Property Outline Fall Final

Monday, October 25, 2010

8:33 AM

Law of Finders
Greater rights to property than all, except true owner
Common law goal: return of lost property to true owner
Allowing finders to keep property for time being, encourages people to publicize findings
Conversion
Replevin: action to recover
Trover: forced sale monetary compensation

Finder: first person to take possession lost/unclaimed personal prop.

Possession: 1. intent to control 2. intent to cont. controlling
Constructive possession: control area which property located

Natural: natural forces; locus in quo

Abandoned: no intent reclaim; any person in possession
Mislaid: intentionally misplace; locus in quo/or finder
Possessor real estate better position to return mislaid property
Lost: out possession w/o realization; finder unless employment
Treasure: property intentionally hidden; finder

Examples:
Charles buries gold in backyard. After death, property passes to Opal. Opal sells land to David. David hires
Ellison to tear down backyard and finds buried gold.
Who prevails? Type of Finding? David or Ellison?
Opal prevails, true owner. Sale of one is not the sale of other. Mislaid/abandoned/treasure. Discuss all 3

Central Bank repossessed an airplane when owner defaulted on loan. Four months later Central Bank took
plane to Lindner aviation for inspection. Aviation conducts business in hanger leased from City airport.
Benjamin employee of Aviation, inspected plane. Finds money in plane wing.
a. Benjamin v Aviation
b. Prevailing party above v City airport
c. Prevailing party above v Central bank
d. Prevailing party above v previous owner of plane (who defaulted to central bank)

Answer:
a. Course of employment; go to Aviation. Instrumental view: if owner likely to return court also awards to
aviation. If court wants to encourage finders then to Benjamin. Most courts Aviation.
b. Locus in quo v legal possession; aviation would most likely keep.
c. Mislaid property; bank wins
d. True owner has to prove was his money.

Bailments
Exists whenever personal property transferred from the possession of one party to another party.
Express on Implied Agreement
1. Bailment requires delivery of possession
Actual (physically handed over), constructive (keys to safe deposit box), symbolic (written instrument)
2. Acceptance by bailee

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3 types (traditional)
Bailment for hire: voluntary and compensation; great care
Gratuitous bailment: voluntary w/o compensation: reasonable care
Involuntary bailment: non intentional; lost/mislaid property: slight care

Bailee Duty of Care

Duty to return or else conversion occurs

Most courts require Reasonable care required for all levels of bailment

What Must be Redelivered

Examples
Grain Silos: similar quality grain and same quantity
Cattle: same number; herd is subject to bailment not indv.
If bailor expects basic change in nature of chattel, no bailment

Examples:

Good Faith Purchasers (BFP)

BFP obtains title against true owner
Once BFP enters chain of title all subsequent holders of title are BFP.
Person cannot transfer better title than he has.
Void: no title
Voidable: title until true owner takes action

Statutory BFP
True owner entrusts property to merchant of that type
Purchaser paid value
Purchaser within ordinary course of business
Purchaser good faith
Purchaser had no knowledge of true owner's title

Equitable BFP

True owner cloaked vendor with indicia of title (Title document, bill of sale)
Purchaser paid value for good
Purchaser was acting in good faith. (investigate title with due diligence)

Examples
Olive removes brooch during dinner. Rolfe steals brooch and sells to Benny a good faith purchaser.

Same facts as above except Rolfe sells brooch to Benny, who sells to brooch in Rolfe's jewelry store.

Olive wins in both circumstances since Rolfe had no original title and cannot transfer void title.

Gifts

a. Donative transfer: transfer without value

Cannot be subject to condition subsequent (act or even must occur before gift is made or effective)
Gift is irrevocable once transferred.
Elements of Donative Transfer
1. Intent: clear convincing evidence

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 1. Intent: clear convincing evidence
Law assumes no one would give away property for free
2. Delivery
Actual, constructive: complete legal control of thing transferred
Symbolic delivery: thing delivered to represent another.
If fundamentally impossible to delivery then no delivery is needed.
3. Acceptance (or no rejection)

Inter vivos gift: gift between living persons

Remain revokable until possession is transferred to donee.
Promises to make gift in future unenforceable!

Gift Causa Mortis: gift of personal property made by party in expectation of death, then imminent, and upon
the essential condition that the property shall belong to the donee in case the donor dies as anticipated,
leaving the donee surviving him, and the gift is not in the meantime revoked.
"concrete, unequivocal, and undisputed"
Express revocation within reasonable time of recovery revokes the gift.
Not favored in most jurisdictions and courts will construe strictly.

Problems
1. Odysseus writes and signs a check to Don, drawn on Odysseus' checking account, but dies before Don
cashes it. Does Don have a right to cash the check?
No donor could have stopped payment on check at any time before it was cashed, and donor's death
revoked authority of bank to cash, gift was incomplete because donor's retention of power to revoke
gift. Check is not a deed of gift and power to ash is not the same as a gift.

2. In Sept Lee hands Peter a signed paper promising that Lee will give Peter 10,000 shares of Profit as
xmas present. Lee dies in November devising all his stock and bonds to Carol. Who gets the stock?
Carol wins. Lee's promise is unenforceable because Peter gave no consideration. When Lee died, he was
legal owner and stock passed according to his will.
3. In September Lee transfers 10,000 shares to Peter with qualification that Lee will receive all paid on or
before Xmas. Lee dies in November and leaves all stock and bonds with Carol. Who gets the stock?
Peter keeps stock. Gift in Sept was present gift with present intent to make gift, delivery, and
acceptance. Lee's retaining the income for 4 months does not make the gift incomplete.

Adverse Possession of Personal Property

Four Theories of AP
Statutes generally punish true owners who sit on rights for too long.
Adverse possession statutes may reward person who uses, improves property.
Used as tools to prove lost grants or correct conveying oversights
Efficient transfer of property

Person uses property statutorily amount of time and becomes owner of property even against true owner
through adverse possession.

Statute of Limitations governs number of years needed for adverse possession in each state.

If possessor merely has color of title (faulty deed) statute shorter

Adverse possessor only gains ownership of land he actually occupies, unless color of title
Elements
1. Hostile- without owners permission
2. Actual possession- not constructive (i.g. building house, farm, fence, paying taxes, mortgaging land or
selling.)

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 selling.)
3. Visible- possession can be perceived- not secret and must represent to the world he/she is owner of
property. Indicate to reasonable person someone is claiming property
4. Exclusive- owner never in possession (sole physical occupancy)
If owner is still occupying land, then adverse possession does not exist
5. Continuous- possession is not surrendered without interruption (possessor merely use property as true
owner would)
6. Period of statute of limitations

discovery rule: cause of action not acrue until injured party discovers/should have discovered facts of action.
In order to be eligible: 1. Must use Due diligence

Tacking: adding of time of first possessor used property to the time 2nd possessor used property through gift
or selling interest. Privity must occur for tacking to occcur.

General: an adverse possessor who acts with respect to property as would an owner of similar property in
the community for the period of limitations usually satisfies each element.

Problems:

In 1995, Adam enters and begins adversely possessing blackacre, located in state with 20 year statute. In
2005, Adam deeds blackacre to Xeno a bona fide purchaser. What estate does Xeno obtain?
Xeno acquires all right, title, estate, that Adam had plus Xeno can tack Adam's ten years.
Assume 20 years statutes
a. In 1985 , Odie true owner ousted from Blackacre by Arthur who in 1990 is ousted by Betty, who in 1995
is ousted by Cory, who in 2000 is ousted by Dan. Who has title in 2011?
None were in privity. Odie still owns Blackacre.
b. If, in 2002 Cury had sued Dan in ejectment to regain possession, what result?
Cory, Prior possessor has right to possession superior to later adverse possessor.
c. Ossie is disseised by Addy in 1980. Addy is in possession until 2005. In that year, Ossie sells to Ben and
Ben then used Addy in ejectment. In this suit, what result and why?
Judgment for Addy by Adverse Possession. Ossie had no rights to transfer to Ben. Ben cannot acquire
more than his vendor had to give.
d. Same facts as in d except Ossie sells to Ben in 1995, and Ben sues in 1995. What result?
Ben prevails, He acquired all of Ossie's right as legal owner.
e. Same facts, as in e except Ben waits until 2005 to bring his ejectment action. What result?
Addy wins, Ben waited too long to sue.

Estates
Escheat: if property owner dies without will and no heirs it escheats to the state.
People's interest in land is based estate to which they hold title

Freehold estates
Have seisin
Can be inherited
Considered real property

Words of Purchase/Limitation
To Jane and her heirs
"To Jane" Purchase
"and her heirs" identifies estate being conveyed

Fee Simple Absolute "whole bundle of sticks"

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Inheritable
Transferable
Not subject to conditions

Life Estate
Duration limited to someone's lifetime
Fewest rights

Rules:
States remove requirement of "and his heirs"
All grantors interests conveyed unless deed specifies otherwise

Heirs at Law
Person who takes property under relevant intestate statute
Cannot change and have no choice of heirs
Heirs determined at death

Parties in will
Devisee- real property legatee- personal property
Intestate- dying without will, testate- dying with valid will
If will makes no provision who gets property after plaintiff dies, reversion in grantor.

Modern Intestate
Intestate, incomplete will, or reference to one's heirs
Real property within state

Per Stirpes- to representative (per branch)

Per capita- counting total #

Problems Intestate

Freehold Estates
Life Estate "To Jane for life" "To Jane for her lifetime" "To Jane while she lives"
Jane life estate, Grantor reversion in fee simple absolute

To John for George's Life

John has life estate Pur autre vie
Grantor has reversion in fee simple absolute

If George dies before John, grantor's reversion becomes possessory.

If John dies before George
- Estate treated as John's personal property

Life Tenant Duty

Life tenant owes quasi-fiduciary duty- obligation to put other parties interest above life tenants.
Quasi- tenant can still use land and profit from it.

Waste
Voluntary- commissive (intentional)
Involuntary- permissive (fails to exercise reasonable care)
Meliorating- waste in attempting to improve property

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Meliorating- waste in attempting to improve property

Terms
Probate- process which property distributed
Testator/Testatrix- executor of will

Fee Estate
Can last forever potentially

Defeasible Estates- that which can be undone or made void

Concept of waste does not apply with defeasible estates

Fee Simple Determinable- estate for limited purposes automatically terminate

Jane and her heirs so long as… but upon breach automatically reverting back to grantor
Until, during, while, unless

Grantor owns possibility reverter

Fee Simple Subject to Condition Subsequent

Estate with limited purpose that can be terminated by the grantor if purpose is violated

John and his heirs upon the condition that… but upon breach grantor may reenter estate.
Provided that, but if, on condition that, provided, however.

Grantor has power of termination.

Expires when statute of limitations is up
Reasonable period of time after condition breached
Cumulative requirements

Legal Differences

Adverse possession determinable begins when condition happens

For a condition subsequent does not begin until power of termination exercised

Determining what Grantor Wanted

Intent of grantor as expressed in deed
If deed is unclear court will choose estate least likely to lead to forfeiture
Determinable less likely
Subject condition subsequent
Restrictive covenant- most likely

Precatory Language: statement of request that lacks legal effect

"To John and his heirs so long as land is used as school, but if not to Jane and her heirs

John holds- fee simple subject to executory interest

Jane holds- executory interest

Fee Tail

To Jane and Heirs of Her Body

Heirs of her body- fee tail

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Heirs of her body- fee tail

Jane takes life estate and lineal descendants take remainders in fee tail

Grantor Holds reversion which becomes possessory if bloodline runs out.

US interpretations

Grantee fee simple absolute

Massachusetts- recognize but grantee can convey fee simple absolute when he chooses

Failure of Issue
Definite failure of issue- grantee dies without children (defeasible or executory)
Indefinite failure of issue- grantees line runs out in future (fee tail)

Problems
a. O conveys to A and his heirs so long as the property is used as a residence
b. O conveys to A and her heirs on the express condition that Blackacre be used only for residence
purpose, but if it ceases to be used for such purposes, then O and her heirs shall have right to reenter
c. O conveys "to A provided that the estate granted shall cease and determine if liquor is sold, used, or
stored on premises.
d. O conveys, "to A and his heirs, it being my wish and purpose in making this conveyance that the
property be used for residential purposes."
e. O conveys " to A and his heirs, provided further that O and A agree and promise to make the property
shall only be used for residential purposes."
f. O conveys Blackacre "to A so long as he wishes to live on the property."
g. O conveys Blackacre "to A provided that he lives on the property, but he does not live there then to O."
h. O conveys "to A for life then to B if graduates from law school, to B and her heirs so long as the land is
used for a law office." What interest do parties have before B graduates from law school?
i. What interest do the parties have in h when B graduates from law school?

Future Interests
Any estate which has no current possessory rights.

Grantor Future Interests

Possibility of Reverter: fee simple determinable
Power of termination: fee simple subject to condition subsequent

Future Interests of 3rd parties

Remainders: follow interests less than fee simple (life estates, fee tails, terms of years)
Follows natural termination and does not divest or cut short prior estate
Owner takes possession immediately (no gaps can occur)

Executory Interest
Statute of Uses
To John and his heirs for the use of Jane and her heirs.
Use is mere legal title to avoid tenure duties

Trust
Allows one person to hold and maintain property for benefit of another
Trustee/beneficiary (creator of trust is settler)

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Executory limitations interests created by deed
Executory divises created by will

Future interest in 3rd party that divests or cuts short a prior estate
Follows defeasible fees
Fee simple that may divest in favor of 3rd party is called fee simple subject to an executory limitation
Same language as determinable except divests to 3rd party, not grantor

Vested Remainders
Owned by ascertained persons and is not subject to condition precedent
All present interests are vested

Contingent Remainders
One or more persons in unascertained or possession of property is subject to condition precedent
(contingency)
Cannot be seized to pay debt
Quitclaim deed cannot convey contingent remainder
Special rules apply

Ascertained Persons
Name of person

Unascertained
Unborn persons
Heirs
A's widow

No condition Precedent
Even that must occur before an interest becomes vested.
Example: O conveys to Blackacre to A for life, then, if B survives A, to B and her heirs.

Condition subsequent
Determinable, condition subsequent, executory limitation
The holder can be divested if a condition develops.
Example: O conveys to Blackacre to A for life, then to B and his heirs, but if B does not survive A, then to C
and his heirs.

Interpreting Grants
Read in order written
Comma and semi colons
Order in which grant is written can change type of interest created

Alternative Contingent Remainders

If grantor makes no provision, grantor retains reversion
Grantor may provide that another take if contingency fails creating an alternative contingent remainder

Executory Interests
Springing: divests or cuts short grantors fee simple
O transfers Blackacre to B to take effect if and when B agrees to farm Blackacre.

Shifting: fee simple determinable/ condition subsequent called fee simple subject to executory limitation

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Shifting: fee simple determinable/ condition subsequent called fee simple subject to executory limitation
when 3rd party takes the interest.

O transfers to Blackacre to A as long as Blackacre is used for farming, then reverts to O.

Vested Remainders
No condition precedent
Holders are ascertained

Indefeasibly vested remainder

: A for life, remainder to be and her heirs
Certain to become possessory
Interest cant be divested
Not worry about class gifts
O conveys to A for life , then to B and her heirs

Vested Remainder subject to Divestment

Determinative condition is condition precedent or condition subsequent
O conveys to blackacre to A for life , then to B and her heirs, but if B does not attain age 21, to C and his
heirs. Divesting occurs after clause granting B her interests.

Vested Remainder subject to Open

"my son Albert, for life, then to Albert's children." Remainder to Albert's children is a class gift since it is a
group of persons identified by description rather names.

Class Closing
Class closes naturally when no one else can be born into that class
Class Closing Rule of Convenience: class closes whenever any member of class can demand possession or
distribution. Class does not necessarily close when person

Doctrine of Destructibility: Contingent remainder destroyed if it has not vested at or before termination of
all preceding life estates and term of years.

1. Only to contingent remainders

2. Does not apply to equitable interests (trusts)
3. Does not destroy executory interests

Rule can be avoided by structuring as grant of a term of years rather than life estate.
Rule not factor in majority of states.

Example: To john for Life, then to jane and her heirs if Jane passes the bar
Applies: if john dies before Jane passes bar contingent remainder destroyed
Not Apply: If Jane ever passes the bar remainder becomes possessory.
If Jane dies then condition failed absolutely.

Merger Rule
Vested life estate and next succeeding vested estate owned by same person the two estates are merged into
one.
Used anytime someone has reversionary interest and a possessory estate.
Two vested estates must be acquired at different times.
Reversion becomes possessory because contingent not satisfied
Conveys reversion to party with possessory estate

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Doctrine minority Rule

Examples: O conveys Redacre to A for life, then to B for life, then to C. A obtains C's vested interest.
No merger because B's future interest is vested not contingent.

O conveys Greenacre to A for life, then to B for life if she attains age 21, then to A.
No merge because 3 estates created in same document

Rule in Shelly's Case

1. Freehold estate given to first transferee

2. Remainder limited to heirs of first transferee in same instrument
3. Freehold and remainder of same quality (both legal and equitable)
Intervening estates are disregarded
A for life, remainder to A's heirs.
Rule abolished in majority of states

Examples
To Jane for life, then to John for life, then to the heirs of John and their heirs.
Invokes
Future interest in freehold is freehold estate

Doctrine of Worthier Title

To grantee for life, then to Grantor's heirs and their heirs.

Interpreting
Rule of Law: cannot transfer remainder interest to his or her heirs
Rule of Construction: can do so if provided intent

Intervivos
Rule of Construction: intervivos conveyance to person with remainder or executory interest to grantor's own
heirs or kin no future interest is created in grantor's heirs, rather grantor retains reversion.

To avoid specifically name person.

Testamentary Branch
No longer applies to wills and most jurisdictions have abolished

Rule Against Perpetuities: No interest is good unless it must vest, if at all, not later than twenty one years
after some life in being at the creation of interest.

Concurrent Ownership
Tenants in common- created by default
Share in rents and sales proceeds according to respective property interest
Interest in common is assignable (transferable), devisable, and inheritable. Transferees become tenants in
common with remaining tenants in common.
Co-Tenant can mortgage interest in property

Joint Tenancy with Right of Survivorship

Last surviving joint tenant owns the property outright and may sell or devise the property

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Four Fold Unities: if broken joint tenancy severed becomes tenancy in common
Unity of Interest- tenant must own an equal share
Unity of Title- Each tenant must have received an interest in same conveyance
Unity of Time- each tenants interest must have vested at same time
Unity of Possession- each tenant must be seized of the entire estate

Absolute Rule no longer the law either for creating or destroying joint tenancies in many states.
Unity of Title still required in some states
Two or more persons inheriting same property become tenants in common.

Creation: Joint tenants- created by clear expression of intent to create a survivorship right. "A and B as joint
tenants, with right of survivorship in a grant."

Right to survivorship
Cotenant automatically vested in share of cotenant who dies
Both joint tenancies and entirety have survivorship rights

Severance: severance turns a joint tenancy into a tenancy in common between severed interest and
remaining joint tenants.

Examples
O, the holder of fee simple absolute in Blackacre, conveys "to A,B, and C, as joint tenants with right of
survivorship." Five years later C conveys to D. The deed to D is a severance of D's interest in joint tenancy.
A and B continue in joint tenancy with each other, but are tenancy in common with D.

Severance important in joint tenancy with right of survivorship; keeps one joint tenant from passing interest
to someone younger.

Most common voluntary severance occurs when one joint tenant unilaterally transfers her interest to
another person.

Mortgages
Vast majority are lien theory states. Title remains with debtor
Lesson: lenders should have all joint tenants sign mortgage.

Mortgages
Majority-Title Theory
Mortgage is a lien (security device; not conveyance of land)
Foreclosure legal title conveyed at that time
Mortgage is paid off then lien is extinguished

Minority Rule
Mortgage is Conveyance of an Estate
Fee holder maintains equity of redemption.
Foreclosure then equity of redemption extinguished
When mortgage is reconveyed from bank to fee holder

Severance of Tenancy
Conveyance
Killing or attempting to kill cotenant

Joint Tenant unilaterally can sever joint tenancy by transferring her interest to third party

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Tenancy by the Entirety
Limited to husband and wife who own property as unit, not by equal shares
Divorce terminates tenancy.
Neither spouse can seek judicial partition
Creation: Grant to husband and wife is presumed to create a tenancy by the entirety
"H and W, husband and wife, as tenants by the entirety."

Majority of states creditor can foreclose on tenancy by entirety only if both spouses liable for debt.

Tenants by the entirety- conveyance to husband and wife identified as such

Tenancy by Entirety- also be married

Tenants by entirety can be joint tenants

Joint Tenants can be joint tenants
Tenants in common cannot be joint tenants

Characteristics of Tenancy by entirety

Creditors of one spouse can only attach survivorship right. Only value if debtor survives his spouse
If one spouse destroys property without permission courts regard as severing tenancy
Historically real property but some jurisdictions allow personal

Relationship of Cotenants
If Cotenant pays more than proportional share of debt then he or she is entitled to contribution from other
cotenants.
Rule used for any expense that is common to entire estate
Fiduciary Duty does not apply to charges against cotenants share rather than entire estate

Examples
House is held by two tenants in common, John and Jane, but is occupied by a renter, Susan
Susan pays rent money to John; is John free to keep the money? No, Jane is entitled to 1/2 net rent after
expenses are deducted.

A house is held by two tenants in common, John and Jane

John occupies the house. What is Jane entitled to?
Nothing, cotenant not obligated to pay other cotenants rent for occupying the premises as all cotenants have
co-equal right to possession.

Relationship Between Co Tenants

If co tenant pays more than proportionate amount he or she is entitled to contribution by other co tenants
Any expense common to entire estate
Fiduciary duty

Limits
Does not apply to charges against co tenants share rather than against entire estate
(tenants in common: Jane mortgages 1/2 interest, defaults on mortgage, buys 1/2 undivided interest at
foreclosure sale)

If tenants in common rent out 1/2 net rent after all expenses

But not obligated to pay each other rent

Accounting
If cotenants owe each other obligations action of accounting brought

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If cotenants owe each other obligations action of accounting brought
Accounting action often coupled with partition action

Surrendering Right of Partition

Intent to surrender right must be clearly stated in writing
Right of partition can only be surrendered for a reasonable period of time

Adverse Possession of Co tenants Share

Must ouster cotenant and prevent from entering possession of estate
Many jurisdictions require notification of cotenant of ouster

Marital Property
Mostly abolished
Dower 1/3 or 1/2 of life estate in all spouses real property.
Spouse cannot defeat by selling or mortgaging property

Needs:
Valid Marriage
Decree in divorce distinguishes dower claim
Sole and beneficial seisin in deceased spouse
Applies to (determinable, subject condition subsequent, or executory limitation, legal estates)

Condominiums
Real estate
Sole interest in unit and tenancy in common in common elements
Board of directors only control purchasers by exercising right of first refusal, and only mod to common
elements.

Cooperative
Intangible property cannot mortgage
Shares of stock in corporation
Proprietary lease to occupy unit
Board of directors holds most power (who buys, all mods, terminate cooperative)
Time Shares
Either condo or cooperative
Owners rights limited to specific period of time
Vacation property
Financial disaster for unit owners

Common Elements
Anything in master deed
Typical common elements: parking lots, side walks, roof, foundations, swimming pools

Absolute restraints on alienation are void but reasonable are enforced (limited period time, justified reason)

Landlord Tenant Law

Non Free Hold Estate
Set period of time
Chattel real (personal property)
Created by property/contract law

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Modern law seeks to protect tenants

Leasehold estate if legal interest that entitles tenant to immediate possession for fixed period or for so long
as tenant and landlord desire
Right to exclusive possession

Categories

Terms of Years
Definite term of duration
Definite ending date even if starting date is uncertain
Tenancy expires automatically without any notice of termination

Periodic Tenancy
Successive units of time until either party terminates. Month to month lease
Terminate tenancy by giving advance notice

Tenancy at Will
No fixed duration and only as long as landlord and tenant desire. Arise from implication if tenancy is not
years or periodic.

Tenancy at Sufferance
Wrongfully continues possession after right to possession ends
Only right is to await sheriff's eviction and access to critical services

Holdover tenant
Landlord either makes tenant in suffernace or periodic tenancy extension not to be over one year or over
original contract.

Creation of Tenancy
The Lease
Statute of Frauds: anything more than one year requires writing agreeing on definite space, time, and agreed
rental amount

Selection of Tenants
Fair Housing Act 1968: no discrimination against people on race, color, religion, sex, family status, national
origin, handicap.
Must be protected class and discriminated because of the above

Tenants Duty to Pay Rent

Some states enact rent control ordinances: limit amount of rent landlord may charge
Defined by lease
Rent obligation in commercial is complex

Landlord's Duty to Deliver Possession

English (Residential Majority) : actual possession (tenant can actually possess) of leased premises
American (Commercial Majority): legal possession (right to sue holdover) of leased premises

Covenant of Quiet Enjoyment

Free from adverse conduct by landlord and claims of title.
Adverse conduct of third parties not covered
Only applies to initial possession

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Only applies to initial possession

Duty of Continued Operation

Factors
Implied in commercial sector if % of sales and no substantial min rent is due
Non Compete Clauses

Limitations on Use of Premise

Language must be mandatory and exclusive
"used for purposes of bookstore" is only permissive

If tenant misrepresents intentions and purpose then landlord can void lease

Conditions of Leased Premises

Constructive Eviction: wrongful conduct of landlord substantially interferes with use and enjoyment of lease.
If repairs landlord must repair in reasonable time after notice.
Tenant cannot repair premises and must move out to complete constructive eviction
"most courts now allow partial constructive eviction: moving out of part of lease.

Independence of Covenant Doctrine

Tenant responsible for all repairs; buyer beware majority rule for commercial leases.
Obligation to repair is separate from contract of lease therefore tenant cannot withhold rent.
Trend is towards abolishing rule but still minority

After Independence of Covenants Abolished

Some states allow commercial tenant to apportion rent but only significant breach
Other states allow apportion rent for any breach of covenant in lease
Others allow commercial tenant for any breach of covenant or implied warranty of suitability.

Implied Warranty of Habitability

Landlord to maintain residential premises to at least level specified in the local building, safety and health
codes
Most jurisdictions recognize implied warranty
Applies to commercial tenancies

Remedies
Tenant entitled to damages equal to amount needed to fix the defective condition and that amount.

Implied Warranty of Suitability

Commercial tenancies
Growing majority of jurisdictions accept
Can be waived by tenant unlike habitability

Landlord Liability Personal Injuries

Require residential landlord to exercise reasonable care to prevent injuries

Fixtures: personal property affixed to realty; attached physically and permanently if objects removal would
substantially damage. "Screw in test"

Trade Fixture: tenant can remove if for purpose of trade and would not materially damage
Traditionally if lease renewed and specific reservation of tenants rights not made, title of trade fixtures
transfers to landlord.
Slight majority of states have abolished rule.

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Slight majority of states have abolished rule.

Warranty of Suitability
Commercial and can be waived

Transfers of Leases

Privity of Contract and Estate

Privity of Contract: legal relationship existing between both parties.
Privity Estate: mutual immediate interest in leased premise. Permits landlord to collect rent.

Assignment and Sublease

Assignment is the transfer of entire remaining term

Sublease is transfer of only part of remaining term

Traditional Rule: transferring lease for even one day less than remaining time of lease results in sublease
rather than assignment. Irrespective to intent.
New York Rule: sublease if grantors leaves any reversionary interest (i.g. right to terminate)
Contractual Rule: Intent of Parties

Assignment
Creates triangle relationship. Privity of contract with original lessee but privity of estate with both lessee and
assignee.

Rights and Duties

Assignor liable for original lessor for all covenants in original lease.

Sublease
New landlord tenant relationship created.

Rights and Duties

No obligation of lessee to original lessor.
Lessor still in Privity of contract and estate with original lessee, not new lessor and therefore cannot collect
rent.

Original Tenant liable for all payments to landlord under term of contract.

Tenants Right to Assign or sublease

Dumpors Rule
If landlord has right to approve assignment or sublease once landlord does so all future assignments and
subleases can be done without consent.
Only overcome if lease is clear that right to approval applies to first lease and all thereafter.

Reasonable Consent
Majority: Landlord does not have to be reasonable in granting consent
Minority Rule: States trending towards reasonableness

Transfer by the Landlord

If landlord conveys interest all they is conveyed is only reversion. Vested future interest

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If landlord conveys interest all they is conveyed is only reversion. Vested future interest

Termination of Tenancy

Eviction Actions

Landlord cannot engage in self help and must use court process
Notice of eviction and if tenant does not leave by date or conditions formal suit.
Expedited and limited Summary Actions

Result
Judgment of possession followed by an execution involving sheriff.

Retaliatory Eviction Defense

1. Tenant must have made prior complaint regarding housing code violation
2. At least partial result of complaint landlord seeks eviction
Defense is never barred
Conduct that Triggers Defense
Restrictive states limit defense to tenants who complain to government agency only
Intermediate states allow defense because of any housing related action taken
Liberal states allow assertion of any statutory or constitutional right

Abandonment of Leasehold
Traditional Rule
Landlord can leave premises vacant and hold tenant responsible for all rent
If landlord goes back into possession reversionary interest and possessory estate merge and nonfreehold is
extinguished.
Landlord can take lease as agent of tenant but owe fiduciary duty.

Modern Rule
Landlord must mitigate damages
Landlord must go back into possession of premises when tenant abandons
Must attempt to relet premises to lessen the defaulting tenants damages
Landlord entitled to stipulated rent less the rent landlord received or should have received in mitigation

Security Deposits
States penalize landlord for failure to return security deposits
Deposit to be held in escrow so landlord cannot touch
Laws clarify whether deposit can be used to pay last months rent

Easements, Restrictive Covenants, and Equitable Servitudes

Easement: interest in land possessed by another allowing limited use or enjoyment of land
Easement is a property right
Rights

1. Protected from interference by others

2. Not subject to will of title holder
3. Interest not right extended to all non-possessors
Not riparian rights, or rights regulated ad hoc.
4. Interest can be created by conveyance

Easement Vocab
Affirmative easement: allows holder to do things on others land

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Affirmative easement: allows holder to do things on others land
Negative easement: allows holder to prevent land possessor from doing certain things
Appurtenant: benefits and burdens neighboring estates.
Rule of construction favors appurtenant.
Easement in gross: does not benefit neighboring estate; instead individual benefits
Not favored by courts
Some states only allow utility companies, railroads to hold in gross.

Dominant Estate: one that benefits from appurtenant easement

Servient Estate: estate burdened
Profit: right of non-title holder to enter land and remove certain items

Courts will favor appurtenant easements over easements in gross

Specific language will be given more importance than general language

License
Contract right now property interest
Subject to will of the land title holder
Usually not enforced in equity

Irrevocable License
Most jurisdictions do not recognize irrevocable license since falls too close to easement
If plaintiff knew of money or investment and was benefitting from, estopped from exercising termination
rights.

Creation of Easements
Expressly in a deed- Primary Rule grantor's intent
By necessity for access
By implication through land use
Prescriptively through adverse Use

Some states also recognize customary rights- easement like rights to public.

Easements by Necessity
UN(ie)
1. Original Unity of ownership between to parcels
2. Strict Necessity; No other means exist for access to public road except over other parcel
Will exist for reasonable necessity or convenience.

Exist by necessity inchoate (unexercised until needed)

Easement by Implication
UVPN (acronym: unity, prior use, visible apparent, reasonably necessary)
(i.g. reference to map, how land used before created)

1. Common ownership of dominant and servient followed by conveyance of one or other.

2. Before severance use of dominant estate of land inside servient estate
3. Use was Apparent obvious, continuous, and permanent
4. Claimed easement necessary and beneficial to dominant estate

Preventing: prevent easement by including language in deed to that effect

Easements by Prescription
Use of claimed easement, openly, adversely, continuously, uninterrupted, and under claim of right for period

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Use of claimed easement, openly, adversely, continuously, uninterrupted, and under claim of right for period
of more than given in statute of limitations.
Elements
Openly- use must be apparent and visible; not secretive (landowner notice/ should notice use)
-Adversely- use must be against title of fee holder- also beyond scope of use
Continuously- use must be constant- as to a reasonable easement holder's use.
Uninterruptedly- use must be continuous and regular
Under claim of right- intentional trespassers may be excluded

Not necessary for exclusive possession

Lack of Consent Critical: someone using another's land permissively then license exists
Cannot develop under license unless:
License revoked by licensor
License repudiated by licensee

Minority of states require Acquiescence or passive assent or submission. Consent by silence.

Servient estate holder must actually constructively know of adverse use and not object.

Customary Rights
Elements
Long and general use of servient estate
No interruption
Without dispute
Reasonable use of land
Limited to particular area of land
Consent of title holder was never required
No other laws violated by use

Minority view of courts.

Littoral Rights (Ocean front estates)

Majority Rule: owner has estate title up to mean high tide line
Minority Rule (MA): owner to mean low tide line.

Limitations on Use of Easement

Easement only be used by appurtenant dominant estate
Cannot benefit non dominant estate even if owned by same person.
Character of use of easement cannot change from what was granted
If use creates unreasonable burden on servient estate

Divisibility of Easement
Allows transfer from current dominant owner(s) to greater number of dominant owners
Unreasonable increase in use of easement is surcharge.
Courts require new owners to use easement collectively rather than individually
Divisibility Summary: 1. dominant owner 2. same use. 3. reasonable divisibility.

Interpreting an Easement
1. Implementing wording that created easement 2. If there are gaps use Rule of Reasonableness to
determine balance between dominant and servient estates. Both interests are viewed for Rule

Moving an Easement
Traditional Rule: cannot be moved
Trend Rule (MA rule): allows servient to move if not going to harm dominant estate

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Trend Rule (MA rule): allows servient to move if not going to harm dominant estate

Use of easement evaluated contemporary standards

Termination of Easement
Express: dominant estate holder conveys a release to servient estate holder
Merger: dominant estate holder acquires both titles
Abandonment: dominant estate stops using easement with objective intent to abandon
Prescription

Real Covenants and Equitable Servitudes

Real Covenant must run with the land
1. Touch and concern the land
2. Be entered with the intent that the promise will run with the land
3. Be entered and enforced by parties with the appropriate privity.

Traditional View
If covenantors estate is rendered less valuable because of promise burden runs with the land
If covenantees estate is rendered more valuable because of the promise, benefit runs with the land.

Restatement
Requires promise be of benefit to use or enjoyment of land

Intent to Run
Parties must have intended promise to run with the land
(Express Intent: run with land)

Privity
Mutual Privity (English Rule)
Original parties had continuing interest in same land

Horizontal Privity (Minority American)

Original parties were grantor and grantee on a deed contained promise

Vertical Privity (Majority American)

Enforcement parties are successors in interest to original contracting parties- no specific relationship needed
between original contracting parties.

Majority of jurisdictions discharge grantor from benefit or burden of real covenant upon conveyance.

Equitable Servitude
Broadly fills in gaps of covenants
When promise cannot be enforced as real covenant because of insufficient privity it will be enforced as
equitable servitude

Equitable Servitude in Gross

Many jurisdictions will not enforce an equitable servitude unless it has both the promisor's burden and the
promisee's benefit run with the land.

Other jurisdictions do not enforce.

Implied Reciprocal Negative Easement

Allow enforcement of restrictive covenant that is not included in deed

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Allow enforcement of restrictive covenant that is not included in deed

Invoke theory: common owner of restricted and unrestricted lot

Purchased with actual or constructive knowledge of restriction

Effects of Common Scheme

If lots are developed in a common development each lot considered dominant and servient on any restrictive
covenants or equitable servitudes established.

Constitutional and Public Policy Limitations

Cannot violate constitution, statutory law, and some states extend to public policy.

Construction of Real Covenants

Some states view as contract and thus interpret intent.

Others disfavor and narrowly construe

Amendment Rights
Real covenants that can be amended will run provided there is a mechanism for exercise of rights
a. Reasonably and in good faith and does not act arbitrarily or capriciously
If Developer keeps rights to amend covenant will not run with the land

Termination of Restrictive Covenants

Express termination- some designed to expire or covevantees can release voluntarily
Waiver- fails to enforce covenant. (narrow waiver application)
Abandonment- not enforced with objective intent to never enforce again.
Changing Use- use changed to such extent that enforcement no longer justified.
Must be inside of development not outside.
Limits on Changing Use
Does not termination just unenforceable in equity
Does not allow rewrite of restrictive covenant by courts
Only applies to real covenants, equitable servitudes, but not easements.

Fee Title Land

Support of Land

Lateral Support: adjacent land that is separated by a vertical plane.

Subjacent Support: support of land separated by horizontal plane. (i.g. removing coal from below)

Liability for Removing Support: owner liable for collapse if land would have collapsed in its natural state.
Strictly liable
Majority Rule: strictly liable for all damages
Minority Rule: only strictly liable for damages to the land
Does not apply to significantly changed land, landslides, pumping water.

Negligent Liability
If no strict liability then negligence can be found
If land would not have collapsed in its natural state negligence must be shown.

Two Tests
Unnecessary excavation: balance between value excavation v steps taken to protect supported land.
Risk of Harm: balance between risk of collapse v cost of prevention

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Risk of Harm: balance between risk of collapse v cost of prevention

Water Rights
Law of water rights depends where water located
(Drainage; precipitation, watercourse; fresh water, aquifer; groundwater, littoral; ocean)

Water in streams, rivers, and lakes

Balances: 1. rights or earlier and later users 2. actual use 3. upstream/downstream rights

Eastern US: riparian rights. Presumes abundance of water and regulates reasonable use.
Western US: priority of appropriation. Presumes shortage of water and regulates on when use began.

Riparian Theories
Natural flow- entitled to water provided natural flow of watercourse. (places with abundance water source)

Reasonable Use- each owner right from others unreasonable use of water which would cause harm to own
reasonable use of water. (majority view)

Riparian Rights (Restatement 2nd): Factors; waters use, effects, economic and social value, etc)
Weakness of Riparian Rights System: hindsight and difficulty of allowance of water use.

Riparian Requisites
1. Must be contiguous to water
2. Must be in watershed (area of land drains into particular body of water)

Diversion
Reasonable use test: diversion of water improper unless there is not present or future injury to downstream
riparian holder.
Natural watercourse test: any diversion is improper

Aquifers and Groundwater Use

Common Law- make use regardless of consequences

Restatement- extract for reasonable and beneficial use
Reasonable Use Test- not balancing and as long as water being used for something reasonable.

Trends and Critique

Interrelationship between various locations where water can be found.

Air Rights "Space above surface of the land"

General Rule: free to use airspace however titleholder sees fit.

Anyone else has use must avoid titleholders use

Airspace Rights
Landowner owns at least as much of space above ground as he can occupy or use in connection with land.
Airplane privileged to fly above min altitude of flight (1,000 above ground or any fixture)

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