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Prop 2 22'

Marketable title on exam
One question from recent exam
Allocating risks:
 Deed conveys interest + allocate risk
 Layers of risk allocation:
o 1. Default allocation
 Not addressed in doc so the law tells us who bears the risk
 Exp: furnace breaks and not anything in K so whatever the law says about
it governs.
o 2. Contractual allocation
 Exp: furnace breaks but K says if something breaks w/in 60 days that
seller bears risk then the seller bears it.
o 3. Counter party risk:
 Risk that person cannot enforce legal rts against OP.
pre k
k phase
execution of
•not yet fully
performed k
post closing
Have a K that does enforce contractual allocation of risk, but the OP is
bankrupt or dead or in a foreign country cannot serve)
Doctrine of marketable title:
Seller responsible for delivering (promises aka a covenant) that they will deliver
“Marketable title” to the buyer
What is marketable title?
o If buyer can get title insurance policy at normal price
o Not implicating the buyer to legal issues.
What happens:
o Buyer gets to walk away free and clear if there is an issue with marketable title.
o If buyer breaches, the seller can keep down deposit though.
When delivery?
o Title delivered at closing
o So, if the title prob can be fixed bef closing then a buyer can’t walk away and say
that there was a title prob. Bcuz it can be fixed before closing occurs.
Title-Risks that might affect marketability of title.
 Encumbrances:
o Easements:
 Exp: power lines
o Covenants:
 Promises binding prop.
 Exp: cannot sell cottage to Melanie.
 a covenant does not lead to an unmarketable title
 Seller can tell buyer and buyer can waive
 Exp:
 Covenant says “must have 2 story houses in subdivision” but the
house is only 1 story.
o Buyer had notice & waived it
o But the buyer can STILL walk away Bcuz it is not only a
covenant is a direct VIOL of a covenant & zoning laws
o Liens:
 gives bank interest to foreclose on prop if u don’t pay back
 Exp: mortgages or tax liens
 Exp: adgister liens: “foreclosing” on a dog for boarding costs
o Encroachment:
 Sheryll’s grill/porch being on our prop. Is an encroachment
 Can negotiate a dif. Price point if encroachment stays existing
 Zoning:
o A mere zoning law does not create a marketable title issue
o viol of zoning law = unmarketable title.
 Exp: prop sold & prop is over the property line by 1’ = unmarketable title
 Can get a variance to correct this (hard to get)
 Could physically move the house lmfao
 Ways to search/record:
o 1. Name
 Search by name to find past buyers and ensure solid route of title (no
prev. title issues that r unresolved)
 Find the chain of title
o 2. Track Indexes
 Searching by parcel #
 Purpose of recording:
o Protect subsequent owner of prop. From
 Voiding out
 Failure to record = next B seller/B purchasers’ conveyance is VALID. But
next purchaser that buys prop from B seller to C purchaser then that K
might not be valid, even tho B purchaser did not record.
 Dispute between prior recorded interest y subsequent interest.
 Failure to record if prop. Is a gift=
o Priority
 Could even get 2 mortgages. Exp: 1st mortgage for 80% of price and 2nd
mortgage for the 20% deposit.
 Types of recording acts:
o 1. Race statute (Itz a race baby!)
 We only care who RACES to the court houses aka who records FIRST.
 Exp:
1. O ➤ A.
2. A failed to record.
 3. O ➤ B.
 4. then B records.
 5. Then O records.
o 2. Notice Statute
 Subsequent purchaser wins if they do NOT have notice
 Notice= recipient of doc (aka buyer) must do the research.
o If prior interest is recorded, then that is NOTICE!
 O ➤ A. O no record. O ➤ B. B had no notice = B wins
o 3. Race Notice Statute: ON FINAL!!$
 Subsequent interest holder must:
 1. Have no notice AND
 2. Must be the one to record first
 Exp:
1. O ➤ A.
2. A ➤ C.
3. then A ➤B.
4. B no notice.
5. Then C records.
6. Then B records. = C wins!
 Misspellings:
o If you misspell someone’s name in a title its okay bcuz we can figure out who it is
o BUT if you record under the wrong name you are SCREWED, it is considered
 Technical defects:
o Notarization is necessary!
 Common granter problem:
o Exp: B owns a land farm and gives a covenant to D. Well then B sells to C a part
of the property, but that prop has the covenant to D on it. No recording or no
inquiry notice given then = it depends on where you are in the country.
 If its all single-family homes and C expects to build a commercial building
he should have assumed that it had a covenant and looked.
 Random info:
o Subsequent purchaser that takes prop in good faith w/out notice is “good faith”.
 Shelter Rule:
o If u buy from someone who would win in a recording act case, then you (the
subsequent purchaser) would also win even if u had notice.
 Exp:
O ➤ A
A = no record
O ➤ B
B has no
notice of A’s
B records.
A then
B ➤ C.
C has notice
of A’s interest
C records
o Applies to gifts of Prop.
 Types of notice:
o 1. Actual notice
o 2. Constructive notice
 Like road laws are notice w/ut direct notice. So, land records r the same
the person ahs constructive notice of them.
o 3. Inquiry notice
 If a reasonable person would have inquired about something and they
were willfully ignorant of the situation bcuz they probs hoped to not have
definitive notice, then they r still imputed to have notice.
= C wins
buy from
someone who
would win in a
recording act
case, then you
would also win
even if u had
Exp: someone random is living on the prop. And u know this, and u do
not inquire who the heck the person is. (nvr on exam lmao)
 Exp: doc A references doc B and you don’t ask = you still had notice
 Exp: physical occupancy: if someone is living their u have notice.
o An inquiry even if u get no answer = u r not on the hook bcuz u do not have
notice y u took neccesito tasks.
 Mechanic liens:
o Priority starts when they get _____
 Wildddd Deeds:
o Exp:
O sells to
A sells to
B does
B sells to
A sells to
C could have told B to fix the problem, but he did not so C is responsible.
 The law places the loss on the person who is in the best position
to avoid the problem in the 1st place.
Anyone buying from C would start a chain of wild deeds
Closing phase:
 Merger:
o Default aka presumed to merge
o @ Closing the K “merges” into the deed
o After deed is delivered to buyer it is deemed as the final expression of our
agreement, so no one cares about the K anymore.
o Can say in the deed “this provision survives closing”
o You can NVR give a deed back or void it out like you could w/ COGS
 Can sue for damages tho
 Deed warranties:
o Aka “promises”
 Types of deeds:
o 1. General warranty deed
 Promising that from this point and back, that there are NO title problems.
 Can be 60 years ago and you are still promising that it is a good
 Exp:
 A to B
notice of
B-C deed
 B gave C a general warranty deed to C
 B to C
 C can sue B if a title issue exists 60 years ago
 Present convents:
 Statute of limitations starts running when deed handed over and
runs for 10 yrs.
 Types of present covenants:
o 1. Season
o 2. A Right to convey
o 3. Encumbrances
 Can have exceptions or be waived
 Q’s to ask:
o Are they breached?
o Do they run with the land?
 Min. = they run w/ the land
 Maj. = they do not run with the land
o Has statute of limitations been breached?
 Future covenants:
 Types of future covenants:
o 1. Covenant of future assurances
o 2/3. Covenant of general warranty and quiet enjoyment
 (can analyze together)
 Future covenants always run w/ the land
o 2. Special warranty deed
 Promise that the title is good from the time I owned the property and
until I sell it. Does NOT cover history.
 Exp:
 A to B
 B gave C a Special Warranty deed to C
 B to C
 C can ONLY sue B for issues w/title with B that happened when B
owned the prop.
o 3. Quick claim deed:
 No warranty of title
 Exp: if it turns out the seller did not own the prop they just sold to
u then u r shit out of lock. It only means that “IF” you have
property in this lot that it will be transferred but there is no
guarantee the seller even has title in the first place.
o Brokers =
 higher level of certifications.
 Access to MLS.
 If the homeowner finds a buyer for their property w/out the brokers
 If exclusive agency: broker don’t get paid
 If exclusive right to sell: broker does get paid
o Agents =
 work for brokers. Avg 6% of purchase price goes 3% to agent y 3% to
 Duty of loyalty = to put u first
o Open listing:
 whatever broker finds buyer gets paid.
o Dual agency:
 Agent represents seller and buyer
 This is dumb
o Unauthorized practice of law:
 Negotiating a real estate agreement or drafting a deed is
Physical condition issues:
 Duty to disclose physical defects (nonfeasance) (these r tort claims)
o 2 types:
 1. Outright lie: (aka affirmative misrepresentation)
 During executory K phase:
o Is a homebuyer entitled to a refund of the deposit when the
seller knew of, but failed to disclose significant leakage
problems in the house’s roof? Yes. A seller of a house is liable
for failing to disclose material problems with the structure of
the house that he knows about. The distinction between
nonfeasance and misfeasance is hard to decipher and courts
are continually restricting the doctrine of caveat emptor in
the interests of fairness and justice. In line with these
restrictions, the court holds that Johnson is liable for failing to
disclose the leaky roof. Johnson knew about the leakage
problems with the roof and not only failed to disclose them,
but lied about them to Mrs. Davis. Because a leaky roof is a
material defect, Johnson is liable to the Davises and must
return the deposit.
 After closing:
o ________________.
2. Buyer doesn’t ask, and seller doesn’t tell (caveat emptor)
 Caveat emptor means u don’t have to tell if they don’t ask.
 “let the buyer beware!” unless there is a “duty to disclose” or
“affirmative disclosure laws” (most common NOW)`
What is Known?
o If u don’t know about it u can’t disclose it so u can’t be obligated to disclose
more than u know.
What is material?
o Material would have significant financial impact on value or hazard to new
What is latent?
o Non-obvious (latent) defects that are known and material must be disclosed.
o Exp: water damage painted over to cover them up are latent aka non-obvious
and MUST be disclosed.
Inspection contingencies:
o A percolation test must be done to ensure the septic system is good.
o If it fails a perc test, then it is not buildable land!
“As is” clauses:
o Exp: lets say the barn was suitable for horses but it actually isn’t and this clause
protects the seller from a warranty or suitability claim.
o As is clauses does not protect seller from disclosing known defects or
misrepresentation. It ONLY protects sellers from ______
o This clause just says the prop. Isn’t of a specific quality
The Stigma Issue:
o Exp: a house that is known as the haunted house in town bcuz of a murder
happening in the shouse but the buyer is from out of town & doesn’t know and
buys the house and then finds out after.
o Exp: the lake house.
Implied warranty of quality:
o Only applies to merchants of housing (which is a builder or contractor).
 Typically applies to new construction
o Guarantess the house is built up to professional standards
o Exp: not built up to code or professional standards.
o Does the claim run w/ the land?
 No bcuz builder and 2nd buyer are not in privity
 Exp: builder sells property they bought to A and A sells to B.
B can sue builder for physical injuries like if the roof caves in and
cause B a physical injury
It is more likely NOW that B can sue the builder for physical
injuries & even for pecuniary damages like the cost of the roof
caving in within a reasonable time.
 Fixtures:
o Real prop = land & affixtures to land
o Exp: affixing sheet rock to the law school walls makes them a fixture even though
they were personal property before being affixed to the walls.
o Exp: is a chandeler a fixture?
o Test= it is not a fixture if it can be removed without damage.
o Exp: shelving from amazon becomes a fixture!
 Trade fixtures: fixtures used in business like bar equipement or a pet stores shelving
o Seller CAN remove trade fixtures
 If gifting a property = must fill-out a deed to ensure a donative transfer.
o Muat be evidenced by a written memorandum (a K is technically NOT req.)
 Must state 3 key terms:
 Set price
 Signed by the party to be _____
 Identify the property
Statute of Frauds
 Limits the length of time able to sue
 A written memorandum (bar napkin etc…) has 3 requirements:
o 1. Signed by party to be charged
 party who tries to back out (seller o buyer)
o 2. Identify property
 ANY way to identify property
o 3. States purchase price
 ANYthing identifying price
 If you are trying to use a check to show a memorandum it woudn’t be sufficient bcuz
not signed by party to be bound, does not state purchase price (it could), and does not
identify property BUT IT CAN!! As long as u sign it and identify it and state purchase
price (praty trying to back out signed on back).
 Reasonable and detrimental reliance on a promise, and the person attempting to deny
something is estopped from denying that promise.
 Exp:
o Gladys Green (defendant) negotiated to sell a parcel of land to the Hickeys
(plaintiffs). The parties came to an oral agreement, and the Hickeys gave Green a
$500 deposit. The Hickeys told Green that they were going to sell their old house and
build on Green’s lot. Less than ten days after making the deposit, the Hickeys sold
their house. Subsequently, Green told the Hickeys that she no longer intended to sell
the property to them and had found another buyer. The Hickeys offered to meet the
other buyer’s price, but Green refused. The Hickeys sued Green, seeking specific
performance of the agreement. Green argued that specific performance was
unavailable, because the agreement did not comply with the Statute of Frauds.
o May an oral contract for the sale of land be specifically enforced if the party seeking
enforcement detrimentally relied on the agreement?
 Yes. An oral land-transfer contract may be enforceable despite violating the
Statute of Frauds if the party seeking enforcement detrimentally relied on the
agreement. In other words, specific performance of an otherwise invalid
contract is available (1) if the party seeking enforcement changed positions
based on a reasonable belief that the agreement was valid, and (2) injustice
would result if she were not granted equitable relief. Historically,
Massachusetts case law suggests courts would only estop a defendant from
asserting the Statute of Frauds in extreme cases, such as those in which the
plaintiff paid in full, took possession, and improved upon the property.
However, the requirements have softened over time. In this case, although
the agreement between Green and the Hickeys was not in writing, the
Hickeys relied on the agreement to their detriment. Green knew about the
Hickeys' reliance. Green does not deny that she entered into an oral
agreement with the Hickeys. Further, there is no evidence that the parties
planned to memorialize the agreement in writing later. Green knew that the
Hickeys were going to sell their house in order to build on her lot, and the
Hickeys entered into a binding agreement with a third party to do so. Once
Green refused the sale, the Hickeys had no place to live, and repudiating the
agreement for the sale of their own home would have exposed them to
possible litigation. An equity court will not ignore such blatant injustice. This
case must be remanded for further proceedings. If the Hickeys have sold
their home or are still under an obligation to do so, specific performance may
be ordered against Green upon the Hickeys’ full payment of the purchase
price. If the contract to buy the Hickeys’ home has been rescinded, however,
the trial court has discretion to order Green to pay the restitution of costs to
the Hickeys instead.
o An oral land-transfer agreement may be specifically enforced, even though it violates
the Statute of Frauds, if the party seeking enforcement detrimentally relied on the
validity of the contract and injustice can be avoided only by specific performance
 /s/ = a email signature
 E-mails agreeing to a purchase price for a specific piece of property and bearing the seller’s
typed name, but omitting other terms, may nonetheless create a valid real estate contract
under the Uniform Electronic Transmissions Act.
 Example:
o Scarlett Wilson (defendant) owned approximately 37 acres of land. Larry Brantley
(plaintiff) called Wilson and asked if the property was for sale. Wilson said she would
sell for $10,000 per acre. Wilson and Brantley exchanged a series of e-mails in which
they agreed to a purchase price of $370,000, in cash at the time of closing, with
closing costs to be split 50/50, but did not set a closing date. Brantley wrote that he
would not have trouble obtaining financing and requested a survey of the property.
The e-mails did not discuss earnest money, retention of mineral interests, or a
deadline for financing. Brantley’s attorney prepared a real estate contract, which
Brantley signed and forwarded to Wilson. Instead of signing, Wilson e-mailed
Brantley stating that she had “decided not to sell . . . at this time for $10,000 per
acre,” because a neighbor had told her that nearby properties had sold for much
higher prices. Brantley brought suit seeking specific performance, asserting that the
e-mails formed a valid contract. Wilson moved for summary judgment, arguing that
the parties did not intend the e-mails to form a contract. Moreover, Wilson argued
that any agreement reached by the e-mails was too vague to be enforceable and
would violate the statute of frauds.
o May e-mails agreeing to a purchase price for a specific piece of property and bearing
the seller’s typed name, but omitting other terms, nonetheless create a valid real
estate contract under the Uniform Electronic Transmissions Act?
 Yes. Summary judgment should be granted only if the record, viewed in the
light most favorable to the nonmoving party, reveals no genuine issue of
material fact remains that would preclude entry of summary judgment for
the movant as a matter of law. Essential terms need not appear solely in one
writing to create a valid contract. Also, Arkansas has adopted the Uniform
Electronic Transmissions Act, which recognizes the validity of electronically
transmitted contracts and the sender’s name typed on an e-mail as a
signature. Here, reasonable jurors could find that the e-mails exchanged
were so connected that they formed one agreement. Jurors could likewise
find that Wilson offered to sell specific property for $370,000, with closing
costs to be split 50/50, and that Brantley agreed to those terms. Moreover,
Wilson’s e-mail to Brantley stating that she had decided not to sell for that
price could be read as evidence that Wilson thought the parties had agreed
to a sale, but had changed her mind. Issues of material fact also remain as to
whether Wilson agreed to sell the property in her e-mails, and whether she
intended to sign those e-mails by typing her name. The remaining terms of
the purported contract were not so unclear as to render it unenforceable,
because a reasonable time to obtain financing and tender performance may
be implied in a real estate contract. If the seller intends to reserve a mineral
interest, then the seller must so state, or the contract is deemed to convey
the entire property. The other missing terms, such as the amount of earnest
money, are not essential to forming a valid real estate contract. Therefore,
viewed in the light most favorable to Brantley, issues of material fact remain
that preclude entry of summary judgment for Wilson. Wilson’s request for
summary judgment is denied.
 Are electronic signature blocks at the end of emails a signature?
o Probably not bcuz of intent, but depends on the judge tbh
Equitable conversion:
 Equitable conversion transfers as soon as you both sign the K’s
o Seen as the equitable owner now
 Comes in 2 fact patterns:
o 1. The second u sign the K u become the equitable owner so if the house burns
down then, you’re responsible! Wtf!
 Every purchase/sale K should have a clause that puts the risk of loss back
onto the seller until closing.
 BUT u still have to buy the house aka close even if the house is burned
down bcuz the buyer bears the risk of loss.
o 2. _____
Legal Remedies for breach:
 Default
Equitable remedies for breach:
 Default is $ damages (aka legal remedies) so to get an equitable remedy u have to show
that $ would not make u whole.
o Types:
 1. Injunctions
 2. Specific performance: enters into written K and seller breaches.
 If buyer breaches after making a deposit then seller keeps deposit.
 Dif b/w amount sold after selling again then, you can only keep
the differential.
What a deed needs to have:
 To Satisfy the statute of frauds:
o Be in Writing
o State 10 essential terms
 Identifies of grantee & grantor
 Legal description of prop.
 Contains words of conveyance indicating a transfer of the interest from
the grantor to the grantee
 Signed by grantor
o Be delivered to & accepted by the grantee
 If a deed has been recorded, then delivery & acceptance is presumed.
 Types of foreclosures:
o 1. A judicial foreclosure action
 is an actual lawsuit
o 2. Power of sale jurisdiction:
 You default and a forced sale then happens
 Read book for 2/15 bcuz I did not pay attention
 Mortgages:
o Are a grant of a SI in a prop.
o Steps:
 1. Buyer GRANTS mortgage to lender
 2. Buyer gives lender a note
 3. Lender gives buyer $
 Equity of Redemption:
o After disclosure this gives the buyer the right to pay the lender off in-full to
redeem the property out of foreclosure.
 Foreclosure:
o Lenders do not want to foreclose bcuz it costs them money & time.
o The differential in the $ goes back to the “owner/pre-foreclosure buyer”
 If the differential is in the negative then, lenders will sometimes accept
short sales which is when the lender releases the mortgage and cuts their
loses bcuz the lender is nvr going to get the full-price in the market @
that time.
o Types of foreclosures:
 1. Judicial Foreclosure:
 A foreclosure IS a lawsuit.
 Court supervises sale (AKA sheriff’s sale)
 Protects the lender more
 Slower and more expensive for lender
 2. Power of sale jurisdiction:
 Lender can just sell the prop if you default (w/ notice ofc).
 Depends on state
 Quick and cheap
 Buyer loses due process protections
 3. Deed of trust: (not a foreclosure but technically is)
 This creates a way for a 3rd party to run the sale like a trustee
o gives power of sale power to trustee
usually depends upon the state whether they use foreclosure or
deed of trust
o 1. buyer defaults & owes $ still.
o 2. Lender assigns a trustee to conduct the bidding
o 3. Home goes into a deed of trust bidding sale.
o 4. Buyer still owes lender $
o 5. Lender bids on property with “paper $” & offers to
“forgive” the buyer from liability.
 Clogging:
o Term in waiver/mortgage that waives the borrower’s right to redeem the
property are INVALID terms. This is impermissible.
 Deed of trust:
o This creates a way for a 3rd party to run the sale like a trustee
 gives power of sale power to trustee
o usually depends upon the state whether they use foreclosure or deed of trust
o process:
 buyer defaults & owes $ still.
 Home goes into a deed of trust bidding sale.
 Buyer still owes lender $
 Buyer bids on property with “paper $”
 2 ways courts rule on this: (juris. Dependent)
o Recourse:
 Can get deficiency judgement against an indiv. For default
o Non-recourse:
 Can not get deficiency judgement against an indiv. For default.
 If LLC, then lender can usually only take a specific entity.
 Only collateral lender can come after is
 .
 What is an adequate sale price when the lender is selling it after a foreclosure?
o No right to contest the foreclosure sale price UNLESS the sale price is 20% or
more, less than what the market price is.
o Exp: $500k house selling for $100k.
What happens when there is a mortgage, and the seller does not pay off the mortgage??
 Steps:
o 1. Buyer buys property from seller.
o 2. There IS a recorded mortgage.
 Buyers are ALWAYS on record notice of a recorded mortgage.
o 3. Buyer is supposed to use proceeds from sale to get a mortgage release
o 4. What happens when the seller does not pay off the mortgage tho?
 Can the lender come after the buyer for the mortgage deficiency?
o If buyer has assumed the mortgage =Yes
o If buyer has not assumed the mortgage =No
 Most mortgages have “due on sale” clauses though.
o Requires seller to waive this clause before selling it.
Purchase Money Mortgages (PMM) & Home Equity Loans:
Purchase Money Mortgages:
 Mortgage used to secure $ used to purchase
 Buyer borrows $ from lender to purchase a house but it’s cash not an actual mortgage
 Whoever would win under priority act is the winner
o Exception: 2 Types of “Super Priority”:
 1. Judgement liens:
 Exp:
o A Runs over B in parking lot
o B sues A
o B has a judgement lien against A’s property now.
o PMM wins against judgement lien still.
 2. After acquired property clause:
 Loaned $ to buyer already and buyer is asking for more money
and the lender attaches an SI to all future property they purchase
 PMM wins against After-Acquired property clause.
Home Equity Loans:
 This puts a SI on the house the equity is coming out of.
 Steps:
o Buyer borrows $ from lender
o Buyer already owns the property
o Buyer is borrowing the $ to renovate OR wants to travel
Marshalling of assets: (Page 530)
 Junior SI’s are necessary
 If a senior SI forecloses on a prop, then the junior SI will be wiped out.
o Notice is req.
 Senior SI & Junior SI both loan money to B.
 B defaults on payments
Mortgage stuff:
 Equity of redemption:
o Created by equity courts
o If borrower defaults, they have rt to redeem prop.
 Invalid clauses= they “clog” the remedy
 Deficiency judgement:
o Differential still owed to lender
 “assume” = look for on exam bcuz indicator of
 After foreclosure the junior mortgage lender is wiped out.
o Buyer buys free & clear of junior intrest
 If u see PMM about after acquired prop or _____.
o PMM always win!!
 Highly leveraged= lots of debt to equity ratio
2nd quiz:
Non-express easements: EXAM!! Do all 4 practice!!
 Types:
o 1. Prescription
 These don’t start w/ permission to enter/use prop.
 Elements:
 1. Visible (open & notorious)
 2. non-permissive (or hostile)
 3. Continuous for the statutory period
o 2. Estoppel
 Is a revocable license that becomes irrevocable because of the
reasonable reliance leading to an “easement by estoppel.”
 Start with permission
 Elements:
 1. Conduct by 1 party
 2. Detrimental change in position by 2nd party
 3. Change made on reasonable reliance on 1st party’s conduct
o 3. Implied by existing use
 Elements:
 1. Unity of ownership (both parcels owned by same person @
o Exp: lake house
 2. When parcels were separated, 1 parcel visibly/apparently made
use of the other parcel
o Exp: 9619 cutting 9629’s lawn
 3. Continusous use expected to continute
 4. Continued use of the quasi-element must be reasonably
necessary to the owner of the parcel claiming the benefit of the
o Reasonable necessity= it’s annoying
o Strict necessity= its nearly impossible
 .
4. Implied by necessity
 Elements:
 1. Unity of ownership (both parcels owned by same person @
o Exp: lake house
 2. Owner of the land transfers a part of the larger piece of land in
a way that creates a landlocked parcel.
 3. Easement must have been necessary for the landlocked parcel
to reach the roadway.
 4. This necessity MUST have existed “AT THE TIME” the prop.
Was divided from its OG common ownership.
 Easement ends when the necessity ends
 Termination of easements:
o 1. Release:
 .
 If A owns parcel 1 & 2. Then the easement is merged into one easement.
 What happens if A sells 1 piece of her land to B now?? No easement. But
u can try to et a dif. Easement established like easement by necessity.
o 3. Express Terms:
 .
o 4. Abandonment:
 Always a Q of intent.
 Non-use does not terminate, there must be specific intent 2 abandon
o 5. Prescription:
 .
o 6. Estoppel:
 License becomes revocable w/ estoppel
 Looking 4 permissive acess, expenditure3 of $ or some other legal
change in position
o 7. Eminent Domain:
 Gov comes in & takes prop.
o 8. Recording acts:
 Unrecorded eaasments.
o 9. Foreclosure:
 If JR SI is foreclosed then easement goes away?
o 10. Implied easements:
 Implied by Necessity:
 Landlocked (req strict nec.)
o Elements:
o Duration: easement ends when necessity ends
 Implied by reasonable:
o 11. Changed conditions:
 .
o Easement on page 570 elements! Exam look it up
 Strivt= close 2 impossible
o Easement misuse:
 Cannot use easement from prop B to benefit parcel C
 Injunction is ALWAYS issued for this misuse
Moving easement:
o Cannot unilaterally move an easement
 Musat have bilateral agreement
Conservation easements:
o Prevent ___ of property
o Conserves prop.
o Issue= what happens 300 yrs. from now? Do we want the same easement then?
o Builders also can take tax deduction on prop.
Agricultural easements:
o Limit land-use 2 agri
Negative easements:
 Are Rare
 Prohibits ____ of property from doing something
 4 exceptions:
o Blocking windows/doors
o Removing lateral support 4 a wall
Restriction On Property:
3 types:
1. Covenants
 Can be terminated by changed circumstances
 Exp: Mel & Sheryll say they hate pink houses & agree 2 nvr paint houses pink. BUT to
make a covenant so when the prop gets sold to Kerry its upheld, u MUST create a
covenant that run with the land!!
 These r a property interest
 Elements:
o 1. Needs to be in writing to satisfy SoF if we want it to run w/ the land
o 2. Intent to run w/ the land is nec.
o 3. Must touch and concern the land
o 4. Must touch & concern the land
 What doesn’t:
 A.
o 5. Privity is nec.
 2 types:
 1. Vertical:
o Privity between A (burden) > C is necessary
A sells prop to C
2. Horizontal:
 To bind subsequent owners:
o Notice is nec.
 Recording usually
 2 types you can get, dependent on what outcome u want:
o 1. If we want to enforce this in equity, we need equitable servitude
o 2. If we want to enforce this in law then u want a ___ covenant
 Individual versus overall reasonableness:
o Dif jurisdictions vary on which reasonableness standard they apply
o Individual reasonableness:
 Is enforcing a covenant that says no cat reasonable to the 3 cats? Maybe
 Looks at facts and circumstances of homeowner specifically.
o Overall reasonableness:
 Looks at if other people r affected by the cats dander in other apts from
the air system.
 Real covenants:
o Require vertical privity
o Might require horizontal privity
 Touch and concern:
o Touch& concern element is met if the promise has to do w/ the occupancy, use
or enjoyment of the property.
o Examples:
 Promise not to paint house pink
 Promise to only paint house pink
 Promise to not build 2-story house
 Promise to not have a garden
 Promise to only use prop. For commercial use
 Promise not to fly a flag outside the home
o Does a covenant not to seek contribution from a prior property owner
for environmental cleanup bind future owners of the property because it
touches and concerns the land? No
o When benefits are held in gross, there is a policy argument that it does
touch and concerns the land
o When benefit in gross is held by developer = hinders alienability of prop.
 Changed circumstances:
o Test = Can the OG purpose of the covenant still be met?
 Hill v. ___:
o Single fam residential use covenant
o Nursing/group home Company comes in
o Home was for people w/ HIV/AIDS
 Neighbors freaked out cuz they were dumb
o Court interpreted “single fam home” broadly as anyone living together in a home.
 Even if narrow interpretation occurred the FHA could invalidate covenant.
 FHA:
o Includes:
 Mental illnesses
 Alcoholism
 Physical & mental disabilities
o Types:
 1. Illegal to discriminate intentionally against people.
 2. Disparate impact
 3. Reasonable accommodations
 Abandonment:
o To legally abandon real property, the owner must successfully divest
himself of all right, title, claim, or possession of the land.
o Has an owner of real property successfully abandoned his interest in
the property where no new owner has taken title to the property? No
 Exam: can be covered by covenant and zoning at the same time. The more restrictive
takes control.
 Shelley v. cramer:
o Race restristive covensnts violate EP bcuz it is state action.
 2. Nuisances:
 .
 3. Zoning
o .
 ______________________________________________________________________
Quiz Tuesday April 4th – 16 MC questions
Recap: Chapter 6 Servitudes
1. Express
Appurtenant – benefit held by parcel of property.
In gross – benefit not held by parcel of property.
Rule Against Reservations in 3rd Persons – cannot convey property and
reserve an easement to someone else in the same transaction. MAJORITY
-modern trend rejects this rule.
CAN grant an easement to one person, then convey property to another (two separate
2. Non-express easements
Estoppel – starts with temporary revocable permission to come on
property (license) that becomes irrevocable thru estoppel = permissive access that
was relied on to another’s detriment. *Look for a legal change in
position*(spending $$, improvements)
Prescription – similar to adverse possession. Over time, true owner loses
the ability to redact or bring action for trespass leading to easement.
Implied by existing use - *must be existing use* (quasi-easement, should
have created an easement but didn’t).
Elements: Unity of Ownership
Visible or apparent
Reasonable necessity
Standards of necessity: 1. Reasonable necessity – (MAJORITY RULE) “hastle to
do”; applies to implied grant; 2. Strict necessity – (MINORITY APPROACH)
“impossible or near impossible to do”; applies to implied reservation; distinguished
by the person requesting the easement is usually the one that caused the problem;
Look for landlocked parcel.
d. Implied by Necessity – creates a landlocked parcel; use strict necessity
Elements: Unity of Ownership
Creates a landlocked parcel
Must be necessary and existed at the time parcel was divided.
3. Misuse of easement: (Brown v. Voss)
 Can’t use easement beyond its scope.
Black Letter Law – get an injunction for misuse.
4. Negative Easements: Know exceptions: (1) blocking windows in building, (2)
blocking well-defined flow of air, (3) interfering with water flow in canal and humanmade channels, (4) removing lateral support for wall foundation.
Covenants that Run with the Land
1. Real Covenant (Law = money damages)
Elements (5): Writing
Intend to run with the land
Notice – usually met by recording
Touch & Concern – has to do with land use; know Caulette fact pattern –
policy argument when benefit is held in gross b/c there can be difficulty finding the
owner of covenant that interferes with free alienability of the land.
Privity (two types)
Vertical privity- required in all jurisdictions, always met
Horizontal privity – (minority rule); promise has to take place as part of a real estate
2. Equitable Servitude (Equity = get injunction)
Elements (4): Writing
Intend to run with the land
Touch & Concern
Two approaches to reasonableness:
1. As applied to the individual
2. Is it reasonable in general?
Changes Circumstances
 Can terminate covenant with a change in circumstances
 High standard and hard to meet
 Basic test – is it possible to still achieve the goals of the covenant?
Selective enforcement/Non-enforcement (Fink case)
 Test for abandonment – look at the facts and circumstances, would a reasonable
person reasonably conclude a restriction? *Look at the number, nature, and severity
of then existing violations and prior acts of enforcement of the restriction* Is it
possible to realize substantial benefit of the covenant?
Hill v. Molokai case
 Does the group home violate the covenant?
 No definition of covenant = court will read broadly
 Even if gave a definition; FHA comes in (discrimination = hard to prove,
disparate impact or reasonable accommodation are better arguments)
Chapter 7 – Nuisance
 Usually, a tort
 Ancient common law doctrines: crude limit on land use (don’t use land in a way
that harms your neighbor)
 Elements: Intentional
Substantial interference with the use and enjoyment of another’s property.
Intent – to do the act, not intent to do something bad (care about the action)
Unreasonable – 3 approaches
1. Traditional (MAJORITY RULE) – met when poorly defined threshold is met.
(dirty, stinky, noisy fairs poorly here)
2. 2nd restatement basic – use is unreasonable if the harm outweighs the benefit (will
often use dollar values on exam)
3. 2nd restatement alternative – use is unreasonable if serious burden and if person
engaged in behavior can compensate p. without going out of business.
Substantial is typically met.
 Typically, and injunction (abatement)
 Modern trend toward money damages
Estancias v. Schultz
 Air conditioning unit noise (like a jet engine)
 Harm to p. = $12,500 decrease in property value
 Benefit to d. = $150,000-$200,000 to change unit (if using the basic approach,
defendant wins b/c benefit outweighs the harm)
 Question in case is unreasonableness; traditional test - probably met: basic test –
having a jet engine at your backdoor is probably unreasonable BUT spending an extra
$150,000 against a $12,500 loss for p.?? **balancing of equities = an argument that
there is not a nuisance at all.
 Case is distinguished b/c there is no public benefit – Houston not in need of more
apartments so injunction is granted.
 Take away = pay attention to fact pattern (1) question of reasonableness; can
make an argument about benefit outweighing the harm, (2) damages; could have
awarded damages if more public harm.
Boomer v. Atlantic *landmark
 Cement plant polluting neighbors
 Discussion – temporary v. permanent damages
NY traditionally issues injunction (this case departs)
Harm = air pollution
Benefit = millions invested, several hundred employed
 Why is this nuisance?
-under basic unreasonableness approach – no nuisance b/c harm does not
outweigh the benefit.
- under alternative unreasonableness approach – nuisance; if substantial and d. can
compensate for that harm, and it would not put them out of business.
**think of public in particular (community needs cement).
 Court discusses regulation of air pollution – legislature should be doing
this; if we are going to be shutting down businesses the legislature should not
be silent.
Balancing of equities = is there benefit to the public as a whole?
Yes = $ damages; No = injunction
o Interesting fact pattern
o Test of reasonableness
Spur v. Del Webb
o cow manure gone wrong (cattle co. v. land developer) – developer unable to sell
some lots b/c of smell.
o Doctrine of Coming to the Nuisance – feed lot already there; developer moved in
**equitable defense, rarely successful, can mention on final**
o Remedy = Webb gets injunction BUT has to buy out Spur; creative remedy that is
not usually done.
Chapter 6
Chapter 7
El Paso Refinery (p. 634), Calullett (p. 639), Western Land (p. 665), and El Di (p. 669). For
Thursday, please prepare Fink (p. 675), Pocono Springs (p. 680), and Mulligan (p. 701).
 Public nuisances:
o Meth houses
o Health related ordinance violations
o Broad
 Special damages (probs on exam lol)
o Priv P: can bring claim if plaintiff suffers nuisance “in kind”
 Exp: Manure lot= flies
o Public nuisance: can bring claim if damaged from a special “in kind” damage:
 Exp: stuck in traffic in an ambulance and can’t get to the hospital in time
(ask prof for further explanation!!)
 A nuisance can be just wrong place, wrong time.
o Exp: a pig in a parlor instead of a barnyard.
Land Use
 Euclideid zoning:
o Segregating land uses
o Single fam use= most protected
 Pre-Existing Nonconforming Uses:
o A permitted use of real property that was lawfully established and maintained at
the time of its original construction but that no longer conforms to the current
zoning law. The nonconforming use might be the structure itself, the lot size, use
of the land or use of the structure. The use will eventually be eliminated, although
the nonconforming use status does not necessarily have to be discontinued upon
the sale or lease of the property. By allowing the use to continue for a reasonable
time, the government can assure itself that the use will not continue indefinitely
and, at the same time, avoid having to pay just compensation for taking the
property through condemnation.
o When purchasing a nonconforming structure, a buyer should be made aware that
in case of substantial destruction by fire or otherwise, the zoning statutes may
prohibit reconstruction of the structure. In such a case, a buyer should discuss the
possibilities of purchasing demolition insurance from an insurance agent. A
nonconforming use can also terminate upon abandonment of the property.
QUIZ:::::: pages 755-780
 Variance =
o Have most of land in certain area has a specific use and the property @ issue is
not w/in that use.
o Is a waiver for a specific person in a specific circumstance
o Elements:
 1. Undue hardship on prop owner AND
 Undue hardship = cannot do anything else w/ the prop w/out the
variance. w/out it the property is sorta worthless.
 2. No adverse impact on neighbors
o Commons v. Westwood zoning board of adjustment
 Had only 30’ of road frontage
 Area variance
 Prop owner was seeking relief from an area-based requirement of the
zoning law,
 A use variance is a variance that gives relief from a use-based requirement
of zoning law.
 Special exceptions:
o Another way for an owner to obtain permission to engage in a use that is
expressly not allowed by the zoning code BUT is allowed if certain conditions are
o Cope v. Town of Brunswick:
o Legis says we think apt buildings r fine here as long as conditions r met. But very
narrow rules so this allows admin agency to interpret it as committed to agency
 Non-delegation doctrine.
 If condition is too vague, you must cross the condition out.
 Undue hardship:
o Strictly applies law
 Variance:
o Zoning amendment that changes the use so the use now permitted in that lot is
surrounded by lots all for different uses.
 Zoning:
 A piece of land is commonly covered by zoning and a covenant.
o Zoning controls if covenant creates illegality. Otherwise more restrictive covenant
 1 amendment implications:
 Group homes:
o Do they count as single-family?
o FHA applies to zoning
 If in a protected class (trumps zoning requirements)
o RLUIPA statute: religious land use & institutionalized persons act of 2009
 Intended to protect religious institutionas from discrimination in the land
use context.
 No gov shall impose or implement a land use regulation in a manner that
imposes a substantial burden on the religious exercises of a person,
including a religious assembly, or institution,
 UNLESS gov can show that it burdens the person, assembly or
 Takings: PAGE 830!!
o Just compensation = the fair market value
o Don’t owe personal expenses
o Don’t owe compensation for the personal value of the house
 .
 .
 10 Q’s chapters 7/8/9 (nuisance/land use/takings) and 5 q’s from 5/6 (servitudes &
real estate)
 5th amend: nor shall priv prop be taken 4 pub use w/out just compensation.
 Just compensation =
o Fair market value (not subjective value like sentimental value, moving expenses,
 Public use=
o Is a restriction o ngovs use of eminent domain
o Exp: taking walgreens and selling prop to CVS
o Exp: economic development. Taking a land and selling it to a developer
o Broad interpretation
 Regulatory takings:
o If the regulation goes WAY too far then it may be a taking.
o Can a regulation (or gov exercise of power) that isn’t a taking, “take prop”.
o Regulatory police power cannot be takings
o When an exercise of police power goes too far then it can be considered a taking
o Alger v.
 F;
 Built a warf
o a gov telling a person they can’t do something on their prop
o Exp: a house is far away but next to a powder magazine (can blow up) may be ok
but a line might be drawn if the house is RIGHT next to a powder magazine then
regulatory taking is ok.
o Exp: Peter is an alc brewer in 1900’s but then prohibition happens (ur legal
activity now becomes illegal). He brought a suit alleging a regulatory taking,
court said this is the regulatory police power so they don’t owe u anything.
o Exp:
o Dif people can own mineral v. soil v. coal rts lol.
Denominator problem: Diminution in value aka DIV:
o Exp: I own 10 acres, 2 of which acres r wetlands. Gov now regulates wetlands
saying u can’t do anything w/ it. Each acre is worth 10K but bcuz of regulation
that 2 acres of wetland r now worth $20k. so now their acres are worth $180k
instead of $200k.
 2 approaches to taking it:
 1. ONLY look @ the affected portion (higher proportion of DIV)
 2. Entire parcel (less DIV)
 Use this to figure out IF a taking has occurred.
o Diminution in value:
 Reduction in value of priv prop owners prop due to a taking
 Exp: coal miner had 100% loss of prop value
 $ value , not really use value that much.
 Exp: eagle feathers were trible artifacts. Dealer sold thrm. Gov
makes ESSA thst bans their sale hence not allowing him to sell the
feathers anymore
 Exp: chick farmer and airforce run way base rt next to u. they fly
50’ over coop & chickens kill themselves. Is this a taking? YES
o Penn central:
 F:
 When buying land @ grand central terminal it planned on building
a 20 story building but now the Owner wants to build a 50 story
building on top of it
 City of NY passes a law saying that they cant do that bcuz its
against the law
 Terminal sues alleging a taking of their prop.
o Neigbors prop value reduces when neigbors prop was regulatorily taken.
 Tests to apply to takings cases (on quiz).
o 1. Penn central Test:
 LAST CHOICE test ONLY IF other tests CANNOT be applied
 (is it a taking? Or regulatory taking?) if all satisfied below then = taking.
(prop owners frequently lose bcuz “gov of character action isn’t defined
too well)
 1. DIV &
o Higher the DIV higher the likelihood of takings claim.
 Higher better for prop owner and lower DIV better
for gov.
 2. Interference w/ investment backed expectations
o If owner spent a lot of $ in reliance on a regulation and then
they change the regulation this weighs in favor of a taking.
 3. Character of gov action
o If gov is acting in a way that is really important (court
saying gov is acting 4 a good policy reason) way then it is a
o 2. Per Se Test:
 Loretta case
 2. Regulation causes
 2. Physical invasion of prop.
o Usually giving people access to the prop.
o Exp: a trail going through ur backyard.
o 3. A Lucas Test
 Person gives ownership of prop to gov. & is compensated.
 A prop
 1. 100% DIV IS a taking
o This is considered a “Per Se” takings
o 4. B Lucas Test: (NVR a taking if following satisfied)
 Exp: gov comes in & says u can’t use any longer use the prop in that
specific way.
 1. Regulation prohibiting a use
 2. That has ALWAYS (like bcuz u didn’t rely on it) been illegal
 3. Is NVR a taking
You are seeking an exception from the zoning law.
You are saying, you shouldn’t apply the zoning law to me
because of my circumstances.
2 Requirement Test:
Undue hardship on the property owner. High
standard. Different from mere inconvenience.
Cannot be an adverse impact on the
It is a conditional use permit.
Special Exception: The ordinance says, this kind of use is
okay if: and lists conditions.
The conditions cannot be too vague.
If the condition is too vague, it is
unenforceable and gets struck out.
Therefore, the use is permitted.
Spot Zoning: Courts will declare a zoning amendment to be illegal if it is
spot zoning. It is a conclusion.
Fact Pattern: An island of nonconforming use.
The new use would be incompatible on all sides
with what had been there before.
Rule: A zoning amendment that changes the use so that the
use now permitted in that lot or area is surrounded on all sides by a
different type of use.
If zoning makes compliance with a covenant illegal, then zoning will
Contract doctrine of illegality.
If you can’t comply with a covenant, zoning will control.
Otherwise, the more restrictive will control.
Went over City of Ladue v. Gilleo.
Went over Village of Belle Terre v. Boraas.
Covenant that defines family and its limited use.
Religious Land Use and Institutionalized Persons Act of
It is an important statute. Religion clause.
When you have land usage involving religious uses, strict
scrutiny is applied as a matter of this statute.
It is intended to protect religious uses from discrimination
by local zoning.
It has to pass strict scrutiny, which is a hard standard to
Just Compensation Clause of the 5th Amendment:
Nor shall private property be taken
for public use without just compensation.
Due Process Clauses of 5th and 14th Amendments*
Important constitutional protections of property.
Just Compensation = FMV: Fair Market Value.
The government has the inherent
power of eminent domain. Eminent Domain
is an inherent power of sovereignty and
allows government to take private property.
Fair Market Value: What a willing
buyer would pay a willing seller.
The government does not owe
moving expenses or personal value.
Once the government files eminent
domain papers, the property becomes