Property Law

Concept of Property
- Property gives owners rights, and creates a duty on others to not infringe on those rights
Why Recognize Property
- Legal positivism - property exists only to the extent it is recognized by the government
- Jeremy Bentham - “before laws were made there was no property; take away laws, and property ceases.”
Five Theories of Property
- Protect First Possession
- Encourage Labor - John Locke - mix labor with tangible things
- Maximize Societal Happiness - Law and Economics
- Ensure democracy
- Facilitate Personal Development - Georg Hegel - Personhood theory
What is Property
- Property Rights are defined by government - legal positivism
- Property Rights are not absolute - They are relative, owner cannot do whatever they want with property
- Property Rights can be divided
- Property Rights evolve as law changes - Changing economic, tech. & social conditions reshape law
Bundle of Rights
- Right to Transfer, Use and Enjoy, to Alienate, to Exclude, to Possess, to Control, Right to Destroy
Acquisition
- Capture
- Pierson v. Post
- Corporeal possession (First in time)
- Whoever “captures” the property first gains possession
Right to Transfer
- Moore v Regents of the University of California
- Genetic code can be personal property, but once you freely give property it is not conversion
Right to Exclude
- Jacque v. Steenberg Homes - Steenberg drove mobile home over Jacque’s land
 - Supreme Court has recognized that the private landowner’s right to exclude others from his or her land is
“one of the most essential sticks in the bundle of rights that are commonly … characterized as property.”
- State v. Shack - Necessity, private or public, can justify entry upon the lands of another
- The right of the owner must be weighed against the right of the general public and against the rights of
individuals who are parties with him in consensual transactions relating tot he use of the property
Right to Use
- Sic utere tuo ut alienum non laedas - use your property in a way that does not injure others property
- Sundowner v. Kings
- Spite Fence Doctrine - no property owner has the right to erect and maintain an otherwise useless structure
for the sole purpose of injuring his neighbor
Right to Alienate
- Andrus v. Allord - Eagle feather case
- Regulation stopped selling of eagle artifacts, but did not compel surrender of them.
- The elimination of one “strand” of the bundle is not a taking, A reduction in value does not equal a taking
Right to Destroy
- Eyerman v. Mercantile Trust Co - will stated to demolish home, held against public policy
- An owner has exclusive control over the use of his property subject only to the limitation that such use
may not substantially impair another’s right to peaceably enjoy his property.
Right to Transfer
- Alienability - Generally any owner can transfer their property.
- Sometimes limited for public policy reasons
- Limited by who can transfer (mentally insane)
- Or what property can be transferred (military pensions)
- What can be given away but not sold (human organs)
- Chain of title - succession ownership over time
- Title by discovery - Court has ruled if you discover land within a sovereign state then the land is under the
sovereign control of that state
- Nemo dat quod non habet - one cannot sell what they do not have (own)
- Two competing theories
- Sovereignty - how does the gov't allocate land
- Property law per se - who owns the specific land in question
- Johnson v. M’Intosh (1823) (Justice Marshall) - Johnson purchased land from NA. M’Intosh purchased from
fed. Gov’t. Held Gov’t was owner through capture/conquest and was only entity that could transfer
Owning Real Property
Rule of Capture
- How do we decide who property should belong to?
- First in Time - General rule for property
- For unowned property - it is typically capture rule
- if you have it first then unowned property would become yours
- Central Planning Rule - agency or authority asserts, gives, exerts property rights
- Government for example bestows property rights
- Auction - sell to highest bidder
- Lottery - give property away randomly
- Ratione Soli - "according to the soil" or "by reason of the ownership of the soil.” If you own the land, you
own the things on the land
- Popov v. Hayashi- Baseball - Where an actor undertakes significant but incomplete steps to achieve
possession of a piece of abandoned personal property and the effort is interrupted by the unlawful acts of
others, the actor has a legally cognizable pre-possessory interest in the property.
- That pre-possessory interest constitutes a qualified right to possession which can support a cause of action
for conversion
- Form of “first in time”
- Eliff v. Texon - a landowner has the right to drain the oil from under his land, and if oil in a reservoir (that is
originally under another’s land) should migrate to under the land of the person draining then the oil is the
property of the one draining.
- But, no owner should be able to carry on his operation in reckless or lawless irresponsibility
- The right to drill oil from a reservoir and the oil that might migrate from under another’s land is limited.
Permitting gas to escape into the air is not a legitimate drainage
- In the conduct of ones business or affairs one had the duty to exercise ordinary care to avoid injury or
damage to the property of others, Here Eliff’s could recover due to Texon’s “waste”
Finders
- Four categories of “found” chattels:
- Lost property - property is lost when the owner unintentionally and involuntarily parts with it
- Mislaid property - when owner voluntarily and knowingly places it somewhere, but unintentionally forgets
it (where)
- Abandoned property - when the owner knowingly relinquishes all right, title, and interest to it
 - Treasure trove - when the owner concealed it in a hidden location long ago. Usually limited to gold, silver,
coins, or currency
- Armory v. Delamirie - The finder of a jewel has superior rights to keep it against all others except the rightful
owner
- Property rights are relative. It is rights of one person compared to those of another. Even a thief can have
superior rights over a third party (person who is not rightful owner)
- Jus tertii - “third party rights.” A court will only decide between the litigants who has better title, not
among litigants and a third party.
- Trover v Replevin - in a common law action of trover the plaintiff seeks damages (payment) for the
wrongful taking of personal property. In a replevin action the person seeks to recover the converted
property.
- A finder becomes a bailee of the chattel and is obligated to (1) keep the chattel safe and (2) return it to the
prior possessor on demand.
- Three basic types of bailments: (1) those for the mutual benefit of both the bailor and the bailee; (2)
those for the primary benefit of the bailee; and (3) those for the primary benefit of the bailor.
- When a bailment is for mutual benefit, bailee has the duty to take reasonable care of the property.
- When the bailment is for the primary benefit of the bailee, extraordinary care is required.
- When the bailment is for the primary benefit of the bailor, the bailee is liable only if the property is
damaged because of gross negligence or bad faith.
- Hannah v. Peel - plaintiff (stationed in defendants home) found piece of property that defendant did not know
about. Court held the property belonged to plaintiff
- Oliver Wendell Holmes on Bridges (item found in public of shop) - the finder got first possession and so
had superior rights against the shopkeeper, the shopkeeper did not know of the item so could not have had
the intent to appropriate it, and inviting the public could not exclude the public from finding the item.
- Owner’s rights. The court mentions Lord Russell’s definition of “where a person has possession of house
or land, with a manifest intention to exercise control over it and the things which may be upon or in it,
then, if something is found on that land, whether by an employee of the owner or by a stranger, the
presumption is that the possession of that thing is in the owner of the locus in quo.”
- Benjamin v. Lindner Aviation, Inc. - mislaid (dissent said abandoned) money in wing of plane
- The property was mislaid since it was obvious someone placed it in the wing of the aircraft
- It is not abandoned property since common sense would dictate no one would voluntarily part with $18k
with the intention of terminating his ownership.
- Mislaid property belongs to the owner of the premises where it was found, which would be the airplane,
not the hanger.
Gifts
- Inter vivos gift
- Gift made during lifetime
 - Testamentary gift - effective after donor dies
- Causa mortis - gift made when someone is about to die
- Donative Intent - donor must intend to make an immediate transfer of property
- Delivery - property must be delivered to the donee
- Acceptance - donee must accept the property, acceptance is assumed
- Types of Delivery
- Manual delivery - occurs when the donor physically transfers possession of the item to the donee
- Constructive delivery - requires that the donor physically transfer to the donee an object that provides
access to the gifted item (key)
- allowed if manual delivery is impracticable or impossible.
- Symbolic delivery - the donor physically transfers to the donee an object that represents or symbolizes the
gifted item, (certificate or some type of paper)
- Sometimes only allowed if manual delivery is impracticable or impossible
- Why require delivery? First, it makes it vivid and concrete to the donor (wrench of delivery), second it is
unequivocal to witnesses that it occurred, third, it gives the donee some evidence of it occurring
- Gruen v. Gruen - father made gift to son, but wanted to retain possession.
- An inter vivos gift requires that the donor intend to make an irrevocable present transfer of ownership; if
the intention is to make a testamentary disposition effective only after death, the gift is invalid unless made
by will
- As long as the evidence establishes an intent to make a present and irrevocable transfer of title or the right
of ownership, there is a present transfer of some interest and the gift is effective immediately.
- “[in] this state a life estate and remainder can be created in a chattel or a fund the same as in real
property.”
- Newman v. Bost
- To constitute a donatio causa mortis 2 things are necessary: Without both there can be no gift
- An intention to make the the gift
- Delivery of the item given
Adverse Possession
- Elements of Adverse Possession
- Actual possession: The adverse possessor must use the property as a true owner would
- Establishes practicality of the claim
- Exclusive possession: possession cannot be shared with owner or others, including general public
 - Open and notorious: possession must be visible and obvious, so that if the owner made a reasonable
inspection (objective standard) he would become aware, others must know the adverse possessor is
possessing the land, cannot be done in secret
- “Adverse and hostile” (claim of right): Can't have permission
- Possession with the permission of the owner will always fail
- Some states require color of title - a title (deed) that would be valid except there was a mistake
(clerical possibly)

- Some states require the adverse possessor to act in good faith (believing they are the owner), in
most states the state of mind is irrelevant, in some states the adverse possessor must act in bad faith
(hostile)
- Continuous possession: must be as continuous as a reasonable owners would be
- Statutory period: defined by state
- Taxes - some states require the adverse possessor pay the property taxes
- Squatters rights are different from adverse possession
- Gurwit v. Kannatzer - 17 acre disputed land
- Adverse possessor must prove that their possession was hostile, that is under claim of right; actual; open
and notorious; exclusive; and continuous over the statutory period.
- The intent of the Gurwits to possess, occupy, control, use and exercise dominion over the property satisfies
the requirement of hostility.
- If no express permission is given from the true owner, then it is assumed permission hasn’t been given
State of Mind
- Some states require the adverse possessor to act in good faith (believing they are the owner), in most states
the state of mind is irrelevant, in some states the adverse possessor must act in bad faith (hostile)
- Adverse possession cannot be claimed if the person has the owner’s consent
- Fulkerson v. Van Buren - Church started using vacant building on Fulkerson’s land
- For possession to be adverse, it is only necessary that it be hostile in the sense that it is under a claim of
right, title, or ownership as distinguished from possession in conformity with, recognition of, or
subservience to the superior right of the holder of title to the land.
- The intention to hold adversely must be clear, distinct, and unequivocal
- Alternatives to boundary disputes:
- Agreed boundaries: If there is uncertainty between neighbors as to the true boundary line, an oral
agreement to settle the matter is enforceable if neighbors accept the line for a long period of time
- Acquiescence: Long acquiescence, though perhaps for a period of time shorter than the statute of
limitations, is evidence of an agreement between the parties fixing the boundary line
 - Estoppel: When a neighbor makes representations about the location of a common boundary, and the other
neighbor then changes her position in reliance on the representations or conduct, the first neighbor is then
estopped to deny the validity of his statements or acts.
- Tioga Coal v. Supermarkets - Tioga claimed a street through adverse poss.
- Court states an objective test might be appropriate.
- Holmes: if the adverse possessor has occupied land for the statutory period, they have put down “roots”
which should not be disturbed.
- Dissent - one must intend to take against the record title holder, cannot assert adverse possession against
the world. The “world” cannot bring suit against a trespasser, only the true owner, therefore the adverse
possessor must be hostile against the owner
Tacking
- Howard v. Kunto
- A purchaser may tack the adverse use of its predecessor in interest to that of his own
- To establish tacking there must be privity between the parties.
- Privity can be through alienation even where
- Privity of contract
- Privity of estate - runs with the land, typically through a deed
- Tolling: There are situations in which the statutory period will be extended, requiring a longer period, or
delayed period: ex: imprisonment, minority, lack of mental capacity, and possibly military service or
residence out of state
Estates and Future Interests
- An estate is a present possessory interest
- A future interest is a right to future possession
- A leasehold estate is a temporary lease in the land
Modern Freehold Estates
- Six Different Freehold Estates:
- Fee simple absolute; Life estate; Fee tail; Fee simple determinable; Fee simple subject to a condition; Fee
simple subject to an executory limitation
- Difference in the 6 freehold estates is duration
- If the words of a conveyance or devise are ambiguous, the modern presumption is to favor a fee simple.
- For life estates: if the language is ambiguous the court will apply the transferor’s intent
- If the intent cannot be inferred, the court applies a rule of construction.
Fee simple absolute
 - Holder has all rights in the “bundle of sticks”; Duration is potentially infinite; No future interest
accompanied
- Fee simple absolute if freely alienable (it can be sold or given away during the owner’s lifetime),
devisable (it can be transferred by will at death), and descendible (it can pass by the laws of intestate
succession if the owner dies without a will).
- Ends by escheat (reversion), adverse possession, eminent domain
- Cole v. Steinlauf - contract stated “to his assigns forever” court held it should state “to his heirs”
- The modern presumption is to favor fee simple if the words of a conveyance or devise are ambiguous.
Fee Simple Defeasible
- A Defeasible estate is an estate that may end upon the occurrence of some future event
- Fee simple defeasible - a fee simple that may continue forever or may end upon the occurrence of some
future event.
- Three types:
- 1. Fee simple determinable; 2. Fee simple subject to a condition subsequent; 3. Fee simple subject to an
executory limitation
Fee Simple Determinable
- Automatically ends when a certain event or condition occurs, giving the right of possession to the
transferor
- Durational language; “To A so long as,” “while,” “during,” “until,”
- The fee simple is cut short if the event occurs
- Ex: “to B and his heirs so long s the land is used as a farm”
- Words of limitation - “and his heirs”
- Words of duration - “so long as” - words of duration that indicate the estate is determinable
- Future Interest - Possibility of reverter - future interests that follows a fee simple determinable
- Can only be retained by the transferor (or heirs)
- The possibility of reverter automatically becomes possessory upon the happening of the condition
- A fee simple determinable is freely alienable, devisable, and descendible, but the durational condition
continues to apply
Fee Simple Subject to a Condition Subsequent
- Is a fee simple estate created in a transferee that my be terminated at the election of the transferor when a
certain condition or event occurs
- If the event occurs the estate does not end automatically, rather the transferor has to the power to end it
- Conditional language: “To A provided that,” “on condition,” “if,” “but if,” “provided, however.”
 - Ex: “to B and his heirs provided that the land is used as a farm, and if it is not, then O may re-enter and
reclaim”
- Future Interest - Right of entry (power of termination) always follows a fee simple subject to cond. subs
- Now the transferor “re-enters” the land by filing a quiet title action
- A fee simple determinable is freely alienable, devisable, and descendible, but the durational condition
continues to apply
Fee Simple Subject to an Executory Limitation
- Is a fee simple estate created in a transferee that is followed by a future interest in another transferee.
- Here the future interest is held by a third party
- Ex: “to B and heirs so long as it is used as a farm, then to C,”
- Future interest can “cut short” the possessory interest
- The future interest that follows the fee simple subject to an executor limitation is an executory interest
- Shifting Executory Interest
- Springing Executory Interest
- The fee simple subject to an executory limitation is alienable, devisable, and descendible; any transferee is
also subject to the condition.
- An executory interest is freely alienable, devisable, and descendible.
Life Estate
- The duration of a life estate is the lifetime of a particular person. When they die, the estate terminates.
- The holder of a life estate is usually called a life tenant
- Life estates can be granted in a way that is measured by the life of a person other than the grantee (life
estate pur autre vie - for the life of another).
- Limitations on possessors of life estates:
- In a life estate, one cannot gain possession through adverse possession
- Possessor can't commit waste
- An ordinary life estate is alienable
- But it is not devisable or descendible
- Can’t give what you don’t have - nemo dat
- A future interest is retained if the grantor conveys a life estate
- A reversion is where the grantor regains possession once the grantee dies
- A remainder is where another gains the future rights once the grantee dies
 - Ex: A conveys “to B for life, then to C” C would hold the future interest (remainder)
- Escheat - if fee simple owner dies without heirs, (there is no reverter or remainder-men) property goes to
the state
- White v. Brown - Lide left house to daughter in will, but stated house could not be sold, language was
ambiguous
- If the language is ambiguous the court will apply the transferor’s intent. If the intent cannot be inferred,
the court applies a rule of construction.
- A restraint on alienation is a provision in a deed or will that prohibits or limits a future transfer of the
property.
- Any such provision of transfer that expressly prohibits the future transfer of a fee simple is void as against
public policy (free alienation is one of the core policies of property)
- Three types of restraints (all void)
- Disabling restraint - A restraint that prevents the transferee from transferring her interest; example: O
conveys “to B, and any conveyance by B is void.”
- Forfeiture restraint - A restraint that leads to a forfeiture of title if the transferee attempts to transfer her
interest; example: O conveys “to B, but if B ever tries to sell the estate, then to D.”
- Promissory restraint - A restraint that stipulates that the transferee promises not to transfer her interest;
example: O conveys “to B, and B promises that she will not sell the estate.”
- Partial restraints on fee simple may be valid if they are reasonable as to duration, scope, and purpose.
- Equitable life estate - property is put into a trust with the trustee managing the property for the
beneficiaries. “O conveys Greenacre to T in trust for the use of B for life, then to C.”
Rights of Future Estate Holders
- Woodrick v. Wood - George died, left life estate to wife, then remainder to children (50% each). Son
conveyed his half to his mother. Mother wanted to raze a barn.
- An injunction is available to prevent an act of “waste”
- Waste is defined as an abuse or destructive use of property by one in rightful possession.
- A life tenant has the right to make beneficial use of the property even though she would be altering the
land in order to do so.
- Substantial pecuniary damage to the reversion should be required, mere alteration which does decrease the
general value is not enough
- Baker v. Weeden - John left land to his wife (life estate) then to her children if she had any, then to his
grandchildren, she remarried but never had any children. She was eventually broke and wanted to partition
some of the land.
- Court should use a “necessary for the best interest of all parties” test.
Waste
- Types of Waste
- Voluntary/Affirmative waste - results from an affirmative act that significantly reduces the value of the
property (e.g., demolishing a valuable house).
- Permissive waste - results from failure to take reasonable care to protect the estate (e.g., failing to make
minor repairs or to pay property taxes).
- Ameliorative waste - results from an affirmative act that leads to a substantial change in the property and
increases its value (e.g., building a swimming pool)
Fee Tail
- It allowed land to be passed down generations going form oldest son to oldest son….
- The owner of a fee tail has only a limited right to transfer. Could only convey a life estate, your own life.
Upon your death the property would pass to an heir
- Fee tails have been abolished in all but 4 states. If a fee tail is attempted where it is abolished a fee simple
arises
Modern Future Interests
- Future interests retained by the transferor: Reversion; Possibility of reverter; Right of entry
- Future interests created in a transferee: Indefeasibly vested remainder; Vested remainder subject to
divestment; Vested remainder subject to open; Contingent remainder; Executory interest
- Each future interest may at some point become a possessory estate.
- A future interest is an “indefeasibly vested remainder in fee simple absolute”
Future Interests Retained by the Transferor
- The reversion, possibility of reverter, and right of entry can only be held by a transferor.
- Each one arises when a transferor conveys an estate to a third party that is smaller (in duration) than the
estate she holds.
- These are the processes by which a transferor “re-takes” possession on the occurrence of an event
- Reversion: A transferor retains a reversion when she conveys a smaller vested estate than the one she has.
- A reversion is the future interest remains after the duration of the time she granted has lapsed
- Possibility of reverter: The possibility of reverter is the future interest retained by the transferor who holds a
fee simple absolute, but conveys a fee simple determinable.
- Gives the transferor the right to possession if the estate she granted terminates (the condition occurs)
- Right of entry: The right of entry is the future interest retained by the transferor who holds a fee simple
absolute, but conveys a fee simple subject to a condition subsequent.
- If the condition occurs then the transferor can “re-enter” to take back the land. Right of entry does not
become possessory until and unless the hold takes affirmative steps to regain possession.
Future Interests Created in a Transferee
 - A future interest created in a transferee can only be a remainder or an executory interest
- Remainder
- A future interest in a transferee that: (1) is capable of becoming possessory immediately upon the
expiration of the prior estate; and (2) does not divest (or cut short) any interest in a prior transferee.
- Capable of becoming possessory: it is only necessary for the transferee to be capable of possessing the
estate. Guaranteed possession is not required
- Ex: “to A for life, then to B” even if A is 18 and healthy, and B is old and not, B is capable of
becoming possessory
- Does not divest: a remainder “waits patiently” for the preceding estate to expire.
- Same ex as above. B cannot divest A’s estate, his possession begins when B’s ends.
- An executor interest looks similar to a remainder, but has a different condition
- Ex: “to A for life, BUT, if B becomes president then to B” the condition is an executory limitation
- Major types of Remainders:
- Vested Remainder: has 3 different types
- Indefeasibly vested remainder - A remainder is vested if (1) it is created in an ascertainable person (must
be alive and identifiable) and (2) it is not subject to a condition precedent other than the natural
termination of the prior estate.
- Ex: “to A for life, then to B”
- Vested Remainder subject to divestment - is vested, but is subject to a condition subsequent.
- Ex: “to A for life, then to B, but if B does not survive A, then to C” C’s interest is subject to a
condition subsequent
- Vested Remainder Subject to Open - remainder held by one or more living members of a group or class
that may be enlarged in the future
- Ex: “to A for life, then to A’s children” If A has one child, any more children would enlarge the group
- Contingent Remainder - if a remainder is not vested, it is contingent
- Is either: (1) given to an unascertainable person or (2) subject to a condition precedent.
- Ex: “to A for life, then to the heirs of A” since there are no current heirs it is not a vested remainder
subject to open (there are currently no ascertainable persons)
- Ex: “to A for life, then to B if he becomes president” that is a condition precedent (becoming
president)
- Ex: on page 351
- Executory Interests
- An executory interest is a future interest in a transferee that must divest another estate or interest to
become possessory.
 - If a future interest in a transferee is not a remainder, it is an executor interest (is the opposite of a
remainder)
- Springing executory interest is where the executory interest follows an interest in the transferor
- Shifting executory interest is where it follows the interest in a transferee
- Ex: “to B for life, then one year after B’s death, to D and his heirs.”
- O regains the estate for one year, but O’s estate is cut short (divested)
- Reading the Instrument
- Evaluate each interest in sequence as it occurs, rather than finding the overall meaning
- Ex: “to B for life, then to D and his heirs, but if E does not survive F, then to me.” D’s remainder is
vested because there is no condition for him to gain possession.
- Ex: “to B for life, then to D and his heirs if E survives F, if not then to me.” D’s remainder is a
contingent remainder since E has to survive (condition precedent) for D to gain possession
Concurrent Interests
Concurrent Ownerships
- Each co-owner or co-tenant has the right to use and possess the entire property
- Modern Concurrent Estates
- Three types:
- Tenancy in common - O conveys “to A and B [as tenants in common].”
- Each tenant has an undivided, fractional interest in the property
- Is freely alienable, devisable, and descendible for each person
- Each has the right to use & enjoy entire parcel even if one’s fractional share is smaller than another
- If language is ambiguous then tenancy in common is presumed
- Joint tenancy - O conveys “to A and B as joint tenants with right of survivorship”
- Each has the right to use and enjoy entire parcel,
- If one persons dies, then the other automatically becomes the sole owner
- A joint tenancy interest is neither devisable nor descendible
- Common law limitations: tenancy is created only when the four unities of time, title, interest, and
possession are present
- If the unity of time, title, or interest is missing, a tenancy in common is created
- If one joint tenant transfers their interest, the joint tenancy is severed, and the grantee becomes a
tenant in common.
- Tenancy by the entirety - “to A and B as husband and wife as tenants by the entirety.”
 - Only married couples can hold property in tenancy by the entirety.
- A tenancy by the entirety can only be ended by death, divorce, or the agreement of both spouses
- James v. Taylor - A deed need not state “joint tenancy.” Survivorship is the distinctive characteristic of a
joint tenancy
- Use of a Straw Person - Is a way to get around the “time” issue of unity.
- A would convey the property to C who would then convey the property to “A and B as joint tenants with
the right of survivorship.”
- Today many jurisdictions have eliminated the need for a straw person
- Severance
- Tenhet v. Boswell - The joint tenancy is not severed if a lease is executed.
- A joint tenant may, during his lifetime, grant certain rights in the joint property without severing the
tenancy. But, when he dies, his interests die with him, and any encumbrances placed by him on the
property become unenforceable against the surviving joint tenant.
- If a joint tenant leases their interest and dies, the lease does not sever the joint tenancy, but expires upon
the death of the lessor joint tenant.
- Partition
- Two kinds
- Partition in Kind: physical division according to proportional interest
- Partition by Sale: Sale and division of proceeds by proportion. (more common)
- Partition by sale should only be ordered when two conditions are satisfied:
- The physical attributes of the land are such that a partition by kind is impracticable or inequitable;
- The interests of the owners would better be promoted by a partition by sale
- Ark Land Co. v. Harper - Was a tenancy in common, no right of survivorship
- “partition means the division of the land held in cotenancy into the cotenants’ respective fractional shares.
If the land cannot be fairly divided, then the entire estate may be sold and the proceeds appropriately
divided.”
- The self-created enhancement (of value increase by commercial enterprise purchasing prop) cannot be the
determinative factor in forcing a pre-existing owner to give up their rights.
- Majority/minority ownership doesn't allow each to suppress other co-tenant’s rights
- The additional cost to Ark Land that will result from a partitioning in kind simply does not impose the type
of injurious inconvenience that would justify stripping the Caudill heirs of their interest in the estate
- Esteves v. Esteves - Son and parents bought house together
- A co-tenant in possession does not owe any rent to a co-tenant out of possession, absent ouster
- Ouster
- Occurs when one co-tenant in possession refuses to allow another co-tenant to occupy the property
- Actual – physically prevent party from using (changing locks)
- Constructive – one party can’t use because of the other party’s use (chair)
- Majority Rule: A cotenant is not liable for rent, even if there is a demand to vacate or pay rent (even if
there is ouster)
- Minority Rule: Before an occupying cotenant can be liable for rent, he must have denied his cotenants
the right to enter (there must have been ouster)
- When the possessing party seeks contribution, then and only then, will the court order a credit (deduction)
for occupancy of the premises
- Each co-tenant is entitled to his portion of rent or profits from the land
- Contribution
- Accounting action is when a co-tenant seeks to obtain share of rents or profits
- Contribution action is when a co-tenant seeks to obtain reimbursement for expenses
- No contribution for improvements to the land
- Can get contribution for repairs
Marital Property
- Separate Property system - used by majority of states
- Property is separately owned by the spouse who acquires it
- Creditors cannot attach to other spouses property.
- Divorce - Equitable distribution of the property owned by each spouse
- Property subject to equitable distribution is any property acquired with the earning of either spouse
during the marriage (some states allow property acquired before marriage to be included)
- Death - The surviving spouse receives a forced share (or elective share) of the decedent’s estate.
- Survivor has a choice: (a) take under the decedent’s will or (b) receive a defined portion of the
decedent’s estate, usually a 1/3 or 1/2 share.
- Typically a dying spouse cannot give property away immediately before death to avoid the forced
share
- Community Property system - used by minority (9) of states
- All earnings and assets acquired during marriage are owned by spouses equally
- Each spouse holds an equal, undivided share in the community property, although neither can transfer
that share to a third party
- Unlike a joint tenancy or tenancy by the entirety, neither spouse has a right of survivorship.
 - Property acquired before marriage or after marriage by gift or inheritance remains the separate
property of the individual spouse.
- Divorce - All community property is divided between the spouses
- Any property acquired before marriage still remains possession of that individual
- Death - The half of the decedent can be allocated (devised) as the decedent wishes.
- The other half (half belonging to surviving spouse) remains property of the surviving spouse
- Tenancy by the Entirety
- At common law, every conveyance to a married couple was presumed to create a tenancy by the entirety.
Today, only half of the states recognize this cotenancy (tenancy by the entirety).
- Sawada v. Endo - Both parties must act together in a tenancy in the entirety
- Neither husband nor wife has a separate divisible interest in the property held by the entirety that can be
conveyed or reached by execution.
- A joint tenancy may be destroyed by voluntary alienation, or by levy and execution, or by compulsory
partition, but a tenancy by the entirety may not.
- A tenancy in the entirety would not be possible where a third party has become a tenant in common or a
joint tenant with one of the spouses, or where the ownership of the contingent right of survivorship of one
of the spouses in a third party has cast a cloud upon the title of the marital estate, making it virtually
impossible to utilize the estate for these purposes.
- With the enacting of the Married Women Property Act the husband could not convey, lease, mortgage or
otherwise encumber the property without her consent.
- It gave the wife the right to convey the property in its entirety, jointly with her husband, during the
marriage relation.
- Guy v. Guy - professional degrees are not marital property, but, equitable reimbursement of the supporting
spouse must be reached
- Pre-nuptial agreements are enforceable unless: (1) the agreement was unconscionable when made; and (2)
the complaining spouse did not receive full financial disclosure from the other spouse, did not execute a
written waiver of rights, and did not have adequate knowledge about the other spouse’s financial condition

Leasehold Estates
Creating the Tenancy
- Selecting the Estate
- 4 nonfreehold estates:
- Term of years tenancy - Fixed duration and agreed upon in advance
- Does not need to be a full year, only fixed duration
 - Once the term ends the landlord may automatically retake possession
- Periodic tenancy - Is automatically renewed for successive periods unless the landlord or tenant
terminate the tenancy by giving advance notice,
- Notice must be equal to period length, though not greater than 6 months
- ex: month to month, year to year etc
- Tenancy at will - Continues “only so long as both the landlord and tenant desire”
- Tenancy terminates automatically if either party dies, tenant abandons possession or landlord sells the
property
- Either the landlord or tenant can terminate at any time
- Modern rule is notice of termination must occur at least before normal rent payment is due
- Tenancy at sufferance - Created when a person who rightfully took possession continues after that right
ends
- Wrongful occupancy, or
- Tenant becomes a holdover tenant
- Landlord has 2 options: view him as trespasser, or renew the tenancy for another term
- Some states limit the renewal by either duration or setting a higher rent (double)
- Effel v. Rosberg - a lease for an indefinite and uncertain length of time is an estate at will.
- If a lease can be terminated at the will of the lessee, it may be terminated at the will of the lessor
- Delivering Possession
- Keydata v. United States - Keydata did not vacate, argued NASA could have taken legal possession
- Under the “American” (minority)(and Massachusetts) rule, the landlord merely covenants that possession
will not be withheld by himself or by one having paramount title.
- Landlord is obligated only to deliver “legal possession,” i.e., the right to possess.
- It’s the tenant’s responsibility to oust a trespasser or holdover. (Tenant has right to sue holdover
tenant)
- Under the “English” (majority) rule, when the lease is silent on the point, the landlord is required to deliver
actual possession of the premises at the beginning of the term.
- Landlord obligated to deliver possession (vacant premises)
- Landlord is in breach if the lessee cannot take possession because of a holdover tenant
- On landlord’s default, tenant can sue for damages and either terminate or continue the lease.
- Landlord has right to sue holdover tenant (and obligation)
Condition of the Premises
 - Covenant of Quiet Enjoyment: Implied covenant that tenant shall have the right of possession, occupancy,
and beneficial use of every portion of the leased premises.
- Breached by 1. actual or 2. constructive eviction, or 3. wrongful conduct by landlord
- Constructive Eviction: When the Landlord, by act or omission, materially deprives the tenant of the
beneficial use or enjoyment of the leased property.
- Does not allow a tenant to fully escape a lease
- In order to show constructive eviction as a defense you must show you were constructively evicted (risk is
that you might have to still pay the back rent and not be granted the eviction)
- Could sue under covenant of quiet enjoyment
- Typically a tenant cannot assert constructive eviction due to the acts of third parties, but many court
recognize an exception if the landlord has a legal right to control the third party conduct
- In general, a tenant seeking to rely on constructive eviction must notify the landlord about the problem,
give the landlord a reasonable period to fix the problem, and then vacate the premises.
- JMB Properties v. Paolucci - A constructive eviction results from a landlord’s failure to keep the premises in
a tenantable condition.
- Untenantability exists when the interference with occupancy is of such a nature that the property cannot be
used for the purpose for which it was rented.
- Constructive eviction cannot exist where the tenant does not surrender the property (in a reasonable
amount of time).
- Tenant can waive any claim of constructive eviction by remaining on the premises for an unreasonable
length of time after the rise of the untenantable condition.
- Untenantability exists when the interference with occupancy is of such a nature that the property
cannot be used for the purpose for which it was rented.
- Tenant does not need to vacate immediately, but does need to vacate in a reasonable amount of time
- If the tenant fails to vacate within a reasonable time, the tenant is considered to have waived the
landlord’s breach of covenant
- Actual Eviction: Tenant is deprived of occupancy of some part of the premises.
- Tenant is not obliged to pay rent
- Must be substantial so as to justify the Tenant leaving, and must leave within reasonable period. If so,
Tenant is not liable for rent.
- Village Commons, LLC v. Marion County Prosecutors - Actual eviction is when the tenant is deprived of the
occupancy of some party the demised premises
- Constructive eviction is when the lessor, without intending to oust the lessee, does an act by which the
latter is deprived of the beneficial enjoyment of some party of the premises, and has the right of election to
quit, and avoid the lease and rent.
- Tenant must quit the premises if he would relieve himself from liability to pay rent
 - Tenant has right to the entire premises, if landlord deprives tenant of use of substantial part, landlord is
not entitled to any part of the rent during the time of deprivation
- Typically a tenant cannot assert constructive eviction due to the acts of third parties, but many court
recognize an exception if the landlord has a legal right to control the third party conduct
- Wrongful conduct requirement may be satisfied by an act or omission. Is met where the landlord: (1) fails to
perform an obligation in the lease, (2) fails to adequately maintain and control the common area, (3) breaches
a statutory duty owed to the tenant, (4) fails to perform promised repairs, or (5) allows nuisance-like
behavior.
- Proving Breach
- If (a) the condition of the leased premises amounts to a breach of the covenant of quiet enjoyment, and (b)
if the breach is so substantial as to justify the tenant absenting the premises, and (c) if the tenant thereafter
leaves within a reasonable time, then it was as though the tenant has been evicted
- Tenant is relieved of obligation to pay rent
- If breach is not so substantial as to work a constructive eviction, tenant may stay in possession and sue
for compensatory damages
- Partial eviction (actual and constructive) - The conventional rule holds that where a landlord commits an
actual eviction, even though from a part of the premises only, the tenant is relieved of all liability for rent
notwithstanding continued occupation of the balance.
- Restatement rejects this idea, and provides that the tenant may receive an abatement in the rent but may
not withhold all rent.
Implied Warranty of Habitability
- Landlord warrants that the leased premises are habitable at the outset of the lease term and will remain so
during the course of the tenancy.
- Landlord must deliver over and maintain, throughout the period of the tenancy, premises that are safe,
clean, and fit for human habitation.
- Tenant must notify the landlord about the defects and allow a reasonable time for the landlord to make
repairs, but tenant is not required to vacate the premises and can remain and withhold rent
- Wade v. Jobe - Requires that the landlord maintain “bare living requirements,” and that the premises are fit
for human occupation.
- To determine whether there is a breach of the warranty of habitability, courts can consider:
- It does not require the landlord to maintain the premises in perfect condition at all times, nor does it
preclude minor housing code violations or other defects.
- Landlord will not be liable for defects caused by the tenant.
- Landlord must have a reasonable time to repair material defects
- Remedies if landlord breaches:
- Sue for damages: The tenant may sue for damages while remaining in possession or after vacating the
premises. Courts differ widely on the appropriate measure of damages.
 - Withhold rent: This is usually the most effective remedy because, as the Wade court observes, it gives the
landlord an incentive to repair the premises. In most jurisdictions, the tenant may withhold all rent, even
for a partial breach of the warranty. Some courts recommend that rent be paid into an escrow fund under
judicial control.
- Terminate the lease: In most states, the tenant may terminate the lease and vacate the premises, thus
avoiding liability for future rent.
- Repair and deduct: In many states, the tenant may withhold rent and use these funds to repair the defects.
(may be prohibited by lease)
- Damages
- Special damages may be recovered when, as a foreseeable result of the landlord’s breach, the tenant suffers
personal injury, property damage, relocation expenses, or other similar injuries.
- General damages recoverable in the form of rent abatement or reimbursement to the tenant are more
difficult to calculate.
- Ex: fair rental value of premises minus rental value in un-repaired condition, or
- Percentage diminution approach - tenant’s recovery reflects the percentage by which the tenant’s use
and enjoyment of the premises has been reduced by the uninhabitable conditions.
Selecting Tenant
- Fair Housing Act of 1968 42 USC §3604
- Exemptions from Fair Housing Act
- Does not apply to two types of property: (1) “rooms or units in dwellings containing living quarters
occupied … by no more than four families living independently of each other, if the owner … occupies
one of such living quarters as his residence”; and (2) any single-family house sold or rented by an owner
if he does not own more than three houses and does not use a real estate broker or agent in the sale or
rental.
- Civil Rights act of 1866 42 USC §1982 - All citizens of the United States 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.
- Defining Dwelling
- The Fair Housing Act defines a “dwelling” as “any building, structure, or portion thereof which is
occupied as, or designed or intended for occupancy as, a residence by one or more families.” Family does
include single persons
- The court in Kozinski flatly holds that “it’s not unlawful to discriminate in selecting a roommate.”
- the right of intimate association
Transferring the Tenant’s Interest
- Ernst v. Conditt - the distinction between an assignment of a lease and a sublease is an assignment conveys
the whole term, leaving no interest nor reversionary interest in the grantor or assignor.
 - In a sublease a tenant grants an interest in the leased premises less than his own, or reserves to himself a
reversionary interest in the term.
- An assignment is a transfer of whole term of lease; creates a triangular relationship
- Privity of contract continues between T and L; it also arises between T and U, because their agreement
is a contract. But privity of estate now exists only between L and U
- As a general matter, L and U are obligated to perform all of the covenants in the original lease that “run
with the land.”
- A sublease is a transfer of less than full remaining term of lease or when the original tenant retains some
interest in the lease creates two separate relationships
- L and T still have privity of contract and privity of estate, which continues their mutual rights and
duties; their original landlord-tenant relationship remains intact.
- T and U also have privity of contract and privity of estate,
- Third Party Beneficiary - party that is not a party with privity of contract (not a part of the contract) but has
some interest in the contract.
- A fundamental principle of contract law is that if A makes a promise in a contract with B in order to
benefit C, then C may enforce the promise against A.
- Even though leasehold interests may be freely transferred at common law, the parties to a lease may alter
this rule.
- Sole discretion clause: The lease might provide that L may refuse consent for any reason whatsoever in
his “sole discretion.”
- Reasonableness clause: The lease might provide that L may refuse consent only on a commercially
reasonable basis. For example, L might deny consent if Z has a bad credit record.
- No standard in lease (silent consent clause): The lease might require L’s consent, but contain no
standard to guide L’s decision; such a provision is called a silent consent clause.
Privity of Estate and Privity of Contract
- Privity of Contract: Relationship existing between both parties of a contract.
- In Assignment and Sublease, exists between Lessor and Lessee/Sublessor, and between Lessee/Sublessor
and sublessee, but not between the Lessor and Sublessee.
- Privity of Estate: Relationship existing between both parties with a mutual, immediate, and simultaneous
interest in a leased premises.
- In Assignment, exists between Lessor and Sublessee.
- In Sublease, does not exist between Lessor and Sublessee, but does between Lessee/Sublessor and
Sublessee
- Kendall v. Ernest Pestana - Lessor has a right to object to a proposed assignee on reasonable commercial
grounds.
 - Majority Rule - where a lease contains an approval clause (a clause stating that the lease cannot be
assigned without the prior consent of the lessor), the 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
objection.
- Minority Rule - where a lease provides for assignment only with the prior consent of the lessor, such
consent may be withheld only where the lessor has a commercially reasonable objection to the assignment,
- Restatement of Property - A restraint on alienation without the consent of the landlord of a tenant’s
interest in leased property is valid, but the landlord’s consent to an alienation by the tenant cannot be
withheld unreasonably, unless a freely negotiated provision in the lease gives the landlord an absolute
right to withhold consent.
Ending the Tenancy
1. Naturally Ending
- Notice is required to end a periodic tenancy
2. Agree to end lease early
3. Abandonment
- Abandonment by the tenant occurs when he vacates the leased property without justification and without
any present intention of returning and he defaults in the payment of the rent.
- If a tenant vacates the premises with justification—for example, due to a constructive eviction—no
abandonment occurs.
- Options Landlord has:
- Sue for all rent: L could keep the premises vacant until the lease term expired, and then sue T for all the
accrued rent. 
- Terminate the lease: L could treat T’s abandonment as an implied offer of surrender and terminate the
lease.
- Mitigate damages and then sue for rent: L could mitigate his damages by reletting the premises to
another tenant, retaining that rent, and then suing T for the balance.
- Tenant might be able to minimize or avoid loss by finding a replacement tenant
- But landlord can reject the substitute tenant if they have a justifiable reason. I.e. not as qualified etc
- Sommer v. Kridel - Landlord has a duty to mitigate damages
- Modern trend is that contract rules apply and a landlord has a duty to mitigate damages when he seeks to
recover rent due from defaulting tenant
- Exception: tenants are required to bear the cost of any reasonable expenses incurred by a landlord in
attempting to re-let the premises
- Tenant might be able to minimize or avoid loss by finding a replacement tenant
- But landlord can reject the substitute tenant if they have a justifiable reason. I.e. not as qualified etc
 - Mitigation doctrine generally applies to commercial property as well
- Forfeiture Clauses - allow landlord to re-enter premises should tenant (materially) breach the contract.
- Material breach could be failure to pay rent, engage in illegal activity,
4. Surrender - mutually agreeing to terminate lease early
5. Eviction
- Tenant in Default - Landlord can retake possession of leased premises when legally entitled to
- Such as a tenant holdover or breach of lease containing reentry clause
- Wrongful Eviction
- Landlord did not have right of possession, or means used by landlord were forcible.
- Allows wrongfully evicted tenant to recover damages.
- Dispossessing Tenant (Rule split)
- Majority: The only lawful means to dispossess a tenant who has not abandoned nor voluntarily
surrendered but who claims possession adversely to a landlord’s claim of breach of a written lease is the
judicial process
- Applies to residential and commercial settings
- Minority: A landlord may rightfully use self-help to retake leased premises from a tenant in possession
without incurring liability for wrongful eviction provided two conditions are met:
- The landlord has a right to repossess and
- The exercise of the re-entry is reasonable/peaceable
- Self Help - the only lawful means to dispossess a tenant who has not abandoned nor voluntarily
surrendered but who claims possession adversely to a landlord’s claim of breach of a written lease is by
resort to judicial process.
- Berg v. Wiley - Under common law a landlord may rightfully use self-help to retake leased premises from a
tenant in possession without incurring liability for wrongful eviction provided two conditions are met:
- (1) The landlord is legally entitled to possession, such as where a tenant holds over after the lease term
or where a tenant breaches a lease containing a reentry clause; and
- (2) the landlord’s means of reentry are peaceable.
- Under the common-law rule, a tenant who is evicted by his landlord may recover damages for wrongful
eviction where the landlord either had no right to possession or where the means used to remove the tenant
were forcible, or both.
Nuisance
- Public nuisance - improper interference with a right common to the public
- Coming to the nuisance is not a defense
 - Private nuisance - a non-trespassory invasion of another’s interest in the private use and enjoyment of land
- Elements
- Intentional: The defendant’s conduct is intentional if he acts for the purpose of causing the harm or he
knows that the harm is resulting or is substantially certain to result from his conduct.
- Nontrespassory: The interference must not involve any physical entry onto the land of another. For
example, noise, vibration, light, and odors are all viewed as nontrespassory invasions.
- Unreasonable: Jurisdictions differ about the meaning of this element. Some states follow the gravity
of the harm test: the defendant’s conduct is unreasonable if it causes substantial harm, regardless of
the social utility of the conduct. Many states use the Restatement standard: conduct is unreasonable if
the gravity of the harm outweighs the utility of the conduct. Restatement (Second) of Torts § 826(a).
A number of states use multi-factor tests that fall somewhere between these two approaches.
- Substantial interference: There must be a “real and appreciable invasion of the plaintiff’s interests.”
Restatement (Second) of Torts § 821F cmt. c.
- Use and enjoyment of land: The defendant’s conduct must interfere with the use and enjoyment of
land, e.g., causing physical damage to the property or personal injury to occupants.
- Sic utere tuo ut alienum non laedas - use your property in a way that does not injure others property
- Richardson’s 3 elements:
- Intentional
- Interference with the use and enjoyment of land
- Non-trespassory invasion
- Two others:
- Substantial interference
- Unreasonable
- Thomsen v. Greve - Factors for determining if an activity is a nuisance
- Restatement of Torts §822: provides in significant part: “One is subject to liability for a private nuisance if,
but only if, his conduct is a legal cause of an invasion of another’s interest in the private use and enjoyment
of land, and the invasion is … intentional and unreasonable.”
- An intentional invasion of another’s interest in the use and enjoyment of land is unreasonable if:
- the gravity of the harm outweighs the utility of the actor’s conduct.
- Factors for determining the gravity of the harm:
- (a) the extent of the harm involved;
- (b) the character of the harm involved;
- (c) the social value that the law attaches to the type of use or enjoyment invaded;
- (d) the suitability of the particular use or enjoyment invaded to the character of the locality; and
 - (e) the burden on the person harmed of avoiding the harm.
- Factors for determining the utility of the the conduct:
- (a) the social value that the law attaches to the primary purpose of the conduct;
- (b) the suitability of the conduct to the character of the locality; and
- (c) the impracticability of preventing or avoiding the invasion.
- Puritan Holding Co. v. Holloshitz - If only harm is aesthetic, then courts generally won't find a nuisance
- In determining whether an action is a nuisance, the court must take into account the location and
surroundings. An activity in one location may be reasonable, but in another may not
- If a nuisance is found outside of the aesthetics, then aesthetics could be used to determine damages
- Sans. v. Ramsey Golf - Utility of conduct must be weighed against the harm The question is not simply
whether a person is annoyed or disturbed, but whether the annoyance or disturbance arises from an
unreasonable use of the neighbor’s land or operation of his business.
- The harm must be substantial before the court will engage in a balancing test
- One way the court adjudicates is through a first in time approach - coming to the nuisance
- Coming to the nuisance has varying degrees of weight depending on the jurisdiction
- The harm suffered must be of the kind that would normally be suffered by a normal person, meaning
cannot be thin skull
- Since there is little utility from actions taken to harm another, acts of malice are usually deemed to be a
nuisance
- Property Rule v Liability Rule
- An injunction against trespass is a property rule
- Contract damages are a liability rule
- If one is willing to pay damages, one is free to breach
- Coming to the Nuisance
- Spur v. Del Webb - In ‘coming to the nuisance’ cases, the courts have held that the residential landowner may
not have relief if he knowingly came into a neighborhood reserved for industrial or agricultural endeavors
and has been damaged thereby
- Nuisance Remedies
- Injunction: The right to stop the wrongdoer from her/her actions causing the nuisance
- Nuisance must be substantial
- Injunction with Compensation - it’s possible that the party committing the nuisance might have to
indemnify the other party, if the nuisance is allowed to continue
- Damages: given if injury is slight
 - Permanent Damages: continuing monetary payment until nuisance abates
- Negotiation: parties are always able to negotiate between themselves.
- Boomer v. Atlantic Cement Co - Held for plaintiffs (granted injunction) but allowed Atlantic to pay plaintiffs
to remove injunction
- “Where a nuisance is of such a permanent and un-abatable character that a single recovery can be had,
including the whole damage past and future resulting therefrom, there can be but one recovery”
- It has been said that permanent damages are allowed where the loss recoverable would obviously be
small as compared with the cost of removal of the nuisance
Private Land Use Planning
- Easements and land use restrictions
- Covenants, Conditions, Restrictions CC&R’s
- Common Law Principles:
- Easements: Land cannot be used unless the owner has adequate access to it, which may require an
easement across land owned by another. Although most easements are the product of agreement, courts
will sometimes impose an easement without the consent of the burdened owner.
- Land use restrictions: An owner might agree to restrict the use of his land by creating a real covenant or
an equitable servitude. Courts were traditionally hostile to these restrictions due to fear they would
impair productive use, but modern law recognizes their value in private land use planning, notably their
use in enforcing CC&Rs.
- Nuisance law: Nuisance law resolves the comparatively rare situation where one owner’s use seriously
interferes with another owner’s use. Today nuisance law is less important than in the past. Since the
1920s, zoning laws and other land use regulations have largely taken over its traditional function,
- The Restatement merges the easement, the real covenant, and the equitable servitude into one doctrine: the
servitude.
- “servitudes are useful devices that people ought to be able to use without artificial constraints.”
Servitudes
- Servitudes functionally fall into 5 categories
- Right to do some act on/enter another’s land (Right of way) - Easement or License
- Right to enter another land and remove something attached to the land (i.e. minerals) - Profit
- Right to restrict an owner from using her land in some way - Negative Easement, or Real Covenant, or
Equitable Servitude
- Right to compel an owner to perform some act on her own land (injunction)- Real Covenant, or
Equitable Servitude (typically equitable servitude)
- Right to compel an owner to pay money to maintain certain facilities - Real Covenant, or Equitable
Servitude (typically real covenant)
Easements
- A nonpossessory right to use the land of another person.
- Five basic types of easements:  
- 1. Express easement
- The express easement arises only with the agreement of the owner whose land is burdened.
- But the remaining four types are imposed as a matter of law, without the owner’s agreement.
- 2. Implied easement by prior existing use
- 3. Easement by necessity
- 4. Prescriptive easement
- 5. Easement by estoppel (or irrevocable license)
- Property:
- dominant tenement or dominant land - land benefited by the easement
- servient tenement or servient land - land which is burned by the easement
- Parties:
- dominant owner - the easement holder
- servient owner - the owner of the servient tenement
- Appurtenant or in gross:
- An appurtenant easement - Runs with the land
- benefits the holder in her use of a specific parcel of land, the dominant tenement. A’s easement is
appurtenant because it benefits A in her use of Greenacre.
- An easement in gross - Runs with the party
- is not connected to the holder’s use of any particular land; rather, it is personal to the holder. Most
easements are appurtenant.
- Affirmative or negative:
- An affirmative easement allows the holder to perform an act on the servient land. A’s easement is
affirmative because it allows her to cross B’s property.
- A negative easement allows the holder to prevent the servient owner from performing an act on the
servient land. Most easements are affirmative.
Creating Easements
- Express easement by grant: This arises when the servient owner grants an easement to the dominant owner
- May be created only in a writing that satisfies the Statute of Frauds
 - A well-drafted easement will: (a) identify the parties; (b) describe the servient land and the dominant
land (if any); (c) describe the exact location of the easement on the servient land; and (d) state the
purposes for which the easement may be used.
- Express easement by reservation: This arises when the dominant owner grants the servient land to the
servient owner, but retains or reserves an easement over that property.
Express Easements
- To determine the true character of an interest, a court must examine the nature of the right rather than the
name given to it by the parties
- An easement implies an interest in land ordinarily created by a grant, and is permanent in nature
- Express easements are subject to Statute of Frauds;
- Must be in writing,
- Signed by the grantor, and
- Showing an intent to create an easement.
- An attempt to create an easement that fails to satisfy these requirements is a mere license, which is
revocable (to an extent)
- A license does not imply an interest in land, but is a mere personal privilege to commit some act or
series of acts on the land of another without possessing any estate therein.
- An easement is not revocable, a license is revocable
- Most are the result of an Express Grant (grantor gives) or Express Reservation (grantor keeps for herself)
- Easement by Exception: Noted in the deed at conveyance that an easement exists over the land.
- Easement remains attached to the land like any other encumbrance, unless the grantee is a bona fide
purchaser. (A bona fide purchaser is one who purchases property without notice of any other party’s claim
to that property).
- Here the easement was recorded before Smith purchased so he could not claim bona fide purchaser
protection
- Millbrook Hunt, Inc v. Smith - Although the agreement provides that the grantor may “relocate” the Hunt’s
improvements, or redirect their trails “in order to make such improvements to the Land,” the grantor does not
have the right to completely exclude the Hunt from the property.
Implied Easement
- Emanuel v. Hernandez - Easement by preexisting use requires the proof of three elements—severance, use
prior to severance, and necessity.
- An easement from a prior existing use will be implied when the owner of a tract or of two parcels
conveys part of the property after having used the land so that one part of the parcel derives from
another a benefit that is apparent, continuous, and permanent.
- Elements of easement by preexisting use:
 - (1) common ownership of the dominant and servient parcels and a conveyance or other transfer
separating that ownership;
- (2) before the conveyance or transfer severing the unity of title, the common owner used part of the
united parcel for the benefit of another part, and this use was apparent and obvious, continuous, and
permanent; and
- (3) the claimed easement is necessary and beneficial to the enjoyment of the parcel conveyed or retained
by the grantor or transferor.
- Modern General Elements:  
- (1) Severance of title to land held in common ownership;
- (2) An existing, apparent, and continuous use of one parcel for the benefit of another at the time of
severance; and
- Using one lot for the benefit of another before the severance
- (3) Reasonable necessity for that use.
- What is reasonable necessity? The easement must be beneficial or convenient for the use of the dominant
tenement, but need not be essential.
- “Reasonable necessity usually means that alternative access or utilities cannot be obtained without a
substantial expenditure of money or labor.”
Easements by Necessity
- Berge v. State of Vermont - Lack of reasonable access is enough to warrant necessity
- Basic requirements for an easement by necessity as:
- (1) there was a division of commonly owned land, and
- (2) the division resulted in creating a landlocked parcel.”
- Easement is to remain in effect as long as the necessity exists
- There is a distinction between “extreme inconvenience,” which would not justify an easement by
necessity, and “necessity, and not convenience, that gives the right.”
- No reasonably consistent, practical means of reaching his property constitutes necessity
- Elements
- (1) Initial unity of ownership of the now separately owned dominant and servient estates,
- (2) Necessity at time of severance (strict)
- Strict Necessity (Majority): Without the easement, the property must not be able to be effectively used
without disproportionate effort or expense
- Reasonable Necessity (Minority)
- When necessity ends, the easement is terminated
 - Classic example: landlocked property
Easements by Prescription
- The distinction between adverse possession and a prescriptive easement “is that an adverse possession
claimant occupies or possesses the disputed land, whereas one seeking a prescriptive easement makes
some easement-like limited use of the disputed land.”
- Elements for Prescriptive easement:
- (1) the adverse use of another’s land;
- (2) that the adverse use was continuous and uninterrupted for the statutory period;
- (3) that the adverse use was actually known to the owner of the land, or so open, notorious and visible
that a reasonable owner of the land would have noticed the use; and
- (4) the reasonably identified starting point, ending point, line, and width of the land that was adversely
used, and the manner or purpose for which the land was adversely used.
- Common approach elements:
- Open and notorious
- adverse and hostile;
- continuous;
- for the statutory period.
Easement by Estoppel
- Elements:
- (1) Permission - a landowner allows another to use his land, thus creating a license;
- (2) Reliance (substantial reliance)- The licensee relies in good faith on the license, usually by making
physical improvements or by incurring significant costs; and
- (3) Knowledge - The licensor knows or reasonably should expect such reliance will occur.
- Easement by Estoppel would last as long as the reasonable reliance would last
- Kienzle v. Myers - An easement by estoppel may be found when an owner of property misleads or causes
another in any way to change the other’s position to his or her prejudice
- “Where an owner of land, without objection, permits another to expend money in reliance upon a
supposed easement, when in justice and equity the former ought to have disclaimed his conflicting
rights, he is estopped to deny the easement.”
- A servitude is established if the permission is given under such circumstances that the person who gives
it should reasonably foresee that the recipient will substantially change position on the basis of that
permission, believing that the permission is not revocable.
- Restatement: “If injustice can be avoided only by establishment of a servitude, the owner or occupier of
land is estopped to deny the existence of a servitude burdening the land when:
 - The owner or occupier permitted another to use that land under circumstances in which it was
reasonable to foresee that the user would substantially change position believing that the permission
would not be revoked, and the user did substantially change position in reasonable reliance on that
belief.
Interpreting Easements
- Marcus Cable Ass. v. Krohn - The contracting parties’ intentions, as expressed in the grant, determine the
scope of the conveyed interest. When the grant’s terms are not specifically defined, they should be given their
plain, ordinary, and generally accepted meaning.
- If a particular purpose is not provided for in the grant, a use pursuing that purpose is not allowed
- But, common law does provide that: the manner, frequency, and intensity of an easement’s use may
change over time to accommodate technological development. The changes must fall within the
purposes determined by the grant’s terms
- Court holds that it is the intent of the parties that is important, not whether there is a greater public good or
increased burden:
- The threshold inquiry is not whether the proposed use results in a material burden, but whether the
grant’s terms authorize the proposed use.
- The traditional rule is that the location of an easement can be changed only if both the servient and
dominant owners agree
- But, the servient owner may relocate an easement as long as this does not significantly lessen the utility
of the easement, increase the burdens on the easement holder, or frustrate the purpose of the easement.
- Brown v. Voss - If an easement is appurtenant to a particular parcel of land, any extension thereof to other
parcels is a misuse of the easement.
- An easement appurtenant to one parcel of land may not be extended by the owner of the dominant estate to
other parcels owned by him, whether adjoining or distinct tracts, to which the easement is not appurtenant.
- If an easement is created by prescription, then any change is viewed very narrowly
- If property is subdivided then property rights of original dominant property(right to use easement) transfer
to the subdivide dominant properties as well.
- If the use intensifies too much the easement can be terminated, but the intensity of an easement’s use
may change over time
Abandoning Easement
- Preseault v. US - Typically the grant under which such rights-of-way are created does not specify a
termination date
- The usual way in which such an easement ends is by abandonment, which causes the easement to be
extinguished by operation of law.
- Upon abandonment the then owner of the fee estate, the “burdened” estate, is relieved of the burden of
the easement.
- Easements, like other property interests, are not extinguished by simple non-use.
 - “In order to establish an abandonment there must be in addition to nonuser, acts by the owner of the
dominant tenement conclusively and unequivocally manifesting either a present intent to relinquish the
easement or a purpose inconsistent with its future existence.”
Land Trusts/Conservation Easements
- A land trust is a nonprofit organization that, as all or part of its mission, actively works to conserve land
by: Acquiring land or conservation easements (or assisting with their acquisition), and/or
Stewarding/managing land or conservation easements
- A conservation easement is a voluntary legal agreement between a landowner and a land trust or
government agency that permanently limits uses of the land in order to protect its conservation values.
Termination of the Easement
- Expiration: Agreement of the easement ends on its terms. The timeframe runs out
- Condemnation: Condemnation of the servient land also terminates the easement. In this event, the
easement holder is entitled to just compensation.
- Estoppel: An easement ends if the servient owner substantially changes his position in reasonable reliance
on the holder’s statement that the easement will not be used in the future.
- Merger: If one person obtains title to both the easement and the servient land, then the easement
terminates under the doctrine of merger.
- Misuse: In some jurisdictions, if the holder seriously misuses the easement, it may be ended through
forfeiture.
- Release: The easement holder may release the easement to the servient owner by executing and delivering
a writing that complies with the Statute of Frauds.
- Prescription: if the servient owner blocks use of the easement in an open and notorious, adverse and
hostile, and continuous manner for the prescriptive period, the easement ends.
- Abandonment: if dominant user ceases to use the land as intended for a certain period of time
- End of Necessity
Land Use Restrictions
- Owners can create land restrictions through covenants, conditions, and restrictions CC&R’s
- This could limit the use of the land in the future: for example before a property is sold.
- A similar device—the equitable servitude—evolved in the equity courts, with less stringent requirements
Traditional Approach
Real Covenants
- Real Covenant: A promise respecting the use of land that may run with the land (affirmative or negative)
- Remedied by damages (modern approach allows for injunctions or damages)
- For a real covenant to run with the land, there must be:
 - (1) Writing
- (2) Intent - the original contracting parties must have intended to bind successors to their respective
estates
- (3) Touch and Concern – the promise must relate in some way to the enjoyment, possession, or use of
the affected land (promise to limit the height, size, or location of structures)
- A covenant touches and concerns the land if it is connected with the use and enjoyment of the land.
The covenant must be so related to the land as to enhance its value and confer a benefit upon it. A
covenant touches and concerns the land when, by restricting the use of one parcel, it enhances the
value of another
- if a covenant is found to touch and concern, this alone may often be enough to show an intent that it
should bind successors
- (4) Notice – technically not a requirement, but the real covenant is not enforceable against someone who
lacks notice
- Types of Notices
- Actual notice: knowledge of a prior interest.
- Record notice: notice of any prior interest that would be discovered by a standard search of the public land
records.
- Inquiry notice: notice of any prior interest that would have been obtained by investigating suspicious
circumstances.

- (5) Horizontal Privity - concerns the relationship between the original parties to the promise.
- Horizontal privity requires “the transfer of some interest in land, other than the covenant itself,
between covenantor and covenantee in connection with the making of the covenant.”: the transfer of
benefit from development company to original owner would suffice
- Mutual interests: horizontal privity requirement is met where the original parties have mutual
simultaneous interests in the affected land (e.g., landlord and tenant; cotenants; or owners of the
dominant and servient lands for an easement).
- Successive interests: horizontal privity, is satisfied by a grantor-grantee relationship between the
original parties, so that they have successive interests in the affected land. 
- (6) Vertical Privity – Privity of estate between one of the covenanting parties and his assignee
- Vertical privity requires that the original parties’ successors be in privity with them: Kenagy’s
purchased from original owners granting vertical privity,
- Most states have abandoned the vertical privity requirements
- If benefit runs, and the burden has not been transferred then the benefit is valid
- If the party looking to assert the covenant would be the benefiting party then the question is does the
benefit run
- If the burden runs, and the benefit has not been transferred then the benefit is valid
- If a party is looking to assert the covenant should not be valid, (that land is not burdened) then the
question is does the burden run
- Deep Water Brewing v. Fairway - The elements of a running real covenant are:
- (1) the covenants must have been enforceable between the original parties, such enforceability being a
question of contract law except insofar as the covenant must satisfy the statute of frauds;
- (2) the covenant must “touch and concern” both the land to be benefited and the land to be burdened;
- (3) the covenanting parties must have intended to bind their successors in interest;
- (4) there must be vertical privity of estate, i.e., privity between the original parties to the covenant and
the present disputants; and
- (5) there must be horizontal privity of estate, or privity between the original parties.
- Covenants may be enforced by or against persons who succeed to interests they held in the burdened or
benefited land.
- The law of running covenants imposes a duty or confers a benefit upon remote parties, not because they
consensually agree, but because the covenant bore a certain relationship to parcels of land and because
they stepped into a certain relationship with the same parcels.
- Where a developer has manifested a common plan to impose uniform restrictions on a subdivision, all lots
are burdened and benefited by the restrictions even if they do not appear in the chain of title to every lot.
Equitable Servitude
- The traditional remedy for breach of a real covenant is damages, while the equitable servitude is enforced
by an injunction.
- Standard equitable defenses are available against an equitable servitude claim.
- It is easier to create an equitable servitude than a real covenant.
- For burden to run need 4 elements:
- Meet statute of frauds (or common plan),
- Intent to bind,
- Must touch and concern, and
- Notice;
- do not need horizontal or vertical privity (only necessary for burden to run)
- Notice is only a requirement if you’re a purchaser for value
- If a party is looking to assert the covenant should not be valid, (that land is not burdened) then
the question is does the burden run
- For benefit to run need 3 elements:
- Meet statute of frauds (or common plan),
- Intent to bind,
- Must touch and concern;
 - do not need notice or horizontal or vertical privity
- If the party looking to assert the covenant would be the benefiting party then the question is does
the benefit run
- Restatement approach:
- Must be in writing
- Intent to bind
- Not contrary to public policy
- The Restatement combines the real covenant and the equitable servitude into one doctrine: the covenant that
runs at law.
- A covenant that runs at law is a type of servitude and arises when
- (Intent) the owner of the property to be burdened intends to create a servitude;
- (Writing) he enters into a contract or conveyance to this effect that satisfies the Statute of Frauds; and
- the servitude is not arbitrary, unconstitutional, unconscionable, or violative of certain public policies
(e.g., it cannot unreasonably restrain alienation).
- Court may modify the servitude if changed conditions have prevented the purpose of the servitude being
accomplished
- Gambrell v. Nivens - Covenants that fail the more exacting requirements for real covenants at law may still
be enforced in equity as an equitable servitude.
- For a covenant to bind remote grantees in equity:
- (1) it must “touch and concern” the land;
- (2) the original parties to the covenant must intend that it run with the land and bind remote grantees;
- (3) the remote grantee must have had notice of the covenant.
- To be binding: restrictions need not be in the chain of title if the purchaser had notice of them
- The first two elements must till be met
Common Interest Communities
- A common interest community(CIC) is a planned residential development
- (a) where all properties are subject to comprehensive private land use restrictions and
- (b) which is regulated by a homeowners association.
- Three types: (1) Condominiums; (2) Cooperatives; (3) Planned subdivisions (gated communities)
- A declaration is a written instrument that establishes a CIC. Usually contains 4 basic parts:
- Homeowners association: It establishes the association that will administer the CIC, specifies the
association’s powers, and provides for an elected board of directors or similar group.
 - CC&Rs: It imposes CC&Rs or similar restrictions on all land within the CIC. These restrictions may be
enforced as real covenants or equitable servitudes (covenants, conditions, & restrictions).
- Assessments: It requires all unit owners to pay monetary assessments which finance the operation of the
association.
- Ownership rights: It generally provides that each unit owner holds fee simple absolute in his particular
unit, an undivided interest in common area of the CIC (for example, a swimming pool, tennis courts,
and meeting rooms), and a membership interest in the association. Alternatively, title to the common
area may be held by the association on behalf of the unit owners.
- Condominium
- Each unit in a condominium is owned separately in fee simple by an individual owner
- The exterior walls, the land beneath, the hallways, and other common areas are owned by the unit
owners as tenants in common
- Cooperatives
- Title to the land and building is held by a corporation; the residents own all the shares of stock in the
corporation and control it through an elected BOD (mainly just NYC)
- Planned Communities
- Fee simple ownership of home
- HOA owns common areas
Enforcing Restrictions
- Three defenses: (1) unreasonableness; (2) abandonment; and (3) changed conditions.
- The defenses of laches and unclean hands are available when equitable relief is sought
- Like an easement, a restriction may also be terminated by condemnation, estoppel, merger, prescription, or
release.
- Restatement § 3.1: a servitude is valid unless it is “illegal or unconstitutional or violates public policy.”
- Under this approach, a servitude violates public policy if it: (1) is arbitrary, spiteful, or capricious; (2)
unreasonably burdens a fundamental constitutional right; (3) imposes an unreasonable restraint on
alienation; (4) imposes an unreasonable restraint on trade or competition; or (5) is unconscionable
- Nahrstedt v. Lakeside Village Condominium Ass - The restriction must be uniformly enforced in the
condominium development to which it was intended to apply unless the plaintiff owner can show that the
burdens it imposes on affected properties so substantially outweigh the benefits of the restriction that it
should not be enforced against any owner.
- Common interest development use restrictions contained in a project’s recorded declaration are
enforceable unless unreasonable, wholly arbitrary, violate fundamental public policy, or impose a burden
on the use of affected land that far outweighs any benefit
- Equity will not enforce any restrictive covenant that violates public policy
- Nor will courts enforce as equitable servitudes those restrictions that are arbitrary,
 - Courts will not enforce a restrictive covenant when “the harm caused by the restriction is so
disproportionate to the benefit produced” by its enforcement that the restriction “ought not to be enforced.”
Abandonment of the CC&R
- Fink v. Miller - property owners may lose the right to enforce CC&Rs if the specific covenant they seek to
enforce has been abandoned,
- To determine abandonment of a covenant; party opposing enforcement must prove that existing “violations
are so great as to lead the mind of the average [person] to reasonably conclude that the restriction in
question has been abandoned.”
- In applying the test courts consider the “‘number, nature, and severity of the then existing violation[s], any
prior acts of enforcement of the restriction, and whether it is still possible to realize to a substantial degree
the benefits intended through the covenant.’
- But, abandonment of one covenant does not suggest abandonment of other, albeit similar, covenants in
the agreement.
Changed Circumstances
- Vernon Township Vol. Fire Dept. v. Connor - “[i]t is only when violations are permitted to such an extent as
to indicate that the entire restrictive plan has been abandoned that objection to further violations is barred.”
- A restrictive covenant may be discharged if there has been acquiescence in its breach by others, or an
abandonment of the restriction
- If conditions have changed for the dominant lots courts will refrain from enforcing such restrictions
- “land shall not be burdened with permanent or long-continued restrictions which have ceased to be of any
advantage.
- Do the changes alter or eliminate the benefit that the restriction was intended to achieve.
Methods to terminate real covenants and equitable servitude:
Eight ways to end real covenants or equitable servitudes.
- Three are exactly the same as for easements:
- 1) Merger - Same as for easements: instantly extinguished if affected properties have a common owner
- 2) Release - Written and recorded agreement to terminate servitude
- 3) Estoppel - Reliance on a promise
- Others come from standard equitable defenses
- Come out of courts of equity, with more flexible rules than law courts
- 4) Unclean hands - Plaintiff cannot successfully sue to enforce a requirement that they themselves have
violated; Imagine Miller in Fink v. Miller had asphalt shingles
- 5) Laches - Plaintiff cannot successfully sue if they have unreasonably delayed doing so
- At some point, old dogs lie; Akin to statute of limitations, though no fixed term: up to discretion of
court; Avoids situations in which substantial investments or reliance have been made
 - Two come from failure to enforce
- 6) Abandonment - We have already seen this in Fink v. Miller
- Sufficient failure to comply with an agreement or requirement that a reasonable person would
conclude it is no longer in effect;
- This is collective
- 7) Acquiescence - Similar to abandonment, but applies in circumstance where a benefited estate fails to
enforce a requirement against others
- Imagine the restaurant in Deep Water Brewing had not enforced the height restriction against other
developments, then sued to do so against Fairway
- This is specific
- Generally speaking, abandonment is more common in CIC context with mutually beneficial
restrictions, acquiescence in circumstances in which there is a single benefited estate.
- 8) Changed circumstances - Courts can modify only if there is a significant changing circumstance
Land Use Regulation
Zoning
- State constitutions grant governments police power to zone for the general prosperity and to promote the
public health, safety, morals, or general welfare
- Three ways (high level) a city can implement a new zoning law:
- To make it effective immediately but pay (eminent domain 5th Am takings)
- Abandonment or allowing non-conforming use until it naturally ends
- Amortization or requiring its termination over a reasonable period of time
- must be a long enough period of time for landowner to recover their investment.
Eminent Domain
- The Constitution limits the government’s eminent domain power.
- Two allowed circumstances:
- (1) the government may take property only for a “public use;” and
- (2) the private owner must receive “just compensation.”
- Gov’t can take property to remedy blighted areas or unsafe buildings, it can take land to give to the
public, it can take land and give it to a common carrier (railroad).
- Three questions regarding Eminent Domain
- Under what conditions may the government take property?
- If the government takes property what must it then do? (Pay?)
 - When is property taken, and when it is simply regulated?
- If land is taken for public use the government can take but must pay, if it is not for public use, then they
must get owner’s permission
Defining Public Use
- Edens v. City of Columbia - “public use” means just that and private property cannot be taken except for
public use, without the consent of the owner.
- Is public use public benefit? Or does public benefit require the possession, occupation and enjoyment of
land by the public at large?
- Absent infringement upon rights of others, and absent public use or compelling public necessity for the
property, the individual’s right is superior to all rights of the Government and is impregnable to the
efforts of government to seize it.
- One man’s land cannot be seized by the Government and sold to another man merely in order that the
purchaser may build upon it a better house or a house which better meets the Government’s idea of what is
appropriate or well-designed.
- It is within the power of the legislature to determine that the community should be beautiful as well as
healthy, spacious as well as clean, well-balanced as well as carefully patrolled.
- “It is only the taking’s purpose, and not its mechanics,” we explained, that matters in determining public
use.
Scope of Public Use
- Kelo v. City of New London - The plan must serve a public purpose,
- Promoting economic development is a traditional and long accepted function of government.
- A taking should be upheld as long as it is “rationally related to a conceivable public purpose.”
- The government’s determination that the area was sufficiently distressed to justify a program of
economic rejuvenation is entitled to our deference
Constitutionality of Zoning
- If zoning goes too far, it can constitute a taking
- However, in the absence of a taking, courts are not to interfere with zoning authorities’ determinations
unless they are arbitrary and irrational, even if they are wrong
- Courts will review a law (zoning ordinance) challenged as unconstitutional as a violation of substantive
due process in 3 steps:
- (1) Whether the law advanced the public health, safety, morals, or general welfare
- (2) Whether the legitimate state interest’s means chosen to achieve its end is rationally related to that
interest, and
- (3) If the law is narrowly tailored to promote that interest
- Village of Euclid v. Ambler Realty - Ordinances, and all similar laws and regulations, must find their
justification in some aspect of the police power, asserted for the public welfare.
- Thus the question whether the power exists to forbid the erection of a building of a particular kind or for a
particular use, should be determined by considering it in connection with the circumstances and the
locality
- The fact the city has some reasonable justifications is enough to justify the means.
- State can take property (title) under eminent domain, if they do they must compensate (5th Am).
- Court used the rational basis test: a law is unconstitutional only if it is “clearly arbitrary and unreasonable,
having no substantial relation to the public health, safety, morals, or general welfare.”
- Modern courts still use the rational basis test to evaluate the constitutionality of a land use regulation
unless the law discriminates against a suspect class (such as one based on race) or impairs a fundamental
right (such as freedom of religion), when the strict scrutiny test is used instead.
Typical Zoning Ordinance
- It is a legislative act with 2 components: (a) the text of the ordinance; and (b) maps that implement the
ordinance.
- The ordinance text creates different types of zones where particular uses are allowed
- The ordinance text will also impose height, bulk, and related restrictions, either on all structures in a
particular zone or on structures devoted to a particular use
- Exceptions - are granted for uses like hospitals, airports, landfills etc.
Non Conforming Uses
- Almost always, a new zoning ordinance will provide that it does not apply to lawful uses that already exist.
These prior nonconforming uses are allowed to continue, zoning regulations usually regulate future
development, not existing uses (to not allow nonconforming uses would be a violation of the 5th Am.)
- Ways to terminate non-confirming use:
- Abandonment or allowing non-conforming use until it naturally ends
- Amortization or requiring its termination over a reasonable period of time
- Must be a long enough period of time for landowner to recover their investment.
- Courts use a balancing test of: benefits to the public of ending the use, and the harm to the owner of
ending the use
- How long should the owner have expected the use to continue? (Pop up business or factory)
- Prohibiting the resumption of a nonconforming use after its abandonment or discontinuance
- Prohibiting the rebuilding or alteration of nonconforming structures or structures occupied for
nonconforming uses
- Prohibiting or rigidly restricting a change from one nonconforming use to another
- A nonconforming use can also be terminated: by destruction of the structure; or if the use is a nuisance
 - Common approach is a balancing test of benefits to the public of ending the use, and the harm to the
owner of ending the use
- Abandonment v. Discontinuation - Abandonment occurs if the landowner both (1) intends to relinquish his
right to the use and (2) voluntarily ceases the use for a set period of time, varying by jurisdiction from 30
days to two years.
- In some jurisdictions, mere discontinuance of the use is sufficient for termination, regardless of the
owner’s intent.
- If a project is underway, but not completed: in most jurisdictions the landowner in this situation acquires
vested rights in the current zoning, and is protected under the nonconforming use doctrine, if she has
already (1) acquired the necessary permits and (2) spent a substantial amount of money in good faith
reliance.
- In some jurisdictions, vested rights arise from substantial expenditures on the project, regardless of
whether permits are actually obtained
- Trip Ass. Inc. v. Mayor and City Council of Balt - A “nonconforming use is a vested right entitled to
constitutional protection.”
- A “nonconforming use” is defined as “any lawfully existing use of a structure or of land that does not
conform to the applicable use regulations of the district in which it is located.”
- If owner can demonstrate the use existed before the regulation and was legal, it is a valid
nonconforming use.
- Merely increasing the frequency of a nonconforming use did not constitute an unlawful extension; rather,
it was but an intensification of the use.
- There is a difference between an intensification and an expansion of the use.
- Increasing the number of nights of adult entertainment would not increase the total time the club was open,
it would only change the uses of when it is open, intensifying the use of adult entertainment, not expanding
it.
- “intensification” is a “more frequent present use of property for the same or a similar use than that for
which it had been used less frequently theretofore.”
Rigid Zoning or Flexible Zoning
- The Standard State Zoning Enabling Act provided only three ways for an owner to escape a zoning
ordinance: (1) the amendment; (2) the variance; and (3) the special exception.
- Amendment - A rezoning decision is valid unless it is “clearly arbitrary and unreasonable, having no
substantial relation to the public health, safety, morals, or general welfare.”
- A handful of states use the change or mistake approach, under which rezoning is valid only (a) if
conditions in the zone have significantly changed or (b) a mistake was made in the original zoning
ordinance.
- Variances - Authorizes zoning officials to approve such variance in cases where a literal enforcement of the
provisions of the ordinance will result in unnecessary hardship,
- Requirements:
 - (1) The variance must be necessary to avoid imposing undue hardship on the owner of the land in
question
- Undue hardship involves the underlying notion that no effective use can be made of the property in
the event the variance is denied
- To show hardship, the owner must first have made reasonable efforts to comply with the zoning
ordinance and the owner’s hardship must not have been self inflicted
- (2) The variance wouldn’t interfere with the basic goals of the zoning scheme
- Most jurisdictions recognize two types of variances.
- An area variance permits a modification of lot size, setback, height, frontage, density, or similar
requirements,
- Usually only a practical difficulty test is used
- A use variance authorizes a type of use that is otherwise prohibited by the zoning ordinance
- Usually requires a strict hardship test
- Detwiler v. Zoning Hearing Board - A variance may be granted when it is necessary to enable a reasonable
use of the property.
- To establish a right to a variance, a landowner must show that
- the effect of a zoning ordinance is to burden property with an unnecessary hardship that is unique to the
property;
- that the hardship was not self inflicted;
- that the granting of the variance will not have an adverse impact on the public health, safety and
welfare;
- and that the variance sought is the minimum variance that will afford relief.
- In evaluating hardship, the use of adjacent and surrounding land is unquestionably relevant.
- A landowner’s knowledge of zoning requirements prior to the purchase of property is not sufficient, in and
of itself, to bar the grant of a variance.
- Hardship is self-inflicted only where a landowner has paid a high price for the property because he
assumed that a variance which he anticipated would justify that price.
- Most states follow the view that hardship exists only if no reasonable use of the land is permitted under the
existing zoning.
- Applicant must show “the property in question cannot be put to a reasonable use” without the variance
Aesthetic Regulation
- It is now well-settled that a city or county has the inherent police power to regulate aesthetics. [i]t is within
the power of the legislature to determine that the community should be beautiful as well as healthy.
- [t]he State’s interest in protecting the well-being, tranquility, and privacy of the home is certainly of the
highest order in a free and civilized society.
- State ex rel. Stoyanoff v. Berkeley - when determining whether any certain proposed structure or use is in
compliance with or offends the basic ordinance: if the result is not oppressive, arbitrary or unreasonable and
does not infringe upon a valid preexisting nonconforming use then it is not a violation
- Court points to property values when discussing “general welfare”
- “Property use which offends sensibilities and debases property values affects not only the adjoining
property owners in that vicinity but the general public as well because when such property values are
destroyed or seriously impaired, the tax base of the community is affected and the public suffers
economically as a result.”
- City of Ladue v. Gilleo - A special respect for individual liberty in the home has long been part of our culture
and our law that principle has special resonance when the government seeks to constrain a person’s ability to
speak there
- Even regulations that do not foreclose an entire medium of expression, but merely shift the time, place, or
manner of its use, must leave open ample alternative channels for communication.
- But, a city may regulate the “time, place, and manner” of speech.
Family Zoning
- Moore v. City of East Cleveland - When the government intrudes on choices concerning family living
arrangements, this Court must examine carefully the importance of the governmental interests advanced and
the extent to which they are served by the challenged regulation
Zoning Limits
- Government can zone for
- Land Use
- What can land be used to do (residential, commercial, industrial)
- Land Density
- Height restrictions, setback, coverage
- Aesthetics
- A review above standard use/density zoning, Historical areas are common
Zoning Critiques
- Competing arguments are: against: liberty, economics, justice vs. increasing porperty values, decrease
nuisances, and place similar uses together
- Test should be whether the ordinance reasonably relates to the welfare of those whom it significantly
affects.
- Steps to determine whether a challenged restriction reasonably relates to the regional welfare:
- First, forecast the probable effect and duration of the restriction
- Second, identify the competing interests affected by the restriction.
 - Third, determine whether the ordinance, in light of its probable impact, represents a reasonable
accommodation of the competing interests.
- Associated Home Builders of The Greater Eastbay Inc v. City of Livermore - the land use restriction
withstands constitutional attack if it is fairly debatable that the restriction in fact bears a reasonable relation to
the general welfare.
- If a restriction significantly affects residents of surrounding communities, the constitutionality of the
restriction must be measured by its impact not only upon the welfare of the enacting community, but upon
the welfare of the surrounding region.
- An ordinance restricting land use is valid if it has a “real or substantial relation to the public health, safety,
morals or general welfare.”
- Euclid: “it must be said … that (its) provisions are clearly arbitrary and unreasonable, having no
substantial relation to the public health, safety, morals, or general welfare.”
- If it is fairly debatable that the ordinance is reasonably related to the public welfare, the ordinance is
constitutional.
Regulatory Takings
- When does a restriction become a taking?
Three Categorical Tests
- Broadly speaking, a taking will be found under these tests if a government entity:
- Authorizes a permanent physical occupation of land;
- Adopts a regulation that causes the loss of all economically beneficial or productive use of land, unless
justified by background principles of property or nuisance law; or
- Demands an exaction that has no essential nexus to a legitimate state interest or lacks rough
proportionality to the impacts of the particular project.
- Pennsylvania Coal v. Mahon - the act cannot be sustained as an exercise of the police power, so far as it
affects the mining of coal under streets or cities in places where the right to mine such coal has been reserved.
- As said in a Pennsylvania case, “For practical purposes, the right to coal consists in the right to mine it.”
- To make it commercially impracticable to mine certain coal has very nearly the same effect for
constitutional purposes as appropriating or destroying it
- In other words there must be a Large diminution in value
The Penn Central Standard
- Penn Central Transportation Co. v. City of New York - diminution in property value, standing alone, can
establish a “taking,”
- “taking” may more readily be found when the interference with property can be characterized as a physical
invasion by government than when interference arises from some public program adjusting the benefits
and burdens of economic life to promote the common good
 - The fact the Landmarks Law has a more severe impact on some landowners than on others does not
mean that the law effects a “taking.”
- Legislation designed to promote the general welfare commonly burdens some more than others.
- Factors (Penn Central Test):
- Economic Impact
- How much is the diminution in value?
- Interference with investment backed expectations
- Seems to favor continuing existing uses over planned uses
- Character of government action
- How intrusive is the governments conduct
- Taking title is always enough
- Permanent physical intrusion is too much (Loretto)
- Zoning is ok (Euclid)
- Penn Central (Brennan’s) two/three factor test
- Economic impact of the regulation/Diminution of value
- Degree of interference with investment-backed expectations
- Character of the governmental action
Permanent Physical Occupation
- Loretto v. Teleprompter Manhattan - a permanent physical occupation of real property is a taking.
- Where real estate is actually invaded by superinduced additions of water, earth, sand, or other material, or
by having any artificial structure placed on it, so as to effectually destroy or impair its usefulness, it is a
taking,
- Simply impairing the use of property is not a taking
Loss of all Economically Beneficial or Productive Use
- Lucas v. South Carolina Coastal Council - when the owner of real property has been called upon to sacrifice
all economically beneficial uses in the name of the common good, that is, to leave his property economically
idle, he has suffered a taking.
- A regulation must do no more than duplicate the result that could have been achieved in the courts—by
adjacent landowners (or other uniquely affected persons) under the State’s law of private nuisance, or by
the State under its complementary power to abate nuisances that affect the public generally, or otherwise.
Exactions: Essential Nexus and Rough Proportionality
- Thus, governments began to require exactions—that the developer provide land or fees to offset the
impacts of the project—as a condition of discretionary land use approvals.
 - What is the limit on how much government may demand?
- An exaction is a taking if either:
- (1) there is no essential nexus between the exaction and a legitimate state interest or
- (2) the exaction is not roughly proportional to the project’s impact.
- “so-called ‘monetary exactions’ must satisfy the nexus and rough proportionality requirements of
Nollan and Dolan.”
- Has the government taken title to property? Eminent Domain Analysis
- Public use?
- Just compensation?
- Has a regulation gone too far? Regulatory Taking Analysis
- Categorical taking (Loretto or Lucas)
- If not categorical, then apply Penn Central Test
Beachfront Property
- Matthews v. Bay Head Improvement - In order to exercise these rights guaranteed by the public trust doctrine,
the public must have access to municipally-owned dry sand areas as well as the foreshore.
- All navigable rivers in which the tide ebbs and flows and the coasts of the sea, including the water and land
under the water, are “common to all the citizens, and that each [citizen] has a right to use them according
to his necessities, subject only to the laws which regulate that use.
- Littoral rights (contingent future interest)- those rights and obligations that are incidental to ownership of
land bordering on the shore of a sea or ocean and thus affected by the tide currents. Littoral land is different
from riparian land, which borders on the bank of a watercourse or stream.
- Erosion is slow imperceivably erosion of land
- Avulsion: the sudden separation of land from one property and its attachment to another, especially by
flooding or a change in the course of a river.
- Accretion: slow imperceivably addition of land (if artificial the line doesn’t move)
- Positive/negative avulsion: rapid and perceptible loss or addition of land
- Line doesn’t move
Selling Real Property
- Right to transfer (Alienate)
- Purchase contract: The parties negotiate and sign a written purchase contract, and prepare to consummate
the transaction.
- Closing: The contract is fully performed at the closing: the buyer pays the purchase price, the lender
advances the loan funds, and the seller transfers title.
 - Title protection: The buyer protects her title through title covenants, a title opinion based on a search of
public land records, and/or a title insurance policy.
- The typical sales transaction is governed by state common law principles which vary among jurisdictions.
- These principles are somewhat different from the modern Uniform Commercial Code provisions that
apply to the sale of goods.
United States Land Surveys
- Metes and Bounds - property lines are drawn by starting with a certain landmark and then following some
natural barrier (stream, road, etc)
- Meridians and Base lines - right angle squares are used to describe parcels of land
- Range lines are the lines that divide land into north south and east west strips they are drawn every 6
miles
The Purchase Contract
- In preparing for closing (1) the seller’s title is examined; (2) the condition of the property is evaluated
(inspection); (3) the buyer obtains financing from a bank or other lender; (4) an escrow is opened to
consummate the transaction; and (5) various documents are prepared, including the deed, mortgage,
promissory note, and escrow instructions.
Statue of Frauds
- Must meet 3 requirements:
- Essential terms: the essential terms of the contract (usually the identity of the parties, the price, the
intent of the parties, and the property description) must be set forth in a writing. 
- Writing: the writing can be a formal contract or an informal memorandum.
- Signature: the writing must be signed by the party sought to be bound.
- Hickey v. Green - Estoppel/Detrimental Reliance/Part Performance
- “A contract for the transfer of an interest in land may be specifically enforced notwithstanding failure to
comply with the Statute of Frauds if it is established that the party seeking enforcement, in reasonable
reliance on the contract and on the continuing assent of the party against whom enforcement is sought, has
so changed his position that injustice can be avoided only by specific enforcement”
- Estoppel can be asserted when there has been an actual change of possession and improvement of the
transferred property, as well as full payment of the full purchase price, or one or more of these elements.
- Part performance is a major exception to the Statute of Frauds. An oral contract for the sale of real property
may be enforced if the buyer: (1) takes possession; (2) pays at least part of the purchase price; and (3) makes
improvements to the property.
- Many jurisdictions require that the buyer take possession and either pay the purchase price or make
improvement
- Equitable estoppel is another exception to the Statute of Frauds.
 - An oral contract may be enforced if: (1) one party acts to his detriment in reasonable reliance on another’s
oral promise; and (2) serious injury would result if enforcement is refused.
Marketable Title
- In every contract for the sale of real property, the seller expressly or impliedly promises that she will
deliver marketable title (also known as merchantable title), unless the contract specifies otherwise.
- An implied condition in every contract of sale that states that one is free from reasonable doubt about
whether the seller can convey the rights he purports to convey
- Requires seller to give buyer title that complies with all covenants and zoning regulations and disclose
of any servitudes
- If marketable title has been breached, buyer can rescind the contract
- Generally, marketable title is defined as title reasonably free from doubt as to its validity.
- Generally, title is unmarketable if:
- (1) the seller’s property interest is less than the one she purports to sell;
- (2) the seller’s title is subject to an encumbrance; or
- (3) there is reasonable doubt about either (1) or (2).
- Lohmeyer v. Bower - A marketable title to real estate is one which is free from reasonable doubt, and a title is
doubtful and unmarketable if it exposes the party holding it to the hazard of litigation.
- To render the title to real estate unmarketable, the defect of which the purchaser complains must be of a
substantial character and one from which he may suffer injury.
- Mere immaterial defects which do not diminish in quantity, quality or value the property contracted for,
constitute no ground upon which the purchaser may reject the title.
- Facts must be known at the time which fairly raise a reasonable doubt as to the title; a mere
possibility or conjecture that such a state of facts may be developed at some future time is not
sufficient.
- Generally municipal restrictions of such character, existing at the time of the execution of a contract for
the sale of real estate, are not such encumbrances or burdens on title as may be availed of by a vendee to
avoid his agreement to purchase on the ground they render his title unmerchantable.
- But, such restrictions (as in this case), under all the authorities, constitute encumbrances rendering the
title to land unmerchantable.
- Factors Affecting Marketability - Almost any private encumbrance causes title to be unmarketable.
- Conversely, statutes, ordinances, and other public restrictions do not make title unmarketable, even if
they severely restrict the use of the property.
- Marketable title concerns the title to property, not the physical condition of that property.
- “One can hold perfect title to land that is valueless; one can have marketable title to land while the land
itself is unmarketable.”
 - Most courts hold that the seller isn’t required to produce a marketable title until closing. Seller can use the
time before the closing to cure any defects (I.e. paying off mortgage or remedying a zoning violation)
- Equitable Conversion
- If there is an enforceable K for the sale of land, the buyer is viewed as the owner from the date of the K
Duty to Disclose
- In most jurisdictions, the seller of residential real property is obligated to disclose defects he knows about
that (a) materially affect the value of the property and (b) are not known to or readily discoverable by a
buyer.
- Actual knowledge of the defect is generally required; whether the seller or realtor should have known
about it is inconsequential.
- Prospective buyers have no duty to disclose facts which materially affect the value of the property
- Most states allow “as is” clauses to be binding
- Stambovsky v. Ackley - Seller must disclose known defects
- Where a condition which has been created by the 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.
- Under the implied warranty of quality the developer of newly-constructed residential property—like houses
in a subdivision—impliedly warrants that the property is fit for its intended use.
- Developer may be liable even if he has no actual knowledge of defects in the houses he sells.
- Strawn v. Canuso - Professionals owe a duty to disclose off-site conditions that materially affect the value or
desirability of the property.
- There is no logical reason why a certain class of sellers and brokers should not disclose off-site matters
that materially affect the value of property.
- Off site conditions can materially affect home values
- We do not hold that sellers and brokers have a duty to investigate or disclose transient social conditions in
the community that arguably affect the value of property.
- Changing nature of neighborhood, school in decline etc need not be disclosed
Merger
- All terms of the K merge into the deed and the deed is the final act of the parties expressing the terms of
their agreement (generally can’t rescind K terms when you’ve signed the deed
Remedies for Breach
- Giannini v. First Nat’l Bank of Des Plaines - Specific performance is available unless: its’ impossible,
meaningless or imposes a real hardship can be proven.
- Specific performance is generally disfavored by the courts
 - Will not be granted if there is no existence fo the thing to be performed
- Similarity between two things (units) could constitute existences
- Nevertheless “[t]here is no hardship in compelling the seller to do what he agreed to do when he
thought it was to his advantage.”
- Other remedies:
- Damages: The non-breaching party can obtain damages, usually calculated as the difference between the
contract price and the fair market value on the date of the breach.
- Non breaching party can also recover any deposit made
- Rescission: Rescission restores the parties to their original positions.
Title Covenants
- Are express promises by the grantor about the state of title.
- The promises that the parties made in the contract ended at the closing unless they were restated in the
deed.
- The doctrine of merger provided that once the grantee accepted the deed all prior promises were
extinguished; the contract was “merged” into the deed
- Three types of deeds commonly used today:
- General warranty deed: the grantor warrants title against all defects, whether they arose before or after he
obtained title.
- Offers the best protection, grantor promises that title is free from all defects at the closing, regardless of
when they were created (before or after the grantor took title)
- Special warranty deed: the grantor warrants title against all defects that arose after he obtained title.
- Limits the grantor’s assurances only to any title defects that arose during his ownership; they do not
cover any problems created before he obtained title.
- Quitclaim deed: the grantor makes no warranties about title, so the grantee receives only what the grantor
has, if anything.
- provides no assurances at all.
- Six standard covenants (covered under both special warranty and general warranty deed):
- Present covenants. They are breached, if at all, at the moment the deed is delivered. At that instant the
grantor either has the estate he claims to convey or he does not. They provide the same assurance as the
implied covenant of marketable title.
- The marketable title doctrine applies to defects discovered before the closing, while title covenants
protect against defects discovered after the closing.
- Covenant of seisin: a promise that the grantor owns the estate he purports to convey; for example, this
covenant is breached if the grantor purports to convey a fee simple but only owns a life estate.
 - Covenant of right to convey: a promise that the grantor has the right to convey title; for example, this
covenant is breached if the grantor is a trustee who lacks the authority to transfer title to the trust
property.
- Covenant against encumbrances: a promise that there are no encumbrances on the title, other than
those expressly listed in the deed; for example, this covenant is breached if there is a prior mortgage
on the property.
- Future covenants. They are breached, if at all, after the closing—most commonly when the grantee is
actually or constructively evicted by a third party holding superior title.
- Covenant of warranty: a promise that the grantor will defend the grantee against any claim of superior
title; for example, if a third party holds better title than the grantee does, the grantor must defend the
grantee’s title.
- Covenant of quiet enjoyment: a promise that the grantee’s possession of the property will not be
disturbed by anyone holding superior title; for example, this covenant is breached if the grantee is
evicted because of a defect in her title.
- Covenant of further assurances: a promise that the grantor will take all future steps reasonably
necessary to cure title defects that existed at closing.
The Deed
- Deed must be signed, sealed and delivered:
- Signed by grantor
- Sealed - empty formality now (notarized)
- Delivered - A deed is only effective when it is delivered.
- Thus, an undelivered deed—even if signed by the grantor—conveys nothing.
- To effectuate delivery the grantor must manifest a contemporaneous intention to immediately transfer
title to the grantee.
- Brown v. Lober - Lober sold land to Brown. He thought he owned 100% of the mineral rights and then tried
to convey that. He learned he only owned 1/3 of the mineral rights.
- The covenant of seisin is a covenant in praesenti and, therefore, if broken at all, is broken at the time of
delivery of the deed
- The mere existence of a paramount title does not constitute a breach of the covenant.
- Possession of the surface does not carry possession of the minerals.
- Rosengrant v. Rosengrant - Couple went with nephew to bank and signed a deed, but the deed was left with
the bank
- Grantor’s intent at the time the deed is delivered which is of primary and controlling importance.
- The import of the writing on the envelope is clear.
- Where a grantor delivers a deed under which he reserves a right of retrieval and attaches to that delivery
the condition that the deed is to become operative only after the death of grantors and further continues to
 use the property as if no transfer had occurred grantor’s actions are nothing more than an attempt to
employ the deed as if it were a will.
- Delivery of a properly formatted deed will transfer possession, not necessarily the recording of the deed
- A valid in praesenti conveyance requires two things:
- (1) actual or constructive delivery of the deed to the grantee or to a third party; and
- (2) an intention by the grantor to divest himself of the conveyed interest.
- Delivery is a matter of intention.
- “Delivery is essential to make a deed operative, but no particular ceremony is necessary. It may be by
acts without words or words without acts, or both. No particular form or ceremony is necessary. …
Intention is the controlling element.
- Restatement - delivery is accomplished when “the donor manifests that the document is to be legally
operative while the donor is alive.”
- Vasquez v. Vasquez - A deed must be delivered, as that term is legally interpreted, in order to be an effective
transfer of the ownership of land.
- Where the grantor delivers a deed to a third person with the intent to part with all control, the legal effect
of the transaction is tantamount to a delivery of the deed to the grantee, conveying him the fee while
reserving for the grantor the use and enjoyment of the land during his natural life.
- When a grantor delivers a deed to a third person without a reservation of a right to recall it, and instructs
the third person to deliver it to the grantee on the grantor’s death, he thereby makes an effective delivery
as a matter of law.
- Most jurisdictions find an effective delivery on these facts if the grantor is unable to retrieve the deed.
- The Vasquez court found that Juanita delivered her deed “without reserving a right to recall.”
- In Rosengrant, the court believed that under the bank’s customary practice Harold could retrieve the
deed whenever he wanted, and so there was no delivery
- A majority of states now authorize a novel type of deed: the transfer on death deed(also called the
beneficiary deed).
- This deed allows an owner of real property to designate the beneficiaries she wants to receive the property
upon her death; it is revocable by the grantor during her lifetime.
- Because the deed is not legally operative until the grantor’s death, delivery is not required.
Title Assurance
- The sale of real property is actually a sale of title.
- Three methods of title assurance:
- Title covenants: the grantor promises in the deed that he has good title to convey.
- Title opinion based on search of public records: an attorney or other professional renders an opinion
about the state of title after searching the public land records.
 - Title insurance: a title insurance company issues a policy that insures the grantee’s title.
- Most buyers will use 2 or 3 methods for extra assurance
Title Opinion Based on Search of Public Records
- The modern recording statutes give special protection to a subsequent bona fide purchaser who acquires title
without notice of an adverse claim and pays valuable consideration.
- If one person purchases a property but never records the deed and another purchases the property later (does
not find any deed transfer or encumbrance on the property in a title search since the deed wasn’t recorded) the one
who purchased the property later would be considered the owner
How to Search Title
- The recorder’s office will use one of two systems: (1) the grantor-grantee index, which is organized by the
names of the parties to the transaction; or (2) the tract index, which is organized by the parcel involved
- Grantor-Grantee index is the most commonly used method
- Every recorded document is indexed in two places: the grantee index and the grantor index.
- Sometimes allows documents to be found that might not be recorded in a tract index search
- In a tract index each parcel of land is assigned a unique identifier, sometimes called a parcel identification
number.
- Every document affecting that parcel is typically filed in a folder under its unique number
- Recording acts allocate risk among parties (who has better title)
- Typically create exceptions to the first-in-time rule
- Courts start with first in time, with exception for a bona fide purchaser.
- The recording acts create special protection for the subsequent bona fide purchaser, which supersedes the first-
in-time rule.
- The diligent buyer who conducts a careful search of the public records and finds no title defects will be
protected against existing unrecorded interests.
- Three basic types of acts that establish who a bona fide purchaser is
- Race: the purchaser who records first has priority.
- Subsequent purchaser has priority over a previously created interest if she records first—even if she actually
knows about that interest. Whoever wins the “race” to the recorders office is given priority. Only LA an NC still
have “race” statutes
- Notice: the subsequent bona fide purchaser has priority.
- Subsequent purchaser for value prevails if he takes without notice of a prior interest. Bona fide purchaser does
not have to record in order to gain priority, but a purchaser may lose their interest to a subsequent bona fide
purchaser if they do not record
- Race-notice: the subsequent bona fide purchaser who records first has priority.
- Protects the subsequent purchaser for value who both takes without notice and records first.
- There is another exception to the bona field purchaser rule:
- The shelter rule - exception to the bona fide purchaser rule: a bona fide purchaser is allowed to transfer his
protection to a later grantee.
- If bona fide purchaser gives property to someone (they are not subsequent BFP they can still fall under the
original subsequent BFP protection
- Luthi v. Evans - A subsequent purchaser, who has actual notice or knowledge of such an instrument, is bound
thereby and takes subject to the rights of the assignee or grantor.
- A deed or other instrument in writing which is intended to convey an interest in real estate and which describes
the property to be conveyed as “all of the grantor’s property in a certain county,” is commonly referred to as a “Mother
Hubbard” instrument.
- Does the recording of an instrument of conveyance which uses a “Mother Hubbard” clause to describe the
property conveyed, constitutes constructive notice to a subsequent purchaser.
- that recorded instruments of conveyance, to impart constructive notice to a subsequent purchaser or mortgagee,
should describe the land conveyed with sufficient specificity so that the specific land conveyed can be identified
- “Mother Hubbard” clause, describing the property conveyed in the general language involved here, is valid,
enforceable, and effectively transfers the entire property interest as between the parties to the instrument.
- But, such a transfer is not effective as to subsequent purchasers and mortgagees unless they have actual
knowledge of the transfer.
 - Also, in situations where an instrument of conveyance containing a sufficient description of the property
conveyed is duly recorded but not properly indexed, the fact that it was not properly indexed by the register of
deeds will not prevent constructive notice.
- But here since the first (Tours) deed was not properly recorded it did not constructively put Burris on notice,
so the act grants the exception to allow the bona field purchaser to gain title
- Messersmith v. Smith - Race-Notice - Here there were two deeds covering the same property from the same
grantor, who had no title, to the same grantee.
- The recording of an instrument affecting the title to real estate which does not meet the statutory requirements
of the recording laws affords no constructive notice.
- It is disputed whether the first deed was acknowledged, the second was not.
- Since there was no acknowledgment of the Messersmith-Smith deed since it was not notarized, it could not be
transferred.
- Smith’s deed could not be properly recorded because it wasn’t notarized (sealed).
- At this time, North Dakota used the Zimmer rule: a subsequent purchaser is deemed to have “recorded” his
conveyance only if all prior conveyances in his chain of title are properly recorded.
- So Seale’s deed isn’t properly recorded and can’t be protected as a bona fide purchaser
- Frederick’s deed was properly recorded and therefore wins the “race” to recording and then that deed
properly puts future parties on notice and therefore Frederick is the bona fide purchaser
Chain of Title—Recording Problems
- Wild deed - a deed from one sale was never recorded and therefore cannot be found
- S conveys to B (does not record, B conveys to C (records), S conveys to D (did will not find the S to B then to
C since B did not record) the S to B deed is a wild deed.
- Deed recorded too late - a purchaser does record the deed, but only after the property has been sold to someone
else, meaning the recording that is late is not in the chain of title.
- Board of Education of Minneapolis v. Hughes - Race-Notice
- a deed which is a nullity when delivered because the name of the grantee is omitted becomes operative without
a new execution or acknowledgment if the grantee, with either express or implied authority from the grantor, inserts his
name in the blank space left for the name of the grantee.
- HELD - [W]e hold that Hughes, when he received the deed from Mrs. Hoerger, had implied authority to insert
his name as grantee, and therefore the deed to Hughes became operative as a conveyance when he inserted his name as
grantee.
- this record of a deed from an apparent stranger to the title was not notice to Hughes of the prior unrecorded
conveyance by his grantor.
- He was a subsequent purchaser in good faith for a valuable consideration, whose conveyance was first duly
recorded;
- That is, Hughes’ conveyance dates from the time when he filled the blank space, which was after the deed
from his grantor to Duryea & Wilson.
- He was, therefore, a “subsequent purchaser,” and is protected by the recording of his deed before the prior
deed was recorded.
- For plaintiff to prevail: It was necessary, not only that the deed to plaintiff should be recorded before the deed
to Hughes, but also that the deed to plaintiff’s grantor should be first recorded.
- If a deed is not properly recorded, it is not considered “recorded” either (1) for providing notice to a
subsequent purchaser or (2) for being “first recorded.” Therefore, Hughes is viewed as having recorded his deed
before the Board.
- Raub v. General Income Sponsors of Iowa, Inc - possession of land by one other than the grantor is ordinarily
sufficient to put parties on inquiry as to the rights of the party in possession.
- But, there may still be notice to defendants if circumstances are shown which would lead a reasonably prudent
person to investigate the possible existence of outstanding rights hostile to the grantor’s title.
- If such circumstances do exist, and if such investigation is not made, then one who claims to be a bona fide
purchaser is nevertheless charged with all knowledge which that investigation would probably have disclosed.
- One who asserts he is a bona fide purchaser must prove his good faith; and good faith is lacking if he knew or,
as a reasonably prudent person, should have known others made claims hostile to his grantor’s title.
Title Insurance
 - If the buyer suffers a loss from a title defect that existed on the effective date of the policy, he receives
compensation from the title company.
- Covers defects of title including dispute of fee simple title, and other property rights such as undisclosed
encumbrances like an easement or covenant, protection against unmarketable title, and protects against a lack of
right of access
- Also covers certain off-record defects such as a forged deed in the chain of title, unlike a title opinion.
- Coverage is limited by standard exclusions and property-specific exceptions.
- An exclusion is a potential risk that the company is unwilling to cover in any policy, such as encumbrances
created or agreed to by the insured party.
- An exception is a problem that concerns the particular parcel, which the title company discovers by searching
its computerized version of the public land records.
- For example, the parcel might be burdened by an easement which cannot be removed. A title insurance
company will not insure against this known defect, so it will be excepted from coverage.
- A title insurance policy imposes two obligations on the insurance company:
- The duty to defend and
- The first duty requires the company to pay the attorneys fees and costs necessary to protect the owner’s title as
guaranteed by the policy
- The duty to indemnify.
- The second obligates the insurer to compensate the owner if a loss occurs.
- Riordan v. Lawyers Title Ins- Defects in the physical condition of the property do not constitute un-
marketability of title.
- A difference exists between economic lack of marketability, which relates to physical conditions affecting the
use of the property, and title marketability, which relates to defects affecting legally recognized rights and incidents
of ownership.
- Coverage for a “lack of right of access” to the insured property is not triggered where access is merely
impractical or difficult as long as the right to access exists.
Financing Real Property
- Four key parts of a real property finance transaction
- Obligation: The borrower’s duty to repay a loan evidenced by a written promissory note or to perform other
duties is called the obligation.
- Security: The borrower will provide security to the lender through a mortgage, a deed of trust, or a similar
encumbrance on the property.
- Foreclosure: If the borrower defaults on the obligation, the lender will have the property sold at a judicial
foreclosure sale or a nonjudicial foreclosure sale and use the sales proceeds to satisfy the loan.
- Rights after Foreclosure: The borrower and the lender may have additional rights after the foreclosure sale
occurs.
- Mortgages allow the lender to hold a security interest in real property—that is, the right to sell the property to
repay the debt—even though the borrowers are in possession of the land.
Creating the Obligation
- The most common obligation is the borrower’s duty to repay a loan, as evidenced by a written promissory
note.
- A promissory note is a specialized type of contract between the borrower and the lender by which the borrower
agrees to repay the loan on certain terms and conditions.
- By contrast, a mortgage or other security instrument has no intrinsic value.
- It essentially provides a remedy which the lender can use to satisfy the obligation if the borrower defaults.
- Although people sometimes talk informally about getting a “mortgage” from a lender, technically a borrower
receives a loan secured by a mortgage.
- A mortgage is a property interest held by the bank
- Acceleration Clause require borrower to pay entire loan if borrower defaults. Acceleration of the loan after
default is a preliminary step in the foreclosure process.
- Due on Sale Clause - It gives the lender the option to demand full payment of the loan if the borrowers sell the
property or any part of it.
 - A mortgage usually provides that the lender can also foreclose if the borrower fails to satisfy certain
nonmonetary obligations, such as (1) keeping the property in good repair, (2) avoiding waste, (3) maintaining
adequate property insurance, and (4) defending his title to the property in litigation with third parties.
Providing the Security
- The mortgage is the traditional security instrument.
- The borrower (the mortgagor) conveys an interest in real property to the lender (the mortgagee) as security for
the performance of an obligation, usually payment of a promissory note.
- Because the mortgage transfers an interest in real property, it must comply with the SoF.
- In some states, the only way to foreclose a mortgage is through a specialized type of lawsuit, which is called
judicial foreclosure.
- But many states allow nonjudicial foreclosure (also called power of sale foreclosure)—that is, a sale
conducted without any judicial involvement—if the mortgage expressly provides such a power.
- This is called a mortgage with power of sale.
- A purchase money mortgage arises when the buyer of real property finances her purchase by giving the seller a
promissory note secured by a mortgage on the property.
Deed of Trust
- Is the most common mortgage substitute, is the main security instrument used in many states.
- Three party relationship
- In form, the borrower (the trustor) conveys real property “in trust” to a third party (the trustee) for the benefit
of the lender (the beneficiary).
- Today the law in most states treats the deed of trust just like a mortgage with power of sale.
Foreclosing on the Security
Borrower’s Rights Before the Foreclosure Sale
- What can borrowers do if they miss a monthly payment and the bank threatens foreclosure?
- Reinstatement: As a general rule, a borrower can avoid foreclosure by paying the missed payments before the
lender accelerates the loan. Some states also allow the borrower to reinstate for a limited period after acceleration
occurs.
- Equitable redemption: All states allow the borrower to avoid foreclosure by paying the loan in full (plus any
incurred costs) after default but before the sale occurs.
Judicial Foreclosure
- Lender begins process by filing a complaint against the necessary parties:
- Borrower, any junior lienors, and any others holding interest in the property junior to the mortgage.
- If a junior interest holder is not named as a defendant, its interest is not affected by the foreclosure.
- With judgment authorizing foreclosure, lender gives notice of the time and place of the foreclosure sale.
- Final step is judicial confirmation of the sale. Court may refuse to confirm, but it’s almost always granted.
Non Judicial Foreclosure
- Once default occurs lender simply gives notice to all parties of the time and place of the auction
- There is no judicial proceeding and the court does not need to confirm
Results of Foreclosure Sale
- The lender whose mortgage was created first has priority under the first-in-time rule unless a subsequent
purchaser or lender is protected under the state’s recording act. Remember that (a) a subsequent bona fide purchaser
or encumbrancer may be protected against prior interests and (b) the shelter rule may also protect a subsequent
party.
- Two basic principles
- Principle 1: Foreclosure eliminates or “wipes out” the mortgage being foreclosed and all junior interests, but
does not affect senior interests.
- The borrower cannot be allowed to increase the lender’s risk by transactions that occur after the loan is made.
- Foreclosure also wipes out all interests that are junior in priority to the mortgage which is foreclosed. This
includes junior mortgages and any other junior interests, such as easements, leases, and covenants.  
- Principle 2: Foreclosure sales proceeds are distributed first to the foreclosing lender, and then to junior
interests in order of priority; any surplus proceeds go to the borrower.
- It protects the lender’s ability to recover on its loan based on the risk it knowingly accepted.
Exercising Rights After Foreclosure
Protecting the Borrower
 - Statutory Right of Redemption - a borrower may regain title by redeeming the property from the successful
bidder within a set period of time.
- Setting Aside the sale - a nonjudicial sale will be set aside if the sales price is so inadequate as to “shock the
conscience” of the court or is “grossly inadequate.”
- Typically a sale for 20% or less of market value will usually meet this standard, but not always.
- A nonjudicial sale may also be set aside where a significant procedural irregularity has occurred
Protecting the Lender
- When the foreclosure sale proceeds don’t fully repay the loan, lender can usually sue the borrower for breach
of contract and obtain a deficiency judgment for the unpaid amount.
- Many states restrict deficiency judgments through anti-deficiency legislation or judicial action, especially
where the property is a home.
- Fair value legislation: Many states restrict the size of a deficiency judgment by limiting it to the amount by
which the loan balance exceeds the fair market value of the property at time of sale.
- Prohibition: Prohibits deficiency judgments altogether in certain situations.
- Judicial approaches: A number of courts will invalidate deficiency judgments based on inadequacy of the
sales price or unfairness in the foreclosure process.
- Wansley v. First Nat’l Bank of Vicksburg - The creditor has no right to a deficiency judgment until he satisfies
the court that it would be equitable, in the light of the sales price, to authorize a deficiency judgment.
- Something more than a difference between the price paid at the foreclosure and the amount of the indebtedness
must be demonstrated before the mortgagee is entitled to a deficiency judgment.
Intellectual Property
- Three types of intellectual property:
- Copyrights: Copyright law protects original works of authorship, such as books, computer programs, plays,
sculptures, and songs.
- Patents: Patent law protects new inventions, such as cell lines, machines, and medicines.
- Trademarks: Trademark law protects words, names, and other symbols which are used by merchants to
distinguish their goods and services from those offered by others.
Patents
- 35 U.S.C. § 101 authorizes the issuance of a patent to anyone who “invents or discovers any new and useful
process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.”
- An applicant must meet five requirements in order to obtain a patent: (a) patentable subject matter; (b) utility;
(c) novelty; (d) nonobviousness; and (e) enablement.
- Patentable subject matter: Four categories of inventions qualify for a patent: “any … process, machine,
manufacture, or … composition of matter.” Abstract concepts, mathematical algorithms, scientific principles, and
physical phenomena cannot be patented.
- Utility: A patent may be issued only for a “useful” invention—one which offers actual benefit to humans.
Because virtually any invention provides some sort of minimal benefit, this element is rarely at issue.
- Novelty: Only a “new” (or novel) invention may be patented. The PTO will examine the prior art—all
inventions, patents, publications and the like that predated the application—to determine if the invention is novel.
- Nonobviousness: An obvious invention does not qualify for protection. If the differences between the invention
and the “prior art” before the application date “would have been obvious … to a person having ordinary skill” in
the area, the PTO will deny the application.
- Enablement: The patent application must describe the invention in such detail as to “enable any person skilled
in the art to which it pertains … to make and use the same.”
- Not patentable: Ideas, mathematical algorithms, laws of nature and naturally occurring phenomena, or physical
phenomena
- Diamond v. Chakrabarty - His discovery is not nature’s handiwork, but his own; it is patentable
- His claim is not to a hitherto unknown natural phenomenon, but to a nonnaturally occurring manufacture or
composition of matter—a product of human ingenuity “having a distinctive name, character [and] use.”
Copyright
- Copyright law protects the manner in which an idea is expressed—not the idea itself. Thus, concepts,
principles, discoveries, facts, and other ideas are not covered by copyright. This concept is known as the idea-
expression dichotomy.
- Three requirements for a valid copyright:
 - Originality: The work must be independently created, not copied from another source. It must also possess at
least a minimal degree of creativity.
- Work of authorship: Eight categories of “works of authorship” are recognized by statute: (a) literary works
(including computer programs); (b) musical works; (c) dramatic works; (d) pantomimes and choreographic works;
(e) pictorial, graphic, and sculptural works; (f) motion pictures and other audiovisual works; (g) sound recordings;
and (h) architectural works. Because these categories are only illustrative, analogous works may also qualify for
protection.
- Fixation: The work must be written, recorded, or otherwise embodied in some physical form. Thus, it must be
“sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period
of more than transitory duration.” 17 U.S.C. § 101.
- Two things not required for a copyright: registration and notice
- Fiest v. Rural Telephone - The sine qua non of copyright is originality
- Facts are not copyrightable; compilations of facts generally are.
- Contemplate that compilations that consist exclusively of facts are potentially within its scope.
- To qualify for copyright protection, a work must be original to the author.
- Original, means that the work was independently created by the author (as opposed to copied from other
works), and that it possesses at least some minimal degree of creativity.
- The requisite level of creativity is extremely low; even a slight amount will suffice.
- To illustrate, assume that two poets, each ignorant of the other, compose identical poems. Neither work is
novel, yet both are original and, hence, copyrightable
- The first person to find and report a particular fact has not created the fact; he or she has merely discovered its
existence.
- “[n]o author may copyright his ideas or the facts he narrates.”
- To establish infringement, two elements must be proven: (1) ownership of a valid copyright, and (2) copying
of constituent elements of the work that are original.
- INS v. AP - when news is transmitted for commercial use, in competition, it can be copyrightable
- It is said that news could not, in practice, be copyrighted, because news is not within the operation of the
copyright act.
- Here the news must be regarded as quasi property, irrespective of the rights of either as against the public
- The news of current events may be regarded as common property
- Hot news doctrine: a newsgatherer may recover from a defendant when (1) the newsgathering or collection
process involves significant expenditures; (2) the collected news or information is time-sensitive; (3) the defendant free
rides on the collected material; (4) the freeriding directly competes with the newsgatherer’s market; and (5) the
freeriding is likely to diminish incentives to collect news/information in a timely fashion
Infringement
- The fair use doctrine allows minor use of a copyrighted work where the use does not materially affect the
rights of the copyright owner.
- The fair use of a copyrighted work for purposes such as criticism, comment, news reporting, teaching
(including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. Factors
in determining whether the use is a fair use:
- (1) the purpose and character of the use, including whether such use is of a commercial nature or is for
nonprofit educational purposes;
- (2) the nature of the copyrighted work;
- (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
- (4) the effect of the use upon the potential market for or value of the copyrighted work.
- Campbell v. Acuff - Parody may claim fair use under § 107
- The statutory factors should be weighed together, not in isolation
- The question is whether the new work merely "supersede[s] the objects" of the original creation, or instead
adds something new, with a further purpose or different character, altering the first with new expression, meaning, or
message; it asks, in other words, whether and to what extent the new work is "transformative."
- The more transformative the new work, the less will be the significance of other factors, like commercialism,
that may weigh against a finding of fair use.
- Must consider what adverse commercial effects a party might have
Trademarks
Trademark Basics
- A trademark is any “word, name, symbol, or device” that is used to identify and distinguish the goods sold by
one person from those of others.
- A word, name, symbol, or device so used in connection with services is a service mark.
- The trademark owner has a specialized right to exclude: she may prevent competitors from using the same
mark for their goods or services within a particular geographic area.
- In general, three elements are required for a valid trademark:
- Distinctiveness: A mark must distinguish the goods or services of one person from those offered by another
person. Some types of marks are considered more distinctive than others.
- Non-functionality: Trademark law does not protect a product feature that is functional, because this area is
governed by patent law. In general, a feature is functional if it is vital to the use or purpose of the product or if it
affects the cost or quality of the product.
- First use in trade: As the Supreme Court explained long ago, “[t]he right to a particular mark grows out of its
use, not its mere adoption.” United Drug Co. v. Theodore Rectanus Co., 248 U.S. 90, 97 (1918). Thus, the first
person to use a mark for a good or service in a particular geographic market generally obtains rights to use the
mark in that market, unless another person has already registered the mark.
- Note that the federal Lanham Act requires first use in “commerce,” which is narrower than “trade.”
- Trademarks are conventionally divided into three categories, from strongest to weakest.
- An arbitrary or fanciful mark is one that indicates nothing about the good or service; this is the strongest type
of mark (e.g., “Exxon”).
- The next strongest type is the suggestive mark, which merely suggests information about the good or service,
thus requiring the observer to use her imagination (e.g., “Roach Motel” for an insect trap).
- Finally, the weakest type is the descriptive mark, which merely describes the good or service. A descriptive
mark is not protected unless it has acquired a secondary meaning, that is, the public associates the mark with the
source of a particular good or service.
- A term that is frequently used as the name for a certain type of goods or services is generic, and thus not
eligible for protection. For example, although “yo-yo” was once a protected trademark, it has become generic
over the years.
- Qualitex Co v. Jacobson - over time, customers may come to treat a particular color on a product or its
packaging as signifying a brand
- Trademarks “reduce[s] the customer’s costs of shopping and making purchasing decisions,”
- Color alone, at least sometimes, can meet the basic legal requirements for use as a trademark
Trade Secrets
- EI Dupont de Nemours v. Christopher - A third party has a right to use this process only if he obtains this
knowledge through his own research efforts,
- One may use a competitor's process if he discovers it by his own independent research;
- But one may not avoid these labors by taking the process from the discoverer without his permission at a time
when he is taking reasonable precautions to maintain its secrecy.
- One who discloses or uses another's trade secret, without a privilege to do so, is liable to the other if (a) he
discovered the secret by improper means, or (b) his disclosure or use constitutes a breach of confidence reposed in
him by the other in disclosing the secret to him