Property Outline (Ostrow)

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Part I – Acquisition of Property 1) Purchase 2) Acquisition by Capture a) Wild Animals: Possession and Ownership (17-35) Possession – finder must acquire physical control and have intent to assume dominion over item Relativity of title – idea that a person can have a relatively better title or right of possession than another, while simultaneously having a right inferior to yet another person. Pierson v. Post (Fox case; rule of capture – need actual possession of animal) H/R: Mere hunting an animal doesn't vest title. One must mortally wound, physically capture, or kill the animal in order to have his title in it vest. vs. Ghen v. Rich (Whale case) H/R: When a hunter catches an animal according to established custom, title to the animal is acquired. Keeble v. Hickeringill (Duck case; rule – right to be free from malicious interference) H/R: A landowner has the right to use his land to lawfully capture wild animals. Any interference with the landowner's lawful exercise of this right is actionable at law. Constructive Possession. Ratione Soli – when the law treats individual as if he is in possession although he really isn’t or is unaware of it. Policy Reason : prevents trespassing. Owner may constructively posses something on his premises of which is he in unaware, so owner is entitled to “prior possessor wins” rule. Fugitive Resources (such as water, oil, gas, etc.) – owner of land owns the minerals but if multiple owners own land, first to tap mineral is the owner. Can only drill straight down (bottoming rule) and not laterally (trespass). Similar to animals because movable and don’t stay in one place. Cons

Transcript of Property Outline (Ostrow)

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Part I – Acquisition of Property1) Purchase2) Acquisition by Capturea) Wild Animals: Possession and Ownership (17-35)

Possession – finder must acquire physical control and have intent to assume dominion over item

Relativity of title – idea that a person can have a relatively better title or right of possession than another, while simultaneously having a right inferior to yet another person.

Pierson v. Post (Fox case; rule of capture – need actual possession of animal) H/R: Mere hunting an animal doesn't vest title. One must mortally wound, physically capture, or kill the animal in order to have his title in it vest. vs.Ghen v. Rich (Whale case) H/R: When a hunter catches an animal according to established custom, title to the animal is acquired.

Keeble v. Hickeringill (Duck case; rule – right to be free from malicious interference)H/R: A landowner has the right to use his land to lawfully capture wild animals. Any interference with the landowner's lawful exercise of this right is actionable at law.

Constructive Possession. Ratione Soli – when the law treats individual as if he is in possession although he really isn’t or is unaware of it. Policy Reason: prevents trespassing. Owner may constructively posses something on his premises of which is he in unaware, so owner is entitled to “prior possessor wins” rule.

Fugitive Resources (such as water, oil, gas, etc.) – owner of land owns the minerals but if multiple owners own land, first to tap mineral is the owner. Can only drill straight down (bottoming rule) and not laterally (trespass). Similar to animals because movable and don’t stay in one place. Cons include overconsumption and prevents conservation. Rule of capture applies.

b) The Problem of the Commons and the Economic Theory of Property (35-50)

1) Harold Demsetz theory of property rights * –If a person seeks to maximize the value of his communal right, he will tend to overhunt and overwork the land because some of the costs of his doing are borne by others. The stock of game and richness of soil will be diminished too quickly. Hurts future generations.- In CO, owner is not concerned with costs b/c they are borne by others. Negotiation is also difficult and costly. PO forces owner to economize costs, and lessens needs to overuse since there is no danger of someone else using your resources, it’s yours. - Externalities = costs that a user does not have to take into account in deciding how to

use a resource. Private property solves problem of common property by allowing owner to economize use of those resources (reduces externalities). Other solutions include statute (regulations), custom and liability.

2) First in time - establishes a priority of rights based on time of acquisition of right

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3) Labor Theory (John Locke) – you own anything that you create from your own labor.

4) Acquisition by Creation

Arguments for property rights in creation:1) Allows creator to enjoy fruits of labor2) Incentive to put in work, time, etc. to create new product/idea, more productive to society

Arguments against property rights in creation:1) Creates monolistic power for creator, no competition, less productive2) Better for society to allow for more competition, leads to better product and lower price

Intellectual Property

INS v. APH/R: "Quasi-property rights" may be invoked to protect against unfair competition by competitors, even when the commodity in question is not "owned" by anyone (like the news). More specifically, when the news has commercial value, it becomes "quasi-property."Dissent – Competition depends upon imitation. The public as a whole may be better off, as long as this freedom to imitate does not destroy the incentive for people to come up with new devices.

vs.Doris Silk Corp.H/R: Absent a patent or protection under statute, a company's property interest in its product is valid only for the products it creates. "Others may imitate these at their pleasure."Chanel H/R: Chanel No. 5 was copied by Smith who sold it at a cheaper price, court ruled in favor of Smith claiming that “imitation is the lifeblood of competition.”Reversed lower ct holding that Smith was relying on natural rights and had ruled in favor of Chanel (John Locke’s labor theory)—competitors should not be able to take a free ride.*

What accounts for the conflicting results between Doris/Chanel and INS? In INS, the work was pretty much done by AP. In Cheney, mere inspiration was taken. INS focuses on fairness arguments, but Doris + Chanel were focusing on efficiency arguments.

Intellectual Property Rights - Competition v. MonopolyIP cases reflect tension between desire to stimulate creation by awarding monopoly rights versus the desire to reduce the cost and increase the quality of goods through competition1) Patents

a) they are for non-obvious processes, machines and inventionsb) gives holder exclusive right to create the product for 20 yrs after invention was created.

After that patent can’t be renewed-this sends pharmaceutical companies in a “tizzy” because their expensive drugs are now going to be recreated

2) Copyrightsa) protects the expression of an idea (not the ideas themselves) in books, articles, etc.b) now automatic—as soon as an idea is expressed it lasts the life of a creator plus 70 years.c) allowed fair use exception permits certain excerpts to be used

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3) Trademarksa) words or symbols associated with a product (cheerios, coke)b) protects the mark not the products themselvesc) last indefinitely unless it becomes very associated w/ product (ex. Xerox)

Universal Pictures Corp. (“Play/copyright case – P alleged copyright infringement”)H/R: Court held the two productions had similar qualities but also differences and did not constitute a copyright infringement. Similarities were from the public domain anyway.

Diamond– case involving denial of patent application related to D’s invention of a human-made, genetic engineered bacterium.H (S. Ct): “A live, human-made micro-organism is patentable subject matter under the Patent Statute. Respondent's micro-organism constitutes a "manufacture" or "composition of matter" w/in statute.”

Samsung - Even though there was no intent to deceive, the use of an imitation (not a likeness) of a celebrity for commercial profit infringes her right of publicity. “Awful holding.”

Morpheus Case:H/R: Court ruled that it was copyright infringement because it was impossible for MGM to go after every person that stole off of Morpheus thus imposed liability on the software distributor. vs.Sony v. Universal H/R: "The sale of copying equipment, like the sale of other articles of commerce, does not constitute contributory infringement if the product is widely used for legitimate, unobjectionable purposes.”

b) Extent of Property Rights (69-93); Right to include/exclude 1) Limits on Property Rights

Moore – Cell case. Court held that P did not have property rights in his spleen following its removal from his body by doctors who made it into a patented cell line of great commercial value. Court was concerned about making body products property that could be sold. Ct also did not want to harm future medical research.

Nature of PropertyBundle of Sticks = includes right to possess, use, exclude, transfer, etc. (eput – rida)Right to Exclude – essence of private property is the right of the owner to exclude others.Trailer case– Ct granted $100k in punitive damages against D who willfully moved his trailer across P’s land after P objected. However, right to exclude has limits when important rights of others become involved. vs.State v. Shack – attorney goes on P’s land to check welfare of migrant workers.H/R: Individual and societal interests may sometimes trump property interests. Property rights serve human values. They are recognized to that end, and are limited by it.

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Acquisition by Find and Adverse PossessionLaw of Finders and Prior Possessors –chimney sweeper found piece of jewelry and has better title to all others except the true owner.R: Prior possessor has superior right over subsequent possessor* (in real + personal property).

Lost property – property the true owner unknowingly loses – belongs to the finder ,Mislaid– property true owner intentionally placed and then left, belongs to the owner or possessor of the premises (unless the true owner is located).Abandoned– property the true owner intentionally and voluntarily relinquished.

Acquisition by Adverse Possession Overview: If a landowner does not bring an action to eject an adverse possessor w/ in the statutory period, the owner is thereafter barred from bringing ejectment action. Purpose is to reward productive use of land and give effect to expectations—a basic policy of property law.

Elements – always apply all elements to a given fact pattern1) Actual – gives notice to legal owner and others who come to the property that the

adverse possessor is using the property and indicates that the AP may be claiming the property and has ousted all other persons. AP must use property as any owner would.

2) Exclusive – adverse possessor holds the land to the exclusion of owner + public3) Open and notorious – means the adverse possessor’s use of the property is so visible

that is constitutes reasonable notice to the owner of a claim of dominion. 4) Hostile/adverse/claim of right – no permission from owner (consent defeats this req)

a) Objective view – The possessor action’s must appear to be the acts of the owner. Intent is irrelevant as long as all other elements satisfied, hostility is implied.

b) Aggressive Trespasser (NJ rule) – here the claim of right means the possessor has a good faith belief that he has title.

c) Good Faith View – in a boundary dispute mistakenly believing that neighbor’s land is yours qualifies as AP. Modern courts will give permit to a GF encroacher to remain by ordering various remedies (damages, etc). Thus, this view rewards GF trespasser but not trespasser who knew what he’s doing at time he enters land. Can lead to lying by AP (state of mind relevant). New York rule.

5) Continuous for the statutory period – Only requires the degree of occupancy and use that the avg owner would make of the property. AP must possess the property for the entire statute of limitations period--Avg is 6-10 yrs. Tacking – adding of time of prior adverse possessors to satisfy SOL reqs. Privity – relationship necessary to allow tacking.* Common legal relationship occurs by contract of sale, gift, or inheritance.

Marengo Caves– not open, notorious or exclusive b/c no knowledge (by either party in this case) that land was being adversely possessed.

Mannillo – D made improvements on their home shortly after they bought it. They did not know, but it encroached onto the P’s land by 15 inchesR: Possession need not be knowingly and intentionally hostile, but it must be notorious to give the true owner actual or constructive notice of the encroachment

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Kunto F: P mistakenly builds home on the lot adjacent to the land described in his deed. Eventually, P tries to quiet title to the land in the deed. D, has been there for summer months, though the line of previous occupants stretches back beyond the 10-year statutory requirement. R/H: 1) In order to establish "continuous" possession, an actor need only possess in a manner that "ordinarily marks the conduct of owners in general…It is not necessary that the occupant should be actually upon the premises continually.” 2) Tacking the adverse use of predecessors is allowed when there is privity of estate.

Suppose that instead of building a home, the Kuntos used the lot each summer for camping, at the end of the summer. No continuity b/c they would not have made any improvements.

Disability StatuteAn action to recover the title to or possession of real property shall be brought within 21 years after the cause thereof accrued, but if a person entitled to bring such action, at the time the cause of actions accrues, is within the age of minority, of unsound mind, or imprisoned, such person [or anyone claiming for such person], after the expiration of 21 years from the time the cause of action accrues, may bring such action within 10 years after such disability is removed

Boundary Disputes – Equitable Remedies (Doctrine of …) Agreed Boundaries –if uncertainty b/w neighbors as to the true boundary, an oral agreement to settle is enforceable if the neighbors subsequently accept the line for a long period of time.Acquiescence (passive assent) – provides that long acquiescence (though shorter than SOL) is evidence of an agreement between the parties fixing the boundary line.Estoppel – is applied when one party gives legal notice to a second party of a fact or claim, and the second party fails to challenge or refute that claim within a reasonable time. The second party is said to have acquiesced to the claim and is estopped from challenging it later.Innocent Improver – Cts will look at relative hardships. The owner might be compelled to give up the property and maybe receive compensation from the encroacher or even sell property built.

Color of Title (constructive AP) where instrument for one reason or another is defective.

2) Acquisition by Gift

Types of GiftsGifts Causa Mortis – a gift made in expectation of immediate approaching death—substitute for a will (revoked if donor recovers from illness). Modern cts enforce it even if there’s evidence of some failure to comply with the wills act formalities, as long as intent is clear.Gift Inter vivos – a gift between living persons.

Elements:1) Delivery – requires objective acts. Trad. rule: if object can be handed over, it must be.

a) physical delivery b) Constructive – handing over some object that will gives access to gift (key)c) Symbolic – handing over something symbolic of the property given (deed)

2) Intent – must be shown by oral evidence

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3) Acceptance

Newman v. Bost (life insurance policy in will, which was in drawer.)R: Symbolic delivery of a gift is not effective. Constructive delivery is allowed only when it is impractical to deliver actual possession. Where manual delivery is possible, it’s required.

Gruen v. Gruen (painting case…p’s son sues step-mom for deceased father’s painting)R: To make a valid inter vivos gift the donor must intend to transfer title; the donor must either actually or constructively deliver the gift to the donee and the donee must accept the gift. These elements must be proved by the donee by clear and convincing evidence.

Part II – The System of Estates

Estate – defined as an interest in land which is or may become possessory and measured by some period of time (even if indefinitely).

Present Estate – a present (or possessory) interest that gives its holder the right to possess land right now.Future Estate – a future interest that gives its holder the right to possess land in the future.

1) Possessory Estatesa) Fee simple absolute defined:

Fee = interest in landSimple = ownership of unlimited durationAbsolute = no future interest can cut off the ownership.

- Basics: 1) Duration : potentially infinite2) Creation : “To A and his heirs”; “To A in fee simple”; “To A”3) Transfer : Alienable (saleable); devisable (passed through will);

descendible (passed through intestacy if die w/o will)4) Future Interest : None

b) Life Estate defined: 1) Duration : interest in land that lasts for the life of the holder or the life of a 3rd party2) Creation: “To A for life”; “To A for the life of B” (pur autre vie) - (pav = 3rd party)3) Transferable: (for the duration of measuring life); alienable, devisable, descendible

- Life estate is always followed by a Future Interest 1) Reversion: FI in grantor; “O to A for life” – A has a life estate; O has a reversion2) Remainder: FI in Transferee; “O to A for life, then to B” – A has a life estate; B

has a remainder

White v. Brown –R: While CL favored the life estate, a modern cts make a strong presumption that a fee simple interest was conveyed. A fee simple will be conveyed unless the words and phrases of the will clearly evidence an intention to transfer less than a fee simple.

Law of Waste – Life tenant is entitled to use of land but cannot waste it.

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Affirmative (voluntary): when life tenant destroyed property or exploits natural resourcesPermissive (involunatary): when land is allowed to fall into disrepair

Defeasible Estates - a present interest in land that may end upon the happening of an event in the future.Examples:“to A so long as the premises are used as an ice cream parlor” (defeasible fee simple)“to A for life, so long as the premises are used as an ice cream parlor” (defeasible life estate)“to A for 10 years, so long as the premises are used as an ice cream parlor (defeasible leasehold)

A defeasible fee is always followed by a Future Interest.*FI in Grantor: “to A so long as the premises are used as ice cream parlor” (possibility of reverter)FI in Grantee: “to A so long as the premises are used as ice cream parlor, then to B”

Identifying Defeasible Fees (Summary):Step 1: Identify the future interest holder

- If a 3rd party, you have fssel- If it is the grantor, you have a fsd or fsscs

Step 2: if the FI holder is the grantor, look for magic words

Types of defeasible fee simples: (memorize)

i) Fee simple determinable (fsd): fee simple that will terminate automatically when a stated event occurs

- Examples: “so long as; while; until” - indicates durational nature of estate- Future Interest: FSD is always followed by a possibility of reverter in the Grantor.- Transfer: alienable, devisable, descendible but always subject to the condition.

ii) Fee simple subject to condition subsequent (fsscs) : until happening of named event and reentry by grantor.

- F to L on the condition that the property be used for residential purposes; in the event it is not so used, F shall have a right to reentry.

- Eamples: on the condition that; but if; provided that) FI: FSSCS always followed by a Right of Reentry in the Grantor (implicit or explicit)

- Transfer: like fsd, fsscs is alienable, divisable, descendible but always subject to the condition

iii) Fee simple subject to executory limitation (fssel): fee simple that terminates automatically upon the violation of a condition (like fsd) and passes to a 3rd party (unlike fsd and fsscs).Examples: ‘so long as…, and if not…, to..” “but if…, then to..”

- To L, but if Blackacre is ever used as a factory, then to M.- FI: fssel is always followed by an executory interest in a transferee named in grant.

2) Future Interests - FI in the Grantor; FI in the Transferee; Executory Interests

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Universe of FI1) In Grantor

- Reversion (life estate) – arises whenever O transfers less than his entire interest (O to A for life or for 2 years)

- Possibility of reverter (fsd) – FI in the grantor following a fsd(O to A so long as used for library purposes)

- Right of reentry/termination (fsscs) – FI in fsscs (O to A but if it ceases to use the land for library purposes, O has the right to reenter and retake the premises).

Reversion vs. Right of Reentry: traditional rule – neither can be soldmodern rule – allows possibility of reverter to be sold but not right to reenter

2) In 3rd party (In Grantee) - Remainder – FI in a grantee that is capable of becoming possessory at the natural

termination of a prior possessory estate (generally a life estate).- Requirements : Held by Grantee; capable of becoming immediately possessory (no

condition precedent); upon natural termination of prior estate (cannot follow a defeasible fee b/c those end unnaturally).

Estates in Remainder- Remainder in Fee Simple (“O to A for life, then to B”)- Remainder in Life Estate (“O to A for life, then to B for life”)- Remainder in FSD (“O to A for life, then to B so long as”)

Vested Remainder– in an ascertained person and not subject to any condition precedentIndefeasible vested remainder – remainder that is certain to become possessor in a particular person

Remainder subject to open or partial divestment – remainder in a class of persons that is certain to become possessory in at least one class member. (subject to open as long as original is alive)

Rules for class gifts: Vesting: Class gift vests when one member of class can be identified.Closing: class closes pursuant to the Fertile Octogenarian Rule or Rule of Convenience.

Vested remainder subject to total divestment – remainder that will become possessory, unless some event occurs which divests the remainderman of its interest “To A for life, then to B and his heirs, but if B does not graduate from law school, then to C”B has vested remainder subject to divestment and C has an executory interest.

Contingent remainder – either in an unascertained person or subject to a condition precedent. (To A for life, then, if B graduates, to B; B has to graduate college, or else it reverts back to O)--If A dies, does B still get it after graduating? Yes, O might hold it in trust until then. CL = no.

Classifying RemaindersIf a condition follows the granting language, the remainder is a VR subject to total divestment.If condition precedes or is part of the granting language, the remainder is a contingent remainder

1) * Hints for classifying remainders following life estate:- LE Contingent remainder Contingent remainder Reversion

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- LE Vested Remainder Subject to Divestment Executory Interest No reversion

Executory Interest – is a FI in a 3rd party that is not a remainder and that divests another interest. Executory interest follows a fssel or a vested remainder subject to divestment.

Shifting executory interest – divests a 3rd party. To A and her heirs, but if A does not graduate from law school, then to B and his heirs. A has fssel and B has shifting executory interest. If A does not graduate, B’s executory interest will divest A of her FSSEL.Springing executory interest – divests the original grantor. To A when she marries. O has fssel and A has a springing executory interest. When A marries her FI will divest O of his FSSEL.

a) Rule Against Perpetuities

RAP at common law invalidates certain future interests (like contingent remainders and executory interests) that may vest beyond the time of perpetuities; the rule limits the testator's power to earmark gifts for remote descendants. In essence, RAP prevents a person from putting qualifications and criteria in his will that will continue to control or affect the distribution of assets long after he or she has died, a concept often referred to as control by the "dead hand" or "mortmain".

Rule: No interest is good unless it must vest, if at all, no later than 21 years [and 9 months] after some life in being at the creation of the interest.

5 Step Approach to RAP Problems1) Determine the Future Interest that is created by conveyance

The RAP only applies to : Contingent remainders; Executor interests; Vested remainders subject to open (i.e., class gifts), and options and rights of first refusal

2) Identify the condition precedent to vesting (What has to happen before FI can vest?)3) Find a validating life

- Alive and relevant : Look for a person alive at the date of the conveyance and their death is directly related to whether the condition will be satisfied (i.e., on A’s death we will immediately know whether A had any children).

- Determine whether the interest must vest or fail to vest within 21 years and 9 months of the validating life (person who is alive at time of creation and related to interest)

4) Will we know, with certainty, within 21 years of the death of our validating life, if the interest will vest? If not certain, then grant fails and RAP applies.

5) If an interest is not certain to vest or fail, strike it from grant*

RAP: Vesting of FIContingent remainders and executor interests vest when the condition precedent is satisfied.

- Class gifts in vested remainder subject to open vest when1) The class closes 2) And all the condition precedent for each class member’s interest are satisfies

All or nothing rule: if condition is not satisfied for one class, gift is void for the entire class.

Common perpetuities scenarios:

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1) Gift to an open class conditioned on the members surviving to an age beyond 21 violates the RAP. 2) An executor interest with no time limit violates the RAP.

Perpetuities Reform1) Cy Pres – court will reform an instrument to validate contingent interests, attempting to

carry out the grantors’ intent in a way that does not violate RAP.2) Wait and See – court will wait and see what happens instead of imagining scenario under

which the rule would be violated.3) Perpetual Trusts – some states have modified the rule to exempt perpetual trusts if

trustees have the power to alienate the trust property.

The Symphony Space, Inc. v. Pergola Properties, Inc. (Court of App of NY, 1996) – most common type of litigated RAP and this is the modern rule. H/R: RAP reflects the public policy of the State. Granting the relief requested by Ds would thus be contrary to public policy, since it would lead to the same result as enforcing the option and tend to compel performance of contracts violative of the Rule. Similarly, damages are not recoverable where options to acquire real property violate the rule, since that would amount to giving effect to the option.

3) Concurrent Estates a) Types of Concurrent Estates

1) Tenancy in common – “To A and B”- Possession: Each has an equal right to possess the whole- Ownership: Percentage need not be equal- Transferable: Alienable, devisable, and descendible- Creditors: Reachable by creditors

2) Joint Tenancy – “To A and B as JTs w/ right of survivorship” - Right of Survivorship – surviving co-tenant atomically becomes property owner once

the other dies (benefit is that there’s no need for probate) *- Requires 4 unities – PITT: possession (JTs must have right to possess entire parcel);

interest (must possess equal interests and interests must last same amount of time); title (must acquire title by same instrument/title); time (created at the same moment).

- Transferable: Alienable, but not devisable or descendibleCreditors: Reachable during life of tenant

3) Tenants in the Entirety – “To H and W” (marriage is assumed)- Requires 4 unities + marriage- Unseverable right of survivorship*- At CL, reachable by creditors of Husband. Modern law varies.

Sawada (Hawaii)R:: The separate creditor of either spouse may NOT reach the property held in tenancy by the entirety.*

Riddle F: Couple hold real estate as JTs. Dying wife realizes H will take over her interest, and conveys a one-half interest in the property to herself in order to sever the joint tenancy. R: Allowed.

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Note: if JT’s die at the same time half goes to one heirs and half goes to the others. But if you survive the other even by one second, you get all the property.

b) Relations Among Concurrent Owners

Delfino – unusual case, usually courts will look at objective commercial value and divide it by sale. Partition by sale is when the court sells the property and distributes the proceeds to tenants according to their interests. Partition in kind is when the court divides up the jointly owned property into individually owned property according to the interests of the parties.

Boxing Ring case: Couple are JTs. W gets mad at H about boxing ring and sues to cancel lease. R: 1) A conveyance of a lease by one joint tenant to a third party does NOT sever a JT. 2) JT has the right to lease his interest to a third party without the consent of other joint tenant.

4) Marital Interests – Common Law Marital Property System (see Swada)

Division of Property upon Divorce:1) CL : Property belongs to spouse; Modern Law: Equitable distribution2) Community Property : divided 50/50 – All property earned by the couple, or bought with

the earnings, during marriage is held as community property regardless of the nominal title, unless the couple agrees otherwise.

3) Separate property is property acquired by gift or inheritance or property owned by a spouse prior to marriage.

Termination of Marriage by Divorce (What is considered marital property varies by state)*

In re. Marriage of Graham (CO) - court held MBA not marital property. (like Mahoney) vs.O’Brien (NY) – Degree held to be marital property because its an investment in the economic partnership of marriage and that the product of the parties’ efforts should be considered marital property. Entitled to increase earning potential. (Elkus follows this ruling) Elkus v. Elkus (NY) – Famous opera singer marries trainer then divorces. Ct held that celebrity status, and its economic value, can be a marital asset subject to equitable distribution.

a) Community Property System (341-344)

Community Property Characteristics1) No right of survivorship2) Transfer: neither spouse can transfer without consent of other3) Management: spouse with title or possession of property manages as fiduciary4) Creditors: of managing spouse can reach any property that spouse is entitled to manage

b) Rights of Domestic Partners (DPs)

Property Rights in Domestic Partners1) Express + implied Ks sometimes used to award property to DPs upon death or divorce2) ALI adopts CL approach: DPs must share primary residence + a life together as a couple.3) Upon divorce, property divided like marital property.

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4) Upon death, property distributed according to intestate statute.

Part III – Leaseholds: The law of Landlord and Tenant (non-freehold estates)Leasehold Estate is an exclusive right of possession of real property for a specified period of time, which is granted in exchange for the payment of rent, and is subject to the terms and conditions of the lease.

A) The Leasehold Estates (4 forms) 1) Term of Years –

- Duration: known fixed period, “to T for two years beginning Jan. 1, 2009” so it ends

December 31, 2011. Notice of Termination: None required2) The Periodic Tenancy –

- Duration: continues for successive periods of fixed duration (ex: month-month, year-year) unless notice of termination given. Notice of Termination:

- Year to year = CL required 6 months notice (shorter under modern statutes)- Less than year to year = equal to period, not to exceed 6 months- Lease must terminate on last day of a period

3) The tenancy at will – - Duration: so long as both LL and T desire- Notice of Termination: At CL, terminable by either party without notice (modern

statutes required some period of notice) Also terminates upon the death of one party.

Intent based approach – ML: look at intent of parties to determine type of leaseFormalistic approach – CL: tries to fit into one of the leasehold tenancies

Garner (Intent based) Tenant (D) enters into lease w/ LL where tenant reserves the sole right to terminate the lease. LL dies and LL’s estate (P) orders tenant to leave. Tenant refuses.R: If a lease grants a personal right to the named lessee to terminate at a date of his choice, it is a fairly typical means of creating a life tenancy terminable at the will of the tenant.

4) Tenancy at Sufferance: Holdovers – Arises when a tenant remains in possession (holds over) after termination of the tenancy. CL gives LL w/ a holdover essentially 2 options:Eviction (+ damages) or Consent (expressed or implied) to the creation of a new tenancy.Crechale – D holds over. Ct held that since LL cashed check even after stating that he treated D as trespasser, LL effectively entered into a new lease on a month-month basis.

1) Selection of Tenants (Herein of Unlawful Discrimination ):

Civil Rights Act § 1982 FHAProtection Bars racial or ethnic

discrimination onlyBars discrimination based on race + ethnicity and religion, national origin, sex, disability and against ppl w/ kids

Type of Property Sale of rental of all property Sale or rental of dwelling only; also includes advertising for

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sale or rental of dwelling. Exemptions None Private clubs; owner of 1-3

single-family dwellings; owner of building w/ 4 or fewer units; old ppl housing

2) Other forms of Discrimination :

Sex – FHA prohibits sex discrimination, including harassing tenants for sexual favors.Family Status – Permissible to limit number of occupants to maintain economic value of the property. Impermissible to rent 1 BR to 2 adults and 2 kids but not to 1 adult 1 child.Handicap – “a physical or mental impairment which substantially limits one or more of the handicapped persons major life activities.” (not including druggies) Ex. seeing eye down must be allowed even if there’s a no-pet policy. LL is req to provide reasonable accommodation. (In most states, LLs can discriminate based on profession, not in ny)

Assignment and Subletting – What you can do w/ leaseholds unless the lease prohibits... (see chart on 279)Assignment = tenant transfers entire remaining interest to assignee. Sublease = tenant sublets an less than entire interest

Assignment – a tenant can assign her interest in the leasehold. Thus, the assignee comes into a privity of estate w/ the LL and each sue the other on lease covenants which run w/ the land.If there is Privity of K then the parties obligations bind regardless whether or not there is privity of estate. P of K is simply describes why LL + tenant are liable to each other (they have a K). P of E describes why an assignee and an original party to the K are liable to each other (a new LL-tenant relationship is created b/w assignee + other original party in K).Sublease – a tenant can sublease and thus become the LL of sublessee. NO privity of estate b/w sublessee and original LL.

- Reversion retained : CL – a sublease occurs if tenant retains a reversion. (meaning the tenant is entitled to possession again before the tenant’s lease expires)

- Right of entry retained : CL – here sublease is an assignment since no reversion was retained. ML varies. Some cases have looked at the intent of the parties.

Assignment vs. Sublease – In sublease, L cannot sue T2. L would have to sue T1 who would consequently sue T2. In assignment, L can sue T2 directly.Privity of estate (physical possession of premises) – L + T; L + T’s assignee but not sublessee.Privity of K (relation to K itself) – exists even after transfer unless agreed to substitute assignee or sublessee in place of tenant. Landlord and tenant, not between tenant’s assignee or sublessee.

Conditt - Racing course case. H: Lease is an assignment b/c D didn’t retain any interestKendall* (aiport case – minority rule held)H: Where a commercial lease provides assignment only w/ prior consent of lessor, such consent may be held only where the lessor has a commercially reasonable objection to the assignee or the proposed use. Majority Rule: lessor may arbitrarily + unreasonably deny approval of assignee.

B) The Tenant Who Defaults (Rights, Duties and Remedies)

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The Tenant in Possession defaults by not paying rent, fails to observe lease obligations or is a holdover.

Berg v. Wiley (wrongful eviction from restaurant – MR held)CL rule is that a LL may use self-help to retake leased premises from a tenant w/o incurring liability if 2 conditions are met: LL is legally entitled to possession and the landlord's means of reentry are peaceable. Modern rule is that there is no self help ( must use summary proceedings). The only lawful means to dispossess a tenant who has not abandoned or voluntarily surrendered is by resort to judicial process.’’’’’

1) The Tenant Who Has Abandoned Possession

Sommer - Tenant opts out of lease before it begins. LL refuses to cancel lease or to rent the apt to anyone else. After term of lease is over, LL sues for lost rent for entire term. H/R: LL maintains duty to mitigate damages and must prove he used reasonable diligence in attempting to re-let apt. Rule is based on efficiency; prevents economic waste.

New York – very traditional, common-law and, in general, pro-landlord state. Based on idea that tenant cannot by his own wrongdoing impose a duty on the landlord out seek out new tenants “continually.” However, strict no self help, which is protective of tenants.

If T abandons possession, LL can terminate lease; Re-let while holding T liable for deficiency;Do nothing + collect rent as it becomes due (mitigate); Contract damages for anticipatory breach

C) Duties, Rights, and Remedies (Regarding the Condition of the Leased Premises) 1) Landlord’s Duties; Tenants’ Rights and Remedies:

Disputes arise b/w tenant + LL regarding condition of premises in 2 ways: 1) tenant might wish to vacate, or to stay but pay less or no rent; 2) tenant (or t’s guest) might be injured by allegedly defective premises + claim damages against LL. CL: tenant takes premises as is, no concern for condition of premises.

a) Quiet Enjoyment and Constructive Eviction* :Realty– Tenant left property after repeated flooding. LL sued for breach.H/R: Ordinarily CQE is implied in lease. When breached substantially by LL, cts have applied the doctrine of constructive eviction as a remedy for tenant. Under this rule any act or omission of the LL that renders the premises substantially unsuitable for the purpose for which they are leased, or which seriously interferes with the beneficial enjoyment of the premises, is a breach of CQE and constitutes a constructive eviction of the tenant.

CQE: LL promises T quiet enjoyment of premises. Breach reqs: 1) Affirmative acts of the LL; or LL’s failure to provide something essential that LL had a duty to provide.

Constructive Eviction (T leaves b/c of LLs failure) T must prove:1) LL breached the covenant of quiet enjoyment 2) Tenant vacated within a reasonable period of time3) Reasonable period depends on circumstances of the case (Reste)

Remedies for Breach of CQE - Vacate based on constructive eviction; Action for declaratory judgment – get court to state there is constructive eviction (do not have to vacate); Remain in possession and sue for damages.

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Partial Eviction: eviction only from part of the premises; tenant is relieved of liability for rent.Tenant’s other remedy: can sue for damages equal to the difference between the value of the property with and without the breach other than eviction.The Illegal Lease: Lease is illegal and void if it is made w/ violations to housing codes such as unsafe + unsanitary conditions. Doesn’t apply if housing codes violated after lease was made.

b) Implied Warranty of Habitability: a warranty implied by law that by leasing a residential property, the lessor is promising that it is suitable to be lived in

Requirements tenant must show: 1) LL had notice of the defect and failed w/ in a reasonable time to repair it; and 2) the defect existed during the time for which rent was withheld.

- Determine breach by looking at local and municipal housing codes and whether the claimed defect has an impact on the safety or health of the tenant.

Remedies - K remedies (Damages for tenant’s discomfort and annoyance) are available; Tenant may withhold payment of future rent and deduct expense of repairs (reimbursement).

Retaliatory Eviction: CL: LL free to terminate tenancies upon proper notice and to refuse to renew expired term of years w/o cause. MR usually forbids retaliatory action by landlords renting residential space. Tenant bears burden of proof that eviction was retaliatory.

D) The Problem of Affordable Housing

Chicago Board of Realtors - Opinion introduces dilemma of attempting to provide affordable housing. The ct demonstrated that by selecting portions of the ordinance and analyzing them, the provisions made it harder for LLs to provide affordable housing. Posner: When price of rental housing is artificially depressed and the cost to LLs artificially increased, supply falls and many tenants, usually the poorer, are hurt. This statute rests the initial costs of the new standards on LLs and could have the effect of depleting their resources, thus leaving them w/ little capital to use to the quality of the housing.

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Chapter 8 – Title Assurance – good titles to land purchased

A) The Recording System Intro1) Purpose – facilitate certainty in title and land transfers- Bona Fide Purchaser (BFP) is a subsequent purchaser, who in GF and w/o prior

notice of an earlier transfer, spends valuable consideration purchasing an interest in real property.

- In the a absence of a recording statute = “first in time is first in right” (CL rule)- With recording statue – ex. O A (A does not record deed) O B (B records deed)

Between A and O, A prevails, but between A and B, B prevails (MR)

2) Types of Recording Actsa) Race Statute – whoever records first win; actual notice of prior is irrelevant.b) Notice Statute –Protects subsequent purchaser against unrecorded instruments

even if she does not record. Unlike race statute where he has to record.

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c) Race and Notice Statute – subsequent purchaser w/o notice is protected against a prior unrecorded instrument only if he records before prior instrument is recorded. Tends to eliminate lawsuits about which deed was delivered 1st + punishes nonrecording. Provides incentive to record, making public records complete.

Types of Notices:i) Actual notice – arises where one is personally aware of a conflicting interest in real

property, often due to another’s possession of the property.ii) Record Notice – learns of easement or covenant through recorded instrumentiii) Inquiry Notice – A purchaser presumed to have notice of facts that would be revealed

through reasonable investigation (see Harper)- Party in possession gives inquiry notice of claim to property. (see Waldorff) - Constructive notice – notice that the law deems you to have regardless of your actual

knowledge (record and inquiry).

Harper - Does a reference to an earlier deed within a deed in the chain of title provide constructive notice of that deed? (Note: This is a race/notice jurisdiction)H/R: Yes. A deed which specifically refers to an earlier unrecorded deed puts a subsequent purchaser on notice of the existence of the earlier deed: thus, the purchaser claiming under the later deed is not entitled to priority though the later deed was recorded first.

Waldorff – Physical possession is constructive notice to all the world and anyone having knowledge of said possession. When possession is open, visible and exclusive, it will put upon an inquiry responsibility to those wishing to acquire interest in the property.

Chapter 10: Private Land Use Controls: The Law of Servitudes

A) Easements: Historical Background Servitude – private contractual interests that run with the land and bind successive owners

1) Easements2) Covenants – Real covenants; Equitable servitudes

Nuisance – judicial remedy for unreasonable use of landZoning – legislative method of regulating land use

Easement – a grant of an interest in land that which entitles a person to use land possessed by another. Written record usually required. - Profit – right to sever and take something from the land of another (ex. Lumber and fish)- License – revocable right to use or enter the property of another (ex. Dinner guests)

Type of Easements: Appurtenant or In Gross1) Easement Appurtenant – benefits owner in the use of his own land

- Transfers automatically with the land, unless purchaser is without notice2) Easement In Gross – benefits owner personally, and not in capacity as land owner (goes

with person). -Generally assignable, but see Miller.

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Affirmative (usual easement) – right to enter/use another persons’ landNegative – right to restrict another’s use of his own land. (Ex: A’s right to prevent B from building on B’s property if it blocks A’s windows.) Negative easements have to be granted.

Easement Appurtenant involves 2 parcels : Dominant estate= land benefitted by the easement + Servient estate = land burdened by it.Easement In Gross involves only the servient estate .

1) Creation of Easements 1) Express Grant - writing signed by grantor2) Estoppel – a revocable license is made irrevocable (i.e., becomes an easement) if licensee

changes position in reasonable reliance of licensor’s statements. (See Holbrook) but see Dalton – not irrevocable even if considerable expense used, only through express grant

3) Change in position – erect improvements or make substantial expenditure.

Holbrook – an easement is created if licensee changes position in reasonable reliance. Van Sandt - (sewage case) - an easement can be implied on the basis of necessity alone. Othen - before an easement can be held to be created by implied reservation, elements must be met.Miller – (lake case) Easements in gross are assignable as if that was the parties’ intentions. If there is a division of the dominant parcel, then the easements must be used in their entirety.

Transfer of Easements:Easements Appurtenant:Assignment: benefit + burden pass automatically to assignees, unless purchaser has no noticeDivision: if dominant estate is subdivided, each resulting parcel has right to use easement on servient estate so long as they do not overburden servient estate.

Easements In Gross: Assignment: assignable, unless contrary to parties intent.Division: Divisible unless (a) contrary to intent of original parties or (b) places an unreasonable burden on servient estate (Restatement). Divisible if used as “one stock” (Miller)

2) Termination of Easements : Preseault– (old railroad on P’s property) - Ct held that since there was nonuse and conduct demonstrating an intent to abandon, P should be compensated for Taking by gov’t.Negative Easements: “LAWS” Negative easements have to be granted.

Easements Review:A. Determine whether an easement has been CREATED:

1. Grant2. Estoppel (Holbrook)

Irrevocable if licensee expends money or constructs improvements in reasonable reliance on statement of licensor

3. Implication from Prior Use (Van Sandt) Common Grantor Prior Use Apparent (provide inquiry notice) Reasonable Necessity

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4. Implication from Necessity (Othen) Common Grantor Strict Necessity (not mere convenience) Necessity existed at time of severance Terminates upon termination of necessity

5. Prescription (Othen, Miller) Actual Use (no negative easement) Open and Notorious (provide inquiry notice) Continuous for statutory period (same as AP) - Defeated only if owner effectively interrupts use (Restatment) Adverse/Hostile/Claim of Right = without consent - Exclusivity = Owner’s use may defeat adversity (Othen)

B. CLASSIFY the claimed or established easement: Affirmative or Negative Appurtenant or In Gross

C. Determine whether the easement can be TRANSFERRED: Appurtanent =

Assigned automatically unless BFP (no notice); Divided automatically unless overburden servient estate

In gross = Assignment permitted unless BFP; Division permitted if (a) not contrary to intent and (b) not unreasonably

burden servient estate or “one stock” rule D. Determine whether the easement has TERMINATED (Presualt)

Abandonment = more than non-use, physical act and intent to abandon E. Determine whether the easement exceeds original SCOPE?

Scope may be adjusted if change is consistent with the terms of the original grant (reasonably foreseeable) (Presault)

B) Covenants Running with the Land Covenants: promise regarding land that runs to successive owners of the promisor’s land.

- Example: O promises to pay dues to maintain a neighborhood poolBurden: promise to pay attached to O’s land; Benefit: right to use pool attached to O’s land

1) Restrictive covenant : a promise to refrain from doing something related to land 2) Affirmative covenant : a promise to do something related to land

a) Covenants Enforceable at Law: Real Covenants Real Covenant: covenant enforceable at law (money damages) – has to satisfy more strict requirements to be real covenant.Elements of RC:

1) Writing - No RC by implication, estoppel or prescription2) Intent to bind successors - Language of instrument (assign to heirs, etc.)3) Touch and Concern land – Promise must effect legal relations as owners of particular

parcel, not members of public. Negative covenants touch and concern land. Affirmative covenants to pay dues touch and concern land

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4) Privity- Horizontal privity (required for burden)- Vertical privity (required for benefit and burden)

A -B (Burden) A X + B Y (Burden and Benefit),

Horizontal privity – shared interest in land other than covenant (grantor/grantee, landlord/tenant)Vertical privity – successor to promisor’s interest in land

- Burden – identical estate required. No vertical privity if X is an adverse possessor or if landlord/tenant. X has to have same exact estate as A to run.

- Benefit – identical or lessor estate

RC Burden and Benefit:BurdenWriting; Intent; Touch & Concern;Vertical Privity (identical estate); Horizontal Privity

BenefitWriting; Intent; Touch & Concern; Vertical Privity (identical or lesser estate).

b) Covenants Enforceable in Equity: Equitable Servitudes Equitable Servitudes – covenant enforceable in equity (injunction) – courts have relied on privity of estates to hold subsequent owners of property liable to real covenants. See Tulk

Elements of Equitable Servitudes:1) Writing (unless implied from general plan); Intent; Touch and Concern land;

Notice: Actual, Record, Inquiry2) Standing: 3rd party beneficiary/privity (Neponsit)

Servitude ComparisonRC Burden RC Benefit ES Restatement

3d

1. Writing 1. Writing 1. Writing (unless implied)

1. Writing, implication, general plan, estoppel, prescription, Necessity

2. Intent 2. Intent 2. Intent 2. Intent

3. Touch & Concern

3. Touch & Concern

3. Touch & Concern

3. Valid unless illegal, unconstitutional or against public policy

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4. Vertical Privity (identical estate)

4. Vertical Privity

4. Standing (successor or 3rd

party beneficiary)

4. Restrictive covenant runs with land (negative easement).

5. Horizontal Privity

5. Notice 5. Notice

Sanborn v. McLean (gas station case – ct held for that reciprocal negative easement exists)Reciprocal negative easement bars a use of the land. If owner of two or more lots sells one with restrictions, the other lot or lots are bound to the same restrictions. ES was implied here from the general plan (make up of lots). D should have known of use by observing the lots around his.

1) Creation of Covenants In Real Covenant - writing required. In Equitable Servitude – express or implied from a general plan or common scheme (Reciprocal Negative Easement = implied equitable servitude)

2) Validity and Enforcement of Covenants

Neponsit* – P, homeowners association, acquired a lien on D’s property for failure to pay fees to P. Fees were required by covenant. H/F: A covenant will run w/ the land + be enforceable against a subsequent purchaser only if: (1) the grantor + grantee intended that it should; (2) the covenant is one 'touching' or 'concerning' the land; (3) there is 'privity of estate' between the promisee or party claiming the benefit of the covenant and the right to enforce it, and the promisor or party who rests under the burden of the covenant. Covenant to pay a fee sufficiently runs with the land.

To determine whether a covenant “touches and concerns” the land ct uses test of affirmative covenant which is a restriction upon the owner’s right to use the land and a burden upon the legal interest of the owner rather than a promise to pay which does not affect the land owner’s legal right which would come with the ownership of the land. Covenant is connected to a benefit to land and should be attached to land itself.*Under CL, P couldn’t sue b/c they did not have vertical privity and courts did not enforce affirmative covenants to pay land. Cts reluctant to enforce affirmative covenants b/c: reqs continuing ct supervision. Affirmative obligation, unlimited in time resembles a feudal service or perpetual rent + puts a clog on titles.

Touch and Concern1) Common Law Test: to run with the land, the promise must benefit/burden the land and

not the parties individually.*- Restrictive covenants and affirmative covenants to pay money to be used in

connection with maintaining land, touch and concern land.Rest. 3.1: Servitude is valid unless it is illegal, unconstitutional or violates public policy. Servitudes that violate PP include: Arbitrary, capricious or spiteful; Unreasonably burdens a fundamental constitutional right; Unreasonable restraint on alienation or trade; unconscionable Negative covenants (like restricting flag display) might satisfy.

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3) Scope of Covenants Hill (AIDS home permitted to remain in a single family residence area) – removal violated FHACourt held it is residential b/c purpose of group was to provide a normal family atmosphere.Definition of family not defined in covenant and thus ambiguous. Law finds in favor of free enjoyment of property. Holds that family means unrelated individuals b/c of PP reasons.

Shelley - covenant made by private individuals to exclude sale based on race.H/R: Ct holds covenant among private individuals violates 14th A (FHA not yet made)Negative covenants uses to land not user.Covenants do not run with RAP. RAP = future interests + covenant = present interest.

4) Termination of Covenants : Expiration; Release; Abandonment; Merger; Estoppel; Prescription; Condemnation; Recording; Changed Conditions

Changed ConditionsModification: Covenant won’t be modified even if the value of the restricted parcel is reduced, if

- Original purpose has not been thwarted, and - Covenant remains of substantial value to the other homeowners (Western Land)- Holdouts : restrictive covenants will be enforced by injunction unless unconscionable

or oppressive (Rick v. West)

Rest. 7.10: Covenant may be modified when a change has taken place that makes it impossible as a practical matter to accomplish its original purpose (compensation for harm may be awarded)

Judicial Review of CovenantsOriginal Use Restrctions are valid unless arbitrary, burdens substantially outweigh benefits for all parties or if it violates public policy (Nahrstadt, Restatement 3.1)Later Adopted Covenants: Reasonableness (Nahrstadt) – b/c subsequent purchasers are not aware of earlier covenants. Business Judgment Rule - considers whether board exercised its discretion in GF

Western Land – (shopping center cannot be built on residential land b/c of covenant)Restrictive covenants will not be thwarted or rendered unenforceable as long as these covenants are still of real and substantial value to those homeowners living within the subdivision.* Covenants stand even though property has greater value if used for other purpose.

Rick v. West (owner refuses to modify covenant restricting land to single-family housing)Rule: By settled doctrine of equity, restrictive covenants in respect of land will be enforced by preventive remedies while the violation is still in prospect, unless the attitude of the complaining owner in standing on his covenant is unconscionable or oppressive.

Common Interest Communities – Usually in CICs any requirement of horizontal or vertical privity is met because the original purchasers are all in privity with the developer and subsequent purchasers are in privity with the original purchasers. Any requirement that a covenant touch and concern the land is usually satisfied. Negative covenants restricting use are almost always held to touch and concern, as are affirmative covenants to pay dues to a homeowners association.

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Nahrstedt (restrictive covenant in deed against keepings pets – ct finds it’s reasonable)H/R: A restriction contained in declaration of the common interest development will be enforced unless the restriction is arbitrary, unreasonable or violates PP.Chapter 11 – Legislative Land Use Controls: The Law of Zoning; Public Land Use Controls .

Framework of ZoningZoning Commission (experts): Composed of political appointees/volunteers; drafts zoning ordinance w/ guidance from professional planners. Local legislature enacts + amends zoning ordinance based on commission recommendations + in accordance with a comprehensive plan.Board of Adjustment grants variances

Euclid – Village passed zoning ordinance which significantly reduced its use and value for Realty (D). Realty sues claiming he was deprived of his property—unconstitutional taking.H: Under the circumstances here, the village’s ordinance is a valid exercise of police power. Realty failed to show that ordinance is discriminatory and has no rational basis

Zoning Restrictions: Aesthetics: Zoning is exercise of police power, legitimately used to protect property values and community character. (Stoyanoff); Single Family Residence: S. Ct upheld the constitutionality of a residential zoning ordinance that limited the number of unrelated individuals who may inhabit a dwelling: “A place where yards are wide, people few and cars restricted are legit guidelines in a land use project addressed to family needs.” (Belle Terre); Single family residence restriction does not qualify for occupancy exemption under FHA. (Edmonds.)

Ch. 12 – Eminent Domain ( + Problem of Regulatory Takings) –another way of land use control.

Eminent domain or taking – power of government to force transfers of property from owners to itself. Limited by 5th Amendment in that need just compensation. Justified by sovereignty argument and economic efficiency (prevents monopolies, etc).

Compensation – needed to serve the dual purpose of offering a substantial measure of protection to private entitlements, while disciplining power of the state, (check on eminent domain power). The Public Use Puzzle - Under what circumstances such government activities should be regarded as takings?

Kelo* - City took resident's property for private interests by means of eminent domain to further economic redevelopment of the area, claiming that the economic benefits constituted public use. H/R: Economic development constitutes a public use of property. Dissent – any lawful use of real private property can be said to generate some incidental benefit to public and corporations will benefit the most. Prof – both sides got entrenched in extremes; no chance for negotiation.

Takings Clause (5thA)- Nor shall private property be taken for public use w/o just compensation.

“Taken”: Physical takings or Regulatory takings (zoning)“Public Use” (Kelo) = public purpose. “Just Compensation” = only get market value. Other alternatives - get 10% over market value.