Property Vocab:

Privity: a relationship between two party by law, lease, service, or blood

An action to quiet title is a lawsuit brought in a court having jurisdiction over property disputes, in order to establish a party's title to real property, or personal property having a title, of against anyone and everyone, and thus "quiet" any challenges or claims to the title.

Perpetual: NEVER ENDING!

Divestment: depravation of title, authority, especially to land

Part I: Introductory

A. What is Property? What is Law? Law and Property State v. Mann (TWEN)

pp. 103-104, 248-249; xiii-lxii

“Privilege & Responsibility” (T)

Property and the State Commonwealth v. Alger (T)Police Power (T)

pp. 623-633

The Power to Exclude pp. 3-20

Part II: Acquiring Property

A. Acquisition by the State1. Conquest pp. 83-100, 1168-11752. Takings

a. Eminent Domain pp. 1141-1168

Regulatory Takings pp. 1175-76, 1179-1181, 1184-119

Acquisition by Individuals

Government Grant pp. 100-101

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Squatting

Squatters often claim rights over the spaces they have squatted by virtue of occupation, rather than ownership; in this sense, squatting is similar to (and potentially a necessary condition of) adverse possession, by which a possessor of real property without title may eventually gain legal title to the real property.

Gift, Will

I. GiftsA. Inter Vivos (during life) Gift - Usual type of gift made during the donor’s lifetime. An inter vivos gift cannot

be revoked. Essential elements:1. Intent to transfer title - donor must intend to make an immediate transfer of property2. Delivery - the property must be delivered to the donee, so that the donor parts with dominion and

control. 3 types of delivery:a. Manual - occurs when the donor physically transfers possession of the item to the doneeb. Constructive - Requires that the donor physically transfer to the donee an object that

provides access to the gifted item. (handing a key that opens a safe)c. Symbolic - donor physically transfers to the donee an object that represents or symbolizes

the gifted item. (note stating “I give my 100 shares of apple to X)i. in many jurisdictions, only allowed if manual delivery is impracticable or impossible.

3. Acceptance - the donee must accept the property, although acceptance of a valuable item is usually presumed.

4. Case Example : a. Gruen v. Gruen – Father wanted son to have valuable painting for his birthday but wanted

to maintain possession until he died. Stepmother kept painting, arguing no gift was made. Son sued and won. (Father retained life estate in painting, while son had remainder interest as a gift)

b. Albinger v. Harris - Albinger sued Harris for engagement ring, lost. Court ruled it is not a conditional gift, but an inter vivos gift.

B. Testamentary Gift or Testament Transfer (WILL)1. Effective only after the donor dies. Usually made by a will.2. Valid only if it satisfies the Statute of Wills, which requires a writing signed by the donor and

witnessed by two or more peopleC. Gifts Causa Mortis - gift of personal property made by a living person in contemplation of death, but is

revocable before the death of the donor or in most states, automatically if the donor does not die. 4 elements:

1. Intent to transfer (Donative Intent)2. Delivery3. Acceptance4. Donor’s anticipation of imminent death

a. Case Example:i. Brind v. International Trust Co. - Brind gifted jewelry and valuables to Trust Co. in

fear of death resulting from surgery. She survived but died shortly after due to underlying illness. Trust co. didn't return jewelry. Brind’s reps sued and won for valuables, b/c she did not die from the contemplated death for which gift was made.

5. Exception : In some jurisdictions, upheld if donor dies of a cause related to the contemplated death rather than exactly the contemplated death.

a. Rest. 2nd of property §31: a failure to revoke within a reasonable time after the donor is no longer in apprehension of imminent death eliminates the right of revocation.

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First Possession

A. Protect First Possession - First come, first served. (First in time concept)1. Case:

a. Pierson v. Post - Pierson shot and killed fox Post was chasing. Judgment for Pierson because though Post was chasing the fox, he had not yet brought it under his control (immobilized) it by wounding it and had not deprived it of its natural liberty. Ownership should be given to the first person to physically possess it.

POPOV case. Power to exclude others.

B. Popov could not, but Hayashi did!1. Has to demonstrate that PROPERTY IS YOURS.

FindersII. Finders: must have intent to control and actual possession

A. Four Categories of Found Chattels:1. Lost Property - Property is lost when the owner unintentionally and involuntarily parts with it.

a. TO (True Owner) holds superior title to finder.2. Mislaid Property - Property is mislaid when the owner voluntarily and knowingly places it

somewhere, but then unintentionally forgets it. Owner of land has rights to mislaid property on land.

a. TO (True Owner) holds superior title to finder.3. Abandoned Property - When the owner knowingly relinquishes all right, title, and interest to it4. Treasure Trove - When the owner concealed it in a hidden location long ago. Treasure trove is

usually limited to gold, silver, coins, or currency.5. General Rule : a subsequent possessors full payment to the finder bars any later action by the true

owner against the possessor. However, the true owner can compel the successful finder to transfer the payment to her.

B. Case Examples :1. Armory v. Delamirie: Chimney Sweep found jewel, took it for appraisal, goldsmith kept jewel. Boy

sued and won.a. Finder of property is entitled to keep it against all but the rightful owner, (and possibly

previous finders).2. Hannah v. Peel: Peel bought house, never moved in. Requisitioned by army during WWII. Soldier

found brooch, gave it to police who gave it to Peel, who sold it. Hannah sued for value of Brooch and won b/c court considered it lost.

a. Owner is not in possession of property unless he occupies it.b. Finder of lost property is entitled to it against all except the real owner. The location,

whether private or open to public and public property make no legal difference when finding lost property. Exception: trespassers don’t get awarded (Bridges v. Hawkesworth)

c. A man possesses everything that is under or attached to his land. Though Sharman found it, he obtained them for his employers and could claim no title for himself. (Staffordshire water co. v. Sharman)

3. McAvoy v. Medina – Customer left pocketbook in Medina’s barbershop. McAvoy, another customer, found it and gave it to Medina in attempt to find true owner. No true owner found, McAvoy sued Medina, Medina won suit.

a. Owner of property has rights to mislaid items on it, b/c courts reason that owner of property has best chance of returning the mislaid property to the original owner

Adverse Possession3

To have acquired title by adverse possession must demonstrate that she maintained

actual possession of the land in question

for the duration of the statutory period of limitations on an action to recover possession of land, and that throughout this period her possession was:

"open and notorious" (i.e., visible and not surreptitious)

"hostile " and "under claim of right" (i.e., without the true owner's permission)

"continuous" (i.e., without interruption), and

"exclusive" (i.e., in a manner that reflects the possessor's dominion and control over the land).

Adverse Possession and Color of TitleUnder color of title:

o Good faith is a necessary prerequisite for establishing adverse possession under color of title.Constructive Adverse Possession:

o It is possible for someone to lose title to land by adverse possession, even where a portion of that land was not physically occupied.

Under the circumstances, the Hatfields cannot reasonably expect to claim title by constructive adverse possession to the 5-acre parcel. At all times, the McCoys (the true owners) have been in open and exclusive possession of the 5-acre parcel. Despite holding a deed that appears to give them title to this land, the Hatfields have not objected to or interfered with the McCoys' possession of the land at any time.

Adverse possession seeks to encourage true owners of land to be vigilant to identify and resolve potential possessory encroachments, and does so by punishing those owners who "sleep on their rights" and fail to object to possessory encroachments in a timely manner. Here, the McCoys are not "sleeping on their rights" -- to the McCoys, there is no appearance that the Hatfields are even attempting to claim possession of the 5 acres in question.

Tacking – adding of time of one AP to another AP.

Courts have traditionally permitted two or more successive periods of adverse possession to be tacked together, as necessary to permit the current possessor to satisfy the requisite statutory period, so long as the successors stood in the relationship of privity. Stella and Frank would stand in a relationship of privity so long as (a) each exercised possession over the land in question and (b) Frank (the current possessor) received the right to possession by virtue of a legal transfer from Stella (the former possessor), either by deed, by devise, or by inheritance.

Privity of Estate vs Privity of Possession. 1st is in a deed, other transferred assuring it is in the deed.

Contract/Sale

The Real Estate TransactionI. Statute of Fraud: Elements – Oral agreements for the sale or property is not enforceable

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A. Essential Terms1. Identity of Parties2. Price3. Property Description

B. Writing1. Can be a formal contract or informal memorandum

C. Signature1. Writing must be signed by the party against whom enforcement is sought

D. Exceptions:1. Doctrine of Part Performance

a. An oral contract for sale of property may be enforced if buyer:i. Takes possessionii. Pays at least part of the purchase priceiii. Makes improvements to the property

2. Equitable Estoppela. An oral contract may be enforced if:

i. One party acts to his detriment in reasonable reliance on another’s oral promiseii. Serious injury would result if enforcement is refused

E. Failure to comply with SOF does not make the K void, but simply prevents it from being enforced

F. Case Example:1. Hickey v. Green

a. Buyers give seller a check with a blank payee line and seller refused to sell and sold property to another buyer. Buyers had partially performed by giving check and selling their own home. Court ruled because plaintiffs relied on the K by agreeing to sell their home to another, injustice can be avoided only by specific enforcement, despite the signature element of SOF not being met. (Equitable Estoppel)

Misrepresentation, Fraud, and RemediesII. Duty to Disclose

A. Most Jurisdictions1. Seller of residential property is obligated to disclose defects he knows about that:

a. Materially affect the value of property andb. Are not known to or readily discoverable by a buyer

B. In few Jurisdictions: Caveat Emptor applies1. Seller of real property has no duty to disclose defects to the buyer. 2. Buyer has complete responsibility to assess condition of the premises.3. Seller is liable only if he:

a. Affirmatively misrepresented the property’s conditionb. Actively concealed its defectsc. Owed a fiduciary duty to the buyerd. (Applies more to commercial property)

C. Case Examples:Johnson v. Davis

Davis agreed to buy Johnson’s house after J assured that buckling around windows was from a problem long fixed.

Rain went and into the house, breaking the roof. Roofers for J – can be fixed under 1000

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Roofers for D – cannot be permanently fixed – roof is wholly bad D sued to rescind the K and demanding deposit back Court ruled in Davis favor. J appealed. Under duty to disclose known issues.

o Court: Johnson knew of the problem.

Stambovsky v. Ackley

a. Although NY follows caveat emptor, buyer would not have been able to discover that the house was haunted had he inspected it. Since seller knew about ghost but did not disclose it and buyer had no other way to discover it, court ruled for P.

b. Teacher’s policy behind – We want buyer to exercise due diligence, so buyer should at the very least research the property. Not doing so is irresponsible, but the case was in 1991 where internet hadn’t really developed yet.

Remedies available to buyer:

Specific performance, Damages, Rescission, Vendee’s lien (put lien on a property to return $$$ to buyer, or sell seller’s property),

Remedies available to buyer:

Specific performance, Damages, Rescission, Vendor’s lien (assume seller owns property, put lien, make buyer make a payment).

The Deed and Warranties of TitleD. Title Covenants

1. Grantor promises in the deed that he has good title to convey. 2. Buyer’s rights will depend on:

a. The type of deed received andb. The scope of any promises that seller made in deed

3. 3 Types of Deedsa. General Warranty Deed – grantor warrants title against all defects whether they arose

before or after he obtained titlei. Guarantees all six covenantsii. Regardless of whether grantor caused the breach

b. Special Warranty Deed – grantor warrants title against all defects that arose after he obtained title

i. Guarantees all six covenants only to the extent that the grantor breached themii. Alternate view: SWD’s only apply to present covenants

c. Quitclaim Deed – grantor makes no warranties about title, so the grantee receives only what the grantor has, if anything.

i. No guarantee of any kind4. 6 Standard Covenants – 2 Types

a. Present – Breached, if at all, at the moment deed is delivered. At that instant, the grantor either has the estate he claims to convey or he does not

i. Covenant of Seisin – promise that grantor owns the estate he purports to convey

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i. Ex. Breached if grantor purports to convey a fee simple but only owns a life estate

ii. Covenant of Right to Convey – promise that the grantor has the right to convey titlei. Ex. Breached if grantor is a trustee who lacks authority to transfer title to

the trust propertyiii. Covenant against Encumbrances – promise that there are no encumbrances on the

title, other than those expressly listed in the deed.i. Ex. Breached if there is a prior mortgage on property

b. Future Covenants – breached, if at all, after the closing; most commonly when grantee is actually or constructively evicted by a third party holding superior title

i. Covenant of Warranty – promise that the grantor will defend grantee against any claim of superior title

i. Ex. If a third party holds better title than the grantee, the grantor must defend the grantee’s title

ii. Covenant of Quiet Enjoyment – promise that the grantee’s possession of the property will not be disturbed by anyone holding superior title.

i. Ex. Breached if grantee is evicted because of a defect in titleiii. Covenant of Further Assurances – promise that the grantor will take all future steps

reasonably necessary to cure title defects that existed at closing.

The Recording SystemIII. Recording System

A. Purpose1. Records conveyances of real property2. Anything related to land can be recorded3. Creates public record of ownership transfers4. Creates priority in case of conflicts5. Recordation is not guarantee of validity, but provides resolution in the event of conflicting transfers

B. Mechanics:1. Documents

a. Mortgages, liens, easements, subdivisions2. Index (See above)

a. Grantor-Grantee (Who?)b. Tract (What?)

3. Techniquea. Search backward through grantees, then search forward through grantorsb. Do so only during respective period of ownership c. Examine documents for validity

C. Recording Statutes (Differs b/w Jurisdictions)1. First in Time First in Right2. Race statute - First to record wins

a. Winner of the race must also be a purchaser for value to prevail. Gratuitous transfers (gifts) are not considered purchases for value.

3. Notice statute – Subsequent bonafide (good-faith) purchases for value always prevail (can’t know that it’s been sold to someone else)

4. Race-notice statutes – must have good-faith and win race to courthouse5. Shelter Rule:

a. Relationship a grantee has with an immediate grantor under a recording statute is transferred to subsequent grantees with respect to grantor

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b. Only later purchasers enjoy grantee’s bona fide purchaser statusc. Ex: O conveys to A, then to B. B takes as a BFP for value, and records. A records later. B later

tries to sell to C. A learns of the potential sale and tells C, “Don't buy from B, I’m the real owner!” C ignores A, and purchases from B. A then sues to quiet title.

i. C wins between A-C because C is sheltered from not being a bona-fide purchaser, even though A told him of what happened.

ii. C enjoys the BFP status of B from the A-B sale.d. Ex: O sells to A and B, both as BFP’s. B records, then A records. B then mortgages the

property to D. Finally, B sells to C, who sees the prior transactions involving A and D when searching title but purchases anyway. A and D seek to assert their claims. Will they win?

i. A will lose because C enjoys BFP status with respect to the early sale.ii. D will win because C does not enjoy BFP status with respect to the mortgage.

Part III: Ownership and Possession

A.Sequential Ownership: Present Estates and Future Interests

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Perpetual right – right of possession NOW.Future interest – you already have the right, but in the future!REVERSION is always retained by the grantorREMAINDER is always created in someone other than the grantor

Defeasible FEE SIMPLE Estates: Fee Simple Determinable

o Ends automatically. To B and his heirs until people land on Mars. The right to possession automatically reverts back to the grantor.

Fee Simple Subject to a Condition Subsequent o Ends with Grantor’s decision to re-enter. To B and his heirs, but if people land on Mars then the

grantor may retake the possession.o RULE: No re-entry by self-help unless it can be accomplished peaceably.o Therefore: If the person in possession refuses to voluntarily turn over his valuable estate, the solution is

to bring an action in EJECTMENT.o An action in ejectment (i.e., an action to recover possession of real property) is today the normal way to

exercise a right of re-entry.o Indifference to the breach--and, even, approval of it--would almost certainly constitute a "waiver" of

the right of re-entry. Courts are rather alert to find such waivers, so they can avoid the "forfeiture" of the estate.

Fee Simple Subject to an Executory Limitation (Fee Simple on Executory Limitation)

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o Ends automatically, but Grantor does not get it. To B and his heirs, but if people land on Mars then to C and his heirs.

o Thus, there are actually 2 types of fees simple on executory limitation: fee simple subject to an executory limitation <divested> fee simple followed by an executory limitation <expires> One is limited by words of condition, and the other by words of duration

Fee simple Terminates Land Goes to: Future Interest

determinable automatically grantor possibility of reverter

on condition subsequent grantor's election grantor right of re-entry *

on executory limitation automatically 3rd party executory interest

REVERSIONS and Particular Estates

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A reversion is:a future interestretained by the grantorto follow a particular estatewhen the particular estate expires

"to Oliver Olympio while he lives on the land.""to Tybald Teleman for 10 years until there shall be a breach of any of the terms or covenants herein."

The two above are "determinable" particular estates (analogous to the fee simple determinable). Specifically: a determinable life estate a determinable term of years

Those below create particular estates subject to a condition subsequent (analogous to fee simple on condition subsequent). Specifically:

a life estate on condition subsequent a term of years on condition subsequent

"to Oliver Olympio for life on the condition that he lives on the land, but if he does not, then I may, at my option, re-enter and take back the land.""to Tybald Teleman for 10 years; but in the event that the lessee shall breach of any term or condition of this lease, the lessor may immediately thereupon, or as soon thereafter as practicable, re-enter and resume possession or maintain proceedings to recover same."

A right of re-entry that cuts off a "particular" estate, i.e., right of re-entry "incident to" a reversion, is always transferable together with the reversion itself.

EXAMPLE:

Leek owns an apartment building, with units leased to various tenants. Leek sells the building to another investor (meaning that Leek conveys the reversions since the tenants hold the possessory interests). The buyer would also get the rights of re-entry under the tenants' leases. They are RIGHTS OF RE-ENTRY INCIDENT TO A REVERSION.

REMAINDERSRemainders come in 2 basic kinds:

vested remainders, and contingent remainders

And vested remainders fall into 3 basic subcategories:

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indefeasibly vested, vested subject to divestment, and vested subject to open

o 1. Vested Remainder Absolute (or “VR in FSA”)o 2. Vested Remainder Subject to Total Divestment (or “VRS to an Executory Interest”)o 3. Vested Remainder Subject to Partial Divestment (or “VRS to Open”)

These can be important distinctions: For example, as we'll see, the Rule Against Perpetuities can only invalidate "contingent" remainders and remainders "subject to open." The Rule doesn't apply to remainders that are either "indefeasibly" vested or vested "subject to divestment."

CONTINGENT REMAINDER

A CONTINGENT REMAINDER is one in which the remainderman's right to immediate possession is subject to a condition precedent.For example: "to A for life, remainder to B and her heirs if B marries C."B doesn't get possession unless something happens first (she's got to marry C).If there's not a remainderman entitled to take possession until something further happens (in addition to expiration of the prior estate), then the remainder is also "contingent."

There are 3 basic ways that a remainder can be "contingent."1. Subject to occurrence of some stated event - "... remainder to B and her heirs if B marries C"

B must first marry C2. To unascertained persons -- "... remainder to B's first child to reach age 21, and his or her heirs"

one of B's children must reach age 213. To unborn persons -- "... remainder to B's next born child and his or her heirs"

another child must be born to B

Some CONTINGENT remainders:

1. "to B for life, then to C's heirs"This is the classic contingent remainder. Nobody has "heirs" until they're deceased. Living persons have only "heirs apparent." As long as C is alive, C's actual heirs are unascertained.

2. "to B for life and then, if C survives B, to C and his heirs"Surviving the prior estate holder is probably the most common type of stated event found in contingent remainders.

3. "to my wife, Sarah, for life, then to my first grandchild"If the grantor doesn't have any grandchildren yet, this would be a contingent remainder to unborn

persons.

Vested Remainder

DEFINITION of a VESTED REMAINDER (long-form):A remainder is vested if the remainderman is:

(a) born and(b) ascertained, and(c) no (stated) event need occur before possession (except expiration of the prior, particular estate).

DEFINITION of a VESTED REMAINDER (short-form): A remainder is vested if it's not contingent.

THREE VESTED REMINDERS:

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Indefeasibly vested, Vested Remainder Absolute (or “VR in FSA”) Vested subject to divestment, Vested Remainder Subject to Total Divestment (or “VRS to an Executory Interest”) Vested subject to open Vested Remainder Subject to Partial Divestment (or “VRS to Open”

Vested subject to divestment (VRS to an Executory Interest):

REMAINDER SUBJECT TO

Contingent Condition Precedent

Vested Subject to Divestment Condition Subsequent

For example, "to A for life, remainder to B and his heirs, but if B does not reach the age of 21, then to C and his heirs."1. Here there's no "condition precedent" -- no pre-condition -- to B's right to possession, so B's remainder is vested.2. There is, however, a condition under which B's vested remainder can be cut off. It's a "condition subsequent."3. Because the condition subsequent can cut off B's vested remainder, we say the remainder is VESTED SUBJECT TO DIVESTMENT.

1. "to B for life, then to C and his heirs, but if C dies before B, then to D and her heirs"2. "to B for life, then to C and his heirs, but if C dies childless, then to D and her heirs"Note that in each of the above conveyances:

C has a remainder that is vested (C is born, ascertained and can take without pre-conditions), but, C's remainder is subject to divestment if a stated event occurs.

If these conveyances to C remind you a lot of the typical words to create a FEE SIMPLE ON EXECUTORY LIMITATION, you're right. That's exactly what they do. The estate of C's remainder is, in each conveyance, a FEE SIMPLE ON EXECUTORY LIMITATION.

VESTED REMAINDERS SUBJECT TO PARTIAL DIVESTMENT (SUBJECT TO OPEN)Remainders are designated as VESTED SUBJECT TO OPEN when they are:

to a class of recipients (e.g., "remainder to my children"), and at least one member of the class is born and ascertained, and other members may be added to the class later.

"To B for life, remainder to B's children and their heirs" If B has one or more living children, this remainder is "vested." But it's nonetheless subject to partial

divestment -- "subject to open"-- as more people are added to share the same pie. B may have more children before he dies. Hence the subject to partial divestment – part of the

property will go to each child born to B.

REVIEV:

REMAINDER SUBJECT TO

Vested (indefeasibly) No Conditions

Contingent Condition Precedent

Vested Subject to Divestment Condition Subsequent

EXECUTORY INTEREST CANNOT be a remainder!

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A remainder must follow:

(1) immediately

(2) after the expiration

(3) of a prior particular estate.

That is:

1. Remainders can only follow particular estates.

A remainder can never directly follow a fee simple.

2. Remainders must wait until the prior particular estate expires.

A remainder can never divest ("cut short") another estate.

3. Remainders have to follow particular estates immediately, without any "gaps" in which possession reverts to grantor.

A remainder can never directly follow possession by the grantor.

These are the three "nevers."

An executory interest is:

a future interest

in someone other than the grantor

having one or more of the following features:

o it directly follows a fee simple, and/or

o it divests ("cuts short") the prior estate, and/or

o it directly follows possession by the grantor

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"to E and his heirs beginning 2 years from the date hereof"

"to E and his heirs beginning from and after my death"

Destructibility Doctrines pp. 778-793

FUTURE INTEREST - DESTRUCTIBILITY

Courts do not like future interest going too far. Families come up with ways to keep land in hands of the family for as long as possible.

1) The Rule of Destructibility (of CRs)

2) Doctrine of Merger (of CRs)

3) Rule in Shelley’s Case (NOT Shelley’s Rule)

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4) Doctrine of Worthier Title

5) Rule Against Perpetuities

If a CR does not vest at the expiration of a LE (or preceding estate), the CR is destroyed.

Destructs interest if it goes too far.

Example:

“Today, like the dinosaur, the doctrine is extinct in the United States.”

John Sprankling

Doctrine of Merger (of CRs)

O creates a LE in A and a CR in B, and A subsequently conveys the LE to O, B’s CR is destroyed

Doctrine of Worthier Title

Applies to inter vivos (between the living) conveyances that purport to create a CR or an EI in O’s heirs.

o DWT destroys future interest in O’s heirs ando Creates instead a reversion in O

Without DWT:o To A for life, then to O’s heirs

O’s heirs have a reminder. O is alive, so we don’t know who O’s heir is. A: LE O’s heirs – CR Original Owner: Reversion.

o Here we do not know O’s heirs until O dies. WITH DWT:

o A: LE

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A: LE

CR

O: Reversion B has not met condition precedent before the end of A’s LE. Thus, B’s CR is destroyed.

O’s reversion is all that remains.

“To A for life, then to B if B reaches 21.” At A’s death, B has not turned 21.

o O’s Heirs – nothingo O holds Reversion

DWT destroys the future interests in O’s heirs, and…

Creates instead a reversion in O.

Rule in Shelly’s case:

The Rule in Shelley’s Case creates a VRA in A after A’s LE. That is ALL the Rule in Shelley’s Case does! Courts then apply the doctrine of merger. Thus: “To A for life, then to A’s heirs” = “To A.”

o Puts them together. Merges to Fee Simple Absolute. Cannot go that far, keep it in the family hands. Reversion for A.

To A for life, then to B for life, then to the heirs of A

The doctrine of merger does not apply here. There is an intervening interest. Thus, A does NOT have a FSA. This without Shelly Rule:

o A: LEo B: VR in LE

What will B have? o A’s heirs – CR.

WITH Rule in Shelly’s Case (RSC)o A: LEo B: VR in LEo A’s heirs – nothingo A: VR in FSAo The doctrine of merger does not apply here.

There is an intervening interest. Thus, A does NOT have a FSA.

“That rule is a relic, not of the horse and buggy days, but of the preceding stone cart and oxen days.”

Sybert v. Sybert, 254 S.W. 2d 999 (Tex. 1953)(Griffin, J., concurring)

THE RULE against Perpetuities The Big Daddy/Mama of destructibility doctrines.

A rite of passage for law students.

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Prior to 1886, lots of rules against perpetuities.

In 1886, Harvard law professor John Chipman Gray writes a treatise and coins the new rule.

Classical rule:

“No interest is good unless it must vest or fail, if at all, not later than 21 years after some life in being at the creation of the interest.”

(p. 780)

“[Gray took] a great field of property law like Perpetuities and confined it to a narrow, mechanistic rule against remoteness of vesting that he came to exalt as if it were an end in itself.”

This rule is about remoteness of vesting. If it goes too far – we will destroy it. Someone’s life + 21 years. If it will not vest in this time, goes too far.

Originally, RAP was a harshly applied rule.

Recent reforms, e.g.: 1) Wait and See

Court will wait and see if it vests (not too far) 2) Cy Pres

Rewrite? 3) Uniform Statutory Rule Against Perpetuities

Will the interest fail or vest within 90 years of creation?

Applicable future interest:

1) Contingent Remainders 2) Executory Interests 3) VR Subject to Open/Partial Divestment

Where O holds interest – this doesn’t apply.

PE FS EI

FSA

FSD POR in O

FSSCS ROE

FSSEI EI in SP

No gap in the timeline of Vested Reminder.

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We concerned about if there is a gap between Vested Reminder.

CR – yes

VRSPD – yes

EI – yes

GOAL:

To determine whether there is any possibility at all that the FI will vest more than 21 years after the death of everyone alive, named, and/or identified at the creation of the interest.

O|----------| GAP |----- VR

Terminology:

“Creation of the Interest” (p. 782)

Inter Vivos: At the moment of sale, delivery, or gift.

By Will (Devise): At testator’s death.

“Vest” o When the condition that made the future interest contingent or uncertain to come into being

occurs. “To A, but if the property is not used for residential purposes, then to B.” B’s EI will VEST, if at all, when the property is no longer used for residential purposes.

o “Vest” “To A for life, then to B if B graduates from law school.” B’s CR will VEST when B graduates from law school. B’s interest will become POSSESSORY only when A dies.

“Vest, if at all” “Forever fail to vest”

o “To A for life, then to B if B graduates from law school.”o B’s CR will forever fail to vest, if B dies without graduating from law school.

Satisfies rule of perpetuity. “Lives in Being”

o Those people alive and/or identified in the instrument at the creation of the interest.o “To A for life, then to B, but if B does not turn 21, then to C.”

A, B, and C are “lives in being.” If the conveyance is inter vivos, so is O.

o “To A, then to B’s kids who turn 21.” B is alive and has one child, C, who is 21. After the time of conveyance, B has another

child, D. A, B, and C, are “lives in being”. Measuring Life! D is NOT a “life in being at the time of conveyance”.

o Why lives in being so important: ID measuring line for perpetuity.

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“Measuring Life” Anyone alive at the creation of the interest who can be used to measure the

perpetuities period. If we do not know after end of measuring life if it will vest within 21 years,

Interest is Destroyed.o “Validating Life”

The measuring life within whose lifetime +21 years the future interest is CERTAIN TO VEST…

Thus SATISFYING RAP!

ID the Masuring and Validating Lives:

A person in the conveyance causally connected to the vesting of the interest, including potentially:o 1) Holder of the interest.o 2) Person creating the interest.o 3) Any person who can affect a condition precedent.o 4) Any person who can affect the identity of the interest holder.o All potential measuring… Look for them in ID Measuring and Validating lives.

Example:o “To A, but if the property is no longer used for school purposes, then to B.”

Who can affect the condition who is alive at the creation of the interest? A is the measuring life. A is NOT a validating life.

HOW DO WE KNOW IT?o Kill A and see if EI of B will vest within 21 years? We don’t know for

sure. It is possible that it will not vest.o B Interest may not vest within RAP.o B’s EI will NOT necessarily vest within 21 years of A’s death.o Thus, A is a measuring but not a validating life.

“If the creative legal mind can invent any possible scenario under which the interest might first vest after the perpetuities period expires – no matter how unlikely the scenario is – the interest is invalid.”

In other words, BE CREATIVE in how you kill off the lives in being at the creation of the interest.

Prof’s five step process in evaluating:

Step One: Determine whether the FI is subject to RAP.

1) CR

2) EI

3) VRS2O

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Step Two: Identify the Measuring Life.

Who is causally connected to the vesting of the interest?

1) Holder of the Interest.

2) Person who created the interest.

3) Any person who can affect a condition precedent.

4) Any person who can affect the identity of the person.

Step Three: Will the FI vest or forever fail to vest within the perpetuities period?

If the answer is YES, the FI satisfies RAP and is VALID. Stop here!

If the answer if NO, the FI violates RAP and is VOID. Go to Step Four.

Step Four : Strike out the language with the FI.

Step Five : Reconstrue the conveyance with the remaining language.

EXAMPLES:

TO A so long as the property is used for residential purposes, then to B.o 1) B has an EI. RAP applieso 2) A is the only one who can affect the condition for B’s EI to vest, thus A is the measuring life.o 3) Kill A. Will B’s EI Vest or Forever Fail to vest within 21 years of A’s death?

NO. Move to step 4.o 4) Strike out the language including B’s EI.

THEN TO B – strike out.o 5) Reconstrue the remaining language:o A: FSDo O: PORo To A so long as the property is used for residential purposes

“To A, but if the property ceases to be used for residential purposes, then to B.”o 3) Kill Ao 4) Strike out.o 5) Reconstrue the remaining language.

A: FSA O: Nothing. Just “To A”

“To Lindsey so long as she does not fail a drug test, then to Paris. But if Paris is convicted of cocaine possession, then to Cheech and his heirs.”

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L: FSSEI. FSD O: POR L: FSSEI P: EI. C: EI

Step 1.

Step 2: L to P and P to C – measuring life.

L: Affects condition for P’s and C’s EIs to Vest

P: Affects condition for Cs EI to vest.

Step 3:

Kill L Will P’s EI vest or forever Fail to vest within 21 years of the death of L?

o At L’s death we will not know if she failed drug test. Goes to P!o Satisfies rule of perpetuity.o Stop here.

Step 3 for Paris:

Kill P – will it vest?o YES. Satisfies RAP.o Stop here.

Will EI vest or forever fail?

FSSEI – Rule of RAP applies.

M: FSSEI

A: EI

Step 2.

Measuring Life – M.

Mel is the only life in being, who can affect the condition for Alice’s EI to vest.

Step 3.

Kill M. WE WANT TO KNOW for certain if EI vests or Failr to vest within 21 years of death.

M: FSA. Just “To Mel.”

“To Ava for life, then to Bette’s kids who turn 25.”

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At the time of conveyance B is alive and has one child, Claude, who is 19.

A: LE

C: CR

Other kids: CR

B: Nothing

VRSPD – at least 1 party has to be VESTED. 25 years in this case.

CR: When no one in the class is yet to be vested.

RAP applies.

Step 2.

A – measuring lifeo A’s death.

B – Measuring life. Can affect class

C could be measuring life. But our goal: To find any way that the future interest could vest beyond…

Kill B (and C)o 21 years after B’s death…

IN THIS CASE – the court can redraft to 21.

Yes. Violates RAP.

Step 5: Strike out.

A: LE O: Reversion

Leave: To Ava for life.

BUT we can wait and See.. Cy Pres.

WASTEA life tenant has a duty not to WASTE

A. Waste – an abuse or destructive use of property by one in rightful possession1. Voluntary Waste

a. Results from an affirmative act that significantly reduces the value of the property (demolishing a valuable house)

b. Voluntary waste.i. From hypo – can sue to stop or get damages.

2. Permissive Wastea. Results from failure to take reasonable care to protect the estate. b. Failing to make minor repairs or pay property taxes

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c. Duty to do repairs, pay property taxes, in life estate. Failure to eject adverse possessor? Nope. Adverse possessors cannot adversely possess

future interest. Future interest is not possessory.3. Ameliorative Waste

a. Results from an affirmative act that leads to a substantial change in the property and increases its value.

b. Building a swimming pool If there is “a complete and permanent change of surrounding conditions that has deprived the

property of its value and usefulness,” then one can change the property…

Waste – change in the condition of the property Decreases the Value/Utility of the property. Or increases…

Hypo: What if the property is no longer economically viable or personally useful in its prior form?

To D for life, then to J when J graduates from law school. If J does not graduate from law school then to Alexa. Currently J is 25 years old and attends college, where she is majoring in political science.

o Can J sue to prevent D from tearing down the guest house?

WASTE: All future interest holders are NOT the same. If Indefeasibly Vested Remainderman (VRA)

o Can sue for Damages or Injunction to prevent future waste. If Contingent reminder – cannot sue for Damages, but can sue for INJUNCTION.

Hierarchy of protection (against waste) Executory interest Holder

No for Damages,

B. Simultaneous Ownership: Co-OwnershipThe Tenancies (TIC, JT, TE) pp. 661-668Rights, Duties, and Responsibilities

Rent and Possession pp. 668-674Transfer by One Co-Owner pp. 674-687Partition pp. 687-693

The Separation of Possession from Ownership: Landlord-Tenant Law

LeaseholdsNon-freehold estates

A. Term of Years tenancy1. Has a fixed duration agreed upon in advance

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2. Once term ends, tenants possessory rights automatically expire and landlord may retake possession of premises

3. Usually used in commercial leases and often seen in residential leases4. death of either doesn't terminate tenancy5. LL can't evict tenant before end of term unless tenant breaches material term of lease

B. Periodic tenancy1. Automatically renewed for successive periods unless the landlord or tenant terminates the tenancy

by giving advance notice2. Month to month periodic tenancies are frequently used in residential leases3. death of either doesn't terminate tenancy4. to evict, LL must give requisite notice that tenancy will not be renewed

C. Tenancy at Will1. No fixed ending point2. Continues so long as both the landlord and tenant desire3. Most states require advance notice to end this tenancy, usually equal to period between rent

paymentsa. But MAY be ended without notice in some.

4. Tenancy terminates automatically if either party dies, the tenant abandons possession, or landlord sells property

5. “T leases Greenacre ‘for as long as both of us wish’”D. Tenancy at Sufferance

1. Created when a person who rightfully took possession of land continues in possession after that right ends.

2. Arises from the occupant’s improper conduct, not from an agreement. 3. More a convenient label for a type of wrongful occupancy than a true estate.4. In this case, tenant would become a holdover tenant5. Landlord may either:

a. Treat T as a trespasser and evict himb. Renew T’s tenancy for another term.

6. Some states require double rent during holdover period while others limit length of the renewed tenancy to no more than one year, although most states have abolished or limited the second option to avoid unfairness to the tenant.

Note: most states require leases of 1+ yrs be in writing (SoF)Case: Vasquez v. Glassboro (page 11)

farmworker not “tenant”; just licensee

Rights, Duties, and Remedies

Occupancy

i. LL's duty to deliver possession1. majority : must deliver possession

if prior tenant is holdover, LL's responsibility to evict If when new tenant arrives and there is a holdover – LL breached the contract. New tenant

can break the lease, sue for damages incurred in search of another lease, or keep the lease and withhold rent for the duration of holdover, and recover cost for alternative lease during the holdover.

2. minority : must deliver only right to possession prior holdover tenant eviction problem of new tenant

3.

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ii. Access1. LL has the right to enter to make repairs. WITH consent of the Tenant. Tenant shall not

unreasonably withhold his consent.2. Without consent: In emergency3. LL shall not abuse this right.4. LL may not enter for any other reason except for court order.5. LL may enter if Tenant is absent for a long time to do repairs.6. Or when Tenant abandoned or surrendered the property.

iii. Tenant has right to visitors and has right to Marry and live with a spouse. LL has right to limit to 1 roommate.

iv. Tenant duty to not do waste and nuisance.v. If LL sells land

Lease still survives.

Tenant's right to assign/sublet

When lease is silent, tenant may transfer by assignment or subleaseLease may require LL consent for sublease

Commercial leasesi. majority rule: LL has absolute right to refuse sublease if in lease

1. case: Slavin v. Rent Control Board (MA)(page 12) – majority rule

ii. minority rule: consent can only be withheld if commercially reasonable objection to assignment1. Case: Kendall v. Pestana (CA)(page 12) – minority rule

Residential leasesi. LL has absolute right to refuse sublease

o Sublease Tenant has executed new lease with subleasee. Landlord remains involved, tenant is liable to landlord for any damages or lost rent incurred

by subleasee. More common in residential settings.

Rent and Landlord’s Duty to Mitigate

i. LL Self-Help to deal with breaching tenant – not allowed in most jurisdictionsii. Summary Process – fast-track for eviction proceedings

Tenants can now present defense, not as much “Summary” as it was before.iii. Remedies when tenant breaches and refuses to leave

1. Tenant stops paying rent sue for back rent sue for possession

2. Tenant keeps paying rent accept new tenancy treat as tenant at sufferance and sue for possession

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i. refuse to accept or cash tenant's rent checksiv. Remedies when tenant breaches and leaves

1. accept tenant's surrender tenant still owes back rent but no future losses

2. re-let on tenant's account find new tenant and sue former tenant for difference between old and new rental prices (must

be reasonable)3. wait and sue for rent at end of lease (don't mitigate damages)

traditional rule allows this most states use modern rule (LL must reasonably try to mitigate)

i. if LL mitigates, can recover reasonable costs of finding new tenant, rent during vacancy, and diff. between rent prices

ii. if not, damages reduced by amount that would have been avoided by reasonably attempt to mitigate

LL has the burden to show that he tried to Mitigate or Mitigated!i. Case: Sommer v. Kridel

1. A landlord has a duty to mitigate damages by making a reasonable effort to re-let the premises when seeking to recover rent from a defaulting tenant. Such a duty is consistent with basic justice and fairness. There is an increasing trend to treat leases not as conveyances of land, but as contracts.

Habitable Premises

Quiet Enjoyment & Constructive Eviction

Covenant of Quiet Enjoyment Implied in all leases, whereby landlord promises not to wrongfully interfere with tenant’s

possession of premises.

Constructive eviction1. Special protection for the tenant in defective leased premises2. When the wrongful conduct by the landlord substantially interferes with tenant’s beneficial use and

enjoyment of leased premises.a. Wrongful conduct may be satisfied by an act or omission. Cases have found this standard is

met where the landlord:i. Fails to perform an obligation in the leaseii. Fails to adequately maintain and control the common areaiii. Breaches a statutory duty owed to tenantiv. Fails to perform promised repairsv. Allows nuisance-like behavior

3. Allows tenant to vacate premises and end the lease, avoiding future liability for future rent4. Over time evolved to include any conduct by landlord other than actual eviction that might

substantially interfere with the tenant’s possession.5. Procedural Steps: (1) Tenant must notify landlord about the problem and (2) give the landlord

reasonable period to act upon the problem, (3) and then vacate premises.Case Examples:

6. Fidelity Mutual Life Insurance Co. v. Kaminsky – Court held landlords failure to prevent protestors from interfering with tenants practice constituted constructive eviction. (nuisance like behavior)

Violating 2 codes – may not be sufficient. But violating A LOT may be!

Partial constructive eviction

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same as above, but can be used if only portion of apt is unusablei. doesn't force tenants in bad situation to live on street in order to sue LL

LL's liability for acts of other tenantsA. traditional rule: LL not responsible unless lease expressly incl. obligation to control conduct of other tenantsB. Modern rule: If landlord fails to protect Tenant’s quiet enjoyment…

Implied Warranty of Habitability

A. Doctrine to protect residential tenants from defective housing conditionsB. More general, such as “clean, safe, and fit for human habitation.” – Need bare living conditions and

compliance with building and housing codes.C. Procedural Requirements:

1. Tenant must notify landlord about defects.2. Allow reasonable time for landlord to make repairs.3. Tenant not required to vacate.

D. Remedies for breach:1. Withhold rent

a. Usually most effective remedy because it gives the landlord an incentive to repair the premises.

2. Repair and deducta. In many states, the tenant may withhold rent and use these funds to repair the defects.

3. Sue for damagesa. Tenant may sue for damages while remaining in possession or after vacating premises.

4. Can also move out if LL had a notice and reasonable time to repair.E. Case Examples :

1. Wade v. Jobe – Court held in residential lease, an implied warranty of habitability exists and bare living requirements must be met, and the premises are fit for human occupation during the duration of the lease. Failure to supply water or heat, or violations involving safety and health will often sustain a tenant’s claim for breach of warranty of habitability.

Retaliatory Eviction pp. 886-891, 893-898

Evidence of complaint within 6 month of the alleged act of retaliation is presumptively retaliation.

Retaliatory eviction; consumer protection legislation. Rule: Landlord cannot evict tenants if the motive is to retaliate against the tenant for taking

action pursuant to their housing rights. Factors to be used to judge whether a defense of retaliatory eviction is established.

o The landlord’s decision was a reasonable exercise of business judgment;o The landlord in good faith desires to dispose of the entire leased property free

of al tenants;o The landlord in good faith desires to make a different use of the leased

property;o The landlord lacks the financial ability to repair the leased property and

therefore, in good faith, wishes to have it free of any tenant;o The landlord was unaware of the tenant’s activities which were protected by

statute;

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o The landlord did not act at the first opportunity after he learned of the tenant’s conduct;

o The landlord’s act was not discriminatory. Cases:

Hillview Associates v. Bloomquist (p.759)o History: Members of a tenants committee met with their mobile home park

maintenance supervisor to complain about the conditions. During the meeting, tenant Davenport got into a physical altercation with the manager. Later, members of the committee received eviction notices.

o Opinion: Landlord may evict tenants for legitimate purposes or no reason at all. However, if the landlord has an illegal intent to prevent tenant from

pursuing their legal activity by eviction, the landlord is guilty of retaliatory eviction.

Here, evidence supports that the supervisor evicted the committee because they complained about the conditions of the park, a legal activity.

However, the supervisor could evict Davenport because he crossed the line of legal activity.

Imperial Colliery Co. v. Fout (p.765)o History: Fout worked at Milburn Colliery Company as a coal miner and leased a

house from Imperial Colliery Company. Fout alleged that the two company are the same. Fout received notice that his lease will be terminated and Fout claimed that he is being evicted in retaliation for his participation in a demonstration against Milburn.

o Opinion: Retaliatory eviction enables the tenant to exercise their right of

habitability by complaining about unfit conditions without fear of reprisal by his landlord.

Here, however, Fout points to an activity that triggered his eviction which was unrelated to the habitability of his premises. Retaliatory eviction defense must relate to activities of the tenant incidental to the tenancy. Fout failed to show that his eviction is related to the tenancy.

Discrimination

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Fair Housing Act Statuteo Refuse to sell or rent after making a bona fide offer; or to refuse to negotiate for the sale or

rental of, or otherwise make unavailable or deny a dwelling to any person because of race, color, religion, sex, familial status, or national origin.

o To discriminate against any person in terms, conditions, or privileges of sale or rental of a dwelling, or in the provision of services or facilities in connection therewith, because of race, color, religion, sex, familial status, or national origin.

o To make, print, publish, or cause to be made, printed or published, any notice, statement or advertisement with respect to the sale or rental of a dwelling that indicates any preference, limitation, or discrimination based on race, color, religion, sex, handicap,, familial status, or national origin, or an intention to make such preference, limitation, or discrimination.

Protected Groups o Race, color, religion sex, familial status (married/unmarried couples, reluctance to rent to

single mothers), or national origin (immigrants). Unprotected Groups

o Sexual orientation, age, employment status, professional status. Disability Discrimination

o Can’t discriminate sale or rental because of a handicap.o Permitted Modifications:

If resident needs to change the premises, landlord can do so at resident’s expense and must restore it to the way it originally was.

Two Exemptions: o Rooms or units in dwellings occupied by no more than four families living independently.

As long as the owner occupies one of the units as a resident.o Single family house sold or rented by owner (not an agent/broker).

As long as owner does not own more than three such homes, and no more than one sale very two years.

FHA Remedies o Damageso Injunctionso Punitive Damageso Criminal penalties, including attorney general investigations.o Mediations.

Showing a Violation o Step 1: Make a Prima Facie Case

Statistical evidence of systematic discrimination due to conduct. Rejection of qualified applicant in a protected class.

Disparate treatment—unwarranted rejection of individuals in protected classes.

o Step 2: Defendant may offer legitimate explanation Exogenous cases: External demographics of location and endogenous causes, such

as low credit scores. Lack of objective qualifications. Burden on defendant to prove this.

o Step 3: Plaintiff may rebut the explanation as a pretext. Intentional discrimination always meets this standard.

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Racial Discrimination

Asbury v. Brougham Refused black lady rent. Suggested to go to a mostly Black unit. P must prove DISCRIMINATORY INTENT

o Was there DISCRIMINATORY INTENT?

o P burden to prove to demonstrate PRIMA FACIE CASEo Burden on LL to demonstrate legitimate considerations.o Shifts to P to demonstrate pretext.

Sex Discrimination: Sex Harassment

Quigley v. Winter Types of harassment:

o Hostile Environmento Quid Pro Quo (refusing to give security deposit unless he saw her naked?)

Prima Facie Case:o Member of a protected classo Subject to unwelcome sexual conducto Tangible terms/conds. of situation adversely change.o Change casually connected to rejection.

Sexual Orientation Discrimination

Sexual Orientation Discrimination Not protected by Federal law. Protected by state statutes.

Part IV: Regulating the Use of Property

The Judicial Regulation of Property: Nuisance and Support Rights1. Unreasonable Uses pp. 333-342, 346-353, 365-3662. Remedies TWEN; pp. 353-359; 376-3883. Support Rights

a. Lateral pp. 401-409

b. Subjacent pp. 409-419

The “Private” Regulation of Property: Servitudes Affirmative Easements (Rights)

Express Easements pp. 511-518?<>i. Appurtenant pp. 518-522

ii. In Gross pp. 522-533

Non-Express Easements

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Estoppel (Irrevocable Licenses) pp. 533-544Prescriptive Easements pp. 311-318Implied by Prior Use pp. 544-551Implied by Necessity pp. 551-556

c. Modification and Termination p. 556

Covenants (Restrictions)

A. Real convenants and equitable servitudes1. General: Private contracts between landowners regarding rights and restrictions of properties

that will also bind successors to the properties.a) Usually must be in writing. b) Writing requirement is also satisfied by a constructive notice: the writing requirement is

satisfied if the covenant is recorded in an earlier instrument. c) Covenants and equitable servitudes are land use restrictions that are binding on future

owners, or “run with the land.” Covenants are property interest because they are binding on current and future property owners.

d) Exception: implied reciprocal negative servitudes, see below.2. Restrictions running with the land

a) Rules for running with the land for equitable servitudes.(1) The burdened side: The question is whether an owner of the servient estate is

burdened by a restriction on the lot that the owner did not herself agree to when she accepted his deed from the seller.(a) restriction is in writing,(b) the parties bound or benefited had notice of the restriction,(c) the grantor intended the restriction to run with the land,(d) the restriction touches and concerns the land.

(2) The benefited side: The question is whether the plaintiff has standing to enforce the burden. Most courts hold that a person is entitled to equitable servitude if(a) she owns real property (b) that the grantor who imposed the restriction intended to benefit by

the restriction.b) Rules for running with the land for real covenants.

(1) The burdened side: Must have all the elements(a) restriction in writing,(b) the parties bound or benefited had notice of the restriction,(c) the grantor intended the restriction to run with the land,(d) the restriction touches and concerns the land, (e) horizontal and/or vertical privity of estate.

(2) The benefited side: Must have all the elements(a) restriction in writing,(b) the parties bound or benefited had notice of the restriction,(c) the grantor intended the restriction to run with the land,(d) the restriction touches and concerns the land,(e) the plaintiff derive her title from one of the covenanting parties, (f) horizontal and/or vertical privity of estate (optional depending on the

state).c) Definition of terms

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(1) Writing (a) A covenant is in writing if the original covenanting parties put it in

writing. (b) Subsequent purchasers need not put the covenant in writing to satisfy

the requirement for the original covenant to run with the land. (2) Notice

(a) Actual notice: Notice is served directly to the purchaser.(b) Constructive notice: Covenant was recorded in the registry of deeds

along with the deed or lease creating the covenant. A reasonable purchaser is expected to search the title to find out whether the party is burdened by restrictions.

(c) Inquiry notice: If the observable conditions on the land as such that any reasonable purchaser would know the property was burdened by a covenant.

(3) Intent to run with the land(a) A deed or lease is evidence of grantor’s intent that the restrictive

covenant to run with the land if it(i) recites that the covenant is made to the “grantee and her heirs

or assigns” or(ii) explicitly states that the covenant is “intended to run with the

land.”(b) Presumption: the court will generally hold that a covenant benefiting

the owner of neighboring land is presumptively intended to run with the land.

(4) Touches and concern the land(a) Traditionally the test required that

(i) the covenant is connected to the enjoyment or the use of the land.

(b) Modern test required that(i) the covenant affects the market value of the land, (ii) (in some states) the restriction affects the parties’ interest as

landowners such that the benefits and burdens could not exist independently of the parties’ ownership interest in real property.

(c) Note: The courts has traditionally used this element to void restrictions on competition instead of a public policy argument. However, the courts today recognize that restriction on competition

(5) Privity of estate: All states require both horizontal privity and vertical privity for the burden of a covenant to run with the land. Some states require privity for standing.(a) Horizontal privity: The relationship between the original covenanting

parties. (i) Tests for horizontal privity.

(a) Instantaneous privity: the prevalent test that require the plaintiff to show that the covenant was created at the moment one of the parties transferred a property interest to the other.

(b) Mutual privity: the minority test that states privity exists if one of the parties holds an easement in the land of the other.

(ii) Examples where horizontal privity is not met.(a) Agreements between neighbors.

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(b) Agreements between grantors and grantees that are not made at the same time as the conveyance of the property interest burdened or benefited by the covenant.

(b) Vertical privity: The relationship between the original covenanting parties and subsequent owners of each parcel.(i) Test for vertical privity:

(a) To establish vertical privity, prior owners must not retain any future interests in the property when they alienate in to later owners.

(ii) Examples where vertical privity is not met.(a) The transaction to a subsequent owner involves a

leasehold or life estate, such that the grantor or some other person has the right to possess the property in the future.

(6) Look at example on P.450.(7) Cases

(a) Whitinsville Plaza v. Kotseas (p.438)(i) History: Kotseas conveyed land to the Trust and promised not

to use the retained land in competition with e Trust. The Trust sold land to Plaza. Notwithstanding the promise, Kotseas proceeded to lease land to CVS for the purpose of carrying on competitive business with Plaza.

(ii) Opinion(a) The courts have traditionally held that a covenant not

to compete does not “touch and concern” the affected parcels of land and does not run with the land.

(b) The court feels it is the right time to overrule the previous ‘touch and concern” rules because it failed to consider that restricting covenants enhances the market value of the property.

(c) Reasonable anticompetitive covenants are enforceable by and against successors to the original parties.

(d) Reasonable covenants against competition may be considered to run with the land when they serve a purpose of facilitating orderly and harmonious development for commercial use.

(e) Enforceable covenants will be ones which is consistent with a reasonable overall purpose to develop real estate for commercial use.

(f) Covenants is enforceable if it is reasonably limited in time and space and consonant with the public interest. Unreasonableness in time, space, or product line, or obstruction of the public interest, are the principal bars to enforcement.

(g) Kotseas has been properly compensated for giving up his right to compete with Plaza and it would be inequitable to allow Kotseas to engage in competition and be further unjustly enriched.

(h) Plaza relied on Kotseas’s covenant not to compete and have developed his property accordingly. The covenant increased the value of the property.

3. Implied reciprocal negative servitudes

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a) General: The court will allow covenants not directly incorporated into the deed for two instances:(1) Equitable estoppel/part performance: Representations are implied in sales

literature or made orally by the developer that land use in a subdivision will be restricted or regulated.

(2) Common plan/common scheme: If most of the lots in a subdivision are burdened by restrictions that were inadvertently left out of a particular buyer’s deed, the restriction applied to the individual as well.(a) Common scheme does not have to apply to the entire subdivision. It

could only apply to certain blocks or zones. If the court finds too many lots in the subdivision are sold without restrictions, the court may find that no common scheme was in fact established.

b) Note: California Supreme Court rejected the doctrine of implied reciprocal negative servitudes, holding instead that restrictions must be in writing or referred to in the deed of the land sought to be restricted.

c) Cases(1) Arthur v. Lake Tansi Village (p.429)

(a) History: Developer distributed brochures to potential purchasers that showed recreational facilities. The developer also placed an advertisement “forever is a long time…but that’s how long you and your family will be able to enjoy the facilities at Lake Tansi Village.” The later owner of the recreational facilities sought to relocate the marina closer to the residential lost and the owners were concerned that the relocation would create noise, pollution and impede their view of the lake. The owners sued for implied negative servitude.

(b) Opinion(i) The court recognized the possibility of enforcing an implied

negative servitude but refused to find one in this case because the evidence was not sufficient that the developer had impliedly promised that the facilities would remain unchanged and the subsequent owner was not on sufficient notice of the intended restriction.

(2) Evans v. Pollock (p.424)(a) History: The present dispute arose when devisees of the original owner

of the entire parcel contracted to sell to Pollock a block which Pollock plan to develop into a marina, private club, and condominium. Charles Evans and other owners whose deeds contained the restrictive covenants sued for equitable relief under the implied reciprocal negative easement doctrine. The restrictive covenant allowed for only residential uses that may be waived by a consent of ¾ of property owners. The trial court found that the original grantor had not intended for the covenant to apply to the block sold to Pollock. The appeal court reversed and claimed that for the restrictive covenant to apply, it must apply to the entire parcel.

(b) Opinion(i) The fact that the restrictive covenant may be waived by a ¾

vote is a strong indication that there is a general scheme or plan of development furthered by the restrictive covenant.

(ii) General plan or scheme may require the restriction to only apply to a certain well-defined similarly situated lots (a block) for the doctrine of implied reciprocal negative easements to apply as to such lots.

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(iii) The court finds that common scheme may apply to a well-defined block and does not need to apply to an entire parcel. However, where a few lots are without restrictive covenants, they may be compelled by the common scheme / plan to follow the covenants.

4. Restraints on Competitiona) Rules

(1) Reasonable covenants against competition may be considered valid and run with the land when they reasonably serve a purpose of facilitating orderly and harmonious development for commercial use.

(2) A restraint on competition will be enforced if it is reasonably limited in time and space and consonant with public interest.

(3) Restrictive covenants “touch and concern” the land by increasing the value of the property.

b) Cases: see above in Whitinsville Plaza v. Kotseas.5. Restraints on Alienation

a) General: Contractual restrictions on the transfer of real property are often held to be void and unenforceable as a matter of public policy.

b) Rules(1) Restrictive covenants on the alienability of a fee simple estate is void unless it

is outweigh by a reasonably restrictions serving justifiable interests of the covenanting parties. Reasonable restrictions are partial restraints on alienation.

(2) The courts will hold restrictions against alienation in gifts to charitable entities valid unless the court deems there is such a unforeseen circumstance that warrant the sale to protect the interest of the charity.

c) Cases(1) Northwest Real Estate Co. v. Serio (p.463)

(a) History: A deed for fee simple of a lot contained a provision that the land should not be subsequently sold or rented prior to a designated date without the consent of the grantor. The grantee contracted to sell to the Serios before the said date and the grantor refused to give consent. Serios sues declaratory judgment finding that the covenant is void.

(b) Opinion(i) The covenant is repugnant to the free-simple title. (ii) The covenant deprives the grantees the unrestrained power of

alienation incident to the absolute ownership.(c) Dissent

(i) The restraint on alienation seems to be one intended to give developer some control over the character of the development for a reasonable time.

(ii) Developing a city or suburban area as a single large enterprise using temporary restraints on alienation may not be detrimental against public interest.

(iii) The court should examine the whether such development is beneficial to the public interest.

(2) Riste v. Eastern Washington Bible Camp (p.465)(a) History: Eastern sold lots to Riste’s parents who agreed to obey the

restrictions on occupancy and resale. Riste’s parents, with the permission of Eastern, assign the lots to Riste. When Riste attempted to sell the property contrary to the restrictions, Easter refused to remove the restrictions and Riste sued for a declaration that the restrictions

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were invalid. Specifically, the restriction forbade sales to any person without approval by Easter and the occupancy must conform to the practices of the church.

(b) Opinion(i) The rule in Washington is that a deed for a fee simple estate

prohibits the grantee from conveying land to another without the approval of the grantor is void as repugnant to the nature of the fee simple estate.

(ii) An exception is allowed for reasonable restraints that are justified by legitimate interests. However, the restraint on this case is against public policy. ??? Why??? Is religion not a legitimate interest?

(iii) Restriction on occupancy is also void because Washington code prohibit real estate instruments that restrict the conveyance on race, creed, color, national origin, or handicap.

(c) Horse Pond Fish & Game Club, Inc. v. Cormier (p.467)(i) History: Horse Pond is a charitable trust and has a property

with restriction that the land shall not be alienated from Horse Pond without 100% vote of the Club or the Club is dissolved. As the land surrounding the property becomes more residential, Horse Pond called a special meeting to vote on a land swap with another. At the meeting, Cormier voted against the land deal and thereafter Horse Ponds filed suit seeking declaration that the restriction on the deed was void as an unreasonable restraint against alienation.

(ii) Opinion(a) Restraint against alienation depends upon its

reasonableness in regard to the justifiable interests of the parties.

(b) However, an express restrictions against alienation in a gift made to a charitable trust or charitable corporation may constitute a valid restraint.

(c) But, the court may permit a sale of land owned by a charitable entity if the court determines that due to unforeseen circumstances that the sale is necessary and would be in the best interests of the charity.

(d) On remand, the court should determine whether the plaintiff is a charitable entity and if so, whether the charity will be served by the sale of the land.

Negative and Affirmative Restrictions

•Usually, the restrictions are in the form of promises not to use the property in a particular way. These are negative restrictions.

• For instance , in order to preserve an ocean view for neighbors, one might promisenot to build on the promisor's land a structure more than one story high.

• But, there may be promises to use the property in a particular way. These areaffirmative restrictions.

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• For instance , a tenant in a mall might promise in the lease 1) to maintain open shop hours for specific times and days or 2) to pay merchant association fees.

• In some circumstances, however, courts might treat a restriction that appears to be affirmative as a negative one.• For instance, a property owner might promise to use his or her vacant lot solely for single family residential purposes. This might appear to be an affirmative promise to use the property as a single family, residential parcel. But, courts do not interpret this an affirmative promise actually to use the property that way.Rather, the courts interpret this as a negative promise not to use the property for any other purpose. So, there is no affirmative duty to build a single family residential structure on that vacant land.The lot may remain vacant. But, when the owner does build an improvement and uses the property, he or she must then use it as a single family residential parcel.

Real Covenants and Equitable Servitudes pp. 556-576

Common Interest Developments

Implied Reciprocal Negative Easements pp. 576-586

In some jurisdictions, another manner by which a promisor could create an implied real covenant or equitable servitude without signing a writing, arises where the promise itself doesnot appear in any writing. This occurs through what courts refer to as a "reciprocal negativeeasement" where

• the owner of two or more parcels of property

• transfers by deed some, but not all, of the owner’s property

• by way of a deed containing restrictions on the use of that transferred property

• where those restrictions benefit the land the transferor retained, and

• the transferred property and the retained property have such a relationship that it is equitable for the transferee to infer that the transferor will limit the use of the retainedproperty to the same extent that the transferee is limiting that of the transferred parcel(s).

In these circumstances, the courts having inferred the grantor promised to restrict the use of the retained parcels, will find the grantor created an implied covenant with respect to that property.

Perhaps as further evidence that covenants are servitudes, the courts have inaccurately referred to this type of promise as a "reciprocal negative easement," even though it really is not an easement. But, it is a servitude.

Creating Implied Restrictions by Estoppel

A further circumstance giving rise to an implied covenant or restriction involves a situation where a buyer or purchaser for value of property from a developer alleges he or she purchased in reliance upon the developer's agents' oral representations and/or sales literature regarding how the other property in the development will or will not be used.

In these cases there might be either an expressed or implied restriction. However, even if the restriction is expressed, it does not appear in any instrument related to transferring an interest in the property. Therefore, courts might rely on an estoppel theory to find the parties created a restriction.

If there is a covenant here, it probably arises from an implied reciprocal negative covenant. For such we must have 1) an owner of two or more lots [in this case O with 10]; 2) who conveys some but not all of those lots subject to restrictions [in this case O conveying 6 of the 10]; 3) where those restrictions benefit the land the transferor retained [in this case O's remaining lots were benefited by the restrictions on the other lots, since the restrictions were consistent with O's residential plan for all 10]; and 4) the transferred property and the retained property have such a relationship that it is

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equitable for the transferee to infer that the transferor intends to limit the use of the retained property to the same extent that the transferee is limiting that of the transferred parcel(s) [in this case the properties' relationships probably arise from their unique suitability to low density, upscale single family housing]. So, covenants on the remaining lots likely arise as reciprocal negative covenants.

ii. Property Owners Associations pp. 586-591

iii. Unit Owners v. Developers pp. 591-598

Covenants Void Against Public Policy pp. 598-604, 610-613Modification and Termination pp. 647-655

C. The Public Regulation of Property: Zoning TBD

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