property outline spring 2014

Property OutlineSpring 2014

Property Outline – Spring 2014

I. General 1. Property = a bundle of rights (to use; sell; exclude) over an object vis-à-vis others. 2. Rights in that bundle may change over time; depend on the resource; the jurisdiction; the laws that legislature

passes/develops; and the person you interact with. 3. Alienation – ability to transfer property

II. Basic Types of property1) Key General Rules

1. First-in-Time –first person to take possession of a thing owns ita. Corollary: prior possessor prevails over a subsequent possessor b. Key contexts: fugitive resources (wild animals, oil and gas, water + finders)

2) Fugitive Resources and Capture1. Wild Animals

a. Rule of Capture (majority rule) – if wild animals are captured, they belong to the captor; capture is required – mere “pursuit” or chasing of the animal is enough

i. SR: mortally wounding or trapping the animal qualifies as capture - pursuer must “manifest an unequivocal intention of appropriating the animal”

1. Pierson v. Post – Post and his hounds are pursuing a fox. Pierson spots the fox and shoots it, killing it. Pierson is entitled to the fox.

a. Dissent – Reasonable prospect standard – property can be acquired if hunter has reasonable prospect of capturing the animal

2. Pros/Rationalea. Competition – society’s object is to capture foxes (destroy them); society

rewards the captor (not the pursuer) to foster competition, resulting in more capture (will implicitly incentivize pursuit)

b. Ease of administration – capture, an objective act, is easier to administer than pursuit – hard to define and can take many forms.

i. Brightline rule – promotes certainty + ease of administrationii. Self help – court wants to avoid vigilante justice – reasonable

prospect standard would create problems of proof/adjudication3. Cons – rule of capture – by promoting pursuit/killing – can lead to overcapture and

overinvestment in capture technology 4. Popov v. Hayashi –application of rule of capture at a baseball game

a. Shows Pierson still good lawb. Custom

i. Custom may dictate a different result than the (general) rule of capture ii. Ghen v. Rich – Among American whalers, custom was to award the whale to the ship that

first killed the whale, even though the whale sank and was discovered days later by another whaler. Ct held that dead whale belonged to P based on this custom, despite D having found the whale washed up on shore.

iii. Rationale (when to apply custom): 1. Limited application – applies only to one industry, a few whale-fisherman

a. Notice– presumes that those “engaged in the trade” KNEW the custom2. Long practice- recognized and acquiesced in for many years, can assume its

functional/worksa. Reliance concept – people likely have made investments based on this way

of doing things (eg purchased equipment; made hiring decisions) 3. No alternative – killing w/ harpoon + marker was the only way to get the whale.

a. Driven by policy goal – killing whales is goodb. Necessity– If ownership wasn’t enforced in the context of the particular

custom, the industry would cease to exist.

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iv. Pros and Cons 1. Pros – economic efficiency – courts lack expertise – tradesmen are better positioned

to determine most efficient practices2. Cons – fairness – rule may affect persons who did not develop the custom

c. “Ratione soli” Doctrinei. Rule – Landowner has “constructive” possession of wildlife present on land (eg) right to an

animal captured by a trespasser on his/her land, even though the landowner never had actual physical possession or control over the animal. Rationale –

1. Self-help – if you are hunting, likely have a gun – trespass violence2. Relativity of title – trespasser has right to deer killed but not as good as land owner

d. Animus Revertendi Doctrine i. Rule –Captured wild animals that have a habit of return (animus revertendi) belong to the

captor when they roam at large; can’t be captured by another 1. BUT, if animal is not native to the area, a hunter may be put on notice the animal is

escaped and belongs to another (eg irregular markings; behavior towards human)ii. Rationale: domesticated animals are valuable to society; reward effort to tame animals

2. Oil and Gasa. Rule of Capture has been applied to oil and gas

i. Rule – landowner can extract (capture) all the oil and gas from a well bottomed under the landowner’s land, even though oil and gas may be drained from neighbors land

ii. Barnard v. Monongahela Natural Gas – Ct holds that D can drill well on leased land, despite concerns that well was siphoning off oil from adjoining landowner.

1. Rationale/Prosa. Economic efficiency: incentivizes the production of oil and gas; oil/gas

extraction economically valuable b. Ease of admin– lack of information means its difficult to tell from whose

property oil and gas comes from; any other rule would introduce the issue of determining how far away the well must be from any adjoining property

c. Reliance – lots of money been expended in protecting lines in oil and gas territory

2. Consa. Economic efficiency – creates a “gold rush mentality” – drill early;

frequently and as closely to neighboring property as possible. Becomes wasteful; diminishing returns; reduces overall efficiency

3. Watera. Ground Water

i. “English” rule applied a rule of capture to ground water – surface owner has right to pump water for his own or commercial use, can sell

1. Rationale: water is plentiful in jurisdictions where rule imposed 2. Cons: Creates incentives for over-extraction/ depletion of aquifers

ii. “American” rule – Reasonable Use standard (majority jsdxns) – can only pull water from ground for “reasonable use” (eg) that which doesn’t interfere with neighbor’s use

1. Rationale: water is scarce, courts may again be concerned about self helpb. Surface water

i. Prior Appropriation – (Any) person who first captures water and puts it into reasonable + beneficial use has a right superior to later appropriators. Doctrine of capture - not limited to riparian landowners

1. Rationale –water scarcity in West. Pros: a. Settlement –Encourages development of water uses + predictable b. Economic efficiency – permits transfer of right to user who values

resource highest, transaction costs are low2. Cons

a. Over-extraction –excessive diversions aquifer depletion

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b. Economic inefficiency: (1) Takes little or no account of relative productivity of land the water services (2) bad land use – encourages bowling-alley parcels of land perpendicular to the banks of stream

ii. Riparian Doctrine – must be a landowner to claim water right; 2 standards determine extent of rights:

1. Natural flow doctrine (British law) –riparian owner entitled to the natural flow of water, without material diminution in quality or quality. Under doctrine, privilege to use water for domestic needs (family, live stock, gardening etc). Can use water for artificial/commercial needs so long as no material affect on water quality/quantity

a. Opposite of rule of capture – severely limits commercial use/for irrigation 2. Reasonable use standard (American rule; majority jsdxns) - Riparian owner

entitled to reasonable use of water; downstream owners cannot enjoin the owner unless they are not receiving enough water for their needs or the upstream owner is substantially interfering with their needs. If downstream owner is not harmed, cannot enjoin upstream owner’s use.

a. If interference, Ct determines what is reasonable by balancing/weighing laundry list of factors (EG domestic use preferred because key to maintain life/only involves small amounts of water)

b. Harris v. Brooks, where Ct held found amount of water pumped by Ds from lake for rice crop irrigation (commercial) caused “unreasonable interference” with Ps ability to conduct their recreational boating/tourism business by draining lake below normal levels. Ct therefore held that use could be enjoined.

c. Rationale for RU doctrine:i. Economic efficiency – fixed definition of rights (eg natural flow)

doesn’t result in right passing to highest valued user because of high transaction costs. Many people along a stream who would be necessary parties to a bargain. RU means court can/should intervene to achieve efficiency because of otherwise high transaction costs that would X deal

ii. Policy goal – RU favors development/use of water – want to incentivize agriculture/industrialization

d. Criticisms: ad hoc balancing of interests has high judicial costs; provides court with flexibility but may trade off with certainty/predictability

c. Takeaway: (1) how we chose to set up a property system will depend on context in which that resource is used; and (2) property systems should be set up to achieve economic efficiency

3) Land, Discovery + Conquest1. Right by Discovery/Conquest

a. Right by discovery– rule of capture as applied to land. The taking of possession by the sighting or finding of unknown/uncharted territory. As an alternative, can also take land by conquest (eg) by force and annexation

i. Johnson v. M’Intosh – Johnson (P) received land title from chiefs of Native American tribes. Ds received a grant from the US government for the same land, bring claim for an action of ejectment. Court holds in favor of Ds. Right by discovery/conquest means Federal government has exclusive authority/ownership over its territory and can distribute it accordingly. Native Americans have right of occupancy – right to be on the land/hunt/farm, but limited right to transfer land. Rationale:

1. History – Numerous European states have respected right of discovery by conquest2. Policy goals – nation building – fed gov wants to retain political control over

sparsely settled lands – providing tribes w/ right to transfer could lead to conflicting claims and disputes

3. Reliance – PP system underlies “great mass of community” – court constrained by reliance interests (material + psychological investments)

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i. Pros – brightline rule – easy to enforce in a way that’s obvious to everyone (vis-à-vis who could use resource better/ who has a natural right to that object); aligns also w/ intuitions

b. Pros and cons (first in time, first in right) i. Pros – brightline rule – easy to enforce in a way that’s obvious to everyone (vis-à-vis who

could use resource better/ who has a natural right to that object); aligns also w/ intuitionsii. Cons - equitability/fairness– who is considered “first” aligns with ethnocentric

determinations of who counts and who doesn’t – can be used to excludec. Takeaways

i. Right by discovery– rule of capture as applied to land. The taking of possession by the sighting or Possession is culturally determined – European notion of property ((place-based, permanent, exclusive) distinct from that of Native Americans (communal, usufructary, resource based)

ii. Property + Power – the determination and enforcement of property rights depends on the power of the state to impose its will. Property confers and rests upon power – economic, political + social standing will give people rights to shape property systems – creates winners and losers ITO resource access

2. Labor Theory of Propertya. Defined – application of labor confers a property right – Locke

i. Historically used to justify taking of land from Native Americans (manifest destiny)b. Applied – Law of Accession (acquisition by accession)

i. A person whose property is taken and used by another is always entitled to the value of the property taken, but that person may lose title by the additions of the other

1. Typically, property belongs to the person who provides more “value-added.” 2. Where A adds labor to Bs raw material, courts usually award the final product to the

owner of the raw material (B), unless As efforts have sufficiently increased its value

4) Economic Theories of Property1. Main Concepts

a. Externality – exist whenever some person makes a decision about how to use resources without taking full account of the effects of the decision

b. Transaction Costs – costs of making an economic exchange. Three main categoriesi. Search costs – cost of locating information about the exchange (eg who to deal with/ where

to purchase goods)ii. Negotiation costs – costs of conducting negotiations (eg time spent communicating)

1. Holdouts seek to be the last person to agree in hopes of driving up price of bargain2. Freeriders reason that no contribution to a group payment is necessary because

contributions of others are sufficient; since each indiv reasons this way, aggregate contribution is insufficient

iii. Enforcement costs – costs of enforcing an agreement (litigation/court costs) c. Economic efficiency – most important criteria to judge the effectiveness of a property system

2. Coase Theoreum – in the absence of transaction costs, individuals will bargain to the most efficient outcome, no matter the initial distribution of rights. Lessons:

a. Transaction costs DO exist, so the law should be used to facilitate private bargainingb. If transaction costs are high, the government (courts) should step in to ensure most efficient

result/outcomei. Ususally, this means the resource is transferred to user who puts the highest value on it (See

Harris v. Brooks- justification for RU doctrine) 3. Demsetz Theory– A property system will be created when benefits exceed costs. Private property is a

means to minimize externalities (through excludability) + transaction costs (by reducing the number of stakeholders). This will creates incentives to manage the resource better – even if some externalities left, those are easier to manage. Promotes most economically efficient outcome.

a. Common property leads to overconsumption/exploitation of resource (tragedy of the commons)– lack of excludability/ transaction costs– for any individual, value of consumption is higher than value of abstaining – “forebearance means you lose” (Hardin)

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b. Assumptionsi. All actors are rational - seek to maximize their own self interest ITO financial well-being;

ii. Economic efficiency is the only metric used to measure socially desirable outcomes c. Criticisms

i. Humans can be irrational actors (see litigation costs) ii. Other motivations than maximizing happiness (eg) seeking reparations for past harms;

political liberty; minimizing state controliii. Economic efficiency may be less important than sustainable use over time iv. Public goods– impossible to exclude people from some public goods (eg national defense +

city streets) and some are better public and key to value of private property (eg beaches, city sidewalks)

1. Anticommons – property divided up so much that it becomes worthlessv. Alternatives to PP can avoid tragedy of the commons – zoning + environmental regulations;

permits to use of the resource (wildlife; pollution). vi. Demsetz = strawman – overlooks distinction between open access and communal property

(where system is in place to regulate use of resource) 1. Native American communities - usufactory rights to resource2. Lobster gangs of Maine– maintain extralegal sanctions to prevent overexploitation

of the resource. Why does it work: a. Small, tightly knit communities b. Have been using resources for years – they know how to use it well c. Absence of rapid technological change

5) Intellectual Property1. Key Policy Takeaway – intellectual property law seeks to manage the tradeoff between providing incentives

for creativity (INS v. AP) and incentivizing the production of cheaper goods (avoiding monopolies, see Chanel and Cheney) and

a. INS v. AP – Ct recognizes that a news agency had a quasi-property interest in news it has gathered and can prohibit competitors from disseminating the news until its commercial value has expired

i. Rationale: want to reward cost/investment in collecting the news. INS is free-riding; INS Ct concerned about incentives to collect and produce information

ii. Example of relativity of title – property right that is only good against competitors b. Public goods contribute to the problem – public goods = are non excludable and non-rivalrous

(multiple people can consume the good without depleting it) c. In IP, no depleting of good by multiple users + often hard to exclude (but, can find means of creating

excludability (eg) software coding/brand loyalty) 2. Common law rule = copying is okay absent some statutory protection

a. Cheney Bros. v. Doris Silk Corp – Ct holds that D can copy fashion designs in the absence of a patentb. Chanel – Ct holds that imitator could reverse engineer the components of Chanel’s perfume and

advertise it as having the same ingredients c. Rationale –

i. Economic value in imitation –monopolies bad – competition drives down the cost of the product for consumers; selling to the public @ lower princes incentivizes efficiency

ii. Deference – common law patent rule would conflict with legislative schemesd. Exception - Right of publicity

i. Rule – person may not use a celebrity’s name, likeness, voice or signature for profit without the celebrity’s consent. Celebrity’s labor in creating a persona of value is protected

1. White v. Samsung Electronics – Ct holds that D violates White’s right of publicity by airing advertisement with robot impersonating White. Dissent:

a. Overextension of property right – anything reminiscent of the celebrity b. Overprotection of IP bad – undermines parodies, stifles innovation (in

this case, personas); inventions build on underlying ideasc. Rich public domain key to creativity - need provide space for new

creators to build on accomplishments of others; analogy to public property increasing value of private property (eg sidewalks)

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3. Major Statutory Protections **Takeaway: (1) protections seek to balance promoting creativity NOW vs. future creativity- idea that inventions build on one another; don’t want to stifle future inventions (2) technology will change how our property systems functions, distribution of resources and their costs

a. Patents – limited monopoly to reward innovation for “novel, useful and nonobvious processes or products;” open to copying after monopoly expires.

i. Limited monopoly (period of protection) key to prevent inventors from hiding info; ANDii. Patent info = public bc inventions build on one another – want to encourage innovation

1. Diamond v. Chakrabarty – Ct holds that while natural organisms (laws of nature/physical phenomena, and abstract ideas)), innovations based on nature (eg products of human ingenuity) CAN be patented (in this case, a micro-organism). Cited legislative intent to encourage ingenuity; says legislature better situated to respond to concerns that this will lead to genetic engineering

b. Copyright – protection for expression of ideas (not the ideas themselves- want to promote creativity) in “fixed media;” lasts for limited time, allows for “fair use”

i. Nichols v. Universal Pictures - Ct holds that P’s use of “interchangeable stock characters” meant D not liable for copyright infringement; copyright protections are limited to expressions of ideas, not the ideas themselves.

ii. MGM v. Grokster - Ct holds Ds liable for having actively encouraged illegal infringement of copyrighted materials (through pirating tech/advertising of a Napster equivalent). Court finds that there was no lawful alternate use for pirating technology – no risk of X innovation

c. Trademark – protects terms, logos, slogans etc identified with particular product or business to avoid consumer confusion (sub-standard work may undermine reputation)

6) Body Parts 1. CA Rule – No legal right to one’s own body parts in CA 2. Moore v. Regents of the Univ. of Cal.- Ct holds that tort of conversion (protects against interference with

ownership of personal property) does not give Moore a COA against doctors who exiced his spleen and made it into patented cell line of great commercial value. Rule of capture in body parts – doctors who created the cell line thus acquired original ownership. Ct held Moore only had right to sue doctors for failure to disclose research/economic interests.

a. Majority Rationale: i. Right to publicity cases don’t apply - don’t create property rights because something is

unique (eg) cellsii. Relevant CA statutes shows legislative intent to limit patient’s right to control body parts (CA

health and safety code);iii. Subject mater of patent (cell line and products) are distinct from raw cells and it’s those cells

with commercial worth (application of law of accession- ownership determined by value added)

b. Public policy arguments against extending the tort: i. Informed consent/fiduciary duty protects patient’s rights

ii. Don’t want to stifle biomedical research - uncertainty over potential liability might prevent transfer of cells between researchers – key to sector

iii. Legislature should decide c. Concurrence – morality – assigning property rights over body parts commodifies human beings to

their pecuniary value– slippery slope to people being kidnapped for their kidneys d. Mosk Dissent – (1) CA body parts law DOES sanction transfer and receipt of body parts for purposes

other than transplantation; (2) ethics – human body is sacred and unique, majority allows 3rd party to profit; (3) informed consent won’t protect patients rights- burden of proof too high (causal connection), unequal bargaining position of patient on operating table, can only sue attending physician

3. Ct really concerned about making body parts saleable, as opposed to property. Alternative solutions to property rights?

a. Ct could make body parts property, but inalienable property (can’t sell)b. Licensing schemes by government to regulate trade (give some profits to original donor)

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7) Right to Exclude/Trespass1. Property is a bundle of rights. The (1) right to include – to sell to another; and (2) right to exclude (keep

people from using your property), are necessary and sufficient conditions of transferabilitya. Transferability good – key to most economic efficient use of land, whereby land transferred to

highest valued user2. General Rule: private landowner has the right to exclude others from his or her land

a. Jacque v. Steenberg Holmes, Inc. – D moved his trailer over Ps property over Ps repeated objections. Ct upholds very large punitive damage assignment, despite economic detriment suffered by Ps due to Ds trespass. Rationale: Punitive damages are critical to creating an economic disincentive to repeated trespass. D had an alternative (a snow-covered road) but chose not to use it because cutting through Ds property was easier/less expensive.

b. Society has strong interest in punish/deterring trespassers. Policy arguments (trespass bad): i. Trespass to land is special – Right to exclude – one of the “most essential sticks in the

bundle of rights” characterized as property.ii. Uphold integrity of legal system- if anyone can use/cross your land it becomes communal

property again. Repeated trespass can leads to loss of land title/ ownership (adverse possession)

iii. Reduce Self help – Repeated trespass may cause landowners to take matters into their own hands; particularly in rural areas, could lead to violence

iv. Administrability – B/L trespass rule allows property owners (as opposed to courts) determine what is the best use of the land –landowners have experience/knowledge + court judgments can be error-prone and costly;

1. Coase theorem applied – courts should facilitate efforts to make property easily transferable (encourage alienability) + let property owners conduct their transactions – if property is worth more sold, then landowner will do so

3. Exceptions on the right to exclude a. Rule: Landowner has absolute right to exclude UNLESS it injures the rights of others; property rights

serve human values non-owners have a right of access to property based on need or some other important public policy”

i. EG worker’s rights to organize and access social servicesb. State v. Shack – where Ct held that an employer housing migrant workers could not exclude union

organizers from entering his property; organizers’ presence on the property was not trespass within the meaning of state statute. Rationale

i. Lack of access to services– Migrant worker community is poor + isolated; lack economic or political power; could be easily exploited. Positive efforts to inform of rights and opportunities are therefore justified.

ii. Absence of alternatives –here, no way to reach the migrant workers other than trespass, because workers were housed on owners’ property. Distinxion vis-à-vis Jacques. In Jacques, D didn’t have to trespass to move the trailer, could have taken the road.

c. Takeaway -State/federal statutes can create limitations on right to exclude based on need or some other important public policy

i. Such statutes will create different incentives – EG Shack creates incentive to treat workers better (knowing state officials can investigate conditions), or pay workers more so they can afford their own housing.

II. Personal Property 1. Finders:

a. In General i. Common Law Rule – Finder of property acquires no rights in mislaid property, is entitled to

possession of lost property against everyone except the true owner, and is entitled to keep abandoned property. [but there are exceptions]

ii. Common Law Writs –1. Trover: suit for damages for wrongful taking of personal property2. Replevin: suit for recovery of personal property wrongfully taken3. Trespass: suit for damages for wrongful intrusion on real property

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kathryn bowen, 02/07/14,

Biber talks about in relation to “reliance interest in property” – can we go over that concept again


Attack: Establish into which category it falls; explain why; then who gets title based on governing rule


4. Ejectment: suit for injunction to remove wrongful intrusion on real propertyb. Lost Property

i. General Rule: Finder entitled to possession against all the word except true owner1. Armory v. Delamire – Chimney Sweep finds a jewel and takes it to a jeweler to have

it appraised. Jeweler refused to give jewel back to the Chimney sweep. Ct holds chimney sweep entitled to jewel or full money value of the jewel.

a. Subrule –Prior possessor wins over subsequent possessor – applies to both personal and real property. Rationale:

i. Rewards honesty – protecting a finder who reports the find reduces incentive for the finder to hide the recovered item, for fear that subsequent possessor will lay claim to it

ii. Protection of peaceable possession deters disruptions in public order – any other rule would lead to an endless series of unlawful seizures and reprisals for property

iii. Entrusting goods to another is an efficient practice that should be encouraged

1. Bailment = where owner of good (bailor) gives good to someone who will take care of it (bailee); bailee owes duty of care to bailor.

2. In Armory, jeweler is a bailee, who must surrender goods to prior possessor.

3. Tantamount to rule that dry cleaner should return your clothes; or neighbor has to return your lawnmower

b. Relativity of title – title to an item is relative to who the claimants are. Owner of the jewel prevails over A, the finder; the finder prevails over B, the subsequent possessor.

c. “Prior possessor wins” rule applies to items acquired through theft/trespass – to rule in favor of subsequent possessor would not deter crime, but would immerse owners and prior possessors in costly litigation with subsequent possessors trying to prove they aren’t thieves

d. Double recovery problem – if the owner returns, and subsequent possessor (eg jeweler) has already paid the prior possessor (eg sweep) damages, will have to give owner back the item. Ct has put onus on the subsequent possessor, creating a potential fairness issue

i. But see Winkfield, where court puts the onus on the owner of an item to recover damages from the postal service, even though item was lost because the cargo ship carrying it sunk. Creates an incentive for owner to be careful about who items are given to.

1. Takeaway – different incentives will be created depending on where courts locate responsibility.

ii. BUT Exceptions – Finder vs. Landowner 1. General rule subject to the following exceptions:

a. Owner of locus gets possessory rights IF finder is a trespasser; employee; guest; or licensee; OR

b. If property is found in a highly private locus or buried2. Public-private space (residential v. commercial) – if found in a private home,

homeowner usually entitled object over finder. Rationale: homeowner has intent to exclude everyone + admit persons for specific purposes – homeowner also has strong expectations that all objects inside the home are his

a. Hawksworth – Ct awards lost bank notes to finder, as items were left on the floor of a pubic shop. Fewer concerns ref: trespass.

3. Owner is not in “physical possession” of home– Ct may award to finder if owner of the house has not moved in (or made it his/her personal space). Argument – owner was unaware of the lost item; since he was living there, less of a claim

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Reaffirm takaway/ how this could be used in an exam


What do we have to know about CL writs:


a. Hannah v. Peel – where Peel’s house was being used to quarter soldiers; Hannah, one such soldier, found a brooch. Ct awards Hannah the brook because D never moved into the house and took physical possession of it. Another motivating factor = Hannah’s honesty (Ct wants to reward him for voluntarily turning over item to commanding officer).

4. Finder is employee - Ct will award item to employer if finder is employee of owner of premises where object was found; Cts reason that employee was “acting for” employer; or that employee was under contractual duty to report lost item

5. Finder is on premises for a limited purpose – (eg) cleaning out a pool, Ct will hold for landowner on basis that finder was on land for a limited purpose, under direction of owner (discourage trespass/honesty)

a. South Staffordshire Water Co. v. Sharman – Staffordshire was hired to clean out Sharman’s pool. Found a ring at the bottom; Ct holds it belongs to landowner, despite the fact he was unaware ring was there

6. Object is found under the soil – Ct will award to landowner if object is found under or embedded in the soil. Rationale –think of objects embedded as part of the soil itself

a. Elwes v. Brigg Gas- Ct awards old boat to owner of the property vs. finder, despite lack of owner’s knowledge that boat was there

i. Exception – Treasure Trove – where gold, silver or money is intentionally buried or concealed in the soil with the intent of returning to claim it. American courts don’t generally recognize

iii. Policy Goals1. Expectation of privacy or security in the home – equates with notions of private

property; right to exclude 2. Discourage trespass – don’t want people going into homes (even into which they

were invited), stealing items and then claiming they are found3. Return item to original owner – likely would favor awarding to locus owner –

original owner more likely to have interacted with locus owner (vis-à-vis finder) and can retrace steps

4. Promote honesty - don’t want people stealing from homes and then claiming it was found property (eg) hotel context (would favor awarding the locus owner) ; but also don’t want to people to hide items they found (would favor awarding the finder)

c. Mislaid Property and Abandoned Propertyi. Categorize

1. Lost property = property that the owner accidentally and casually lost (eg) O’s watch slips off his wrist and lands on the street

2. Mislaid property = property intentionally placed somewhere and then forgotten (eg) O lays watch on sink in hotel room and forgets to pick it up

3. Abandoned property = property that is voluntarily and intentionally abandoned by owner (eg) items left in a garbage can

ii. General Rule – Lost property goes to the finder as opposed to the owner of the premises (subject to exceptions); mislaid property goes to the owner of the premises; abandoned property goes to the finder

1. McAvoy v. Medina – Finder finds a pocket book on a table in a barber shop. Ct awards pocket book to shop owner, with rationale that pocketbook owner deliberately placed the item on the table, likely to return

a. Distinxion v. Hawkesworth – Where Ct awarded package of bank notes found on the FLOOR of a public shop to finder. Rationale: items were lost – usually items not deliberately placed on the floor

iii. Policy Goals 1. Want to facilitate the return of the item to the true owner – assumed mislaid

object was intentionally placed where it was found, it is likely true owner will remember and return to the locus to reclaim it; assumed that owner no longer has an interest in/ will never come looking for abandoned property

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2. Criticismsa. Lines are blurry and easily circumvented – could take a wallet from a table,

drop it on the ground and claim its foundb. Administrability – Courts have to guess as to the owner of the item’s intentc. True owners will likely retrace their steps regardless of whether item was

intentionally or unintentionally leftiv. Shipwrecks – if ship is abandoned and embedded in soil goes to government; if court finds

ship to be abandoned, finder gets all; if ct finds ship isn’t abandoned, finder gets salvage award

1. Takeaway – could apply salvage award concept to finders, give shopkeeper item (to facilitate return to true owner) and given finder award – incentivizes honesty

v. CA Finders law – finder must identify owner if known + must make reasonable effort to return; if over >100 USD, must take to the police. If item not claimed, then goes to finder

2. Giftsa. Defined – gift if a voluntary transfer of property without any consideration. b. Types

i. Gift inter vivos – gift made during the donor’s life when donor is not under threat of impending death.

1. Irrevocable, donor cannot give it back unless done voluntarily returns** No Backsies

ii. Gift causa mortis – gift made in contemplation of immediately approaching death. In practice, may substitute for a will

1. Revocable IF the donor recovers from the illness that prompted the gift. 2. Court may be more strict because greater fraud risk – donor is dead and can’t speak

c. Three elements: i. Intent – donor must intent to pass title presently, not merely transfer possession – must be

shown by extrinsic evidence; intent can be proven by delivery if objective act performed1. A promise to give property in the future is not a gift (eg) a will/gratuitous promise

ii. Acceptance – must accept (eg) to avoid gifts of kilos of cocaineiii. Delivery

1. Manual – physical transfer of the gift; a. CL Rule – Must be manual if possible; if manual = impracticable, because of

physical size/weight of chattel constructive delivery is ok (and sometimes symbolic);

2. Constructive – usually handing over the means of obtaining possession and control over the item (eg a key), or in some other way relinquishing dominion/control over the property

3. Symbolic – handing over of some object that is symbolic of the thing given – most common is an instrument in writing

a. In CA, symbolic delivery is always acceptabled. Newman v. Bost – O, on deathbed, calls in his housekeeper, Julia, hands her keys to all the furniture

in the house, and says she is to have everything. In his bedroom bureau, which can be unlocked by one of the keys, is an insurance policy. Ct holds that O has not made a gift of the insurance policy because it is in the room where O lies dying and is capable of manual delivery. Ct also may be suspicious that (1) O did not know the insurance policy was in the bureau (not a locus where important documents are normally kept) + (2) that Julia placed in there after the fact (colored by fact that she is a servant, of a lower-class, female)

i. Takeaway – question of intent requires fact finding; colored by gender and class considerations and motivated by policy goals

e. Policy Goalsi. Fraud – Requiring delivery protects the unwary, sick or barely competent donor from

making improvident oral statements, particularly a concern in case of gift causa mortis1. In Newman court says symbolic is NOT ok because would undermine statute of

wills, which entails a higher evidentiary showing (eg two witnesses instead of 1); purpose of these requirements is to prevent fraud

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ii. Possession – delivery is objective evidence of the intent to give; presence of the object in the grantee’s hands substantiates the claim of a gift

iii. Wrench of delivery – delivery impresses the grantor with legal significance and finality of the act; once object is handed over, realization that it belongs to another.

III. Property in Land1) Estates

1. Fee Simple (or fee simple absolute)– an estate that has the potential of enduring forever a. Key Elements – heritable; perpetual; freely alienable

i. Traditionally created by grant “– “his heirs” language no longer necessary under modern lawii. “His heirs” = “words of limitation” describing the kind of estate created

1. Only A has a present possessory interest in the land – can sell or give away the b. Laws of Inheritance

i. If you die without a will, property goes (in order from) issue (children/grandchildren); ancestors (parents and/or grandparents); collateral relatives (brothers, sisters, aunts/uncles, cousins etc); state

ii. If children, take equal sharesiii. If living spouse and children spouse takes half, children divide the other half

2. Life Estate – an estate in property that exists only for the life of the person named in grant a. Key Elements

i. A only has the right to the property for his/her lifetimeii. If B buys the property then only gets the land as long as A lives

iii. If “to A for life, and then to B and his heirs” B has a remainderiv. If “To A for life” O has a reversion

3. Life Estate or Fee Simple? a. Distinguishing depends on the facts and probable intent of the grantor (Cts must interpret)

i. Rule – presumption of transfer of fee simple – Unless words and context clearly indicate intention to the contrary, strong presumption that testator intended to create a fee simple

1. White v. Brown – where Ct read grant as creating a fee simple (not a life estate), despite the testator having included language (1) granting home “to live in” and (2) constrainting alienation (home “not to be sold”). Ct held that grantor intended fee simple – key for majority was absence in grant of provision for remainder or reversion; also declared the constraint on alienation as void + against PP

a. Takeaway – law is complex; lay people don’t understand + Cts will have to interpret intent of grantor as a result

b. Restraints on Alienation i. Types

1. Disabling Restraints – withholds from the grantee the power of transferring her interest;

a. “To A, Not to be Sold” 2. Forfeiture restraints – provides that if the grantee attempts to transfer his

interest, it is forfeited to another person; a. To A, But if A Attempts to sell then to B”

3. Promissory restraints – provides that the grantee promises not to transfer his interest;

a. “To A, A promises not to sell..” ii. Validity of Restraints on alienation

1. Restraints on a fee simple – generally all void; Rst and a few courts allow “reasonable” limited restraints

a. Rationale: Courts reluctant to enforce bc alienation restraints on a fee simple risk restricting alienation forever

2. Restraints on life estates – forfeiture and promissory restraints may be valid, if reasonable; disabling restraints are invalid

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a. Rationale: Cts less likely to strike down forfeiture restraints on alienation bc (1) alienation of a life estate is restricted only for a limited period of time + (2) forfeiture restraints considered less problematic– disabling restraints create potential for fraud on the part of the owner – try to sell property to unbeknownst buyer – take off with the money

iii. Rationale: Restraints on alienation undermine economic efficiency1. Remove property from the market, prevents it from being allocated to the highest

valued user;2. Make property unmortgageable – bank won’t lend money bc can’t sell the estate;3. Undermines incentives for land development – owner will not be able to reap profits

from sale;4. Concentrates wealth in an already rich class; and 5. Prevents creditors from reaching the property to pay the owner’s deaths

c. Problems Created by Division of Management among Multiple Parties i. Rules for the sale of life estate property

1. Traditional Rule: Sale of life estate can be made where estate was deteriorating and income insufficient to pay taxes and maintain property

2. “Necessary for the best interest of all parties” standard - an equity court may intervene and order the sale of property if the sale is “necessary for the best interest of all the parties.”

a. Baker v. Weedon – where Ct holds that equity court CAN affect sale of the property despite absence of consent from testator’s grandchildren who had future interest. Reasoning: v. close relationship with widow suggests that he wanted her taken care of –sale would benefit her poor economic situation; testator wasn’t as close with grandchildren, but Ct reserves them some land that is subject to appreciation in value.

i. Forced sale = a flexible remedy; but a tough standard to meet + should be used sparingly because of rationale that grantor wants the land itself passed on to the holders of the remainder, and not the money that could be acquired by sale

b. Takeaways: i. Conflicts will arise between present and future landowners –

often a bilateral monopoly – where two parties are locked into dealing with each other Can lead to negotiation costs that foreclose efficient transfers. Ct may have to intervene – why:

1. Distinct interests – Future holders care about long terms; current owners short term

2. Parties that have rights may not exist yet or may be legal infants

ii. Life estates have limited utility – very few persons will buy a life estate bc only retain rights until holder dies; bank won’t lend money for a mortgage because can’t sell the estate

iii. Use trusts instead – avoid mgmnt issues of life estates1. Trusts give bank/trustee power to manage; beneficiaries

get regular payments throughout their lives 2. Reduces risk that land is locked up in asset form that has

limited utility – can invest trust funds into stocks/bondsii. Waste

1. Defined – conduct by the life tenant that permanently impairs the value of the land or the interest of the party holding title – common law form of action against the life tenant (can enjoin the life tenant to stop waste or recover damages for waste)

a. Doctrine says that you should act to maximize value of the propertyb. Very fact dependent

2. 3 types

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a. Affirmative Waste – occurs when the life tenant actively causes permanent injury (eg by removing natural resources or destroying buildings)

i. Open mines doctrine – if quaries or mines were open before the tenant took the life estate, then it is not waste for the life tenant to continue their use; where life tenant opens the land for new mines, remainderman can enjoin

b. Permissive Waste – occurs when the land is allowed to fall into disrepair, or tenant fails to take reasonable measures to protect land (incl. failure to pay taxes)

c. Ameliorative Waste – when principal use of the land is substantially changed, but change increases the value of the land

i. Rule: can do what you want with the land so long as it improves value of the property – Woodrick v. Wood

iii. Gift of Remainder vs. Will 1. Remainder = irrevocable gift of present right to future possession of property

(ownership becomes possessory upon death) 2. Will = revocable statement of intention to give a gift in future (upon death)

a. **Will can always be revoked 4. Defeasible Fees

a. Defined – A fee simple that is “defeasible” on the happening of some event; the owner of the fee simple then loses the property (not absolute)

i. Violation means that the owner loses the land and it goes to someone elseb. One way we constrain land - most commonly encountered in deeds restricting the use of land

i. Mountain Brow Lodge v. Toscano – Toscano’s give property to the Lodge as a gift; grant contains restriction on what the lodge can do with the property (can’t be sold and can only be used as a lodge). Ct upholds the grant, finds that the restriction is on land USE, not on alienation. Dissent argues that restriction on use is effectively/ in practice a limitation on sale – no one will ever pay money for the land because can only be used as a lodge BY the nonprofit.

1. Policy Concerns with Limitations on use of Defeasible Fees a. In practice restricts alienability – see above for reasons that X EEb. Issues with transfer – If lodge dissolves or condition violated, goes back to

Toscanos, but could occur hundreds of years in future. High likelihood that generations will forget to transfer down explicitly, so transfers through intestacy. That’s bad

i. Administrability –would be incredibly complex to assign ownership;

ii. Anticommons– would be awarded to all generations with an interest fragmentation Very unlikely owners would ever come to an agreement on what to do with the property. Land becomes economically useless.

c. Three types – necessarily must be paired with a future interest in land

Types of Defeasible Fees[could last forever, but if the right thing happens, they die]

FS Determinable FS Subject to Condition Subsequent

FS Subject to Executory limitation

Description A fee simple that is so limited it will automatically end when a specified event occur

MAY endure forever, but if the contingency occurs then the

Fee simple that does not automatically terminate but may be cut short (divested) at the grantor’s election when a stated condition happens

Fee simple that, on the happening of a stated event, is automatically divested in favor of a third person

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estate automatically ends; the estate terminates immediately and fee simple automatically reverts to the grantor (key distinction vis-à-vis a fee simple subject to condition subsequent)

Does not automatically end – If O does not CHOSE to exercise her right of entry when condition is violated, fee simple continues in A

Example O conveys Blackacre “to School Board so long as premises are used for school purposes”

Language like “so long as;” “to A until…”; “to A while…”

Language like “but if X event happens;” “upon condition that X happens,” the grantor retains a right of entry

Correlative Future Interest

Possibility of Reverter[Interest held by Grantor]

Right of entry/ power of termination[Interest held by Grantor]

Executory interest[Interest held by Grantee]

5. Future Interestsa. Types of future interests

i. Interests held by grantor – reversion; possibility of reverter; right of entry

Future Interests Held by GrantorReversion Possibility of Reverter Right of Entry

Defined When grantor conveys a vested estate of a lessor quantum than he has

When a grantor carves out a determinable estate of the same quantum

When grantor creates an estate subject to condition subsequent and retains power to cut short the estate

Correlative Present Interest

Life estate [lesser estate than a fee simple]

Fee simple determinable Fee simple subject to condition subsequent

Example “To A for life” “To A so long as alcohol is not used on the premises”

“To A on condition that if alcohol is used on the premises, O shall have the right to reenter and retake the premises”

Rights of Grantor Estate automatically reverts to grantor on life tenant’s death

Estate automatically reverts to granter upon the occurrence of the stated event

Estate does not revert automatically; grantor must exercise his right of entry

Alienability Transferable, descendible and devisableAT COMMON LAW CANNOT BE SOLD OR TRANSFERED

Transferable, descendible and devisableAT COMMON LAW CANNOT BE SOLD OR TRANSFERED

Descendible and devisable, but some courts hold not transferable inter vivosAT COMMON LAW CANNOT BE SOLD OR TRANSFERED

ii. Interests held by grantee – remainder or executor interest

Future Interests Held by GranteeKey Rule - Remainder or Executory Interest:

1. IF prior estate is life estate or term of years next estate = is a remainder

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2. IF prior estate is a defeasible fee (eg FS determinable or FS subject to condition subsequent)/ feel simple subject to executory limitation next estate = executory interest

Remainder Executory InterestDefined A future interest that (1) has the capacity of

becoming possessory at the expiration of the prior estates; AND (2) cannot divest the prior estates

Passive, waits patiently for the natural termination of the preceeding estate;

Owner of a remainder takes possession immediately following the natural ending of the prior life estate, with no gaps in possession.

2 types – vested + contingent

A future interest that in order to become possessory, must divest or cut short the prior estate

Active, always cuts short the prior estate

Example O conveys “to A for life, and on A’s death, to B and her heirs” – A has a possessory life estate; B has a remainder in fee simple

O coveys “to A for life, then to B after A’s funeral” does Not create a remainder in B since there is a gap in time between the termination of A’s life and the start of Bs right to possess. O has a reversion.

Shifting executory interest – O conveys “to A and his heirs, but if B graduates from law school, to B and her heirs.” A has a fee simple subject to executory limitation, B has a shifting executory interest. (Shifting interest shifts title upon the happening of some uncertain event)

Alienability Yes – can always be sold (also @ common law)

Releases – transfer of the future interest to the grantee of the present possessory estate is allowed under common law – can always sell/give right to the current owner of the defeasible fee

b. Attack: Take each interest in sequence1. Life estate or defeasible fee (DF = FS determinable, FS subject to condition subsequent, FS

subject to executory limitation)a. IF prior estate is life estate or term of years next estate = is a remainder b. IF prior estate is a defeasible fee (eg)/ feel simple subject to executory limitation next

estate = executory interest2. If remainder vested or contingent?

a. Does the remainder take immediately? a. If no contingent remainder with a reversion in O – vested remainders must be

capable of taking immediatelyb. Can at least one of the grantees be ascertained

a. If no contingent remainderi. If contingent remainder reversion in O

b. If yes is there a condition precedent or condition subsequent? [see below for note]

i. If no indefeasibly VR or VR subject to open1. Is there a possibility of additional grantees?

a. If no indefeasibly VRb. If yes VR subject to open

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ii. If condition precedent contingent remainder; likely another contingent remainder follows (alternative contingent remainders) WITH a reversion in O

iii. If condition subsequent – subject to full AND/OR partial divestment1. Is there a possibility of additional grantees?

a. If yes VR subject to full and partial divesment (subject to open)

c. Notes on reading grants:i. Condition precedent (contingent remainder) or condition subsequent

(vested remainder subject to divestment)? 1.Follow the commas2.If the conditional element is incorporated into the description of, or

into the gift to the person taking the remainder, then the remainder is contingent (eg condition precedent); but if after words giving a vested interest, a clause is added divesting it, then remainder is vested (eg subject to condition subsequent)

ii. Always check for a reversion (particularly with contingent remainders) iii. Vested remainder in fee simple on executory limitation – If an interest

can only be divested AFTER the grantee takes possession, then the grant is NOT a VR subject to divestment. It is a VR in a fee simple subject to executor limitation.

1.O conveys “To A for life, then to B and his heirs, but if B sells alcohol on whiteacre, then to C and her heirs.” – not a VR subject to divestment since B must sell alcohol on WA to be divested, and this cannot occur until after B takes possession. B’s interest cannot be divested while it is still a vested remainder. C has a shifting executory interest.

Types of RemaindersKey distinction – Vested Remainder vs. Contingent Remainder

1. Vested remainders certain to take (but may not get possession (eg) subjet to divestment); contingent remainders NOT certain to take

2. RAP applies to Contingent remainders, executory interests + vested remainders subject to open

Vested Remainder (indefeasibly)

Vested Remainder Subject to Divestment

Vested Remainder Subject to Open

Contingent Remainder

Reqs Created in a:1. Ascertained person; AND2. Not subject to a condition precedent

Created in an1. Ascertained person; AND2. Subject to a condition subsequent

Created in1. A class of recipients; and2. At least one member is qualified to take possession (eg one member of the class is born and ascertained); and3. Other members may be added later to the class (so shared are not fixed)

Created in an1. Unascertained person; OR2. Subject to a condition precedent

**When does a contingent remainder vest?1. The unascertained person becomes ascertained;2. Unborn persons are born; or3. The condition precedent occur

Sub-Rules Condition subsequent = Something whose after-the-fact occurrence will cut off a right of possession after its ready to take effect (eg) “its

**Remainder can be subject to both open and complete divestment

Eg – O conveys “to A for life, then to the children of

Unascertained person – person not yet born or cannot be determined until happening of an event

Condition precedent = express

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yours, BUT you’ll lose it if X occurs”

A, but if no child survives A, to B.” A who is living, has a child, C. C has a vested remainder subject to open; also subject to complete divestment if A leaves no children surviving him

condition attached to the remainder (eg) “to B if B reaches age 30”; something that has to occur BEFORE there is a right to immediate possession – “it will be yours if X occurs”

Examples O conveys “to A for life, then to B and her heirs”

To be vested, a remainder must be capable of going into possession whenever and however the preceding estate ends

O conveys “to A for life, remainder to B and his heirs, but if B does not reach the age of 21, then to C and his heirs. (ex of condition subsequent)

O conveys “to A for life, then to A’s children.” If A has a child, B, the remainder is subject to open. **Note – if A has no children, then remainder is contingent (no person qualifies as a child)

O conveys “to A for life, then to the heirs of B.” B is alive.

B’s heirs have a contingent remainder, because don’t know who they will be until B dies (unascertained).[A person must be dead to have an heir]. Contingent remainder vests as soon as B dies.

EG2 – O conveys to A for life, then to B if B survives A, but if B does not survive A, to C.

B and C have alternative contingent remainders. There is also a reversion in O (at CL, life estate could terminate prior to life tenant’s death by forefeiture or merge reversion; also B and A can die simultaneously)

6. RAP Applicationa. CL Rule: no interest is good unless it must vest, if at all, not later than twenty-one years after some

life in being at the creation of the interesti. Judges were wary of contingent interests, which unlike vested interests, tended to make land

ummarketableii. Effect was to permit a donor “to provide for all of those in his family whom he personally

knew and the first generation after them upon attaining majority”iii. Must prove as a matter of logic that all the relevant contingencies will be resolved within

the lifetime of someone alive at the time of the gift plus 21 years b. Application

i. Step 1 – Determine whether we have an interest to which the RAP applies 1. RAP only applies to interests that are NOT vested at the time conveyance is created2. Contingent remainders; VR subject to open + executory interests

ii. Step 2 - Determine when the “creation of the interest” occurred1. The interest subject to RAP is created only when the instrument identifying the

interest is effectivea. If grant or sale during life, it’s the time of the grantb. If bequest by will, it’s the time the grantor dies [can revoke a will anytime

prior to death]iii. Step 3 – Determine who qualifies as a “life in being”

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1. Identify a validating life– a person who enables you to prove that contingent interest will vest or fail within the life, or at the death, of that person, or within 21 years after that person’s death

a. FOCUS ON RELEVANT LIVES - Can include the preceding life tenant, the taker(s) of the contingent interest, anyone who can affect the identify of the takers, and anyone else who can affect events relevant to the condition precedent

b. If there is no human being to qualify as a life in being, the 21 years is measured from the effective date of the instrument creating the future interest subject to the rule

iv. Determine 1. When would 21 years after the last life in being be; AND

a. Concentrate on possibilities, not probabilities – produces the shortest possible time period

b. hypothetically terminate the lives as soon as possible after the creating instrument became effective

c. Then add 21 years d. Have to consider one who is conceived but not yet born (the life of the last

surviving life in being + 21 years + the gestation period if any) i. **Key is afterborn children – kill all the lives in being except the

progenitor –everyone dies, A has a kid after the grant, then A dies 2. Whether it is at all possible it might take more than that time for the interest

to vest or become impossible of vesting To be valid under RAP, we must be able to determine that, as of the creating instrument’s date, these contingencies or events either must occur or must lose the possibility of occurring within the rule’s time period. To vest:

a. Within the rule’s time period, a contingency must occur or lose forever the possibility of ever occurring;

b. Within the rule’s time period, the time must pass; and/orc. Within the rule’s time period, the holder of the subject interest must decide

or must forever lose the right to do so v. Determine what becomes of the future interest that is not “good” under the CL RAP

1. Cross out any interest that violates RAP – the remaining valid interest standsc. Class gifts

i. All or nothing rule – if a gift to one member of the class might vest too remotely (eg beyond the life in being + 21 years), the whole class gift is void

1. This covers vested remainders subject to openii. Exceptions: If no more members of class can be produced, or a member of class would

qualify for distribution at time the gift is made (rule of convenience) 1. Rule of convenience- cuts off the possibility of new entrants to a class at the earlier of

two times: (1) the natural (physiological) closing of the class (eg) when the possibility of births or adoption ends (eg the death of a class’s ancestor); OR (2) the premature or artificial closing of the class through the operation of the rule of convenience

d. Savings Clausesi. If you want to guarantee that the remainder vests and is valid under RAP

ii. Savings Clauses are thrown in – “notwithstanding any other provision” – its an override, applies regardless

iii. “It will terminate;” “provide clear title” – vest with possessory interest in a certain timeframe (whoever is alive at my death +21 years) goes to kids or charity

7. RAP Modern Trends and Alternativesa. Application to commercial property

i. General rules1. RAP does apply to commercial agreement options to purchase

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a. Perpetuities period is 21 years after the creation of the instrument2. RAP does not apply to preemptive rights (rights of first refusal)

a. Rights of first refusal - does not give holder power to compel the owner to sell, only requires the owner, if and when she decides to sell, to offer the property first to the holder of the right

b. Rationale: no uncertainty of title; rights of first refusal only marginally affect alienability (unlike commercial option agreements)

ii. The Symphony Space, Inc. v. Pergola Properties, Inc. – Ct applies NY’s statutory rule against perpetuities to commercial option agreements, holding that the option agreement between P and D violated RAP because it could be exercised 21 years after the agreement was negotiated. Ct rejected wait-and-see approach for the option agreement + decided not apply RAP to preemptive rights because they only marginally affect transferability.

1. Rationale: Commercial option agreements should be subject to RAPa. Impedes alienability - present estate holder lacks incentives to

develop or manage the property; banks won’t provide a mortgage2. Counterarguments: Commercial option agreements should NOT be subject to RAP

a. Economic efficiency – parties here aren’t trying to tie up the land; agreement intended to make money for all by increasing property values over the long-term

b. Doesn’t impede alienability – we know who the people are that own the option – can simply by them out. Avoids traditional concerns with grants like “to O’s great grandchildren.”

b. RAP reform – focus on actual rather than possible facts in assessing the validity of life estates

i. Statutory patches for specific problems –eg Fertile octogenarian/ unborn widow –presume that if you are under 12 or older than 80 can’t be fertile; presume current wife is the “widow” for the purposes of the grant

1. Problem: could have a chilling effect on judicial action – courts weary to intervene to issue specific rulings because legislature has already spoken

ii. Reinterpret grants that violate (Cy press doctrine) – an invalid interest is reformed, within the limits of the rule, to approximate most closely the intention of the creator of the interest

1. Court can reduce age contingencies to 21 years or make other approchate changes to reform the invalid interst

a. eg O’s grandchildren that “survive to 25”)– modify so as to conform with 21 year perpetuities period

i. Rationale: if grantor had been aware of RAP would have written will so as to conform

2. Can also couple with wait and see – reformation is postponed until the end of the wait-and-see period

3. Problem: difficult to interpret centuries-old intent iii. Wait-and-see – Rather than invalidating an interest at the time of its creation on the basis

of the what-might-happen test, wait and see whether a contingent interest actually vets within some permissible period

1. If invalid under CL rule – second chance; interest is valid if it vests or terminates within the permissible vesting period

2. More than ½ states have adopted 3. Disadvantages:

a. Inconvenience uncertainty as to whether an interest is valid or void may persist for decades

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b. Wealth concentration – Results in extension of the dead hand and more wealth being tied up in the trust

iv. Uniform Statutory Rule against Perpetuities – use of a flat 90 year permissible vesting period (90 year wait and see approach)

1. If @ the end of 90 year permissible vesting period, interest is still in existence and unvested it is invalid

2. Problem: uncertainty for 90 yearsv. Limited Abolition of RAP for trust properties

1. In these states, a perpetual trust is permitted2. Implemented in a handful of states3. Can have certain tax advantages – being free from federal estate and

generation skipping transfer taxes 4. Tax-exempt dynasty trust can last as long as local perpetuities law permits –

if law permits perpetual trusts, can go on forever 5. Advantages:

a. Resolves alienability concerns - trustee has power to sell the property based on economic decision-making and invest in other assets

b. Attracts capital – perpetual trust states have a comparative advantage in attracting trust business and capital because trusts are incorporated in the state ; also creates jobs

6. Disadvantagesa. Wealth concentration – still concentrates wealth in the hands of

asset-rich aristocracy; fears of dynastic wealth/dead hand were what originally created pressure for RAP

b. Economic efficiency – irresponsible beneficiaries may still benefit from trust – would be better if assets were allowed to flow to highest value user

c. Administrability - may have to divide/distribute trust assets amongst generations and generations of beneficiaries

2) Common Property1. Joint Ownership2. Marital Property3. Community Property

3) Landlord Tenant1. Leases2. Subleases3. Default4. Rights & Duties

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property outline spring 2014

Documents

general rule of capture

cons rule of capture

rule of capture majority

capture pursuer

captor capture

capture technology

ease of administration

brightline rule