Bobs Property 2 Outline

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Prop 2 Outline LANDLORD-TENANT LAW I. The Leasehold Estates – based on their duration. A. Term-of-Years 1. An estate that lasts for: a. a fixed period of time; or b. for a period set by a formula that fixes calendar dates for a beginning and ending. 2. It can be for 1 day, 2 months, or 3,000 years, etc. 3. It can terminate early if some event or condition occurs. 4. It states from the outset when it will end, so no notice of termination is necessary. B. Periodic Tenancy – a lease for a repeating term that continues for until either L or T gives notice-of-termination. 1. It can be for month-to-month or year-to-year or whatever. If notice isn’t given, it automatically renews. 2. To terminate it under the common-law: a. For a year-to-year lease -- 6 months. b. For a lease shorter than year-to-year -- same as the period, however not to exceed 6 months. 3. You must give a full-period of notice (i.e., by the last day before the start of the notice period). 4. The termination date must be the last day of the period, not something in the middle. 5. Many states have statutes that shorten the length of notice that has to be given to terminate a periodic lease. 6. Problem 1 (p. 364) a. On October 1, L and T enter into a 1-year lease beginning on October 1. 1) If T moves out on September 30, what are L’s rights? a) L has no rights. b) Notice is not required to terminate a term- of-years. 2) What if the lease had been from “year-to-year” beginning on October 1?

Transcript of Bobs Property 2 Outline

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Prop 2 Outline

LANDLORD-TENANT LAW

I. The Leasehold Estates – based on their duration.

A. Term-of-Years 1. An estate that lasts for:

a. a fixed period of time; orb. for a period set by a formula that fixes calendar dates for a beginning and ending.

2. It can be for 1 day, 2 months, or 3,000 years, etc.3. It can terminate early if some event or condition occurs.4. It states from the outset when it will end, so no notice of termination is necessary.

B. Periodic Tenancy – a lease for a repeating term that continues for until either L or T gives notice-of-termination. 1. It can be for month-to-month or year-to-year or whatever. If notice isn’t given, it

automatically renews.2. To terminate it under the common-law:

a. For a year-to-year lease -- 6 months.b. For a lease shorter than year-to-year -- same as the period, however not to exceed

6 months.3. You must give a full-period of notice (i.e., by the last day before the start of the notice

period).4. The termination date must be the last day of the period, not something in the middle.5. Many states have statutes that shorten the length of notice that has to be given to

terminate a periodic lease.

6. Problem 1 (p. 364)

a. On October 1, L and T enter into a 1-year lease beginning on October 1.1) If T moves out on September 30, what are L’s rights?

a) L has no rights.b) Notice is not required to terminate a term-of-years.

2) What if the lease had been from “year-to-year” beginning on October 1?a) You must give notice to terminate, b/c it is a periodic tenancy. b) At common law, T would have to give at least 6 months notice of

his intent to terminate on September 30.c) Many states now allow 30-days notice.d) T could only terminate on Sept. 30. It couldn’t give advance

notice to terminate on August 14 or Nov. 12.e) Neither party gave notice, so the lease remains in effect for

another year.3) What if the lease had been for no fixed term”at an annual rental” for

$24,000 per year payable in $2,000 monthly payments?a) It’s a periodic tenancy.b) Many states say that if an annual rent is reserved there’s a year-to-

year tenancy. This requires 6-month or 1-month notice depending on the state.\

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c) Other jurisdictions say it’s a month-to-month tenancy if rent is paid monthly. This requires 30-days notice.

7. Problem 2 (p. 364)a. Facts

1) T is a month-to-month T.2) It told L on November 16, 2001, that it was leaving on November 30,

2001.3) It left and paid no more rent.4) L re-let the premises as of April 1, 2002.5) There’s no statute or lease provision governing notice.6) L sues T for unpaid rent for December 2001 through March 2002.

b. If this is a mid-month to end-month lease, the notice is okay.c. If not, is the notice void or does it terminate the lease as of December 31, 2001?d. Majority rule -- terminates as of Dec. 31, 2001.

What are the implications if the notice is “void”?

C. Tenancy-at-Will (p. 365)1. A tenancy of indefinite duration, i.e., it’s for no fixed period and continues as long as the

L and T agree.2. Termination

a. If it only allows one party to terminate, it implies a right in the other to terminate.1) A one-sided termination right can be grafted onto either of the other two

tenancies.2) Ex. “tenancy in T for 10 years or until L terminates” = term-of-years

determinable.b. Either party dying terminates the lease. Why?c. Notice of 30 days or the period-of-time between rent payments must be given to

terminate.d. Majority Rules (if only 1 party can terminate it):

1) T can terminate the lease:a) Follows Garner, rather than common law (i.e., may not be a

tenancy-at-will, and neither can terminate it).b) Will probably be determined to be a determinable life estate.

2) L can terminate the lease:a) Usually creates a tenancy-at-will of L or T (though inconsistent

with the lease and the parties’ intent).

3. Garner v. Gerrish (NY. Ct. App. 1984) (p. 365)a. Does a lease that T can terminate at will create a (i) determinable life tenancy,

or (ii) a tenancy-at-will?b. Problem 1: at common law, life estates required livery-of-seisin, which did not

happen here.c. problem 2: at common law, granting one party (here, the lessee) a right to

terminate implied the other had the same right, at least to the majority.d. Held: old rules like livery-of-seisin abandoned, so this can be a life-estate

determinable [this is closest to the true intent, in any event].

e. Note: would the court have ruled otherwise if the parties didn’t admit that this was a lease?

4. Problem 2 (p. 368). L leases land to T for “as many years as L desires.”

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a. This is the opposite of Garner.b. Under CL, T has a tenancy-at-will.c. The Restatement -- cited in the problem – says the parties may agree that the

lease is terminable at the will of one party, regardless of the party.d. The Restatement – T has a determinable fee simple – terminable at L’s will,

unless it’s unconscionable.

5. Problem 3 (p. 368) – For $500 monthly rent, L leases land to T for the duration of the war. What estate does T have? What difference does it make? a. How do you eliminate the possibilities?

1) If not term, and not periodic, and not at sufferance – it must be at-will.2) But why not – if not at sufferance, not at-will, and not periodic – it must

be term.3) Where you start determines the ending!

b. Why not just call it – a tenancy-until-war-ends?c. If you put it in a tenancy-at-will box, either party can terminate-at-will – they

didn’t agree to this.

D. Tenancy by Sufferance – Holdover Tenancy 1. T doesn’t leave when the term ends. The parties have no agreement so it’s not really a

“tenancy”.2. Common law:

a. L may (i) evict T and get damages; or (ii) consent to a new tenancy.b. If L doesn’t evict T:

1) Majority: gives rise to a periodic tenancy; 2) Minority: gives rise to a term-of-years.

c. The period or term is determined based on:1) How the original lease computed rent, or 2) the length of the original term or period, with the maximum for each

being one year. d. The same terms (rent, duties, etc.) apply unless they agree differently, or

circumstances changed. 3. Today, most states have statutes that govern holdover.4. Crechale & Polles v. Smith, (Miss 1974) (pg. 369)

a. Facts1) L and T had a 5-year term-of-years at $1,250 per month.2) The T said it had a short-term renewal so it could move, but L disagreed.3) The T didn’t vacate the premises.

b. General rule – holdover year-to-year tenancy let L (i) evict, or (ii) consent to a new 1-year lease.

c. Holding -- when a L elects a remedy, it can’t change its mind later.1) The L told the T it would not accept a holdover. It elected to terminate

that lease and treat the T as a trespasser.2) A L who then fails to evict the T and accepts monthly rent checks, in effect

agrees to extend the lease on a month-to-month basis.3) The L’s letter made clear that it wouldn’t agree to a hold-over. He could

not later treat the T as a holdover.4) The T, though, was still in possession and must have been a T-at-

sufferance.5) When the L accepted a month’s rent, an implied month-to-month tenancy

resulted.

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5. Notes and Questions 1 (p. 371-372) a. At common law, a hold-over on a term-of-years lease didn’t lead to a new lease

for the same term – at best, a periodic tenancy was established.b. A court had to determine the term. It was (i) the length of the original term, or (ii)

how the rent is computed in the lease. But there was a 1-year maximum. The terms were the same.

6. Term v. Term 7. Notes and Questions 2 (p. 372-373)

a. Some statutes specify the maximum length of a holdover. Some call for double rent payments, etc.

b. What do you prefer? Why?8. Notes and Questions 3 (p. 373)

a. Is vacating but leaving a few things a holdover?b. What if T is too sick to move?c. Probably not. Courts frown on creating holdovers.

III. The Lease (373)A. Or something else -- a license? Billboard, CDs in Target, etc.B. If it’s not clear:

1. What did the parties intend – did they think about it?2. How many restrictions are on T?3. How much control does L retain?4. Does the non-L perform services? The more services, the less likely a lease?

B. Why don’t you want a lease? Leases give Ts rights. You may want to evict them out in a hurry.C. Is a lease a conveyance or a contract -- there are elements of both.

1. It was conveyance-oriented, transferring a possessory interest in land – it transfers property rights.

2. Now it is contract-law controlled. A promise to pay rent, to provide utilities, etc.3. So the law in this area now includes more and more contract principles – duty to

mitigate, warranties, etc.4. Leases are interpreted using contract-law principles.

D. Statute of Frauds – all interests in property except leases under one year must be in writing.E. Form Leases -- Leases can be long, and Ls use form leases.

IV. Selection of Tenants – Discrimination: What is discrimination?A. Three statutes limit how L may discriminate in selecting Ts. Understand the rights they give,

and distinguish arguments that can be made.1. Federal Fair Housing Act – most limiting.2. Fourteenth Amendment to U.S. Constitution – Guarantees equal access, but limited to

gov’t action.3. 42 USC §1983 – only to race, but no exemptions.

B. Map out the FHA provisions – 3603, 3604 from pp. 377-378.C. Exemptions from Prohibition:

1. religious organizations/private clubs sometimes2. There is also an exemption for certain types of housing.

a. Single-family homes an owner sells or rents if it doesn’t own more than 3 homes at one time; and

b. units in dwellings with living quarters occupied or intended to be occupied by not more than 4 separate families if the owner also resides there.

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3. Note -- There are exceptions to exemptions, e.g., discrimination in advertising is a violation even if it’s in connection with an exempt subject matter.

D. Notes/Questions pp. 378-3841. Note #1

a. Can’t discriminate in financing or broker services.b. Injured parties can get damages/punitive damages.

2. Note #2 a. The 14th Amendment and 42 USC §1983 also offer protections.b. The FHA doesn’t require intent -- discriminatory effect. But 42 USC §1983

requires intent.3. Note #3 – Mrs. Murphy’s -- exemptions.

a. Black couple is rejected due to their race.1) Violates 42 USC §1983, but not the FHA due to the exemption in

§3603(b)(2).2) But the ad would violate §3603(c), because the exemptions don’t apply.

b. 2nd hypo – ad doesn’t violate the FHA; 42 USC §1983 doesn’t apply to ads. But the discrimination would.

c. 3rd hypo – the wording probably violates the FHA.d. You can’t have a ceiling on black Ts to prevent white flight and promote

integration. How do we balance the competing goals of (i) antidiscrimination, and (ii)

integration?4. Note #4 – discusses discriminating on grounds other than race, religion, or national

origin. FHA didn’t originally prohibit discrimination for sex, handicap, or family status.5. Note #5 -- states and local government may more broadly define discriminatory

behavior; e.g., age, sexual orientation, marital status, etc.6. Note #6 – avoid some words in a housing ad.7. Note #7 – winning plaintiff gets attorney fees.

V. Delivery of Possession (p. 384)A. ISSUE: If T arrives at the premises and finds the previous T is a holdover, how do the parties

proceed?B. Hannan v. Dusch, (Sup. Ct. of App. VA 1930)

1. Plaintiff leased property to the defendant for 15 years, but other Ts refused to vacate the premises.

2. If there is no express obligation, must L oust trespassers to ensure T has possession on the first day of the term?

3. Do you grant possession or “the right to possess?”4. English Rule – L must ensure T can possess at the proper time – L is in the best position

to do so.5. American Rule -- if L doesn’t promise to do so, it’s not at fault if a T holds-over – he

gave the new T the right to possess -- T can evict the prior T as well as L could. 6. Adopts the American Rule – L is not at fault.7. You lease should have the language that you want.

C. Notes and Questions (p. 387)1. The law remains divided. The Restatement (Second) of property and the Uniform

Residential Landlord and Tenant Act adopt the English Rule.2. American Rule -- T can sue the party wrongfully in possession to recover possession

and for damages.3. Which rule do you prefer and why?4. English Rule -- the reasons for it:

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a. L knows better the property’s status.b. L knows better whether someone improperly possesses the property.c. Only L can evict T before the new lease begins.d. T got less than bargained for; he must sue old T.e. Only L can get assurances from the prior T.

D. Problems1. T pays 1 year in advance for land-locked property and the neighbors won’t let him

access it. Is this consistent with the English Rule?a. No – the thing leased wasn’t delivered.

2. T executes a lease, takes possession and pays rent. It discovers L had previously leased the land to another T for the same term. Does T have to keep paying?a. There’s an implied legal right of possession.b. This means either (i) L hasn’t given the right of possession to someone else who

is in possession, or (ii) it hasn’t given the right of possession to anyone who’s not in possession.

c. T loses – it has unfettered possession.

VI. Subleases and Assignments (p. 388)

A. Ernst v. Conditt, (Tenn. Ct. App. 1964) (p. 388)

1. Factsa. The Ernsts leased land to Rogers for 1 year and 7 days beginning on June 23,

1960.b. Rogers opened a go-cart track.c. Rent was the greater of (i) $4,200 per year at $350 a month, or (ii) 15% of gross

receipts.d. Rogers couldn’t sublet without the Ernsts’ permission. Even if Rogers did sublet,

Rogers’s duties would remain.e. Ernst let Rogers sublet to Conditt and extended the term to July 31, 1962.f. Rogers stopped paying rent after October 1960, except that he paid for June

1961. But he kept in possession.g. Ernst sues for (i) unpaid rent, and (ii) the cost of removing Rogers’

improvements.2. Arguments:

a. Ernst argues – Rogers assigned the lease to Conditt so Conditt is directly liable.b. Conditt argues – he and Rogers had a sublease so Rogers is directly liable.

3. Privitiesa. PoE – by taking possession, Rogers gets in PoE with Ernst.b. PoC – by signing a lease with rent, Rogers is in PoC with Ernst.

4. The Court found Conditt liable. It said it was an assignment and not a sublet.a. The PoE ended Rogers stopped possessing the property, but the PoC continued.

5. If Rogers had subleased to Conditt, Ernst and Conditt would have PoC. Conditt couldn’t be liable on the covenant to pay rent and the cost of removing the improvements.

6. If an assignment, PoC exists and Conditt is liable.7. The court is confusing PoE with PoC.

B. Notes and Problems (pp. 393-394)1. Sublease or Assignment?

a. Formalistic Approach

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1) Assignment –when the lessee transfers its entire interest under the lease.2) Sublease – if the lessee transfers less than its entire interest under the

lease. It has a reversion – regains possession.3) Partial Assignment – lessee transfers its interest in a part of the

premises.b. Parties’ Intent – less common approach The words used aren’t conclusive,

though they have evidentiary value.

2. Consequences – sublease/assignment

a. Problem 2(a) – L leases to T for 3 years at $1,000/month. A year later, T “subleases, transfers, and assigns” to T1 for 1 year from that date. Neither T nor T1 pays rent to L. What are L’s rights against T and T1?1) Intent Test -- given the words of the transfer, it doesn’t tell us much.2) Other Test -- it’s a sublease; T transferred less than its entire interest.3) L may sue T for rent. With a sublease, L and T still have PoE and T is

liable for the rent.4) Under common-law, L can’t sue T1:

a) L and T1 aren’t in PoE. T and T1 are in PoE.b) L and T1 are also not in PoC because T1 didn’t assume the lease

covenants.5) But L can always assert an equitable claim against T1.What if T1 had agreed to pay the rent? Does this affect L’s rights?1) L and T1 now have PoC so L is a 3rd-party beneficiary and could sue.

b. Problem 2(b) -- L leases to T for 3 years at $1,000/month. T must pay rent in advance on the 1st day of each month. T can’t sublet or assign without L’s approval.6 months later, T transfers to T1 for the rest of the term with L’s permission. At first, T1 pays rent directly to L, then defaults.L sues T. What result and why?1) T’s liable to L on PoC. The lease has a covenant to pay rent.2) T’s assignment to T1 ends the PoE between L and T, but not the PoC

from the covenant.3) PoC remains unless L expressly releases T – a novation. L’s consent to

an assignment doesn’t implicitly release T from covenants.

c. Problem 2(c) -- L leases to T for 3 years at $1,000/month. T has to pay rent in advance on the 1st day of each month.6 months later, T assigns her entire interest to T1, who assumes the lease covenants.3 months later, T1 assigns his interest to T2.3 months later, T2 assigns its interest to T3. T3 fails to pay the rent.L sues T, T1, T2, and T3.What are their liabilities and why?1) T is liable for T3’s default – PoC; there was no novation of the original

lease and its covenants.2) T1 is liable to L for T3’s default – PoC. T1 assumed the lease covenants.3) T2 isn’t liable. It didn’t breach and its PoE expired when it assigned to

T3. T2 was never in PoC with L.

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4) T3 is liable to L – PoE arose from the assignment. If you’re in PoE, you’re liable for breaches of the lease that run with the land. These do -- they touch-and-concern the land.

5) If L proceeds against T, T can proceed against T1 on privity of contract (T1 assumed the lease covenants; T2 and T3 didn’t) or against T1 and T3 on a subrogation theory – it had to pay based on their breaches. Similarly, if T proceeds against T1, T1 can proceed against T3 on the same basis.

3. What if the Ernst lease had required L’s consent, but it couldn’t be unreasonably withheld?

C. Kendall v. Ernest Pestana, Inc. (Ca. 1985) (p. 395)1. Facts

a. The city of San Jose leased airport hanger space to the Perlitches.b. The Perlitches first sublet to Bixler for 25 years (5 years + 4 5-year options).

Bixler operated an airplane maintenance business.c. Perlitch then assigned the lease to Pestana.d. Bixler sold his business to Kendall and wanted to assign the lease to Kendall, but

Pestana refused to consent.e. Pestana sought more rent and onerous terms.f. Kendall was financially sounder than Bixler.

2. Issue: Can Pestana arbitrarily refuse to consent to Bixler assigning the lease to Kendall?

3. Holdinga. Pestana can withhold consent only for commercially-reasonable reasons.b. The law favors free alienability.c. Ls have legitimate concerns, but the “reasonable reasons” standard is fair.d. The lease is a contract. All contracts require good-faith and fair dealing.e. The court rejected 4 common arguments:

1) L chose T, and the lease relationship is inherently personal -- not anymore.

2) T could’ve negotiated the provision it wanted – Ts think they can assign.3) Leases were drafted relying on the rule – competent counsel should know

the majority rule was under attack.4) L should be able to capture any higher rental value – it didn’t bargain for

that. Neither did T. Why should it benefit if it can charge more?

f. Make your lease explicit – permit yourself to be arbitrary.4. Factors to consider to see if refusal is reasonable:

a. Financial status of assignee.b. The proposed use of the property – suitability and legality.c. What build-out is needed?

5. This case only addressed commercial leases – it’s silent as to residential leases.

D. Notes and Questions (p. 400)1. Note #1 – California codified Kendall, but the court later upheld express provisions.2. Note #2 – Should Kendall apply to residential?

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3. Note #3 – How are a reasonableness standard and a duty to mitigate related? If L has a duty to mitigate and the proposed T was reasonably acceptable, L can’t sue for the rent that the proposed T would’ve paid.

E. Problems (p. 402) – these jurisdictions follow Kendall and consent can’t be unreasonably withheld.

1. Problem 1(a) – L leases to T for 5 years. After 2, T wants to transfer the lease to T1, but L refuses because T1 is a T in another of L’s buildings under an expiring lease that L wants to renew.

2. Krieger – L is unreasonable. The clause’s purpose is to protect L with respect to that particular property, not generally.a. The authors say Krieger is a bad decision. You can’t force L to mitigate by

leasing to its T from another building.What if T1 is not already L’s T but is a prospective T who wants to use the leased property for a business that will compete with L?a. Pay ‘N Pak – L is reasonable.b. Protecting L from competition is not general protection – it’s specific to that

property.

2. Problem 1(b) – L is a Christian organization. It leases space at its headquarters to T. T wants to transfer the lease to T1. T1 provides information on birth control and abortion. L refuses.a. American Book – L is unreasonable. T1 was acceptable by objective criteria.b. To let L refuse would give in to arbitrary matters of personal taste, sensibility,

and convenience. Religious entities must be held to the same standards.c. What if L wouldn’t have leased to T1?

3. Problem 2 – T can’t assign without L’s consent. L refuses so T transfers to T1 for the term minus 1 day. This is a sublet, not an assignment.a. Walgreen – yes it’s transparent, but it was upheld. L should’ve thought to ban

subletting as well as assignment.

4. Problem 3 – L leases to T. T must pay rent and can’t sublet or assign without approval. T assigns to T1 with approval. T1 doesn’t expressly assume lease obligations. T1 then assigns to T2 without approval. T2 defaults in rent and L sues T1.a. Dumpor’s rule terminates a prohibition on assignment unless it’s specifically

reserved.b. The Restatement rejects Dumpor’s rule.c. T1 wins if Dumpor applies. T1 didn’t assume lease covenants so there’s no

privity of contract. And T1 assigned so there’s no privity of estate.d. Dumpor’s doesn’t apply to subleases.

VII. T Who Defaults (p. 403)

A. T in Possession1. Berg v. Wiley (p. 403) -- illustrates modern trend prohibiting self-help re-possession if T

defaults.a. Facts

1) L and T have a 5-year lease.

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2) T had shut-down and was remodeling. The parties had several arguments – with police – about the issue.

3) L, with the help of a locksmith and police officer, entered the premises and changed the locks.

b. Issue – can L use self-help re-possession?c. Ruling -- No

1) L objected to T’s remodeling without permission and operating a restaurant while violating the health code.

2) T didn’t abandon or surrender the premises. The closing was temporary during the remodeling.

3) At common law, L can use self-help if:a) A breach legally entitled it to possession; andb) it exercised its right in a peaceable manner.

4) There was no such breach here.5) L was not peaceful. They were the very sort we try to avoid.6) An entry can be a breach of peace even if no force is used, so long as the

acts of entry could give rise to altercations.7) L is liable for damages to T for wrongful eviction.8) Self-help is no longer allowed – even if peaceful. Use the Summary

Proceedings Act.9) Notes – some states may still allow self-help, but it is gaining momentum

and is or soon may be majority rule

2. Notes and Questions (p. 408)a. Note #1 (p. 408)

1) Common law let a L use self-help – if it used only reasonable force. But it could still be criminally prosecuted.

2) Modern: The trend is to prohibit self-help, but most states still allow it. The issue is whether the force used was reasonable.

b. Note #2 (p. 408)1) In some states, L use self-help in commercial leases, but not residential.2) Should it matter if the lease expressly permits self-help? The courts are

split.3) Eliminating self-help makes eviction more expensive and will increase

rent. Are the social benefits worth it?

3. Note: Summary Proceedings (p. 409)a. The rise of Summary Proceedings statutes has hastened banning self-help.b. They’re supposed to be quick and cheap. But they’re not. That’s the problem.

4. L’s Remedies in Addition to Eviction (p. 410) – L may also want back rent, future rent, damages to the premises, etc. We’ll address later.

B. T Who Abandoned (p. 410)1. Sommer v. Kridel (p. 410) – residential L must mitigate damages even if T abandons.2. Facts

a. Two separate cases. In one, T backed out of lease before taking possession. In the other, T left one year into a 2-year lease.

b. Each requested to be let out, but L said no.3. Issue – Does L have to mitigate damages if T breaches the lease?

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4. Yes, L must mitigate damages.a. Not requiring L to mitigate damages was based on principles of property law.

1) A lease conveys a property interest to T which forecloses any control by L.

2) You can’t require L to worry about T abandoning T’s property.3) Property law doesn’t impose a duty to mitigate.

b. Can’t continue to distinguish between a residential lease and an ordinary contract.

c. Duty to mitigate arises from contract law.d. L must prove that it used reasonable diligence in trying to re-let the premises.

1) Offer or show property to others.2) Advertise in local papers.3) T can rebut by showing that L failed to purse Ts that T brought to L.

e. Each case must be judged on its own unique facts to determine of L properly mitigated.

5. Notes and Questions (p. 416): MITGATIONa. Note #1 (p. 416)

1) Justifications for no duty to mitigatea) T shouldn’t be able to impose duty on L through wrongdoing.b) T bought an interest in real estate and is stuck with it.c) Vacant property leads to vandals.d) Efforts to mitigate may be seen as accepting the surrender.

2) If surrender is accepted, it ends T’s liability for future rent.3) What if T abandons? This is an implied offer of surrender. How does L

accept, or avoid accepting?

b. Note #2 (p. 417)1) Is there any reason to impose a duty to mitigate in some cases but not

others?2) Mitigation is fairer, helps avoid waste, and promotes efficiency.

c. Note #3 (p. 418) – NY has kept the old rule.d. Note #4 (p. 418) – mitigation examples.

6. Notes: L’s Remedies/Security Devices (p. 419)a. Rent and Damages.

1) L can sue for back rent and damages if T breaches.2) But how much future rent can L recover? Anticipatory breach.

b. Security Devices (p. 420)1) Security Deposits -- we want to protect T from abuses. Statutes do so.2) Other techniques

a) L avoids restrictions on security deposits by renaming them.b) Consideration, bonus, advance rent, liquidated damages, etc.c) Rent acceleration.

VIII. Duties, Rights and Remedies (Premises Condition) (p. 421)

A. Landlord’s Duties; Tenant’s Rights/Remedies1. Introduction

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a. Ls have an incentive to ignore everyday repairs because they’ll soon be T’s burden. And Ts have an incentive to neglect maintenance near the end of the term -- they’re about to move.

b. CL had an implied covenant of possession, but nothing with respect to the condition of premises: (i) historically the value was in the property, not the structures on it, but now, (ii) it’s the use of land and housing.

c. Disputes over the premises’ condition usually arise if: (i) T wants to vacate, or stay and pay less, or (ii) T gets hurt, blames the premises, and sues.

2. Quiet Enjoyment and Constructive Eviction (p. 422)a. Courts created this as the first pro-T reform to make the L-T relationship less

one-sided.1) This is not a “possession” right, but a right derivative of the right to

possess. 2) The L’s “substantial” breach of quiet use and enjoyment. Do you have

examples?3) T can stop paying rent. But it has to leave – unlike IWH.4) Courts make “quiet use and enjoyment” covenant dependant on covenant

to pay rent.

b. Reste Realty Corp v. Cooper (p. 422) – expands the implied covenant-of-quiet-enjoyment; the court could’ve reached the same result relying on standard exceptions to caveat lessee.1) Facts – how do you feel about the parties?

a) 5-year commercial lease of basement office. She used it for sales meetings and training for her jewelry business.

b) Water regularly ran off the driveway (not being leased) into the basement. L’s agent promptly cleaned the mess.

c) A year later, L and T expanded the lease to cover more of the basement. Repaved the drive, but it still leaked.

d) L’s agent died and T’s complaints were ignored. T then abandons.e) L then bought the building and sued T for all rent. L wants

damages.2) Rule: Constructive Eviction Theory

a) L argued that (i) T accepted the water damage, (ii) it wasn’t “permanent,” and (iii) T waited too long to leave.

b) The prior L’s promises bind the new L.c) Acceptance -- T didn’t accept the leakage. It worked with L.

Wait -- it didn’t wait too long, because it had hope and it received promises. Permanence – no incidence was permanent, but it recurred. And the driveway’s condition was permanent.

d) The driveway wasn’t part of the lease, and an inspection wouldn’t have revealed the latent defect.

e) L had a duty to disclose latent defects. This is a new duty.f) The covenant of quiet enjoyment – breached by an act that (i)

renders the premises substantially unsuitable for the purpose for which they were leased, or (ii) seriously interferes with T’s use of the premises.

g) A breach causes constructive eviction.

c. Notes and Questions (p. 427)1) Note 1. Constructive Eviction

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a) CL -- L’s duties independent – T could get damages, but not terminate the lease or stop rent.

b) Exception – T’s only had to pay rent if L was not disturbing its possession.

c) If a condition was the L’s unlawful disturbance – a breach of the implied CoQE – it was as if T was evicted.

d) If evicted, T didn’t have to pay rent.e) Constructive eviction is a substitute for dependency of covenants.

2) If T can vacate due to L’s acts, it doesn’t matter if we call it (i) breach of a covenant of quiet enjoyment, (ii) material failure of consideration, or (iii) breach of an IWH.

3) Note 2. Scope of CoQE.a) Initially, the quiet use and enjoyment covenant was breached only

if T was physically ousted. It was expanded to include beneficial enjoyment.

b) T could always sue for damages, but now it can stop paying rent.c) Reste could’ve relied on (i) breach of promise to repair, (ii)

negligent repairs, (iii) breach of duty to disclose latent defects, or (iv) breach of duty to maintain common areas.

d) Reste gives “quiet enjoyment” a life of its own. It creates an independent duty to provide premises that can be reasonably used and enjoyed in light of the purposes of the lease. Some statutes do the same!

4) Note 3. Partial eviction – actual and constructive.a) If T is evicted from a part of the premises does it have to pay rent?b) Restatement – yes, for part it can use.c) If there’s a constructive partial eviction, T must continue paying

rent.

5) Note 4. Tenant’s remedies.a) Constructive eviction, like actual eviction, used to require ouster.

Now you don’t have to leave premises for a partial constructive eviction.

b) Could leave or stay, and sue for damages on the price differential between the property’s value as promised and as it is with the breach.

d. Problems (P. 429)1) Problem 1 – T is a T-at-will of L. L causes a nuisance that interferes with

T’s business. T vacates, rents space at a higher rent, and sues for damages for constructive eviction from a breach of quiet enjoyment.

If L can terminate at-will, it can terminate constructively. Kent turned it into an implied periodic tenancy and let T sue.

2) Problem 2 – In each of these, T has a term-of-years and vacates before the term ends and stops paying rent. When L sues, T defends based on constructive eviction and breach of quiet enjoyment.

3) Problem 2(a) – L fails to control excessive noise by partying neighbor Ts. What if it’s not noise, but cigarette smoke?

More and more cases require L to control the behavior of other Ts.

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4) Problem 2(b) – The apartment building has been the site of crime. L installs deadbolts and hires guards, but the problem continues.

No breach. Has a duty to take reasonable steps, but L isn’t an insurer of safety.

5) Problem 2(c) – An abortionist has been the target of protesters singing, passing out leaflets, etc. L has done nothing.Constructive eviction. L failed to act even though repeatedly asked to do so.

6) Problem 3 – T thinks L breached quiet enjoyment and wants to abandon, claiming constructive eviction. Rather than vacate, T sues, alleging a substantial breach and seeking permission to leave within 30 days. Why not just leave?

Can avoid the risks inherent in a constructive eviction action. But only the wealthy or commercial Ts can do this.

e. The Illegal Lease1) If the premises breach city codes before the lease, a court may refuse to

enforce it.2) “Scienter” required - actual or constructive knowledge of the violation.3) T treated as a T-at-sufferance. It doesn’t have to pay rent under the lease.

But if it stays, it must pay a reasonable rent for the premises’ condition – it’s not “free”.

4) Minor technical violations don’t render a lease illegal, nor if L didn’t have knowledge.

5) The illegal-lease doctrine was the bridge from quiet enjoyment and constructive eviction to the IWH.

3. Implied Warranty of Habitability (p. 431)a. Hilder v. St. Peter (p. 431). Vermont adopts IWH.

1) Factsa) T rented an apartment for herself, 3 kids, and grandkid.b) Lots of problems and broken promises: window, sewer, door,

pipes, falling plaster, toilet, and lights.2) Issue: Old law (constructive eviction) required T to abandon premises

before suing. Did IWH?3) L/T law has morphed over time.

a) Property v. Contract. L’s only covenant was to provide T possession.

b) L didn’t have a duty to provide habitable premises. Caveat lessee. Quiet enjoyment and constructive eviction were the only exceptions.

c) T no longer a farmer -- L can better repair and handle litigation expenses.

d) Modern Ts want decent housing.4) Given the changes in the L/T relationship, it would be wrong to continue

to impose caveat lessee on residential leases.5) Leases now have IWH in essential facilities of the rented unit and

common areas. Not waivable, even in writing.a) L must deliver and maintain premises in habitable condition.b) How do you define latent and patent defects in essential facilities?

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c) Standard for judging breach? A “substantial” code violation is prima facie evidence, but not de minimis.

6) If no code covers the breach and it impacts T’s health/safety, T can sue L or stop paying rent – T doesn’t have to move before suing.

7) Before suing, T must notify L of the problem and a allow reasonable time to fix. If T fixes, it can deduct its cost from rent.

8) Damages – rescission, reformation, damagesa) Value of dwelling as warranted less value of dwelling as rented.b) Discomfort and annoyance damages.c) Punitive – willful misconduct or fraud.

9) T got back rent. Entitled to more damages.10) The Court wanted proof of $1,500 awarded that wasn’t explained (why?).11) The Court dropped T’s claim for punitive damages – it hadn’t appealed

this.

b. Notes, Questions and Problems (p. 437-439)1) Note 1. IWH and other legal doctrines.

a) IWH is great for T, but – constructive eviction and illegal lease remain valid.

b) Not all states have it. Even where it is, there can be exceptions. For example, long-term leases, Mrs. Murphy, etc.

c) Most states haven’t adopted it for commercial leases.

2) Note 2. Standard and breach of IWH.a) Different states use different words, but they apply it the same.b) The standard – safe/healthy housing. Substantially complying with

codes should suffice. But it’s more than just avoiding slum conditions.

c) Air conditioning? Loud noises? Cable?

3) Note 3. Remedies for breach.a) T doesn’t have to vacate to sue L.b) T can use it as a defense to (i) L’s action for possession and back

rent, and (ii) summary eviction proceedings.c) Abandoning, staying, and normal, special and consequential

damages aren’t the only remedies. Specific performance is possible.

d) States calculate damages differently.e) What if rent is so low that it’s fair even given a horrible

apartment?

4) Note 4(a). L’s maintenance and janitorial service goes on strike. City sanitation workers won’t cross the picket lines. Bad odors, bugs, non-maintenance occur.

Court found a breach, though it recognized that L isn’t a guarantor of every amenity. It doesn’t have to be perfect, but it can’t allow conditions that affect Ts health and safety.

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5) Note 4 (b). T lives in fancy building with doorman, elevator, gym, pool, etc. State law requires premises be in accord with “uses reasonably intended by the parties.” Does this extend the IWH?

No. IWH only protects against conditions that threaten T’s health and safety, or, in the eyes of a reasonable person, deprive Ts of the essential functions of a residence.

6) Note 4(c). T only agrees to pay $50 because the place is so run-down. Then T refuses to pay because it’s so run-down.

T can’t be asked to waive the IWH. This is just an end-run around the IWH.

7) Note 5. Why do Ts favor IWH over quiet enjoyment, constructive eviction, and the illegal lease doctrine? Is there a downside?

(i) It’s a clearly-created landlord duty, (ii) damages are generous, (iii) T can withhold rent, and (iv) T doesn’t have to abandon.

Downside -- if the court rules against T, it can be evicted and must pay past rent.

c. Note: Retaliatory Eviction (p. 439-440)1) CL – Ls had all the cards.2) MODERN: Now most jurisdictions have anti-retaliation statutes to

prevent evictions and non-renewals for a T exercising its rights.3) Often, if L takes action within 3-6 months, it’s presumed retaliatory.

After, T has the burden to prove the retaliation

d. Note and Problem: L’s Tort Liability (p. 440)1) Some have “negligence” standards for harm.2) Some have strict liability for injuries caused by latent defects.3) But most haven’t gone this far – tort law hasn’t been extended into L/T

law.4) Problem 1 – L leases to T knowing that T is going to run a horse farm. A

customer hurt on a soft, narrow riding trail sues L. a) Pritchett held that L is liable where (i) L knows T open it to the

public, (ii) the defect exists at the outset of the lease, (iii) L knew about it, and (iv) L knew T wouldn’t fix.

b) This only creates a duty to the public, not T.5) Problem 2 – L leases a farm to the father of a boy who gets hurt by an

auger and sues L.a) Posner – the auger was open and obvious. L is liable only if T

didn’t know about it. L can avoid liability by putting T on notice.6) Problem 3 – L leases an apartment to parents of a little boy who gets

hurt riding a bike in the parking lot. There’s no speed bumps. Is L liable?a) Common-Area Exception – L must keep common areas safe.b) What if little girl is hurt on street and there’s no fence?

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i. Maybe – L must take whatever precautions a reasonable person would take. Consider all the facts. Courts don’t all agree on this.

7) Problem 4 – T is attacked in adjoining parking garage that L owns. Does it matter if other Ts did the attacking?a) Common-Area Exception – not extended to criminal activity.

Does this make sense? What about duty to provide lights, etc.? Could a landlord reasonably foresee?

8) Problem 5 – Does it matter if the lease has a liability waiver?a) Courts disagree. If they’re invalid, Ls are likely to charge higher

rent.

B. Tenant’s Duties; Landlord’s Rights/Remedies (p. 441)

1. T breaches its duty not to commit waste if it affects a substantial portion of the premises as would change:a. its characteristic appearance;b. the fundamental purpose of the erection;c. the uses contemplated; ord. its nature as would affect the realty itself, extraordinary in scope, or unusual in

expenditure.

2. There’s no bright-line test: lawful or waste?

3. An addition not being waste doesn’t mean you can take it. It may be waste to take it, or it could be a fixture.

IX. The Problem of Affordable Housing (p. 444)A. Chicago Board of Realtors v. City of Chicago (p. 444)

1. Chicago codified and expanded IWH.2. It won’t really improve health, safety, and welfare, and may have the opposite effect.3. Ls will offset higher costs by increasing rents.4. Ls will screen more carefully because the cost of a deadbeat T increases. Marginal Ts

won’t get a place.5. Fewer rental units will be brought to market.

B. Note: The Debate over Landlord-Tenant Reforms (p. 447)1. Rent Controls – virtually all U.S. economists think they’re bad.2. Posner analysis of dangers if Ts have too many rights. It leads to less rental housing if

the burden is too great.

C. Economic impact of IWH.

LAND USE CONTROL

Private land use controls:

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A: EASEMENTS

I. Private Land-Use Controls: The Law of Servitudes (p. 667)

A. The most intellectually-challenging material in the class.

B. There are overlapping categories with different elements, but they’re based on history, not logic. The Restatement 3d of Servitudes helps, but it is new.

C. Private (no government) agreements that create interests in land that bind and benefit the contracting parties. They often (i) increase the value of 2 or more parcels, or (ii) burden 1 parcel for the benefit of another parcel.

D. The created interests are “servitudes”; 2 major types:

1. Easements

a. Affirmative Easement

1) A Servient landowner grants an affirmative easement to the owner of a dominant parcel.

2) The dominant-parcel owner can then enter or perform an act on the servient tenement.

b. Negative Easement – a landowner can’t do something on its land. Uncommon.

c. Appurtenant vs. in-gross … this goes to whether will “run-with-the-land.

d. Different than licenses.

1) Permission to use land without trespassing.

2) Unlike easements, they’re revocable-at-will unless (i) the license is coupled with another interest such as a profit, or (ii) estoppel.

2. Covenants

a. At-law – courts enforced covenants for damages.

b. In-equity – equitable servitudes -- covenants that are to be specifically performed by court order.

E. All servitudes fall into 5 types:

1. A can enter B’s land -- easement.

2. A can enter B’s land and remove something attached to it -- profit.

3. A can restrict how B’s land is used – real covenant, negative easement, or equitable servitude depending on several factors, including the remedy that A seeks if B breaches it.

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4. A can require B to perform an act on B’s land – real covenant or equitable servitude depending on the remedy sought.

5. A can require B to upkeep some facilities – real covenant or equitable servitude depending on the remedy sought.

F. The functional overlap is the result of history. What courts would enforce them? Who called them what?

G. The law of servitudes is a study of how cultural changes impacted property law. What law did we need?

H. These are interests-in-land, so the Statute-of -Frauds applies

II. Easements (p. 668)

A. Historical Background, and Some Terminology (p. 668)

1. It’s easier to understand the law of servitudes from a historical perspective than as a logical system.

2. The primary modern servitudes (real covenants, easements, and equitable servitudes) are products of the 19th century – after land became fenced.

3. An easement gives the easement-owner the right to use (or prohibit the use of) land they don’t own.

a. Easement Appurtenant – whoever owns the land that the easement benefits gets the rights.

1) If in doubt, it’s an easement appurtenant.

2) Requires a dominant tenement (estate) and servient tenement. The easement attaches to and benefits the dominant tenement.

3) Usually transfer with the property, but they can be made non-transferable.

b. Easement in Gross -- gives the right to a person without regard to ownership of land.

1) There’s only a servient estate – it doesn’t benefit any other land.

2) May or may not be transferable. Sometimes called “personal”, but only in the sense that they don’t attach to any land.

B. Creation of an Easement (p. 671)

1. There are 5 ways to create an easement.

a. Expressly (in writing) – usually done this way

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b. Implied reservation easement or quasi-easement

c. Implied by necessity (true need for an easement)

d. Easements by prescription

e. Estoppel – resorting to equity. 3 ways by equity: (i) estoppel, (ii) fraud, and (iii) part performance

C. Willard v. 1st Church Scientist (Ca 1972) - Express Easement – in 3rd parties (p. 672) – May a grantor deed property to one person and reserve an easement for 3rd party? Yes.

1. Facts

a. McGuigan owns lots 19, 20. Lot 19 had a building, and Lot 20 was vacant. First Church of Christ, Scientist, uses lot 20 for parking.

b. Petersen bought lot 19 from McGuigan and was building an office on it. Willard, a realtor, wanted to buy lot 19 and 20. Petersen agreed to sell lot 19 and went to McGuigan to buy lot 20.

c. She sold lot 20 to Petersen, subject to a recorded easement -- for church parking. The easement ran only so long as it is used for church purposes. But Petersen’s deed for lot 20 to Willard didn’t mention the easement.

d. Willard isn’t a BFP because the McGuigan-to-Petersen deed containing the easement is in Willard’s direct chain-of-title.

e. Willard sued to quiet title to lot 20 -- to remove the easement in the McGuigan-Petersen deed.

2. What kind of easement is it – appurtenant or gross?

a. Gross – if so, the church members can use it even if the church moves down the street.

b. Appurtenant – probably -- the deed says the easement is “to run with the land [lot 20?] only so long as the property for whose benefit the easement is given is used for church purposes.”1) We call it an appurtenant-easement-in-fee-simple-determinable.

2) It’s unclear if the easement terminates if the Christian Scientists sell the church to a religious group. The deed says “the church”.

3. Ruling

a. Common law rule – owners who transfer land can only reserve an easement to themselves, not to 3rd parties. This is feudally based. Either the courts wanted to (i) limit conveyance-by-deed and promote livery-by-seisin, or (ii) believed that only parties to a deed can take advantage of it.

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b. Ruling

1) Inequitable -- original buyer paid a lower price for the property -- it was encumbered. McGuigan said she sold it for a lower price.

2) There’s no proof that Willard relied on the common-law rule. But why should the court presume that they negotiated with a false view of the law before this case?

3) The old rule is archaic, unnecessary, and may frustrate the grantor’s true intent. It is overruled prospectively; you can’t apply it unless the parties relied on it.

c. Willard can sue Petersen on the covenants in the warranty deed -- if he insisted on one.

4. The land being subject to a parking easement doesn’t mean it has no value. What else could it be used for?

D. Notes and Questions: (p. 675)1. Note 1 – Restatement (Third) of Property, Servitudes, lets a landowner create an

easement in favor of a 3rd party, but contrary authority remains.

2. Note 2 – How can you draft a document to carry out McGuigan’s intent and not violate the common-law rule? Is the church’s lawyer liable for malpractice?

a. Just use another piece of paper. She first conveys to the church. Then, the church conveys to Petersen and keeps an easement.

b. She’s probably liable for malpractice. A lawyer of ordinary skill knows to use 2 pieces of paper.

3. Note 3 – The difference between an exception and a reservation? Many lawyers use them interchangeably. Many courts don’t distinguish between them.

a. Reservation – creates a new servitude that didn’t previously exist as an independent interest.

b. Exception – excludes from a grant a pre-existing servitude on the land.

c. Re-grant theory – an easement reserved by the grantor wasn’t a reservation, but rather a re-grant of the easement by the grantee to the grantor.

4. Note 4 – Is the easement appurtenant or gross? See above. Probably appurtenant.

E. Note: Licenses (p. 677)1. License – a licensee can do some act that otherwise would be a trespass. Unlike an

easement, it’s revocable. Two exceptions: (i) a license with an interest – go to remove timber, and (ii) estoppel.

2. The Restatement (third) of Property treats an irrevocable license as an easement.

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F. Holbrook v. Taylor (pg. 677) – Easement-by-Estoppel

1. Facts

a. In 1964, Taylor bought a 3-acre parcel adjoining Holbrook’s land. Holbrook’s land has an unused road that a mining company had used to haul coal.

b. In 1965, Taylor built a $25,000 house; he used the road with permission for construction purposes. There is no other way to access Taylor’s property.

c. In 1970, Taylor refused to pay Holbrook $500 for using it, so Holbrook blocked it. Taylor sued to remove the obstruction. He argued that he had the right to use it by (i) prescription, or (ii) estoppel.

2. Held:

a. Taylor had an irrevocable license-by-estoppel (which becomes an easement).

b. Holbrook knew Taylor was spending money in reliance on the road. Taylor didn’t have one by prescription, though.

G. Short excerpts (p. 680-681):1. Shepard (Or. 1952) -- an easement-by-prescription or estoppel may be recognized to

circumvent the Statute of Frauds. If the parties are friends/neighbors, demanding a written document may be uncomfortable.

2. Henry (RI 1959) – opposes Shepard-- Courts shouldn’t grant “equity” for estoppel, etc., to avoid the statue-of-frauds. It’s bad policy to recognize rights that restrict land use. A license is a license, even with a harsh result.

H. Notes and Questions (p. 681):1. Note 1 – Restatement 3rd of Property, Servitudes has servitudes-by-estoppel. You need

improvement or investment, but courts can grant damages, specific performance, an injunction, or nothing.

2. Note 2 – If Taylor’s home burns down, can he build a new one using the same right-of-way?

a. The expectations that create the servitude also define its scope and terms.

b. Relevant expectations are those that reasonable people in the landowner’s position and the other party would have in the circumstances.

3. Note 3 – If the facts justify estoppel, should the owner of the servient parcel get damages? Is it otherwise fair?

a. If it was worth $500 to Holbrook, why not make Taylor pay $500? Efficient damages.

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I. Van Sandt v. Royster (Kan. 1938)(pg. 682)1. Facts

a. Before 1904 -- Bailey owns lots 4, 19, and 20; her house is on lot 4. She built a sewer from lot 4, over lots 19 and 20, to the public sewer.

b. January 1904 – Bailey sold lot 19 to Jones by general warranty deed; no easement is mentioned. He builds a house, connecting to Bailey’s private sewer drain. He’s not a BFP without notice.

c. 1904 -- Bailey sold lot 20 to Murphy by warranty deed; no easement is included. He builds a house and connects to Bailey’s private sewer drain. By mesne conveyances lot 20 passes to Royster.

d. 1920 – Jones sells lot 19 to Reynolds.

e. 1924 – Reynolds sells lot 19 to Van Sandt.

f. Post-1904 – Gray owns lot 4. Van Sandt owns lot 19, Royster owns lot 20, and Gray owns lot 4.

g. 1936 – Van Sandt’s basement is flooded with sewage. He finds the private sewer drain. He sues to stop Royster and Gray from using the drain.

2. Holding

a. Issue 1 -- Does an easement exist, burdening lot 19 for the benefit of lots 20 and 4.

1) A quasi-easement existed in 1904, and the Court implies a reservation on that basis.

2) A quasi-easement is an apparent/continuous use that the parties would reasonably expect to continue when the land is divided.

3) The quasi-easement impliedly reserved an easement. When Gray sold each parcel, she impliedly retained a sewer easement.

4) England rejects this unless it’s necessary.

5) The Court rejects the England rule; it adopts the Restatement’s test, based on the parties’ intention. Consider:

i) The difficulty/cost to fix the problem.

ii) Does the price paid reflect the use?

iii) Was there a warranty deed?

iv) Did they know about it?

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6) Jones knew about it or should have. Sewage has to go somewhere.

b. Issue 2 – is Van Sandt a bona-fide purchaser without notice? No, he had notice. The sewer is apparent and could’ve been discovered.

J. Notes and Questions: Implied Easements (p. 688)1. Note 1

a. There are two kinds of implied easements.

1) Quasi-easement -- apparent and continuous use of a portion of the tract when divided.

2) Necessary Easement – necessary to enjoy the parcel and the necessity arose at time of severance. Note distinction in note 1. Some states require strict necessity as the only way for an implied easement to arise.

b. If a court implies an easement based on an existing use, and it’s hidden, should it be valid against a later purchaser of the servient parcel?

1) The courts are split. Does the dominant rule matter if courts just do what’s equitable in each case?

2. Note 2 – One person owning the dominant and servient tenements destroys an easement. It can be re-created if a necessity arises when the new severance is made.Othen v. Rosier (TX 1950) – Ease. by Necessity (p. 689)

1. Facts

a. Othen acquired 2 land-locked parcels that were originally owned by Hill. He drove across a parcel owned by Rosier, who had bought it from Hill.

b. When Rosier re-routed around a levee, Othen could no longer use the road.

2. Holding

a. Othan claimed an easement, while Rosier said it was at most a license he could revoke at any time.

b. Elements of easement-by-necessity:

1) unity of ownership of servient and dominant estates at some point;

2) roadway is a necessity -- not a convenience -- to the dominant tenement;

3) necessity existed when the 2 estates were severed (case falls apart on this element);

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c. When the severance occurred, Othan/Hill appears to have another way to another road. That may have ended, and led to his seeking this implied easement. Plus, there was no evidence that there was no other way when severance occurred.

d. Othan’s land being surrounded by the “servient” estate holder’s land is not dispositive of element #3 on creation-of-necessity at time of severance.

e. Prescriptive Easement – no

1) Othan and the “servient” tenement’s owner were using the roadway; it wasn’t only used by the owner of the “dominant” tenement.

2) Permissive use = license – joint use does not serve as “notice” of a hostile claim.

f. Texas doesn’t have other doctrines we’ve studied.

g. Othan now must buy an easement.

K. A Note on Othen (p. 694)L. Notes/Quest./Probs.: Easement-by-Necessity (p. 695)

1. Note 1

a. Over the past few hundred years, courts rely on (i) public policy, or (ii) the parties’ intent.

b. Conflict on what is “strict necessity” – in some states, it is pretty extreme. But not in others.

2. Note 2 – Landlocked lot 5 surrounded by lots 1-4. What do you do?

a. A party bought all 5 lots, but not at the same time. The easement disappeared when he bought lot 5.

3. Note 3 – Easements-by-necessity end when the necessity is eliminated (e.g. building a new road that is accessible to the dominant tenement).

4. Note 4

a. Some western states allow parties to use eminent domain in land-locked situations or by showing necessity. Prior common ownership not required.

b. If an easement-by-necessity is based on (i) the parties’ intent, the price should reflect it and no compensation should be given, or (ii) public policy and the price doesn’t reflect it, compensation probably should be given.

M. Notes/Quest./Probs: Easements by Prescription (p. 696)1. Note 1 – Adverse Possession v. Prescription.

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a. They’re different rights -- use v. possession. Using land isn’t the same as possession – so while use is not the subject of adverse possession, the law of prescription arose (same basic elements).

b. Lost Grant Theory of Prescription – a non-permissive use that was acquiesced in.

c. Exclusive use is required for prescription, but it’s defined differently than for adverse possession.

d. Would a letter to a possessor stop adverse possession from running?

If the fiction of lost grant is followed, then yes. But generally nothing short of making entry or legal action will break continuity of possession.

2. Note 2 – If A acquires a prescriptive easement over O’s land, should A have to pay O damages?a. If damages are given, as of what date do you compute them? Date of entry?

b. Does it matter if there’s bad faith?

3. Note 3 – Why should joint use prevent a prescription from arising? Is there any basis?4. Note 4 – houses adjacent to golf courses. Should you (i) build a fence, (ii) reach an

agreement with the course, or (iii) file a lawsuit for nuisance or trespass?5. Note 5 -- Public Prescriptive Easements

c. Continuous use by public, under claim of right. The owner is on notice by kind and extent of use, and claimed by general public, not individuals. Similar is the “implied dedication” theory.

d. Beach access – beaches held in public trust up to the high-tide line – prescriptive easement?

N. Matthews v. Bay Head Improv. Assoc. (p. 701) – Does the public have a right to access through and to use the dry-sand area not owned by a quasi-public body ancillary to its right to enjoy tidal lands?1. Facts

a. To access a beach, the public had to cross privately-owned land.

b. An association was created to care for the beach, provide lifeguards, security, etc. But only local citizens could join it. The association also bought and leased some land that gave beach access.

c. This effectively precluded the general public from using the beach.

2. Holding

a. Association membership had to be opened up to the public during peak times.

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b. Public-Trust Doctrine – state has ownership, dominion and sovereignty over land flowed by tidal waters, which extend to the mean high-water mark, in trust for the people. The peoples’ right includes boating, fishing, swimming, etc.

c. The court expands this doctrine to include the right to access the dry-sand/dry-beach area to allow access to bathing, swimming, and other shore activities for the general welfare.

d. A beach is both wet and dry. To enjoy the rights guaranteed by the Public-Trust Doctrine in the wet sands, the public needs access to the dry sand areas as well. You can’t separate the parts.

e. Without access, the other rights are meaningless. Owners must allow reasonable access to the shore and a suitable recreation area on dry sand.

f. The general public must be permitted to join the Bay Head Improvement Association.

O. Notes and Questions (p. 706)

1. Note 1

a. What’s reasonable use and reasonable access?

1) Merely passing through v. sunbathing v. beach volleyball v. drinking. For which activities may the owner charge?

b. Factors to consider (Supreme Court upheld the Court of Appeals after book went to print):

1) Dry sand area’s locale related to foreshore.

2) The extent and availability of publicly-owned upland dry sand area.

3) Nature and extent of public demand.

4) The owner’s usage of the upland sand area.

c. The owner can’t prevent public from accessing privately-owned areas, but it can charge a fair fee.

2. Note 2 – isn’t this just a taking without compensation?

3. Note 3 – Michigan case and Justice Markman’s dissent.

4. Note 4 – Public Trust Doctrine is rooted in Roman law, an 1892 Supreme Court opinion, and more recent law-review articles.

III. Assignability of Easements (p. 709)

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A. For appurtenants, they pass automatically to assignees if (i) parties who created it so intend, and (ii) the burdened party has notice of the easement.

B. Easements in gross are personal, as learned earlier, not ordinarily to run with the land.

C. Miller v. Lutheran Conference & Camp (PA 1938) (p. 709)

1. Facts

a. In 1899, Rufus, Frank, and others formed Pocono Spring Water Ice Co.

b. They leased to Pocono for 99 years the lake created by building a dam. Pocono would use the lake for various recreational activities. It also intended to harvest ice during the Winter to sell.

c. Easement-in-Gross -- On the same day, Pocono grants to Frank and his heirs, the exclusive right to fish and boat. Frank granted ¼ of his right to Rufus. They built cabins, etc.

d. Grant to brother included "bathing" rights, but Frank didn’t have those rights to assign. Frank and Rufus got the right to bathe by prescription.

e. The brothers began marketing the property as a vacation destination and built cabanas, etc.

f. In 1925, Rufus died. His heirs assigned the rights to the Lutheran group, which began to "exploit" for bathing and recreation.

g. Frank’s wife controlled another corporation that got the rights from the original after a foreclosure, sued to prevent such uses by the defendant.

2. Held

a. The easement is in-gross -- doesn’t attach to specific land.

b. Easements in-gross never used to be assignable, but court wants to honor the parties’ intent. The easement was to Frank "his heirs and assigns”, so the intent was that these were transferable.

c. This court also recognizes the need to distinguish between easements for personal/recreational use, and those intended for commercial use.

d. Assignment seems more natural and appropriate where the rights are commercial.

e. Even with a commercial easement, you can argue that there could be overuse. This court uses the "one-stock" rule - use by mutual agreement only (all parties have a veto power) to prevent overuse.

f. So Frank can veto Rufus’s executor.

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Notes, Questions, and Problem (p. 714-716)

3. Note 1

a. Appurtenant Easements - burdens of servient tenement are limited by the needs of the dominant one. American courts try to avoid increasing the burden on the servient tenement.

b. Easements-in-Gross -- modern cases allow them to be assigned if the parties so intended, but they can be split unless the right was exclusive.

4. Note 2

a. "One-Stock" Rule – must run it as one person. It’s designed to prevent overuse. Easy to apply, minimizes court filings, requires unanimity, and there’s no duty of reasonableness when exercising veto. But it has been abandoned.

b. Now you can divide unless

1) It’s contrary to the original parties’ intent.

2) It would place an unreasonable burden on the servient parcel.

5. Note 3 -- What about a "reasonable use" standard such as for riparian owners? Could be heading there.

6. Note 4 – A owns Blackacre. A conveys an easement over Blackacre to B for the benefit of Whiteacre, which B once owned but sold to C several months earlier. B then conveys the easement to C. Who, if anyone, has an easement over Blackacre?

The easement conveyance from B-to-C was ineffective, because the conveyance from A-to-B was ineffective.

Creating an appurtenant easement requires that the grantee own the benefited land, the dominant estate. This is the “unity-of-title” requirement. Without this, no appurtenant easement can be created.

At the time of the conveyance from A-to-B, unity-of-title was lacking because B no longer owned the benefited land (Whiteacre).

The subsequent transfer of the easement from B-to-C would not cure the flaw in the easement’s creation.

IV. Scope of Easements (p. 716)

A. Brown v. Voss (Wash. 1986) (p. 716) – Can a dominant tenement’s owner extend an easement to non-dominant land?

1. Facts (see diagram on p. 717)

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a. Voss’ predecessors gave an easement to Brown’s predecessors to use Parcel A to access Parcel B.

b. Brown bought B and Voss bought A. Brown then bought Parcel C, which is contiguous to Parcel B, but not to Voss' Parcel A.

c. Brown spent $11,000 to demolish home on Parcel B and start a house on both Parcels B and C.

d. Construction trucks, etc., began arriving and Voss blocked the driveway. He argued that Brown was overburdening the servient tenement on Parcel A.

e. (i) Brown sued to force Voss to open the road; and (ii) Voss sued to stop Parcel C from using Parcel B’s easement over Parcel A.

2. Trial Court -- permitted Brown to use the road, but gave Voss $1 for increasing the burden.

a. Prior Rule -- a dominant estate’s owner can’t extend easements appurtenant to its other parcels that aren’t appurtenant to the servient tenement.

b. Holding – (i) It would not increase the burden; (ii) Parcel C is landlocked without it. Would this justify an easement-by-necessity?; and (iii) Voss didn’t suffer real injury -- $1 damages

3. Ruling – reversing the court-of-appeal’s reversal.

a. Extending an easement to benefit a non-dominant parcel is misusing it. But Voss had to show damages to get injunctive relief; he didn’t do so.

b. Overburdening an easement violates the law, but there was no, or only minimal, overburdening.

c. Damages – rather than an injunction – for a minor infringement were appropriate.

d. Brown could only use it for a single-family home; if overburdening arose, Voss could seek relief.

4. Dissent -- there is a trespass and it’s hard to measure damages. So injunctive relief is appropriate.

5. Discussion – is this a good rule? (i) Do we want a bright-line or discretionary rule? (ii) Which is more efficient – damages or injunction? (iii) How do we minimize the costs? (iv) Which rule is more equitable?

A. A reasonableness test: (i) Justified -- if the issue is increased use of the dominant parcel; it’s the original subject; (ii) Not justified -- if the issue is non-dominant land – they never thought of it.

B. What if the Browns later add a guest house, etc.?

B. Notes, Questions, and Problems (p. 721)

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1. Note 1 – personal background to the case.

a. Before the lawsuit, neither side knew the issue. They were fighting over the easement’s location. Voss’ lawyer didn’t let them tell their story. He thought it was a slam-dunk legal issue.

b. Parcel C had direct access to Route 101 – it wasn’t landlocked, but the court never found out.

c. Brown lost the property to tax foreclosure, and Voss bought it!

2. Note 2 – If a dominant parcel’s owner wants to split into 100 lots, can each use an access easement?

a. Servient tenements must accommodate "normal development of the dominant estate," which changes over time.

3. Note 3 – Does having an easement imply the right to run wires or pipes for utilities?

a. Not usually, but sometimes . . .

4. Note 4 – Can the servient tenement change the easement location?

a. Traditional rule -- "no." Still the majority.b. Restatement (3rd) and gaining popularity -- "yes" if the servient pays and the

dominant tenants can still properly use the easement.

5. Note 5 -- important

a. Prescriptive easements aren’t as broad as those by grant, implication, or necessity.

b. The use that led to their creation is more strictly applied; e.g., a prescriptive easement to get cows to a stream can’t be extended to allow bicycles.

6. Note 6 – apply Brown v. Voss to Othen v. Rosier.

A. The court could protect Rosier’s entitlement by awarding damages rather than an injunction.

V. Termination of Easements (p. 725)

A. Preseault v. United States (Fed. Cir. 1996) (p. 725): Is converting a long unused railroad right-of-way to a public recreational trail under gov’t authority “taking” property?

i. Facts

1. A railroad had an easement or fee-simple interest for property where it put a railway. The railroad stopped using it and removed its track by 1975.

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2. Congress enacted the "rails-for-trails" law 10 years later and turned old railways into bike paths. A servient tenement holder sued to remove the paths because they weren’t permitted uses.

ii. Issue 1: Did the railroad have a fee simple or an easement? Easement.

1. The railroad took 2 parcels by eminent domain under a special law, but the court held it got an easement under Vermont law.

2. For parcel 3, it got a warranty deed with language giving it fee simple, but the court construed it under Vermont law as giving property "only to the extent necessary to achieve the railroad goals." The court just ignored the language of the deed!

iii. Issue 2: If an easement, does the scope include using it for a public trail? No.

1. An easement may be adjusted, but it must be consistent with the original grant.

2. The easements permitted only public and cargo transport. The easement can’t be extended this way – trails were not foreseeable when granted.

iv. Issue 3: If trail use was in the scope of the easement, was it abandoned by discontinuing railroad use, relieving the servient tenement of the easement. Yes.

1. These easements usually terminate, if at all, by abandonment. This isn’t caused by mere non-use – it requires an act showing an intent to abandon.

2. The company removed tracks and made no effort to restore rail service.

3. Vermont collected fees for licenses for a few years, but this was an administrative issue, not proof that there was no abandonment.

4. The Interstate Commerce Commission did not abandon it, or authorize the rail company to abandon it, but Vermont law controls -- under it, the railway "abandoned."

v. Issue 4: Is public use of the strip, authorized by the ICC, a taking of private property? Yes, for 2 reasons:

1. The public trail wasn’t in the easement’s scope.2. There was no easement – abandoned.

b. Notes and Problem (p. 735)

i. Note 1 -- cites to a related case and articles.

ii. Note 2 -- Courts usually interpret "right-of-way" as an easement, not fee simple. But some have relied on the parties’ intent and other facts to find otherwise.

iii. Note 3 -- easements may be terminated: (i) Release – by written document (SoF); (ii) Expiration – of time or when an event occurs; (iii) Necessity – when the necessity

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ends; (iv) Merger – if the same person owns the dominant and servient estates; (v) Estoppel – if the servient owner reasonably relies on dominant owner’s statement; (vi) Abandonment – mere non-use is often insufficient; (vii) Condemnation – government takes title to land; and (viii) Prescription -- it can terminate like it was created.

iv. Note 4 – Whiteacre has an easement on Blackacre. The county forecloses on Blackacre for not paying taxes and sells it to a new owner. Does the easement continue?

1. Yes – an easement increases the value of one parcel and decreases the value of other. There’s no net change, and maybe a total increase.

B. Negative Easements (p. 736)

a. They prohibit a "servient" tenement holder from acting. Historically, there were 4 things you can agree not to do: (i) block windows; (ii) interfere with light and air; (iii) remove support of adjoining land; and (iv) interfere with the flow of an artificial stream.

b. England had no recording system, but they were created by prescription. They began limiting them in early-mid 1800s.

c. America adopted the English rules, but there are a few new ones – conservation, etc. And we use “equitable servitudes.”

C. Conservation and Other Novel Easements (p. 738) – the most common negative easements.

a. An easement prohibiting anyone from developing your land. Over 5 million acres are in conservation easements – more than the total size of D.C., Rhode Island, and Connecticut.

b. The Uniform Conservation Easement Act -- one with an interest in the parcel can enforce it, but not general public.

c. Façade Preservation Easement.

d. Primary Resident Easement – “no vacation homes.” It’s unclear if they can be enforced.

i. Can we assign non-commercial easements in gross?

Covenants Running With the Land (p. 740)

III. Historical Background (p.7401. Covenants Enforceable at Law: Real Covenants

a. Real Covenants -- run-with-the-land at law. Property owners allocate resources efficiently by arranging land use to minimize conflict.

1) Parcel A agrees that it can’t do X; Parcel B agrees that it can’t do Y.

2) Eliminate negative externalities.

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b. Assignable Property Right – needed to enforce real covenants. Contracts don’t bind assignees.

c. American courts – run-with-the-land, but the law is confusing. England -- you can’t enforce them; privity-of-estate only arises with landlord-tenants

d. Hypothetical Situation (p. 742)

e. Benefits vs. Burdens – it’s harder to establish a burden runs-with-the-land than a benefit.

f. Privities (p. 743)

1) Horizontal Privity – privity-of-estate between original covenanting parties.

2) Vertical Privity -- one covenanter and a successor-in-interest.

g. Old Restatement – when do they “run”? “Benefit” – don’t need horizontal privity. “Burden" – need horizontal privity.

h. New Restatement (3d) -- removes the horizontal-privity requirement. But a covenant isn’t enforceable against one with no knowledge of it.

i. Old common-law rules are being relaxed. Know the basics, including the Restatements.

j. Problems and Notes (p. 744)

1) Note 1 – A and B restrict their lots to single-family residences and record an agreement. B sells to C, who builds an apartment building. A sues C. Who wins?

A can’t recover if you need horizontal privity-of-estate for the burden to run at law. A and B aren’t grantor-grantee when the promise is made, and they have no interest other than the covenant in each other’s land.

What if A built the apartment building?C can recover from A under the Restatement view because privity-of-estate isn’t required for the benefit to run. It seems unfair.

2) Note 2

a) New Restatement changes the rules: (i) Vertical privity isn’t required for burden or benefit; (ii) It distinguishes between negative and affirmative real covenants and equitable servitudes; (iii) Negative promises = easements; and (iv) It distinguishes parties and affirmative from negative.

2. Covenants Enforceable in Equity: Equitable Servitudes (p. 746)

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a. Tulk v. Moxhay -- 1848 English case (p. 746)

1) Facts

a) Tulk sold a Leicester Square garden to Elms. Elms promised for himself, his heirs, and his assigns: (i) not to cover the garden with a building (negative covenant); (ii) to maintain the garden in proper repair (affirmative covenant); and (iii) to allow Tulk’s tenants to use the garden for a fair fee (affirmative easement for a 3rd party – void).

b) Elm sold the garden to Moxhay, and the deed didn’t contain the covenants. But Moxhay knew about them. He planned to build a building; Tulk sued to enforce the covenants.

2) Ruling -- the "ES" ran with the land and was enforceable if Moxhay had knowledge.

b. Notes, Questions, and Problems (p. 748)

1) Note 1

a) Tulk sued only on the negative covenant, but the Chancellor’s logic applies equally to all.

b) In England, only negative covenants are enforceable in equity. In the U.S., affirmative ones are also enforceable.

2) Note 2 – Equitable Servitude

a) ES, enforceable by injunction, is a covenant affecting how land is used that is enforceable against successor owners or possessors in equity regardless of its enforceability at law.

b) The parties must intend that an ES run with the land (not just between the original parties) and it must "touch and concern land.”

c) A purchaser must have actual or constructive notice of the covenant.

d) Horizontal privity-of-estate is not important in equity. Vertical privity is not needed for the burden to run.

3) Note 3 – Property Theory of ES

a) Unlike a real covenant, which attaches to an estate in land, an ES burdens the land itself and not the estate.

b) Restrictions on land-use create ES that burden land and are property rights. Consideration isn’t always necessary to create an equitable servitude.

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4) Note 4

a) The difference between real covenants and ES is in the remedy you seek.

i. Real Covenant -- damages.

ii. Equitable Servitude -- injunction.

b) If injunctive relief had been sought in Problem 1 on 744: A can enjoin C from building an apartment house. C has record notice. If A seeks to build an apartment house, C can enjoin A.

c) Injunction v. Damages. What do you want and why?

5) Note 5

a) A distinction between "real covenants" and "ES" is almost irrelevant in the U.S. -- equity and law courts are merged (in Mich., 1963).

b) Restatement 3rd drops the distinction.

IV. Creating Covenants (p. 750) -- with 1 exception -- next case -- they must be written (Statute of Frauds) and not implied.

1. Sanborn v. McLean (MI 1925) (p. 751)

a. Facts

1) A developer began selling lots for residential use. 53 of 91 deeds required residential use.

2) There was no reciprocity, but the law assumes that the "dominant" tenement is bound similarly to the "servient" tenement when it appears to be the intent.

3) The Defendant bought the 23rd lot from the developer. There was no negative covenant in the deed. The Defendant tried to build a gas station. Neighbors sought an injunction.

b. Holding

1) Issue 1: will the equitable servitude be implied on every lot in the subdivision?

a) Yes -- common grantor planned for a residential subdivision. Negative-reciprocal easements run with the land.

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2) Issue 2: Was McLean a subsequent bona fide purchaser without knowledge?

a) Equitable servitudes bind those with actual or constructive knowledge.

b) The defendants said they didn’t know of the negative-reciprocal easement, but there was a filed plan from which to imply knowledge. The neighboring plots put them on inquiry notice.

c. Other Issues:

1) Is it fair assuming a buyer has inquiry notice of implied reciprocal negative easements?

2) When a subdivision plat is filed and a lot sold with restrictions, later purchasers buy at the risk of the same restrictions.

3) Negative easements are hard to discover.

2. Notes and Questions (p. 754)

a. Note 1 – other cases have held the same in MI.

b. Note 2 – in MI, neighbors’ deeds = constructive knowledge of the negative reciprocal easement.

c. Note 3 -- most courts imply negative restrictions from general plans. But not all – CA and MA.

d. Note 4 – Virginia wants them in the general plan.

V. Validity and Enforcement of Covenants (p. 755). To enforce covenants in equity, show: (i) Intent the covenant’s benefit/burden run to the original parties’ successors; (ii) The purchasers of the original promisor had notice; (iii) The covenant touch and concern land; and (iv) Some states require vertical privity for the benefit (not burden) of a covenant to run in equity.

1. Neponsit Property Owners Assoc. v. Emigrant Industrial Savings Bank (p. 755)

a. Facts

1) A bank bought land at a judicial sale. The deed required it to pay a $4-yearly assoc. fee. It argued the payment was a personal covenant that didn’t run with the land.

2) The covenant required payment to maintain roads, parks, paths, etc.

b. Common law rule:

1) To enforce a covenant (i) the grantor and grantee must intend it to run with the land; (ii) the covenant must "touch or concern" land; and (iii) the

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promissee and party against whom the burden is to be enforced must have "privity of estate".

2) Affirmative covenants to pay money used to be considered personal and did not touch-and-concern land.

c. Ruling

1) For the burden to run at law or in equity, a covenant must touch-and-concern the land.

2) Issue 1 -- Does a covenant to pay money touch-and-concern the land?

a) A promise to pay for services is the same as the promisor promising to do them itself. Both restrict the owner’s right to use the land, and are a burden on the owner’s legal interest.

b) The promise here is to spend money on property with easements benefiting the burdened lots – in essence, to pay a share to maintain a common easement.

c) New touch and concern test -- Does the covenant alter the legal relations (the legally enforceable advantages and burdens) of the parties as owners of interests in land and not just as a member of the community in general?

i. Promisor’s interest becomes less valuable -- burden touches-and-concerns the promisor’s land.

ii. Promisee’s interest becomes more valuable -- benefit touches-and-concerns the promisee’s land.

d) The distinction between covenants that (i) run with land, and (ii) personal covenants depends on their effect on the legal rights that flow from owning the land and are connected with it.

3) Issue 2 -- Is there privity between Neponsit Realty and NPOA -- can NPOA enforce it?

a) Privity exists in substance, if not form: (i) NPOA is acting as the property owner’s agent or representative; and (ii) look behind the plaintiff’s corporate form to see the members, who have economic interests at stake.

b) NPOA is the property owner’s agent: (i) Does this mean each parcel is a dominant estate whose owner can sue on an assessment against a delinquent owner? (ii) NPOA have exclusive enforcement rights? (iii) What if NPOA doesn’t want to?

c) The agreement’s express provision that assigns may include a property owner’s association. (i) If it hadn’t so provided, could the

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property owners have organized an association in 1921 and assigned it enforcement rights? (ii) If a 3rd-party beneficiary can enforce servitudes even if not in privity with the covenantee, can the property owners assign the enforcement right to a 3rd-party beneficiary without the burdened owner’s consent?

d) Enforcement by 3rd parties who are not the property owners’ agents. (i) If power was given to a public body or charitable organization to enforce under a 3rd-party beneficiary theory, could they enforce under Neponsit?

4) The court rejects the technical over reality. The Court found the covenant ran with the land, so it could enforce it against the bank.

2. Notes (p. 762)

a. Note 1 – Why did this get litigated? Maybe the bank wanted to establish precedent. It usually was on the other side. Or, maybe there was a grudge.

b. Note 2 – these assessments aren’t common. But back then the outcome was uncertain. An assessment covenant is an affirmative covenant; courts don’t like to enforce them. NPOA didn’t own land -- standing?

c. Note 3 – Vertical Privity on the Benefit Side.

1) Is it vertical privity or standing? Does it matter?

2) It’s well settled that homeowner associations now have standing to enforce covenants.

3) Most jurisdictions no longer require vertical privity to enforce covenants in law or equity.

d. Note 4 – Touch and Concern: Affirm. Covenants

1) Covenants restricting the use of land almost always are held to touch and concern land.

2) But courts hesitate to enforce affirmative covenants against successors for 4 reasons: (i) Courts don’t want to order acts requiring judicial supervision. (ii) enforcing an affirmative covenant that requires the covenanter to maintain property or pay money, may impose large personal liability on a successor. (iii) An aff. obligation unlimited in time resembles a feudal service or perpetual rent. (iv) Some courts view affirmative covenants as clogs on title.

e. Note 5 – Touch and Concern: Covs to Pay Money

1) Most cases in which courts find a covenant does not touch and concern land involve monetary obligation and tying arrangements.

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2) But generally upheld for a common-interest community.

f. Note 6 – Touch and Concern: Pros and Cons – they’re still controversial.

g. Note 7 – New Rest. Discards Touch and Concern

1) Default Rule – a covenant is valid. Most negative and affirmative covenants are initially unobjectionable and the parties’ intentions should be given effect.

2) The bases for holding that a covenant is invalid at its inception are that it is illegal, unconstitutional, or against public policy.

3. Restatement (Third) of Property, Servitudes (p. 766)4. Problems (p. 767)

a. Problem 1 – A common-interest community has the following restrictions. Is any invalid under the touch and concern test? Under the Restatement?

b. Problem 1(a) – No flag may be displayed.

1) Probably violates Restatement of Servitudes §3.1 as burdening a fundamental constitutional right. (i) Constitutionality under 14th Amendment depends on if state action is present.

c. Problem 1(b) – No signs except your address, nor may Christmas lights be put outside of a house.

1) Banning signs may be against public policy or unduly burden the right of free speech. Banning Christmas lights is probably OK.

d. Problem 1(c) – No solar energy device may be installed on the roof of any house.

1) Violates public policy.

e. Problem 1(d) – No house may be used to provide day-care for non-residents of the house.

1) Permitted, except by a California statute.

f. Problem 1(e) – House sellers must pay 10% of the capital gain to the developer. What if they appreciated more quickly than normal houses?

1) Probably doesn’t touch and concern – it benefits the developer. It could be an invalid restraint on alienation. But under the Restatement, it’s invalid only if there’s no rational justification for it.

g. Problem 2 – do you have to continue paying a developer under a deed for supplying water that you no longer use – you dug a well.

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1) New York case – no, because there’s no touch and concern. Restatement – yes, just look at it reasonably.

5. Caullett v. Stanley Stilwell & Sons, Inc. (p. 768) – it’s always more difficult to enforce a burden.

a. Facts

1) The defendant sold property to the plaintiff with a covenant requiring it to hire the defendant as the builder if it built anything.

2) The plaintiff brought suit to remove this building restriction -- a tying arrangement.

b. Ruling – the Court ruled for Caullet on 3 grounds:

1) Only clear restrictions will be enforced. This provision is too ambiguous to enforce.

a) It didn’t describe the type of structure, the cost, or the obligation’s duration.

b) Could the developer sue Caullett for breach of contract if Caullett has another builder construct a house?

2) It can’t create a real covenant or equitable servitude because it touches and concerns the land only in an incidental manner. It’s a personal arrangement between the parties.

a) The court isn’t convincing – if a covenant-not-to-compete touches and concerns, why doesn’t this?

b) This looks like a negative covenant: “You can only build if you hire me.”

c) It is hard to see anything touching the land more than a building.

d) What’s the policy objection? It won’t restrict alienability – the price will take it into consideration.

3) The benefit is in gross – a commercial advantage in operating the business without enhancing or affecting the use or value of any retained lands – the burden won’t run.

a) The covenant is personal to the grantor and isn’t directed toward improving neighboring properties.

b) Its primary test is whether the promise benefited the defendant's land, not just a contractual promise that is personal.

c) The covenant burdens Caullett’s land, but doesn’t benefit the builder’s land – only the builder personally.

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6. Notes, Questions, and Problem (771)

A. Note 1

1. In the U.S., if you create an easement-in-gross, the burden runs with the servient land.

2. Grant easement to erect billboard. Runs with land if one buys the land knowing about it.

3. If the benefit is in-gross, the owners may be difficult to ascertain and locate.

B. Note 21. Was the benefit of the assessment covenant in Neponsit appurtenant or

gross?

The court might have found that the covenant’s benefit was appurtenant based on the agency and piercing-the-corporate-veil theories it used to find vertical privity.

The benefit of the covenant really flowed to the other lots in Neponsit rather than to NPOA or to the lot owners personally.

How could’ve Neponsit avoided the difficult privity issue in enforcing the benefit other than the court’s solution?

By ruling that the burden can run even if the benefit is in-gross – based on parties’ intent.

C. Note 3

1. The new Restatement says that benefits in-gross are freely permitted and the burden will run when the benefit is in-gross.

2. It also provides special termination rules.

D. Note 4

1. Conservation servitudes created as covenants have the benefit in-gross running to a public or non-profit agency, so the burden ordinarily wouldn’t run.

2. But special statutes have been enacted.

E. Note 5 – For a variance, a developer gives a city a covenant running with the land limiting 5 apartments to low-income families. What rules in this chapter harm the city enforcing this?1. There’s no horizontal privity-of-estate between the developer and the city.

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2. No enforcement permitted by a 3rd party not in privity-of-estate with the developer.

3. If the covenant imposes affirmative burdens on the developer, it may not touch and concern the land and run to assignees.

4. If the benefit is in-gross to the city, the burden won’t run to assignees.

5. If the benefit is in gross, it can’t be transferred by the city to another enforcement organization.

7. Note: Defeasable Fees as Land Use Control Devices (p. 772)

A. A defeasable fee differs from a servitude in that the remedy for its breach is forfeiture.

B. The remedy for breaching a servitude is damages, injunction, or enforcing a lien.

C. They were popular 100 years ago, but not any longer except with respect to gifts.

VI. Scope of Covenants (p. 773)

A. Hill v. Community of Damien of Molokai (p. 773)

1. Facts

a. Damien leases a house to use as a group home for AIDS patients. The 4 occupants are unrelated and require some visiting-nursing care.

b. Neighbors argued that they violated a single-family-use covenant on the property. Damien argued that (i) the covenant permits that use, and if not permitted (ii) it violates the FHA.

c. The court says that the lower court’s findings of fact were errors of law? See page 775.

2. Rules of Construction

a. If language is ambiguous, resolve the covenant against the restrictions. Don’t imply restrictions into the covenant – they must be expressly stated.

b. Interpret the covenant reasonably, but strictly. Don’t create an illogical construction. Give words their ordinary meaning.

3. Issue 1 – The Restrictive Covenant: Does Operating a Group Home Constitute Residential Use?

a. Operating a group home for 4 unrelated folks is a residential use. The AIDS patients use it as a home with a traditional family structure (True?).

1) Albuquerque defines family not more than 5 unrelated people living together. This is 4.

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2) The covenant doesn’t define Family so the court defines it broadly. Public policy favors group homes for the disabled.

3) It may increase traffic but the covenant isn’t directed at traffic, and any increase is small.

4. Issue 2 -- if the Court had ruled that “family” didn’t include a group home, the neighbors violated the FHA.

a. Discriminatory Intent

1) You don’t have to show an intent to discriminate – only that the handicap is a reason for the policy being challenged.

2) The evidence is insufficient to support a finding of intentional discrimination in enforcing the covenant – note this is different than why it was adopted.

b. Discriminatory Impact

1) Only must prove that the behavior has a discriminatory effect. Enforcing the covenant denies housing to the handicapped.

2) This is a rebuttable presumption.

c. Reasonable Accommodation

1) They must “reasonably accommodate” the home; change a generally-applicable rule to reduce the burden on the handicapped.

2) Enforcing the covenant will impose no undue hardship on the neighbors. A slight increase in traffic is insufficient.

B. Notes

1. Note 1 – the neighbors continued to harass the residents; e.g., raised champagne glass when an ambulance took a patient to the hospital.

2. Note 2 – What’s a “single family” is often litigated.

3. Note 3 – FHA defines handicap “as a physical or mental impairment that substantially limits one or more of a person’s major life activities.”

a. It expressly excludes alcoholics and drug users, but not for those in recovery. A group home for recovering drug addicts might be held not to be a single-family home, but the FHA would protect it.

4. Note 4 – what activity is non-commercial? (i) Computer business, day care, piano lessons, etc. (ii) Courts decide them on a case-by-case basis.

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C. Shelley v. Kramer – it can be unlawful to enforce a lawful restriction.

1. Private agreements that restrict those to whom an owner can sell don’t involve government action so the 14th amendment does not apply – it’s not state action.

2. But activities of state courts and judges is state action Courts can be stopped from hearing cases against those being sued for breaking a “private” restrictive covenant.

3. 1948 case – Hard to prove intent (from 1866 act). Now with FHA it would violate 3604(c) (publication).

D. Notes and Questions (p. 785)

1. Note 1 – Barros v. Jackson, 346 U.S. 249 (1953) – a court can’t give damages against a seller who breaches a covenant not to sell to a non-white – it is state action.

2. Note 2

a. Were there any non-constitutional bases for declaring the covenant in Shelley not only unenforceable but invalid? (i) Unreasonable restraint on alienation; and (ii) Contrary to public policy.

b. Did the covenant meet all the common-law requirements to run-with-the-land?

1) There are problems with touch-and-concern and horizontal and vertical privities.

2) Initially, developers put them in all deeds in a development. When neighbors did it, they got sloppy. Many were not even in deeds.

3. Note 3 – even though unenforceable, some deeds still had discriminatory clauses as a “signal” that a neighborhood was not friendly to non-whites.

4. Note 4 -- A racially-discriminatory covenant violates FHA. Does a title report of a racial covenant on property violate the FHA?

VII. Termination of Covenants (p. 786)

A. Covenants can be changed or modified.

1. Terminated by expiration, release, merger, estoppel, abandonment, prescription, and condemnation.

2. They can also be modified or terminated with the consent of all – or some – interested parties.

B. Western Land Co. v. Truskolaski (Nevada 1972) (p. 786)

1. Facts

a. A builder subdivided 40 acres and (i) restricted the development to single-family residences, and (ii) prohibited stores and mercantile businesses.

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b. The builder retained a 3.5-acre corner parcel. The builder later sought to re-zone the parcel so it could build a shopping center

c. The area had changed from (i) quiet small roads with residential/agriculture lots to (ii) busy and noisy 4-lane roads and commercial development.

d. The homeowners in the subdivision sued for an injunction to stop the shopping center.

2. Ruling

a. No injunction -- if the surrounding area, together with changes to subdivision, had changed and the restrictive covenant’s goals (quiet streets, little traffic, little noise) were impossible to achieve.

b. The neighborhood remained residential and the covenant remains of substantial value to the residents. The covenant to keep out business remained valid and necessary.

c. The restrictive covenant is enforceable because the single-family residential character of the neighborhood hasn’t been adversely affected, and the restrictions purposes have not been thwarted.

d. If the restrictions have any value to the remaining land, courts will allow enforcement and not use the “changed circumstances” doctrine to remove a restrictive covenant.

e. If the covenant’s original purpose can still be accomplished and the restricted area will gain substantial benefit, the covenants stand even if the property is worth more if used for other purposes.

f. It has to impact the entire subdivision, not just the border lots. A line must be drawn somewhere – it draws the line at the end of the subdivision.

g. The changes were not so great as to make it inequitable or oppressive to restrict the property to single-family residential use. And there’s no abandonment or waiver.

C. Rick v. West (New York, 1972) (p. 790)

1. Factsa. Rick filed a declaration of restrictions and limited lots to single-family

residences. West bought a lot and built a house, but Rick couldn’t sell other lots.

b. Rick, and his successor, wanted to develop non-residential, but West wouldn’t consent – all the other property owners consented.

2. Holding

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a. The court upheld the covenant. There was no evidence of major changes in the neighborhood and none in Rick’s tract. He just guessed wrong.

b. She relied on it being residential when she bought, and she had a right to do so.

c. This was true even though the town decided this land was ill-suited for residential and re-zoned it.

D. Restatement (3rd) of Property, Servitudes (2000) -- §7.10 – Modification and Termination of Servitudes Because of Changed Conditions. (p. 791)

E. Notes and Questions (p. 792)

1. Note 1 – Changed-Condition Doctrine – strict standard to terminate a covenant.

a. Should a court award damages or an injunction? Does it matter how many folks oppose it?

b. In Western Land, for example, how much is the builder damaged by not building the shopping center v. the damage to the home owners. Does it make sense for the builder to pay them?

c. Should you ever require the opposing folks to pay damages – reverse damages?

d. Four possible rules: (i) enjoin covenant breaches – Western Land; (ii) grant damages for breaching the covenant; (iii) deny relief against breaches if changed conditions affect all the subdivision; or (iv) enjoin breaches of the covenant if you pay damages to the parties breaching them.

2. Note 2 – a MA statute requires damages – not an injunction – in some cases.

3. Note 3 – holdouts to city development. Think of odd buildings in odd places. The white house on Beltline.

4. Note 4 – In Western Land, the neighbors ultimately capitulating and allowed commercial development. Low-traffic office buildings, not retail.

F. Pocono Springs Civic Assoc. Inc. v. MacKenzie (Sup. Ct. PA 1995) (p. 793)

1. Facts

a. MacKenzie bought a vacant lot. There was a covenant to pay homeowners association dues. They could not build on it – percolation problems.

b. They couldn’t get rid of it. They tried to (i) return it to the seller, (ii) gift it, (iii) lose it though a tax foreclosure – no buyers (tried twice), (iv) give it to the association, and (v) abandon it.

2. Holding

a. You can’t abandon “perfect” title:

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1) The SoF requires written transfers.

2) You can’t avoid tort liabilities that come with land ownership by walking away.

3) If you could abandon land title, there would be an unseemly scramble among persons trying to establish a new ownership.

b. The duty to pay money ran with the land and benefited it. The person with seisin is responsible to pay it, no matter how it attempts to abandon. Someone always owns property.

G. Questions and Note (p. 796)

1. Note 1 – What, if any, relief should a court give the MacKenzies? Does Restatement (3d) of Property offer any relief? Is enforcement of covenant unconscionable?

a. The termination rules in Restatement §7.12 don’t apply to obligations to community associations.

b. The servitude wasn’t overreaching when it was created, but they never would’ve agreed to pay the dues if they knew they couldn’t build on it.

c. It probably passed percolation tests when they bought it, but failed when they went to build.

2. Note 2 – What would you advice the MacKenzies to do to stop the hemorrhaging of cash? (i) Transfer it to a shell LLC with no assets. (ii) Give it to a homeless person with no assets or a neighbor for a garden. The separate assessment may disappear if the lot lines did.

3. Note 3

a. In feudal times, land tenants owed lords a service. Like an affirmative covenant, but if the tenant didn’t perform, the lord got the land. He wasn’t personally liable and didn’t risk losing other land.

b. With an affirmative covenant, all the landowner’s assets are at risk if it doesn’t perform.

H. Restatement (3rd) of Property, Servitudes (2000) -- §7.12 – Modification and Termination of Certain Affirmative Covenants. (p. 797).

I. Termination by condemnation. (i) If eminent domain destroys an easement, the government is supposed to pay for it. (ii) If it uses land and violates a restrictive covenant, it must pay damages to the landowners having the benefit.

VIII. Common-Interest Communities – a set of restrictive covenants in a common area. The law is still developing.

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A. Homeowners with fee-simple title to their homes jointly own common areas as tenants-in-common. Homeowners must pay to support common areas even if they don’t use them.

B. Horizontal and vertical privity requirements are met because (i) the original purchasers are in privity with the developer, and (ii) later purchasers are in privity with the original purchasers.

C. A homeowners association enforces the servitudes/rules.

D. Condominium -- Each unit is separately owned by in fee simple by an individual owner. The exterior walls, land, hallways, and other common areas are jointly owned by unit owners as tenants-in-common.

E. By what standards should rules and regulations be judged? (i) Can newcomers simply disregard them? (ii) Can you prohibit cats or dogs? (iii) If you don’t like it, move!

F. Narstedt v. Lakeside Condo Assoc (CA 1994) (p. 800).

1. Facts

a. A Master Deed bans cats, and a lady owned 3. It fined her, but she sued to have the rule declared unenforceable.

2. Ruling

a. The legislature ruled they are presumptively valid; challengers must show they’re unreasonable by the standard applicable to equitable servitudes.

b. They are used to achieve the stability essential to the success of a shared-ownership development. The common restrictions work like ordinary restrictive covenants – to bind new owners, they must run with the land.

c. Buyers are entitled to rely that they will be uniformly enforced. A court will uphold them if reasonable and reject them if unreasonable.

d. It is unreasonable if (i) it is arbitrary and imposes burdens on all owners that substantially outweigh the benefits, or (ii) it violates public policy.

e. You look to those who made it, not those who want to challenge it. Case-by-case litigation would be a nightmare.

f. Reasonableness vs. unreasonableness is decided based on how and why the regulations were adopted, not on a subjective view applying them to a particular individual.

g. There is a lesser standard for subsequently-adopted regulations -- a case-by-case review of is appropriate to see if it is reasonable in a situation.

3. Dissent – no blood, no foul.

G. California Civil Code §1360.5 – overrules Nahrstedt and allows at least one pet in each unit.

H. Notes and Questions (p. 809-813)

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1. Note 1 – Do people with allergies deserve protection? FHA? Equal protection? No, they’re not a protected class and it doesn’t impair a major life activity.

2. Note 2 – losing party may have to pay legal fees. So it can be expensive to be in a litigious community.

3. Note 3 – Restatement (3rd) distinguished between types:

a. Direct restraints – sale without consent, limits on permissible transferees, etc. – must be reasonable.

b. Indirect Restraints – pets, paint color, etc. -- only need rational justification.

c. It also distinguishes between original limitations and subsequently-adopted limitations.

4. Note 4 – CA court later used a good-faith “business judgment” standard to review a board’s economic decision.

5. Note 5 – NY adopted the good-faith business-judgment rule when examining regulations. It notes that such a review is more deferential.

6. Note 6 – CA now applies the same deferential review to subsequent regulations if they’re recorded.

I. What do you think the standard of review for rules set forth in an association’s charter?

J. Note: New York’s Cooperative Apartments (p. 814)

1. In a co-op, a corp. has title to the land and building. People own shares and get a lease for their living space.

2. If a shareholder doesn’t pay, the rest must pitch in to make the mortgage payments. So there’s extensive interviews before approving a shareholder. This also allows them to screen and eliminate potential members.

K. Mulligan v. Panther Valley Prop Owners (p. 815) – upheld rule prohibiting high-risk sex offenders from living there.

L. Better Twin Rivers v. Twin Rivers Homeowners’ Association, (N.J. 2006) – not in textbook.

1. A group of homeowners challenged restrictions on their “expressive” rights – political signs, access to the newsletter, use of community rooms, etc.

2. The court found that common-interest communities were like shopping centers or downtown areas. Though not “quasi-municipal”, a court must apply a balancing test while looking at 3 factors: (i) The nature, purposes, and use of the property; (ii) The extent and nature of the public’s invitation to use it; and (iii) The purpose of the expressive activity on the property in relation to both the private and public use of the property.

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M. Timothy Egan, The Serene Fortress: Many Seek Security in Private Communities, NYT (9/3/95) (p. 817)

Judicial land use controls

I. Judicial Land Use Controls: The Law of Nuisance (p. 639)

A. Miscellaneous Opening Stuff

1. General Rule -- use your property so as not to injure the property of another.

2. The law of nuisance is part torts and part property. (i) torts – nuisance liability arises from negligence or other misconduct; (ii) property – the liability is for interfering with the use and enjoyment of land.

B. An Introduction to the Substantive Law (p. 639)

1. Morgan v. High Penn Oil Co. (N.C. 1953) (P. 639)

a. Facts1) Morgan owned land on which it had a house, restaurant, and trailer park.

High Penn had a refinery 1,000 feet away; 2-3 days a week it emitted nauseating fumes.

2) Morgan sued for nuisance, seeking an injunction and temporary damages.

b. Ruling

1) Use your property so as to not harm another property. Courts lump a lot into “nuisance” laws, but there’s no real uniformity.

2) Nuisance – major non-trespassory invasion using/enjoying land. It can be unintentional.

3) Intentional – conduct that a person (i) acts for the purpose of causing, or (ii) knows is resulting from his conduct, or (iii) knows is substantially certain to result from conduct.

4) When is an actor liable for its conduct?

a) Intentional Conduct – if it is unreasonable under the circumstances.

b) Unintentional Conduct – if it is negligent, reckless, or ultra-hazardous.

5) In operating the refinery, High Penn intentionally and unreasonably impaired Morgan’s use of their property.

6) $2,500 damages and an injunction.

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2. Nuisance Issues – Not in Textbook

a. Restatement – describes nuisance well, but courts don’t follow it; e.g., Morgan only cited it.

1) Why were the acts unreasonable? If it had followed the Restatement, it may have reached a different decision.

2) High Penn’s operations were well-suited to the area (but so were Morgan’s operations).

b. Circular Reasoning -- if I interfere with how you use your land – you’re interfering with me! How do we resolve this conflict?

c. We need to develop an analysis that separates two distinct questions in nuisance:

1) What is the cheapest way to avoid it?

2) Who should bear these costs?

d. Coase

1) Assign one party the rights and they will negotiate an efficient outcome.

2) Put the burden on the low-cost avoider. (i) Could Morgan close windows?, (ii) What can High Penn do?

e. Epstein – Corrective Justice – rejects Coase.

1) He rejects the reciprocity argument. Just because the defendant can’t invade the plaintiff’s land doesn’t mean the plaintiff has invaded the defendant’s land.

2) Applied to Morgan – it doesn’t invade High Penn’s land by not closing their windows.

f. Miscellaneous Issues with Morgan (i) The award only included past damages. The true cost is higher. How much higher? (ii) What if Morgan could avoid the damages at a lower cost? (iii) What about damages to other citizens? Can we restrict them to Morgan? (iv) Can High Penn buy its way out of the injunction? At what cost?

3. Notes and Questions (p. 641)

a. Note 1 – Unreasonableness

1) Morgan has the textbook rule – actionable nuisance interfering with use and enjoyment of land that is (i) substantial and (ii)

a) intentional and unreasonable, or

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b) the unintentional result of negligent, reckless or abnormally dangerous acts.

2) Unintentional – traditional tort ideas.

3) But most modern nuisance cases involve intentional conduct. Liability only arises if the nuisance is unreasonable.

4) What does unreasonable mean?

a) Jost v. Dairyland Power – not a CBA. Focus on the level of the interference.

b) Restatement – use a CBA. What’s the cost (of unabated activity and the cost to abate it) and the conduct’s benefits?

5) The Restatement basically examines if the “gravity of the harm outweighs the utility of the actor’s conduct.”

6) A lot of courts cite the Restatement, but few actually apply its principles.

b. Note 2 – More on Unreasonableness: Trespass Compared

1) Intentional Tort -- usually results in liability regardless of the harm or the reasonableness of the conduct causing it.

2) Trespass

a) Unintentional – almost identical test as for private nuisance (negligence, recklessness, ultra-hazardous activity)

b) Intentional – as with intentional torts, reasonableness irrelevant – liability is given, and damages are the real issue

3) Nuisance:

a) Intentional -- unlike trespass, you ask about reasonableness and the harm.

b) Unintentional – same test as trespass; negligence, recklessness or ultra-hazardous activity

4) Why more stringent with trespass than with private nuisance (e.g. water run-off versus released gases)? Restatement (2nd) Torts -- tries to eliminate the different standards of proof.

5) Trespass has fewer parties than nuisance. This reduces negotiation costs and impacts if a court is needed to resolve a dispute.

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6) Restatement

a) Invasion is “unreasonable” under nuisance law if: (i) the harm’s gravity outweighs the utility of the actor’s conduct; or (ii) the harm is serious and awarding damages would not drive the company out of business.

b) Conduct that’s a nuisance may become reasonable if compensation is paid.

c) Do we want a company out of business or have uncompensated plaintiffs?

d) Is the Restatement equitable? What are our goals? Pinto/Hummer.

c. Note 3

1) Fear/Loathing -- is it a nuisance if the public fears the use to which you’re putting your property? Some courts say yes.

2) Air and light – interfering with them may be public nuisance. Overly sensitive uses aren’t protected. Could it be a negative easement?

3) Spite and Spam -- easier for courts to find violation, e.g. spite fences.

4) Plain Old Ugly -- aesthetics – by itself, probably not enough.

4. Note: Lateral and Subjacent Support (p. 645)

a. Nuisance Law – one of the rights incident to land ownership. Others include water rights, freedom from trespass, and the right to support.

b. Lateral – all parcels surrounding land provide lateral support – but only the land in its natural state and not buildings on the land. There’s strict liability, but it can be waived or expanded.

c. Subjacent – law is basically the same with respect to under your land.

d. Why not just apply nuisance law? Because it’s non-invasive? Or is it? Or why not recognize another form of negative easement?

C. Remedies (and More on the Substantive Law) (p. 646)

1. Estancias Dallas Corp. v. Schultz (TX 1973) – temp damages and (i) future damages, or (ii) injunction.

a. Facts

1) The plaintiff’s house was next to a large, loud air conditioner tower that serviced 8 apartment buildings with 155 units.

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2) The apartments were built while the plaintiffs lived there.

3) The husband suffered $1,000 in damages and the wife $9000 for health, discomfort, etc., but they chose an injunction.

4) The defendant argued that the trial court didn’t balance the equities. It’s expensive to have an HVAC in each apartment.

b. Ruling

1) Even if the jury finds a nuisance, the court must balance the equities to determine if it should issue an injunction.

2) The appellant didn’t show that the court failed to balance the equities.

3) A court should deny injunctive relief only if it would significantly injure the public.

a) But here’s there’s no public interest.

b) Even if these apartments shut down, the city has other apartments.

4) The noise is substantial, interferes with the plaintiffs’ use of their home, and reduced the home’s value from $25,000 to $12,500.

5) It is irrelevant that: (i) the increased cost of quiet air conditioning at the outset would’ve been $40,000; or (ii) it now costs $150,000-$200,000 to install quieter air conditioning now; or (iii) without air conditioning, nobody would rent the apartments.

6) Temporary damages; and either (i) Permanent damages; or (ii) Injunction

c. Is this inefficient?

1) Should the apartments get a windfall for not buying enough land to buffer the sound?

2) Why don’t they buy the plaintiff’s house? It’s cheaper than installing individual units.

3) Does it just transfer the problem to the private sector? Should the apartment complex be required to buy its way out?

2. Is there a better way to set the ground rules to avoid private-nuisance problems and their uncertainty?

3. Notes and Questions (p. 648).

a. Note 1 – many cases involve air conditioning.

b. Note 2 – Why was a nuisance found in Estrada when the benefits are greater than the costs?

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1) The damages are maybe $25,000 (how about damages to neighbors who didn’t sue?). That’s the benefit to granting the injunction.

2) But the cost was $40,000.

3) Estancias implicitly rejects the Restatement-utilitarian approach for the threshold test.

4) So what do we do?

c. Note 3 – Why not limit the remedy to damages? If it’s cheaper to fix the noise than to pay damages, the problem will go away.

1) Were the cost estimates reasonable? Or was the defendant trying to engender sympathy?

2) Again, what is our goal?

d. Note 4 – selling injunctions

1) If a plaintiff sells its injunction rights, it gets a price it believes is fair.

2) If the court awards damages, that’s the price.

e. Note 5 – is extortion really a problem?

4. Boomer v. Atlantic Cement (N.Y. 1970) (p. 649) – permanent damages awarded – not an injunction. Balance the nuisance’s harm to an injunction’s harm.

a. Facts

1) Neighbors sue a cement plant near Albany for creating dust, explosions, noise, etc. They sought damages/injunction. The trial court gave temp damages, but no injunction.

b. Ruling

1) The threshold question is if court should: (i) resolve the litigation between the parties as equitably as possible, or (ii) try to promote public welfare and broad policy objectives.

2) New York law has favored injunctions even if there was a marked disparity between (i) the harm caused by the nuisance, and (ii) the losses caused by an injunction.

3) The court rejects this law because it wasn’t warranted by a cost-benefit analysis.

4) An injunction would close Atlantic and: (i) Air pollution needs technology beyond the court’s management abilities. (ii) The plaintiffs’

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damages are small relative to Atlantic’s value and the impact of putting it out of business. (iii) A contingent injunction is unfair. (iv) A short injunction that wouldn’t be renewed if the defendant fixed the problem doesn’t work because the technology might never be developed.

5) The total damages are small relative to the value of Atlantic’s operation.

6) So the court gave permanent damages. This is the easiest solution given all factors -- including the economic effect if the Court shut down the company.

7) This is movement toward balancing the equities on both sides.

c. Dissent -- The majority is licensing a continuing wrong. When the company pays damages, it has no incentive to improve conditions.

5. Notes and Questions (p. 653)

a. Note 1 – the harm from Atlantic’s nuisance was much worse than the court’s opinion indicated. (i) The blasting frightened kids, cracked walls, etc., and filled the air with fine dust. (ii) Damages awarded exceeded those stated in the opinion -- $710,000 instead of $185,000.

b. Note 2 – The Liability Issue

1) A subsequent case similar to Boomer used the weighing test and found no liability.

2) Does Boomer reflect the Restatement test of unreasonableness turning on the feasibility of payment? It was before the Restatement and the Restatement cites it.

c. Note 3 – The remedy issue: injunctions. Is balancing equities a sensible way to decide whether to issue an injunction? What factors should a court consider?

1) Do we consider all the plaintiffs? All the possible plaintiffs? The public at large?

2) Balancing equities is often neither sensible nor necessary. (i) It reconsiders similar elements of hardships and utilities considered when determining a nuisance existed. (ii) It overlooks relevant considerations. Consider transaction costs and bilateral monopolies in achieving a settlement.

d. Note 4 -- The remedy issue: permanent damages.

1) Advantages to permanent damages: (i) Eliminate the need for an injunction. (ii) The defendant must eliminate the nuisance. Or, if cheaper, pay damages.

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2) Disadvantages to permanent damages: (i) Maybe a bad measure of real social costs, especially if the nuisance level varies over time. (ii) Undervalue social costs if not all parties are before the court. (iii) Eliminate defendant’s incentive to cure the nuisance.

6. Spur Industries v. Del E. Webb Dev. (AZ 1972) (p. 656) -- Public v. Private Nuisance and going to the nuisance.

a. Facts

1) Spur had lots of land, but its cattle feedlots kept growing. Webb started building houses far away, but expanded toward the feedlots. Eventually, couldn’t sell units near feedlot.

2) Developer says private and public nuisance.

b. Ruling

1) The Court examined 2 issues: (i) May a feedlot be enjoined when it became a nuisance only because a builder brought residents to the area? (ii) If the feedlot is enjoined, can the Court have the builder indemnify the feedlot for losses caused by the injunction?

2) Public v. Private Nuisance—it’s a matter of degree.

a) Private – affects a single/small number of persons in enjoying private rights not common to the public.

b) Public -- affects a lot of people or an entire community or neighborhood.

3) Spur was a public and private nuisance.

a) Private Nuisance

i. Injured residents get damages because their injury is slight.

ii. If slight, why was a nuisance found? The court must’ve been using the threshold test.

b) Public Nuisance

i. You can get an injunction.

ii. The general public can bring an action; Webb can also because its loss of sales is a “special injury”.

4) Here Spur violated a public-health ordinance on dangerous nuisances in a ‘populous’ area.

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5) Del Webb must indemnify Spur for losses since it brought people to the nuisance. Spur couldn’t have foreseen the development.

6) The Court expressly looks to the interests of, and tries to protect, the homeowners.

7. Notes and Questions (p. 661)

a. Note 1 -- Public nuisance: unreasonably interfering with a right of the general public.

1) Elements of unreasonableness include: (i) Does it interfere with public health, safety, peace, comfort or convenience? (ii) Does a statute or ordinance prohibit it? (iii) Is it temporary or will it continue? (iv) Is the effect permanent or long-lasting?

2) The underlying basis for liability for private and public nuisances are the same:

a) Intentional -- substantial harm caused by unreasonable conduct.

b) Unintentional -- negligent, reckless, or abnormally dangerous activity.

3) Public nuisance law -- protect public rights.

4) Private nuisance law -- protect rights in the use and enjoyment of land.

5) Standing

a) Private nuisance – only owners of interests in land can bring suit.

b) Public Nuisance – any member of the affected public, but only if the person can show “special injury.”

b. Note 2 -- Coming-to-the-Nuisance -- doesn’t bar a suit, but it’s relevant.

1) May impact whether a court grants damages or an injunction.

2) Interesting balance of fairness and utility. What if an area needs more housing, and favors housing over cattle production?

3) What if the plaintiff knew of -- or could anticipate -- the nuisance before moving?

a) We impose remedies to induce desirable behavior.

b) If you can’t anticipate a change in land use, you can’t be properly induced.

4) Why not enjoin a nuisance but have the plaintiff pay the defendant’s compliance costs?

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5) We want to impose some cost on the defendant – even in coming to the nuisance – to force it to act efficiently.

c. Note 3 – Four Rules

1) In any nuisance (and most property) actions, there are 4 possible outcomes.

a) Injunction – Morgan; Estancias.

b) Allow the conduct to continue if the defendant pays damages – Boomer.

c) Deny all relief – let it continue.

d) Abate the activity only if the harmed parties pay to remove it – Spur.

2) We want an economically efficient outcome.

8. Nuisance Law and Environmental Controls (p. 665)

a. Nuisance law is not effective in dealing with environmental other than on a local level.

1) The litigation is cumbersome and expensive.

2) Each plaintiff suffers only a little damage and has little incentive to bring an action.

3) Courts don’t have the knowledge to devise an efficient remedy.

b. Do we regulate pollution?

c. Do we sell the right to pollute? Is this most efficient?

1) The costs of pollution control go up per-unit of control – the marginal cost increases.

2) When the per-unit cost of control is greater than an emission fee, company will pay to pollute – cheaper than reducing pollution.

3) Cost-efficient controllers will hit this point later so they will control more pollution. This minimizes pollution-control costs.

Source A Source BControl Cost MC TC MC TC1st Pollution Unit $1 $1 $3 $32nd Pollution Unit $2 $3 $4 $73rd Pollution Unit $3 $6 $5 $12

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4th Pollution Unit $4 $10 $6 $185th Pollution Unit $5 $15 $7 $256th Pollution Unit $6 $21 $8 $33

MC = Marginal CostTC = Total Cost

1. Assume each is producing 6 units of pollution, for a total of 12.

2. The government wants to cut total pollution in half -- to 6. It sets an emission at $4.50 per unit of pollution.

3. A would control 4 units and B would control 2 units. A’s cost would be $10 and B’s cost would be $7 – the total is $17.

4. No other combination has equivalent control at that cost.

Legislative land use controls

I. Legislative Land-Use Controls: The Law of Zoning

A. Introduction

1. Historical Background – City planners grew with the growth of industrialized cities and urbanization.

a. How should a city grow? What is liked and disliked about cities? How do we obtain the likes?

b. Smog, noise, over-crowding, congestion, etc., were increasing. Property values went down when adjacent parcels were put to widely disparate uses.

2. Our approaches weren’t working

a. Nuisance Law – wasn’t solving the problems.

1) Courts didn’t want to hinder development. They declared only highly objectionable conduct to be nuisances.

2) It only addressed problems after-the-fact. Required expensive lawsuits.

b. Rest. Cov. – only worked if they were adopted before a community was built. This was rare.

3. A number of city designers gained prominence.

a. High-rise or low-rise? Paris (high density), New York (mid-density), London (low density).

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b. Private yards or public parks? Gardens/breathing room/greenery/play areas/etc.

c. Separate uses – homes, green belt, industrial, etc.

d. We eventually developed zoning.4. Village of Euclid v Ambler Realty (OH) (p. 828)

a. Facts

1) This case was designed to have the Supreme Court rule that zoning regulations were unconstitutional takings.

2) Amber owned 68 acres. Euclid adopted an ordinance that highly regulated uses: (i) building types, (ii) height, (iii) lot size, and (iv) etc. Ambler’s land’s value went down 75%. Ambler argued it was unconstitutional – deprived Amber of property without due process and denied it equal protection.

3) Does the zoning ordinance violate Amber’s constitutional rights by imposing unreasonable and confiscatory regulations under the guise of the police power?

b. Ruling

1) Times have changed

a) 50 years ago zoning was unnecessary. It would’ve been rejected as arbitrary and oppressive.

b) The meaning of constitutional guaranties never varies, but the scope of applying them must change to meet new conditions that constantly arise.

2) Zoning must find justification in some aspect of the police power.

3) Zoning is "not unconstitutional per se," but it may be a wrongful taking. It depends on circumstances and conditions.

4) The opinion rests on narrow grounds – instead of relying on police power as a tool of social engineering, the Court extended the nuisance-control rationale. A court should seek guidance from nuisance law. But non-nuisances can be prohibited.

5) In some zones, Euclid prohibits all industrial regardless of whether it causes a nuisance. Lawful, valid uses are being prevented.

6) If a zoning classification is debatable, the Court will defer to legislative judgment. There’s a presumption of constitutionality.a) Segregating residential area makes it easier to guard against fires,

control car accidents, decrease noise, and preserve a favorable environment, etc.

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b) Even if you disagree, they’re not arbitrary or unreasonable. They have substantial relation to public health, safety, morals, and general welfare.

7) This case is a broad attack. The ordinance could still be applied unconstitutionally.

c. Other Issues the Case Raises

1) Zoning doesn’t interfere with property rights – it protects property rights. Particularly if you’re a single-family homeowner.

2) The social theory underlying Euclidean Zoning is like the Garden City movement.

a) Segregating Uses -- desirable.

b) Wholesome Housing – single-family homes with yards -- is the central aim, to which all else is subsidiary. Multi-family units and apartments harm nice areas of single-family communities.

c) Open Space -- is desirable – setback lines, lot-size requirements, etc.

3) It was also believed that after mapping and zoning little change would be needed.

4) True “nuisances” can be addressed on a legislative basis -- simpler than private lawsuits, but note that the basis to abate/remove the nuisance already exists.

3. Notes and Questions (p. 836)

b. Note 1

1) This is now known as Euclidean Zoning.

2) “Higher” uses are OK in areas zoned for “lower” uses, but not vice-versa. Lower uses can be more valuable than higher uses. Commercial property is worth more than residential.

3) This can also be seen as overt licensing of segregation by class.

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c. Note 2

1) Substantive Due Process – fundamental rights and liberties as found by the court but not enumerated in the Bill of Rights.

2) The Court uses it to strike down social legislation it deems unfair. Now it’s used to for personal, and not economic, liberties.

d. Note 3

1) Why didn’t they argue it was an unlawful taking under the 5th Amendment?

2) What’s the diff between (i) physically taking land, and (ii) just taking its economic value?

e. Note 4 – should they have made a specific attack?

f. Note 5 – Houston is the only major city without a zoning ordinance and it still regulates use.

B. The Structure of Authority Underlying Zoning (p. 838)

1. Enabling Legislation (p. 838)

a. Zoning is exercising police power to protect health, safety, etc. This is a state power. Zoning Enabling Act – permits cities to enact their own zoning regulations (most states have it).

b. The regulations must be consistent with a comprehensive plan. A municipality must have a Board of Appeals.

2. The Comprehensive Plan (p. 839)

a. A statement of the local government’s objectives and standards for development. It shows, at least in a general way. How development will occur.

b. 25 states require them. Even if one exists, zoning inconsistent with it is not necessarily invalid.

c. The future is too unpredictable for long-term planning. What was thought 30 years ago?

d. We’ve had a tidal wave of personal mobility and suburbanization. Fast food restaurants, etc.

C. The Non-Conforming Use

1. PA NW Distributors v. Zoning Hrg Bd (p. 841)

a. Instituting Zoning – in General

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1) At times non-conforming uses are tolerated. Cities believe they will fade away over time. But some don’t; e.g., junkyards. Owners had a reason to hang on – they were monopolies.

2) You could forbid (i) the non-conforming use after it was abandoned – but they weren’t being abandoned, or (ii) forbid maintenance and repair – but this just made them shabby.

3) Amortization – have a reasonable time during which the non-conforming use could continue, but after which it is unlawful.

b. Facts

1) An adult book store opened. 4 days later, the township indicated it was changing the law to regulate “adult commercial enterprises”.

2) The ordinance gave a 90-day amortization period by which it had to be out of business.

3) The bookstore appealed to the zoning board and court and lost, and appealed again.

c. Ruling

1) Many other states allow the "amortization" approach, but not Pennsylvania.

2) In Pennsylvania, municipalities can’t control lawful pre-existing uses unless they are: (i) nuisances; (ii) have been abandoned; or (iii) are taken by eminent domain on payment of compensation.

3) You must balance (i) the government’s right to protect "health, safety, morals and general welfare" (the "police power"), if reasonable, with (ii) constitutionally guaranteed rights to use one's property unfettered by government restrictions unless it: (i) violates a law, (ii) creates a nuisance, or (iii) violates a covenant, restriction, or easement.

4) There’s a big difference between (i) phasing out non-conforming uses through gradual attrition, and (ii) extinguishing lawful uses on a timetable not of the owner’s choosing.

5) Extinguishing existing uses, even over a phase-out period, is a confiscatory taking and requires payment.

6) It doesn’t matter that the business could be conducted elsewhere in the township; there is a vested right to continue business where it lawfully chose in the first place.

7) Amortization is unlawful per se.

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d. Concurrence

1) Agrees in result, but would limit it to these specific facts and not invalidate amortization zoning restrictions.

2) If it were reasonable (for example, several years' duration), it could be valid. The purpose of amortization is to let owners recoup investment, etc.

2. Problems, Notes, and Questions (p. 846)

a. Problem 1

A buys a vacant lot for $50,000. 10 years later it’s rezoned single-family; the value is now $12,500. Under Euclid, A can’t complain.

B buys the vacant lot next to A’s for $10,000 and builds a store for $40,000 -- $50,000 investment. B earns 10% profit and a salary. It’s rezoned single-family; the value of the land is now $2,500. If B has to shut down the store, it’s a taking and he gets compensated. Why the difference?

1) B loses the value of the business. But B has recovered his initial investment and has a business B may be able to move.

2) Is the burden greater on A or B either economically or equitably?

3) Why protect non-conforming uses?

4) If non-conforming uses weren’t protected, investors would be less likely to invest. But speculators also have value – they hold land open for later development.

b. Note 2

1) Changes

a) Non-conforming uses run-with-the-land; survive a change in ownership. If not, the sale price would go down.

b) Some states let you expand to grow your business. Some let you change non-conforming uses to other non-conforming uses.

2) Destruction and Abandonment

a) If either occurs, courts are quick to end a non-conforming use. It has to be for a set period of time.

c. Note 3 – Amortization

1) Would a longer period have mattered? No – the court rejected the amortization approach in principle. An unconstitutional effect can’t be made legal by waiting.

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2) Should a longer period have mattered?

3) There are cases with virtually identical facts that go each way.

4) Relevant factors to an amortization period: (i) nature of the use; (ii) amount invested; (iii) scope of improvements; (iv) public detriment caused by use; (v) character of the neighborhood; and (vi) time needed to amortize the investment.

d. Note 4 – Vested Rights

1) Vested-Rights Doctrine – a proposed use may be protected if sufficient commitments had been made – plans, permits, etc. This is when the planning is before the zoning change, but it hasn’t started operating.

2) Estoppel - detrimental reliance may save a "non-conforming use" that would otherwise not have arisen.

D. Achieving Flexibility in Zoning (p. 849)

1. Variances and Special Exceptions (p. 849)

a. Can we avoid zoning rule that makes no sense?

b. Appeal to the Board of Zoning Appeals.

1) Special Exceptions consistent with the ordinance’s general purpose and intent.

2) Grant a variance that isn’t contrary to public policy if a literal reading of the ordinance results in an unnecessary hardship.

c. Amend it? Lawsuit? If it’s bad only in specific situations, instead of scrapping the whole thing, build-in flexibility.

d. The variance doctrine isn’t complex, but it’s less important than the judge’s feel of the particular situation before it.

e. Commons v. Westwood Zoning Board (NJ 1980) (p. 850)

1) Facts

a) Restrictions on house size, lot size and set-backs made the lot un-developable under a zoning restriction

b) Commons wanted to build a house to fit a lot with insufficient frontage and area. Other than size, it was in character with the neighborhood.

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c) It tried to alleviate the hardship and bring the property into compliance: (i) tried to sell the lot; and (ii) tried to buy more front footage from neighbor so as to have enough to build normal house.

d) Neighbors oppose it on the grounds it would reduce property values.

2) Ruling

a) To qualify for a variance, the plaintiff must show two things:

i. undue hardship -- no effective use of the property can be made without the variance; and

ii. granting the variance wouldn’t be detrimental to (a) the public good or (b) area’s zone plan.

b) Undue Hardship

i. If the land isn’t suitable for any purpose (property owner isn’t entitled to have property zoned for its most profitable use).

ii. Not self-imposed.

c) Commons satisfied the standard.

d) Variance might be denied on condition that the complaining neighbors buy the property at fair-market value.

e) The zoning board needs to fully explain and support its decision.

f) Commons must submit detailed plans.

f. Notes and Questions (p. 855)

1) Note 1

a) Zoning boards can impose conditions on a variance grantee to maintain the proper character. Fences, lights, etc.

b) But it can’t condition the grant on the variance not running-with-the-land.

2) Note 2

a) If an owner enclosing a porch to reduce heating costs and protect its children’s health will extend the house 4 feet beyond the limit, can it get a variance for practical difficulties or undue hardship?

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No -- they’re conjectured benefits that lack a real nexus to the property. It’s a personal convenience. Fuhst v. Foley.

b) Can an owner get a variance to add a porch for an invalid child if it already violates the ordinance?No -- existing violations aren’t a basis for new violations. And “hardship” doesn’t include personal infirmary.

3) Note 3 – If you buy undeveloped property knowing that it can’t be developed without a variance, does this preclude a variance?

a) Maybe.

b) But if A sells to B and A would qualify for a variance, why shouldn’t B?

c) Let purchasers stand in the shoes of the original owner if the claimed hardship doesn’t arise out of the sale.

4) Note 4

a) Commons examined an “area” restriction, not a “use” restriction.

b) The burden of proof is higher for a use restriction. Why? Because they can drastically change the district’s nature.

c) Use restrictions, in many states, require “unnecessary hardship”; area restrictions only require “practical difficulties.” Is this a real difference?

5) Note 5 -- Grant versus Denial

a) A variance being issued is reversed on appeal far more often than is an appeal of a variance being denied.

b) Are most variances illegally granted?

c) The party who wants the variance is more focused than the neighbors. And more likely to offer a bribe.

6) Note 6 – Zoning Bored – if council is not paying attention, it can’t make a reasoned decision.

g. Cope v. Town of Brunswick (Maine 1983) (p. 858) – special exception, not a variance.

1) Facts

a) Plaintiff wanted an exception to build apartment buildings.

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b) It argued that the zoning ordinance unconstitutionally granted discretion to the Zoning Board.

c) The land was zoned for suburban-residential use, but it could be used for apartments if the zoning board granted a special exception.

2) Ruling

a) Zoning boards have no authority to regulate the use of private property.

b) Through enabling acts, states delegate to municipalities. The municipalities then delegate to zoning authorities.

c) The delegation must be sufficiently detailed to prevent arbitrary decisions.

d) Criteria’s (2) and (4) were too general to provide the necessary guidance.i. (2) – use won’t adversely affect the health, etc., of the

public.

ii. (4) – won’t devalue surrounding property.

e) Variances and special exceptions are different and have different standards.

i. Variance -- prohibited use that’s allowed in some circumstances.

ii. Special Exception -- permitted use if certain criteria are met.

f) The ordinance here set out when and what type of apartment complexes could be built. It didn’t prohibit them.

g) The ordinance reflected a decision to allow apartments if the developer met conditions (no adverse uses, purposes of ordinance upheld, and property values in area maintained, etc.).

h) The legislature established its validity – it comports with health, safety and welfare if specific standards are met.

i) A zoning board should not have the discretion to determine if it comports with health, safety, and welfare.

j) There must be objective criteria and the zoning board can see if they exist, but it can’t have discretion.

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k) (2) and (4) grant too much discretion and, in any event, were already decided by the legislative body.

h. How could the ordinance have read to be lawful?

i. Notes and Questions (p. 861)

1) Note 1

a) Variance – administratively-authorized departure from the zoning ordinance, granted in cases of unique hardship, in which applying the ordinance strictly is unconstitutional.

b) Exception – a use the ordinance permits where it’s not incompatible, but might cause harm if not watched.

2) Note 2

a) Some jurisdictions use exceptions as in Cope – to give zoners a lot of leverage in applying them. This invites abuse.

b) Other jurisdictions do the opposite and provide greatly detailed criteria. If they are met, the exception must be granted.

c) Special exceptions are great for addressing anticipated situations. Variances for unpredictable situations.

d) Rule of Reason (variances) v. Standards (exceptions).

3) Note 3

a) Some cities rely almost exclusively on special exceptions. Zoned an entire town agricultural with special uses.

b) The courts reject this.

Week 9

I. Spot Zoning (p. 862)

A. State v. City of Rochester (Minnesota 1978) (p. 862)

1. Facts

a. A developer bought 1.18 acres subject to the city re-zoning it from single- to multi-family (from R-1/R-2 to R-4). It was 3 blocks from the central-business district, near other apartments, a hospital complex, etc. Neighbors opposed the re-zoning.

b. The Planning Commission recommended denial, but the Council re-zoned the property R-4.

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c. The neighbors argued that:

1) The re-zoning is “quasi-judicial” act by the council that is (i) subject to strict judicial scrutiny, and (ii) presumptively invalid as not supported by written findings of fact.

2) Even if the re-zoning is a legislative act, it is arbitrary and capricious because it was (i) inconsistent with the city’s land-use plan, and (ii) without reasonable relation to the health, safety, or welfare of the community.

3) It was invalid spot zoning.

2. Issue

a. Was the rezoning “quasi-judicial” or “administrative”? Courts examine these closely.

b. Was it “legislative” so the challengers must prove an improper use of police power? These are presumptively valid.

3. Ruling

a. Re-zoning is legislative – it’s subject to a deferential review. Reversals are rare.

1) You can reverse it only if you show it is not supported by any rational basis related to public health, safety, morals, or general welfare – or it amounts to a taking.

2) It’s not a re-named “special use”, which is subject to less deference. A court reverses denying a special use if council didn’t make written findings of substantial evidence showing the use improper under the ordinance’s permit standards.

b. It was validly using legislative power and (i) was reasonably related to the public health, safety and welfare, and (ii) was not invalid as spot zoning.

c. Re-zoning before amending the land-use plan was not arbitrary and capricious: (i) a city must adopt a land-use plan before adopting an initial zoning ordinance, but (ii) a city can amend the land-use plan after it amends the zoning ordinance.

d. The re-zoning’s reasonableness is debatable, but that’s not enough for the court to interfere. There is a rational basis for concluding a 6-story condominium is compatible with the area.

e. Spot Zoning – amendments invalid as legislative acts unsupported by a rational basis related to promoting public welfare.

1) It’s a “use” classification for a small parcel that is inconsistent with surrounding uses that benefit or harm a small group.

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2) Here, there’s no island of non-conforming use. And the neighbors didn’t prove that property values would go down a lot.

B. Notes and Questions (p. 867)

1. Note 1

a. Spot Zoning – has several definitions

1) Some courts use “spot zoning” to refer to improper zoning, but others use it neutrally.

2) Improperly allowing an “island” of land to be used more intensively than adjacent property. It suggests undue pressure.

3) Spot zoning is invalid if: (i) a small parcel singled-out for special/privileged treatment, (ii) that’s not in the public interest, or (iii) it’s inconsistent with Comprehensive Plan.

4) Reverse “spot zoning” – harm -- not benefit -- to a small group not in the public interest.

2. Note 2 – Judicial Review

a. Amendments are “legislative.” The legislative body’s judgment stands unless you show there’s no rational basis; as in Rochester, if reasonable minds can differ, the courts defer.

b. But we’ve seen increasing judicial scrutiny.

1) Some courts show less deference if there are red flags, such as “spot zoning,” a quid-pro-quo agreement with a developer, or circumstances haven’t changed.

2) Other courts don’t view re-zonings as legislative and refuse to be deferential.

c. Should it have mattered in Rochester that other apartment buildings were around? Was the re-zoned land a buffer between the apartments and the single-family homes? Or had property values already been negatively impacted?

3. Note 3 – Legislative or Quasi-Judicial?

a. Fasano – rejected by Rochester

1) Did not require a change in circumstances or the original Comprehensive Plan; it focused on the re-zoning at issue.

2) Courts show less deference if a decision seemed adjudicative, rather than legislative.

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b. Now courts are moving away from Fasano, which has been reversed in part.

4. Note 4 – Plebiscites: Another twist on legislative versus quasi-judicial. Plebiscites – citizens vote on a public question. Some courts have this for re-zoning questions.

5. Flexibility – Permit variances, special exceptions, and detailed-criteria special exceptions in the “legislation” so as to eliminate having to re-zone. If rezoning is the only way, put in conditions on grants of rezoning (still must be reasonable/have a rational basis) [recall note 1]

C. Note: Other Ways to Achieve Zoning Flexibility (p. 870)

1. Contract and Conditional Zoning

a. Conditional Re-zoning – the property owner agrees to use the land in the specified manner.

b. Contract Re-zoning – the owner and zoning authority agree, perhaps with the owner agreeing to restrict its use in exchange with the re-zoning.

c. Courts have begun to accept conditional re-zoning, but contract re-zoning was thought illegal.

d. The conditions on the owner must be reasonable.

2. Floating zones -- establish “zones,” but set their actual locations at a later time when more appropriate.

a. First, the government creates a use district by ordinance that sets forth standards and criteria to govern the uses permitted in the zone.

b. Later, the zone is attached to a particular area through a zoning amendment.

3. Cluster Zones and PUDs

a. Cluster Zones

1) A developer builds not in strict compliance with a zoning ordinance’s area restriction.

2) Try to preserve some characteristic of a rural environment.

b. PUDs: Planned Urban Developments – mixes residential, commercial, and industrial uses. Unlike Clusters, it governs uses and areas.

II. Expanding the Aims (Exercising the Muscle) of Zoning (p. 871)

A. Introduction

1. Zoning began as a way to control nuisances – to ensure light and air, avoid fire, prevent overcrowding, etc.

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2. It’s just about become social engineering in the name of public health, safety, and welfare. A Maryland county council approved an anti-smoking measure – never approved -- that imposed $750 fines against residents if their smoke irritated neighbors.

3. We concentrate on (i) aesthetics as a zoning factor, (ii) efforts to control household composition, and (iii) efforts to control the size/nature of local populations.

B. Aesthetic Regulation (pg. 872)

1. State ex rel. Stoyanoff v. Berkeley (Mo 1970) (p. 872)

a. Facts

1) It was a nice suburb with expensive, conservative, and traditional homes. The Stoyanoffs applied to build a pyramid house. The architectural board denied it.

2) The Stoyanoffs said the ordinance was unconstitutionally vague -- it provided no standard for the architectural board to use.

3) Two experts testified that property values would decline if the house were built.

b. Ruling

1) Enabling statute authorizes the ordinance. This type of regulation promotes general welfare, including protecting the value of close properties and general aesthetics.

2) Protecting neighborhood character/value is a legitimate zoning objective. The house was gross and would clash with the area.

3) The board considered factors other than aesthetics. And the process with the architects was “open.”

4) The ordinances’ general standards were sufficient – the board had to find that a proposed structure was suitable in the neighborhood and wouldn’t adversely affect the general welfare or property values.

c. Other Questions – (i) Do successful architects have time to serve on architectural boards? (ii) Would a pyramid house truly lower property values? Was there empirical evidence? (iii) Why not accept any plan drawn by an architect? They’re experts. (iv) Why not protect neighbors with damages? (v) Why not require landscape screening? (vi) Do they fear the house or the people who were going to move in?

2. Notes (p. 879)

a. Note 1

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1) Courts developing nuisance law rarely declared an ugly site a nuisance.

2) Court initially viewed zoning under the police power as a form of nuisance control. In the 1950’s, courts began to accept zoning restrictions based exclusively on aesthetics.

3) In Berman v. Parker, the Supreme Court expanded the meaning of “public welfare” to include spiritual as well as physical, and aesthetic as well as monetary. Most states follow Berman.

b. Note 2 – Stoyanoff didn’t rest its decision solely on the legitimacy of aesthetics. It relied largely on protecting property values.

c. Miscellaneous Issues -- Architectural expression isn’t protected speech. But courts or at least scholars think that “close”, if not “strict” scrutiny, should be applied to architectural issues.

3. Anderson v. City of Issaquah (Wash 1993) (p. 880)

a. Facts

1) Anderson needed a land-use certification to develop commercially-zoned property.

2) The IDC gives it the run-around. It denies plans without giving specifics to follow: (i) does not fit in with surrounding uses, (ii) doesn’t fit the city’s image, (iii) wants more depth to the façade, (iv) bad color, etc.

3) After spending $250,000 on making and revising plans, Anderson sues.

b. Ruling

1) A Court sees how an ordinance applies to a person who sought to comply with it.

2) The void-for-vagueness doctrine seeks to limit the discretionary and arbitrary enforcement of laws.

3) The requirements aren’t in the code, and IDC didn’t help. He wasn’t told how to comply, he was told to drive down the street to see what others had done.

4) The Court refused to answer whether aesthetic considerations may legally be the sole purpose of land-use regulation. But aesthetics can be a purpose if presented in a way that provides guidance.

5) Anderson met all the written requirements so the certificate must be issued.

4. Notes and Questions

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a. There are 2 central problems with aesthetic zoning: (i) Can a city draft aesthetic standards with enough precision to give reasonable guidance to its agents and citizens? (ii) Does it unduly interfere with free expression?

Tension: The more specificity the less free expression.

b. Note 1 -- Can a design board truly review art? Would Frank Lloyd Wright or other famous architects be able to get by a review board?

c. Note 2 – Compare Private Restrictive Covenants

Anderson would’ve lost if he were subject to private covenants. A private committee only has to act reasonably and in good faith. Constitutional constraints don’t apply in this context. Some gated communities are like small towns, but do you treat them as public for some constitutional purposes? Living in a gated community is voluntary. You know the rules before you move in.

1) Should architectural boards set by private covenants be subject to lower standards than a city board? In a gated community?

The difference in mobility suggests that public regulations should be subjected to more scrutiny that private ones.

d. Note 3 – First Amendment Concerns -- No court has found architectural expression to be protected by the First Amendment. Commentators believe that design regulation implicates expressive values and should be subject to close scrutiny.

5. City of Ladue v. Gilleo (U.S. 1994) (p. 891)

a. Facts

1) Ladue’s ordinance prohibits signs on residential property except for (i) for sale, identification, safety, and (ii) commercial and business interests, churches, non-profits.

2) The Ladue restrictions were content-neutral. If so, then why is commercial permitted?

3) Picture of big tire in Detroit on Page 894.

4) Gilleo had a sign protesting the Persian Gulf War. It was tore down a few times. When she asked for protection, she was told that the ordinance didn’t allow that kind of sign. Gilleo sought a variance and was denied. She sued, alleging that the ordinance breached her “right to free speech.”

5) She got a preliminary injunction.

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6) Ladue added a “Declaration of Findings, Policies, Interests and Purposes” to its ordinance. They listed reasons to avoid an arbitrariness challenge -- traffic hazards, property values, aesthetics, etc.

7) She amended her complaint to challenge the new ordinance.

b. Ruling

1) Signs are protected expression, but are more subject to regulation than speaking because they take up space, obstruct views, etc. Physical aspects can be controlled, but content regulations are suspect.

2) Ladue prohibited signs with political, religious, and personal messages.

3) There are 2 distinct grounds for challenging the constitutionality of a sign ordinance:

a) You can’t restrict too little speech by having exemptions that discriminate on the basis of the message.

This allows the government to choose what is heard.

b) You can’t restrict too much speech by limiting the viability of signs as a means of communication.

4) Ladue has an interest in avoiding visual clutter, but it’s insufficient to overcome the ordinance’s breadth and selectivity. It covers pivotal speech such as a sign protesting a government decision to go to war.

5) There aren’t good alternatives to this cheap, easy, and targeted-to-neighbors speech.

6) The ordinance was unconstitutional to the extent it foreclosed important free speech.

C. Notes

1. Note 1 – Cite to a note regarding Ladue.

2. Note 2 – Signs – can you ban signs that advertise lawful home businesses?

3. Note 3 – Art of One Sort or Another

a. Courts have been reluctant to decide how the First Amendment protects visual art.

b. Tyree Guyton – Heidelberg Project.

c. Are nude statutes, murals, etc., actually constitutional-protected symbolic speech?

d. Should expressions of ecstasy be protected? Are they nuisances?

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4. Note 4 -- Adult Entertainment

a. Control-of-content cases are subject to more careful scrutiny than controls on time, place, and manner of speech.

b. But courts often seem not to act that way. They have upheld ordinances regulating space, distance, set-off of adult-theme stores from churches, housing, etc. This is also true for liquor licenses.

c. Detroit limited adult businesses by separating them through set-offs, distance requirements, etc. Washington limited adult businesses by congregating them in one area.

d. Adult-business regulation is considered content neutral – the regulation arises in an effort to reduce unwanted secondary effects.

5. Note 5 – Religious Establishments

a. Can you exclude churches from residential areas?

b. Why not use nuisance laws if church conduct becomes a problem? Mega-churches and parking.

6. Note 6 – cites to an article.

III. Controls on Household Composition (p. 901)

A. Belle Terre v. Boraas (U.S. 1974) (p. 901)

1. Factsa. Belle Terre (Long Island; <700 people and >1 sq. mile) enacted an ordinance

restricting land use to one-family dwellings -- meaning related people or no more than two unrelated people. It argued it was necessary for traffic, noise, lack of air, and space for children.

b. They leased a house to 6 students from State University at Stony Brook. They argued it interfered with a bunch of their rights.

2. Ruling

a. The Court treated it as an ordinary zoning measure that required only a rational basis.

b. It was a “legislative” act, not “judicial or quasi-judicial”. If it had a basis for public welfare, as it did, it constitutionally exercised police power.

c. The Court gave great deference, and saw the case as involving no fundamental rights calling for strict scrutiny and compelling state interests.

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d. The law had to (i) be reasonable, not arbitrary, and (ii) bear a rational relationship to a permissible state objective.

e. A quiet place with wide yards, few people, and motor vehicles restricted are legitimate guidelines in a land-use project addressed to family needs.

3. Dissent by Justice Marshall

a. It’s a burden on fundamental rights of association and privacy. It’s subject to strict scrutiny and demanded more than a rational basis to sustain it.

b. Under-inclusive -- it lets any number of related people live together regardless of the impact on the neighborhood amenities.

c. Over-inclusive -- prohibits co-habitation by 3 unrelated people no matter how little their impact on the community.

d. Zoning officials can concern themselves with land uses, such as the kind of dwellings that can be built and the number people who can live in them. But they can’t restrict who those people are, whether they are white, Jewish, married, etc.

e. The ordinance unnecessarily burdens their 1st Amendment freedom of association and their constitutionally-guaranteed right to privacy.

f. The ordinance stand only if the burden is needed to protect a compelling governmental interest. Less restrictive means were available to advance the same goals -- why not restrict the number of vehicles, prohibit frat houses, or prohibit boarding houses if this is what was primarily at issue?

4. Other Issues

a. A lot turns on the level of review and deference – strict scrutiny or rational basis?

b. Why not be more flexible? Why not consider whether the legislative classification is in fact substantially related to the statute’s object.

B. Notes and Question (p. 908)

1. Note 1 – can only regulate the family so much . . .

2. Note 2

a. Some states interpret their constitutions as not allowing definitions of “family” to maintain single-family neighborhood. The purposes are valid, but the means, a narrow definition of family, have no reasonable tie to a city’s goals.

b. How does this compare to the Damien of Molokai case? Is this close to an FHA violation? (We’ll see there is a exemption for space-based restrictions on the number of persons in the FHA, but only if safety-based, not on a preference for single-family, nuclear family, neighborhoods, etc.

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C. City of Edmonds v. Oxford House (U.S. 1995) (p. 911)

1. Facts

a. An Edmonds’ ordinance limited use in a zone to “single family,” defined as parties related by blood/marriage or up to 5 unrelated persons in same household.

b. Neighbors sued to remove a group home of recovering alcoholics. Oxford House counter-sued under FHA, and the U.S. sued for discrimination.

c. Edmonds argued that its “family” restriction was a “number of persons” restriction that qualified for the absolute exception under the FHA.

2. Ruling

a. The Court’s sole question is if Edmonds’ family-composition rule is a “restriction regarding the maximum number of occupants to occupy a dwelling” within the meaning of the FHA’s absolute exemption.

b. The Sup. Ct. looked to 3604(f)(3)(B) reasonable accommodation and treated this as a “reasonable accommodation” case. The neighbors and city could be required to allow this use for 10-12 recovering persons because it was “reasonable” to accommodate in this way.

c. The FHA exempts zoning rules that reasonably restrict the number of people in a house.

d. This ordinance was broader -- a use restriction with numbers in it. The main goal was to promote family. So it did not qualify as an exemption.

e. Rules that cap the number of occupants to prevent over-crowding, plainly fall within the FHA exemption; rules designed to preserve the family character of the neighborhood do not.

f. The exemption makes sense for health and safety in homes, and viable ones usually set out square feet needed per person, etc. Edmonds had another ordinance limits occupants based on square footage -- it didn’t need another.

g. The lower courts must decide if Edmonds has violated the FHA.

D. Notes and Problem (p. 915)

1. Note 1 – citation to an article.

2. Note 2

a. Oxford House v. St. Louis (1996) -- A zoning ordinance requiring group homes to be 8 or fewer people has a rational basis and is enforceable. Not seeking a variance defeats a reasonable accommodation claim under the FHA.

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b. Albert v. Zoning Brd of Abington Twp (PA 2004): A treatment home for recovering alcoholics isn’t a single-family detached dwelling. The average stay is only 2-6 weeks.

3. Note 3

a. Florence Hammonds – good decision? She sells the house to the neighbors; no more group home.

b. What if Florence sold the house to MORC? The neighbors sue, but drop the case. Can MORC sue the neighbors for suing it?

Was there discriminatory intent?

4. Note 4

a. Group homes have become common because they’re less expensive than large facilities and thought to be more humane.

b. Neighbors oppose them for a variety of reasons.

c. Where do you put a group home? Group-home zone. Developmentally disadvantaged next to alcoholics next to pedophiles, etc.

EMINENT DOMAIN AND REGULATORY TAKINGS

Eminent domain: - (1) public use- (2) just compensation

Regulatory taking- Per se- Park central

Remedy for eminent domain