THE PROPERTY OUTLINE

I. What is Property?

In general, the law defines property as rights among people that concern things. Property consists of a package of legally recognized rights held by one person in relationship to others with respect to some thing or other objects.

Property & The Law

Legal PositivismLegal positivism promulgates that property rights arise only through government

Johnson v M’IntoshThe title to lands must be admitted to depend entirely on the law of the nation in which they lie. Conquest gives a title which the Courts of the conqueror cannot deny. Property rights are defined by the law.

Natural Law TheoryRights arise in nature as a matter of fundamental justice, independent of government. The role of government is to enforce natural law, not to invent new law.

John LockeDeclaration of Independence

Defining Property: What Types of Rights Among People?

Scope of Property RightsProperty rights are inherently limited. They exist only to the extent that they serve a socially acceptable justification.Property law is a process for reconciling the competing goals of individual owners and society in general.

Bundle of RightsProperty is a bundle of rights in relation to thingsUnder this approach, the most important sticks in the bundle are

1. The right to exclude2. The right to transfer and 3. The right to possess and use.

The rights in the bundle can be divided in other ways, notably by time and by person. These rights are not absolute nor a necessary component of property.

From Rights to RelationshipsThe law has increasingly recognized that property hold both rights and owe duties. Property is more accurately defined as relationships among people that concern things.

Defining Property: Rights in What Things ?

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All property is divided into two categories (1) real property and (2) personal property.

Real PropertyReal Property consists of rights in land and anything attached to land (building, signs, fences, trees). It included certain rights in the land surface, the subsurface (including minerals and groundwater), and the airspace about the surface.

Historically, property law was almost exclusively concerned with real property as control over land provided was the basis for political sovereignty, the foundation of social status, and the principal form of wealth.

Real property law became complex and arcane and personal property law remained relatively simple and straightforward.

Personal PropertyChattelsItems of tangible, visible personal property are called chattels. Virtually every moveable thing around is a chattel owned by someone with the exception of (1) body parts (2) wild animals in their natural habitat.

Intangible Personal PropertyRights in intangible things, such as stocks, bonds, patents, trademarks, copyrights, trade secrets, debts, franchises, licensees, and other contract rights, are classified as intangible personal property.

Jurisprudential Foundations of Property Law

The scope and extent of property rights turn on the underlying justification for private property. In American law, no single approach is accepted as the complete justification for private property & is best seen as a blend of several theories – although utilitarianism is the dominant theory.

First Occupancy (aka First Possession) [Blackstone]The first occupancy theory reflects the familiar concept of first in time: the first person to take occupancy or possession of something owns it. The first-in-time principle is the basic rule for determining the respective priority of competing title claims to real property All other things being equal, it offers a quick, clear, and inexpensive method to resolve competing claims to property rights and thereby avoid conflict.

NatureFirst occupancy theory seeks to explain how rights of private property arise in unowned natural resources. The custom of first occupancy ripened into permanent property rights.

Critiques of Theory

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1. While it helps to explain how property rights evolved, it does not adequately justify the existence of private property.

2. The first occupancy approach is counterproductive because it encourages the waste of natural resources conservation is impossible

Labor-Desert Theory [Locke]The labor desert theory posits that people are entitled to the property that is produced by their labor. One’s respective property rights arise as a matter of natural justice because they mixed their labor with unowned raw materials, not simply because they were first in time. Traces of the labor theory linger in American property law, often intermixed with first occupancy law {i.e. accession, adverse possession, good faith improver doctrine}

NatureThe labor theory assumes a world in a state of nature, without private property ownership. The theory proceeds in four basic steps1. Every person owns his body2. Thus, each person owns the labor that his body performs;3. So when a person labors to change something in nature for his benefit, he

mixes his labor with the thing and4. By this mixing process, he thereby acquires rights in the thing.

Critiques of Theory1. At best, the theory should permit a person to receive the value that his or her

labor adds to a thing, not title to the thing itself.2. The labor theory honors only first labor, not all labor.3. Assumes an unlimited supply of land and other natural resources.

Utilitarianism: Traditional Theory [Bentham]Utilitarian theory views property as a means to an end. Private property exists to maximize the overall happiness or utility of all citizens. Accordingly, property rights are allocated and defined in the manner that best promotes the general welfare of society.

NatureProperty and law are born together and die together. Before law was made there was no property; take away law and property ceases. In crafting property law, the role of the legislator was to do “what is essential to the happiness of society; when he disturbs it, he always produces a proportionate sum of evil.”

Critiques of Theory1. Utilitarian theory is effectively meaningless because it is impossible to assess

happiness. 2. It offers no guidance about how property rights should be allocated or defined. 3. As property rights are merely a tool used to engineer maximum happiness,

new socioeconomic conditions may require property rights be reallocated or redefined little stability

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Utilitarianism: Law and Economic Approach [Posner]Under this view, private property exists in order to maximize the overall wealth of society.

Defines property as rights to the exclusive use of valuable resources. The law enforces property rights in order to motivate individuals to utilize efficiently. An efficient allocation of resources is one which value – defined as an individual’s willingness to pay – in maximized. The key to efficient allocation is a truly free marked in goods and services. Accordingly, the principal role of property law is to foster voluntary commercial transactions among private parties.

NaturePresumes a world filled with economically rational actors, all constantly seeking to maximize their self interests. In this setting, an efficient property law system must have three central components;1. Universality all property is owned by someone2. Exclusivity The law recognizes an absolute right of an owner to exclude all

members of society from the use or enjoyment of the owned resource.3. Transferability Property rights are freely transferable so that a resource can

be devoted to the most highly-valued use.

Coase TheoremThe free exchange of property rights may be impaired by transaction costs (i.e. cost of investigating a potential purchase, negotiating a purchase contract). Property will eventually be devoted to its highest value use, regardless of how the property rights are initially allocated, if no transaction costs exist. Externalities – economic costs or benefits – caused by a person’s failure to consider the full impacts of his use of resources.

Critiques of the Theory1. One major concern is its assumption that social utility or value is

appropriately measured by willingness to pay. 2. Minimal government intervention championed by law and economics tends to

perpetuate the existing unequal distribution of wealth. 3. Economic analysis cannot answer the ultimate question of whether an efficient

allocation of resources would be socially or ethically desirable.

Liberty/Civic Republican Theory [Jefferson]Liberty theory argues that ownership of private property is necessary for democratic self government.

NatureProperty rights provided citizens with the economic security that allowed independent political judgment. Critiques of the Theory

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Scholars are skeptical of the original assumption that property ownership is essential to political freedom. Liberty theory seems to support a redistribution of wealth from the rich to the poor.

Personhood Theory [Hegel]Personhood theory justifies private property as essential to the full development of the individual. Thus, a person should have broad property rights over such things.

NaturePeople define themselves through objects. The emotional and psychological link between a person and certain things is so great that a person should be able to control the thing through enhanced property rights. Critiques of the TheoryExplanation not a justification & offers little guidance on the allocation or definition of property rights.

II. Acquisition by Capture

The Capture Rule As a general principle, no one own wild animals, ferea naturae, in their natural habitat. Under the common law capture rule, property rights in wild birds, fish, and other animals are obtained only through physical possession. The first person to capture of kill a wild animal acquires title to it. This rule does not apple to domesticated or tame animals (domitae naturae).

Pierson v. Post Established the actual capture rule as the American standard for acquiring title to wild animals. Rejected probable capture rule. Symbolized the struggle between the jurisprudence theories – formalism [mechanical application of common law rules] & instrumentalism [law should serve as an instrument of social change].

Defining Capture

Tests to Determine Possession1. Certain Control2. Reasonable Prospect3. Custom4. Equitable Division5. Pre-Possessory Interest

The Actual Capture Standard / Certain ControlA hunter who actually kills or captures a wild animal, and immediately takes possession of it, acquires title. It also suggests that the mortal wounding of an animal by one not abandoning his pursuit may constitute capture.

Release or Escape after CaptureIn general, ownership rights end when a wild animal escapes or is relates into the wild. If an exotic animal escapes far from its native habitat, the exotic nature of

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the animal effectively puts others on notice someone else owns it. A captured animal that has the habit of occasionally returning to its captor (animus revertendi) is still considered property because it is in the law’s interest in motivating owners to tame wild animals for productive use outweighs the concern for certainty.

RationaleThe rule encourages the killing or capture of wild animals for the benefit of society consistent with the utilitarian theory. The rule creates a clear, bright line standard for determining ownership {avoid disagreements, efficient mechanism for resolving any disputes, certainty of title encourages owner to invest time and energy in making the captured animal more useful for society.

CriticismsEncourages destruction of wild animals. Advocates of the law and economics movement observe that the capture rule results in over-intensive hunting. Because no person can control hunting by others, each person has an incentive to protect his or her individual self-interest by killing animals as rapidly as possible. Under such a system, conservation of wild animals for prudent, long-term human use is impossible.

Probable Capture Standard / Reasonable ProspectA pursuing hunter with reasonable chance of success has sufficient possession to create ownership. Turns on the likelihood that the pursuer did actually obtain possession not that the pursuer would obtain possession.

Role of CustomCustom may help the courts define capture, as reflected in Ghen v. Rich, concerning property rights in whales.

Ghen v. RichThe court can look to custom and usage within an industry to determine the rule of law regarding the ownership of property. If a fisherman does all that it is possible to do to make the animal his own, that is sufficient to obtain possession.

Popov v. HayashiA person who catches a baseball that enters the stands is its owner. A ball is caught if the person has achieved complete control of the ball at the point in time that the momentum of the ball and the momentum of the fan while attempting to catch the ball ceases. A baseball, which is dislodged by incidental contact with an inanimate object or another person, before momentum has ceased, is not possessed. Incidental contact with another person is contact that is not intended by the other person. The first person to pick up a loose ball and secure it becomes its possessor

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Equitable DivisionWhere more than one party has a valid claim to a single piece of property, the court will recognize an undivided interest in the property in proportion to the strength of the claim.

Pre-Possessory InterestWhere an actor undertakes significant but incomplete steps to achieve possession of a piece of abandoned personal property and the effort is interrupted by the unlawful acts of others, the actor has a legally cognizable pre-possessory interest in the property. That pre-possessory interest constitutes a qualified right to possession which can support a cause of action for conversion.

The degree of control necessary to establish possession is contextual. A finder may be protected by taking such constructive possession of the property as its nature and situation permit.

Popov v. HayashiWhere more than one party has a valid claim to a single piece of property, the court will recognize an undivided interest in the property in proportion to the strength of the claim.

Rights of LandownersRatione soliOwner of land has constructive possession of wild animals on the owner’s land; landowners are regarded as the prior possessors of any animal ferae naturae on their land, until the animals take off. But the landowner did not acquire title to such an animal until and unless it was captured, whether by the landowner

Right to Exclude HuntersThe trespass doctrine provides an American landowner with protection similar to ratione soli. A landowner may bar hunters and others from trespassing on his land. This doctrine gives hunters the exclusive opportunity to capture wild animals on the property.

Keeble v. HickeringillAn individual may not maliciously prevent another from capturing wild animals in pursuit of his trade.Competing fairly to attract the animals is allowed.

Regulation by GovernmentState and Federal RegulationsModern game laws and other government restrictions have substantially eroded the capture rules. States routinely regulate hunting and fishing within their borders to protect wild animals on behalf of the public in general. When hunting is permitted, government regulations are usually consistent with the capture rule.

No Propriety Ownership of Animals

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State and federal governments do not own wild animals. Thus, most courts hold that government entities are not liable to damage to private property caused by wild animals.

Problems and Examples“Relativity of title” – Prior possession, no matter how obtained, is good against those below in the chain

Example: Trespasser steals something, then someone steals it from him. He still has possessory rights against the thief, but not the original owner

Oil and gas – own all resources under one’s land and to a certain height above the landCoase Theorem: parties have incentive to reach the most efficient outcome and will generally negotiate to achieve that resultTexas holds that if its under multiple properties, a 2/3 vote to share it creates a shared regimeMost states hold you only get as much as is under your property

WaterEastern states: Riparian rule, land owners on a river must share with othersWestern State: Prior appropriation, first to use it beneficially gets rights

III. Acquisition by Creation

Any expenditure of mental or physical effort, as a result of which is created an entity, vests in the person who brought the entity into being, a proprietary right to commercial exploitation of that entity, whose right is separate and independent from ownership of that entity.

Early common law provided little protection for intellectual property. Absent some special common law or statutory right, a mans property is limited to the chattels which embody his invention. The general common law rule is that property rights cannot exists in an idea.

International News Services v. Associated Press Rule: The news is not just the substance, but also the particular form of words in which the author has communicated it, and is protected1. The work that goes into writing a unique article must be respected {reap what sown}2. Allowing INS to copy would destroy the incentive for entrepreneurship3. Cheaper news might be in public interest, but destroying incentive to gather it is not

Cheney Brothers v. Doris Silk CorporationRule: In general, property rights cannot exist in an idea. In the absence of some recognized right at common law, or under the statutes…a man’s property is limited to the chattels which embody his invention. Others may imitate these at their pleasure.

Moore v. Regents of University of California

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Rule: Conversion (interference with property) requires ownership of that property. A person retains no ownership interest in body parts after removal, and thus cannot sue on a theory of conversion.

IV. Acquisition by Find

Goal is to award possession in a fashion that facilitates the true owner reclaiming the propertyThree factors that dominate judicial analysis of finders rights:

1. The presumed intent of the original owner, reflected in the categories of found property

2. The identity of the competing claimants; and3. The location where the item if found.

Who is a Finder?The first person to take possession of lost or unclaimed property is a finder.

Possession requires both (1) an intent to control the property and (2) an act of control.

In the case of nonportable objects – the finder must assert an act of control that is appropriate to the situation.

Categories of Found PropertyThe common law recognizes four basic categories of found property:

1. Abandoned Property2. Lost property3. Mislaid property4. Treasure Trove

Found property is assigned to one of these categories according o the presumed intent of its original owner. Broadly speaking, if a found object does not fit within these categories, it is not subject to the law of finders.

Abandoned Property Property is abandoned when the owner intentionally and voluntarily relinquishes all right, title, and interest in it. When an owner releases his or her rights through abandonment, the property becomes unowned. The first person who takes possession of abandoned property acquires title that is valid against the world, including the prior owner.

Lost PropertyProperty is deemed lost when the owner unintentionally and involuntarily parts with it through neglect or inadvertence and does not know where it is.As a general rule, an owner retains title to lost or mislaid property found by another.

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Why law seeks to encourages the productive labor an owner undertakes to acquire property; security of property; alternative rules would encourage theft

Mislaid PropertyProperty is mislaid when the owner voluntarily puts it in a particular place, intending to retain ownership, but then fails to reclaim it or forgets where it is.As a general rule, an owner retains title to lost or mislaid property found by another.

Treasure TroveConsists of gold, silver, currency, or the like intentionally concealed by an unknown owner for safekeeping in a secret location. Common law - The finder acquires title to lost property that is superior to the claims of all other persons except the owner. Modern courts – seeking to deter trespass – increasingly aware treasure trove to the landowner, either treating as an object embedded in the soil or as mislaid property.

Rights of Finders Against Third Persons

Finders KeepersThe finder acquires title to lost property that is superior to the claims of all other persons except the owner. EXCEPTION - The owner or occupant of land where the object is found often receives title, despite the finder’s claim.

Amory v. DelamirieRule – By finding and possessing a lost item, the finder of lost property has a title superior to all but the true owner.

Finders gain title, but not ownership. Finder becomes “bailee” and has responsibility not to waste his finding

Superiority of title – priority is given to finders over all but the true owner. WHY?

To make it easier for the true owner to track down and reclaim the propertyTo maintain order in society and prevent further wrongdoingMay be difficult to prove ownership, easier to prove prior possession

Rights of Finders Against LandownerModern court – seeking to deter trespass by would be finders – tend to vest title in the person who owns or occupies the land where the object is found. Location of ObjectIn general, objects found either within a house or embedded in the soil on private land are awarded to the landowner, not the finder. Such objects are were already in constructive possession of the landowner before the fine. Focuses on the reasonable expectations of the parties {A landowner probably reasonably expects to own objects within their house or under their land while visitors should have no expectation}

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Hannah v. PeelRule – A landowner must physically occupy the land in order to have superior title to lost property found on land. Courts look at reasonable expectations of parties.

Status of FinderThe status of the finder plays an important role in determining relativity of title. Lawful occupants with broad rights to use and enjoy the land are more likely to be successful plaintiffs. If the finder is an employee (gardener) or present at the land for a special purpose (mailman), the claim of the landowner normally prevails.A trespassing finder acquires no rights in found objects, unless the trespass is merely trivial or technical.

Rights to Objects Found in Public PlacesA valuable object left in a public place such as a store or bank is usually considered mislaid property and awarded to the owner or occupant of the premises, not the finder. The court treats the object as mislaid property that has be entrusted to the custody of the owner or occupant.

McAvoy v. MedinaRule – An object found in a public place is treated as mislaid property and title is vested to the owner of the premises, not the finder, on a theory of constructive possession. The landowner is deemed a bailee, and is obligated to use reasonable care for the safe keeping of the object until the owner should call for it. [American Rule]

Finders StatutesAdopted by many, but not all, statesREQUIRES the finder to turn the property in to proper authorities. If the true owner does not reclaim the property within a requisite waiting period, the finder becomes the true owner. If the true owner does reclaim it, the finder is entitled to a finder’s fee

Purposes1. Creates a central “lost and found” to facilitate the true owner’s retrieval of the property2. Assuring the finder some compensation encourages finders to turn in the property3. Eliminates having to try to discern the intention of an unknown true owner

V. Adverse Possession

In general, an occupant acquires title to land by adverse possession if his possession is 1. Actual 2. Exclusive3. Open and Notorious

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4. Adverse or hostile under a claim of right5. And continuous, 6. For the statutory period.

Compliance is usually measured by the conduct of an average or reasonable owner given the location, nature, and character of the land.

Actual Possession The adverse possessor must take actual possession of the land.

Majority ApproachUnder the majority view, this element requires that the claimant must physically use the particular parcel of land in the same manner that a reasonable owner would. The acts necessary to satisfy this requirement vary from parcel to parcel, depending on the nature, character, and location of the land, and the uses to which it may be devoted.

Minority ApproachStatutes in ten states – including California, Florida, and New York, specify the particular conduct that constitute actual possession. When adverse possession is premised on a claim of right, the claimant must cultivate, improve, or substantially enclose the property. The claimant who holds color of title may also meet the actual possession requirement by cutting firewood or timber for fences.

Color of Title Exception – Constructive PossessionIn general, a claimant can acquire title only to the land he or she actually occupies. A special rule applies if the claimant has color of title. Color of title exists when an adverse possessor has a claim to the land based on a defective document that purports to transfer title, such as an invalid deed or will. The claimant with color title who has actual possession of party of the land described in the deed or other document is deemed to be in constructive possession of the entire parcel.

Exclusive PossessionThe adverse possessor must hold exclusive possession. Possession must not be shared with either the true owner or the general public. Absolute exclusivity is not required. The claimant’s possession must be as exclusive as would characterize an owner’s normal use for such land. In order to interrupt the claimant’s exclusive possession, the owner must retake possession of the property in a manner that is suited to its condition. If two adverse possessors simultaneously take possession of the same piece of land, the courts normally rule that they will acquire title as tenants in common.

Open and NotoriousThe claimant’s possession must be open and notorious. The acts of possession must be so visible and obvious that a reasonable owner who inspects the and will receive notice of an adverse title claim. Activities that establish open and notorious possession are dependent on the circumstances but activities such as residing on the land, building fences or other improvements, or cultivating crops are almost always sufficient.

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Van Valkenburg v. LutzSome states have statutes that require specific kinds of acts for adverse possession. NY statutes provide that if the claimant does not enter with color of title, adverse possession can only be claimed where the land is “protected by a substantial inclosure” or “usually cultivated or improved.” Thus, in NY, a person without color of title would have to show that a hunting cabin is a usual improvement and that taking sand and gravel was a usual cultivation.

Adverse or Hostile Possession Under Claim of RightWhat state of mind must the adverse possessor have? There are three different approaches on this issue.

Objective Test Majority ViewIf the possessor uses the land as a reasonable owner would use it – without permission from the true owner – this element is satisfied.Asks Did the true owner authorize the possession?If the possession is unauthorized and the other standard criteria are satisfied – adverse possession is established. The adverse possessor’s subjective belief about who owns the land is irrelevant.The possessor need not prove a rightful title claim or any actual intent to claim title at all.

Why? The occupant’s conduct – regardless of intent – affords notice to the true owner. The objective standard provides the usual benefits of a bright line standard.

Good Faith Test Minority ViewThe adverse possessor must believe, although a mistaken belief, in good faith that he owns title to the land. Claim of right standard – the adverse possessor must have a title claim that he subjectively believes is rightful.

Why?A method of curing minor title defect and thus protecting the title of the intended owner.

Intentional Trespass Test Minority ViewThe adverse possessor must (1) know that he does not actually own the land and (2) subjectively intend to take title from the true owner.

Boundary Line Disputes

Majority View – Most jurisdictions apply the objective test in this situation.

Mannillo v. Gorski

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Rule – When the encroachment of an adjoining owner is of a small area and the fact of an intrusion is not clearly and self-evidently apparent to the naked eye but requires an on-site survey for certain disclosure, the encroachment is not open and notorious. In that case, the statute of limitations will run against the owner only if the owner has actual knowledge of the encroachment.

Innocent improver doctrine – Under modern law, a good faith improver of a neighbor’s lot may let the encroachment remain if the owner pays damages to the improver, or may give te improver the option of selling the land at fair market value

Minority View – Maine Doctrine A minority of jurisdictions hold that if the possessor is mistaken as to the boundary and would not have occupied or claimed the land if he had known the mistake, the possessor has no intention to claim title and adversity is missing. In order to prove hostility in a boundary line dispute, the adverse possessor must intend to claim title to all the land up to a specific line whether or not it is the true boundary. If the adverse possessor mistakenly believed that they own the land up to the boundary, they lack the claim of right required for hostility under this view.

Continuous PossessionThe claimant must hold continuous possession during the statutory period. The required continuity is measured by the location nature and character of the land. The claimant’s acts of possession need only be as continuous as those of the reasonable owner. The occupant’s continuous possession may be interrupted by actions of the true owner. If the owner reenters the land and retakes possession in open and notorious manner, the required continuity and exclusivity ends.

TackingSuccessive periods of adverse possession by different persons may be combined to satisfy the statutory duration requirement if they are in privity with each other. Privity arises when one claimant transfers possessory rights to another, usually by deed, devise, or intestate succession. No privity exists between successive trespassers.

e.g. ExampleBecause the requisite possession required to successfully claim by adverse possession is possession and dominion as ordinarily marks the conduct of owners of property of like nature and condition, seasonal occupancy will not defeat a claim of adverse possession.When several successive purchasers received record title to tract A under the mistaken belief that they were acquiring tract B immediately contiguous thereto, and when possession of tract B was transferred and occupied in a continuous manner for more than 10 years by successive occupants, sufficient privity of estate is present to permit tacking and thus establish adverse possession as a matter of law.Howard v. Kunto

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Government Entity as OwnerAt common law, land owned by a government entity was immune from adverse possession. Federal lands are subject to a statutory version of adverse possession.

Why? Government lands are held in trust for all citizens. Thus, the goal that adverse possession seeks to serve – the overall welfare of society – is best protected by retaining public ownership, not by transferring title to a private owner.

Landlord as OwnerIn general, the tenant who holds possession of leased premises with permission of the landlord cannot assert adverse possession. However, the statutory period for adverse possession will begin if the tenant unequivocally repudiates his status as a tenant and claims title to the land.

Future Interest Holder as OwnerA future interest is immune from adverse possession until the interest holder is entitled to immediate possession of the land. Until that point, the interest holder has no right of action against the adverse claimant.

Policy Rationales for Adverse Possession Adverse possession is premised on utilitarianism; the doctrine seeks to maximize societal happiness in a broad sense.

Limitations ModelMost authorities view adverse possession as a specialized statute of limitations to recover possession of land. Under this approach, the traditional elements of adverse possession determine when the statute of limitations period begins. This level of possession gives fair notice to the supposed owner the occupant’s apparent claim of title. Two key policies underpin the limitations model

1. The limitations period minimizes the risk of judicial error in determining title. 2. The limitations model guarantees the stability of the possessor’s title, which in

turn encourages the possessor to place the land in optimum productive use.

Administrative ModelViews adverse possession as a useful method for curing minor title defects, thereby protecting the title of the possessor. Mistakes often occur in the conveyancing process. Under this approach, the elements are not intended to give notice. Rather, they demonstrate the possessor’s belief that he owns title to the land.

Development Model The law of adverse possession is best explained as a tool to facilitate economic development. Under this model, the elements test whether the adverse possessor or the true owner have placed the land in productive use.

Efficiency/Personhood Model

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Focuses on avoiding injury to the adverse possessor. Over time, the adverse possessor grows progressively attached to the land, while the absentee owner becomes increasingly detached. Accordingly, at some point, it becomes appropriate to shift title to the adverse possessor on principles of efficiency, personhood, or reliance.

Adverse Possession of Personal Property

Under the traditional view, one whose possession of a chattel is1. Actual2. Adverse 3. Hostile4. Exclusive5. Open and notorious, and

New Jersey rule (majority): Statute of limitations beginsWhen true owner knows who has his property or by the exercise of due diligence could know who has the property.Burden of proof is on the plaintiff to show that it would not have been possible to find who had the chattelNew Jersey is a very equitable state, tries to be fair

Discovery Rule

The discovery rule provides that, in an appropriate case, acause of action will not accrue until the injured party discovers, or by exercise of reasonable diligence and intelligence should have discovered, facts which form the basis of a cause of action.

Factors Considered;1. Whether the original possessor used due diligence to recover chattel2. Whether at the time of the alleged theft there was an effective method to alert

the world of theft3. Whether there was a way to put a reasonably prudent purchaser on

constructive notice that someone other than the possessor was the true owner of the chattel.

Under the discovery rule → the burden is on the owner as the one seeking the benefit of the rule to establish facts that would justify deferring the beginning of the period of limitations.

The important point is not that there has been a substitution of possessors, but that there has been a continuous dispossession of the former owner. Subsequent transfers of the chattel may affect the degree of difficulty encountered by a diligent owner seeking to recover his goods.

To that extent → subsequent transfers and their potential for frustrating diligence are relevant in applying the discovery rule.

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General rule – you can only transfer as good of a title that you have Exception - merchants

New York rule (minority): Statute of limitations does not begin until Owner actually knows who currently possesses the property AND asks for it backFinder can make the clock start running applies concept of laches: Possessor gets it if BOTH(1) owner did not diligently seek to discover who had her property AND if she had acted diligently she would have (2) The possessor relied to his detriment on the owner’s failure to discover and reclaim the property. Burden of proof is on the non-owner

Due Diligence/Discovery RuleMajorityThe statute of limitations does not being to run on the owner of stole goods as long as the owner continues to use due diligence in looking for them. The conduct of the owner, not the possessor, is controlling. The cause of action thus accrues when the owner first knows or reasonably should know through the exercise of due diligence where the stolen goods are

e.g. ExampleRule: Under the discovery rule the statute of limitations on an action for replevin begins to run when the owner knows or reasonably should know of her cause of action and the identity of the possessor of the chattel.O’Keeffe v. Snyder

The best way to acquire possession would be to advertise for “found property” so they could have found it. Additionally, for NY rule, you must have some reliance in it

6. Continuous for the 7. Appropriate statue of limitations period

In most states, the limitations period begins running when the adverse possessor obtains possession of the chattel.

Recovery of stolen property – debated common law rule is that a thief enjoys right to possession of stolen good(s) that is superior to all except the true owner

1. Replevin – actual property2. Conversion – damages3. Trespass on chattel, trespass on property to rob

VI. Acquisition by Gift

A gift is a voluntary, immediate transfer of property without consideration from one person (donor) to another (donee).

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Balancing test between policies of certainty and donor autonomy

Gift Inter VivosOrdinary gift made by one living person to another

There are three requirements for a valid gift inter vivos;1. Intent (the donor must intend to make an immediate gift)2. Delivery (the donor must deliver the gift) and3. Acceptance (the donee must accept the gift)

IntentThe donor must intent to make an immediate transfer of ownership to the donee. The correct test is “whether the maker intended the gift to have no effect until after the maker’s death or whether he intended it to transfer some present interest.As long as the evidence establishes an intent to make a present an irrevocable transfer of title or the right of ownership, there is a present transfer of some interest and the gift is effective immediately.

Evidence of IntentThe statements and actions of the donor usually provide the best evidence of intent. Intent may be inferred from the donor’s act of giving possession of the item to the donee, the nature and value of the item, the relationship between the parties, and other circumstances.

LimitsIf the donor intents the fit to take effect in the future, it is a nullity that confers no rights on the donee. If a condition precedent must be fulfilled before a gift becomes effective, no immediate transfer has occurred and thus no gift will be found. An invalid conditional gift may be enforceable as a valid contract. However, a gift that takes immediate effect may be subject to a condition subsequent.

e.g. ExampleRule: As long as the evidence establishes an intent to make a present and irrevocable transfer of title or the right of ownership, there is a present transfer of some interest and the gift is effective immediately.Gruen v Gruen

Delivery Focus is on possession – not donor intent – Must have some objective act

Constructive notice is adequate when the evidence of donative intent is concrete and undisputed, when there is every indication that the donor intended to make a present transfer of the subject-matter of the gift, and when the steps taken by the donor to effect such a transfer must have been deemed by the donor as sufficient to pass the donor’s interest to the donee.

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The delivery rule requires that the delivery necessary to consummate a gift must be as perfect as the nature of the property and the circumstances surroundings of the parties will reasonably permit.

When evidence of donor intent is compelling, many courts will ignore delivery; if evidence is weak, however, courts may rely on a lack of delivery to invalidate a gift.

Methods of Delivery1. Manual / Actual Delivery2. Constructive Delivery3. Symbolic Delivery4. Delivery to Third Person

1. Manual Delivery / Actual DeliveryTraditional Rule – In order to constitute delivery of an item of personal property, the donor must physically transfer possession of the item to the donee.

IssuesSome items are too bulky/cumbersome to be handed overImpractical when the donee receives less than the complete title to the itemIntangible personal property cannot be manually delivered

2. Constructive DeliveryConstructive delivery occurs when the donor physically transfers to the donee the means of obtaining access to and control of the property, most commonly by handing over a key. All jurisdictions permit constructive delivery when manual delivery is impractical or impossible.

Courts are more likely to find constructive delivery adequate to support a gift when the evidence of donative intent is concrete and undisputed, there is every indication that the donor intended to make a present transfer and when the steps taken by the donor must have been deemed by the donor as sufficient to pass the donor’s intent.

3. Symbolic DeliverySymbolic delivery occurs when an object that represents or symbolizes the gift is physically handed to the donee. In practice, this type of delivery is almost always effected by giving the donee some type of writing. Most jurisdictions permit symbolic delivery when manual delivery is difficult. The modern trend is to recognize an informal writing as symbolic delivery even when manual delivery is possible.

4. Delivery to a Third PersonDelivery of a gift may be effected through a third party intermediary. The status of the third party intermediary turns on the donor’s intent. Thus, the donor’s express statement of intent at the time of the transfer to the intermediary is usually controlling. When intent is unclear, it must be judicially determined from the circumstances of the case. A donor may use a third party delivery to create a valid conditional gift.

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e.g. ExampleRule: When an item was present and could have been manually delivered, constructive delivery is insufficient to constitute a gift causa mortis.Newman v Bost

AcceptanceCourts universally presume acceptance of a gift that is unconditional and valuable to the donee unless the donee expressly refuses to accept it.

Gift Causa MortisA gift causa mortis may be defined as a gift of personal property in anticipation of the donor’s imminently approaching death. The donor may revoke a gift at any time before his death. If the donor does not die from the anticipated peril, the gift is automatically revoked as a matter of law.

A valid gift causa mortis requires;1. Intent 2. Delivery3. Acceptance4. Expectation of Imminent Death

Donor’s Anticipation of Imminent DeathGenerally occurs at the donor’s death bed but also extends to other situations where death may be weeks or even months away. Normally involves the donor confronting the substantial certainty of death in the near future from a particular illness or affliction. A gift made by a donor contemplating suicide meets this requirement. A donor’s natural apprehension of death in the distant future does not support a gift causa mortis.

Criticisms of DoctrineLacks the formal safeguards that the law requires for a valid will. Thus, the courts often view the doctrine with disfavor, fearing that it encourages fraud, perjury, and undue influence.

VII. Public Trust Doctrine

Navigable waters and closely related lands are held by the sovereign in trust for use by the public in such activities as commerce, fishing, and navigation. If the sovereign conveys such property to a private owner, it remains encumbered by the trust, and the rights of the owner are accordingly limited.

Under the public trust doctrine, the public is entitled to use the wet sand beach below the median. Thus, when the state conveys such property to a private owner, the title is subject to the public’s preexisting rights under the public trust doctrine, including the right to use the wet-sand beach.

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What property is subject to the public trust doctrine?To doctrine clearly applies to ocean waters, tidal wetlands, the wet sand ocean beach between the high and low tide lines, navigable bodies of fresh water such as lakes and rivers, the beds of navigable bodies of waters, fresh water wetlands.

What uses does the doctrine extend to?Traditionally – Commerce, fishing, navigationMost states have extended the doctrine to swimming, hunting, bathing, boating, and other recreational usesThe public trust doctrine also encompasses the preservation of lands in their natural state to serve as open space, wildlife habitat, and ecological units for scientific study.

VIII. Nuisance

The common law divided nuisances into two categories (1) private nuisances and (2) public nuisances.

Nuisance Per Se v Nuisance Per AccidensNuisance Per Se An act or condition that is always considered to be a nuisance, regardless of surrounding circumstances {most commonly an activity prohibited by law}

Nuisance Per Accidens An act or condition that is only a nuisance because of the surrounding circumstances, such as location or manner of operation.

Temporary v Permanent NuisanceIn general, a permanent nuisance exists where the nuisance is certain or likely to continue in the future due to the physical nature of the condition, the cost of abatement, or other factors; any other nuisance is deemed temporary. Important distinction in determining (1) appropriate measure of damages & (2) the running of the statute of limitations.

Private NuisanceA private nuisance is a nontrespassory invasion of another’s interest in the private use and enjoyment of land.

Elements of Private Nuisance1. Intentional2. Nontrespassory3. Unreasonable and4. Substantial interference5. With the Use and Enjoyment of the plaintiff’s land.

e.g. Example

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Rule: A nuisance exists when a person’s conduct substantially interferes with another’s interest in the use and enjoyment of hisMorgan v. High Penn Oil

Intentional InterferenceA person’s harmful conduct is deemed intentional if either (a) acts for the purpose of causing the harm or (2) he knows that the harm is resulting or is substantially certain to result from his conduct.

Nontrespassory Conduct other than physical entry.

Unreasonable InterferenceTraditional Approach – Look at gravity of harm – factors considered; character of the neighborhood, nature of the wrongful conduct, its proximity to the plaintiff’s property, its frequency, duration, and the nature and extent of resulting injury to the plaintiff.

Balance of Utilities An intentional interference is deemed unreasonable if the gravity of the harm outweighs the utility of the actor’s conduct. A court must compare (a) the utility of the conduct with the (b) the gravity of the harm that this conduct causes to the plaintiff.

Five factors bear on the gravity of harm1. The extent of the harm (degree/duration)2. Character of the harm (physical damage/ personal discomfort)3. Social value of the plaintiff’s use and enjoyment4. The suitability of the particular use or enjoyment invaded to the character of the

locality5. The burden on the plaintiff of avoiding the harm

Factors bearing on the utility of defendant’s conduct1. Social value of the primary purpose of the defendant’s conduct2. The suitability of the conduct to the character of the locality 3. The impracticability of preventing or avoiding the interference

Severe Harm TestUnreasonable if the harm caused by the conduct is serious and the financial burden of compensating for this and similar harm to others would not make the continuation of the activity not feasible

Substantial InterferenceThe law does not concern itself with slight inconveniences or petty annoyances there must be a real and appreciable invasion of the plaintiff’s interests

Interference with Use and Enjoyment of Land

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Element met through physical injury to the land itself, tangible personal property, sickness, substantial discomfort or annoyance to people physically present

Coming to the NuisanceTraditional Rule The law protected first in time useModern Rule Consider plaintiff’s coming to the nuisance as one factor in determining reasonableness

Remedies for Private Nuisance

Traditional Rule The traditional remedy in private nuisance cases was an injunction against the offending conduct.

Balance of Equities ApproachAll other things equal, the court will issue an injunction only if the resulting benefit to the plaintiff is greater than the resulting damage to the defendant. The public interest in continuing or preventing the defendant’s conduct is usually weighed in the balance. If an injunction is refused, the plaintiff receives compensatory damages.

Boomer v. Atlantic Cement Co.Adopted the emerging modern rule – provided a third option – the payment of permanent damages in lieu of an injunction – essentially by shifting the balancing standard from liability analysis into remedy analysis.

Spur Industries v. Del E. Webb Compensated injunction – Another remedial option is to issue an injunction against the nuisance, but require the plaintiff to compensate the defendant for costs of compliance. Because the plaintiff was the direct cause of the problem, the court exercised its equitable powers to require the plaintiff to indemnify the defendant for the costs of moving or shutting down. Outlier – has not been followed by others.

Public Nuisance A public nuisance is an unreasonable interference with a right common to the general public. Virtually any conduct that unreasonably interferes with the public health safety, welfare, or morals may constitute a public nuisance. Factors that bear on unreasonableness include:

1. Whether the conduct involves a significant interference with the public health, safety, peace, comfort, or convenience

2. Whether the conduct is prohibited by a statue, ordinance, or regulation and 3. Whether the conduct is continuing or permanent and has a significant effect upon

the public right.The typical plaintiff in a public nuisance action is a city or other governmental entity that brings suit on behalf of the general public and seeks damages, an injunction, or an abatement order. A private party may only sue on this theory if a special injury {harm of a kind different from that suffered by the general public} can be demonstrated.

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IX. Possessory Estates

Analysis of possessory estate (1) Identify who holds the possessory estate – Words of Limitation(2) Identify which possessory estate has been created based on duration – Words

of Purchase

Focus on terminology, the words of limitation necessary to create the different estates, and the different permissible combinations of possessory estates and future interests.

Words of purchase – “to A” – identify the person who now owns the estate

Words of limitation – “and his heirs” Serve to signal the type of estate received [do not create property rights in anyone else]

There are three ways to convey a property interest;1. A property interest is transferable if, while the owner of the interest is alive, he

can freely transfer it to any third party.2. A property interest is devisable if, upon the owner’s death, he can freely will it in

his last will and testament to any third party.3. A property interest is inheritable if the heirs of the owner of the interest can

inherit the property interest if the owner dies without a valid will.

Freehold estates – estates that are equated with ownershipThe technical distinction between the three basic freehold estates is premised on duration. Each type of estate creates different rights and duties in its holder.

1. Fee simple absolute2. Fee simple determinable 3. Fee simple subject to a condition subsequent4. Fee simple subject to an executory limitation5. Life estate absolute 6. Defeasible life estate7. Fee tail

AbsoluteEstates restricted only by the standard limitation that defines that category of estate.

DefeasibleAn estate subject to a special provision included in the language of the deed, trust, or will that creates the estate that may end the estate prematurely if a particular future event occurs.

Fee Simple Absolute“To A and his heirs…”

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O A - FSA

Characteristics Fee simple is a freehold estate whose duration is potentially infinite. The estate may be terminated by escheat. In a few states, escheat is seen as ending a fee simple absolute and other estates. In most states, the escheat process simply transfers a continuing estate to the state as another new owner.

CreationModern American law assumes that an owner normally intends to convey the entire estate rather than a lesser estate – thus unless language clearly evidences transferor’s intent to create lesser estate, the conveyance will be construed as transferring a fee simple estate.

Rights and Duties of Estate OwnerThe fee simple absolute is freely transferable, devisable, and inheritable.Fee simple absolute provides an owner with the maximum quantum of rights recognized under American law. No future interest – no duties to other interest holders.

1) Fee simple absolute owner is entitled to use of land forever2) Fee simple absolute owner is entitled to sole possession, which generally allows

the owner to exclude all other persons from the land.3) Fee simple absolute owner may transfer rights

Restraints on Fee Simple EstatesCourt uniformly hold that any total or absolute restraint on alienation of a fee simple estate (whether absolute or defeasible) is null and void. A promissory restrain by the grantee is generally held unenforceable.

Fee Simple DefeasibleThe defining characteristics of the fee simple defeasibles is that they may last foreverIf the language of a conveyance states out like a fee simple absolute, but there is an express condition subsequent after the fee simple words of limitation qualifying the fee simple, the possessory estate is one of the fee simple determinable.

Fee simple words of limitation + express condition subsequent = fee simpleDefeasible

There are three fee simple defeasibles 1. Fee simple determinable2. Fee simple subject to a condition subsequent3. Fee simple subject to an executory limitations

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Identifying a Fee Simple Defeasible(1) Ask who holds the future interest? Grantor or third party?

If original grantor holds future interests either FSD or FSSCSIf 3rd party holds future interest FSSEL

(2) If the grantor retains the future interest – how does the condition subsequent cut short the fee simple – automatically or only upon the grantor’s actions?

Automatically? FSDOption to terminate FSSCSAmbiguous FSSCS

Where the grantor retains the future interest, and the words of limitations are ambiguous, the courts favor construing the estate as a FSSCS.

Rights and Duties of Defeasible Estate OwnerThe owner of a defeasible estate generally has virtually the same tights and duties as an owner of the parallel absolute that he cannot commit waste.

Judicial OppositionVarious judicial mechanisms are employed to limit the scope of defeasible estates. The granting language must indicate a clear intent to impose a condition on the estate. Words of covenant or promise merely create a contractual obligation. Where ambiguous language could be construed as creating either an absolute or defeasible estate, courts uniformly follow a constructional preference for an absolute estate.

Fee simple Determinable / Fee Simple Determinable With an Executory Limitation“To A and her heirs as long as/so long as/during/until/while”

O A – FSD O FSA

Fee simple defeasible where the grantor retains the future interest with the intent to terminate the fee simple automatically the moment the express qualifying condition occurs. The hallmark of a fee simple determinable is language of time or duration.The only future interest that will follow a fee simple determinable is a possibility of reverter

Fee Simple Subject to Condition Subsequent“To A and her heirs, but if/ however, if/provided that/ right of reentry clause

O A – FSSCS O FSA

Fee simple defeasible where the grantor retains the future interest with the intent to create an option to terminate

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Characterized by words of event or conditionThe only future interest which will follow a fee simple subject to a condition subsequent is a right of entry/power of termination.

Fee Simple Subject to an Executory LimitationFee simple defeasible where a third party retains the future interestRegardless of language, FSSEL terminates automatically upon the occurrence of the express condition subsequentThe only future interest which will follow a fee simple subject to an executory limitation is an executory interest

Fee tail“To A and the heirs of his body”Freehold estate whose duration is measured by the lives of the lineal descendants of a designated person – endures as long as the transferee’s bloodline continues

CreationRestricts land so that they only pass to lineal descendants of the first take. Fee tail male – feel tail female – fee tail special

Accompanying Future InterestsTwo future Interests are created by a fee tail

1. One in the lineal descendants of transferee for as long as transferee’s bloodline continued and

2. One in transferor that becomes possessory when transferee’s bloodline ended.All living lineal descendants of transferee received a remainder.

Rights and Duties of Estate OwnerThe holder of fee tail is entitled to the use and enjoyment of the land involved, but not to the extreme of committing waste – cannot unreasonably interfere with the ability of the future interest holders to enjoy their rights.

Statutory LimitationsThe majority of states interpret fee tail language as creating fee simple absolute in the first taker. In some, the fee tail is preserved for one generation, and is then converted to fee simple absolute in the issue of the first taker. In other states, fee tail language creates a life estate in the first taker, followed by a vested remainder in fee simple absolute in the first taker’s issue.

Life EstateFree hold estate whose duration is measured by the lives of one or more specified person.The holder of the life estate is called the life tenant. Life estate pur autre vie – Life estate is measured by the life of a person other than the grantee

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Creation – The holder of a fee simple can create a life estate only by using language that clearly reflects this intention

Accompanying Future Interest –Reversion if future interest remains with grantorRemainder if future interest is granted to a third party

Rights and Duties of Life Estate OwnerThe life tenant is entitled to the use and enjoyment of land, including any rents and profits it produces – but cannot commit waste. A life tenant has a restricted right of transfer.

X. Future InterestsA future interest is the present right to possess the puberty in the future. Every possessory estate other than a fee simple absolute must be coupled with a future interest

Analyzing InterestsThere are three steps to analyzing each future interest

1. Identify which future interest it is – state the name of the future interest2. Identify who holds the future interest & 3. State the duration of the future interest

(1) Identify Which Future Interest It IsThe name of the future interest turns primarily on

1. Which possessory estate it follows & 2. Whether the grantor or a third party holds the future interests

(2) Identify Who Holds the Future InterestWhere the future interest is express, the clause creating the future interest should contain words of purchase that indicate who holds the future interestIf there is no express language indicating to whom the future interest is granted, the courts imply that by default the future interest is retained by the grantor in fee simple

(3) Identify the Duration of the Future EstateExamine the express clause granting the future interest and look for words of limitation which indicate the duration of the interest if an when it becomes possessoryThe duration of a default future interest is in fee simple as a general rule

ReversionWhen an owner coveys an estate smaller than the estate he holds, he retains a future interest called a reversion

Possibility of ReverterWhen a transferor creates a fee simple determinable, the future interest retained is a possibility of reverter

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Right of EntryWhen a transferor creates a fee simple subject to a condition subsequent, the future interest retained is most commonly termed right of entry. Requires future interest holder to take affirmative action in order for estate to become possessory. RemainderA remainder is a future interest created in a transferee that is capable of becoming a possessory estate upon the natural termination of a prior estate created by the same instrument. Three components

1. The future interest must be created in a transferee2. Both the remainder and a prior estate must be created by the same instrument3. A remainder must be capable of becoming a possessory estate when the prior

estate naturally ends

Vested RemainderA vested remainder is a remainder that is (1) created in a living, ascertainable person and (2) not subject to any condition precedent.

Vested Remainder Subject to DivestmentA vested remainder that is subject to a condition subsequent. A condition precedent is an event that, according to the creating language, must occur before the remainder can become possessory. If the language first makes a conveyance then adds on a later condition it creates a condition subsequent.

Vested Remainder Subject to OpenThe vested remainder subject to open is a vested remainder in one or more ascertainable members of a class that may be enlarged by the addition of presently unascertainable persons

Transfer of InterestThe reversion is freely transferable. In most jurisdictions, the possibility of reverter and the right of entry are freely transferable. Some jurisdictions follow the common law approach but allow these interests to be conveyed inter vivos to the holder of the defeasible estate. The transfer of a future interest to a third party does not change the name of the affected future interest

Rights of Interest HolderPreventing WasteThe holder of a future interest can only enjoin actions that the prudent owner of a fee simple absolute estate would not have performed

Right to Eminent DomainTraditional Rule – One holding a possibility of reverter or right of entry receives no share of eminent domain proceeds

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Waste DoctrineThe waste doctrine restrains the present estate owner from acting in a manner that unreasonably injures the affected land and thus reduces the value of the future interest. The law presumes the original grantor intended the estate holder to pass on possession of the land to the future interest holder in approximately the same condition it was received. Two principal types of waste are recognized today (1) affirmative waste and (2) permissive waste.

Affirmative WasteAffirmative waste occurs when the voluntary acts of the present estate owner significantly reduce the value of the property. Mining – If an open mine existed when present owner took possession, its operation may be continue until the resource is totally depleted. The present estate owner may not open a new mine unless all affected future interest holders agree.

Timber Cutting – Life tenant may cute trees to the extent consistent with good husbandry – either to clear land for cultivation or to obtain firewood and building materials.

Permissive WastePermissive waste stems from inaction: the failure of the possessor to exercise reasonable care to protect the estateWill be found where the life tenant fails to repair a dwelling, pay property taxes and assessments, mortgage payments necessary to preserve the estate for the future interest holder

XI. Concurrent Ownership

SUMMARY OF CONCURRENT OWNERSHIPType of Tenancy

Definition Creation Termination

Tenancy in Common

Each tenant has a distinct, proportionate, undivided interest in the property. There is no right of survivorship.

To A and B. Only unity that is required is possession.

May be terminated by partition

Joint Tenancy

Each tenant has an undivided interest in the whole estate, and the surviving co-tenant has a right to the whole estate.

To A and B as joint tenants with the right of survivorship. Without survivorship it may be construed as a tenancy in common.Joint tenants must take;1. Identical interests2. From the same

The right of survivorship may be severed, and the estate converted to a tenancy in common by (1) a conveyance by one joint tenant (2) agreement by joint tenants (3) murder of one joint tenant by another or (4) simultaneous death of

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instrument3. At the same time4. With an equal right to possess

joint tenants. A joint tenancy can be terminated by partition (voluntary or involuntary)

Tenancy By the Entirety

Husband and wife each has an undivided interest in the whole estate and a right of survivorship.

To H and WMost states presume a tenancy b the entirety in any joint conveyance to husband and wife where the four unities are present.

The right of survivorship may be severed by divorce, mutual agreement, or execution by a joint creditor. Tenancy by the entirety cannot be terminated by involuntary partition.

Tenancy in Common

A tenancy in common is a form of concurrent ownership wherein each co-tenant is the owner of a spate and distinct share of the property, which has not been divided among the co-tenants. Each owner has a spate undivided interest in the whole. Tenancies in common can arise by an express conveyance or devise to persons as tenants in common or when persons inherit property from a descendent.

Right to possessionEach tenant in common has the right to possess and enjoy the entire property, subject to the same right in each co-tenant. One co-tenant can go into possession of the whole unless another co-tenant objects. The co-tenants can come to any agreement about possession they desire. If they are in conflict over possession, a court may order partition of the property or give some other remedy.

No right of SurvivorshipWhen a tenant in common dies, her interest passes to her devisees or heirs. It does not go to the surviving tenant in common.

Equal Shares Not NecessaryEqual shares are not necessary for a tenancy in common. It is presumed that the shares of the tenants in common are equal, but this presumption can be overcome by evidence that unequal shares were intended.

Same Estates Not NecessaryTenants in common can have different types of possessory estates.

Presumption of Tenancy in CommonUnder modern law, whenever a conveyance is made to two or more persons who are not husband and wife, they are presumed to take as tenants in common and not as joint tenants. This presumption can be overcome by evidence that a joint tenancy is intended.

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Joint TenancyA joint tenancy is a form of concurrent ownership wherein each co-tenant owns an undivided share of property and the surviving cotenant has the right to the whole estate. The right of survivorship is the distinctive feature of the joint tenancy. There is no limit on the number of persons who can hold together as joint tenants. On the death of each joint tenant, the property longs to the surviving joint tenants, the property belongs to the surviving joint tenants, until only one is left. The tenant who lives longest takes the property alone. Can be created in real or personal property.

Creation A joint tenancy can be created by will or deed, or by joint adverse possession. Joint tenancy does not arise where persons inherit property by intestate succession. Heirs always take as tenants in common. A joint tenancy can be created only be express words in an instrument indicating an intent to create a joint tenancy. The clearest way to create a joint in tenancy is to convey “To A and V as joint tenant with the right of survivorship, and not as tenants in common.” These words will create a joint tenancy, but anything less might not. The right of survivorship must be expressly provided for.

Fiction of One Entity By a common law fiction, joint tenants are regarded as composing on entity. Each joint tenant is siesed per my et per tout. In theory, then, each owns the undivided whole of the property; when one joint tenant dies, nothing passes to the surviving joint

Four Unities RequirementBecause joint tenants are seised of the undivided property as one fictitious entity, the common law requires that their interest be equal in all respects. The must take their interests at the same time, by the same instrument, with identical interests, and with an equal right to possess the whole property. If these four unities of time, title interest and possession

The Joint Tenancy Four Unities Requirement

Time – Interest of each joint tenant must vest at same timeTitle – All joint tenants must acquire title by the same deed or will, or by joint adverse possessionInterest – Interest of each joint tenant must be equal in an estate of one duration (identical interests)Possession – Each joint tenant must have right to possession as a whole

Unity of TitleConveyance to self – Because of the common law rule that ne person cannot convey to himself – where an owner wishes to create a joint tenancy they must use a straw person.

A straw person is a person not intended to have any beneficial interest in the property, who much convey as directed by the beneficially interested parties.

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Severance of Joint TenancyAny joint tenant can at any time destroy the right of survivorship by severing the joint tenant. Upon severance, the joint tenancy becomes a tenancy in common and the right of survivorship is destroyed. Severance occurs automatically when one or more of the four unities is severed.

[1] Conveyance by a Joint TenantEach joint tenant has the right to convey her interest. A conveyance of the tenant’s entire interest or share severs the joint tenancy with respect to that share. Either a conveyance to a third person or to another joint tenant severs the share conveyed from the joint tenancy. A deed to a third person severs the joint tenancy even though the other joint tenant does not know about the deed.

Contract to ConveyA contract by one joint tenant to convey her interest in the property, which is specifically enforceable in equity, may sever the joint tenancy. Under the doctrine of equitable conversion, the execution of a contract gives the buyer equitable ownership and converts the seller’s legal ownership into a contract right to receive the selling price. Thus, the unity of interest is severed in equity.

Contract by all tenantsA contract to convey land signed by all of the joint tenants has been held not to sever the joint tenancy.

Conveyance to SelfUnder common law, a joint tenant who wished to convey the tenancy to a tenancy in common had to convey to a straw person. Some recent cases have permitted a join tenant to unilaterally sever the tenancy by conveying her interest to herself without using an intermediary.

[2] Mortgage by joint tenant Jurisdictions are not in agreement over whether joint tenancy is severed when one joint tenant gives a mortgage on the joint tenancy is required. Courts divide between jurisdictions following the title theory of mortgages and those following the lien theory.

Title Theory statesAt common law, a mortgage has the effect of conveying the legal title to the mortgagee (money lender); the mortgagor (borrower) kept an equity of redemption entitling the mortgagor to get legal title back on payment of the mortgage (redeem the mortgage). Because a mortgage by a joint tenant conveys the legal title of the joint tenant, the mortgage destroys the unity of interests and severs the joint tenancy. It cannot be revived by the mortgagor’s paying off the mortgage. The title theory of mortgages still followed in a number of states, but in some of them the consequences have been whittled away by the equitable idea

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that the mortgagee holds title only for security purposes, and the courts reach the same results as in lien theory states.

Lien Theory StatesMost states hold that the mortgagee does not have legal little, but rather a security interest called a lien. Legal title remains in the mortgagor. In theory lien states, a mortgages does not sever the joint tenancy buy the states differ on whether the surviving joint tenant takes one half subject to the mortgage if the debt is not paid before the debtor joint tenant dies.

e.g. ExampleA mortgage given by one joint tenant does not sever the joint tenancy.The property right of a mortgaging joint tenant is extinguished at the moment of his death. Thus, the mortgage does not survive as a lien on the surviving tenant’s property.Harms v Sprague

Effect of Mortgage on Joint TenancyTitle Theory State Lien Theory State

Interest Held by Mortgagee (Lender)

Legal Title Security Interest (lien)

Interest Held by Mortgagor (Joint Tenant)

Equity of Redemption Legal Title

Effect Unity of Interest destroyed; joint tenancy severed

Joint Tenancy Survives

[3] Lease by Joint TenantOne joint tenant has the right to lease her interest in the property, even over the objection of one joint tenant. Swartzbaugh v Sampson

Common Law – Lease SeversConveyance of a leasehold destroyed the unity of interest because the lessor joint tenant only had a reversion in the property whereas the other joint tenant has a fee simpleModern view – Lease does not SeverThere is no severance by one joint tenant giving a leasehold, and the surviving joint tenant takes the whole. But the cases are split over whether the surviving joint tenant takes one half subject to the lease.

[4] Agreement among joint tenantsJoint tenants can agree among themselves that one tenant has the right to exclusive possession. Such an agreement does not sever the joint tenancy. Joint tenants can make an agreement to hold as tenants in common. Such an agreement severs the joint tenancy even though none of the four unities is broken. In this situation, intention, rather than the four unities, controls.

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[5] Murder of one joint tenant by anotherIf one joint tenant murders another, most courts hold that this effects a severance, converting the joint tenancy into a tenancy in common.

[6] Simultaneous DeathThe Uniform Simultaneous Death Act provides “Where there is no sufficient evidence that two joint tenants or tenants by the entirety have died otherwise than simultaneously the property so held shall be distributed one half as if one had survived and one half is if the other had survived.

Avoidance of ProbateThe joint tenancy is a useful estate, particularly between husband and wife because it avoid probate.

Joint Bank AccountsIn a joint and survivor bank account, either party on the account can withdraw the amount deposited and the survivor takes whatever is remaining in the account when the other joint tenant dies. If a depositor is aging or sick and needs another person to pay bills, the depositor may open a joint banking account intending it to be a convenience account. If a convenience account is the depositor’s intent, one can lawfully write checks during the depositor’s life to pay bills but has no rights of survivorship. Turns on intent of depositor

PresumptionThe presumption is that by signing a joint tenancy card at the bank, which provides survivorship rights.

Lifetime rightsThe majority of states hold that the joint account belongs during the lifetime of the parties in proportion to the net contributions of each to the sums on deposit.

Tenancy by the EntiretyA tenancy by the entirely is a form of concurrent ownership that can be created only between a husband and wife, holding as one person.

Five Utilities of Tenancy by EntiretyTimeTitle

InterestPossessionMarriage

Fiction of One PersonHusband and wife re considered to be one person. As ne person, they do not take the estate by the moieties; rather both – holding as one – are seised per tout et non per my.

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Severance by One Tenant ImpossibleNeither tenant acting alone can sever the four unities and destroy the right of survivorship.

Creation of Tenancy by the Entirety[Modern Presumption]Where the conveyance is unclear, most states that retain the tenancy by the entirety presume that a conveyance to a husband and wife creates a tenancy by the entirety. This presumption can be rebutted by evidence that some other estate was intended. In a few state that have the tenancy in entirety, a husband and wife, are presumed to take as tenants in common or sometimes joint tenants.

Rights of Tenant During Marriage [Married Women’s Property Act]Adopted by all states. They provide that a married women is able to receive, hold, manage, and dispose of real and personal property as if she were a single woman. The MWPA did not specifically mention the wife’s interest in a tenancy by the entirety.

Act forbids either spouse to convey separately The courts in the majority of states recognizing the tenancy by the entirely hold that the equality intended by the MWPA can be achieved in this way (1) give both husband and wife equal rights to possession during marriage and (2) forbid both husband and wife, acting alone, to convey his or her interest (thus, with respect to voluntary transfer and creditors, putting the husband in the same position the wife had at common law. Under this view creditors of one spouse cannot reach the property because neither the husband nor the wife acting alone can transfer his or her interest.

Rule: The interest of a husband or a wife in an estate by the entirety is not subject to the claims of an individual’s creditor during the joint lives of the spouses.Sawanda v Endo

Act gives wife same rights as husband hadSome courts hold the MWPA had the purpose of giving the wife the same rights as the husband had at common law. Thus, with respect to a tenancy by the entirety, the wife acquires the right to possession of one half and the right to convey her interest in the same manner as the husband could at common law. Neither spouse can destroy the right of survivorship of the other. Because each spouse can voluntarily convey his or her interest, a creditor of an individual spouse can seize and sell his interest.

Forfeiture under Drug LawsCourts have held that the government is in the same position as a creditor of the drug dealing spouse and can reach whatever interest a creditor can reach.

Rights and Duties of Co-TenantsThe rights and duties of co-tenants are more or less the same regardless of the type of co-tenancy.

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Possession by one CotenantEach co-tenant is equally entitled to the possession and enjoyment of the entire co-tenancy property. No co-tenant may exclude another co-tenant from any part of the property.

Agreement by PartiesCo-tenants can agree among themselves that one co-tenant has the right to exclusive possession. A private agreement does not sever the unity of possession nor does it sever a joint tenancy.

Partition Any tenant in common or joint tenant has the right to bring a suit in partition. This is an equitable processing in which the court either physically divides or sells the common property, adjusts all claims of the parties, and separates them. The judicial remedy of partition terminates the co-tenancy and divides the common property. Partition is not available to tenants by the entirety because neither spouse can destroy the right of survivorship of the other spouse.

Partition in KindThe court may order physical partition of the property into spate tracts if that is feasible. Once the land is physically partitioned, each party owns her tract alone in fee simple. If the separate tracts are not equal in value, the court will require one tenant to make a cash payment, called owelty, to the other tenant to equalize the values

e.g. ExampleRule: A partition by sale may be ordered only when: (1) the physical attributes of the land are such that a partition in kind is impracticable or inequitable; and (2) the interests of the owners would be better promoted by a partition by sale.Delfino v Vealencis

Marital Rights

AlimonyAlimony (support) is no longer owed by the husband to the wife for her life. The husband has the obligation of supporting the wife for a limited period of time until she can reenter the job market and support herself. CALLED REHABILATIVE ALIMONY

Property DivisionAt common law, the wife had no claim to the husband’s property. In common law property states today, a wife is entitled to equitable distribution of a fractional share of the husband’s property. The equitable distribution statutes vary. Some authorize the court to divide all property of the spouses, regardless of the time or manner of acquisition. Other authorize division of all property acquired during marriage. Equitable division requires the court to consider a wide range of factors, including the length of the

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marriage, the earning capacity of the spouse, and the childcare responsibilities of one spouse.

Professional DegreesThe court has divided three ways

[1] Not divisible property Increased earning power from a professional degree is not property and therefore is not divisible on divorce.

e.g. ExampleRule: An educational degree is not encompassed by the concept of property and does not constitute marital property.In Re Marriage of Graham

[2] Reimbursement alimony givenSome courts have held that the appropriate remedy is reimbursement alimony. This is a restitution remedy, which returns to the supporting spouse the cost of her investment in the other spouse’s degree.

[3] Divisible PropertyNew York has held that earning power increased during the marriage by acquiring a degree or celebrity status is property subject to division. Thus, the supporting spouse is awarded a share in the value of her investment in human capital

Community PropertyCommunity property rests on a notion that husband and wife are a marital partnership that both contribute to the material success of the marriage, and that both should share equally in material acquisition. Community property is owned in equal undivided shares by the spouses. Community property consists of earnings of either spouse during the marriage and property acquired through earnings. Property owned by either spouse before marriage or acquired after marriage by gift, descent, or devise is separate property.

XII. Rights of OwnersRight to UseThe owner of the property has the right to use it as she sees fit, subject to some rights in neighbors and to police power regulation.

Right to TransferAn owner ordinarily has the power to transfer her property by gift, sale, inheritance, or will. The right to transfer is important because it encourages people to bargain with each other and transfer the property by agreement to the person who values it most highly. In making property transferable, property law furthers a market economy. Restrictions on transfer of property imposed by some former owner may be held void under the rule prohibiting restraints on alienation. The law requires a very convincing justification for making property inalienable.

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Caveat EmptorThe old rule was that the seller did not have to disclose any defects in the condition of the premises unless a defect was fraudulently concealed. The buyer had the opportunity to inspect and caveat emptor (let the buyer beware) applied.

Exceptions Even in those states still professing to apply caveat emptor, exceptions are blossoming

e.g. ExampleWhere a seller publicized her house locally as inhabited by poltergeist, it has been held that an out of town buyer who did not know of the reputation for poltergeists can rescind the contract of sell. The seller created the situation, and a physical inspection was highly unlikely to reveal the poltergeists.Rule: Where a condition which has been created by the seller materially impairs the value of the contract and is undiscoverable by or unlikely to be within the scope of knowledge of a purchaser exercising due care, nondisclosure constitutes a basis for rescission as a matter of equity. Stombovsky v. Ackley

Duty to DiscloseCaveat emptor is still applied in some states but most states no hold that the seller must disclose all known material defects to the buyers. Many states have statutes requiring sellers to give buyers a written statement disclosing facts about the property.

e.g. ExampleRule - When the seller of a home knows of facts materially affecting the value of the property that are not readily observable and are not known to the buyer, the seller is under a duty to disclose the defects to the buyer.Johnson v Davis

Off-Site ConditionsSome courts have required sellers to reveal the existence of off-site conditions that might affect market value, like hazardous waste nearby, a noisy neighbor, or crimes in the neighborhood.

Real Estate BrokersIf the seller has a duty to disclose, a real estate broker also has a duty to disclose to a buyer material defects known to the broker but unknown to and unobservable by the buyer.

Right to ExcludeIt is generally accepted that the essence of private property is the right of the owner to exclude others – the right to exclusive possession. Courts have traditionally granted great protection to this right.

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e.g. ExampleEvery person has a right to the exclusive enjoyment of his own property for any purpose which does not invade the right of another personJacque v Steenberg Homes

Real property rights are not absolute. Hence, private or public necessity may justify entry upon the lands of another.

But see, e.g. ExampleThe ownership of real property does not include the right to bar access to governmental services available migrant works.State v Shack

Right to Buy

Recording SystemAll states today have recording acts providing for recordation of documents affecting land title. Prior to these acts, the common law rule gave legal effect to conveyances in accordance with the time of execution.

Recording ActsStatutes were enacted to require some sort of recordation to give notice to the world that title to property had been conveyed, and thus to put subsequent purchasers on guard. Such statutes set up a system that permits the recordation in each county of any deed (or other instrument affecting title) to property in that county.*NOTE Recordation is only an issue when there is more than one grantee contesting title. Recordation is not essential to the validity of a deed as between he grantor and the grantee.

IndexingThe recorder indexes the deed by entering a notation in the index book showing in which deed book the deed can be found reproduced in full. The usual index system includes an index for grantors and an index for grantees; tract indexes exist in a few localities.

Grantor/Grantee IndexIn the grantor index, entries are made chronologically, as instruments are filed, under the name of the grantors, listed alphabetically. The entry will include first the grantor’s name, then the name of the grantee, then a description o the property, and the type of instrument, and finally a reference to the volume and page of the deed books where the recorder’s copy of the instrument can be found. The grantee will contain the identical information, except that it will be entered alphabetically under the name of the grantee.

Tract IndexIn urban areas where land has been platted and broken down into blocks and urban lots, the recording office may keep a tract index. Entries are made under block and lot number.

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All instruments are indexed on a page that delays only with the lot to which the instrument related.

Types of Recording Acts1. Race Statutes

Under a race statute, as between successive grantees to the same land, priority is determined solely by who records first. Whoever wins the race to record prevails over a person who has not recorded or who subsequently records. Notice is irrelevant.

2. Notice Under a notice statute, a subsequent bona fide purchaser prevails over a prior grantee who fails to record. The subsequent purchaser wins under a notice statute if he has no actual or constructive notice of a prior claim at the time of the conveyance.

3. Race NoticeUnder a race notice statute, in order for a subsequent purchaser to win, he must both be without notice and win the race to record.

Examples of Recording StatutesType of Statute Typical Language EffectRace No conveyance or mortgage

of an interest in land is valid against any subsequent purchaser whose conveyance is first recorded.

Grantee who records first prevails

Notice No conveyance or mortgage of an interest in land is valid against any subsequent purchaser for value without notice thereof, unless it is recorded.

Subsequent bona fide purchaser (i.e. for value without notice) prevails

Race Notice No conveyance or mortgage of an interest in land is valid against any subsequent purchaser for value without notice thereof whose conveyance is first recorded.

Subsequent bona fide purchaser (i.e. for value without notice) who records first prevails

RecordationProper recordation gives the grantee the protection of the recording system. After recordation, all persons who thereafter take an interest in the land have constructive notice of the existence and contents of the recorded instrument, and no subsequent purchase without notice can arise. In race notice jurisdictions, recordation protects the grantee from prior unrecorded claims as well as eliminates the possibility of a subsequent

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bona fide purchaser. A deed is valid between the grantor and the grantee if it is delivered. Recordation raises a rebuttable presumption that the instrument has been validly delivered and that it is authentic, but if forged or not delivered, recordation will not validate it. Recordation does not protect a subsequent purchaser against prior interests that have arisen by operation of law.

Effect of Failure to RecordIf a person does not record and thereby come within the protection of the recording act, the common law rule of prior in time, prior in effect is applicable.If a person does not record, the person leaves in her grantor, the power to defeat the deed by executing a subsequent deed in favor of a bona fide purchaser.

Suit Against Double-Dealing GrantorIf a person fails to record and loses title to a subsequent purchaser, the person may sue her grantor who conveyed twice, and recover under the theory of unjust enrichment the amount that the received from the subsequent purchaser. The grantor, exercising the power left in him by the unrecorded deed, is selling the prior purchaser’s property, and the grantor holds the proceeds as a constructive trustee for the prior purchaser.

What Can be RecordedPractically every kind of deed, mortgage, contract to convey, or other instrument creating or affecting title to property can be recorded. A judgment or decree affecting title to property can also be recorded. And, even before a judgment, where a pending lawsuit may affect a title to property, any party to the action can record a lis pendens (notice of pending action) which will effectively put third parties on notice of all claims pending in the laid suit.

Indexing Under Misspelled NameTraditional Rule – Through the application of the doctrine of idem sonans (if the name as written sounds the same as the pronunciation of the correct name, it refers to the correct person), recoded names pronounced substantially the same as the correct ones gave constructive notice to subsequent purchasers.

Mortgages

Terminology

Mortgagor – The borrower or debtor is the mortgagor.

Mortgagee – The lender is the mortgagee

Equity – The borrower’s interest is called the equity (short for equity of redemption)

Deficiency Judgment – If, on foreclosure sale, the land does not bring enough to pay the debt, the lender can sue the borrower on the note for the deficiency. A judgment for this

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deficiency, collectible out of the general assets of the borrower, is called a deficiency judgment.

Amortized Payment Mortgage – The typical home mortgage is a mortgage for 25 or 30 years with even monthly payments over the period. The monthly payments are calculated so as to return principal as well as interest to the lender of the period of the mortgage.

Second Mortgage – A mortgage given second in time, with notice of the earlier mortgage, is called a second mortgage. The second mortgagee’s rights are subject to the rights of the first mortgagee. The second mortgagee has a right to the proceeds only after the first mortgagee is paid off.

Foreclosure – A judicial proceeding that orders the property sold at public sale, the equity of redemption barred, the debt paid, and any excess proceeds given to the mortgagor.

History of MortgagesBorrower conveyed land to lender in fee simple subject to a condition subsequent. If the loan was repaid on the agreed date, the lender would convey fee simple to the borrower. The condition subsequent was called a provisio for redemption. On default, the mortgagee was the absolute owner. Equity intervened to give borrowers a right to redeem at any time, even after the agreed date. Equity took the approach that the borrower should be treated as the owner in equity and the mortgage should be deemed no more than a device to secure the debt. The right to redeem was called the equity of redemption. Equity gave the lender the right to foreclose the right of redemption

Nature of the Mortgage TransactionThe mortgage transaction consists of two documents (sometimes combined into one):

1. The NoteThe note is a document that evidences the debt. The note is a personal obligation of the borrower, and the lender can sue the borrower on the note if the borrower does not pay. Sometimes called the debtors bond.

2. The MortgageThe mortgage is the agreement that the land will be sold if the debt is not paid and the lender reimbursed from the proceeds of the sale. The mortgage gives the lender security.

Transfer of the Mortgagor’s InterestPurchase Subject to Mortgage Assumption of Mortgage

Definition If the sale is subject to the mortgage, the new buyer takes the land subject to the lien on it, but the new buyer is not personally liable on the debt.

If the new buyer assumes the mortgage, she becomes personally liable to it.

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Rights If the debt is not paid, the mortgagee can foreclose on the land, but the mortgagee cannot sue the new buyer on the debt. The original mortgagor remains liable on the debt.

The mortgagee can sue either the new buyer or the original mortgagor, both are subject to a deficiency judgment. If the mortgagee elects to sue the original mortgagor, the original mortgagor can sue the new buyer, who assumed the mortgage, for the debt or foreclose upon the land.

Can the mortgagee sue the buyer?

No YesCan the mortgagee foreclose on the mortgage lien and sell the property?

Yes Yes

Statutory Period of RedemptionIn many states, by statute borrowers have a period of time after judicial foreclosure during which they can redeem from the purchaser at foreclosure sale. Do not confuse the statutory right to redeem the property from the purchaser at the foreclosure sale with the judicially created right of redemption, which is cut off at the foreclosure sale.

Due on Sale ClauseA due-on-sale clause provides that, at the mortgagee’s election, the entire mortgage debt is due n sale of the mortgagor’s interest

Deeds in Lieu of ForeclosureWhen a mortgagor cannot pay its debt, he or she can always sell the property and pay off the loan

Judicial DecisionsCourts have set aside foreclosure for inadequacy of price where the price is so low as to shock the conscience of the court. And they may scrutinize the sale to make certain tat proper notice was given and other safeguards complied with. Or the court may hold that a private foreclosure sale must use commercially reasonable methods for producing a fair price.

Inadequacy of Foreclosure Sale PriceAll jurisdictions adhere to the rule that mere inadequacy of the foreclosure sale price will not invalidate a sale, absent fraud, unfairness, or other irregularity.

Standards for Invalidating A Foreclosure Sale Based on Price1. Shocks the Conscience Standard

Inadequacy of the sale price is an insufficient ground unless it is so gross as to shock the conscience of the court, warranting an inference of fraud or imposition.

2. Grossly Inadequate StandardIn the absence of some other defect in the foreclosure process, the price must be grossly inadequate before a sale may be invalidated

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Under either standard, unless other foreclosure defects exist, it is extremely difficult to get a sale set aside on mere price inadequacy. Where other facts are present, such as chilled bidding, unusual hour of sale or any other indicia of unfairness, courts do set sales aside.

Murphy v. Fin. Dev. Corp. RulesIn his role as a seller, the mortgagee’s duty of good faith and due diligence is that of a fiduciary. A mortgagee must exert every reasonable effort to obtain a fair and reasonable price under the circumstances, even to the extent, if necessary, of adjourning the sale or of establishing an upset price below which he will not accept any offer. What constitutes a fair price, or whether the mortgagee must establish an upset price, adjourn the sale, or make other reasonable efforts to assure a fair price, depends on the circumstances of each case. Inadequacy of price alone is not sufficient to demonstrate bad faith unless price is so low as to school the judicial conscience. The duties of good faith and due diligence are distinct and any inquiry as to their breach calls for a separate consideration of each. In order to constitute bad faith there must be an intentional disregard of duty or a purpose to injure. The issue of lack of due diligence is whether a reasonable man in the lenders place would have adjourned the sale. A finding that the mortgagee had, or should have had knowledge of his ability to get a higher price at an adjourned sale is most conclusive evidence of such a violation of due diligence and good faith. The requirement that the sale be conducted in a reasonable manner, including the advertising aspect, requires that the person conducting the sale use the ordinary methods of making buyers aware that are used when an owner is voluntarily selling his land. In a case where bad faith is found, where the mortgagee’s conduct amounts to more than mere negligence, the awarding of damages may be based on the fair market value – the difference between the fair market value of the subject property and the price obtained at the sale. Where the mortgagee fails to exercise due diligence, the proper assessment of damages is the difference between a fair price for the property and the price obtained at the foreclosure sale.

Reasoning The substantial amount of equity which plaintiffs had in their property, the knowledge of the lenders as to the apprised value of the property, and the plaintiff’s efforts to forestall foreclosure by paying the mortgage arrearage within weeks of the sale, all support the master’s conclusion that the lenders had a fiduciary duty to take more reasonable steps than they did to protect the plaintiff’s equity by attempting to obtain a fair price for the property. They could have established an appropriate upset price to assure a minimum bid. They could have postponed the auction and advertised commercially by display advertising in order to assure that bidders other than themselves would have been present.

LEASEHOLD ESTATES

Summary of Leasehold Estates

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Type of Leasehold Definition Creation TerminationTenancy for Years Tenancy that lasts

for some fixed period of time

To A for 10 Years Ends at the point of the stated period

automatically without the

requirement of notice

Periodic Tenancy Tenancy for some fixed period that

continues for succeeding periods until either party gives notice of

termination

To A from month to month

OrTo A with rent

payable on the first day of every month

OrLandlord elects to

bind holdover tenant for an additional

term

Ends by notice from one party at least

equal to the length of the time periodEXCEPTION – Only 6 months

notice is required to terminate a year-to-

year tenancy

Tenancy at Will Tenancy of no state duration that lasts as long as both parties

desire

To T for and during the pleasure of L

OrTo T as many years

as T desires

Usually ends after one party displays

an intention that the tenancy should come to an end. May also end by operation of law

(death of one party, attempt to transfer

interest)Tenancy at Sufferance

Tenant wrongfully holds over after the termination of the

tenancy

B’s lease expires, but B continues to

occupy the premises

Terminated when landlord evicts the tenant or elects to hold the tenant to

another term.

The 1866 Civil Rights Act provides All Citizens of the United States shall have the same right, in every State and Territory, as is enjoyed by white citizens thereof to inherit, purchase, lease, sell, hold, and convey real and personal property. 42 U.S.C. §1982The Act bars all racial discrimination, private as well as public, in the sale or rental of property

Fair Housing ActThe Fair Housing Act makes it unlawful to refuse to sell or rent a dwelling to any person because of race, color, religion, national origin, sex, disability, or familial status.In addition to prohibiting discrimination in renting or selling, the Act prohibits advertising or making any public statement that indicates any discriminatory preference.

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ExemptionsThe FHS provides that private clubs, dwellings for religious organizations, and certain persons are exempt from the act.

Single Family DwellingA person leasing or selling a dwelling she owns is exempt if she

(1) Does not own more than three such dwellings(2) Does not use a broker and(3) Does not advertise in a manner than indicates her intent to discriminate

Small Owner-Occupied Multiple UnitA person is exempt if she is offering to lease a room or an apartment in her building of four units or less, one of which she occupies and she does not advertise in a discriminatory manner – Mrs. Murphy’s Exception

Familial Status Exemption The FHA exempts from the familial status provisions

(1) Housing occupied solely by people 62 years of age or older and (2) Housing units at least 80% occupied by at least one person 55 or older

The units must have significant facilities and services specifically designed to meet the social or physical needs of older persons

Comparison of Civil Rights Act and Fair Housing ActCivil Rights Act §1982 FHA

Protection Bars racial or ethnic discrimination only

Bars racial and ethnic discrimination, and discrimination based on religion, national origin, sex, disability, and against persons

with childrenType of

PropertySale or rental of all property Sale or rental of dwelling only; also

includes advertising for sale or rental of dwelling

Exemption

None Private clubs, religious organizations, qualifying owner of 1 to 3 single family dwellings, qualifying owner-resident of

building with 4 or fewer units, qualifying senior citizen housing

Landlords Duty to Deliver PossessionLegal Right to PossessionThe landlord has the duty to transfer to the tenant at the beginning of the tenancy the legal right to possession.

Actual PossessionEnglish Rule – Majority

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In most jurisdictions, the landlord has the duty to deliver to the tenant actual possession as well as the right to possession at the beginning of the term. If the previous tenant has not moved out when the new tenant’s lease begins, and the landlord does not remove the person within a reasonable period of time, the landlord is in default.

Tenant’s RemediesThe tenant can terminate the lease and recover damages sustained by having to obtain quarters elsewhere. Or the tenant can affirm the lease, refuse to pay rent for the potion of the term during which he was kept out of possession, and recover damages. Damages include costs of ousting the holdover tenant, and loss of anticipated business profits that the landlord could have foreseen.

American Rule – MinorityIn some jurisdictions, the landlord has no duty to deliver actual possession at the commencement of the term, and hence not in default under the lease when the previous tenant continues to wrongfully to occupy the premises.

Remedies against Holdover TenantThe incoming tenant can sue to evict the holdover and recover damages. Or the incoming tenant can treat the holdover tenant as tenant for another term, with rent payable to the incoming tenant. Because the purpose of the holdover doctrine and penalty is to give the person with the tight to possession more clout to recover possession, it should extend to the incoming tenant with the right to possession.

Eviction of TenantThe landlord may with to (i) evict the tenant during the term of the lease for nonpayment of rent or for other cause or (ii) evict the tenant who holds over after the term expires.

Termination for Breach of CovenantAt common law, the landlord had no power to terminate a lease if the tenant did not pay rent. The landlord’s remedy was to sue for rent due. Statutes in most states now give the landlord power to terminate a lease for nonpayment of rent when due. Breach of another covenant by the tenant does not give the landlord power to terminate the lease and evict the tenant.

Lease provisionsIn view of the independent covenants rule, almost all leases contain express provisions authorizing the landlord to terminate the lease on breach of any covenant by the tenant. Forfeiture clauses are ordinarily construed as creating in the landlord an optional right of entry for breach of condition.

Actual vs. Constructive EvictionType Definition Remedies if Eviction

by LandlordRemedies if Eviction by Others

Actual Eviction - Total

Physical expulsion or exclusion from

Tenant may terminate lease, pay no more

If by the person with paramount title – same (may

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possession from possession of entire premises

rent, and collect damages

terminate lease and pay no more tent and collect damages)

Actual Eviction - Partial

Physical expulsion or exclusion from possession of part of the premises

Tenant may stay in possession and pay no rent until possession is restored

If by person with paramount title – tenant may terminate lease and seek damages, or sat in possession and pay proportionate rent

Constructive Eviction

Substantial interference with use and enjoyment of premises

Tenant must vacate in order to stop paying rent or receive damages

No remedy unless landlord has duty to permit nuisance or to control common areas

Covenant of Quiet EnjoymentA tenant has a right of quiet enjoyment of the premises, without interference by the landlord. This right arises from the landlord’s covenant of quiet enjoyment, which may be expressly provided in the lease. If not expressly provided, such a covenant is always implied in every lease. If breached it constitutes constructive eviction.

Landlord’s Duty to Provide Habitable Premises

Caveat LesseeUnder the common law, there is no implied covenant by the landlord that the premises are in tenable condition or are fit for the purposes intended. Before he purchases his states in land, the tenant is able to inspect the premises and thus protect himself. Unless the landlord gives an express warranty, the landlord has no duty to the tenant with respect to the condition of the premises. The tenant takes them as is.

Independent Covenants RuleEven if there is an express warranty or suitability, the tenant must overcome the independent covenants rule if the tenant wants to terminate the lease or be excused from rent. Under the independent covenants rule, the tenant is not excused from performance (paying rent) by the landlord’s breach, and the tenant’s remedy is to sue the landlord for damages.

Implied Covenant of HabitabilityThere is an implied covenant of initial habitability and fitness in leases of urban dwellings, including apartments. The dependent covenant doctrine applies and the tenant is relieved of his obligations when the landlord breaches the implied covenant of habitability.

Landlord’s Duty to Repair After Entry by Tenant

Common LawAt common law, the landlord has no duty to maintain and repair the premises.

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Landlord’s Covenant to RepairThe parties can by agreement put the duty to repair on the landlord. The landlord’s covenant to repair might be deemed independent of the tenant’s covenant to pay rent.

Implied Continuing Covenant of HabitabilityA large majority of courts have implied on the part of the landlord a continuing covenant of habitability in leases of urban dwellings. They have also held that the dependent covenant doctrine of contract law applies, and thus a violation by the landlord is a defense to an action by the landlord for the payment of rent. For the landlord to sue on the tenant’s covenant, the landlord must have performed on her own. Thus, under modern law in most states, a landlord has a duty of delivering habitable premises and of maintaining them in habitable shape.

RationaleThe tenant bargains for, and expects to get, continuing services, including maintenance, from the landlord.

Scope of WarrantyCourts differ on what standards are used to measure the landlord’s duty. Generally they fall into one of two groups.

Housing CodeSome courts hold that the standards are those of the housing code. If there is a substantial violation of the housing code, the landlord’s warranty is breached. Minor violations not affecting habitability do not constitute a breach.

Fit for Human HabitationSome courts require that the premises be fit for human habitation. A violation of the housing code is compelling evidence of breach, nut not conclusive. The standard as applied may be higher or lower than the housing code requirements.

Notice to LandlordThe landlord is not in breach until a reasonable time has passed after the tenant has given the landlord notice.

Remedies for BreachThe tenant’s covenant to pay rent is dependent on the landlord’s performance of her duties under the implied warranty of habitability. On breach by the landlord, the tenant has the following remedies.

Tenant’s Remedies for Breach of Implied Warranty of HabitabilityRemedy ResultTerminate Lease and Recover Damages

Tenant vacates the premises and recovers damages (i.e. relocation costs and the difference between the lease rent and cost of substitute of premises)

Continue Lease and Tenant remains in possession and recovers damages (rent

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Recover Damages reduction):1. The difference between the agreed rent and the fair

market value of the premises as they are –OR-2. The difference between the fair market value of the

premises if they had been as warranted and the fair market value of the premises as is

Continue Lease and Use Rent to Repair

Tenant remains in possession and may use a reasonable amount of rent to repair the defective conditions

Continue Lease and Withhold Rent

Tenant remains in possession and, after notice to the landlord, places his rent in escrow until the default is eliminated

Use as Defense Against Landlord’s Action for Rent

Tenant may use the landlord’s breach as a defense in an action by the landlord for rent

Waiver by TenantA waiver for the landlord’s obligations under the implied covenant of habitability is not permitted. The primary purpose of implying the obligation is to give tenants power to enforce the housing code, and it would be against public policy to permit tenants to waive that power.

Retaliatory EvictionSome cases hold that a landlord, acting under retaliatory motivation, cannot evict a tenant. Retaliatory action is a defense against eviction, even in a summary eviction proceeding.

SERVITUDES

The term “servitudes” refers generically to a family of five nonpossessory interests in land: 1.) the easement; 2.) the license; 3.) the profit; 4.) the covenant; and 5.) the equitable servitude.

Summary of Nonpossessory InterestsEasement Profit License Real

Covenant/Equitable Servitude

Definition A grant of an interest in land that allows someone to use another’s land

Right to take part of the land or a product of the land of another

Permission to go onto another’s land

Promise to do or not to do something on the land or related to the land

Example Owner of parcel A grants owner of parcel V the right to drive

O allows A to come onto O’s land to cut and remove

O allows the electrician to come onto his land to fix an outlet

O convey an adjoining parcel to A. A promises not to build a swimming pool on the property

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across parcel A timberWriting Generally

required.Exceptions –ImplicationNecessityPrescription

Required Not required*Note – An invalid oral easement is a license

Required. Exception – equitable servitude may be implied from general plan of development of residential subdivision

Termination Express termsMergerReleaseAbandonmentAlteration of dominant tenementEnd of necessityDestruction of servient tenementPrescriptionChange of Conditions

Same as easement

Usually revocable at will. May be irrevocable if coupled with an interest or if licensor estopped by licensee’s expenditures

MergerEstoppelHardshipChange of ConditionsAbandonmentEminent Domain

I. The Easement

1.) Defined The easement is defined as the grant of a non-possessory property interest in land. In easement parlance, the parcel that derives the benefit as a consequence of the easement is called the dominant tenement. The parcel that bears the burden of the easement is called the servient tenement.

2.) Easements can be affirmative or negative. Most easements are affirmative.

Affirmative – An affirmative easement gives its holder the right to do something on another’s land, called the servient tenement.

Negative – The negative easement entitles it holder to compel the servient landowner to refrain from doing something on that servient land that would otherwise, but for the negative easement, be permissible.

Negative easements are recognized for

1. Light2. Air

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3. Subjacent or lateral support4. Flow of an artificial; stream5. Easement of view or scenic easement ( recognized by modern law)

3.) An easement is either appurtenant to land or it is held in gross.

Appurtenant – The easement is appurtenant when it benefits the easement holder in his physical use or enjoyment of his land.

To have an easement appurtenant, two parcels of land must be involved:a.) there must be a benefited parcel, known as the dominant tenement, andb.) there must be a burdened parcel, known as the servient tenement.

The easement appurtenant is transferred automatically with the dominant tenement, regardless of whether it is even mentioned in the transfer.

Gross – An easement is in gross when it confers upon its holder only a personal or commercial gain, not linked to the use and enjoyment of his land.

The easement in gross is not transferable unless it is for commercial purposes.

CREATION OF EASEMENTNegative easements can only be created expressly, in a signed writing.

There are four ways to create an affirmative easement1. Express Grant

a. An easement over the grantor’s land may be granted to another. 2. Reservation

a. An easement may be reserved by the grantor over the land granted. If the grantor conveys land, reserving an easement, the land conveyed is the servient tenement.

i. Reservation in favor of grantor – An easement could not be reserved at common law because only rights issuing out of the land could be reserved. English courts eventually found a way around this restriction by inventing the regrant theory.

1. Under the regrant theory, a deed from O to A purporting to reserve an easement in O was treated as conveying a fee simple absolute to A, who by the same instrument regranted an easement to O

ii. Reservation in Favor of Third Party1. Common law – At common law, an easement could not be

reserved in favor of a third party. Likely to be held void. 2. Minority view – Some modern cases hold that an easement

may be reserved in favor of a third person. There is no reason to prohibit this in modern law. If the easement is invalidated, the grantee is unjustly enriched by getting more than she bargained for

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Willard v. First Church of Christ Scientist (1972)Facts: Petersen bought land which was subject to an easement reserved for the benefit of the defendant, a third party to the transaction. He then sold the land to Willard with no mention of the easement in the deed. Willard subsequently brought suit to quiet title.Issue: May a grantor reserve an easement for the benefit of a third party?Rule: A grantor’s intent is dispositive in the interpretation of his conveyance. Therefore, if there is enough evidence to indicate that the grantor intended to reserve an easement for the benefit of a third party the easement will be upheld.Note: Jurisdictions are split on this issue with some courts adhering to the old common law rule that a grantor may not reserve an easement for the benefit of a third party.

3. Implicationa. An easement by implication is created by operation of law, not by a

written instrument. An easement can be implied only in very narrowly defined circumstances indicating that the parties intended an easement or that an easement is a necessity. Implied easements are limited to two kinds (1) an intendment easement based on an apparent use existing at the time the servient tenement is separated from the dominant tenement and (2) an easement by necessity

i. Easement Implied from Existing Use - Quasi Easement If prior to the time at tract of land is divided into two lots, a use exists on the servient party that is reasonably necessary for the enjoyment of the dominant party and which the court finds that parties intended to continue after the tract is divided, an easement may be implied. An easement can be implied only over land granted or reserved when a tract is divided into two or more parcels.If an easement is implied in favor of the grantee, the easement is created by implied grant to the grantee. If an easement is implied in favor of the grantor, the easement is created by implied reservation to the grantee.

REQUIREMENTS FOR IMPLICATION1. Existing at Time of Tract Division – At the time the tract

is divided, a use of one part of the tract must exist from which it can be inferred that an easement permitting its continuation was intended.

a. Apparenti. The previous use must be apparent – It is

apparent if a grantee could, by a reasonable inspection of the premises, discover the existence of the use

b. Continuousi. The previous use must be continuous, not

sporadic. Based on the idea that the

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activities should be such that there is a great probability that the use was known to the parties at the time of the grant, from which an intent can be inferred that the parties wanted the use to continue

2. Reasonable Necessitya. The easement must be necessary for the enjoyment

of the claimed dominant tenement. i. In most jurisdictions, reasonable necessity,

and not strict necessity is required. This is a flexible requirement.Factors Considered

1. Cost and difficulty of establishing a new road or other alternate use

2. Whether the price paid reflect the expected continued use of the servient portion of the original tract

ii. Necessity – An easement by necessity is implied if the owner of a tract of land divides the tract into two lots and by this division deprives one lot of access to a public road of utility line. An easement of way over the lot with access to the public road or utility line is implied.

1. An easement by necessity is implied only when land is divided. The necessity must exist when the tract is served.

a. The easement is implied only over that portion of the divided tract that blocks access to a public road from the landlocked parcel.

b. An easement by necessity cannot be implied over land that was never owned by the common grantor of the dominant and servient tenements.

2. Usually an implied easement of way by necessity must be strictly necessary and not just a more convenient access.

3. The doctrine of easements by necessity rests on the ground that public policy requires a way of access to each separate parcel of land or on the ground that, or because access is essential to use, the parties intended to create an easement but overlooked putting it in the deed.

4. An easement by necessity lasts only so long as it is necessary. It terminates when the necessity ceases.

5. The extent of necessity determines the scope4. Prescription

a. An affirmative easement may be acquired by satisfying the elements of adverse possession. The use must be open and notorious, adverse and under a claim of right, continuous, and uninterrupted for the length required by the statute.

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i. Open and notorious1. The use must be made without any attempt at concealment.

ii. Adverse & Under a claim of right1. A claim of a prescriptive easement must be under a claim

of right and not with permission of the owner of the land. The court may apply the objective or subjective test

a. Objective Test – It is sufficient that the acts of the user appear to the community to be under a claim of right

b. Subjective Test – The user must in good faith believe that he has a right to use the servient land

iii. Continuous1. The adverse use must be continuous – Continuity requires a

continuous claim of right and period acts which, given the nature of the type of easement claimed, give notice to the owner that an easement is being claim.

iv. Uninterrupted1. If the adverse use is interrupted by the owner of the land

being used, the prescriptive period ends. Statute of FraudsAn easement must satisfy the Statute of Frauds. Unless lone of the exceptions to the Statute applies, creation of an easement requires a written instrument signed by the grantor.

Scope of EasementThe scope of an easement depends on the intention of the parties. In ascertaining this intent, a court may examine whether the easement was created expressly or by prescription, what changes in use might reasonable be foreseeable by the parties, and what changes in use are required to achieve the purpose of the easement under modern conditions and preserve the usefulness of the easement to the dominant tenement. The court will also look at whether the increase in the burden is unreasonable.

Generally, an express or implied easement of way can be increased in scope to meet the needs of the dominant tenement as they normally develop.

Use for Benefit of Nondominant LandAn easement granted for the benefit of lot 1 cannot be used for the benefit of lot 2, even though the same person owns lots 1 and 2. The dominant owner cannot increase the scope of the easement by using it to benefit a non-dominant tenement.

Holbrook v. TaylorBrief Fact Summary. The Appellants, Mr. and Mrs Holbrook (Appellant), sued to enforce a license by estoppel regarding a road he used for egress and ingress to his property. Holbrook constructed a house at considerable expense and also made repairs to the road in question.

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Synopsis of Rule of Law. A license by estoppel can be created by licensor’s consent, along with the licensee’s construction of various structures and repair to the land in question.

Van Sandt v. RoysterBrief Fact Summary. The Plaintiff, Van Sandt (Plaintiff), discovered that his basement was flooded with sewage and brought an action to enjoin the Defendant, Royster (Defendant), from using and maintaining the underground sewer. The pipe crossed a single property encompassing both lots and the adjacent lot in 1904 that was owned by Bailey.

Synopsis of Rule of Law. An easement is implied to protect the probable expectations of the grantor and grantee that a prior existing use will continue after the transfer. Thus, where the grantee is aware of a reasonably necessary use of the grantee’s property for the comfortable enjoyment of the grantor’s property an easement by implication is created.

Othen v. RosierFacts – The Plaintiff, Othen (Plaintiff), claims a roadway easement across two tracts of land owned by the Defendant, Rosier (Defendant). The Defendant had constructed a levee which made the lane so muddy that it was impassable and deprived Plaintiff of access to and from his farm.

Held – There is no easement by necessity. An implied easement may be shown if (1) originally there existed common ownership of the dominant and servient estate; (2) the easement is a necessity not a mere convenience and (3) the necessity existed at the time of the severance of the two estates. Here, there was a common owner, Hill. However, there was no necessity because the common owner retained the ownership for 3 years of the 16 acres over which he could have accessed the road or could have been able to cross his land to the north to access the road. In addition, it was not shown that necessity existed at the time the dominant and servient estates were severed.There is no easement by prescription. An easement by prescription must be hostile or adverse in character. Here, Plaintiff and others enjoyed the easement with consent or license of the Defendant. Express or implied permission could not ripen into an easement by prescription.

II. The License A license is permission to go on land belonging to the licensor. A license is generally revocable at the will of the licensor.

Irrevocable Licenses A license may become irrevocable in certain limited situations.

(a) License coupled with an interest

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A license coupled with an interest cannot be revoked. A license coupled with an interest is one that gives the licensee the right to remove a chattel of the licensee, which is on the licensor’s land.

(b) EstoppelA license may become irrevocable under the rules of estoppel. If the licensee has constructed substantial improvements on either the licensor’s land or the licensee’s land, relying on the license, in many states the licensor is estopped from revoking the license.

Minority View – Estoppel RejectedSome courts hold that the licensor will not be estopped to revoke the licensee. Statute of Frauds

How long irrevocable Irrevocability exists only for whatever time is requires to enable the licensee to reap the fruits of his expenditures. Some courts hold that irrevocability is limited to the life of the pertinent structure or improvement. A few courts hold that an irrevocable license is like an easement and is capable of lasing forever.

Theatre TicketsA ticket creates a revocable license, but this is not an interest in land so as to permit self-help. The ticket holder can be denied admission or ejected by the theater owner. The ticker holder’s remedy is to sue the theatre owner for breach of contract.

III. The Profit

1.) The profit defined. The profit entitles its holder to enter servient land and take from it the soil or some other resource, such as minerals, timber, oil, fish or wildlife.

IV. Real Covenants

1. Defined – A real covenant is a covenant that runs with the land at law. The covenant is a promise to do or to not do something related to land, that is capable of binding successors to the originally covenanting parties. The covenant is unlike the easement because it is not the grant of a property interest. Instead, the covenant starts out as a mere contractual limitation, or promise, regarding land.

2. The covenant can be affirmative or negativea. Affirmative – a promise to do somethingb. Negative – a promise not to do something

3. Requirements for the burden to run The burdened tract is analogous to the servient tenement under the law of easements. The benefitted tract is analogous to the dominant tenement. For the burden of A’s original promise to B to be capable of running from A to A-1, five elements must be met. To remember them, go “WITHN.” The five elements required for the burden to run

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a. Writingi. The original promise must have been in writing

b. Intenti. The original parties must have intended for the promise to bind

successorsc. Touch and Concern

i. The promise must touch and concern the land, meaning that it must affect the parties’ legal relations as landowners, and not simply as members of the public at large.

1. Covenants to pay money to be used in connection with the land, such as annual Homeowners’ Association dues, and covenants not to compete do touch and concern the land.

d. Horizontal & Vertical Privity

i. Horizontal Privity – Refers to the nexus between the original parties A & B. The burden will only run if there is a successive relationship between the parties. It requires that A and B had to be in what is called succession of estate, meaning that at the time this promise was made, they were in a grantor-grantee relationship, a landlord-tenant relationship, or

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a mortgagor-mortgagee relationship, or that they shared some other servitude in common, in addition to the covenant now in question.

1. English Rule – The parties to a promise are in privity of estate only if they are in a landlord and tenant relationship (burden of covenant only runs if it is contained in a lease)

2. Mutual Interest – The burden will run if one party has an interest (apart form the covenant) in the land of the other

3. Successive Relationship – The burden will run where the promise is continued in a conveyance of the estate, i.e. where one of the original parties to the promise succeeds to an estate previously owned by the other party.

ii. Vertical Privity – Refers to the nexus between the original party and the successor. It simply requires some non-hostile relationship between A and A-1, such as contract, blood relation, or devise. The only time that vertical privity will be absent is if A-1 acquired her interest through adverse possession.

e. Noticei. A bona fide purchaser of the burdened land is not bound at law if

he has not notice of the covenant. 4. Requirements for Benefit to Run

There are four requirements for the benefit to run to successor owners of the promisee’s land. Remember WITV

a. Writing – The original promise between A and B must have been in writing.

b. Intent – The original parties intended that the benefit would run. Courts are liberal in imputing the requisite intent to the parties.

c. Touch and Concern – The promise must affect the parties in their legal relations as landowners.

d. Vertical Privity – There must be some non-hostile nexus between B and B-1.

5. Remedies for Breacha. If the promise is breached, the promisee or his successor may

i. Seek damagesii. Seek and injunction

Distinguishing Characteristics of Real Covenants and Equitable ServitudesReal Covenants Equitable

ServitudesCreation Writing is always required Writing is usually

required but may arise by implication from common scheme of development of a residential subdivision

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Running of the Burden Requires1. Horizontal privity (shared

interest in land, apart form the covenant, by originally covenanting parties, or covenant put in a deed from grantor to grantee and

2. Vertical privity (successor holds entire interest held by covenanting party)

No privity required**privity is relevancy in equity only when the person trying to enforce the benefit does not own land that was once owned by the original promisor.

Running of the Benefit Vertical Privity Required No privity required in most states

Remedy Damages Injunction

V. Equitable ServitudesAn equitable servitude is covenant – whether or not running with the land at law – that equity will enforce against assignees of the burdened land who have notice of the covenant. The usual equitable remedy granted is an injunction against violation of the covenant.

Tulk v. Moxhay (1848)Facts: Tulk, the plaintiff, sold land with a covenant requiring the vendee, his heirs and assigns to keep the land in an “open state, uncovered with any buildings.” The defendant eventually acquired the property through a deed that was silent about the covenant, but he had actual notice of the covenant’s existence.Issue: Will a party who had notice of a restrictive covenant be permitted to use land in a manner inconsistent with the terms of the covenant?Rule: If a restrictive covenant is attached to property by the owner, no one purchasing with notice of that covenant can stand in a different situation from the party from whom he purchased.

1. Creation – Most courts hold that the Statute of Frauds requires a writing signed by the promisor. However, negative equitable servitudes may be implied from a general plan for development of a residential subdivision

a. Negative Servitude Implied From General PlanA reciprocal negative easement is a promise which binds other lots in the subdivision in a similar way, which forbids some use of the land.

On a theory of equitable estoppel, most courts will imply a negative servitude on a lot even though there is no writing creating the servitude on the lot – Where a purchaser, buying a lot restricted to residential use, relies on the promise of the sub-divider to restrict the other lots and makes a substantial investment, the sub-divider and any assigned d of the other lots are estopped to plead the Statute of Frauds.

i. General Plan Required – A court will imply a reciprocal negative servitude only if the evidence shows that the developer had a

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reasonable uniform general plan for development of all lots of the same character.

ii. Evidence of General Plan – The general plan must exists at the time the developer sells the first burdened lot within the general plan. If the plan arises later, it will not impose burdens on lots previously sold without the burdens.

b. Using General Plan to Show Who Has the Benefiti. Even in jurisdictions that do not imply restrictions form a general

plan, a general plan can be used to show who the developer intended to have the benefit of written restrictions on other lots. If there is a general plan, then prior and subsequent purchasers of lots within a subdivision can enforce a written restriction on a restricted lot. It is inferred form the plan that the developer intended to confer a benefit on all lot owners.

Requirements for the Running of Benefits and BurdensCovenants Equitable Servitudes

Benefit Burden Benefit BurdenIntent X X X XNotice X XTouch and Concern

X X X X

Horizontal Privity

X

Vertical Privity

X X

2. For an equitable servitude to be enforced by a successor to the promisee or against a successor to the promisor, certain requirements must be met. Remember WITNES

a. Writing – In general, but not always, the promise must be in writing.b. Intent – The originally promising parties must have intended that the

promise would bind successors. Courts are generous in finding the requisite intent. The court ascertains intent from the purpose of the covenant and the surrounding circumstances

c. Touch and Concern – The promise must affect the parties in their legal relations as landowners.

d. Notice – The assignees or successors of the originally promising parties must have had some form of notice of the promise.

i. Actual Notice – If the assignees had actual knowledge of the covenant in a prior deed, he clearly has notice

ii. Record Notice – If the covenant is in a deed to the assignee’s lot, he has record notice.

1. Chain of Title – If the covenant is in a deed or deeds to other lots in a subdivision conveyed by the developer to

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prior grantees, the assignees has record notice if the deeds to neighboring lots are in the assignee’s chain of title

iii. Inquiry Notice – Regardless of whether such prior deeds are in the purchaser’s chain of title, the lay of the land puts him on inquiry notice to look at the deeds of the neighboring lots from the developer

Sanborn v. McLeanDefendants owned property and started to build a gas station on the rear of the lot behind their home.Defendants had inquiry notice that there was a general plan of the common owner to restrict the area to residential property. Defendants did not have to ask their neighbors about the restrictions, but had to look around at all the residences built in accordance with a general plan. From that, Defendants were put on inquiry notice that there was a record and reason for such general conformation.

e. Equitable Servitude

Touch and Concern1. For the burden/benefit to run with the burdened land in equity as well as law, the

covenant/equitable servitude must touch and concern the burdened land. Early cases asked whether the covenant burdens or benefits a party in the physical use or enjoyment of particular land.

2. The function of the requirement is to permit courts to stop covenants from running when the social utility of the covenant is outweighed by the fettering of the burdened property.

3. Covenant with Benefit in Grossa. When the benefit of a covenant does not touch and concern the land

(benefit in gross), the majority is that the burden will not run. i. English Rule – English courts refused to recognize an easement in

gross. Easements must be tied to land. When the equitable servitude developed, they vied it as an interest analogous to a negative easement. The burden of an equitable servitude to run there must be both a dominant and servient tenement.

ii. American Rule – Easements in gross are recognized and the burden of the easement runs with the land. Although courts have held that an equitable servitude is an interest analogous to an American easement, the majority of courts hold that the benefit/burden of an equitable servitude in gross will not run.

iii. Minority View – The burden of a covenant will run even though the benefit is in gross. They see no reason to distinguish between covenants and easements.

Common Interest Communities

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These communities include condominiums, cooperatives, and subdivisions with homeowners’ associations enforcing covenants. They are run by private governments (boards) that enforce and make rules, assess charges, and make repairs and improvements.

Condominiums A condominium is ordinarily created by a declaration or master deed stating that the owner is creating a condominium to be governed by the provisions of the state condominium act. Each purchaser, by accepting the deed, becomes an association member and must abide by its by law. Each condominium development consists of individual unites, common area, and limited common areas.

1. Each individual unit is owned separately in fee simple. 2. The entire condominium except the individual units is called the common area.

a. The common area is owned by all owners of the units as tenants in common.

i. The condominium owner has no right to partition the common areas so long as the structure remains intact.

ii. A nonexclusive easement for entrance and exit and for support, through the common areas, is appurtenant to each tenant.

Rules of ConductThe originating document may provide for certain rules of conduct. Or the promulgation of rules may be left to subsequent action by the membership association or board.

Restrictions in Originating DocumentsRestrictions appearing in the originating document have a very strong presumption of validity. The trend is to strike down these original covenants only if they are arbitrary or violative of public policy or a constitutional right. The reason for this distinction is that buyers voluntarily agree to be governed by these terms where they buy in and are entitled to rely on the enforceability of restrictions in an originating document.

Nahrstedt TestWhen condominium use restriction is contained in declaration of common interest development and is recorded with county recorder, restriction is presumed to be reasonable and will be enforced uniformly against all residents of common interest development unless restriction is arbitrary, imposes burdens on the use of lands it affects that substantially outweigh the restriction's benefits to the development's residents, or violate fundamental public policy.Reasonableness or unreasonableness of condominium use restriction is to be determined not by reference to facts that are specific to objecting homeowner, but by reference to common interest development as a whole.

Business Judgment RuleIn order to determine the reasonableness of a condominium association's actions some jurisdictions have adopted the

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business judgment rule under which judicial action to prohibit authorized action by the association can only be justified by fraud, self-dealing, or unconscionable conduct. The business judgment rule limits judicial review of decisions made by condominium's board of managers to whether board's action was authorized, and whether it was taken in good faith and in furtherance of legitimate interests of condominium.

Violated if (1) outside scope of authority (2) serves no legitimate purpose or (3) made in bad faith

Objective Reasonableness Test/ Balancing TestThe actions of the governing body of a condominium must meet the test of reasonableness. In determining the reasonableness of actions taken by a condominium association, the rights of an individual unit owner must be weighed against those of the entire residential community in the condominium. A rule which reflects a reasonable effort by the association to accommodate the concerns of its unit owners will be found to be sufficiently related to the health, happiness and enjoyment of the occupants at condominium complex and will be upheld.

Restrictions Subsequently AdoptedRestrictions not in the originating documents but adopted by a board subsequently must be reasonable. A court may give a less deferential review to a subsequent bylaw change than it givens to a covenant in the originating documents. The reliance interest of the buyers is not so strong with respect to subsequent changes. Here courts may balance the importance of the new rule’s objective with the importance of the individual interest infringed upon.

ZONINGBy dividing up a city into use zone from which harmful uses are excluding, zoning purports to prevent one landowner from harming his neighbor by brining in an incompatible use.

Zoning in general is constitutional but concrete applications of specific provisions could provide to be arbitrary and unreasonable on an individual basis.

Euclidean Zoning Separates conflicting uses from highest (least harmful) to lowest (most harmful) use.

Principle of Cumulative Uses The principle of cumulative uses underlies zoning law. It states that higher but not lower uses are permitted in any district.

Density ControlsDensity controls are rules that indirectly control the number of people using an area of land. They may include height limitations, setback requirements, and minimum lot and house sizes.

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Density ZoningOrdinance focuses on overall density of an area rather than having lot size restrictions (i.e. small lots are permitted, but more land is set aside for party)

Planned Unit DevelopmentOwner of large tract of land is allowed to mix uses as long as overall density limits are not exceeded

Source of Zoning PowerThe state legislature is the sovereign power, and a city or country has no power to zone unless given such powers by the state legislature. The act giving power to zone is called the enabling act. All zoning ordinances must be authorized by and must conform to the state’s enabling act. Any zoning ordinance that does not conform to the enabling act is ultra vires (beyond the authority of the local body and is therefore void).

Delegation of PowerUnder our constitutional theory, a legislature cannot delegate discretionary power to an administrative body unless it lays down standards to govern the exercise of the power. In zoning cases, where the standard to be applied is vague, the delegation of authority can be attacked as an improper delegation of power.

Constitutional LimitationsWhen a state enact an enabling act, it does so under the authority of its police power, the legislative power a state has to regulate human affairs so as to promote health, safety, welfare, and morals. The power of states to authorize regulation of property use by zoning laws and the power of local governments to enact such laws have been specifically upheld as valid uses of police power.

Due Process Clause

Single

Family

HousingTwo Family

Housing or higher use

Multi-family Housing or higher use

Commercial Uses (e.g., stores)

Light Industrial Uses (e.g., computer assembly) or higher use

Heavy Industrial Uses (e.g., steel manufacturing) or higher use

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14th Amendment“No State shall deprive any person of life, liberty, or property, without due process of

law”

Procedural Due ProcessCourts have drawn a distinction between legislative actions and administrative actions. For legislative actions, notice does not have to be given to each landowner affected, whereas for administrative actions, it does have to be given. Administrative actions include variance and special exceptions, which are granted by the zoning board of adjustments.

Substantive Due ProcessThe current test for whether federal substantive due process had been violated is; Does the ordinance bear a rational relationship to a permissible state objective?

If so The ordinance is valid under the Due Process Clause.The ordinance must be a rational way of achieving the the objective, not necessarily the best way. Legitimate state objectives have been held to include public health, safety, and general welfare. Few zoning ordinances are struck down under the rational relationship test.

Equal Protection Clause14th Amendment

“No state shall deny to any person within its jurisdiction the equal protection of the laws”

As applied to zoning, this clause requires that landowners who are similarly situated to be similarly treated, except where treating them differently can be justified. Under the EPC the question is whether the government can take away the right from these persons and not from others. To establish a violation of the EPC, the plaintiff must prove a discriminatory purpose or intent. Discriminatory effect is not enough. The legislation only has to bear a reational relation to a permissible state objective.

Takings Clause5th Amendment

“Nor shall private property be taken for public use without just compensation”

Although this amendment is expressly applicable only to the federal government, it has also been held applicable to the states under the 14th amendment, which requires states to provide citizens with due process of law. If an ordinance is a taking, the landowner’s remedy is an injunction against its enforcement, or possibly, interim or permanent damages.

Possible Challenges to Zoning OrdinancesUltra Vires An argument that the zoning ordinance is beyond the authority of the

zoning body and therefore void. Must look to enabling act adopted by states

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Federal Due Process (Procedural)

An argument that the zoning ordinance was improperly adopted. If the zoning action was legislative (general in effect), individual notice is not required. If the zoning action was administrative (effecting only one, or in some states a few parcels of land), the landowner must be notified and given an opportunity to be heard.

Federal Due Process (Substantive)

An argument that the ordinance is not reasonable and so is invalid. Unless a fundamental right is involved, the zoning action need only bear a rational relationship to permissible state objective, such as health, safety, and welfare concerns. Almost every zoning action will pass this standard.

State Due Process (Substantive)

Similar to federal due process, but many states require more than is required under federal law and might find a rational ordinance unreasonable.

Federal Equal Protection

An argument that the zoning action has the purpose or intent to discriminate. Most zoning actions will be tested under the rational relationship test and will be upheld.

Federal Takings Clause

An argument that the zoning action has taken property without just compensation. Most zoning actions will not constitute a taking.

Administration of Zoning OrdinanceSection 3 of the Standard Zoning Enabling Act requires that local zoning ordinance be made in accordance with a comprehensive plan. To prepare the plan, the enabling act requires that a planning commission composed of citizen by appointed by the mayor or other executive officer.

Legal Effect of PlanA master or comprehensive plan is a guide for development within the city; it states policies and guiding principles. To restrict the use of property, the plan must be implemented by the local legislature enacting a zoning ordinance or subdivision regulations, which have legal effect.

Variances Special ExceptionsA variance permits an owner to use land in a manner otherwise prohibited by the zoning ordinance

A special exception allows an owner to put property to use that the ordinance expressly permits

Zoning enabling acts provide for a board of adjustment to grant relief by the way of variance where the restrictions contained in the ordinance cause the owner practical difficulty or unnecessary hardship.

An exception is a conditional use under a zoning ordinance and results from a legislative determination that such use will not ordinary be detrimental or injurious to the neighborhood within the zone. Whether the use will generally comply with the health, safety, and welfare of the public and the essential character of the area is a legislative question

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VariancesZoning enabling acts provide a board of adjustment to grant relief by way of variance where the restrictions contained in the ordinance cause the owner practical difficulty or unnecessary hardship. The standards for variance are practical difficulty or unnecessary hardship, for which the evidence should be strong because the variance is departure from the uniform plan.

Special ExceptionA special exception to a zoning ordinance is one allowable where certain conditions specified in the ordinance are met. The theory is that certain uses can peacefully coexist with their neighbors when specified conditions occur. The board of adjustment is empowered to determine whether the conditions specified in the ordinance are met.

Standards for Special ExceptionLegislative power cannot be delegated to an administrative agency unless the standards are sufficiently clear to prevent gross arbitrariness. Delegation of power without standards is improper.

An alternative approach to special exceptions reduces discretion by listing detailed criteria regarding such things as design, location, hours of operation, standards of performance, and the like in the ordinance; if the proposed use meets the criteria, an exception must be granted.

See e.g., Cope v. BrunswickA zoning provision giving the Board the discretion to deny or permit a special exception based on whether the use would alter the essential characteristics of the surrounding property or would adversely affect the health, safety or general welfare of the public was unconstitutional because it permitted the board to decide a legislative question without specific guidelines to determine what characteristics would render it detrimental or injurious to the neighborhood.

Zoning for Aesthetic Objectives

Common Law RulePolice power cannot be used to accomplish objectives that are primarily aesthetic.

Modern RuleCities may enact regulations primarily for aesthetic objectives. The standard to be applied to aesthetic ordinances is whether the prohibited use offends the sensibilities of the average person and tends to depress property values.

The stabilizing of property values, and giving some assurance to the public that, if property is purchased in a residential district, its value as such will be preserved, is probably the most cogent reason back of zoning ordinances. Stoyanoff

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Architectural Review BoardsMost courts uphold the power of a city architectural review board to deny building permits for proposed buildings that the board disapproves. The standard for the discretion of the boards varies by jurisdiction.

Broad Discretion RuleState has authority to create architectural board with power to regulate architectural design and appearance for purpose of promoting and maintaining general conformity with style and design of surrounding structures.

See e.g., State ex rel. Stoyanoff v. BerkleyThe city government’s delegation of authority to a non-elected Architectural Board was constitutional, even without very specific standards.  “The Board shall disapprove the application if it determines that the proposed structure will constitute an unsightly, grotesque or unsuitable structure in appearance, detrimental to the welfare of surrounding property or resident.

Narrow Discretion Rule Whenever community adopts aesthetic standards as component of land use governance, they can and must be drafted to give clear guidance to all parties concerned; land use certification applicants must have understandable statement of what is expected from new construction, and design professionals need to known in advance what standards will be acceptable in given community.

But see Anderson v. City of IssaquahBuilding design sections of city municipal code were unconstitutionally vague as applied to applicant for land use certification; commissioners of city's development commission, having no objective guidelines to follow, necessarily had to rely on their own subjective “feelings” as to “statement” city was trying to make on its “signature street,” and commissioners' individual concepts were as vague and undefined as those written in code.

Exclusionary Zoning Zoning measures whose purpose or effect is essentially to close an entire community to unwanted groups – typically people of low income

There are several tests for establishing the validity of zoning ordinances which are presumably exclusionary

Fair Share TestEach community must provide its fair share of housing needs in the region. When it is shown that a developing municipality in its land use regulations has not made realistically possible a variety and choice of housing burden shifts to the municipality to establish a valid basis for its action or nonaction.

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Every developing municipality must, by its land use regulations, presumptively make realistically possible an appropriate variety and choice of housing and presumptively it cannot foreclose persons of low and moderate income for housing and must affirmatively afford that opportunity, at least to the extent of the municipality's fair share of the present and prospective regional need therefor unless the municipality can demonstrate pecuniary circumstances which dictate that it should not be required so to do.

See e.g., Mount LaurelCourt held that a city’s zoning regulations were in violation of the state constitutional requirements of substantive due process and equal protection because the regulations were not concerned with the general welfare of all persons. The intent of the town legislature is not controlling; the effect is. Township zoning ordinance which was so restrictive in its minimum lot area, lot frontage and building size requirements as to preclude single-family housing for moderate income families was presumptively contrary to the general welfare and outside the intended scope of the zoning power and was not justified by objective that housing have sufficient taxable value to come close to paying its own governmental way nor by environmental reason that plot size was required for safe individual lot sewage disposal and water supply.

Rational Basis TestExclusionary zoning ordinances are presumed to be constitutional. As long as ordinance could be rationally related to a legitimate local purpose, the ordinance is valid.

Moderate TestExclusionary zoning ordinances are presumed to be constitutional. As long as ordinance could be rationally related with reference with regional interests, the ordinance is valid.

Exclusionary Zoning Techniques

Minimum Housing Cost Invalid-No rational relationship between cost and advancing public health and safety

Minimum Floor-Area requirements Superseded in many communities by housing codes (i.e. FHA)

Minimum lot-size requirements Valid –When found justified by the conditions of the community in question

Minimum setback requirements Valid –Increase light and air, reduce the danger from fire, and advance aesthetic concerns

Barring trailers Generally Valid

Tiebout Hypothesis

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Consumers benefit from being able to vote with their feet among municipalities offering varying packages of public goods and taxing policies. The specialization of municipalities and the competition among them will enhance the efficiency of metropolitan organization because people will congregate with others of similar tastes and therefore be more likely to get public goods they most prefer.

Waring Blender ModelCalls for all land uses and all types of households to be represented in each neighborhood in proportion to their representation in the entire metropolitan area Produces great diversity within neighborhoods but no diversity between neighborhoods, and thus may limit the variety of residential choices available to households.

Inclusionary ZoningInclusionary zoning consists of any number of devices designed to require or encourage developers to supply low and moderate-income housingi.e. [A requirement conditioning a building permit on the builder’s agreement to provide a certain number of units for lease at below market rents.]

TAKINGS CLAUSE

Fifth AmendmentTakings Clause… nor shall private property be taken for public use, without just

compensation

Analysis under the takings clause can be divided into four questions1. Is there a taking?

A possessory taking occurs when the government confiscates or physically occupies property.A regulatory taking is when government regulation leaves no reasonable economically viable use of property. (i.e. zoning)

2. Is it property?Generally, the court has relied on other sources of law, usually state law, in deciding whether there is a property interest.

3. Is the taking for public use?The court has very broadly defined public use so that almost any taking will meet the requirement. The court has said that a taking is for public use so long as it is “rationally related to a conceivable public purpose” in other words, so long as it meets the rational basis test.

4. Is “just compensation” paid?The key is that just compensation is measured in terms of the loss to the owner; the gain to the taker is irrelevant.

What is a “public use”?The government may not condemn for purely private purposes

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A taking is for public use so long as the government acts out of a reasonable belief that it will benefit the public (economic development, blight removal, eliminating the social and economic evils of a land oligopoly). KELO

Economic development can qualify as “public use,” for eminent domain purposes

State may use its eminent domain power to transfer property from one private party to another if purpose of taking is future use by public.

Broad viewPublic use means advantage or benefit to the publicPermits an act of condemnation so long as the objective it serves is in the public interest, as an exercise of the police power must be

Narrow viewPublic use means actual use or right to use of the condemned property by the by the public

TestsThere are several tests for determining whether the use is for public use.

Public Use Ends TestIf the ends are sufficiently public in one sense or another, the test is passed.

Public Use Means TestAsks whether the power of eminent domain is really necessary to accomplish whatever aim the government has in mind. Takings should be permitted only for pressing needs the attainment of which would be unduly difficult without the means of eminent domain

Level of ScrutinyThe court in Kelo employed an ends test, but applied it in a very deferential manner, affording legislatures broad latitude in determining what public needs justify the use of the takings power.Most state courts take the same approach but some review the government’s justifications for a proposed project with close scrutiny requiring a showing that the project’s aims cannot be achieved by some means less intrusive than eminent domain.

Just CompensationJust compensation has been held to be satisfied by payment of market value. Compensation in the constitutional sense is not full compensation, for market value is not the value that every owner of property attaches to his property but merely the value that the marginal owner attaches to his property.

Kelo v. City of New London, ConnecticutAn economically depressed city sought, through a private economic development corporation, to take private property for purposes of a new economic development

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project. The owners, who did not want to sell their property, objected that it was not for public use. City's exercise of eminent domain power in furtherance of economic development plan satisfied constitutional “public use” requirement, even though city was not planning to open condemned land to use by general public, where plan served public purpose.Issue – Whether the city’s proposed disposition of this property qualifies as a public use within the meaning of the Takings Clause of the Fifth Amendment to the ConstitutionHolding – SCOTUS, in a 5-4 decision, ruled in favor of the city. Justice Stevens wrote for the Court, joined by Justices Kennedy, Souter, Ginsburg, and Breyer. The Court relied on Berman and Midkiff to hold that a taking is for public use so long as the government acts of a reasonable belief that the taking will benefit the public. Reasoning - The Court said that the city’s action was for public use because it reasonable believed that its action would create over 1,000 new jobs and increase economic growth.

RULE A taking is for public use so long as the government acts out of a reasonable belief that it will benefit the public.

Concurrence - Justice Kennedy wrote a concurring opinion stressed that there are limits and that it would not be public use if the government took from one private owner solely to enrich another. Court should look to legislative intent not just efficacyA court applying rational-basis review under the Public Use Clause should strike down a taking that, by a clear showing, is intended to favor a particular private party, with only incidental or pretextual public benefits.Dissent – Public use excludes economic development. Justice O’Connor lamented that the majority’s approach would allow the government to take private property simply to put it to more economically advantageous use – presumption of invalidity – must show clear and convincing evidence that taking would lead to economic developmentJustice Thomas urged a major change in the law, contending that public use should require the government to be the actual user of the private property.

Comparison of Takings RulesGovernment Action That Results in Per Se Taking

Government Action that Does Not Result in Per Se Taking (Apply Balancing Test)

Government condemns land Government temporarily occupies land (e.g., government-built dam causes temporary flooding of private property

Government permanently occupies land (e.g., government-built dam causes permanent flooding of private property)

Rent control ordinances allow landlord to voluntarily lease units at controlled rents

Government authorizes third parties to occupy land (e.g., cable TV company installs cables in apartments over landlord’s objections)

Law temporarily deprives land of all economically valuable use (e.g., development moratorium)

Law requires landlord to lease units at Law prohibits continued operation of a

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controlled rents common law nuisanceLaw (whether enacted before or after purchase) destroys all economically viable use of land

Law reduces the value of land or an interest in land (e.g., mineral interest)

Government imposes exaction that logically relates to a legitimate government interest (essential nexus) and bears a rough proportionality to the negative impact on the public

What is a Taking?Federal and state government can take property in various ways

1. An action brought by the government to condemn propertyIf the government formally exercises its power of eminent domain by bringing a condemnation proceeding and thus taking title to the land, the government has of course taken the property and must pay for it.

2. Permanent physical occupation authorized by the government

Per Se RuleAny permanent physical occupation or invasion by the government is a taking.

Physical occupation is the functional equivalent of depriving the owner of title, because the owner’s power to exclude others is the essence of property and physical invasion by the government compromises that power. Thus, the government must may compensation no matter how trivial the invasion. If the occupation or invasion is not permanent a multifactor balancing test is used by the courts.

Results in inverse condemnation

If the government does not invade property itself but authorizes third parties to permanently occupy private property, the same categorical rule applies.

See e.g., Loretto v. Teleprompter The Supreme Court held that a statute authorizing private cable TV companies to install cables in apartment buildings, over the landlord’s objection, is a physical invasion of the landlord’s property and a taking. However, if the occupation is not permanent, the balancing test applies.

It is the distinction between permanent occupations, as to which the finding of a taking necessarily follows, and the temporary invasions that the Court says call for a balancing process.

Multi Factor Balancing Test Factors considered;

1. Character of government action

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2. Economic impact of regulation3. Degree of interference with investment-backed expectations

Applied if invasion is temporary

3. Regulatory takings not involving physical occupation or invasionArises from regulations that affect the use and value of the land. Regulatory activity might be considered a taking depending on the application of various tests.

Per Se RuleIf the regulation deprives land of all economically beneficial uses, it is a taking unless the government can justify its actions as preventing a common law nuisance. Common law nuisances include those acts defined as nuisances by judicial common law and not the legislature.

See e.g., LucasIf a regulation prohibits all economically beneficial use of land and the proscribed use could not have been prohibited under a given state’s nuisance law, the regulation is a “taking” which requires “just compensation” to be paid to the landowner.

Per Se RuleNo taking results if the government regulates to control common law nuisances or nuisance like activity; the government should not have to pay to regulate activities that are harmful to the public

The rationale here is that when a regulation has the purpose or effect of protecting against a harm, it is an exercise of the police power and noncompensable; but when the regulation aims to extract a benefit, it is a taking and the owner must be compensated. The difficulty is that the distinction between harms and benefits can be arbitrary, absent some well-defined norm against which to judge the conduct in question.

When a regulation protects against a harm, no taking results. When a regulation promotes a public benefit, it results in a compensable taking.

See e.g., Hadacheck v. SebastianA city ordinance prohibiting, as a police measure, brickmaking within a designated area, does not take, without due process of law, land of an owner within the prohibited district containing deposits suitable for brickmaking, which cannot be profitably manufactured elsewhere.Since the ordinance only prohibited manufacture of the bricks and not the removal of the clay itself, this was not a deprivation of property rights incident to ownership. Under the police power, the prohibition of manufacture could be justified relating to the health and comfort of the communityJustification – All property in this country is held under the implied obligation that the owner’s use of it shall not be injurious to the community

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Compare Just v. Marinette CountyRegulation prohibited the filling of wetlands. The regulation could be construed to control a public harm (i.e. prevent pollution by the manmade fill or create a public benefit (i.e. wildlife conservation).The Court found that an ordinance regulating wetlands development did not work a taking. The purpose and effect were to control a public harm, not to extract a benefit. The ordinance simply limited land uses that were not natural and indigenous (neutral benchmark). The Court contrasted cases finding a taking when an ordinance prohibited bathing, swimming, and boating, and when an ordinance limited building height.

Harms from Permanent Physical Occupation1. Owner is deprived of right to exclude2. Owner is deprived of right to use the property3. Owner is deprived of all value, because no one will pay for land that is

permanently occupied by another4. Demoralization when a stranger invade and occupies owner’s property

REGULATORY TAKINGS

The general rule at least is that while property may be regulated to a certain extent, if a regulation goes too fair it will be recognized as a taking.

In determining whether a government regulation results in a taking, the court will employ a balancing test.

Whether a regulatory action that diminishes the value of a claimant's property constitutes a "taking" of that property depends on several factors,

1. Economic impact of the regulation on the claimant 2. The extent to which the regulation has interfered with distinct investment-backed

expectations – 3. The character of the governmental action.4. Preventing harms versus forcing benefits

If the restriction is reasonably related to a legitimate public interest, then it does not result in a taking. Diminution in property value alone does not establish a taking.

Compensation is required when a regulation deprives an owner of all economically beneficial uses or his land. Under that rule, a statute that wholly eliminated the value of Lucas’ fee simple title clearly qualified as a taking. This rule is limited to the extraordinary circumstance when non productive or economically beneficial use of land is permitted. Anything less than a total loss would require the kind of analysis applied in Penn Central.

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A state may not evade the duty to compensate on the premise that the landowner is left with a token interest.

A claimant does not waive his right to challenge a regulation as an uncompensated taking by purchasing property after the enactment of the regulation challenged.

In order to determine if a temporary taking has occurred “requires careful examination and weighing of all the relevant circumstances.” 

Pennsylvania Coal Co. v. MahonSCOTUS struck down a PA statute forbidding coal mining that caused the subsidence of any house in the area. Before the statute was enacted, the coal company had sold the surface rights to Mahon, but had reserved the right to remove the coal thereunder and to undermine the surface. Because the statute made it commercially impracticable to mine the coal, and thus had nearly the same effect as the complete destruction of the mineral rights, the Court held the statute invalid as a taking without compensation. The Court noted that there is a valid interest in every purchase and sale but in ordinary private affairs, the public interest does not warrant much of this kind of interference.

RULE – The general rule at least is that while property may be regulated to a certain extent, if a regulation goes too fair it will be recognized as a taking,

Diminution in Value Test – If a government regulation of a use that is not a common law nuisance imposes too great a burden on property owner, the government must provide compensation. The question depends on the particular facts. The greatest weight is given to the judgment of the legislature, but is always open to interested parties to contend that legislature has gone beyond its constitutional power.

Conceptual SeveranceIn practice, the courts tend to look at the whole parcel of which the regulated part is a portion. Thus, takings are seldom found to occur based on the diminution-in-value test unless the whole parcel loses all or virtually all of its value.

See e.g., Keystone Coal v. DeBenedictisThe Court considered only the loss in value caused by having to leave support pillars of coal in place, and thus found no taking because the coal companies had not shown a sufficient diminution in value. The millions of tons of cola that had to remain in place under the statute were not a separate segment of property, but only a few percent of the total coal owned by the companies.

See e.g., TahoeA regulation that affects only a potion of the parcel-whether limited by time, use, or space- does not deprive the owner of all economically beneficial use.

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Other Factors to Consider in Balancing Test

Implicit Compensation Reciprocal advantages and disadvantages

E.g., If a parcel is zoned for single-family hosing only, no doubt there is a loss of value compared to the situation in where the property could be used for any purpose whatsoever. Because neighboring parcels in the single-family zone are equally limited, there is an offsetting advantage to each and every landowner in the zone, realized b the fact that neighboring property in the zone cannot be used for purposes that would lower the value the lots limited to single family hosing (i.e. commercial use)

Invested Backed-Expectations

In determining the taking issue, one must consider not only the economic impact of the regulation on the landowner, but the degree to which the regulation interferes with distinct investment backed expectations.

Penn Central v. NYCThe application of NYC’s Landmark Law has not effected a taking of appellant’ property. The restrictions imposed are substantially related to the promotion of the general welfare and not only permit reasonable beneficial use of the landmark site but also afford appellants opportunities further to enhance no only the terminal site proper but also other properties.The government action contemplates that appellants may continue to use the property precisely as it has been used for the past 65 years: as a railroad terminal containing office space and concessions. So the law does not interfere with what must be regarded as Penn Central's primary expectation concerning the use of the parcel. More importantly, on this record, we must regard the New York City law as permitting Penn Central not only to profit from the Terminal but also to obtain a "reasonable return" on its investment.

TEST - Whether a regulatory action that diminishes the value of a claimant's property constitutes a "taking" of that property depends on several factors, including the economic impact of the regulation on the claimant -- particularly, the extent to which the regulation has interfered with distinct investment-backed expectations -- as well as the character of the governmental action.

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