Download Property Outline - St. Thomas More – Loyola Law School

Property Outline
Fall 2005
I. Acquisition
A. Capture - first to take possession, owns it
1. Wild Animals - must be captured/possessed to be owned. Pursuit is insufficient
(Pierson)
a. Practical Certainty - an animal must be captured, mortally wounded or trapped
so that capture/possession is practically certain (deprived it of “natural liberty”)
i. Not Enough - reasonable prospect of capture (even if “hot pursuit”)
(Pierson - dissent argues for following custom)
ii. Policies:
a. Competition - rewarding captor fosters competition, pursuit
does not. Want to promote killing of undesirable animals (foxes).
b. Administrability - easier to admin capture than pursuit.
c. Administrability - if just pursuit, would be “fertile source of
quarrels”
b. Exception - Custom in certain circumstances (Ghen)
i. an exception to the rule in a specific industry which can only affect a
few persons is okay, when usage is a custom
a. Ghen whaling Rule - if fisherman does all that is possible to
make whale his own, that is sufficient + narrow industry + industry
wide custom
i. D wanted rule of capture applied
b. Policy:
i. if exception is not sustained, then this branch of industry
will necessarily cease (no other means of appropriation, no
other way to guarantee the fruits of labor)
c. Exceptions - rule of increase, animus revertendi (encourage domestication)
i. animus revertendi - captured wild animals that develop habit of
returning to captor’s property belong to captor as they roam at large
a. escaped wild animals - captor loses ownership w/possession
unless D knows animal belongs to prior possessor
ii. rule of increase - offspring belong to whoever owns mother
2. Constructive Possession-Wild Animals - owner of land is in possession of any
wild animals on their property, until they leave/take off (ratione soli)
a. intentional interference with wild animals such that they flee property is only
interference in that it interferes with a business [or commits tort] (Hickeringill)
3. Natural/“fugitive” Resources
a. Westmoreland - “minerals ferae naturae” - when mineral has tendency to
escape w/o volition of owner [overturned by some jurisdictions]
i. when they escape, and go into other land, or come under another’s
control, the title of former owner is gone
b. Water:
i. English Rule - “first to capture”/unlimited withdrawal from shared
water
ii. American Rule - rule of capture only if usage is reasonable (e.g.,
unreasonable if harm neighbors)
iii. Prior Appropriation: First to appropriate and put to good use
(American West)
a. upside - productive use of water
b. downside - encourages premature development
iv. Riparian Rights: owner of land along water has rights, subject to rights
of other riparians, regardless of type of use (American East)
a. downside - encourages “bowling alley” parcels (water access)
c. Oil & Gas:
i. Escape - return to wild as common property. (Hammonds
- Pl had rights to gas reinjected into their land by D)
Cases
1. Pierson - on unpossessed waste land, Lodowick Post and his dogs started and hunted a
fox. Pierson then caught and killed this fox in view of Post. (in New York). Court held
that pursuing alone gave Pierson no property right to the wild fox, which was acquired by
Post through killing and taking the animal.
2. Ghen - Ghen shot and killed a whale, 3 days later dead whale floated to surface
(without identifying marks) within the ebb and flow of tide discovered by Ellis, who
recovered and sold it to Rich. Rich shipped out the blubber and tried out the oil.
Plaintiff’s employee then laid claim to the whale. Court made exception capture rule Ghen did all possible + narrow industry + industry custom.
3. Keeble - owns a decoy pond (with tons of decoys) that draws lots of wild fowl. On
three separate days, Hickeringill shot a gun nearby and drive the fowl away. Court held
Keeble was employed in a legal business which was interrupted by Hickeringill’s actions.
B. Demsetz/Blackstone Theories
1. Blackstone - property rights evolved as a concept of “natural right” (property in
own person - Locke)
a. w/o ownership, no personal stake in creating/buying products of stable/modern
society
i. Property may be defined by i) substance/definition and ii) use
b. property rights can be caused/conferred by
i. Labor on the land making use of it (agriculture, livestock)
ii. First to discover
iii. Mere occupancy (w/o use or competition)
iv. Taking by force
c. transferable property rights emerged as result of commercial traffic
d. Post-mortem - society allows continue of post-mortem property rights to
preserve “peace of mankind,” thru either seizure by state or private transfer
2. Demsetz - property rights evolve to internalize externalities, when benefits
outweigh negatives
a. hunters realize they have finite targets, thus consider limiting their and others’
actions (which is to their advantage)
i. communal property - extremely high externalities
a. false assumption - 10 cows on communal land, each “costs” 1/10
of whole
ii. trespassing - creates high transaction costs of communcal property
b. Externalities - the effect of one person’s activity on another, which that first
person is not forced to take into account
i. externalities don’t always = inefficiency, but do encourage inefficiency
a. ex: often costly to individual to give group benefit, so will not
do - which leads to “inefficiency” being born by all (p.49)
ii. it’s unwise for a society to ban all activities with costly external effects
or to make all engaging in them pay for the effects, as efficient use of
resources is an important benefit of private property
3. Demsetz - property rights - externalities continually internalize, increasing
efficient use of resources/ improving general welfare
a. Exception - transaction costs - the “negotiating costs” of internalizing
externalities when it is advantageous to do so
i. if transaction costs too high, then resources will not be used in most
efficient fashion (externalities are caused by transaction costs)
b. Exception - tragedy of the commons - common property not used efficiently overconsumption -b/c not enough incentive to internalize externalities (common
w/pollution problems)
i. group cannot agree due to transactional costs.
ii. “free ride” may happen - one who won’t pay b/c believes that others
will pay their share
c. Exception - anti-commons – Under-use due to too many property rights or
property holders
i. encourages under-use
ii. inhibits conveyance due to high transaction costs of determining
owners (sometimes intentional preservation of prop. - make tiny parcels to
drive up transaction costs of worthwhile purchase)
d. utilitarian theory dominant today - efficient use of resources most important
aspect of property.
4. Coase Theorem - in a world where there are no transaction costs, it doesn’t
matter what the rule (liability rule) is, resources will allocate to maximize utility
a. upshot - as you drive transaction costs down, you will have better allocation of
resources.
b. Cf. other ways to get people to modify property-use to maximize utility
i. government regulation
ii. private interest groups can sometimes modify
iii. file a lawsuit (torts)
C. Creation
1. Rule - property rights are recognized through acquisition by “creation.”
a. Allows for property rights in intangible items and in discovery.
b. Policy - acquisition by creation rewards labor.
c. Locke - “natural rights” perspective - everyone has property in their own
bodies, and as a consequence we each own, as a matter of property, the labor of
our own bodies
i. historically, lots of property in common. If you take your labor and mix
with common property, result is property that you own.
2. Accession - person whose property is taken and used by another is entitled to
value of property taken, but may lose title by accessions (additions) of other.
a. if improver doesn’t take title, then gets value of improvements.
b. if improver takes title, prior owner may get unimproved value.
3. Body Parts - bodies and body parts may not be sold, Moore
a. Moore - no continuing interest after excisement of tissue/parts for discard
i. Competing policy:
a. Patient has a right to make autonomous medical decisions. A
doctor has conflict of interest if body parts have research value
b. Cf. threaten to disable by civil liability parties involved in
socially useful activities - imposing a “pedigree” duty on all cells’
pedigree unreasonably burdens medical research companies
b. Gifts - may donate organs or bodies, but no sales for transplantation. (partially
market-inalienable)
c. Exception - blood, hair, sperm
i. Kane - children tried to have father’s frozen sperm destroyed,
relying on Moore, but Kane’s girlfriend got it through Kane’s will.
ii. exception - frozen embryos
d. Accession - when one adds to property of another (labor, new materials),
thereby creating a property interest
i. tissue discarded/donated for research becomes both factually and
legally distinct from the cells taken once patented, Moore
a. cells are “raw material”; and patents are product of invention
(intellectual property right)
e. Cf. Right of Publicity - property interest in “self,” assignable during life,
descendible at death.
Cases
1. Moore - had hairy cell-leukemia. Doctors at U of Cali took blook tissues and samples,
removed his spleen. Told him they were using his cells for research, did not explicitly
discuss their uniqueness or their great scientific and commercial value. Moore alleges
blood and bodily substances his “tangible personal property.” Court holds no property
rights exist in one’s own body, or the parts. (Moore does have a C/A for breach of
fiduciary duty and lack of informed consent.)
4. Intellectual Property - Common Law
a. Rule - in the absence of recognized right, common law or statute,
man’s property is limited to the chattel which embody his inventions; and
i. e.g., temporary/seasonal designs not patentable, Cheney Bros.
b. Others may imitate these at their pleasure, Cheney
i. Exception - news = “quasi-property” - temporary property rights only
among competitors, INS
ii. Policy - encourage innovation and reward invention, but discourage
monopolies
a. copiers serve public good by helping to lower prices, Chanel
c. Exception - Imitation (not likeness) of a Celebrity infringes on their right of
publicity
i. Zacchini - SC decision - protection of the right of publicity provides an
economic incentive to make investments in activities valued by the public
a. Midler - Ford has its advertising agency use imitation of Bette
Midler. Midler wins damages against agency.
b. Vanna White- cause of action against Samsung for creating a
robot that looked like her.
d. Rule - IP - protects expression of ideas (not ideas themselves)
Cases
1. INS v. AP - AP and INS are news agencies in competition with each other. Both
distribute news to their members. INS admits it has been taking published news from AP
and re-publishing it, either by direct copying or rewriting. Court holds AP has no
property rights prior to or after publication, but does have property rights among its
industry competitors, which prohibit them from reaping gains from the AP’s efforts.
2. Cheney Bros. - Cheney Brothers and Doris manufacture silk. Cheney makes patterns
that are fashionable for only a season. Doris came out with a duplicate design and
undercut P’s price. Court holds okay to copy b/c patterns are a type of invention and the
property rights to them are limited to the product itself. Competitors may imitate and
reproduce.
3. Chanel - An imitation perfume company claimed that its product was the equivalent of
Chanel, and also less expensive. Court holds imitation brand did not interfere with
Chanel’s property rights in its own perfume as the perfume is unpatented, and the
imitation brand performs serves the “public interest” by offering comparable goods at a
lower price. Court holds no attempt to create CONFUSION over trademark.
5. Intellectual Property - Patent, Copyright, Trademark - (Statutory Exceptions)
a. Patent - non-renewable, 20 years from date of application - any new and useful
process, machine, manufacture, composition of matter, or any new and useful
improvement
i. Five Standards for Patentability (non-obviousness, utility, and novelty most important)
1. Category - fits into a general category of patents
i. Design
ii. Process - process, art or method
iii. Plant
2. Nonobvious - has not been preceded in identical form in the public prior art
3. Utility - it is useful
4. Novelty - represents a nontrivial extension of what was known (novelty)
5. Enablement - disclosed/described in application so as to enable others to make
use of invention
ii. Can’t Patent 1. Laws of Nature (newton’s discovery of gravity)
2. Products of Nature/Physical Phenomena (minerals, plants)
a. Chakrabarty - non-naturally occurring microorganism is not product of
nature.
b. Parke-Davis - valid patent even when separation process isn’t novel and
thing itself is a “product of nature,” as long as product wasn’t available to
public commercially or therapeutically perviously
i. purified form different from natural state - not “nature’s
handiwork”
b. Cf. Funk Bros. - lower degree of human intervention. Mixture has no
independent action, different use, or new effect. Just an unknown
phenomenon of nature.
3. Abstract Ideas (e.g., einstein’s theory of relativity)
a. Process patent - transformation and reduction of an article “to a
different state or thing” qualifies for patent even w/o any novelty in any
individual steps. Diamond
iii. Patent Process
a. PTO - Patent Office
b. If no desire to amend claims “patent prosecution”, then “final rejection”
c. appeals process from PTO
i. Appeal to BPAI - Board of Patent Appeals and Interferences
ii. Appeal to Federal Circuit - (formerly CCPA - Court of Customs
and Patent Appeals) - this circuit has no geographical limitations,
but limited by subject matter
iii. After Federal Circuit, appeal to Supreme Court
iv. Policy - pro/con
a. pro
i. encourages invention
ii. encourages innovation - the commercialization of inventions
iii. encourages disclosure - allows others to benefit from invention
iv. encourages copying - limit to embodiment of chattel, Cheney
v. encourages improvements - designing around the patent
vi. discrete information - more efficient property allocation
b. con
i. prosecution costs
ii. Patent Office - not supported by fees (b/c it’s gov. cash cow)
iii. Court costs
iv. Risk of monopoly
v. Overprotection
b. Copyright - protects expression of ideas (not ideas themselves), lasts 70 years
after death of author or creator (subject to “fair use”)
i. anything expressive can be copyrighted, as long as the expression can
be separated from an object’s functionality. Brandir International
ii. works must be original - low standard. Feist
a. requirements
i. independent creation
ii. modicum of creativity
b. 2 poets compose same poem. Each is copyrightable.
iii. facts and ideas can’t be copyrighted. Baker
a. even if larger work copyrighted. protection only extends to components
of work original to author
b. compilations of facts can be copyrighted, but not the facts in them.
i. as long as
a. choice of selection
b. arrangement
c. coordination
c. “sweat of brow” approach rejected. no originality Feist Publications
iv. Cannot copyright if copyright would bar all forms of expression where
substance is inseparable from expression. Morrissey - not allowed to copyright
contest rules
v. Policy - copyright strives to achieve balance between fostering incentives for
the creation of literary and artistic works and the optimal use and dissemination of
such works
c. Trademark - words/symbols indicating source of product or service - TM owners
protected when use of similar mark results in confusion. Volkswagen
i. rights arise out of the use of the mark in commercial activity and are lost when
it is abandoned or becomes generic (aspirin)
a. Copying is okay.
i. Not okay to imitate and creating trademark confusion. Chanel
ii. Cyberspace issues
a. “cybersquatters” Volkswagen
i. Anti-Cybersquatting Consumer Protection Act (ACPA)
b. “parasites” - Toys “R” Us - “dilution” by selling sex under site
“adultsrus”
i. “dilution” - can be from promoting similar goods under similar
mark, or by dissimilar goods/services that cast negative light
c. “poachers” - similar domain names to disseminate unfavorable
info about original group. Planned Parenthood - plannedparenthood.com
= anti-abortion messages.
d. Exception - trademark law is inapplicable when Celebrities try to
protect themselves from domain names on the internet
Cases
1. Volkswagen - Virtual Works bought “vw.net” to use as an ISP address. On buying,
knew of potential confusion with Volkswagen and intended to profit from this, if
possible. In 1998, VW dealerships expressed interest in purchasing “vw.net”. Virtual
Works then called VW trademark department and said that unless they made offer in 24
hours, Virtual Works would sell to the highest bidder. Court held Virtual Works
intended in bad faith to profit from the VW mark.
2. Chakrabarty - created a non-naturally occurring bacteria. Q whether live, humanmade micro-organism a patentable subject matter. Court holds patentee has produced a
new bacterium with markedly different characteristics from any found in nature.
3. Parke-Davis - Scientist was able to separate a purer form of adrenaline than previously
available. Court holds that b/c purer adrenalin had not previously been available to the
public commercially or therapeutically, it is valid patent - even when activity of
separating out the thing is not novel and the thing it self is a “product of nature.”
4. Funk Bros. - discovers that a certain mixture of certain species of bacteria are not
mutually inhibitive on each other. Doesn’t qualify as “invention” or “discovery” because
the bacteria in mixture have no independent action, different use, or new effect. Just an
unknown phenomenon of nature.
5. Feist Publications - Feist and Rural are phonebook competitors. Feist copys
copyrighted phonebook info from Rual’s phone book. Court holds facts
(names/numbers) not protectible. Rural’s selection of facts is useful, but not creative.
6. Baker - Pl. devises particular system of book-keeping. Says this is protected by
copyright when another person copies. Court holds you can’t copyright an idea. The
“statement” of the idea may fall under copyright, but not the idea. Only the particular
expression of that idea.
7. Brandir - Pl. designs bike rack. Court holds no way to distinguish artistic expression
uinhibited by functional considerations.
F. Finders
1. Rules/Players
a. owner (true owner)
i. Intent of the true owner regarding the property
a. can abandon property - voluntarily relinquish right, title, and interest
b. can lose property - unintentionally lose
c. can mislay property - intentionally put somewhere, but fail to pick up
i.
b. finders (subsequent possessors) - a person who takes possession of unclaimed
property
i. have right to possession against all but Owner
a. Owner may recover against Current Possessor or Prior Possessor (even
if Prior recovered from Current)
i. exception - Voluntary Bailee - Someone the bailor entrusts
property to
a. If bailee sells/pays for item to current possessor, Owner
does not have right over current possessor. Has to deal
with bailee, not the present possessor. Winkfield doctrine
ii. if finder turns over to police, and owner doesn’t show up, finder becomes
owner (statute in many states)
c. property owners (or land owners)
i. Rule - Owners get everything which is attached to or under their land,
unless abandoned/lost (In re Seizure - used car has 82k in gas tank, goes to
subsequent car’s owner (it’s “abandoned”) - not to DEA)
a. exception - does not necessarily possess things that lie unattached on the
surface (unknown to him)
i. mislaid property - goes to owner
a. A finder of property acquires no rights in mislaid
property - owner has duty of care over chattel
i. Law of bailment - you may claim reasonable
expenses for caring for someone’s lost property
before they reclaim
ii. abandoned property - goes to finder if tenant - tenants
keep lost items that they find. Hannah
b. trespassers may not acquire property rights
i. Bishop v. Ellsworth - a trespassing finder has no title to
an object found
a. Thief has rights against subsequent possessors
c. employees may not acquire property rights
i. Staffordshire Water Co. - man working on pool who
finds rings, has to return them to Company.
d. if underground, possibly no property rights
i. Elwes v. Brigg Gas Co. - dug up ancient boat under earth goes to
property owner, not gas co.
ii. Private place w/public access - goes to private owner if mislaid
a. if lost or abandoned - to finder Bridges - guy finds money on floor of
public area of a shop, they advertise for owner and can’t find, sues to get
the money from shop owner. Court holds finder owns the property against
owner of property. (non-trespasser)
2. Elements of Finding
i. actual physical control
ii. intent to specifically possess
a. ex: kids playing w/piece of dirt that breaks into diamond belongs to all
3. Shipwrecks - ship lost at sea and sunk still is owner’s property, but there is a
salvage award to finder or reducer
a. U.S. asserts title to any abandoned shipwreck embedded in submerged land of a
state
Cases
1. Armory - chimney sweep boy found a piece of jewelry, had it appraised and was
robbed of the precious stones. Court holds sweep acquired property rights against all but
true owner.
2. Hannah - Soldier stationed at a house finds a lost brooch there. Property owner
claims. Court holds that belongs to the tenant.
3. McAvory - Man finds a wallet in a barber shop. Barber knows it belongs to a transient
client. Court holds no rights to wallet. Duty of the shop-owner to care for the wallet as
mislaid item.
G. Gifts
1. Gift = Intent + Delivery + Acceptance
a. Intent - Donor must intend to make a present transfer of title, not merely
possession.
i. Donor’s intent retained even if physical possession is retained until
death so long as present ownership of interest is presently donated in an
inter vivos gift Gruen v. Gruen (Dad wrote note to son “I give you
[Klimt] painting, reserving possession for my life”)
b. Delivery - if an object can be delivered manually, it must be. Newman.
(constructive delivery)
i. if object can’t be handed over
a. Constructive delivery - When actual delivery is possible but
impractical, delivery of some object that is means of obtaining
possession. Newman (Delivery of keys = constructive delivery something that affects thing you’re giving)
i. delivery of key when if item is not available is sufficient.
Thomas (the safe was not present in a bank vault at the time
of the gift)
b. Symbolic delivery - handing over something symbolic of
property given (i.e., representation/written notice) when physical
delivery is impossible or impractical. (Excluded in Newman but
courts now moving towards)
c. Acceptance - presumed when chattel is valuable to donee (Gruen)
2. causa mortis Gift - made in contemplation of and in expectation of immediate
approaching death. if donor lives, the gift is revoked.
a. Policy - gift causa mortis is a substitute for a will. more strictly applied than
“gift inter vivos” due to undercutting of safeguards of Statute of Wills.
3. inter vivos Gift - irrevocable once made.
Cases
1. Newman - Man on deathbed, gives his housekeeper keys to the bedroom bureau and
says that everything in the house is hers. Court holds gifts causa mortis may not be
accomplished by symbolic delivery (only “actual”).
2. Gruen - Pl alleges that his father made an inter vivos gift to him of a Klimt painting.
Wife of father disputes. Court holds that if the elements of a valid inter vivos gift are
proved, then the possessory and ownership rights of the gift may be separated.
H. Adverse Possession
1. if landowner does not bring action to eject Adv. Poss. w/in statutory period,
owner is thereafter barred from bringing ejectment action.
a. Elements
i. Actual entry giving Actual physical possession
a. purpose: to trigger c/a, start SOL running, set boundary of prop
you hope to AP
b. statute tolls based on this entry
ii. Open + Notorious possession
a. notice given by
i. actual notice; or
ii. self-evidently apparent to the naked eye w/o need for
survey
b. some statutes req for AP w/o color of title only for land
protected by substantial inclosure or usually cultivated or
improved. (Van Valkenberg: no substantial enclosure, and chicken
coop & Charlie’s house ≠ cultivated/improved)
c. minerals/possession of stuff under ground: can AP minerals
underground if same person owns surface estate and mineral rights
(Marengo: cave)
d. minor encroachment: no presumption of knowledge of owner.
Owner must have actual knowledge for open & notorious
possession (Manillo: 15 inch encroach over common boundary)
iii. Continuous and uninterrupted for statutory period
a. req only degree of occupancy and use that average owner would
make of that particular type of prop.
i. summer home: seasonal use sufficient for continuous
possession if such lands are normally used this way
(Howard v. Kunto)
b. abandonment: intentional relinquishiment of possession for any
period of time  continuity lost, SOL must start over if AP
returns. Tacking not permitted.
c. Tacking: separate periods of Adverse Possession can be tacked
together if there is privity of estate (Howard v Kunto)
i. Privity of estate: possessor voluntarily transferred
possession to subsequent possessor
iv. Exclusive
v. Adverse/Hostile
a. hostile = without owner consent
b. purpose: to make sure owner not lulled into thinking AP won’t
make claim against him
c. Three diff views:
i. AP’s state of mind irrelevant (objective test): actions
of AP impt. Person can be AP w/o intending to.
Squatter counts as AP. Majority rule. (Manillo)
ii. AP has good faith mistake (subjective test): if AP knows
he has no title  his possession NOT adverse. Squatter
can’t be AP (Van Valkenburgh)
iii. Aggressive Trespasser: thought I didn’t own it, but
intended to make it mine
d. color of title NOT req to be AP. (color of title: claim founded
on written instrument which unknown to claimant is
invalid/defective)
e. common proof:
i. protected by substantial enclosure
ii. usually cultivated or improved
iii. CA - also payment of property tax
f. don’t have to live on property
i. Ewing - unimproved lot in Cincinatti used for digging
sand and gravel. From time to time dug sand and gravel,
never resided there - given AP.
ii. Cf. Pettis - AP not established even though extensive
use of suburban tract. Included plainting pine trees and
keeping livestock.
b. CA elements
i. CA statute of limitations - 5 years
ii also must pay property taxes.
c. Policy for Adv. Poss.
i. penalizing owner’s non-use
ii. quiet claims of title in subsequent possession after Adverse Possession
iii. Efficiency (reduced transaction costs)
iv. quiet stale claims
d. Toll of statute of limits vests new title in AP, which “relates back” to date of
the event that started statute of limitations running
i. this may include anything earned under the rule of increase
e. Notes
i. you cannot adversely possess against the Government
a. state owns its lands in trust for all the people, who should not
lose land b/c of negligence of a few state officers or employees
ii. adverse possession cannot happen by renting (Charlie’s House/Lutz)
iii. Prescription - gives rights of use (rights of use/easements), but no title
iv. Native American objects - immune from AP, instead possessor must
show “Right of possession”
f. Color of Title and Constructive Adverse Possession
i. Color of title - claim founded on a written instrument (deed, will) or a
judgement or decree that is for some reason defective and invalid (deed
improperly execute, grantor’s incompetent/ didn’t actually own land, etc.)
ii. Actual possession under color of title of only a small part of land
covered by defective writing is constructive possesion of all that writing
describes.
a. Exception - if owner ocupies a piece of property that you are AP
under color of title, then Adv. Possessor only gets as much as they
occupy
2. Disabled persons: statute of limitations for AP doesn’t run if owner under
disability, until disability ends.
a. Limits: must be specific disability in statute
3. Adverse Possession of Chattels
a. Same as reqmts for land, but SOL generally shorter.
b. Problem: most AP of chattels is NOT open & notorious.
a. to handle this prob, 2 diff views on when SOL starts
i. Majority/Due Diligence rule: SOL doesn’t start as long as
owner continues using due diligence to look for goods. AP accrues
when owner discovers/reasonably should know where stolen
goods are (O’Keeffe v Snyder)
a. burden of owner to show due diligence, otherwise
statute runs at AP
ii. NY rule: AP doesn’t start until owner discovers who has goods
and makes demand for return of goods. (Guggenheim v Lubell)
1. Policy: difficult to obtain title via AP  deter theft.
Also risk of buying stolen goods on purchaser, so should
inquire
c. Thief cannot AP chattel
d. 4 choices for rules
1. strict application of SOL for AP
2. Adv. Possession proof necessary for C of A; no C of A (if theft)
: AP must be “open an notorious”, meet other elements of AP
: burden of proof on Subsequent Possessor to show AP
3. Diligence; if diligence, then Discovery Rule
: burden of proof on Owner to show diligence
Discovery rule - in qualifying cases, cause of action does not
accrue until injured party discovers (or by exercise of reasonable
diligence and intelligence should have discovered), facts which
form the basis of a cause of action (burden to prove on Pl - owner,
vs. AP, where burden to prove on AP) [Statute of limitations exception]
4. NYC - no SOL until O makes demand
: burden of proof on Subsequend Possessor (to make sure no
true O who could make demand)
4. Alternatives to AP
a. Doctrine of agreed boundaries - when uncertainty betw. neighbors, an oral
agmt is enforceable.
b. Doctrine of acquiescence - long acquiescence, though shorter than statute of
limitations, is evidence of an agmt betw. parties fixing the boundary line.
c. Doctrine of estoppel - when A’s conduct/A represents indicates a boundary,
and B’s conduct changes in reliance on A’s representation. A is then barred from
denying the validity of this representation by estoppel.
Cases
1. Lutz - Lutz owned property next to adjacent, unused property. Developed a garden on
it and put a one room shack up for his brother. Van Valkenburgh’s buy property at tax
estate sale. Order Lutzes off in lawsuit, Lutzes claims prescriptive right to walkway and
admits VV’s possession. Lutz then claims to have acquired right to property through
adverse possession. Court holds property not improved and not open/hostile.
2. Marengo Cave Co. - Marengo open possession of an underground cave not
“notorious” (even though cave mouth on surface).
3. Manillo - Unbeknownst to Pl, D built steps and concrete walk that encroach 15 inches
onto Pl’s property. Court holds minor, mistaken, or unknown encroachment don’t satisfy
elements necessary for Adv. Poss.
4. Howard - D’s bought title to property and home which they thought on one property,
which actually was for adjacent property. Pl’s discovered they were owner of record,
moved for recovery of land. Court held summer occupancy sufficient to establish
continuous possession okay as well as “tacking” when privity of estate.
5. O’Keefe - O’Keefe painting allegedly stolen. O’Keefe didn’t report theft until 20 years
after, when she discovered the current possessor, D, in 1976. Court held after theft,
subsequent possessors can’t be transferred title.
II. Rights of Property Owners
A. Bundle of Rights:
1. Right to use property
2. Right to exclude. Jacque v. Steenberg Homes. (Case where trespassed on land
despite owner’s attempt to exclude)
a) Right is not absolute, limited by public good. State v. Shack (Migrant
workers)
3. Right to alienate or dispose of
III. Possessory Estates
1. person who has present right to take actual possession immediately holds the
possessory estate
2. person who has present right to take actual possession in the future holds the future
interest
A. Analyzing Possessory Estates
1. “to Andrew and his heirs”
a. Words of Purchase indicate to whom the property rights are being transferred
- “to Andrew”
b. Words of Limitation indicate the duration for the rights transferred
- “and his heirs”
2. Constructive Intent - if not explicit, must first attempt to give effect to testator’s intent
(White)
3. Presumption against partial intestancy (that intention of testator was to dispose of
whole of their estate)
4. No absolute restraints on alienation - contrary to public policy
a. makes property unmarketable
b. restraints perpetuate concentration of wealth
c. discourage improvements on the land
d. prevent owner’s creditors from reaching the property
e. restraints on alienation
i. disabling restraint - witholds from grantee power of transferring interest
ii. forfeiture restraint - if grantee attempts to transfer interest, forfeited to
another person
iii. promissory restraint - grantee promises not to transfer his interest
B.
1.
2.
3.
Fee Simple Absolute
theoretically lasts forever. conveys maximum use of property under law.
language - “to A”, “to A in fee simple”, “to A forever”, “all to A”
vocabulary - inheritance of fee simple
a. intestate - if decedent dies w/o will
b. heirs - persons who survive the decedent and are designated as intestate
i. note - living people have no heirs
c. issue - if decedent leaves issue (child), they take to the exclusion of all other
kindred)
d. ancestor - Take as heirs if decedent leaves no issue
e. collaterals - All person related by blood to the decedent who are neither
descendants nor ancestors
f. per stirpes - division of decease’s estate in equal parts divided per branch
C. Finite Estates - Life Estate, Term of Years
1. Life estate - “to Charlie for life”
a. If life tenant and remainder cannot agree to sell interests, parties can go to court
for decision.
i. Equitable necessity: Necessary for the best interest of all parties:
deterioration and waste of property is not the ultimate test is the
consideration of whether sale is necessary for the best interest of all
parties. Baker v. Wheedon (destitute wife was required to keep property
by heirs because speculated later sell later for more money)
b. Waste: when two or more persons have possessory rights at same
time/consecutively, waste concept says A should not be able to use property in a
manner that unreasonably interferes w/ expectations of B
i. Waste dependent upon many variables:
a. Nature of property interest of competing parties
i. greater A’s interest, more freedom A has in using
property
ii. more tenuous B’s interest, less protection given B
b. conduct in question
c. remedy sought
ii. Law of Waste - Designed to avoid uses of property that fail to
maximize the property’s value. A should not be able to use the property in
a manner that unreasonably interferes with the expectations of B.
a. Life tenant will want to maximize earning during expected
lifetime.
i. Factors
a. nature of property interests of parties
b. conduct in question
c. remedy sought
ii. Life tenants can make substantial alterations or even
demolish a structure when conditions changed provided the
value of the remainder is not diminished by these actions
esp if long life expectancy. Melms v. Pabst Brewing
b. Two types of waste
i. Affirmative waste - liability resulting from injurious acts
that have more than trivial effects
a. Injurious waste - acts that substantially reduce
value (exceptions - extracting minerals and cutting
lumber)
ii. Permissive waste - failure to take reasonable care
of property  negligence.Kimbrough v Reed (life
tenant let water pump fall in disrepair, killing lawn,
shrubs, trees  assessed damage for wast)
c. Problems w/ life estate
i. Sale: selling property could be advantageous
ii. Lease: also could be beneficial
iii. Mortgage: can’t improve property w/o borrowing from bank, and bank
won’t loan if it’s a life estate
iv. Waste: maybe tenant wants to cut timber, take down building, but
can’t b/c actions consitute affirmative waste
v. Insurance: life tenant doesn’t have to insure property. If property
destroyed, life tenant gets everything and remaindermen nothing.
d. Trust v life estate: More flexibility: trustee holds legal fee simple and can
manage property as defined by trust (usually can sell, mortgage, lease, remove
minerals, anything reasonable prudent person would do).
2. Term of Years
a. “to Charlie for 25 years”
b. life estate “pur autre vie” (measured by another person’s life)
D. Fee Simple Defeasibles
1. FS Determinable
a. Automatically ends at the happening or nonhappening of an event
b. Created by
i. “durational” language
a. “so long as”; “while”; “until”; “during”; “unless”
c. Future Interest = “possibility of reverter”
i. reverts to the Grantor automatically when this condition happens
d. if estate looks like a FS Determinable, but the future interest is in anyone other
than Grantor, estate is Fee Simple Subject to Executory Limitation.
2. FS Subject to Condition Subsequent
a. May be cut short/divested at the transferor’s election - does not terminate
automatically
b. created by words that emphasizes power of grantor to reclaim
i. “but if”, “provided that”, “provided, however”, “on the condition
that”
c. sometimes contains language expressing the transferor’s right of reentry
d. Future interest = “Right of Reentry” or “Power of Termination”
e. if estate looks like FS Subject to Condition Subsequent, but future interest is in
anyone other than the Grantor, estate is Fee Simple Subject to Executory
Limitation.
3. FS subject to Executory Limitation
a. similar to the other defeasible estates, but has future interest in someone other
than the Grantor
b. Future Interest = executory interest
i. a “springing” executory interest cuts off the possession of the grantor
a. don’t come along that often
ii. a “shifting” executory interest cuts off the possession of anyone else
4. Present Valuation of “life estate” and “remainder” p.229
a. Life estate present value formula = (present value x interest) x (value of $1 as
yearly annuity for years of life estate)
: total value = treasury tables for life expectancy (94%, etc.)
b. Remainder forumula = (value of $1 as yearly annuity for years of life estate) x
present value
E. Policy Arguments against FSSCS and FSD
a. fsscs i. con - may be heirs 100 yrs down road, may not care about condition
ii. pro - protects against “unfair” AP
b. fs determinable i. con - AP may happen sooner - statute of limitations runs sooner
ii. pro - want to quiet title, lower transaction costs
c. Alienability - with both fs det and fssubj.cs, there is a problem of absent or
uninterested heirs, with this, you maintain both the original intent of the grantor
and have someone who has a sincere stake in the property
Cases
1. White - Decedent dies with question of whether her informal will passed on a life
estate or fee simple in property. Court holds must consider constructive intent if not
stated in language.
2. Baker - Pl, the life tenant, is in economic distress, and asks court for directed sale of
the land to be invested and the interest from the investment to be used for her
maintenance. The contingent remaindermen, who were in charge of sale, have been
hindered by the slow growth of a highway which is significantly increasing the property
value.
IV. Future Interests
A. Future Interests - held by Grantor
1. Reversion - Automatically reverts to grantor upon Transferee’s death.
a. May or may not be expressly retained (often not expressly retained)
Ask: Does O convey all she had? Or something less?
Ex. O conveys “to A for life”  A=life estate, O=reversion in FS
b. Vested - reversions are vested interests
c. Alienable - since reversion is vested, it is alienable, accelerates into possession
upon termination of preceding estate, not subject to RAP.
i. fully transferable - intervivos or testate/intestate.
2. Possibility of Reverter - follows fee simple determinable. Automatically reverts to
grantor upon stated event.
a. May or may not be expressly retained.
b. ex: O conveys “to A and his heirs so long as liquor is not sold on premises” 
A=FSD, O=possibility of reverter
c. Alienability:
i. Majority Rule - freely alienable during life and by will
ii. Common Law - can’t be transferred by will or intervivos, Marenholz
i. may be inherited or transferred to owner of possessory fee simple
3. Right of Re-entry (power of termination) - grantor retains power to cut
short/terminate estate. follows Fee Simple Subject to Condition Subsequent. Does
NOT automatically revert, grantor must exercise right
a. usually expressly retained.
b. ex. O conveys “to A and his heirs, but if liquor sold on premises, O has right to
reenter and retake.” A=FSSCS. O=right of reentry
c. Alienability:
i. Majority Rule - freely alienable during life and by will
ii. Common Law - can’t be transferred by will or intervivos, Marenholz
i. may be inherited or transferred to owner of possessory fee simple
d. Statute of limitations and Adverse Possession
i. theoretically statute of limitations should start to run when when
attempt to exercise right of re-entry is rebuffed
Cases
1. Mahrenholz - Huttons convey 1.5 acres to School District. Retain possiblity of
reverter. Convey 38.5 to Jaqmain. Jaqmain convey to Mahrenholz. Mahrenholz
attempts to acquire 1.5 acres which were are used by School District.
2. Mountain Brow - Decedent Toscano granted property to Mountain Brow for their use
only, and not to sell. Mountain Brow attempts to quiet title. Court holds that use
restrictions are not void due to restriction of alienability if not spiteful and capricious.
B. Future Interests - held by Transferee
1. Remainders - Vested/Contingent - future interests created in grantee.
Note: classify interests in order, from left to right, stopping after each clause/comma
a. Vested Remainder: vested if remainderman is:
i. borne
ii. created in ascertainable person AND
iii. no expresss condition precedent in clause creating remainder or
preceding clause.
a. Types of Vested Remainders:
i. Indefeasibly vested remainder: holder of remainder is
certain to acquire a possessory estate at some time in
future and also certain to be entitled to retain permanently
ii. Vested remainder subject to open: vested in class of
persons, at least one of whom is qualified to take
possession, but shares of the class members unfixed b/c
more ppl can become members of class.
iii. Vested remainder subject to divestment: either vested
subject to being divested by condition subsequent or by
inherent limitation of estate in remainder.
a. When lang ambiguous, law tends to favor this
b. Contingent Remainder: any other type of remainder that is not vested.
i. unascertainable person OR
ii. subject to condition precedent
iii. other tips
a. the person to whom the conveyance gives the remainder cannot
be identified by name (“Bart”, “B”, etc.)
b. there is a condition precedent. some event (other than the
termination of the preceding estate) that might (or must) occur
before the party has the right to take actual possession
c. Note - when remainder interest is conveyed to Owner, it is still a
remainder interest (not reversion)
2. Executory Interest: looks like FSD or FSSCS, but future (executory) interest is
not in the grantor.
a. how to tell executory interest from remainder:
-if no preceding est  executory interest
-if follows FS  executory interest
-if doesn’t follow natural termination of preceding est (doesn’t wait
patiently)  executory interest
b. Two types
a. springing interests: cuts off grantor. Divests grantor.
i. Is most commonly seen in the “future interest only” or the “gap”
conveyance
b. shifting interests: cuts off anyone else besides grantor.
i. Cuts off or divests the right to possession of a transferee
C. Alienability
1. court cuts out full clause that voids alienation (Mountain Brow)
2. Policy against restraints on Alienability
a. restraints make property unmarketable
b. Restraints tend to perpetuate the concentration of wealth by making
it impossible for the owner to sell property and consume the proceeds of
sale
c. Discourage improvements on land
d. Restraints prevent owner’s creditors from reaching the property,
working hardship on creditors who rely on the owner’s enjoyment of the
property in extending credit (Unjust enrichment)
D. RAP = “no interest is good unless it must vest, if at all, not later than 21 yrs after
some life in being at the creation of the interest”
1. “No interest good”: means you only need to worry about rule when you see
a. contingent remainder
b. executory interest
c. Vested remainder subject to open
2. “must vest, if at all”
a. Contingent remainders must vest or fail to vest w/in the perpetuities
period
b. Executory interest must become possessory within the statutory period
c. Vested remainder subject to open must close or completely vest.
3. “not later than 21 yrs after some life in being at the creation of the
interest”
a. To be valid, an “interest” created by a conveyance must vest or not
within 21 yrs of the lives in being at the creation of the interest. OR
b. If an “interest” can vest, but only greater than 21 yrs after lives in
being, then the interest violates rule.
* If there is any possibility that an interest will vest too remotely (beyond the
period), it is void.*
4. Hints:
 if the condition is expressly tied to the named person who is alive the
interest will not violate RAP.
 if remainder must vest, if at all, at the death of the life tenant, the
conveyance will not violate RAP.
E. RAP: Create, Kill, & Count: seek to identify someone w/ an interst that could
vest greater than 21 yrs after the lives in being
1. Create: Create after the conveyance 1) someone who will be eligible to claim the
interest, 2) start creating as far back people-wise as you can.
2. Kill: Kill everyone who was alive at the time of the conveyance.
3. Count: Count for 21 yrs to see if interest has vested. If not, then the interest violates
the RAP and is void.
4. Exception - Gift to Class
a. Gift to a class is not vested in any member of the class until the interest of ALL
members have been vested. All members must be identified and all conditions
precedent are satisfied.
5. Policies for RAP
w/o rule:
a. property would be unproductive/unalienable
b. property would be concentrated in wealthy few
c. property held onto by socially undesirable/weak ppl (we want survival of
fittest)
d. having rule allows us to strike fair balance btwn present generation and
succeeding generations to do what they want w/ land
e. we want land to be controlled by the living, not the dead
6. Waiting period on RAP
a. Wait and See Doctrine
i. instead of assuming possible events that might occur, but rarely do (CL
RAP), look at actual events that happen.
ii. validity of interest not determined at time its created, rather wait & see
a. some state wait out ComLaw perpetuities period (lives affecting
vesting +21 yrs) before declaring contingent interest void
b. some states use USRAP (rejects waiting for CL perp period.
Instead waits 90yrs)
c. if it does vest w/in perp period, then fine. If doesn’t, then can
either reform instrument so it’s consistent w/ grantor’s intent, or
they can void interest.
V. Co-Ownership
A. Tenancy in Common
1. each owner has separate but undivided interests in property
a. each has right to possession of whole (w/2, half interest in possession of whole)
2. interest can be conveyed or devised (by will, etc.)
a. Free Alienability (of undivided share)
3. no survivorship rights
a. when tenant dies, interest passes to devisees/heirs
4. American law - presumption of tenancy in common
a. under common law - presumption of joint tenancy
i. to overcome, must expressly state intent to create JT. (“to A and B as JT
w/ right of surivor”)
B. Joint Tenancy
1. right of survivorship (key characteristic)
a. when one joint tenant dies – interest extinguished - nothing passes to other
joint tenants (b/c already own whole – estate continues in survivors free of
decedent’s interest)
i. creditor cannot collect (though gov. taxes sometimes do)
ii. avoids probate court (therefore popular w/husbands&wives)
b. cannot pass on joint tenancy interest by will
c. Killer of other joint tenants loses their right of survivorship in decedent’s
share.
d. Simultaneous Death - Uniform Simultaneous Death Act – upon simultaneous
death of joint tenants – 50% of property distributed as if A survived, and 50% as
if B survived. (assuming cannot determine the order of death)
2. joint tenants are regarded as single owner
3. each tenant seised both by share and whole
a. each owns “undivided whole”
b. Unequal Shares (historically impossible, now possible)
i. one person can pay for 2/3 and collect 2/3 of profit from
conveyance/sale
ii. **bank accounts (as property) may also be owned proportionally
4. 4 Unities - must have to have JT
i. Time – must be acquired or vest at same time
ii. Title – must acquire title by same instrument. (cannot arise through intestate
succession or other act of law)
iii. Interest – equal, undivided shares and identical interest measured by duration
iv. Possession – right to possession of whole – tho one joint tenant may give to
another joint tenant
5. breaking unities
a. any one tenant can convert into tenancy in common unilaterally
b. court can partition
c. involuntary alienation
d. any one tenant can bring action for judicial partition
e. Note - if not four unities, or after sever, then tenancy in common
7. Unilateral Conveyance - converts to tenancy in common
a. Secret conveyance IS allowed
i. common law - severs Joint Tenancy as betw. 3rd party and cotenants
ii. does not have to advise them of conveyance
b. any tenant can unilaterally sever (Riddle)
i. minority - cannot sever by conveying to self - must use straw man or
other intermediary to convert w/conveyance back to self
c. CA can unilaterally sever a joint tenancy, have to record it.
i. if recorded properly, then severs
ii. if not recorded properly, then doesn’t sever
8. Mortgages - Harms
a. Lien Theory - American common law - mortgage/lien on joint tenant’s
interest in property does not sever joint tenancy without conveyance of deed
(foreclosure) after expiration of a redemption period (during which time people
buy their houses back, etc.). (Harms)
i. title stays with mortgage holder (“home owner”), not with lender
ii. mortgage expires with joint tenant
b. Title Theory - mortgage severs JT. Lender holds title, holder of mortgage has
equity in redemption (like a temporary/contingent transfer of title for money).
9. Bank Accounts
a. Majority rule: surviving acct holder have right of surivorship & takes
remaining amt unless challengers (heirs/devisees) can show wasn’t
depsitor’s intent.
i. creditors can reach all, but JT can get back proportion of amt they
deposited via litigation
ii. types of JT accounts
a. “true joint tenancy” account – 50% of account draw rights, plus
survivorship rights
b. “payable-on-death” account – only survivorship rights, no draw
rights
i. account giving survivorship rights is effectively a will –
A’s name is on account solely for passing property at death
iii. “convenience” account – A can draw to pay O’s bills, but no
survivorship rights
b. Disputes during life – presumption that account belongs to parties in
proportion to net contribution
10. Leases - do not sever Joint Tenancy
a. Leases are extinguished at death of cotenant lessor
b. see Rent
C. Tenancy by Entirety
1. only created by husband and wife
2. surviving tenant has “right of survivorship”
3. Husband/wife considered to hold as one person – do not hold by moieties
a. each party seizes of entirety at creation of estate (has a whole interest)
i. neither husband nor wife has separate divisible interest in property held
by entirety that can be conveyed or reached by execution
b. contrast w/joint tenancy, where each party seizes by moieties – specific,
undivided interest in whole
4. Alienability - cannot convey share to 3rd party – must convey together
5. after divorce, they become tenants in common
6. No Property/Chattel Limits - can be created in any amount of real property and in any
amount of personal property
7. 4 Unities - must have all 4 to have Tenancy by Entirety
i. Time – must be acquired or vest at same time
ii. Title – must acquire title by same instrument. (cannot arise through intestate
succession or other act of law)
iii. Interest – equal, undivided shares and identical interest measured by duration
iv. Possession – right to possession of whole – tho one joint tenant may give to
another joint tenant
8. see Common Law Mortgages
D. Partition
a. partition C/A available for all co-tenancies, except tenancy by entirety (married
couples)
b. court partition options - partition in kind favored over partition by sale
i. can sell the property and divide profits
a. Partition by sale usually only possible under emergency - when
i. physical attributes of land are such that partition in kind
is impracticable or inequitable; and
ii. the interests of all owners would be better promoted by
the sale
iii. also when there are NOT many fractional owners
ii. can divide the property by separating the interests (partition in kind)
a. favored over partition by sale
b. modern practice is to sell land (b/c tenants want or courts
order)
c. other factors affecting court decision
i.. Land involving homestead – court may ignore in sale if suit to partition
by sale
a. Johnson – 6 interests, value materially depreciated if sold in
portions – despite homestead ordered sale after C/A by tenant in
common.
ii. Court doesn’t favor adjacent plot to tenant in common’s other property
a. Gray – orders “physical partition” and then draw lots to see who
gets what
iii. Sale by “metes and bounds” – may delineate a tenant in common’s
property on physical partition (partition in kind)
a. Kean – A cotenant w/B. A conveys by metes/bounds to C.
partition suit by C results in land conveyed by m/b to C because
“does not prejudice/injure” B
i. Metes and bounds – territorial limits of real property as
measured by distances and angles from designated
landmarks and in relation to adjoining properties
d. Partition may be brought for the entire property or for a fraction
E. Rent & Lease to 3rd Parties - all Tenancies
a. Lease to 3rd Parties - you can lease at will to 3rd Parties. don’t need consent,
but may be compelled by cotenant to account for rents collected from 3rd parties.
i. Accounting for Benefits
i. rents and profits - must account to cotenants for amounts
received
ii. taxes, mortgage payments, other carrying charges - right to
contribution from other cotenants to value of their share in
property
a. but if tenant who has paid taxes or interest in sole possession,
and value of use and enjoyment exceeds payments, not actionable
iii. repairs and improvements - no affirmative right to contribution
in absence of agreement; but receives credit for reasonable repairs
in partition action
v. improvements - interests of improver are protected if can be
accomplished w/o detriment to interest of other cotenants
a. improved portion may be awarded to improving
cotenant
if does not diminish other interests
b. property sold - award improver the addded value
c. improver bears all burden from improvements that
decrease value (bears full cost of “improvement”)
ii. One tenant can apportion to himself any particular parcel of the general
tract - until partition (including leasing portions of property)
b. Rent from Co-tenant - Cotenant in possession isn’t liable full rent to a
cotenant not in possession as long as cotenant in possession hasn’t ousted other
cotenant or other agmt. (Spiller)
i. implications
a. encourages suit for partition (so each person can use as they plz)
b. ouster may also result in satellite litigation
ii. Ouster - asserted by depriving other of right to possession OR
a. denying entry
b. denying title
c. any act of absolute ownership
d. ouster also beginning of running of the statute of
limitations for Adverse Possession (Spiller)
iii. Minority – non-possessory cotenant demands (in letter) rent or vacate,
this is enough to entitle nonposessory cotenant for rent
iv. Cotenant cannot maintain a C/A against another cotenant for rent for
occupancy of property or profits derived from own labor.
i. Ouster - cotenant must try to enter, and if refused entry, then
allowed the remedies of an ousted cotenant.
c. other Fiduciary duties
i. generally co-tenants have no fiduciary duties to each other
ii. fiduciary duty imposed by
a. cotenant buys in concurrently owned property at a mortgage
foreclosure or tax sale and then asserts superior title – courts
compel buyer to hold title for benefit of all cotenants
b. when cotenants are kindred and one in exclusive possession –
can claim adverse possession only where sole ownership so
unequivocal and notorious as to put cotenants on actual notice of a
hostile claim
Cases
1. Riddle - In secret before her death, Mrs. Riddle uses as a “straw man” (associate in her
attorney’s office) to unilaterally terminate a joint tenancy with her husband and turn her
interest into a tenancy in common. Court creates new rule, says that person can
unilaterally sever joint tenancy without the use of an intermediary device.
2. Harms - Joint tenant dies after co-signing and using joint tenant interest as collateral
for a note. Also signs separate mortgage on joint interest to secure payment of note.
Court holds joint tenancy not severed when less than all JT’s mortgage interest (“lien”
theory, not “title” theory of mortgage.)
3. Delfino - Garbage truck repair company. Pl. and D’s are tenants in common. Pl’s
brought C/A seeking partition of the property by sale. Court holds no partition of a
tenancy in common by sale possible. Instead divides property.
4. Spiller - Pl and D are tenants in common. Their lessee, Auto-Rite, moves out of their
building. D then begins to use property as warehouse. Pl demands rent. Court holds no
liability for rent unless proves ouster.
5. Swartzbaugh - Boxing ring. Walnut orchards. Husband Defendant and wife Plaintiff
are Joint Tenants. D leases portion of property. Pl. does not join in the lease. Pl. brought
C/A to cancel lease agmt made by D. Court holds one JT who has not joined in the leases
executed by her cotenant and another cannot cancel the leases where lessee is in
exclusive possession of the leased property.
6. Sawada - Husband D and wife are tenants in entirety. Husband D involved in car
accident w/Pl’s, Pl’s bring suit. Four months later, H + W convey their house to their
sons. One month later, Pl’s win suit against D. Can’t collect their judgment, so file for
fraud on conveyance to sons. Court holds not subject to claims of one party’s individual
creditors.
7. 1500 Lincoln Ave. - Husband and wife own property as tenants by entirety. Husband
D is convicted of drug trafficking – selling drugs w/o prescription. Government wants to
claim his interest in tenancy by entirety, preserving wife’s interest if she is able to prove
an innocent owner defense. Court holds okay to burden the Wife’s property, and steps
into “shoes” of huband by seizing his half of tenancy by entirety.
8. Lee – (Cf. 1500 Lincoln) gov. not allowed to execute forfeiture of H+W’s home. Felt
Wife in 1500 lost right to control and manage the estate, b/c gov never present nor paying
for property.
VI. Marital Interests
A. Married Woman’s Property Act: husband’s creditors cannot encumber wife’s
property. (against common law tradition), Sawada
B. Divorce - Marrieds
Common Law
1. Alimony - replaced by division of property or “Rehabilitative Alimony
a. Property Division - “equitable” - based on “fairness”
i. title holder gets property
b. “Rehabilitative Alimony” – no longer lifelong, just until significant other reenters job market.
2. Marital Property - only earnings of either spouse and what was acquired with
earnings during marriage (not gift, inheritance)
3. Professional Degrees - not property
i. Majority of courts - professional/education degrees are not property
Graham
ii. Minority - Restitution Alimony (New Jersey rule) - award alimony to
make up for the expenditures that the wife made to help her husband’s
education
iii. Minority - New York Rule - To the extent that appreciation in one
spouse’s career was due to the other’s efforts and contributions, this
appreciation constitutes marital property (Elkus)
a. irrespective of type of career (whether degree/non-degree)
Community Property
1. upon divorce, divided either equally or “equitably”
a. CA divides equally
Cases
1. Graham - W pays for 70% of H’s MBA education and all house bills in 7 year
marriage. Wants to divide MBA degree as “asset” of marriage. H in school for majority
of marriage. Court holds master’s degree doesn’t constitute marital property divisible by
court.
2. Elkus - Husband and wife getting divorce. Pl wife becomes superstar opera singer. D
husband was her coach for ten years, helped her career from its early stages. Court holds
that career/celebrity status subject to equitable distribution.
C. Death - Marrieds
1. Common Law - “forced”/Elective Share – gives the surviving spouse an elective
forced share in all property that decedent spouse owned at death.
a. regardless of will or devisement. (usually aligns w/intestacy statutes - 1/2 or
1/3; less if kids)
b. does not apply to JT
2. Community Property - no elective share (minority rule)
a. no survivorship
b. if dies intestate property passes to spouse
c. may devise up to 1/2 in will.
d. stepped up tax basis of property sold. so at death, new amount of property, if
then sold, only owe difference for amount stepped up (present value at death)
minus what sold for
D. Mortgages - Marrieds
1. Common Law – Tenancies by Entirety are not subject to the claims of one party’s
individual creditors (no lien can attach for separate debts of the husband/wife) Sawada
i. Exception - Gov. may burden spouse’s property (e.g., right of
survivorship) when one spouse commits an illegal act on property held as
TE. 1500 Lincoln
ii. Cf. Lee. Can’t burden if illegal act not committed on property.
2. Community Property - husband and wife have equal management powers, but may
be arguable if equal managers (one may be fiduciary, operate for good of community)
a. Cannot unilaterally sever community property to third party
b. 1 spouse can’t give mortgage on community property real estate
c. Creditors follow management and control. can reach
whatever community property that creditor spouse is legally
entitled to manage. If H + W are equal managers, can reach
through either to property.
c. husband + wife can freely change the character of their property by written
agmt. Some states = oral agmt.
E. Mixing Community Property with Separate Property
a. Partially paid for assets
i. Inception of right rule – character determined at purchase
ii. time of vesting rule – title does not pass to purchasing spouse
until all payments made, hence it is community property
iii. pro rata apportionment – “buy in” pro rata
b. unidentifiable - assumed to be community property
F. Migrating Couples (mix of Common Law and Community Property)
1. character of assets - by law of state where acquired (unless both parties consent to
change in ownership)
a. NEVER CHANGES unless consent to change in ownership (even if change
states
2. Disposition at Death - governed by the law of the state in which the owner domiciled at
the time of death.
a. Elective share is inconsistent with—or at least not required under—CP
principles (the reason for this should be apparent).
b. CP states do not ordinarily have elective share statutes (but see, e.g., quasi-CP
in CA).
3. With no elective share statute, a surviving spouse who moves from a Common Law to
a CP state has a problem.
a. Husband may own alone at Common Law. Then can devise to mistress, on
move to Community Property state, no no means to take an elective share.
b. Compounding problems, because the property in question is not CP, neither
does surviving spouse have the rights at death associated with that form of
ownership.
i. Unless planned for, this situation may result in the surviving spouse
failing to get a share of the decedent spouse’s personal property following
a move from a C/L to a CP jurisdiction.
G. Rights of Domestic Partners
1. Common law marriage
i. cohabiting parties must manifest their intent to be husband and wife and hold
themselves out to public as husband and wife
ii. if jurisdiction recognizes common law, same rights as couple married w/license
and ceremony
2. Same sex couples
i. Rights & benefits of marriage dependent on legislation
ii. VT permits same-sex couples to unite in “civil union” entitling members
benefits provided to married couples (Baker)
iii. Defense of Marriage Act (DOMA): denies marital benefits for couples in VT
who move to another state that does not recognize civil unions
Cases
1. Baker - Vermont case saying same-sex and different-sex couples must be treated
equally in regards to marriage.
VII. Leasehold Estates
A. Tenancies
1. Term of Years – estate that lasts for some fixed period of time or for a period
computable by a formula that results in fixing calendar dates for beginning and ending,
once the term is created or becomes possessory.
a. common law - no limit to the number of years permitted (some statutes limit)
b. can also be terminable earlier upon the happening of some event or condition
2. Periodic Tenancy – a lease for a period of some fixed duration that continues for
succeeding periods until either the landlord or tenant gives notice of termination.
a. if notice not given by Tenant, period automatically extends for another period
i. if notice given is too short, it will apply as notice for next term (at
least 30 days in advance, but no longer than than 6 months)
a. otherwise extends as notice to NEXT TERM e.g., half a year’s
notice is required to terminate a year-to-year tenancy, otherwise
extends for ANOTHER YEAR
b. for any periodic tenancy of less than a year, notice of termination must be
given equal to the length of the period, but not to exceed six months.
i. notice must terminate the tenancy on the final day of the period, not in
the middle of the tenancy.
c. death of landlord or tenant has no effect on duration of term of years or
periodic tenancy
d. Holdover - majority rule: can hold someone over for a periodic tenancy
based on the period in which rent is due, but in no event longer than one
year.
i. some statutes – provide that landlords may demand double rent from
holdovers
e. Rule: When landlord makes first election, they’re stuck with it
3. Tenancy at Will – tenancy of no fixed period that endures so long as both landlord and
tenant desire.
a. if lease provides that it can be terminated by one party, it is necessarily at the
will of the other as well if a tenancy at will has been created
i. unilateral power to terminate a lease can be engrafted on a term of years
or a periodic tenancy
b. tenancy ends, among other ways, when one of the parties terminates it, or at
death of one of the parties
i. modern statutes ordinarily require a period of notice – 30 days or a time
equal to the interval betw. rent payments – in order for one party or the
other to terminate a tenancy at will
c. Majority Rule: if landlord tries to reserve termination for himself or only
for tenant, then called tenancy at will
i. contrary Restatement - allows determinable tenancies to be created at
will of tenant alone (Garner) or landlord
4. Tenancy at Sufferance: Holdovers (p.451)
– arises when a tenant remains in possession (holds over) after termination of the
tenancy.
a. common law – give the landlord confronted with a holdover two options – i)
eviction (plus damages) or ii) consent (express or implied) to the creation of a
new tenancy
Cases
1. Garner - Tenant leasing an apartment. The landlord dies. Lease does not have end
date. “privilege of termination…at a date of his own choice.” Court holds a lease which
grants tenant the right to terminate the agreement at a date of his choice creates a
determinable life tenancy on behalf of the tenant instead of merely establishes a tenancy
at will.
2. Crechale - Defendant tenant’s moving out, but new building won’t be ready until a
month or two after his lease expires. Requests to stay beyond lease. Pl. contends D
became holdover tenant for a new term. Court holds that if landlord neglects to evict a
holdover tenant and to demand double rent for holdover period, choosing instead to
accept monthly rent payments – lease extended on a month-to-month basis.
B. Statutes of Frauds
1. Contracts that MUST be Written Down - pneumonic - MYLEGS
a. Marriage - contracts in consideration of marriage
b. Year - can’t be performed within one year (i.e., leases greater than one
year)
c. Land - contracts for sale of land
d. Executor - if executor obligated to pay any debts out of his own money, agmt
reflecting this must be written down
e. Goods - contracts for sale of goods worth more than $500 have to be written
down.
f. Surety - when you assume the responsibility to pay the debts of someone else guarantees the performance of a contract
B. Lease is Conveyance or contract? (both)
1. conveyance – transfers possessory interest - so conveyance that creates prop.
rights
2. contract – usually contain a number of promises – so contract creating contract
rights
C. Bargaining Power and Form Leases – landlord/prospective tenant unequal?
1. unfair - buyer has not choice but to accept terms - assumes absence of
competition
2. fair - seller trying to avoid costs of negotiating and drafting a separate agmt.
with each purchaser
3. Posner - what is important is whether competition forces sellers to
incorporate terms that protect purchasers in their contracts
C. Selection of Tenants
1. Civil Rights Act (1866) - prohibits racial discrimination in all types of housing
transactions
i. includes “races” of Germans, English, etc.
a. no cap on damages (FHA originally had cap, but now doesn’t)
b. Jones - bars all racial discrimination, private and public, in the sale or rental of
property (under CRA of 1866)
c. does not deal with discrimination in the provision of services and facilities, and
does not prohibit discriminatory advertising
e. “All citizens of the U.S. shall have the same right, in every State and Territory,
as is enjoyed by white citizens thereof to inherit, purchase, lease, sell, hold, and
convey real and personal property.”
2. Fair Housing Act - prohibits discrimination b/c of race, color, religion, sex, familial
status, handicap, or national origin
a. cannot refuse to sell or rent after bona fide offer
b. cannot advertise indicating preference
c. cannot represent not available when available
d. to induce to rent by representations of entry into neighborhood of specific
classes of people
i. “blockbusting” illegal
e. terms, conditions, etc.
f. Buildings constructed after 9/13/88 – failure to design to allow handicapped
entry
i. public areas
ii. kitchens, bathrooms usable
g. Exemptions
i. single-family house sold or rented by owner
ii. if doesn’t own more than 3 such properties
iii. exception is once per 24 months
iv. dwellings containing living quarters occupied or intended to be
occupied by no greater than four families living independently of each
other, and if owner actually maintains and occupies
v. under NO CASE CAN ADVERTISE
h. “Handicap” – physical or mental, must have record of having it
i. does not include current drug use or drug problem (legal or illegal)
ii. includes alcoholism
iii. does not include infectious, contagious, and communicable diseases
iv. explicitly does not include transvestites
i. applies to “dwelling” place, be it residential or commercial
3. pfc of violation of Fair Housing Act Violation
a. Procedure of Section 3604 – Step One (prima facie case)
i. prove member of statutorily protected class
a. familial status includes children
b. may ask questions for objective reasons (nuisance/potentially
noisy tenants) (Soules)
ii. prove applied for and was qualified to rent/purchase
iii. proved rejected although housing remained available
a. don’t have to prove intent, just discriminatory effect
i. unless non-facially discriminatory, then may inquire into
motive
b. Procedure of Section 3604 – Step Two (D rebut, Pl respond)
i. D may explain whether actions motivated by permissible considerations
a. “ordinary person” standard
b. skeptical view of subjective rationales – looking for objective
reasons
ii. Pl may then rebut D’s explanation by proving these reasons are
“pretextual”
Cases
1. Soules - Single mother Pl. with child denied opportunity to look at apartment by
realtor D where trying to match quiet neighbor with current tenants. Court holds D’s
question regarding the age and nature of child did not constitute impermissible racial
discrimination to the “ordinary” person.
D. Delivery of Possession
1. Legal rights - implied covenant does exist to ensure that there are no legal obstacle to
the tenant’s right of possession (but not physical/actual obstacle).
2. English Rule – majority - implied duty requiring lessor to put lessee in actual
possession.
a. only lasts for first day of tenancy
b. Lessee remedies - can sue for damages against third party and against
i. may take an abatement if they can retake a portion of premises
ii. can terminate lease
iii. can sue landlord for damages
iv. not obligated to pay rent
v. may also go against prior tenant to recover possession or damages
c. Policy supporting
i. landlord better position to resolve dispute has more info. better
possession to evict, to sue. knows more about agmt with tenant, etc.
3. American Rule – no implied duty requiring lessor to put lessee in actual possession.
a. Tenant must sue against “wrongdoer” – holdover tenant
b. Lessee remedies - can sue for damages against prior tenant; no action against
landlord
i. can sue tenant for damages and to evict
ii. can retake a portion
c. Policy supporting
i. puts fault on wrongdoer. unfair to landlords.
ii. tenants incentives. may be faster.
iii. prevents waste
Cases
1. Hannan - D leased to Pl a piece of land in Norfolk for 15 years. Prior tenant still on
land, D made no effort to evict. No contract/language stating D or Pl has responsibility to
remove prior tenant. Under American Rule, court holds no duty to deliver actual
possession to Lessee when former tenant holds over.
E. Assigns and Subleases
1. Sublease – transaction whereby a tenant grants an interest in the leased premises less
than his own, or reserves to himself a reversionary interest in the term
a. instrument purports to transfer the lessee’s estate for less than the entire term –
even for a day less – it is a sublease, “regardless of its form or of the parties’
intention” (see modern law rule)
b. lessee is said to have retained a reversion against subletter
c. Leasehold interests are freely transferrable.
2. Assignment – conveys whole term, leaving no interest or reversionary interest in the
grantor or assignor
a. instrument purports to transfer lessee’s estate for the entire remainder of the
term, “regardless of its form or of the parties’ intention” (see modern law rule)
b. may also transfer all interest in only part of property
i. possibility of reverter or right of re-entry will not disrupt an
assignment
c. Leasehold interests are freely transferrable.
3. Leases - obligations of lessee to lessor are not affected by an assignment or subletting
to a third party, even if made with consent of lessor, unless expressly states or implies so
as to waive contract duties.
a. Under assignment, privity of estate is terminated, but privity of contract
continues and is unaffected. (therefore liability for rent continues)
b. However, lessee may covenant with subletter/assignor to assume his
contractual obligations, thereby making them liable to him
c. if no express contract, then no privity of contract
i. but there is “Privity of Estate”
a. Privity of Estate has been transferred from Assignor to
Assignee, no longer Privity of Estate after assignment
d. Sublease - no Privity of Estate if sublease between sublessee and original
Lessor
i. no “Privity of Contract” either, unless it is inferred from contract
4. Two approaches for determining sublease/assignment
a. majority rule – by above definitions
b. modern law rule (but also uses definitions as persuasion)
a. look to intention of instrument alone for guide – language of
conveyance read in light of surrounding circumstances.
a. actual words “sublease” or “assign” not conclusive, though may
be persuasive
5. Premature termination
a. if landlord exercise power to forfeit by breach of original tenant, then holds
this against sublessees and assigns.
b. if original tenant merely gives up primary lease voluntarily – “surrenders” –
then sublessees and assigns’ rights remain intact – makes privity of estate
w/landlord
6. Contractual restrictions on alienability of leasehold interests are permitted. (applies
to both subleases and assignments)
i. minority of jurisdictions/Restatement rule – Restraint on alienation only
valid for commercially viable reasons. [default rule - Kendall]
a. where lease provides for assignment [or sublet] only with prior consent
of the lessor, such consent may be withheld only where lessor has a
commercially reasonable objection to the assignment, even in absence of
a provision in the lease stating that consent to assignment will not be
unreasonably withheld
b. Reasonableness Factors
i. can’t deny for personal taste, convenience, or sensibility.
ii. also can’t deny in order to extract higher rent than what is
originally contracted for [unless reasonable. (fair market value,
etc.)]
iii. Factors
1. financial responsibility
2. suitability of use
3. legality of proposed use
4. need for alteration of the property
5. nature of the occupancy
iv. exception – unless a freely negotiated provision in the lease
gives he landlord an absolute right to withhold consent. (or
sufficiently arguable right – Carma Dev. v. Marathon Dev.
California)
v. Kendall - exception - may only apply to commercial lease
i. have to argue whether property is residential or not
b. Key Policy – clause for protection of the landlord is in its ownership
and operation – not for its general economic protection
ii. common law/“majority of jurisdictions” – where lease contains an approval
clause, lessor may arbitrarily refuse to approve a proposed assignee no matter
how suitable the assignee appears to be and no matter how unreasonable the
lessor’s objections
7. Remedies - Privity of Contract, Privity of Estate
a. Subleases - can never assign all covenants.
i. O can ONLY sue original Tenant
a. only going to be one privity of contract
ii. Sublease - O keeps Privity of Contract and Estate w/first tenant
a. Assignment
i. always a contract betw. O and original Tenant (even if subsequent
tenants assume all covenants)
ii. Last person holding assignment has privity of estate
w/Landlord/Owner
iii. If you assume all covenants, you have Privity of Contract w/Landlord
Cases
1. Ernst - Ernsts leased property to Rogers. Rogers makes Go-Kart business, which he
sold to Conditt. Conditt takes over the business, lease, and possession of property from
Rogers, and then stops paying rent. After lease expires, the Ernsts sue. The court holds
that Rogers’ conveyance to Conditt is an assignment. Therefore Conditt liable for rent,
not Rogers.
2. Kendall - City of San Jose leased to Perlitches. Perlitches signed a 25 year sublease
with Bixler. Perlitches assigned their interest to Pestana. Bixler proposed sale of biz and
assignment to Kendall. Lease requires lessor’s consent. Pestana refused b/c he wanted
more rent money. Kendall filed suit. Court holds that in commercial lease, lessor may
not unreasonably and arbitrarily withhold his consent to an assignment, in the absence of
a provision that such consent may be unreasonably withheld.
F. Disputes Involving Tenants in Default
1. When no abandonment/voluntary surrender, Owner is legally entitled to use self-help
to retake the leased premises if: (Alternative views)
i. common law - ejectment or self-help, when landlord legally entitled to
possession
a. self-help means of reentry must be peaceable and as “reasonably
necessary”
i. split – “reasonable” = either “nonviolent” or “not against tenant’s
will”
ii. Modern Trend (majority)
a. No self-help (Berg)
b. Must resort to judicial process
i. set up summary procedure to make judicial process faster
iii. may apply to both residential and commercial leases (though in some
jurisdictions prohibition on self-help only applies to residential)
2. Summary Proceedings
a. Typical statute
i. requires only a few days’ notice to tenant prier to bringing eviction
action
ii. range of issues subject to litigation is narrow
i. some permit tenant defense that conditions of premises are not
habitable (and therefore may withhold rent)
b. Note - **although intended to be quick, most such statutes are time-consuming
and expensive
3. Abandonment
a. Elements of abandonment
i. tenant vacates without justification and without any present intention of
returning and defaults in payment of rent
a. tenant cannot unilaterally create a surrender. may only abandon.
b. Landlord has to make reasonable efforts to re-let the property, and have
to mitigate damages.
i. landlord bears burden of proof that reasonable diligence was exercised.
a. factors to consider - no standard formula
i. offered or showed apartment to prospective tenants
ii. advertised in newspapers
ii. landlord has to treat property as part of his “vacant stock” cannot wait until other vacancies are filled before renting (Sommer)
a. Landlord doesn’t have to accept anything below fair market
value.
iii. Punishment - 2 alternatives
a. recovers no rent subsequent to abandonment
b. recovers the difference betw. the agreed rent and the amount of
loss that could reasonably have been avoided (Austin Hill)
iv. Cf. Restatement - no duty to mitigate
a. landlord should not be forced into new agmt.
b. landlord should not be forced to seek out new tenants
“continually”
c. What can landlord do after abandon?
i. treat abandonment as a surrender (terminate lease)
ii. obtain another tenant while holding original tenant liable for any
deficiency (not termination - this is “re-letting” on behalf of the tenant that
abandons)
a. e.g., if you have to rent for less than the amount that was agreed
on in original lease, you can get this money from original tenant
i. this doesn’t always mean that landlord is accepting a
surrender
a. if landlord re-lets for a different, higher amount
i. should landlord get the difference, since
still holding tenant liable?
a. JURISDICTIONS SPLIT
iii. permit premises to remain vacant while collecting agreed-upon rent
from original tenant
4. Surrender - terminates the lease, provided landlord accepts the tenants offer.
extinguishes liability for future rent, but not previously owed rent or past breaches of
other covenants.
a. Intent test to determine if Landlord has acceptance of surrender
i. if landlord’s actions are inconsistent with or repugnant to continuation
of the original lease
5. Default on Rent
a. if tenant is in possession and defaults on rent, the landlord may terminate the
lease and recover possession.
i. some jur - may also recover damages equal to difference betw. rent
reserved in lease (unexpired term) and reasonable rental value of premises
for period.
b. Other landlord options
i. security deposits (problem is landlord incentivized to keep deposit)
ii. rent acceleration - upon tenant’s default, all rent for entire term is due
and payable.
Cases
1. Berg - Wiley (D) owns building. Berg (Pl.) rents from him and opens restaurants.
Wiley thinks that Berg violated their contract, and so re-enters and locks her out. Court
holds Wiley’s re-entry and locking out of his tenant was wrong as a matter of law.
2. Sommer - had 2 year lease, sends letter to the landlord saying that he wants to abandon
the lease. Landlord doesn’t answer the letter. Court held that landlord had a duty to
mitigate tenant damages.
G. Landlord Duties/Tenant Rights
1. Covenant of Quiet Enjoyment - tenant has right of quiet enjoyment w/o interference
by landlord. Implied in every lease (may be express).
a. breached by either actual or constructive eviction (tenant must leave)
i. result - tenant’s rental obligation ceases
ii. Partial eviction by landlord - tenant can stay in possession w/o paying
rent
b. constructive eviction - act or omission of landlord causing breach
1a) premises made substantially unsuitable for the purpose for which
they are leased, OR
1b) substantially interferes with beneficial enjoyment of premises
2) Tenant Must Vacate (huge risk)
3) Reasonable Time rule - after exposed to constructive eviction, remedy
lost if does not vacate w/in a reasonable time after right comes into
existence
4) No constructive eviction by 3rd parties - see below
5) remedy - no liability for future rent and entitled to recover damages
c. Agent rule - eviction causable by agent of landlord or someone who acquired
legal right thru him.
d. Third Parties - Landlord not responsible for conduct of 3rd parties unless
consents to or causes that conduct (always when expressly written, potentially for
implied consent)
i. modern trend - permits constructive eviction where landlord has the
ability to control the conduct.
e. Partial Eviction - actual vs. constructive
i. actual eviction from part - tenant relieved of all liability for rent
ii. constructive eviction from part - no relief from rent liability. Brine v.
Bergstrom
2. Common Law - tenant takes premises “as is” (caveat lessee) no landlord obligation to
warrant fitness (all covenants in lease “independent”)
a. independent covenants rule (gilbert’s p.243) - tenant not excused from
paying rent if landlord breach (e.g., not keeping premises in repair)
a. only tenant remedy - sue for damages
b. exceptions (duty to pay rent dependent on having)
i. duty of “quiet enjoyment”
ii. hidden defects known to landlord
iii. fraud
iv. landlord knows of “latent” defects (not easily discoverable by ordinary
inspection)
c. Other implied covenants
i. duty to deliver legal possession, see Hannan
ii. no repair duty
3. Implied Warranty of Habitability - premises must be - safe, clean and fit for human
habitation. Presumed in lease. (can’t be waived)
a. covers latent (dormant) and patent (known/open) defects in essential facilities of
residential unit (tenant can’t assume risk of known defects)
b. Breach
1a) substantial violation of housing code = pfc. (not defects caused by tenant);
OR
a. not de minimus (one or two minor violations standing alone)
1b) defect has impact on safety or health of tenant - “uninhabitable” in eyes of
reasonable person
a. not only slum-housing - continued loud noise in an apartment building
may constitute Millbridge Apts.; failure of AC; Park Hill Terrace Assoc.
2) Tenant gives notice to landlord of deficiency/defect + allowed reas. time for
correction
3).can be used as C/A OR Defense in ejectment action
a. generally only applies to residential, not commercial leases
c. Remedies - tenant may stay in possession of property
i. contract remedies - rescission, reformation, damages available
ii. withhold future rent, pay rent + sue for damages, deduct repairs,
terminate lease + sue for damages
a. defect affecting habitability must exist during time rent withheld
iii. complete defense to ejection (for nonpayment of rent)
a. may abate rent due to IWH at landlord’s expense
b. if wishes to stay in possession - complete defense to eviction
iv. Retaliatory Eviction - can’t evict for good faith complaint. can’t evict
for period of days (90-180) after.
d. Compensatory + Punitive Damages
a. Compensatory - ways to measure
i. Fair Market Value (as warranted) - Current Market Value (w/defects)
ii. Rent (warranted and paid) - Current Market Value
iii. percentage of lease value
iv. discomfort
b. Punitive Damages - if conduct manifesting personal ill will, or reckless or
wanton
disregard of one’s rights; if fails to repair facility that is essential to health and safety of
his or her tenant
4. Law of Waste - tenant must not make change that affects vital and substantial part of
premises - change characteristic appearance; fundamental purpose; uses contemplated
a. waste determ. by degree and permanence of effect on use and value of leased
premises, and length of tenant’s term remaining
b. no bright line distinguish lawful activity
i. Rumiche v. Eisenreich - no waste - tenant replaced defective ceiling
w/illegal sheetrock, put frame on window, installed light fixture and light
switch. (voluntary waste)
ii. tenant takes small item from premises, may be waste
c. premises destroyed
i. common law - must continue to pay - interest in soil continues
ii. premises in building destroyed - don’t have to pay (impossible for
landlord to furnish agreed consideration)
5. Affordable Housing Issues - Policy against Rent Control / IWH
a. reduces resource landlords devote to quality of housing, making provision of
rental housing more costly.
b. screen applicants more carefuly, b/c cost of renting to a deadbeat is higher;
marginal tenants have harder time persuading
c. general economic result of rent control - costs of landlords artificially increase,
supply falls and many tenants, usually poorer/newer, are hurt - “ceiling on rents
reduces the quantity and quality of housing available.”
d. counter-arguments - rent controls make it possible for existing tenants to stay
where they are, with roughtly the same proportion of income going to rent as
they’re used to (more justified in some situations than others)
i. best arg. are moral arguments here
Cases
1. Reste Realty Corp. - D/tenant leaves premises after repeated water leak, through
adjacent driveway. Pl/owner wants her to pay for period of rent for full term of lease. D
argues had signed 2nd lease where was aware of damages to premises. Court holds
“constructive eviction” due to leak on premises, and vacation w/in “reasonable time”
after right came into existence. Holds Pl. signed 2nd lease on reliance on Agent’s
promise, which was not completed, and that 9 months after Manager dies (who helped
her) is w/in reasonable time.
2. Hilder - Pl. Hilder moves into apt. for 14 months w/3 kids + 1 grandkid. Oral agmt.
Many probs - toilet clogged for whole tenancy, broken window, water leaking, odor raw
sewage permeated, no front door key, bathroom light inoperable. Landlord does nothing.
Court holds in favor of adopting the implied warranty of habitability. Also holds
contructive eviction not viable (b/c abandonment unnecessary to get damages).
3. Chicago Board of Realtors - Pl. Landlords argue against constitutionality of
Residential Landlord and Tenant Ordinance - codifies implied warranty of habitability.
Not a rent control measure. Posner/Easterbrook concurrence - Court holds Ordinance is
constitutional. Posner’s critique on economic grounds.
VIII. Land Transactions
A. Process overview
1. Locating a buyer
a. brokers
b. listing
2. Offer
a. negotiating the K
i. “earnest money
ii. B’s (buyer’s) conditions
ii. counteroffer
3. Agmt. (likelihood of equitable title)
a. executory period
i. inspections/disclosures
ii. buyer secures financing, seller is satisfied by financier
iii. title evaluation by buyer
a. certificate of title - free of all encumbrances
4. Closing
a. B gives lendr note and Mortgage
b. Lender gives B $$
c. B gives S (seller) $$
d. S delivers deed to B
5. Post-closing
a. record deed
b. title insurance
B. Duties of a Broker
1. Cannot engage in the practice of law (illegal in every state)
a. many states do not enforce (often tension here)
2. Listing agreements - 6% commission of sale price
3. Agent - owes duty to the principal (seller or buyer)
a. fiduciary duties - duties of care, skill, diligence, loyalty - put their principal’s
interest first
b. who is the principal?
i. some states - agent can handle entire transaction - b/c may include
buying, lending and selling party, etc.
ii. problems from representing buyer & seller
a. conflict of interest - incentive to increase sale price to recover
higher 6% commission, may tell buyer that the defects are not that
bad to push through sale // conversely, may be interested in sooner
rather than later sale, which may push price down
i. agent gets paid when it closes
ii. Probs alleviated by “buyer’s agent”?
a. sometimes not - agent gets paid when it closes
iii. by lawyer?
a. may be more diligent in the terms, also paid by the hour
c. Agent duty hypos
i. is buyer’s agent be in violation of duties if she accepted a “bonus”
commission from the selling agent? [Yes - sounds like a kick-back.]
ii. is seller’s agent be in violation of her duties if she told the buyer that
seller would accept a price below the listing price? [depends if in seller’s
best interest]
iii. is buyer’s agent in violation duties if she doesn’t disclose to her
principal that the real estate was contaminated with toxic waste? (most
inspections won’t pick this up) [Yes, in interest of principal to know info]
C. Contract for Sale
1. Statute of Frauds
a. requirements
1) Essential Terms
i. must be in writing (and have essential terms)
ii. signed by the party against whom enforcement is sought
2) Other Essential Terms
i. Who (names of parties)
ii. Intent to buy or sell
iii. Price; or if not specific price - how going to calculate price (“at market
value”, etc.)
iv. What property - enough about Property that’s subject of sale so that
we understand what parties intend to transfer in transaction
b. Exceptions:
i. Part performance: allows specific enforcement of oral agreements when
particular acts have been performed by one of the parties to the agreement (most
Jx n/a to damages)
a) Acts that constitute:
i. act is unequivocal to performance of K (e.g., buyer takes
possession and pays all or part of purchase price or makes
improvements)
ii. Pl shows that he will suffer irreparable harm if K not
enforced
ii. Estoppel: when unconscionable injury would result from denying enforcement
of the oral K after one party has been induced by the other to change his
position in reliance on the K. Hickey.
a. applicable if unjust enrichment would result if a party who has received
the benefits of the other’s performance.
Cases
1. Hickey v. Green, MACA 1982: Court enforced specific performance of sale of house
based on contract theory including promissory estoppel. Oral agreement w/ old lady to
buy her house. They gave her deposit check for $500 and sold their house. She did not
cash check and chose to sell house to someone else. Sued based on promissory estoppel.
On check wrote “deposit on lot” and wrote address. Contract upheld. Writing on check
could meet statute. Based on Promissory estoppel. Court affirmed specific performance
but remanded to 1) require Green to sell the Hickeys her house at $15,000 (if the Hickeys
were still required to sell their old house) or 2) if situation changed, require Green to pay
full restitution of all costs reasonably caused including litigation
2. Marketable Title
a. Implied Condition of K of sale of land - seller must convey to the buyer a “marketable
title.” if seller can’t convey, buyer can rescind contract until closing
i. “marketable title” - a one which is free from reasonable doubt - as would
create a just apprehension of its validity in reasonable person
ii. a title is doubtful and unmarketable if it exposes the party holding it to the
hazard of litigation.
iii. defect must be of a substantial character and one from which he may suffer
injury. not mere immaterial defects.
iv. potential encumbrances on title (exposing to litigation)
1. they don’t actually have title
2. have less than fee simple, sell fee simple
3. liens
4. unpaid contracts
5. mortgages
6. easements
7. covenants
8. NOT mere existence of zoning ord. (all property zoned)
Cases
1. Lohmeyer v. Bower - Doctor enters into contract to buy property. 2 violations original title requires house to be two stories (house is one story), zoning violation of
closeness of house to side/rear lot line. Court holds these violations make property
unmarketable, and rescinds contract based on this (that house could never have been
sold). Owner’s offer to make changes not accepted b/c compels purchaser to take
something he did not contract to buy.
3. Equitable Conversion - if specifically enforceable K for sale of land - equity regards
as done that which ought to be done.
a. in equity, buyer viewed as owner from the date of the K (has “equitable title”);
seller has claim for money secured by vendor’s lien on the land. Seller also holds
legal title as trustee for buyer.
b. risk of loss - equitable conversion - used to justify that from time of K of sale
of real estate, the burden of fortuitous loss is on the buyer (buyer is “owner”),
even though seller retains possession - most courts
i. buyer can’t rescind agmt.
ii. if buyer has risk of loss, and seller has insurance, in most states seller
holds insurance proceeds as trustee for buyer.
c. inheritance - equitable conversion/common law may apply when party to a K
for sale of land dies and issue arises whether decedent’s interest is real property
(land) or personal property (right to the purchase price).
i. seller’s interest = personal property / right to purchase price ($)
a. seller can’t rescind agmt.
ii. buyer = owner of land.
iii. ex. O agrees to sell Blackacre to A for $10k. Before closing, O
dies intestate. under statute, B succeeds to O’s real property, and
C succeeds to O’s personal property. under EC - C gets $10k
when paid. A gets land. B gets nothing.
4. Duty to disclose - most states requires some disclosure by seller - Stambovsky
a. seller has duty to disclose all known defects, nondisclosure = fraud or
affirmative representation.
i. remedy - rescind contract or sue for damages.
ii. most state statutes require seller to deliver to prospective buyers a
written statement disclosing facts about property. may include:
a. known significant structural defects, soil problems, underground
sewage or storage tanks, presence of hazardous materials,
alterations or repairs made w/o necessary permits, violations of
building codes/zoning, encroachments by neighbors
b. CA - must disclose neighborhood noise problems + nuisance
c. stigma statutes - state statutes that preclude disclosure of info.
like murder/AIDS death in property
b. defect must be “material” to be actionable. 2 tests (both take buyer’s
perspective - apply as alternative tests)
i. objective test of whether a reasonable person would attach importance
in deciding to buy [majority rule]
a. and whether reasonable person or reasonably prudent inspector
should have discovered defect
ii. subjective test of whether defect “affects the value or desirability of the
property to the buyer”
c. waiving disclosure rights - can do if w/specificity
i. “as is” clause - upheld if defects are reasonably discoverable and there is
no fraud. not binding if fraudulent representation or concealment of info.
d. old common law - caveat emptor - buyer beware - no duty upon vendor to
disclose any information concerning premises, particularly regarding patent
defects or those where Pl. has equal opportunity to discover. (includes latent
defects)
i. exceptions - except when special duty or fraud. or condition created by
seller (Stambovsky).
ii. still generally applies to commercial sales
Cases
1. Stambovsky v. Ackley - Seller fostered belief in community that house was haunted.
Buyer discovers, and brings action seeking rescission of contract of sale, saying
reputation impairs value and potential for resale. As matter of equity/public policy, court
creates exception to caveat emptor. c.e. presumes that defects are patent, or that Pl. has
equal opportunity for obtaining information. Holds may be impossible to discover
property’s bad reputation in community. Unfair to buyer, particularly when seller
created & fostered house’s reputation as haunted. // where a condition which has been
created by seller materially impairs the value of the contract and is peculiarly within the
knowledge of the seller or unlikely to be discovered by a prudent purchaser exercising
due care with respect to the subject transaction, nondisclosure constitutes a basis for
rescission as a matter of equity. **key in this case is misfeasance by the owner [vs.
nonfeasance in Johnson]
2. Johnson v. Davis - Pl’s buy house. D’s know that roof leaks, but affirmatively
represent that there are no problems with roof. Several days after moving in, there is
heavy rain and water “gushes” from around windown and from ceiling. Court enlarges
exception to caveat emptor, finds for Pl. Where seller of a home knows of facts
materially affecting the value of the property which are not readily observable and are not
known to the buyer, the seller is under a duty to disclose them to buyer. This duty is
equally applicable to all forms of real property, new and used.
5. implied warranty of quality - implied covenant - if not met buyer may rescind up until closing (caveat emptor not used in sale of real estate by vendor-builder)
a. factors
i. limited to latent defects
ii. manifest after subseq. owner’s purchase and were not discoverable
from reasonable inspection prior to purchase
a. can’t sue until after closing/transfer of deed to Pl.
iii. limited to within a “reasonable period of time”
iv. Standard of care is “customary standard of skill and care” (Pl. must
prove)
b. implied warranty can be waived in K if privity + stated specifically
i. but subsequent purchaser cannot waive
a. even if first buyer waives, cannot waive for second buyer??
ULT sect. 2-312
ii. no general disclaimers
c. 6 year SoL
d. warranty not implied where seller not a “merchant of housing” (builder,
subdivider, or commercial vendor)
a. suits against individuals must be based on fraud, misrep., or failure to
disclose
e. warranty of “suitability”
Cases
1. Lempke v. Dagenais - Pl. are subsequent owners - bought a house w/a garage with a
bad roof. Sued builder of garage, who built house for prior owners. No privity of
contract betw. builder and subsequent purchaser. Court holds implied warranty of
quality may be relied upon by subsequent purchasers, and allow recovery for
economic loss. Court says holding limited to latent defects which manifest after subseq.
owner’s purchase and were not discoverable from reasonable inspection prior to
purchase, and limited to within a reasonable period of time. Standard of care is
“customary standard of skill and care.”
6. Merger - when buyer accepts deed, “all contractual obligations met,” and contract
merges into deed (“merger”). Deed is final act of parties expressing terms of their
agreement. what da fuck does this apply to??
a. thus must sue on warranties (if any) of deed, not promises of contract.
b. exceptions - fraud and contractual promises deemed collateral to deed
i. to avoid doctrine, say particular obligation is collateral
c. seller/buyer can bargain about what contract warranties survive closing. But a
provision that no contract warranties survive closing is not valid if seller has
misrepresented a material fact/committed fraud.
IX. Deeds
A. Deed - document that conveys title
a. Short form deed - includes essential elements
i. grantor
ii. grantee
iii. words of grant
iv. description of land involved
a. boundaries hierarchy (historically)
i. natural monuments, beat
ii. artificial monuments, beat
iii. references to adjacent boundaries
iv. directions (northwest)
v. distances (30 feet)
vi. area (5 square miles)
vii. place name (Quinn farm)
v. signature of grantor
vi sometimes - attestation or acknowledgement
b. general warranty deed - warrants title against all defects in title, whether arose before
or after grantor took title (most states)
a. grantor warrants…
i lawfully seized in fee simple
ii. good right to convey fee simple
iii. free from all encumbrances
iv. defend grantee against others claiming premises
v. guarantee quiet enjoyment
vi. promise to sign further assurances on demand
c. special warranty deed - contains warranties only against the grantor’s own acts but
not the acts of others. (e.g., if defect is mortgage on land executed by grantor’s
predecessors in ownership, grantor not liable)
d. quitclaim deed - contains no warranties of any kind. merely conveys whatever title
the grantor has, if any, and if the grantee of a quitclaim deed takes nothing by the deed,
grantee cannot sue grantor.
e. consideration - necessary to give for presumption of BFP
f. forgery - a forged deed is void. (returns to person who’s name was forged - grantor)
i. factors
1) false representation with intent (scienter)
2) recipient reasonably relies on statement.
3) reliance has to lead to detriment or damage to recipient.
ii. BUT - subsequent BFP has superior title to prior interest
a. (law places blame on person who could have prevented the loss)
McCoy v. Love - oil found on property of potential bona fide subsequent
purchaser sold property by illiterate 87 year old widow.
b. UNLESS - there is no intention to enter K. see Pethy hypo ??
B. present covenants - #1-3 - broken at time deed is delivered. [present + future
covenants implied in land ??]
1. covenant of seisen - grantor warrants that he owns estate he purports to convey (runs
w/statute of limitations).
a. causes of action “run with land” for statutory period (beginning from original
grant). subsequent grantees may sue for breach of present covenants. Rockafellor
[class rule]
b. grantee doesn’t have to take possession to convey to subsequent grantee
c. Damages - measured by consideration money + interest Or, what covenantee
could have recovered from original grantee who breached in their conveyance.
this is maximum that can be recovered.
2. covenant of right to convey - grantor warrants that he has the right to convey the
property
3. covenant against encumbrances - grantor warrants that there are no encumbrances
on the property (mortgages, liens, etc.)
a. defects carry real and substantial probability of litigation or loss at the time of
conveyance
b. does not include latent conditions on property unknown to seller
i. or not ripened into interest that can be recorded on the land records
Frimberger - damages are speculative b/c EPA had not sued Frimberger
c. to be free of all encumbrances, must be a marketable title saleable to RPP
d. innocent misrepresentation [watch for no representation]
1) a representation of material fact
2) made for the purpose of inducing the purchase
3) the represenation is untrue, and
4) there is justifiable reliance by the Pl. on the representation by the
defendant and
5) damages
C. future covenants - #1-3 - can’t be broken until grantee or successor is evicted from
property or is otherwise damaged
1. covenant of general warranty - grantor warrants that he will defend against lawful
claims and will compensate grantee for any loss
: grantor not liable for legal fees incurred by grantor in successfully defending
title, b/c 3rd party’s losing claim is not liable. only if grantee loses to superior
land claim. McDonald v. Delhi Sav. Bank (1989)
2. covenant of quiet enjoyment - grantor warrants that grantee will not be disturbed in
possession and enjoyment of the property by assertion of superior title (“same as general
warranty” - often excluded)
a. mere existence of paramount title does not constitute breach of the covenant.
Must be interference w/“possession and enjoyment of the premises” - disturbance
or interference w/these - to constitute breach. Brown.
3. covenant of further assurances - grantor promises that he will execute any other
documents required to perfect the title conveyed.
D. estoppel by deed - if a grantor subsequent acquires a deed prior to selling that same
property (i.e., that grantor did not really own) results in “estoppel by deed,” where the
title automatically passes to the grantee. to avoid unnecessary litigation
Cases
1. Brown v. Lober - O conveyed 80 acres to 1st buyer, reserving 2/3 of mineral rights.
Buyer conveyed 80 acre tract of land w/coal underneath conveyed to Browns. Discover
only own 1/3 of mineral rights when trying to sell rights to Coal Co. B/c SoL has run out
on covenant of seisen, must sue executor of decedent conveyor (1st buyer) on theory of
covenant of quiet enjoyment / contructive eviction (interfered w/upon having to modify
contract). Court holds no contructive eviction, or breach of quiet enjoyment, b/c they are
not in possession of subsurface minerals. Possession of the surface does not carry
possession of the minerals. Until person holding superior title (2/3 possessor) interferes
with Pl.’s right to possession (e.g., by beginning to mine coal), there can be no
constructive eviction and no breach of covenant of quiet enjoyment. Mere modification
of contract does not equal breach.
2. Frimberger v. Anzellotti - Pl. buys property from D, adjacent to wetlands. D conveys
property by warranty deed, “free and clear of all encumbrances.” After purchase, State
Department of Environmental Protection notes wetlands violation and that Pl. would have
to submit application to DEP demonstrating necessity of maintaining encroaching area. D
conveys by quitclaim to B, who conveys by (general) warranty to Pl. Court holds that
latent violation of a land use does not interfere w/covenant against encumbrances.
Latent conditions on property that are in violation of statutes or government regulations
cannot be discovered by a title search or physical examination. In addition, disputes are
better resolved through contractual remedies. EP hasn’t done anything yet, so possibly
there’s no encumbrance. Even if a violation, not clear that State will inflict economic
cost on purchaser, so Court is hesitant to rule as regard to encumbrance.
3. Rockafellor v. Gray - Original grantee Gray is foreclosed on, then brings suit to
vacate foreclosure. Before his C/A, sheriff takes prop./deed and conveys to Connelly,
who conveys to Dixon for $4k, who conveys to H&G for $7k. H&G, remote grantees,
cross-p Connelly during vacate suit for breach of covenant of seizin for $4k. Court
affirms TC, that b/c sheriff’s deed is vacated, Connelly breached covenant of seisen in
conveyance to Dixon, and that H&G had right to sue for breach for $4k.
E. Delivery - deed must be delivered with the intent that it be presently operative.
1. 2 normal circ:
i. grantor hands deed to grantee upon receipt of purchase price
ii. grantor gives deed to third party - indicates grantor intends to transfer
property when all conditions are fulfilled
a. grantor cannot recall deed from agent
b. if necessary to carry out parties’ intent and do equity, the title of
grantee will “relate back” to date the grantor handed the deed to agent
i. fiction avoids prob that a will is required to pass title at death title regarded as transferred during grantor’s life
ii. Note - ORAL agmt okay when grantor hands deed to 3rd party
and gives instructions to deliver at death (no SoF probs)
2. Over-ride - transfer of a deed from grantor to grantee overrides grantor’s explicit
declaration of intention that deed shall not become operative immediately
a. delivery - was manually delivered - execution of attestation clause is prima
facia proof
b. acceptance - presumed since deed is beneficial to conveyee
c. physical possession of a duly executed deed is not conclusive proof it was
legally delivered
3. Exception - formal execution and delivery can only be overcome by evidence that no
delivery was intended. Sweeney
a. requirements for a will to make a testamentary transfer are much more
stringent than an inter vivos conveyance (courts frown on b/c deeds/conditions
don’t replace a will)
4. Delivery w/o Handing Over - okay if no possession, just intent to be immediately
bound by transfer (present intent to convey title).
a. Death - inter vivos transfer of land w/o handing over
a. must be present intent to transfer, if not, at death b/c of Statute of
Wills, delivery cannot take legal effect b/c grantor “intended it to be a
will,” not a deed
5. Valid inter vivos conveyance by deed
a. requires:
1) actual or contructive delivery of deed to grantee or 3rd party
2) intention by grantor to divest himself of conveyed interest
b. if grantor reserves power to revoke - NO DELIVERY. Rosengrant.
6. Conditional Delivery - only effective if present delivery of interest, but subject to
condition precedent. (ex. springing executory interest, etc.)
Cases
1. Sweeney, Adminstratrix v. Sweeney - Maurice deeds to John (recorded). John deeds
back to Maurice (unrecorded + burned), so that Maurice protected if John pre-deceases
him. Maurice dies. Maurice’s wife sues for property. Condition attached to John’s
conveyance to Maurice is invalid (that he predecease Maurice). John’s delivery to
Maurice is valid.
2. Rosengrant v. Rosengrant - Retired couple live on farm in Oklahoma. Make present
transfer to their nephew of their farm through 3rd party banker. Envelope in which deed
is kept at bank says “uncle or nephew.” Court holds transfer was “pro forma,” b/c of
writing on the envelope, also b/c of evidence that uncle continued to use property as if it
were his own after death. No present intent to transfer. Thereby using deed as will,
which violates Statute of Wills. Invalid transfer.
X. Title Assurance
A. Recording System - allows for the recording of all instruments which affect an
interest in property, e.g., deeds, mortgages, lients, easements, etc. - not just deeds
1. Kinds of indexes
a. grantor-grantee indexes
b. “tract” indexes.
c. [recording offices exist at county level (very local places)]
i. original document presented for recordation is copied by recorder and
returned to grantee
2. Indexes generally contain:
a. name of grantor/grantee
b. document number
c. recording date
d. location of the documents usu. Book and page number
e. type of document
f. brief description of the property.
3. Research Process
1) search backwards in the grantee index - your client’s grantor was once a
grantee. Find the prior grantee, and the grantee before that, and the one before
that, etc.
i. how far back do you need to go? local rules, AP/SoL, personal level of
comfort
a. commercial property far more extensive searches b/c of gov.
reg. (ex. CERCLA - purchaser liable for cleaning up toxic land)
b. agencies of federal gov. - require a search back to original
source
2) once back far enough, search forward in grantor index, looking for all deeds
(or other interests) “out” (given) by the grantor until reaching next grantor in
chain. Then drop prior name and move forward with the new name.
3) note - go back to date of execution in deed, not just when recorded
- 1900-1915 O to A, recorded in 1915
- 1915-1934 A to B, recorded in 1939
- 1934-1952 B to C, recorded in 1952
4. Requirements - in order to give constructive notice to subsequent purchaser,
instrument must describe land w/ “sufficient specificity” so that specific land can
identified.
a. Mother Hubbard (general) clauses are not effective as to subsequent
purchasers unless they have actual notice of transfer Luthi
b. where instrument w/sufficient description is duly recorded but not indexed,
this does not prevent constructive notice.
i. if tract index available, courts split whether title searcher must use tract
index as well as grantor-grantee index or rely on tract index alone
c. Doctrine of idem sonans - though a person’s name is inaccurately written,
their identity is presumed from similarity of sounds betw. correct pronunciation
and pronunciation as written. If pronunciations are practically alike, then idem
sonans applies. Orr: Green - Reid, Reed, Read all give notice.
i. to be material, variance must be such as has misled opposite party to
prejudice
ii. note: first and last names are usually most important to courts (not
middle names)
Cases
1. Luthi v. Evans - Owner assigned her interest in oil and gas 2x, first in a “Mother
Hubbard” clause, and the second time in the same county (Kufahl lease) to another buyer.
Both assignments recorded promptly. Court held legislature intended that recorded
instruments should describe land with “sufficient specificity” so that specific land could
be identified. Recording of Mother Hubbard assignment did not describe w/sufficient
specificity to give constructive notice to subsequent purchaser. B/c 2nd buyer had no
actual knowledge of prior assign, his later assign prevailed over 1st assign. **have a
recorded document, but it’s sufficiently defective so that did not provide
constructive notice
2. Orr v. Byers - Pl obtains judgment against William Elliot in prior suit for $50k.
Written judgment for “William Duane Elliot,” jment recorded under this and “William
Duane Eliot,” instead of correct name “William Eilliott.” When Elliot sold property later
to D, title search failed to identify judgment against Elliott (and jment not satisfied by
proceeds from sale). Pl then sued D to recover foreclosure of jment lien. Court holds an
abstract of judgement containing a misspelled name does not impart constructive
notice of its contents under the doctrine of idem sonans.// written name is material.
B. Recording Acts - modified common law to favor subsequent bona fide purchasers
(recording acts do not affect validity of deed or other instrument) [exam - have to be able
to identify different types of acts]
1. BFP
1. subsequent purchaser
2. for value (paid value)
3. good faith - “without notice” (no notice of interest you’re adverse to)
2. historical - common law - priority of title determined by priority in time of conveyance
3. Race statute - as between successive purchasers for value, the person who wins
the race to record “wins.” (as between successive purchasers for value, the person who
wins the race to record “wins.”)
a. hypo - O conveys Greenacre to A on Weds. A does not record. On Friday O
conveys Greenacre to B. B records the following Monday, and one day later, A
records.
i. B. recorded first
ii. What if B knows about the O to A conveyance?
a. doesn’t matter
b. alternate def - as between successive purchasers, the person who wins the race
to record prevails. irrelevant whether subsequent purchaser has actual knowledge
of prior purchaser’s claim.
4. Notice statute - as between successive purchasers, a subsequent purchaser for
value and without notice “wins.” (as between successive purchasers, a subsequent
purchaser for value and without notice “wins.”)
a. hypo - O conveys Greenacre to A on Weds. A does not record. On Friday O
conveys Greenacre to B; B actually knows of the deed to A. B records the
following Monday, and one day later, A records.
i. A prevails. B had actual notice.
ii. Assume that A does record (prior to B recording), and B does not know
of the O to A deed.
a. A prevails. B had constructive notice (can’t be BFP).
b. hypo - Oscar conveys Greenacre to Ansel on Weds. Ansel does not record. On
Friday Oscar conveys Greenacre by gift to Emerson who has no knowledge of the
prior deed; Emerson records the following Monday, and one day later, Ansel
records. Who has superior title?
i. Ansel prevails. b/c donative transfer. Not for value, so Emerson not
BFP.
ii. Assume that the Oscar to Emerson deed is conveyed pursuant to a sale.
One month later Emerson conveys to Henry?
a. Emerson prevails as to Ansel. BFP w/o notice.
c. alt. def - prior purchaser wins if subsequent purchaser has notice (whether
recorded/unrecorded). if prior unrecorded, subsequent purchasers w/o notice
wins, even if subsequent purchaser doesn’t record.
i. OR - Unrecorded prior purchaser loses against subs. purchaser w/o
notice (good faith), even if subs. purchaser doesn’t record.
5. Race-notice statute - a subsequent purchaser prevails over a prior purchaser if
there is no notice and recorded before prior purchaser. (in a race-notice jurisdiction,
the subsequent purchaser must be 1) a BFP and 2) record first)
a. hypo - O conveys Whiteacre to A, who does not record. O subsequently
conveys to B, who purchases in good faith and for valuable consideration, but
does not record. A then records and conveys to C. C purchases in good faith and
for valuable consideration. B records. C records.
i. Who prevails in a notice jurisdiction?
a. B prevails over A. BFP and w/o notice.
ii. ultimately - C prevails over B. BFP for value + w/o notice + recorded
before B.
iii. Who prevails in a race-notice jurisdiction?
a. A prevails over B. but ultimately - C prevails over B.
i. A was only one that could convey title, so C prevails over
B, b/c B had no title to record
ii. shelter rule benefits C
iii. (B could sue O here)
b. hypo - O owns Blackacre. O gives a mortgage to A, which A does not record.
O gives a mortgage to B, who has actual notice of A’s mortgage, which B records.
O then gives C a mortgage, and C has no notice of A’s mortgage. C records
i. In a notice jurisdiction.
a. A prevails over B. B had actual notice + actual value. B
prevails over C. C had contructive notice.
b. ultimately - C prevails over A. C has no notice, plus value
given (mortgage is value given).
ii. In a race-notice jurisdiction.
a. A prevails over B. B had actual notice (not BFP). B prevails
over C. B won race to record first.
b. ultimately - C prevails over A. rec
i. shelter rule doesn’t apply here b/c O is conveying to all
three people (they all have same rights as O, not chain)
c. al. def - subsequent purchaser protected only if i) w/o notice of prior instrument
(unrecorded) and ii) records before prior instrument is recorded
i. OR - prior purchaser loses against subs. purchaser who in good faith
(w/o notice) records title, unless Prior records first.
6. More Hypos
a. O conveys Greenacre to A on Wednesday, which conveyance A does not
record. O conveys Greenacre on Friday to B. B knows of the deed from O to A.
B records the following monday, and one day later, A records
i. B wins.
b. O conveys Greenacre to A on Wednesday, which conveyance A does not
record. O conveys Greenacre on Friday to B. B has no actual knowledge of the
deed from O to A. and B does not record. A then records.
i. B wins.
c. O conveys Greenacre to A on Wednesday, which conveyance A records. O
conveys Greenacre on Friday to B. B has no actual knowledge of the deed from
O to A.
i. A wins.
d. O conveys Greenacre to A on Weds., which conveyance A does not record. O
conveys Greenacre on Friday to B. B has no actual knowledge of the deed from
O to A, and B does not record. A then records. B then records, and C purchases
from B.
i. C wins. Shelter doctrine. B was BFP.
Cases
1. Messersmith v. Smith - prior to 5/46 - record title owners of property - Aunt and
Nephew. 5/46 - Aunt conveys quitclaim to Nephew. 7/51 - Nephew’s quitclaim recorded
properly. 5/51 - Aunt conveys lease to Smith. 5/51 - Smith conveys lease to Seale.
5/51 - Seale’s lease w/improper acknowledgement recorded properly Race-notice
statute governs. B/c nephew’s quitclaim recorded properly first - he has superior title
to Seale/innocent subsequent purchaser, whose record was defective (latent defect).
C. Persons Protected by Recording Acts - BFPs + shelter rule
1. BFP - “bona fide purchaser” - takes title to real property without notice of
interests of others
a. consideration required (for “value”)
i. most courts - req. more than nominal value - “substantial
amount” or “not grossly inadequate”
ii. if any consideration exchanged, even inadequate, burden of
disproving on party attacking exchange
b. buyer w/notice pays consideration at their peril
i. Lewis - allowed keep title and pay remaining money to
outstanding interest
ii. Anderson - returned money prior to notice, lost money paid
subsequent to notice
2. partial consideration
a. 3 potential remedies for partial consideration (authorities split whether
partial even constitutes BFP)
i. award land to holder of outstanding interest and award
buyer payments made (most common)
ii. award buyer a fractional interest in land proportional to
amount paid prior to notice (could be co-ownership - joint
tenancy, etc.)
iii. allow buyer to complete purchase, but to pay remaining
installments to holder of outstanding interest. Lewis
iv. harshest rule - Anderson
3. “shelter rule” - a person who takes from a bona fide purchaser protected by the
recording act has the same rights as his grantor.
4. recording statutes do not protect donees (gifts) and devisees (inheritance)
a. Q may be whether donee or purchaser or devisee (and whether entitled
to protection)
5. lawyer or other agent in charge of closing a transaction is liable in negligence
to grantee for failure to record a deed promptly if grantee suffers
a. also liability to 3rd parties if reasonably foreseeable that they would
detrimentally rely on lawyer’s title work (such as buyer in case of seller’s
lawyer who improperly records deed)
Cases
1. Daniels v. Anderson - Pl contracts to buy 2 lots from Jacula. Contract of sale also
gave Pl a right of first refusal on a “Contiguous Parcel” for same price as any prospective
buyer offered. Pl receives deed that doesn’t mention right of first refusal, deed recorded.
D contracts to buy Parcel, Jacula doesn’t tell Pl. D spends $40,000 of $60,000 when told
that there is right of refusal. Pays rest, records deed. Pl sues. actual notice given Court
holds that D received notice prior to completion of payment, and not bona fide
purchaser.
2. Lewis v. Superior Court - Ds Lewis contract to buy property from Shipley for $2.3M.
A few days before they acquire title, Pl Fontana Films records lis pendens against
shipley. Lis pendens recorded on 2/24, indexed on 2/29. Ds pay $350k on 2/25, acquire
title and record on 2/28. Ds pay rest in March. Court holds old case Davis no longer
applies for reasons of modern property law (real prop. unique + injury even if not fully
bought), distinguish constructive/actual notice, did not determine proper remedy, unfair
to penalize Ds for paying cash instead of financing (which would have paid full price on
purchase).
3. Alexander v. Andrews - Husband + wife own home tenants in common (home worth
$7.7k). Wife dies, devising half interest to son Charles. Husband devises half interest to
daughter Sarah. Husband then conveys half interest to Charles for $1,000 plus care for
life/burial. Charles records deed. Then Sarah records deed. Two years later Husband
dies. Daughter tries to claim half interest. Court holds Charles protected as subsequent
purchaser only to extent of $1k paid before Sarah recorded her deed. Remainder of
consideration - lifetime care and burial costs, paid after Sarah recorded her deed, which
gave Charles constructive notice of prior claim.
D. Chain of Title Probs
1. “chain of title” - refers to recorded sequence of transactions from sovereign to present
claimant.
a. technical meaning - period of time for which records must be searched and the
documents that must be examined within that time period.
i. varies from jurisdiction to jurisdiction - generally is the series of
recorded documents that give constructive notice to subsequent purchaser
b. standard title search required against each owner - from date of execution of
deed granting title to owner to date of recordation of first deed by such owner
conveying title to someone else
2. Wild Deed - a title that is outside the chain of title, usually b/c a previous instrument
connected to chain of title not recorded. Hughes
3. Deeds recorded too late
a. hypo - O to A deed. Not recorded. O to B deed, B records. Not BFP.
A records, O to A. B to C deed, C records.
i. Deed are outside the chain of title, doesn’t provide constructive
notice
4. Deeds recorded too early
a. hypo - O agrees to sell to A. A conveys to B deed, B records. O conveys to A
deed, A records. A conveys to C deed, C records. What will C discover when
searching the grantor/grantee index?
i. C will discover O to A, but not A to B.
ii. Who among innocent B or C should get the deed?
a. most courts say B’s deed is outside the chain of title and
doesn’t provide constructive notice
5. Defects - deeds not filled in properly
a. deed that does not name a grantee is a nullity, and wholly inoperative as a conveyance
until name of grantee is legally inserted
b. if deed is nullity b/c name of grantee omitted - becomes operative w/o new execution
or acknowledgment if grantee, with either express or implied authority from grantor,
inserts his name in blank space left for name of grantee
a. grantee may insert name in blank space, provided he has authority from grantor
to do so, and that this authority may be in parol (oral/unwritten, and implied from
circumstances
b. when grantor receives and retains consideration, and delivers deed in condition
described to purchaser, authority to insert name is presumed
6. Deeds from common grantor - where common grantor has not bound his remaining
land by writing, statute of frauds prevents enforcement of restrictions against the grantor
or subsequent purchaser of a lot not expressly restricted.
a. where grantor binds his remaining land by writing, reciprocity of restriction
between grantor and grantee can be enforced
i. here, subsequent purchaser from common grantor acquires title subject
to restrictions in deed to the earlier purchaser
b. each of several grantees, if within the scope of the common
scheme, is an intended beneficiary of the restrictions and may
enforce them against the others
7. List of probs
a. conflict in present possessory estates
b. conflict between owner of possessory estate and owner of nonpossessory
interest, e.g., a lien, easement, covenant
c. conflict between the holders of two nonpossessory interest, e.g., two
mortgagees
Cases
1. Brd of Ed. of MN v. Hughes - Lot in Minneapolis for sale. 5/06 - Hoerger sells to D
12/16/10 - Hughes fills in name as grantee (becomes BFP) shortly before records.
No notice, b/c D&W did not record 4/09 - Hoerger sells to D&W 11/09 - D&W sells to
Pl. 1/10 - Board of Ed records 12/21/10 - D&W records. Court holds deed to D
became operative as conveyance when he filled in his name as grantee. This made him a
“subsequent purchaser,” who had no constructive notice b/c the Pl’s record was only of
conveyance from D&W to Pl, but did not show from Hoerger to D&W, therefore they
had to title to convey (and notice could not be given). wild deed.
2. Guillette v. Daly Dry Wall - Recorded deed of a lot in a subdivision refers to plan
w/restrictions “imposed solely for benefit of other lots shown on plan” and that “same
restrictions are hereby imposed on each of said lots now owned by seller.” Later deed
of another lot from same grantor refers to same plan but not restrictions. Plan does not
mention restrictions, and later grantee took w/o knowledge of them. Ds wanted to build
multifamily apartment building on its lot. Neighbor Pls sue for injunction only to build
single family homes. Court holds later grantee bound by restrictions even though not
contained in deed in its chain of title. Deed conveyed to Pls conveyed not only described
lot but also an interest in the remaining land owned by grantor. There was constructive
notice, and subsequent grantee has to look at all the deeds out to grantor. // Fair to
force conveyee to research and figure out all? Developer is the cheapest “cost avoider”
here.
E. Inquiry Notice
1. Types of notice w/respect to a prior claim - actual, record, and inquiry notice.
a. record + inquiry give constructive notice.
2. Inquiry notice - incumbent on purchaser to ascertain through diligent inquiry
contents of earlier deed + interests conveyed therein. Purchaser charged with notice of
whatever inquiry would reveal, even though no inquiry was made. Harper
a. don’t necessarily have to find, just have to conduct reasonable inquiry.
b. deed in chain of title, discovered by the investigator, is constructive notice of
all other deeds which were referred to in the deed discovered, including an
unrecorded plat included in the deed discovered
c. note - happen w/quitclaim deeds or any time suspicion as to other conveyances
d. Actual possession is constructive notice. Such possession, when open, visible,
and exclusive, will put upon inquiry those acquiring any title to or a lien upon the
land so occupied to ascertain the nature of the rights the occupants really have in
the premises.
3. Marketable Title acts - limit title searches to reasonable period (30-40 years) - when
one person has record title to land for this period of time, inconsistent claims or interests
are extinguished. (except for interests excepted from statute)
4. Contracts to convey legal title - on payment of the purchase price, create equitable
interest in purchaser. Waldorf
a. Beneficial ownership passes to purchaser while seller retaines mere naked title
i. Subsequent successors to legal title take such title burdened w/equitable
interests of which they have either actual or constructive notice
Cases
1. Harper v. Paradise - Susan conveys deed in life estate to Maude w/remainder to son,
Clyde. Deed is not recorded and is lost. Susan dies and her Children/heirs convey
quitclaim to Maude to replace lost deed (quitclaim instrument appears to convey fee
simple). Maude mortgages property to Thornton, who forecloses and sells to Paradise.
Clyde finds lost deed and records. Maude quitclaim, records security deed in 1928
Paradise records in 1955. Clyde records in 1957. Recitals of quitclaim put subsequent
purchasers on notice of earlier misplaced or lost deed. 1928 deed put subsequent
purchaser on notice. Not conveying, just a disclaimer of interests of heirs.
2. Waldorf Insurance v. Eglin Nat. Bank - Choctaw takes out mortgage on condo
properties for $850k, recorded. Mortgage assigned to Bank. Choctaw conveys to
Waldorf for $23k. Waldorf pays $1k and begins occupancy. 1973, Choctaw takes
another mortgage for $600k. 1974, another note/mortgage for $95k. 1974 - Choctaw
owes separate debt to Waldorf, which is “written off” in exchange for remaining price of
condo. Waldorf records deed - 1975. Foreclosure C/A - 1976. Court holds for Waldorf,
saying required to make reasonable inquiries as to possession. [see below analysis]
Waldorf’s interests also superior to Bank b/c retained equitable interest as purchaser,
and bank had constructive notice.
XI. Land Use
A. Nuisance Law (judicial control of land use) - unprivileged interference with a
person’s use and enjoyment of land. (non-trespassory interference)
1. History - English common law - could bring anything that interfered w/use&enjoyment
a. Remedy - injunction
b. sic utere tuo ut alienum non laedas - one should use one’s own property in such
a way as not to injure the property of another
2. Two types of nuisance (main diff. - scope of harm - general vs. specific)
a. Public nuisance (general harm)
i. affecting many people (entire community/neighborhood)
ii. moral harm (sometimes)
a. unlicensed casino
b. brothel
iii. Pl suffers the general harm/violation of rights enjoyed by citizens as
part of public
iv. type of harm
a. significant interference w/public health, safety, peace, etc.
b. permanent or short-term effects
v. intentional vs. unintentional - see private nuisance (same factors)
b. Private nuisance (specific harm) (most common)
i. Pl suffers specific harm - enjoyment of private rights not common to
public
ii. affects individual or few people
c. cf. Trespass (relevant to consideration of remedies) - nuisance considers
reasonableness of activity and level of harm caused
i. trespass - physical invasion of land by tangible thing
ii. nuisance - interference w/possessory interest
d. Not Nuisance
i. negative publicity from nearby toxic waste dump.
ii. light and air - bright lights from nearby drive-in.
iii. unsightlinesss - ugly, unkempt house not a nuisance
iv. Cf. spite fences - nuisance for fence built for no purpose other than
vexing neighbor
e. Special Cases - generally nuisance protects ordinary uses, not abnormally
sensitive ones
i. Halfway houses - may be a nuisance, may not
ii. McMansion (going to edge of prop., 3 stories high) - prob. not nuisance
iii. Spite fences - nuisances (no utility)
3. Intentional, private nuisance
a. Elements (4)
i. substantial interference (actual injury)
a. something ordinary member of community finds annoying
- generally socially acceptable (e.g., if you can’t use your TV b/c
neighbor’s satellite interferes w/signal)
b. doesn’t protect extra-sensitive Pl
ii. w/use & enjoyment (possessory interest)
iii. intentional
a. purpose/knowledge, or knows with substantial certainty it will
result from conduct. Morgan
b. regardless of skill or care to prevent nuisance. Spur.
iv. unreasonable - 3 tests
a. balancing the utilities (minority view/Restatement)
i. utility of D’s conduct
a. benefit to community of D’s conduct
b. value of D’s activity to D
ii. gravity of harm to Pl
b. level of interference - whether interference crosses liability
threshold (“pure reasonableness” test) - imposed threshold
i. doesn’t consider value of D’s conduct
c. pure reasonableness as level, w/ “factors” of balancing
test/Restatement
i. majority rule
ii. gravity of harm and reasonableness of activity
4. Unintentional, Private Nuisance. Morgan
a. Elements
i. D done affirmative act that interferes w/use & enjoyment
i. unintentional - negligence, reckless, abnormally dangerous
activity
ii. factors of level of harm (unreasonableness/negligence)
a. extent and character of harm
b. suitability of activity to location
c. social value of activity
ii. liability for nuisance w/o regard to care taken to avoid injury
5. Remedies for Nuisance - can sue for injunction or for damages (note Coase Theorem
applies here)
a. 4 types - should be able to argue betw. all four
i. abate nuisance by injunctive relief (Morgan, Estancias)
a. can also grant injunction, but postpone effect to future date
ii. let activity continue if D pays damages (Boomer)
a. see below permanent damages
iii. let activity continue by denying all relief
iv. abate activity if Pl pays damages (Spur)
b. elements
i. “balancing of equities” (vs. balancing of utilities under nuisance
analysis)
a. injury to D from injunction
b. injury to public from injunction (public policy)
c. injury to complainant if injunction denied
ii. whether “necessity” of public/3rd parties compels injured party to seek
relief by damages rather than injunction
c. Permanent Damages - servitude on land Boomer - injunction which Ds could
dissolve by paying one recovery
i. Pls get one recovery for all damages (past, present, future)
a. prior New York rule - nuisance = injunction (w/o regard to other
considerations)
ii. Perm Damages Elements (injunction vs. damages)
i. must balance equities (injunction is equitable relief)
a. Economic disparities of injunction
i. important in Boomer - $45M plant vs. $185k
house
ii. not important in Whalen
b. Criticism of balancing equities in Boomer
i. not a class action - compares general loss to
public/3rd parties of D’s action vs. specific harm to
individual Plaintiffs (w/o 3rd parties)
iii. Policy issues - Boomer
i. plant has no control over rate of new discoveries
ii. effective control of pollution is a greater problem than courts
can solve, can’t fix air pollution thru by-product of private C/A
iii. “public interest” best served by permanent damages (jobs, etc.)
iv. cf. no incentive to abate pollution in future
6. “Coming to the Nuisance”
a. total bar - residential landowner may not have relief if damaged after
knowingly came into area reserved for industrial/agricultural
i. “first in time”
ii. no longer rigidly applied - everything’s much more interconnected now
b. indemnification of nuisance owner - elements for requiring indemnity at
ejection
i. public nuisance exists
ii. residential owner/developer could foresee that was bringing population
into agricultural area would bring them to nuisance. Spur
7. Right to Support - right to support of one’s land from adjoining lands is an incident of
ownership. (strict liability)
a. Lateral support - support provided to one piece of land by the parcels of
land surrounding it (doesn’t extend to structures on land)
i. support that subject parcel would receive under natural conditions
ii. no right to support structures on land
b. Subjacent support - support from underneath land as opposed to on sides
(when mineral rights severed, etc.)
i. must support above buildings
Cases
1. Morgan v. High Penn Oil Co. - Oil refinery near home, restaurant, trailer-park of Pls.
2-3 days per week, refinery emits noxious gases and odors making Pls sick. Pls inform
Ds, do not desist. They bring suit for nuisance. Court holds there’s nuisance. Awards
damages based on substantial impairment of Pls’ use and enjoyment of land. Grants
injunction b/c holds sufficient evidence to warrant inference that Refinery will continue
to operate similarly - likely to cause irreparable future injury.
2. Estancias v. Schultz - Noise from D’s air-conditioning building next to Pls property.
Sounds like “jet engine or helicopter.” Held permanent nuisance and enjoined in TC.
Court holds equities properly balanced, nuisance under doctrine of “comparative
injury” or “balancing of equities.” (no benefit to public generally by air conditioning e.g., if there were shortage of housing in Houston)
3. Boomer v. Atlantic Cement Co. - Pls lives near cement plant. Dirt, smoke and
vibration emanating from the plant (serious probls). No way to improve nuisance. TC
rules nuisance + NO injunction (not in best interest of public - $45M & 300 employees.
Pls appeal for injunction. Court gives injunction dissolvable by permanent damages “servitude on land” - contingent on No further C/A, but public health or other public
agencies are not foreclosed from seeking relief.
4. Spur Industries v. Del. Webb Develop. - Pl. developed residential property. D
operated cattle feedlot nearby - initially no problem. Pl then expanded residential
development south until came closer/became affected by D’s activities. Pl alleges D is a
public nuisance. Court holds 1) feedlot is both private and public nuisance. 2)
residential developer must indemnify nuisance owner.
B. Easements - Private Party agmts
1. Types of Servitudes
a. Easements - a grant of use rights (non-possessory interest in land) - gives
someone right to use land in possession of someone else
a. affirmative easements - allow certain uses
b. negative easements - restrict uses
b. Covenants - a promise respecting use of land
a. real covenants
b. equitable servitudes
c. Vocab
i. Dominant estate - party that uses easement (non-possessory interest)
ii. Servient estate - burdened property - grantor of easement - party that
“owns” easement (dominant owner)
2. Express Easements - grant of non-possessory use of someone’s property
a. Creation - requires written instrument + signed by party to be bound by it (express
grant of easements within Statute of Frauds)
i. Exceptions to requirements
a. fraud
b. part performance
c. estoppel
d. implication
e. presciption
ii. note - may also be created by implication or prescription
iii. can be reserved between grantor and grantee
iv. can also be reserved in 3rd parties
b. Types of Easements (easements are use rights, they are non-possessory)
i. easement appurtenant - easement benefitting another tract of land - use
of easement is incidental to ownership of that other tract. Willard. (stays w/land doesn’t travel - “benefits the dominant estate”)
a. courts favor easement appurtenant if confusion as to which
i. policy - administrability, maximize use of land
b. note - must have a dominant and servient tract of land
ii. easement in gross - easement benefitting particular person and not a particular
piece of land. doesn’t have to own land adjoining estate. (travels w/person)
a. don’t have to have a dominant parcel of land
i. e.g., Cable Company can have easement in gross (no dominant
parcel, but easement onto property)
c. duration - same as any possessory estate (fee simple, life estate, etc.)
1. may last as long as necessity lasts
2. extinguished when owner has both dominant/servient parcels
d. No Right of Revocation - easements may not be revoked by granting party
e. versus Licenses - (from “licensee”) oral or written permission to do some act that
otherwise would be trespass (e.g., theater ticket, invitation to come to dinner)
i. don’t fall under Statutes of Frauds
ii. licenses are revocable (easements are not)
a. exceptions
i. license w/an interest (license that is incidental to interest - also
called a “profit”) - irrevocable
a. e.g., license to enter land if have interest in removing
timber
ii. license irrevocable under estoppel - irrevocable
iii. Estoppel exception - “easement by estoppel” (actually an irrevocable
license) no right to revoke license if:
a. elements
i. party acquires license
a. may be oral or written or implied by use
ii. with knowledge of licensor, erects improvements/makes
substantial expenditures, in reliance on license
iii. licensor/licensee expectations - “reasonable person” in
position of each who gave/received + used license
b. duration - so long as its nature calls for (necessity upon which reliance
exists endures)
c. remedies (same as nuisance)
i. injunction
ii. damages to licensor
iii. nothing to licensor
Cases
1. Willard v. First Church - Willards bought encumbered lot across from church, which
had right to use property for parking when there were services. Sued to quiet title. Court
holds grantor can deed property to one person and effectively reserve interest to 3rd
party. Such reservation vested interest immediately in 3rd party. Willard not BFP b/c
there was constructive notice - could have discovered by reasonable inspection +
previous deed included easement.
2. Holbrook v. Taylor - Ds gave coal company right to establish roadway. Mine closes.
Pl neighbors move in and use the road w/permisson of Ds - build house ($25k) and
improve road. Ds then try to revoke license to use road. Pls sue. Court holds license is
irrevocable on doctrine of estoppel.
3. Implied Easements - 2 types - arise from inference of intent of parties to a
conveyance
a. Easement implied by prior existing use (quasi-easement) - implied on basis of
apparent and continuous use of a portion of the tract already existing when tract is
divided (to protect the interests of the continuing use) Van Sandt
i. can’t have an easement in your own property - easement then vests instead in
grantee and becomes a real easement
ii. counter-policy - warranties against encumbrances
iii. factors
1) common ownership
2) apparent + continuing use
3) reasonable necessity
a. necessity also important requirement here (but arises prior
to division, rather than upon division)
4) whether prior use known to parties at conveyance ???? need for both
types of implied easements ???
a. known or reasonably knowable + foreseeable use
b. apparent condition - discoverable by RP investigation
i. hidden pipes/sewers/drains - if underground, still an
apparent condition if the appliances connected with and
leading to are obvious
b. Easement by necessity - implied when court finds claimed easement is necessary to
the enjoyment of claimants land and necessity arose when claimed dominant parcel was
severed from claimed servient parcel (at time of severence - can’t attach to prior existing
use)
i. factors (Peth)
1) unity of ownership of alleged dominant and servient estates
2) easement is necessity (not mere convenience)
a. majority rule - strictly necessity - land can be used w/o
easement, but not w/o disproportionate effort + expense. Othen
i. therefore in situations where no prior existing use, and no
strict necessity, can’t imply easement
ii. if “necessity” is removed, then so is easement
b. greater necessity required for grantor than grantee (courts view
reservations less favorably than grants)
3) necessity existed at time of severance of 2 estates
c. General notes
i. Unifications - if dominant tenement and servient tenement come into same
ownership, easement is extinguished (doesn’t return w/o new grant)
ii. 3rd parties - may not imply easements across 3rd parties, even by necessity
(otherwise would be state taking property)
iii. riparian owners - have rights of reasonable use on waters adjacent Miller
iv. the mere fact that claimant’s land is surrounded by land of another does not, by
itself, give the former a way of necessity over the land of the latter - where there
is no privity of ownership ???
d. easement by prescription - get “use” right (not possession, as with adverse
possession) Miller
i. adverse possession of use vs. adverse possession of land
a. note - this is always argued along w/other easements
b. scope - not as broad in scope as that created by grant, implication, or
necessity
i. uses must be consistent w/general kind of use by which
easement was created (ex. can’t use motorcycles if previously was
footpath)
ii. elements:
1) open + notorious
2) continuous + uninterrupted
3). adverse
a. if owner permits passage, then not adverse (beach cases)
4). under claim of right
5) “exclusive” - that claimant’s right to use the land does not depend upon
a similar right in others (dif from AP)
a. thus, you can aquire easement even if True Owner uses (unlike
AP)
6) lost grant jurisdiction - without permission of owner (arguable point)
iii. all other AP principles apply (tacking, etc.)
e. public prescriptive easement (elements same as private) - adverse right is claimed by
general public, not individuals. Matthews v. Bay Head.
i. Beaches public trust doctrine - state holds, in public trust for people, the beach
from the water to the mean high tide line. Private owners have dry sand portion
of beach between mean high-tide line and vegetation line
a. extended to include bathing, swimming and other shore activities
(historically navigation and fishing)
b. public must have access to the shore
c. public must also have access to foreshore Matthews
d. extends to all land covered by ebb and flow of tide + all inland lakes
and rivers that are navigable.
ii. if legislature passes statute giving public right to cross private land - this is
“taking” that must compensate private party for
a. judicial order may also be “taking”
Cases
1. Van Sandt v. Royster - Sewage floods basement of Pl. Underground sewage line
running across property of Pl from property of D (original grantor - reservation). Pl
alleges no easement ever created and, even if so, easement is superceded by his title as he
was bona fide purchaser without notice of easement (actual or constructive). Court holds
easement by implication reserved/created b/c necessary to use/enjoyment of property of
D + Pls had constructive notice (discoverable by RP investigation).
2. 2. Othen v. Rosier - Pl’s land is cut off from the road by the D’s land. Had used a
lane also used by the owner, but due to erosion problems this lane was obstructed by D.
Sues to have opened, claims easement by necessity. Court holds not an easement, but a
license. No evidence that prior to original conveyance, the roadway was a necessity.
Therefore license, not easement.
3. Matthews v. Bay Head Improvement Ass. - Beach owned privately. Maintained by
beach association. Court holds extension of public trust doctrine and forces Beach
Association to open membership to the public.
4. Assignability of Easements
a. easement in gross - is assignable if the parties so intended
i. any easement in gross is assignable. Miller
a. exception - recreational easement is not assignable (hunting,
fishing, boating, camping)
b. “one stock” rule in gross (profits) - have to be conveyed as one
stock - w/assent of all owners.
b. easement appurtenant - limited by the needs of dominant tenement
Cases
1. Miller v. Lutheran Conferance - Miller and brother own property and flood to make
lake. They create Corp., which conveys to them 99 year license. Miller conveys to
brother 1/4 interest. Brother dies, and heirs convey to Lutherans. Lutherans act as
though intending to license bathing and boating rights. Miller sues to enjoin. Court
holds that no bathing rights conveyed, but Miller obtained easement through prescription.
And that the easement in gross (profits) in bathing/et al. couldn’t be conveyed separately
by brother’s heirs - had to be conveyed w/Miller.
5. Scope of easement
i. Scope of easement - extent of right acquired is determined from the terms of the grant
properly construed to give effect to intention of parties at its creation. Brown
a. Extension - an easement may not extend to non-dominant land (even if
attached to dominant land)
i. an easement may not be extended if not w/in intent at creation
b. Purpose - expansion of easement must be reasonably foreseeable at time of
easement’s creation. Preseault.
i. cf. fee simple - easement acquired is no more than the specific purpose
of its use, and no more (fsimple can use land for any purpose not
infringing on others)
c. Misuse of easement = trespass.
ii. Developing easements
a. dividing dominant estate - holder of easement/profit is entitled to use of
servient estate in manner reasonably necessary for enjoyment of servitude. Can
change to accommodate normal development of the dominant estate (like selling
into subdivisions).
i. holder not allowed to cause unreasonable damage to servient
estate or interefere unreasonably with its enjoyment.
b. can’t develop beyond what was foreseeable at creation of easement
c. installing utilities - private easement doesn’t permit - not foreseeable
d. change of location of easement - once fixed, can’t be changed by servient
owner w/o permission of dominant owner (and vice versa??)
iii Remedy - damages or injunctive relieve
a. note - injunctive relief may involve a question of equities, and whether
actual/substantial harm suffered by either party
Cases
1. Brown v. Voss - Express easement. Pl has property w/an easement onto Ds property
#1. D buys property #2. Pl says easement does not extend to second parcel. TC does not
give injunctive relief to either side. Awards damages of one dollar (permitting extension
of easement). Even though no new traffic, and no additional damage to servient estate.
Court holds easement does not extend, damages to Pl, but no injunction.
6. Termination of easement
1. abandonment of easement
a. elements
i. nonuse of easement
ii. acts by dominant owner that conclusively/unequivocally manifest
either:
a. present intent to relinquish easement; or
b. purpose inconsistent w/its future existence
2. termination by prescription - may be terminated if servient owner wrongfully +
physically prevents easement from being used
3. Other ways can end
i. for term of years
ii. defeasible (same as other real property)
iii. Bona Fide Purchase
iv. merger of ownership (merger dominant + servient estate)
v. end of necessity
vi. dominant owner releases easement
4. right of way - if strip referred to as “right-of-way,” court usually finds that easement is
granted
Cases
1. Preseault v. US - Rails to Trails Act. Government is “banking/saving” these corridors
for future use, in mean-time used for Trails. Railroad tracks are taken up where easement
was. State creates a nature trail. Property owners sue. Court holds that 1) railroad tracks
were on granted easement (not fee simple grant) // only can take what you need under
Vermont law 2) conversion from railroad to easement was not reasonably foreseeable.
public versus trains. 3) easement was abandoned. 4) government has to recompense for
taking.
7. Negative Easements - right of dominant owner to stop the servient owner from doing
something on the servient land
a. all landowners have duty of supporting adjoining land
b. rare - generally only permitted for light, air, subjacent/lateral support, or flow
of artificial stream
i. instead, created necessity for other means of restricting use. (covenants
+ equitable servitudes)
c. creating negative easement
i. can bargain w/adjacent land for additional rights respecting buildings +
streams
a. these agmts. enforceable against successor owners
ii. American courts - negative easement cannot be acquired by
prescription
i. prescription doesn’t apply until rights of servient owner
interfered with and C/A arises against dominant owner
ii. only rarely created (ex. “view” easement + solar easment, for
solar panels + conservation easement, for preserving scenic or
historica areas)
C. Covenants + E. Servitude - Private Party agmts
1. real covenants & equitable servitudes
a. both are promises concerning land use that benefit promisee + burden promisor
b. both pass on “benefit” and “burden” to successors of original parties
c. “Touch & Concern” - impact on occupation or use of land
i. affirmative obligations - don’t touch & concern + don’t run w/land.
Caullett - couldn’t retain right to build on conveyed property
i. historical exception - repair of property (can be required to
undertake by covenant)
ii. club membership obligations (condos) - don’t touch or concern
land unless common interest community (condo assoc. w/annual
sports club dues). Neponsit
ii. covenants restricting use of land - almost always touch and concern
land.
iii. affect on market value - may indicate
c. Horizontal privity (US) - horizontal privity of estate btw. successive owners
(recall tacking)
d. Vertical privity
i. Privity of estate btw. one of the original parties to promise/covenant &
their successors & assigns (e.g., relationship btw A & D or B & C)
ii. generally, successor must acquire the entire estate for veritical privity
iii. NO vertical privity for adverse possession
iv. Successor/Assignees have privity
v. Notice required (as before)
e. Burden/Benefit
a. properties must exist to have burden/benefit (can’t plan on after
division)
b. where benefit in gross (personal) and does not extend to other
lands, burden does not run w/land at law (at best obligates grantee
personally)
i. NOT single personal service upon the property
ii. NOT benefit clearly personal to grantor, securing mere
commercial advantage in operation of a business and not
enhancing/otherwise affecting use/value of any retained lands
c. Burden “in gross” (personal burden) - does not preclude
covenant from running with land conveyed where benefit attaches
to property of one of parties
f. main differences
i. real covenant - can’t be implied. privity of estate required.
remedy = damages.
ii. equitable servitudes - can be implied. no privity required.
remedy = injunction/enforcement of lien.
2. equitable servitude - promise concerning use of land btw. A & B
1. General Characteristics
i. remedy = injuctive relief
ii. “run w/ the land”
iii. will probably be in writing but may be implied from common plan.
iv. permits affirmative duties
2. Burden runs if:
a. s/f; or implied from a common plan e.g., Sanborn vs. McLean
b. intent to bind successors
c. touch and concern
d. successor/assignee (“C”) has notice, e.g., Sanborn vs. McLean
i. BUT - not enforceable against BFP w/o notice
ii. Sanborn - sometimes inquiry-notice just through observation of
neighborhood
e. *no Horizontal/Vertical privity req.
i. b/c interest in land being enforced - similar to easements
4. Benefit runs if:
a. s/f; or implied from common plan, e.g., Sanborn vs. Mclean
b. intent to bind successors
c. touch and concern
d. *no Horizontal/Vertical privity req.
e. *no notice req.
5. burden & benefit only run if both run (not just for one side)
6. can’t be enforced where benefit is in gross (personal) and neither
affects retained lands of grantor nor part of neighborhood scheme of similar
restrictions.
a. courts consistently enforce owner of benefited property against
successor, with notice, to burdened land - even if covenant does not run
w/land at law
b. BUT - depends primarily on covenant’s having been made for benefit of
other land, either retained by grantor or part of neighborhood scheme
c. Conservation servitudes - if benefit is in gross (to person), burden will
not run
Cases
1. Tulk v. Moxhay - (equitable servitude) Promise from Elms to Tulk to 1) maintain
garden (affirmative covenant) 2) keep garden open uncovered by any buildings (ct says
this is a negative covenant, arguably, could be a negative easement i.e., the right to have
someone not do anything) 3) Tulk’s tenants could use the garden after paying a fee (an
affirmative easement). Elms sells to Moxhay & Moxhay wanted to build. Ct upholds
injunction because if not enforced, Moxhay could then devalue the property despite the
promise. Technically, this contract would not be enforceable at law, but court of equity
enforced  case establishes equitable servitude for first time.
2. Sanborn v. McLean - Original common owner; D & P each individually purchased
property previously original common owner. McLean built a gas station on their lot and
Sanborn says there’s a common plan & restrictions implied to McLeans. Original
owner carved 91 pieces of property to be sold. Prior to McLean purchase 20 lots sold
contained the restriction, lot that McLean purchased did not have a restriction (38 no
restriction), 33 later conveyed & did have the restriction. Ct implies general plan.
a. Technically, there only 20 lots who contained restriction, so when really
did the restriction come into existence.
b. Ct. implied mutual restriction when first lot sold  General plan of
restriction began.
c. Cts will not necessarily imply restriction when only 20% of the lots
have restriction
d. Notice established when McLean saw houses with general design
3. real covenants - promise concerning the use of land btw A & B
a. Typical disputes (A-B, C-D, A-C; chart p. 861)
i. A v. B: Was a real covenant or equitable servitude created?
ii. A v. C: Does burden run to C?
iii. D v. B: Does benefit run to D?
b. General Characteristics
i. remedy = damages
ii. more difficult to create
iii. “run w/the estate”
iv. must be in writing, w/ordinary exceptions to s/f
v. hard to establish & relatively rare
a. cf. equitable servitudes
vi. not be enforced unless meaning is clear and free from doubt. if
covenants are vague/ambiguous, should not be construed to impair
alienability of subject property. Caullett
c.Burden runs to “C” if
i. s/f
ii. Covenant shows intent to bind successors
a. Most often - writing creates covenant e.g., B, his heirs,
assigns
b. Sometimes courts infer from writing, e.g., it plainly
states a restriction on the land w/o limitation to an individual
c. Sometimes courts infer intent to bind successors if
covenant satisfies “touch and concern” element.
iii. touches and concerns burdened land
a. not merely burden on person, but on land
b. may be determined by whether has substantial effect on
land, positive or negative (Neponsit)
iv. vertical privity req.
a. must accede to exact same estate
b. exception - rights of all homeowners asserted through agent like
a neighborhood Homeowner’s Assoc. Neponsit.
v. horizontal privity - betw. original parties to covenant
vi. assignee has notice before buying (constructive/actual)
a. BFP not bound by covenant if no notice
d. Benefit runs to “D” if
i. s/f
ii. Covenant shows intent to bind successors
iii. touches and concerns benefitted land
a. not merely benefit to person, but to land
b. may also be determined by whether has substantial effect on
land, positive or negative (Neponsit)
iv. Vertical privity
a. exception - Homeowner’s Assoc. (3rd party beneficiary)
Neponsit.
b. may accede to lesser estate or original estate
v. *no Horizontal Privity req.
vi. *no notice required for benefit to run
Cases
1. Neponsit v. Emigrant Industrial Savings Bank - Land has covenant to pay $4/sq.ftmeasure annually since 1917. Notice of covenant in deed. D bank buys deed at
foreclosure sale. Court writes new deed, refers to prior covenant. Pl Property Owner’s
Association brings action to foreclose on lien. Court holds that covenant is restrictive
covenant which touches and concerns D’s land, even though Pl does not accede to any
land owned by original promisee.
2. Caullett v. Stanley Stilwell & Sons - D developer conveys land w/clause reserving
the right to “build or construct the original dwelling or building on the premises.” Pl sues
to get rid of the clause. Court holds that clause is unenforceable b/c - 1) incursions on the
use of property will not be enforced unless meaning is clear and free from doubt. if
covenants are vague/ambiguous, should not be construed to impair alienability of subject
property. 2) does not “touch and concern” the land. 3) no broader neighborhood scheme.
4. termination of covenants
a. Covenants remain in effect if
i. original purpose of covenants can still be accomplished (not thwarted)
ii. substantial benefit accrues by enforcement
a. benefit of community vs. individual homeowner Rick
iii. even if property has greater value if used for other purposes. Western
Land Co.
a. otherwise, would be able to continually encroach on property by
lowering surrounding land values
b. cf. utilitarian arg - land used for most efficient use
b. Violations - termination if events violating covenant frustrate original purpose of
covenant by:
i. widespread/frequent enough so that general consent is implied (by group of
homes or individ - depends on terms/how many have covenant); or
ii. events constitute abandonment or waiver of covenant.
c. Unenforceability - 14th amend - only affects State conduct. Where covenants are
secured by state courts, can invalidate enforcing the agmt.
i. Shelley - not enforceable. (now these cases fall under FHA)
d. Zoning regulations - where covenants and zoning conflict, more restrictive of two
prevails.
i. zoning regulations do not terminate/modify covenant unless make compliance
w/servitude illegal.
ii. residential/commercial - residential covenant enforceable in commercial
district
a. residential + commercial use permitted in commercially zoned area
b. commercial use forbidden in residentially zoned area
e. Abandoning Land - can’t abandon land or covenants once title is perfected. Pocano.
f. Termination by Condemnation - (act of Gov.)
i. if gov. condemns existing easement or condemns servient land so as to destroy
an existing easement, gov. must pay compensation to easement owner
ii. if gov. uses land in violation of restrictive covenant, gov. must pay damages to
landowners having the benefit
iii. if gov. condmens land on which there’s affirmative covenant to pay money,
gov. must pay beneficiary of covenant for loss of benefit
Cases
1. Shelley v. Kraemer - Ds African Americans buy property that has covenant restricting
sale to use and occupancy of 50 years by those not “Negro” or “Mongolian.” Property of
community has this covenant. Other property owners also bound by covenant bring the
suit. Court holds judicially determined injunction against sale is State action, and
therefore not enforceable under the 14th Amendment.
2. Western Land Co. v. Truskolaski - Subdivision/neighborhood when created has
restrictive covenant prohibiting any mercantile business. Homeowners enjoin D from
constructing a shopping center on 3.5 acre parcel. D alleges that subdivision has changed
so radically as to nullify the purpose of the covenants. Court holds injunction stands b/c
1) substantial benefit accrues to homeowners by enforcement of covenant
2) events in violation of covenants are not sufficient or frequent enough to constitute
general consent, waiver or abandonment.
3. Rick v. West - D conveyed property w/restrictive covenant that area’s use is for
residential purposes. City rezones the area as commercial. Pl’s purchase property. They
then wish to modify their covenant to sell to commercial entity - a Hospital. D refuses to
waive her covenant of residential use. Court holds that covenant trumps interests of Pls.
No consideration can/should be given when the restriction is not outmoded and when it
affords real benefit to the person seeking its enforcement.
4. Pocono Springs Civic Assoc. v. MacKenzie - Ds buy land, then realize they can’t
build on it. Attempt to abandon land. Pl is Civic Association that charges fees. TC says
land not abandoned, and awards Pl association fees. Court holds that b/c in PA once title
is perfected, it cannot be abandoned, Ds have not abandoned property.
5. Common Interest Communities - enforceability of restrictions
a. Condo/community restrictions - enforceable if meet requirements of equitable
servitudes or covenants running w/land.
a. if meet requirements, then enforceable unless “unreasonable”
b. if restriction contained in declaration of common interest development +
recorded, then restriction presumed to be reasonable and enforced uniformly
unless it:
i. is arbitrary;
ii. imposes burden on use of land it affects that substantially outweighs
benefits to development’s residents; or
iii. violates fundamental public policy (such as federal/state constitutional
provision)
b. Homeowners association - all homeowners automatically members
i. association elected by members
ii. has power to:
a. adopt new regulations reasonably necessary to manage common prop.
b. administer servitude regime
c. protect community members from unreasonable interference in
use/enjoyment of their prop.
d. raise funds
e. levy assessments enforceable by fines + lien on individual property
c. Condos
i. each unit owned separately in fee simple by individual owner
ii. exterior walls, land beneath, hallways, and other common areas are owned by
unit owners as “tenants in common”
iii. separate mortgages on each, separate real estate taxes (failure to pay doesn’t
jeopardize others)
iv. can be residential or commercial use
v. condo declaration made before first sale
vi. monthly charge to maintain common facilities and insure against
casualty/liability
vii. enforce a fraction of common expenses
viii. horizontal/vertical privity - condo owners are in privity w/developer (through
original purchasers)
ix. touch and concern - usually satisfied
a. negative covenants - touch and concern
b. affirmative cov. to pay dues - touch and concern
Cases
1. Nahrstedt v. Lakeside Village Condo Assoc. - Pl buys condo, has 3 cats - Boo-Boo,
Dockers & Tulip. Condo association forbids cats, fines Pl. for every month she keeps
cats. Pl sues. Court holds for Condo Assoc., b/c where restriction contained in
declaration of common interest development + recorded 1) cat restriction presumed to be
reasonable and enforced uniformly and i. is not arbitrary ii. does not impose burden on
the use of land it affects that substantially outweigh benefits to development’s residents
or iii. violate fundamental public policy (such as federal/state constitutional provision)
D. Legislation - zoning regulations
1. Overview
a. power to zone delegated by state (local zoning must conform to state statute)
b. enabling statute empowers municipalities to legislate zoning of:
i. building/structure size, location and use
ii. density of population
iii. use of land
iv. variances (exceptions)
a. may also be variance for use
v. special exceptions (conditioned on certain things)
c. “comprehensive plan” - only half of states require comprehensive zoning plans,
and sometimes only weak req.
i. even when written plan exists, zoning regs. inconsistent w/plan are not
necessarily invalid, as long as reasonable + in public interest
d. Euclidean zoning - districts graded from “highest” (single-family residences)
to “lowest” (worst kind of industry)
i. hierarchy - single family housing, two-family housing, multi-family
housing, commercial uses, light industrial uses, heavy industrial uses
ii. cumulative use ords. - permit higher uses in lower use area.
iii. noncumulative ord. - homes excluded from industrial areas, etc.
2. Zoning - Constitutionality - zoning in general is constitutional
a. constitutionality factors:
1) purpose - zoning is to benefit public welfare or under other police
power
2) rational basis review - if validity of zoning scheme is debatable,
legislature controls
a. strict scrutiny - if nexus of effect infringes on fundamental
right, then law subject to strict scrutiny (see City of Ladue)
b. otherwise, if even one rational reason, then constitutional.
Village of Belle Terre
3) not arbitrary or unreasonable - on face or in application. Euclid
a. must have relationship to public welfare/police power
b. must be sufficiently definite - otherwise is void for vagueness
i. if not sufficiently definite, causes arbitrary enforcement.
c. procedural safeguards - don’t cure vagueness problems b/c
no way for appellate court to review a decision w/o clear standards.
4) “taking”= zoning regulation that takes property without compensation.
a. may be taking if it“goes too far.” Pennsylvania Coal Co. v.
Mahon
b. “taking” allegations dismissed if regulation is of nuisance-like
condition or if leaves property owner with some reasonable use
c. remedy - injunction or damages.
b. Constitutional/individual property rights - individual has right to use
property, unfettered by gov. restrictions, except where use violates any law, use
creates a nuisance, or owner violates any covenant, restriction, or easement. PA
Cases
1. Village of Euclid v. Ambler Realty Co. - Village enacts zoning law, and Pl sues to
get injunction. He has property developed for industrial use, and says that the value of
his property and opportunity is curtailed. Sues under 14th amend - deprives of liberty
and property w/o due process of law. Court holds that zoning regulation does not violate
14th amendment or rights of property and is proper exerercise of State’s police power b/c
1) purpose of zoning is to benefit the public welfare; 2) if validity of legislative
classification for zoning is debatable, legislature’s decision msut be allowed to control; 3)
since there are previous regulations on industrial areas, there’s no reason why private
areas cannot also be regulated - even if this means excluding all business from them.
3. Nonconforming Uses - when use was already in existence when zoning ordinance
is passed.
a. allowed to remain b/c immediate termination violate due process or be
unconstitutional taking. (unless compensates for resulting loss of use)
i. policy reasons
a. political reasons - uncertainty caused by nonconforming uses
b. evolution - hoping problems will just go away (lands move to
equilibrium for use that’s intended)
ii. use vs. market-value damage
a. zoning which affects general property value w/o development or
evidence of intention for future use is constitutional. Village of
Euclid. (value drops by 3/4)
b. zoning which affects a nonconforming, existing use may be
unconstitutional w/o compensation
iii. vested rights doctrine - a pre-existing operation is protected, while
plans to engage in some particular use are insufficient.
a. factors:
i. how far developer gone in getting gov. approval
ii. how much money invested in good faith
iii. what money spent on
iv. estoppel - when developers rely reasonably and to their detriment on
the issuance of a permit and proceed to make substatial expenditures
a. must proceed in good faith + make all reasonable inquiries as to
permit’s validity. cf. Parkview - had to remove 12 stories of
building.
b. restrictions of nonconforming use (constitutional)
i. amortization - nonconforming use must terminate w/in specified
period of time. [CLASS RULE - UNCONSTITUTIONAL]
a. falls within constitutional police power so long as it is
reasonable
b. amortization triggered on sale may also be reasonable
c. termination of nonconforming use (constitutional)
i. nonconforming uses survive change in ownership (runs w/land)
ii. destruction (force majeur) may terminate
a. can’t rebuild a nonconforming use
iii. abandonment may terminate
a. factors
i. intent to abandon
a. b/c of difficulties here, some statutes say that if
don’t engage in nonconforming use, then
abandoned (for period of time)
b. gay bathhouse applies for homeless shelter status
intentionally abandons nonconforming use Stokes
ii. leave for significant period of time
iv. sometimes, if “substantially discontinued” (instead of completely)
a. Toys R Us v. Silva, 1996 p.981
d. expansion of non-conforming use - some jurisdictions provide that
nonconforming use may expand, especially to meet natural changes such as
increased demand
i. some also permit converting one nonconforming use into another, as
long as reduces impact of use on zone in question
Cases
1. PA Northwestern Distributors v. Zoning Hearing Board - Adult bookstore moves
into Moon Township. Township then board rezones area, requiring pre-existing
commercial business to come into use standards of zone w/in 90 days. (disallowing adult
commercial enterprises w/in 500 or 1,000 feet of school). Court holds that amortization
and discontinuance of a lawful, pre-existing nonconforming use is per se confiscatory and
violative of PA constitution.
4. Purpose of Zoning - signs, aesthetics, adult entertainment
a. Signs - signs are subject to police powers (can regulate time, place and manner, where
not restricting based on content) Gilleo
i. may also regulate audible expression
ii. unconstitutional factors:
1) if descrimination is on basis of content [strict scrutiny]
2) type of sign + where restricted
a. residential, political signs - may not restrict (no alternate means
of expression) City of Ladue
b. commercial signs - least deference - may be banned from
residential areas
3) if eliminates entire medium as means of communication,
leaving ample alternative channels for communication
4) if substantial local interest which is a justification for prohibition
a. must be compelling justification for scope of restriction
b. Aesthetics - constitutionality
i. factors
1) purpose - to promote “public welfare”
a. if can show against community aesthetics values + depresses\
property values. Stoyanoff.
2) must also be reasonable - “sufficiently definite” in expression
ii. BUT - private restrictive covenants - private architectural restrictions only
have to act reasonably + in good faith.
iii. first amendment - no court has ever held architectural expression is protected
by First Amendment.
c. Adult Entertainment - zoning of adult bookstores, cinemas, entertainment.
i. constitutional to:
a. disperse (not w/in X yards of X property) (Young - adult book stores)
b. concentrate (all w/in X geographical area) (Renton - adult
entertainment, held time, place and manner aimed at secondary effects)
ii. NO outright ban (Schad - banned nude dancers)
a. key is equal protection among type of biz (theater, bookstores, etc.)
iii. Religious Land Use and Institutionalized Persons Act, 2000
a. prohibits land use regulations imposing substantial burden on religious
exercise w/o compelling government interest + least restrictive means of
furthering interest
b. prohibits regulations treating religious institutions unequal relative to
nonreligious institutions, otherwise discriminate, or exclude from
jurisdiction
Cases
1. Stoyanoff v. Berkeley - Pls want to build an ultra-modern house in neighborhood
w/colonial + tudor style houses. Architechural board refuses. Pls hold that 1) City
lacked power to adopt ordinances regulating style + 2) that it is unreas. + arbitrary use of
police power. Asks for writ to compel issuance of building permit. Court upholds
board’s denial of permit b/c 1) City’s ordinance establishing Architectural board is
sufficiently definite; and 2) constitutional b/c basic purpose to be served is general
welfare of persons in entire community. (general property values)
2. Anderson v. City of Issaquah - Pl wants to build a retail building on “signature
street” of city. Submits drafts of building 4 times to architectural board, and is denied
each time. Refuses to make more changes after 9 months and $250k invested, board
issues final rejection. Pl sues to force them to issue certification. Court holds that must
issue certification b/c it arbitrarily enforces law. 1) city statute regulating asthetic features
is unconstitutionally vague on its face + in application // face - code sections don’t give
meaningful guidance - not technical words or legal words (had to drive up and down
street to gauge unwritten meaning) // application - Commissioners issued judgment based
on “feelings.”
3. City of Ladue v. Gilleo - Pl puts up outdoor sign on property, after vanishes tells
police - who say it’s against city policy to have signs. Puts up indoor sign, and petitions
for variance. City denies petition and Gilleo sues for violation of First Amend. DC
grants prelim injunc., City changes ord. Pl amends complaint. D argues regulation is
content neutral and purpose (clutter) justifies comprehensive sign prohibition + only
regulates “time, place, manner” of speech. Court holds new ordinance is unconstitutional
b/c prohibits too much free speech by banning all signs/entire medium, leaving no
reasonable alternative substitutes to medium. Also that city’s interest does not outweigh
burden on rights. Also respect for expression in “home.”
5. Exclusionary Zoning
a. Nontraditional families - may regulate/exclude certain groups
i. constitutionality - must be rational relationship to objective of preserving
“family values” + quiet seclusion [can regulate unrelated individuals in homes.
Boraas
a. minority trend is CA/NY - to give more rights to unrelated individuals
b/c no relationship to controlling pop. density
b. note FHA may apply
ii. excluding traditional family - higher standard of justification if reach
into/regulate number/type of family unit. Moore - grandmother living w/two
grandchildren of different fathers
b. Low-income persons - may have purpose or affect of limiting housing to the affluent ord. may stipulate minimum house/lot size, minimum front footage, excessive
requirements for off-site/on-site improvements, may prohibit apts. + rental homes.
a. cf. Fair Share Test (Mt. Laurel) - each community must provide its fair share
of housing needs in the region. [trend/minorityview?]
i. court arg. must consider general welfare of state’s citizens beyond the
borders for the particular municipality if substantial external effect
(beyond municipality, but w/in state)
b. in general - if there isn’t sufficient mixed housing, then there is an affirmative
duty to create. (if you can convince court)
Cases
1. Village of Belle Terre v. Boraas - Long Island housing ordinance restricts households
to one-family units. “Family” = blood, adoption, marriage, OR two unrelateds. Six
college students rent a house, the village serves landlord w/violation of zoning. Landlord
+ tenants bring action. Court holds zoning ord. + definition of “family” is constitutional,
b/c falls w/in police power of the state. Under rational basis test, it’s constitutional.
2. S. Burlington Cnty. NAACP v. Twnshp. of Mt. Laurel - 30% of land was zoned for
industrial, 1.2% for retail, remainder for residential. Lot size minimums. NJ law requires
that public services paid for by real estate tax. NJ law also permits local areas to create
favorable tax circumstances to attract more homes and business. Local covenant requires 1 child for 3 apartments, if greater # of kids, then developer has to pay cost of
tuition for students. Current/potential residents sue. Court holds ordinance is
unconstitutional. must provide mixed income housing.
XII. Eminent Domain
A. Fifth Amendment - “nor shall private property be taken for public use, w/o just
compensation.” [affects States thru 14th Amend.]
1. Effect - gov. can take private property and reallocate for “public use,” if properly
compensate.
2. Rationales for “taking”
a. historical justification - source of land’s ownership flows from sovereign.
i. retains implied right
ii. political - landed aristocracy wanted to protect rights
b. (Posner) - prevents “monopolies” - probs when “right-of-way” Co.’s or Gov
subsequent to building - landowners in path hold out for prices in excess of
land’s market value. Leads to less valuable use of land. (RR’s, bases, etc.)
3. Rationale for “just compensation” - serves dual purpose of protecting privat
entitlements, while disciplining State. Otherwise State would take land beyond power to
xuse efficiently.
B. Elements of Constitutional Taking
1) Purpose - Gov. may only take for public use/benefit - coterminous with scope
of sovereign’s police powers - must be directed to public welfare - Midkiff
a. State or Federal gov. may take
1a) Primary Benefit - whether primary benefit is public or private. Poletown.
a. taking for private use is not authorized - irrespective of incidental public
benefit
b. Poletown - building GM factory is for public benefit, incidental private
benefit
c. Kelo - even if just economic development
2) Means - transfer to priv. owner/individ. - okay for gov. to take prop and
immediately transfer it to private individual
i. purpose important, but not “mechanics” HI Hous. Auth.
ii. not essential that entire community, or even considerable portion,
directly enjoy or participate in any improvement to constitute public use
3) Rational Basis review - where purpose + means (exercise) of eminent domain
is rationally related to conceivable public purpose, court will defer.
a. review is “very narrow.” Midkiff
i. applies to States and Gov.
b. Midkiff. - after this case, almost have to have purpose which is
unconstitutional “on its face” to be unconstitutional
4) Just Compensation = fair market value of property at time when taking
occurs
a. doesn’t replace need for justifying public purpose
b. policy against
i. land is unique. no fair value.
ii. personal value.
iii. high value prop. consistently gets more than fair market value,
low value prop. consistently gets less.
4a) Special Issue - Federal Gov. takes property owned by State or City - if
market value of property ascertainable, no right to greater than market value, even
if substitute exceeds value of compensation measured in market-value terms
a. if NOT ascertainable - substitute facilities doctrine - State/City
gets market value PLUS cost of obtaining/constructing equivalent property
5) State Protections
a. CA - to limit of Midkiff. anything that’s for public benefit.
b. WA - greater protections. Finds there is inseparable public/private
benefit
6) Limits - purely private takings
a. attenuation between
b. violates other Constitutional Rights. Oakland Raiders - Commerce
Clause.
i. note - probably could have taken Raiders, otherwise.
C. Regulatory Taking - Midkiff & Penn Central - overall principles
1.) Condemning land and Taking title for public use/benefit = taking + requires just
compensation
a. ask - does Fed have power? Midkiff.
b. easement = taking (permanent physical occupation) [no Penn Central test] and
requires just compensation. Nollan.
2.) Penn Central Factors (case-by-case approach) - use restriction may be a taking if not
reasonable means of achieving a substantial government purpose
i. Penn Central Factors:
1) economic impact on the claimant - whether severe economic loss
2) degree regulation interferes with distinct, investment backed
expectations
a. whether owner’s use is existing/ongoing, and
b. currently zoned for (see Palazzolo)
3) character of government action - substantial advancing of a legitimate
state interest. [regulations which just restrict use more okay vs. Loretto which require you to restrict something on land]
a. promotes common good - not taking if regulates to promote
common good. Loretto
a. prohibiting sale of eagle feathers - not a taking
ii. conceptual severance - value is relative (note role of public interest)
a.) large damage - taking entire interest
i. PN Coal - coal interest. taking. notice in private contract
protects public interest. (severe economic loss)
b.) small damage - severing an interest + permitting devaluation (from
other uses/rights under fee simple, or from owner’s total wealth)
i. Penn Central - severance + devaluation of air rights. no taking.
b/c substantial surface rights remain. public interest in zoning.
i. Keystone - severance of coal interest as % of entire coal owned.
no taking. protects public interest in health.
ii. Hadacheck - severance of brick rights from other use rights.
no taking. also protects against nuisance.
iii. Transfer Development Rights - mitigate loss in property value
b/c can transfer development rights to other buildings.
a. this is not just compensation. just affects the degree of loss
iv. Average Reciprocity of Advantage - regulation more likely to not be a
taking if regulated owner acquires some value from regulation PN Coal
D. Regulatory Taking - 3 Categorical Rules
1.) Nuisance & Harm control (“public bad” test) - if government action is traditional
nuisance/harm-control measure, then no taking, b/c it is an exercise of police power and
noncompensable. Hadacheck + Lucas
a. broad power to regulate use of property, but can’t be arbitrary Loretto
b. Even if loss substantial or total (Hadacheck - brick maker - lost 90% of value
of land)
c. public benefit - if regulation has purpose of acquiring public benefit, then it is
an exercise of eminent domain, and requires compensation. Hadacheck [p.1138
// Gilbert’s p.403]
2.) Permanent physical occupation/possession = taking (by regulation). Loretto.
a. regardless of benefit to public welfare or if only minimal expense to
landowner. Loretto
b. size of invasion is irrelevant. Loretto.
c. 3rd Parties - if authorizes permanent physical occupation by Gov. or 3rd
party, then also per se taking. Loretto
d. OTHERWISE for period of taking it is taking (even if removes before/after
suit) - this is analysis for temporary takings = 1st Engl. Evangelical Church
2a.) Unusually Serious Physical Invasion - if effectively destroys all usefulness of
property = taking
a. not mere restriction of use or consequential damage
i. direct over-flights above property = taking.
2b.) Temporary Physical Invasion = taking???? Loretto
a. factors of temporary invasion [Peth - will go over these in later cases]
i. actual physical invasion
ii. infringement of basic property rights
a. infringe on right to “possess, use and dispose of”
b. right to exclude - most treasured right
i. easement of passage for boats to private pond
from navigable waterway = taking (even though
invasion by boats is temporary)
iii. extent/size of invasion
iv. period of time (how temporary)
3.) Destroys All Economic Value - if denies all economically beneficial uses of land,
regulation is a taking, unless State justifies as preventing/upholding common law
nuisance or property law Lucas
a. rationale - nuisance not a taking b/c owner’s use is already prohibited under
police power
b. Practically - courts never find - always some productive use of land left.
(then go to Penn Central)
c. Token interest - if taking is otherwise established, may not avoid
compensation by leaving a “token interest” Palazzolo
d. probs w/Lucas
i. doesn’t permit any zoning unless traditional nuisance
ii. Moral Hazard prob. - Lucas encourages hazardous use of land, b/c case
provides insurance as long as not traditional nuisance
4.) Notice - Prior or Subsequent to Ownership - notice to property owner does not
affect “taking” - can still argue for taking subsequent to regulation. Palazzolo
a. BUT - can use notice in Penn Central analysis
5. Peth - if process in place, have to exhaust the process before filing in court alleging a
taking.
E. Exactions
1. “essential nexus” test
1) essential nexus must exist between exaction and “legitimate state interest”
(must be “substantial advancing” of interest) Nollan
a. cases
i. Nollan - no nexus
ii. Dolan - nexus
2) must be“rough proportionality” between exaction and projected impact of
specific development in case. Dolan
a. no precise mathematical inquiry
b. Dolan - no reasonable relationship
2. Limit - Const. right may permit an easement - 1st Amend. [Pruneyard - over 25k
vistors to mall a day. in Dolan]
a. doctrine of “unconstitutional conditions” - gov. can’t require person to give up
constitutional right in exchange for benefit
3. “exaction” - local government measures that require developers to provide goods and
services or pay fees as condition to getting project approval
a. rationale - trying to internalize the externalities of development (and tie closely
to property); so developer has to pay for city services that city otherwise
would be forced to pay for in order to sustain development (sewers, etc.)
b. rationale against exactions - city governments can print money by overregulating or by exactions
F. Damages - where court decides that government’s regulation are a taking, then have
to pay for period betw. law’s enactment (when taking occurs) and court’s decision. 1st
Engl. Evang. Church
1. Legislature’s options at decision
1. Repeal
2. Amend
3. Condemn + Pay for land
2. “inverse condemnation” - regulatory taking or taking where gov has not
initiated a condemnation proceeding Pl sues.
Cases
1. HI Housing Authority v. Midkiff - p.1098; HI land is ownership is extremely
concentrated, due to prior ownership by Royal Chieftains. State passes law permitting
individuals to petition state to condemn land they live on. Land owner sues. Court holds
that 5th Amend. does not prohibit HI from taking, w/just compensation, property from
lessors and transferring to lessees in order to reduce concentration of ownership of fees
simple in State, b/c for justifiable public purpose of reducing concentration of ownership
+ compensation to be paid.
2. Poletown Neighbhd. Council v. Detroit - GM wants a new plant in Detroit. City
decides to seize property of private individuals to clear land for plant. Purpose is public
benefit - revitalization/to bolster the economy. Court holds private benefit is incidental to
public benefit.
3. In re City of Seattle - City attempts to condemn land for project designed to forestall
central city decay by developing a retail shopping center, public square, park, museum,
and off-street parking. Court holds public-use not satisfied, b/c for both private and
public purposes. [in subsequent case where Seattle bought all land, able to condemn
nearby land b/c for public park]
4. Oakland v. Oakland Raiders - Oakland Raiders football team decides to move
franchise to Los Angeles. Oakland sought to keep the team by eminent domain. After
subsequent remand/appeals, Court of Appeals holds that taking violates the commerce
clause.
5. Loretto v. Teleprompter CATV Corp. - p.1117; Pl owns a building. D runs TV
cables across buildings, and Pl’s building is in the route of the cable. One of Pl’s tenants
requests cable, and a line is draped over the front of the building to the first floor. Court
holds that compensation must be paid, b/c use/draping constitutes a “taking.” This taking
is unaffected by whether taking falls under State’s police power/for public welfare.
6. Hadacheck v. Sebastian - p.1132; Brick-maker sitting on clay field. Los Angeles
zones his property as residential, and can’t use it as brick field, suffering huge loss in
value of property. Court holds that zoning is constitutional, not a “taking,” even though
lost almost 90% of value of property.
7. PN Coal v. Mahon - p. 1140; [3 rights - Coal, Surface, Subsidence.] Plaintiff sues to
stop Coal Co. from mining under their property so as to remove supports and cause a
surface + their house to cave in. Property deed conveys surface, but expressly reserves
right to mine out coal - grantee takes premise w/this risk. Kohler Act - State statute
disallows mining where threatens surface owners. Court holds Kohler Act is
unconstitutional b/c constitutes a “taking,” which cannot be accomplished w/o giving just
compensation. dissent - coal mining here is a nuisance. and regulation of nuisance is
constitutional.
8. Keystone v. DeBenedictis - Mining subsidence control case. Purpose not just to
balance private economic interests, but to protect public interest in health, environmental
quality, fiscal integrity. Millions of tons of coal to remain in place okay b/c only “few
percent” of companies total coal owned by companies.
9. Penn Central Transport. v. New York - p. 1151; Owners of Grand Central Station
want to destroy its façade and erect a small commercial high-rise. New York city has
zoning which classifies prop. for landmarks/historical preservation. Creates affirmative
duties to make repairs and to get permission for improving property. But allows right to
transfer development of property to other buildings. Court holds that it’s not a taking.
Diminution in value isn’t that big b/c can transfer development rights to other buildings.
But transfer development rights aren’t compensation (not a taking).
10. Lucas v. SC Coastal Council, 1992 - p.1171; Lucas buys property on beach.
Community zones property prohibiting development on beaches due to erosion. State TC
says that regulation renders his property “valueless.” State SC finds regulation is to
prevent serious public harm. Court holds that prevention of public harm is only stated
rationale, not actual, and b/c takes all economic value, must be compensated - unless
State can show that nuisance is one of those that is traditionally regulated. (not one that
legislatures consider to be nuisance)
11. Palazzolo v. Rhode Island, 2001 - p.1193; Owner has property along coastal
wetlands. Commission refuses to grant permits to build. Owner sues, alleging “taking.”
Court holds that owner not deprived of all economic value of property ($200k left), but
that Owner had right to challenge regulations that existed prior to his ownership of
property.
12. Nollan v. CA Coastal Commission, 1987 - p.1199; Owners want to rebuild their
property on the beach. County commission conditions housework on a public easement.
Court holds that a public easement itself is a taking. The fact that easement is activated
by condition
13. Dolan v. City of Tigard, 1994 - p.1207; Plumbing and electric supply store owner
wants to redevelop the site. Applies for permit. Permit conditioned on dedicating % of
prop. to bike path and to flood plan. SC of Oregan upholds. Court overturns OR SC,
says that no reasonable relationship between exaction and projected impact of
development.
14. 1st Engl. Evang. Church v. Los Angeles, 1987 - p.1220; Flood from overflowed
river destroys church’s buildings on riverbank - “Lutherglen” - facility for disadvantaged
children. After flooding, Los Angeles passes ordinance prohibiting all building in the
flood protection area. Church sues for compensation. Court holds that taking occurred.
Rationale - just b/c it’s temporary doesn’t mean no compensation is due. Here taking
occurred for considerable number of years. [eventually found that not to be a taking]
15. Kelo v. New London, 2005 - City initates condemnation proceedings for economic
development. Court holds that taking falls under public use. Public use = public
purpose, even though just for economic developments. Majority - public use = public
purpose, even if just for economic development.// Kennedy - RB review is enough to
guard. // O’Connor - 3 cases where taking okay (disclaims her Midkiff opinion); 1. public
ownership; 2. public use or access - Railroads, etc. (where public is using, even if private
operated); 3. exigencies - using eminent domain to alleviate public harms // Thomas should be no exigencies, only O’Connor’s first two.
Policy Arguments – 2 categories
1. Promote public good
a. economic arg - promote highest value use of land (most efficient use), which in
turn increases general welfare
i. lower transaction costs – externalities will naturally internalize
ii. force internalizing of externalities thru liability rules (nuisance, zoning,
etc.)
b. moral arg
i. social/national welfare
ii. justice (State v. Shack)
c. paternalism – government must step in to regulate or inequalities
surface (Mt. Laurel)
2. Promote rights of individual property owners
a. historical arg. – individual right to exclude is cherished. (Jacque v. Steenberg
and Marshall’s arg. in Loretto)
b. moral args.
i. property is unique, can’t properly compensate for
ii. justice
c. economic arg.
i. Houston – no zoning required – individuals in marketplace are best able
to regulate to highest value/most efficient use.
a. gov. regulation increases transaction costs betw. individuals
d. autonomy – individual right to liberty in democratic society