Law of Real Property: US Constitution & Court Decisions

• Module 1 goes over the Law of Real Property and basic information relating to it

Sources of U.S. Real Estate Law

• Court decisions deal with the interpretation and application of laws.

The US Constitution

• The 4th amendment affords property owners' right to secure their houses which include privacy rights.
• The 5th amendment prohibits the federal government from depriving any person of property without due process of law and from taking private property for public use without just compensation.
• Many cases dealing with obtaining judgments against a person's property and foreclosing on a security interest or mortgage in real property resulted from the 5th amendment.
• A component of the 5th amendment is eminent domain, which provides land owners with rights when the government is taking their property for public purposes by providing just compensation.
• The 14th amendment is the same as the 5th amendment but applies to state governments and provides that no state may deprive any person of property without due process of law.
• State laws that interfere with any rights given to citizens in the US Constitution are unconstitutional per the 14th amendment.
• The Equal Protection Clause of the 14th amendment requires states to apply laws equally so that all citizens enjoy the same protections, rights, and equal opportunities related to land ownership and possession, and it covers racial discrimination in leasing, lending, and purchasing and selling land.

Federal Legislative Enactments

• Congress passes laws to carry out objectives of the constitution and for the operation of the federal government.
• The United States Code (USC) refers to congressional enactments.
• An example of a citation is 42 USC §§ 9601 et seq., where 9601 is the section number within the volume, 42 is the title or volume number, and § signifies section.
• The Mortgage Reform and Anti-Predatory Lending Act is part of the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act, which includes protections for mortgagors, including appraisals and subprime mortgage loans.
• Real Estate Settlement Procedures Act (RESPA) deals with maximum closing costs and good-faith estimates of closing costs.
• The American Recovery and Reinvestment Act of 2009 (ARRA) provides federal funds to stimulate the economy, such as financial assistance for residential mortgagors.
• The Comprehensive Environmental Response, Compensation, and Liability Act (CERLA) is a federal act that authorizes the cleanup of disposal sites for hazardous waste and permits the government to collect cleanup costs from current and former property owners.

Federal Administrative Regulations

• A new agency is created or an existing agency is assigned to implement and enforce each federal legislative enactment passed by Congress.
• The Bureau of Consumer Financial Protection (now known as the Consumer Financial Protection Bureau (CFPB)) enforces the new laws on mortgage lending and disclosures and is located within the Federal Reserve.
• The bureau is required to develop regulations on credit counseling and new disclosure forms for consumer mortgage lending, and it fills in the details for general statutory provisions with procedures, forms, and enforcement.
• The Restoring American Financial Stability Act of 2010 was passed by Congress in general form and intended to regulate problems in mortgage lending, in terms creating the mortgage relationship and required disclosures and in foreclosure processes should the debtor default.
• The CFPB has developed required disclosures to consumers and the forms lenders must use.
• Regulations of an administrative agency fill in the details on the congressional statute's skeletal purpose.
• The Code of Federal Regulations (CFR) contains all federal regulations in a series of volumes, and this series of paperback volumes is printed every year due to many administrative agency regulations.
• The Federal Register, which is an update to the CFR, is published each working day and includes changes and proposed changes in existing regulations.

State Constitutions

• Usury, or charging in excess of a certain maximum interest rate in a credit transaction, is addressed in state constitutions.
• State constitutions tend to be more specific.

State Legislative Enactments

• Examples include obtaining licenses for selling real estate, methods of financing real estate purchases, the time period for adverse possession, and provisions for creating a will or probating an estate.
• Details of real estate law are largely found in state legislation.
• State legislative enactments contain uniform laws and are drafted by representatives of industry, academia, and the legal professions.

State Administrative Regulations

• State legislative bodies create or assign administrative agencies to enforce legislation.
• These agencies also provide the details, forms, and procedures necessary for compliance with state laws.

County, City, and Borough Ordinances

• Ordinances are laws passed by local entities.
• Most laws related to zoning, regulation of homeowners during short-term leases of their properties through services such as Airbnb, building permits, building inspections, fire codes, building-height restrictions, noise regulations, and curfews.

Private Law

• Private law comes from individuals and landowners
• Examples include restrictions on the use of property for tenants.
• The homeowners' associations area of private law continues to evolve significantly.
• Issues can arise regarding whether the private rules of the association violate rights given by laws and constitutions.
• Private law is also created through contracts for the purchase, sale, lease, or mortgage of real estate.

Court Decisions

• The role of courts is to answer the questions of application and to clarify ambiguities in statues, ordinances, and contracts.
• Courts also make, apply, and analyze common law.
• Common law is law that is not found in any code or statute and it develops through court decisions and part of case law.
• Case precedent is a guideline for contracts and transactions that occur after the judicial decisions.
• Once a court has interpreted a particular statute or contract, other parties an use and rely upon the court's interpretation.

Additional Information on Real Estate Law

• Real estate law affects all life through leasing apartments; rent stabilization laws in big cities; Income-restricted affordable housing requirements; and zoning - Houston is largest US city without zoning
• Requirements for property maintenance and inspections and affects everyone's life.

Federal Constitution Powers

• Gives governments power to just take land provided they still have to buy it / pay for it through the Bill of Rights' takings clause.
• The government has eminent domain power which involves balancing the need for public use and private ownership of land.
• The legislature makes a statute such as creating federal, state legislation, or other state laws which may include the fair housing act, truth in lending act, environmental statutes, and urban renewal statutes.

Federal Administrative Regulations

• These provide more specific details, and Congress makes statutes, but regulatory agencies, like the Department of Justice (DOJ), issue regulations on all these acts.

State Statutes

• May be housing crises or property tax related.
• Most action takes place at the state level.

State Court Decisions:

• Common law is judge-made law.
• Judges in courts can only deal with cases + controversies (has to be present) and can't just walk in and ask a question.
• Courts can issue advisory opinions in other countries, however there is separation of powers in US law.

Real and Personal Property and Property Types

• Types of Property
• Property is anything that can be owned, possessed, controlled, divided, transferred, sold, and made unavailable to others.
• Property can be real or property and tangible or intangible.
• Real property is the earth and things permanently attached and connected to it, such as land, buildings, landscaping, pools, mineral rights, water rights, and air rights.
• Personal property is movable and not fixed or permanently attached to real property and is also known as chattels, goods, or personalty, or is simply anything that is not real property such as office chairs, computers, and monitors.
• A bill of sale is a short form of an agreement for the purchase + sale of personally property that identifies what is transferred, the date of sale, names of seller and buyer, value received by seller in exchange.
• Tangible property exists in physical form, such as buildings, landscaping, pools, office chairs, computers and computer monitors.
• Intangible property lacks a physical form, such as air rights, easements, and a copyright held to the building design.

Fixtures

• A fixture is personal property that has become so attached to the real property that it loses its identity as personal property and passes to the buyer with a transfer of title to real property.

Fixture Tests:

• Disputes arise often in residential purchases, commercial leases, secured creditors and third parties.
• One or more of the following tests must be satisfied for an item to be considered a fixture:
• Intention, or agreement, of the parties ,where parties have expressly agreed to the character of property
• Character of the property and adaption to use with real property, considered how integrally connected the property is to the real property
• Unique, custom-manufactured goods are often determined to be fixtures, or otherwise goods used elsewhere may be considered as such. For Ex., wood paneled fridge vs normal fridge
• Actual or constructive annexation -Permanence of annexation suggests that the item is a fixture + real property -The degree of difficulty in removing the item aids in the interpretation of permanence -Substantial harm caused to the real property by its removal -Resulting damage of removing or if it causes substantial harm, the item is a fixture

Trade Fixtures:

• Items installed by a commercial tenant for the purposes of conducting a trade or business on the property of the tenant.
• Trade Fixtures remain the personal property of the tenant and they may be removed at any time during the lease and for a reasonable period after if they don't cause material or permanent injury to the realty.
• Examples include a restaurateur removing wood, wall, floor displays, or lighting, etc.

Attachments:

• Crops, trees, bushes, + grasses attached or affixed to the land.
• Fructus naturales are things produced primarily by nature, meaning forests and shrubbery, that require no annual labor or cultivation and is considered real property where title to them passes with the sale of land.
• Fructus industriales are things produced through human effort, for instance, crops or fruit groves.
• They require some sort of annual planting cultivation and are considered personal property.

Real Property Interests

• Air Rights
• Air rights allow an owner to use + develop the airspace above the surface of the earth. -Most states recognize limitations and the landowner may construct an antenna, tower, or billboard. -A business owner may emit gases, fumes, and odors from its operations. -Invasion of another's airspace may be permitted as long as entry is reasonable and complies with applicable law or overhanging trees, in which case a trespassing is occurring which would warrant a seek removal of trees

Transferability of Air Interests:

• Transferable development rights (TDRs) are achieved through zoning, whereby local govs may regulate a landowner's ability to sell the development rights to others, such as Trump who could only build a story tower but air interest sold to adjacent properties

Rights to Sunlight and Views:

• A landowner doesn't have the right to sunlight or views but can build structures casting shadows or blocking neighbors view.
• Many states recognize the right to solar energy, and an Owner may sue for damages or seek injunction against adjacent landowner whose structure substantially impairs or interferes with solar panel system, but some states limit this to residential not commercial.

Mineral rights

• Surface landowner owns the mineral rights, being real property when below the surface and personal property once extracted. -Rule of capture: gives owner title to minerals that are captured and stored from a well on the owner's property, even if the gas and oil flowed to the well from beneath another's property.

Rights to Support of Land

• Laws entitle owners to have their land supported in its natural state from an adjacent landowner's property. -Lateral Support: involves removing or changing soil on adjacent property that supports a landowner's property, which also involves the requirement that landowners not damage the support of adjacent land by causing land to slip, cave in, fall, or otherwise move. -Once a landowner changes natural conditions of his land + erects structures, all subsequent owners have duty to maintain the commuting support of the land, however not liable if there is an act of God -Subjacent Support involves actions causing the land surface to subside or sink or cave in, which imposes a requirement that adjacent landowners preserve the support of the surface of the earth by not causing the land to subside. The owner of a mineral interest can be liable to surface owner if the mineral owner's operations caused adjacent land to subside.

Water Rights

• Right to use water includes streams and water courses. -These are use rights, as you don't actually own the molecules of the water, and states have dif approaches but two common law forms are used primarily -Riparian rights means water belongs to those who own land bordering the watercourse. Ownership of land that borders water includes the right to reasonably use that water in common with other landowners who come into contact or lean on this same watercourse for their lands. -When not enough water for demand, allocations made in proportion to owners frontages, whereby natural uses of water, like drinking, take allocation priority over artificial uses, like farming .This also applies to natural water sources but not artificial ones, meaning littoral rights apply when borders natural water, right to use it but may not alter water's position by artificial means

Prior Appropriation Doctrine

• Is observed in the Western states with scarce water. "First in time, first in right to use water over later users” means that there were Water rights acquired regardless of whether or not individual is a riparian owner

Claimant Requirements

• Claimant must divert and use water regularly for domestic, industrial, agricultural, or some other beneficial use. Rainfall is real property.
• Surface Waters originate from rain, springs, or melting snow, have not reached a natural watercourse, and landowners may be responsible for surface-water runoff
• Reasonable conduct rule allows diversion of surface waters as long as conduct is reasonable under the circumstances
• Percolating water is the definition ,water found below the surface of the land.A surface owner has right rights to pump water for their own use but When owner diverts, obstructs, or dams percolating waters on her land, it must be done so that it will not unreasonably injure the property of adjacent landowners

Real Property Estates and Interests

• Estate = an interest in land that has 2 characteristics—(1) the right to possess the land and (2) the length of time ownership may last

Present Interests:

• Includes current ownership in property
• Includes Freehold, meaning an ownership interest in land. -Includes Non-freehold that is smth less than an ownership interest - Leasehold estates

Future interests:

• An interest requiring a person to wait for some event or time in the future in order to obtain possession"

Freehold Estates:

• Fee simple estates (two types)

Fee Simple Absolute,

• Also known as fee simple or fee interest, where the Complete ownership lasts until end of time and is Subject to only certain limitations, like contractual restrictions between homeowners and gov regulations. -May sell, gift, or convey the interest during lifetime by conveying to A to signify fee simple transfers

Fee Simple Defeasible

• Interests that may be cut short by the occurrence (or nonoccurrence) of a condition, limitation, or restriction as to the property -Depending on the type of fee simple defeasible either the grantee's interest will terminate automatically or the grantor must perform an action in court (called a quiet title action) to terminate ownership
• Fee Simple Determinable -A fee simple absolute interest that automatically terminates upon the occurrence or nonoccurrence of some condition, limitation, or restriction to the property. -If fee occurs, frantor automatically reacquires possession or if deceased, goes to grantor heir
  • Usually the grantor intends to prevent property from being put to a certain use. -Common Keywords are "Until", "so long as", "unless”, and “for the time that" -Possibility of reverter - fee simple eterminable's future interest held by the grantor
• Fee Simple Subject to a Condition Subsequent
  • feesimpleabsoluteinterestthatcan FeeSimpleSubjecttoa terminate upon the occurrence or nonoccurrence of some condition, limitation, or restriction to the property., as a condition of Granting or Heris, a lawsuit must need to bring a lawsuit that actually restored ownership to the property.
  • Until this, holder of the fee remains in possession
• Grantor must state that the fee is subject to a condition in order for this to occur
• “On the condition that”, “but if”, “provided that"
• Right of reentry or power of termination the condition for Fee is not met
• Executory interest - if future interest is held by anyone other than grantor or grantor's heirs

Life Estates

Is where property is held for a person's lifespan and Includes the ability for life estate pur autre vie - when the measuring life is that of someone other than the holder of the estate Not inheritable being the life tenants estate does not have any interested in the estate upon death because Holder of the future interest takes the property immediately upon death of the lie tenant.

• Life tenant may not commit waste (or else estate terminates)
• Where tenant damages, destroys, or reduces value of propert

Remainders and Reversions:

• Reversion = if holder of the future interest is the grantor
• Remainder if holder of the future interest is someone other than grantor
• If holder of future interest is dead, heirs inherit

Holder has right to:

• Enjoy undisturbed possession during the life estate
• Sell, transfer, or convey the life estate interest to another person.
• Conveyance will still be subject to termination at end of Measuring life

Tenant has following duties:

• Not commit waste.
• Make ordinary repairs so the property does not fall into disrepair Due To neglect like
• Painting, roof repairing, and window replacement
• Pay the property taxes
• Pay interest, but not principal, payments on the mortgage recorded on the title to the property at the time the life tenant takes the estate
• Nuisance/Trespass/Duties to Third Parties

Child Tampering:

• Attractive nuisance doctrine: landowner liable for injuries caused to trespassing children if hazardous object or condition present + that the child was on the property be, and was an, object / condition likely to attract children

Licensees:

• Persons who enter land under permissive use by owner. -Implied permission for emergency crews in emergencies and for home solicitation salespeople to enter land, whereas Landowners duties are as such" greater as owed to trespassers, or do not intentionally injure licensees. and must either warn or make safe any known dangers on the property

Invitees:

• People who enter land that is open to public or enter land for a biz purpose, like for Religion service or while at a public park
• Highest duties when it comes to Landowners duties: -Must not intentionally injure -Must warn or make safe known dangers and must ALSO have a duty to reasonably inspect and discover non obvious or hidden dangerous conditions and warn against or make safe those conditions

Easements:

Is the right to use another's land for a specific purpose like, Holding of easement, means guest is essentially using land Landowner who owns land is subject to the rights of the easement holder, like Public util right to install or maintain utilities OR a neighbor using the other neighbor's driveway to park

Classification of Easements:

• Affirmative or Negative -Interest that allows the holder or owner of the easement to use land of another. -ex, right to use driveway to get to street faster, and the grant is almost always affirmative in character
• *Negative easement: grants right to restrain or prevent the use of land owned or possessed by another person.
  • For example chris grants his neighbor tyler his tree to ensure tyler (the easement holder) can have a decent view from his house

Appurtenant or in Gross with -Appurtenant easement: benefits a parcel of land rather than conferring a personal benefit upon the holder of the easement. it Does Requires at least two parcels of land, called -Dominant estate / Dominant tenement: the party is identified by which land the benefit occurs and the

• *Servient estate or servient tenement: identifies the party whose land is burdened with a one lot needs driveway
• Easement in gross delivers personal benefit to someone (person or business) rather than to benefit a landowner, meaning Holders don't requires the land to identify a property and are Not attached to, or appurtenant for any parcels of land; Usually not between adjacent property owners,for examples: utility easements or installs utility lines on someone’s front yard"

Creation of Easements:

Easements by Grant: created by an express agreement, that needs to meet requirements of state’s Statute of Frauds, and deed has record of the Grants.

• *Express grants: when a property owner (the grantor) grants to another the right to use portion of property then This property is then a servient tenement to the grantee of the easement

Easements by Reservation:

-The landowner who conveys the property has a dominant tenement over the grantee’s property

Explore the foundation of U.S. real estate law with a focus on court decisions and the U.S. Constitution. Understand the 4th Amendment's protection of privacy rights for property owners, the 5th Amendment's due process and eminent domain clauses, and the 14th Amendment's extension of these protections to state governments.