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PROPERTY FALL 2013

Table of Contents
Landlord-Tenant Law....................................................................................................................... 3
Types of Leases............................................................................................................................ 3
Creating a Tenancy...................................................................................................................... 3
Assignments and Subleases......................................................................................................... 3
Landlord Duties/Tenants Rights and Remedies............................................................................4
Termination of Tenancy................................................................................................................ 5
Fair Housing................................................................................................................................. 6
Civil Rights Act.......................................................................................................................... 7
Fair Housing Act of 1968........................................................................................................... 7
Real Estate Transactions................................................................................................................. 8
The Sales Contract....................................................................................................................... 8
Marketable Title........................................................................................................................... 9
Duty to Disclose........................................................................................................................... 9
Implied Warranty of Quality......................................................................................................... 9
Deeds......................................................................................................................................... 10
Real Estate Finance (Mortgages)................................................................................................ 10
Recording................................................................................................................................... 11
Title Insurance........................................................................................................................... 11
Nuisance Law................................................................................................................................ 12
Coase Theorem.......................................................................................................................... 13
Calabresi/Melamud........................................................................................................................ 13
Wills, Estates, Present & Future Interests...................................................................................... 14
Wills & Trusts.............................................................................................................................. 14
Freehold Estates & Life Estates.................................................................................................. 15
Defeasible Estates..................................................................................................................... 15
Future Interests.......................................................................................................................... 16
Rule Against Perpetuities........................................................................................................... 18
Common Law/Marital Property and Community Property..........................................................23
Marital Property (dominant system)....................................................................................... 23
Community Property............................................................................................................... 24
Equal Protection......................................................................................................................... 24
Eminent Domain, Takings, and Zoning.......................................................................................... 25
Eminent Domain........................................................................................................................ 25
Takings....................................................................................................................................... 25
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Zoning........................................................................................................................................ 28
Personal Property.......................................................................................................................... 28
Finders....................................................................................................................................... 28
Gifts........................................................................................................................................... 29
Adverse Possession....................................................................................................................... 30
Servitudes..................................................................................................................................... 31
Easements................................................................................................................................. 31
Covenants.................................................................................................................................. 32
Common Interest Communities................................................................................................. 33
Intellectual Property...................................................................................................................... 34
Jurisprudence................................................................................................................................ 34
General Property Themes............................................................................................................. 35

Landlord-Tenant Law
Types of Leases

Term of Years: lease continues until designated period ends WITHOUT need for notice
Periodic Tenancy: lasts for initial fixed period (like 1 month) and continues for additional
equal periods until lease is terminated with notice
Tenancy at Will: either party can terminate the tenancy, no fixed duration, no notice
Tenancy at Sufferance: arises when T holdovers after termination of lease.
o L can evict or renew tenancy.

Creating a Tenancy

Modern lease = combination of K and conveyance.


o Statute of Frauds applies: if lease is > 1 year, then must be in writing.
Delivery of Possession
o American rule (minority): Ls only duty is to deliver legal possession. Ts
responsibility to sue/evict holdover tenant.
Policy: efficiency argument less economic waste (Ts interest to evict and
more direct relationship to holdover T)
Hannan v. Dusch: P signed lease but another T occupied apt. L did not evict.
Ct went with American rule because no express covenant creating L
responsibility.
o English rule (majority): Ls duty to deliver actual and legal possession.
Implied covenant: T would not enter lease if did not assume vacated
premises
Policy: L has superior ability to ensure property is vacant. L is least cost
avoider.

Assignments and Subleases

Assignment: transfer the enter interest in Ts part of estate (P E with L). Transfer can be
under different terms.
Sublease: transfer less than Ts remaining interest.
o Sublease doesnt impact L-T relationship. Creates L-T relationship with TS(sublessee)
o Ls powers over S despite no legal relp: create K w/ S, evict T (so evict S), L sues S
and other Ss as 3rd party beneficiary
Tests for assignment vs. sublease: has T retained any interest? What are parties
intentions?
Privity of Estate: Relp between L and person land was conveyed to.
o PE can only exist with ONE PARTY AT A TIME per K
o L can sue A if A breaches
o Affect use and enjoyment of land (touch and concern of land), actual/implied notice
assignee must know of covenant before acquiring interest, must clarify
whether L&T intended to extend to assignee
o Assignments: L-A. Subleases: L-T, T-S.
Privity of Contract: Relp between the parties responsible for K (can still exist without P E)
o Assignments
L-T have PK unless novation (T1 and L release T from master lease)
T-A have PK . T can sue A for indemnification if he pays because A broke lease.
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L-A have PK. if A assumes conditions of master lease. Then, L can sue A as 3 rd
party beneficiary for recovery.
Creates liability for breach PK remains until end of lease unless L grants T
novation
Subleases
L-T and T-S.
If S assumes conditions of master lease in agreement with T then also L-S
Limits on transfer (Consent to assignment)
Unless a lease expressly limits assignment or sublease T has free
alienation. Most leases have restrictions.
Courts interpret restriction narrowly (if no assignment, sublease still
allowed)
Limits on Ls power to deny consent
Absolute prohibition on assignment (courts allow but disfavor)
Assignments granted at Ls sole discretion
Commercially objectively reasonable: requires commercially
reasonable reason to deny consent
o Kendall v. Pestana: P wants to buy interest from sublessee for
airplane hanger space but D unreasonably refuses to consent to
assignment without increase in rent and other terms. Court
required consent unless reasonable objection.
Policy: favors alienability of property and upholds K
implying good faith and fair dealing
o Commercially reasonable factors: financial strength, building
image, lessee might not succeed or is not financially
responsible, legality, need to alter premises, nature of
occupancy (office, factory), competition with Ls business
interests in the same building
o Not commercially reasonable: personal taste, convenience,
sensibility, higher rent, ethically opposed
Cannot violate anti-discrimination laws
Remedies: A breaches, L can sue L or A.
If L transfers future interest in land, tenancies go with the land/ new L

Landlord Duties/Tenants Rights and Remedies

L has overwhelming bargaining advantage in apartments because L is repeat player


o Housing is increasingly decentralized because increase in number of housing
owners
o Ex of unenforceable clause: Confession of Judgment clause: T agrees in advance to
admit wrong to court in future suit
o Unenforceable provision illegal lease
Commercial leases: caveat lessee: Let the Tenant Beware: losing relevance
o T has duty to maintain unless lease provision assigns repair to L
o L only has to deliver possession and not interfere with Ts possession
o T cannot move out if L damages, but can sue L for damages
Covenant of Quiet Enjoyment: implied covenant where L agrees not to interfere with
Ts use and occupancy. Right not to be legally disturbed in your own leased premises.
o Constructive Eviction: if quiet enjoyment interrupted, T can move out and stop
paying rent as if evicted
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Based on arising conditions preventing intended use


Elements: 1) Ls wrongful act/failure to control condition 2) substantially
interferes with QE 3) was not part of original agreement between L&T 4)
creates condition of constructive eviction
Procedure: T must give notice, reasonable time to correct, vacate within
reasonable time
Remedies: Leave & recover damages (additional cost of relocating and
renting a similar unit), Stay & damages (value of premises value as is, or
rent - % decrease in value)
Reste Realty v. Cooper: D claimed constructive eviction against P suing for
rent. D leased premises from P. Premises were continually flooded by rain
runoff on driveway of Ps property. Court held constructive eviction:
substantial breach of quiet enjoyment.
Implied Warranty of Habitability: only applies to residential leases. L has burden of
repair, regardless of lease provisions
o Policy: increasing number of urban dwellers increase tenant rights. Tenants are
not skilled in repair or negotiating leases.
Cons: reduces quantity of affordable housing because L incurs extra costs
(Posner in Chicago)
o Test: would a reasonable person find the premises uninhabitable, definted by
local housing codes and fitness for human habitation
o Hilder v. St. Peter: P moved into apt owned by D. Apt was in poor state (broken
toilet, no key, etc.) D failed to fix, P fixed at own expense. Court held IWH.
o Procedure: Provide L with notice of problem, allow reas. Time to fix, prove defect,
take remedy
o Remedies: rescind lease, reformation (remake K), compensatory/punitive damages,
stay and withhold rent, repair and deduct
Constructive Eviction vs. IWH
o CE: more commercial, fewer remedies, broader
o IWH: more residential, more remedies, narrower

Termination of Tenancy

Residential leases favor tenants, but commercial favor landlord.


Periodic tenancy: L&T can terminate for any reason
Term of years tenancy: L terminates if T materially breaches lease covenant
Methods of termination
o Surrender: T leaves premises and L accepts. Mutual agreement to release
possession.
o End: lease comes to normal end
o Abandonment: T vacates 1) without justification, 2) lacks intent to return 3)
defaults on rent. T still liable for rent.
Ls rights:
Common law:
o Leave premises vacant and sue later for accrued rent
o Mitigate damages by reletting premises to new T. Sue T1 for
unpaid amount.
o Terminate lease.
Modern approach:
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Acceleration clause: leave premises vacant. If T abandons, make


all future rents immediately payable (increasing jurisdictions
discourage this)
o L must make reasonable efforts to mitigate or damages will
be reduced by mitigation amount
Policy: waste of unused resources, L least cost avoider, L
better situated to fill unit, better for apartment to be
occupied
Con: L shouldnt be forced to accept or find
replacement tenant.
L must prove reasonable effort through:
Advertising/offering/showing unit
Market rent for comparable units
Time remaining in original lease
Cost of preparing property
L can recover even if efforts to relet are unsuccessful. If
replacement unwilling to pay fair market value, do not
have to relet.
CA rule: abandonment = anticipatory breach of K. full
balance of upcoming rent due, discounted by mitigation of
reletting
Sommer v. Kridel: Ts engagement broken and offered to
surrender leased premises to L. L leaves vacant and does
not take measures to mitigate. Court held must make
reasonable attempts. (Legal changes of lease as K, not
conveyance anymore.)
Eviction: for tenancy at sufferance/holdover tenants
If T defaults on material conditions in term of years or on lease obligation in
periodic tenancy, L can evict
Cannot evict for discrimination or retaliation
Self-help eviction is discouraged.
Policy: encourage summary proceedings to speed up litigation.
Encourage judicial process. Self-help gives L too much power over T
and had potential for violence.
Force: Traditional English rule allows L to use reasonably necessary
force.
Peaceable: modified view: L can retake possession through
peaceable methods only.
No self-help: most jurisdictions prefer this now
o Berg v. Wiley: T leased space from D to operate restaurant.
Violated lease provisions like health codes and Ds demands for
notice of remodeling. D changed locks and confronted T. Ct held
P didnt abandon, D cant use self-help.
Unlawful detainer: notice to quit or fix breach in 3 days.
Summary eviction proceedings: L gives T notice of eviction and opportunity to
fix or leave.
o

Fair Housing
(Californias Fair Housing law covers more than Federal FHA. (if exempt from federal,
probably still covered/must comply according to CAs law.)

No discrimination on basis of race, sex, ethnicity, national origin, age, religion

Covered by Act?
Race
National Origin
Gender
Families/disabilities
Exemptions
Broad enforcement
options?

3601 (Fair
Housing)
Yes
Yes
Yes
Yes
Yes

1982 (Civil Rights Act)


Yes
Yes (not explicit. It meant race. Today, it
means national origin)
Yes
-

Civil Rights Act

Civil Rights Act 1866: prohibits private discrimination of race or ethnicity in rentals or sales
of real property
o Only bars intentional discrimination
o Jones v. Mayer: 1982: Civil Rights Act applied to private transactions

Fair Housing Act of 1968


Prohibits private discrimination in sale of rental of residential housing on the basis of
Race, color, religion, national origin (not same as language), people with
children (familial status), sex, handicap
Implicit: failure to make reasonable accommodations for person to
have equal opportunity to housing is illegal (ex. ramps for wheelchairs)
Disabled can make changes at their own expense. L can require return
to original state before end of lease.
o DOES NOT prohibit discrimination on marital status or sexual orientation
o EXEMPTIONS:
Sale or lease by owner of single-family dwelling (owns < 3 houses)
Owner occupies rental housing w/ 4 or less units
Purpose: to discourage discrimination for people who are in the industry of
housing but still allow autonomy for individual homeowners
o Actions prohibited
Refusal to sell or rent after bona fide offer
Refusal to negotiate
Make unavailable or deny
Discrimination in terms, conditions, facilities, services, etc
Making, printing, publishing indication of preferences or discrimination
Misrepresenting availability (not showing one unit to minority and showing it
to a white tester)
o Remedies: violators subject to injunction, compensatory and punitive damages
Buchannan v. Warley 1917: banned zoning ordinances that resulted in racial zoning
Shelley v. Kramer 1948: struck down restrictive covenants. Cant be enforced by court.
o

Index of Dissimilarity (professors paper):


o percentage of a citys blacks that would have to move for integration
o 100 = apartheid, 0 = complete integration. Housing segregation hasnt changed
much. Discrimination is more subtle.
Proving discrimination
o Disparate treatment: focuses on s intent and how individual applicant is
treated.
o Disparate impact: focuses on discriminatory effect of s policy. ( must show
pursue policy that disproportionately affected protected group
o Damages: average recovery for racial discrim = $100k.
Determining Fair Housing violations
o Violation of 3604?
If yes, does fall into exempt categories?
o even if exempt, has engaged in discriminatory advertising
if yes, there is a violation, regardless of exemption
o even if exempt, has engaged in racial discrimination?
If yes, violated Civil Rights Act
Civil Rights Act (1982) does not apply to discriminatory advertising
Affordable Housing issue
o Chicago Board of Realtors v. Chicago: L sue Chicago over legislation passed to
protect tenants (rent control, IWH, etc.). Court sustained ordinance, Posner
dissented:
Each provision decreases efficiency. Less $ for L.
Low-income housing market will shrink
Housing quality tradeoff with affordability
Rent control = inefficient allocation of resources and no reasonable
rate of ROI

Real Estate Transactions


The Sales Contract
1. Finding a Buyer
Sellers brokers enter into listing agreement.
Issue: Sellers brokers are on commission for each house they sell biased
towards making the sale with buyer toes line of fiduciary duty
Brokers have fiduciary duty to their principal act in their best financial interest
Licari v. Blackwelder: Ps inherit house and gets broker to avoid selling to neighbor.
Broker sets up buyer who buys for low price and then sells it to unwanted neighbor
for significantly more. Broker made profit and violated fiduciary duty.
2. Execution of K to Purchase
Comply with Statute of Frauds
Essential terms (parties, intent to buy/sell, purchase price/financing plan,
description of property) need not be formal or in single document
In writing
Signed by party against whom enforcement is sought
Exceptions:
Part performance: oral K + reasonable reliance
Equitable estoppel: enforce oral sale K if buyer reasonably relied to his
detriment on the sellers oral agmt to sell
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3.
4.

5.
6.

Leases < 1 year


Open escrow account and hire escrow agent (fiduciary duty to buyer and seller)
Inspection
Physical condition of property, state of title
Financing contingency (down payment, 30-45 contingency), Earnest money from
escrow (usually 1% of purchase price given to seller at time of signing of K usually
refund if inspection issue but not financing issue), title info, title insurance
Closing
Seller executes/delivers deeds, pays brokers, wraps up mortgage
Remedies for default:
Specific performance: abatements for defects
Rescission: buyer recovers partial payment if seller breaches, seller can find another
buyer if buyer breaches
Damages: benefit of the bargain (K price fair market value) or seller keeps buyers
deposit, or buyer receives some expenses back if seller breaches in good faith

Marketable Title

Implied covenant of marketable title legal title only, not physical condition of land
o Seller really owns property
o Sellers title is absolute and not shared with others
o Property is not subject to legal liabilities
Encumberances include: easement, covenant, lien, mortgage obligations, future
interests/leaseholds/current shared interests
o Permissible encumberances: insignificant blemish, public land use regulations (or
zoning ordinances), building code defects, visible encumbrances
Also cannot have restrictions exposing buyer to litigation, lower property value, property
uninsurable, violation of zoning ordinance or covenants
o Lohmeyer v. Bower: P bought title from D. P discovered zoning violations. Ct held
violations unmarketable title.
Subject to encumbrances on record buyer waives protection that sellers title is
absolute and not shared with others. Also gives up protection for existing restrictions like
easements. Still protected from unrecorded/unknown encumbrances.
Remedies: buyer must notify seller of title defect and allow time to fix
o Buyer can sue seller and be excused from perfoming K or seek damages (like
abatement of purchase price, recovery of down payment)

Duty to Disclose

Old Rule: Caveat emptor let the buyer beware


o BUT seller cannot intentionally misrepresent or actively conceal (commit fraud)
Modified caveat emptor
o Latent defect is difficult to discover AND
o Seller creates condition
o Stambovsky v. Ackley: seller created haunted reputation of house but did not
disclose to buyer.
o Johnson v. Davis: seller did not disclose water leaks in house to buyer
Policy consequences: seller has better information least cost avoider (buyer doesnt have
to pay for inspector)

Implied Warranty of Quality

Accompanies sale of new home by people in the business of building (contractor,


developer, etc)
o Allows buyer to recover if builder did not exercise standard of skill/care exercised by
professional builders
Negligence standard: if negligent workmanship, buyer has cause of action.
Cause of action also extends to subsequent buyers
Property rule: liable for x number of years after work is completed
(generally 6 years)
o only applies to residential, not commercial buildings. Commercial buildings are
protected under contractual provisions.

Deeds

Consummates the land transaction.


Three types:
o Quitclaim deed: relinquishes any title he may have (even if doesnt have any
interest) like easement.
o Special warranty: fee simple transaction. Most common guarantees seller has
done nothing to compromise title buyer is getting what seller got when seller
acquired property.
o General warranty: absolute guarantee of title. Buyer has full ownership places
huge liability on seller.
Valid deed requirements
o In writing SoF
o Signed by grantor
o Grantee/grantor must be named
o Contain words of conveyance
o Description of property
o (Effective upon valid delivery intent to transfer interest)
Delivery
o Requirements for valid delivery
Words or actions of conveyance
Intent to IMMEDIATELY transfer interest (transferring at death/future interest
doesnt count)
BUT delivery is presumed if
Grantee has physical possession of land OR
Deed is recorded
Sweeney v. Sweeney: Maurice and his brother deeded Maurices home to each other. Held:
valid delivery of second deed, so Maurice owned it at time of death. <= Maurice was
fraudulent, but not considered by court.
Forgery: ineffective to transfer rights to subsequent purchasers (even if bona fide)
Fraud: if bona fide purchaser, purchaser gets title and original owner has cause of action
against person committing fraud
Death: if grantor dies before delivery, then revoked at sellers death.
Donor gives signed deed to donee: admit evidence of whether present transfer
intended. If evidence clouds intent, revoke.

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Real Estate Finance (Mortgages)

Mortgage = conveyance of interest in real property as security for paying a loan


o Mortgagor = borrower/owner; mortgagee = bank/lender
Foreclosure: If the mortgagor defaults on loan payments to the bank
o Judicial foreclosure (some juris) courts oversee
o Power of sale foreclosure (some juris): private process, avoids foreclosure
process
Procedure:
o Mortgagor receives notice of foreclosure
o Right of redemption: original owner can buy back property within statutory period
after foreclosure
Another borrower protection: anti-deficiency statutes limit ability of
lender to get deficiency judgment.
o Public auction to sell property to highest bidder
Price stands unless it is unreasonable
Murphy v. Financial Development Corp.: property was sold within a few
hours of foreclosure. Held: lender has fiduciary duty to mortgagor
must take reasonable measures/due diligence to achieve fair value
(not fair market value) of property upon foreclosure
o Money from sale pays off first mortgage, then second mortgage, etc
If not enough money to pay off debt, possible deficiency judgment against
mortgagor.
Predatory Lending: grant mortgage loans with teaser rates interest rates go up after
introductory period. Helps banks avoid checking whether buyers qualify for the true
financial burden.
o Commonwealth v. Fremont Investment & Loan: granted many sub-prime loans that
gave it the ability to foreclose.

Recording

Policy:
o Protects bona fide purchasers from prior unrecorded conveyances and from losing
valuable consideration
General rule: First in time: if no one records, first in time wins
o Exception: Notice and race-notice statute.
o Race statute (very uncommon): first to record prevails, regardless of notice
o Notice statute: 1) subsequent BFP who provides 2) valuable consideration and 3)
has no notice of prior interest
o Race-notice: 1) subsequent BFP who provides 2) valuable consideration 3) has no
notice of prior interest and 4) records first
Types of notice:
o Actual notice: directly told
o Inquiry: reasonable buyer should have asked about property rights
o Constructive notice: constructively notified if prior buyer recorded
Shelter Rule: if C buys from B, C is protected whether he has notice of As record if B had
no notice of As title when B purchased from O. B was a BFP and thus had full title
ownership rights to convey to C.
o Policy: prevents fraud, encourages productive use/land transfer, penalizes person
who was in best position to avoid loss (seller is least cost avoider).
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But, raises transaction costs (buyer has burden of doing title search)

Title Insurance

Title insurance insures against defects in the record (status of legal title)
o Covers title held by another
o Defect/lien/encumbrance
o Unmarketable title
o Insured owner has no right of access to land
o Excludes:
Defects that can be found through inspection/survey of land
Problems created by insured
Defects not in public records
Ordinance/regulation on land
Rogge v. Chelsea Title & Guaranty: Rogge purchased land with title insurance from
Chelsea. Chelseas title search uncovers acre shortage in purchase description. Held:
insurer has duty to disclose information affecting buyers decision, whether it falls under
title search. (discourages malpractice).
Possible solutions
o System of title registration run by state eliminates title insurance monopolies and
reduces costs, runs risk of ineffective state-run system
o Remove seller & buyer broker buyer broker is paid on commission of sale so
incentivized to encourage buyer to buy fiduciary duty conflict

Nuisance Law

Externalities
o Demsetz: reduce negative externalities by assigning private property rights
Private property better allocates resources and reduces costs of negotiation
when internalizing externalities
Weaknesses: ignores benefits of communal property, role of culture/politics
Ex) ocean fisheries
o Hardin: reduce negative externalities through social regulation
Ex) carpooling
o Merge of Demsetz and Hardin: pollution credits
Definition: interference with persons private use and quiet enjoyment of land
Public vs. private nuisance
o Public = activity prohibited by law affects public
Aggregation of private nuisance
o Private = activity affecting one person or small set of individuals
First in time?
Relative economic harm/benefit
Cost to remedy
Negligence
Health and safety
Estancias Dallas Corp. v. Schultz: Schultzs enjoyment of residence interrupted by AC unit
of Estancias apartment building. Held: balance of equities test damage to Schultzes
outweighed damage to public from nuisance.
Tests:
o Balance of equities: gravity of harm > social utility? (private harm > public
benefit?)
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Gravity of harm
Extent of harm
Character of harm (ex: legitimate or malicious)
Social value of s use
Suitability of s location
Burden on to avoid harm (first in time coming to nuisance?)
Utility of conduct
Social value of s use/conduct
s cost of avoidance/prevention
Suitability of location

Remedies
o Harm > utility injunction on s activity
o Utility > harm damages or no recovery
o Harm is substantial and unreasonable receives damages
o Temporary damages = damages for past harm
o Permanent damages = damages for past and future harm.
o Boomer v. Atlantic Cement Co.: creates nuisance by emitting dust and noise from
cement plant. Held: injunction conditioned on paying permanent damages
essentially permanently purchases right to nuisance from s.
o Spur Industries v. Del E. Webb Development Co.: Webb began developing residential
areas near Spurs ranch ranch created nuisance of smell and flies. Held: Spur
endangered public health but was first in time. Webb came to the nuisance. Use
liability rule Webb pays Spur to move.

Coase Theorem

First Coase Theorem: assignment of property rights does not affect the amount of
interference most efficient user will get the rights
o Conditions for theorem to apply (aka absence of transaction costs)
Absence of bilateral monopoly (no two parties are locked into dealing with
another)
Absence of collective action and free rider problems (parties cannot hold out
or free ride)
Adequate wealth (parties can buy the rights they need)
Knowledge of partys best interest (what partys best option is)
Second Coase Theorem
o If transaction costs are high assign property interests to party that would buy
them.
o Court can set level of nuisance where marginal cost of nuisance generator =
marginal benefit of abatement for victim
o Basically, property right goes to most socially valuable user
First Coase Theorem example: Cap and Trade
o Many parties, no opportunity to free ride, wealthy competitors, knowledge of
pollution costs/permit prices

Calabresi/Melamud

Property Rules vs. Liability Rules


o Property rules: assign rights to people that can only be transferred by consent
(voluntary transfer)
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Low transaction costs


Liability rules: forces involuntary transfer of right in exchange for payment
Short circuits negotiations but higher transaction costs
Boomer v. Atlantic Cement Co.: Atlantic paid permanent damages to - basically a
nuisance easement
Spur v. Webb: came to the nuisance must pay for injunction.
Alienability rules: rights that no one can give up, voluntarily or involuntarily
Calabresi unifies Coase and Hardin
o

Wills, Estates, Present & Future Interests


Wills & Trusts

Will disposes of property owned at death effective upon death.


o Requirements
Executed validly
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Witnessed by 2 parties
Exception: holographic will
Valid if in testators own handwriting and signed by him and testator is
of sound mind
If no valid will intestate
Order of distribution: spouse issue (children) parents & parents
descendants (siblings) grandparents & descendants
Divide shares based on representation if one person of a generation died

Trust: fiduciary relationship where trustee manages the property in the trust on behalf of
the beneficiaries
o Settlor: grantor/benefactor
o Trustee: holds legal title and can invest/dispose of trust assets.
Can also be one of the beneficiaries
o Beneficiaries
o Creation of trust
Testamentary trust must comply with statute of wills. Allows for increased
flexibility (liquidate trust assets)
Inter vivos trust interest in real property, must meet SoF. Avoids delay and
cost of will administration.

Freehold Estates & Life Estates

Fee simple absolute: no restrictions on alienability infinite duration To A and his


heirs
Life estate is a freehold interest ownership for the that lifetime
o Life estate per autre vie: bound by original recipients lifetime becomes
measuring life even if sells life estate interest
o Life estate + remainder = 100% fee simple absolute
o Reversion: estate goes back to owner after recipient of life estate is dead
o Escheat: when you die without hours, title transfers to state
o Cannot commit waste
Affirmative waste: actively lowers property value
Permissive waste: passively allows property to deteriorate
Ameliorative waste: increase property value NOT considered waste
If commit waste on life estate REVERSION
Woodrick v. Wood: Mother has LE with equal remainders to son and daughter. Mother
wants to demolish deteriorating barn that is lowering property value. Daughter refuses.
Held: for mother because ameliorative waste =/= waste.
Baker v. Weedon: Anna receives life estate and wants to sell part of property for livable
income, but grandkids with remainder wont allow sale. Held: partial sale or agreement
with parties.
Ambiguous conveyances: prefer fee simple when language of conveyance is
ambiguous language must be clear to create partial interest
White v. Brown: Lide appointed niece to be executrix of estate and had sister-in-law to live
in her home. Home was expressly not to be sold. Held: Lide conveyed fee simple absolute
to sister-in-law because intention was not clearly conveyed in will. Not a life estate.
Present value of remainder: value of property / (1+r)^n (n = years to ownership)

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Defeasible Estates

Can terminate early upon occurrence of specified event or action


o CANNOT commit waste (otherwise reversion allowed)
Fee simple determinable
o Creation: so long as, while, during
o Duration: automatically terminates when specified event occurs
o Possibility of reverter termination estate back to grantor
o Ink v. City of Canton: Ink deeded land to city as long as it was used as public park
revert to heirs if not used as park. Held: Ink heirs receive damages but retain
possibility of reverter.
Fee simple subject to condition subsequent
o Creation: on condition that, but if, provided however
o Duration: grantor gets right of entry option to terminate estate
o Right of entry: grantor can enter and retake property
Fee simple subject to executory limitation
o Creation: future right of possession goes to transferee instead of grantor
o Duration: third party interest divests from current owners interest
Restrictions on Alienation:
o Disabling Restriction: grantee does not have power of sale
NOT allowed fee simple, GENERALLY NOT for defeasible
Allowed life estates
o Forfeiture Restriction: grantee loses proceeds from sale. Grantor can stop
transaction or get proceeds.
NOT allowed fee simple
Allowed defeasible AND life estates
o Promissory Restriction: contract not to sell
NOT allowed fee simple
Allowed defeasible AND life estates
o Policy governing free alienation:
Prevents concentration of wealth (like RAP)
Land to most valuable use (favoring commercial development and
marketability)
Favor current generation (past generations cannot accurately evaluate
current gens interests)
Creditors can recover debt
Balancing Test: Restrictions on alienation
o Does condition discourage improvements too much?
Better to have broader classification (only for residential > only for cotton
farming)
o How constrained is universe of buyers?
Specify class of buyers restricted/confined to
o Is restriction too vague?
Better to be more specific on what is restricted
o How harsh is the penalty for violation?
Better to be less harsh
o Does restriction efficiently regulate land-use?
o Availability of restriction encourage charity?
o Is goal of restriction reasonable and useful?

16

Future Interests

Grantors Interests
o Reversion: grantor retains future interest when conveying an estate less than FSA
o Possibility of reverter: O retains future interest when creating fee simple
determinable
o Right of entry: O retains future interest in taking back estate when creating fee
simple subj to condition subsequent
Grantee/Transferees Interests
o Vested Remainders (immediately possessory at natural termination of prior Life
Estate OR term of years does not cut short prior interest)
Indefeasibly vested remainder: remainder in a PRESENTLY IDENTIFIABLE
person. NOT subject to any limitations, conditions, or RAP.
Ex) To A for life, then to B.
Vested remainder subject to divestment: (gets it UNLESS condition
violated) remainder subject to condition subsequent (interest can be taken
away)
Ex) B: To A for life, then to B and his heirs, but if B does not reach age
21, then to C and her heirs.
Vested remainder subject to open: remainder in one or more members of
a class that may increase ID certain but share of remainder uncertain
Note: AT LEAST ONE member of class must exist
SUBJECT TO RAP
Ex) Children of C: To B for life, then to the children of C and their
heirs
Contingent remainder: (satisfy condition, THEN gets it)
Subject to a condition precedent to become possessory
Created in unascertainable person (condition not yet fulfilled)
SUBJECT TO RAP
Ex) B: To A for life, and then if B reaches age 21, to B and his heirs
Ex) B: To A for life, then to B if B returns to France
Alternate contingent remainders: if one partys interest vests, then
the complementary contingent remainder fails.
Contingent remainders can become vested.
o Executory Interest: future interest that divests interest away from another
estate/interest
SUBJECT TO RAP
Can divest a vested future interest OR fee simple determinable
Shifting executory interest: divests another transferee
Ex) C divests from B: to A for life, then to B, but if C returns from
France, then to C.
Springing executory interest: divests transferor
Ex) B divests from reversion: to A for life, then to B if B gives A a
proper funeral.

17

Defeasible Fees

Freeholds

Present Estates

Future Interests
Held by
Transferor

Future Interests Held


by Transferees

Fee Simple Absolute

n/a

n/a

Fee Simple
Determinable

Possibility of
Reverter

n/a

Fee Simple Subject to


a Condition
Subsequent

Right of Entry

n/a

Fee Simple Subject to


an Executory Interest

n/a

Executory Interest

Indefeasibly Vested
Remainder

Life Estate

Leaseholds

Vested Remainder
Subject to Open
Term of Years

Other Lease Interests

Reversion

Vested Remainder
Subject to
Divestment
Executory
Interest
Contingent

Rule Against Perpetuities

Purpose: prevent living people from having too much control over property after they die
avoid aristocracy
Rule: A valid interest must vest, if at all, within 21 years of a life in being. must be
certain to vest or fail
o 21 years plus any gestation period if can satisfy by pregnancy, RAP is
not violated
o Entire class of persons must vest or fail within 21 years must CLOSE and
gift vests to EVERY member in class
Process:
o 1) Does RAP apply to the interest?
Includes:
Contingent remainders
Vested subject to open (unless class closes)
Executory interests
Option to purchase/right of first refusal
o 2) When does perpetuities period begin?
Deeds: effective upon delivery
Wills: effective at death
Trust: effective at death
Inter vivos: effective when irrevocable
18

3) Is the interest certain to vest of fail within 21 years?


Class closed?
o 4) Is there a measuring life that validates the interest?
Unborn spouse, potentially having kids after measuring lives die, issue of
widow (might have a different widow and have children after 21 years)
o General guidelines:
If going 1 generation past lives in being with interests vesting by 21
probably valid
Going 2 generations past lives in being probably void
Exception: to A for life, then to my first grandchild to reach 21.
o Valid if devise rather than convey (if creator dead at the time
class of children closed children are validating lives)
Symphony Space v. Pergola Properties: Broadwest sold dance studio to Symphony and
rents it back for $1/yr (tax evasion) and paid for option to purchase at certain numbers of
years, some more than 21 years. Held: Violated RAP because cloud of title.
Approaches to Resolving RAP Violations
o Cy Pres: make the smallest modification to make interest valid
o Wait and See: see if it vests within 21 years.
Pros: upholds transferors intent, protects transferor from attorney error
Cons: impairs marketability of land, ties up wealth from commerce,
uncertainty of title
o USRAP: wait and see for 90 years if it vests or fails. If it fails, court can reform
document to most closely follow transferors intent.
o Separability doctrine: cross out invalid interest and leave remaining interests as
is.
o Mutual mistake: both parties understand the same thing change to reflect
meeting of the minds
o Damages substitute for forfeiture: monetary fine.
o Dynasty trust: put money in trust and give power of sale. No limit to length of
trust.
o

19

Generation skipping tax: forces each generation to pay tax encourages each
gen to increase wealthConcurrent Interests
Numerous clausus: categories established and virtually finite.
o

Characteristic

Tenancy in Common

Definition

Each co-tenant owns


fractional share of
entire parcel of land
None; default rule

Conditions

Joint Tenancy

Tenancy in the
Entirety
Each spouse owns the
whole parcel
Parties must be
married
4 elements of unity

Equal shares
required?
Survivorship?
Restrictions on
transfer?

No

Avoid probate
when tenant dies?
Avoid taxes when
T1 dies?
How to end?

No

Specific intent,
vesting, etc.
unity of interest:
1) acquire title
simultaneously;
2) in same deed/will;
3) equal parts;
4) equal right to
possess whole
Yes, though this is
eroding
Yes
-No, but transfer
converts JT to tenancy
in common
-JT inalienable (right
of survivorship T1s
interest ends upon
death cannot
devise)
Swartzbaugh: lease
doesnt sever JT
Mortgage
extinguishes at death
Yes

No

Yes

Yes

One party buys out


others OR petition for
partition (Delfino)

Divorce
Death
Mutual agreement

>2 parties
permitted?
Widespread?

Yes

Mutual agreement,
Party transfers
interest
Petition for partition
Yes

Universal

Universal

About 20 states
(never in community
property states)

No
No

Yes
Yes
Yes
Sawada: can create
shield to creditors

Yes

20

Tenancy in Common: DEFAULT PRESUMPTION unless explicitly stated otherwise


o Each co-tenant has an undivided fraction of interest (not necessarily
equal) right of possession/use of entire parcel
o Transfer: may transfer part or all of interest without co-tenants consent
o Termination: buyout OR partition in kind/by sale
o Delfino v. Vealencis: Tenants in common with Vealencis owning 30% interest and
runs garbage hauling business. Delfino wants partition by sale, but court holds
partition in kind. Vealencis pays Delfino compensation for inability to divide property
evenly.
Note: court should have calculated value of sale and given Delfino 70% of
value.
Joint Tenancy: must be explicitly stated to A and B as joint tenants or to A and B
with right of survivorship
o Each joint tenant owns EQUAL undivided shares in entire parcel
Right of survivorship: at one joint tenants death, surviving tenant owns
entire parcel
o Requires 4 unities
Time: acquire title at the same time
Title: acquire by same deed or will
Interest: must own equal fraction of estate
Possession: must have equal right to possess entire parcel
o Transfer:
Virtually inalienable
Conveyance severs JT, grantee becomes tenant in common with other
tenants, other tenants are still JT to each other
Lease DOES NOT SEVER JT.
Mortgage (not treated as conveyance of title but as lien) mortgage
terminates when cotenant dies. (Harms v. Sprague: mortgage died with John.
Sprague as joint tenant received entire property using right of survivorship. If
Sprague had died first, mortgagee could go after entire property for payment)
Mutual agreement severs JT
Partition in kind/by sale severs JT
o Swartzbaugh v. Sampson: Husband leases part of walnut farm to Sampson for
boxing club against wifes wishes. Held: JT can lease interest Sampson assumes
all interest rights husband had for lease term.
Wifes possible remedies: declare nuisance, demand access for conflicting
use (if ousted fair market value), partition in kind
o Riddle v. Harmon: Mrs. Riddle had JT with husband but conveyed her share to
herself without straw man to terminate joint tenancy. Held: court said straw man is
archaic and allowed Mrs. Riddle to convey to herself. encourages fraud
Note: desk drawer deed: Wife could convey to herself and keep deed in
drawer. Destroys deed if she survives, deed surfaces if husband survives.
o Joint Bank Accounts: depends on intent of parties, not on bank terms
Convenience account: O wants A as JT to help pay Os bills no right of
survivorship
Survivorship account: O wants A to have survivorship rights, but no current
access
Joint tenancy: O wants to make present gift to A of half of accounts funds,
as well as survivorship rights to whole sum
21

Presumptions:
Account funds belong to each party PROPORTIONATE TO
CONTRIBUTION unless there is clear contrary evidence of intent
Presumes RIGHT OF SURIVORSHIP unless clear contrary evidence of
intent
o Creditors:
Can seize interest and sever JT during debtor tenants life.
Interest disappears after debtor tenants life.
Tenancy in the Entirety: only exists between husband and wife with right of
survivorship.
o Requires 4 unities + marriage
o Can create creditor shield: creditors of one spouse cannot access this interest
because neither husband nor wife can transfer interest
o Termination: mutual agreement, divorce, death
o Sawada v. Endo: Mr. Endo gets in car accident but transfers ownership of property to
kids before suit is filed. Court: creditors cannot reach property interest regardless of
transfer because of tenancy by the entirety.
Rights and Duties of Cotenants

ACCOUNTING RULES
1) If cotenants are in possession, they share operating costs pro rata.
2) If 1 cotenant in possession, entitled to contribution IF expenses >
implied income (fair rental value).
3) if 1 cotenant managing, share net profits with cotenants.
4) if 1 cotenant extracting resources, share net profits.
5) if 1 cotenant makes improvements, that cotenant receives any
resulting gain or bears any resulting loss.
6) Necessary repairs treated like operating costs; optional repairs
treated like improvements.
o Right to possession: each cotenant has right to use parcel
Liability for Rent: NOT liable to other cotenants for rent
EXCEPTION: Ouster cotenant in possession refuses request of
another cotenant to share possession of land can get fair rental
value proportionate to his share
o Right to rent, income, profit
3rd parties: each cotenant gets pro rata share of rent from 3 rd parties
Minerals/natural resources: each cotenant entitled to pro rata income from
NONRENEWABLE resources of land
o Liability for Mortgage/Tax Payments
Each cotenant must pay proportionate share of payments that could create a
lien on property if left unpaid
Tenant has right to sue other cotenants if he pays more than his share
EXCEPTION: cotenant in sole possession: cannot receive
contribution UNLESS they exceed the fair rental value of property for
that period
o Liability for Improvements and Repair Costs
Cotenant who pays for these is NOT entitled to contribution UNLESS they
have a prior agreement
22

EXCEPTION: repairs are necessary as operating expense (usually repairs are


seen as improvements)
Liability for Waste
Treated like removing nonrenewable resources
Partition options
Property rules:
PREFERRED METHOD: Partition in kind: physical division of
property in separate parcels
o Owelty: if value of divided land is different, court will order
compensation to offset the difference
Partition by sale: use when in kind is impracticable and owners
interests better served this way
Liability rules:
Partition by sale with compensation
BEST SOLUTION: Partition in kind with compensation

o
o

23

CREDITORS RIGHTS IN TENANCY BY THE ENTIRETY


Group
I

Rule Governing
Tenancy by Entireties

Logic

Husband controls; wife


can inherit whole

Common law interest


left intact after Married
Women's Property Act

In theory, husband's
creditors should be
able to reach all but
the wife's right of
survivorship

Conveyance to
children fraudulent;
Sawadas can recover
almost the whole value
of the house

(now abolished)

Interest reachable

Effect in Sawado

II

Both parties can


alienate their interest,
subject to the right of
survivorship of the
spouse

Gives woman the


common law position
of the man

Creditors of either
spouse can reach the
present interest and
that spouse's right of
survivorship

Conveyance to
children fraudulent;
Sawadas can recover
at least half-interest in
the house

III

Neither party can


alienate their interest

Gives man the


common law position
of the woman

Creditors cannot reach


any of the interest,
unless both spouses
are involved (i.e., both
are tortfeasors or joint
debtors)

Conveyance arguably
ok; Sawadas barred
from recovering while
Mrs. Endo is alive

IV

Either party can


alienate their right of
survivorship

Protects the
inviolability of the
tenancy during the
lifetime of the innocent
spouse

Creditors can reach the


survivorship interest

Conveyance to
children probably
fraudulent; Sawadas
should be able to
recover, but only to
the value of the right
of survivorship (not
much)

Common Law/Marital Property and Community Property


Marital Property (dominant system)

Husband and wife separately control assets


Ownership: Spouse owns any property he/she acquires and any assets purchased by
separate wage earnings. Everything else goes into the pot.
Divorce:
o Equitable distribution of marital property
What is marital property is most of the pot primarily one spouses? If so,
richer spouse gets a bigger share of marital property.
Marital property defined: 3 approaches
o All property acquired at any time marital property
o All property acquired during marriage marital property
o Only property acquired from earnings of each spouse DURING
marriage (excludes gifts/inheritances) marital property
o Degrees/professional licenses majority = NOT marital
property
NY: they are marital property.
NJ: Reimburse costs of financing education.
24

In Re Marriage of Graham (CO mar. prop. state): Wife contributed to 70%


financial support and husband completed BA and got MBA during first half of
marriage. Held: Not marital property. TC erred in discounting + paying over
time. Should do either one.
OBrien (NY): increased earnings from medical degree acquired during
marriage marital property. Error: should give property based on
contribution of spouse (one spouse gets MP because other spouse got a
degree)
Elkus v. Elkus: Mr. Elkus wants incrase in wifes opera career success as
marital property. Court: Mr. helped advance Mrs. Career potential (manager,
housewife) entitled to either lump sum or portion of future earnings.
Prenups: enforceable if 1) sufficient disclosure of assets 2) full mutual
knowledge of each others property 3) not unconscionably made
Goodwill: Reputation that generates future stream of profits
divisible marital asset.

Death:
o Surviving spouse takes EITHER
What they would normally get from decedents will
OR forced elective share of of property

Community Property

Everything spouses own goes into common pot for each spouse
o General Rule: assume community property unless proven otherwise
o INCLUDES increased value to separate property due to community efforts (or
efforts by a spouse during marriage), not reasonable rates of return from
investment
o EXCEPTION: things acquired BEFORE marriage and gifts and inheritances are
separate property
o Partially paid for assets: 3 approaches
**Pro rata (CA & WA)**: % of property paid before marriage percentage
as separate
Inception of right (TX): separate or community determined when legal
right acquired
Time of vesting: determined when title passes
o Must have mutual consent to convey anything (small gifts okay)
o Degree acquired during marriage depends on jurisdiction
Divorce: divided equitable (equally in CA) between spouses, separate property retained
by original owners
Death: Spouse can transfer half of community property and all of separate property
NO tenancy by the entirety
MIGRATION:
o property initially characterized DOES NOT CHANGE unless both spouses consent
o MP CP: separate remains separate, subsequently acquired becomes community
o CP MP: CP remains CP but at death forced elective share get statutory share
+

Equal Protection

Common Law Marriage: live together with marriage roles for x years can reap
marriage benefits
25

Varnum v. Brien:
o Levels of scrutiny:
Standard (rational basis for legitimate scrutiny): logical demonstration +
underlying goal
Ex) age classification for driving, income classification for taxes
Immediate scrutiny: important government interest and substantially related
Strict scrutiny: presumptively invalid and compelling state interest and
necessary to achieve the interest
Ex) race classifications (affirmative action)

Eminent Domain, Takings, and Zoning


Eminent Domain

5th amendment of US Const.: Nor shall private property be taken for public use without
just compensation.
o Eminent Domain: liability rule govt takes without consent & provides
compensation
Purpose: protect against redistribution of wealth by requiring public purpose
and compensation
Avoids holdouts by individual owners and delay of development
o Test: is there a public use?
Ultimate private ownership =/= taking improper under public use
requirement
Berman v. Parker: Taking of department store to develop for another
businessman okay
Redistribution of land wealth to promote equality = public purpose
Hawaii Housing Auth. v. Midkiff: Court held program to decrease land
oligarchy (buy land from landowners and lease it to homeowners to
build their houses) serves public purpose of redistributing land wealth
to promote equality
Urban renewal: land given directly to private company for economic devt =
public purpose
Kelo v. City of New London: Court okayed goal of economic
development when s property condemned to revitalize city.
New Means Test (Tom Merrills Economics of Public Use) public use is too
vague
o Public use if 1) necessary to overcome transaction costs 2) low CS lost
3) not rent-seekers
o 1) how important is power of eminent domain? (how important are liability
rules to this project?)
Is government unable to overcome transaction costs through property rules?
(holdouts?)
o 2) Are those losing their property holding a lot of consumer surplus?
CS: when condemning property, pay owners market value but what about
the additional value residents hold above market price (neighborhood value,
sentimental value)
o 3) Are those receiving rent-seekers?
Rent-seekers: private interests that capture government/public entities for
own services some public benefit but a lot more private benefit
26

Poletown Neighborhood Council v. City of Detroit: GM tells Detroit it will move plant
unless City finds and sells them big plot of land cheaply (condemn Poletown).
Merrills test NOT public use though high transaction costs through bargaining,
too much CS (ethnic community) and GM is rent-seeker.
Compensation
o Fair market value: valued at highest and best use it can be adapted for (including
future use)
o No compensation necessary for: goodwill, owners sentiment, economic value of
rebuilding
o Partial takings:
If reduces value of remaining parcel pay severance damages (reduction in
value)
If increases value can offset severance damages, but must still pay
compensatory damages
o

Takings

Exaction: Govt takes from private owner in exchange for a regulatory accommodation
(favor)
o Nollan v. California Coastal Commission: wanted to improve house but commission
wouldnt approve project unless granted easement across beachfront property so
public could better access beach. Held: taking because no nexus goal was to get
people to see the beach from road.
Test for Taking
o 1) Is there an exaction?
If yes, nexus between exaction and accommodation? (favor must be
related to purpose of regulation)
If yes, is there a rough proportionality between exaction and
accommodation?
o Yes no taking
o No taking
o 2) If no, is there public use?
If no, taking prohibited.
o 3) If yes, permanent physical occupation?
Yes taking, compensation required
o 4) If no common law nuisance/negative externality being eliminated?
must be common law nuisance affecting neighbors
Yes no taking even if property value drastically reduced
No total wipeout of value that was not because of a limit that was
part of original title? Land deprived of all economically productive use
Yes taking
o 5) If no, weigh Penn Central factors:
Average reciprocity of advantage if burdens imposed on owners by
regulation offset by benefits conferred on owners not a taking
Diminution in value to claimant closer to 100%, probably a taking
Extent to which regulation interferes with reasonable investor
expectation
Conceptual severance: Look at taken portion as fraction of the whole (significant
fraction or not?)
27

Pennsylvania Coal v. Mahon: Coal co. transfers property to Mahon, reserving rights
to minerals. Government passes Kohler Act, not allowing subsidence through mining
(takes away support estate access from Penn Coal) Held: regulatory taking
deprived Penn of 100% of support estate value.
o Keystone Coal: same facts but technology had improved. Held: no taking because
the amount required to avoid subsidence was comparatively less with better mining
technology.
Remedy = compensatory damages
Lucas v. South Carolina Coastal Council: SC enacted Act after Lucas purchased 2 lots to
build houses that barred permanent structures on beachfront lot. Held: taking because
too far limit was not part of original title.
Palozzolo v. Rhode Island: Palazzolo owned coastal wetlands land, got sole ownership after
creation of Council to protect wetlands. Held: not a taking because not total wipeout of
value. Also had reciprocity of advantage (enjoyed public benefit of protected wetland) and
investor expectations (full notice of regulation)
o

28

29

Zoning

Village of Euclid v. Amber Realty Co.: intended industrial use for land but Euclid passed
zoning laws dividing parcel into 3 zones, decreasing value of land. Held: not a taking
o Issues: Substantive due process (inhibits freedom of K vs. protecting public safety);
equal protection (creating class zoning? Or is there rational zoning criteria?); taking
(require compensation? usually no taking because doesnt satisfy three factors
unfair)
Purpose: separation of uses; groups interests; regulates future development
Zoning process: 1) State passes enabling statute 2) Comprehensive Plan adopted by
zoning commission 3) Enact zoning ordinance (no total wipeouts) 4) Appoint
administrative board to approve variance/exceptions
Non-conforming use:
o Existing uses are grandfathered: new zoning laws/systems DO NOT AFFECT
existing property
o Most ordinances bar expansion of non-conforming use
o Cannot be transformed into different non-conforming use
o Abandonment terminates non-conforming use
o Destruction of structure terminates non-conforming use
o Nuisance then cannot continue using
o Eminent domain
o Problem with Artificial Monopoly: owner of nonconforming has monopoly
because ordinance prevents subsequent competitor market entry. Solution:
amortization: owner of use recovers his investment and then right to continue use
ends. Valid if time period is reasonable.
o Northwestern Distributors v. Zoning Hearing Board: zoning board enacts ordinance
prohibiting adult stores after already started operating adult bookstore. Allowed
90-day amortization period. Held: Rezoning existing nonconforming u se out of
existence = per se taking. No phaseouts allowed.
Variances permitted if: 1) show hardship (conforming to zoning would prevent
reasonable return on investment of property and 2) public interest (variance wouldnt
fundamentally change area)
Aesthetic zoning: majority = valid government purpose
o Stoyanoff v. Berkeley: uniform theme of houses in neighborhood but one house
desired to be built looks grotesque, modern deviates from theme. Held: conserves
property values and there was notice of Board passing this.

Personal Property
Finders
Recover Possession
Recover Damages
Real Property
Ejectment
Trespass
Personal Property
Replevin
Trover
Establish ownership
Quiet Title
Driving Principles: RELATIVE OWNERSHIP & POLICY AGAINST SELF-HELP
o Goals of Finders Law:
Get property to true owner
Provide clarity of new ownership
Discourage unlawful behavior
30

Rules:
o Finder = first person to take possession of lost/unclaimed property
Requirements: intent to control AND act of control
CA LAW: value > x turn into police and get it back if no claimant
o Finder has superior title to ALL but true owner
Mislaid: consciously lose possession (put it down and forget)
Lost: unconsciously lost possession
o Abandoned: deliberately/intentionally giving up property: finder has ABSOLUTE
TITLE
o Finder in a public place becomes owner (place = shop: Bridges v.
Hawkewworth)
o On private land, employee finder vs. owner belongs to owner (South
Staffordshire v. Sharman)
o On private land, finder is a trespasser to owner.
o Tenant finder lessor owns it. (Elwes v. Brigg: tenant w/ 99 years lease finds
embedded boat)
o Possessor of land possesses EVERYTHING on land.
Hannah v. Peel: Peel was conveyed house subsequently requisitioned for quartering of
soldiers. Soldier was stationed there and found brooch on window frame, turned it in. Peel
sold it. P wanted brooch or equivalent damages. Held: For soldier b/c Peel was not
physically in possession no right to brooch, didnt know about it.
Armory v. Delamirie: chimney sweeper finds jewel and brings to goldsmith for
identification. Held: damages to sweeper value of best jewels fitting socket (efficient
deterrence)
Popov v. Hayashi: Popov catches ball but does not maintain control of it. Hayashi picks it
up in midst of mob chaos. Held: neither has superior title equal and undivided interest
in ball.

Gifts

Requirements: Intent, Delivery, Acceptance


o Intent:
even if intent is after delivery still valid gift
gift causa mortis (on deathbed) interpreted more strictly can retract if
recovers or at any time before death
If extremely valuable item, require SPECIFIC INTENT/DELIVERY
(Newman)
o Delivery: PRESENT TRANSFER (no promises of future gift) wrench of
parting
Actual delivery
Constructive delivery: give someone means of accessing property (key)
Symbolic: symbolizes intention of giving gift (piece of paper, property related
to gift like saddle for gift of horse)
Middleman: Delivery made when donor delivers to donees agent OR donors
agent delivers to donee
Bailment: one person owns it but another has possession bailorowner/bailee-borrower relationship determines liability
Bailee liable for damage to property if he asks to borrow
Bailor liable if he asks bailee to watch over property
Mutually beneficial ordinary duty of care to prevent damage
31

Neither/involuntary bailment no duty of care


Valid gift if it is a present gift of future interest (but might be high
taxes upon appreciation)
o Acceptance: presumption of acceptance UNLESS there is refusal.
Inter vivos gifts are IREVOCABLE
Newman v. Bost: Van Pelt hands keys to Newman housekeeper/fiance to bureau and
gives her furniture in house, bureau in Van Pelts room. Bureau contains life insurance
policy. Held: furniture that keys open or in s room are gifts. No delivery of life insurance
policy not for Newman.
Gruen v. Gruen: Dad sends 2 letters giving painting to son for birthday but wants to keep
painting til death. Held: okay to give present transfer of future interest. FRAUDULENT
(indicated by second letter trying to avoid taxes)

Adverse Possession

Goals: 1) encourage productive use (reward earners) 2) clarity of title 3) encourage active
ownership (punishes sleepers)
Elements required:
o 1) open and notorious 2) actual entry 3) exclusive and continuous
occupancy 4) adverse and hostile claim of right 5) for the statutory period
Hostility: AP has NO legal interest legally incompatible with using land
Bars tenants, cotenants, licensees; cannot AP government
land, cannot AP against future interests until they become
possessory
Open and Notorious: visible and obvious enough for reasonable owner to receive notice
of AP
Actual entry:
o Majority: enter land and use as ordinary owner (if vacation homes area, use as
vacation home sufficient)
o Minority (CA): must cultivate, improve, or substantially enclose property
EXCEPTION: color of title (see below)
Exclusive and continuous occupancy: true owner or general public cannot be sharing
with AP. True owner must use as ordinary owner would. If multiple APs concurrently
possessing, acquire title as tenants in common
Adverse and hostile: true owner cannot have consented to occupancy (ex)
maintains gate for AP)
o Objective test (Majority): Did true owner consent to possession? If no, AP valid.
o Good faith test (Minority): AP has good faith mistake belief he owns property.
Statute of Limitations:
o Change in ownership does NOT reset timer during owners line of succession
EXCEPTION: SoL does NOT apply to State
o Tacking: if AP1 conveys title to AP2, combine their possessory time to satisfy SoL
Requires privity between APs
Relativity of title: AP2 drives out AP1 AP1 can eject AP2 gap of
recovering possession still attaches to SoL.
Howard v. Kunto: Summer homes Kunto takes possession from Millers who
occupied for a long time deeds incorrectly reference lots next to them.
Kunto moves in, sues to eject Kunto. Held: Summer possession = typical
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owner of area & tacking allowed (privity of estate color of title). Court ruled
for Kunto.
o Discovery rule: SoL begins running when reasonable owner discovers/should have
discovered identity of possessor of property
OKeefe v. Snyder: paintings disappear from gallery but she doesnt report
theft for 26 years. Held: SoL does not run until reasonable owner discovers
through due diligence.
o Disability: minor, insane, in jail
After SoL runs, add 10 years after disability ends OR get 21 year
SoL, whichever is longer.
Disability MUST BE IN EXISTENCE when SoL CLOCK BEGINS
Van Valkenburg v. Lutz: cleared path on vacant lot to get to his, built house for brother,
put trash and little garden all on vacant lot. VV buys lot and kicks out Lutz. Lutz gets
easement by prescription and tries to AP. Held: no AP because did not actively possess (did
not improve land), knew land wasnt his, de minimis use does not satisfy open and
notorious poor reasoning
Color of Title: (belief AP is true owner through written document) if you have color of
title, you have constructive possession of ENTIRE parcel even if you only possess part of it
o If NO color title and improve part of land, owner might only lose the improved
part
o If have color of title over Xs and Ys lots, deed conveyed by X, possessing Xs lot
does not get X and Y lots because Y had no reason to know of AP.
Real property:
o O sells to A, then O sells to B Fraud BFP without notice BFP gets good title
o O sells to A, stranger sells to B Forgery BFP cannot get good title. Must go
through AP.
Personal property:
o Seller acquires through fraud and sells to BFP BFP gets title immediately.
o Seller acquires through theft and sells to BFP BFP must go through AP.
Liability rule: AP values his improvements on land more than true owner uses land AP
compensates true owner for acquired property
Property rule: provides windfalls to certain parties AP awards windfalls

Servitudes

Applies when: 1) vertical privity between successor and predecessor AND 2)


touch and concern land
Trend: increased encouragement of using servitudes
In general:
o Positive easement: ability to cross land
o Profits: allow possessor to remove things from land
o Licenses: revocable rights of access
o Ability to restrict use of land
o Ability to require landowner to perform certain acts

Easements

Definition: nonpossessory right to use land in possession of another


o appurtenant: runs with land
o in gross: personal to holder of easement does not run with land
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Express easement: voluntary agreement by servient parcel MUST BE IN WRITING


Reserved easement: often when parcels severed and sold
Implied easements
o Quasi-easement: apparent and continuous (or permanent) use of portion of
property
Easement by necessity: necessary for claimants enjoyment of land (landlocked parcel)
o Only when claimed parcel is severed from servient parcel (then reserve easement)
o Endures only as long as necessary (gone when another way of access is available)
Easement by prescription: adverse possession: open/notorious, continuous, adverse,
under claim of right
o Must show use was NOT PERMISSIVE
o AND owner DID NOT OBJECT
o AND claimants right to use land was not like the others using it
Easement by estoppel: after giving neighbor license to use easement estopped from
revoking easement after licensee invests in land in reliance on easement
o Requirements: licensee expends substantial labor and money in reliance, licensor
knows/reasonably expects reliance will occur
Fiction of lost grant: after 20 years presume grant of easement was made and lost.
Othen v. Rosier: Othen seeks to enforce roadway easement on Rosiers land. Held: seller
did not reserve easement because Othens land was not landlocked when Rosier
purchased his parcel.
Brown v. Voss: 3 parcels stacked on top of each other. owns A. bought B and C and
wanted to build house straddling property line, moving fill material for it on easement.
Easement on lot A was only to access plot B. Held: no injunction because though misuse of
easement, no additional harm.
Termination of Easements
o Lapse: expires on own express terms
o Changed conditions: necessity for easement could disappear (no longer
landlocked, new access, etc)
o Merger: ownership of dominant and servient estates combined (what happened in
Brown later)
o Reverse prescription: oust easement holder and hold for statutory period
o Abandonment/misuse: requires intent to abandon or actions manifesting intent
o Failure of notice: failure to record and someone takes property without notice of
easement
o Injunction: but NO INJUNCTION if imposes unreasonable burden on servient estate
AND benefits of dominant estate outweigh servient estate burdens

Covenants

Real covenant: promise concerning the use of land that benefits the original parties to the
promise and their successors
3rd Rest Creation of Servitudes
o Intent to create servitude running with the land
o Compliance with SoF
o Notice to the party that one seeks to bind
o Cant be illegal, unconstitutional, or violate public policy
Violating FHA: a) disparate treatment? (covenants purpose is to exclude
particular people) b) disparate impact? (excludes people protected under
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FHA?) c) reasonable accommodations? If not large cost to community,


should enforce and accommodate
o Affirmative obligations require strict vertical privity (affirmative covenant
passes only when transfer entire interest or life estate)
Neponsit Prop. Owners Assoc. v. Emigrant Ind. Savings Bank: subdivided land and sold it
subject to covenant of annual charge on property owners. Neponsit transferred interest to
property owners association bank forecloses a house and refuses to pay.
Hill v. Community of Damien of Molokai: neighborhood covenant of only single family
housing group home for AIDS patients. Held: single family ambiguous in policy, group
home lives like an ordinary family. If required occupants to be related, would violate FHA
anyway. (disparate treatment, disparate impact, reasonable accommodation)
Termination:
o Release (generally by purchase)
o Changed conditions
o Merger
o Behavior of other parties
Abandonment: pattern of disregard of covenant must be OBVIOUS
(multiple people stop following covenant of mowing lawn)
Acquiescence: defendant gave consent to violation
Unclean hands: person trying to enforce covenant got it uncleanly
Caches: unreasonable delay before brining suit of violation
Estoppel: violation of behavior seemingly okay and violator becomes reliant
on this behavior
o Recording problems: actual, constructive (reasonably would know), inquiry
(reasonably would ask about like if notices everyone follows a behavior)
Western Land Co. v. Truskolaski: owned land and subdivided it subject to 1 family
covenant. Later tried to build shopping center owners tried to enjoin. Held: not enough
changed conditions (pop. Growth, higher traffic, more commercial devt nearby) and
covenant still had substantial value. Also unsympathetic to applying covenants to his
benefit.
Rick v. West: West has residential covenant on part of land but wants to sell to hospital.
Held: changed conditions insufficient, cannot sell for non-residential use.
Liability Approach: measure change in property value with current and use and
suggested alternate use by looking at comparable areas with alternate use
Property vs. Liability rules (modern approach moving towards liability rules)
o Turn down request
o Eliminate covenant
o Eliminate covenant and pay homeowners
o Keep covenant and homeowners pay developer
Use ^ when market value does not reflect homeowners valuation of property
Homeowners pay consumer surplus to developer (their value above
developers valuation of their property) requires changed conditions
argument

Common Interest Communities

Condominiums: each owner owns unit in fee simple, undivided share in common areas as
tenant in common

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Cooperatives: each resident owns shares of residential corporation (which owns all units
and building and land)
Rules governing servitudes:
o CC&Rs in constitution means notice greater deference
Florida 1: assumption of validity
Void if 1) unconstitutional 2) illegal 3) against public policy
Florida 2: reasonableness burden exceeds benefit (aggregate
utility maximization)
Business Judgment Rule: all but unjust most deferential
o Regulations/statutes after living there
No presumption of validity
General reasonableness required
Impact on individual and process because individual had no notice
o Restrictions on sale
Pre-approval only upheld if rejections are reasonable
Provisions that give association right of first upheld
Nahrstedt v. Lakeside Village Condo Association: condo has restriction against pets.
Nahrstedt has 3 cats. Court: goes with Florida 1 because she had notice and it was in
terms of initial deed.
40 West 67th Street Corp. v. Pullman: Crazy shareholder of cooperative causes trouble.
Coop board voted to terminate his lease. Court upheld termination by referring to business
judgment standard.
Valid or invalid servitudes
o Valid: aesthetic bans, business restrictions, bans on religious services (if all
encompassing)
o Invalid: assembly bans, flag bans, green energy/public policy bans

Intellectual Property

Intellectual property arose from the notion of intangible property created for the purpose
of pursuing commerce
o Keeble v. Hickeringill: had decoy pond to capture ducks. shot guns to scare
away ducks. Held: interfering with business in a non-competitor way (better decoy
pond would have been okay)
Trademark: patent identifiable characteristics to create logo or trademark (no knockoffs)
o Test: show consumers contested logo/infringement and see if it makes them think
of a specific brand or general product. If specific, then infringes upon trademark.
Copyright: statutory protection. Protects an idea. Lasts for 70 years.
o Allowed to use for quotes in reviews, teaching, parodies
Patent: 17-22 years. Cannot patent discoveries. Can patent
inventions/processes/machines
o Goal: try not to create windfalls for first movers for a long period that disincentivizes
other developers.
o Also tries not to benefit first movers that invest little cost/resources but gain a lot
Trade Secrets: enforcing NDAs
Personality: property rights of individual identity
o Enables individuals to exploit their own identities, prevents public confusion
Cheney Brothers v. Doris Silk Corp.: Cheney made patterns and Doris Silk copied one that
sold well. Held: encourage competition so allowed. No copyright/patent.
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Jurisprudence

Methods of approaching a case


Obvious precedent follows
Precedent unclear: ask questions
o Will applying precedent produce unfair outcome?
o Outcome legitimate to parties?
o Outcome socially inefficient?
New rule:
o New rule upheld by higher court or overturned?
o Will rule fit into bright line test? Easy to apply to other cases?
o Rule fits into new trend in the law?
o Rule wins social legitimacy?
Issue new rule
The Metaphysical Club
o Judges want to maintain legitimacy of judicial system
o Law is always changing
Conditions change (tech, economy) new facts new rules requiring
widespread application
To predict how judge will rule: (according to Holmes)
o Think about social changes and conditions facing judge
o Combined with judges temperament and underlying legal reasoning

General Property Themes

Least cost avoider to prevent conflict


(nuisance, recording)
Clarity in defining property interests (RAP,
recording, numerous clausus)
Protect good-faith purchasers (BFP)
Alienability (RAP, lessor can sublease
interest, cant prohibit sale of fee simple
via covenant)
Reward Labor (AP, giving cotenant fruit of
his labor)
Perfecting (recording)

Possession (abandonment, AP, avoid selfhelp)


o Allow AP to protect interests
Contract vs. Conveyance duality
Efficiency (waste, AP, nuisance)
Realism vs. Formalism
Good faith (sellers, landlords), fiduciary
duty (super good faith brokers, lenders)
Notice (protection of those taking on new
property)
Anti-discrimination

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