PHILOSPHICAL UNDERPINNINGSI. Two Treatises of Government, Locke – Labor Theory of Value

o Private property exists because of labor - Not only do you own land b/c you work it, but if people own land individually it will work out better for society, b/c ppl will improve land they own. Is the ownership of land by individuals justified as opposed the ownership of all land by all mankind.

II. Some Fundamental Legal Conceptions as Applied in Judicial Reasoning, Hohfeld o Hohfeld's analysis began by distinguishing right (or claim) from liberty (or privilege), power and

immunity, and defined them through three corelatives, i.e. duty, liability, and disability. He arranged these fundamental legal concepts in terms of Jural Opposites and Jural Corelatives.

III. What Is Property , Halper o Property right - the right to use or to decide who uses it; this power is not absolute

Limited by zoning laws, taxes, nuisance, police power Is it really property if someone else can tell you how to use it? Yes.

State will define, to a degree, how you can use your property. But, they can't go so far as to make the use totally impractical as to make no use.

Gov't cant limit your property to such a degree that you cant use it, but it can take it away as long as it justly compensates you

Foundations of property associated with agriculture. Better individually owned, because you'll pay better attention to it; take better care if its your own.

Cant keep all income derived from property - property is taxed State say who owns what, but not entirely. Part of the reason why property rights exist and are enforceable is not only because the state

says so, but also because most ppl respect them. Must have custom and popular approval.o Ownership is not a single right, but a bundle of rights of which the important attributes are the right to

use, the right to exclude others, and the right to exploit the income potential of the property (all of which are limited). You share the property with the state, and to a degree with the rest of the community.

IV. Toward a Theory of Property Rights, Demsetz (Duk 35-45)o Gets to concept of property by virtue of value.

Native Americans around Quebec - they hunt for food, and gather. They don’t care about who owns what. Then Europeans come over and want animal fur. Then they start killing animals and start selling to Europeans. Then, riches of the forest gain a value, and becomes important because they can get more than their food from it, and it becomes property. This is how property starts. Property is derived from the fact that it has value (may have very limited application)

o Demsetz tells us: an owner of property gains his rights by virtue of communal consent. Halper doesn’t totally agree with this, but partially true only. Halper says we need both state and community consent.

Community - now can be whole world (communication & technology); in the past only small area due to lack of communication over large distances - they were isolated. The idea of community is broader, and the idea of the consent of the community is also much broader.

Property rights arise from negotiation and agreement. Halper disagrees. Europeans didn’t negotiate with natives in the Americas, they take over the land through violence.

o Private property v. public property (halper) If you have individual responsibility for something, you will probably do it, if you will be

punished for not doing it, or rewarded for doing it. Communal property is not good; creates externalities

Less efficient to have communal ownership, and more efficient to have individual ownership

V. Summa Theologica, Thomas Aquinas o The attributes of property - 2 principle attributes;

You will tend to take care of private property if you think it’s yours; where there is a communal property, each individual would shirk his responsibilities.

The desirability of private property - a more peaceful state happens if everyone is content with his own. Quarrels arise more frequently where there is no division of the things possessed.

o Aquinas derives his view directly from scripture - so to abuse your property, Aquinas would say would be sinful. b/c God gives earth to all, and you shouldn’t abuse (Aquinas' view)

VI. Utilitarian Theory o Private property is said to nourish individuality and healthy diversity: It "performs the function of

maintaining independence, dignity and pluralism in society by creating within which the majority has to yield to the owner. Whim, caprice, irrationality and 'antisocial' activities are given the protection of the law." Important function of property rights is to promote economic efficiency.

VII. What is Property, Proudhon o Property is theft! Proudhon is an anarchist; believes structure of govt bad.o He doesn’t like the idea of property

He says your allowed to use stuff, but not gain from its use because of law that doesn’t allow it. He refutes the natural rights theory;

o Cicero - Roman lawyer talks about property. You go to the theatre, and there are lots of open chairs. Empty chairs are communal property and you can move into them. You might individually buy a seat, but the seats not used are communal property.

Proudhon criticizes this - he says if he buys a seat, his communal rights are limited to that seat. He cannot allow himself to overstep to other seats. Rights of the community vastly outweigh rights of the individual

VIII. The Right to Include, the Right to Exclude o Notion of property as a relationship among people that entitles so-called owners to include (permit) or

exclude (deny) use or possession of the owned property by other people. Both rights (to include and exclude) are necessary and sufficient conditions of transferability.

o Jacque v. Steenberg Homes, Inc . Facts : Pl denied Df permission to cross over his lands to deliver a trailer. Df crossed anyway. Rule : Every person has a constitutional right to the exclusive enjoyment of his own property for

any purpose which does not invade the rights of another. Rule : The private landowner’s right to exclude others from his or her land is one of the most

essential rights of property.o State v. Shack

Fact : Pl denied Df (govt workers) access to his land to render services to farmworkers. P had the right to keep his work free from interference, but he had no right to isolate his farm

workers from the outside world. Right to exclude is not absolute.

Non-owners have a right of access to property based on need or on some other important public policy

Property rights limited to avoid injusticeIX. Acquisition by Discovery

o Who is first in point of time is stronger in right. -Maxim of Roman Lawo Johnson v. M'Intosh

Facts : Indian tribe wants to sell some of its property (land). Sells land to x. Then state sells the same land to y.

HISTORY – WILLIAM I

I. Both Romans & Celts had influence in England:

Celts owned property in common, and tribes had leaders. Romans come and institute a system of private property ownership. In the clash btwn the 2, private property wins, and the leaders end up privately owning the property. So now England is a mixture of Celtic and Roman ideas of ownership.

II. Beginnings of Modern property rights during the Anglo-Saxon period Next come the Anglo-Saxons and the Jutes (Germanic tribes mostly) - they invade England, and take a lot of

it over. Germanic tribes tend to own property in common, but not completely (like condo – you have to own something individually to have access to communal property).

Then Vikings come - they pillage and steal at that time (that’s how the culture was). Some were Danes, and some Norwegians.

Alfred the Great (King of Wessex) – victorious over the Danes. Alfred doesn’t kill all the Danes, and told them they could live under their own law.

So all living in peace until descendants of Alfred (about 100 years later) start killing Danes. Danes from Denmark (Sweyn and son Canute) come to England to defend the Danes. Victorious over West Saxons, and Canute accepted as king of England. o Ethelred actually has claim to throne,but he dies, and Canute marries Ethelred's widow. But

Ethelred's sons are still alive and want to fight Canute. Ethelred's sons: Edward the Confessor and Alfred Atheling. Edward the Confessor (grows up

in Normandy - Frenchman) Canute (King of England, Denmark and Normandy) dies. But before he dies, he divides England in 3 parts,

Earldoms. When Canute dies, many rivals for his throne. Many of them die. Ultimately, Edward the Confessor becomes King and reigns for a while, but not so interested in being King,

he is very religious. Godwin gains a lot of influence over Edward. Godwin becomes so powerful, he begins to challenge Edward.

Edward then turns to Normandy military (William I) for help & they are victorious over Godwin. Since Edward has no sons, he promises throne to William. o Godwin very powerful, and when Edward dies, Godwin's son Harold becomes King of England.

William in Normandy with big army ready to invade England. Norwegians also ready to attack England.o Norwegians land in England (east) and Harold goes to fight them. Harold victorious over

Norwegians, who sail away and don’t come back.o Normans (led by William) land in south of England. Harold goes to South and meet Normans at

Hastings. Battle of Hastings changes the history of the world. 1066 - William I (the Conqueror) becomes king of England. says all land in England is his

o Many descendants of Canute trying to get throne, so William becomes ruthless, and wipes out rivals for the throne (out of 70 Saxon lords, he kills 68).

o Takes 70 of his henchmen (knights) and made then tenants in chief. They are holding it for the king. They need to provide soldiers for the king (safety) and food

After 1070, the Norman system of property ownership takes effecto Now we have a "pyramid" society, and we begin to see the origins of the American law of property

(which is nothing without the king. Without the force to protect it, it means nothing. People gave up rights of property for safety).

III. Hierarchy of land ownership: William owns all land and grants land to 70 knights – vassal of the Pope On top, you have the soldiers (knights) - directly on top is the tenant-in-chief

o They are granted land (through subinfeudation) o Everyone owes services to someone above him, as well as part of their harvest.

Next to the knights, you have priests - Church big player in medieval society In the middle, there is the mense-tenant (pronounced mean-tenant) At bottom, you have the tenant-in-demand

o Tenants holds lands. Tenants closest to king are called tenants-in-chief. o lord, who owns the fief. Lord has servant and villains (peasants) to till the soil, and some villains

soldiers (at the bottom of the ladder)

English people need security, and gives themselves to others for that security. So, they accept William b/c they need him for safety. This system worked because it provided food and security to the populace.

IV. Doomsday Book - great survey of all landholdings in England executed by William I Describes the landholdings, and landholding relationships. Very valuable document. It forms the basis of the real estate law we practice today

FEUDALISM – LANDED ESTATES

I. Feudal Tenures and Services Military service

o knight service where tenant had to provide king with fighting men for 40 days/year After a while, king accepted money (scutage or shield money) instead of services & hired

mercenaries. So tenants under military function become country gentlemen instead of knights

o Grand sergeantry - splendid court like, pageantry for knights Economic tenure – see incidents below

o Socage is what evolves into the fee simple. All these relationships are personal relationships btwn the lord and the tenant. Nobody owns anything except the King. All you have are grants in land called tenure. You have rights as a landholder, but not a landowner. You can’t sell it; your children can’t inherit it.

o Forfeiture - If tenant breached loyalty to lord, or refused to perform royal services, land forfeited Religious tenure

o Frankalmoign - providing king/lords who gave lands to church with prayer & salvation Unfree tenures - lords lands held by peasants (villeins) who worked the land

o Their rights to the land were custom, and set forth in records. Became known as copyholds. Copyholds later lost idea of servility and becomes another form of landholding.

copyholds - evolves to an equivalent to a fee simple Socage is very diff from copyhold - a grant that stems from a royal grant. Different from

copyhold b/c it derives from custom, not royal grant Socage becomes alienable and inheritable at a much earlier stage

II. Incidents – Economic tenure (Socage) Homage & fealty- tenant under homage bound to do nothing to injure lord or land; vice vera Warship - lord (not mother) takes custody of minor's land until minor comes of age

o The guy who dies is a knight, and can’t perform any services since he's dead. So he gets profit on being a guardian of the ward. Has to pay lord again to get the landholding.

Marriage - approval by lord. Source of revenue, as approval given for a price.o He can stop men from getting married too (originally over widows and daughters) o Seniorage - you can sleep with tenant's wife on the first night of the marriage

Aids - lord could require financial or other aids from tenants (magna carta limited this to 3 things)o Ransoming of lord from his captorso Knighting of eldest sono Marriage of eldest daughter

Relief - lord's permission for the heir of a deceased tenant to continue the tenancy. Fixed by payment, and another source of revenue.

III. Scutage - king sells right to these lords not to be a knight, and buys knights Going to concept of paying money, and holding land in exchange (Evolution of the country gentile) However, they can’t get out of grand sergeantry (ceremonies).

o Carrying a banner - participating in a grand ceremony (which are very important, significant)IV. Avoidance of Feudal Incidents

Substitution - either through lord's consent & homage to lord from new tenant, or through subinfeudation

Primogeniture (only oldest son inherits patrimonial tenancy) - eliminated risks to fulfillment of feudal obligations that sharing of tenancies among multiple heirs posed

Grant in mortmain - transfer land to church or someone who is incapable of fulfilling feudal obligations. Person would then still live on the land. So widespread, it was banned by the Magna Carta.

V. Tensions between King and Nobility Henry I (William’s son) – Establishes royal courts - sometimes lord of manor very unfair, and also very

dangerous to the king. Henry’s daughter marries Geoffrey of Plantagenet (from France). Plantagenet family rules for several

centuries until Plantagenet female heir marries a Tudor. Writ of Assize Novel Desseisn - King creates an institution where judgment made by 16 ppl (a jury)

o Before, disputes were settled by combat - the adversary system : Trial by Combato This is a tremendous blow to the power of nobilityo Starts a system, that evolves into our own property system

King Richard (Henry I’s grandson)- Edict of toleration of the Jewso Jews allowed into England - b/c so they can lend money to Christianso Edict has rules on how and when debts can be collectedo You get something called mortgage - where you lend money against land

King John (Richard’s brother)- reigns for a long time; doesn’t get along with the barons (who are very strong)o Barons dangerous b/c they’re getting a lot of money from incidents o Creates Magna Carta - very significant - The fairness of the judicial system starts hereo Only aids now - ransom, daughter's marriage, and son's knighthood. Other services gone.

1290 (King Edward I - John's grandson) - Statute gets passed to create the estate called the fee tailo Out with Subinfeudation (delegating duties to someone under you)

Bothers the king - they seem to be getting away with not performing their feudal duties b/c king is not getting money (plus barons for same reason don’t like)

LANDED ESTATES

I. Socage evolves to fee simple In feudalism, a tenant had a status as a tenant of the fee or a tenant for life. Status then becomes estate Rise of the fee simple estate - b/c of heritability and alienability

o Fee simple estate, while still in early middle ages, still has services attached to it (not free): Its forever - longer than you live, can't be taken away, except by power of eminent domain Rights of inheritance - still there is a tax that goes to the baron

Under socage, you could inherit, but had to pay a transfer tax (first up to the lord, then later becomes customary, but you still have to pay)

So much money going to barons, they are gaining a lot of power You can borrow money against the estate (mortgage) You can buy and sell it

Other types of feudal estates become part of fee simpleo Fee tail - estate with an attempt to keep estate within the blood family - conveyance to person &

heirs of his bodyo Before fee tail, there was a conditional fee - property which if conveyed outside family, you would

lose itII. The Fee Tail - an estate of inheritance in real property which cannot be sold, devised by will, or otherwise alienated

by the owner, but which passes by operation of law to the owner’s heirs upon his death. Rich families wanted to make land inalienable - so the land stays with the family, passed down through

inheritability, and cannot be transferred (keep land, power & money in the family). In 1258 they enacted the De Donis Conditional which changed the Fee Simple to the Fee Tail.

After enactment of De Donis, barons had a lot of power & overwhelmed the king (War of the Roses). Great families had developed in the fee tail a secure land base from which they could challenge the king.

o Edward IV - Taltarum's Case 1472 - King challenges undermines barons' power from fee tail Created the means by which a tenant in tail would "bar the entail" - by bringing a collusive

lawsuit known as a common recovery, the fee tail tenant in possession could obtain a court decree awarding him a fee simple, cutting off all his rights of his issue and extinguishing any reversion or remainder. (Alienability) Fee tail tenant thereby became the sole owner

III. Seizin - Fee simple, fee tail and life estate are freehold estates. At common law, a freeholder has seisin Seisin - possession of an estate of land

o Livery of seisin - ceremonial transfer of the land; a deed, a particular happening in a day The grantor and grantee come together, with witnesses, the grantor takes a piece of soil,

and ceremoniously hands it to the grantee. It's the literal handing over of land. IV. Inheritance of a Fee Simple (Hierarchy)

Heirs - persons who survive the decedent and are designated an intestate successors under the state's statute of descent. No living person has heirs.

Issue - includes all further descendants (like grandchildren) Ancestors - if no issue, parents take as heirs Collaterals - all persons related by blood to the decedent who are neither descendents nor ancestors Escheat - is a person dies without heirs, property in feudal times went to overlord; now goes to state

LIFE ESTATE

I. Introduction - Tenant holds estate for his life only. Upon death of tenant, land goes back to grantor English focused on leaving land to their heirs

o Alternative - leave estate to wife for life with a remainder over to your children (while life estate is in existence, the fee simple estate is called a remainder)

o Wife can stay for life, children get fee simple; Useful - If wife remarries, doesn’t go to those children, only to heirs of your body

You can sell a life estate, but the grantor only has it for the life of the grantee. Then would go to the person who owns the remainder. Probably wouldn’t want to buy a life estate. No one can inherit your life estate

II. Alienability - The capacity for a piece of property or a property right to be sold or otherwise transferred from one party to another.

Restraints on alienability - withholds from the grantee the power of transferring his interest Objections to restraints on alienability

o Makes property unmarketableo Land not available for best and highest use (land can’t be used to its optimum)o It perpetuates a concentration of wealth o Discourage improvements and discourage loans.

Unlikely to invest money if you can’t sell it; can’t get mortgages White v. Brown

o Facts : Jessie Lide died, and left a will that states, "I wish Evelyn White to have my home to live in and not to be sold."

o Court says it was a fee simple. Ambiguous, so the court looks at the surrounding circumstances. The court decides that a

person wouldn’t want to make a will where his home would be sold and its assets split up for the heirs to share. Most likely they would want the home to stay in the family, so they gave White the fee simple.

Presumption of fee simple rather than life estate, unless clear intent that it’s a life estate.III. Valuation of Life Estate and Remainder

Figure out how many years are left on the life estate (# years life expectancy); future, present value You can mortgage it, if there's someone willing to lend you the money

o Life estates can be measured by the life expectancy of the person who has it.

IV. Law of Waste - becomes relevant when two or more ppl have right to possess property at the same time (concurrent), or consecutively. A should not be able to use the property in a manner that unreasonably interferes with the expectations of B. Designed to avoid uses of property that fail to maximize the property's value

Affirmative Waste – (voluntary acts) Changes you make to the property that can diminish future interest Permissive waste – (failure to act) Negligence - failure to take reasonable care of the property

o You have to pay taxes - if you don’t and property goes to state, then you're liable to remainderment for waste

o Insurance - Duk says you don’t have to carry property insurance if you're a life tenant. Halper says: If there is insurance on the house, and house burns down, life tenant will keep

the proceeds. Remainder gets the property, but not insurance proceeds. You have to require that insurance proceeds be used for improvement purposes for the damaged house. You want insurance for the 100% replacement cost of the building, specify the insurance co., etc.

Point is you want to do a thorough job to protect the remainder Baker v. Weedon

o Facts: Decedent leaves his 3rd wife Anna his farm for life with a contingent remainder to her children or if no children, to his grandchildren from previous marriages. Anna never has any children. Anna is old now and destitute, and she cannot run the farm, so it has no use to her, and she wants to be able to sell it because she needs the money now to live. Also, the farm is now worth a lot of money, and is increasingly gaining value. So, if Anna continues to hold it, there will be economic waste b/c she is not using it to full potential. However, the remaindermen don’t want the farm to be sold yet b/c they see that the value is increasing.

o Economic waste if Anna holds, it but remaindermen stand to substantially lose interest if land sold prematurely. Court uses necessity test & requires best interest of all parties to be considered.

o Rule: Court will only force a sale if in the best interest of ALL parties with interests in a life estate, otherwise life tenant and remaindermen must agree

V. Why create a legal life estate – In drafting a life estate - you can give life tenant power to sell or mortgage a fee simple

Sale - circumstances might change so that a sale of the property is advantageous. The life tenant cannot sell a fee simple unless all other persons having an interest in the property consent or a court of equity orders sale and reinvestment of the proceeds

Lease - it might be advantageous for the life tenant to lease the property for a period extending beyond the life tenant's death

Mortgage - if the life tenant has no capital of her own, she may be unable to improve the property without borrowing from a bank and giving the bank a mortgage on the property. A bank ordinarily does not lend money if the security is a life estate rather than a fee simple.

Waste - the life tenant may want to take minerals out of the land or cut timber or take down a still usable building. The actions may constitute waste, entitling the remaindermen to an injunction or damages.

Insurance - the life tenant is under no duty to insure buildings on the land, If the life tenant does insure buildings and the buildings are destroyed by fire, the life tenant has been held entitled to the whole proceeds and the remaindermen nothing.

VI. Life estate (Halper's view vs. Duk) Duk mentions that the significant principle is that you can’t use your property that would interfere with the

expectations of the remainderment. Halper says remainderment can’t expect anything, but there is a relationship.

Duk has some reasons for not loving life estates;o Will render the title unmarketable - Halper says it won’t if life is long enough, you can at least

mortgage & lease it, and many of the problems associated can be fixed by having insuranceo You can’t sell it - Halper says not such a terrible thing, b/c its given to you to live in

Duk talks about a way out - life tenant can get power to sell property, but proceeds must be divided with the remainderment (using the present worth formula)

Duk recommends trusts - don't do life estates, instead do a trusto Trust - a lot of flexibility; lay it all out in trust instrument, and trustee figures it out

o Halper says empirically, trusts don’t work out so well. A lot of trustees are thieves, not honest. A lot of trustees very negligent.

LEASEHOLD ESTATE

I. Leasehold Estate – Nonfreehold Estates Ground lease is a lease of a piece of land - Tenant will normally build a building, either for his own use or use

by others where he becomes a landlord. Ground lease landlord agrees to a mortgage whereby the proceeds go to the tenant. Subordinated ground lease - if tenant doesn’t pay lease, owner can get proceeds

The Term of Years - A term of years is an estate that lasts for some fixed period of time or for a period computable by a formula. A term must be for a fixed period, but it can be terminable earlier upon some happening of some event or condition. o b/c it’s for a fixed period of time, no notice of termination is necessary to bring the estate to an end.o Duk says it can start in a certain date and end on a certain date. Halper says not necessarily true

No tenant is willing to pay rent until property is available for use. Then term really starts. If you have to build a building, term may not exist for years You do start the term, but not necessarily the obligations or rights of tenant for

years afterwards The Periodic Tenancy - Is a lease for a period of some fixed duration that continues for succeeding periods

until either the landlord or tenant gives notice of termination. (month-to-month, year-to-year)o If notice is not given the period is automatically extended for another period o Creates an issue: if you really have a year to year tenancy, and you holdover after 1st year is up,

you'll probably get caught up into another yearo Month-to-month - very useful; more flexible, mobile

II. The Tenancy at Will - This is a tenancy of no fixed period that endures so long as both landlord and tenant desire. It’s a tenancy at will if lease provides that one party can terminate it, it is necessarily at the will of the other

too. Modern statutes ordinarily require a period of notice Garner v. Gerrish

o Facts: Lease said "tenant has the privilege of termination of this agreement at a date of his own choice." Landlord executrix tries to get tenant out saying the lease created a tenancy at will.

o Court rejects that a tenancy at will is created. The lease simply granted a person right to tenant to terminate on date of his choosing. Otherwise, it would violate the intent of the parties. A lease agreement that grants tenant the sole right to terminate creates a "determinable life tenancy" for the tenant.

III. The Tenancy at Sufferance: Holdovers Arises when a tenant remains in possession (hold over) after termination of the tenancy. In this situation, landlord has 2 options:

o Eviction (plus damages), oro Consent (express or implied) to the creation of a new tenancy

Crechale & Polles, Inc. v. Smith o Facts: Lease was for 5 years. At the end of the lease, tenant proposes a month to month

arrangement, but landlord refuses. Despite this refusal, tenant stays past the end of lease and submits a check for a month. Landlord cashes the check. The following month, tenant submits another check for one month's rent, but landlord refuses to accept it. Instead, landlord brings suit against holdover tenant for value of a one-year lease.

o The landlord first requested that tenants vacate the premises, but he failed to pursue the remedy for eviction. Then, he accepted the payment for the month after the lease termination, so he implied that he accepted to the lease extension on a month-to-month basis.

DEFEASIBLE FEE SIMPLE

I. A fee simple may be absolute - it cannot be divested nor will it end if any event happens in the future (not terminable). Default is fee simple absolute. If intention is to create a fee simple defeasible, you have to say so.

II. Defeasible fee simple – fee simple (forever) but may come to an end if event occurs Fee simple determinable - will end automatically when a stated event happens, & revert back to grantor.

o Language must state that the event will terminate the fee simple. It has to say the land is being granted on a condition, or until an event occurs.

Traditional language: "to A so long as", "to A until", "to A while", or language stating that upon an event the land is to revert to the grantor.

o The future interest that is created in a fee simple determinable is called a possibility of reverter. Fee simple subject to condition subsequent - does not automatically terminate but may be cut short by

grantor's re-entry after a stated event (preferred by courts, b/c forfeiture is optional)o The language will say the transferor has the right to re-take the property if the stated condition

occurs, but unlike fee simple determinable, it is not automatic. Traditional language: "to A, but if X happens", "to A, upon condition that if X happens", "to

A, provided, however , that if X happens". o The future interest that is created is called a right of entry (or also known as power of termination).

Mahrenholz v. County Board of School Trustees o Facts: Grant of land to Df with condition that "this land to be used for school purpose only;

otherwise to revert to Grantors herein." Uses it for school purposes, then just for storage.o The court held that the language "for school purpose only" showed intent to grant the land to the

school only as long as it was needed, thus it was a fee simple determinable. Legal Consequences from classifying estate as fee simple determinable vs. subject to condition subsequent

o Transferability of the future interest - At common law a possibility of reverter and a right of entry descended to the heirs at death of owner of the interest, but neither was transferable during owner's life b/c they were not thought of as "things.”

Modern trend is that they are both thought of as "things," and are transferable inter vivos. However, some states still

follow common law rules, and interests are not transferable inter vivos Diff btwn them; possibility of reverter is transferable but right of entry is not; or Merely attempting to transfer a right of entry during life destroys it

o Statute of limitations starts running on The possibility of reverter by the grantor when the determinable fee ends. The right of entry until grantor attempts to exercise the right and is rebuffed (or reasonable

time)o Difference between conditions imposed by the grantor in creating defeasible estates and covenants

(promises) made by a grantee If a condition is breached, the land is or may be forfeited to the holder of the future interest A covenant is a promise by the grantee that a specified act will or will not be performed. If a

covenant is breached, the promisee may sue for an injunction or damages. Mountain Brow Lodge No. 82, Independent Order of Odd Fellows v. Toscano

o Facts: Grantor (Df) conveys property to Pl; clause with revertero 1st Clause - "property is restricted for the use & benefit of the [lodge], only;

valid, creates a defeasible estate; a fee simple subject to condition subsequent, so title will automatically revert back to grantors if land ceases to be used for lodge purposes.

o 2nd clause - and in the event the same fails to be used by the [lodge] or in the event of a sale or transfer by the [lodge] of all or any part of said lot, the same is to revert to the [grantors] herein, their successors, heirs or assigns."

It prohibits the sale or transfer of the land under penalty of forfeiture, so it is an absolute restraint on alienation and is void. Common law does not permit restraints on alienation.

o Court says the clauses are severable b/c of language, so 1st part can survive on its own. It's a defeasible estate; fee simple subject to condition subsequent

Notes on Alienability

o City conveys property to Railroad, as long as land used as site for RR's headquarters only. Court said this was an indirect restraint against alienability b/c it had the practical effect of "affecting marketability adversely" by unreasonably limiting the class of persons to whom it may be alienated.

Most restrictions are valid and enforceable, unless it effectively restricts alienation of the land to other grantees.

o Court can hold a condition unreasonable and void if it is capricious and imposed for spite or malice.III. Condemnation of Defeasible Fees and the Valuation of Defeasible Fees and Reversionary Interests

Gov't takes land through it eminent domain power (condemnation). But, land is a fee simple defeasible. Gov't has to pay fair market value. o Majority view: holder of fee gets everything; holder of revisionary interest gets nothing b/c it is

considered to remote and contingent to be capable of valuation.o Rest. Of Property: if the defeasible fee would probably not end in a short period of time (not

counting the condemnation), fee owner gets everything. City of Palm Springs v. Living Desert Reserve

o Facts: McCallum conveys property to the City. It was a fee simple in the land subject to condition subsequent, where condition is that its used as Desert Reserve & Equestrian center, and if condition met, would go to Living Desert. City decides it would rather use the property as a golf course, and brought a condemnation action against Living Desert (the revisionary [future] interest holder), claiming that the power of termination (the right of entry) was not compensable, b/c the possibility of meeting the condition was too remote.

o The fact that the city owned the present possessory interest in the land, the action of condemnation makes the violation of the condition imminent. Living Desert gets fee simple.

Ink v. City of Canton o F acts: heirs conveyed land to city with condition that it be used solely as a park. The state then

condemned that land to be used for a highway. o According to the general rule, the holder of the fee gets the fair market value of the property when

the gov't condemns the property. If the possibility of reverter (by violating the condition) is too remote, the grantors (heirs) would get nothing, b/c the city would most likely never cease to use it as a park.

The problem is that the city would get the fair market value of the land, when they rec'd it as gift, and the heirs (grantors) get nothing. Another issue is the value of the land. There is no market for land used solely as a public park, so it has no value. But then the state would be condemning the property, and not have to pay for it.

o Court says they will not follow the rest rule. They instead awarded the city the value of the land as restricted for use as a public park and subject to forfeiture (which is almost nothing b/c it has no value). The heirs were awarded the difference btwn that amount and the value of the land as a fee simple absolute.

DEFEASIBLE LIFE ESTATE

I. Defeasible Life Estates - Not really common anymore; enforceable, but not encouraged by the law. Past - widow left a defeasible life estate in will, with the condition that its forfeited if she remarries.

o Now - a widow may renounce the will, and claim her share of outright ownership instead May violate the common law rule against restrains on marriage - the common law favors marriage

o In determining whether a proviso violates the common law rule against restraints on marriage, ask whether the proviso has the purpose:

Of coercing abstention from marriage - the provision is invalid "to A for life, but if A marries, then to B" - Has purpose of penalizing marriage

Of providing support until marriage, without any desire to hinder marriage - then provision will be upheld

"to A for life so long as A remains unmarried, then to B" - Has purpose of supporting A until she remarries, not to discourage marriage

Life estates could be terminated before someone's life ended (not anymore, but used to 500 years ago)

FUTURE INTERESTS INTRO

I. Future interest - confers rights to the enjoyment of property at a future time By doing this the testator controls inheritance of the land Future interest is either a remainder or a reversion.

o Interests retained by the transferor, (reversionary interest – goes back to grantor) Reversion Possibility of reverter Right of entry (or power of termination)

o Interests created in a transferee, (Remainder - future estate that doesn’t go back to the grantor): Vested remainder Contingent remainder Executory interest

Future interest gives legal rights to its owner (it’s not merely an expectancy). o Owner of a future interest can:

Sell or give away the remainder Can enjoin the present possessory owner from committing waste Sue 3rd parties who are injuring the land or are claiming the title hostilely

Future interest does not entitle its owner to present possession, but it is a presently existing interest that may become possessory in the future.

FUTURE INTERESTS IN THE TRANSFEROR

I. Reversion - is the future interest left in the grantor when he carves out of his estate a lesser estate and does not provide who is to take the property when the lesser estate expires

O grants land "to A for life," the land would revert back to O or his heirs at A's death. The right to future possession is called a reversion.

Lesser estate depends on hierarchy of estates which is, in order of greater to lesser:o Fee simple, Fee tail, Life estate, Term of years

Reversions are retained interests, which may remain vested in the transferor. When a reversion is retained, it may or may not be certain to become possessory in the future:o Certain to become possessory - Ex. O conveys to A for life.

When A dies, it goes back to O, or his heirs (they will have possession of the interest they held).

o Not certain of becoming possessory - O conveys to "A for life, then to B and his heirs if B survives A." O has a reversion in fee simple that is not certain to become possessory. If B dies before A, then O entitled to possession at A's death If A dies before B, O's possession is divested on A's death and will never become possessory.

At common law a reversion was transferable during life and descendible and devisable at death, and remains so today.

II. Possibility of Reverter - Arises when an owner carves out of his estate a determinable estate of the same hierarchyIII. Right of Entry - When an owner transfers an estate subject to condition subsequent and retains the power to cut

short or terminate the estate, the transferor has a right of entry

FUTURE INTERESTS IN THE TRANSFEREE

I. Introduction - A remainder is a future interest that at the end of the preceding possessory estate, the owner of that future interest gets possession if it is then vested.

Cannot be retained by the transferor; interests only created in transferees. There doesn’t have to be a certainty of future possession, only that it is possible.

o If at the time the interest is created, there is no possibility that it will become into possession of the owner of the future interest when the prior estate terminates, then it is not a remainder.

II. Vested Remainder - A remainder is vested if It is given to an ascertained person; and It is not subject to a condition precedent (other than the natural termination of the preceding estate).

A remainder may be indefeasibly vested - Meaning that the remainder is certain of becoming possessory in the future, and cannot be divestedo if O conveys “to A for life, and then to B +heirs,” B (or B’s successor) will clearly be entitled to

possession upon A’s death. A vested remainder may not be certain of becoming possessory. It can be vested subject to being divested

o Ex: "to A for life, then to A's children." A has one child, B, so B has a vested remainder because B is ascertainable. But, A may have no other children in his life, and B could die before A, so the vested remainder is not certain to become possessory

o Remainder vested subject to open or vested subject to partial divestmento A remainder created in a class of persons can still be vested, as long as one member is ascertained,

and there is no condition precedent. So for example, if you say, "to A's children," and A has no children yet, this is

unascertainable, and so it is not a vested remainder. Here it would be a contingent remainder.

But, if A has at least one child, then since one member is ascertained it is vested, and if A has more children, then they are also entitled to the remainder, even though they didn’t exist when it was created (they were then unascertainable). It is open to later-born children.

If A never has any children, reverts back to grantor.III. Contingent Remainder

A remainder is contingent if:o It is given to an unascertained person; or

Ex. "to A for life, then to B's heirs," but B is still alive. The remainder is contingent here b/c B's heirs cannot be ascertained until B dies (you can't have heirs if you're still alive, only heirs apparent)

o It is made contingent upon some event occurring other than the natural termination of the preceding estate

Ex. "to A for life, then to B + heirs if B survives A" condition precedent - B + heirs can only take possession if B survives A If B doesn’t survive A, who gets possession then? - goes back to grantor + heirs,

unless there's an alternative contingent remainder Alternative Contingent remainder

Ex. "to A for life, then to B + heirs if B survives A, and if B doesn’t survive A, to C + heirs" - Alternative - if the condition that B survive A is not met, then it goes to C + heirs. B here has fee simple subject to divestment, C has a shifting executory interest which will become possessory only by divesting B's remainder

IV. Historic Differences between vested and contingent remainders - Law has a preference for a vested remainder (if an instrument is ambiguous, will be interpreted as a vested remainder)

A vested remainder becomes possessory once the preceding estate ends. A contingent remainder cannot become possessory so long as it remains contingent.

At early common law, a contingent remainder was not assignable inter vivos (b/c thought of as merely a possibility of becoming an interest). Now, mostly, can transferable inter vivos. Vested remainders have always been transferable during life and at death.

At common law, contingent remainders were destroyed if they did not vest upon termination of a preceding life estate; vested remainder not destructible in this manner

Contingent remainders subject to the Rule against Perpetuities; vested remainders not.V. History of Executory Interests: Statute of Uses

Prohibitory Rules prior to 1536 (in Common Law)o No shifting future interest - No future interest could be created in favor of a transferee if the

interest could operate to cut short a freehold estate. Reason for the rule - O could not create a right of entry in a stranger, which a shifting interest resembled.

o No springing future interest - No freehold estate could be created to spring up in the future (out of the grantor). Reason for the rule - a freehold estate could not be created unless a feoffment with livery of seisin took place on the land.

The Rise of the Use (this is prior to 1536): Common law courts vs. Equity Courtso The common law courts adjudicated title, declaring who had rights in land

Law courts - the feoffment w/ livery of seisin created a fee absolute in X They refused to compel the uses, to hold the land for benefit of A

o Chancellor (equity court) did what conscience required by enforcing personal duties. Chancellor didn’t pay attention to law courts; only did what needed to be done in “good faith” and morally right. So, here developed in equity a protected interest known as the "use" (benefit).

Feoffment to uses : Shifting - Ex: O goes on the land and enfeoffs "X + heirs to hold to the use of A + heirs, but if A inherits the family manor, then to the use of O's second son B + heirs." [feoffment to uses]

o The Chancellor enforced this duty. He couldn’t change the title of the land (under law courts jurisdiction), but he could coerce the legal owner by threatening him with imprisonment.

o Bargain and sale deeds Ex: Suppose O and his grantee did not want to go out to the land (maybe too far away) and

perform livery of seisin. So instead, O sold property to A for £50, and gave a bargain and sale deed to "A + heirs"

Law courts - b/c no feoffment w/ livery of seisin, legal title and seisin were still in O. But here, the chancellor would enforce this and require O to hold legal title for the

benefit of A Benefits of raising a "use"

o Before 1540, land couldn’t be devised by will, but you could get the equivalent of a will by "uses" It avoided feudal incidents (taxes), so it became very popular Avoided the feudal incidents, which were paid through inheritance, not conveyance. So

even though you're conveying property to heirs, they would still have gotten it through inheritance, but no feudal incidents are paid

Abolition of the Use o Henry VIII began to run short of money after his break with Rome. So, he resolved this by restoring

feudal revenue, which had been depleted through the prevalence of useso In 1536, Henry VIII pushed the Statute of Uses through Parliament in order to dispense with the

evasive devise of the use. Statute of Uses - Converted all equitable estates that were created through "use" into legal estates.

o The Statute of Uses created two new future interests: shifting and springing executory interests. This made it legal to do what formerly could only be done equitably.

VI. Modern Executory Interests - a fee simple subject to an executory limitation - a fee simple that upon the happening of a certain event, is automatically divested by an executory interest in the transferee.

Shifting executory interest - Divest or cut short some interest in another transferee o Always follows a defeasible feeo Ex: If O conveys property “To A and her heirs, but if B returns from Canada sometime next year, to B

and his heirs”; here, B has a shifting executory interest, and A has a fee simple subject to this shifting executory interest.

Springing executory interest - Divest the transferor (the grantor) in the futureo If O conveys property “To A, if and when he marries”; here, A has a springing executory interest, and

O has a fee simple subject to this springing executory interest.

The executory interest may be created to follow a defeasible fee, rather than a possibility of reverter or right of entry .o Possibility of reverter or right of entry can only be created in the grantor/transferoro The executory interest can only be created in the transferee

THE TRUST

I. The Trust - Allow settlors to arrange their assets in ways that maximize flexibility in property management as well as transfer wealth to future generations.

The trustee holds legal title to the trust property and manages that property for the benefit of the beneficiaries, who have the right of beneficial enjoyment of the propertyo trustee has the power to sell trust assets and reinvest the proceeds in other assetso Net income of the trust is paid to the beneficiarieso Upon termination of the trust, the trust assets as they exist are handed over to the designated

beneficiaries, free of the trust. Trustee is the legal owner (they hold the legal fee simple), but subject to equity court, which enforces

trustee's duties to beneficiaries. Beneficiaries hold equitable interests Trustee is a fiduciary - so subject to stringent duties in managing trust property;

o Duty of loyalty - trustee must act for the exclusive benefit of the beneficiaries Benefits of the trust:

o Spendthrift trusts - protect the beneficiaries interest by making them inalienable Rules against restraints on alienation don’t apply to beneficiaries' equitable interests

Duk says more reliable than gifts/sales of property with life estate, etc. o Proposes the trust as a useful instrument to overcome other difficultieso Problem with trusts - not all trustees are competent or honest. But most are good. o You can use the trust to minimize the federal estate tax when the spouse passes away

DESTRUCTION OF CONTINGENT REMAINDERS

I. Rules Furthering Marketability by Destroying Contingent Future Interests We don’t want land made inalienable. Since it's possible to do this with contingent remainders, executory

interests, etc., judge made new rules to obstruct making land virtually inalienable.o Contingent remainders tend to make land unmarketable

The Rules that destroy contingent interests and make land more marketable:o Destructibility of contingent remainders (abolished in most states)o The Rule in Shelley's Case (abolished in most states)o The Doctrine of Worthier Title (abolished in most states)o The Rule against Perpetuities - very important, still used.

II. Destructibility of Contingent Remainders - A remainder in land is destroyed if it does not vest at or before the termination of the preceding freehold estate

Common law judges are distrustful of contingency and the feudal system (livery of seisin). They wanted to preserve the system that they had.

If the remainder is still subject to a condition precedent when the preceding estate terminates, the remainder is wiped out, and the right of possession moves on to the next vested interest.o Ex: O conveys property to A for life, then to B and her heirs if B reaches 21. o If at A's death B is under 21, B's remainder is destroyed. O now has the right of possession.

Also, a life estate could be terminated before the life tenant's death by forfeiture or merger. The life tenant had the power to destroy contingent remainders whenever he wished.o Ex: O conveys property to A for life, then to B and her heirs if B survives Ao A conveys life estate to O; the life estate merges into the reversion, destroying B's contingent

remainder. O gets a fee simple, not a life estate from A (see doctrine of merger)

Doctrine of merger (still in effect today) provides that if the life estate and the next vested estate in fee simple come into the hands of one person, the lesser estate is merged with the largero Ex: to A for life, remainder to B + heirs. o If A conveys life estate to B, the life estate and the remainder merge. B gets a fee simple.

The destructibility doctrine did not apply to executory interests or contingent remainders in trusto The exemption of executory interests is why judges developed the Rule against Perpetuities

Important element - the rule against restraints on alienation. (RAP takes care of it now) III. The Rule in Shelley's Case - Under this rule, if an instrument creates a life estate in land in A, and also creates a

remainder to A's heirs (unascertained, so it’s a contingent remainder), and the life estate and remainder are both legal or both equitable, then it becomes a remainder in fee simple (vested remainder in A).

The rule converted the contingent remainder into a vested remainder. That's all it did! Then the Doctrine of Merger may come into play:

o Ex: Conveyance to "A for life, then to A's heirs" The Rule gives A a vested remainder in fee simple. A's life estate then merges into the

vested remainder, leaving A with a fee simple in possession. The land is immediately alienable by A and not tied up for A's lifetime.

But, the life estate cannot merge into a vested remainder in fee simple if there is an intervening life estate, blocking merger

If grant is to heirs of body, same rule, but it becomes a fee tail. Reason for this Rule: Overlord gets relief when underlord dies; overlord doesn’t get relief if underlord's

heirs own property IV. The Doctrine of Worthier Title - The rule provided that where there is an inter vivos conveyance of land, with a

limitation to the grantor's own heirs either by remainder or executory interest, no future interest in the heirs is created. Instead, a reversion is retained by the grantor.

Since the grantor is trying to convey an heir the same estate in land that the heir would take under the laws of inheritance, the heir would be adjudged to have taken title to the land by inheritance rather than by the conveyance, because descent through the bloodline was held to be "worthier" than a conveyance through a legal instrument.

In this way, tax evasion was prevented (feudal tax through inheritance, not conveyance) Ex: O conveys property "to A for life, then to O's heirs."

o Without this doctrine, there is a contingent remainder in favor of O's unascertained heirso Under this doctrine, though, that contingent remainder doesn’t exist. Instead, O has a reversion

(after A's life estate terminates, goes back to O. If O is not alive, then to O's heirs through inheritance).

The doctrine also furthered alienability - O could convey a reversion, but since O's heirs are not ascertained, they couldn’t convey the future interest

V. The Rule Against Perpetuities The Common Law Rule - Compromise btwn families who were concerned about securing land from

incompetent children, and the common law rule of alienability. Judges basically created this rule, saying that they can understand that a father knows the capabilities and the living members of his family, and from the father's informed judgment, say that they want to restrict the alienability of the land given to incompetent children. However, there was no way for the testator to know anything about unborn children, so there was no reason to impose this restriction. Therefore, the compromise was that the father was permitted to control the land as pertains to living members only, so a time limit was imposed.

Mechanics of the Rule o Only applies to interests that are not vested at time of conveyance (future interests). These are:

Contingent interests Executory interests Also, Class gifts (this is a special case)

o Then, determine whether the interest might not vest within the perpetuity period of "lives in being plus 21 years"

You must prove that a contingent interest is certain to vest or terminate no later than 21 years after the death of some person alive at the creation of the interest. If you cannot prove that, the contingent interest is void from the outset.

The person's life that you are using to determine this is called the validating life. Validating Life:

o The preceding life tenanto The taker or takers of the contingent interesto Anyone who can affect the identity of the takers o Anyone else who can affect events relevant to the condition precedent

Ex: "for A for life, then to A's first child to reach 21"o A is the validating life. You can prove that any child to reach 21 will

necessarily do so within 21 years of A's death. It is certain to vest or fail within this period

In searching for the validating life, we ask whether there is with respect to a given person an invalidating chain of possible events after the interest's creation. It's what might happen, doesn’t matter what actually does happen. If what might happens is that the interest remains unvested following that person's life plus 21 years, then that person can't be the validating life.

All possible events, no matter how unlikely are taken into account. Examples:o The fertile octogenarian - presumes that anyone, even an octogenarian - that is, a person between

80 and 90 years of age - can parent a child, regardless of gender or health. "To A for life, and then to the first of A's children to reach 25 yrs" A at time is 85.

In applying the rule, you would argue that in her 86th year, A could have a child, and in her 87th year, all her other children could die, and she dies at 88. B/c the interest wouldn’t vest within 21 years of A's and all her other children's death (they all form the lives in being), it makes to gift void. Instead, after the life estate is over, there's a reversion.

The precocious toddler - assumes a living person is fertile at birth The unborn widow - because who is a widow cannot be determined until the spouse dies, the

law will assume the possibility that he marries a woman not born at the time a gift was made Ex: "for A for life, then to A's first child to reach 25"

o There is no validating life; the contingent remainder is void. You cannot prove that A's first child to reach 25 will do so within 21 yrs after A's death

Class Gifts - a special case under the RAPo "all or nothing" rule holds that if a gift to one member of the class might vest to remotely, the whole

class gift is void.o For a class gift to be vested under RAP, the class must be closed (when gift is created, every member of

the class must be in existence and identified), and each member of the class must be satisfied with the perpetuities period

Ex: "A for life, then to A's children," and A has one living child B The remainder is vested subject to open, but it is not vested under the RAP until A dies

and all of A's children are then in existence and identified. But because the remainder beneficiaries will be ascertained at A's death, the remainder

is valid. Future Interests in Transferors: Executory Interests Following Defeasible Fees; and Options

o Future interests retained by transferor (reversions, possibility of reverter, right of entry) are not subject to the RAP. They are treated as vested as soon as they arise.

Example: if you have a future interest retained in the transferor: O conveys Blackacre "to the School Board so long as it is used for a school" School has a fee simple determinable, and O has a possibility of reverter. Exempt from

RAP. However, if the future interest in retained in transferee:

O conveys Blackacre "to the School so long as it is used for a school, then to A + heirs"

A's executory interest violates RAP b/c it will not necessarily vest within A's lifetime, or within 21 years after A's death.

When an interest violates RAP, it is struck out and the remaining valid interests stand.o The Symphony Space, Inc. v. Pergola Properties, Inc.

o Facts: Pl purchased a property (far below market price), and as part of that transaction, Df retained an option for the exclusive right to repurchase the property. The option allowed the holder to exercise the option to purchase the property if one of several conditions were met. Pl defaulted upon the mortgage provision of the option and triggered one of the preconditions for exercise of the option by Dfs. Dfs gave Pl notice of their intention to repurchase the property.

o Invalid under RAP; RAP also applies to commercial transactions Possibility that it won’t vest within 21 years.

CO-OWNERSHIP: CONCURRENT INTERESTS

I. Coparseny - not that important; never took hold in the American colonies and was eliminated At common law under the system of primogeniture the eldest son was the heir. If a decedent only had

daughters, the daughters took as coparsenorsII. Tenancy in Partnership (discussed later)

III. Tenants in Common Have separate but undivided interests in the property

o The interest of each is inheritable and may be conveyed by will or deedo There are no survivorship rights between tenants in common. o Each tenant in common owns an undivided share of the whole

Ex. T conveys property to A and B. A and B are tenants in common.o If A conveys his interest to C, then B and C are tenants in commono If then B dies intestate (without a will, so this is the default), then B's heirs and C are tenants in

commonIV. Joint Tenants

Have a right of survivorship By common law, joint tenants together are regarded as a single owner

o In theory, each owns the undivided whole of the property. When one joint tenant dies, nothing passes to the surviving joint tenant(s). The decedent's "share" is still part of the whole, but the decedent's share is extinguished. The other joint tenant all collectively are one owner, free from the decedent's stake.

The Four Unities - Since joint tenants are seised together as one owner, common law insisted that their interests should be equal in all respects. So the four unities were essential:o Time - the interest of each joint tenant must be acquired or vest at the same timeo Title - all joint tenants must acquire title by the same instrument or by a joint adverse possession. A

joint tenancy can never arise by intestate succession or other act of law.o Interest - All must have equal undivided shares and identical interests measured by durationo Possession - Each must have a right to possession of the whole. After a joint tenancy is created,

however, one joint tenant can voluntarily give exclusive possession to the other joint tenant. The unity of possession is essentially to a tenancy in common as well; none of the other 3

unities is though. If these 4 unities don't exist, a joint tenancy is not created. Instead a tenancy in common is created.

o Some jurisdictions have statutes that abolished the requirement of the 4 unities, and instead, if you explicitly say a joint tenancy is created, it is.

If the 4 unities exist when it's created, but are later severed it turns into a tenancy in common. o So joint tenants can change their interests into a tenancy in common by mutual agreement

destroying one of the four unities.o If they can solve their problem by mutual agreement, any one of them can bring an action for

partition.

o Also, one joint tenant can convert interest to tenancy in common unilaterally by conveying their interest to a 3rd party (destroys unity of time).

V. Tenancy by the Entirety - can be created only by husband and wife All 4 unities are required, plus the 5th - the unity of marriage Surviving tenant has a right of survivorship Husband and wife are considered to hold as one person at common law

o Therefore neither one can defeat the right of survivorship by conveying to a 3rd party. Only a conveyance by both together can do so

o Neither one acting along has the right to judicial partition of property Divorce terminates tenancy by the entirety because it terminates the unity of marriage ( a requirement)

o As a default, the parties usually become tenants in commonVI. Presumptions

At common law, presumption was for joint tenancies over tenancies in common Today, however, the presumption is reversed

o Ex: "to A and B as joint tenants and not as tenants in common" - this will create a joint tenancyo However, if you say "to A and B, jointly" it may not

Courts have thought this may indicate an intent to create some type of concurrent estate, but not necessarily joint tenancy.

Some states require an express provision for survivorship to create a joint tenancy Ex: "to A and B as joint tenants with the right of survivorship"

Conveyances to husband and wifeo Common law presumed an intention to create a tenancy by the entirety, absent some clear

indication to the contrary. This presumption still has a lot of force today.VII. More of Joint Tenancies

Avoidance of Probate - joint tenancies btwn husband and wife is the practical equivalent of a will, but at the joint tenant's death probate of the property is avoided; therefore, they are very popular.o Probate - the judicial supervision of the administration of the decedent's property that passes to

others at the decedent's death. They are costly, and property may be tied up for a while.o Joint tenant avoids probate b/c no interest passes. The decedent's interest extinguishes at death,

and the survivor's interest continues on the whole without the participation of the decedent. A joint tenant cannot pass her interest in a joint tenancy by will. The joint tenant's interest ceases at death.

o This has important consequences for creditors. If a creditor acts during a joint tenant's life, the creditor can seize and sell the joint tenant's

interest in property, severing the joint tenancy. If the creditor waits until after the joint tenant's death, the decedent's joint tenant interest

has disappeared, so there is nothing the creditor can seize.o But, this does not control federal estate taxation

Congress (looking at reality) provides that when a joint tenant dies, his share of the jointly held property is subject to federal estate taxation.

If the joint tenants are husband and wife, one-half is subject to taxation. However, no taxes are paid b/c any amount of property that passes to surviving spouse qualifies for marital deduction and passes tax-free.

Instances where court might ignore the unity of interest: o In certain situations this makes no sense, and since this is justifiable only on historical grounds,

courts may ignore it in situations where it counts. Ex: A and B take title as joint tenants. A furnishes 1/3 of purchase price and B 2/3, intending that when they sale, the proceeds will

also be split up the same way if sold during their joint lives, then a joint tenancy will be created, and a court will divide the proceeds according to their intent.

VIII. Severance of Joint Tenancies Riddle v. Harmon

o Facts : Husband and wife purchased land, taking title as joint tenants. Before she dies, wife decides she doesn’t want husband to get her interest, so she could dispose of her interest by will. She grants a deed to herself for ½ interest, to terminate the joint tenancy & create a tenancy in common.

o A joint tenancy can be severed by 1) voluntary conveyance, 2) partition proceedings, 3) involuntary alienation under an execution, or by 4) any other action which operates to sever the joint tenancy

Each tenant has the right to convey his or her separate estate by way of gift or otherwise w/out the knowledge or consent of the other joint tenant to terminate the joint tenancy.

If one of the unities is destroyed (interest here), it becomes a tenancy in common. Harms v. Sprague

o Facts: Two brothers (decedent & Pl) held land as joint tenants. The decedent (without the Pls knowledge), mortgages one of the properties and becomes a co-debtor on a mortgage with Df. Decedent’s will devises everything to Df.

o Court held that joint tenancy is not severed when less than all of the joint tenants mortgage their interest in the property. Since John's interest is now extinguished, any lien against it has been extinguished as well.

CO-OWNERSHIP: MARITAL INTERESTS

I. During Marriage (The Fiction that Husband and Wife Are One) In the English marital property system, man and wife considered one person. At the instant of marriage, wife

moved under her husband's protection or cover. He had right to possession of her property during marriage. This right, jure uxoris, was alienable by the husband and was reachable by his creditors. In exchange for all this, and a marriage vow to obey her husband, the wife rec'd the benefit of the husband's support and protection.

By the 19th century, all common property states had enacted Married Women's Property Acts. They removed the disabilities of coverture (cover of wife's property during marriage), gave a married woman, like a single woman, control over all her property. This gave wife legal autonomy, and protected her property from her husband's creditors. But domestic duties of wife still existed.

Sawada v. Endo o Facts: Car accident, Endo found liable, Sawada awarded $25k. Endo had a property held in tenancy

in the entirety with his wife. They then conveyed the property to their sons, but they still lived there (they no longer held any title). Looks like they conveyed the house so that creditors can't get it, and that amounts to fraud. Sawada asks for conveyance to be set aside, and to seize the property.

o Rule : Husband and wife do not have separate divisible interests in property held in tenancy by the entirety.

o Rule : Married Women's Property Act - says a wife's property is protected from husband's creditors. Can't go after assets of one spouse for the debts incurred by the other.

o Conclusion : The basic rule is that a tenancy in the entirety estate is not subject to the claims of creditors of one of the spouses during their joint lives. Therefore, Sawada could never actually seize the property anyway (b/c can't take wife's property, and their ownership is not divisible), it was not fraudulent for them to give it away.

II. US government can reach the interests of a debtor-spouse who owns tenancy-by-the-entirety property IRS is the one creditor that can reach the interest of a debtor spouse in tenancy-by-the-entirety property.

o In U.S. v Craft, court said that while state laws delineates what rights a taxpayer has in property the government seeks to reach, federal law determines whether those rights qualify as property within the meaning of the federal tax lien statute.

o So it doesn’t do away with the Sawada rule, gov't ability to take property is based on the federal tax lien statute, and also for civil forfeiture (if property used for illegal drug transactions, govt can take it away). But what if one tenant is innocent and one guilty - we shouldn’t take away the innocent tenant's interest, but we also can't divide it b/c they both own the whole. So what the court has done is that the only forfeitable interest is the guilty tenant's survivorship interest.

CO-OWNERSHIP: THE COMMUNITY PROPERTY SYSTEM

I. Introduction - Now it's really for married couples that own the property as "community property." The fundamental idea is that earnings of each spouse during marriage should be owned equally in undivided

share by both spouses. The basic assumption is that both husband & wife contribute equally to the material success of the marriage, and so each should own an equal share f property acquired during the marriage by their joint efforts. Community property includes earnings during marriage and the rents, profits, and fruits of earnings. Whatever is bought with earnings is community property.o Separate property (not community property) - acquired before marriage and property acquired

during marriage by gift, devise, or descent. o In some states income from all property (incl. community & separate), is community property. In

other states the separate property retains its separate character.o Property acquired or possessed during marriage by either spouse is presumed to be community

property. Strong presumption - hard to prove otherwise. Just because a deed says it's separate is not

controlling. Otherwise a spouse could just convert earnings into separate property (by buying something with earning from community property).

In most states spouses can convert the character of their property by written agreement (& in some states by oral agreement). So if both agree community property can become separate property & vice versa.

If marriage terminated by divorce, some states require equal division of community property. Other states allow divorce courts to make an equitable division of community property.

CO-OWNERSHIP: RELATIONS AMONG CONCURRENT OWNERS

I. Partition - the privilege of each co-owner to transform a concurrent estate into estates held in severalty. This action is available to any joint tenant or tenant in common; NOT for tenants by the entirety. Preference for partition in kind (dividing the property) over partition sale (selling & dividing up proceeds).

But sometimes partition in kind is not possible, so courts allow partition by sale under certain circumstances.o Reason for preferring partition in kind: sale of one's property w/o his consent is an extreme exercise

of power warranted only in clear cases. Partition by sale should only ordered when 2 conditions are satisfied:

o The physical attributes of the land are such that a partition in kind is impracticable or inequitable; and

o The interests of the owners would be better promoted by a partition by sale Delfino v. Vealencis

o Facts: Plaintiff and defendant own property as tenants in common. Plaintiff and defendant own an undivided 99/144 and 45/144 interest, respectively. Plaintiff wishes to partition the land by sale, and defendant (who runs a garbage disposal business on the land) wants a partition in-kind.

o Practicability of physically partitioning the property - in this case only 2 owners. o Does it promote best interests of parties? - looks at the consequences of doing each to decide this:

This court says there was not enough evidence of hardship caused to Pl by doing a partition in kind that would warrant them to do a partition by sale instead. Plus, Df would be forced to surrender her home, her business, and possibly, her livelihood.

Notes on Partition in kind vs. Partition by sale o Duk says this case doesn’t have a big following, and most courts favor partition by saleo Ark Land Co. v. Harper - Property owned by family for almost a century. Ark bought 2/3 of property

from family members, but rest wouldn’t sell it to Ark. Ark wanted partition by sale so they could in the end buy the whole thing, and said that partition in kind would ass several mm in costs for their building plans. However, court said partition by sale would work hardship on family b/c of emotional

attachment to land, and money alone cannot compensate. Just b/c economic value of property as a whole would be less if partitioned in kind is not sufficient in cases of longstanding ownership + emotional ties.

o Johnson v. Hendrickson - decedent's property passes to widow & 2 children. Wife remarries, and when wife dies her share passes to her widow & 2 children from that marriage. 1st marriage children don’t live there; they want partition by sale. 2nd marriage children & husband live there and want partition in kind. Court said b/c the value of the land when divided would be less than as a whole, we should do partition by sale. Court didn’t give any weight to the fact that 2nd marriage guys actually live there & also own a property adjacent.

o Gray v. Cotts - one of 4 cotenants argued he should get a specific piece of land adjacent to his home. Court says no, just divide it up into 4 parcels of equal value, then cotenants should draw lots to determine who receives which parcel. Again, court doesn’t care about a cotenant acquiring the land adjacent to another property he owns.

II. Sharing the Benefits and Burdens of Co-ownership - May enter into agreement concerning their rights & duties with respect to use, maintenance, and improvement of the property. But if not, there are independent rules.

Spiller v. Mackereth o Facts: Parties own a building as tenants in common. When a lessee vacated, Df used structure as a

warehouse. Pl then demands Df either vacate half of it, or pay rent on half. Df didn’t, and Pl sued.o Rule : In the absence of an agreement to pay rent or an ouster of a cotenant, a cotenant in

possession is not liable to his cotenants for the value of his use and occupation of the property.o Since no agreement to pay rent, court looks to see if there is evidence of an ouster.

Ouster used loosely in cotenancy cases to describe 2 distinct fact situations: The beginning of the running of the statute of limitations for adverse possession

o Basically, the finding of an ouster in the adverse possession cases is a claim of absolute ownership and a denial of the cotenancy relationship by the occupying cotenant

The liability of an occupying cotenant for rent to other cotenants.o Where the occupying tenant refuses a demand of the other cotenants to be

allowed into the use and enjoyment of the land (claim of ownership unnecessary here)

o Not adverse possession b/c Df acknowledges the cotenancy relationship. This case involves the cotenant's liability for rent; to be ;liable he must have denied his cotenants the right to enter. There can be no denial unless there is a demand or attempt to enter. Simply requesting the occupying tenant to vacate is not sufficient b/c occupying cotenant holds title to the whole and may rightfully occupy the whole unless the other cotenants assert their possessory rights.

Swartzbaugh v. Sampson o Facts: Mrs. Swartzbaugh (Pl) and her husband own land as joint tenants. Husband leases part of

property to Sampson (Df) to be the site for a boxing ring (lessee has exclusive possession), despite Pl's outspoken opposition. Pl never signed joined in the lease. Pl eventually sues to cancel lease.

o Rule : Unity of possession: Each tenant owns an equal interest and each has a right to possession of the whole. A joint tenant can only recover the right to be let into joint possession with his cotenant. He cannot eject his cotenant in possession.

Usually, you cant get rent from cotenant for occupancy or profits derived. However, you may compel the tenant in possession to account for rents collected from third parties.

The act of one joint tenant without express or implied authority from or consent if his cotenant cannot bind or prejudicially affect the rights of his cotenant.

o No ouster here - lessee has no right to adverse possession or by prescription to land from landlord. Also, she never demanded to be let into property.

o If cotenant did not join in the lease, then she is not bound by its terms, so she still has the right to the enjoyment & use of that property. So if she demands to be let in, and is refused, she can recover (see Spiller liability of an occupying tenant for rent to other cotenants).

o Where a tenant has leased a joint property without consent of his cotenant, and places lessee in possession. Basically, he is merely giving his lessee the right he had been enjoying. The lease is valid; can't be canceled.

o Rules from this case : A conveyance of a lease by one joint tenant to a third party does NOT sever a joint tenancy. Joint tenant has the right to lease his interest to a third party without the consent of other

joint tenant. Accounting for Benefits, Recovering Costs - Each owner has a right to an accounting of profits made from the

property. This is b/c the concurrently owned property can yield benefits to cotenants but also give rise to expenditures (taxes, etc.)

Rents an Profits - Cotenants who collects from third parties rents and other payments arising from the co-owned land must account to cotenants for the amounts received. Absent ouster, accounting is usually based only on actual receipts, not fair market value.

Taxes, mortgage payments, and other carrying charges - A cotenant paying more of these expenditures has a right of contribution from the other cotenants, at least up to the amount of the value of their share in the property. Also, the cotenant paying more than his share is credited for the excess payments in an accounting or partition action.o However, if the tenant who has paid taxes or interest has been in sole possession of the property,

and the value of use & enjoyment he has equals or exceeds such payments, there's no action for contribution from the others.

Necessary Repairs - cotenant making or paying for them has no affirmative right to contribution from the other cotenants in the absence of an agreement (Reason: b/c whether such expenditures are justified are too uncertain for the law to settle). But, cotenant gets credit for reasonable repairs in a partition or accounting action.

Improvements - same thing, cotenant has no right to contribution, but also no credit given in accounting or partition actions. o However, the interests of the improver are to be protected if this can be accomplished w/o

detriment to interest of other cotenants. But we look only to the value added by the improvements, and not the actual cost of them.

CO-OWNERSHIP: CONDOS & CO-OPS

I. Distinguishing the Structure of a Condominium from a Coop Condos- own apt yourself, but lobby of the building is owned in common with everyone else Co-op is different - owned by co-op corporation, it owns everything.

o YOU own a leasehold estate. You own:o A proprietary leasehold estate o a stock in the co-op corporationo You don’t actually own any real estate

A lot riskier to own co-op than condoo If co-op corp defaults on mortgage, you lose everything even if you paid.o You make sure the co-op corp owns the building. You don’t own anything, so your shares are based

on the assets of the corp. Make sure the corp has these assets. o Co-op lease - they will include a forfeiture provision - which they probably won’t enforce unless you

cross them. If you don’t pay a co-op fee, it becomes a lien against your property, which might ultimately result in a foreclosure

Advantage of co-opo When you pay the mortgage, you can borrow more money again (like for improvements)o Always will have a mortgage. When one runs low, they'll take out another oneo Less down paymento You can’t do this in a condo

In condo - they increase common charges to fund improvements Ultimately, once a certain # of apts are sold, sponsor will turn over control to board of directors (if co-ops),

or condo assn (if condos). Condo assn not nearly as powerful as board of directors Risk - During good times, coops and condos have about equal risks, but during bad times, there's a big diff

o Co-op - 100 ppl own coop together. Half don’t send monthly payments. Only way to preserve what you have is by putting up the other half (putting up double), just to keep it.

Many resemblances to tenancy in common and joint tenancyo In condo - if half the ppl don’t pay, you still keep your property, no forfeiture of the building, only no

improvements made b/c no money coming in to fund the improvements Condo owner more likely to survive when there's a down turn in the economy

Sponsor - the guy who conceives of the idea, either builds the building, sells units in it, or he's buying an existing building, and as quickly as possible, getting rid of existing tenants and re-selling.o To get rid of existing tenants

Get eviction plan - you need approval of certain % of the tenants Non-eviction plan - cant evict anyone; most plans are non-eviction plans

If you buy out enough ppl, other may lose rent control rights Offering plan is what you get - you can hang the sponsor on the offering plan (sue him for fraud)

o You describe the buildingo Describe the financial foundation of the building (what you paid for it, paid for renovations, etc.)o Then you describe the procedure by which a person can buy a unito Explain what the monthly carrying charges are o Will be vastly diff in a condo and co-op

In co-op charges include your mortgage, real estate taxes, and maintenance Condo only maintenance

o Not bound by these numbers. The carrying charges may be higher (or lower - but less likely)o What you can get (definite) out of offering plan is the % of common charges (the proportion you pay

of total share)o Co-op owned by corp, and run by board of directors

II. Functions of a Condominium Declaration : Five types of property Individual living unit Side walks and landscape - common elements, each owner has an undivided interest Parking spaces or semi-private lawns – assigned exclusive control. Not wholly individual nor entirely

common Recreational facilities – may be owned by the developer and leased to condo Common elements of structures, i.e. common walls and roofs of joined townhouse style codo’s.

III. Origins of the Cooperative Movement Robert Owen – History

o Marries rich, goes to work for father-in-law, proves to be a good manager.o Provides a living wage, provides housing and does not steal it back at the company store.o Jeremy Bentem – friend and philosopher, noteworthy theories on capitalism.o Word of Owens’s store reach a bunch of weavers in Rochdale, who decide to get together and form

a store of their own. They organize it as a coop. Each owner gets one vote, regardless of the amount of capital contributed. (the capital contribution does determine share of profits). This starts the coop movement.

IV. Common Interest Community Associations Introduction

o A collection of individual rights related to individual home ownership that are similar to Condo’s.o Developer would have drafted a set of CC&R’s – Covenants, Conditions and Rules that will govern

the way the members of the community will live. By buying into the community, a party contractually obligates him/herself to live by the community rules. Infractions are punishable by a fine which can result in a lien in the event of a failure to pay. The community association often provides some services, i.e. road maintenance, snow removal, ect.

o Streets within the community are often common property of the community. They are not public roads, they are privately owned.

Nahrstedt v. Lakeside Village Condominium Association, Inc. o Facts: homeowner’s assoc has a covenant in the rules against pets; Pl has pets and is repeatedly

fined for the pets; Pl sues for declaration that the covenant is invalid as applied to her.o The enforceability of a restrictive covenant on the ownership of pets should be tried to determine

whether the restriction was reasonable as applied to the particular facts of the challenging homeowner

Mulligan v. Panther Valley Property Owners Assn . o Facts: Gated community that decided they would establish a rule prohibiting tier 3 sex offenders

from living in the community.o When a community decides to establish a set of rules they can generally make up any rules that they

want as long as the rules don’t result in prohibited discrimination.

CO-OWNERSHIP: PARTNERSHIPS

I. Covenants of a limited partnership Power of a limited partner tends to be constricted so that he agrees with the limited partners that they can

get involved in some decisions (not always true, but may happen) General partner has a lot of power

o Only person in the limited partnership that has unlimited liability b/c of power, may be crooked and defraud partners Unlimited liability - all assets are open to attack. This was a serious problem: Ended this a while back - now a general partner of which there was limited liability b/c it

was a corporation. This is a tax problem - then this type of partnership has to be taxed like a

corporation So now under, some circumstances, sometimes taxed as corp sometimes as

partnership Now tax law lets you choose if you want to be taxed as one or the other

o Partnership don’t pay taxeso For real estate businesses, corporation tend to be avoided

Limited partner has only limited liabilityII. How do you start a limited partnership?

Write a partnership agreement. What do you need?o Statement that forms the organizationo Give it a name and a term o Can last forever, but usually don’t. May not want it to last forever b/c that is an attribute of a corp,

and having this attribute, this would be a thing that would make it taxable as a corp. although now you can choose how you want to be taxed.

o Title of agreement should be concise. Ex: Partnership Agreement, Dateo Purposes of the partnership

Largely irrelevant, b/c unless you limit the partnership to specific purposes, the limited partnership can do anything

o Tell who are the parties - who's involved?o Introduce the subject - tell the story

What the deal is all about Identify the premises Limit liability to the one premises

o Say who gets what Not every partner has to be equal to all the others - what share does each get?

Layers of clauses - Should be organized so that things that relate to each other are near to each other. When you arrange things, you begin to understand the logic to the deal, and the clauses then make sense.o 1st layer

Every clause has an "address"o 2nd layer

Obligations of the partners All partners have an obligation to contribute capital Time and attention of the partners

o 3rd layer Some people get compensated for work

As a matter of law, you don have to be compensated, so to get paid, it must be in the agreement

You may get paid a fixed amount depending on accomplishing goals. May be percentage

Compensation for administration, and also in getting goals accomplished (development partnerships)

o 4th layer - Then go into causes dealing with administration General partner

doesn’t have unlimited authority - the limitations are stated in agreement, and consented to by 2/3 of partners

can be replaced - how to deal with that; way of getting them out (b/c of illness, bankruptcy, crime, etc)

Provide that he has authority to bind partnership except …. Provide that he must keep partnership funds in a bank account, and invest funds in

safe securities Must keep books and records Don’t pay income taxes - but do pay other types of taxes. Part of general partner's

responsibilities Provide for a fiscal year. Usually use calendar year, b/c tax code favors it.

Tax matters partner - required to name one partner in charge of taxes. Usually general partner, but doesn’t have to be. Purpose: IRS wants to talk to 1 person on behalf of partnership

Provide for where the offices of partnership will beo 5th layer - relationship of partners to other partners and to partnership

Fiduciary duty - duty to act in the best interests of the entire partnership, even if they conflict with your own

Often litigated Don’t want partners to reveal information to competitors Distributions and allocations

Allocations - takes the money that comes in and allocates among partners for 2 purposes

o For income tax reporto For balance sheets purposes - for financial statement

Distributions - means to get money back File a certificate for limited partnership with secretary of state

Must publish an ad that you formed a companyIII. Capital account - crucial element in organizing a partnership

Every partnership has capital (shares in %), and is allocated among the partnerso a partner can contribute property that has an agreed value. While there is a single capital account

for the partnership, each partner’s interest is tracked in separate individual capital accounts. What influences your capital account?

o Money you put in, and the money you take outo Can be increased by contribution of property - has to be valued through negotiation

o It also increases or decreases with the gains or losses of the partnership. The Partnership will income and expenses that will impact the capital account. Each year the Partnership will file a tax return which will show the allocation of the Partnership’s profits or

losses to the different partners. The partners then file their own taxes and are responsible for the taxes on the profits or losses.

Partnerships generally prohibit the assignment of interest. The reason is to control who can participate in the partnership.

IV. Liquidation plan General partner will be the liquidation partner Assets would get sold, and debts paid. The partners need to equalize their share contribution Termination –

o Taxes become due. Internal Revenue Code 704Bo Liquidation officer oversees the dissolution of the partnership.o Equalization of capital accounts – at the end of the deal, the capital should first be distributed so

that those partners who contributed capital in excess of their share in the partnership. Each partners capital level should be reduced or increased until it equals their share in the partnership. Then there can be a final distribution.

Upon the death of a partner, the heirs can inherit the right to collect distributions but that does not make them a partner automatically. Often the general partner gets to decide who becomes a partner and who doesn’t. Sometimes the surviving partners vote, some partnership use other means.o Tontine – partnership agreement where the last surviving partner gets everything.

On occasion a partner will want to leave or the Partnership will want to expel a partner. The partnership agreement will usually address the method for accomplishing this. Usually done through a buyout.

OWNERSHIP LIMITS: THE LAW OF NUISANCE

I. An Introduction to the Substantive Law - A nuisance is any substantial non-trespassory invasion of another's interest in the use and enjoyment of their land.

A private nuisance is an interference with the use and enjoyment of land, in order to give rise to liability, must be substantial; it must also be either intentional or unreasonable, or the unintentional result of negligent, reckless, or abnormally dangerous activity.

Unreasonableness o In cases of air and water pollution, noise, odors, etc., there’s intent, but liability only arises when the

resulting interference is substantial and unreasonable. o Instead of looking at social benefits vs. costs (rest. of Torts says this, but few courts follow it), the

relevant inquiry is whether the level of interference rises to a level of liability. A lot of courts won't even consider the social benefit of the intentional nuisance (Jost v. Dairyland).

Morgan v. High Penn Oil Co. o Facts: Pl own land, which they rent out. Later, Df builds oil refinery that emitted nauseating gases

and odors in great quantities. o Private Nuisance: Evidence shows that Df intentionally and unreasonably caused noxious gases and

odors to escape to such a degree as to impair in a substantial manner the Pl's use & enjoyment of her property. Additionally, Df intends to operate in the same way, and if permitted would inflict irreparable harm to Pl, so injunction appropriate.

o Notes and Questions (Duk 641-645) Fear - the fact that the fear of something makes property value decline is sufficient

consideration for a nuisance. Like if halfway house or toxic dump – even if they don’t actually affect; the fear of them will affect.

Spite - courts commonly find nuisance liability where it was done in spite, and purely to annoy neighbor; it has no use whatsoever otherwise.

Aesthetic Nuisance - ugliness alone doesn’t make a nuisance (unless out of spite) Lateral and Subjacent Support

o Lateral Support of land - lateral support is that provided to one piece of land by the parcels of land surrounding it.

o Subjacent support - where one person owns surface rights and another subsurface rights.II. Remedies (and more on substantive law)

Estancias Dallas Corp. v. Schultz o Facts: Df operated an AC unit on the property next the Pl’s residence. Bad noise. o Balancing of equities to determine if an injunction should be granted. The court will consider the

injury which may result to the Df and the public by granting the injunction, as well as injury caused to Pl if injunction denied.

o Cases where nuisance permitted to exist are based on the rule of necessity. No injury to the public if injunction granted, b/c no shortage of apts for public to live in, no

necessityo Rule : Where there is little evidence showing benefit of the nuisance to the public and there is no

evidence to indicate necessity, an injunction may be granted. Boomer v. Atlantic Cement Co .

o Facts: Df operates a cement plant. Bad - dirt, smoke, vibration, and particulate contamination o Alternatives to an injunction:

Postpone injunction to give opportunity for tech advances to permit Df to eliminate nuisance. But this is hard - may not be able to get tech in such a short period of time.

Grant injunction conditioned on payment of permanent damages to Pls which would compensate them the total economic loss to their property present & future caused by Df's operation (the court chooses this one).

Encourages nuisance makers to improve techniques to minimize nuisance, and thus minimize paying damages.

o Court also discusses that some problems like air pollution is not something the courts are equipped to resolve through private litigation or by creating an effective policy to eliminate pollution. Instead, it requires govt expenditures and technological developments.

o Dissent : argued that an award of permanent damages destroys any incentive on the part of the Df to abate its pollution in the future - presumably even if new, cost-effective technology is developed.

Spur Industries, Inc. v. Del E. Webb Development Co. o Facts: Pl, developer, planned a community, which ended up growing in size, and approached Df's

feedlot. The feedlot produced unpleasant scents and flies.o Public nuisance (the operations of the cattle feedlot was appropriate, just not in the vicinity of a

residential area - health concerns). So court grants the injunction. o Coming to the nuisance - a residential landowner usually can't get relief when he knowingly came

into the neighborhood that had the nuisance he is complaining of o Pl has to indemnify Dfs for a reasonable amount of the cost in moving or shutting down.

OWNERSHIP LIMITS: EASEMENTS

I. Private Land Use Controls: The Law of Servitudes Easement Profit - the right to go on someone else's land and take the minerals and natural resources of the land. Negative Easement Real Covenant Equitable Servitude

II. Historical Background of Easements – illogical. In medieval England, village land was cultivated using the common field system. Land divided into strips, &

each tenant would be assigned possession of scattered, noncontiguous strips. Done in a way that each

farmer gets fair share of good & bad land. Also b/c you have to rotate your crops. So need a way to get to other parcels of land, which is through other's parcels. So easements, real covenants, and equitable servitudes developed.

First English text on easements - Gale on easements (1839) Easements can be affirmative or negative

o Affirmative - granted by the servient owner, it gave a neighbor the right to enter or perform an act on the servient land

o Negative - easements forbidding landowner from doing something on his land that might harm a neighbor

Easements may also be classified as appurtenant or in gross - both types give easement owners the right to make some specific use (or restrict some specific use) of land they do not owno Appurtenant —when it benefits its holder in his physical use or enjoyment of his property; when two

parcels of land are involvedo Easement in gross —gives holder only a personal or commercial gain that is not related to his use

and enjoyment of his land; no dominant tenement III. Creation of Easements

Easement created by grant - Easements created by a grant in a deed need to identify the property(s), describe the easement (nature of rights), must be in writing, should be notarized and recorded. (Statute of fraud and Statute of limitation.) o Willard v. First Church of Christ, Scientist

Facts: Churchgoer sells her property, and grants an easement in the deed for it to be used for church purposes (for parking). Pl wants to remove the easement.

Common Law Rule : you can't "reserve" an interest in property to a stranger to the title (this was b/c in early common law the law courts wished to limit conveyance by deed as a substitute for livery of seisin). This basically invalidated the easement.

This rule is archaic and should be abandoned. It is entirely inconsistent with the basic principle followed in the construction of deeds, which is to determine the intention of grantor as gathered from the four corners of the document.

Court balances injustice resulting in failing to give effect to grantor's intent with reliance on the old common law rules. Since no reliance on the common law rules, so we don’t apply it.

o Notes and Questions Rest. 3rd Property - provides that an easement can be created in favor of a 3rd party. Some

courts still follow old common law rule. In Willard, court says easement can be reserved in favor of a 3rd party, but cannot be

excepted. Reservation - a provision in a deed creating some new servitude which did not exist

before as an independent interest. Exception - a provision in a deed that excludes from the grant some preexisting

servitude on the land. Regrant - a way around the common law rule against reservations. Basically, convey land,

then regrant it back, but it worked like an easement. This also meant that both grantee & grantor had to sign (b/c considered 2 separate deeds); however, American courts have allowed it when only grantor signed.

Licenses - oral or written permission given by the occupant of land allowing the licensee to do some act that otherwise would be a trespass (like plumber coming to fix the drain, etc.). License is revocable where an easement is not.o Exceptions to the rule that a license is revocable (irrevocable licenses treated like easements):

A license coupled with an interest can't be revoked - When a license is tied together with some other legally recognized interest the license is irrevocable until that other interest is vindicated. (O grants A right to take timber from property owned by O - A has an interest & irrevocable license).

A license can also become irrevocable under the rules of estoppel (Holbrook v. Taylor ).

Easement created by estoppel - If a licensor grants a license on which the licensee reasonably relies on to make substantial improvements to the property, equity requires that the licensor be estopped from revoking the license. License made irrevocable through estoppel continues to exist until the reasonable expectations of the parties have been satisfied.o Holbrook v. Taylor

Facts : Pl permitted Df to use roads across his land to access another property where Df is building a house. Dfs had widened the road, and graveled part of it to help them use it.

No easement by prescription - no prior adverse use; use was with Pl's permission Easement by estoppel – licensee reasonably relied on Pl’s permission, and made

improvements, so Pl can’t revoke the license given.o An oral license is just as valid, binding, and irrevocable as a deeded right of way

Shepard v. Purvine Henry v. Dalton

Easement created by Implication o Quasi-Easement - You can't have an easement on your own property, but you can make use of one

part of your land for the benefit of another part, this is a quasi easement. o An implied easement arises where the prior use was or might have been known of by the parties

and it is reasonably necessary to the use of the land such that the parties can be assumed to have contemplated its continuance.

o Elements necessary to establish an easement implied from prior use: Common owner prior to division Prior use must be reasonably necessary for the use and enjoyment of the "quasi-dominant"

estate Prior use must be continuous, not sporadic Parties must intend, at time of division, to continue the prior use Prior use must be existing at the time of division Prior use must be apparent, but doesn’t necessarily mean that it is visible

o Van Sandt v. Royster Facts: Pl discovered his basement filled with sewage from Df's house. Df had been draining

sewage across pl's land. Pl sued to stop this practice. Prior owner of both lots had created a quasi-easement, so easement by reservation implied

from prior use had been validly created when she conveyed title to each of the purchasers.o If the dominant and servient tenement come into the same ownership, easement is extinguished,

and will not be revived by the land being divided again. But a new easement by implication may be created, if intended.

Easement by Implied Necessity - where property has been divided by a common owner in such a manner that an easement for access is necessary (if you're landlocked). o Only permitted for right of way - ingress & egress btwn landlocked parcel & public road. o Common owner prior to division

An easement implied by necessity cannot burden property never owned by the common grantor who created the problem.

o Necessity must exist at the moment the property is divided . No prior use is needed. Othen v. Rosier

Facts: Hill owned a large parcel of land, which he divided up & sold. One of the parcels was landlocked and acquired by Othen (Pl), who would cross Rosier's (Df) land to reach a public road.

When Hill had conveyed parcel to Rosier, he had owned other land that was contiguous to Othen's parcel and a public roadway. Othen had an easement implied by necessity across some other property, but not Rosier's.

o Easement by necessity lasts as long as the necessity exists; if necessity is removed (by creating a new public road), the easement is terminated.

o The servient estate owner is permitted to select a reasonably convenient location for the easement, b/c he can best minimize the damage to the servient estate.

Easement by Prescription - Adverse use for a sufficient period of time can ripen into an easement by prescription. o Required to establish prescriptive use: Adverse use under a claim of right that is open and

notorious, and continuous for the prescriptive period. Prescriptive period - same time period as adverse possession (20 years) The use of another's land must be adverse & not with permission of the owner. But a

permissive use can become adverse if user does things that are inconsistent w/permission. Adverse - When owner did not object (he acquiesced). Some courts say that owner must

effectively interrupt or stop the adverse use. To be open & notorious, the adverse use must be conducted so that the use may be

discovered by any reasonable inspection (not in secret or concealed). Continuous use – use has to be consistent, not constantly. Exclusive use of the property (in Othen, not exclusive b/c both landowners used the road, so

it wasn’t an easement by prescription). Exclusivity doesn’t require that only claimant made use of the land, but that his claim doesn’t depend upon a like claim in others. So in most states, can get this even if servient owner uses it too.

o History: Richard I enacted a statute that prohibited challenges to possession enjoyed since 1189. So if you could say you used the property since 1189, then it’s yours. But s time went on, harder for people to actually remember this stuff & prove it. Then got to a point that if the use existed as long as any living person could remember, it was presumed to exist since 1189. Then changed to 20 yrs.

Public prescriptive use - where the public uses, can be acquired by the public at large. Owner must be put on notice that the adverse right is being claimed by general public, not by individuals.o Custom - beach front property owners own the dry sand part of the beach. Common law held that

the public acquired a customary right to use the dry sand part if that use has gone on so long. To establish this customary right, the public must prove immemorial usage w/o interruption that is peaceable, reasonable, certain & consistent with other customs.

Prescriptive easement of beaches not likely b/c courts presume the use of beaches is at owner's permission.

o Implied Dedication - where the owner intends to dedicate his property to public use. Evidence of intent is inferred from long-standing public use and owner's failure to halt the use.

o Public Trust Doctrine - Beach access - state holds in public trust the beach from the water to high tide line (wet sand area). This is to enable the public use of tidal waters and lands.

Matthews v. Bay Head Improvement Association Facts: The dry sand beaches were owned by a non-profit corp, and restricted access

of the dry sand beaches to residents of Bay Head and their guests. The court rules that private beachfront landowners organized as a "quasi-public"

entity must give the general public access to and use of privately-owned dry sand areas as reasonably necessary.

Court said under the public trust doctrine, members of the public must be given "reasonable access " to the foreshore and be permitted to use privately owned dry sand areas of the beach when such use is "essential or reasonably necessary" for enjoyment of the ocean.

IV. Assignability of Easement Appurtenant —passes automatically with the dominant tenement Easement in gross — (general rule) not transferable unless it is for commercial purposes

o Miller v. Lutheran Conference & Camp Association Facts: Pocono grants to Frank and heirs + assigns the exclusive right to fish and boat in the

lake. Then, Frank granted to Rufus 1/4 interest in right to fish, boat, and bat in the lake. Rufus dies, and his estate granted licenses to Lutheran to boat, fish and bathe in the lake.

Frank sued to stop Lutheran from use of the lake. Argued that Since Frank never had bathing rights, so his conveyance of them was void

o Court said bathing rights acquired by prescriptive use, so there was an easement in gross acquired.

If there were bathing rights, they were in gross, so neither divisible nor alienable. o Since this was a commercial easement, it was intended to be transferable.o But even though they were transferable, they were not divisible. .

o Recreational easements in gross are not assignable - intended to be personal, and we don’t want to burden the servient land beyond the original contemplation of the parties.

o Easement in gross is divisible when the creating instrument so indicates or when the easement is exclusive (or if it would create a burden on servient estate).

V. Scope of Easements – to determine scope, look at intentions of parties creating the easement Extension/Enlargement - An easement cannot be used for the benefit of land that is not the dominant estate

o Brown v. Voss Facts: Easement existed btwn parcel A (servient) and parcel B (dominant). B subsequently

acquired another parcel of land and used the easement for both parcels of land. There was no increase in burden to the servient estate by this use.

Rule : When an easement is created by an express grant, the extent of the right acquired is to be determined from the terms of the grant properly construed to give effect of the intention of the parties.

Grant gave easement to parcel B, not parcel C. Doesn’t matter that C is now combined into same ownership w/ dominant estate; have to look at what parties intended to agree on when easement was created.

Rule : An easement appurtenant to one parcel of land may not be extended by the owner of the dominant estate to other parcels owned by him, whether adjoining or distinct tracts, to which the easement is not appurtenant.

Rule : Just because there is no added burden on the servient estate, doesn’t mean that there's no misuse of the easement. If an easement is appurtenant to a particular parcel of land, any extension to other parcels is a misuse.

o Not es, Questions, and Problems Easement owner can use servient estate as reasonable, even if changed from original use

b/c of normal development, but must be reasonable. A private easement of way usually doesn’t permit the easement owner to install on the

easement utilities like electrical lines or sewer pipes - b/c such uses are not reasonably foreseeable by the parties - the easement was created to give a way in and off the property.

Location - the location of the easement, once fixed by the parties, cannot be changed by the servient owner without permission of the dominant owner.o Rest says ok for servient owner to change location if at his expense, as long as it doesn’t lessen the

utility of the easement, or increase burdens on easement owner's use & enjoyment, or frustrate purpose for which easement was created.

Scope of prescriptive easement – use not confined to the uses made during prescriptive period. But, the uses made must be consistent with the general kind of use by which the easement was created and what servient owner might reasonably expect.

VI. Termination of Easements - Easements are extinguished in 5 principle ways. Once an easement is extinguished it cannot be revived - it must be created again in any way easements can be created.

Expiration – expire by its terms if by grant; or when purpose of easement has ceasedo Necessity - expires when the necessity is eliminatedo Estoppel - expires when licensee gets full value of expenditures made in reliance on the license.

Merger – if dominant and servient estate merge (get same owner), easement is extinguished Release – a waiver; generally, it must be written. Oral release is valid through equitable estoppel (when

servient owner relied on it to his substantial detriment). Abandonment - if the easement holder manifests a clear and unequivocal intention to abandon the

easement. Mere nonuse will not suffice to prove this. Abandonment is established by either a present intent to relinquish the easement or a purpose inconsistent with its future existence. o Can be abandonment if not used within a statutory periodo Act of obtaining alternative means of access to the dominant parcel could constitute an intent.o Preseault v. United States

Facts: RR had a right of way easement on Pl's property, for its rail line. Then, RR ceased operations over that portion, & removed tracks. RR then entered into agreement with U.S. for the lines to be used as a public trail. Pl sued b/c govt taking their property.

Scope of the easement : Court looks at intent of parties when conveyance was made. Since the estate was acquired solely for RR's needs it was an easement, not a fee tail. Intent was to grant an easement for RR lines, and it was not reasonably foreseeable that it would be used as a public trail.

Easement vs fee tail - when deed refers to the strip of land as a right of way, court usually finds an easement. But sometimes intent is to create a fee simple.

Termination: RR intended to abandon the easement when they removed the RR tracks, and there was no intent to revive the use of the easement for that purpose.

Estoppel - if the servient owner relies upon a statement or representation by the easement owner Condemnation - if the govt exercises their eminent domain power Prescription - if the servient owner wrongfully and physically prevents the easement from being used for the

prescriptive period, the easement is terminated.VII. Negative Easements - A negative easement is the right of the dominant owner to stop the servient owner from

doing something on the servient land. In common law England traditional negative easement were the right to stop your neighbor from interfering

with light, air, support of your home, and water. English courts don’t like creation of new neg. easements, so courts decide no more than 4 traditional.

o American courts accepted the English restriction on creating new types of easements. Today negative easements are usually treated as equitable servitudes. But in America, sometimes a new easement is recognized.o Conservation and Other Novel Easements

o Conservation easement - developed to preserve historic or scenic areas; prevents servient owner from building on the land except as specified in the grant. Statutes enacted in almost all states authorizing conservation easements. Perpetual, transferable and can be in gross.

o Owner will give the easement to a non-profit/ public/charitable org for free, and usually gets tax deductions

OWNERSHIP LIMITS: COVENANTS RUNNING WITH THE LAND

I. Historical Background Since can't create new types of negative easements, landowners create K's instead. They sought judicial

recognition of a K right respecting land use enforceable not only against the promisor landowner, but his successors in title too.o Property owners (neighbors) will bargain with each other to allocate resources efficiently by

arranging land uses so as to minimize conflicts. o But, for this to work, the agreements have to be enforceable. B/c promises not enforceable against

or by a person not a party to the K, this couldn’t be enforced on subsequent owners. o Privity of Estate – there is a relationship btwn those making the covenant

American courts developed the real covenant - a promise respecting the use of land that runs with the estate in land at law. This means that it binds or benefits subsequent owners of the estate. Usually burdens one and benefits another.o Runs with the land - if party breaches covenant on land usage they made w/ another person, this is

just K law. Property law gets involved when covenant is sought to be enforced by or against a successor to the estate in land.

o Real covenant can be affirmative (a promise to do an act) or negative (promise not to do an act).

o Horizontal privity (older view, not much used anymore) requires privity of estate between the original parties, for the burden to run, but not for the benefit to run. Exists when the relationship btwn contracting parties is sufficiently connected to permit the covenant to run.

Horizontal privity applies to burdens, not benefits. Most courts don’t use this as a req. only vertical privity.

o Vertical privity - (most courts require this) requires privity of estate between the original promisor and the successor to the burdened estate, for either the burden or benefit to run.

Definition of vertical privity is more easily met for benefits to run than for burdens to run Burden - covenant is enforceable only against someone who has succeeded to the same

estate as that of the original promisor. If promisor had fee simple, person against whom enforcement is sought must have succeeded to that fee simple estate.

Benefit - promise is enforceable by a person who succeeds to the original promisee's estate or not a lesser interest carved out of that estate. NY still has need to vertical privity.

II. Covenants Enforceable in Equity: Origins of Equitable Servitudes Tulk v. Moxhay

o Facts: Tulk sold property to Elms who promised for himself and assigns not to build on the property. With knowledge of this covenant, Moxhay purchased the property from Elms, and, ignoring the covenant, build on it.

o Under English law, the burden of the covenant would not run because horizontal privity was lacking. The Chancellor reasoned that it was highly unfair for Moxhay to purchase the property, knowing of the covenant (and probably paying a lesser price b/c it existed), only to ignore it. Because the covenant was intended to bind successors, its substance touched and concerned the land, and Moxhay had notice, it was enforceable in equity against Moxhay.

o Negative covenant enforceable as equitable servitudes. An equitable servitude was viewed as an interest in property like a negative easement. Becomes enforceable in equity when not at law.

o Equity requires that possessors in equity intend the promise to run, that a subsequent purchaser have actual or constructive notice of the covenant, and that the covenant touched and concerned the land .

All subsequent owners bound by the servitude, just as they are bound by an easement. The benefits runs to all assignees.

The property theory of equitable servitudes:o At first it started out as a promise enforced in equity, now it's an interest in land.o Unlike a covenant, which only attaches to estate in land, equitable servitude burdens the land itself,

not the estate (in this respect its like an easement) Traditional difference btwn real covenants and equitable servitudes relates to remedy sought

o Remedy for breach of real covenant is damages (at law)o Remedy for breach of an equitable servitude is an injunction or enforcement of a lien (in equity)

Unification of servitudes - B/c of merger of law & equity courts, may not really matter anymore to distinguish btwn real covenants and equitable servitudes. But may be reasons for differentiation.

Restrictive covenants o Not to be taken lightly – even though trivial issues, huge investments may be lost b/c of poorly

written covenants running with the lando Negative easement and restrictive covenant - idea is that they are the same thingo Under certain circumstances, restrictive covenants won’t be enforced, but restrictive use will

Sherman antitrust act - you should know about thisIII. Creation of Covenants

Real Covenant : Only one way to create - by a written instrument (interest in land within statute of frauds), and signed by person conveying. If deed containing the covenant signed only by grantor, and it contains a promise by grantee, promise is enforceable against the grantee (grantee is bound by accepting the deed).

Equitable Servitude - also an interest in land. But it may be implied in equity under limited circumstances. Can never arise from prescription (b/c it always arises out of a promise).o Equitable Servitudes by Implication from a Common Development Scheme - Many states will imply a

negative equitable servitude where a real estate developer sells lots in a subdivision on the promise

that all the lots will be burdened with the same restriction, and later fails to carry through on the promise to burden all the lots.

Sanborn v. McLean Facts: Developer subdivided a tract of land into building lots and started selling

them with a restricted use to single-family residences. Df purchased one of these lots, without the restriction, and started to construct a gas station. Neighbors sought to enjoin him from this use as a violation of an implied negative equitable servitude.

Court grants injunction. B/c the initial restrictions imposed by the developer, were for the benefit of the lands held by him to carry out the scheme of a residential district, an implied reciprocal servitude burdened developer's property w/o the restriction, including the one Df purchased. Therefore, that servitude was equitably enforceable against Df, who was put on notice by the "uniform residence character given the lots by the expensive dwellings" that his lot might be burdened by a covenant restricting it to residential use.

o Reciprocal negative easement —initial common ownership, situated so as to receive reciprocal benefits, sale of one lots with benefit to retained lots the burden runs to the retained lots of there is notice

o Subdivision Map - if you own a piece of property, and you're going to divide it into more than 5 units, you have to submit a plan that every lot will have access to the road, have access to utilities, and you take the map and file them in the appropriate governmental entity. Diff govt entities have jurisdictions over this. You have to get subdivision approval.

You can be bound by restrictions on a subdivision map If you sell part of a piece of property you own w/o subdivision approval, it is a felony

IV. Validity and Enforcement of Covenants Equity imposes 3 requirements:

o Intent - original parties must have intended the burden (or benefit, or both) to run (this is intended when covenant says it binds successors, heirs, assigns.). If covenant is silent, court will look at surrounding circumstances whether running covenant intended

o Notice - on the part of the purchasers of the original promisoro Touch and Concern - the substance of the promise must touch and concern the burdened land

Look at the effect - determine whether covenants are sufficiently economically beneficial they would be imposed by the present owners if they had the opportunity to negotiate btwn themselves

Also no good if illegal, unconstitutional, or violate public policy. May modify or terminate.o Vertical Privity - may be required in some jurisdictions for the benefit (but not the burden) of a

covenant running in equity. Neponsit Property Owners' Inc. v. Emigrant

o Facts: Plaintiff, a homeowners association, acquired a lien on Defendant's property for the failure to pay fees to the association. These fees were required by covenant which was included on the deed. Plaintiff foreclosed on the property to satisfy the lien.

o Covenant runs with the land when there's intent, touch & concern, & privity of estate (vertical privity):

Paying money does touch and concern when money used to benefit through maintenance Association is acting as a convenient instrument for parties who do have vertical privity

o Landmark decision b/c courts weren't doing that be4, and so many homeowners assn wouldn’t have existed if not for this

Restatement (Third) of Property, Servitudes (2000) §3.1 o Servitude valid unless illegal or unconstitutional or violates public policy.

Violate public policy may be b/c It's arbitrary, spiteful or capricious Unreasonably burdens a fundamental constitutional right Imposes an unreasonable restraint on alienation

Imposes an unreasonable restraint on trade or competition It's unconscionable

Caullett v. Stanley Stilwell & Sons, Inc. o Facts: D sold P property with the condition that his construction company would build the house. P

and D couldn’t negotiate so P sued to quiet title. o Clause too vague and it didn’t touch and concern the land.

To constitute a real rather than a personal covenant, the promise must exercise direct influence on the occupation, use, or enjoyment of the premises. It cannot be a use incidental to the performance of a promise. There must be a reasonable limitation or proscription to the land (like limiting land to residential purposes), but this provision is not similar.

Defeasible Fees as Land Use Control Devices - A defeasible fee differs from servitude in that the remedy for its breach is forfeiture; remedy for breach of servitude is damages, injunction, or enforcement of a lien.

Enforceable restrictive covenant o Express covenant must comply with the statute of fraudso Implied covenants means imposed on everythingo Must be touch and concern (for anything)

Issue comes up with requiring someone to pay money w/o limitation. Hard time with idea that money touched and concern.

Courts would impose personal liability on a property owner w/o him agreeing to it by himself. So there was an obligation to pay money, ok, as long as there was privity.

Concept that obligation to pay money on the thing, but most person could lose is the thingV. Scope of Covenants

Hill v. Community of Damien of Molokai o Facts: Df is a groups AIDS home; neighbors sued to enforce restrictive covenant limiting property use

to "single family home."o Ambiguous restrictive covenants should be construed in favor of free use and enjoyment of property

and against restrictions. The term "family" is ambiguous and so it is construed against the restrictions.

o Also, restrictive covenants violate the FHA (Fair Housing Act) when they have a discriminatory intent, effect or constitute a failure to make reasonable accommodations.

Shelley v. Kraemer o Facts: Restrictive covenant that you can't sell property to non-whites. White homeowners sued

black purchasers for violation of this covenant. o Covenant is unconstitutional under the 14th amendment, and may not be enforced (also said

covenants are invalid). o Also, covenants based on race are also void under the FHA

FHA makes it unlawful to refuse to sell or rent or otherwise make unavailable a dwelling to any person based on race, color, religion, sex, national origin, familial status or handicap.

VI. Termination of Covenants Expiration - Usually don’t expire, unless the covenant actually has an expiration date.

o Covenants in leases, and leases expire, so when lease expires, and you make a new lease, you need to make a whole new set of covenants, b/c it will expire with the lease.

o Some states have statutes that say whatever you do will expire You can tie up land up to a certain point, but after that the covenant expires You may have a case if legislative act is constitutionally unenforceable

Release - If there's a restriction, you could release a restrictiono A covenant running with the land can be released, either if it’s in a lease or outside of the lease.

Abandonment (Prof can’t quite grasp this; don’t need to know it) Merger - When the two properties come together, the covenant is gone. Estoppel Prescription

Condemnation -Theoretically only for public purpose, but what constitutes a public purpose is an evolving principle. When state takes the property, they take the covenant too. The pay you for dominant tenement (property) and owner of the servient tenement (covenant) too.

May also be modified or terminated with all interested parties' consent Courts may also do this on basis of changed conditions

o Usually applied to private property. Usually comes out from a residential subdivision where life changes. The covenant is no longer appropriate.

VII. Termination by Changed Conditions Rest (3rd) of Property, Servitudes : Modification & termination b/c of changed conditions:

o If the change makes it impossible as a practical matter to accomplish the purpose for which the servitude was created, court may modify to permit purpose to be accomplished. If modification not practicable, or wouldn’t be effective, court can terminate it.

o If purpose of servitude can be accomplished, but b/c of changed conditions the servient estate is no longer suitable for uses permitted by servitude, court can modify servitude to permit other uses under conditions designed to preserve the benefits of the original servitude.

Western Land Co. v. Truskolaski o Facts: Pl subdivided 40 acres and included on the subdivided lots covenants limiting the use of the

lots to residential use. Later, because of changed circumstances Pl attempted to building a shopping center on some of the lots. Df wants to enforce the covenants.

o Changed circumstances - area becomes very populous, increase in traffic, noisy etc. Previously little population & residential & quiet. Also huge increase in commercial development.

Even so, restrictive covenants are still enforceable if the residential character of the neighborhood has not been adversely affected, and the purpose of the restriction has not been thwarted. Still is suitable for residential purposes

Changed conditions do not invalidate a residential covenant where the character of the subdivision remains residential

o A zoning ordinance can’t override privately-placed restrictions, even where economic efficiency would be served by invalidating covenant. Area still suitable for residential purposes. There are two sets of laws, and whatever is more restrictive, the developer has got to deal with it

o Added Note: A lot of ppl depending on the covenant. They bought in reliance that it was going to be residential. But even that won't prevail if you have other 2 conditions. But it does prevail here b/c they get substantial benefit out of it (so covenant will be enforced)

Rick v. West o Facts: Lots restricted to residential use and all but one resident agree to release covenant in order to

build a hospital; Pl says covenant no longer enforceable b/c of changed conditions.o A landowner in a subdivision under a restrictive covenant has the right to insist upon adherence to

the covenant even when other owners consent to its release; holdout landowner relied on covenant in purchasing property and expectations should be upheld; enforced unless unconscionable or oppressive.

Notes and Questions o MA has a statute that limits damages for failure to comply with a covenant, long list of

circumstances here. It deals in part with changes in the neighborhood, or ppl acting nasty. Covenants still enforced, but you can only get damages.

o Idea that it will be enforced by either damages or injunction, is enough to deter either one (not just damages, but most likely you would rather be made to comply than pay damages).

o MA is only illustration that Duk explains in detail where you can get damages onlyVIII. Termination by Abandonment?

Pocono Springs Civic Association, Inc. v. MacKenzie o Facts: MacKenzie purchased a vacant lot at Pocono Springs. Later, MacKenzie decided to sell their

still-vacant lot, but couldn’t b/c it was conditioned it it being suitable for on-lot sewage system. Believing their investment to be worthless, MacKenzie attempted to abandon their lot at Pocono Springs in order to avoid association fees to Poconos.

o MacKenzie argues they manifested an intent abandoned it.

o Rule : Abandoned property is that to which an owner has voluntarily relinquished all right, title, claim and possession with the intention of terminating his ownership, but without vesting it in any other person and with the intention of not reclaiming further possession or resuming ownership, possession or enjoyment.

o They remain owners in fee simple, with a recorded deed and "perfect" title. PA law doesn’t allow abandonment of real property owned in fee simple with perfect title.

Questions and Note o Why are courts so reluctant to enforce affirmative covenants?

Compares them to feudal incidents - If tenant didn’t perform service, forfeited land to his lord. But, he was not personally liable, & other lands were not risked, only the one which he owed service for.

Courts don’t want to rule where you are exposed to personal liability - With an affirmative covenant, all landowner's assets are at risk when owner fails to perform. So running covenants to pay money in common interest communities are more onerous than feudal services.

Rest 3rd Modification and Termination of certain affirmative covenantso Covenant to pay money or provide services terminates after a reasonable time if instrument doesn’t

specify total sum due or definite termination point. Doesn’t apply for obligations to pay for services or facilities concurrently being provided in the burdened estate.

o Covenant to pay for services or facilities may be modified or terminated if obligation becomes excessive in relation to cost for providing services or facilities or to value rec'd by burdened estate.

Modification based on decrease in value to the burdened estate should take into account any investment made by convenantee in reasonable reliance on continued validity of covenant obligation.

Doesn’t apply when servient owner only obliged to pay for actual use and they can get services elsewhere.

o None applies to common interest communities or to obligations pursuant to a conservation servitude.

IX. Operating covenants (not in text) You own land, convert to shopping center. Sell store for a low price, in exchange a covenant to have 15

straight yrs in business. Store doesn’t do so well, decides not to do business. o In NY the covenant is not enforceable.o Operating covenants are executory contracts in bankruptcy

Lease, deed, reciprocal easement and operating agreement (constituting of a shopping center) all contain covenants

Reciprocal easement and restrictive covenants in operating leases - who could sell whato Know what each kind of store sold

OWNERSHIP LIMITS: THE LAW OF ZONING

I. Historical Background Zoning laws - related to nuisance. Zoning comes into being only about 100 yrs ago. Before no legislative

land use regulation in America. Proactive response to nuisance laws with early principles of (1) separation of uses (2) production of single-

family home (3) low-rise development (4) medium-density of population Village of Euclid v. Ambler Realty Co. - Landmark decision (1920s) - 1st big zoning case

o Facts: Euclid passing a zoning ordinance and Ambler challenges it. Ambler argues that be4 zoning ordinance, worth $10k/acre (commercial), after only worth $2,500/acre (residential use only).

o Court says govt allowed to take that value via zoning, b/c all that happened was that Ambler bought a piece of property, and now his profits are lower than they would have been.

Case is telling you that the state has the power to do this, and the exercise of this power doesn’t violate the 14th amendment. The Supreme Court was comprised of individuals with different political points of view, and the majority decides this way, so very important to note.

o Idea of Euclid (Euclidian zoning) - you lay out the zoning from highest to lowest Highest - one-family house Then you have a zone where you have apts and commercial property Lowest – industrial You can’t put the lowest in the highest, but you can put the highest in the lowest

II. The Structure of Authority Underlying Zoning Enabling Legislation - In the constitution the gov’t has considerable “police power”, which is often used to

justify zoning laws. This covers health safety, welfare and morals. The 5th and 14th amendments restrain these powers.o If you don’t have the legislation like zoning. Then property system will collapse - if everyone does

anything they want, then nothing will have value. Hoover presses zoning very hard, and Congress passes a model standard statute, and every state adapts this

(This incorporates the Euclidian zoning). But, some states don’t have Euclidian zoning, and in some cases, you can't put a one-family house in an industrial zone.

Standard Zoning Act (passed in 1920s):o Municipality is entitled to regulate:

Building Height (also see this in restrictive covenants - bound by the most restrictive) The number of stories of a building Sideyards (Buffer zones - fire breaks) - set up a certain amount of property you can't build

on, on each side of the building - mostly for fire purposes If buildings are too close to each other, they are all wiped out in a fire

Density of the population - they can regulate the number of people in the house Where buildings will be - All types of buildings together (all industrial, etc.)

Or you can have the Euclidian type of zoning Topography - How much of the earth you can change (like if the land is too high up, you may

want to take some away to make it at level with the road) The Comprehensive Plan - Zoning ordinances have to conform to a comprehensive plan (architects)

o What plan has to deal with - the purposes of the zoning ordinances To lessen congestion in the streets

But that's what brings ppl with money that will spend it in the community - may be outmoded. No congestion, no business.

Safety from fire, safety from panic Provide adequate light and air Promote well-being To curb population density (but population is increasing, and that's ok. There's eventually

going to be a more dense population, you can't require ppl to move to rural areas so that urban areas don’t get too dense)

To facilitate the adequate provision of transportation, water, sewerage, schools, parks,, and other public requirements

Must be made with the reasonable characteristics of the area and promoting the use of the land

Zoning boards have to comply with :o The zoning plan (comprehensive plan)

Even when the zoning ordinance is inconsistent with the comprehensive plan (which is the 1st thing to which it will be judged), it is ok as long as it can be considered reasonably within the public interest.

o State statuteo State and federal constitutionso Fair housing act (zoning may get around this and still discriminate)

Building boom in 1946 (before that not too much, depression, etc.)o Ppl building - war veterans returning, and they were given possibility to buy houses with little to no

down paymento So zoning laws come into play

Made in a way to exclude poor people, African-Americans, Asian-Americans, just about anyone whose dislike in community - but in clever ways

So it’s good that building booming, but a lot of people left outIII. The Nonconforming Use

PA Northwestern Distributors, Inc. v. Zoning Hearing Board o Facts: Board supervisors of Moon Township gets very upset about the opening of the adult book

store. So they pass zoning laws - restrict a place where you can place an adult bookstore. They give him 90 days to get out of business, and they think this is reasonable.

o Nonconforming Use - You're doing something that's legal before zoning law. If law changes, they can't stop you from doing it. If you have a nonconforming use, you can stay there

o In some states you can't advertise a nonconforming use. Notes

o Zoning laws have to grandfather prior construction that would not conform. If you have a grandfathered building, under certain circumstances you might be able to add-

on with a non-conforming addition.o The right to maintain a nonconforming use runs with the land; survives a change in ownership.

Vality v. Smith - NY state - said the nonconforming use ends with the sale Easy to get rid of a nonconforming use in some situations:

o If it’s a nuisance in the first placeo If the use is abandonedo Extinguished by eminent domain (which can extinguish anything)o Destruction - You lose the non-conforming use when the building is destroyed. The new building

must conform to the current zoning requirements when built. Problem: fire insurance policy will only pay for what you had that burned down, not for

anything new that you introduceo Abandonment

Ex: Gay bathhouse as a nonconforming use, but the AIDS epidemic, so no more use for the bathhouse. Wants to convert property to a homeless shelter, claiming he had the nonconforming use.

Amortization – should provide the property owner with sufficient time to liquidate assets and find a new source of income (PA Northwestern dissent). Has to be reasonable.o most states allow amortization under these circumstanceso during amortization period owner has a temporary monopoly on that industry (policy consideration

for making them comply) Vesting Rights (very important)

o Developing a piece of land is a lot of work, and carries with it some risks Start out by tying up a piece of land (by buying or leasing) - this may take months of work Work - testing the soil, searching the title, etc. Then you apply for site plan approval, part of the subdivision process.

Before you build anything anywhere you must have this Then get building permit - A lot of money spent (or owe)

o You do all this stuff, then zoning law passed that makes your building illegal. Developer is protected. If you have spent substantial money on a validly issue permit, they can't take away this right. You need to have the building permit already, and have had to spend a lot of money in

reliance of getting the building permito Vested rights lay in the doctrine of estoppel

From the equity courts - b/c its unfair to deal with developers that way

o Parkview associates v. NY - Obtained an illegal building permit – court held that the permit could not be relied upon to claim vesting rights. Parkview had to remove the top 12 stories of the building. Not a validly issued permit.

Can't exchange one non-conforming use for anothero Steiner v. De Luccia - Guy owns an apt house - a nonconforming use. He makes major changes in the

building - doesn’t change the structure, but creates more apts. Court says he no longer has a nonconforming use.

IV. Achieving Flexibility in Zoning Variances : board has the power to grant a property owner the right to use his property in an explicitly

forbidden manner; must demonstrateo Some unique character of the property (not the occupant) where the strict application of a zoning

ordinance would result in undue hardship upon the developero The granting of the variance would not substantially impair the public good and the intent and

purpose of the zone plano Commons v. Westwood Zoning Board of Adjustment

Facts: Vacant piece of land. Under zoning ordinance, he can't build on it and he can't sell. He can't even buy another strip of land to make it larger so he can build on it. He asks for a variance, zoning board rejects application.

Undue hardship is shown where Pl can make no effective use of his property (not most profitable use, just any effective use)

If zoning ordinance causes undue hardship, 14th & 15th amendments pop up. If it goes too far it becomes a condemnation (so they have to pay you). Middle ground is to issue you a variance. SC says they have to issue the variance.

o Area variance (what Commons has) - a license to deviate from restrictions imposed by zoning board Special Exceptions - a use permitted by the ordinance but requiring special permission when certain criteria

are met. Special use permit can't be denied if you comply with criteria for permit.o Cope v. Inhabitants of the Town of Brunswick

Facts: Pl has a special permit. Court says he didn’t conform to the criteria. SC says unconstitutional. The power to regulate private property cannot be delegated to a

municipality without a sufficiently detailed statement of policy to determine an owner’s rights and prevent arbitrariness; the Board here had no standards and so the delegation was improper.

Zoning Amendments o State v. City of Rochester

Facts: Zoning for 1-family houses. Want to build condos, so they want to change the zoning. A municipality’s amendment of a zoning ordinance is a legislative act, so allowed Standard of review for legislative acts—upheld unless it is shown that it is unsupported by

any rational basis related to promoting the public health, safety, morals or general welfare or that it amounts to a taking without compensation.

Rezoning stands because there was a need for high density housing so it was rational and related to public need.

This isn’t spot zoning. Spot Zoning Problem - invalid zoning amendment which creates:

o an island of nonconforming use in a larger zoned districto dramatically reduces the value for uses specified in the zoning ordinance of either the rezoned

property or abutting property Other Means for Achieving Flexibility in Zoning

o Conditional or Contract zoning - enacted with the understanding that the property owner will abide by certain conditions.

o Floating Zones – zoning ordinances define uses and areas but do not attached them to specific ground until later.

o Cluster Zones – allow a developer to avoid literal compliance with area restrictions of zoning ordinances.

o Planned Unit Developments – involve mixed use areas, residential, commercial and industrial. V. Expanding the Aims (and Exercising the Muscle) of Zoning

o Aesthetic Regulation - most courts held that zoning was legitimate when used to further public health, safety, and general welfare. To justify aesthetic zoning the determination is often couched in terms of the safety (ugly billboards will fall on someone) or property values (ugly houses make the house next door less valuable)

State ex rel. Stoyanoff v. Berkeley Facts: Pl apply to build a house in modern style in tudor style neighborhood, but zoning

says must promote “health and general welfare” and required buildings to conform with surrounding structures. So they were denied permit.

A permit may be denied if the structure would adversely affect the general welfare and property values of the community. Stability of value is directly related to general welfare.

o Standards for aesthetic Regulation Anderson v. City of Issaquah

Facts: Pl applied for building permit and was denied; made numerous modifications and continued to be denied; sued for unconstitutionally vague provisions.

Aesthetic regulation is subjective so special effort must be made to avoid arbitrary application; local building ordinances that impose aesthetic conditions must provide sufficiently clear guidance to interested parties.

o Freedom of Speech City of Ladue v. Gilleo

Facts: Pl not allowed to put anti-war sign on her front lawn or in her window because of local ordinance; sued for violation of First Amend right to free speech.

Ordinances restricting signs may not be content-based and must support a compelling public interest.

Govt may only regulate time, place and manner of speech. Because the ordinance allows commercial signs it is discriminating based on content.

Heightened scrutiny—substantial state interest and reasonably tailored to accomplish that purpose. The desire to control lawn clutter is not sufficient to overcome the ordinance’s chilling effect of free speech.

Controls on Household Composition o Defining the “Family”

Village of Belle Terre v. Boraas Facts : Ordinance restricted house to single-family occupancy and excluded households

with more than two unrelated persons; suit on ground that ordinance was unconstitutional as arbitrary and unreasonable.

The legislature may properly define what is a “family” for zoning purposes if the ordinance is reasonable, not arbitrary and the definition is rationally related to public welfare. Here the purpose is to maintain family neighborhoods, decrease traffic and noise, low population density—all legitimate.

o Fair Housing Act —creates exception to FHA discrimination claims for regulations of the number of individuals who can live in a house

City of Edmonds v. Oxford House, Inc. Facts: Ordinance controlling “family” composition limited to 5 or fewer unrelated

persons; group home for recovering alcoholics sued for violation of FHA for failure to make reasonable accommodation for disabled people;

The purpose of the FHA exception is to permit ordinances controlling the number of occupants in relation to floor space for safety reasons;

o Edmond’s purpose is to control the character of the neighborhood. A single-family zoning ordinance is not automatically exempt from FHA scrutiny because

it limits household size. Exclusionary Zoning

o Low Income Housing : developing municipality must make by its land use regulations a realistic opportunity for the development of low and moderate income housing.

Southern Burlington County NAACP v. Township of Mount Laurel Facts : Zoning ordinances established lot size and floor plans in various zones which

made it so that none of the housing would be affordable for low income residents. NAACP brought action on behalf of low income people who sought housing in the town.

A developing municipality must make it realistically possible in its land use regulations for housing to be built for low income residents;

the ordinance is facially invalid so burden shifts to municipality to show valid reasons for not fulfilling obligation (financial reasons such as tax burden for public resources are not valid)