Property Law Notes - Bundle of Rights, Easements, & More (PDF)

Emma O’Keefe – Property Bundle of Rights  The law considered it to be a relationship between people with respect to things or land o Right to a thing - not the thing itself  Property consists of the socially recognized and legally enfor...

Emma O’Keefe – Property Bundle of Rights  The law considered it to be a relationship between people with respect to things or land o Right to a thing - not the thing itself  Property consists of the socially recognized and legally enforceable rights to things or land  Bundle of Rights:  Right to Exclude o E.g. right to prevent someone from entering your property, or using your toy o Corollary: right to include  Right to Transfer o By sale, lease, gift, devise, inheritance  Right to Possess and Use o Use property in way that you wish  Right to be Free from Nuisance o Prevent another from unreasonably interfering with your use and enjoyment of your land  Right to Destroy o Consume or destroy that which you own.  Since these sticks are separate, it’s possible to have some rights but not others o Ex. Trustee has right to sell, but not right to use for personal interest  These rights are important because: o Productive use of resources o Privacy o Family o Democracy  Rights are limited o Right to exclude:  Cannot prevent someone from your crossing property to save another from getting hit by a car // cannot exclude law enforcement with a valid warrant  Legislation limiting ability of foreclosing banks to remove homeowners from their homes. o Right to Possess and Use  Cannot use in way that unreasonably affects neighbor’s use  Nuisance law, land use controls, e.g. zoning o Right to transfer  Cannot transfer to avoid creditors claims.  Civil rights legislation forbidding discrimination in who you rent or sell to. o Right to destroy  Historic preservation laws prevent owners from destroying historic properties  Have public significance, have historical value to public.  Property law is a process of reconciling the competing goals of individual owners and society in general Acquisition of Property Objectives behind Property Law  3 Core Objectives to decide property rights: o Fairness 1 Emma O’Keefe – Property o Incentives (for productive behavior) o Certainty  Try to tie arguments back to these underlying objectives o It’s all about balance on all these things: certainty, fairness, avoiding conflicts, judicial efficiency, etc., Capture  Certain Control Rule – outdated o The first to occupy animal owns it o Occupancy is achieved where:  Deprive animal of tis natural liberty  Mortal wounding  Trapping so escape is impossible counts  Level of control  Manifest unequivocal intent to appropriate the animal  This is how it appears to others  The certainty of control o Pierson v. Post (fox hunting)  Dissent – reasonable prospect rule: Pursued the animal such that you have a reasonable prospect of capturing the animal (closer to actual rule now)  Capture Rule o 1. Unequivocal intent to appropriate (show you do not intend to abandon) o 2. Bring within power and control  Take reasonable precautions against escape  Absolute security against the possibility of escape is not required o Ohio v. Shaw (stolen fish from net – fish did not need no possibility of escape to still be owed by original fishermen)  Factors to consider for when courts should or should not follow customs: o No contrary custom or usage exists among those whom the court’s decision will govern o Custom is of long-standing duration o Custom requires Hunter 1 to take all practicable steps to secure the animal o Custom works well in practice / essential to the industry  Ghen v. Rich (whaling customs)  Judge sides with custom bc no person would engage in fruits of his labor could be appropriated by any chance finder  You cannot violently or maliciously interfere with someone else’ property where they do business o Competition is fine – it’s the violence / malicious interference that matters o Keeble v. Hickeringill (decoy pond, gun shot scares ducks away)  Rationale Soli: by reason of soil o Constructive possession o You have ownership of animal on your land until it leaves your land  disincentivizes trespass o gas & oil under your property – it’s yours  If it leaves your land, it’s owned by whoever it’s under  Animus Revertendi 2 Emma O’Keefe – Property o If you have domesticated animals that wonder onto someone else’s property are still owned by you as long as they have a habit of returning  Meant to let your domesticated livestock graze  Rule of Increase o If one person’s animal wonders off and mates with another person’s animal, whoever owns the mother keeps the offspring  Pre-Possessory Interest o If you can show you had a pretty good chance of achieving possession and action was interrupted by unlawful actions, then you have pre-possessory interest (significant step)  Popov v. Hayashi (baseball scramble – used actual capture rule) Find  Step 1: Pick Appropriate Legal Category: o Lost  Unintentionally placed, unintentionally left behind  Finder right against all others but true owner  Armory v. Delamire (boy finds jewel, appraiser won’t return it)  Why we should give it to the finder  Incentive for productive action – bring item back into commerce  Incentives the finder to actually use the property which gives it social benefits rather than hide it o Mislaid  Intentionally placed, unintentionally left behind  Locus owner has superior title to property over finder but not true owner  McAvoy v. Medina (mislaid pocketbook on barber shop table – gave to locus owner as bailor) o Abandoned  unintentionally placed, intentionally left behind  internationally place, intentionally left behind  Finder has superior title to all including true owner  Some exceptions ↓  Sometimes even for lost, abandon, mislaid property locus owner gets superior title over the finder o Rules:  If attached to land, goes to locus owner  If not attached to land, goes to finder o Factors to consider  Item attached or embedded in land  Finder is agent of locus owner  Locus owner makes manifest intent to control the property  Item found in private or public part of private land  i.e. pocketbook found on floor of shop  public – finder rights / private – L.O. rights  Locus owner is bailee of true owner  i.e. pocketbook found on table – McAvoy v Medina  if no bailment, finder has greater interest o Examples: 3 Emma O’Keefe – Property  Hannah v. Peel (found broach – considered unattached to land therefore right to finder – factors come from this case ^)  Bridges v. Hawkesworth (plaintiff found banknotes on the floor – found on public part of private land = rights to finder)  South Stafford Water Co. v. Sharman (found rings in pool while paid to clean it – rights to locus owner bc finder was an agent of locus owner and it was found in a private part of private land)  Elwes v. Brigg Gas Co. (boat embedded in soil discovered by gas company, boat property of locus owner – embedded in land) Gifts  Inter Vivos Gift Doctrine o Gift of personal property during life  Not devise of personal property at death  Requires will  Not gift of real property  Requires deed  There are three requirements to make a gift of personal property o 1. The donor must intend to make a present transfer of an existing interest in the property (intent is commonly the problem in litigated gift cases) o 2. The donor must deliver possession to the done with the manifested intention to make a gift o 3. Acceptance by the donee is also required (seldom an issue – assumed where gift has value)  Intent o Must show owner’s intent to make a present, irrevocable transfer of the property  Present – at the time of the gift (i.e. during life)  irrevocable – owner cannot pull gift back o evidence  objective acts work, but are not required  oral evidence  infer from situational facts o evidence can be manufactured – creates risk of fraud  to prevent against fraud: delivery requirement  Delivery o Higher evidentiary standard  No oral evidence – have to show objective facts  Have to show that something was physically handed over o 3 types of delivery  Manual Delivery  Means physically placing into the donee’s hands the item that is being given o Best serves policies  Best evidence that there is no fraud  Tangible, not circumstantial, evidence o Best evidence of intent  Donor feels the “wrench” of delivery  If gift can be manually delivered, then it must be 4 Emma O’Keefe – Property o Constructive and symbolic delivery are not adequate in these situations  Constructive Delivery  Physically hand over an object that gives access to of control over the item being given o E.g. key to a bureau, or to a car.  Gives the recipient control over the gift.  Constitutes constructive possession of the gift.  Use for items that are not convenient or possible physically to hand over.  Symbolic Delivery  Physically hand over something that symbolizes the item being given  Usually, a written statement o E.g. a letter stating that “I give you my piano.”  Oral statement not sufficient o Something must be handed over  Gruen v. Gruen (“I give you the Klimt painting, reserving possession for my life” father to son) o Son got a future interest in painting – that is a present ownership interest  Reservation of a lifetime interest does not defeat present gift intentions o What is sufficient to constitute deliver must be tailored to suit the circumstances  Under these circumstances, it would be illogical for the law to require the donor to part with possession of the painting when that is exactly what he intends to retain – symbolic delivery with letters is fine  Gift Causa Mortis o Gift by someone who apprehends that they are facing imminent death  Substitutes for will in situation where person does not have time to create one – exception to the Statute of Wills  Gift only takes effect if the person dies o Same three criteria as for inter vivos gifts  Except that, with respect to intent, a gift can be revoked if the person does not die at that point.  Courts may interpret requirements more strictly since substituting for a will Adverse Possession  Adverse possession functions as a method of transferring interest in land without the consent of the prior owner  Adverse Possession Elements: o Hostile o Exclusive o Lasting o Uninterrupted o Visible o Actual  These elements are under a reasonable user standard 5 Emma O’Keefe – Property o Use as a reasonable owner of that particular land would use it under the circumstances  Hostile o Means non-permissive o Possession without having first obtained permission o If possession is permissive, it is not hostile o Majority of states: Does not need to be intentional (mistakes count Mannillo CT doc) o Hostile with Claim of Right – possessor necessary state of mind  Minority rule 1: Good faith state of mind  “I thought I owned it”  Most “claim of right” jurisdictions follow this.  Minority rule 2: Bad faith state of mind  “I know I do not own it and intend to take it by adverse possession”  Only a few jurisdictions follow this  Majority rule: state of mind irrelevant  “Claim of right” is not part of the test  Exclusive o One of rights of property ownership is right to exclude others  Possessor must exercise this right to exclude o Cannot open property to public at large  i.e. community garden, etc., o Exclude as much as a reasonable owner would under the circumstances  Lasting o Possession must last for the statutory period  Most states it’s 10,15, or 20 years o Exceptions to the lasting requirement:  Disability exception  Tacking exception**  Uninterrupted o Possession must be uninterrupted for duration of statutory period o Cannot possess for a while, take a break, then possess again  Each possession restarts clock on statutory period o Measured by nature of land  As continuous as reasonable owner would be on the land  i.e. summer occupancy of a summer vacation home is continuous (Howard v. Kunto)  Visible o Open and notorious o Must make your possession obvious to the world  Mannillo v. Gorski (steps encroached by some inches)  Where there’s a minor encroachment, not visible to naked eye, it does not meet open and notorious requirement of adverse possession o Sufficiently visible that reasonable owner would see if inspected  True owner need not actually have seen  Actual o Must actually possess the land  Cannot posses it from afar 6 Emma O’Keefe – Property o Must physically use the land  Required acts vary depending on nature of land  Use as much as a reasonable owner would for that land o Only claim that which you actually occupy  Exception: if actually possess part, with “color of title”** to the whole, then actual possession of portion constitutes constructive possession of hole  Color of title is when person has a document that appears to give title, but the document is invalid o Ex. A deed signed by a minor  Color of title** o A claim founded on a written instrument (a deed, a will, etc.,) or a judgment or decree that is for some reason defective and invalid o Color of title is usually giving you more land than you’re entitled to  Purposes behind adverse possession o Standard statute of limitations objectives  Bring actions before memories fade, evidence lost.  Settle disputes before people make investments in reliance on status quo o Quiet Title  After adverse possession period, prior owner’s claims eliminated  People do not want to invest if other can later claim title  Not good for improvement of land  Adverse possession doctrine functions to cleanse title  Clear up ambiguities. o Reward Productive Use of Land  Favor those who actually use and develop the land (occupier) over those who ignore it (true owner, or adverse possessor who barely uses).  Increases productive use of land  Important to encourage more cultivation of undeveloped lands o Incentive Owners to Monitor Their Land  If fail to monitor land, can lose it  Promotes clarity and prevents disputes  If land cannot easily be given back, the true owner may be forced to convey the land so occupied upon payment of the fair value of the land o But if the conveyance puts too much hardship on the true owner such that it renders the land unusable, the court will require ejectment  Tacking & Privity o Tacking allows adverse possessors to join their time of possession onto another’s adverse possession of the same land to get to the required statute of limitations o Traditionally, before tacking is allowed, adverse possessor has to show they were in privity with predecessors  Usually color of title** issue o Want to favor those who are there in good faith though o New Rule:  Privity is there to have some reasonable connection between successive occupants of real property so as to raise their claim of right above the status of the wrongdoer or the trespasser (from Howard v. Kunto - all in wrong plot)  Don’t want to reward squatters 7 Emma O’Keefe – Property o Reasonable connection = privity o Owners changing doesn’t affect adverse possessor  Don’t need to tack owners ever  Tacking applies to the adverse possessor  Disabilities  True owners with disabilities get extensions of the statute of limitations o Freezes / tolls adverse possession clock while owner is disabled  4 recognized disabilities o Mental incapacity o Physical incapacity o Age of minority o Imprisoned  True owner given 10 years later disability ends to bring ejectment action, or original statutory period, whichever is longer  Disability must exist at the time that ejectment action first accrues o At time that all adverse possession elements first met o When the adverse possession clock begins, not at first entry  Disabilities that arise later does not stop the clock  You can’t join disabilities together to extend the clock  Owner and owner’s successors in interest benefit from owner’s disability o So owner can transfer property without losing extension o Transferable = alienable  Disability can lengthen, but cannot shorten  Owner gets the longer of: o The original adverse possession period o Or the extension after the disability ends Boundary Disputes  Agreed Boundaries  If there is uncertainty as to true boundary line, a written or oral agreement on it is enforceable if the neighbors subsequently accept it for a long time. o To demonstrate, must show:  Initial uncertainty about location of boundary line  An actual agreement – express or implied, written or oral – to treat particular line as the true boundary  In some states, possession up to the agreed line  Would not qualify for adverse possession because agreement makes it not “hostile”  Estoppel Boundaries  If one neighbor makes representations about, or takes actions that appear to indicate, a boundary line, and the other changes their position based on this, then first neighbor is estopped from changing their position regarding the location of boundary line o It may also be sufficient that one neighbor remains silent while other makes substantial expenditures in reliance on the boundary line  Rooted in notions of reliance and fairness o There need not be an actual agreement between the neighbors  Acquiescence Boundaries 8 Emma O’Keefe – Property  If adjacent landowners each recognize a fence or other clear line as the boundary for an extended period, courts will treat this as the agreed boundary line  Differs from Doctrine of Agreed Boundaries in that it does not require actual agreement between parties  Differs from Doctrine of Estoppel in that neither party needs to have changed their position in reliance on the boundary  Differs from adverse possession in that o “extended period” may be shorter than the SOL o Other adverse possession elements not required 9 Emma O’Keefe – Property Landlord-Tenant Law Leasehold Estates  Leasehold estate is a type of possessory estate in land o The right to possess land now o The landlord owns the future interest (remainder)  They are possessory estate for which the start and end dates are identifiable at the time the estate is created o As opposed to life estate which doesn’t have a specified end date  4 Types of Leasehold estates:  Term of Years o Nature: Tenant in possession for a fixed term o Creation: Lease states the starting and ending dates  Must be in writing if for more than a year (statute of frauds) o Termination: Automatic at the end of the period – no notice required o Extension: Requires mutual agreements of parties and creation of new lease  Periodic Tenancy o Nature: Tenant has right to occupy for a repeating term / a recurring fixed period  i.e. month to month  automatically renews unless one of the parties gives timely notice of termination (w/ same terms and conditions as original lease) o Creation:  Express – in a document  Implied  1. Term of years tenant holds over and landlord consents o Gives rise to a periodic tenancy o Period is that in which rent generally paid o Maximum period for implied periodic tenancy is one year.  That period then renews unless one party terminates.  2. Or tenant at will and they begin paying rent o Termination: Proper and timely notice required – otherwise automatic renewal  notice must be equal to one period, or six months, whichever is shorter  notice period always ends on the last day of the periodic tenancy period  so count it back o Duration: For length of period, which renews automatically unless one party gives timely notice of termination  Tenancy at Sufferance o Nature: At end of term of years, tenant remains in possession without landlords consent – i.e. hold over o Landlord options:  1. Evict / eject  Can collect damages  2. Consent to stay on  Expressly or impliedly (by accepting rent)  If consent, then implied periodic tenancy arises 10 Emma O’Keefe – Property o Period measured by prior term, or by way that rent payment period stated in the lease – (jurisdictional split)  3. Negotiate new term of years lease with holdover o Termination: Whichever option landlord chooses - tenancy at sufferance ends o Purpose for creating this category  To protect landlords from adverse possession  Keeps you as a legally recognized tenant – not an adverse possessor  Tenancy at Will o Nature: Tenant in possession with landlord consent and leasehold immediately terminable by either party o Creation  Express – usually involves agreement to pay rent  Implied  Enter with consent but without agreement to pay rent o i.e. living on a friend’s property  if you being to pay rent, periodic tenancy arises o period = frequency with which rent is generally paid o Duration: Lasts so long as both parties desire // either can terminate at will o Termination  Express  One party gives notice of termination to other o Earlier era: no advance notice required o Modern Statutes: must be 30-day notice  Implied  If either party dies The Lease  To determine if it’s a lease consider the following factors o Intention of the parties o The number of restrictions on use o The exclusivity of possession o The degree of control retained by granting party o The presence or absence of incidental services  It matters primarily whether an arrangement amounts to a lease because leases give rise to the landlord-tenet relationship which carries certain rights, duties, liabilities and remedies that do not attach to other relationships  Conveyance vs. Contract o A lease is both a conveyance and a contract  A lease transfers a possessory interest in land – conveyance that creates property rights  It also usually contains a number of promises, such as a promise by tenant to pay rent or a promise by the landlord to provide utilities – therefore a contract o Courts commonly rely on the contract principles to reshape the law of leases Delivery of Possession  Our class will follow the American Rule  American Rule v. English Rule – which is better 11 Emma O’Keefe – Property o American: The landlord is not bound to put the tenant into actual possession but is bound only to put him in legal possession  Potentially less complex litigation  Shouldn’t hold landlord responsible for other’s actions  Landlord doesn’t have a strong incentive to sue holdover tenant (still getting paid)  Burden should be on the tenant who needs property  If you want to guarantee no holdover, may prevent landlord from renting back to back, could make rent more expensive overall o English: In the absence of stipulation, there is in every lease an implied covenant on the part of the landlord that the premises shall be open for entry by the tenant at the time the fixed lease begins  Principles of fairness  Landlord is at best position to have knowledge on holdover tenant  Point of lease is to give property interest to tenant, so if there’s a holdover, no tenant would sign and doesn’t further purpose of the lease  American rule could deter tenants from wanting to rent or requesting a number of conditions  The very likely intent of the parties is to have the property open  Under American Rule, tenant who cannot get access to their property (bc of holdover tenant) still has to pay rent to landlord  Under English Rule, have to give landlord time to holdover tenant out o In that time, the new tenant can:  Rescind the lease (get out of the deal)  Sue for any damages (cost of new place)  Not rescind and sue for the amount of time they didn’t get it  If tenant at sufferance is only occupying part of the premises, the new tenant can occupy the other and pay a discounted rent  Taking it on themselves to bring action against holdover themselves (rare) o The tenant does not have to pay rent while waiting for landlord to remove holdover  Hannan v. Dusch (holdover tenant situation – followed American rule) Sublease and Assignment  An assignment transfers a tenant's entire interest in a lease to a new tenant  A sublease allows a tenant to retain some interest in the lease while granting another party use of the property  Unlawful Restraints on Alienation o Alienation = transfer (If you don’t have right to transfer then it’s unalienable) o Absolute restraint on alienation is unlawful  One reason behind this doctrine: If property is not transferable, it cannot move to a higher value user – market can’t function o You can put reasonable restraints on alienation  Commercial Transfers o Have to have a commercially reasonable reason to deny consent of transfer  Both as a contract & conveyance this should be the rule  Contract o Implied good faith – reading terms in o Implied good faith = needs to be commercially reasonable 12 Emma O’Keefe – Property Conveyance  o Doctrine against unreasonable restraints on alienation o Don’t have an absolute right to deny transfer in property law o To simply want to extract more rent  unreasonable o Factors of reasonability under Kendall v. Ernest Pestana (renting part of airport hangar – wouldn’t let subleaser assign to new tenant):  Financial responsibility of the proposed assignee  Suitability of the use for the particular property  Legality of the proposed use  Need for alternation of the premises  Nature of occupancy  You cannot deny consent solely on the basis of personal taste, convenience, or sensibility o Not commercially reasonable  Landlords want to protect their finances and underlying use of their property The Tenant Who Defaults  Landlord Options if Tenant Defaults o Landlord could put forfeiture provision in the lease  If tenant violates a lease term, landlord can evict tenant  Courts will enforce provision, but will read provision narrowly o Sue for Damages o Evict Tenant o Summary eviction proceeding  Statute to help landlords evict a tenant who stops paying rent  Streamlined process  Can only litigate grounds for eviction (i.e. is tenant paying rent or not)  Court will give tenant a certain amount of time to move, if they don’t move in that time they will send marshals to remove you  Self-Help o Can landlord self-help and evict tenants by changing the locks? o Common law rule: You can use self-help if  You’re legally entitled to possession  Your eviction is peaceable o Modern rule: No self-help at all  Must go through judicial proceedings o Berg v. Wiley (commercial restaurant tenant – went in and changed locks while Berg absent after violations – considered not peaceable bc if Berg had been there would be violence (landlord even had peace officer there) – switched to modern rule)  Tenant Abandons o Where a tenant abandons = surrender of premises  Landlord can:  Accept surrender o Terminates relations with prior tenant  Does not accept surrender o Sue tenant for rent  May be limited by duty to mitigate 13 Emma O’Keefe – Property o If they find a new renter, landlord can still sue tenant for the difference if rent is less o If new renter pays a higher rent, then courts will actually give excess to tenant since landlord did not surrender the rights o Modern Mitigation Rule: Landlords must take reasonable efforts to mitigate  Treat it as vacant stock (advertise it, show it, etc.)  Duty to mitigate comes from court’s viewing leases more like a contract (mitigation is basic contract principle) o How far does landlord have to go to mitigate damages?  Just has to be reasonable (landlord doesn’t have to accept an unsuitable tenant)  Have to make reasonable efforts to seek new tenant (do what they normally do) o Tenants reason for surrendering is not at issue (doesn’t matter) o Sommer v. Kridel (broken engagement – landlord wouldn’t let him out of lease nor show it to other suitable tenants – Court switched to mitigation rule for fairness) The Fair Housing Act  Historical Background o Racially discriminating zoning in place separating neighborhoods by race  Eventually struck down by Supreme Court (Buchanan v. Worley) o So then, white people began using restrict covenant to prevent black people from moving in  Covenant = private contract between private landowners  i.e. agree to not sell to black people o this too was deemed unconstitutional but not until 1948 (Shelly v. Kramer) o Not until Fair Housing Act that housing discrimination was outlawed  Reached farther than race – includes other protected minority statutes  Protections o Protections against ‘harmful’ discrimination  As opposed to discrimination based on credit score, references, etc., o Discrimination based on classifications is per se harmful discrimination o It is unlawful to discriminate against someone in housing on the basis of:  Race  Color  National origin  Sex (construed as gender)  Familial Status (family with children – not marriage status)  Handicap  3604 – Substantive Provision o Unlawful to discriminate on basis of protected characteristics by  Refusal to sell or rent or otherwise make unavailable  Discrimination in terms of conditions or services  Publish advertisement that discriminates  Handicap Only:  Refuse reasonable accommodations or modification (at expense of handclapped person)  3603 – Exceptions o Single Family dwelling sold or rented by owner so long as: 14 Emma O’Keefe – Property  Does not own more than 3 single family homes  Sells or rents without use of a broker or agent o Four unit or less dwelling where owner occupies one of the units as his residence o *These exemptions do not apply to discriminatory advertisements o Note that Civil Rights Act of 1968 prohibits housing discrimination by race with no exceptions (but the other protected classes have these exceptions ^)  Proving Discrimination: o Discriminatory Intent – usually sufficient but difficult to prove o Discriminatory Effect – indirect proof of intentional discrimination via burden shifting test  Burden Shifting Test o Plaintiff – show prima facie o Defendant – show permissible purpose (justification) o Plaintiff – show that purpose was a pretext  Prima Facie Case: o Plaintiff has the protected characteristic that was allegedly the basis for the discrimination o P was qualified for the house o P applied for the housing o The housing was available o P was denied the housing  Permissible Purpose o Private Housing: D must show denying this person was necessary to achieve a valid business purpose o Public Housing: Government must show a compelling government interest with no discriminatory alternative  Pretext o P must show that D’s permissible purpose is really a pretext for impermissible discrimination o P demonstrates this by showing that there is an available alternative practice that has less disparate impact and serves the entity’s legitimate needs. o If so, this suggests that choice of method that has disparate impact impermissibly reflects intentional discrimination Landlord Duties to Repair and to Maintain Habitability  History Leading to Implied Warranty:  Caveat Lessee o Let the lessee beware o If you agree to lease a premise, you get it as it comes  You can’t look to the landlord to make repairs  Similar to if you purchased a home o This made sense given the nature of leases in the agriculture society in which this law developed o Independent Covenants  Tenants covenant to pay rent is independent of landlords covenant to make repairs  So tenant had to keep paying rent if landlord breaches 15 Emma O’Keefe – Property  Made sense at the time – rudimentary agriculture tenants  Could make their own repairs o Dependent Covenant (in implied / holdover cases)  If landlord breached covenant of quiet enjoyment (part of the lease) tenant could stop paying rent  Quiet enjoyment = covenant to put tenant in legal possession o No one can oust tenant o Your possession will be undistributed  This system wasn’t working well in an urban world o Wanted to find a way to make tenants rent dependent on landlords duty to repair  Courts trying to find a way to work that in current legal systems  Came up with constructive eviction  Constructive Eviction o Treating unrepaired conditions that were under express covenant as a constructive eviction of tenant  Eviction would then be a violation of quiet enjoyment  Dependent covenant  So the tenant no longer has to pay rent o Difficulty:  To assert constructive eviction, tenant has to move out and use constructive eviction as a defense to landlord suing for back rent – puts tenants at risk o Tenant has to show:  1. Landlord engaged in wrongful conduct  Wrongful conduct includes: o Landlord breaks express covenant o Landlord breaks statutory duty o Landlord affirmative acted to render premises uninhabitable o Landlord allowed a morally wrong condition on premises  2. That wrongful conduct rendered premises unsafe / uninhabitable o To assert:  1. Tenant has to move out  2. Tenant has to have given landlord reasonable time to fix problem  Example of why it wasn’t satisfactory: o Apartment with peeling paint  Paint is lead based o Tenant scared for safety for her children  Landlord refuses to repair  No express covenant in lease  Tenant stops paying rent o Under the constructive eviction doctrine, landlord wins  Landlords actions are not wrongful  Didn’t break an express covenant  Tenant didn’t move out  Given this problem courts felt the doctrine needed to evolve more o Doctrine of implied warranty of habitability emerged Implied Warranty of Habitability  In the rental of any residential dwelling unit an implied warranty exists in the lease that the landlord will deliver over and maintain throughout the period of tenancy, premises that are safe, clean, and fit for habitation  Legal standard for what is uninhabitability: 16 Emma O’Keefe – Property o Covers all latent and patent defects in the essential facilities of the residential purposes  Essential facilities are the facilities vital to the use of the premises for residential purposes  The tenant must show that (in order to withhold rent): o 1. The landlord had notice of the previously unknown defect and failed, within a reasonable time, to repair it o 2. The defect, affecting habitability, existed during the time for which rent was withheld  Hilder v. St. Peter (landlord didn’t fix anything – a million things wrong will place) o Case that showcases all of these rules being applied / established implied warranty  Courts look to housing codes but still needs to be a thing that affects habitability  Warranty cannot be waived or assumed in residential leases o If they did, landlords could get tenant to waive this because of inequality of bargaining power  This doctrine would then be eviscerated  Bad for society (not good housing  missing work, missing school, etc.,)  Tenant’s duty to repair o Doctrine of waste o Tenant just can’t neglect so that the value of the property is unreasonably impacted o Creates limited duty of repair on tenant’s part (burden on the landlord for big things) 17 Emma O’Keefe – Property Possessory and Future Interests Possessory Interests  3 Historical Takeaways from the Development of Possessory Interests o 3 take aways  1. Ownership of land was not always what it is today  There are multiple variants between where it started and the fee simple o Ex. The life estate  2. The ability to pass it onto your heirs / transfer generated more wealth and value of land  Gave incentives to support longevity of land  If there’s no right to transfer, no ability to give land from lower value user to higher value user  3. The Fee Simple was really important to development of modern industrial revolution  You need more than resources, you also need more capital o The fee simple provided that capital  The Fee Simple o A type of possessory estate  Right to possess now o Two Key Elements  1. Potentially unlimited duration  Passes automatically to heirs, unless transferred or devised  Only ends if O dies intestate and without heirs o Then the land escheats to the state  2. Unlimited right to transfers  Freely alienable  Freely inheritable and divisible o To convey land to someone else:  At common law  Had to use specific language from an inter vivos transfer o “To A and his heir”  Otherwise all that is created is a life estate  Words of purchase: “To A” 18 Emma O’Keefe – Property Words of limitation: “and his heirs” o Define duration of estate o Heirs do not receive any interest until such time as A dies  Modern Practice  “To A” is sufficient to create a fee simple o Heritability  If O dies without will goes to heir Heritability Order:  Heir – one who survives the decedent - Issue takes first (biological descendants) and inherently through intestate - Then ancestors (parents, then grandparents) succession - Then collaterals (other blood relatives i.e.  Statutes determine who are the brother and sisters take first then others in heirs and what order of kin the order of closeness) line goes - Spouse has a statutory right to share of  Heirs can only be determined estate (technically not considered an heir) - If no heirs: Land escheats to state (only upon one’s death way that fee simple can terminate)  If O dies with a will, goes to devisee (person/thing listed in will) o The issue inherits by right of representation  Right by which secondary issue (grandchildren) represent primary issue who predeceased O  Assets flow to next stage in genealogical tree.  Members of each generation inherit equal shares o Also known as inheritance per stripes (“by the stocks”)  If one of O’s issue predeceases O, then that person’s interest goes “by the stocks” to their issue  At common law, children born out of wedlock did not inherit.  Today they do  At common law, there no such thing as adoption  Today adopted children take from adoptive parents just as biological issue do  The Fee Tail o Requires grantee to pass on to his/her own issue.  Grantee does not have right to convey entire interest to a third-party during life (can only convey a life estate) o Grantee does not have right to devise interest (must pass to issue)  Issue take property in fee tail (must pass on to their issue, and so on)  Contrast with fee simple that is freely transferable, devisable. o Motivations for rule  Ensure that property passes to the next generation  Landed aristocracy stays in power  Prevent single heir from frittering away property  Prevent against forfeiture  Keep land in family and so retains family’s status and wealth o If grantee dies without issue  Possession returns to O in fee simple – reversion  Unless O has provided that it go to some other party – remainder o How to convey a fee tail  “To A and the heirs of his/her body” 19 Emma O’Keefe – Property Note that words of limitation (that define duration of estate) are to the  “heirs of his body,” i.e. to A’s issue.  Different than fee simple which is “to A and his/her heirs.” o Historical changes to the Fee Tail  Allows disentailment  First through “common recovery”  Complex procedure to change your estate from fee tail to fee simple  19th century court allows owner in fee tail to convey fee simple to another, and the other to convey back in fee simple  Legal fiction that avoids complicated common recovery lawsuit o Leads to use of future interests o Modern Practice  US abolished the fee tail  Except for Maine, Delaware, Massachusetts, and Rhode Island  Seen as anti-democratic  Violates Jeffersonian ideal of independent land owners  Today, a conveyance “To A and the heirs of his body” usually creates a fee simple in absolute in A o Broader Takeaway  Legal recognition of particular estates in land affects how one can hold private property in land  Today, O cannot create or transfer a fee tail in most jurisdictions even if she wants to  Limit on property rights for policy reasons (promote democracy)  Life Estate o Lasts for duration of life o Can be grantee’s life or third party’s life  “To A for life” or “To A for the life of B”  O conveys blackacre “To A for the life of B” o A receives a life estate “per autre vie” o B is “cestui qui vie”  o Always followed by a future interest  Reversion in O or remainder in 3rd party o How to create a life estate:  “To A for life” o Baker v. Weedon (old man young wife – left to her with future interest in grandkids)  If one co-owner unreasonably deprives the other co-owner of value of the property, they can sue for waste (usually future interest will sue life estate holder)  The life tenant cannot sell a fee simple unless all other persons having an interest in the property consent or unless a court of equity orders sale  Rule for when property will be court ordered to be sold:  1. When it is necessary  2. And when it is in the best interest of all owners  Leasehold Estate o Distinguishing factor is that they have a defined possession now  Freehold estates: no defined termination date (i.e. fee simple, life estate) o Leasehold are nonfreehold estates 20 Emma O’Keefe – Property Defeasible Possessory Estates  States that can be prematurely ended if a stated event happens  Prematurely = before their full duration is complete o E.g. for a life estate, before life ends o E.g. for a fee simple, before it escheats to the state  Freeholds are either absolute or defeasible o Absolute = will necessarily exist for their full duration o Defeasible = Possessory estate in land that is subject to be annulled or revoked upon the happening of some future event  Why make a defeasible estate? o To give the grantor control over property after the conveyance o To use the property in order to control the behavior of the grantee  Any of the possessory estates can be defeasible o Defeasible fee simples, but remember it also applies to life estates and fee tails  Fee Simple Determinable o When the stated event happens the possessory estate ends automatically o At that point, the right to possess the land immediately and automatically reverts back to O or O’s heirs or devisees if O is dead  When O grants a Fee Simple Determinable, O is said to retain a “possibility of reverter” o How to Create  Use durational language  For so long as, while used for, until such time as  Words that merely state the purpose of the conveyance are insufficient to create a fee simple determinable  For example “To A, to be used for park purposes” o This is a fee simple absolute, not a fee simple determinable  Fee Simple Subject to Condition Subsequent o When the stated event happens the estate does not automatically terminate  Rather O has the right to terminate and re-take this estate  This is know as “right of entry” or “a power of termination” o The key difference is O must exercise this right for the estate to terminate  Until O exercises the right of entry, the grantee retains the right to possess the land o To create  Use conditional language  Provide, however, that if, or on the condition that if o Paul Smith College v. Roman Catholic (Hotel Company deeds property to church)  Deed “as and for church purposes only if not this shall be void and grantor has right to re-enter”  Void – fee simple determinable  Re-enter – condition subsequent o Confusing language – which one it is matters  This is a fee simple determinable 21 Emma O’Keefe – Property Keys on language that property would be void  Overrules right of re-enter language  Phrase “as to be used for church purposes only” also suggests intent  was to immediately revert o Mountain Brow Lodge v. Toscano (restrictive language in deed – power of alienation issue)  This deed invalidly restricts transfer and sale but is the use restriction invalid?  No, put form before substance – use restriction is fine  Adverse Possession with Defeasible Estates o Determinable  Adverse possession clock starts once condition is broken o Condition Subsequent  Adverse Possession clock starts once the owner re-enters  Clocks stops as soon as it starts  Protects owner from adverse possession  Determinable does not o Courts disfavor defeasible estates and prefers adverse possession  Reversion to heirs has a lot of potential problems  Makes property very difficult to transfer o If O is worried about adverse possession  Should choose FSSCS o If O is worried about collecting profits  Should choose FSD  Fee Simple Subject to Executory Limitation o Estate created when a grantor transfers a fee simple subject to condition subsequent, and in the same instrument creates a future interest in a third party rather than in himself  Ex. If O conveys land to the Hartford School Board, but if it ceases to use the land as a school, to the City Library  The school board has a simple fee subject to executory limitation, and the City Library has an executory interest o If the condition is breached the possession is forfeited immediately, regardless of any action on the part of the holder of the executory interest to take possession  The practical effect is that the fee simple subject to executory limitation is functionally closer to a fee simple determinable than a fee simple subject to condition subsequent Future Interests  Future interests are: o 1) Interests retained by the transfer  A) Reversion  B) possibility of reverter  C) Right of entry o 2) Interests created in a transferee  A) Vested remainder  B) Contingent remained  C) Executory interest o The future interest does not become possessory until some time in the future  However, it is a presently existing property right 22 Emma O’Keefe – Property Future Interest Held by the Grantor  Reversion o A future interest retained by the grantor or her successors in interest when the grantor transfers an absolute estate of lesser duration than she initially owns  Absolute = no condition (will fulfil its full duration) o Hierarchy of estates  1. Fee Simple  2. Fee Tail  3. Life Estate  4. Leasehold estates o Attributes  Alienable, devisable (by will), and inheritable (by intestate succession)  Nothing has to happen for O’s future interest to become possessory other than for the prior possessory estate to end  Compare to possibility of reverter and right of entry which require a stated event to occur first  Possibility of Reverter o The interest remaining in O (or in O’s heirs) when O transfer a determinable estate o O’s interest automatically and immediately becomes possessory o Attributes  O’s interest automatically and immediately becomes possessory when the stated event occurs  Alienable, devisable and descendible in most jurisdictions o Language to create  Durational language, e.g. “so long as” or “until such time as”  Right of Entry o A power retained by O to cut short an estate conveyed subject to a condition subsequent and to resume possession of that estate, upon the happening of the stated event o Attributes  O must exercise this right. Not automatic  Alienable, devisable and descendible in most jurisdictions o Language to create  Conditional language, e.g. “but if”. Future Interest In a Guarantee  Executory Interest o Cuts short the prior possessory interest and interest then goes to a 3 rd party or cuts O’s possession short on condition  Becomes possessory automatically  Freely alienable, devisable, descendible o To create: there must be a stated condition, upon the happening of which possession transfers from the first grantee to another grantee  Doesn’t matter if it’s durational or conditional language – both work o Terminology  Future interest = executory interest  Possessory Interest = [estate] subject to executory interest 23 Emma O’Keefe – Property  Two types of Executory Interest o 1. Shifting executory interest  Can divest or cut short some interest in another grantee  To A, so long as blah blah, then to B o 2. Springing Executory Interest  Can divest or cut short an interest in the grantor  To A and her heirs when A marries o Grantee is cutting O’s estate short when A marries  Remainder o A future interest in a grantee that can become possessory upon the full completion of a prior possessory estate o A remainder interest waits patiently and does not become possessory until the prior possessory estate has reached its full completion o Alienable, devisable and descendible  Types of Remainder Interests o Vested remainder o Contingent remainder o Vested remainder subject to complete divestment o Vested remainder subject to open  Vested Remainder o A remainder interest that, at the time of the conveyance, is held by a living identifiable person and that is not subject to a condition precedent (other than the full completion of the prior estate) o Two key elements:  1) Living, identifiable person;  2) No condition precedent o Given that the taker is identifiable, and there is no prior condition that must be met, we already know who will take the possessory interest and whether they will definitely take it  This makes the remainder interest “vested” o If one who takes a vested remainder dies before the interest becomes possessory, then that person’s heirs or devisees inherit that remainder  Once it has vested A, or A’s heirs or devisees, cannot lose it  Contingent Remainder o A remainder interest that, at the time of conveyance, is either held by an unidentifiable person, or that is subject to a condition precedent (other than the full completion of the prior possessory estate,) or both. o Note that here, too, there are two key elements  Holder of interest not identifiable  Or, there is a condition that must be met before interest can become possessory (i.e. there is a condition precedent)  If either, or both, of these elements met, then the interest is contingent  Condition precedent = you stand to gain something  Condition subsequent = you stand to lose something o Usually followed by another remainder, or by a reversion in O  Something must happen to the estate if the contingency is not resolved and the contingent remainder does not become possessory 24 Emma O’Keefe – Property o Alternative contingent remainders: o To A for life, and then to B if she graduates law school before A dies, otherwise to C  Both C and B have contingent remainder  No reversion in O bc either B or C will get a fee simple based on if condition is fulfilled or not  Vested Subject to Complete Divestment o Vested  1. Alive and ascertainable  2. No condition precedent o A remainder that has vested but is defeasible upon the occurrence of a stated event or condition o If the stated event happens, then the holder can lose her interest  Interest can be divested o Requires a condition subsequent – not condition precedent  Vested Remainder Subject to Open o Deals with situation where future interest vests in one who is alive and ascertainable and who ultimately may have to share the interest with others who are not yet ascertainable  It vests in someone, but that person is a member of a class each member is holder of future interests but maybe not everyone in the class is currently ascertainable o Ex. O grants “To A for life and then to A’s children” A has one child, B  B has a vested remainder  But he will have to share it with any future born children o For this to exist at least one person in the class has to be alive, ascertainable, with no condition precedent, but more people can be added in the class o Property is not transferable until the class closes o Closing of the Class (but also see rule of convenience)  Where grant is “to A for life, and then to A’s children,” there comes a point where A cannot have any more children (i.e. when A dies)  At that point, the class of A’s children is said to “close” o It is no longer open to additional members being added.  At the point that the class closes, a “vested remainder subject to open” becomes a plain old “vested remainder” in the existing members of the class  No more class members can be added  It is no longer “subject to open.”  With a VRSO it is always important to be able to say when the class “closes”  Rule of Convenience o O conveys “To A for life, and then to B’s Children.” B has one child, C. o Rule: Where the class will not naturally close upon the death of the possessory interest holder, the class closes as soon as any member of the class becomes entitled to immediate possession and enjoyment of his interest in the property.  This will occur when one of B’s children or their successor in interest survives A. Then that person is entitled to possession. That is when the class closes.  If B continues having children, they do not get an interest. 25 Emma O’Keefe – Property  This allows someone who wants to purchase the property to know with whom they need to transact  Facilitates transferability of property  Note: another limit on property rights. Rule Against Perpetuities  No interest is good unless it must necessarily vest, if it is to vest at all (it could fail), not later than twenty-one years after the death of some person who was alive at the creation of the interest o Court Compromise in 1600s England o You can have your contingent future interest – but not for too long  Need to either vest or fail in a short time  Perpetuities Period o Grantor must be able to show that the interest will vest or fail within 21 years of the death of someone living at the time the interest was created o If you can’t prove that then it fails at time of conveyance  Only applies to future interests in a transferee that are not fully vested o 1. Executory interests o 2. Contingent remainders o 3. Vested remainder subject to open  Does not apply to future interest in the grantors or heirs even if they are contingent  Grantor must prove if it will vest, it will vest within 21 years of someone alive at the time of the conveyance o You only have to consider those who can directly effect the vesting = Measuring lives  Of the measuring lives, one must be a validating life  Validating Life = The proponent of the conveyance seeks to identify a person, alive at the time of the interest, with respect to whom can say that, if this interest is to vest (it may fail), it must do so within 21 years of that person’s death.  Opponents can only show there is no validating life – only need one example of no vesting Steps for working through RAP on exam  1. Identify the future interests  2. Ask whether RAP applies to each future interest o Only applies to future interests in a transferee that not fully vested  3. Identify event upon which interest(s) vest  4. Identify the measuring lives o Alive and ascertainable and can directly affect the vesting  5. For each measuring life, ask the “perpetuities question”: o Must the interest necessarily vest, if it is to vest at all (it could fail), within 21 years of that person’s death? o Try to come up with an example of where it would vest too remotely  6. If the answer is “yes” for any measuring life o Then that person is a validating life and the interest is valid  7. If the answer is “no” for all measuring lives o Then there is no validating life and the interest is void o Strike it and see what you left with 26 Emma O’Keefe – Property Perpetuities Reform  RAP kind of defeats common sense and feelings of fairness o Form over substances  Doesn’t really play in reality because people don’t transfer via contingent remainder o But through trusts which RAP doesn’t affect  Two big reforms – jurisdictional split: o Wait and See Doctrine  You cannot prove that it will vest  Instead of declaring it invalid immediately, courts will wait and see if it does in fact vest  Either waits 21 years after death or some jurisdictions have a flat waiting period of 90 years – If it doesn’t vest then, then you strike it o Reformation (cy pres French for so close)  First apply RAP test  If RAP would invalidate it, can it be reformed to serve grantor’s intent within the rule  i.e. “TO A’s child who reaches 25” change the language to “to reach 21” to satisfy the rule  Uniform Law Recommendation o Do wait and see and then reformation  Wait 90 years and then try to reform it – If it still fails, then it’s invalid Co-Ownership Co-Tenancy  More than one person owns a possessory or future interest at the same time o Ex. Roommates, siblings who inherit family home together  All co-owners have a simultaneous right to possess the whole o How to decide who gets to use which part of property at a given moment?  Negotiate and work it out o If you can’t work it out, terminate co-ownership and become individual owners of part of property  Benefits o Affordability  Allows individuals who could not purchase property individually, to purchase together o Family  Keep property in the family  Keep alive bonds between family members  Share family property equally o Business  Allows investment in jointly owed property  3 types o Tenancy in common o Joint tenancy o Tenancy by entirety Tenancy in common  Each has right to use the whole  Freely transferable  Freely descendible, devisable  Creditors of one tenant can reach that person’s share  To create expressly state “tenants in common” o If there’s ambiguous language it’s presumed to be tenancy in common 27 Emma O’Keefe – Property  Formally presumed to be joint tenancy  Termination: o Partition  Either voluntary or judicial  Partition in-kind  Physically divide  Partition by sale  Sell and divide proceeds  Delfino v. Vealencis (Delfino’s wanted to partition by sale, V. did not, her trash company was there) o Can only partition in kind if it is in the best interest of all parties  Swartzbaugh v. Sampson (wife did not want boxing ring as tenant on land) o In cases where one joint tenant in possession leases all of the joint property without the consent of his cotenant and places the lessee in possession o It seems to be based on the theory that the joint tenant in possession is entitled to the possession of the entire property o By giving a lessee a right the cotenant has already been enjoying, he does not prejudicially affect the rights of the cotenant Joint Tenancy  Each has right of whole  Key characteristics: right of survivorship o When one joint owner dies, the other continues in possession of the whole o Making the survivor the sole owner  This makes the interest neither descendible nor devisable – though it is transferable  Avoids probate o Nothing passes through the estate  Survivor is automatically owner of whole o But cannot avoid estate tax  Limits reach of creditors o Must act during joint tenant’s life o After death, other joint tenant owns whole.  If one co-tenant murders other, this voids right of survivorship  Need 4 unities to create o Time – each must take their interest at the same time o Title - - each must take their interest by the same legal instrument or by joint adverse possession  No joint tenancy by intestate succession. Tenants in common instead. o Interest – each must own an equal interest in the property o Possession – each must have the right to possess the whole  Termination o Sever one of unities  E.g. One joint tenant transfers ownership interest  This turns joint tenancy into tenancy into tenancy in common  Partition – either voluntary, or judicial o Can physically divide (in-kind partition) o Or sell and divide proceeds (partition by sale) 28 Emma O’Keefe – Property Tenancy by the entirety  Co-ownership between married couple (needs 4 unities + married) o Right of survivorship  So not devisable, inheritable o Co-owners are viewed as a single unit  Both must together to transfer, partition, borrow against property  so cannot transfer independently  More protections against creditors o Creditors of debtor joint tenant cannot reach the property during that person’s life o If debtor JT is first to die, then spouse takes property under right of survivorship and creditors cannot reach. o If debtor outlives spouse, then takes whole under right of survivorship at that point creditors can reach whole  Termination o Divorce – turns into tenancy in common o Release – one spouse conveys interest to other / Converts into solo ownership o Partition – only if both parties seek it together / one alone cannot  Individual Autonomy o Autonomy with respect to:  Transfer of interest o Amount of individual autonomy:  Devise of interest  Tenancy in common –  Use of interest as collateral for a loan most  Ability to move for partition  Joint tenancy – middle  Tenancy by the entirety – Incentive Problems  Incentive to use property in wasteful way o Capture all the benefits of use – share the costs  Incentive to let others handle costs or other responsible o Free rider problem  Lack of incentive to make repairs or improvements o Pay full costs, only get share of benefits o Collective action problem  Law seeks to correct / reduce these problems  Law provides mechanisms for enforcing duties and/or exiting co-ownership  Waste o One co-owner can sue another for waste o Waste established where one owner’s use and enjoyment of the property unreasonably interferes with their co-owners’ use and enjoyment  E.g. digs up and destroys grounds in search for artifacts; or clear- cuts and sells trees o Remedy  Injunction to stop wasteful action  Accounting for share of the value taken o Guards against wasteful use  Contribution o Action to require co-owner to pay pro rata share of taxes, mortgage loan, and other carrying costs of the property  If one pays more than proportionate share, can bring action against others seeking their share. 29 Emma O’Keefe – Property o Only available for obligations that, if not paid, could give rise to a lien against the property  Theory is that, if not paid, could lead to foreclosure, so all co- owners have a stake in paying o Addresses free rider and collective action problems o No right to contribution for repairs or improvements  co-owners may not agree on whether needed or how performed  Should not allow one to impose obligations on others.  May eventually be able to get credit in an accounting (repairs) or final accounting (improvements).  Ouster o Ouster occurs when a co-owner in possession denies another co-owner’s the ability to enter and use the property  E.g. locks out a co-owner who trying to use the property o Ejectment  Court puts co-owner into possession with other co-owner.  Note: This does not deny possession to other co-owner; it just requires them to share possession o Rent  Ousted co-owner can demand pro rata share of fair market rental value of the property.  Proportion depends on ownership interest in the co-owned property  It as if co-owner in possession is renting ousted co-owner’s share o Partition  Dividing the property into separate parts  Move from co-ownership, to individual ownership o Ouster and Adverse Possession  When one co-owner ousts the other, that gives rise to an action for ejectment  The adverse possession clock (statute of limitations on actions for ejectment) accordingly starts to run at that point  If the clock runs out, the co-owner in possession can take the ousted co-owner’s share by adverse possession  Payment of Rent o A co-owner in possession  Does not owe rent to other co-owners  Each is entitled to possess and use the whole o A co-owner who rents to a third-party  Does owe the other co-owner their pro rata share of the actual rent received  May be less than pro rata share of fair market rental value o A co-owner who ousts another co-owner  Does owe the ousted co-owner rent for the period during which ousted  Here, amount is a pro rata share of fair rental value of the property  Sharing of Profits o A co-owner can take profits from the land (e.g. oil, timber, minerals) o But owes the other a pro rata share of the amount received  Accounting o Legal action to account for and settle financial obligations among co-owners  A final accounting is generally done at partition o Determine amount of benefits to be shared  Rent received, net of expenses  Profits taken (e.g. oil, timber, minerals), net of expenses o Determine amount of liabilities to be reimbursed  Taxes, mortgage payments, etc. 30 Emma O’Keefe – Property  Cost of repairs  Not cost of improvements (except in final accounting in the event of partition) o Addresses and reduces free rider problem.  Partition o Divide co-owned property into one or more individually owned shares o Move from co-ownership, to individual ownership o The last resort remedy  Used when co-ownership relationship breaks down o Voluntary  Parties voluntarily decide to partition the property  In-kind  Parties jointly convey one portion of property to one, other portion to other  By sale  Parties sell property and split proceeds o Judicial  Used where one co-owner wants to divide, and the other does not.  A co-owner brings action against other in equity asking court to divide land or the proceeds therefrom  Usually accompanied by final accounting  At this point, the division, and any associated payments due from one to the other, may take into account repairs or improvements one co-owner has made, if the court finds them to be reasonable  In-kind partition  Apportion land among co-owners  Court likely to award improved portion to improving co-owner  Or, if cannot do so, to award “owelty” to improving co-owner to compensate for excess costs  Partition by sale  Judge order property sold and distribute the proceeds pro rata 31 Emma O’Keefe – Property LAND USE CONTROLS Real Estate Transactions Intro to Land Sales  Four Stages of Basics of Residential Real Estate Transaction o Seller and buyer find each other o Negotiation and signature o Preparing for closing – the executory interval o Closing  1. Seller and Buyer find each other o Seller uses broker o Brokers list property on multiple listing service  Alternatively, seller can operate on own  2. Contract negotiation and signature o Preprinted form contract often used o Buyer submits signed offer o Seller provides signed counter-offer  Keeps going until they come to terms, in which case both sign, or they go their separate ways o If negotiation successful, then buyer and seller sign contract  They are in contract o Buyer provides “earnest money”  Not a down payment  A down payment is 10% and that’s to show the bank you can handle the loan  Money you will lose if you break the contract  Usually 1% of price  Stops buyers from putting multiple bids in on properties  3. The Executory Interval Phase o The period between contract and closing o Several things must happen  Buyer inspects property  Seller makes disclosures  Buyer gets financing (the mortgage loan)  Buyer/lender investigate title o Risk of opportunistic behavior  Parties react to additional information gained and/or changing value of property  Law tries to protect against this  4. Closing o Seller signs and delivers deed o Buyer provides check to seller  Down payment o Lender provides balance of funds to seller o Buyer signs note and mortgage o Title insurance company issues policy 32 Emma O’Keefe – Property o Commissions paid to brokers o Transfer is now completed  Although loan must still be repaid. o Deed, mortgage recorded  Revenue stamps indicating payment of state tax on sale of real property  Core themes o Stages are designed to minimize opportunistic behavior  Especially during the executory interval phase o Reduce transaction costs  This allows property to move to higher value user and so promotes efficient use of property  The deal depends on keeping transactions costs low o Efficiency  Marketable Title o Two broad types of possessory interest  Freehold estates  Of uncertain duration  Gives the full bundle of rights  Fee simple, fee tail, life estate  Encumbrances  Any right or interest in land that restricts use of land or reduces it’s value but is consistent with transfer of a free hold estate  Ex. Lease o Of a specific duration o Restricted use  Ex. Easement o Right to make use of someone else's property without full bundle of rights  i.e. gas company coming onto your property  ex. Mineral rights, restricted covenants, mortgage interests o Marketable title = property will be free of any encumbrances  Unless they have been expressly agreed to o Buyer can rescind during executory interval and get their earnest money back if seller does not provide marketable title by time of closing  Lohmeyer v. Bower o Unmarketable due to a restricted covenant  But Lohmeyer agreed to all encumbrances in agreement  Court: that doesn’t matter bc he didn’t agree to encumbrances that were violations of restricted covenants or zoning laws  Can’t accept an existing violation o Marketable title is not the same thing as perfect title  Other interests/defects in title does not matter if they’re not substantial Unreasonable threat to litigation – phrase that pays o Law doesn’t require perfect title bc record doesn’t always reflect reality  So dealing with things in record that don’t effect properly today  i.e. a mineral rights in the record that have been released but that’s not in the record 33 Emma O’Keefe – Property  can lower transaction costs if you don’t need to deal with that ^ o unmarketable = if buyer knew all the facts, would not pay for it Contract of Sales  The Contract o Basic contract principles apply o For sale of land, other than leases of less than a year, statute of fraud’s require written contract o Essential Elements of Contract  Identity of parties  Words showing intent to buy or sell  Purchase price (if determined)  If not determined then o Process by which will determine price, or o Some courts will assume reasonable price  Adequate description of property  Signature of party against whom contract being enforced (the “party to be bound”)  Statute of Frauds o Document can be informal just so long as it is in writing  Exceptions to Statutes of Fraud (circumstances where court will enforce oral contracts) o Estoppel  Court will enforce oral contract where one party is  Induced by other to substantially change position in reliance on oral contract,  And would suffer serious and irreparable injury if contract not enforced  Hickey v. Green (G agreed to sell to H then sold to someone else – never signed check)  Hickey sold his house and relied on promise = specific performance o Part Performance  Allows specific performance of oral agreements for more than 1 year where one of parties has partially performed agreed upon actions.  Rationale is that actions should serve the same evidentiary function as writing would have under Statute.  Part performance usually turns on three factors that show parties intent to enter contract: o Buyer taking possession of property. o Buyer paying part or all of purchase price. o Buyer making improvements to the property.  Remedies for Breach of Contract o Recission – cancels contract o Restitution – put each in position were before contract (e.g. return downpayment) o Damages – loss of bargain damages  Difference between contract price and fair market breach at time of breach  Some jurisdictions do not allow where breach caused by good faith inability to convey marketability title 34 Emma O’Keefe – Property o Incidental Damages – compensation for out-of-pocket expenses incurred in reliance on contract o Consequential Damages – breach causes special, foreseeable loss o Specific Performance – court requires the breaching party to perform Additional Doctrines Related to Contracts  Duty to Disclose Defects o Where seller knows of facts (actual knowledge, not reason to know) that “materially affect” the value of the property are not readily observable by, and are not known to, the buyer  Then the seller is under a duty to disclose them to the buyer prior to the signing of the contract.  If does not, then buyer can get out of contract, or sue for damages after closing o Note: does not require an affirmative misrepresentation o Johnson v. Davis (seller knew about leaky roof – said nothing) o Has to be readily observable to buyer, not readily observable to professional inspector  Otherwise would be a big additional transactional cost  Doctrine of Merger o Upon closing, the contract “merges” into the deed. At that point, buyer cannot sue seller for breach of contract. Rather, deed warranties now govern relationship between the parties and must sue on breach of such a warranty. o E.g. if contract calls for marketable title, but contract does not make any warranties about title, then buyer cannot sure for defect in title after closing. Cannot rely on contract for this  Equitable Conversion o Real estate contracts are in most cases specifically enforceable. o Under doctrine of equitable conversion, where there a specifically enforceable contract for the sale of land in place, then the law sees buyer, in equity, as owner of property from date of contract.  Said to have “equitable title.”  Seller viewed as holding legal title as trustee for buyer. o Death of buyer pre-closing  Seller entitled to purchase price since buyer held to be equitable owner of land as of time of contr