Chapter 44Real PropertyChapter 44

Real Property

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What can a person who holds property in fee simple do with the property? Can a person who holds property as a life estate do the same?

What are the requirements for acquiring property by adverse possession?

What limitations may be placed on the rights of property owners?

What is a leasehold estate and how is it created? What are the respective duties of the landlord and

tenant?

What can a person who holds property in fee simple do with the property? Can a person who holds property as a life estate do the same?

What are the requirements for acquiring property by adverse possession?

What limitations may be placed on the rights of property owners?

What is a leasehold estate and how is it created? What are the respective duties of the landlord and

tenant?

Learning ObjectivesLearning ObjectivesLearning ObjectivesLearning Objectives

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Nature of Real PropertyNature of Real Property

Real property is immovable and includes: Land.Buildings.Plant Life and Vegetation.Airspace.Subsurface (mineral) rights.Fixtures .

Real property is immovable and includes: Land.Buildings.Plant Life and Vegetation.Airspace.Subsurface (mineral) rights.Fixtures .

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FixturesFixtures

A fixture is personal property that becomes permanently affixed to real property.Intent that it become a fixture is necessary.Intent is determined by:

• The fact that the property cannot be removed without causing damage to the realty.

• The fact that the property is so adapted to the realty that it has become part of the realty.

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FixturesFixtures

Trade fixtures: installed for commercial purposes by a tenant.

They remain the property of the tenant and can be removed when tenant leaves, repairing any damage caused by removal.

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Ownership of Real Property

Ownership of Real Property

Ownership interests are classified as either Possessory or Non-Possessory:

•A Possessory interest such as a fee simple, life or leasehold estate, gives the owner a right to possess the land. •A Nonpossessory interest such as an easement, profit or license, does not give the owner a right to possess the land.

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Ownership in Fee SimpleOwnership in Fee Simple The Fee Simple (sometimes called fee simple

absolute) gives the owner the greatest aggregation of rights, powers and privileges possible under American law and can assigned to heirs. A “conveyance” (transfer of real estate) “from A to

B” creates a fee simple. A is the Grantor and B is the Grantee.

Fee Simple Defeasible: grants conditional ownership to Grantee as long as he complies with condition. “A to B as long as ….”

The Fee Simple (sometimes called fee simple absolute) gives the owner the greatest aggregation of rights, powers and privileges possible under American law and can assigned to heirs. A “conveyance” (transfer of real estate) “from A to

B” creates a fee simple. A is the Grantor and B is the Grantee.

Fee Simple Defeasible: grants conditional ownership to Grantee as long as he complies with condition. “A to B as long as ….”

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Life EstatesLife EstatesEstate that lasts for the life of some specified

individual. “A grants Blackacre to B for B’s life” grants B a life estate in Blackacre.

When B dies, Blackacre returns to A or his heirs or assigns, or a third party in the same condition, normal wear and tear excepted.

Grantor A retains a “future interest” in the property. During B’s life, she can possess, use, and take the

fruits of the estate, but not take from the property itself.

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Reversionary Interest: Grantor retains ownership interest in land. Land reverts back to Grantor if condition fails or when life tenant dies.

Reversionary Interest: Grantor retains ownership interest in land. Land reverts back to Grantor if condition fails or when life tenant dies.

Future Interests Future Interests

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Future InterestFuture InterestRemainder Interest: Grantor assigns/transfers/sells her future interest to a 3P who now has a remainder. When Grantee dies, interest passes to 3rd Party.

Remainder Interest: Grantor assigns/transfers/sells her future interest to a 3P who now has a remainder. When Grantee dies, interest passes to 3rd Party.

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Non-Possessory InterestsNon-Possessory InterestsAn easement is a right of a person to make

limited use of another person's real property without taking anything from the property.

A profit is the right to go onto land in possession of another and take away some part of the land itself or some product of the land.

Property that is benefited by easement/profit carries the the interest with the sale of land.

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Non-Possessory InterestsNon-Possessory InterestsIf the owner of the easement (A) or profit has

the right to go onto another’s land (B) that is adjacent to A’s own, it is said to be appurtenant. If A’s property is physically separated from B’s, it is said to be in gross.

If the owner of the easement (A) or profit has the right to go onto another’s land (B) that is adjacent to A’s own, it is said to be appurtenant. If A’s property is physically separated from B’s, it is said to be in gross.

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Non-Possessory InterestsNon-Possessory Interests

Easements or profits can be created by:Deed (physical delivery is sufficient).Will (at Grantor’s death).Contract between Grantor and Grantee.Implication: circumstances surrounding

creation of easement imply its creation.Necessity.Prescription: easement by adverse possession.

Easements or profits can be created by:Deed (physical delivery is sufficient).Will (at Grantor’s death).Contract between Grantor and Grantee.Implication: circumstances surrounding

creation of easement imply its creation.Necessity.Prescription: easement by adverse possession.

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Termination of an Easement or ProfitTermination of an Easement or Profit

By deed back to owner of the land burdened by it.

Owner of easement or profit becomes owner of the land burdened with it.

Abandonment by the owner of the right.

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LicensesLicenses

Revocable right of a person to come unto another’s land without removing anything from the land.

Personal privilege that arises from the consent of the owner of the land that can be revoked.

Revocable right of a person to come unto another’s land without removing anything from the land.

Personal privilege that arises from the consent of the owner of the land that can be revoked.

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Transfer of OwnershipTransfer of Ownership Ownership in real property can be

transferred by: A written Deed.A Gift.A Sale.An Inheritance.Adverse Possession.Eminent Domain.

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DeedsDeeds

A Deed is the instrument setting forth the interests in real property being transferred.

Necessary components of a Deed: Names of Grantor and Grantee. Words evidencing intent to convey. Legally sufficient description of the land. Grantor’s signature. Delivery of the Deed.

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Types of DeedsTypes of Deeds

Warranty Deed.Special Warranty Deed.

Quitclaim Deed.Grant Deed.Sheriff’s Deed.

Period of redemption.

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Recording StatutesRecording StatutesRecording a deed (or any interest in real

property) puts the public on notice of the new owner’s interest in the land and prevents the previous owner from fraudulently conveying the same interest to another buyer.

Race statute.Pure notice statute.Notice-race statute.

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Transfer By InheritanceTransfer By Inheritance

Owner of real property dies, his property is transferred by:Will (testate).Without Will (intestate).

Title is transferred at the time state law so provides in its testate and intestate laws.

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Transfer By Adverse Possession

Transfer By Adverse Possession

One person possesses the property of another for a certain statutory period of time, that person automatically acquires title to the land, just as if there had been a conveyance by deed. Must be:

• Actual and exclusive.

• Open, visible and notorious.

• Continuous and peaceable.

• Hostile and adverse.

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Eminent DomainEminent Domain

Rights in property are not absolute. They are constrained by federal and state laws, e.g., nuisance, tax and environmental.

A “Taking” By Eminent Domain: The 5th amendment gives the government the right to “take” private land for public use with just compensation.

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Leasehold Estates Leasehold Estates

Anyone who rents housing to the public for commercial purposes subjects herself to various state and federal Landlord-Tenant laws.

Owner of the property is the LESSOR and Tenant is LESSEE; the contract is called the LEASE. The property interest is called a leasehold estate.

Anyone who rents housing to the public for commercial purposes subjects herself to various state and federal Landlord-Tenant laws.

Owner of the property is the LESSOR and Tenant is LESSEE; the contract is called the LEASE. The property interest is called a leasehold estate.

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Leasehold EstatesLeasehold Estates

A real property owner or lessor agrees to convey the right to possess and use the property to a lessee for a certain period of time.

Tenancy for Years:Periodic Tenancy.Tenancy at Will.Tenancy at Sufferance.

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Tenancy InterestsTenancy Interests

Tenancy for Years Created by an express contract Property is leased for a specified period of time

Periodic Tenancy Does not specify how long lease lasts But rent paid at certain intervals

Tenancy at Will For as long as both agree.

Tenancy at Sufferance Wrongful possession without the right to possess

Tenancy for Years Created by an express contract Property is leased for a specified period of time

Periodic Tenancy Does not specify how long lease lasts But rent paid at certain intervals

Tenancy at Will For as long as both agree.

Tenancy at Sufferance Wrongful possession without the right to possess

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Landlord-Tenant Relationships

Landlord-Tenant Relationships

Lease Agreement can be oral or written (oral may not be enforceable). Lease gives Tenant the temporary right to exclusively possess the property.

Sources of Law:Common Law.State and Local Statutes, andThe Uniform Residential Landlord and Tenant Act

(URLTA) which has been adopted by 1/4 of the states.

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Lease AgreementLease Agreement Form of the Lease:

Must express intent to establish the lease.Provide for transfer of possession to the

Tenant.Provide for the Landlord’s “reversionary”

interest.Describe the property. Indicate length of the term, amount of rent,

when and where rent paid.

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Rights and DutiesRights and Duties

Trend in the law is to curtail, by contract and real estate law, the immense freedom that Landlords had in the past.Possession.Using the Premises.Maintaining the Premises.Rent.

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Rights and DutiesRights and Duties

Landlord has a duty to deliver actual physical possession under URLTA or legal right to possession (“American” rule).

Tenant’s right to exclusive possession is only subject to Landlord’s limited right to come unto the property.

Tenant has a “covenant of quiet enjoyment” by which Landlord promises Tenant’s peace and enjoyment of the property.

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Rights and DutiesRights and DutiesEviction occurs when Landlord:

Deprives Tenant of possession of the leased property; or

Interferes with this use or enjoyment of the property to the extent that Tenant cannot use or enjoy.

Constructive eviction occurs when Landlord: Breaches lease or covenant or quiet enjoyment; and Makes it impossible for the Tenant to use and enjoy

the property.

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Rights and DutiesRights and DutiesTenant’s Duty Not To Commit Waste:

Tenant is liable for destruction or abuse of the property.Tenant not liable for normal wear and tear or

depreciation in value over time.

Altering the Premises:Tenant needs Landlord’s consent to make material

alterations. Installation of fixtures become the property of the

Landlord. Whether Tenant can remove depends on state law and consent of Landlord.

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Rights and DutiesRights and Duties

Residential property -- Landlord must furnish premises in habitable condition.

Landlord is responsible for maintaining common areas such as stairs, parking lots, elevators and swimming pools.

Commercial property -- may still require Tenant to maintain depending on the lease.

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Rights and DutiesRights and DutiesImplied Warranty of Habitability applies to

major (substantial) defects if Landlord knew or should have known about & he had a reasonable time to repair.

To determine breach, Courts consider:Whether Tenant caused damage.How long defect existed and age of building.Defects impact on Tenant’s safety and health.Whether defect contravenes relevant statutes.

Implied Warranty of Habitability applies to major (substantial) defects if Landlord knew or should have known about & he had a reasonable time to repair.

To determine breach, Courts consider:Whether Tenant caused damage.How long defect existed and age of building.Defects impact on Tenant’s safety and health.Whether defect contravenes relevant statutes.

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RentRent Rent is Tenant’s payment to the

Landlord for the Tenant’s occupancy or use of the Landlord’s real property.Payment based on agreement, custom, state

statute, waiver. Security Deposits.

A deposit by Tenant which Landlord may retain for non-payment of rent or damage to premises.

URLTA has specific provisions as to when it may be kept and when it must be returned.

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Tenant’s RemediesTenant’s RemediesIf Landlord breaches the warranty of

habitability, depending on state law, Tenant may:Withhold rent -- put in escrow.Repair and Deduct -- notify, repair, and deduct repair

from rent.Cancel the Lease -- must be constructive eviction or

breach of habitability.Sue for Damages -- difference between what paid for

and what received.

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Landlord’s RemediesLandlord’s Remedies

Landlord’s Lien on all Tenant’s personal property.

Lawsuit to Recover Possession -- ejectment or unlawful detainer.

Landlord’s Duty to Mitigate Damages.Must make reasonable efforts to re-rent the

premises.

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Rights and Duties: Liability

Rights and Duties: Liability

Landlord is liable to Tenants and Licensees (Tenant’s guests) based on who has the right to controls the area where the injury occurred.

Landlord is liable for injuries caused by defects in common areas. “Attractive nuisance” doctrine for children and an unfenced swimming pool.

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If Landlord makes any repairs, they must be done with reasonable care.

LL may be liable for injuries caused by crimes or third persons when reasonably foreseeable.

Exculpatory clauses may be unenforceable if injury results from violation of statutory duty.

If Landlord makes any repairs, they must be done with reasonable care.

LL may be liable for injuries caused by crimes or third persons when reasonably foreseeable.

Exculpatory clauses may be unenforceable if injury results from violation of statutory duty.

Rights and Duties: Liability

Rights and Duties: Liability

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Tenant’s Liability?Tenant has a duty to maintain safe conditions in

those areas under her control.In commercial leases, both Landlord and

Tenant may be responsible and liable for same area.

Rights and Duties: Liability

Rights and Duties: Liability

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Transferring Rights to Leased PropertyTransferring Rights to Leased Property

Transferring Landlord's Interest.Landlord may sell any and all of his rights in

the real property.New owner buys “subject to the lease,” if

lease is recorded. Transferring Tenant’s Interest.

Landlord’s consent may or may not be required by statute or the lease itself.

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Transferring RightsTransferring Rights Transferring the Tenant’s Interest (cont’d)

Assignments: Tenant transfers his entire interest in the lease to a third person. Original Tenant is not released from liability under the lease.

Subleases: Tenant transfers all or part of his interest in the lease for a shorter period of time than the lease. Original Tenant is not relieved of liability under the lease.