Property II Skeleton PDF

# LAND TRANSACTIONS ## 1. CONTRACTS FOR SALE ### a. STATUTE OF FRAUDS - Statute of frauds requires real property transactions to be: - in writing - signed by party to be bound - description of real estate - price ### Part Performance - If the statute of frauds is violated, an in...

# LAND TRANSACTIONS ## 1. CONTRACTS FOR SALE ### a. STATUTE OF FRAUDS - Statute of frauds requires real property transactions to be: - in writing - signed by party to be bound - description of real estate - price ### Part Performance - If the statute of frauds is violated, an injured party can sue for part performance where there is: - satisfactory evidence of the K - detrimental reliance ### Equitable Estoppel - An injured party may also sue for equitable estoppel to enforce an oral K if the seller caused the buyer to reasonably rely to their detriment upon the seller's agreement to sell ### b. MARKETABLE TITLE - Marketable title is an implied condition of a real estate K where a title not subject to such reasonable doubt as would create a just apprehension of its validity. - Marketable title essentially ensures that the seller is representing to the buyer that they are allowed to sell what they are purporting to sell. - The seller promises the rights to the land and promises attached to the land. - If there is no marketable title, a buyer is entitled to rescind the K. ### Encumbrances - Title is unmarketable if there is an encumbrance. - An encumbrance is any right to or interest in land which may subsist in another to the diminution of its value. - The mere existence of a restrictive covenant makes title unmarketable, unless it has been waived. - A violation of a restrictive covenant makes title unmarketable and cannot be waived. - The mere existence of a zoning ordinance is not an encumbrance and doesn't make title unmarketable. - A violation of a zoning ordinance is an encumbrance and renders title unmarketable. ### Equitable Conversion - Equitable conversion is where, during the executory period, a buyer who signs a real estate K is regarded as having equitable title and bears the risk of loss, while the seller holds legal title as trustee for the buyer. ### c. DUTY TO DISCLOSE DEFECTS #### Common Law - Under common law caveat emptor, the seller had no duty to disclose known defects. - The seller was only held responsible if there was affirmative misrepresentation. #### Modern - Today, a seller has a duty to disclose latent defects and any nondisclosure is fraud. - A seller has a duty to disclose defects: - known to the seller - not readily observable to the buyer - the defect must be material - Whether a defect is material depends on the standard, under the reasonable person standard, one must ask whether a reasonable person would attach importance to it, under the subjective standard, one must ask whether the defect affects the value or desirability of the property. ### d. MERGER DOCTRINE - Under the merger doctrine, when the buyer accepts a deed, the buyer is deemed to have satisfied that all contractual obligations have been met, thus the K merges into the deed and is deemed final. - However, this does not apply for collateral promises, fraud, or implied warranty of quality. ### e. REMEDIES FOR BREACH OF SALES CONTRACT - Generally, when a contract for sale is breached, the three remedies are: - damages - rescission - specific performance - **Compensatory damages** are measured by the loss of bargain rule (contract price – market value at time of breach). - **Special damages** are allowed if: - natural and probable consequence of the breach - reasonably foreseeable - **Punitive damages** are generally allowed. - **Recission of the K** is available in addition to retention of deposit for the seller OR restitution of the deposit for the buyer. - **Specific performance** is available for real estate K's if: - uniqueness in land - damages inadequate remedy ## 2. THE DEED ### a. WARRANTIES - The three warranties of title are: - general warranty deed - special warranty deed - quitclaim deeds - **General warranty deeds** warrant title against all defects in title whether they arose before or after the grantor took title. - **Special warranty deed** warrant only against the grantor's own acts, but not acts of others. - **Quitclaim deeds** have no warranties and come "as is". ### b. COVENANTS #### Present Covenants - Under general warranty deeds, present covenants can only be breached at time of delivery. - The present covenants are: - covenant of seisen - covenant of right to convey - covenant against encumbrances - **Covenant of seisen** is where the grantor warrants they own the property. - **Covenant of right to convey** is where the grantor warrants they have the right to convey property. - **Covenant against encumbrances** is where the grantor warrants there are no encumbrances that haven't been disclosed. #### Future Covenants - Under general warranty deeds, future covenants can only be breached in the future when the grantor fails to live up to their promise. - The future covenants are: - covenant of general warranty - covenant of quiet enjoyment - covenant of further assurances - **Covenant of general warranty** is where the grantor warrants they will defend against “lawful” claims and will compensate for any loss the grantee may sustain by assertion of superior title. - **Covenant of quiet enjoyment** is where the grantor warrants the grantee won't be disturbed in possession and enjoyment of property by assertion of superior title. - However, mere existence of paramount title does not breach a future covenant even if it does breach a present covenant. - **Covenant of further assurances** is where the grantor promises they will execute any other documents required to perfect the title conveyed. ### c. DELIVERY - A deed must be delivered with the intent it be presently effective (constructive delivery suffices). ## 3. FINANCING REAL ESTATE TRANSACTIONS ### a. MORTGAGES - A mortgage is an interest in land created by written instrument providing security for payment or performance. - If the mortgagor defaults, the mortgagee's right to take possession of mortgaged property depends on the mortgage theory followed in that jurisdiction. - The two mortgage theories are: - title theory - lien theory - **Title theory** is where the lender takes title to the land and the borrower only has equity of redemption. - **Lien theory** is where the borrower keeps legal title and the lender has a lien on the property. - Under the title theory, the mortgagee can take possession at any time. - Under the lien theory, the mortgagee can't take possession prior to foreclosure. ### b. INSTALLMENT K FOR LAND - An installment contract for land is where the buyer takes possession but the seller contracts to deliver title to the buyer only after the buyer has paid the purchase price plus interest in regular installments over a fixed period of time. ### c. FORECLOSURE - Foreclosure is the judicial or nonjudicial process by which the lender attempts to recover the balance from the defaulting borrower by forcing the sale of collateral property, thereby foreclosing the borrower's equity of redemption. ## TITLE ASSURANCE ### 1. THE RECORDING SYSTEM - The recording system is available to search and pull records between the K and delivery for purchasers to do their homework and find where the sticks are by doing a title search. - Recording system protects purchasers by showing a previous owner went to the courthouse and recorded so that the world is on notice. - A subsequent bona fide purchaser is protected against prior unrecorded interests. - A bona fide purchaser is one who purchases an interest in land without notice of another interest already held by a third party. ### 2. RECORDING ACTS - Under race statute, the person who records first wins between successive purchasers of the same parcel of land. - Under notice statute, a subsequent bona fide purchaser prevails over prior grantee if: - they fail to record. - there is no actual/constructive notice - Under race-notice statute, a subsequent bona fide purchaser is protected if they are: - without notice - record first. - Where a recorded instrument appears valid, recordation should impart constructive notice. ### 3. CHAIN OF TITLE - Chain of title is all documents of which the purchaser has constructive notice. - To give notice to subsequent purchasers, a deed must be in the chain of title. #### Wild Deeds - If a properly recorded deed has a grantor unconnected to the chain of title (wild deed), the deed doesn't impart constructive notice to subsequent purchasers from the chain. #### Common Deeds - Every recorded deed from a common grantor gives constructive notice of its contents to subsequent purchasers of any lot in the subdivision. ### 4. INQUIRY NOTICE - Inquiry notice is where based on facts that would cause a reasonable person to make an inquiry into the possible existence of an interest in real property. - Actual possession of real estate is sufficient to put the world on notice of an interest, such that the person seeking to buy should inquire about it. ### 5. MARKETABLE TITLE ACTS - Marketable title acts is the limitation on the time period for which you can be challenged by a prior claim, which is generally 40 years. ### 6. TITLE INSURANCE - Title insurance guarantees that the insurance company has searched public records and insures against any defects in public records. - Title insurance only promises good title. ## ADVERSE POSSESSION ### 1. ELEMENTS - Adverse possession is where a person takes possession and use of a property belonging to another. - Possession must be: - actual - exclusive - open and notorious - adverse/hostile and under a claim of right - continuous and uninterrupted. ### 2. TACKING - An adverse possessor can “tack” their possession to the previous possession of their predecessors to meet the statute of limitations as long as there is privity between successive possessors. - There is privity if there is a voluntary transfer of an estate or possession. - Three things can be tacked for adverse possession: - time of possession through privity - contiguous parcel of land through intent of parties - ownership against successive owners. ### 3. DISABILITY - Disability is an extension of the statute of limitations if the owner is under a disability at time of adverse possessor's entry. - Disability essentially stops the clock because the true owner is not at liberty to check on their property; the clock starts again when the disability is removed. - The three disabilities are: - minority - unsound mind - imprisonment. ### 4. ADVERSE POSSESSION OF CHATTELS - Adverse possession of chattels is a cause of action that won't accrue for the statute of limitation purposes until the injured party discovers or by reasonable diligence should have discovered facts which form the basis of the cause of action. ## JUDICIAL LAND USE: NUISANCE - Generally, one should use one's own property in a way as to not injure the property of another. - An individual can use judicial land use controls when their property rights are harmed by a neighbor's use of their property. - **Nuisance** is a substantial nontrespassory invasion of use or enjoyment of land that's caused by either: - negligent, reckless, or ultrahazardous activities - activities that are intentional and unreasonable. - To establish a nuisance, the gravity of harm must outweigh the utility of conduct. - The remedies for nuisance are: - injunction that stops the nuisance - damages that compensate an individual, but the nuisance continues. ## PRIVATE LAND USE: SERVITUDES ### 1. SERVITUDE - A servitude is a present interest in someone else's land that benefits you. - The two types of servitudes are: - easements - covenants. ### 2. EASEMENT - An easement is a property right to use the land of another. - Easements can be created by: - express grant or reservation - irrevocable license - implied by prior use - by necessity - by prescription - public trust - The two types of easements are: - affirmative easement - negative easement - **Affirmative easements** are the right to enter the servient estate. - **Negative easements** are the right to keep the other landowner from doing something on their land. - Easements are either easement **appurtenant**, which benefits the dominant estate and burdens the servient estate, or easement **in gross**, which benefits a particular person/entity rather than land. - In determining who is benefitted by the easement, a **dominant estate** is the land benefitted by the easement, while a **servient estate** is the land burdened by the easement. #### Grant/Reservation - An easement can be created by express grant or by reservation. - Whether an easement is created by grant or by reservation, the court will give effect to the grantor's intent. - An easement can be reserved for a third party. #### License - A license is permission from the owner to use the land and is revocable unless: - coupled with an interest - irrevocable by estoppel. - In determining whether there's a license or easement, courts look at intent and exclusivity. - Generally, as a matter of equity, a license can ripen into an easement. #### Prior Existing Use - An easement implied from a prior existing use is based on: - apparent and continuous use - intent of the parties - necessity is a factor, under a “reasonable necessity” test. #### Necessity - An easement by necessity is implied when a tract is divided so as to deprive a portion of the tract from access to a public road (servient tract is one w/ access). - To establish easement by necessity one must show: - unity of ownership of dominant and servient tracts - easement is a true necessity, not mere convenience - necessity existed at time of severance - An easement by necessity only lasts until the necessity ends. #### Prescription - An easement by prescription is analogous to adverse possession where there must be: - actual, exclusive, open and notorious, adverse/hostile and under a claim of right - continuous and uninterrupted possession. - An easement by prescription requires use without permission, thus if a landowner has consent or a license, they will never have an easement by prescription. #### Public Trust - A public trust can only establish a rolling easement (boundary adjusts as shoreline shifts) if there is proof that an easement exists through dedication, prescription, or custom. - An easement does not roll with drastic avulsion, rather only for gradual, imperceptible changes. #### Scope - The scope of an easement is exceeded if: - not contemplated by parties - there is a difference in degree and nature of burden. #### Termination - An easement may be terminated by: - release - expiration - merger - estoppel - condemnation - prescription - abandonment. - Abandonment of an easement occurs if there's: - nonuse by owner of the easement - present intent to relinquish OR purpose inconsistent with future use. ### 3. COVENANTS #### a. REAL COVENANTS AT LAW - Real covenants at law are a promise regarding the use of land that runs with the land at law. - Real covenants at law are generally contracts that create a property right and are either an affirmative promise to do something OR a negative promise to not do something. - Real covenants at law are created by a written instrument signed by the parties to be bound. - Real covenants at law run with the land if there's: - intent by the parties - notice - “vertical privity” for the burden to run and horizontal privity - touch and concern the land. - If there's a breach of a real covenant at law, the remedy is damages. #### b. EQUITABLE SERVITUDES - Equitable servitudes are covenants that equity will enforce against assignees of the burdened land. - Equitable servitudes are created by a promise implied in equity. - Equitable servitudes run with the land if: - parties intended promises to run - notice - covenant “touch and concerns” the land. - Privity is NOT required. - The remedy for equitable servitudes is an injunction. #### c. TERMINATION - Generally, the majority rule is to enforce covenants strictly because you can't just abandon contract duties. - However, under changed conditions doctrine, an individual may terminate a covenant if the challenger shows conditions have changed to render covenant unenforceable if: - must have change in ability to achieve purpose of contract - must have changed for everyone in covenant, not just one person's property. #### d. DISCRIMINATORY SERVITUDES - Generally, courts will enforce private covenants that are discriminatory unless they violate law or public policy. ## LEGISLATIVE LAND USE CONTROLS: ZONING ### 1. ZONING GR'S - Zoning is constitutional if within the scope of police powers and substantially related to public safety, health, welfare, or morals. - If the validity of the zoning classification is “fairly debatable”, the court will defer to the legislature. - Zoning is presumed valid and to rebut validity, there must be no rational basis. - States MUST DELEGATE police power to local governments by STATUTE and provide a comprehensive plan that local gov must act in accordance with when enacting a zoning ordinance. - **Comprehensive plans** are “master” plans for management of community's needs that sets forth vision for the community with texts and maps and provides plans for: - infrastructure - public works projects - housing issues - land use ### 2. NONCONFORMING USE - Nonconforming use is a way for a landowner to argue under equity that their existing lawful use of property is “grandfathered” in after the zoning ordinance prohibited it. - Some states end nonconforming use through amortization. - However, the majority of states follow that nonconforming use can continue BUT CAN'T be EXPANDED OR ALTERED. - Abandonment or destruction always eliminates nonconforming use. ### 3. VARIANCE - Variance is an administrative authorized departure from the terms of the ordinance for unique and individual hardship. - Variances run with the land if granted. - A variance will be granted if there is: - undue hardship - negative criteria. - The types of variances are: - Use (hardship to use the property as zoned) - Area (adjustments in site, density, dimensional requirements). - Whether an area variance may be granted requires balancing: - purpose of the zoning restriction - effect of the restriction on the property - effect of the variance on the neighborhood and public interest. ### 4. SPECIAL EXCEPTION - A special exception may be granted if already written into the zoning ordinance (e.g., hospital in a residential zone) ### 5. ZONING AMENDMENT - A zoning amendment is a legislative action, not a quasi-judicial action. - Zoning amendments are presumed valid and subject to rational basis test which asks whether the amendment falls within the police powers of the government. - **Spot zoning** is a zoning change that intensifies use of a tract by amending the zoning map and essentially singles out one parcel of land for special treatment. - Spot zoning is invalid where a zoning amendment: - singles out a small parcel of land for special treatment. - is nonconformity with the comprehensive plan. - is only for the benefit of one landowner rather than public interest. ### 6. EXPANDING AIMS OF ZONING #### a. AESTHETIC REGULATION - Traditionally, aesthetic regulation was considered an infringement on the owner's property rights and outside of police powers. - However, today aesthetic regulations are presumed valid and within police powers for the purpose of keeping property values higher, provided it has substantial relation to public safety, health, welfare, or morals. - However, such regulations are invalid and not within police powers if the regulation is arbitrary and capricious. #### b. HOUSEHOLD COMPOSITION - **Household composition controls** are zoning regulations limiting the number of unrelated people who can live together in a residential zone. - Generally, ordinances that restrict occupancy in a single-family residential zone by limiting the amount of unrelated persons in a home is constitutional (ex: family is blood relatives, adoptees, and marriage). - However, limiting the definition of family to a narrow group is not constitutional. #### c. EXCLUSIONARY ZONING - All zoning is exclusionary in that it seeks to exclude unwanted uses, but sometimes zoning results in excluding unwanted people. - **Exclusionary zoning** is zoning regulations that limit access to certain housing types (typically excluding lower-income or marginalized groups). - Generally, if the law doesn't exclude on a suspect basis (race) and its rationally related to public safety, health, welfare, and morals it's typically a valid zoning use. ## TAKINGS ### 1. EMINENT DOMAIN AND THE TAKINGS CLAUSE - Generally, eminent domain is where the government in the U.S. has the power to take private property for public use, but is limited by the fifth amendment. - Eminent domain existed prior to the constitution and is generally justified by the efficiency of taking property for a higher use rather than to leave it at a lower value. - Under the takings clause, the government cannot take private property for public use without just compensation. - **Public use** is where the public: - owns and uses it - has access to it - is public property - has a public purpose - is a public benefit to the economy. - Generally, public uses are valid if the government had a rational basis. - However, there is no public use for: - purely private transfers without economic benefit - evidence that public purpose is a pretext for taking the land - taking is not reasonably necessary to achieve public purpose. - The government can't take private property without providing just compensation, which is the market value of the property at the time of taking. - There is a taking and just compensation if there is: - actual taking of title through eminent domain - physical occupation of property - regulatory takings. - **Regulatory takings** are when the government deprives a property owner of some value of their property. - Regulatory takings require balancing: - economic impact of regulation on the claimant - interference with investment-backed expectations - character of government action.