power of termination.”
        1. Ex: O conveys Blackacre “to A and his heirs, but if intoxicating liquor is ever sold on the premises, O has the right to reenter and retake Blackacre.” A has a FS SCS; O has a ROE for breach of condition subsequent.
        2. Tip: You will usually see ROE expressed in grant of an estate SCS
      2. Alienability: Like POR, alienability of ROE has changed in modern times:
        1. Common Law: ROE could not be transferred I/V b/c treated as a chose in action, and choses were inalienable. It was not a property interest but rather a special right in grantor to forfeit grantee’s estate if he wished. ROE could be released, however, to owner of FS and was inheritable by heirs of grantor.
        2. Modern Law: In some states, ROE is now alienable; in others, common law is followed. Possibly in a few, a harsh rule is followed: mere attempt to transfer ROE destroys it.
          1. Ex: O conveys Blackacre “to Railroad Company, but if it fails to maintain an overpass, O has right to reenter and retake Blackacre.” Subsequently, O conveys ROE to son. This attempt to convey right destroys it, and RR has FSA.
      3. Termination: f/ common law and statute:
        1. Common Law: ROE or POR could endure indefinitely — This remains law in majority of states.
        2. Statute: In some states, however, statutes have been enacted expressly limiting period during which POR and ROE can exist. The typical statute limits them to 30 years, after which preceding FS becomes absolute.

 

Reversion

Possibility of Reverter

Right of Entry

Correlative Possessory Interest

Life Estate

Fee Simple Determinable

Fee Simple Subject to Condition Subsequent

Example

To A for life”

To A so long as alcohol is not used on the premises”

To A on condition that if alcohol is used on the premises, O shall have the right to reenter and retake the premises”

Rights of Grantor

Estate automatically reverts to grantor on life tenant’s death

Estate auto reverts to grantor upon the occurrence of the stated event

Estate Does not revert automatically; grantor must exercise his right of entry

Alienability

Transferable, descendible and devisable

Transferable, descendible and devisable

Descendible and devisable, but some courts hold not transferable I/V

    1. FIs in Grantee:

Remainders: FI created in grantee that is capable of becoming a present possessory estate on expiration of prior possessory estate created in same conveyance in which remainder is created. Never divests or cuts short preceding estate; always waits patiently for preceding estate to expire naturally. Once created, remainder or e/i can be transferred back to grantor, but the name originally given the interest does not change.

      1. Ex: o conveys Blackacre “to A for life, then to B if B is then living.” B has remainder b/c B’s interest is capable of becoming possessory upon termination of LE
    1. Essential Characteristics:
      1. Must Have Preceding Estate: remainder can be created only by express grant in same instrument in which preceding possessory estate is created.
        1. Ex: O conveys “to A if A marries B.” No preceding estate has been created by O in anyone; thus A does not have a remainder. A has instead a springing EI.
      2. Must Follow a FT, LE, or Term of Years; CANNOT follow a FS.
        1. Ex – FT: A conveys “to A and the heirs of his body, and if A dies w/o issue, to B and his heirs.” If FT has not been abolished, A has a FT and B has a remainder in FS.
      3. Must Be Capable of Becoming Possessory on Natural Termination of Preceding Estate: remainder cannot divest a preceding estate prior to its normal expiration.
        1. Ex: O conveys “to A for life, then to B.” B has a remainder b/c B takes when preceding estate (A’s life estate) expires.
        2. Compare: O conveys “to A for life, but if B returns f/ Rome during the life of A, to B in FS.” B does not have a remainder; rather B’s taking divests A’s estate and thus B has a shifting EI.
      4. Estates in Remainder: may be FS, LE or a term of years, or, in those JDs where such an estate is permitted, FT.
        1. Ex: O conveys “to A for life, then to B for 10 years, then to C for life, then to D.” C has a remainder for life, and D has a remainder in FS.
    2. Classification of Remainders: “vested” or “contingent.” VR is a remainder that is both created in an ascertained person and is not subject to any condition precedent. CR is a remainder that is either created in an unascertained person or subject to a condition precedent.
      1. How to Classify: Take each interest in sequence as it appears in instrument.
          1. Remember: A CR will always follow CR. However, VR is followed by EI b/c they divest VRs. But if, after words giving a vested interest, a clause is added potentially divesting it, remainder is vested.
      2. Why Classify: at common law VRs were favored and CRs disfavored. The judges thought CRs were objectionable b/c made land inalienable. CRs were not alienable, whereas VRs were.
    3. Vested Remainders: created in ascertained person and not subject to a condition precedent. Remaindermen have right to immediate possession, whenever and however the preceding freehold estates may determine – that is right now. (never POR)
        1. Note: expiration of preceding estate (such as death of a life tenant) is not a condition precedent.
      1. 3 different typesof VRs: indefeasibly vested, vested subject to open, and vested subject to complete divestment.
        1. Indefeasibly VR: remainder is certain of becoming (permanently) possessory in future; cannot be divested.
        2. VR Subject to Open: when a remainder is vested in a class of persons, at least one of whom is qualified to take possession, but the shares of class members are not yet fixed b/c more persons can subsequently become members of the class.
          1. Ex: O conveys “to A for life, then to A’s children.” If A has no children, remainder is contingent, b/c no person qualifies as a child. If A has a child, B, remainder is vested in B subject to “open up” and let in other children. B’s remainder is sometimes called “vested subject to partial divestment.” (Once remainder has vested in B, interests of unborn children are EIs b/c they may partially divest B.)
            1. Class Gifts: gift to a group of persons described as a class, i.e., “children of A.” “brothers and sisters of A,” or “heirs of A.” A class is either open or closed.
            2. Tip: class gift to “the children of A” remains open until A’s death. It does not close b/c A has become too old or physically unable to have more children.
            3. A conveys VA “to B for life, remainder to B’s children”. If B has 3 kids, but 2 predecease B, surviving child does not take entire property on B’s death b/c not conditioned on surviving the life tenant (would have been diff if remainder had been to “B’s surviving children”
        3. VR Subject to Divestment: divested either by condition subsequent or inherent limitation of estate in remainder.
          1. Ex – Condition Subsequent: O conveys “to A for life, then to B, but if B does not survive A, to C.” VR in B is subject to total divestment on occurrence of a condition subsequent (B dying, leaving A surviving). C’s EI will divest B if condition happens.
          2. Ex – Inherent Limitation: O conveys “to A for life, then to B for life, then to C and his heirs.” B has a VR for life subject to total divestment if B fails to survive A. The divestment occurs b/c of inherent limitation in a remainder for life: It fails if it does not become possessory w/in life tenant’s life. C has an indefeasibly VR in FS.
        4. Vested Subject to Open and Complete Divestment: remainder can be both vested subject to open and to complete divestment. For ex, O conveys “to A for life, then to children of A, but if no child survives A, to B.” A, who is living, has child C. C has a VR subject to open up and let in her bros and sisters; it is also subject to complete divestment if A leaves no children surviving him (i.e., if C and all other children of A die before A).
      2. Alienability: VRs are alienable I/V, devisable by will and inheritable
          1. Divested At Death: A VR can be so limited that it is not transmissible at death.
            1. Ex: O conveys “to A for life, then to B, but if B does not survive A, to C.” B’s VR is not transmissible. If B dies during a A’s life, B can pass nothing on B’s death. In that case, C’s EI would divest B at A’s death and become a VR.
    4. Contingent Remainders: if it either is limited to an unascertained person or is subject to a condition precedent. (always POR)
      1. Remainders in Unascertained Persons:
        1. Ex – Unborn Children: O conveys “to A for life, then to A’s children.” A has no children yet.
        2. Ex – Heirs: O conveys “to A for life, then to B’s heirs.” B is alive. Since no one is an heir of the living (but only an heir apparent), takers are not ascertained, thus CR. B’s heirs will be ascertained only at his death. If B dies during A’s life, remainder will vest in B’s heirs at B’s death.
        3. Reversion: In each of the above examples, there is a reversion in O. Whenever O creates a CR in FS, there is a reversion in O. Whenever O creates a VR in FS, there is never a reversion in O.
    5. Remainders Subject to Condition Precedent: this is a CR. A condition precedent is an express limitation set forth in instrument (other than termination of preceding life estate), which must occur before remainder becomes possessory.
      1. What is a Condition Precedent: condition expressly stated in the instrument. Suppose O conveys “to A for life, then to B if B marries C.” B has a remainder subject to an express condition precedent. The condition precedent is marrying C. If B marries C during A’s life, remainder vests indefeasibly in B.
        1. What is Not a Condition Precedent: termination of preceding estate is not a condition precedent. If it were, all remainders would be contingent, b/c no one is entitled to possession until preceding estate is terminated.
          1. Surplusage: Language that merely refers to termination of preceding estate is surplusage and does not create a condition precedent.
            1. Ex: O conveys “to A for life, and on A’s death, to B.” The words “on A’s death” merely refer to natural termination of LE and do not state a condition precedent. They are therefore surplusage and may be struck out. B’s remainder is vested.
          2. Survivorship: A remainder subject to a condition precedent other than survivorship is not also subject to an implied condition precedent of survivorship.
      2. Conditions Subsequent Distinguished: words must be read in sequence and interests classified in sequence.
        1. Ex: O conveys “to A for life, then to B if B survives A, but if B does not survive A, to C.” B and C have alternative CRs. A condition precedent has been expressly attached to B’s remainder. O intended exactly same thing as in preceding example, but her intention was phrased differently. Here, O stated the condition of survivorship twice, once in connection w/ each remainder.
          1. Reversion in O w/ Alternative CRs: Inasmuch as B will take if D survives A, and if B does not survive A, C will take, it looks impossible for property to revert to O. At common law, LE could terminate prior to life tenant’s death by forfeiture of merger. If this happened, neither B nor C would be ready to take on termination of LE and property would revert to O. Or B and A can die simultaneously, so neither survives the other and conditions precedent on B’s interest and C’s interest can never be satisfied. Tip: However unrealistic these possibilities may appear today, in classifying FIs on an exam, you must assume that LE can terminate before death of life tenant by forfeiture, merger or simultaneous death of grantees.
      3. Preference for VRs: If instrument is ambiguous, law favors a vested construction rather than a contingent one (or EIs).
        1. Condition Subsequent Must Be Read Carefully: In above instrument, condition subsequent is not operative to divest a child of A who dies before A without children. It is operative only to divest a child of A who dies before A with children. Thus, suppose A had 2 children, B and C, and C had a child D. Then B and C die before A. B’s share would go under his will as he devised or to his heirs. C’s share would be divested in favor of D.
      4. Alienability: VRs have always been alienable IV and devisable by will.CRs and EIs, were not alienable IV at common law, except in equity for a valuable consideration, by operation of doctrine of estoppel, or where released to owner of possessory interest.
        1. Modern Law: In large majority of JDs today, contingent interests are alienable IV or, when survivorship is not a condition precedent, devisable by will. Some states follow old common law rule that c/r was not assignable IV.
        2. Creditor’s Rights: rule: If debtor can voluntarily transfer it, creditor can reach it. Thus, creditors can reach VRs; they can also reach CRs if they are alienable in particular JD.

    6. Executory Interests: Generally, EI is a FI in a grantee that, in order to become possessory, must divest or cut short prior estate, or divest or spring out of grantor at future date. The main difference b/tw remainder and EI: remainder never divests prior estate, whereas EI almost always does. FI capable of becoming possessory immediately/auto at termination of prior estate. EI: if there’s gap in time b/tw termination of prior estate and when FI is capable of becoming possessory. (always POR)

a. Two Prohibitory Rules: No Shifting Interests, No Springing Interests

i. (common law prior to 1536) No FI could be created in favor of a transferee if interest could operate to cut short a freehold estate

ii. (common law prior to 1536) no freehold estate could be created to spring up in future.

Until 1540 land could not be devised by will – but O could obtain the practical equivalent of a will by enfeoffing “X and his heirs to the use of O during O’s lifetime and then to the use of such persons as O shall appoint by will.”

Today, in any JD, springing and shifting future interests can be created by deed, trust or will; no special form of conveyance has to be employed.

Statute of Wills in 1540 permitted wills of land.

          1. Ex –Springing EI: O conveys Blackacre “to my daughter A if and when she marries B.”O retains FS and creates EI in A to spring out of O in future when A marries B. A springing EI was, in early days, useful device to give groom assurances that bride would come to altar endowed w/ property.
        1. Alienability: All FIs created in a grantee are inheritable, devisable and alienable.
      1. Springing Interest: a FI in a grantee that springs out of grantor at a date subsequent to granting of interest, divesting the grantor.
        1. Ex: O conveys “to A and her heirs if A quits smoking.” A has a springing EI. It will divest FS of O, the transferor, if it becomes possessory.
        2. Tip: How do you tell an EI f/ a remainder? If is no preceding estate, FI must be an EI. And if FI does not follow natural termination of preceding estate, it must be an EI.
      2. Shifting Interest: a FI in a grantee that divests a preceding estate in another grantee prior to its natural termination.Diff is that a shifting interest divests a grantee whereas a springing interest divests grantor.
        1. Ex: O conveys “to A and his heirs, but if B returns from Rome, to B and his heirs.” A has a FS subject to an EI. B has shifting EI.
        2. Ex: O conveys “to A for life, and on A’s death, to B and his heirs, but if B does not survive A, to C and his heirs.” C has a shifting EI – it vests by cutting off B’s VR. Why is B’s interest vested. Remember to classify interest in sequence. Once it is classified as a VR in fee, any further interest cannot follow a vested FS, either in possession or in remainder, and therefore C’s interest cannot be a remainder if B’s prior estate is a VR in fee.
      3. An Oddity: An EI is always either a springing or a shifting interest – except in case of a FI in a grantee following a FS Det.This EI is neither springing or shifting because FS Det ends by its own special limitation.The EI does not divest it but rather succeeds it.
        1. Ex: O conveys Blackacre “to Board of Education so long as used for school purposes, then to the Red Cross.” Red Cross has EI. There cannot be a remainder after any type of FS. The only permissible FI in a grantee is an EI, so interest in the Red Cross is EI.
    1. Correlative Estates: LE = reversion, FS Det = POR, and FS SCS = ROE.
    2. Legal or Equitable Interests: FIs can be legal FIs or equitable FIs. Legal FIs are created w/o imposition of a trust. Ex, O conveys Blackacre “to A for life, remainder to B and his heirs.” Equitable FIs are created in trust.
      1. Ex: O conveys property “to X in trust to pay the income to A for life and on A’s death to convey the trust assets to B.” X is trustee, owning a legal FS in the trust assets. A has an equitable LE and B has an equitable remainder.

 

Future Interest

Example

Reversion In Grantor Following Future Interest?

Transferable?

Indefeasibly Vested Remainder

To A for life, then to B.”

No; remainder certain to become possessory

Yes; B’s remainder is transferable during life and at death

Vested Remainder Subject to Open

To A for life, then to A’s children.” A has a child, B. B has a vested remainder subject to open.

No; A’s children are certain of possession

Yes; B’s remainder is transferable during life and at death

Vested Remainder Subject to Divestment

To A for life, then to B, but if B dies before A, to C.” B has a vested remainder subject to divestment by C.

No; no possibility of property reverting to grantor

B’s remainder is transferable during life but not transferable at B’s death if B predeceases A

Contingent Remainder

To A for life, then to A’s children.” A has no child.

To A for life, then to A’s children who survive A.” A has a child B.

To A for life, then to B if B reaches 21.” B if 17.

To A for life then to B’s heirs.” B is alive.

To A for life, then to B if B survives A, and if B does not survive A, to C.”

Yes

Yes

Yes

Yes

Yes

No; no child is alive.

B’s contingent remainder is transferable during life, but is not transferable at B’s death if B predeceases A

B’s remainder is transferable during life, but remainder fails if B dies under 21

No; no one is heir of B until B dies

B’s remainder is transferable during life, but fails if B predeceases A; C’s remainder is transferable during life and at C’s death if A is then alive

Executory Interest

To A, but if B returns from Rome, to B.”

To A for life, then to B but if B does not survive A, to C.”

To A upon her marriage.”

No

No

No reversion, but grantor has possessory fee until A’s marriage

Yes

C’s executory interest is transferable during life and at C’s death if A is alive

Yes

 

    1. The Trust: Duality of ownership
      1. Trust Defined: a fiduciary relationship where trustee, holds legal title to property subject to equitable rights in beneficiaries.
        1. Creation of a Trust: intent to create an express trust — written instrument (deed or will) is required by SOF. But an oral trust of personal property is permitted.
      2. Spendthrift Trusts: whensettlor imposes a valid restraint on alienation, providing that beneficiary cannot transfer his interest voluntarily and that his creditors cannot reach it for satisfaction of their claims. Despite general invalidity of restraints on alienation, validity of spendthrift restrictions on equitable interests in trust has been recognized in most American courts. cannot create a spendthrift trust for own benefit
        1. Ex: S transfers a fund in trust to pay income to A for life, remainder to B. The trust instrument provides: “Each beneficiary, A and B, is hereby forbidden to alienate his or her interest, nor shall the interest of any beneficiary be subject to claims of his or her creditors.” A cannot transfer her LE, and her creditor’s cannot reach it. Thus A has a stream of income f/ trust for A’s life, which A’s creditors cannot reach.

 

Concurrent Ownership

partition = privilege of each co-owner to transform a concurrent estate into estates held in severalty.

    1. Tenancy In Common: Each tenant has separate but undivided interest in property, including right to possession of whole. No survivorship rights. Equal shares not necessary for TIC, and co-tenants can own diff types of estates.
        1. Alienability: alienable, inheritable, deviseable.
        2. Presumption: Today, TIC is presumed whenever a conveyance is made to 2 or more persons who are not husband and wife.
    2. Joint Tenancy: JTs own an undivided share of property and surviving co-tenant has right of survivorship of entire estate.

right of survivorship (ROS). Each T seised per my et per my tout (per the share or moiety and by the whole). Each owns undivided whole of property.

        1. Four Unities Required:

i. time – interest of each JT must be acquired or vest at same time

ii. title = All JTs must acquire title by same instrument or by a joint A/P

iii. interest – all must have equal undivided shares and identical interests of duration.

iv. possession – Each must have an equal right to possess whole of property. After a JT is created, however, one JT can voluntarily give exclusive possession to the other JT. (The unity of possession is essential to a TIC as well; none of the other 3 unities is.)

          1. Conveyance by H to H and W:At common law, such a conveyance violated unities of time and title, so used strawman to convey to H and W in JT to preserve 4 unities of JT. Today, more intent-based approach, so most states permit direct conveyance f/one spouse to both spouses as JTs in 1 deed.
        1. Creation:Common lawpresumed that any conveyance to 2 or more persons created a JT, absent contrary language. A conveyance to spouses was presumed TBE. In most states today, a conveyance to 2 or more persons (including spouses) creates a TIC. Presumption in English common law favoring JTs over TICs has been abolished.

A conveys BA “to A (herself) and B, as joint tenants”. This was not effect to create a JT at CL b/c no unity of time and title – need a straw.

          1. Overcoming Presumption: Today, JT can be created only by express words indicating intent. “to A and B as joint tenants with ROS– but, no express mention of survivorship is necessary if intent is clear
        1. Severance: Modern law holds if 4 unities exist when JT is created but are later severed, JT turns into TIC when unities cease to exist – ROS is destroyed.
          1. Conveyance by JT: JT has right to convey her interest but by doing so she severs JT w/ respect to that share.
          2. By Will: JT cannot be severed by will. Must be severed I/V.
          3. Mortgage by JT: In title theory states, a mortgage conveys title and thus severs tenancy. In lien theory states (majority), a security interest, rather than title, is conveyed and a mortgage does not sever a JT.
            1. Harms v. Sprague (at death of bro, lien theory)

vanishing theory = property right of mortgaging JT is extinguished at moment of death.

          1. Agreement Among JTs: JTs can agree that one T has right to exclusive possession w/o severance. However, severance occurs if they agree to hold as TIC although none of 4 unities is broken; intent controls.
          2. Other Situations:Divorce does not terminate a JT, unless parties agree. Where one JT murders another a severance occurs in most states, creating a TIC. Other JDs hold that no severance occurs; rather courts award victim’s heirs everything except murderer’s life interest in ½ the estate. In simultaneous death cases, usually 1/2 each goes to estates of JTs.
          3. Unilateral (single-party) Severance okay (but at CL – needed straw)

Riddle v. Harmon (wife secretly deeded self and husband TIC by straw)

        1. Avoidance of Probate: JT avoids probate since no need to change title at a JT’s death.

in community property states (like CA), a couple can jointly own community property

• a community property owner cannot convey comm. prop. I/V, but can devise by will

    1. Tenancy by the Entirety:inheritable, alienable, and deviseable. 4 unities + marriage required. There is ROS. They do not hold by the moieties; rather, both are seised of entirety, per tout et non per my.

moiety = half; a ½ interest. Sometimes used to mean any portion or fractional interest.

      1. Nature of the Tenancy: can be created only b/tw husband and wife, holding as 1 person. It is similar to JT except that severance by one tenant is impossible; thus, ROS cannot be destroyed unilaterally. Divorce acts as a partition and terminates TBE b/c it terminates marriage.
        1. Creation: At CL a conveyance to husband and wife created TBE. CL remains as presumption in many states but some states presume a TIC while others presume a JT.
    1. Partition: fairness and efficiency (Concurrent Estates)

Delfino v. Vealencis (garbage business – partition in kind (not partition by sale))

partition = court will either physically partition land into separately owned parts or order sale and divide proceeds among Ts (courts prefer in kind over sale)

Ouster (Black Letter in character)

• if JT rents against other JT’s wishes, 2nd JT can:

• sue to collect reasonable rental value f/1st JT (up to his share)

• ouster: an actual demand for physical entry followed by actual refusal of demand

• majority: ousted

• minority: non-leasing JT can sue for ½ even if not actual ouster

• if you don’t want an ouster, but want share of rent/profit, then sue for accounting

• to acquire sole title by AP against a co-T, there must be an ouster.

Accounting (Black Letter in character)

• non-leasing co-T sues leasing co-T for share of rents/profits ups to share of property

 

LANDLORD-TENANT LAW

 

Modern leasehold estates include

I. Term of Yearsfixed period (w/dates)

can be terminable earlier upon happening of some event or condition

no notice of termination needed at end of term

II. Periodic Tenancyfixed duration w/succeeding periods (L or T give notice)

If notice is not given, period is auto extended for another period.

common law – 6 months notice required to terminate a year to year tenancy. For PT less than a year, not to exceed 6 months. Termination has to be on final day of period (month), not in middle

Death of LL or T has no effect on duration of a term of years or periodic tenancy, but it does on TAW.

III. Tenancy at Willno fixed period; endures so long as both LL and T desire.

unilateral power to terminate a lease can be engrafted on a TOY or a PT.

ends when one of parties terminate it. Also ends at death of one of parties. Modern statutes generally require 30 days (or time = interval b/tw rent payments) notice for termination.

IV. Tenancy at Sufferance = when T remains in possession (holds over) after termination of tenancy.

Common law gave LL 2 options: 1) eviction (plus dgs); 2) consent (express or implied) to creation of new tenancy

Garner v. Gerrish(original L died, court said determinable life tenancy)

Crechale & Polles, Inc. v. Smith (if treat holdover T as trespasser, cannot later hold T liable for new lease term)

If holdover, can either evict or make it PT for month-to-month)

 

The Lease: conveyance and contract

If L gives T a written lease for a butcher shop in L’s supermarket, and property is taken in eminent domain and the market is torn down, T is entitled to compensation for the value of the leasehold (absent contrary agreement) b/c pure condemnation of entire property extinguishes the lease.

  • A lease transfers a possessory interest in land, so it is a conveyance that creates real property rights
  • A lease contains # of promises/covenants, so it is a contract too, creating contract rights.

Selection of Tenants (Herein of unlawful discrimination)

2 types of discrimination:

  • Irrational discrimination – some discomfort f/associating w/member of a group. Immoral and interferes w/efficient operation of markets
  • Rational discrimination –using a trait on the part of a group as a proxy for a negative/unfavorable characteristic (i.e. all members of a group will be a bad credit risk)

general rule: L rents to whoever he pleases

• exceptions: CRA, FHA, and state and local laws

Civil Rights Act: 42 USC §1982must show discriminatory intent/motive

Money damages are usually remedies.

Only refers to racial distinctions, not all distinctions of FHA (does not prohibit discriminatory advertising)

Fair Housing Act§§3601-3619, 3631: only a discriminatory effect must be shown, discriminatory motive is not necessary

  • Usually injunctive relief for remedies

 

Soules v. US Dept. of Housing & Urban Development (no discrimination against mom w/child)

Bronk v. Ineichen: (Accommodations provided to a deaf person w/dog need only be reasonable, not absolute)

 

DELIVERY OF POSSESSION

1. English Rule (majority) – every leaseimplies a covenant to deliver physical possession: premises will be open to entry by T at beginning of term (doesn’t extend past first day of lease). Duty of L to give T both legal right of possession and actual possession

2.American Rule (minority) – noimplied covenant to deliver possession. T can protect himself by putting an express covenant in lease. Duty of L to give T only legal right of possession.

commercial Ts usually use American rule and require EXPRESS covenants to avoid problems

• Case law is still divided b/tw English and American rule.

Hannah v. Dusch(Former T wouldn’t leave premises when current T was supposed to move in. Court followed American rule and held no implied covenant to deliver possession)

Demurrer: a pleading stating that although facts alleged in a complaint are true, they are insufficient for P to state a claim for relief and for D to frame an answer

 

Implied Covenants

  English American
Legal Possession Yes Yes
Physical possession Yes No – must have express contract.
Quiet possession Yes Yes

SUBLEASES & ASSIGNMENTS

1. Assignments

when lessee transfers entire interest (or entire remainder of his term) → lessor retains a reversion; right to possession reverts to him at end of designated term

assignee (new T) is in privity of estate w/L → their obligations are same as in original lease unless otherwise provided (no reversionary interest retained by 1st T)

• privity of estate b/tw L and 1st lessee is terminated, but privity of contract may still exists b/tw them

if a valid covenant against assignment is contained in a lease: the assignment is voidable, and T may be liable for damages for breach of the covenant, but the assignment is not automatically void.

2. Subleases

• when lessee transfers anything less than his entire interest (or term, for even one day)

no privity of estate or contract b/tw original L and sublessee → neither can sue the other

lessee retains a reversion; right to possession reverts to him at end of designated term

• Rules in determining whether a transfer is a sublease or an assignment:

1) effect of a reversion

common law: if transferring T conveyed anything less than entire leasehold estate (retained a reversion) → sublease (regardless of form or intent)

• if transferor conveyed entire leasehold estate → assignment (regardless of form/intent)

2) effect of retaining a ROE

common law: if transferring T retains a ROE in case transferee breaches a condition of lease → assignment

modern law: would be considered a sublease

3) modern trend (less common approach)

• examine intent of either a sublease or an assignment; actual words used are not conclusive

• if transferor charges more rent than he’s been paying → sublease

• if transferee pays a lump sum → assignment

Ernst v. Conditt (assignment despite contract b/c gave entire interest in property)

PRIVITY OF ESTATE: conveyance (full estate in land)

PRIVITY OF CONTRACT: an express agreement to be bound by terms of lease b/tw lessor and lessee

If LL exercises power to forfeit primary lease b/c breach by original T, then LL is entitled to possession over assignees and sublessees. But if original T gives up lease voluntarily, rights of possession of sublessees and assignees remain intact.

Kendall v. Ernest Pestana, Inc. (w/o contract specifications, lessor may not arbitrarily withhold consent to an assignment)

majority rule: LL can arbitrarily refuse to give consent

minority rule: has growing favor: consent can be withheld only where LL has a commercially reasonable objection. (Kendall court adopts this rule, reversed predominant view that a L may arbitrarily withhold consent on 3 grounds)

1) a lease is a conveyance, so subject to public policy favoring reasonable alienation

2) a lease is a contract, which mandates that LL has duty to act in good faith and to deal fairly

3) free alienability: provisions are permitted as long as they are commercially reasonable

 

DRAFTING STRATEGIES

Absolute discretion clauses (now codified) — permitted for landlord

termination and recapture clauses (now codified)

• L allowed to implement express conditions that are deemed reasonable to withhold consent

Kendall provides a default rule when a lease a silent

 

DEFAULTING TENANTS

 

The Tenant in Possession

Berg v. Wiley(changed locks on premises after T breached — prohibition of self-help)

majority rule (non-Berg) doesn’t flat out prohibit self help, but courts are strict on what constitutes reasonable force.

• (2) Speedy eviction remedies are available; lawful means = judicial process for eviction/ejectment.

summary proceedings = quick and efficient means to recover possession.

Common law allowed LL to use self help if:

1. LL is legally entitled to possession (breach of lease with reentry clause)

2. LL’s means of reentry are peaceable.

 

The Tenant who has Abandoned Possession

Sommer v. Kridel (cancelled wedding T, P’s failure to respond to D’s letter exhibits acceptance, thus terminating tenancy and any obligation of rent. Reasonable efforts = treat it as if it one of his vacant stock (vague)

Riverview Realty Co. v. Perosio (in conjunction w/Sommer — Burden of proof on LL)

minority view/mitigation rule (Sommer rule)based on antitrust law

1) conceptual: lease as a contract leads to L having a duty to mitigate when T has surrendered/ abandoned premises prior to expiration of lease

• options

1) L can terminate the lease — all future obligations are terminated

2) L can mitigate damages — no termination of lease

majority view: based on property law

• L is under no duty to mitigate damages caused by a defaulting T

Restatement: abandonment of property is an invitation to vandalism, & law should not encourage such conduct by putting a duty of mitigation of damages on L

surrender: terminates a lease, provided that L accepts T’s offer to end tenancy – if L resumes possession, L is held to have auto waived rights to hold T liable for remaining rent.

absent an agreement or statute, eviction terminates the LL-T relationship and excuses T f/ further rent

if T abandons, T remains liable, but recover reduced of L made no efforts to mitigate

 

DUTIES, RIGHTS & REMEDIES (Especially Regarding the Condition of the Leased Premises)

1. Landlord’s Duties

the latent defect exception to the general rule of o L responsibility to maintain the premises in good repair is only duty to disclose, not duty to repair

an exception to “no duty” principle is where L repairs: even though no duty to act, once she does so, she must act reasonably, and is thus liable fornegligent repairs

T, as an occupier, has primary liability to 3rd-party invitees. He is always under a duty to maintain premises in good repair despite what L promised.

common law: implied covenants regarding title and possession, but not condition of premises

• w/o contractual provisions to the contrary, caveat lessee = tenant took premises “as is”

but, if defects/dangerous conditions known to L and not easily discoverable, L had a duty to disclose defect

modern doctrine hasn’t replaced this rule wholesale, but has modified it

Liability for Condition of Premises

Theory

Express Promise (CL)– LL had to have breached and express of some sort to be liable

Exceptions to caveat lessee (look at other points)

Independent CQE – not predicated on exceptions in caveat lessee.

Remedy

T can get damages = difference in value of property w/ or w/o breach

T can get damages only or damages and damages under CQE.

Or get remedy of express promise and CQE

If there is a breach, T can abandon property, not liable for future rent, and T can get damages. If breach isn’t substantial, T is limited to damages as calculated in express promise

 

Under theory of nuisance, remedies would include injunction or damages.

 

a. Quiet Enjoyment and Constructive Eviction

• dependent/independent distinction of CQE

in contract law, covenant promises are considered dependent promises

in property law, LL/T obligations are independent of each other: T pays rent, L maintains premises

independent CQE on basis that the promises in a lease are dependent on each other (contract law)

1) quiet enjoyment: T has right to “quietly enjoy” premises; L cannot interfere w/this right

• this covenant is implied in every lease

even at common law, where general rule was caveat lessee, breach of this covenant absolved T f/ responsibility to pay rent

• this covenant can be breached by either actual or constructive eviction

• COA: Independent Covenant of QE (Reste case) (not predicated on exceptions in caveat lessee)

Remedies: sue for breach of contract for damages equal to value of property w/and w/o breach (T must stay in possession)

• COA: Exceptions to Caveat Lessee (1st full paragraph p.530)

includes: implied duty to make and keep premises habitable for short-term leases; duty to disclose latent defects LL knew or should know and which T could not be held to have notice; maintain common areas; repairs; can’t fraudulently misrepresent condition of premises; any express obligations in lease; abate immoral conduct and nuisances (not all JDs)

Remedies: sue for breach of contract for damages (T must stay in possession) or withhold rent

• COA: Express Promise (explicit clause in lease) Common Law

• Remedies: stay in possession and sue for breach of contract for damages

if breach is substantial, T can leave premises on theory of constructive eviction and have no liability for future rent plus you can get damages to compensate your loss

• this is how Reste changed things (Reste JDs)

• justification for QE: dependent contractual covenants

Reste expands QE beyond original bounds

2) actual eviction (or partial actual)

if L evicts T f/entire leasehold, T may treat lease as breached and terminate it – no longer has to pay rent

if T is evicted f/only a portion of leasehold, may stay on premises and refuse to pay rent until L restores entire premises to T – can sue for dgs equal to diff b/tw value of property w/ and w/o breach

3) constructive eviction

if, through L’s fault, T’s QE to premises is substantially interfered with, T may treat lease as terminated and vacate premises — T is no longer liable for rent

• theory: L has so interfered w/T’s right of possession that he might as well have evicted T

• necessary elements are:

i) substantial interference: T’s use & enjoyment of premises must be substantially interfered with

but, if T knows of interference when signed lease, court may hold he waived interference

ii) notice to L: T must give notice to L of defect & give L a reasonable time to remedy problem

iii) T must vacate: T cannot stay on & refuse to pay rent –must vacate w/in a reasonable time

iv) fault: interference w/T’s enjoyment & use of premises must be fault of L

• he must act, or fail to act, to T’s damage

4) damages: after vacating, T can recover damages for add’l cost of substitute premises, lost profits, increased expenses proximately caused by eviction, etc.

 

1. Rent and Dgs

Doctrine of anticipatory breach – LL wants to recover dgs equal to diff b/tw rent in lease for unexpired term and reasonable rental value of premises for that period.

– If a T abandons, however, repudiation is clear cut, and anticipatory breach will apply if JD extends that contract doctrine to leases.

• Short-term tenants cannot commit even ameliorating waste. Long-term tenants can only if increases value of premises

absent a statute or clause in the lease, a breach, such an nonpayment of rent, results in COA for $ damages – not a right to terminate

2. Security Devices

security deposit

rent acceleration = provision that upon T’s default, all rent for entire term is due and payable. If rent is accelerated, LL usually can’t take possession as well.

 

Reste Realty Co. v. Cooper (continuous flooding) Reste created an implied CQE in all leases

Rule: When a LL causes a substantial interference w/ enjoyment and use of leased premises, T may claim CE.

  • CE evolved f/ a desire of courts to relieve T f/ harsh burden imposed by CL rules.

 

THE ILLEGAL LEASE

generally: some local housing codes prohibit rental of premises in violation of code

in such cases, T cannot be forced to pay rent

limitations: for T to be able to defend against L’s action for rent, illegal condition must have existed when lease was signed

doesn’t apply for minor technical violations or violations which LL had neither actual nor constructive notice of

also, although T need not pay rent, still liable for reasonable rental value of premises (T under an illegal lease is a T at sufferance) Gives T a lot of leverage – T can withhold rent and delay eviction.

usually, if illegal condition is substantial (premises are unfit for human occupancy), this will not by very much $

The Implied Warranty of Habitability – move toward IWH now

1) Traditional approach

• common law: L had no duty to keep premises in repair once T moved in

2) Implied warranty of habitability

most courts now imply, in every noncommercial lease, covenant that premises be delivered to T in habitable shape

a) commercial leases: some courts have extended this implied covenant to commercial leases

b) standards applied

c) waiver: IWH cannot be waived by T – waiver is held as violation of public policy

breach of IWH – Remedies

1) Damages: remain in possession and keep paying rent – not as effective as abatement. Sue for damages as affirmative COA (1 of 2 most common remedies)

2) Recission – T terminates lease and sues for damages

• least used choice; not common b/c Ts are usually not in a position to leave

3) Reformation – Remain in possession and w/hold rent (1 of 2 most common remedies)

L sues 1st, T will warranty as defense (T takes a big risk b/c T can be liable for unpaid rent and can be evicted

– RS approach – abatement of rent

– tort approach – damages for discomfort and annoyance or for infliction of emotional harm, and punitive dgs

 

Hilder v. St. Peter (extreme living conditions – T sued for rent paid during tenancy)

new rule IWH = In rental of any residential dwelling unit an IWH exists in lease, oral or written, that LL will deliver over and maintain throughout tenancy, premises that are safe, clean and fit for human habitation. Covers essential facilities, latent defects, and is not waivable.

To claim breach and recover dgs, T must show:

1. LL had notice of defect and failed to repair it within reasonable time.

2. Defect affected habitability.

Standards of breach of IWH:

  1. housing codes. Breach = failure to comply w/ housing code
  2. substantial compliance w/ housing code. Breach = only a substantial violation.
  3. fitness for human habitation standard
  4. reasonableness standard

measure of dgs = diff in value b/tw apt as warranted and value of apt in as it actually exists

• problem w/ term “fair rental value – FRV” (Kline)

Some JDs have not adopted IWH. Not all JDs who have adopted IWH apply it across board to all residential leases.

Legal advantages T has under IWH that T doesn’t have under CQE:

  • remedies – in both Reste and non-Reste JDs, T can withhold rent and remain in possession.
  • damages (slight) – can only get punitive dgs in JDs with a broad interpretation of Reste
  • duty of LL – IWH imposes a continuing duty on LL to provide suitable premises. In non-Reste JDs, LL has a continuing duty only wrt limited obligations, like maintaining common areas.

Risk: If can’t show substantial breach, then LL can evict.

diff b/tw CQE and IWH: what are the specific differences and similarities b/tw the 2, and what are their elements?

IWH applies mainly to residential tenancies – not extended generally to commercial tenancies (some talk of change but not happened yet)

• cannot be waived

• tends to rely on municipal building codes to set a baseline for conditions

remedy: T can both remain in position and withhold rent

independent CQE – refers to both residential and commercial tenancies

• can be waived by a commercial lessee

• operates independent of building codes, has its own baseline f/industry/social economic/geographic norms

remedy: T must vacate if want to withhold rent (remedy 3)

 

Tenant’s Duties; L’s Rights and Remedies

doctrine of waste = property ownership divided such that 2 or more persons have consecutive rights to possession.

waste caused by (T’s) action v. waste caused by inaction

Common law rule = in absence of a lease provision to contrary, a T is not relieved f/ obligation to pay rent despite total destruction of leased premises. (Theory is that interest in soil remains to support lease.)

• 2 exceptions:

1. If a portion of building is leased, total destruction of building relieves T of obligation to pay rent. (Land wasn’t essence of bargain; space in building was.)

2. Impossibility doctrine – destruction of property w/o fault of either party ends contractual obligations.

efficiency argument – who is the cheaper insurer?

 

Real Estate Transaction:

land transfer process is governed by 2 important SEPARATE documents/legal arrangements: contract of sale and deed

Agreement

Contract of Sale: evidence of agreement b/tw contractor and contractee (“meeting of the minds”) that binds them

• Formalities (compliance of SOF)

• Warranties

• Seller’s Duties

Conveyance

Deed: evidence of a conveyance/transfer (affectuates a transfer of the land)

• Formalities (compliance of SOF)

• Types of Warranties and Covenants

typical sale of house involves: (1) seller lists property w/real estate broker, who receives commission (usually 6%) if broker sells property. (2) after negotiating price and other matters, seller and buyer sign a contract for sale, which will call for deal to be closed at some future time (usually 60 days). Contract requires buyer to make a down payment (called earnest money) that buyer forfeits if he backs out of contract w/o good reason. (3) b/tw signing of contract and closing, parties/agents investigate seller’s title, ensuring it is good. Buyer/agents inspect property for defects, and if buyer is not paying all cash, arrange financing f/a lender. (4) At closing, buyer receives and records seller’s deed in county courthouse. If buyer has arranged a loan, buyer executes a mortgage to bank or other lender, which is also recorded. Seller receives a check for purchase price.

 

The Contract of Sale: involves two steps

1) contract to sell/purchase property is signed; it includes specified date for the 2nd step

2) closing, when seller gives buyer deed to property and buyer gives seller the agreed-upon consideration

• FORMALITIES

a. Statute of Frauds: sale must be in writingto prevent fraud

Exceptions to SOF:

1. part performance = allows specific enforcement of oral agreements when particular acts (payment of $, taking possession) have been performed by one of parties to the agreement.

2. Estoppel = applies where unconscionable injury would result f/ denying enforcement of oral contract after one party has been induced by other seriously to change his position in reliance on contract.

b. Essential Terms: writing must contain all essential terms for agreement

c. Specific Performance: since all real property is unique, courts will use their equity powers to compel a buyer/seller to go through w/a deal, rather than award damages

d. Oral revocation: most states hold that SOF applies only to making of a contract affecting an interest in land and will thus allow subsequent oral modification or revocation of contract

e. Time of Performance: unless contract specifies time is of the essence, if contract is not performed on date called for in agreement, each party has a “reasonable” time in which to complete its performance

 

Specific Performance

Hickey v. Green(oral agreement (no SOF) D backed out, did not cash $500 check, P sued for specific performance)

Part Performance Doctrine: only when seeking remedies of equity like specific performance

1) satisfactory evidence of contract theory: SOF can be ignored if there (past) behavior/conduct that was unequivocally referable to oral agreement

2) detrimental reliance (or estoppel) theory

  • Detrimental reliance is justified on 2 points:
    • Sufficient evidence – evidentiary standpoint
    • Equitable function – if someone has so changed his position based on promise, it would be unfair not enforce agreement.
  • reliance = payment of purchase (alone wouldn’t be enough), taking possession, making valuable improvements that are irreparable, providing services.
    • Ps reliance was reasonable b/c sold their own house. If they were held to that deal, Ps might suffer loss that may not be remedied by money damages.
  • Fraud – if there is fraud, maybe order specific performance

Restatement (2nd) of Contracts, section 129 (1981): A contract for transfer of an interest in land may be specifically enforced despite failure to comply w/ SOF if it is established that the party seeking enforcement, in reasonable reliance on contract and on the continuing assent of the party against whom enforcement is sought, has so changed his position that injustice can be avoided only by specific enforcement.

provides vague standards that is subject to judicial manipulation

this is the standard rule

• in Hickey, court stretched rule to save buyer

but in Walker: no reasonable reliance b/c not foreseeable by sellercollateral act (act that is beside the contract, not w/in contract).

shows movement away f/rigid application of Restatement

Operative policy is to prevent opportunistic behavior.

 

MARKETABLE TITLE – seller’s implied warranty: duty to deliver marketable title. (p.579-580)

an implied condition of a contract of sale of land is that seller must convey to buyer a marketable title.

marketable title = title reasonably free f/ doubts; one that a prudent person would be willing to buy.

• buyer can rescind contract of seller cannot convey a MT

MT does not mean perfect title; it means one that is good enough for a title insurance co. to be willing to insure

Test: What would a reasonably prudent person accept?

 

• Marketable Title

• Private Covenants:

• Municipal Zoning Laws

• Other Encumbrances

• easements

• covenants

• ordinances

• hazardous waste

• environmental regulations

• Express Provisions

• record, marketable, insurable

• express exceptions

• Remedies

 

Violation of public and private restrictions

Lohmeyer v. Bower, (no MT b/c not restrictions, but violations of restrictions: hazard of litigation — does not make title free f/reasonable doubt )

private restriction covenant – makes title unmarketable and thus contract can be rescinded.

  • violation of private building codes do no make title unmarketable

public restriction covenants, such as municipal zoning ordinance, are not encumbrances and do not make title unmarketable

majority: mere existence of a PRC makes a title unmarketable b/c it may prevent some use by buyer

private restrictive covenant (usually only in cases of HOA)

PRC was waived by P, so not applied in this case b/c of contract

court treats PRC and MZO differently b/c:

1) private claims to land are recordable in courthouse – title searchers will not have difficulty finding PRV

• MZO are usually not recorded in an abstract of title

2) PRC is a real property interest (much like a fee simple)

• MZO don’t give gov’t a legal interest in the land

3) common law asserts private claims over public claims

 

Title Unmarketable?

Private restrictive covenant

Existence

Yes

Violation – yes, maybe; if it creates a substantial defect, or if purchaser might be harmed by violation title is unmarketable

Municipal Zoning Ordinance

Existence

No

Violation – yes, if defect is substantial and

if defect will cause injury or harm to purchaser.

 

Insurable Title: less safe for buyer than MT b/c MT protects buyer against resale

MT: protects buyer against resale

 

Adverse possession and its impact on the marketability of title

Conklin v. Davi, (Bs wanted to rescind insurable title b/c AP. But Rule: Title obtained by AP is not necessarily unmarketable.)

Title is marketable if it can be shown that:

1. outstanding claimants could not succeed if they were to assert a claim; and

2. there is no real likelihood that a claim will ever be asserted.

remedies:

• $ damages

can get down payment back b/c of breach

loss of bargain damages (diff b/tw contract price and market value of land on date of breach (closing date))

• in most cases, date of breach is considered date of closing (unlike Conklin)

• specific performance (p.589)

• when a buyer asks for SP, courts usually grant it

• available if court determines that $ damages are inadequate

when a seller asks for SP, courts ordinarily grant it on theory that seller may find it difficult to “prove w/reasonable certainty the difference b/tw contract price and market price of land”

 

Risk of Loss

doctrine of equitable conversion: if there’s a specifically enforceable contract for sale of land, equity regards as done that which ought to be done.

• b/tw date of contract to sell and closing, EC treats buyer as having title to property

• EC doctrine treats buyer as equitable owner of land f/date of contract w/seller as legal owner

• seller’s interest is deemed security for the debt owed him by buyer

• buyer still does not have right of possession until closing

if EC has occurred, seller’s interest is considered personal, not real, property (right to purchase price) and buyer is treated as owner of land

Applied to determine who bears risk of loss when property is destroyed b/tw signing purchase contract and closing.

 

The Duty to Disclose Defects

• Duty to Disclose

• General Rule on p. 596

(1) if seller knows of facts materially affecting value of property (2) and if facts are not readily observable and are not known to buyer — then seller has duty to disclose to buyer (new and used property)

(i) objective test of materiality: would a reasonable person attach importance to it in deciding to buy?

(ii) disclosure forms

(iii) statutes (legal and contractual responses)

• Theories

1) misrepresentation/reliance

2) ethical: silence is unethical (and unfair) in the face of an inquiry or in regard to a known defect

3)economic: cheapest cost avoider

Scope: on-site and off-site

• Implied warranty/Q.

• Rules v. Standards

• Judicial v. Legis.

 

On-site defects

Stambovsky v. Ackley, (haunted house)

doctrine of caveat emptor (buyer beware) imposes no duty on vendor to disclose any info concerning premises unless confidential or fiduciary relationship b/tw parties of some conduct by seller that constitutes “active concealment”

seller had done a lot to create defect (ghosts) so she had duty to disclose

there was an “as is” clause; refers to tangiblephysical matters, not things of paranormal matters

• clause does not apply to matters that are particularly in the knowledge of seller

 

Material Defect Known to Seller (caveat emptor is steadily being eroded)

• defect must be “material” to be actionable

• 2 tests of materiality:

1) objective test of whether a reasonable person would attach importance to it in deciding to buy, or

2) subjective test of whether the defect “affects value or desirability of property to buyer”

several states have enacted “stigma statutes” which shield sellers f/a failure to disclose psychological or prejudicial facts that might affect market value (such as murder or death)

• “innocent land owner defense” is available f/CERCA (amended in 1988 by SARA) to one who buys property after site is contaminated and does not know/have reason to know that hazardous substance was released on property

CERCLA (Comprehensive Environmental Response, Compensation, and Liability Act) imposes duty on buyer to make “all appropriate inquiry” into previous ownership if buyer is to escape cleanup liability

CERCLA – imposes s/l for cleanup costs of a hazardous waste site upon any current owner or operator of a site containing hazardous waste, any prior owner of the site at time it was contaminated, any generator of hazardous waste, and transporters of hazardous substances.

• usually, “as is” clause in a sales contract will be upheld if defects are reasonably discoverable and no fraud

• clause is not binding if fraud or concealment of info by seller

 

Johnson v. Davis (lie w/leaky roof – rejected doctrine of caveat emptor; not to be used to take advantage of B’s ignorance)

Rule: if seller knows facts materially affecting value of home that are not readily observable, seller has duty to disclose.

common law: no liability for nonfeasance

• Ds failure to tell Ps of latent defect would not be actionable

but, failure to disclose material fact when intended to induce false belief is close to an affirmative representation

 

merger doctrine = contract merges into deed, and once deed is accepted, it is deemed the final act of parties expressing terms of their agreement. B can’t sue S on contract terms after deed has been executed and delivered. Can only sue based on deed.

fallen into disfavor, many ways to get around it

not applicable to facts at hand unless question states otherwise

 

Off-site defects

• Memo regarding Strawn case (sex offender moving to neighborhood)

• what legal analysis?

1) Materiality: is it sufficiently material?

• a reasonable person would attach importance to the info in deciding to buy

court should take judicial notice.

2) not known to buyer? buyer usually does not know

3) readily observable by buyer? buyer usually does not know

4) seller knowledge?

5) (off-site) physical condition? yes, sex offender’s presence in neighborhood is physical

• arguments distinct Strawn

• sex offender may be considered transient social condition; not rooted in land like toxic wasteland in Strawn

• recommendations for State Board to limit their personal liability in this situation:

3) brokers could lobby for Megan’s Law (posting at police station) for this purpose

• if issue goes to State SC and court rules in favor of extending such a duty to seller and real estate brokers,

after Strawn case, home-sellers in NJ went to legislature to pass a statute to make all city gov’ts to disclose all factors that may offset property value

home-sellers simply need to say: “there’s list of conditions at police station, go look” to absolve liability

 

Warranties from Seller

• common law: rigidly applied doctrine of caveat emptor

many modern courts overruled CL and held there is implied warranty that bldg is fit for use contemplated by both parties

• this warranty is often implied in housing that was fairly recently constructed

Uniform Land Transactions Act: not yet adopted by any state but likely to be influential on judicial decisions

Uniform Land Transactions Act §2-309(b) (1975) provides 2 implied warranties against those who are in “business of selling” real estate

1) warranty of suitability: property is suitable for its intended purpose; arises in case of used and new buildings

2) warranty of quality: applies only to new construction only

broader than warranty of suitability in that defects may not be so serious as to make property unsuitable for its intended purpose, but may nonetheless breach IWQ.

IWQ runs w/ land to subsequent buyers

 

Implied Warranty of Quality

Suits on IWQ can only arise after closing has taken place and Π has accepted deed.

 

Implied warranty of (workmanlike) quality

Lempke v. Dagenais, (poor construction of garage)

privity of contract is not necessary b/cIWQ is independent (of contract), and has a life of its own. Basic expectation by P2 that dwelling will be suitable.

Rule: A subsequent purchaser of property may recover f/ one performing defective contractor services for prior owner if work contained latent defects not apparent at time of purchase (under theory of breach of IWQ)

  • IWQ is notgenerallywaiveable. Limitations: must be latent defect not discoverable by reasonable inspection, and must be within a reasonable time; IWQ only available when P2 is suing a builder/vendor; P has burden to show that defect was caused by D’s workmanship.

 

The Deed (document that makes the transfer happen) — Conveyance

1. Requirements

2. Warranties of Title

3. Breach of Covenants

 

Delivery: to make a deed effective, deed must be delivered w/ intent that it be presently operative

 

Warranties of Title (deed and warranties are intended for buyer to get a legally effective title)

3 types of deeds:

1. General Warranty Deed (GWD) = warrants title against defects, whether they arose before or after grantor took title

 

6 covenants in GWD:

present covenant of seisin – grantor owns land/estate

present covenant of right to convey – it’s possible for person w/ seisin not to have right to convey, for ex. a trustee.

present covenant against encumbrances – encumbrances = mortgages, liens, easements, restrictive covenants, etc.

 

encumbrance = every right to or interest in the land which may subsist in 3d persons, to the diminution of value of the land, but consistent w/ the passing of the fee by conveyance.

 

future covenant of general warranty – grantor will defend against lawful claims and compensate grantee for any loss grantee may sustain by assertion of superior title

future covenant of quite enjoyment – identical to covenant of general warranty; often omitted f/ GWDs

future covenant of further assurances – grantor will execute any other documents required to perfect title

 

present = can only be broken at time deed is delivered. COA on present breach usually subject to SOL starting f/ date of delivery of deed.

future = not breached until grantee or successor is evicted, buys up the paramount claim, or is otherwise damaged.

 

2. Special Warranty Deed = warrants only against grantor’s own acts but not acts of others. Ex. – If defect is a mortgage on land executed by grantor’s predecessors in title, grantor is not liable.

3. Quitclaim Deed (QCD) = no warranties of any kind

 

habendum clause = (“to have and to hold”) usually in modern deeds. Not necessary, but may limit the estate granted. Used in feudal times to declare which lord held land and by which services.

 

The Deed:, p. 602

forgery – forged deed is void. Grantor whose signature is forged to a deed prevails over all persons, including subsequent BFPs f/grantee who do not know deed is forged.

fraud – deed procured by fraud is voidable by grantor in an action against grantee, but a subsequent BFP (bona fide purchaser) f/ grantee who is unaware of fraud prevails over grantor. (2 innocent persons; law places loss on person who could have best prevented loss to the other)

indenture – (pre-Xerox) deed made f/ sheepskin torn into 2 pieces, one for grantor and one for grantee, which fit together to prove authenticity.

 

Present vs. Future Covenants

Brown v. Lober, (mineral rights — good example of limitations of warranty)

Rule: mere existence of a superior title does not constitute a breach of CQE.

General rule: easement which is a burden upon estate granted and which diminishes its value is a breach of CAE, regardless of whether grantee knew about it.

Intention to exclude encumbrance should be manifested in deed itself.

 

Latent land use violation

Frimberger v. Anzellotti, (wetland violation – D didn’t know)

Rule: latent violation of a land use statute/regulation existing when conveyance is made is not a breach of CAE so Frim cannot get damages. Policies: concern for certainty in title– latent violation can’t be uncovered by title search or physical examination of property; cheapest cost avoider was lawyer.

  • Smart growth laws – stop suburban sprawl; comprehensive regulation.

 

Executory Contract (contract that is not finished yet) Present Covenant (Closing Stage)
title unmarketable

Covenant Against Encumbrances

Violation of zoning ordinance = title unmarketable broader applicability; B can rescind (latent) violation of zoning ordinance is not an encumbrance (this is where people sue for breach, looking for damages)
Violation of building code does not make title unmarketable; B can’t rescind. violation of building code is not an encumbrance, no breach of CAE

 

Why difference for violation of zoning ordinance?

– standard for unmarketable title is relaxed after sale had closed and is final.

contract stage – Court trying to figure out when B should be able to rescind. B/S can limit losses at this stage by correcting violation or finding another buyer.

Post-closing – Court has to figure out when B should be able to sue for breach of relevant covenant. Extent of S’ liability is almost unlimited, b/c B has no incentive to keep dgs low. S can’t mitigate by finding another B.

How do we determine b/tw zoning ordinances and building code? go to books to see what they’ve called it. If it is a zoning ordinances look at analysis in Lohmeyer. If it is a building code buyer can’t rescind.

 

Damages: note p. 625

  • Breach of Present covenant of seisin the return of all or a portion of purchase price, should use actual purchase price to avoid litigation
  • CAEdifferent, if encumbrance is easy to fix, measure of damages would be cost of removal

• if encumbrance is not easy to fix, diff of value of land w/ and w/o encumbrances

damages are calculated on date of breach (date of delivery would be date of closing)

 

Remote grantees

Rockafellor v. Gray, (implied assignment to H&G)

b/c on day Connelly conveyed land to Dixon, he had no title and no possession of premises, cov of seisin was breached

covenant ran w/ land to H & G, Dixon’s successors

SC previously adopted minority rule (English/minority rule says present covenant runs w/land, and is broken the instant conveyance is delivered) and held that a warranty of seisin (present) runs w/ land to remote grantee and is broken the instant a defective conveyance is delivered (American/majority rule says that present covenant does not run w/land but w/interest holder)

what’s the issue w/damages?

Connelly in fact received no consideration for that $4,000 deed (recited consideration was $4000, actual consideration (Connelly’s benefit) was 0)

damages are actual purchase price; limited to amount paid by original grantee to original grantor ($4,000) + interest

H&G cannot recover amount it paid to Dixon ($7,000)

amount of recited consideration ($4000) sets damages in this case

proof of actual consideration would be admissible only in suit b/tw grantor (Connelly) and original grantee (Dixon)

why?

reliance argument that court offers: right to rely on the consideration ($4000) cited (p .612)

• typically deeds contain specified nominal consideration

consideration a necessary element for contract, but not for deed

• so don’t have to specify consideration

Connelly could have avoided lawsuit by stating a nominal ($10 p. 612) consideration

2 important points

1) implied assignment theory

2) damages rule necessarily restricts attractiveness of avenue for remote grantee

future covenant runs w/land to all successors in interest of grantee (ALWAYS, whether minority/English/Rockafeller or majority/American/non-Rockafeller rule), present covenants don’t (according to majority American rule)

present covenants don’t run w/land, if breached they are breached at moment of conveyance

express consideration in deed is only a factor when remote grantee is suing original grantor for breach of cov of seisin

recited consideration is original purchase price (purchase price of a house), actual consideration is $ that actually exchanged hands (down payment on a house)

 

Remedies for breach of covenants: (present and future)

1) general rule: grantee’s purchase price + interest + costs

2) CAE (present covenants) – $ paid to remove defect or comp. for decrease in FMV caused by defect

3) breach of future covenants – remote grantee suing original grantor: damages = purchase price paid by original grantor

  • Original grantee suing original grantor purchase price plus interest. (breach of cov. of seisin, and QE)

4) breach of present covenants – remote grantee suing original grantor: (Rockafeller measure of damages:) limited to amount of consideration recited in deed f/original grantor to original grantee

  • Original grantee suing original grantor amount B would have to pay to remove encumbrance.
    • What if B doesn’t want to give up E difference b/tw value w/ encumbrance and value w/o encumbrances.

 

Chapter 10: Private Land Use Controls: The Law of Servitudes

PRIVATE LAND-USE CONTROLS: EASEMENTS, LICENSES, COVENANTS, & EQUITABLE SERVITUDES

 

5 types of land-use rights:

Easement A is given the right to enter upon B’s land.
Profit A is given the right to enter upon B’s land and remove something attached to land.
real covenant or equitable servitude A is given the right to enforce a restriction on the use of B’s land.
A is given the right to require B to perform some act on B’s land.
A is given the right to require B to pay money for upkeep of specified facilities

 

Easements:legal interest that gives you right to use property, licenses, equitable

Historical Background

profits a prendre = rights to take off the land things that were though of a “part” of the land (e.g., timber, minerals, wild game and fish)

Creation of Es

E & Profit = interest in land. Governed by SOF. Creation of E generally requires written instrument signed by party to be bound.

 

reservations in favor of 3rd parties

Willard v. First Church of Christ, Scientist, (church parking on Sundays)

SC focuses on intent of grantor: should override formalistic and policy arguments.

  • Easement appurtenant –Refers specifically to property; attached to land, viewed as part of land; attached to a dominant tenement

if DT is subdivided, easement appurtenant attaches to each separate parcel unless this extension would overburden ST

  • Easement in grosspersonal, does not attach to the land, no dominant tenement

common law rule (rejected by Willard) = A reservation allows a grantor’s whole interest in property to pass to a grantee, but revests a newly created interest in grantor; (grantor could not, by reservation, vest an interest in land to benefit a 3rd party)

majority of JDs follow the common law b/c .

• certainty

• it’s easy to apply common law rule, so why change it

• reliance

These arguments have been rejected b/c courts have moved f/ formalism to intent.

Intent analysis – look at instrument, context

• language/text of deed — easement of appurtenant: attached to land

court favors easement appurtenant over easementin gross if ambiguous (may look to constructional preference and fairness)

• duration: F/S determinable

• this is an easement of appurtenant in F/S determinable

• must determine duration b/c easement is an interest in land (in relation to estates)

 

reservation = a provision in a deed creating some new servitude which did not exist before as an independent interest.

exception = a provision in a deed that excludes f/the grant some pre-existing servitude on land.

Difference b/tw reservation and exception isn’t really important anymore.

regrant theory = an E “reserved” by the grantor is not a reservation, but a regrant of an E by grantee to grantor.

  • A deed from “O to A and her heirs, reserving an E in O,” was treated as if it were 2 deeds. The deed grants A a f/s; then A is treated as granting an E back to O.

easements vs. licenses

most imp: licenses are not an interest in land, easements are

in formalistic understanding, licenses can be revoked at any time, easements can not

• an easement may terminate, but it is irrevocable

license = permission given by occupant of land allowing licensee to do some act that would otherwise be a trespass.

2 exceptions to the rule that a license is revocable:

1. license coupled w/ an interest cannot be revoked. Ex, O grants A the right to take timber f/ BA. A has an interest (profit) and an irrevocable license to enter BA and take timber. Looks like E by necessity (EBN).

2. license can become irrevocable under the rules of estoppel – looks like an E.

 

licence’s reliance

Holbrook v. Taylor, (road to landlocked mining property, and later house)

Court held T had acquired a right to use road b/c, by estoppel;license H gave T to use road became irrevocable.

equity argument: Important facts for estoppel were (All were with express or tacit approval of H.)

– T had been allowed to use road for some time

– T maintained and improved road

– T built $25,000 house on his lot

bilateral monopoly problem: stuck

• in BM situation b/c D has injunction and no pressure f/outside to behave efficiently, efficient transfer is foreclosed

an easement may be established by

1) express agreement

2) implication

3) prescription

4) estoppel

• only the last 2 are asserted by P

2. how long is this irrevocable license should be good for? For all time?

1st Restatement says no: once holder of benefit has recouped reliance interest that led to creation of license, license is terminated – addresses concern for certainty

• 3rd license created by estoppel is of indefinite duration (not necessarily mean forever) – more fuzziness

• room for equity

• courts have been moving toward softer law

 

 

 

  Easement License Lease
Legal Interest Use Use Possession
Revocable? NO, but you can terminate an E Yes, but see Holbrook, irrevocable through estoppel NO, but can be terminated

 

Private land-use controls

Easements: interest in property: non-possessory right to use land that belong to someone else

• must be in compliance w/Statute of Frauds

Appurtenant vs. Gross

ExpressEasements by Reservation or Grant

Implied

Prior existing use

Necessity

Prescription

Licenses

• pro-irrevocability argument

• courts are attracted to this; do not like injunctions

• 3 basic elements

1) invitation to access by licensor: express or implied (constructed)

2) expenditure of $ or labor (in good faith reliance) by licensee

3) must be knowledge on part of licensor that reliance will occur

• some courts tweak: doesn’t need knowledge as long as there is a reasonable expectation

• a right to use

• usually revocable (when irrevocable, more like an easement)

 

Implied Easements:

  • Prior existing useVan Sandt case (sewer case)
    • Elements
      • Severance of title to land that is held in common ownership at one time.
      • Has to be an existing, apparent, and continuous use when severance occurred.
      • There has to be a reasonable necessity for use at time of severance
    • Intent: In most of these cases where an E wasn’t specifically mentioned, it was no doubt the intent of grantor for the use to continue probably a mistake or an oversight.
  • Easement by necessityOthen Case (eroded/muddy road)
    • Requirements:
      • Severance of title in land held in common ownership
      • Strict necessity has to exist at time of severance

A is not entitled to an easement unless A’s and B’s parcels were formerly one and the division caused A’s parcel to be landlocked

      • Strict (not reasonable) necessity — land must be landlocked and does not touch public road
    • Distinctions f/ prior existing use.
      • No prior existing use required for EBN.
      • Strict vs. reasonable necessity
      • E for prior existing use continues indefinitely, EBN only continues so long as it is necessary.
    • Rationale: intent of grantor grantor usually grants whatever is necessary for grantee to use and enjoy land. Economic don’t want land to be landlocked, not used to its fullest extent.
  • Prescriptive easement(Similar to AP)
    • Requirements:
      • Use was open and notorious
      • Use was adverse and under claim of right
      • Use was continuous and uninterrupted for statutory period
    • Differences f/ AP
      • Doesn’t give absolute title just right to use land
      • Exclusivity requirement relaxed – Claimant has to prove they are using it, independent of use of others.

 

equity

Van Sandt v. Royster, (sewer case)

Court held Π had notice of easement when he purchased land. Court says apparent and existing use that parties expect to use once land is divided — easement implied f/a prior existing use.

Quasi-Easement = an owner may make use of one part of his land for benefit of another part of his estate. “Quasi” b/c an owner can’t have an E in his own land.

distinction b/tw English and American approach

Eng: for implied reservation of an easement, must show strict necessity b/c an implied reservation contradicts a grant

if you want to prove an implied grant, need reasonable necessity (b/c does not contradict conveyance)

Courts only imply E by reservation in cases of strict necessity.

• in IG, DT is parcel conveyed to grantee, while in IR it is parcel retained by grantor

• implied reservation doctrine is recognized in only about ½ of JDs

Amer: most reject Eng rules and adopt modern streamlined approach:

• if a party want to prove easementimplied f/prior existing use, must have:

1) severanceof title to land held in common ownership (unified parcel then divided)

2) existing apparent and continuous use when severance occurs (not later)

• apparent can be discoverable upon reasonable inspection

3) reasonable necessity for the use at time of severance

reasonable necessity means use is convenient or beneficial to use and enjoyment of the one trying to retain easement

express easements disappear when dominant and servient tenements come into same ownership. It will not be revived by a severance of the united title into the former DT and ST.

 

RS Comment: effect of prior use as a circumstance in implying, upon a severance of possession by conveyance, an E results f/ inference as to intention of parties. To draw such an inference, prior use must have been known to parties at time of conveyance, or, at least, have been w/in possibility of their knowledge at the time. Each party to a conveyance is bound not merely by what he intended, but also to what he might reasonably have foreseen the other party to the conveyance expected. Parties to a conveyance may, therefore, be assumed to intend continuance of uses known to them which are in a considerable degree necessary to the continued usefulness of land.

 

easement by necessity

Othen v. Rosier, (muddy road)

court says no easement by necessity b/c must show

((1)must show unity of ownership b/tw DT and ST)

P did not show road was (2) a necessity, but perhaps merely convenience

• P did not show (3) necessity existed at time of severance of 2 estates

adopts strict necessity b/c intent and efficiency

for P, license argument

• built house w/reliance to use road, but TX follows NY view, where license is revocable so great risk

Most courts, like the court in Othen, require strict necessity but some courts have granted an EBN where access to the land exists but it is claimed to be inadequate, difficult, or costly.

 

fiction of the lost grant = If a use was shown to have existed for more than 20 years, it was presumed that a grant of an E had been made and that the grant had been lost. The presumption of grant could not be rebutted by evidence that no grant had in fact been made.

Lost grant theory draws a confusing distinction b/tw acquiescence and permission.

owner is presumed to consent or acquiesce in the use. But, if the use is by permission of the owner, it’s not adverse.

To secure and EBP under lost grant theory, you must show that the use was not permissive and also that the owner acquiesced. Letter disapproving use rebuts any claim of acquiescence or grant.

In a JD following the fiction of the lost grant, to prevent an EBP from being acquired, the owner must effectively interrupt or stop the adverse use.

 

public prescriptive E = can be obtained by a long continuous use by public under a claim of right. Landowner must be put on notice, by the kind and extent of use, that an adverse right is being claimed by general public, not by individuals.

theory of implied dedication = used by some courts to find public Es rather than prescription. Owes something to the lost grant fiction, b/c it seeks a substitute for a grant in an implied dedication. Can be used where landowner evidences an intent to dedicate and the state accepts by maintaining land used by public.

 

easement by prescription

Matthews v. Bay Head Improvement Association, (access to beach)

Court held that public has a right to gain access through and to dry land area not owned by a municipality but by a quasi-public body (D). This right is ancillary (supplementary) to public’s right to enjoy tidal lands.

Rule: public must be given both access to and use of privately-owned dry sand areas of beach as reasonably necessary.

right to exclude is not absolute

public trust doctrine = ownership, dominion & sovereignty over land flowed by tidal waters, which extend to the mean high water mark, is vested in the state in trust for people. (public uses: navigation, fishing, and recreational, including sunbathing)

• What’s the proper scope of PTD?

 

assignability of an easement in gross

Miller v. Lutheran Conference & Camp Assoc. (devisability of easements of lake use)

benefits/burdens of appurtenant easements (attached to land) pass auto in assignees of land to which they are appurtenant (if parties so intend and burdened party has notice of easement)

• but, benefit may not be assignable if benefit is in gross (not attached to land – personal)

riparian owners = abutting owners

Old rule= EIG never assignable, regardless of intent.

Court in Miller held that EIG was assignable (only in commercial economic uses; not when EIG is for personal enjoyment.) Intent of parties to make it assignable has to be clear.

  • Updated RS say that E is assignable, whether personal or commercial unless stated otherwise.

issue of transferability, courts take following approaches

i) look at intent

ii) look at purpose/nature of easement: commercial or non-commercial (personal enjoyment)

iii) reclassify easement (appurtenant as opposed to in gross)

• prescriptive EIG to bathe acquired f/R and F by commercial use

• assignability is not an issue b/c both R and F acquired

question of divisibility

Court applies “one stock rule” – can be divided among diff owners, but all owners have to act as one; must be single collective: must get unanimous consent from all easement holders, F can veto D’s use of lake. Can’t be divided into separate shares.

analogy to TIC; treat EIG holders like TIC: TIC can do a physical partition, TIC can ask for partition sale

Modern trend is that intent of parties determines divisibility of EIG: Divisibility of E will lead to more efficient uses b/c entitlement will more quickly end up in hands of party that values it most

 

Scope of Es

an excessive or improper use of an easement normally justifies injunctive relief, as well as provable damages, but does not usually extinguish easement

1) express easements: scope of use permitted depends primarily on language used in easement

reasonable changes in the dominant estate may support changes in the use permitted

subdivision of DT may give each transferee right to use easement as long as burden is not thereby increased

an easement appurtenant to one parcel cannot be used for benefit of a separate parcel

2) easements by necessity: permitted use depends on extent of necessity

3) other implied easements: scope depends on quasi-easement use, changed by reasonably foreseeable changes in use of DT

4) prescriptive easements: scope normally limited to original use

 

Brown v. Voss, (attempt to expand scope of use of easement to non-dominant tenement)

Court rejected black letter rule that easement cannot be extended to non-dominant land over objection to servient owner. Court alters bright line rule and formulated discretionary rule that requires a court to weigh various factorsb/c bilateral monopoly problem – not reaching an efficient bargain. ST can be protected by damages, which lies in TC’s discretion fashion appropriate remedy (could be an injunction)

E cannot be extended to non-dominant land – Black letter law.

just go w/ injunction w/cases like these

2 big picture issues

1) better to have clear rules or general flexible standards? efficiency or fairness?

2) conflict b/tw property rules and liability rules

• property: entitlement of property interest owners, transfers should be voluntary

• liability: extended easement allowed if P pays damages

P could have avoided litigation altogether by:

put express restriction/limitation in deed: transfer will be used for DT and no other tenement/land

sometimes forfeiture clauses: easement is forfeited if used for non-dominant land

these aren’t really enforceable, just hopefully a deterrant

 

General Rule = location of an E, once fixed by parties, cannot be changed by ST w/o permission of DT

A prescriptive E is not as broad in scope as an E created by grant, by implication, or by necessity. Uses made of a prescriptive E must be consistent w/ the general kind of use by which E was created and be foreseeable evolution of old use.

Ex. – An EBP acquired by pedestrian traffic or by herding livestock w/ mean and horses across land has been held not usable by motor vehicles.

 

negativeeasements: right of dominant owner to stop servient owner f/ doing something on servient land.

• English courts started to recognized NE: right of dominant to stop servient owner f/doing something on servient land

4 types p 855: 1) block windows 2) interference of airflow to your land in a defined channel 3) removing support of your building 4) interference w/waterflows in an artificial stream

• Eng courts were rigid in not expanding NEs

• Amer courts followed suit. Now and then a new type of NE is recognized.

problem: landowners responding to changes – wanted courts to create new NEs against current and future servient owners

good idea to enforce new easements/mutual promises against successors, but not going to call them NE, but rather real covenants and equitable servitudes

conservation E = developed to preserve scenic and historic areas and open space. An owner of land can give a public body or a private charity a conservation E, preventing servient owner f/ building on land except as specified in grant.

 

termination of easements

f/commercial to recreational use

Preseault v. United States, (termination of easements (b/c of conversions))

issue 2: whether scope of easements were sufficiently broad in scope to permit use for a public recreational trail – assuming easements were still in effect in 1986

CL –scope of E may be adjusted for changing times to serve original purpose, so long as change is consistent w/ terms of original grant; allows expansion of E, but does not permit a change in use not reasonably foreseeable at time of establishment

foreseeability test: whether use was reasonably foreseeable at time of creation of easement

1) expectancy: to ensure new use was w/in reasonably expected by parties (servient owner)

2) fairness: would new use suppose burdens on servient owner – increased burdens as unduly unfair

• court said no, not reasonably foreseeable in 1899 that it is used as a public trail/value of conservation

Restatement: more liberal: must look at purpose of easement: public use/enjoyment

issue 3:termination issues

1) by unification: dominant and servient tenements become one

  • E is terminated if it is released to owner of ST – but must be in writing

2) by prescription: if ST wrongfully/physically prevents easement f/being used for prescriptive period, easement is terminated

3) by abandonment: does not occur only by nonuse, must be unequivocal act showing intent to abandon

  • E is terminated if ST sale to a BFP

 

Covenants Running w/ Land

Historical Background

 

real covenants (affirmative or negative) promises to use/not use land in a specified way. Remedy for breach is dgs

• covenants run w/ land but are not an interest in land

• “benefited” land comparable to “dominant tenement” and “burdened” land comparable to “servient tenement”

common law required real covenants to be in writing

• RCs can be contained in a deed; grantee is bound even if he does not sign doc containing the covenants

• RC cannot arise by estoppel, implication, or prescription, as can an E.

 

• traditional requirements of burden to run w/land (party who is not party to contract is being sued)

writing – must be signed by promisor

If deed creating RC is signed by g’or only, and it contains promise by g’ee, promise is enforceable against g’ee. The g’ee is bound by act of accepting the deed.

intent – promisor

notice – success / A or C

if assignee of promisor gave valuable consideration, there is add’l requirement that he have notice of covenant

• touch and concern

Most neg. cov. respecting land do relate to use, occupation, and enjoyment of land. Affirmative covs. present problems for touch and concern; this is b/c: how does promisor comply w/promise? Enforcement? – only by suing; what does that have to do w/land? Can pay obligation by paying money.

• privity of estate

successive (g’or-g’ee) relationship = if B’s promise had been in a deed conveying BA f/ A to B, A & B would be in privity of estate. Giving privity this meaning prevents enforcement of the cov against successors only when the cov was not created in conjunction w/ the transfer of some other interest in land

strict vertical – b/tw promisor and assignee (successors in interest) (all courts)

horizontal – b/tw 2 original covenanting parties (some courts)

traditional requirements of benefit (person not a party to original contract is doing the suing)

writing

intent of original parties

• touch and concern

• no horizontal privity

• relaxed vertical privity

remedy for breach: damages (equity)

 

equitable servitude: covenant enforceable at equity against assignees of burdened land; does not matter whether covenant runs w/land

• May be implied in equity under certain limited circumstances. Cannot be obtained by prescription.

• covenants do not run w/ land but arean interest in land

• most courts feel that an ES is an interest in land and for that reason require that it be in writing

but some courts will, despite lack of writing, imply an equitable servitude incases involving restrictions in subdivisions

• if there’s a reciprocal scheme in neighborhood, a court may enforce it

it has to be reciprocal (other property in neighborhood must have a similar restriction), it must be either negative or restrictive (it cannot be affirmative), and it must be part of developer’s scheme of development

• not all courts recognize these types of servitudes in residential subdivisions

conditions of enforcement: (1) must be intent that servitude be binding on assignees, (2) vertical (not horizontal) privity is required (3) covenant must touch and concern the land and (4) a BFP w/o notice does not take subject to covenant

• traditional requirements of burden

intent

noticecan be actual, constructive, or inquiry

notice is a defense of enforcement of servitude, but not an element (not part of prima facie case for enforceability)

touch and concern doctrine: burden/benefit of covenant/ES must relate to use, occupation and enjoyment of premises

• no privity

• traditional requirements of benefit

intent

• touch and concern

relaxed vertical privity for 3rd party (some courts)

For a person other than original cov’ee to enforce benefit, in some JDs beneficiary must show that he acquired title to his land f/ cov’ee, either before or after cov was made. In this sense, VP may be required for enforcement of benefit in equity.

• beneficiaries?

remedy for breach: injunction or enforcement of a lien in equity (legal)

• Usually, parties go after injunction, not damages

 

3rdRestatement: obliterate distinction RC and ES – unification of servitudes

• instead of focusing on technicalities, enforcibility of a servitude (any promise of land forcing promise) must have:

intent

• compliance w/SOF

• servitudes are notillegal, unconstitutional or violative of public policy

 

horizontal privity

• traditional test is grantor/grantee relationship or some sort of land transfer b/tw them

• for A and B to be in HP

1) if promise in a deed of land transfer f/A to B

2) subdivisions (2nd full paragraph p. 862) example

a) S → X (straw w/covenant respecting use of the land)

FSA w/covenant Covenant will be recorded

 

X → S

FSA w/covenant vertical privity w/ A, B, and C (FSA w/covenant)

Vertical privity (again) to D, E, and F

• problem w/privity w/neighbors

 

Covenants Enforceable at Law:

A way for landowners to structure the utilization of their land for mutual benefit.

Goal – judicial recognition of a contract right respecting land use that is enforceable not only against the promisor landowner, but against his successors in title as well.

 

Covs enforceable in equity (ES)

enforceability by and against subsequent assignees

Tulk v. Moxhay, (1st case to hold that written covenant was enforceable against subsequent purchaser who acquired title to burden land with notice of covenant) (Generally a covenant that does not run w/land will not be enforced against a subsequent vendee.) Gets around road block of privity. Enforceable b/c it’s not a covenant, but calling it an equitable servitude.

Rule = if an equity is attached to property by owner, no one purchasing w/ notice of that equity can stand in a different situation f/ party f/ whom he purchased.

ES = a cov respecting use of land enforceable against successor landowners in equity regardless of its enforceability at law. Like an E, b/c it is a property interest in land Privity requirement goes out window. Requirements:

1. parties intend the cov to run, intent to bind successors

2. Subsequent Purchaser has actual or constructive notice of the cov

3. cov touch and concern the land

– HP not required, nor is VP, for burden to run.

important points:

enforceability if private land use thru Tulk case

categorization is important: running of benefit or burden??

what remedies: damages (traditional way requires that we analyze as RC question) or injunction (analyze as ES question)?

notice is a defense of enforcement of servitude, but not an element (not part of prima facie case for enforceability)

If cov isn’t enforced, purchaser will get a benefit that he didn’t bargain for.

Vertical Privity – with respect to RCs, rule –benefit of a RC runs to a successor in land. Any successor in interest can qualify for benefit. For burden, the successor has to have identical interest to predecessor.

 

11.24.03

4. inquiry notice

Sanborn v. MacLean (gas station)

Court held there was a reciprocal negative E (RNE) on D’s lot requiring D to abide by restrictions in deeds of other lots in neighborhood.

Rationale:

D was put on notice of inquire as all lots were uniform in use, although no restrictions in D’s chain of title

scope

What point in time did this scheme arise? Must have arisen b/tw sale of lot 1 – 21. Court says as long as common grantor sells one lot w/ a restriction, an implied ES can arise. (Broad application of ES).

Sanborn approach = for implied reciprocal servitude/NE, there must be common building scheme that arises at sale of 1st lot. Can take evidence of common scheme after sale and assume there was common scheme.

intent – did grantor intend to impose a scheme of mutually enforceable restrictions for benefit of ALL of purchasers and ALL of successors. — Prof. Says court misapplies their own rule.

Reciprocal Negative Easement (RNE) = if owner of 2 or more lots, so situated as to bear relation, sells on w/ restrictions of benefit to land retained, servitude becomes mutual, and during period of restraint, owner of lot or lots retained can do nothing forbidden to owner of the lot sold.

 

 

 

3 approaches for determining whether or not there is an ES:

1. Riley = (CA) an ES will not be implied f/ existence of restrictions on other lots in a subdivision, f/ an oral promise of developer to restrict the remaining lots, or f/ a general scheme of restrictions not included, by recitation or incorporation, in deed to the lot alleged to be burdened by servitude.

2. Existing Uniform Plan = look for scheme at time of sale of 1st lot only; don’t consider later evidence. Constructive notice standard, not inquiry notice. Tries to balance concerns of Sanborn and Riley.

  1. Sanborn Approach (radical approach) – applies a standard of inquiry notice – a form of notice which says, “purchaser, you had knowledge of certain facts that should have put you notice of a uniform development scheme.” Imputed notice of existence of uniform plan.

 

After developer sells all lots and has no economic interest to protect, any right reserved to modify the restrictions ceases.

 

5. affirmative covenant

Neponsit Property Owners’ Association, Inc. v. Emigrant Industrial Savings Bank (HOA wants dues f/bank)

A promise to pay money is an affirmative covenant does this cov. T&C the land? Association is the assignee.

• 2 aspects:

1) touch and concern doctrine: burden/benefit of covenant/ES must relate to use, occupation and enjoyment of premises (neg cov are related, but affirm covs present probs for T&C)

English courts: affirmative covenants don’t T&C land (rigid)

this court rejects Eng rule and adopts new broader test: based on effect of covenant rather than on technical distinctions

must know whether covenant alters the legal relations (values) of the parties as owners of interest in land (p.879 footnote 30 – Bigelow test) – does covenant actually affect the estate (if coventor’s legal interest in land is rendered less valuable by the covenant’s performance, then the burden of the cov satisfies the req that the cov T&C land. (this test in unhelpful and very vague.))

• this test is an improvement over English rule

Eagle Enterprises, Inc. v. Gross (p.887 note 2)

affirmative covenant: $ to pay for water after built own well

• this covenant does not T&C land so not enforceable

• both cases are similar b/c involve paying $, but diff results

• RS has moved away f/T&C b/c problematic

RS 3rd– use this for T&C!!! a RC or ES is enforceable if parties so intend, it complies w/ SOF, and it’s not illegal, unconstitutional, or violates public policy. Intent can be expressed or implied.

  • Cov violates public policy when harm of those covs outweigh the utility of the cov.

Neponsit = A cov which runs w/ land must affect legal relations (advantages and burdens) of parties to the cov as owners of particular parcels of land.

cov in Neponsit T&C the land b/c it substantially affected the property owner’s legal interest in his property. Property owner received an E in common and a right of enjoyment in public improvements.

Rule moves away f/ physical touching to looking at the effects of the cov.

2) privity of estate

• Neponsit HOAmust show burden runs w/bank (court says it does) and that benefit runs to Neponsit

• both sides of covenant must be enforced

• question: whether there’s vertical privity of estate b/tw Nep HOA and prior Nep Realty

Rule – Benefit of ES is enforceable only by one who has succeeded to some possessory interest of original promisee.

b/c NY was one of those JDs where VP is required for the promisee to enforce the benefit of the ES (HOA never engaged in any land transaction)

Zamairski v. Kozial case p. 883

• Kozial wants to build where previous owner promised not to build

• Z wants injunction

lower court grants injunction and subsequent higher court says injunction is not proper b/c Barnes and Zamaiski do not have privity of estate

• Z cannot enforce covenant b/c not in vertical privity of estate (only neighbors)

• Z must prove that he can trace title to his property f/the promise

• Nep HOA must be able to show transfer f/Nep Realty to Nep HOA

• but no land transfer so no vertical privity of estate

• how can Nep HOA enforce benefit of the servitude?

Nep court circumvents privity requirement not by privity in form, but privity in substance/function b/c Nep HOA is an agent of Nep realty co. (common interest by agency theory) (b/c P represents all the property owners, the corporate entity is recognized for what it is, a representative form; it succeeds to the estate of he owners and privity of estate is established)

• NY adopted this for HOA, but not for neighbor situations

1) what problems f/agency theory?

2) in this situation, how do you construct a transaction to put Z and Barnes in vertical privity?

the test of whether a covenant runs w/land is whether it imposes a burden upon an interest in land that also increases the value of a different interest in the same or related land

 

Common Interest Communities

11.26.03 pp. 925-949

 

F. HOMEOWNERS’ ASSOCIATIONS

1. condos: popular shared ownership; each individual owner has separate FS in unit, while exterior/land/common areas are owned by all Ts in TIC

2. cooperatives: each individual has long-term renewable lease to the unit, and owns shares in the corporation that actually holds title to the land and improvements. Resident is a T of the corporation in which he has ownership interest.

 

Nahrstedt v. Lakeside Village Condominium Assoc., Inc: (no cats allowed)

AC:

If there’s reasonable likelihood that restriction would interfere w/homeowners’ property, that’s the reasoning AC used.

• 4 models of judicial review:

1) contract/consent model

2) administrative agency model

• p. 943 Mulligan/Panther case (sex offender case)

• use restriction must be justified, not just w/respect to due process, but also substantive due process.

• HOA places use/sale restriction; Mulligan challenges restriction

• court says burden of proof is on board to show that the restriction is reasonable

Mulligan case involves vote of members of board (diff than declarations made at inception) – restriction arose out of a decision later made by board

• follows distinction of RS

• move toward more aggressive standard of judicial review

3) business judgment/ corporate board model

(Landon case) economic decision was made: to spot treatment instead of fumigation of entire house

as long as restrictions are passed w/ procedures that are sound, restriction is prima facie reasonable.

• “all that’s necessary in making financial decisions is that the board exercise its deiscretion, upon reasonable investigation, in good faith and w/regard for best interest of community association”

burden of proof is on homeowner to show that is not being done

4) local gov’t model

• has not formally been adopted by any state to date

• assumes that HOA is acting in substance as a state actor

• thus HOA should be subject to constraints imposed on state (not private) actors (private actor model)

if they’re going to act like a state actor (police), then they should be subject to same types of standards/regulations that arise f/fed and state constitutions

• courts now move closer to aggressive standard of judicial review

SC says cat restriction is not irrational

restrictions (must be reasonable)

homeowners must follow restrictions unless 1) wholly arbitrary, 2) violates public policy, 3) utility analysis: imposes burden on use of protected land that far outweighs any benefit

SC moves closer to a contract/consent model: recorded declarations are contract b/tw owner and association – court should not insert itself into that contract/bargain (presumed consent)

burden of proof on owner, not on board

• applies to those declarations that were recorded at inception of the planned community

 

12.01.03 pp. 951-984

 

I.LEGISLATIVE PUBLIC LAND-USE CONTROLS: THE LAW OF ZONING

Chapter 11: ZONING: LAND USE CONTROLS

 

Zoning: is a public form of land use controls

Principles

Use seg.

Suprem./SFH

Low/medium density

Legislative Planning

Constitution

Contmp. Forces

Philosophical tensions

Amortization

 

Historical Background:

  • Law of Nuisance– Judicial Land use planning; If one is complaining about something, and sues for an injunction judge decides.
    • Problem, with nuisance is that it is not preventative, can’t sue until after nuisance has occurred.
  • Zoning is prospective – prevent problem before it happens.
  • Zoning is utilitarian– means to an end.
    • Method which society encourages development of jobs, housing, protecting natural resources, environment, and commerce defining the character of the community.

 

Euclid producedfour Principles for zoning: (social theory rests on these 4)

  • Segregation/separation of uses is desirable;Different uses harm each other if contiguous (utility)
  • Supremacy of single family home – promotes wholesome values.

• should be encouraged b/c moral/ethical family values

  • Low/medium density is better than high density: preserve open space – necessary for healthy living results in height and use restrictions and lot size restrictions.
  • Legislative planning: rational planning/thinking ahead for a community is good

These principles are undergoing re-examination.

 

Factors that led to attack on the principles

  • Population growth
  • Scarcity land
  • Demand for smaller houses
  • Political activism
  • Development/ planning through referendum
  • Regionalism– regional planning;decisions made in one city will affect traffic, costs, air, in another city.
    • Air quality, water supply, housing availability
  • Smart growth movement – urban growth boundaries are being devised to channel development to protect open space. Revising building codes to fill in cities
    • Discouraging sprawl, protect open space, favor high density over low density
  • Technology– home office possible shatters our classical understanding as residential communities and commercial communities. Also feeding the political activism.
    • Technology is fueling home office boom
    • Affecting politics of zoning – use of internet to rally troops, find out info that used to not be readily available

 

A. intro

1. zoning power: only the state has the power to zone

• this power has been delegated to cities and counties by statutes called “enabling statutes

• thus, all local zoning activity must abide by the enabling statutes

2. goals of zoning: orderly development of community; promotes economic growth, community health, welfare, safety

3. how zoning works: one of fundamental characteristics of zoning is to segregate uses of land into geographic regions

• thus, highrises may only be permitted downtown rather than in rural areas

• it can be used to foster commercial districts as well as residential districts

• for health and safety reasons, zoning can regulate the density of human population

• this can be achieved by limiting building heights, providing for minimum and maximum years

4. constitutional considerations: as w/ other areas of law, zoning is affect by the Constitution

for instance, if zoning in area is going to be changed, due process requires landowners in area be given a hearing

• zoning restrictions must be for a legitimate governmental objective

equal protection clause requires that all landowners who are similarly situated be treated equally, unless there is a legitimate reason for not doing so

as w/eminent domain, if zoning regulations amount to a taking, just compensation must be given by the state

a. taking

 

b. leading case:

Village of Euclid v. Ambler Realty Co. (P’s parcel divided into 3 diff zones – reduced value by ¼: zoning did not violate due process)

SC made comprehensive zoning constitutional/justified zoning for 3 reasons

1) judgment that urban life is increasingly complex (great increase in population/concentration)

• public restrictions on land use is now not unreasonable

2) must consider circumstances and conditions of the area to judge validity of police power

3) court can analogize zoning practice to nuisance law

• “don’t use your property in ways to injure others”

• public considerations in land use are important

if the validity of a legislative classification for zoning purposes is fairly debatable, the legislative judgment must be allowed to control

• zoning laws are not presumptively valid

Protective Zoning: Protect property f/ industrial incursions, stabilizes property values, protect from vagrants.

Assumption before Euclid was that market forces should determine how land is used.After Euclid, market uses began to conform to a public plan of orderly development.

 

B. administration of zoning ordinances

1. intro: zoning ordinances present many opportunities for abuse and for objection by affected landowners

• administration of zoning ordinances thus creates the potential for considerable litigation

2. comprehensive plans: enabling acts inevitably require the local zoning authority to adopt a comprehensive plan (which can be revised f/time to time)

• the zoning must conform w/the plan

• the plan serves to limit the local zoning board’s whims

 

3. Non-Conforming Uses

State zoning enabling acts exist

 

Comprehensive Plan:

  • Came out of Euclid
  • statement of local gov’t’s objectives and standards for development.

 

Philisophical debate/tension – land uses should be dictated by free market vs. those who believe that public interest should determine land use (in the form of regulation/planning)

 

Amortization

Legality

Policies

Operation

Alternatives

 

Non-conforming use is one that was valid, but was invalidated b/c of an ordinance

Pre-existing lawful use that is not in compliance w/ a subsequently adopted ordinance

• Tended to be tolerated b/c zoners were concerned w/law of takings

so came up w/amortization: provide a reasonable time during which owner can maintain pre-existing use, after that time, use was to be terminated (amortization period was to provide a return on original investment)

PA Northwestern Distributors, Inc. v. Zoning Hearing Board (zoning ordinance after opened adult bookstore)

Holding: yes, unconstitutional, judgment reversed for P.

Rationale:

  • Amortization – to gradually phase something out phase out use of property as an adult bookstore,after value of non-conforming use has been recovered.
    • Amortization is a per se rule — unconstitutional
      • Must compensate owner unless nuisance theory, property was abandoned, or property was taken by eminent domain
        • Hope was that non-conforming uses would just fade away, but tended not to fade away.
        • can condemn use by condemning property, but expensive and time-consuming
        • In fact, non-conforming get stronger b/c they have a monopoly, since no new ones are allowed to be built.
        • if store isabandoned, owner can’t come back and re-open store –people didn’t tend to abandon
        • Prohibit expansion/repairs– bad b/c then there is no incentive for improvement
    • w/ Amortization – give a reasonable period to run store (equivalent to remaining life of use), after which the use will be terminated want to mitigate that person’s loss.
  • Court talks about property owners’ right it’s important (moral)
  • Utilitarian: there are investment-backed expectations that should be supported
  • Court distinguishes b/tw retroactive (lawful use) zoning, and prospective (future) zoning – amortization/phase out.
    • The property owner is having a result that is forced upon him.
    • Public must gain some benefit f/this public decision
      • If only cost-effective way to do this is amortization, then amortization should be available as zoner’s tool
      • About balancing interest: reasonable provisions (adequate notice) so that no deprivation to property owner vs. public interest

 

12.03.03 pp. 984-999

 

• zoning is a public process, so zoning authorities need flexibility in light of public changes

• 3 basic tools:

variances: an authorized deviation/departure f/strict enforcement of terms of zoning ordinance, granted in individual cases of unique and individual hardship which a strict application of the terms of the ordinance would be unconstitutional

• usually granted by local zoning boards/planning commissions

• thus level of judicial review for variances are aggressive – since variances are not legislative

• very individualized requests, so can’t draft a statute like special exceptions or rezonings

jurisprudence: dealt w/most effectively by rule of reason – less clear, more general on case-by-case basis

zoning by its nature is general; it does not take into account the particularities of every lot in the zone

boards of zoning adjustments empowered to grant variances for conditions unique to particular lot

• if condition is not unique, a change in zoning should be sought

suppose, for example, that when a tract of land was changed f/a commercial zone to a residential zone, a 20-foot side yard requirement was imposed

if there were a few lots that, due to their shape, could not be used for housing if the 20-foot side yards were required, the zoning adjustment board could grant a variance

special exceptions: an unusual conditional use that is (specifically) authorized by a zoning ordinance if special types of conditions are met (these conditions are set out in advance); results f/ legislative determination that such use will not ordinarily be detrimental or injurious to the neighborhood w/in the zone.

• considered legislative in nature: legislature has sole discretion – come out of legislative action

deferential judicial review

jurisprudence: courts have taken view that special exceptions are dealt w/most effectively by having clear standards

• ex: homeless shelters

where a particular use is compatible in theory w/the surrounding zoning if certain conditions are met, a special exception can be issued to the landowner

• criteria must be established for granting special exceptions

1) ex: a gas station may be compatible w/a residential neighborhood if the gas storage tanks are placed underground

the ordinance regarding special exceptions would have to set forth the requirements for permitting a gas station in a residential neighborhood

2) ex: a hospital

rezoning/zoning amendment: occurs when legislative body changes zoning ordinance to place land in a diff zone (ex: land is rezoned f/residential to industrial)

• more of a regional/geographical reclassification

• considered legislative in nature: legislature has sole discretion

• deferential judicial review

 

Achieving Flexibility in Zoning

 

  Variance (Use/Area) Special Exceptions Re-zone
Decision-making/ maker Administration /quasi-judicial Legislation Legislation – Arnel

Administration – Fusano.

Nature of Problem Variances respond to deviations that cannot be predicted; Legislature can predict type of requests. Statute will say that if X wants to do something, they can so long as they comply with standards. Can be predicated Cannot be predicted

Designed to respond to unique circumstances.

Nature of Inquiry

 

Rule of reason; can get a variance if there is undue hardship. Flexible rule of reasonableness Clear standards (Cope case) Must be adjudicated under clear standards. N/A

 

Judicial Review Aggressive Deferential – if standards are clear Deferential (Arnel)

Aggressive (Fasano)

 

Commons v. Westwood Zoning Board of Adjustment (no justification for denying variance to build home)

Rule: A denial of zoning variance must be based on sufficient findings on whether the area will be adversely impacted, and whether denial will cause undue hardship.

Undue hardship – notion that no effective use can be made of the property in the event the variance is denied. Use of property may be subject to reasonable restraint.

an owner is not entitled to have his property zoned to its most profitable use

3 factors to determine undue hardship:

  1. Consider origin of existing situation. If property owner in title created nonconforming conditions, then hardship may be deemed self-imposed. (Necessary to know when zoning ordinance limitations were adopted and the status of the property with respect to those limitations at that time.)
  2. Efforts which the property owner has made to bring the property into compliance with the ordinance’s specifications. (Ex. Attempts to sell the property or acquire more land)
  3. When undue hardship is found to exist, board must be satisfied that the negative criteria are satisfied before granting a variance. The variance must not substantially impinge upon the public good and the intent and purpose of the zone plan and ordinance.

possibility that the denial of a variance will zone the property into inutility so exercise of eminent domain is called for and compensation will have to be paid

conflict b/tw right of owner to use his land as he pleases, right of the public to restrict the exercise of property rights, and rights of the property owners in immediate vicinity

applicant carries burden of establishing negative criteria by a fair preponderance of evidence, but that the less of an impact, the more likely the restriction is not vital to valid public interests.

 

Cope v. Inhabitants of the Town of Brunswick (variance to build apt bldgs /excessive discretion granted to local zoning board)

Rule: A zoning ordinance may not delegate to a local board a legislative authority.

A legislative body cannot give the Board discretionary authority to approve or disapprove applications for permits the Board thinks best serve the public interest w/o establishing standards to limit and guide the Board.

• the 2 factors upon which D rejected Ps’ application were so general that they did not limit D’s discretion

instead, gave D discretionary authority to approve/disapprove apps as D thinks best serves public interest

the lack of sufficiently detailed standards would permit a discriminatory application of the law, so the ordinance is unconstitutional

• an exception allows the owner to use his property as the ordinance expressly permits

whether a use would comply with the public health, safety, and welfare and with the essential character of an area is a legislative question

in authorizing exceptions, the legislature makes a determination that the use would not ordinarily be detrimental to the neighborhood within the zone

the delegation to D under this ordinances permits D to decide that same legislative question again

b/c D found that Ps complied w/all the requirements of the ordinance except for the 2 invalid ones, Ps should received the exception

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