Table of Contents I. Possession, Competition, and Personhood A. General B. First in Time 1) Conquest 2) Capture 3) Creation C.

Finding 1) General 2) Finder v. Unconscious Possessor 3) Abandoned Property 4) Statutes D. Adverse Possession 1) General 2) Elements 3) Actual Entry and Possession 4) Open and Notorious 5) Adverse 6) Continuous Possession 7) Chattels and Adverse Possession E. Gifts (see IV.A) (Newman v. Bost / Gruen v. Gruen) II. III. The Right to Exclude and Its Limitations Real Estate Transactions and the Recording System A. Sales / Gifts 1) Contracts of Sale 2) Marketable Title 3) Risk of Loss 4) Duty to Disclose Defects 5) Material Defect Known to Seller 6) Warranties from Seller B. Deeds 1) Requirements 2) Warranties of Title 3) Breach of Covenants (Brown v. Lober? And two others) 4) Delivery (review book cases?) C. Financing D. Recording System E. Chain of title Problems 1) General 2) Protected Persons 3) Inquiry Notice 4) Marketable Title Acts 5) Title Registration 6) Title Insurance

4) Rights and Duties of Ownership 5) Leasing 6) Martial Interests 7) Community Property B. Easements 1) General 2) Types 3) Easements Appurtenant 4) Easement in Gross 5) Creation 6) Creation by Implication 7) Easements by Prescription 8) Assignability of an Easement in Gross 9) Scope 10) Termination C. Real Covenant 1) General 2) Equitable Servitudes 3) Enforceability 4) Inquiry Notice 5) Affirmative Covenant D. Servitudes in Gross E. Termination of Servitudes F. Homeowners Associations VI. Landlord-Tenant Law and Housing Discrimination A. Leasehold Estates 1) General 2) Types of Tenancies 3) Lease 4) Tenant Selection (discrimination) 5) Landlords Duty to Deliver Possession 6) Assignment and Subleasing 7) Abandonment B. Landlords Duties 1) Quiet Enjoyment / Constructive Eviction 2) Illegal Lease Agreements 3) Implied Warranty of Habitability 4) Tort Liability C. Tenants Duties and Obligations 1) Duty to Repair 2) Duty Not to Commit Waste 3) Duty to Pay Rent D. Government Intervention 1) Tenant Selection 2) Rent Control 3) Chicago Ordinance 4) Government Subsidized Housing VII. Nuisance, Zoning, and Land Use Regulation A. Nuisance 1) Private 2) Public 3) Unintentional Act 4) Compared to Trespass 5) Negligence (not element if act is intentional) 6) Remedies B. Zoning 1) General 2) Administration of Zoning Ordinances 3) Nontraditional Zoning Objectives C. Land Use (???)

IV. The Right to Dispose (Gifts, Possessory Estates, and Future Interests) A. Gifts B. Possessory Estates 1) General 2) Fee Simple 3) Feel Tail Estate 4) Life Estates 5) Defeasible Estates C. Future Interests 1) General 2) Grantors 3) Grantees 4) Trusts 5) Destruction of Contingent Remainders 6) Rule Against Perpetuities V. Common Ownership, Servitudes, and Common Interests Communities A. Co-Ownership 1) Common Law Concurrent Tenancies 2) Severance 3) Partition

VIII. Eminent Domain and Regulatory Takings A. General B. Public Use C. Takings

I. POSSESSION, COMPETITION, CREATION, AND PERSONHOOD A. GENERAL 1. What Is Property? Property is extraordinarily difficult to define. The ordinary person defines property as things that are owned by people. However, the law defines property as rights among people that concern things. a. Bundle of rights: It is common to describe property as a bundle of rights in relation to things. The most important rights in this metaphorical bundle are: 1) the right to exclude; 2) the right to transfer; 3) the right to use 4) the right to possess. b. Real v. Personal property: Real property consists of rights in land and anything attached to the land (e.g., buildings, signs, fences, or trees). Personal property consists of rights in things other than land. There are two main types of personal property: 1) chattels (tangible, visible personal property; such as jewelry, livestock, cars, etc.) and 2) intangible personal property (invisible, intangible things; such as stocks, bonds, patents, debts, contracts, etc.). 2. Theories & Rules: a. First-In-Time (FIT): The first person to occupy or possess something owns it. This theory is a fundamental part of American property law today, often blended with other theories. One major drawback of this theory is that while it helps explain how property rights evolved, it does not adequately justify the existence of private property. Pros: easy to administer, minimizes conflict, encourages initiative, helps to maintain peace. Cons: May not be equitable; may not promote people who would use land more efficiently. 1) First Occupancy Theory: The first person to live in some place/property owns it. 2) First Possession Theory: The first person to seize control of something owns it. b. Labor (Locke) Theory: People are only entitled to the property produced by the mixture of their labor and objects. Unlike the FIT rule, mere occupancy or seizure is not enough to have possession of something. c. Law of Accession: A person (accessioner) who, in good faith, applies labor to anothers property acquires title to the resulting project if this process 1) substantially increases the value of the item or 2) was willful on behalf of both parties. If in bad faith, or not 1) or 2), then owner of raw material takes possession. Labor Theory typically pops up in accession cases, but it is often hard to determine the outcome (i.e. there is not much consistency) d. Utilitarianism: Property exists to maximize the overall happiness or utility of all citizens. Accordingly, property rights are allocated and defined in the manner that best promotes the general welfare of society. This is the dominant theory underlying American property law. e. Hallmarks of Good Legal Rules: Legal rules are preferable (like the rule of increase) if they: 1) Establish certainty while minimizing controversy, 2) Recognize the pre-legal expectations or custom of a particular community, 3) Provide for desirable societal incentives, 4) Do not offend notions of fairness Note: There may be a potential for conflict between a preference for clear rules that give straightforward notice to the public and a preference for flexible standards that may help promote fairness in different situations.

B. FIRST IN TIME 1. Acquisition By Discovery Johnson v. MIntosh (1823): Facts: Johnson (P) inherited a tract of land from his father, who bought the land from the Piankeshaw Indians. MIntosh (D) was later granted title from the United States government. Johnson brought an action to eject M'Intosh from the land. Rule: Land title transfers are only valid when made under the rule of the currently prevailing government. Issue: Are land title transfers from Indian tribes to private individuals prior to the American Revolution recognized in a United States court? Holding & Reasoning: (Marshall, J.) No. Land titles transferred by Indians to private individuals under foreign rule before the American Revolution are not recognized in the United States. Discovery of land brings with it the right to obtain title either by purchase or conquest, subject to the Indians' right of occupancy. However, the treaty ending the American Revolutionary War transferred sovereignty and power of the lands under such transfers from the British to the United States. The land conveyance to Johnson in this case was made under English rule. After the American Revolution, the land came under American rule and thus the transfer to Johnson became invalid under American law. Additionally, in the treaties between the Indians and the United States, the Indians had a right to annul the agreement with Johnson and reserve the land for themselves. However, because they did not do so, there is a presumption that they deemed that transfer to be no longer valid. The court rules in favor of M'Intosh that the transfer from the Indians to Johnson is now invalid. Notes: 1) McIntosh gives us our first glance at Occupancy Theory and the FIT rule, 2) This brings up first possession, which also comes into play regarding capture and creation, 3) According to Labor Theory, indians occupied and whites possessed the land, 4) Abandonment as far as Indians leaving land, and then whites being able to take over. Most landowners in the U.S. trace their ownership (i.e., title) back to grants (or patents, when conveyances of public land from the government) from the United States. The U.S. traces its title, by grant and otherwise, all the way back to the discovery and conquest of America. Both discovery and conquest are terms of art referring to methods of acquiring territory in international law. However, neither of these two modes of territorial acquisition has much immediate relevance today. a. Discovery (passive): Discovery entails the sighting or finding of unknown or uncharted territory and is frequently accompanied by a landing and the symbolic taking of possession. Possession of the discovered land is perfected by settling in and making an effective occupation, in a reasonable amount of time. b. Conquest (violent): Conquest is the taking of possession of an enemy territory through force, followed by formal annexation of the defeated territory by the conqueror. 2. Acquisition By Capture Pierson v. Post (1805): Facts: Post (P) was hunting a fox and Pierson (D), seeing this, captured and killed the same fox. Post brought a trespass suit claiming that he had legal possession of the fox. The lower court found in favor of Post. Pierson appealed. Rule: Property in wild animals is acquired by occupancy, meaning at least mortally wounding or capturing from a distance, and at most physical possession. Issue: Does pursuit of a wild animal vest property rights in the pursuer? Holding & Reasoning: (Tompkins, J.) No. Mere pursuit of a wild animal does not with it vest property rights in the pursuer. To have property 3

rights, one must take possession of the property, or at least make it so it is clear and definite that he will take possession. Post was merely pursuing the fox in question; there is no way he could guarantee that he was going to take possession of the fox. Once Pierson captured the fox and took possession, he became the rightful owner. The decision of the lower court is reversed. Dissent: (Livinston, J.) Property in wild animals is acquired when the pursuer is within reach or has a reasonable prospect of taking physical possession. No one would hunt foxes, or anything else for that matter, if others came in at the last second to take the animal away from the original pursuer. Ghen v. Rich (1881): Facts: Ghen (P) killed a whale for commercial purposes. Several days letter, Ellis found the whale and, contrary to custom, sold it at auction to Rich (D), who harvested the blubber and oil from the whale carcass. Ghen sued Rich seeking to recover the value of the whale. Rule: A person establishes a property right over whales when he takes possession of the carcass and takes practical steps to secure it. Issue: Whether the custom that the finder of a whale notify the whaler of his discovery validly confers a property interest in the whale by the original whaler. Holding & Reasoning: (Nelson, J.) Yes. The court held that killing and anchoring a whale with appropriate indicia of appropriation were enough to establish a possessory right to that whale. A custom under which the first party to harpoon a whale claims ownership of it was held to be dispositive even if the harpoon failed to remain attached to the boat. Also, the industry would suffer if whalers could so easily lose the fruits of their efforts by allowing another party to lay claim to the whales they took the effort to hunt down. Thus, the custom compelling the finder of a dead whale to contact the original whaler established the whalers property claim in that whale, and the blubber and oil therein. Keeble v. Hickeringill (1707): Facts: Keeble (P) owned land where he set up a decoy pond, which he used for the lawful purpose of luring wildfowl to his property. Keeble used the decoy pond as part of a profit-making venture. On three separate occasions, Hickeringill (D) fired off guns near the decoy pond for purposes of scaring away the wildfowl that had gathered there. Keeble sued for damages resulting from Hickeringills actions. The lower court found in favor of Keeble and awarded him damages for the disturbances. Rule: A property owner has a right to make lawful use of his property for profit without malicious interference of others. Issue: Does a remedy exists for a property owner whose use of his property for profit is frustrated by the malicious act of another? Holding & Reasoning: (Holt, C.J.) Yes. A property holder making lawful use of his land is free to do so without interference from others. Where the property owner uses his property for a profit-making venture, it constitutes his trade, and interfering with ones livelihood subjects one to an award of damages. Keeble was making lawful use of his property, for profit. Hickeringills actions improperly interfered with Keebles lawful activities. Hickeringill would have been free to interfere with Keebles business venture by setting up a competing decoy pond on his own property, thus diverting the wildfowl to his own property; this would not have been unlawful. Elliff v. Texon Drilling Co. (1948): Facts: The Elliffs (P) owned a producing gas well under their property in Texas. Texon Drilling Co. (Texon) (D) was drilling on property near Petitioners land. During drilling, a well blew out, causing wells on Plaintiffs land to blow out. The first blow out also caused large quantities of gas and oil to drain from under Petitioners land and escape into the air. The Elliffs brought a negligence suit to recover damages for their lost gas and distillate. The lower court found in favor of the Elliffs, but the Texas Court of Civil Appeals reversed. The Supreme Court of Texas granted certiorari. Rule: Negligent waste or destruction of gas and distillate drained from a neighboring well under the law of capture is not a legal appropriation of those minerals. Issue: Does the law of capture absolve a drilling company's liability for wasted gas and distillate when the gas and distillate was drained from a neighboring well 4

before it was wasted? Holding & Reasoning: (Folley, J.) No. Negligent waste or destruction of gas and distillate drained under the law of capture is recoverable. A landowner has absolute ownership in all gas and distillates underneath his land subject to the law of capture, which asserts that once gas and distillate is reasonably drained from under an individual's property, that individual no longer has title to those minerals and it belongs to whomever's land under which it drains. However, this transfer in title is subject to proper appropriation of the drained minerals. Negligent waste or destruction of the minerals does not produce the same transfer of ownership. Thus, although under the law of capture Texon had a right to appropriate the minerals that drained from the Elliffs' well, this right of appropriation does not extend to negligent waste and destruction of the minerals. Texon was negligent in allowing its well to blow out and this negligence caused the gas and distillate to escape into the air. If Texon had properly appropriated the gas and distillate then they would not be liable to the Elliffs. However, negligent waste and destruction is an exception to the law of capture. Therefore, Texon's drainage was wrongful and it is liable for damages to the Elliffs. The decision of the Texas Civil Court of Appeals is reversed. Notes: 1) Pierson says pursuit alone is not enough to establish possession, and Keeble says that it is illegal to impede with another persons lawful pursuit. Contradiction? 2) Pierson distances itself with Keeble by saying Keeble had possession by ratione soli (according to the soil) Landowner has constructive possession of the wild animals while they are on his land. Landowner loses right when animal takes off, but may lure the animal/resource back. Animus Revertendi: If animal has habit of returning, owner retains title, even when the animal leaves 3) Keeble gives us our first glance at the Abuse of Right Doctrine (below). 4) A pivotal question in any capture case is where the alleged capture(s) took place. In Pierson the capture was on common unclaimed land, thus anyone had a right to the fox; in Keeble the ducks were on Keebles land, and thus were his alone to capture there (Ds scaring was similar to capture); in Elliff the capture was made equitably by the two wells, until Texon infringed on Elliffs right to to lawfully capture (similar to Keeble). 5) Law of capture is concerned with how to handle fugitive resources (such as, animals, oil, & water). a. Rule of Capture - Wild Animals: No one owns wild animals (or fugitive resources) in their natural habitats. Property rights in such animals are acquired only through physical possession. The first person to kill, capture, or mortally wound a wild animal acquires title to it; pursuit alone is not enough. 1) Release or Escape After Capture: In general, ownership rights end when a wild animal escapes or is released into the wild. However, if a captured wild animal is tamed such that it has the habit of returning from the wild to its captor, it is still owned by the captor. 2) Evaluation of the Capture Rule: Today the capture rule is condemned by legal scholars for the same reason that once supported it: it encourages the destruction of wild animals. Modern game laws and other government restrictions have substantially eroded (though not erased) the capture rule. Despite the breadth of these regulations, however, state and federal governments do not own wild animals in a proprietary sense. 3) Rights of Landowners: English law held that the owner of land was in constructive possession of the wild animals on the land. American courts reject this view; here, a landowner owns no rights in wild animals on her land. However, because an owner may bar hunters and others from trespassing on her land, this gives an American landowner the exclusive opportunity to capture wild animals on the land, or Constructive possession, subject of course to hunting laws. 4) Rule of Increase: According to the rule of increase, offspring of domestic animals belongs to owner of mother. We recognized that the rule of increase may be so widespread 5

because it: 1) contributes to economic utility and overall efficiency; 2) is simple, certain, cheap, and easy to administer; 3) is predictable for potential litigants and the broader public; 4) fits in with or takes advantage of existing natural forces or tendencies and human habits, customs, or intuitions; 5) appeals to widespread notions of fairness. Note: Rules which are not supported by all of these considerations may be more controversial, or more inconsistently applied, than the rule of increase. These are not magic words, but simply concepts to help recognize and use arguments that relate to them. b. Abuse of Right Doctrine: An owner abuses his property right when they exercise that right with the subjective intent of harming someone. More recently, however, courts have begun to establish that motive is irrelevant. c. Fugitive Resources: Other resources are often analogized to wild animals because of their fugitive (ability to wander from place to place) status. Thus, the rule of capture has been applied to these resources. 1) Oil & Gas: If a pool of (resource) lies under the property of both A and B, both may drill and pump, and whoever extracts the resource, owns the resource by right of capture. Note: This may cause too many wells, although you may be enjoined from capturing more of the resource than needed, in the interest of conservation. Rule of capture makes it difficult to conserve for the future. When oil is reinjected it is often seen as returning to the state of nature, and thus is no mans property. Many argue that the reinjected oil should be effectively under the control of the person who put it there. 2) Water: The rule of capture plays an important role in the case of water ownership. Early on, water was subject to the Rule of Absolute Ownership, which allowed each landowner over an aquifer of lake to withdraw freely without regard to the other landowners; this was in reality the a rule of capture. In contrast, the Rule of Reasonable Use was more popular in America, and was itself a rule of capture but with the added provision that wasteful uses of water which caused harm to neighbors were considered unreasonable and unlawful. Today, most states are subject to either the Rule of Prior Appropriation, or a Riparian Doctrine, which follow from the Reasonable Use Rule. i. Rule of Prior Appropriation: Popular in where water is scarce (e.g. West); applies to surface water; the first person to put the water to reasonable use has the right of ownership. ii. Riparian Doctrine: Popular in where water is abundant (e.g. East); applies to groundwater; if an individual owns land on a river, he has the right to reasonable use of the water (and underground water). Note: Both systems are essentially laws of first possession, and neither system is perfect; Riparian rights take little or no account of the relative productivity of land the water services, encourage the development of uneconomical parcels of land merely for access to water, and ration poorly when stream levels are low. Prior appropriation encourages premature development and excessive diversion, it also rations poorly when supplies dwindle. d. Law & Economics: Study of the relationship between transaction costs and externalities; in particular, how the external effects of using resources are unlikely to be fully considered through bargaining when transaction costs are high, which increases the likelihood that those resources will be misused. 1) Externalities: The costs or benefits that arise out of your action, and which you fail to fully consider, because some of these costs or benefits fall on other people. 2) Transaction costs: The costs of arranging an offer or deal between parties. 3) Coase Theorem: Demonstrates that in the absence of transaction costs, regardless of the initial assignment of rights and liabilities, parties will reach an overall efficient, value6

maximizing, result. The Coase Theorem, in assuming away transaction costs, helps us see how important transaction costs can be in the real world. Note: Even if we assume away transaction costs, differences in the initial assignment of rights and liabilities may lead to different outcomes (even if those outcomes will be efficient overall). Two reasons for this, which we discussed in greater detail, are: i. Wealth effects: ii. Endowment effects: 4) Law and Economics: Demsetz - A system of communal resources leads to a system where exploitation by one imposes external costs on the other. i. Tragedy of the commons: Commonly held property leads to greater resource consumption and externalities than private ownership ii. Tragedy of the anti-commons: 3. Acquisition By Creation Cheney Brothers v. Doris Silk Corp. (1929): Facts: Cheney Brothers (P) manufactured seasonal silks in various patterns, some of which succeeded commercially and some of which did not. Even commercially successful patterns did not last more than 8 or 9 months on the market. Copyright and patent laws made it impractical for Cheney Brothers to register and protect each print it produced every year. Doris Silk Corp. (D) copied one of Cheney Brotherss successful prints and made it available for less than Cheney Brotherss price. Cheney Brothers sought to enjoin Doris Silk Corp. from using its designs and undercutting its sales. The trial court denied the injunction, and Cheney Brothers appealed. Rule: Unless the common law or statute expressly states otherwise, a mans property interest is limited to physical items, which others are free to copy. Issue: May a fabric design be subject to protection from copying in the absence of copyright laws addressing the situation? Holding & Reasoning: (Learned Hand, J.) No. Copyright laws do not grant the relief that Cheney Brothers seeks, and nothing in the common law provides for it either. International News Service v. Associated Press (1918) does not create a broad common law patent or copyright, for such a holding would conflict with copyright mechanisms established by Congress. Thus, Cheney Brothers has a protected property interest in the actual silks that it produces, but not in the pattern of the silks; the patterns are free to be duplicated and further distributed. The relief that Cheney Brothers sought would effectively grant it a monopoly over those patterns, thereby exceeding the scope of Congresss intention. The trial courts order denying the injunction is affirmed. International News Service v. Associated Press (1918): Facts: The Associated Press (P) and International News Services (D) are both involved in the news collection business. The collected news is distributed by the parties to newspapers around the county. Both parties are in direct competition with each other. The Ds were involved in collecting news posted by the Ps on bulletin boards and newspapers and then reproducing this news as their own work. This action was filed by the Ps arguing that this copycatting of the news constituted unfair competition. The trial court granted a preliminary injunction to AP; the appellate court sustained the injunction; The United States Supreme Court granted certiorari. Rule: A quasi-property right exists in published news such that appropriating the published news gathered by another for further commercial purposes constitutes unfair competition in trade. Issue: Whether a continuing property right exists in published news such that appropriating the published news gather by another for further commercial purposes constitutes unfair competition in trade. Holding & Reasoning: (Pitney, J.) Yes. INS is liable for unfair competition because it interfered with APs quasi-property right in selling its gathered news. A quasiproperty right exists in published news such that appropriating the published news gathered by another for further commercial purposes constitutes unfair competition in trade. While there is no continuing 7

property right against the public in uncopyrighted news matter after it is initially published, a commercial news source does retain rights to the material against other news sources. Competitor news sources owe each other a duty to conduct their own business in a manner that will not unnecessarily or unfairly injure the business of others. When INS takes news gathered and published by AP on a bulletin board and sells it to its own customers without putting in the same level of time, money, and production skill as AP, INS engages in an unauthorized interference with the normal operation of APs legitimate business interest. By taking news gathered by AP and selling it as its own, INS gains a commercial advantage over AP in that it is able to offer its customers an identical product without having to put in the same time, labor, and money to produce it. INS is liable for unfair competition because it interfered with APs quasi-property right in selling its gathered news. The decision of the appellate court granting an injunction against INSs practice is affirmed. Dissent: (Brandeis, J.) Under general public policy principles, once knowledge or communications have been expressed to the general public, the originator loses any property right he or she may have had in the knowledge or communications. The knowledge and communication cease to be considered property, as they can no longer be owned and protected by the originator. As such, they also cannot be appropriated by another in unfair competition in trade. When AP published its news on a public bulletin, it gave up its property right in the news matter. Thus, INS cannot be liable for unfair competition by taking and selling this news matter to its own customers. This result is necessary as a matter of public policy. International News Service v. Associated Press o INS brought suit against AP seeking injunctive relief on three counts That AP stop bribing employees of INS newspapers to send them information on news stories That AP stop bribing INS employees to send them news information so that they can publish it in AP newspapers That AP stop copying news from bulletin boards and early editions of newspapers from east coast cities before they are sent to the west coast o The court granted the injunctive relief on the first two counts, but not on the third o They found that there was a difference between rights relating to individuals and rights relating to competing businesses o Property is construed as a bundle of rights pertaining to the interests people have to property o In the case of INS and AP, since they were competitors in the same field, the interest that INS maintained in relation to the news was different than a person on the street would, and the interest that INS has is in the news is protected The question here is not so much the rights of either party as against the public but their rights as between themselves the property (news) must be termed quasi property, irrespective of the rights of either as against the public o The test should not be applied as against the public, but the two competitors as against each other - Cheney Brothers v. Doris Silks o The case dealt with a silk manufacturer who was suing a competing manufacturer for copying a silk design and undercutting the price o The court found that there was no cause of action here since the materials were not and could not be copyrighted o The court refuses to grant injunctive relief in the case o The court ruled that the creation of additional copyright claims was a legislative matter and not for the courts to decide 8

o The court narrowed the scope if the INS ruling finding that this was not an instance of unfair competition because of the difference between silk manufacturing and distribution of the news Smith v. Chanel o Smith is claiming that his perfume is the equivalent of Chanel No. 5, and sells it at a much lower value o The court finds that such competition is beneficial to the public because it keeps market prices low and products to be innovative o Since the product was not patented, there is no common law claim, so there is no cause of action against Smith Consider the notion of unfair competition in terms of property rights in business o Question of leaning more towards the unfair side or the competition side o Stems from the labor theory There is legal weight to the creation of something through labor o Even Hand admits that it is a shame to turn the plaintiff out of court There are a lot of efficiency based arguments to be made against the copiers o Copying diminishes monopoly and increases innovation and maintains low market price o Some contend that there will still be first mover advantage under this system to maximize utilitarian concepts Notion of public goods o Definition on page 1074 - two characteristics Once it has been provided it is very difficult to prevent consumption Consumption by one person does not diminish the ability of others to consume the same good o These goods should be priced as cheaply as possible, but should not necessarily be offered for free because then no one would take the time to produce it o Generally courts resolve these kinds of trade-offs by allowing copying, but not permitting methods of competition that effectively destroy competition to create these public goods (or methods that destroy productive competition) From Baird: we should consider this on an ad hoc basis Creators to have an advantage, even if it is very brief Two points o The law will permit copying o But it will not permit actions that will destroy productive competition Three aspects of IP to be familiar with o Patents run for 20 years and there is a discretionary process of review o Copyright is lifetime of creator plus 70 years o Trademarks are protected to help consumers identify certain producers with certain markings Moore v. Regents of the University of California o Moore brought a cause of action against Cal. for several claims, among them are unlawful conversion, breach of fiduciary duty, fraud and deceit, etc. o Issue of conversion Conversion is the wrongful exercise of ownership rights over the personal property of another Conversion is a tort that protects against interference with possessory and ownership interests in personal property Moore claims that he continued to own his cells after they were removed from his body at least for the purpose of directing their use 9

However no court has imposed conversion liability for the use of human cells in medical research To establish conversion, the plaintiff must establish an actual interference with his ownership or right of possession. Where plaintiff has neither title to the property alleged to have been converted, nor possession thereof, he cannot maintain an action for conversion Moore did not expect to maintain possession of his cells after removal, so in order to sue for conversion he must have retained an ownership interest in them The court found that Moore did not have a valid conversion claim and the decisions that his arguments were based on were not controlling in this case as they dealt with privacy rights and the right to property interest in ones own image and likeness however only property can be converted, and since he had retained no interest, nor expected to keep interest in the cells after their removal o The patent cannot extend liability for conversion because the patent is not on the genetic material itself (which is a naturally occurring thing and therefore cannot be patented), but the work done on the genetic material by the doctors The patent protects and rewards the inventive effort, not the holding of the stuff to begin with o In this case, the court found that the doctors did breach fiduciary duty by not totally informing Moore about the purposes they were planning to use his cells, however the other claims were not valid Moore o -issue of modern medicine and the rights to personhood o -Modern transferability is not a necessary condition to property rights -ivory or eagle feathers as an example -you still have property rights to them but you cannot sell them (but you can donate them) o -Should body parts be saleable? o -Moore's complaint alleges several things: most importantly conversion o -Conversion claim -the wrongful exercise of ownership rights over the personal property of another -the issue of the case is the conversion claim (for our purposes) and how it pertains to property rights o -Why does the majority rule the way that it does Issues of society - do we have to get consent from everyone to do research on their 'materials;' If we give property rights in things like these cells then that could hinder research and we would all be worse off for it On the individual interest in dignity: imposing liability based on the disclosure arguments is enough - Moore is already protected by the right to disclose arguments that Moore won on The actual product that is created by this research is not subject to Moore's property claims - one can patent the final product and the inventive measure to get it, but cannot patent the raw material The new product is not Moore, but something they got from him Patent law recognizes the inventive effort and that it is something to protect Argument based on a California State Statute Health and Safety Code 7054.4 10

o State statute requires disposal of biological wastes after surgery, which effectively limits a patients control over excised body parts making it tough to recognize property rights over what is basically trash to be discarded o -Arabian's concurring opinion He has a problem with the commodification of the human body that seems to be happening - he is taken aback by what Moore is asking for He supports demurer because the legislature hasn't fully established whether or not there is a claim (similar to Judge Hand's ruling) This is a new kind of claim that we haven't really seen before, and if we recognize property rights there will be a slippery slope in that people will be able to start selling their body parts for profit Arabian thinks that this is a new issue and that the courts should not create new rules before the legislature has a chance to step in He adopts a more restrained approach o -Mosk's Dissent Most important concept is the "bundle of rights" that the claim is based on There are four rights to property o Right to transfer o Right to possess o Right to include o Right to exclude While some of these rights may be limited in some circumstances, this does not mean that there is no property right in these situations Moore should have whatever rights to do what he wants with his own tissue Mosk's theory on Arabian's legislative deference Believes that the court are quite off the hook in a new situation like this Whether this is a new situation, that doesn't relieve the courts of enforcing or even fashioning a judicial ruling Harps on the inadequacy of the non-disclosure action Mosk thinks that liability will be hard to prove without a property right o Mosk v. Arabian and the Bundle of Rights If we recognize these rights we give them the right to sell body parts for profit according to Arabian Acquisition by Find - Armory v. Delamirie o Facts Armory was a chimney sweeper who found a jewel and took it to Delamiries jewelry shop to have it appraised. Delamirie was a goldsmith, and removed the stones under the pretense of weighing the jewel. Delamirie offered three half-pence to Armory for the jewel, and plaintiff refused and demanded the jewel be returned to him. Defendant refused and returned the empty socket Trover Common law action for money damages resulting from the defendants conversion to his own use of a chattel owned or possessed by the plaintiff The damages are measured by the value of the chattel at the time the conversion occurs or the value of the plaintiffs interest 11

o Interest is the value of the chattel discounted by the probability that the true owner will appear and reclaim it o Issue Does the discoverer of lost property acquire absolute ownership and possess superior title against all but the true owner? o Reasoning The discoverer of lost property acquires title superior against all others except the true owner o Analysis Only the true owner has absolute title. A finder of property does not acquire an absolute title. However, the discoverer does acquire a title superior to the rest of the world. In this case, since Armory found the jewel, and since Delamirie is not the true owner of it, Armory has superior title o Conclusion The discoverer of lost property has a title superior to all but the true owner but does not acquire absolute ownership (that is the title of the FIRST finder has superior title against all except the true owner) Bailment o A bailment is the rightful possession of goods by a person (the bailee) who is not the owner A voluntary bailment occurs when the owner of the goods (the bailor) gives possession to the bailee i.e. when you leave your clothes with a laundry, check your coat at a restaurant, etc. o In the case of found goods, the bailment is involuntary from the standpoint of the owner but not from that of the finder, who has, after all, chosen to take possession o By doing so, the finder assumes the obligation of a bailee The obligations differ, holding some to a standard of great care, some (such as finders) to a standard of minimal care, and the balance to an ordinary negligence standard of reasonable care under the circumstances Anderson v. Gouldberg case where the plaintiffs trespassed upon a third partys land, cut down trees, and took them to defendants mill o In an action of replevin (a lawsuit to obtain return of the goods and not damages) the court ruled for the plaintiffs o The question is whether possession of wrongfully obtained property is sufficient title to enable the party enjoying it to maintain replevin against a mere stranger who takes it from him o When it is said that to maintain replevin, the plaintiffs possession must have been lawful, it means merely that it must have been lawful against the person who deprived him of it possession is good title against all the world except those having better title Hannah v. Peel o Facts In 1938 a house was conveyed to Defendant Major Peel, who never lived in the house. In 1940 the home was requisitioned by the government to be used by Plaintiff Hannah, a lance-corporal who served in a battery of the Royal Artillery While there, Hannah found a brooch on the top of a window frame in a remote bedroom being used for a sick bay There was evidence at the time to suggest that Peel had no knowledge of the brooch 12

o Issue Who possesses superior title to a found item: a landowner who has never lived on the land, or the finder of the property on that land? o Rule The finder of property on the land of an owner who has never occupied the land has superior title against the land owner o Analysis (1) a landowner possesses everything attached to or under his land (2) a landowner does not necessarily possess that which his unattached to his land Since the brooch was not attached to the land, and due to the meritorious conduct of the plaintiff, the court ruled in his favor o Conclusion The finder of property on the land of an owner who has never occupied the land has superior title against the land owner o Right to Exclude Right to Exclude I. Introduction notes a. Felix Cohens notion of property as a relationship among people that entitles so-called owners to include (that is, permit) or exclude (that is, deny) use or possession of the owned property by other people II. Jacque v. Steenberg Homes, Inc. a. Facts: Steenberg Homes needed to deliver a mobile home, and the best route to deliver it was over the Jacques land. Steenbergs assistant manager inquired as to how much it would cost to allow the truck to cross the land, and Mr. Jacque refused any amount. Steenberg Homes crossed the land anyway. Jury ruled in favor of Jacque, and awarded $1 of nominal damages and $100,000 in punitive damages b. The Supreme Court has recognized that the private landowners right to exclude others from his or her land is one of the most essential sticks in the bundle of rights that are commonly characterized as property. c. Every person has the right to exclusive enjoyment of his own property for any purpose which does not invade the rights of another person d. However the court found that that right is hollow if the legal system provides insufficient means to protect it i. Jacques have the right to tell Steenberg that they cannot cross the land, and that right must be protected by the state III. State v. Shack a. The right to exclude is not absolute, and the maxim that one may use ones property in such a way as to not harm another means, in this case, that where individuals on your land are entitled to a certain civil right, then the right to exclude does not bar entry of government agents who enter to secure that right for that person b. Property rights serve human values. They are recognized by to that end, and are limited by it. Title to real property cannot include dominion over the destiny of persons the owner 13

Plaintiff informed his commanding officer, and upon his advice, turned the brooch over to the police Since the true owner was not found, two years later, the police awarded the brooch to the defendant, who offered a reward to the plaintiff The plaintiff refused, argued that he had superior title as the finder and sued Defendant claimed he had superior title as it was found in his house

permits to come upon the premises. Their well-being must remain the paramount concern of a system of law. c. The ends of congress in creating the rights would not be gained if the intended beneficiaries could be insulated from efforts to reach them i. A mans right in his real property is not absolute d. The farmer cannot assert the right to isolate the migrant worker in a manner that affects his well-being IV. Reliance interest in property a. When owners grant rights of access to their property to others, they are not unconditionally free to revoke such access. Non-owners who have relied on a relationship with the owner that made such access possible in the past may be granted partial or total immunity from having such access revoked when this is necessary to achieve justice b. When people create relations of mutual dependence involving joint efforts, and the relationship ends, property rights (access to or control of valued resources) must be redistributed (shared or shifted) among the parties to protect the legitimate interests of the more vulnerable persons c. Property rights are redistributed from owners to non-owners: i. To protect the interests of the more vulnerable persons in reasonably relying on the continuation of the relationship ii. To distribute resources earned by the more vulnerable party for contributions to joint efforts; and iii. To fulfill needs of the more vulnerable persons Adverse Possession I. Introduction notes a. Adverse possession functions as a method of transferring interests in land without the consent of the prior owner, and even in spite of the dissent of such owners b. It rests upon social judgments that there should be a restricted duration for the assertion of aging claims and that the passage of a reasonable time period should assure security to a person claiming to be an owner c. The theory upon which adverse possession rests is that the adverse possessor may acquire title at such time as an action in ejectment (or other action for possession of real property) by the record owner would be barred by the statute of limitations d. The policy is to reward those using the land in a way beneficial to the community i. The statute is not to reward the diligent trespasser, nor is it to punish the negligent owner, it is to quiet all titles which are openly and consistently asserted, and to provide proof of meritorious titles, and correct errors in conveyancing e. Holmes the foundation of the acquisition of rights by lapse of time is to be looked for in the position of the person who gains them, not in that of the loser II. Elements of Adverse Possession a. An entry that is: i. Entry is required because adverse possession depends on a statute of limitations running against a cause of action ii. Entry also helps stake out what it is the adverse possessor might end up claiming iii. Some academics hold that entry shows an interloper who at least is working on the property, making it productive, and by these means earning some rights b. Open and notorious i. Entry must be sufficiently open and notorious that they would put a reasonably attentive property owner on notice that someone is on their property ii. This requirement reflects the sleeping principle underlying adverse possession 14

III.

IV.

c. Continuous for the statutory period and i. It must be continuous but not literally constant ii. An adverse possessor is permitted to come and go in the ordinary course, given the nature of the property in question d. Adverse and under a claim of right i. Sometimes expressed as hostile and under a claim of title Nome 2000 v. Fagerstrom a. Case dealt with the question of the true title to a tract of land that the Fagerstroms had been in possession of i. Traditional native land uses involve possession, but not concepts of ownership, however Fagerstrom had exhibited signs of true ownership (improvements on the land, exclusion of others, etc.) b. In order to acquire title by adverse possession, the claimant must prove, by clear and convincing evidence, that for the statutory period his use of the land was continuous, open and notorious, exclusive and hostile to the true owner i. The first three conditions describe the physical requirements of the doctrine ii. The fourth refers to the intent requirement c. Nome argues that the Fagerstroms usage and improvements on the land was not substantial enough to warrant substantial enough activity and that only when the Fagerstoms placed a cabin on the disputed parcel did their possession become adverse d. The court found that whether the continuous and notorious requirements are made does not depend on the existence of significant improvements, substantial activity, or absolute exclusivity i. The conditions of continuity and exclusivity require that the land be used for the statutory period as an average owner of similar property would use it 1. Possession need not be absolutely exclusive, it need only be the type of possession which would characterize an owners use ii. Where physical visibility of possession is established, community repute is also relevant evidence that the true owner was put on notice 1. The function of the notoriety requirement is to afford the true owner an opportunity for notice. However actual notice is not required; the true owner is charged with knowing what a reasonably diligent owner would have known e. The court found that the Fagerstroms established by clear and convincing evidence, continuous, notorious, and exclusive possession for ten years prior to the date that Nome filed suit Manillo v. Gorski a. Facts i. Manillo and Gorski owned adjoining lots. For more than 20 years, steps and a concrete walk leading from defendants house impinged upon plaintiffs land by some 15 inches. At some point, plaintiff filed a complaint seeking to halt the defendants alleged trespass. Defendant counterclaimed for a declaratory judgment arguing that she gained title to the 15 inch strip of land by adverse possession because her taking was not hostile, a necessary element of the cause of action. Plaintiff argued that the encroachment must be accompanied by a hostile intent to invade the rights of another. However, since the defendant was not aware that the steps and path encroached on the plaintiffs lot, but rather erroneously believed that she owned the land, proof of the hostile intent element was lacking. The trial court agreed and entered judgment for the plaintiff. 15

b. Issue i. (1) must be a claim for adverse possession include a knowing and hostile intent to invade? (2) Does a minor encroachment satisfy the open and notorious requirement for adverse possession c. Ruling i. The adverse possession need not be knowingly and intentionally hostile but must be notorious enough to give the true owner actual or constructive notice of the encroachment d. Reasoning i. The court discards the requirement that the entry and continued possession must be accompanied by a knowing and an intentional hostility and hold that any entry and possession for the required time, which is exclusive, continuous,m uninterrupted, visible and notorious, even though under mistaken claim of title is sufficient to support a claim of title by adverse possession. ii. The court held that no presumption of knowledge arises from a minor encourachment along a common boundary. Only where the true owner has actual knowledge thereof may it be said that the possession is open and notorious. Generally, where possession of the land is clear, unequivocal, and immediately visible, the owner may be presumed to have knowledge of the adverse occupancy. However, when the encroachment is small and the intrusion is not apparent, but requires an on-site survey, such a presumption is erroneous. The precise location of the dividing line is then ordinarily unknown to either adjacent owner. Therefore, to permit a presumption of notice in the case of a mior border encroachment not exceeding several feet would require the true owner to be on constant alert for violations. The only method of certain determination would be by obtaining a survey each time the adjacent owner undertook any improvement at or near the boundary, placing an undue and inequitable burden upon the true owner. Thus, we remand this case for a determination of whether plaintiff should be required to convey the strip of land to the defendant e. Conclusion i. The adverse possession need not be knowingly and intentionally hostile but must be notorious enough to give the true owner actual or constructive notice of the encroachment f. Elements of adverse possession in the case i. The entry into and continuance of possession must be accompanied by an intention to invade the rights of another in the lands i.e., a knowing wrongful taking g. The Maine Doctrine i. In order to qualify as adverse possession, the possessor must have the intent to lay claim to the title that is there must be actual hostile intent ii. Mistakenly occupying land believed to be yours does not qualify as adverse possession 1. The court found that this thesis rewards the possessor who entered with a premeditated and predesigned hostility the intentional wrongdoer and disfavors an honest, mistake entrant. h. Connecticut Doctrine i. The act of entry and possession itself is an assertion of title and the denial of title to all others. It doesnt matter that the possessor was mistaken, and had he been better informed, would not have entered the land 16

V.

VI.

VII.

VIII.

i. The court ruled that whether or not the entry is caused by mistake or intent, the same result occurs the actual owner is ousted from possession Notes following Manillo a. Mistaken improvers i. The modern tendency as described in Manillo is to ease the plight of innocent improvers in that case by forcing a conveyance (at market value) of land from the owner to the improver ii. A variation is to give the landowner the option to buy the improvement (at market value) Howard v. Kunto a. Issues in the case i. Is a claim of adverse possession defeated because the physical use of the premises is restricted to summer occupancy? 1. No, the court rejected the conclusion that summer occupancy only of a summer beach home destroys the continuity of possession required by the statute. Possession requires such possession and dominion as ordinarily marks the conduct of owners in general holding, managing, and caring for property of like nature and condition 2. The summer occupancy for over 10 years with the continued existence of the improvements to the land and beach area constituted uninterrupted possession within this rule ii. Can the person with title to track A, and mistaken possession of track B, thinking that it is A, for the purposes of the statute of limitations, use the period that his immediate predecessor, were in occupation of B thinking it was A (where they had title) 1. Yes, the technical requirement of privity should not be used to upset the long periods of occupancy of those who in good faith received an erroneous deed description 2. The requirement of privity is nothing more than a judicial recognition of the need for some reasonable connection between successive occupants of real property 3. Since the defendant had a good faith belief that he was receiving the title to the land he occupies, privity exists Notes following Howard v. Kunto a. Problems: Disabilities i. In every state, the statute of limitations can be extended if specified disabilities are present ii. A disability is immaterial unless it existed at the time when the cause of action accrued b. Typical disability provision i. An action to recover the title to or possession of real property shall be brought within twenty-one years after the cause of action, at the time the cause of action therefore accrues, it is within the age of minority, of unsound mind, or imprisoned, such person, after the expiration of twenty-one years from the time the cause of action accrues, may bring such action within ten years after such disability is removed OKeefe v. Snyder a. Issue 17

i. When did OKeefes cause of action accrue? On the date of the alleged theft in March, or more than six years before the date of the suit via adverse possession b. Ruling i. The statute of limitations is tolled (suspended) if the owner of stolen chattel makes a thorough effort to locate and recover the lost chattel c. Analysis i. The discovery rule states that upon discovery of theft, the status of limitations is tolled (suspended) if the true owner of the chattels makes diligent efforts to locate and recover the lost chattels 1. Diligent efforts a. Reporting the theft to police b. Registering the chattels with a registry so as to notify potential buyers that the chattels may be stolen ii. If OKeefe made diligent efforts, then her cause of action would accrue when she first knew or reasonably should have known through the exercise of due diligence of the cause of action, including the identity of the possessor of the paintings Real Estate Transactions and the recording system Real Estate Transactions I. There are three main points in terms of land transactions a. The chief function of a real estate contract involves smoking out any problems with the property before transfer of title b. See the executory nature of a contract i. The contract is designed to allow the parties to fulfill various contingencies before the contract is finalized: due diligence, surveys, etc. II. The Contract a. The importance of the inspection clause i. Often the most contentious aspect of a sales contract b. Specifies the day of closing, that is when the property will actually be transferred c. Once the contract is signed, then the parties must undertake the next steps to see If the property will be transferred d. Question of what will happen in the event of the buyer backing out, and provisions for the financing and exchanging of money e. How to get out of your contract i. Refuse all demands that the buyer is making (time periods, inspection dates, closing dates and locations, etc.) 1. Try to get the first buyer to back out 2. Or not to fulfill their contractual obligations in a timely manner Licari v. Blackwelder Facts: Appeal by the defendants from the judgment of the trial court awarding damages to the plaintiffs for breach of the defendants duty as real estate brokers to find a buyer for the plaintiffs property at the best possible price, and for acting improperly in dealing for themselves to the financial loss of the plaintiffs Issue: is a broker under any affirmative, legal duty to inform his employer of any facts which might affect the sale of the property in question? Rule: A broker or his agent must act with the utmost good faith towards his principal he is placed under a legal obligation to make full, fair, and prompt disclose to his employer of all facts within his knowledge which are, or might be, material to the matter in connection with which he is employed, which might affect the principals rights and interests, or his action in relation to the 18

subject matter of the employment, or which in any way pertains to the discharge of the agency which the broker has undertaken. Analysis: Upon hearing that a more advantageous sale or exchange can be made, the facts concerning which are unknown to the principle, the broker has the duty do communicate these facts to the principle before making the sale. Failure to do so renders the broker liable to the principle for whatever loss the latter may suffer as a consequence thereof and precludes recovery of any commission for his services. The obligation that existed between the defendants and the plaintiffs imposed upon the defendants the duty to find a buyer for the property at the best price to the plaintiffs based upon the defendants knowledge, advice, and information concerning all material facts affecting the property in question III. Statute of Frauds a. The Statute of Frauds is applicable in all states to any contract for the sale of land or for the sale of any interest in land b. The purpose of the SOF is to make people more secure in their property by making deceitful claims unenforceable c. Sections important to Property Law i. Except for leases less than three years, no interest in land can be created or transferred except by written instrument ii. No action can be brought upon any contract or sale of lands or any interest concerning them unless the agreement upon which such action shall be brought or some memorandum or note thereof shall be in writing and signed by the party to be charged therewith d. Memorandum, in order to satisfy the SOF must specify i. The names of the parties ii. The land to be conveyed iii. The purchase price iv. The signatures of the parties e. Exceptions to the SOF i. Part Performance: specific enforcement of an oral contract of real property can occur if certain actions have been done in good faith of the oral agreement 1. If the act makes sense only as having been performed by one of the parties to the agreement 2. If the plaintiff shows that he would suffer irreparable injury if the contract were not enforced, then the buyers taking of possession along is sufficient to constitute part performance ii. Estoppel: when there is some significant injury that will result from denying enforcement of the oral contract, or else the unwritten contract in violation of the statute of fraud 1. Occurs when one party has been induced by the other to change his position to his detriment on reliance on of the contract 2. It may also apply when unjust enrichment would result if a party who has received the benefits of anothers performance were allowed to rely on the statute Hickey v. Green Facts: Green owned Lot S in Plymouth. On July 11, Hickeys orally agreed to purchase Lot S from Green for $15,000, and Green accepted a deposit of $500. The payee name was left blank because the Hickeys were uncertain whether Ms. Green or her brother was to receive the check. Green later informed Hickey that she no longer intended to sell him the property, and was selling 19

it to another buyer for more money. Hickey, who had sold his home, offered to match, but Green refused. Hickey sued for specific performance Issue: Can specific performance be granted to a party where an oral contract for the transfer of land exists, notwithstanding the SOF, if the party seeking enforcement has substantially relied on the oral agreement? Rule: An oral agreement for the transfer of land is sufficient to overcome the statute of frauds requirement of a writing when there is an oral promise, partial payment, and an act made in reliance thereof is evidenced Analysis: Restatement (Second) of Contracts provides that notwithstanding a failure to comply with the statute of frauds, the party seeking enforcement of the contract for the transfer of an interest in land may nonetheless enforce the contract if he reasonably relied on it and changed his position in reliance thereof such that injustice to him can only be avoided by specific enforcement. An oral promise coupled with part performance is sufficient to overcome the Statute of Frauds. Payment of the purchase price alone is not sufficient to constitute part performance, but payment and subsequent possession of the property by the buyer is Additional Notes: if the party who had purchased the Hickeys house sought possession or enforcement of the contract, then Green should be required to complete the conveyance. If the party did not seek possession after all, then Green must simple refund Hickey the money Walker v. Ireton: an oral agreement to purchase a farm. The seller backed out and the buyer sued for specific performance. The plaintiff had sold his original farm, but did not indicate his intention to sell to the seller, nor did he inform him of the sale. The sale did not constitute detrimental reliance, and the deposit was not sufficient part performance. IV. Marketable Title a. A marketable title is one that is free from reasonable doubt about whether the seller can convey the rights he purports to convey. Thus it is not sufficient that a court would probably hold the title good in a litigation. Instead, the title must be free from reasonable doubt so that the buyer will be able to resell in the future. The purchaser is not required to buy a lawsuit. i. If the seller cannot convey marketable title, the buyer is entitled to rescind the contract b. Defects that would make title unmarketable i. Faults in the chain of title ii. Encumbrances: Mortgage or lien, easements, use restrictions, land use and zoning violations Lohmeyer v. Bower Facts: Plaintiff Lohmeyer entered into a contract to purchase Lot 37 from Bower. The contract provided that Bower would convey the title by warranty deed that is the conveyance was subject to the defendant producing a merchantable title showing it was free and clear of all encumbrances. Lot 37 was subject to a restrictive covenant, which hit violated, so Lohmeyer brought suit to rescind the contract. Issue: Is the title rendered unmarketable when the property is subject to encumbrances, such as the violation of an ordinance or other burdens placed on it? Rule: If title to real property does not expose the buyer to litigation, it is marketable title Analysis: A marketable title is one which is free from reasonable doubt, and a title is doubtful and unmarketable if it exposes the party holding it to the hazard of litigation. To render the title unmarketable, the defect must be of a substantial character and one from which he may suffer injury. A buyer may ordinarily not rescind a contract where the encumbrances are the result of a municipal ordinance, but may rescind a contract based on the existence of private covenants. Since forcing the buyer to correct the violation of having no second story would be overly burdensome and unreasonable, the court permits rescission. 20

Conclusion: if title to real property does not expose the buyer to litigation, it is marketable title V. Equitable Conversion a. Doctrine addresses what happens between the signing of the contract and the transfer of title b. Most courts treat the signing of the contract as vesting in the purchaser equitable ownership of the land, and the vendor is treated as becoming equitable owner of the purchase price c. Rick of Loss i. The question is that in the event that something happens to the land, who takes the loss ii. Most courts hold that since the purchaser acquires equitable ownership of the land as soon as the contract is signed, the risk of loss immediately shifts to him, even if he never takes possession prior to the event d. If equitable conversion has occurred, the sellers interest is personal property, and the buyer is treated as owner of the land VI. Duty to disclose defects a. Latent Defects (exceptions to caveat emptor) i. Most of what caveat emptor deals with are physical defects with the property ii. Fraudulent misrepresentation iii. Act of concealment iv. Confidential or fiduciary duty between the parties to create an expectation of full disclosure v. Affirmative misrepresentation b. When there is a condition that is peculiarly within the knowledge of the seller, and not discoverable under reasonable diligence by the buyer, concealment is grounds for rescission. Stambovsky v. Ackley Facts: Stambovsky (P) bought Ackleys house in Nyack. After purchase, P discovered that the house was reputedly haunted. Defendant had fostered the houses reputation by reporting to local newspapers and including the home in walking tours of Nyack. Plaintiff was not told that the house was haunted. Issue: Under New York property law, can the nondisclosure of a material fact which adversely affects the value of land be the basis for the rescission of the sales contract, where the buyer has acted reasonably and prudently and where the seller has created the material condition? Rule: Failure to disclose a condition forms the basis of rescission where (1) a seller has created the condition which materially impairs the value of the contract; (2) the condition is uniquely within the knowledge of the seller; and (3) the condition is unlikely to be discovered by the prudent buyer. Analysis: The court did not decide whether or not the house was actually haunted, rather it looked at the impact of the folklore that the house was haunted as disseminated and discussed by the defendant. The defendant cannot deny the existence of the spirits, and the house is, as a matter of law, haunted, and the defendant fostered the houses reputation. The proactive fostering materially impacted the houses marketability. Caveat emptor is applicable where the buyer has an equal opportunity to discover details about the house he is buying. However it would not be reasonable for a buyer to be expected to know supernatural information, or the houses reputation in a new area. Conclusion: Failure to disclose forms the basis of rescission where: (1) seller has created the condition which materially impairs the value of the contract; (2) the condition is only within the knowledge of the seller; and (3) the condition is unlikely to be discovered by a prudent buyer VII. Law in Equity Johnson v. Davis 21

Facts: Johnson contracted to sell his home to Davis for $310,000. Defendant knew the roof leaked, but affirmatively represented to Davis that it did not. Several days later, plaintiff discovered water gushing into the home from around the windows and from the ceiling in two rooms as the result of heavy rain. Plaintiff sued to rescind the contract and recover the deposit. Issue: Where a seller is aware of a material fact of which the buyer is unaware, does the seller have an affirmative duty to disclose that fact? Rule: Where a material fact affects the value of the property and those facts are not known or readily observable to the buyer, a seller of real property is under a duty to disclose such material facts to the prospective buyer. Analysis: Johnsons fraudulent concealment and affirmative representation that the roof was undamaged was a material misrepresentation thus entitling the Davises to rescission of the sales contract. This is true even if the defendant had not positively lied the plaintiff should still be free to recover. Where the failure to disclose a material fact was intended to provoke a phony belief, the difference between actual concealment and an affirmative misrepresentation is immaterial. The application of the doctrine of caveat emptor, which relieves a seller from liability for concealing material facts, is inapplicable here as it is out of step with modern times and does not conform to current notions of justice, equity, and fair dealing. Where the seller has information that adversely impacts the value of the property and where that information is concealed from the buyer, the seller has an affirmative duty to disclose those material facts. a. Materiality Test to determine if disclosure is necessary: i. An objective test of whether a reasonable person would attach importance to it in deciding how to buy; or ii. A subjective test of whether the defect affects the value or desirability of the property to the buyer b. Stigma Statutes, or Noisy Neighbor Statutes i. Sellers are required to inform potential buyers of neighborhood nuisances (such as the case with the McKnights), noisy neighbors, or any other such nuisance that cannot be readily discerned by the potential buyer ii. Several states require sellers to inform potential buyers about psychological or prejudicial factors such as a murder having taken place in the house or someone in the house dying of AIDS. VIII. The Deed a. Warranties of Title i. Short form deeds 1. Contain all of the essential elements required in order for an instrument to be a conveyance a. Grantor, grantee, words of grant, description of land involved, signature of the grantor, attestation and acknowledgement (sometimes) ii. There are three types of deeds in the United States 1. General Warranty Deed: warrants title against all defects in title, whether they arose before or after the grantor took title 2. Special Warranty Deed: Contains warranties only against the grantors own acts but not the acts of others. If the defect is a mortgage on the land executed by the grantors predecessors in ownership, the grantor is not liable. 3. Quitclaim deed: Contains no warranties of any kind. Merely conveys whatever title the grantor has, if any, and if the grantee of a quitclaim deed takes nothing by the deed, the grantee cannot sue the grantor iii. Consideration 22

1. It is customary to state in a deed that some consideration was paid by the grantee, in order to raise a presumption that the grantee is a bona fide purchaser entitled to the protection of the recording acts against prior unrecorded instruments iv. Description of Tract 1. Customary methods of decription: a. Reference to natural or artificial monuments and, from the starting point, reference to directions and distances b. Reference to a government survey, recorded plat, or some other record c. Reference to the street and number or the name of the property v. Forgery and fraud 1. A forged deed is void 2. The grantor whose signature is forged to a deed prevails over all persons, including a bona fide subsequent purchaser from the grantee who does not know the deed is forged 3. A bona fide purchaser from the grantee who is unaware of the fraud prevails over the grantor vi. Indenture and deed poll 1. Before copying technology existed, when two parties wanted a copy of the deed, they would write the deed twice two columns of some paper or parchment, then both parties would sign the bottom of each column, then the page was cut in an irregular line so that the deeds could be tested against one another for their genuineness 2. A Deed poll is signed only by the grantor the top was not indented but polled or shaved even b. The Warranty Clause of the General Warranty Deed i. A covenant of seisin: The grantor warrants that he owns the estate that he purports to convey ii. A covenant of right to convey: The grantor warrants that he has the right to convey the property iii. A covenant against encumbrances: The grantor warrants that there are no encumbrances on the property: mortgages, liens, easements, covenants, etc. iv. A covenant of general warranty: The grantor warrants that he will defend against lawful claims and will compensate the grantee for any loss that the grantee may sustain by assertion of superior title v. A covenant of quiet enjoyment: The grantor warrants that the grantee will not be disturbed in possession and enjoyment of the property by assertion of superior title vi. A covenant of further assurances: The grantor promises that he will execute any other documents required to perfect the title conveyed vii. The first three covenants are present covenants, and the last three are future covenants: Present covenants are broken, if ever, at the time the deed is delivered; either the grantor owns the property at that time or he doesnt. A future covenant promises that the grantor will do some future act, such as defending against claims of third parties or compensating the grantee for loss by virtue of failure of title. A future covenant is not breached until the grantee or his successor is evicted from the property, buys up the paramount claim, or is otherwise damaged Mortgages et. al I. Mortgage: a financial agreement in which the person buying property receives a loan, and the property is pledged as security to guarantee repayment of the loan 23

a. History i. Over the past two decades the market for home loan mortgage financing has been dramatically transformed 1. Loans were generally done through geographically based banks which resulted in a shortage of loan capital in rapidly expanding areas ii. Fannie Mae and Freddy Mac 1. Federal National Mortgage Association and Federal Home Loan Mortgage Corporation 2. They were created to establish a secondary market in which mortgages could be bought and sold (like stocks) evening out the credit flow across the nation 3. Fannie Mae and Freddie Mac were instrumental in creating Mortgage-Backed Securities (MBS) a. Hundreds of mortgage loans were purchased and pooled together b. Securities representing the pool were issued to investors who received payments of principal and interest as they were made by homeowners 4. This increased the supply of capital and reduced interest rates iii. Fully amortizing fixed interest rate mortgage 1. With this type of loan, borrowers make a constant payment each month that includes both a component for interest and one for principal 2. The amount of each payment stays the same for the life of the loan 3. As the principal is paid off, the part of each payment attributable to interest declines and the part attributable to principal increases iv. Adjustable rate mortgages 1. Emerged in the 1980s 2. Featured an initial below-market interest rate that gradually increases according to an index based on debt issued by the Federal Reserve Bank 3. Typically, an adjustable rate mortgage loan can go up or down by a limited amount each year v. Sub-Prime Lending 1. The increasingly risky segment of the mortgage market 2. Loans to people with low credit scores and sometimes unverifiable income 3. Often, borrowers were allowed to borrow 100% or more of the value of the properties they were purchasing (instead of 80-90% in the prime mortgage market) 4. Negative amortization a. Resulted when borrowers paid less than full interest accruing on the debt, which led to growth rather than the decline of the mortgage principal b. Notes on Foreclosures and finance law i. Fair Housing Act of 1968 1. Outlaws discrimination in housing based on race, sex, national origin, religion, color, disability, or familial status ii. Home Mortgage Disclosure Act of 1975 1. Requires regulated mortgage lenders to disclose information about applicants for home mortgage loans iii. Community Reinvestment Act 1. Mandates that federally regulated financial institutions meet the credit needs of their communities iv. Federal Housing Enterprises Financial Safety and Soundness Act 24

1. Established affordable housing goals for Fannie Mae and Freddy Mac v. Deeds in lieu of foreclosure 1. In instances where a borrower cannot pay its debt, it can frequently avoid foreclosure by tendering its deed to the lender in lieu of foreclosure 2. In most instances, the lender will agree to give up any claim for a deficiency judgment 3. When a mortgagor cannot pay its debt and the propertys value is above the amount of the loan, he can always sell the property and pay off the loan 4. When the debt is greater than the loan, he or she can offer a deed in lieu of foreclosure vi. Transfer by the mortgagor 1. The mortgagor can transfer his interest in the land by sale, mortgage, or otherwise 2. The transfer will not shake off the mortgage 3. The land remains subject to the mortgage in the hands of the transferee 4. The purchaser of the equity may buy the mortgagors equity either a. Subject to the mortgage: if the purchaser merely takes subject to the mortgage, he is not personally liable for payment of the mortgage debt. The mortgagee may not sue the buyer for any balance still remaining on the loan after foreclosure; that is, the mortgage may not get a deficiency judgment against the purchaser b. Or assuming the mortgage: if the new buyer assumes payment of the mortgage, he is liable, both to the original mortgagor and to the mortgagee, for re-payment of the mortgage loan. Thus the mortgagee can get a deficiency judgment against the assuming purchaser c. The Subprime Mortgage Crisis i. The number of subprime mortgages originated almost doubled from 1.1 million in 2003 to 1.9 million in 2005 ii. Almost one-third of all mortgage debt originated in 2005 was in the form of either subprime or Alt-A loans iii. Over three quarters of subprime loans had short-term teaser rates that reset to much higher rates after two or three years iv. Median credit scores for these borrowers were almost 100 points lower than for Alt-A borrowers, who themselves had lower scores than those in the prime market v. Over one-third of subprime loans and two-thirds of Alt A loans did not require that borrowers document their income, and median loan-to-value ratios on subprime loans were 95 percent; for Alt-A loans the rate was 90 percent vi. From 2000 to 2006 the price of homes in the United States grew by more than 88 percent 1. The madcap growth was attributable to a number of factors a. The culture of buying and selling homes as a sport b. The low interest rate policy of the Federal Reserve Bank vii. From mid-2006 to 2009 housing prices declined 32 percent, and mortgage defaults rose Commonwealth v. Fremont Bank Facts: Attorney general brought suit against Fremont for allegedly unfair practices in subprime loans. The trial judge found for characteristics of the loans that qualified them as unfair: (1) The loans were ARM loans with an introductory period of three years or less; (2) they featured an introductory rate for the initial period that was at least three percent below the fully indexed rate; (3) they were made to 25

borrowers for whom the debt-to-income ratio would have exceeded 50% of their monthly income had Fremont measured the borrowers debt by the monthly payments that would be due at the fully indexed rate rather than under the introductory rate; (4) the loan-to-value ratio was 100%, or the loan featured a substantial prepayment penalty Issue: Did the loan practices constitute unfair loans? Rule: Yes, where these for factors were found to be present, the loans were considered to be unfair. Analysis: The judge reasoned that Fremont as a lender should have recognized that loans with the first three characteristics just described were doomed to foreclosure unless the borrower could refinance the loan at or near the end of the introductory period and obtain a new introductory rate, however the fourth factor would make that impossible. The judge granted a preliminary injunction that required Fremont to. Give advance notice to the Attorney General of its intent to foreclose on any of its home mortgage loans. As to loans that possess each of the four characteristics of unfair loans and that are secured by the borrowers principal dwelling, to work with the Attorney General to resolve their differences regarding foreclosure. The injunction did not relieve the borrowers of their obligation to prove that a particular loan was unfair and foreclosure should not be permitted. The court of appeals found that Fremont should have reasonably known that by doing the things that made the loan practices unfair that the majority of the subprime loans would not be able to be paid off and that public policy supported the grounds and content of the preliminary injunction. II. Mortgage Statutes: Installment Land Contract a. The buyer makes a down payment, and pays the rest of the purchase price in installments. The buyer does not receive the deed until he has paid all (or sometimes most) of the purchase price. b. No bank loan is necessary as the financing is done between the parties Bean v. Walker Facts: Bean agreed to sell his home to Walker for $15,000. The sale contract provided that the $15,000 was to be paid over a 15 year period at 5% interest, in monthly installments of $118.62. Bean retained legal title to the property and agreed to convey it to Walker when full payment of the purchase price was completed giving the Walkers a possessory interest. The contract contained an acceleration clause. Walker was later injured, and after making paying approximately half of the principle, went into default. Issue: Does a buyer who defaults on a payment in an installment land sale contract automatically forfeit prior payments to the seller and lose possession of the property? Rule: If forfeiture would result in the inequitable disposition of property and an exorbitant money loss to the buyer, equity can and should intervene to stop forfeiture of the buyers payments because a buyer in an installment land sale contract obtains equitable title which must be eliminated before the seller can retake possession. Analysis: The critical question for the court to decide is whether the buyer in an installment land sale contract has acquired a property interest that must be eliminated before the seller may retake possession. In this case, the defendants acquired equitable title and the plaintiffs held the legal title in trust for them. Therefore the case had to foreclose the equitable title or bring an action at law for the purchase price in order to retake possession. Equity should be applied when forfeiture would lead to an unfair disposition of property and an exorbitant loss of money would occur. Conclusion: If forfeiture would result in the inequitable disposition of property and an exorbitant money loss, equity can and should intervene. Title Assurance I. The Recording System II. Introduction a. The recording system didnt exist in English law until the 20th Century b. In the US, statutes provide for land title records to be maintained by the country recorder in each county 26

c. The land title records include copies of documents filed with the recorder and indexes to these copied documents i. The originals are copied and returned to the owner d. The recording acts generally do not affect the validity of a deed or other instrument a deed is valid and good against the grantor upon delivery without recordation e. The recording system serves other functions i. It establishes a system of public recordation of land titles ii. The recording system preserves in a secure place important documents that, in private hands, may be easily lost or misplaced f. The recording acts in general have adopted and broadened the equitable doctrine of bona fide purchaser i. A subsequent bona fide purchaser is protected against prior unrecorded interests III. The Indexes a. Tract index i. Tract indexes are less common than grantor-grantee because different states had different ways of identifying various tracts of land ii. There was no short formula by which a tract of land could be described b. Grantor-grantee index i. Separate indexes are kept for grantors and grantees ii. In the grantor index, all instruments are indexed alphabetically and chronologically under the grantors surname (same for grantee) IV. Bona Fide purchasers a. Modern recording acts generally protect only bona fide purchasers a person who took for value and without notice of the prior interest V. Types of Recording Acts a. Race Statute i. Places a premium on the race to the recorders office. The subsequent purchaser must record before the earlier purchaser, but is protected regardless of whether he has notice of the earlier conveyance ii. Generally only found in Louisiana and North Carolina b. Notice Statute i. A pure notice statute provides that an unrecorded instrument is invalid against any subsequent purchaser without notice, regardless of whether the subsequent purchaser records prior to the first purchaser c. Race-Notice i. A race-notice statute protects the subsequent purchaser only if (1) he records before the earlier purchaser; and (2) he takes without notice of the earlier conveyance Daniels v. Anderson Facts: In 1977 Daniels contracted to buy two lots from Defendant Jacula. The contract gave Daniels the right of first refusal if defendant ever decided to sell an adjacent parcel for the same price as any prospective buyer offered. Plaintiff received and recorded the deed, but the right of first refusal was not mentioned, nor was the contract of sale recorded. In 1985 Zografos contracted with Jacula to buy the adjoining parcel, Daniels was not notified. In July Daniels wife told Zografos about the right of first refusal, and in August, Zografos paid the remaining balance. Daniels sued both for specific performance on his preemptive option. Zografos argued that he was a bona fide purchaser without notice of the option. Issue: At what point during the executory stage of a real estate installment contract does a buyer become a bona fide purchaser when he receives notice of an outstanding interest after paying less than the full purchase price? 27

Rule: a purchaser becomes a bona fide purchaser only after the full purchase price has been paid. Analysis: During the executory stage of a real estate installment contract, a buyer who receives notice of an outstanding interest subsequent to paying some, but not all of the full purchase price is not considered a bona fide purchaser. A bona fide purchaser takes title to real property without notice of the interests of others. A majority of jurisdictions have applied a pro tanto rule which protects the buyer to the extent of the payments made prior to notice, but no further. This is true even though some appellate courts have held that partial payment of the consideration is insufficient to render the buyer a bona fide purchaser. Thus, we hold that the trial courts determination of the ownership issue was fair and not an abuse of discretion. Three possible ways to apply the pro tanto rule. The most common method is to award the land to the holder of the outstanding interest and award the buyer the payments that he or she made. Second method is to award the buyer a fractional interest in the land proportional to the amount paid prior to notice. The third method is to allow the buyer to complete the purchase, but to pay the remaining installments to the holder of the outstanding interest. The court ordered Zografos to convey the land to Daniels, and ordered Daniels to pay Zografos the full purchase price, and the property taxes that Zografos had already paid. Conclusion: A purchaser becomes bona fide only after the full purchase price has been paid Lewis v. Superior Court Facts: In 1991 Lewis contracted to buy a home for $2.3 million. A few days after they took title, Fontana Films recorded a lis pendens (notice of lawsuit affecting title to the property) on February 24th. Lewis closed on October 28 after giving Shipley a note for the balance. Up to this point the plaintiffs did not have notice of Fontanas lis pendens. In September 1993, they were informed when they were served with defendants lawsuit. Issue: If a buyer has not paid for the property in full, can he still be considered a bona fide purchaser Rule: A seller need not be fully paid before the buyer can be considered a bona fide purchaser Analysis: A seller need not be fully paid before the buyer can be considered a bona fide purchaser. Defendant erroneously relies on the holding in Davis v. Ward (which held that a buyer becomes a bona fide purchaser only upon full payment), but the court declined to follow the Davis rule. Conclusion: A Seller need not be fully paid before the buyer can be considered a bona fide purchaser VI. Notice a. Actual Notice: if the subsequent purchaser is shown to have had actual notice of the existence of the prior unrecorded interest, he will not gain the protection of the recording act in a notice or race-notice jurisdiction b. Record Notice: the subsequent grantee is deemed to have record notice if the prior interest is adequately recorded. However the mere fact that a deed is recorded somewhere in public records does not mean that the recording is adequate the document must be recorded in a way that a reasonable searcher would find it c. Inquiry Notice: : even if a purchaser has neither record notice nor actual notice of a prior unrecorded conveyance, he may be found to have been on inquiry notice of it. Inquiry notice exists where a purchaser is in possession of facts that would lead a reasonable person in his position to make an investigation, which would in turn advise him of the existence the prior unrecorded right. Such a person is on inquiry notice even if he does not in fact make the investigation. Harper v. Paradise Facts: Harper conveyed by warranty deed a 106 acre farm to her daughter-in-law for life, remainder in fee simple to Maudes named children. The deed was lost or misplaced and not recorded until 1957, when plaintiff found it and recorded it. John Harper recorded a deed prior to this one, stating that this deed was lost. Maude conveyed to Ella as security for a loan, which Ella eventually foreclosed on. Thus there was continuous chain of title between Ella and the Paradises 28

who were the grantees of the 1955 deed. Defendants claim direct title from the deed from Susans heirs to Maude and claim title by adverse possession. Clyde argues that defendants title is invalid because the 1928 deed put all parties on notice of the earlier deed Issue: are later grantees presumed to have inquiry notice of the subject matter of prerecorded deeds? Rule: In a race-notice recording jurisdiction, ensuing grantees are considered to have inquiry notice of the subject matter of prior recorded deeds in the chain of title Analysis: The 1928 deed explicitly referenced the 1922 deed to Maude. As a result, Maude is considered to have taken the 1928 deed with notice of the 1922 deed. The narration in the 1928 deed put any subsequent purchaser on notice of the earlier deed. Therefore the 1928 deed is not entitled to priority, despite the fact that it was recorded before the 1922 deed. Moreover, defendants cant rely on the 1922 deed because any interest potentially obtained under this deed would be Maudes life estate, which terminated in 1972 when she died. It was up to the defendants to learn, through careful examination, the contents of the 1922 deed because the 1928 deed provided constructive notice of its existence. Defendants made no effort to ascertain the interest conveyed in the 1922 deed when they bought the property in 1955. They could not claim adverse possession since 1940 because the statute would not have begun to run until after Maudes death Waldorf Insurance and Bonding, Inc. v. Eglin National Bank Facts: Choctaw developed a condominium complex and agreed to sell one of the units to Waldorf. Choctaw then mortgaged the property twice, and both times mentioned unit 111 as one of the units to be mortgaged, even though equitable interest was created in Waldorf, and in fact had struck an agreement with Choctaw to write off money owed to Waldorf in exchange for the purchase price of the unit. The bank then moved to foreclose on the units, including unit 111. Issue: Are those who claim adverse possession of some property on constructive notice of an ownership interest by others who are in actual possession? Rule: Actual possession gives all parties constructive notice of any right which the party in possession is able to establish Analysis: Actual possession puts all adverse claimants on constructive notice of an ownership interest in a piece of property. At the time Choctaw executed the mortgages to the Bank, Waldorf openly and exclusively occupied Unit 111. The bank therefore, is deemed to have constructive notice of defendants adverse title, such that the bank cannot claim any benefits stemming from the recording act. It doesnt matter that other people without legal title were in possession of the units because each unit was contrived to be sold individually and maintained separately. Conclusion: Actual possession gives all parties constructive notice of any right which the party is able to establish. Future Interests, Gifts, Possessory Estates I. Acquisition by Gift a. To complete a gift of personal property an owner must (1) deliver the property to the donee, (2) with the manifest intention to make a gift to the donee, and (3) the recipient must accept it i. The gift is generally not revocable (except where a gift is made causa mortis, and the owner ends up not dying) b. Delivery: for the delivery requirement to be met, control of the subject matter of the gift must pass from donor to donee, a mere oral statement that a gift is being made will not suffice i. Symbolic and Constructive 1. Symbolic handing over something symbolic of the property given 2. Constructive handing over a key or something granting access to the property given 3. These deliveries will suffice when the property is something that cannot be physically delivered: either intangibles or something inconvenient to deliver 29

ii. Written instrument: this can be a valid substitute for physical delivery of the subject matter c. Intent: there must be an intent on the part of the donor to make a gift, and the intent must be to make a present transfer, not a transfer in the future i. However a gift will be enforced if the court finds that it is a present gift of the right to the subject matter, even if the enjoyment of the subject matter is postponed to a later date ii. The intention to make a gift need not be announced by the donor in express terms, but may be inferred from the facts attending the delivery what the donor said and did d. Acceptance this is generally not ever an issue unless the donee repudiates the gift, in which case it is not valid Newman v. Bost Facts: Plaintiff alleged that defendant, while sick and near death, gave her all of the furniture and other property in his house, including a $3,000 insurance policy as a gift causa mortis. Shortly before his death, while helpless in bed, defendant summoned his nurse, Enos Houston, to go into his room and hand him his private keys, which were then handed to Plaintiff. He told her he wanted her to have everything in the house. He pointed to specific pieces of furniture, and pointed in the direction of the hallways. His voice failed soon after delivery of the keys. One of the keys given to Newman opened a locked bureau, which contained the life insurance policy. Bost, the administrator of the estate, sold all the property in the decedents home. Plaintiff sued for the value of the property as well as the insurance policy Issue: is symbolic delivery a valid form of gift-giving? (2) is constructive delivery a valid form of transfer when actual delivery is impractical? Rule: Symbolic delivery of a gift is not valid and constructive delivery is only allowed when it is impractical or impossible to deliver actual possession Analysis: A valid gift donatio causa mortis must be made by a donor who (1) intends to make a gift and (2) actually delivers the thing to be given. In this case, it is not clear whether the decedent intended to give only the bureau that he pointed to or its contents, or both. Thus, the life insurance, which was in the bureau, was not a valid gift. As to the second prong of the rule, in order to make it a valid gift, the donor must deliver actual possession, however written instruments are allowed. When practical delivery was impractical, constructive delivery was permissible constructive delivery is the handing over of the means of attaining possession and control. Thus, the title to the life insurance policy did not pass to the plaintiff because it was present in the bureau drawer and was capable of actual manual delivery to the plaintiff. Since there was no actual or constructive delivery of the insurance policy, there was no valid gift. However, since the furniture in the house was heavy and impractical to deliver, the handing over of the key was a valid means of constructive delivery. Any other furnishings to which Newman did not have the keys, were not constructively or actually delivered. II. Notes following a. Donatio Causa Mortis i. Elements 1. There must be intention to make a gift 2. There must be delivery of the thing given ii. The court found this to be a doctrine to be extended in this case, but to be strictly construed and confined within the bounds of precedent the requirements are more strictly applied than that of a gift inter vivos iii. The act of establishing a will is sufficiently easy today, much easier than when Causa mortis originated it is a substitute for a will iv. Gifts causa mortis require only one witness, and no publicity is tobe given that the gift has been made, and no probate or registration is required 30

v. If symbolical deliveries of gifts causa mortis are to be allowed, or if constructive deliveries be allowed to the extent claimed by the plaintiff, the statue of wills may prove to be of little value vi. If the donor lives, the gift is revoked Gruen v. Gruen Facts: plaintiff commenced this action seeking a declaration that he is the rightful owner of a painting which he alleges that his father, now deceased, gave to him for his birthday. Plaintiffs father evidenced this by writing a letter to his son giving him the painting for his birthday. Plaintiff concedes that he has never had possession of the painting but asserts that his father made a valid gift of the painting in 1963, reserving a life estate for himself. His father retained possession of the painting until he died in 1980, 17 years after the gift to his son via the letter was made. Defendant contends that the purported gift was testamentary in nature and invalid insofar as the formalities of the will were not met or, alternatively, that a donor may not make a valid inter vivos gift of a chattel and retain a life estate with a complete right of possession Issue: Can a valid inter vivos gift of a chattel be made where the donor has reserved a life estate in the chattel and the donee has never had physical possession of it before the donors death? Rule: A party may make a valid inter vivos gift of a chattel by giving a future interest in the chattel as a gift while retaining a life estate in himself. Analysis: an important decision exists between the intent with twhich an inter vivos gift is made and the intent to make agift by will. An inter vivos gift requires that the donor intend to make an irrevocable presnt transfer of ownership; if the intention is to make a testimony disposition effective only after death, the gift is invalid unless made by will. Thus, plaintiff is mistaken in maintaining that his father intended to make a transfer of title only at his (fathers) death. Quite the opposite, the father intended to make a present transfer of a future interest. Title to this future interest (a remainder) vested at the time of the gift. It is immaterial that actual possession did not occur until sometime in the future. Secondly, in order to have a valid inter vivos gift, there must be delivery of the gift, either by a physical delivery of the subject of the gift or a constructive or symbolic delivery, sufficient to divest the donor of dominion and control over the property. As to defendants argument that the gift was invalid because possession was not delivered, we note that the rule is fliexible. The delivery that is required here is that delivery which is best under the circumstances. Since the plaintiff had only a remainder, it was impossible to deliver such an interest until the father died. In terms of acceptance, when the gift if of value to the donee, acceptance is presumed on his part Conclusion: A party may make a valid inter vivos gift of a chattel y giving a future interest in the chattel as a gift while retaining a life estate. III. Notes Following Gruen a. Donative Intent i. In order to make a valid inter vivos gift, there must exist the intent on the part of the donor to make a present transfer ii. The evidence is all but conclusive that Victor intended to transfer ownership of the painting to plaintiff in 1963, but retain a life estate in it and that he did, therefore, effectively transfer a remainder interest in the painting to the plaintiff at that time iii. His intent was demonstrated by the letters, oral and written statements iv. His actions of possession, exhibition, and maintenance were not inconsistent with a life estate v. The failure to file a gift tax return might indicate that the donor had no intention of making a present gift, it does not indicate that in this case vi. A valid inter vivos gift of a remainder interest can be made not only in real property, but in stocks, bonds, as well as chattels 31

vii. The test is whether the maker intended to gift to have no effect until after the makers death, or whether he intended to transfer some present interest viii. As long as the evidence establishes an intent to make a present and irrevocable transfer of title or the right of ownership, there is a present transfer of some interest and the gift is effective immediately b. Delivery i. Delivery is not a rigid rule, but is to be interpreted as necessary to consummate the gift by being as perfect as the nature of property and the circumstances and surrounding parties will reasonably permit 1. It must be tailored to the circumstances of the case ii. Since Victor gave title to the painting, not possession of the painting to his son, it would be illogical for the law to require the donor to part with the possession of the painting when that is exactly what he intends to retain c. Acceptance i. Where the gift is of value to the party, its acceptance is implied unless demonstrated otherwise ii. Plaintiff not only relied on that, but made statements to his friends and colleagues regarding the gift, and kept and showed the gift letters from his father Possessory Estates I. Possessory Estates a. The Fee Simple i. Fee Simple Absolute is the most unrestricted and longest estate it is as close to unlimited ownership as the law recognizes; it is the largest estate in terms of duration and could conceivably last forever ii. It is inheritable iii. Generally created by the words conveying to whoever and his heirs 1. If a person dies intestate, the decedents real property descends to his heirs 2. Heirs are persons who survive the decedent and are designated as intestate successors under the states statute of descent 3. No one is an heir of the living, and no living person has heirs (yet) a. If someone grants to A and heirs, you cannot know who the heirs are until A dies and they are ascertained iv. Issue 1. If a decedent leaves issue, then they take to the exclusion of all other kindred the word issue is synonymous with descendants 2. Issue does not refer only to children, but also to further descendants v. Ancestors 1. Parents usually take as heirs if the decedent leaves no issue vi. Collaterals 1. All persons related by blood to the decedent who are neither descendants nor ancestors are collateral kin vii. Escheat 1. If a person dies intestate without heirs, the persons real property escheats to the state b. The Life Estate White v. Brown Facts: Mrs. Jesse Lide died in 1973, leaving a holographic (un-witnessed and handwritten) will. The will read, in part: I wish Evelyn White (plaintiff) to have my home to live in and not to be sold . . . my house is not to be sold. Plaintiff, her husband, and her daughter loved with Mrs. Lide for 25 years. 32

White filed the action to obtain construction of the will, alleging that she was vested with fee simple title to the home. Mrs. Lides heirs (defendants) claimed that the will conveyed only a life estate to Mrs. White, leaving the remainder to go to them under the law of intestate succession. The trial court held that the will, on its face, unambiguously conveyed a life estate. Issue: Does the wills conveyance of the home to Mrs. White to live in give her a life estate or a fee simple in the home? Or alternatively does Mrs. Lides will, taken as a whole, clearly evidence her intent to convey only a life estate in her home to Mrs. White? Rule: A will conveys a testators entire interest unless a contrary intention appears by the wills terms and context Analysis: Historically, the presumption that a testator conveyed only a life estate existed at common law. However, the legislature has enacted statutes which create a presumption against partial intestacy and reverses the common law presumption that a life estate was intended unless the intent to pass a fee simple was clearly expressed in the will. Thus, a will shall convey all the real estate belonging to the testator unless a contrary intention appears by the terms of the will, its words and its context. If the will only contained language that the hioe was for the plaintiff to live in, a fee simple would pass. However, the language not to be sold caused difficulties. The court looked to the context of the will to determine if Lide intended to convey only life estate and where there is ambiguity, we construe a will to dispose of the testators entire estate, which would be a fee simple in this cae. Consequently, it appears that Lide attempted to pass a fee simple to White and further attempted to restrain White from alienating the property. There was not enough evidence of clear intent to convey a life estate, so a fee simple is presumed. The attempted restraint on alienation must be ruled void and inconsistent with public policy. Conclusion: a will conveys a testators entire estate unless a contrary intention appears in the wills terms and context Dissent: Disagrees on four grounds (1) Dissenters to not agree with the courts interpretation of the words to live in and believes that this is consistent with a life estate; (2) Beyond the words, the will must be construed in its entirety and must be interpreted as conveying a life estate; (3) a will should be construed in favor of all its provisions; (4) Apt language doctrine if a person drafting a will shows somewhere else that they know how to create one estate, then we must assume that when the use of different language is in a different part, then the meaning of that part must be different, the language of what she gives Mrs. White is different than what she gave Mr. Perry. Baker v. Weedon Facts: Weedon was married twice, producing children in each of those marriages, and then a third time to Anna Plaxico, which produced no children. Anna and Weedon managed a farm together and were married for 20+ years, while the relationship of Weedon with his other daughters was strained. Upon his death he executed a will that gave all of his property to his wife and her descendants, and in the even that she has no children, then everything will be split amongst his grandchildren he made a point to mention the explicit exclusion of his daughters. The land was only being used for farming, and was providing Anna with insufficient income to live, however the commercial value of the land was very high, so she sought to have the chancery court sell the land to provide her with money to live. The remaindermen sought an interlocutory appeal based on the question of whether or not the chancery court could divest them of their future interest in the property Issue: May a trial court order a judicial sale only if it is necessary for the best interest of all parties, that is, for both the life tenant and contingent remaindermen? Rule: A court should order a judicial sale only if it is in the best interests of both the life tenant and the remaindermen Analysis: if the circumstances so dictate and the facts so merit, trial courts have jurisdiction to order the sale of land for the prevention of waste. However, the court is of the opinion that deterioration and waste of the property is not the exclusive and ultimate test to eb used in determining whetehr a sale of land affected by a future interest is proper, but also that consideration should be given to the question of 33

whether a sale is necessary for the best interests of all the parties: the life tenant and the contingent remainderman. In this case, a sale would benefit the defendant but create financial loss to the plaintiffs, and is therefore not in the best interest of all parties. c. Leasehold Estates i. Nonfreehold possessory estates 1. Tenants do not have seisin (possession) 2. When a lease is involved, the landlord holds seisin d. Defeasible Estates i. An estate that ends or may end prior to its natural end point if a condition is attached to its possession ii. Three types of defeasible fee simples 1. The fee simple determinable 2. The fee simple subject to condition subsequent 3. Fee simple subject to executory limitation iii. Fee Simple Determinable 1. A fee simple which automatically comes to and end when a stated event occurs 2. Sometimes called a fee simple on a special limitation 3. It is created by language indicating that the transferor is conveying a fee simply only until an event happens a. Words with a durational aspect typically signal a fee simple determinable: so long as; until or during 4. Words that merely state a purpose (such as to the school board for education purposes) grants fee simple, not fee simply determinable 5. Every fee simple determinable is accompanied by a future interest which is generally retained by the transferor or his heirs 6. The future interest is called a possibility of reverter iv. Fee simple subject to condition subsequent 1. Is a fee simple that does not automatically terminate but may be cut short or divested at the transferors election when a stated condition happens a. O conveys Whiteacre to the Hartford School Board, its successors and assigns, but if the premises are not used for school purposes, the grantor has a right to re-enter and retake the premises 2. The Boards fee simple may be cut short if O elects to exercise his right of entry, but it is not automatically terminated when the stated event happens unless and until entry is made, the fee simple continues 3. The future interest retained by the transferor to divest a fee simple subject to condition subsequent is called a right of entry (also known as power of termination) v. Fee simple subject to executory limitation 1. The estate created when a grantor transfers a defeasible fee simple, either determinable or subject to condition subsequent, and in the same instrument creates a future interest in a third party rather than in himself the third party interest is called executory interest a. O conveys to the Hartford School Board, but if it ceases to use the land for school, then to the City Library vi. Transferability 1. Modern law in most states is that possibility of reverter and right of entry are transferable inter vivos 34

Mountain Brow Lodge v. Toscano Facts: The action was to quiet title of a gift deed from James V. Toscano to the Lodge the respondents are the trustees of the estate of Toscano. Lodge sought to quiet the title as to the trustees interest in the land. The language of the will: Said property is restricted for the use and benefit of the second party, only; and in the event the same fails to be used by the second party or in the event of sale or transfer by the second party of all or any part of said lot, the same is to revert to the first parties herein, their successors, heirs or assigns. Toscano argues that the language creates a fee simple subject to condition subsequent and is valid and enforceable. Lodge claims that that the restrictive language amounts to an absolute restraint on its power of alienation and is void. Issue: May the use of land conveyed to another be restricted? Rule: The use of the land conveyed to another may be restricted Analysis: a restraint on the alienation of land is void as against public policy. Thus, a condition which prohibits appellant from selling or transferring the land under penalty of forfeiture is an absolute restraint against alienation and is thus void. However, a condition relaxing the use of land is clearly severable. In other words, under the plain language of the deed to the grantors, their successor or assigns may exercise the power of termination if the land is not used by the second party or in the event of sale or transfer by the second party. Thus, the invalid restraint against alienation does not necessarily affect or nullify the condition on land-use. The outstanding question to be addressed is whether the condition at issue created a defeasible fee. The clause of conveyance did not intend to restrict any alienation of the property, only regulate how it was to be used; thus creating a fee simple subject to condition subsequent. No formal language is necessary to create a fee simple subject to condition subsequent as long as the intent of the grantor is clear. Conclusion: The use of land conveyed to another may be restricted. e. Falls City, Nebraska Case i. A condition attached to a defeasible fee simple is an unenforceable indirect restraint restraint against alienation if it materially and adversely affects marketability ii. If the condition subsequent in the conveyance expressly limits alienation of the property to an impermissibly small number of persons, it is void and unenforceable iii. Most use restrictions are valid and enforceable unless they also have the practical effect of affecting marketability adversely by unreasonably limiting the class of persons to whom it may be alienated iv. Shares the opinion as the dissent in Toscano f. Form vs. Effect i. If a provision is viewed merely as a restriction on land use, then under the general rule, it is valid ii. If it is viewed as a restraint on alienation (because, after all, the provision could significantly limit future transfers of property), then under the general rule it is invalid unless reasonable under the circumstances iii. The substance rules that the substance, not the form, of the conveyance controls 1. Form is relevant but not conclusive 2. If it has a significant impact on transferability, then it should be treated as a restraint on alienation Future Interests A. Introduction 1. Future interests confer the rights to enjoyment of property at a future time i. Most future interests are created in the context of family wealth transfer transactions, particularly those implemented through a trust virtually every family property trust today involves one or more future interests 2. Future interests retained by the transferor 35

i. Reversion ii. Possibility of reverter iii. Right of entry 3. Interests created in a transferee i. Vested remainder ii. Contingent remainder iii. Executory interest 4. A future interest is not an expectancy, but gives legal rights to its owner it is a presently existing property interest (such as the example in Baker v. Weedon) B. Future interests in the transferor 1. Reversion i. Historically the earliest future interest to develop ii. If O grants to A for life, then the land would revert back to O at As death Os right to future possession is called a reversion 1. At As death, whoever owns the reversion is entitled to possession of that land iii. A reversion is the interest left in an owner when he carves out of his estate a lesser estate and does not provide who is to take the property when the lesser estate expires 1. A reversion is the interest remaining in the grantor, or in the successor in interest of a testator, who transfers a vested estate of a lesser quantum than that of the vested estate which he has 2. The hierarchy of estates decides what is a greater quantum a. Fee simple fee tail life estate leasehold estate iv. Reversions are retained interests which remain vested in the transferor v. When a reversion is retained, it may or by not be certain to become possessory in the future vi. A reversion is transferable during life and descendible and devisable at death 2. Possibility of Reverter i. Possibility of reverter arises when an owner carves out of his estate a determinable estate of the same quantum ii. Theoretically, a possibility of reverter can be retained when a life tenant conveys his life estate to another, determinable on the happening of an event 1. The cases, almost without exception, deal with carving a fee simple determinable out of a fee simple absolute iii. A possibility of reverter is a future interest remaining in the transferor or his heirs when a fee simple determinable is created 1. Example: O conveys to the School Board so long as the land is used for school purposes School Board has a fee simple determinable, and O has a possibility of reverter in fee simple iv. If the grantor has given away a fee simple determinable, he retains only a possibility of reverter. If he has given away something less than fee simple, he retains a reversion. 3. Right of Entry i. When an owner transfers an estate subject to condition subsequent and retains the power to cut short or terminate the estate, the transferor has the right of entry 1. O conveys to the School Board, but if it cease to use the land for school purposes, then O has the right to re-enter and retake the premises B. Future Interest in Transferee a. Remainders generally: a remainder is a future interest that can become possessory only upon the expiration of a prior possessory interest, created by the same instrument 36

i. Requirements: There are three requirements for a future estate to be a remainder 1. the grantor must convey aa f present possessory estate to one transferee; 2. he must create a non-possessory estate in another transferee by the same instrument; and 3. the second, non-possessory, estate (the remainder) must be capable of becoming possessory only on the natural expiration (as opposed to the cutting short of the prior estate ii. Following a term of years: Today, we refer to an estate following a term of years as a remainder iii. Distinguished from reversion: Distinguish between the remainder and the reversion. Most importantly, the remainder is created in someone other than the transferor, whereas the reversion is an interest left in the transferor after he has conveyed an interest to someone else iv. No remainder after fee simple determinable: there cannot be a remainder after any kind of fee simple, including after a fee simple determinable. If an interest is created in a third person to follow a fee simple determinable, that interest is called an executory interest, not a remainder b. Vested Remainder i. A remainder is vested if it 1. Is given to an ascertained person 2. Is not subject to a condition precedent (other than the natural termination of the preceding estates) ii. A remainder is vested if it is created in an ascertained person and is ready to become possessory whenever and however all preceding estates expire iii. A remainder may be indefeasibly vested 1. The remainder is certain of becoming possessory in the future and cannot be divested - O conveys to A for life, then to B and her heirs a. B has an indefeasibly vested remainder certain to become possessory upon termination of the life estate if B dies during As lifetime, on Bs death, Bs remainder passes to Bs devisees or heirs (if B has no heirs or issues, then the land escheats to the state) b. O has no further interest in the land c. B has a vested remainder in fee simple absolute Remainder tells us the kind of future interest; in fee simple absolute tells us the kind of estate held as a remainder iv. A remainder created in a class of persons (to As children) is vested if one member of the class is ascertained, and there is no condition precedent 1. If more kids are born then the remainder is vested subject to open, or vested subject to partial divestment c. Contingent Remainder i. A remainder is contingent if 1. It is given to an unascertained person or 2. It is made contingent upon some event occurring other than the natural termination of the preceding estates the remainder would be subject to condition precedent ii. O conveys to A for life, then to the heirs of B 1. The remainder is contingent because the heirs of B cannot be ascertained until B dies iii. A remainder that is contingent because it is subject to a condition precedent 37

1. O conveys to A for life, then to B and her heirs if B survives A a. The language if B survives A subjects Bs remainder to a condition precedent B can take possession only if B survives A 2. O conveys to A for life, then T be and her heirs if B survives A, and if B does not survive A to C and his heirs a. The language if B survives A subjects Bs remainder to the condition precedent of B surviving A, and the language and if B does not survive A subjects Cs remainder to the opposite condition precedent b. In this case there are alternate contingent remainders in B and C if the remainder in B vests, it cannot in C and vice versa iv. Vesting subject to divestment 1. O conveys to B for life, then to B and her heirs, but if B does not survive A to C and his heirs a. B does not have a contingent remainder, B has a vested remainder in fee simple subject to divestment; C has a shifting executory interest which can become possessory only by divesting Bs remainder 2. Gray, Whether a remainder is vested or contingent depends upon the language employed. If the conditional element is incorporated into the description of, or into the gift to, the remainderman, then the remainder is contingent; but if, after words giving a vested interest, a clause is added divesting it, the remainder is vested 3. If the first future interest created is a contingent remainder in fee simple, the second future interest in a transferee will also be a contingent remainder 4. If the first future interest created is a vested remainder in fee simple, the second future interest in a transferee will be a divesting executory interest d. Notes on Remainders i. The law has a preference for a vested remainder 1. Where an instrument is ambiguous, the courts construe it in favor of a vested remainder a. The law always delights in the vesting of estates, and contingencies are odious in the law, and are the causes of troubles, an vesting and settling of estates, the cause of repose and certainty ii. Vested v. Contingent 1. A vested remainder accelerates into possession whenever and however the preceding estate ends a contingent remainder cannot become possessory so long as it remains contingent 2. At early common law a contingent remainder, with few exceptions, was not assignable during the remaindermans life and hence was unreachable by creditors a. A contingent remainder was thought of as a mere possibility of becoming an interest and not as an interest that could be transferred b. In some states, contingent remainders are still not transferable, however vested remainders have always been transferable 3. At common law contingent remainders were destroyed if they did not vest upon termination of the preceding life estate, whereas vested remainders were not destructible in this manner 4. Contingent remainders are subject to Rule Against Perpetuities, where vested remainders are not 38

5. In some jurisdictions the owner of a contingent remainder may not sue for waste, or for partition, or for a trust accounting, where a vested remainderman has such standing e. Executory Interests i. A future interest in a transferee that must, in order to become possessory: 1. Divest or cut short some interest in another transferee (shifting executory interest) a. O grants Blackacre to A and her heirs so long as A maintains the rose garden, then to B and her heirs b. O grants to A and her heirs, but if A cuts down any trees, then B can enter 2. Divest the transferor in the future (springing executory interest) a. Interest that cuts short the interest of the transferor b. O conveys Blackacre to A and A's heirs in one year i. O has fee simple subject to executory interest c. O conveys Blackacre to A for life, then one day after A's death to B and her heirs i. A has a life estate ii. O has reversion for one day iii. B has a springing executory interest divesting O ii. This type of interest emerged out of the courts of equity in England (the court of the Kings Conscience) 1. The chancery court was concerned with conscience, not with seisin, and did not pay attention to the seisin rules of the common law courts a. This developed the equitable principle of a protected interest known as a use (benefit) iii. Modern Executory Interests 1. The effect of the Statute of Uses was to permit the creation of a new estate: a fee simple subject to an executory limitation 2. This is a fee simple that, upon the happening of a stated event, is automatically divested by an executory interest in a transferee such a fee simple can be created either in possession or in remainder a. O conveys to A and his heirs, but if A dies without issue surviving him, to B and her heirs A has a possessory fee simple subject to an executory limitation (or subject to divestment by Bs executory interest); Bs future interest can only become possessory by divesting A 3. Executory interests are usually treated as contingent interests because they are subject to a condition precedent and do not vest until they become possessory C. The Rule Against Perpetutities a. The Rule Generally: i. Statement of Rule: In summary: No interest is good unless it must vest, if at all, no later than 21 years after some life in being at the creation of the interest. ii. Paraphrased: an interest is invalid unless it can be said, with absolute certainty, that it will either vest or fail to vest, before the end of a period equal to: (1) a life in existence (and specified in the document creating the interest) at the time the interest is created plus (2) an additional 21 years 1. Example: O conveys Blackacre to A for life, remainder to the first son of A whenever born who becomes a clergyman. At the date of conveyance, A has 39

no son who is presently a clergyman. Viewing the matter from the date of the conveyance, it is possible to imagine a situation in which the remainder to the son could vest later than lives in being plus 21 years. Thus As son could be born to A after the date of conveyance, and this son could become a clergyman more than 21 years after the death of A, and more than 21 years after the death of all of As sons living at the time of the conveyance. Since this remote vesting is possible even though unlikely the contingent remainder is invalid. b. The Mechanics of the rule i. The first step in applying the common law version of the Rule Against Perpetuities is to determine whether the future interest in question is even subject to the Rule, which applies only to interests that are not vested at the time of the conveyance that creates them ii. Basically only three interest are subject to the Rule 1. Contingent remainders 2. Executory interests 3. Class gifts iii. The next step is to determine whether the given interest might not vest within the perpetuity period of lives in being plus 21 years 1. The Rule Against Perpetuities is a rule that strikes down contingent interests that might vest too remotely iv. It is a rule of logical proof 1. You must prove that a contingent interest is certain to vest or terminate no later than 21 years after the death of some person alive at the creation of the interest if you cannot prove that, then the interest is void from the outset v. What is necessary is at least one person who will enable you to prove that the contingent interest will vest or fail within the life, or at the death, of that person, or within 21 years after that persons death this person is the validating life vi. O transfers a sum in trust for A for life, then to As first child to reach 21. A is the validating life. You can prove that any child of A who reaches 21 will necessarily reach 21 within 21 years of As death. The remainder must vest or fail within this period; it cannot possibly vest more than 21 years after A dies vii. O transfers a sum in trust to A for life, then to As first child to reach 25. A has no child 25 or older. There is no validating life; the contingent remainder is void. You cannot prove that As first child to reach 25 will do so within 21 years after As death c. Applicability of Rule to Various Estates i. Contingent Remainders: The rule applies to Contingent Remainders 1. Example: O conveys to A for life, remainder to the first son of A to reach the age of 25 and his heirs. At the time of conveyance A does not have a son who has reached the age of 25. The remainder in the unborn son is contingent, rather than vested, since it is not yet known which son if any will reach the age of 25. Since there is a possibility of remote vesting, the gift to the oldest son violates the Rule, and is invalid. ii. Vested Remainder: A vested remainder can never violate the Rule, because a vested remainder vests at the moment it is created 1. Example: O conveys to A for life, remainder to As children for life, remainder to B and his heirs. The gift to B and his heirs does not violate the Rule, because that gift is a vested remainder, which vested in interest (though not in possession) on the date of conveyance. Even though the remainder to B 40

and his heirs might not become possessory until later than lives in being plus 21 years, the gift to B is valid. iii. Reversion: the rule does not apply to reversionary interests (reversions, possibility of reverter, and rights of entry). These are deemed to vest as soon as they are created iv. Executory interests: the rule applies because these are not vested as soon as they are created 1. Example: O conveys to the City of Klamath Falls, so long as the city maintains a library on the property, then to A and his heirs. The executory interest in A violates the Rule because it might vest beyond the lives in being plus 21 years the city might maintain a library on the property longer than any life in being at the time of the gift plus 21 years. Instead of the executory interest in A being valid, O and his heirs would have a possibility of reverter v. Options to purchase land: often subject to the rule 1. Option as part of a lease: if an option to purchase property is part of a lease of that property and is exercisable only during the lease term, then the option is not subject to the rule 2. Option in gross: if the option is not part of a lease or other property interest, the common-law approach (and that of most states) is that the Rule does apply a. Example: O sells Blackacre to A, with the condition that if at any time the property is used for the sale of alcohol, O or his heirs may repurchase the property for the amount originally paid by A. Since there is no time limit to this option, and since the option is not attached to any lease or continuing interest by O, the option is void as a violation of the Rule 3. Right of First Refusal: the court is split about when RAP applies and when it doesnt 4. Land Use Restrictions: such as equitable servitudes are not covered by RAP d. Class Gifts i. A rule known as the all or nothing rule holds that if a gift to one member of the class might vest too remotely, the whole class gift is void or, under the Rule of Perpetuities a class gift is not vested in any member of the class until the interests of all the members of the class have vested ii. A gift that is vested subject to open is not vested under the rule against perpetuities 1. For a class gift to be vested under the Rule, the class must be closed (that is each and every member identified and in existence) iii. Closing Rule (rule of convenience): the rule cuts off the possibility of new entrants to a class at two earlier times 1. The natural or physiological closing of the class a. When the possibility of births or adoptions ends 2. The premature or artificial closing of the class through the operation of the Rule of Convenience a. Under the rule of Convenience, the class closes on the distribution date of a beneficiary of the class gift is then entitled to distribution b. It is based on the notion that because of difficulties or inconveniences, in allowing persons born after distribution to participate in the gift, the donor would prefer to exclude such persons c. The main inconvenience of keeping a class open beyond the distribution date is that the distributees would receive a defeasible 41

interest, and such an interest is considerably less useful to them than one that is indefeasible e. Future interests retained by the transferor are not subject to the Rules Against Perpetuities they are treated as vested as soon as they arise f. Table Future Interest Does RAP Apply? Example of Gift that Violates or Doesnt Violate the Rule Contingent remainder Yes O to A for life, remainder to his first son that turns 30, made when no son of A has turned 30. Remainder violates RAP even if son turns 30 one year later. Vested remainder No (vests at creation) O to A for life, then to As last surviving child for life, then to C and his heirs. Remainder in C is vested, and thus doesnt violate RAP, even though it may not become possessory for 100 years Reversion No (vests at creation) O to A for Life. Os reversion doesnt violate RAP Possibility of Reverter No (vests at creation) O to A and his heirs so long as property is used as a church. O has the possibility of reverter that cannot violate RAP Right of re-entry No (vests at creation) O to A and his heirs, but if property ceases to be used as a church, grantor and his heirs may re-enter. O has a right of re-entry that cannot violate RAP Executory Interest Yes O to A and his heirs so long as property is used for a church, then to B and his heirs. Executory interest in B violates RAP even if A stops using as a church one year later Option to purchase in lease No O rents to Corp, Corp gets right to purchase during lease-term. Corpss right cant violate RAP Option to purchase in gross Yes, in some but not all courts O sells A right to purchase property for $100,000 at any time. Some courts say this violates RAP even if A tries to exercise 1 year later Right of First Refusal Yes, in some but not all courts O gives A right to match any offer at any time. Some courts say this violates RAP even if A asserts it means its only exercisable by him during his lifetime 42

Land-use restriction (equitable servitude)

No

O conveys Lot 1 to A while keeping Lot 2; O and A agree that each lot will have a singlefamily-use restriction, binding on their assigns. Neither restriction will ever violate the RAP.

g. D. Co-ownership and Marital Interests A. Common Law Concurrent Interests 1. Types, characteristics, creation a. There are three main types of concurrent interests i. Tenancy in common ii. Joint tenancy iii. Tenancy by the entirety b. Tenancy in common i. Tenants have separate but undivided interests in the property; the interest of each is descendible and may be conveyed by deed or will ii. There are no survivorship rights between tenants in common iii. Example: T devises Blackacre to A and B. A and B are tenants in common. If A conveys his interest to C, then B and C are tenants in common. If B dies intestate, Bs heir is a tenant in common with C iv. Each tenant in common owns an undivided share of the whole c. Joint Tenancy i. Joint tenants have the right of survivorship, which is the outstanding characteristic of a joint tenancy ii. Joint tenants together are regarded as a single owner; each tenant is seised per my et per tout (by the share or moiety and by the whole). iii. Each owns the undivided whole of the property therefore when one tenant dies, nothing passes to the surviving joint tenant or tenants iv. The estate simply continues in survivors freed from the participation of the decedent, whose interest is extinguished v. Four unities are required for a joint tenancy 1. Time the interest of each joint tenant must be acquired or vest at the same time 2. Title all joint tenants must acquire title by the same instrument or by a joint adverse possession. A joint tenancy can never arise by intestate succession or other act of law 3. Interest all must have equal undivided shares and identical interests measured by duration 4. Possession each must have right to possession of the whole. After a joint tenancy is created, however, one joint tenant can voluntarily give exclusive possession to the other joint tenant. (The unity of possession is essential to a tenancy in common as well; none of the other three unities are) vi. If these four unities do not exist, a joint tenancy is not created; instead it is a tenancy in common. vii. If the four unities are ever severed, then the joint tenancy turns into a tenancy in common when the unities cease to exist. 43

viii. Joint tenants can change their interests into a tenancy in common by a mutual agreement destroying one of the four unities ix. Any one joint tenant can convert a joint tenancy into a tenancy in common unilaterally by conveying his interest to a third party; this severs the joint tenancy as between the third party and his cotenants because it destroys one or more of the unities x. Action for partition 1. A court will either physically partition the tract of land into separately owned parts or order the land to be sold and divide the proceeds among the tenants. xi. Joint tenancy is an effective means of avoiding probate 1. It is the practical equivalent of a will, but at the joint tenants death, probate of the property is avoided 2. It avoids probate because no interest passes on the joint tenants death 3. Under the theory of joint tenancy, the decedents interest vanishes at death, and the survivors ownership of the whole continues without the decedents participation 4. A joint tenant cannot pass their interest by will d. Tenancy by the entirety i. Only created in a husband and wife ii. It is like a joint tenancy in that it requires the four unities, but also requires a fifth the unity of marriage iii. The surviving tenant has the right of survivorship iv. Husband and wife are considered to hold as one person at common law both are seised of the entirety 1. As a result, neither husband nor wife can defeat the right of survivorship of the other by a conveyance of a moiety to a third party; only a conveyance by husband and wife together can do so v. Neither husband nor wife acting alone has the right to judicial partition of property held as tenants by the entirety Riddle v. Harmon Facts: Mr. and Mrs. Riddle purchased a parcel of real estate, taking title as joint tenants. Several months before her death, Mrs. Riddle retained an attorney to plan her estate. After reviewing the pertinent documents, he advised her that the property was held in joint tenancy and that, upon her death, the property would pass to her husband. Distressed upon hearing this, she requested that the joint tenancy be terminated so that she could dispose of her property interest by will. As result, the attorney prepared a Grant Deed whereby Mrs. Riddle granted herself an undivided interest in the subject property. The document also provided that the purpose of the grant deed is to terminate the joint tenancy formally existing between the Grantor, Francis P. Riddle, and Jack C. Riddle, her husband. He also prepared the will disposing of Mrs. Riddles interest in the property. Both the grant deed and the will were executed in December, and Mrs. Riddle died 20 days later. The lower court refused to sanction her plan to sever the joint tenancy and quieted title to the property in her husband. The executrix of the will of Francis Riddle appeals from that judgment. Issue: Can a joint tenant unilaterally terminate a joint tenancy by conveying her interest from herself as joint tenant to herself as tenant in common? Rule: A joint tenancy can be severed unilaterally by a joint tenant without the use of an intermediate third party (e.g. a strawman) by conveying his interest in the property to himself. Analysis: a joint tenancy can be severed unilaterally by a joint tenant without the use of an intermediate third party (e.g. a strawman) by conveying the interest in the property to himself. In Clark v. Carter 44

(transfer of property requires two parties, grantor and grantee) the wifes action of conveying her interest to herself was found no to sever the joint tenancy. In that case, the Court of Appeal found the strawman to be an essential part of a valid and successful conveyance. The law of requiring two separate participants to transfer property was rooted in the English common-law ceremony of livery of seisin. However, in the instant case, we abandon that antiquated rule that one cannot convey an interest in property to oneself. Similarly, we reject the logic of Clark because the English common law ceremony of livery of seisin as the means of transferring of title has been replaced in modern times with grant deeds and title companies. Moreover, with the passage of time and the development of new caselaw, several legal tools have been created to circumvent Clark, thus undercutting the rule. Conclusion: A joint tenancy can be severed unilaterally by a joint tenant without the use of an intermediate third party by conveying the joint tenants interest in the property to himself. 2. Notes following Riddle a. The Uniform Simultaneous Death Act i. Unless a governing instrument such as a will provides otherwise, the half-andhalf approach is used unless there is clear and convincing evidence that one of the joint tenants survived the other by 120 hours Harms v. Sprague Facts: In June 1973, Plaintiff William Harms, and his brother, John Harms, held title to real estate (Property No. 1) as joint tenants with full survivorship rights. In a separate transaction years later, Defendant Charles Sprague, the future executor of the estate of John Harms, negotiated to purchase some property (Property No. 2) from the Simmonses for $25,000. The Simmonses requested that Sprague sign a promissory note for $7,000 before finalizing the sale. So on June 12, John Harms and Charles Sprague executed a promissory note for $7,000 payable to the Simmonses. The note stated that it was to be paid by the future proceds of the sale of John Harms interest in Property No. 1, not later than six months from the date the note was signed. However, John Harms also executed a mortgage, in favor of the Simmonses, on his undivided interest in Property No. 1 to secure payment of the same note. Plaintiff and co-tenant William Harms was unaware of the mortgage. On December 10, 1981, John Harms died and devised his entire estate to defendant Sprague. The mortgage from John Harms to the Simmonses was recorded on December 29, 1981. The trial court held that the mortgage severed the joint tenancy and survived John Harms death. The appellate court reversed and found the property unencumbered by the mortgage. Issue: (1) Is a joint tenancy severed when less than all of the joint tenants mortgage their interest in the property? (2) Does the mortgage survive the death of the mortgagor and become a lien on the property? Rule: a mortgage does not sever joint tenancy in a lien theory jurisdiction and the surviving joint tenant takes an interest of a deceased joint tenant without being encumbered by the mortgage. Analysis: A lien on a joint tenants interest in property does not sever the joint tenancy in a lien theory jurisdiction, absent the conveyance by deed following the repayment of a mortgage debt. The court found support for thisp position in both Peoples Trust and Savings Bank v. Haas (judgment lien secured against one tenant did not sever the joint tenancy) and Van Antwerp v. Horan (levy upon interest of a debtor joint tenant does not destroy unity of interst and does not esever the joint tenancy). This is because the mortgage title only exists between the mortgage, and the mortgagor so title does not transfer between them. Thus, the mortgage executed by John Harms does not survive as a lien on plaintiffs property. A surviving joint tenant succeeds to share of the deceased joint tenant by virtue of the conveyance which created the joint tenancy, not as the successor of the deceased. The property right of the mortgaging joint tenant is extinguished at the moment of his death. While John Harms was alive, the mortgage existed as a lien on his interest in the joint tenancy. Upon his death, the interest ceased to exist and along with it the lien of the mortgage. Conclusion: A mortgage does not sever a joint tenancy in a lien theory jurisdiction and the surviving joint tenant takes an interest of a deceased joint tenant without being encumbered by the mortgage. 45

3. Multiple-party bank accounts a. Generally take one of three forms i. Joint accounts 1. A and B or A or B 2. Joint bank accounts are used by depositors with a variety of purposes ii. Savings account trusts 1. Also called Totten Trust accounts 2. A in trust for B iii. Payable on death accounts 1. A, payable on death to B 4. Relations among concurrent owners a. Each tenant owns an equal interest in all of the fee and each has an equal right to possession of the whole. Neither a joint tenant nor a tenant in common can do any act to the prejudice of his cotenants in their estate b. Actions in resolving disputes with cotenants: i. Partition in kind: the privilege of each co-owner to transform a concurrent estate into estates held in severalty 1. Partition in kind is granted where a physical partition of the property would be feasible and practical ii. Partition by sale: selling the property and distributing the proceeds among the owners 1. The court used a two pronged approach to the question of whether or not partition by sale should be ordered a. Are the physical attributes of the land such that a partition in kind is impracticable or inequitable? b. Would the interests of the owners be better promoted by a partition by sale? 2. The action is available to any joint tenant or tenant in common; it is unavailable to tenants by the entirety Delfino v. Vealencis Facts: Plaintiffs Angelo and William Delfino and Defendant Helen Vealencis own real property as tenants in common. The property is a rectangular 20.5 acre parcel of land with defendants house on the extreme western side of it. The Delfinos own an undivided 99/144 interest in the land, and defendants own a 45/144 interest. The defendants and the plaintiffs are the sole owners of the property. Defendant also runs a rubbish and garbage removal business on a portion of the land. None of the parties present, however, are in actual possession of the remainder of the property. Plaintiffs, one of whom is a residential developer, want to develop the property into 45 residential lots. So in 1978, plaintiffs brought an action in the trial court seeking a partition of the property by sale with the proceeds of the sale divide according to their prospective interests. Defendant moved for judgment of in-kind partition (court ordered physical partition of the land). After a hearing, the trial court concluded that a partition in kind would result in material injury to both parties. The court then ordered the property to be sold at auction by a committee, and that the proceeds be paid into the court for distribution to the respective parties. Issue: did the superior court properly order the partition sale of property owned by the plaintiffs and the defendant as tenants in common when a physical partition is possible and that type of sale would protect the interests of only one party: the owner of the larger share of the property? Rule: a partition by sale should only be ordered when a physical partition of the property is impracticable or inequitable and the interests of all the owners would be promoted by a partition by sale Analysis: Courts are not required to order a physical partition of land pursuant to General Statutes 52500 (statute governing the sale of real or personal property owned by two or more persons in 46

Connecticut) and such a sale should only be ordered when a physical partition of the land is impracticable or inequitable, and when the interest of all the parties would be best served by such sale. Here, the property is basically rectangular in shape. The defendants home is located ont eh far western end of it and there are two opposing ownerhip interests at work. While the facts demonstrate that the physical partition of the property into two separate tracks is clearly feasible, the lower courts failed to consider that partition by sale would force the defendants to surrender their home and business, both of which were located on the property. Defendant has been in actual and exclusive possession of the property for a time and while his business might adversely affect plaintiffs attempts to develop their residential lots, we must consider the interests of all the parties, not just the plaintiffs. The potential economic gain for one tenant or group of tenants alone cannot justify a partition by sale. Thus, the trial court erred in ordering a partition by sale. Conclusion: A partition by sale should only be ordered when a physical partition of the property is impracticable or inequitable and the interests of all the parties would be promoted by partition by sale. iii. Notes following Delfino 1. Partition by sale can work hardship on owners unwilling to sell because they have emotional attachments to the land, as in the case of a homestead; money alone cannot compensate for the sentimental losses that sale would entail: Ark Land v. Harper 2. When the partition would require the land be divided into much smaller parts that would severely diminish the financial value of the land, the court does not have to do it: Johnson v. Hendrickson 3. If a court orders partition, whether by sale or in kind, it might also order compensation (called owelty) to make appropriate adjustments, for instance if one cotenant gets more valuable part than another cotenant c. Sharing the benefits and burdens of co-ownership Spiller v. Mackereth Facts: Plaintiff John Spiller and Defendant Hettie MAckerreth owned a building in Tuscaloosa, Alabama as tenants in common. The lessee, Auto-Rite, was renting the building but later vacated. Thereafter, Plaintiff began using the structure as a warehouse and acquired new locks to secure the merchandise he stored inside. Defendant then wrote a letter demanding that plaintiff either vacate half of the building or pay half the rental value. Issue: Is a cotenant in possession of property liable to other cotenants for rent when there is no evidence of ouster? Rule: unless otherwise agreed upon, one tenant in possession of property is not liable to his fellow tenants for the value of his use and occupation of the property unless there is ouster. Analysis: the general rule is that an absence of an agreement to pay rent or ouster of a cotenant, one cotenant in possession is not liabel to his other cotenatns for the value of the use and occupation of the property. Ouster can refer to either the beginning of the running of the statute of limitations for adverse possession or liability of an occupying tenant for rent to ther cotentnts. The Alabama cases involving as adverse possession require a finding that the possessing cotenant asserted complete ownership of the land to support a conclusion of ouster. The finding of assertion of ownership may be established in several ways. The instant case involves a cotenants liability for rent. Indeed, the adverse possession rule is precluded in this case by Spillers acknowledgement of the cotenancy. Before an occupying cotenant can be liable for rent, he must have denied his cotenant the right to enter. Simply requesting the occupying cotenant to vacate is not sufficient because the occupying cotenant holds title to the whole and may rightfully occupy the whole unless the other cotenants assert their possessory rights. In this case, defendants letter demanded only that plaintiff vacate or pay rent but did not indicate any desire to enter the building. Defendant argues that plaintiffs installation of new locks is clear proof of an ouster. 47

The evidence, however, does not support the fact that the locks were used for any purpose other than to secure plaintiffs goods inside. There is no evidence to suggest that defendant or any other cotenant was barred from entering the building because of the locks. Without evidence of ouster, plaintiff is not liable for rent. Conclusion: Unless otherwise agreed upon, one tenant in possession of property is not liable to his fellow tenants for the value of his use and occupation of the property unless there is ouster. i. Notes following Spiller 5. Willard v. First Church of Christ, Scientist a. Facts i. Genevieve McGuigan owned lots 19 and 20 in Pacifica, California. Both lots were located across the street from the First Church of Christ, Scientist, of which she was a member. She allowed vacant lot 20 to be used as a parking lot during church services and sold lot 19 to one Peterson, who used the building on the lot as an office. Thereafter, wanting to resell lot 19, Peterson listed it with Plaintiff-Willard. Willard expressed an interest in both lots and he and Peterson signed a deposit receipt for the sale of the lots and Peterson delivered a deed for both in fee simple. Peterson did not own lot 20 at the time of the sale to Willard, so he approached McGuigan with an offer to buy it. McGuigan would only sell the lot if the church could continue to use it for parking. She then had the churchs attorney draw up a provision in the deed to the lot stating that the change of ownership was subject to an easement for automobile parking during church hours and that such easement was to run with the land only so long as the property was used for church purposes. After the easement language was added to the deed, McGuigan sold the property to Peterson and Peterson recorded the deed. Thereafter, plaintiff paid Peterson the agreed upon purchase price and received his deed about a week later; Willard recorded this deed. However, the Peterson-Willard deed did not mention the easement for the parking lot by the church. It appears that Peterson mentioned the churchs intentions with respect to the lot in question, but did not inform Willard of the actual easement clause in (his) McGuiganPeterson deed. The easement clause became known to him several months after his purchase of the lot and he thereafter initiated an action to quiet the title against the church. Testimony was proffered by McGuigan that she bought lot 20 with the specific intention of providing parking for the church and that she would not have sold it knowing that the church could no longer use it for parking. The trial court held that both McGuigan and Peterson proposed to convey the easement to the church but that the clause in the deed was invalid because this interest may not vest in a third party. b. Issue: i. Can a grantor reserve an easement in the property for a third party when such property is conveyed to a grantee c. Rule i. A grantor can reserve an easement in property granted to a third party other than the grantee d. Analysis i. A grantor can reserve an easement in property granted to a third party other than the grantee. The old common law rule that stated that one cannot reserve an interst in property to a stranger in title is no longer followed in this jurisdiction. Historically, common law courts opposed a preson reserving an 48

interest in property to a stranger to the title. And while California availed itself of this rule, we do not feel restrained by such antiquated feudal concerns today. In modern times, we treat property grants the same was as contracts, thus carrying out the main objective of the law: the intent of the grantor. Thus, awards under the old common law model would lead in inequitable consequences because the original grantee had in all likelihood paid a lesser price for the land in return for permitting a particular use of the land to carry on. In this case, plaintiff has not proven that he had relied upon the old common law rule in buying the lot. Nor could he argue that there was a bias against him because the lot was idele and vacant for a prolonged period. To be sure, the lot was in use by the church for parking during the entire time the plaintiff was negotiating to purchase it. Thus, in this case, the interest of the grantors prevail over any interest the grantees may have had had the old rule been followed. Taking the clause in its entirety, it is apparent that both McGuigan and Peterson proposed to convey the easement for parking to the church. e. Conclusion i. A grantor can reserve an easement in property granted to a third party other than the grantee. 6. Holbrook v. Taylor a. Facts i. This action was brought about to establish the right to use a roadway over the unenclosed, hilly woodlands of another. In 1942, defendants purchased property. In 1944, they allowed a mining road to be cut on the property which was used for that purpose until 1949. Defendants were paid a royalty for the use of the road during that period and for that purpose. In 1964, plaintiff bought a three-acre building site adjoinging defendants property and built a house on the land the following year. Defendants allowed the plaintiffs and their builders to use the thoroughfare for access to and from the building and for development of the house. After the house was finished, plaintiffs still used the road frequently. Plaintiffs used the road without incident until 1970. At trial, evidence was offered to show plaintiffs were permitted to use and repair the roadway so that they could reach their house, as this was the only point where a road could be created to provide access thereto. At a cost of roughly $100, plaintiffs broadened the road, put in a culvert and paved part of it. Sometime thereafter, defendants wanted the plaintiffs to provide a signed written instrument relieving them of any liability in the event someone was hurt on the roadway. Plaintiffs contend that this request was a calculated effort on defendants part to force plaintiffs to buy the land upon which the road was placed for $500. Thereafter, an argument ensued and the defendants raised a steel cable across the road to block ingress and egress to the property and erected no trespassing signs. Sometime later, the Taylors filed this action to get rid of any and all obstructions and to declare their right to use the road without any interference. b. Issue i. Can an easement be established (1) by prescription; or (2) by estoppel? c. Rule i. When a person has been granted a license which includes the right to make improvements and does so at considerable expense in reliance on the license, 49

the licensor may not revoke the license and restore his premises to its former condition after the licensee has exercised the privilege given by the licensee. d. Analysis i. The court first addresses the issue of an easement established by prescription. At all times prior to 1965, the use of the roadway by the appellees was with the permission of the appellants. There is no evidence to suggest that the use of the roadways was, at any time, adverse, continuous, or uninterrupted. Thus, the trial court was fully justified in its finding that the right and use of the easement was not established by prescription. The court then turned to the issue of whether an easement was established by estoppel. An easement can be established by estoppel when the person making use of the property does so with the permission of the property owner; and courts have long recognized this right with respect to the use of a roadway over another persons land. The court follows this rule first recognized in Lashey Telephone Co. v. Durban (a licensor may not revoke a license, which includes the right to erect structures and acquire an interest in the land similar to the easement, after the license has been exercised the privilege of a license and erected improvements on the land at considerable expense). In this case, it is clearly evident that the plaintiffs made use of the road with the consent and/or tacit approval of the Holbrooks. Plaintiffs used the road to build and improve their home and then widened and kept up the road at added cost to them. These facts clearly satisfy the Lashey rule prerequisites, and, as such, plaintiffs license to use the road is irrevocable as their right to such use has been established by estoppel. e. Conclusion i. A license cannot be revoked by the licensor after the licensee has made improvement(s) on the land at a considerable expense in reliance on the license. 7. Shepard v. Purvine a. Facts i. Plaintiff and Defendant were neighbors and close friends but were not dealing at arms length with respect to the ensuing agreement. Both agreed to a transfer of property rights that was, in effect, a license for a right-of-way. Their agreement was made orally, without written deed. This was done because, under the circumstances, for plaintiff to have insisted on a deed would have been embarrassing; as it would have been to express doubt in his friends integrity. Ones word was considered as good as his bond. Thus, no formal transfer of rights was established. b. Issue i. Is an oral license valid? c. Ruling i. An oral license may bind as effectively as one written 8. Henry v. Dalton a. An oral license to do an act on the land of the licensor is revocable at the option of the licensor, even if the licensee has spent money in reliance upon the license 9. Van Sandt v. Royster a. Facts i. In 1904, Bailey owned a plot of land in Chanute, Kansas. Her plot was divided into three lots numbered from west to east, as lots 4, 20, and 19. Baileys home was located on lot 4, on the most eastern part of her land. 50

Earlier that year, the city of Chanute built a public sewer on Highland Avenue, which ran parallel to lot 19. Highland Avenue ran alongside of lot 19. Shortly after, a lateral drain was built, spanning all of the lots and running from the Bailey home on lot 4, across lots 20 and 19 into the public sewer. Also in 1904, Bailey sold lot 10 to John Jones and sold lot 20 to Murphy. Both lots were conveyed by general warranty deed. Each person then constructed a house on his own lot. Title to lot 20 was later conveyed to defendant Louise Royster and Co-Defendant Gray took title to lot 4 when lots 19 and 20 were sold. By 1924, lot 19 had been conveyed to Plaintiff who continued to own and live there. In March 1936, Van Sandt discovered his basement had been flooded with raw sewage. He discovered the cause was a break in the sewer drain which extended across the properties of Royster and Gray. This drain pipe was located several feet underground and was not visible without an excavation. In fact, there was nothing on the ground behind the houses to indicate the existence of a drain or its link to the houses. Van Sandt sued to enjoin Royster and Gray from making use of the drain, but the trial court held for the defendants. Thereafter, Van Sandt appealed and argued that a sub-surface easement was not created and that even if one was, it cannot be a valid easement as he was not given any notice of it. Defendants counterargued that an easement as he was not given any notice of it. Defendants counter-argued that an easement was created by implied reservation on the severance of the servient estate from the dominant estate of the deed when lot 19 was sold by Jones to Bailey. Defendants further argue that there is a valid easement by prescription. b. Issue i. Is an easement by implication (one of strict necessity) created when the easement was in use by an earlier title holder but was not readily detectible by the party to whom the property was conveyed? c. Rule i. The creation of an easement by implication depends upon the conditions under which the conveyance was made, including the extent to which the prior use was or might have been known by the parties; thus, each party is presumed to have notice of all reasonably necessary uses which are apparent upon a reasonably prudent investigation. d. Analysis i. The creation of an easement by implication depends upon the conditions under which the conveyance was made, including the extent to which the prior use was or might have been known by the parties. Thus each party is assumed to have notice of all reasonably necessary uses which are apparent upon a reasonably prudent investigation. An easement is an interest in land which one person has in anothers. typically, an owener cannot have an easement in his own land but is permitted to use one part of his land to the benefit of another part of the land; often called a quasi-easement. The part of the land that benefits from this is a quasi-dominant tenement, while the other part of the land burdened with the particular use is a quasi-servant tenement. An implied easement arises when one party interferes with the intentions of another party; where such interference is drawn from the circumstances, not the language of the conveyance. These circumstances take account of the extent to which prior use was known or might have been known by the respective parties. Thus, all 51

parties are presumed to have notice of all reasonably necessary uses which would be apparent upon a reasonably prudent inspection. In this case, when Jones bought lot 19, he was aware of the lateral sewer drain across all three lots and knew it was originally built for Baileys use. The easement for the sewer was necessary for the use and enjoyment of Baileys property. Of critical importance here is that an easement can be implied on the basis of necessity alone such that Van Sandt cannot claim a lack of notice with respect to the lateral sewer when he bought his property. Both plaintiff and his wife made a careful inspection of the property; they knew the house had modern plumbing and they knew that the plumbing had to drain into a sewer. e. Conclusion i. The creation of an easement by implication depends upon the conditions under which the conveyance was made, including the extent to which the prior use was or might have been known by the parties; thus each party is presumed to have notice of all reasonably necessary uses which are apparent upon a reasonably prudent investigation. 10. Othen v. Rosier a. Facts i. The entire 2493 acres of the Tone Survey was once owned by one Hill. By mesne (intermediate) conveyances, Hills 100 acre tract eventually came into the possession of Defendant Rosier and others in 1924. In 1897, Hill conveyed a 60 acre tract by mesne conveyances to Plaintiff Othen in 1904. It was southeast of, and contiguous to, the 100 acre tract of the Rosiers leaving Hill ownership of a 53 acre tract just east of the 100 acre tract and a 16.31 acre tract just west of the 60 acre tract. Hill conveyed these two tracts to separate buyers on January 26, 1899. These buyers afterward conveyed the 53 acre tract to Othen in 1913 and the 16.31 acre tract to Rosier in 1924 respectively. Thus, Othens entire property consisting of both conveyances was not contiguous with any of the highways that border the Tone Survey to the north and south. Prior to this action, plaintiff would reach the main roadway, Belt Line Road, by walking through a gate on the western line of his 60 acre tract, then along the eastern line of the defendants 16.31 acre tract, and thena longa fenced lane which runs along the south side fo defendants 100 acres. This lane led to a gate which opened out onto Belt Line Road. Within close proximity of the gate was the defendants home, orchard, and barn. The lane was used by the defendants to haul wood and to allow their livestock access to the 16.31 acre tract for grazing. All repairs and maintenance to the lane were carried out solely by the defendants themselves. At some point, pooling rain water endangered the use of the road and threatened to erode defendants farmland, so they built a long lefee along the southern boundary of the road. For weeks at a time, this levee muddied the land making it impassable except by horseback. Plaintiff brought an action seeking (1) a temporary injunction to restrain the defendant from using the levee and (2) a mandatory injunction to prevent the defendants from interfering with plaintiffs use of the lane. The trial court held that plaintiff had an easement of necessity along the use of the lane. The trial court held that plaintiff had an easement of necessity along the lane and ordered the defendants to guarantee that it remain open and operational. The Court of Civil Appeals affirmed the judgment, but later reversed the injunction holding that it was imprecise. On rehearing, the 52

appellate court concluded that plaintiff held neither an easement of necessity nor an easement by prescription. b. Issue i. Can an easement be implied when the party seeking the easement has not proven its use as a necessity or that its use was with the permission of the neighboring property owner? c. Rule i. An easement by implied reservation can only be created when it is shown that there (1) was unity of ownership between the alleged dominant estate and servient estate; (2) that the easement is a necessity and not a mere convenience; and (3) that the necessity existed at the time of the severance of the two estates. An easement by prescription can only be acquired if the use of the easement was adverse. d. Analysis i. An easement by implied reservation can only be created when it is shown that there (1) was unity of ownership between the alleged dominant and servient estates; (2) that the easement is a necessity and not a mere convenience; and (3) that the necessity existed at the time of the severance of the two estates. The court noted, however, that an easement by prescription can only be if the use of the easement was adverse. The entire Tone Survey was, at one time, owned by Hill. Thus, the unity of ownership element of the rule is satisfied. In spite of this, there is no proof to suggest that the roadway was a necessity when Hill conveyed the 100 track. It seems as though the roadway was just a convenience as Hill could have just as easily crossed the 53 acre tract and gone around the 100 acre tract to get to Belt Line Road. AT this time, however, no easement existed over the 16.31 acre tract because Hill still owned that land in 1896, and an easement cannot be created where both tracts of land are owned by the same title holder. The fact that plaintiffs land is completely land-locked by his neighbors property does not necessarily mandate a right-of-way of necessity for the plaintiff over the neighbors estate. Thus, the plaintiff is precluded from recovering under an easement by necessary theory and an easement by prescription can only be maintained if the use of the easement here was adverse. It was not. In this case, the lane had been fenced both to the north and south since 1906. Both defendants and their tenants have used it for general farm purposes as well as to move livestock to pasture with defendants permission or at least its tacit approval. Thus, Othens use of the path could not have developed into a prescriptive right. The court likewise rejected plaintiffs proof of his use of the roadway prior to 1906, deeming it too vague to establish a prescriptive right e. Conclusion i. An easement by implied reservation can only be created when it is shown that there (1) was unity of ownership between the alleged dominant and servient estates; (2) that the easement is a necessity and not a mere convenience; and (3) that the necessity existed at the time of the severance of the two estates. 11. Preseault v. United States a. Facts i. The Preseaults (plaintiffs) owned a fee simple interest ina tract of land along the shore of Lake Champlain in Burlington, Vermont on which they had a home. A right-of-way ran across several previously separate properties 53

composing the track. In 1899, the right-of-way was acquired by the RutlandCanadian Railroad Co. which operated a railroad on the strip after constructing tracks across the land. By 1975, the railroad tracks were dismantled and carted away from that section of the right-of-way on the plaintiffs land. Eight years later, Congress enacted the Rails-to-trails Act which effectively (1) preserved defunct railroad lines for future use; and (2) allowed the public recreational Commission to sanction abandonment of the rail line or to permit discontinuance of rail service and convey the right-ofway to any public/private entities willing to preserve the rail corridor as a public trail. By 1986, the ICC endorsed an agreement between the Virginia Railway, the State of Vermont, and the City of Burlington to cease rail service over the plaintiffs land and to continue using the once active railroad line as a public trail. Plaintiffs first brought an action against the ICC arguing the unconstitutionality of Rails-to-Trails, but the US Supreme Court held that the act was constitutional. Plaintiffs next brought an action against the United States government arguing that the government, by way of the ICC, effected a taking of the plaintiffs property when it sanctioned the conversion of the rail line to public trail use relying on the holding in Loretto v. Teleprompter Manhattan CATV Corp. The trial court disagreed and ruled in favor of the government. b. Issue i. (1) Does governments use of the right-of-way go beyond the scope of the easement, thus constituting a taking of the servient estate? (2) was the easement terminated by its non use c. Rule i. Only where the non use is coupled with a definitive act demonstrating either a present intent to surrender the easement or a use incompatible with its future continuance can an easement be terminated by abandonment d. Analysis i. (1) when the Governments use of a tract of land goes beyond the scope of the easement, a taking of the servient tenement is effected. Here, the court is in agreement with the trial court that the right-of-way was at some point an easement. Even if the easement still existed in 1986, the court found that the Governments use of the land for a recreational trail is not within the scope of the easement. Although a public recreational trail may be described as a roadway for the transportation of persons, its public nature and usage is clearly different from the commercial enterprise character and use of the transportation of goods and persons via railroad. And while the scope of an easement may be modified over time, this may only occur if the change is consistent with the terms of the original grant. This did not happen here. Thus, the court holds that the change in use of the railroad corridor to a recreational trail is not consistent with the terms of the original railroad easement. (2) Vermont law recognizes and follows the well-established rule fo law that an easement may not be terminated by mere no use. Thus, in order to validly terminate an easement by abandonment, there must be a voluntary relinquishment or surrender of the property, or an interest in property, coupled with an affirmative act by the owner of the dominant tenement which irrefutably and explicitly displays a present intent to surrender the easement without any intention of resuming enjoyment or possession, or of vesting it in 54

anyone else. Here, we agree with the trial judge that the removal of the rails and all related equipment resulted in an abandonment. It is irrelevant that the means to restore the railway service of the rail corridor still exists. To be sure, we not that one irrefutable piece of evidence in favor of abandonment is that fact that following the closure of the railroad line and the removal of the railroad tracts in the early to mid 1970s, neither the State nor the railroad had made any attempt to reinstate railroad service on the line. Lastly, we not that where there is physical entry upon the private lands of another by the government or one of its agents, a taking has occurred. It is irrelevant that the government may put in a series of events which result in the taking of private property through a state or local actor, the consequences still mandate a compensation to those whose property interests were affected. In this case, the amendment compels compensation. e. Conclusion i. Only where the non use is coupled with a definitive act demonstrating either a present intent to surrender the easement or a use incompatible with its future continuance can an easement by terminated by abandonment. 12. Tulk v. Moxhay a. Facts i. Tulk was the owner of several houses and a vacant parcel in Leicester Square. The Square was enclosed by an iron railing and stone work. That same year, Tulk sold the vacant ot in Leicester Square to one Elms. The deed contained a covenant which stated that Elms and her heirs and assigns would maintain the property as a square garden and as public pleasure ground, in an open state and uncovered with buildings. This property passed by various mesne conveyances (a conveyance which is between the first grantee and the present holder in the chain of title) from Elms eventually to Defendant. However, defendants deed contained no similar covenant against the construction of buildings on the Square, but defendant admitted that he purchased the land with notice of the original covenant in the 1808 deed. Defendant tried to alter the character of the square garden and asserted the right to build on the garden as he saw fit, but plaintiff filed an injunction to prevent defendant from using the pleasure ground and garden for any purpose other than its original open state, devoid of any structures built thereupon. b. Issue i. Can a covenant be enforced against a purchaser of land when that purchaser acquired the land through mesne conveyances with knowledge of the prior covenant c. Rule i. Where a person purchases land with notice of a covenant, that covenant will be enforced in equity against him d. Analysis i. An unambiguous covenant existed between Tulk and Elms, restricting Elms use of the land he purchased. It is clear that by the terms of the conveyance, Elms promised to use his land adjoining the Square and neighboring plaintiffs remaining houses and land as a square garden only. Thus, if Moxhay were permitted to purchase this same land from Elms and violate the covenant, then any title holder who tried to sell his land surrounding the Square, like Tulk, would run the risk of having it rendered worthless because 55

its sale price would be adversely affected by the breached covenant. This is clearly inequitable and cannot be allowed. To do so would permit the defendant to resell the unburdened land and a higher price, and thus be unjustly enriched. Therefore, the court held that if a covenant is attached to property by its original owner, no one with notice of that covenant can purchase the property and not be bound by the covenant. e. Conclusion i. Where a person purchases land with notice of a covenant, that covenant will be enforced in equity against him. 13. Sanborn v. Mclean a. Facts i. On December 28, 1892, McLaughlin, then owner of lots on Collingwood Avenue in Detroit, deeded lots 37 to 41 and 50-62, inclusive, with restrictions that provided no residence shall be erected on said premises, which shall cost less than $2,500, and nothing but residences shall be erected upon said premises. Said premises shall be from on Helene (now Collingwood) avenue and be placed no nearer than 20 feet from the front street line. On July 24, 1893, McLaughlin conveyed lots 17 to 21, 78-82, and 98 with the same restrictions. On September 7, 1893, McLaughlin sold lot 86, which, by mesne conveyances, was eventually conveyed to Mclean by a deed which did not contain these restrictions. The defendants thereafter occupied a partially built house on the lot whose construction was eventually completed by Mclean. Sometime later, the defendants commenced construction of a gasoline filling station at the rear of their lot. Plaintiff-neighbor Sanborn, who owned the adjacent lot, filed for an injunction. Defendants were enjoined by decree and appeal followed. b. Issue i. When a lot is purchased in a subdivision and does not contain a restriction(s) in the deed, but such restrictions are contained in the deeds of adjoining lots in the subdivision from which it was sold, can those restriction(s) be implied in the newly acquired property. c. Rule i. Where a common plan or scheme exists for the development of a residential subdivision and the buyer takes the property with actual or constructive notice of it, an equitable servitude may be implied even where no written instrument is present. d. Analysis i. Where a developer has set up a common plan or scheme for the creation of a residential subdivision, and a purchaser takes a lot with actual or constructive notice of it, an equitable servitude can be implied on a lot, even where no written instrument is present. In the instant case, the McLaughlins imposed the restrictions on the neighboring lots for their own benefit; specifically for the benefit of the lands they still owned and mainly to carry out the scheme of a residential district. Because McLaughlin sold these lots with restrictions I order to benefit themselves, the servitude was both mutual and reciprocal; binding buyer and seller alike. Thus, this restriction is deemed a negative reciprocal easement, and it attached to lot 86 before defendants even acquired the land. Moreover, the restriction was still enforceable against the new owners after they purchased the lot if the defendants acquired it with 56

actual or constructive notice. Because the abstract of title to lot 86 showed that it was part of a much larger subdivision and because the deeds were on record, the defendants had constructive notice to follow the easement and were thus bound by it. Moreover, the common plan and scheme for the residential neighborhood had been in force for over 30 years and observed by all lot purchasers during that time. We would be hard pressed to believe that defendants did not notice the strictly uniform residential use of the neighboring lot and did not even bother to enquire why all the lots conformed to each other. It is more probable that the defendants had had inquiry notice of the restrictions and were thus bound by them. We note that even the slightest inquiry in to the character of the neighborhood would have revealed the easement on lot 86. e. Conclusion i. Where a common plan or scheme exists for the development of a residential subdivision and the buyer takes the property with actual or constructive notice of it, an equitable servitude may be implied even where no written instrument is present 14. Neponsit Property Owners Association, Inc. v. Emigrant Industrial Savings Bank a. Facts i. In January 1911, the Neponsit Realty Co. filed a land map with the County Clerks office of a track of land in Queens County that it owned. Neponsit Realty sold lots in the track to purchasers which were developed for strictly residential purposes. In 1917, Neponsit Realy deeded a lot to Dyer, which contained a covenant which stated that the property would be subject to an annual charge not exceeding in any year, the sum of four dollars, that the charge was to be used for the maintenance of the roads, paths, parks, beach, sewers and such other public purposes and that the fees were payable to Plaintiff Neponsit Realty Owners Association. It was the Association that managed the use of the fees collected. Moreover, the covenant stated that the charges were due on the first May every year and that failure to pay according to these terms would result in a lien on the owners land until the fee was paid in full. Defendant thereafter acquired title to the Dyers land at a foreclosure sale. Every deed in the chain of title since the original conveyance by Neponsit Realty subjected the property to the original covenant and defendants deed was no exception. The plaintiffs sued to foreclose on the lien and enforce the covenant for the annual maintenance fee. Defendants motion for judgment on the pleading was denied. b. Issue i. Is an affirmative covenant to pay annual maintenance fees enforceable against successive purchasers of land c. Rule i. An affirmative covenant to pay money for improvements or maintenance done in connection with, but not actually on, an area of land touches and concerns the land and thus is enforceable against subsequent purchasers. d. Analysis i. The court notes that the crucial question in this case is to what extent the covenant significantly affects the legal rights of the parties bound by it. It is a matter of degree or extent which differentiates a covenant that runs with the land from one which does not. A covenant which does not run with the land 57

is simply an agreement between two parties. In this case, an owner in the subdivision obtained a common right of enjoyment, with other property owners, in the roads, beaches, public spaces of the community when he paid the annual fee. However, to allow these areas to be fully enjoyed by all over time, the owners must help pay for their upkeep. As a result, the burden was inseparably attached to the land, held by various owners, who collectively enjoy the benefit. Thus, the covenant unequivocally touches and concerns the land. We now turn to the issue of the potential lack of privity of estate between plaintiff and defendant; specifically the argument that plaintiff never owned the public sites referenced in the covenant and that the covenant was created only as the assignee of the property owners. The court notes that it would be nearly impossible to separate the interests of the two parties; the association and the individual owners and further note that there is, in essence, privity of estate between the Association and the defendant. An affirmative covenant to pay money for improvements or maintenance done in connection with, but not actually on, an area of land touches and concerns the land and is thus enforceable against subsequent purchasers, such that a homeowners association, as the agent of the property owners, can rightfully enforce the covenant. e. Conclusion i. An affirmative covenant to pay money for improvements or maintenance done in connection with, but not actually on, an area of land touches and concerns the land and is thus enforceable against subsequent purchasers. 15. Shelley v. Kraemer a. Facts i. On February 16, 1911, 30 out of 39 owners of property along both sides of Labadie Avenue in St. Louis entered into a restrictive covenant which provided that, for the next 50 years after the date of the signing, no part of any of the property was to be used or occupied by any person, not of the Caucasian race, it being intended hereby to restrict the use of said property for said period of time against occupancy by people of the Negro or Mongolian race. These 30 title holders owned 47 out of a total of 57 parcels of land in the community. On August 11, 1945, the Shelleys, who were AfricanAmericans, received a warranty deed for the parcel in question from one Fitzgerald. The record indicates that the Shelleys had no actual knowledge of the restrictive covenant at the time of their purchase. On October 9, 1845, Kraemer and his neighbors, all of whom were bound by the covenant, brought an action to enjoin the Shelleys from taking possession of their newly purchased land and requested that a judgment be entered by the court divesting Shelley of their title and revesting title in Shackelford or some other [non-African American] person. The Missouri Supreme Court directed the trial court to grant relief for the plaintiff. b. Issue i. Can a racially restrictive covenant be judicially enforced c. Rule i. Judicial enforcement of a racially restrictive covenant constitutes discriminatory state action, and is therefore prohibited by the Equal Protection clause of the 14th Amendment. d. Analysis 58

i. The Supreme Court held that in granting judicial enforcement of the restrictive agreements in these cases, the states have denied the petitioners the equal protection of the laws and that, therefore, the action of the state courts cannot stand. The court finds support for this position in the Equal Protection Clause of the 14th Amendment which prohibits judicial enforcement by state courts of restrictive covenants based on race. We further note that freedom from discrimination by the States in the enjoyment of property rights was among the basic objectives sought to be effectuated by the framers of the 14th Amendment. That such discrimination has occurred in these cases is clear. Because of the race or color of these petitioners they have been denied rights of ownership or occupancy enjoyed as a matter of course by other citizens of different race or color. The 14th Amendment declares that all persons whether colored or white shall stand equal before the laws of the States, and, in regard to the colored race, for whose protection the amendment was primarily designed, that no discrimination shall be made against them by law because of their color. Had the restrictions enforced by the instant covenant been imposed by a statute or an ordinance, they would certainly be found unconstitutional. However, the covenant here was held out for judicial enforcement by the state courts. Consequently, where there is official action by the state courts and judicial officers, the state court is implicated because these officials are regarded as actors of the state, acting in an official, authorized capacity. Actions regarding the 14th Amendment follow a similar thread of reasoning and legal application. In the instant case, the record clearly shows that Shelley was a willing and able buyer of the property in question, and that Fitzgerald was a motivated seller. Were it not for the intercession of the Missouri State courts, Shelley would have been free to possess and enjoy their property. Although the racial covenant was first defined by private contract, the state must comply with the requirements of the 14th amendment because of its action in judicially enforcing the covenant which violated the 14th Amendment. e. Conclusion i. Judicial enforcement of a racially restrictive covenant constitutes discriminatory state action, and is therefore prohibited by the equal protection clause of the fourteenth amendment. 16. Western Land Co. v. Truskolaski a. Facts i. In 1941, plaintiff, Western Land Co, subdivided a 40 acre development outside the city limits of Reno and subjected the lots to restrictive covenants which limited them to single-family dwellings and prohibited commercial businesses of any kind. The land around the subdivision was put mainly to residential and agricultural use, with very little commercial development. In 1941, the city of Reno had a population of about 20,000 people. By 1961, Plumb lane, now a major thoroughfare, had expanded eastward, becoming the main east-west artery through the southern part of the city. By 1969, Renos population grew to about 95,100 people and the Lakeside Plaza shopping Center, a major commercial enterprise, had been built across from the eastern end of the subdivision. Within its vicinity, a supermarket, butcher shop, hardware store, beauty shop, and dress shop were constructed. Despite this commercial progress, the traffic density within the subdivision remained fairly 59

low. The homeowners believed that this low level of traffic resulted in a safe environment for children playing in the area. Defendants (the homeowners) brought suit in district court to enjoin plaintiff from constructing a shopping center on a 3.5 acre parcel within the subdivision. The district court held that the restrictive covenants were still enforceable and enjoined the Western land Co from constructing the supermarket b. Issue i. Can a restrictive covenant for a residential subdivision be terminated when the residential character of the neighboring area has changed but the owners therein still want enforcement of the covenant? c. Rule i. A restrictive covenant for a residential subdivision cannot be terminated as long as the object and purpose of the restrictions has not been thwarted and enforcement of the covenant remains of substantial value to the landowners within the subdivision d. Analysis i. A restrictive covenant for a residential subdivision cannot be terminated as long as object and purpose of the restrictions have not been thwarted and enforcement of the covenant remains of substantial value to the landowners within the subdivision. The record clearly indicates that the subdivision is still suitable for residential living in spite of the commercial changes in the area and that the covenants restrictions remain of significant value to the landowners. Specifically, the low traffic density has provided a safe environment for children playing in the area which the landowners absolutely regard as important. Thus, the childrens safety would probably be adversely affected if the added traffic were allowed to pass through the area. Appellant Western Land directs our attention to the Reno City Councils goal of rezoning the area for commercial use. However, we remain unconvinced. The City Councils intent to rezone does not prove that the property is more suited for commercial use than residential use; only that they wish it to be used commercially. e. Conclusion i. A restrictive covenant for a residential subdivision cannot be terminated as long as the object and purpose of the restrictions has not been thwarted and enforcement of the covenant remains of substantial value to the landowners. 17. Rick v. West a. Facts i. Plaintiff Rick owned and subdivided 62 acres of vacant land in 1946 which included covenants that restricted the land to single family dwellings. In 1956, plaintiff sold a one half-acre lot to Defendant West whereupon she built a house. In 1957, the land was zoned for residential use. Thereafter, plaintiff contracted for the sale of 45 acres to an industrialist, the sale being conditioned on the track being rezoned for industrial use. Even though the 45 acres was rezoned, the sale fell through. The sale failed as a direct result of defendant refusing to release the covenant. Plaintiff sold only a few of the lots, but conveyed the remaining land to the other lot owners. Again, in 1961, plaintiff tried to sell 15 acres of the track to Peekskill Hospital, but the defendant yet again refused to consent to the release of the covenant. Plaintiff sued, claiming that the covenant was no longer enforceable because of a 60

change in conditions. The trial court held for the defendant stating that there was no evidence of any substantial change in the character of the neighborhood. b. Issue i. Should a restrictive covenant still be enforced when only one landowner in a subdivision refuses to consent to the release of the covenant c. Rule i. The law respects and protects the rights of even a single landowner in a subdivision under a restrictive covenant who insists upon adherence to the covenant even when other owners desire and consent to its release d. Analysis i. Any landowner in a subdivision under a restrictive covenant has the right to insist upon adherence to the covenant even when the other owners do not. Plaintiff owned the land in question free of all encumbrances in 1946. It was his right to do what he wished with the property. He elected to transform this land into a residential development and created certain restrictions on the lots to promote their sale. When defendant bought her lot, she relied upon those restrictions as part of sale process and she has the right to continue relying on them. We turn first to the potential advantages of having a hospital on the property. A balancing of equities approach is irrelevant here and any application weighing the benefit of a hospital on the land is immaterial. The record indicates that defendant is the only covenantee in opposition to releasing the covenant; however this fact does not extinguish her right to have it fully enforced as is just as worthy of our protection as any other. West simply insists upon adherence to the covenant, which is as binding today as it was when she purchased the burdened land in 1956. e. The law respects and protects the rights of even a single landowner in a subdivision under a restrictive covenant who insists upon adherence to the covenant even when other owners desire and consent to its release. 18. Pocono Springs Civic Association v. MacKenzie a. Facts i. MacKenzie purchased a lot in the Pocono Springs housing development in October, 1969. By 1987, plaintiffs decided to sell the lot which was still vacant. An offer for the purchase of the lot later fell through because it had been conditioned upon the property being suited for an on-lot sewage system which it was not. Thereafter, the defendants took several actions evidencing their intent to abandon the property, including an attempt to turn the lot over to the appellee, which was declined; their mailed notarized statement to all interested parties expressing their desire to abandon the lot; and an assertion that they neither visited the lot nor utilized the developments services since 1986. Defendant also stopped paying all association fees. Plaintiff sued the defendants for payment. At trial, defendants defended on the grounds that they had abandoned the lot. The trial court rejected the defendants abandonment defense and granted summary judgment in favor of the association. b. Issue i. Can an owner of real property successfully abandon his property when he still possesses perfect title? c. Rule 61

i. Where the owner still holds title in fee simple absolute and has not relinquished his rights, title, claim, and possession to the property, that property cannot be considered abandoned d. Analysis i. The court first dealt with the issue of intent. MacKenzie claimed that the trial court erred in granting summary judgment because whether they abandoned their property should be a question of intent. The court rejects this argument noting that MacKenzies intent is irrelevant to this legal analysis. The law in the state is clear: if the owner still possesses perfect title, real property held in Pennsylvania cannot be considered abandoned. Abandoned property is that property to which an owner has voluntarily relinquished all right, title, claim and possession with the intent of terminating his ownership, but without vesting it in any other person, and with the intention of not reclaiming further possession or resuming ownership. The evidence clearly indicates that defendants have not surrendered their rights or title to their lot and remain the owners of the land in fee simple. Neither the title nor the deed has been sold or transferred to another. Thus, we need not go any further. As a matter of law, the defendants defense must fail. Notwithstanding appellants argument to the contrary, they have not abandoned the property. e. Conclusion i. Where the owner still holds title in fee simple absolute, and has not relinquished his rights, title, claim, and possession to the property, that property cannot be considered abandoned. 19. 40 West 67th Street Corp. v. Pullman a. The business judgment standard is applied to the decision of a co-op to expel a resident. Easements and Promises Concerning Land I. Easements Generally A. Definition: an easement is a privilege to use the land of another a. Affirmative Easement: an affirmative easement is one entitling its holder to do a physical act on anothers land i. Example: A, who owns Blackacre, gives B a right of way over Blackacre, so that B can pass from his own property to a street which adjoins Blackacre. B holds an affirmative easement. b. Negative Easement: a negative easement is one which enables its holder to prevent the owner of the land from making certain uses of that land. i. Example: A owns Whiteacre, which is next to the ocean; B owns Blackacre, which is separated from the ocean by Whiteacre. A gives B an easement of light and air, which assures B that A will not build anything on Whiteacre which would block Bs view of the ocean. B holds a negative easement. B. Appurtenant vs. in gross: a. Appurtenant: an easement appurtenant is one which benefits its holder in the use of a certain piece of land. The land for whose benefit the appurtenant easement is created is called the dominant tenement. The land that is burdened or used is called the servient tenement. i. Example: Blackacre, owned by S, stands between Whiteacre, owned by D, and the public road. S gives D the right to pass over a defined part of Blackacre to get from Whiteacre to the road. This right of way is an easement 62

II.

that is appurtenant to Whiteacre Blackacre is the servient estate, and Whiteacre is the dominant tenement ii. Test for: for an easement to be appurtenant, its benefit must be intimately tied to a particular piece of land (the dominant tenement) b. Easement in Gross: an easement in gross is one whose benefit is not tied to any particular parcel i. Example: O, who owns Blackacre, gives E, who lives across town, the right to come onto Blackacre any time he wants, and use Os swimming pool. Since the grant is not given because of Es ownership of nearby land, the easement is in gross. c. Profit: related to easements is something called the profit a prendere. A profit is the right to go onto the land of another and remove the soil or a product of it. thus the right to mine minerals, drill oil, or capture wild game or fish, are all profits. Creation of Easements A. Five ways to create: a. By an express grant (which generally must be in writing) b. By implication, as part of a land transfer c. By strict necessity, to prevent a parcel from being landlocked d. By prescription, similar to the obtaining of a possessory estate by adverse possession e. By estoppel B. Express Creation: if an easement is created by a deed or will, it is express a. Statute of frauds: an express easement must be in writing. This is required by the statute of frauds. b. Reservation in grantor: often, an express easement is created when the owner of land conveys the land to someone else, and reserves for himself an easement in it. this is called an easement by reservation i. Example: A deeds Blackacre to B, with a statement in the deed that A hereby retains a right of way over the eastern eight feet of the property c. Creation in stranger to deed: at common law, it was not possible for an owner to convey land to one person, and to establish by the same deed an easement in a third person. i. Modern courts abandon rule: but most modern courts have abandoned the no easement for stranger to the deed rule. 1. Example: O owns two parcels, 1 and 2. O sells parcel 1 to P without recording and easement over parcel 2 in favor of parcel 1. O then deeds parcel 2 to D, with a statement in the deed, easement reserved in favor of P or his successors to parcel 1. Today, in most courts, the easement will be enforced even though P was not a party to the O-D deed. C. Creation by implication: an easement by implication may sometimes be created. If so, it does not have to satisfy the statute of frauds a. Summary of requirements: for an easement by implication to exist, these three requirements must be met: i. Land is being severed from its common owner. That is, its being divided up so that the owner of a parcel is either selling part and retaining part, or is subdividing the property and selling pieces to different grantees ii. The use for which the implied easement is claimed existed prior to the severance referred to in (i), and was apparent and continuous prior to that severance. 63

iii. The easement is at least reasonably necessary to the enjoyment of what is claimed to be the dominant tenement Example: O owns two vacant side-by-side lots, Blackacre and Whiteacre. Blackacre (but not Whiteacre) adjoins a public street that contains a public sewer main. O constructs a house on Whiteacre, and runs a sewer line from that house underneath Blackacre to the public main. O then sells Whiteacre to A, without mentioning the existence of the sewer line either orally or in the deed. Later, A sells Whiteacre to B and O sells Blackacre to C. C blocks the sewer line from Whiteacre as it enters Blackacre. B sues to have the blockage removed. B will win, because O created an easement by implication, since (1) O owned both parcels simultaneously; (2) the use existed while O still owned both; and (3) the easement remains reasonably necessary to the owner of Whiteacre. b. Severance from common owner: an easement will only be implied where the owner of a parcel sells part and retains part, or sells pieces simultaneously to more than one grantee c. Prior Use: the use for which the easement is claimed must have existed prior to the severance of ownership d. Necessity: according to most courts, the easement must be reasonably necessary to the enjoyment of what is claimed to be the dominant tenement i. Easement by grant vs. by reservation: Courts require a lesser showing of necessity where the easement is created by grant (i.e. in favor of the grantee) than where the easement is reserved (i.e. in favor of the grantor) e. Easement of light and air: An easement of light and air (the right to have ones view remain unobstructed) cannot be created by implication, in most states D. Easement of necessity: the courts will sometimes find an easement by necessity if two parcels are so situated that an easement over one is strictly necessary to the enjoyment of the other a. Requirements: unlike the easement by implication, the easement by necessity does not require that there have been an actual prior use before severance. But three requirements must be met i. [1] the necessity must be strict rather than reasonable ii. [2] the parcels must have been under common ownership just before a conveyance; and iii. [3] the necessity must come into existence at the time of, and be caused by, the conveyance that breaks up the common ownership b. Landlocked parcels: the most common example of an easement by necessity is where a parcel is landlocked, and access to a public road can only be gained via a right of way over adjoining property c. Strict necessity: while courts say that the necessity must be strict, they dont mean that the property must have absolutely no use without the access. Instead, they mean that it must be the case that without the easement, the property must not be able to be effectively used without disproportionate effort or expense. But this is a tougher-tomeet standard than the reasonably necessary standard for easements by implication created by a grant. d. Pre-conveyance actual use not required: as long as the need for the easement was created by the severance from common ownership, it does not matter that no actual use of the claimed right of way occurred before the conveyance 64

III.

e. Need must be caused by conveyance: for the easement by necessity to exist, the necessity must come into existence at the moment of the conveyance, and be caused by that conveyance a necessity that comes into existence post-conveyance will not suffice i. Alternative exists, then disappears: So if the would-be dominant parcel has some alternative means of access at the time of the conveyance, and that alternative means disappears at some later date, the dominant holder does not get an easement by necessity E. Easement by prescription: an easement by prescription is one that is gained under principles of adverse possession. If a person uses anothers land for more than the statute of limitations period governing ejectment actions, he gains an easement by prescription a. When the statute starts to run: the statutory period does not begin to run until the owner of the servient tenement gains a cause of action against the owner of the dominant tenement. Therefore, an easement of light and air cannot be acquired by prescription (since the owner of the servient tenement never can sue the owner of the dominant tenement, because the latte merely looks out over the formers property, rather than trespassing upon it) b. Adverse Use: the use must be adverse to the rights of the holder of the servient tenement, and without the latters permission c. Continuous and uninterrupted: the use must be continuous and uninterrupted throughout the statutory period. Thus if the use is so infrequent that a reasonable landowner would not be likely to protest, the continuity requirement is not satisfied d. Tacking: there can be taking on the dominant side of the prescriptive easement F. Easement by Estoppel: one last way an easement may be created is by estoppel. An easement by estoppel is created where A allows B to use As land under circumstances where A should reasonably foresee that B will substantially change position believing that this permission will not be revoked, and B in fact changes position. An easement can come into existence by this method even though the parties never mention the word easement or mention the possibility of revocation a. Can be oral: An easement by estoppel may occur even where there is no writing. In other words, the usual Statute of Frauds for easements does not apply to easements by estoppel. Thats what happens in the above example, in which an easement by estoppel occurs based on Os oral grant to A of permission to use the road across Blackacre. G. Reservation and Exception a. A reservation: a provision in a deed creating some new servitude which did not exist before as an independent interest i. Example: O conveys Blackacre to A reserving a 20 foot wide easement of way along the south boundary of Blackacre. The easement did not exist as an independent interest prior to the conveyance by O. b. An exception: is a provision in a deed that excludes from the grant some preexisting servitude on the land. i. Example: after the above conveyance, A conveys Blackacre to B, except for the easement previously reserved by O Scope of Easements A. Prescriptive Easement: if the easement is created by prescription, the scope of the allowable use is determined by looking at the use that took place during the statutory period. Therefore, a use that is substantially broader (or more burdensome) to the servient tenement) than existed during the time when the statute of limitations was running, will not be allowed. 65

IV.

B. Development of dominant estates: Regardless of how the easement was created (e.g. whether by implication, prescription, etc.) the court will allow a use that increases dues to the normal, foreseeable development of the dominant estate. a. Excessive Use: on the other hand, an increased use that unreasonably interferes with the use of the servient estate, viewed in light of the parties original understanding about how the easement would be used, will not be allowed C. Use for benefit of additional property: the holder of the dominant estate is normally not allowed to extend his use of the easement so that additional property owned by him or by others is benefitted. D. Servient owners right to relocate easement: courts are in dispute about whether the servient owner may relocate the path of the easement to a different part of the servient owners property a. Common law approach: at common law, the rule has been that the path of the easement is fixed, and the servient owner may not relocate the easement to a different portion of the servient owners property, even if this doesnt cause an extra to the dominant owner b. Modern approach: but the modern approach (and that of the Third Restatement) is that the servient owner may relocate the easement, if this doesnt materially inconvenience the dominant owner i. Example: A gives B a recorded easement over As property to get to the public road; the conveyance says that the easement is over a particular 10-foot wide strip on the east side of As property. Later, A wants to build a house on the east side, and wants to shift the easement to a 10 foot strip on the west side of As property. At common law, B would be able to block this change, even if using the west-side path wouldnt harm him. But under the modern approach, if using the west side strip wouldnt be materially harder for B, A may make the change. Transfer and subdivision of Easements A. Transfer of burden: when the title to the servient estate is transferred, the burden of easement remains with the property a. Example: O, the owner of Blackacre, gives A, a neighboring landowner, an express right of way over Blackacre. O then sells Blackacre to B. After the sale, As easement remains valid against Blackacre. B. Transfer of Benefit: Whether the benefit of an easement runs with the land (i.e. is enforceable by an assignee) depends on whether the easement is appurtenant or in gross a. Transfer of easements appurtenant: an easement appurtenant (one where the benefit applies to particular land only) normally passes with the transfer of the dominant estate. (thus in the above example, if A sells his land to X, X may enforce the easement against either O or one who bought from O) i. Where deed is silent: This rule that the easement appurtenant passes with the transfer of the dominant estate applies even if the deed of transfer does not mention the easement ii. Subdivision: if the dominant estate is sub-divided into smaller lots sold to different people, and the geography is such that each of the smaller lots can benefit from the easement, then each will generally be permitted to do so, but this will not happen if this would result in an extreme increase in the burden to the servient estate b. Easements in gross: But easements in gross are different i. Common law: at common law, easements in gross are not-transferrable 66

V.

1. Example: O owns Blackacre, which adjoins to a public beach. O sells A, who lives in a different city, the permanent right to park in Os driveway and walk across As land to the beach. Since this easement is in gross it is not ultimately tied to particular land held by A at common law it is not transferrable by A to anyone else ii. Modern View: today courts make it easier to transfer easements in gross 1. Commercial easements: Nearly all modern courts allow assignment of commercial easements in gross, i.e., easements that are intended to be used for economic purposes a. Example: O gives the telephone company the right to string wires over his land. Today, because of the commercial nature of this easement in gross, nearly all courts would hold that the phone company can assign this right to some other outfit that takes over the phone operations 2. Noncommercial easement: some but not all modern courts allow assignment of some non-commercial easements in gross. But even these courts wont allow assignment where the close relationship of the parties, or the lack of compensation for the easement suggests that the parties didnt intent to allow assignment a. Example: A owns property abutting a lake, with a path running from the public road to the lake. A gives to his close friend B, who lives 10 miles away, a free easement to go from the road to the lake so that B can swim and boat. Even in courts following the more liberal modern rule under which easements in gross are generally assignable whether of a commercial nature or not the close personal relationship between A and B, and the lack of consideration, would lead to the conclusion that B cannot assign his easement to C, since A and B probably intended that the easement would remain personal to B. Termination of Easements A. Abandonment: unlike estates in land, an easement may be terminated by abandonment in some circumstances a. Words alone are insufficient: the easement holders words along will never be sufficient to constitute an abandonment b. Intent plus conduct: but if the easement holder intends to abandon an easement, and takes actions manifesting that intent, he will be held to have abandoned the easement, and it will be extinguished i. Mere non-use not enough: mere non-use of the easement, even for a long period, is typically not enough to show the requisite intent to abandon. However, affirmative conduct by the easement holder, coupled with non-use, can be enough. ii. Example: A conveys to B the right to use a strip on As land as a driveway to get to the public road that abuts As property. Several years later, a different public road is build adjacent to Bs property. B stops using the driveway for a period of three years, during which B uses only the new public road. This cessation of use would probably not be enough to constitute abandonment, because it does not constitute unequivocal evidence that B intended to relinquish the benefits of the servitude. If, however, B also built a masonry 67

wall between his property and As, blocking Bs access to the driveway over As property, this act would be unequivocal enough to constitute abandonment, and the easement would be extinguished. VI. Licenses A. Definition: a license is a right to use the licensors land that is revocable at the will of the licensor. This revocability is the main thing that distinguishes licenses from easements. Exceptions: a. No Statute of Frauds: A license is not required to satisfy the Statute of Frauds, so it may be created orally b. Illustrations: some licenses are much like easements, except for revocability (e.g. O orally gives A the right to use Os driveway to get from As land to the public highway; this would be an easement if it were in writing, but this is a license because it is oral). Other licenses are much more transitory. For instance a ticket to a sports event or a concert is a license, similarly, the right to use a parking lot is generally only a license B. Exceptions to revocability: there are a couple of exceptions to the general rule that licenses are revocable at the grantors will a. Oral license acted upon: Most important, a license is irrevocable if its use would have been an easement except for failure to meet the statute of frauds, and the licensee makes substantial expenditures on the land in reliance on the licensors promise that the license will be permanent or of long duration i. Example: P orally gives D permission to build a roadway across Ps land so that D can get from his land to the public highway. D expends substantial money digging and paving the road. P attempts to revoke, and sues D for trespass. A court would probably hold that the license, though oral, was irrevocable because of Ds substantial reliance expenditures. VII. Covenants running with the land A. Definition: like easements, covenants may under some circumstances run with the land. A covenant running with the land is simply a contract between two parties which, because it meets certain technical requirements, has the additional quality that it is binding against one who later buys the promisors land, and/or enforceable by one who later buys the promisees land a. Legal relief: When we use the term covenant, we are talking about a promise that is subject to legal rather than equitable relief. That is, when a covenant is breached, the relief granted is money damages, not an injunction or decree of specific performance. An injunction for specific performance may be granted for breach of what is called an equitable servitude discussed below B. Statute of Frauds: for a covenant to run with the land is must be in writing VIII. Equitable Servitudes/Restrictive Covenants A. Generally: Equitable servitudes, also referred to as restrictive covenants, are a special type of restriction on how the land will be used a. Enforced at equity: restrictive covenants are enforced at equity by the award of an injunction or a decree of specific performance. When a court not only gives equitable relief, but applies it against an assignee of the original promisor, the promise is referred to as an equitable servitude against the burdened land. b. Enforced: equitable servitudes generally run as to both burden and benefit. That is, they can generally by enforced by whoever the current owner is of any parcel that was intended to be benefitted, and against whoever the current owner is of the parcel that was intended to be burdened. However, on the running of burden side, 68

servitudes are subject to one important special rule: the current owner will be bound only if he had some form of notice of the restriction at the time he took ownership c. Affirmative vs. negative: most agreements for which equitable enforcement is sought are negative in nature they are usually agreements not to violate certain building restrictions. But occasionally an equitable servitude may involve an affirmative promise: such as the promise to pay dues to a homeowners association, or the promise to make certain repairs. B. Privity not required: the requirements of privity are virtually non-existent in connection with equitable servitudes. For instance, two neighboring landowners that never had any landtransfer relationship between them can, by agreement, impose land-use restrictions that will be binding on assignees a. Example: A and B, who own adjacent parcels, agree that neither will tear down his house without the others consent. A and B sell their properties to X and Y, respectively. Assuming requirements of notice are met, X can get an injunction against Y to stop a threatened demolition in violation of the restriction, even though Y may not have expressly agreed to honor the restriction. C. Running of benefit and burden: A servitude normally runs with the land on both the benefitted and the burdened sides. That is, unless there is evidence that the original parties intended otherwise, the burden will be binding upon any successor to the original owner of the burdened parcel, and the benefit will be enforceable by any successor owner of the benefitted parcel a. Requirement of notice: the single most important thing to remember about equitable servitudes is that equity will not enforce an agreement against a subsequent purchaser of the burdened parcel unless he had notice of the restriction: either actual or constructive. i. Actual notice: if the subsequent purchaser of the burdened land happens to know about the restriction, it is irrelevant that the restriction is not recorded anywhere ii. Constructive: Also, the subsequent purchaser will be deemed to be on notice if he has constructive knowledge of the restriction. Most importantly, if the restriction is properly recorded in the land records that fall within the purchasers chain of title, the purchaser is bound even if he does not in fact discover the restriction by the time he buys 1. Lack of notice: conversely, if the restriction is not recorded, then the subsequent purchaser will not be bound unless he happens to have actual notice, or some non-record form of constructive notice, of the restriction. 1. Garner v. Gerrish a. Facts: i. Robert Donovan owned a house located in Potsdam, New York. On April 14, 1977 he leased the premises to a tenant, Lou Gerrish. The lease was executed on a printed form, neither party was represented by council. The blanks in the form were filled in by Donovan. With respect to the duration of the tenancy, the lease provided it shall continue for and during the term of quiet enjoyment from the first day of May 1977, which term will end and Lou Gerrish has the option of terminating the lease at the date of his choice. The lease also contained the standard reference to the landlords right of reentry if the rent was not timely paid. Gerrish lived there absent any confrontation until 1981. In 1981, Donovan died and Plaintiff Garner became the 69

executor of the estate. Thereafter, Garner called for defendant to leave the premises. Defendant refused and this action was initiated by the plaintiff. Plaintiff argues that the lease created a tenancy at will because the length of the lease was indefinite. Defendant argues that the lease created a determinable life tenancy by its language. b. Issue: i. Does a lease which grants a tenant the right to terminate a lease create a determinable life tenancy or merely establishes a tenancy at will? c. Rule: i. A determinable life tenancy is created if a lessee has the option of terminating a lease when he pleases d. Analysis: i. At common law, the rule was that at least for so long as the lessee shall please is a lease at will of both the lessee and the lessor. That is, as long as the lessee adhered to the terms of the lease and both the lessor and the lessee agreed that the lease should continue, the lease was in force. This rule had its origin in the ancient ritual of livery of seisin, where the transfer of a clod of dirt, was required to create a life estate. However, because livery of seisin, like the requirement for a seal, has been abandoned, commentators generally urge that there is no longer any reason why a lease granting the tenant alone the right to terminate at will should be converted into a tenancy at will terminable by either party. Today, however, the courts look to the terms of the agreement to determine what type of lease has been created. In this case, the terms of the agreement clearly indicate that Donovan and defendant agreed that defendant would have a determinable life tenancy. As such, the lower courts judgment is reversed e. Conclusion i. A determinable life tenancy is created if a lessee has the option of terminating a lease when he pleases. 2. Hannan v. Dusch a. Facts i. Plaintiff Hannan leased real estate from Defendant Dusch on August 31, 1927 in the city of Norfolk, Virginia, for a term of 15 years beginning in January 1, 1928. At the time that the lease was to commence, the tenant then in possession failed to vacate and Defendant-lessor Dusch failed to put plaintiff-lessee in possession. Plaintiff argues that the defendant has a duty to deliver him actual possession and that he should have evicted the holdover tenant. Defendant maintains that he has a duty to deliver only the legal right to possession, not actual possession. There is no covenant in the lease stating that defendant must put plaintiff in actual possession. b. Issue i. Must a landlord deliver actual possession of the leased property to the tenant or just the legal right to possession c. Rule i. A landlord has a duty to deliver only the right to possession of the leased premises to a tenant, not actual possession of the property d. Analysis i. We start our analysis with two rules governing this issue, absent an agreement to the contrary (e.g. covenant): The English Rule and the American Rule. The English rule states that the landlord must place the tenant in possession. The American rule says that the landlord must only give the tenant the right to possession; that is, a landlord must at least provide the legal right to possession. Moreover, once the tenant takes 70

possession, he is responsible for ejecting a trespasser. But where a covenant exists containing a specific duty to put the tenant in possession, that covenant would prevail. In this case, however, there is no covenant in the lease, so we must choose the better rule supported by reason. We thus hold the English rule is best suited to the facts at hand for the following reasons: (1) a tenant contracts for possession and not for a lawsuit to evict a holdover; and (2) the landlord is in a better position to assess whether the current tenant will in fact, holdover. However we choose the American rule because it is unfair to hold the landlord liable for the wrong of another. That is, under the American rule, when a new tenant fails to obtain possession of the premises because a former tenant wrongly holds over, his remedy is against the wrongdoer and not against the landlord. This is because the landlord has not covenanted against the wrongful acts of another and should not be held responsible for such a tort unless he so contracted. This accords with the general rule as to other wrongdoers, whereas the English rule appears to create a specific exception against lessors. e. Conclusion i. A landlord has a duty to deliver only the right to possession of the leased premises to a tenant, not actual possession of the property. 3. Ernst v. Conditt a. Facts i. Plaintiff Walter Ernst and his wife leased a track of land in Davidson County, Tennessee to Frank Rogers for a term of one year, seven days. Rogers built and operated a racetrack as well as a go-kart track and improved the property by erecting floodlights. Rogers operated the business for a short time and then entered into negotiations with defendant A.K. Conditt for the sale of the business. The original lease was modified and allowed for an extension of the term of the lease by two years. Rogers was given the right to sublet the premises to Conditt on condition that Rogers remain personally liable for the performance of the terms of the terms of the lease. Thereafter, Rogers leased the premises to the defendant. In the Rogers-Conditt contract, the term sublet was used. After defendant took possession, he operated the track for a short time. Thereafter, Conditt quit paying rent, but he remained in possession. Ernst sued Conditt for the rent owed. Plaintiff contends that the RogersConditt agreement was an assignment of the lease, thereby rendering Conditt liable to Ernst. Defendant contends that the Rogers-Conditt agreement was a subletting, thereby rendering Rogers directly liable to Ernst. b. Issue i. How does a court determine whether an assignment or a subletting has occurred between respective parties? c. Rule i. The determination of whether an assignment or a subleasing has occurred between the parties is based on the intentions of the parties d. Analysis i. A landlord may recover from the assignee in an assignment, but not in a sublease. At common law, an assignment was created when the entire interest in a lease was conveyed and nothing was left to the original lessee. Also at common law, where the interest granted was less than that owed by the original lessee, a sublease was created and the original lessee retained a reversionary interest. Under the modern law, we look to the intention of the parties as a method of determining whether there has been an assignment or a sublease. At common law, Conditt is liable to Ernst because he took Rogers entire interest in the land, even though the modified Rogers-Ernst 71

contract held Rogers personally liable to Ernst. This Is because Rogers liability to Ernst is not determined by the Rogers-Conditt agreement even though the modified Ernst-Rogers agreement contained the word sublet. Ernsts consent to sublet is viewed by the court as only consent for someone other than the original lessee to go into possession. In essence, it authorizes both a subletting and an assignment. Either way, defendant is liable to plaintiff under the modern rule. Rogers retained no reversionary interest by the terms of the Rogers-Conditt agreement, as he conveyed all the rights to the property that he had. e. Conclusion i. The determination of whether an assignment or a subletting has occurred between the parties is based on the intentions of the parties. 4. Kendall v. Ernest Pestana a. Facts i. This case concerns a commercial lease and that the lessee may not assign or sublet the premises without the lessors prior written approval. The city of San Jose leased a 44,000 square foot hanger to Irving and Janice Perlitch. Prior to assigning their interest to Defendant Pestana, the Perlitches sublet the premises to Robert Bixler for a 25 year term to run an airplane maintenance business. Thereafter, Bixler attempted to sell his interest to Plaintiff Jack Kendall and others as the plaintiff was more financially sound than Bixler. Abiding by the terms of the original lease, Bixler requested consent from Pestana for the sublease. Defendant responded by demanding an increase in rent in exchange for the consent and argued that he may arbitrarily refuse consent. Plaintiff argued that Pestanas arbitrary refusal is void as against public policy because it is an unreasonable restraint on alienation. b. Issue i. In the absence of a provision to the contrary, may a lessor unreasonably and arbitrarily withhold consent to an assignment? c. Rule i. Only where a lessor has a commercially reasonable objection to the assignee or the proposed use may the lessor withhold consent to an assignment; such withholding of consent may not be unreasonable or arbitrary d. Analysis: i. The court acknowledges that the common law favors the free alienability of property; however, it may be restricted by contract as a protective measure afforded to the lessor. Traditionally, these restrictions are strictly construed against the lessor. This is particularly true when the act of assigning terminates the lease. However, this traditional majority rule has come under steady attack in recent years giving way to the following rule: a lessor may withhold consent only when he has a commercially reasonable objection to the assignee or to the assignment. Support for this modern rule can be found in the following reasoning: (1) public policy disfavors restraints on alienation and favors free alienability; (2) the lessors interests are protected by the fact that the original lessee remains liable to the lessor as a surety; (3) a lease is increasingly viewed as contractual in nature, such that there exist obligations imposed on both parties to deal with one another fairly and in good faith; duties which are implied by law in every contract. Thus, the lessor has discretion to withhold consent when done so in good faith and for good reason. Specifically, the lessor may withhold consent where (1) the property is not well suited for the planned use; (2) the planned use is illegal; (3) the planned use involves an altering of the property e. Conclusion 72

i. Only where a lessor has a commercially reasonable objection to the assignee or the proposed use may the lessor withhold consent to an assignment; such withholding of consent may not be unreasonable or arbitrary 5. Berg v. Wiley a. Facts i. Defendant-landlord Wiley leased land and a building to Phillip Berg for a 5 year term beginning December 1, 1970. The lease provided that no changes be made in the building structure without the defendants consent and that defendant reserved the right to retake possession should Berg fail to meet the lease terms. Thereafter, Phillip Berg assigned the lease to Plaintiff Berg. Without obtaining Wileys permission, Kathleen remodeled the premises for use as a restaurant. The present dispute arose out of Wileys objection to Kathleens continued restaurant remodeling without his permission and her operation of it in violation of health regulations. Defendant demanded that the heath code violations be remedied and that she complete the remodeling within two weeks. But after two weeks, plaintiff closed the restaurant and placed a sign on the premises that read, Closed for Remodeling. Earlier that day, Wiley attempted to change the locks on the doors, but stopped when plaintiff arrived. Thereafter, without plaintiffs knowledge, defendant changed the locks. Berg contends that she was wrongfully evicted. Defendant raised an abandonment defense. The trial court ruled defendants entry was forcible and this appeal was filed. b. Issue: i. (1) Was the evidence submitted sufficient to support the jurys finding that the tenant did not abandon or surrender the premises and (2) did the trial court err in finding Wileys reentry forcible and wrongful as a matter of law c. Rule i. The jurys finding is sufficient that the tenant did not abandon or surrender the premises and the trial courts determination was correct as a matter of law; thus, a landlord may NOT resort to nonpeacable measures, nor employ self-help remedies to regain possession of his land. d. Analysis i. A landlord may use self-help at common law if he was legally entitled to possession. Such is the case when the landlords means of entry are peaceable and the tenant holds over. Here, defendant claims he was entitled to possession because plaintiff breached the lease. But it is for the courts, not defendant, to determine if the landlord is entitled to possession. As to whether the entry was peaceable, defendant contends that only actual or threatened use of violence should give rise to liability. The court disagrees. Public policy discourages self-help remedies as evidenced by both the courts and the legislature. To that end, the legislature has created summary proceedings to help landlords regain possession quickly. Thus, we find defendants entry was not peaceable and given the sour relationship between the two parties, the only reason violence didnt erupt was because plaintiff was absent when the locks were changed. Certainly any use of self-help has violent potential. Thus, a landlord may not use self-help unless the tenant has abandoned or surrendered the premises. Otherwise, the landlord must resort to the judicial process to regain possession. e. Conclusion i. A landlord may not resort to nonpeaceable measures nor employ self-help remedies to regain possession of his land. 6. Summer v. Kridel a. Facts: 73

i. On March 10, 1972, Plaintiff Sommer leased an apartment to Defendant Kridel for a two year term. Defendant paid Sommer $690, half of which was used for the first months rent. Prior to the defendant taking possession, defendant wrote plaintiff that he could no longer afford the lease as his wedding engagement was broken and that up until that point, both sets of parents planned to take on the rent payments after the wedding. Plaintiff did not respond. Thereafter, a third party enquired about the apartment. Though the third party was ready, willing, and able to rent the apartment, she was told that it had already been rented to defendant. After a year, the apartment was at last rented under similar terms and conditions as those negotiated with the defendant. Plaintiff then sued for dmages for rent due from the date defendant was to take possession until the date the apartment was finally rented to a third party. Defendant denies liability arguing that plaintiff failed to mitigate damages and because plaintiff refused to accept defendants surrender of the premises. b. Issue: i. Must a landlord mitigate damages by making reasonable efforts to relet an apartment wrongfully vacated by the tenant? c. Rule i. A landlord is under an affirmative duty to mitigate damages and must make reasonable efforts to relet an apartment wrongfully vacated by the tenant d. Analysis i. The majority rule states that a landlord has no duty to mitigate any damages. This is because a lease is considered to be a property interest which bars any control of the property by the landlord. Thus, the reasoning goes, since a landlord has no control, it would be unrealistic to require him to mitigate. However, modern notions of fairness and equity have eroded the real property concepts which served as the basis of the majority rule and the Law of Estates has reacted by allowing specific clauses in contracts to deal with these changes. Given that the court now considers a lease for the most part as a contract, the court can now apply the contract principle that the landlord must mitigate damages. The basis for this rule stems from notions of fairness. That is, it would be inherently unfair to allow a landlord to simply sit by and watch damages grow when he is in a position to prevent those damages. Thus, where the landlord has many vacant apartments, he must make reasonable efforts to relet each one as applicable to the situation. Since the landlord is in the better position to prove that his efforts were reasonable, he shall have the burden of showing that his efforts were, in fact, reasonable. e. Conclusion i. A landlord is under an affirmative duty to mitigate damages and must make reasonable efforts to relet an apartment wrongfully vacated by the tenant. 7. Reste Realty Corp. v. Cooper a. Facts: i. Defendant-lessee Cooper leased the basement of a commercial office building from plaintiff-lessor Reste Realtys predecessor in title. Unfortunately, whenever it would rain, water ran off an improperly surfaced driveway into her rented offices and meeting rooms below. When the basement flooded, Donigian, the resident manager of the complex, would quickly take steps to remove it. after a new five year lease was negotiated, Donigian promised to remedy the flooding permanently. The driveway was resurfaced, but the flooding persisted. Donigian died in 1961. Thereafter, whenever it rained, defendants complaints were ignored and it became almost impossible for her to hold her meetings there. Soon after, she vacated the premises. 74

Plaintiff sued for the balance of the lease and argued that Coopers abandonment was unjustified because the flooding was not permanent and because the defendant inspected the premises and nonetheless accepted the premises as is. b. Issue i. If a tenants right to quiet enjoyment is interfered with by the landlord, may the tenant vacate the premises and terminate the lease without incurring liability on the remaining lease? c. Rule i. If a tenants right to quiet enjoyment is interfered with by the landlord, he may vacate the premises and terminate the lease. d. Analysis i. Plaintiff lessor Reste initially argues that abandonment was unjustified because defendant inspected the premises an accepted the premises as is. The court finds this arugment unconvincing as the faulty driveway surfacing caused the flooding and it was not party of the premises leased. Even so, we find no evidence supporting the fact that defendant knew of the defect prior to leasing her offices. Plaintiff next argues that defendant waived her right to quiet enjoyment because she released the space for another five years knowing that the flood problem existed. The court found this argument equally unpersuasive as Donigain promised to remedy the flooding but didnt. Thus, the key question here is whether defendant was justified in vacating. A covenant of quiet enjoyment is implied in every lease such that when a duty to act or failure to act renders the site unsuitable for the leased purposes, the covenant is breached. If a breach occurs, the tenants remedies include termination of the lease or vacating the premises. Here, Cooper could not use the basement for conducting business. This was the use for which the premises were rented. Thus, she was justified in vacating and cancelling the lease. Lastly, plaintiff argues that defendant waived the right to cancel the lease because she remained in possession for an unreasonable time after learning of the defect. The court disagrees and holds that there was sufficient evidence for the trial court to conclude that Cooper acted reasonably under the circumstances. e. Conclusion i. If a tenants right to quiet enjoyment is interfered with by the landlord, he may vacate the premises and terminate the lease. 8. Hilder v. St. Peter a. Facts i. October 1974, Plaintiff Hilder and her three children rented an apartment from Defendant St. Peter for $140 per month. Plaintiff discovered a number of problems with the dwelling after taking possession and after paying rent. There was a broken kitchen window which the defendant promised to repair but never did so. Plaintiff repaired the window at her own expense out of concern that one of her children might get cut on the glass shards. The key to the door was missing. The toilet was clogged and filled with feces; it would only flush if water were poured down. The bathroom light and wall outlet were inoperable so outlets in adjoining rooms were used with extension cords. Water leaked into the apartment from the upstairs apartment causing ceiling plaster to fall onto her bed and into her grandsons crib. There was also a strong odor of raw sewage in the apartment. Defendant promised to remedy all, but never did. The trial court held the Warranty of Habitability was breached and awarded plaintiff total rent paid. Defendant argued that because plaintiff never 75

vacated, the full award was in error. Plaintiff argues that abandonment of the premises is not necessary. b. Issue i. Does every residential lease contain an implied warranty of habitability? c. Rule i. Every residential lease contains an implied warranty of habitability d. Analysis: i. Historically, the lessee took possession of the property as is. The landlord was under no affirmative duty to make the premises livable unless the lease contained an express covenant. Now, modern law requires that the leased land be safe, habitable, and sanitary. This change can be seen as a measurement of how much society has changed. The typical tenant of the middle ages was a farmer who was capable of making repairs himself. However, todays tenant is generally unable to repair his own living unit. Therefore, in step with modern society, we now hold that there exists in every residential lease an implied covenant of habitability whose protections cannot be waived. In making a determination as to whether the warranty has been breached, courts may look to the local municipal housing codes or to the minimum state housing code standards. If the warranty is breached, the tenant must notify the landlord and allow him time to remedy the defect. If the defect is not remedied, the tenant may pursue rescission, reformation and damages; punitive or otherwise. Damages are calculated as the difference between the value of the dwelling as warranted and the value of the dwelling as defective. Alternatively, the tenant may repair the defect and deduct the expenses from the rent or withhold the rent until damages are calculated. e. Conclusion: i. Every residential lease contains an implied warranty of habitability. 9. Chicago Board of Realtors v. City of Chicago a. Facts i. In 1986, Chicago enacted the Residential Landlord and Tenant Oridnance, which essentially codified the implied warranty of habitability and established new landlord responsibilities and tenant rights, including: (1) the landlord must pay interest on security deposits; (2) the security deposit must be held in an Illinois bank; (3) a tenant may withhold rent in an amount reflecting the cost to him of the landlords violating a term of the lease; (4) a landlord is forbidden from charging more than $10 per month for late rent; and (5) creates a rebuttable presumption that a landlord who seeks to evict a tenant after the tenant has exercised rights conferred by the ordinance is retaliating against the tenant for the exercise of those rights. The district court denied a motion for a preliminary injunction brought by the group of property owners challenging the constitutionality of the ordinance as violative of the contracts cause and the constitution, violating procedural and substantive due process, the equal protection clause, and that it was void for vagueness. b. Issue i. Is a rent control ordinance that is sufficiently specific reasonable in light of its stated purpose to promote health, safety, and welfare? c. Rule i. A rent control ordinance which is sufficiently specific and gives due deference to the legislative judgment is reasonable in light of its stated purpose to promote public health, safety, and welfare d. Analysis 76

i. The court started by noting that its interest here is not the constitutional analysis of the issues presented, but rather a policy analysis. The court agreed that the ordinance is reasonable, but also acknowledges a strong argument to the contrary because it reapportions landlord and tenant rights. While the ordinance was designed to promote social welfare, its real intention is debatable. Additionally, its actual impact is doubtful because landlords will most likely try to raise rents if they cannot charge more than $10 for late rent; and if tenants can withhold rent, landlords will not improve housing as it will no longer pay. This will ultimately hurt tenants and force those who cannot pay higher rents to go homeless. If the landlords cant raise rents, more resources will go to condominiums, reducing the net stock of housing. The state bank provision of the ordinance requiring security deposits to be placed in Illinois banks serves as a wealth transfer tool promoting class legislation and protectionism and benefiting the middle class, not the poor. Essentially, this ordinance transfers wealth from out-of-state banks and tenants to the middle class allowing the middle class to get preferential treatment by the landlords because they are a better risk against late rent. This becomes apparent once one understands that out-of-state persons cant vote in Chicago state and local elections, and those with very low incomes generally dont vote. e. Conclusion i. A rent control ordinance which apportions tenant-landlord rights is reasonably related to a legitimate public goal Landlord and Tenant I. Introduction A. Various Types: there are four estates that involve a landlord-tenant relationship: (1) the tenancy for years, (2) the periodic tenancy; (3) the tenancy at will; and (4) the tenancy at suffrance B. Statute of frauds: Under the original English Statute of Frauds, any lease for more than three years must be in writing (otherwise it merely creates an estate at will). In the US, most statutes now require a writing for all leases for more than one year a. Option to Renew: in calculating whether a lease is for more than one year (so that it probably has to be in writing), most courts add together the fixed term and any period for which the tenant has the option to renew C. The Estate for years: Most leases are estates for years. An estate for years is any estate which is for a fixed period of time. (So even a six month lease is an estate for years) a. Certain term: for a lease to be an estate for years, the beginning date and the end date must be fixed b. Automatic termination: because an estate for years contains its own termination date, no additional notice of termination need be given by either party on the last day, the tenancy simple ends, and the tenant must leave the premises D. Periodic tenancy: the periodic tenancy is one which continues from one period to the next automatically, unless either party terminates it at the end of a period by notice. Thus a yearto-year tenancy or a month-to-month tenancy would be periodic a. Creation by implication: normally a periodic tenancy is created by implication. Thus a lease with no stated duration (e.g. T agrees to pay L $200 per month, but with no end period) creates a periodic tenancy. Also, if a tenant holds over, and the landlord accepts rent, probably a periodic tenancy is created b. Termination: a periodic tenancy will automatically be renewed for a further period unless one party gives a valid notice of termination 77

II.

i. Common law: at common law, six months notice was needed to terminate a year-to-year tenancy, and a full periods notice was necessary when the period was less than a year. Also, at common law, the notice had to set the end of a period as the termination date ii. Modern: most states today require only 30 days notice for any tenancy, even year to year. Notice today must still generally be effective as of the end of a period, but if the notice is not sufficiently in advance of one period, it is automatically applicable to the following period E. At Will Tenancy: a tenancy at will is a tenancy which has no stated duration and which may be terminated at any time by either party a. Implication: usually a tenancy at will, like a periodic tenancy, is created by implication. For instance, if T takes possession with Ls permission, with no term stated and no period for paying rent defined (so that the lease is not even a periodic one), it will probably be at will. Also, a few courts hold that if one party has the option to terminate at will, the other party has a similar option so that the tenancy is at will. F. Tenancy at sufferance: there is only one situation in which the tenancy at sufferance exists: where a tenant holds over at the end of a valid lease. Here, the landlord has a right of election between: (1) evicting the tenant; and (2) holding him to another term as tenant Tenants right of Possession and Enjoyment A. Tenants right of possession: Courts are split about whether L impliedly warrants to T that he will deliver actual possession at the start of the lease term. The question usually arises when a prior tenant holds over a. American View: the so-called American view is that the landlord has a duty to deliver only legal possession, not actual possession. Despite the name, at most a slight majority of American courts follow this rule b. English Rule: other courts follow the so-called English rule, by which L does have the duty to deliver actual possession. In courts following this rule, T has the right to terminate the lease and recover damages for the breach if the prior tenant holds over and L does not oust him. Alternatively, T may continue the lease and get damages for the period until the prior tenant is removed B. Quiet Enjoyment: T has the right of quiet enjoyment of the leased premises. This right can be violated in two main ways (1) by claims of paramount title; and (2) by acts of L, or persons claiming under him, which interfere with Ts possession or sue of the premises a. Claims of Paramount Title: L, by making the lease, impliedly warrants that he has legal power to give possession to T for the term of the lease. If someone else successfully asserts a claim to the property which is superior to Ts claim under the lease, L has breached this warranty. i. Cant terminate without eviction: Assuming T has taken possession, he may not terminate the lease (or refuse to pay rent) merely on the grounds that a third person holds a paramount title. It is sometimes said that T is estopped to deny Ls title to the leased property. On the other hand, if the third person then asserts his paramount title in such a way that T is evicted, T may terminate the lease and recover damages. b. Interference by landlord or third person: if L himself or someone claiming under L interferes with Ts use of the premises, this will be a breach of the covenant of quiet enjoyment i. Conduct by other tenants: if the conduct of other tenants makes the premises uninhabitable for T, the traditional view is that L is not responsible (unless the 78

III.

other tenants use their portion for immoral or lewd purposes, or conduct their acts in the common areas). But the modern trend is to impute the acts of other tenants to L where these acts are in violation of the other leases, and L could have prevented the conduct by eviction or otherwise c. Constructive Eviction: if Ts claim is merely that his use or enjoyment of the property has been substantially impaired (e.g. excessive noise, terrible odors) the eviction is constructive. When T is constructively evicted, even if the is Ls fault, T is generally not entitled to terminate or stop paying rent until he abandons the premises. C. Condemnation: if the government uses its right of eminent domain to condemn all or part of the leased premises, T may have a remedy. a. Total Taking: if the entire premises are taken, the lease terminates, and T does not have to pay rent b. Partial: if only a portion of the premises is taken (even a major part), at common law the lease is not terminated. Also, T must continue paying the full rent (though he gets an appropriate portion of any condemnation award which L collects from the government). However, the modern trend is to let T terminate if the condemnation significantly interferes with his use, and to give him a reduction in rent even for a small interference. D. Illegality: if T intends to use the property for illegal purposes, and L knows this fact, the court will probably treat the lease as unenforceable, especially if the illegality would be a serious one a. Variance or permit: if the intended use of T requires a variance or permit, and T is unable to get the variance or permit after the lease is signed, most courts hold that the lease still remains valid Condition of the Premises A. Common Law View: at common law, T takes the premises as is. L is not deemed to have made any implied warranty that the premises are fit or habitable. Nor does L have any duty to repair defects arising during the course of the lease a. Independence of covenants: also, the common law applies the doctrine of independence of covenants in leases. Thus even if L does expressly promise to repair (or warrants that the premises are habitable), if he breaches this promise T must still pay rent. T may sue for damages, but he is stuck in the uninhabitable living conditions b. Constructive eviction: however even at common law, T can raise the defense of constructive eviction he can terminate the lease if he can show that the premises are virtually uninhabitable. But he can only assert constructive eviction if he first leaves the premises, something which a poor tenant in uninhabitable residential space can rarely afford to do. B. Modern implied warranty of habitability: Today, the vast majority of states (either by statute or by case law) impose some kind of implied warranty of habitability. That is, if L leases residential premises to T, he impliedly warrants that the premises are in at least good enough condition to be lived in. if L breaches this warranty, T may (among other remedies) withhold rent, and use the withheld rent to make the repairs himself. a. Waiver of known preexisting defects: some but not all courts hold that if T knows of the defect before he moves in, he will be held to have waived that defect so that the implied warranty of habitability does not apply to that defect. If the defect is one which T neither discovered nor reasonably could have discovered before moving in, then all courts agree that an otherwise-applicable implied warranty of habitability protects T against the defect 79

IV.

b. Standards for determining habitability: all courts agree that the existence of a building code violation is at least evidence of uninhabitability. However, most courts require that to prove uninhabitability, T must show that the conditions not only violate the building code, but are also a substantial threat to Ts health or safety. (Conversely, most courts hold that if conditions are a substantial threat to Ts health or safety, the warranty is breached even if there is no building code violation) i. Relevance of nature of building: Some (but not all) courts hold that the age of the building and the amount of rent charged may be considered in determining whether there has been a breach. Thus a given condition might be a breach of the warranty as to a new luxury high-rise, but not as to an old lowrent structure c. Kinds of leases: i. Residential: most statutes imposing an implied warranty of habitability apply to all residential leases (though some apply merely to units in multiple dwellings, so that a single-family house would not be covered) ii. Commercial leases: most statutes and cases do not impose an implied warranty of habitability as to commercial leases d. Waiver in Lease: generally, a clause in the lease expressly stating that there is no implied warranty is usually not effective. (But some statutes will enforce a deal in which T promises, in a separate writing, and for adequate consideration such as lower rent, to make the repairs himself e. Remedies: if T shows a breach of the implied warranty of habitability he may have a number of remedies i. Terminate lease: T may usually vacate the premises and terminate the lease (after he puts L on notice and L still refuses to make the repairs) ii. Withhold rent: T may also withhold rent until the defects have been cured. (But most statutes, and some states, require T to deposit the rent in some sort of escrow account) iii. Use rent for repairs: many cases and statutes allow T to make the repairs and then to deduct the reasonable costs of those repairs from the rent. T must usually give L advance notice of his intent to make the repairs from the rent. T must usually give L advance notice of his intent to make the repairs and to deduct, so that L can make the repairs himself and avoid the loss of rent f. Retaliatory eviction is barred: by the doctrine of retaliatory eviction, L usually may not terminate a periodic lease or deny Ts request for a new lease at the conclusion of a tenancy for years, on account of Ts assertion of the right to habitable premises. The doctrine is most likely to be applied where L tries to terminate the tenancy in retaliation for Ts complaints made to a housing authority about code violations. Also, some courts apply the doctrine where the non-renewal or termination is in retaliation for Ts withholding of rent or his joining in a tenants organization C. Destruction of premises: if the premises are suddenly destroyed or damaged (by natural elements), at common law T must keep paying rent, and may not terminate the lease Tenants Duties A. Duty to pay rent: T of course has a duty to pay rent a. Breach of Ls duties: Most courts today hold that if L materially breaches his implied or express obligations, T is temporarily relieved from continuing to pay rent B. Duty to repair: At common law, T had an implied duty to make minor repairs a. Modern Rule: However most courts today do not impose this duty on T and most impose it on L under the doctrine of implied warranty of habitability 80

V.

C. Fixtures: a fixture is an item of personal property that is attached to the land (e.g. lighting, build-in bookcases, etc.) a. Right to affix: T is usually allowed to attach fixtures if this would not unfairly damage the value of Ls reversion b. Right to remove: if T has attached an item to Ls property so tightly that its fair to regard it as part of the real estate, then as a general rule T may not remove it at the end of the lease term i. Factors: the following factors, if present, argue in favor of a finding that the item is a fixture (and thus not removable at lease-end by the tenant) 1. The item is firmly imbedded in the real estate 2. The item is peculiarly adapted or fitted to the real estate 3. The items removal would destroy the chattel or significantly damage the real estate ii. Trade fixtures: where the item is a so-called trade fixture an item attached to the real estate by a commercial tenant for use in the tenants business there is a very strong presumption that the trade fixture is removable as long as T restores the premises to their original condition. In other words, the firmly imbedded and peculiarly adapted or fitted factors described above do not account for much in the case of trade fixtures D. Duty to behave reasonably: T has the implied duty to behave reasonably in his use of the premises. Landlords Remedies A. Security Deposits: a. Interest: in many states, L is required by statute to pay interest on the security deposit b. Right to keep: once the lease terminates, L must return the deposit to T, after subtracting any damages. If T abandons the lease before the end of the lease term and L re-lets, L must immediately return the deposit c. Commingle: L may normally commingle the security deposits with his own funds B. Acceleration clause: Most leases contain an acceleration of rent clause, by which if T fails to pay rent promptly or otherwise breaches the lease, L may require that all of the rent for the rest of the lease term is payable at once a. Generally valid: most courts enforce such acceleration clauses. C. Eviction: a. Express Forfeiture clause: most leases explicitly give L the right to terminate the lease if T fails to pay rent or violates any other lease provision. Such clauses will be enforced, but only if Ts breach is material b. Summary proceedings: in most states, if L is entitled to terminate the lease and regain possession, or T holds over at the end of the lease term and L wants to get him out, L may do so by summary proceedings, which provide for a speedy trial of Ls right to immediate possession. Summary proceedings usually work by limiting the defenses which T may assert D. Damages for holdover: if T holds over after the lease terminates, L is entitled to damages as well as eviction E. Abandonment: if T abandons the premises (and defaults on the rent) before the scheduled end of the lease term, L has three basic choices: (1) to accept a surrender of the premises, thus terminating the lease; (2) to re-let on Ts behalf; and (3) to leave the premises vacant and sue for rent as it comes true a. Accept surrender: L may treat Ts abandonment as a surrender and accept it. This has the effect of terminating the lease, so that no further rent becomes due from T. If 81

VI.

T takes possession and/or leases to someone else, and does not notify T that he is acting on Ts half, then this will probably be held to be an acceptance of surrender, causing Ts rent obligation to end. b. Re-letting on Ts account: L may re-let on Ts behalf, if he notifies T that he is doing so. This has two advantages to L: (1) T remains liable for all rents coming due, if no new tenant is found; and (2) if a new tenant is found who pays a lesser rent, T is still liable for the difference between this and the original rent due under the L-T lease. c. Leave vacant: Courts are split on whether L has the right to leave the premises vacant, and hold L to the lease. Usually the question is phrased, Does L have the duty to mitigate i. Traditional view: the traditional view is that L has no duty to mitigate ii. Duty to mitigate: but an increasing minority of courts now hold that L does have a duty to mitigate, by attempting to find a suitable replacement tenant. In these courts, if L does not make such an effort, T is off the hook. Transfer and sale by lessor; assignment and subletting by lessee A. Generally Allowed: unless the parties to a lease agree otherwise, either may transfer his interest. Thus L may sell his reversion in the property, and T may either assign or sublease his right to occupy a. Distinguish assignment from sublease: be sure to distinguish sublease from assignment. An assignment is a transfer by T of his entire interest in the leased premises. Thus he must transfer the entire remaining length of the term of his lease. A sublease is a transfer by T of less than his entire interest. i. Significance: the main difference of this distinction is that if T assigns to T1, T1 is personally liable to pay rent to L, even if he makes no express promise to L or T that he will do so. If T merely subleases to T1, T1 is not personally liable to L for the rent. B. Running of benefit and burden: Determine whether a particular promise runs with the land, either as to benefit or burden. If the benefit runs, then an assignee of the promisee can sue to enforce; if the burden runs, an assignee of the promisor will be liable. If neither the burden nor the benefit runs, then the promisors assignee is not liable, and promisees assignee cannot sue a. Touch and Concern test: the burden runs if the promise touches and concerns the promisors assignees interest in the land. Similarly, the benefit runs if the promise touches and concerns the promisees assignees interest in the property b. Normally both or neither: normally, either the benefit and burden will both run, or neither will run. C. Rights after T assigns: here are the rights of the parties after T assigns to T1 his rights under the L-T lease: a. Ts liability to L: After the assignment, T remains liable to L (whether Ts promise to L does or does not touch and concern the land b. Ts rights against T1: After the assignment, T1 becomes primarily liable, and T is only secondarily liable. Therefore, if L sues T when T1 does not make the rent payments, T can then sue T1 for the amount that T has had to pay (even if T1 never expressly assumed the lease duties at the time of the assignment) c. Ls rights against T1: Assuming that T1 does not make any specific promises of performance when he takes the assignment, T1 is liable only for those promises made by T whose burden runs with the land 82

D. Assignment by L: Now, assume that L assigns his rights to L1. Here, the same rule applies: L1 has the burden of covenants whose burden runs with the land, and has the benefit of covenants whose benefit runs with the land E. Agreement by the parties about transfer: All of the above assumes that the lease itself contains no provisions restricting transfer. Most leases, however, contain a promise by T that he will not assign or sublease his interest without Ls consent a. Generally enforced: most states will enforce such a clause, even if L is completely unreasonable in refusing to consent to the transfer i. Strict construction and waiver: however, courts construe such anti-transfer clauses strictly, and are quick to hold that L waived the benefit of the clause ii. Consent to second transfer: also, if L consents or waives his objection to a particular transfer, he is usually held to have also waived his right to a subsequent transfer under the rule of Dumpors case b. Modern Trend: an increasing minority of states hold (often by statute) that even if the lease says that L has an unconditional right to refuse to consent to a transfer by T, the consent may not be unreasonably withheld. c. F. Morgan v. High Penn Oil Co a. Facts i. Prior to August 1945, Morgan acquired a track of land which contained a dwelling house. Immediately after purchasing the land, plaintiff built a restaurant and a trailer park on the land and rented both to a third person. Plaintiff also rented space in his home for additional income. Beginning in October 1950, High Penn Oil Co. (defendant) operated an oil refinery approximately 1000 feet from plaintiffs property. In addition, within a one mile radius of the refinery was located a church, at least 29 homes, a plant nursery, and various small businesses. Two or three days a week, the refinery emitted large amounts of nauseating gasses and odors in to the surrounding air. People of ordinary sensitivities within a radius of 1.25 miles of the refinery were rendered uncomfortable and sick by these gasses. Plaintiffs use and enjoyment of his land and those to whom he rented were thus substantially impaired. Plaintiff and others situated nearby insisted that High Penn top the emissions immediately, but defendant did not. Defendant argued that its use of the oil refinery is part of its business; that its business was a lawful enterprise and thus halting the refinerys operation was not actionable at law because it was not an abatable private nuisance. Defendant also argued that the refinery can only be considered a nuisance if it was constructed or operated in a negligent manner. A jury disagreed, found the refinery to be a nuisance, and awarded $2,500 and damages. The trial judge entered a judgment to that effect and enjoined the defendant from continuing to operate the refinery b. Issue i. If an otherwise lawful enterprise is not constructed or operated in a negligent manner, may it still be considered a nuisance per accidens (an otherwise lawful act or structure which can become a nuisance by virtue of its location) or a nuisance in fact? c. Rule i. A private nuisance exists when one improperly uses his own property in a way that injures the land or some incorporeal right of another; that is, where there 83

is a substantial interference with the use and enjoyment of anothers land which is either intentional or unintentional and is the result of negligence, recklessness, or abnormally dangerous activity d. Analysis i. The existence of negligence is not a prerequisite to maintain or create a nuisance per accidens, also known as a nuisance in fact. A private nuisance exists when one improperly uses his own property in a way that injures the ladn or some incorporeal right of another; that is, where there is a substantial interference with the use and enjoyment of anothers land which is either intentional or unintentional and is the result of negligence, recklessness or an abnormally dangerous activity. In this case, the refinery is a lawful enterprise and thus cannot be regarded as a nuisance per se. however, it can be considered a nuisance per accidens, even when negligence has not been proven or alleged. The law of private nuisance restes on the concept embodies in the legal maxim Sic utere tuo ut alienum non laedas (every person should use his or her own property so as not to injure another). When a person acts with the specific purpose of causing the nuisance or knows that the nuisance is substantially certain to result from his or her conduct, that intrusion into a persons private use and enjoyment of the land is considered intentional. Therefore, when a party intentionally produces or sustains a private nuisance, he is liable for the ensuing harm irrespective of the level of skill employed to circumvent such harm. In this case, it is apparent that the defendant both deliberately and unreasonably caused injurious gasses and odors to escape from its plant significantly impairing plaintiffs use and enjoyment of his land. In addition, the proof offered by the plaintiffs demonstrates that defendant aims to maintain the operation of the refinery in the same manner thus continuing to impose lasting injury on the plaintiff and his use and enjoyment of his property. Plaintiff is therefore entitled to mandatory or prohibitory injunctive relief as may be required to prevent High Penn Oil from continuing the nuisance. e. Conclusion i. A private nuisance occurs where there is a substantial interference with the use and enjoyment of anothers land by one who is using his own land improperly. G. Notes a. Unreasonable: an interference with use and enjoyment of land, in order to give rise to liability, must be substantial; negligent, reckless, or abnormally dangerous activity. b. An intentional invasion is unreasonable if i. The gravity of the harm caused outweighs the utility of the actors conduct ii. The harm caused by the conduct is serious and the financial burden of compensating for this and similar harm to others would not make the continuation of the conduct not feasible c. A trespass: any intrusion which invades the possessors protected interest in exclusive possession, whether that intrusion is by visible or invisible pieces of matter or by energy which can be measured only by the mathematical language of the physicist H. Estancias Dallas Corp v. Schultz a. Facts i. In early 1969, an eight building apartment complex containing 155 rentable units was completed next to the home of plaintiff in the city of Houston. 84

Thereafter, Defendant began operating a large, single air conditioning unit which served the entire complex. The unite was located 5.5 feet from the plaintiffs property line and about 70 feet from their bedroom. According to the testimony proffered, the unit sounded like a jet airplane or helicopter when operational. The noise was so loud that it prevented the plaintiffs from carrying on normal conversations within their home with all the doors and windows closed and also interferes with their sleep at night. Plaintiffs testified that as a result of this noise, their property value dropped $15,000. The original owner of the complex claimed that this air conditioning system cost about $80,000 to construct; that separate AC units for each of the 8 buildings would have totaled $120,000; and that the cost of conversion to this latter system would have been between $150-200,000, and that these apartments could not be rented without air conditioning. We not that at the time, there was no shortage of apartments in the city of Houston. The jury found that the noise generated by the equipment constituted a permanent nuisance and the court issued a permanent injunction against the defendant and awarded $10,000 in interim damages to the plaintiff. Defendants appealed, arguing the court had erred in its holding because it failed to balance the equities. b. Issue i. Can a court appropriately grant an injunction for a permanent nuisance tot eh complaining party if the harm sustained by that party is less than the harm the party causing the nuisance would suffer from the issuance of the injunction? c. Rule i. An injunction remedy for nuisance will be denied only if the necessity of others compels an injured party to seek damages in an action at law and not because the defendant has the right to hurt others d. Analysis i. A court must balance the equities when considering whether or not to grant an injunction. Applying this approach, the court will consider both the potential harm to the defendant and to the public if an injunction is granted as balanced against the harm to the plaintiff if the injunction is denied. The court follows the well established rule as created by the Texas Supreme Court in Story v. Central Hide (even though a jury finds facts constituting a nuisance, there should be balancing of equities to determine whether an injunction should be granted). Thus, if an injunction is not granted, it will not be because the party causing the nuisance has the right to injure his neighbor. Instead, the nuisance will be allowed to continue and the injunction seeking relief denied only if the court finds that the necessity of others which compelled the injured party to seek damages in an action at law is absent. However, the Story Court placed great emphasis on the public interest; holding, in effect, that an injunction could be granted even if it would cause only minor injury to the public and to the nuisance-causing party when balanced against the harm suffered by the moving party. In this case, there is no proof that the apartment availability in the city of Houston is scarce. As such, there is no evidence to suggest that the public would be harmed needlessly or left homeless should this one apartment complex go without its loud air conditioning system. Moreover, there is no evidence to suggest that plaintiffs request for relief via action for damages rather than a request for an injunction is justified e. Conclusion 85

i. An injunction remedy for nuisance will be denied only if the necessity of others compels an injured party to seek damage in an action at law and not because the defendant has the right to hurt others I. Boomer v. Atlantic Cement Co. a. Facts i. Atlantic Cement Company operated a large cement plant near Albany, New York. Neighboring land owners including plaintiff alleged damage to their property interests as a result of the high levels of dirt, smoke and vibration that he plant produced. The trial court held that a nuisance was present and awarded temporary damages to the neighbors in exact sums until the trial commenced. The trial court denied the plaintiffs request for an injunction because it reasoned that the total damage sustained by plaintiffs was small compared to the damage that an injunction would exact upon the defendant. Plaintiffs were also awarded a monetary sum of $185,000 for permanent damages. b. Issue i. Should a court resolve the litigation between the parties in terms of an equitable remedy or should the court, seeking the promotion of the public welfare, channel private litigation into broad public objectives? That is, should a court grant an injunctive remedy for a nuisance when the injunction would have greater economic ramifications for the party causing the nuisance than for the party complaining of the nuisance? c. Rule i. A court may grant an injunction conditioned on the payment of permanent damages to the injured party in order to compensate the party for the harm caused by the nuisance to the complaints respective property rights d. Analysis i. A court may grant an injunction conditioned on the payment of permanent damages to the injured party in order to compensate the party for the harm caused by the nuisance to the complainants respective property rights. The trial court denied an injunction because of a large inequality in economic consequences between imposing the injunction and denying the injunction. The trial courts awarding of damages, however, disregards the historical doctrine that an injunction should be gratned where a nuisance has been established and where the plaintiff has suffered considerable injury. But if we adhered to the letter of the law, this rule would require the closing of the plant. Alternatively, we could grant the injunction but postpone its result until after a period of time. This option would allow time for as yet to be developed advances in technology to stop the nuisance without closing the plant. But there is no guarantee that such advances will ever be developed and until that time, the created harm persists. Thus, the best alternative is to issue the injunction and require ACC to pay the plaintiffs permanent monetary damages to be set by the court. It is within the power of the court to do so. Permanent damages are permitted when the amount the moving party could recover is less than the cost of completely removing the nuisance. In reality, defendant would be purchasing a servitude on the plaintiffs land whereby future recovery by the plaintiffs or their grantees would be foreclosed. e. Conclusion 86

i. A court may grant an injunction conditioned on the payment of permanent damages to the injured party in order to compensate the party for the harm caused by the nuisance to the complaints respective property rights J. Spur Industries v. Del E. Webb Development a. Facts i. The area located along Grand Avenue; roughly 15 miles west of the urban center of Phoenix was first put into agricultural use in 1911 and was used primarily for farmin-related activites until the late 1950s. four years later, the retirement community of Youngtown was established in the region for senior citizens. By 1956, feedlots were developed about 2.5 miles south of Grand Avenue andby mid 1959, between 7,500 and 8,500 head of cattle were being fed there. In May 1959, plaintiff commenced development on a residential community known as Sun City, using 20,000 acres of farmland it previously purchased; land that was less expensive than the land closer to Phoenix. One year later, defendant bought the feedlots and began an operational and geographic expansion program. In early 1960, Webb offered these newly built homes for sale, situated just 2.5 miles north of the Spur feedlots. Four months later, roughtly 500 houses were either completed or in the process of being built. Ironically, at this juncture, plaintiff did not consider the smells emanating from defendants feedlots to be problematic and continued its expansion south of Grand Avenue. By 1962, the feedlots grew to 144 acres from 35. By December 1967, defendants lots were within 500ft of Webbs property. Only plaintiff filed an action to enjoin defendants operation of the feedlots, arguing it was public nuisance. At the time of the complaint, 20,000 to 30,000 head of cattle were being fed, producing over 1,000,000 lbs of manure per day. Although defendant employed suitable housekeeping practices with regard to the lots, the odor and the flies nonetheless created an annoying, if not unhealthy situation. The citizens of Sun City eventually complained and Webb faced sales resistance. b. Issue i. (1) can a lawful activity become a nuisance because others have moved into the area after the commencement of the activity and thus be subject to the nuisance? (2) assuming such an activity can be enjoined, should the injunction-requesting party be required to provide compensation for the cost of ending the activity? c. Rule i. A lawful activity can become a nuisance and thus be enjoined if others thereafter entered the zone of activity; however, if the party requesting the injunction created the need for the injunction, that party can be requested to provide compensation for relocating or halting the nuisance-causing activity d. Analysis i. (1) Yes. A lawful activity can become a nuisance and thus be enjoined if others thereafter entered the zone of activity. A public nuisance is one that affects the rights enjoyed by the general public. In this case, the court is persuaded that the feedlots constituted both a public and a private nuisance to the extent that Sun City residents were involved. Arizona State Law codifies public nuisances as including any conditional place in populous areas which constitutes a breeding place for flies, which are capable of carrying and transmitting disease-causing organisms to any person or persons. 87

Accordingly, Sun City fulfills the populous area element of the law. Additionally, the court notes that the plaintiff lost sales, a real and apparent injury, such that it had standing to bring this action. (2) Yes. The complaining party can be required to provide recompense to the nuisance-causing party for the cost of relocating or ceasing the activity. It is important to note that a court of equity is charged with the protection of all parties interests, not just the publics interest. As such, the interests of a lawful business operation whose activities thereafter become a nuisance because of the encroachment of others must also be protected. In these so called coming to the nuisance cases, the law has held the complaining party may not obtain relief if it came to an area with knowledge that the area was used or to be used for industrial or agricultural development. But the law is flexible to advance what is fair and practical under a given set of facts. In this case, the evidence shows that Spur industries and its predecessors in title were unaware at the time their feedlot operatio commenced that an entire city would be built around them, forcing them to move and defendant must move its operations because it is in the publics interest to do so. Similarly, plaintiff is entitled to relief because of the damages caused by the defendants feedlot activities upon the Sun City residents. However, it would be inequitable to allow Webb, a real estate developer, who has already received the benefit of low rural land prices to build a city and then use the existence of that city as a tool to neutralize a nuisance without paying the offender. We stress however, that this type of relief is narrowly drawn and applied to specific causes of action where a developer has brought in those very residents which cause the once lawful activity to become a nuisance. Thus having brought people to the nuisance to the foreseeable detriment of Spur, Webb must indemnify Spur for a reasonable amount of the cost of moving or shutting down. e. Conclusion i. A lawful activity can become a nuisance and thus be enjoined if others thereafter entered the zone of activity; however, if the party requesting the injunction created the need for the injunction, that party can be required to provide compensation for relocating or halting the nuisance-causing activity. Spur Industries Inc., v. Del E. Webb Development The court considers two issues o Is the feedlot a nuisance to the public o If it is a nuisance, should Spur be forced to stop the feedlot Issues o The feedlot is lawful when it begins, it becomes a nuisance once Del Webb enters into the area o Question of can a once legal business become a nuisance because someone else moves into the area And if it is, can that nuisance be enjoined? o Assuming it can be enjoined, do you have to indemnify the operator of the feedlot o Situation that involves the granting of reverse damages Force the nuisance plaintiffs to compensate the nuisance defendants o Public vs. Private nuisance Difference of degree - one person or a small number versus an entire community or neighborhood o The feedlot is a nuisance under the statute "breeding ground for flies etcetera" 88

However it would likely be a nuisance outside of the statute The case could have come out differently if some of the facts had changed o If the development was not full, or people were not living very close to the feedlot, then the injunction would probably not have been granted Public vs. Private nuisance o If you are a private owner, you can sue for private damages o If it is public, you must be able to show special damages in order to sue This restriction has been criticized and liberalized to be expanded If you're suing for damages under public nuisance, you must show special damages in order to recover If you're suing for equitable relief, in most jurisdictions you're not required to show special damages Four general ways to resolve nuisance problems o Abate the activity through an injunction Essentialyl telling the defendant that it can't do a specific action unless it strikes a bargain with the plaintiff o Let the act continue as long as plaintiffs get damages o Let the act continue denying all relief o Impose reverse damages The defendant is enjoined from the activity, but plaintiff must pay damages Environmental Controls o The contributions that nuisance law can make on environmental law is limited Litigation of the issues is expensive Potential plaintiffs do not have great incentive to bring suit Judges are generally ill-equipped to deal with the complex science issues that can be present in environment issues Nuisance litigation is very cumbersome on plaintiffs

Zoning and other Public Land-Use Controls I. The Taking Clause, and Land-Use Controls as Implicit Takings a. The Taking Clause Generally: state and federal governments may take private property for public use this is the power of eminent domain. However, the fifth Amendment provides that private property shall not be taken for public use, without just compensation. This is the so-called takings clause, made binding on the states by the fourteenth amendment i. Land-use control as taking: Normally, land-use controls will not constitute a taking for which the government must pay compensation. But very occasionally, a regulation may so drastically interfere with the private owners use of his property, or with the value of that property, that the court will conclude that there has been an implicit taking ii. Damages vs. injunction: if the court does find an implicit taking it will award one or both of the following remedies: (1) it will strike down the regulation, i.e. enjoin the government from enforcing it any more; or (2) it will award damages to the owner for his lost use or value b. Taking/Regulation distinction: if the state merely regulates property use in a manner consistent with the states police power, then no compensation needs to be paid, even though the owners se of his property or even its value has been substantially diminished. Thus zoning regulations, environmental protection rules, landmark preservation schemes, etc., will usually not constitute a compensable taking. But if the regulation goes too far, it will become 89

II.

a taking even though the state calls it a regulation. Here are some of the principles the courts look to when deciding whether a regulation has become a compensable taking: i. Substantial advancement of legitimate state interests: the land regulation will be a taking unless it substantially advances legitimate state interests 1. Broad range of legitimate interests: a broad range of governmental purposes constitute legitimate state interests. These include maintaining residential uses, preserving landmarks, protecting the environment, etc. 2. Tight means-end fit: in order for regulation to substantially advance legitimate state interests, there must be a fairly tight fit between the state interest being promoted and the regulation chosen (more than mere rational relation between means and end) 3. Rough proportionality for give-backs: when a city conditions the owners right to develop his property on some give back by the owner, there must be a rough proportionality between the burdens on the public that the development would bring about, and the benefits to the public from the give-back ii. Deprivation of all economically viable use: if a regulation is found to deny the landowner of all economically viable use of his land, this will make the regulation a taking iii. Physical occupation: if the government makes or authorizes a permanent physical occupation of the property, this will automatically be found to constitute a taking iv. Diminution in Value: the more drastic the reduction in value of the owners property, the more likely a taking is to be found. This diminution in value standard is probably the single most important factor v. Prevention of harm: a taking will probably not be found where the property use being prevented is one that is harmful or noxious to others c. Damages for temporary taking: if a land-use regulation is so broad that it constitutes a taking, the owner may be able to bring an inverse condemnation suit. Under such a suit, he may receive damages for the temporary taking (temporary because the regulation is eventually struck down by the court) i. Use in moderation: this principle means that local governments do not have the unlimited right to put temporary moratoriums on development an owner who, because of the moratorium, cant make any economically viable use of his property for some period of time may well be able to recover damages on the theory that his property has been taken, even though the taking was not permanent d. Subsequent owner who takes with notice of restriction: suppose the case is one of those relatively uncommon ones in which the land-use restriction is so great that a taking will be deemed to have occurred. Even if the person who owns the property at the time the regulation is put into effect does not sue, a subsequent buyer who buys the property with knowledge of the restriction may proceed with the suit just as the original owner would have Zoning a. Generally: the main type of public land-use regulation is zoning. Zoning is generally done on the local, municipal, level. The municipalitys power to zone comes from the state police power, or power to act for the general welfare, which is delegated by state statute to the municipality i. Use zoning: most zoning is use zoning, by which the municipality is divided into districts, in each of which only certain uses of land are permitted (e.g. a residential only district, a commercial district, etc.) 90

ii. Density controls: other zoning laws govern the density of population or construction. Thus a town might establish a minimum lot size for single-family homes, minimum set-back requirements (requiring a certain amount of un-built land on some or all sides of the structure), minimum square footage for residences, and height limits b. Legal limits on zoning: i. Constitutional limits: several different federal constitutional provisions may limit a citys ability to zone in a particular manner 1. Taking clause: first, the fifth amendments takings clause means that if a zoning regulation is so overreaching that it deprives the owner of all economically viable use of his land, or is not substantially related to some legitimate public purpose, the zoning will be treated as a taking for which compensation must be paid 2. Procedural due process: the fourteenth amendments due process clause imposes certain procedural requirements on the zoning process. For a zoning action that is administrative rather than legislative, an owner is entitled to a hearing, an impartial tribunal, and an explanation of the governments decision 3. Substantive due process: if the zoning law fails to bear a rational relation to a permissible state objective, it may violate the substantive aspect of the due process clause 4. Equal protection: a zoning law that is adopted for the purpose of excluding racial minorities will trigger strict judicial scrutiny, and will probably be found to be a violation of the equal protection clause of the fourteenth amendment ii. Aesthetic Zoning: most courts today hold that aesthetic considerations may constitute one factor in a municipalitys zoning decision, but they may not be the sole factor. c. Administration of zoning: i. Bodies involved in: several governmental bodies generally get involved in zoning 1. Town council: the zoning code is enacted by the municipal legislature. 2. Board of zoning appeals: a board of adjustment or board of zoning appeals usually exists to award or deny variances, and to hear appeals from the building departments enforcement of the zoning laws 3. Planning or zoning commission: the town council generally appoints a planning commission or zoning commission. The commission generally advises the town council on the contents of the zoning code ii. Variances: virtually all zoning ordinances have a provision Village of Euclid v. Amber Realty Facts: Defendant Village of Euclid is an Ohio Municipal corporation and is basically a suburb of Cleveland. The Village is mostly farmland and undeveloped open land. Plaintiff, owns a 68 acre tract of land in the western end of the Village; bordered by Euclid Avenue, to the south and by a major railroad to the north. Residential lots with buildings were located to the east and west of the tract. In November 1922, the village council approved a zoning ordinance which redistricted the land. This rezoning damaged the property value of the plaintiff. Issue: Can an ordinance constitutionally restrict and control the lawful uses of an owners land so as to confiscate and destroy a great part of its value constituting a cloud upon the land? Rule: the constitutional protection afforded by property rights are not violated by zoning ordinances which are considered a valid exercise of authority 91

Analysis: Building zone laws are creatures of modern society. Until recent years, urban life was comparatively simple, bu with the increase and concentration of the population problems have developed, and are constantly developing, which require, and will continue to require, additional restrictions to the use of and occupation of private lands in urban communities. Regulation as applied to these conditions are so common that they are now uniformly sustatined, whereas helf a century ago, they probably would have been rejected as arbitrary and oppressive. Such regulations are upheld for reasons analogous to those which justify traffic regulations, which, before the advent of automobiles and highways, would have been condemned as fatally arbitrary. Valid zoning ordinances do not infringe upon the constitutional protections afforded property owners and are considered a legitimate exercise of authority unless found arbitrary and unreasonable. The ordinance under review must be justified under some aspect of the police power asserted for the public welfare. Before a city ordinance can be declared unconstitutional, its provisions must be found to be clearly arbitrary and unreasonable, having no substantial relation to the public health, safety, morals, or general welfare. Conclusion: the constitutional protection afforded by property rights are not violated by zoning ordinances which are considered a valid exercise of police power - The Structure of Authority underlying Zoning o Enabling legislation The zoning ordinance is seen as an exercise of police power, and the boards and committees that make the decisions are seen as having their power delegated to them from the legislature o The Comprehensive plan The standard act says that zoning regulations shall be in accordance with a comprehensive plan Only about half the states require comprehensive plans Even when a written plan exists, zoning regulations inconsistent with it are not necessarily invalid, so long as they are considered reasonable and in the public interest - The Nonconforming Use PA Northwestern Dist. V. Zoning Hearing Board Facts: The plaintiff opened an adult bookstore in a Mormon area, and the zoning board rezoned, giving him an amortization period to move Issue: is an amortization provision of an ordinance constitutional when its enforcement effectively deprives a property owner of the nonconforming use of his property when the use was in effect and lawful before the ordinance was adopted? Rule: A zoning ordinance, regulation or amortization clause which denies a property owner the lawful pre-existing but presently nonconforming use of his property before the ordinance or regulation was put into effect amounts to a governmental taking whereby the owner must be justly compensated Analysis: The court first notes that Sullivan provides an incorrect statement of law regarding amortizations as such provisions are not a sensible means of effecting valid zoning regulations. In our state, property is held in subordination to the right of reasonable regulation by the government which is necessary to preserve the health, safety, morals, or general welfare of the public. A zoning ordinance is considered presumptively valid, but such an ordinance or regulation can be invalidated if the landowners constitutionally guaranteed rights to use the property without government restrictions outweigh the enforcement of the ordinance itself. But where a landowners use of his property creates a nuisance or violates a law, covenant, restriction, or easement, a landowners rights will not be upheld. Hence, our State Constitution protects the right of property owners to use their property in any laful way, with conditions. However, we reject a per se restriction against amortization provisions as going too far. Where the provisions are reasonable in consideration of the elements herein discussed and adequate notice has been provided, reasonable land regulation is permitted. Here, the amortization 92

clause divested plaintiff of the lawful use of his property by obliging him to stop all company operations within 90 days. This is not a reasonable provision because it fails to provide adequate time for the elimination of the nonconforming use. Certainly 90 days is an insufficient period of time to allow a merchant to close his business. Conclusion: A zoning ordinance, regulation, or amortization clause which denies a property owner the lawful pre-existing but presently nonconforming use of his property before the ordinance or regulation was put into effect amounts to a governmental taking whereby the owner must be justly compensated. - Changes o The right to maintain a nonconforming use runs with the land o Some jurisdictions provide that nonconforming uses may expand, especially to meet natural changes such as increased demand, and some allow nonconforming use to be changed to another nonconforming use generally only if the change reduces (or does not increase) the impact of the use on the zone in question o Destruction of a nonconforming use, or abandonment, usually terminates it Toys R Us v. Silva The court held that the nonconforming use was lost because use of the premises was substantially discontinued for 2 years - Vested Rights o A pre-existing operation, legal before zoning changes, is generally protected - Variances and Special Exceptions o Variances Commons v. Westwood Zoning Board Issue: Should a variance application be denied when an applicant has shown the likelihood of undue hardship but where the zoning board has provided only a conclusive statement, omitting specifics, that the granting of the variance would prejudice the intent and/or purpose of the zoning plan Rule: A zoning board would grant a variance in exceptional circumstances where the strict application of the zoning ordinance would result in undue hardship upon the owner/developer of the land; where the variance would not substantially impair the public good, and where the intent and purpose of the zone plan ordnance would not be impaired. The boards denial of a variance must be accompanied by the specific findings of fact on which the board reached its conclusion Undue hardship existing where a title holder cannot make effective use of his property should the variance application be rejected In order to grant the variance in Commons, two requirements must be met The variance must be necessary to avoid imposing undue hardship on the owner, and the hardship must not have been self-inflicted The grant of the variance must not substantially impinge upon the public good and the intent and purpose of the zoning plan and ordinance o Special Exceptions Cope v. Inhabitants of Brunswick Exception would be granted if o (1) the other requirements of the ordinance were met o (2) the use will not adversely affect the health, safety, or general welfare of the public o (3) the use will not tend to defeat the purpose of the ordinance or of the comprehensive plan for the development of Brunswick 93

o ($) the use will not tend to devaluate or alter the essential characteristic of the surrounding property - Variances and Exceptions compared o Variance An administratively-authorized departure from the terms of the zoning ordinance, granted in cases of unique and individual hardship, in which a strict application of the terms of the ordinance would be unconstitutional o Exception A use permitted by the ordinance in a district where it is not necessarily incompatible, but where it might cause harm if not watched. Exceptions are authorized under conditions which will insure their compatibility with surrounding uses. State ex rel. Stoyanoff v. Berkeley Facts: Plaintiff applied to the building commissioner for a permit to build a home that had architecture that seriously deviated from the houses surrounding it Issue: Can a valid zoning ordinance regulate the architectural design and appearance of a proposed structure because that building may not conform in appearance with neighboring structures Rule: an architectural board has the power to deny an application/permit for a structure if it determines that the proposed structure would be unsightly, grotesque, or generally unstable in appearance with reference to the nature of the surrounding neighborhood and thus adversely affect the general welfare and/or property values City of Ladue Case that found a provision outlawing signs on a lawn or in a house is an unreasonable restriction of the First Amendment Zoning Legislation o It is a delegation from a state enabling act o There are largely appointed bodies that are deciding and governing zoning o The real authority is the state legislatures down through the appointed and elected local officials to whom the authority is delegated o There must be a comprehensive plan for an ordinance to be valid PA Northwestern Distributor o Facts: an adult bookstore moves in, and a town creates a zoning ordinance against it o Nonconforming use A use that does not conform to recently enacted zoning restrictions Amortization How to get rid of non-conforming use The dominant approach to get rid of non-conforming uses The minority rule is that amortization is unlawful They were there first The majority approach is that amortization must be applied by a balancing test The length of the period, the investment the owner has made, how offensive the non-conforming use is, etc. The initial idea was that non-conforming use should be waited out until they withered on the vine, but this did not work We will not get into floating zones Three mechanisms to get flexibility in standard zoning o Variances 94

Special exceptions Zoning amendments Commons v. Westwood Zoning Board (955) o The lot in question does not have enough area o They try various remedies to fix the problem o The relevant legal standard is that the statute delegates the power to grant the variance The variance must be necessary to avoid undue hardship on the owner No effective use can be made if the variance is denied It cannot be detrimental to the public interest or impinge on the public good Or the intent or plan of the zoning ordinance o The court reverses the decision to deny the variance Cope o Three ways to achieve flexibility when we think that the zoning is harsh o About special exceptions, but variances are brought up Spot zoning o The key issue in zoning amendments is whether they will be treated as legislative and get deference or be treated as quasi-judicial and receive less deference o City of Rochester

o o

Eminent Domain Kelo o The relevant language is the fifth amendment o The question is what may or may not be considered a public use Public use is usually seen as language of limitation The issue in Kelo is how broadly or narrowly to interpret the public use standard o Two other questions that usually come up in takings What is just compensation? What counts as a taking? Rules to constitute a taking If there is a regulation issue that so drastically diminishes the value of a specific piece of property rendering it essentially economically worthless, then it constitutes a taking (even if it isn't bulldozed) If there is a government action that requires an actual, physical, invasion of the property, it constitutes a taking

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